Exhibit 10.1

FACILITY AGREEMENT

dated as of April 3, 2017

by and among

Endologix, Inc.,

as the Borrower,

the other Loan Parties party hereto from time to time,

the Lenders

and

Deerfield Private Design Fund IV, L.P.,

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

     35  

Section 1.3

 

Business Day Adjustment

     36  

Section 1.4

 

Loan Records

     36  

Section 1.5

 

Accounting Terms and Principles

     37  

Section 1.6

 

[Reserved]

     37  

Section 1.7

 

Officers

     37  

Section 1.8

 

Joint Drafting and Negotiation

     37   ARTICLE 2 AGREEMENT FOR THE LOAN      37  

Section 2.1

 

Use of Proceeds

     37  

Section 2.2

 

Disbursements

     37  

Section 2.3

 

Payments; Prepayments; No Call; Non-Callable Make Whole Amount

     38  

Section 2.4

 

Payment Details

     39  

Section 2.5

 

Taxes

     39  

Section 2.6

 

Interest

     41  

Section 2.7

 

Yield Enhancement Payment; Default Interest

     42  

Section 2.8

 

Delivery of Warrants

     43   ARTICLE 3 REPRESENTATIONS AND WARRANTIES      43  

Section 3.1

 

Representations and Warranties of the Loan Parties

     43  

Section 3.2

 

Borrower Acknowledgment

     56  

Section 3.3

 

Representations and Warranties of the Lenders

     56   ARTICLE 4 CONDITIONS OF DISBURSEMENT      57  

Section 4.1

 

Conditions to the Disbursement

     57   ARTICLE 5 PARTICULAR COVENANTS AND EVENTS OF DEFAULT      58  

Section 5.1

 

Affirmative Covenants

     58  

Section 5.2

 

Negative Covenants

     65  

Section 5.3

 

Change in Control

     71  

Section 5.4

 

General Acceleration Provision upon Events of Default

     72  

Section 5.5

 

Additional Remedies

     76  

Section 5.6

 

Recovery of Amounts Due

     77  

Section 5.7

 

Credit Bidding

     77   ARTICLE 6 MISCELLANEOUS      77  

Section 6.1

 

Notices

     77  

Section 6.2

 

Waiver of Notice

     78  

Section 6.3

 

Fees, Charges, Costs and Expenses Reimbursement

     79  

Section 6.4

 

Governing Law

     79  

Section 6.5

 

Successors and Assigns

     80  

 

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Section 6.6

 

Entire Agreement; Amendments

     81  

Section 6.7

 

Severability

     81  

Section 6.8

 

Counterparts

     81  

Section 6.9

 

Survival

     82  

Section 6.10

 

No Waiver

     83  

Section 6.11

 

Indemnity

     84  

Section 6.12

 

No Usury

     84  

Section 6.13

 

Specific Performance

     85  

Section 6.14

 

Further Assurances

     85  

Section 6.15

 

Agent

     85  

Section 6.16

 

USA Patriot Act

     88  

Section 6.17

 

Placement Agent

     88  

Section 6.18

 

No Fiduciary Relationship

     88  

Section 6.19

 

Joint and Several

     88  

Section 6.20

 

No Third Parties Benefited

     88  

Section 6.21

 

Binding Effect

     88  

Section 6.22

 

Marshaling; Payments Set Aside

     89  

Section 6.23

 

No Waiver; Cumulative Remedies

     89  

Section 6.24

 

Right of Setoff

     89  

Section 6.25

 

Independent Nature of Secured Parties

     89  

Section 6.26

 

Sharing of Payments, Etc.

     90  

Section 6.27

 

Confidentiality

     90  

Section 6.28

 

Intercreditor Agreement

     91  

Annex

 

Annex A    Disbursement Amount 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(h)    Litigation Schedule 3.1(m)    Real Estate Schedule 3.1(x)   
Borrower’s Subsidiaries Schedule 3.1(z)    Borrower’s Outstanding Shares of
Stock, Options and Warrants Schedule 3.1(aa)    Material Contracts Schedule
3.1(dd)    Environmental Schedule 3.1(ff)    Labor Relations Schedule 3.1(gg)   
Jurisdiction of Organization, Legal Name, Organizational Identification Number
and Chief Executive Office Schedule 5.1(y)    Post-Closing Requirements Schedule
5.2(iv)    Contingent Obligations Schedule 5.2(vii)    Transactions with
Affiliates

 

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Exhibits

 

Exhibit A    Form of Loan 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    Form of Compliance Certificate

 

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FACILITY AGREEMENT

This FACILITY AGREEMENT (this “Agreement”), dated as of April 3, 2017, by and
among Endologix, 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”), Deerfield Private Design Fund IV, L.P.
(“Deerfield Facility Entity”), as agent for itself and the Lenders (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 a term loan to the
Borrower to provide funds necessary (i) to refinance certain of the existing
Indebtedness (including a certain amount of the existing 2.25% Convertible
Notes), (ii) to provide funds for the Borrower’s working capital and general
corporate purposes, and (iii) to pay a portion of the fees, costs and expenses
related to this Agreement;

WHEREAS, Borrower desires to secure all of the Obligations (other than those
Obligations under the Warrant, any Stock and the Registration Rights Agreement)
by granting to Agent, for the benefit of the Secured Parties, a first priority
(subject only to the prior priority of the Permitted Priority Liens) perfected
Lien upon substantially all of its personal and real property including all of
the issued and outstanding Stock of its direct Subsidiaries (in each case, other
than Excluded Property); and

WHEREAS, each of the Loan Parties is willing to guaranty all of the Obligations
(other than those Obligations under the Warrant, any Stock and the Registration
Rights Agreement), and to grant to Agent, for the benefit of the Secured
Parties, a first priority (subject only to the prior priority of the Permitted
Priority Liens) perfected Lien upon all of its respective personal and real
property, including all of the issued and outstanding Stock of its direct
Subsidiaries (in each case, other than Excluded Property) which are issued to 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:

“2.25% Convertible Note Documents” means the 2.25% Convertible Notes, the 2.25%
Senior Note Indenture and each other document or agreement from time to time
entered into in connection with the foregoing.

“2.25% Convertible Notes” means those certain 2.25% senior unsecured notes,
governed by the terms of a base indenture, as supplemented by the first
supplemental indenture relating to the 2.25% senior notes (together, the “2.25%
Senior Notes Indenture”), between the Borrower and Wells Fargo Bank, National
Association, as trustee, each of which were entered into on December 10, 2013.

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“2.25% Senior Notes Indenture” has the meaning provided therefor in the
definition of “2.25% Convertible Notes.”

“3.25% Convertible Notes” means those certain 3.25% senior unsecured notes,
governed by the terms of a base indenture, as supplemented by the second
supplemental indenture relating to the 3.25% senior notes (together, the “3.25%
Senior Notes Indenture”), between the Borrower and Wells Fargo Bank, National
Association, as trustee, each of which were entered into on November 2, 2015, as
the same may be amended, restated, refinanced, supplemented or otherwise
modified in connection with a Permitted 3.25% Convertible Note Refinancing.

“3.25% Convertible Note Documents” means the 3.25% Convertible Notes, the 3.25%
Senior Note Indenture and each other document or agreement from time to entered
into in connection with the foregoing, as the same may be amended, restated,
refinanced, supplemented or otherwise modified in on with a Permitted 3.25%
Convertible Note Refinancing.

“3.25% Senior Notes Indenture” has the meaning provided therefor in the
definition of “3.25% Convertible Notes.”

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

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

“ABL Agent” has the meaning assigned to such term in the definition of “ABL
Credit Facility” herein or the agent for the facility referenced in clause
(ii) of the definition of “ABL Credit Facility.”

“ABL Credit Facility” means (i) that certain Credit and Security Agreement,
dated as of the Agreement Date, by and among the Borrower, the other Persons
party thereto from time to time as “Borrowers” (as defined therein) or
guarantors therein, Deerfield ELGX Revolver, LLC, in its capacity as Agent (as
defined therein (including any Third Party Agent (as defined therein)), in such
capacity, together with its successors and assigns in such capacity, the “ABL
Agent”) and the financial institutions or other entities from time to time
parties thereto, each as a Lender (as defined therein), as amended, restated,
supplemented or otherwise modified in accordance and in compliance with the
Intercreditor Agreement and (ii) any credit agreement that replaces or
refinances the agreement set forth in clause (i) or in this clause (ii),
provided, that any such replacement or refinancing meets the following
conditions: (A) has an aggregate commitment amount not greater than the
commitments under the facility referred to in clause (i) unless otherwise agreed
in writing by the Agent, (B) is secured on a senior basis to the applicable
Obligations hereunder with respect to either all assets securing the applicable
Obligations or with respect to accounts receivable, inventory, equipment, cash
and/or related assets, and the agent therefor enters into an intercreditor
agreement reflecting the foregoing lien priority and other provisions that are
mutually acceptable to such agent and the Agent in their reasonable good faith
discretion (such intercreditor agreement, the “Refinancing ICA”), (C) does not
have one or more obligors that are not obligors under this Agreement, (D) is not
secured by assets and property that do not also comprise Collateral, (E) does
not prohibit payments, repayments or prepayments under the Loan Documents
(provided that, for the avoidance of doubt, the foregoing shall not preclude the
ability of the agent and lenders under such facility to have liens senior to
those of the Agent in accordance with clause (B) above), (F) has a final
maturity date equal to or later than the final maturity date of the replaced or
refinanced asset based loan facility, and (G) either (x) contains terms that are
prevailing market terms at the time of the establishment of such facility for
the type of financing and for the quality of borrower, as mutually determined by
Borrower and Agent in their reasonable good faith judgment (provided, that if
the parties cannot mutually agree that the terms of

 

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the refinancing facility are then prevailing market terms for the type of
financing and for the quality of borrower, then Borrower and Agent shall
mutually agree in their reasonable good faith judgment to select one third-party
investment bank or debt advisory firm reasonably acceptable to each of Borrower
and Agent to make such determination for both parties based on debt term sheets
provided to such entity by unaffiliated potential lenders (which determination
need not be made in writing), the determination of which shall be binding on
both parties; provided further, that if Borrower and Agent cannot reasonably
agree in good faith upon one third-party investment bank or debt advisory firm
reasonably acceptable to each of them, then the parties shall select a retired
judge or justice by mutual written consent of the parties (and if the parties do
not agree within five days of a written request to do so by any party, then upon
the request of any party, the referee shall be selected by the presiding judge
of the state or federal court in the county or district where venue is otherwise
appropriate under applicable law), the determination of which shall be binding
on both parties or (y) contains terms (1) that are substantially identical to
the ABL Credit Facility as of the Agreement Date or (2) with respect to pricing,
amounts, types and timing of prepayments and payments, and borrowing base
components (including advance rates, eligibility criteria and reserves), in each
case, that individually are not less favorable to the Loan Parties and, with
respect to all other terms, that are not, when taken as a whole, less favorable
to the Loan Parties in any material respect.

“ABL Debt” means “ABL Obligations” as defined in the Intercreditor Agreement (or
similar term in the Refinancing ICA).

“ABL Debt Documents” means “ABL Documents” as defined in the Intercreditor
Agreement (or similar term in the Refinancing ICA).

“ABL Financial Covenant” has the meaning set forth in Section 5.4(s).

“ABL Lenders” means the lenders under the ABL Debt Documents.

“Accounts” means, collectively, (a) any right to payment of a monetary
obligation, whether or not earned by performance, (b) without duplication, any
“account” (as defined in the UCC), any accounts receivable (whether in the form
of payments for services rendered or goods sold, rents, license fees or
otherwise), any “health-care-insurance receivables” (as defined in the UCC), any
“payment intangibles” (as defined in the UCC) and all other rights to payment
and/or reimbursement of every kind and description, whether or not earned by
performance, (c) all accounts, “general intangibles” (as defined in the UCC),
Intellectual Property, rights, remedies, Guarantees, “supporting obligations”
(as defined in the UCC), “letter-of-credit rights” (as defined in the UCC) and
security interests in respect of the foregoing, all rights of enforcement and
collection, all books and records evidencing or related to the foregoing, and
all rights under the Loan Documents in respect of the foregoing, (d) all
information and data compiled or derived by any Loan Party or to which any Loan
Party is entitled in respect of or related to the foregoing, and (e) all
proceeds of any of the foregoing.

“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, (c) a merger or consolidation or any other combination with
another Person or (d) the acquisition (including through licensing) of any
Product or Intellectual Property of or from another Person if the Acquisition
Consideration paid in connection with such acquisition is in excess of
$5,000,000 individually or in the aggregate with respect to all such
acquisitions in any twelve (12) month period.

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

 

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

“Affiliate” means, with respect to any Person, (a) any Person that directly or
indirectly controls such Person, (b) any Person which is controlled by or is
under common control with such controlling Person, and (c) each of such Person’s
(other than, with respect to any Lender, any Lender’s) officers or directors (or
Persons functioning in substantially similar roles) and the spouses, parents,
descendants and siblings of such officers, directors or other Persons. As used
in this definition, the term “control” of a Person means the possession,
directly or indirectly, of the power to vote five percent (5%) or more of any
class of voting securities of such Person or to direct or cause the direction of
the management or policies of a Person, whether through the ownership of voting
securities, by contract or otherwise.

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

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

“Agreement Date” means the date of this Agreement.

“All-in Yield” means the interest rate (including margins and floors), original
issue discount and fees paid to all lenders (or consenting lenders) of such debt
or their Affiliates (based on the remaining life to maturity), but not including
any fees not paid to all lenders (such as fees to initial purchasers (i.e.,
investment banks in Rule 144A offerings), underwriters or lead agents).

“Amortization Payments” means the three principal payments due on April 2, 2021,
April 2, 2022 and on the Maturity Date that are set forth in the table in
Section 2.3(a).

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

“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
to which such Person or any of its property is subject. “Applicable Laws”
includes Healthcare Laws and Environmental Laws.

“Approved Fund” means any (a) investment company, fund, trust, securitization
vehicle or conduit that is (or will be) engaged in making, purchasing, holding
or otherwise investing in commercial loans and similar extensions of credit, or
(b) any Person (other than a natural person) which temporarily warehouses loans
for any Lender or any entity described in the preceding clause (a) and that,
with respect to each of the preceding clauses (a) and (b), is administered or
managed by (i) a Lender, (ii) an Affiliate of a Lender, or (iii) a Person (other
than a natural person) or an Affiliate of a Person (other than a natural person)
that administers or manages a Lender.

“Authorizations” means, with respect to any Person, any permits (including
Regulatory Required Permits), approvals, authorizations, licenses,
registrations, certificates, clearances, concessions, grants, franchises,
variances or permissions 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 to which
such Person or any of its property is subject, and any supplements or amendments
with respect to the foregoing.

 

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“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.

“Bank of America Cash Collateral Account” means that certain deposit account
#1453234066 of Borrower at Bank of America, N.A. (or such replacement deposit
account provided by Bank of America, N.A. or by another commercial bank)
established and maintained for the sole purpose of providing cash collateral in
favor of Bank of America, N.A. (or such replacement commercial bank) for
obligations of the Borrower in respect of certain commercial credit cards (or
with respect to a replacement commercial bank, similar commercial credit cards
to those provided by Bank of America, N.A. as of the Agreement Date) provided to
the Borrower by Bank of America, N.A. (or such replacement commercial bank);
provided that the aggregate amount on deposit in such deposit account (or such
replacement deposit account) shall not at any time exceed $2,500,000.

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

“Bloomberg” has the meaning set forth in the definition of “Volume Weighted
Average Price.”

“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.

“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.

“Capped Call” means the capped call transactions referenced in Schedule 5.2(iv)
in respect of the 2.25% Convertible Notes and any like transactions that are
economically similar to such transactions entered into in connection with any
Indebtedness contemplated under clause (k) of the definition of Permitted
Indebtedness.

“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 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

 

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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, (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 and (f) investments made in accordance with
the Borrower’s investment policy in effect as of the Agreement Date that was
provided to the Agent’s counsel on March 14, 2017 at 12:15 p.m. New York time,
and any amendments thereto that do not, when taken as a whole, materially
increase the risk of the investments made by the Borrower from time to time from
such Borrower’s investment policy in effect as of the Agreement Date.

“Change in Control” means any of the following events: (a) any Person or two or
more Persons acting in concert shall have acquired beneficial ownership,
directly or indirectly, of, or shall have acquired by contract or otherwise, or
shall have entered into a contract or arrangement that, upon consummation, will
result in its or their acquisition of or control over, voting Stock of the
Borrower (or other securities convertible into such voting Stock) representing
more than 50% of the combined voting power of all voting Stock of the Borrower;
(b) the Borrower shall have ceased to own, directly or indirectly, 100% of the
Stock of any of its Subsidiaries (with the exception of any Subsidiaries
permitted to be dissolved or merged to the extent otherwise permitted by this
Agreement and other than, solely with respect to Foreign Subsidiaries, directors
qualifying shares as necessary to comply with foreign law); (c) the occurrence
of a “Change of Control”, “Change in Control”, “Fundamental Change” or terms of
similar import under the 2.25% Convertible Note Documents, the 3.25% Convertible
Note Documents or the ABL Debt Documents; or (d) the occurrence of any “Major
Transaction” (as defined in any Warrant). As used herein, “beneficial ownership”
shall have the meaning provided in Rule 13d-3 of the SEC under the Exchange Act.

“CMS” means the federal Centers for Medicare and Medicaid Services (formerly the
federal Health Care Financing Administration), and any successor Governmental
Authority.

“CoC Fee” means:

(a) if both (1) principal on the Loans are (or are obligated or required to be)
prepaid, repaid, redeemed or paid (in each case, for the avoidance of doubt,
other than any Amortization Payments) in full (or in part) prior to the Maturity
Date and (2) a Change in Control is consummated (or a first public announcement
of a potential Change in Control is made) prior to the Maturity Date (and, for
the avoidance of doubt, with respect to any such public announcement, where a
Change in Control is ultimately consummated (whether before, on the date of or
after the Maturity Date)), $4,200,000 (or, if such amount is prepaid, repaid,
redeemed or paid in connection with a partial (as opposed to full) prepayment,
repayment, redemption or payment of the Loans (in each case, for the avoidance
of doubt, other than any Amortization Payments), then such ratable portion of
such amount based on the principal amount of such Loans prepaid, repaid,
redeemed or repaid (in each case, for the avoidance of doubt, other than any
Amortization Payments));

(b) if both (1) principal on the Loans are (or are obligated or required to be)
prepaid, repaid, redeemed or paid (in each case, for the avoidance of doubt,
other than any Amortization Payments) in full (or in part) prior to the Maturity
Date and (2) a potential Change in Control is first publicly announced (or a
Change in Control is consummated) both (A) on or after the Maturity Date and
(B) within 150 days after such prepayment, repayment, redemption or payment in
full (or in part) of principal on the Loans (in each case, for the avoidance of
doubt, other than any Amortization Payments) prior to the Maturity Date, an
amount in cash equal to all interest payments that would have been required on
the prepaid, repaid, redeemed or paid Loans (or the Loans obligated or required
to be prepaid, repaid, redeemed

 

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or paid) from the date of such prepayment, repayment, redemption or payment (or
the date such prepayment, repayment, redemption or payment was obligated or
required to be made) through and including the Maturity Date (in each case, for
the avoidance of doubt, other than any Amortization Payments); or

(c) if both (1) principal on the Loans are (or are obligated or required to be)
prepaid, repaid, redeemed or paid (in each case, for the avoidance of doubt,
other than any Amortization Payments) in full prior to the Maturity Date and
(2) a potential Change in Control is first publicly announced (or a Change in
Control is consummated) both (A) on or after the Maturity Date and (B) more than
150 days after such prepayment, repayment, redemption or payment (in each case,
for the avoidance of doubt, other than any Amortization Payments) in full of the
Loans prior to the Maturity Date, $0.

“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.

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

“Compliance Certificate” means a certificate, duly executed by an Authorized
Officer of the Borrower, appropriately completed and substantially in the form
of Exhibit F hereto.

“Contingent Obligation” means, with respect to any Person, any direct or
indirect liability of such Person: (a) with respect to any Indebtedness of
another Person (a “Third Party Obligation”) if the purpose or intent of such
Person incurring such liability, or the effect thereof, is to provide assurance
to the obligee of such Third Party Obligation that such Third Party Obligation
will be paid or discharged, or that any agreement relating thereto will be
complied with, or that any holder of such Third Party Obligation will be
protected, in whole or in part, against loss with respect thereto; (b) with
respect to any undrawn portion of any letter of credit issued for the account of
such Person or as to which such Person is otherwise liable for the reimbursement
of any drawing; (c) under any Swap Contract, to the extent not yet due and
payable; (d) to make take-or-pay or similar payments if required regardless of
nonperformance by any other party or parties to an agreement; or (e) for any
obligations of another Person pursuant to any Guarantee or pursuant to any
agreement to purchase, repurchase or otherwise acquire any obligation or any
property constituting security therefor, to provide funds for the payment or
discharge of such obligation or to preserve the solvency, financial condition or
level of income of another Person. The amount of any Contingent Obligation shall
be equal to the amount of the obligation so Guaranteed or otherwise supported
or, if not a fixed and determinable amount, the maximum amount so Guaranteed or
otherwise supported.

“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, 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.

“Convertible Note Documents” means, collectively, the 2.25% Convertible Note
Documents and the 3.25% Convertible Note Documents (which, for the avoidance of
doubt, shall include the indenture and each other document or agreement from
time to time entered into in connection with any Permitted 3.25% Convertible
Note Refinancing, in each case, to the extent such indenture, documents or
agreements are permitted pursuant to the terms of the definition of “Permitted
3.25% Convertible Note Refinancing).

 

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

“Correction” means repair, modification, adjustment, relabeling, destruction or
inspection (including patient monitoring) of a product without its physical
removal to some other location.

“Current Balance Sheet” has the meaning set forth in the definition of
“Enterprise Value.”

“DEA” means the Drug Enforcement Administration of the United States of America,
any comparable state or local Governmental Authority, any comparable
Governmental Authority in any non-United States jurisdiction, and any successor
agency of any of the foregoing.

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

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

“Dispose” and “Disposition” mean (a) the sale, lease, license, transfer,
assignment, 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 (other than solely for Stock that does not constitute
Disqualified Stock) , pursuant to a sinking fund obligation or otherwise, or is
redeemable (in each case, other than solely for Stock that does not constitute
Disqualified Stock) at the option of the holder thereof, in whole or in part, on
or prior to the date that is ninety-one (91) days following the Maturity Date
(excluding any provisions requiring redemption upon a “change in control” or
similar event, provided that such “change in control” or similar event results
in the occurrence of the payment in full of the Obligations (other than
unasserted contingent indemnification obligations and other than Obligations
under the Warrant and the Registration Rights Agreement)), (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 ninety-one
(91) days 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 ninety-one (91) days following the Maturity Date.

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

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

“Drug Application” means a new drug application, an abbreviated drug
application, or a product license application for any Product, as appropriate,
as those terms are defined in the FDCA.

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

“EBITDA” means, at any date of determination, an amount equal to (a) Net Income
of the Successor Entity for the most recently completed trailing four quarter
measurement period, plus (b) in each case, to the extent deducted in determining
Net Income (whether in cash, paid in-kind or otherwise) for such period, without
duplication, (i) Interest Expense of the Successor Entity for such trailing four
quarter

 

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period, (ii) income taxes of the Successor Entity for such trailing four quarter
period, (iii) depreciation and amortization of the Successor Entity for such
trailing four quarter period; provided that, with respect of all components of
the foregoing clause (a) and clause (b) of this definition, such amounts shall
be limited to those of Successor Entity only (and not any of its Subsidiaries)
unless such Subsidiaries (other than any Excluded Subsidiaries) become
Guarantors under the Loan Documents and provide a Lien on all of their assets
and property that would constitute Collateral under the Loan Documents and take
such other actions that would be required by Section 5.1(l) (such actions of
such Subsidiaries in such instance, the “Successor Entity Subsidiary Joinder
Actions”).

“Eligible Assignee” means (a) a Lender, (b) an Affiliate of a Lender, (c) an
Approved Fund, and (d) any other Person (other than a natural person) approved
by Agent; provided, however, that with respect to clause (d) above, no such
Person shall include (i) Borrower or any of Borrower’s Affiliates or (ii) unless
an Event of Default has occurred and is continuing, (A) any direct competitor of
Loan Parties, in each case, as determined by Agent in its reasonable discretion,
(B) any investor or fund that has publicly announced in writing its intention to
obtain control of the Borrower publicly or otherwise to the knowledge of the
assigning Lender, or (D) any Person listed in the email delivered by counsel to
the Borrower to counsel to the Agent on March 16, 2017 at 5:00 p.m. (Pacific
time) and any Affiliates or Approved Funds of any such Person actually known to
the assigning Lender and to the Agent to be Affiliates or Approved Funds of any
such Person.

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

“Employee Benefit Plan” means any “employee benefit plan” within the meaning of
Section 3(3) of ERISA, under which (A) any current or former employee, director
or independent contractor of the Borrower or any of its Subsidiaries has any
present or future right to benefits or compensation and which is contributed to,
sponsored by or maintained by the Borrower or any of its Subsidiaries or (B) the
Borrower or any of its Subsidiaries has had or has or could reasonably be
expected to have any present or future obligation or liability.

“Enterprise Value” means (a) the Market Cap, minus (b) the amount of the
Indebtedness of the Successor Entity and its Subsidiaries as shown on a
consolidated basis on the latest balance sheet publicly filed under the Exchange
Act prior to the announcement date of the Successor Entity Transaction (the
“Current Balance Sheet”), plus (c) the amount of cash and Cash Equivalents
(without giving effect to clause (f) of the definition of “Cash Equivalents) of
the Successor Entity and its Subsidiaries as shown on a consolidated basis on
the Current Balance Sheet.

“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.

 

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

“ERISA Affiliate” means collectively the Borrower, any Subsidiary of Borrower
and any Person under common control or treated as a single employer with,
Borrower or any Subsidiary of Borrower within the meaning of Code Section 414
(b), (c), (m) or (o) or under ERISA.

“ERISA Event” means any of the following: (a) a reportable event described in
Section 4043(b) or (c) of ERISA (other than an event for which the 30-day notice
period is waived) 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 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
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 Domestic Holdco” means a wholly-owned Domestic Subsidiary of the
Borrower substantially all of the assets of which consist of Stock of Excluded
Foreign Subsidiaries held directly or indirectly by such Subsidiary and which
does not engage in any business, operations or activity other than that of a
holding company, excluding for purposes of such determination, Indebtedness of
such Excluded Foreign Subsidiaries.

“Excluded Foreign Subsidiary” means 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.

“Excluded Property” means, collectively:

 

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(a) voting shares of any (A) Excluded Foreign Subsidiary of Borrower or
(B) Excluded Domestic Holdco, in each case, in excess of 65% of all of the
issued and outstanding voting shares of capital stock of such subsidiary;

(b) any lease, license, contract, property right or agreement as to which, if
and to the extent that, and only for so long as, the grant of a security
interest therein shall (1) constitute or result in a breach, termination or
default under any such lease, license, contract, property right or agreement or
render it unenforceable, (2) be prohibited by any applicable law or (3) require
the consent of any third party (in each case of clauses (1), (2) and (3), other
than to the extent that any such breach, termination, default, prohibition or
requirement for consent would be rendered ineffective pursuant to Sections
9-406, 9-407, 9-408 or 9-409 of the UCC of any relevant jurisdiction or any
other applicable Law), provided that such security interest shall attach
immediately to each portion of such lease, license, contract, property rights or
agreement that does not result in any of the consequences specified above;

(c) any “intent to use” trademark applications for which a statement of use has
not been filed (but only until such statement is filed);

(d) motor vehicles and other assets, in each instance, in which perfection of a
security requires notation on certificates of title with a value, individually,
of less than $250,000;

(e) without in any way limiting clause (a) above, equity interests in any Person
(other than wholly owned Subsidiaries) to the extent not permitted by the terms
of such Person’s organizational or joint venture documents (so long as such
joint venture was not entered into (or such Subsidiary was not formed) in
contravention of the terms of the Loan Documents and such prohibition did not
arise in anticipation of the restrictions under the Loan Documents);

(f) any assets financed by purchase money Indebtedness or Capital Leases, to the
extent such purchase money Indebtedness or Capital Lease is permitted hereunder,
if the documentation governing such purchase money Indebtedness or Capital
Leases securing such purchase money Indebtedness or Capital Leases prohibits the
creation of a security interest or lien thereon or requires the consent of any
Person as a condition to the creation of any other security interest or lien on
such property or if such contract or other agreement would be breached or give
any party the right to terminate it as a result of creation of such security
interest or lien;

(g) those assets as to which Agent determines (in its sole discretion) that the
cost of obtaining such a security interest or perfection thereof are excessive
in relation to the benefit to Agent and the Lenders of the security to be
afforded thereby; and

(h) the Bank of America Cash Collateral Account;

provided, however, notwithstanding anything to the contrary herein or under the
other Loan Documents, “Excluded Property” shall not include (a) any proceeds,
products, substitutions, receivables or replacements of Excluded Property
(unless such proceeds, products, substitutions, receivables or replacements
would otherwise constitute Excluded Property) or (b) any assets or property
provided as security or collateral for the ABL Debt or for which a Lien has been
granted in favor of ABL Agent, any ABL Lender or any other Person party to the
ABL Debt Documents.

“Excluded Subsidiary” means (a) any Excluded Domestic Holdco and (b) any
Excluded Foreign Subsidiary.

 

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“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,
or Taxes measured by capital or net worth, 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 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 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 Applicable 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.

“Existing ABL Agent” has the meaning assigned to such term in the definition of
“Existing ABL Credit Facility” herein.

“Existing ABL Credit Facility” means that certain Credit and Security Agreement,
dated as of July 29, 2016, by and among the Borrower, the other Persons party
thereto from time to time as “Borrowers” (as defined therein), Midcap Financial
Trust, a Delaware statutory trust, as Agent (as defined therein, in such
capacity, the “Existing ABL Agent”) and the financial institutions or other
entities from time to time parties thereto, each as a Lender (as defined
therein) (in such capacity, the “Existing ABL Lenders”), as amended, restated,
supplemented or otherwise modified prior to the Agreement Date.

“Existing ABL Debt Documents” shall have the meaning of “Financing Documents”
(as defined in the Existing ABL Credit Facility).

“Existing ABL Lenders” has the meaning assigned to such term in the definition
of “Existing ABL Credit Facility” herein.

“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 Food and Drug Administration of the United States of America,
any comparable state or local Governmental Authority, any comparable
Governmental Authority in any non- United States jurisdiction, and any successor
agency of any of the foregoing.

“FDCA” means the Federal Food, Drug and Cosmetic Act, as amended, 21 U.S.C.
Section 301 et seq., and all regulations promulgated thereunder.

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

 

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“Final Payment” means such cash amount as may be necessary to repay the
outstanding principal amount of the Loans and any other Obligations (including,
for the avoidance of doubt, for any applicable Non-Callable Make Whole Amount
payable hereunder and the CoC Fee payable hereunder, but excluding
(A) unasserted contingent indemnification obligations and (B) those Obligations
under the Warrant, any Stock and the Registration Rights Agreement), owing by
the Borrower and the other Loan Parties to the Secured Parties pursuant to the
Loan Documents.

“First Amortization Date” has the meaning set forth in Section 2.3(a).

“Foreign Benefit Plan” means any employee benefit plan that is subject to the
laws of a jurisdiction outside the United States, including those mandated by a
government other than that of 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, which Subsidiary is not a Domestic Subsidiary.

“GAAP” means generally accepted accounting principles in the United States
applied on a consistent basis, subject to the provisions of Section 1.5.

“General Intangible” means any “general intangible” as defined in Article 9 of
the UCC, and any personal property, including things in action, other than
accounts, chattel paper, commercial tort claims, deposit accounts, documents,
goods, instruments, investment property, letter-of-credit rights, letters of
credit, money, and oil, gas or other minerals before extraction, but including
payment intangibles and software.

“Good Manufacturing Practices” means current good manufacturing practices, as
set forth in 21 C.F.R. Parts 210 and 211.

“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.

“Guarantee” by any Person means any obligation, contingent or otherwise, of such
Person directly or indirectly guaranteeing any Indebtedness or other obligation
of any other Person and, without limiting the generality of the foregoing, any
obligation, direct or indirect, contingent or otherwise, of such Person (a) to
purchase or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness or other obligation (whether arising by virtue of partnership
arrangements, by agreement to keep-well, to purchase assets, goods, securities
or services, to take-or-pay, or to maintain financial statement conditions or
otherwise), or (b) entered into for the purpose of assuring in any other manner
the obligee of such Indebtedness or other obligation of the payment thereof or
to protect such obligee against loss in respect thereof (in whole or in part),
provided, however, that the term Guarantee shall not include endorsements for
collection or deposit in the Ordinary Course of Business. The term “Guarantee”
used as a verb has a corresponding meaning.

“Guarantor” means each Subsidiary of the Borrower (other than any Excluded
Subsidiary) or other Person who provides a guaranty of the Obligations (other
than unasserted contingent indemnification obligations and other than those
Obligations under the Warrant, any Stock and the Registration Rights Agreement)
under the Security Agreement or other Loan Document.

 

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“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.

“Healthcare Laws” means all applicable Laws relating to the procurement,
development, provision, clinical and non-clinical evaluation or investigation,
product approval or clearance, manufacture, production, analysis, distribution,
dispensing, importation, exportation, use, handling, quality, reimbursement,
sale, labeling, advertising, promotion, or post-market requirements of any drug,
medical device, clinical laboratory service, food, dietary supplement or other
product (including, without limitation, any ingredient or component of, or
accessory to, the foregoing products) subject to regulation under the Federal
Food, Drug, and Cosmetic Act (21 U.S.C. et seq.), Clinical Laboratory
Improvement Amendments of 1988 (42 U.S.C. §263a et seq) and its implementing
regulations (42 C.F.R. Part 493) and similar state or foreign laws, controlled
substances laws, pharmacy laws, consumer product safety laws, Medicare,
Medicaid, and all laws, policies, procedures, requirements and regulations
pursuant to which Regulatory Required Permits are issued, in each case, as the
same may be amended from time to time.

“Immaterial Subsidiaries” shall mean, as of any date of determination, any
Subsidiary of the Borrower that is not a Loan Party that, when measured as of
the most recent fiscal quarter end or fiscal year end for which the Borrower has
filed its 10-K or 10-Q, when taken together with all other Immaterial
Subsidiaries as of such date, (i) did not have assets with a value in excess of
5.0% of the total property and assets of the Loan Parties and their Subsidiaries
on a consolidated basis set forth in the balance sheet included in such 10-K or
10-Q in accordance with GAAP and on a pro forma basis and (ii) did not have
revenues representing in excess of 5.0% of total revenues of the Loan Parties
and their Subsidiaries on a consolidated basis.

“In Connection with a Change in Control” means any prepayment, repayment,
redemption or other payment (in each case, whether in full or in part) of the
Obligations (other than unasserted contingent indemnification obligations and
any Obligations under the Warrants, the Registration Rights Agreement or Stock)
that is both (1) made, or that is obligated or required to be made (including as
a result of the Lenders’ exercise of the Put Right), hereunder prior to (but not
including) the Maturity Date and (2) either: (a) such prepayment, repayment,
redemption or other payment is made (or is obligated or required to be made) at
any time during the period that commences 150 days prior to the earlier to occur
of (i) the first public announcement of a potential Change in Control (and, for
the avoidance of doubt, where a Change in Control is ultimately consummated
before, on the date of or after the Maturity Date) or (ii) the consummation of a
Change in Control, and ends on the consummation of a Change in Control, (b) such
prepayment, repayment, redemption or other payment is otherwise made (or is
obligated or required to be made) as a result of a Change in Control, or
(c) such prepayment, repayment, redemption or other payment is made (or is
obligated or required to be made, whether through acceleration or otherwise) at
any time on or after a Successor Entity Transaction.

“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 120 days past due and other than items covered by clause (xiv) of this
definition) of such Person, which in accordance with GAAP should be shown to be
a liability on the balance sheet;

 

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(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) all 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);

(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 other Indebtedness, lease, dividend or other obligation 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 liability that such liability will be paid or discharged, or that any
agreements relating thereto will be complied with, or that the holders of such
liability 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;

(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;

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

 

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(xiv) earn-outs, all purchase price adjustments, profit sharing arrangements,
deferred purchase money amounts and similar payment obligations (or continuing
obligations of any nature of such Person arising out of purchase and sale
contracts) (including in connection with Permitted Acquisitions), but only to
the extent the same (x) have become due and payable and are recorded as a
liability on the balance sheet of such Person and (y) are payable in cash;

(xv) all off-balance sheet liabilities of such Person; or

(xvi) all obligations arising under non-compete agreements, bonus, deferred
compensation, incentive compensation or similar arrangements, other than those
arising in the Ordinary Course of Business.

“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).

“Intellectual Property” means all copyright rights, copyright applications,
copyright registrations and like protections in each work of authorship and
derivative work, whether published or unpublished, any patents, patent
applications and like protections, including improvements, divisions,
continuations, renewals, reissues, extensions, and continuations-in-part of the
same, trademarks, trade names, service marks, mask works, rights of use of any
name, domain names, or any other similar rights, any applications therefor,
whether registered or not, know-how, operating manuals, trade secret rights,
clinical and non-clinical data, rights to unpatented inventions, and any claims
for damage by way of any past, present, or future infringement of any of the
foregoing.

“Intercreditor Agreement” means (a) the Intercreditor Agreement dated as of the
Agreement Date by and among Agent and ABL Agent and acknowledged and agreed by
the Loan Parties, as amended, restated, supplemented or otherwise modified from
time to time in accordance with the terms thereof and (b) the Refinancing ICA,
as amended, restated, supplemented or otherwise modified from time to time in
accordance with the terms thereof.

“Interest Expense” means, for any period, interest expense for the Successor
Entity set forth in the Successor Entity’s most recent publicly reported income
statement; provided that such amounts shall be limited to those incurred by the
Successor Entity only (and not any of its Subsidiaries) unless such Subsidiaries
(other than any Excluded Subsidiaries) have completed and consummated the
Successor Entity Subsidiary Joinder Actions.

“Interest Payment Date” has the meaning set forth in Section 2.6(a).

“Interest Rate” means 6.87% per annum for the principal amount of the Loans and
any overdue interest thereon, plus any additional amounts set forth in Section
2.7(b).

 

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

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

“Investment Company Act” means the Investment Company Act of 1940, as amended,
including the rules and regulations promulgated thereunder.

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

“IRS” means the United States Internal Revenue Service.

“L/C Cash Collateral Accounts” means, collectively, each segregated deposit
account of Borrower from time to time established and maintained with the
issuers of letters of credit for the sole purpose of securing Borrower’s
obligations under such letters of credit to the extent such obligations
constitute “Permitted Contingent Obligations” for purposes of clause (i) of the
definition of thereof; provided, that (a) no such deposit account shall hold an
aggregate of cash and Cash Equivalents in excess of 110% of the aggregate value
of the letters of credit it is securing and (b) with respect to all such deposit
accounts, the aggregate amount deposited there in at any time does not exceed
$10,000,000.

“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, and 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. For purposes of this Agreement and the other Loan
Documents, any Loan Party or any Subsidiary shall be deemed to own subject to a
Lien any asset which it has acquired or holds subject to the interest of a
vendor or lessor under any conditional sale agreement, capital lease or other
title retention agreement relating to such asset.

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

“Loan Disbursement Request” means that certain Loan Disbursement Request, dated
as of the Agreement Date, executed and delivered by the Borrower in favor of the
Secured Parties.

“Loan Documents” means this Agreement, the Notes, the Security Agreement, the
Intercreditor Agreement, the Warrants, the Registration Rights Agreement, the
Perfection Certificate, the Loan Disbursement Request, any patent security
agreement, any trademark security agreement, any copyright security agreement
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
Loan or Disbursement funded by such Lenders in the form attached hereto as
Exhibit A, 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).

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

“Market Cap” means the number of outstanding shares of common stock of the
Successor Entity listed on a National Securities Exchange, multiplied by the per
share Volume Weighted Average Price for such common stock as of the Trading Day
immediately preceding the announcement of the Successor Entity Transaction.

“Market Withdrawal” means a Person’s Removal or Correction of a distributed
product which involves a minor violation that would not be subject to legal
action by the FDA or which involves no violation (e.g., normal stock rotation
practices and routine equipment adjustments and repairs), etc.

“Material Adverse Effect” means a material adverse effect on (a) the business,
operations, results of operations, financial condition or properties of the Loan
Parties and their Subsidiaries, taken as a whole, (b) the legality, validity or
enforceability of any provision of any Loan Document, (c) the ability of any
Loan Party to timely perform the Obligations, (d) the creation, perfection or
priority of the Liens, taken as a whole for the Collateral, granted under the
Loan Documents, or (e) the rights and remedies of the Secured Parties under any
Loan Document.

“Material Contracts” means (a) the Operative Documents, (b) the Convertible Note
Documents, (c) the agreements listed on Schedule 3.1(aa), and (d) each other
agreement or contract to which such Loan Party or its Subsidiaries is a party
the termination of which could reasonably be expected to result in a Material
Adverse Effect; provided that Capped Calls shall not be considered Material
Contracts.

“Material Intangible Assets” means all of (i) each Loan Party’s Intellectual
Property and (ii) license or sublicense agreements or other agreements with
respect to rights in Intellectual Property, in each case that are material to
the financial condition, business or operations of the applicable Loan Party.

“Maturity Date” means April 2, 2023.

“Medicaid” means the medical assistance programs administered by state agencies
and approved by CMS pursuant to the terms of Title XIX of the Social Security
Act, codified at 42 U.S.C. 1396 et seq.

“Medicare” means the program of health benefits for the aged and disabled
administered by CMS pursuant to the terms of Title XVIII of the Social Security
Act, codified at 42 U.S.C. 1395 et seq.

“Merrill Lynch Securities Account” means that certain securities account
maintained in the name of the Borrower at Merrill Lynch identified by account
number XXXXX2509 that includes only assets that are cash or Cash Equivalents and
which will have a balance of $0 (and will contain no cash, Cash Equivalents or
other assets) on and after September 1, 2017.

 

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“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).

“National Securities Exchange” means the New York Stock Exchange, the Nasdaq
Global Select Market or the Nasdaq Global Market (or, in each case, a successor
thereto).

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

“Net Income” means, for any period, the net income (or loss) of the Successor
Entity set forth in the Successor Entity’s most recent publicly reported income
statement; provided that such amounts shall be limited to those of the Successor
Entity only (and not any of its Subsidiaries) unless such Subsidiaries (other
than any Excluded Subsidiaries) have completed and consummated the Successor
Entity Subsidiary Joinder Actions.

“Non-Callable Make Whole Amount” means, on any date of prepayment or early
redemption of all or any portion of the Loans, an amount in cash equal to all
required interest payments due on the Loans that are prepaid from the date of
repayment or early redemption through and including the date that is the First
Amortization Date, plus any accrued and unpaid interest and fees and unpaid
costs and expenses incurred pursuant to the terms of the Loan Documents.

“Notes” means the Loan Notes.

“Obligations” means all Loans and Disbursements, any Non-Callable Make Whole
Amount, any CoC Fee, interest, 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.

“Operative Documents” means the Loan Documents, the Financing Documents (as
defined in the ABL Credit Facility as of the Agreement Date) and the
Subordinated Debt Documents (as defined in the ABL Credit Facility as of the
Agreement Date).

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

“Ordinary Course of Business” means, in respect of any transaction involving any
Loan Party, the ordinary course of business of such Loan Party, as conducted by
such Loan Party in accordance with past practices, as applicable.

“Organizational Documents” means, with respect to any Loan Party, the documents
by which such Person was organized (such as a certificate of incorporation,
certificate of limited partnership or articles of organization, and including,
without limitation, any certificates of designation for preferred stock or other
forms of preferred equity) and which relate to the internal governance of such
Person (such as by-laws, a partnership agreement or an operating, limited
liability company or members agreement), including any and all shareholder
agreements or voting agreements relating to the capital stock or other equity
interests of such Person.

 

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“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 or enforcement of, or
otherwise with respect to, any Loan Document.

“Participant” has the meaning set forth in Section 6.5.

“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
from time to time by any Loan Party or any of its Subsidiaries to any Secured
Party, in substantially the form of Exhibit B.

“Permitted 3.25% Convertible Note Refinancing” has the meaning provided therefor
in the definition of “Permitted Indebtedness.”

“Permitted ABL Credit Facility Liens” has the meaning provided therefor in
clause (u) of the definition of “Permitted Liens”.

“Permitted Acquisition” means any Acquisition by a Loan Party, in each case, to
the extent that each of the following conditions shall have been satisfied:

(a) the Borrower shall have delivered to Agent (i) at least ten (10) Business
Days prior to the closing of the proposed Acquisition: (A) a description of the
proposed Acquisition; (B) to the extent available, a due diligence package
(including, to the extent available, a quality of earnings report); and (C) the
most recent drafts (or, if available, executed counterparts) of the respective
agreements, documents or instruments pursuant to which such Acquisition is to be
consummated, any available schedules and exhibits to such agreements, documents
or instruments and all other material ancillary agreements, instruments and
documents to be executed or delivered in connection therewith, and to the extent
required under the related acquisition agreement, all required regulatory and
third party approvals and copies of any environmental assessments and (ii) at
the earlier of (A) the time of closing of the proposed Acquisition or (B) as
early before the closing of the proposed Acquisition as available, in each case,
final, fully executed copies of the respective agreements, documents or
instruments pursuant to which such Acquisition is to be consummated and all
schedules and exhibits to such agreements, documents or instruments and all
other material ancillary agreements, instruments and documents executed or
delivered in connection therewith;

(b) the Loan Parties (including any new Subsidiary to the extent required by
Section 5.1(l)) shall execute and deliver the agreements, instruments and other
documents to the extent required by Section 5.1(l);

 

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(c) no Event of Default or Default has occurred and is continuing, or would
exist after giving pro forma effect to, the proposed Acquisition;

(d) all transactions in connection with such Acquisition shall be consummated,
in all material respects, in accordance with applicable laws;

(e) the assets acquired in such Acquisition are for use in the same line of
business as the Loan Parties are currently engaged or a line of business
reasonably related thereto;

(f) such Acquisition shall not be hostile and, if applicable, shall have been
approved by the board of directors (or other similar body) and/or the
stockholders or other equity holders of any Person being acquired in such
Acquisition;

(g) no Indebtedness or Liens are assumed or created (other than Permitted Liens
and Permitted Indebtedness) in connection with such Acquisition;

(h) all conditions to Permitted Acquisitions (as defined in the ABL Credit
Facility as of the Agreement Date) have been satisfied and Agent shall have
received any requested evidence showing satisfaction thereof; and

(i) the total consideration paid or payable (including without limitation, costs
and expenses, deferred purchase price, seller notes and other liabilities
incurred, assumed or to be reflected on a consolidated balance sheet of the Loan
Parties and their Subsidiaries after giving effect to such Acquisition but
excluding (A) any equity interests issued as consideration for such Acquisition
and (B) the net proceeds of any issuance of equity interests made after the
Agreement Date that are used for purposes of such Acquisition) (such amounts,
collectively, the “Acquisition Consideration”) shall be in an amount not to
exceed $15,000,000 in the aggregate for all such Acquisitions during the term of
this Agreement; provided, however, that, in the case of each Acquisition, Agent
has received prior to the consummation of such Acquisition evidence satisfactory
to Agent that Borrower has, immediately before and immediately after giving
effect to the consummation of such Acquisition, unrestricted cash (it being
understood and agreed that cash and Cash Equivalents shall not be considered
“restricted” cash for purposes of this proviso solely due to compliance by the
Loan Parties with the requirements set forth in Section 5.1(k)) in one or more
deposit accounts subject to a Control Agreement (and/or in the Merrill Lynch
Securities Account in accordance with, and subject to the limitations set forth
in, Section 5.1(k)) in an aggregate amount equal to or greater than the positive
value of the product of (x) eighteen (18) multiplied by (y) the Monthly Cash
Burn Amount (as defined in the ABL Credit Facility as of the Agreement Date), as
determined as of the last day of the month immediately preceding such
Acquisition.

“Permitted Contingent Obligations” means

(a) Contingent Obligations arising in respect of the Indebtedness under the Loan
Documents;

(b) Contingent Obligations resulting from endorsements for collection or deposit
in the Ordinary Course of Business;

(c) Contingent Obligations outstanding on the date of this Agreement and set
forth on Schedule 5.2(iv) (but not including any refinancings, extensions,
increases or amendments to the indebtedness underlying such Contingent
Obligations other than extensions of the maturity thereof without any other
material change in terms adverse to the Lenders);

 

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(d) Contingent Obligations incurred in the Ordinary Course of Business with
respect to surety and appeal bonds, performance bonds and other similar
obligations not to exceed $2,000,000 in the aggregate at any time outstanding;

(e) Contingent Obligations arising under indemnity agreements with title
insurers to cause such title insurers to issue to Agent mortgagee title
insurance policies;

(f) Contingent Obligations arising with respect to customary indemnification
obligations in favor of purchasers in connection with dispositions of personal
property assets permitted under Section 5.2;

(g) so long as there exists no Event of Default both immediately before and
immediately after giving effect to any such transaction, Contingent Obligations
existing or arising under any Swap Contract or Capped Call; provided, however,
that such obligations are (or were) entered into by Borrower or an Affiliate of
Borrower for the purpose of directly mitigating risks associated with
liabilities, commitments, investments, assets, or property held or reasonably
anticipated by such Person and not for purposes of speculation and either
(i) with respect to a Swap Contract or a Capped Call, are (or were) entered into
in the Ordinary Course of Business or (ii) with respect to a Capped Call, are
(or were) entered into in connection with the 2.25% Convertible Notes, the 3.25%
Convertible Notes, any refinancings thereof permitted hereunder or in connection
with this Agreement or any of the other Loan Documents;

(h) guarantees by (A) one or more Loan Parties of the obligations of Foreign
Subsidiaries up to $1,000,000 in the aggregate at any time outstanding, (B) any
Loan Party of the obligations of any other Loan Party (but, for the avoidance of
doubt, excluding any Immaterial Subsidiary that may be a Loan Party where,
before and immediately after giving effect to such guarantee (including any
rights of contribution set forth in the Loan Documents or otherwise), the Loan
Parties cannot represent and warrant that such Immaterial Subsidiary is Solvent
on an individual basis) and (C) any Foreign Subsidiary of the obligations of any
other Foreign Subsidiary;

(i) Contingent Obligations arising in connection with the issuance of letters of
credit in an aggregate face amount not to exceed $10,000,000 at any one time
outstanding secured solely by Liens permitted pursuant to clause (s) of the
definition of Permitted Liens;

(j) Contingent Obligations arising in respect of the Indebtedness under the
Financing Documents (as defined in the ABL Credit Facility as of the Agreement
Date); and

(k) other Contingent Obligations not permitted by clauses (a) through (j) above,
not to exceed $2,500,000 in the aggregate at any time outstanding.

“Permitted Dispositions” means each of the following:

(a) dispositions of inventory in the Ordinary Course of Business;

(b) dispositions of furniture, fixtures and equipment in the Ordinary Course of
Business that the applicable Loan Party or Subsidiary determines in good faith
is no longer used or useful in the business of such Loan Party and its
Subsidiaries (or such Subsidiary and its subsidiaries);

(c) to the extent constituting a Disposition, Permitted Investments and
Permitted Licenses;

(d) disposals of obsolete, worn out or surplus tangible personal property;

 

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(e) without limiting transactions permitted under Section 5.2 hereof,
dispositions by any Loan Party to any other Loan Party so long as each Loan
Party (other than, with respect to any transferring Person, an Immaterial
Subsidiary) will remain Solvent after giving effect to the transfer;

(f) abandonment of Intellectual Property that does not constitute a Material
Intangible Asset;

(g) the unwinding or terminating of Swap Contracts or any Capped Call permitted
by clause (g) of the definition of “Permitted Contingent Obligations” either
(i) with respect to a Swap Contract or a Capped Call, in the Ordinary Course of
Business or (ii) with respect to a Capped Call, that were entered into in
connection with the 2.25% Convertible Notes, the 3.25% Convertible Notes, any
Permitted 3.25% Convertible Note Refinancing permitted hereunder or in
connection with this Agreement or any of the other Loan Documents;

(h) dispositions of equipment or real property to the extent that (i) such
property is exchanged for credit against the purchase price of replacement
property or (ii) the proceeds of such disposition are promptly applied to the
purchase price of such replacement property;

(i) the entering into of any Permitted License;

(j) Dispositions by any Foreign Subsidiary to any other Foreign Subsidiary or to
any Loan Party;

(k) Dispositions approved by Agent in writing;

(l) to the extent constituting a Disposition, the payment of cash and Cash
Equivalents in the Ordinary Course of Business; and

(m) Other Dispositions (excluding dispositions of Intellectual Property) the
proceeds of which, when aggregated with the proceeds of all other Dispositions
made pursuant to this clause (m) are less than $2,500,000 during the term of
this Agreement; provided that (i) the consideration received for such assets
shall be in an amount at least equal to the fair market value thereof
(determined in good faith by the board of directors (or similar governing body)
of the Loan Party that owned such assets), (ii) no less than 75% thereof shall
be paid in cash.

“Permitted Indebtedness” means each of the following:

(a) the Loan Parties’ and their Subsidiaries’ Indebtedness to Agent and each
Lender under this Agreement and the other Loan Documents;

(b) Indebtedness incurred as a result of endorsing negotiable instruments
received in the Ordinary Course of Business;

(c) Capital Leases and purchase money Indebtedness not to exceed $5,000,000 at
any time (whether in the form of a loan or a lease) used solely to acquire
equipment used in the Ordinary Course of Business and secured only by such
equipment;

(d) Indebtedness existing on the Agreement Date and described on Schedule 3.1(f)
(but not including any refinancings, extensions, increases or amendments to such
Indebtedness other than Permitted Refinancings);

 

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(e) so long as there exists no Event of Default both immediately before and
immediately after giving effect to any such transaction, Indebtedness existing
or arising under any Swap Contract or Capped Call; provided, however, that such
obligations are (or were) entered into by Borrower or an Affiliate of Borrower
for the purpose of directly mitigating risks associated with liabilities,
commitments, investments, assets, or property held or reasonably anticipated by
such Person and not for purposes of speculation and either (i) with respect to a
Swap Contract or a Capped Call, are (or were) entered into in the Ordinary
Course of Business or (ii) with respect to a Capped Call, are (or were) entered
into in connection with the 2.25% Convertible Notes, the 3.25% Convertible
Notes, any Permitted 3.25% Convertible Note Refinancing permitted hereunder or
in connection with this Agreement or any of the other Loan Documents;

(f) Indebtedness in the form of insurance premiums financed through the
applicable insurance company;

(g) trade accounts payable arising and paid within 120 days of the date when due
and in the Ordinary Course of Business;

(h) [reserved];

(i) Subordinated Debt;

(j) the ABL Debt under the ABL Credit Facility, in accordance with the terms of
the Intercreditor Agreement;

(k) Indebtedness of the Loan Parties incurred under the 3.25% Convertible Notes
in an aggregate principal amount not to exceed the aggregate principal amount
outstanding on the Agreement Date after giving effect to any repayments or
prepayments thereon on the Agreement Date, and, so long as no Event of Default
has occurred and is continuing, any refinancing or extension thereof or new
issuance in connection with the exchange thereof and/or a new issuance all or
any portion of the proceeds of which will be used in connection with the
repurchase or other refinancing of all or any portion thereof therewith that
(i) has an aggregate outstanding principal amount not greater than $200,000,000
(when taking into account all such existing, refinanced, extended and newly
issued Indebtedness), and does not provide for any amortization payments or
other principal payments of any kind in advance of the first Business Day after
the Maturity Date, (ii) has a maturity no shorter than the first Business Day
after the Maturity Date (in the case of clause (i) and clause (ii), it being
understood that, in each case, any provision requiring an offer to purchase such
Indebtedness as a result of a change in control, fundamental change, delisting,
asset sale or similar provision or any exercise or conversion of Stock (other
than Disqualified Stock) shall not violate the foregoing restrictions in
clause (i) or clause (ii)), (iii) is unsecured, (iv) does not have one or more
obligors that are not obligors under this Agreement and the other Loan
Documents, (v) contains terms that are prevailing market terms at the time of
issuing or initial borrowing for the type of financing and for the quality of
issuer or borrower, as determined by Borrower and its advisors in their
reasonable business judgment, (vi) does not have an All-in Yield greater than
the lesser of (A) 6% per annum and (B) an All-in Yield that would result in more
than $10,000,000 per annum being paid in interest thereunder, (vii) does not
cause Borrower either on an individual basis or together with the other Loan
Parties and their Subsidiaries (on a consolidated basis), immediately before, at
the time of and immediately after giving effect to such Indebtedness (and after
giving effect to the use of the proceeds thereof), to no longer be Solvent (or
such Persons are not Solvent immediately prior to giving effect thereto), and
(vii) if in existence at such time or on the same date, is permitted under the
ABL Debt Documents (collectively, a “Permitted 3.25% Convertible Note
Refinancing”);

 

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(l) Indebtedness of the Loan Parties incurred under the 2.25% Convertible Notes
in an aggregate principal amount not to exceed the aggregate principal amount
outstanding on the Agreement Date minus any prepayments, repayments, redemptions
or payments thereon made on the Agreement Date or from time to time thereafter;

(m) without limiting the provisions of Section 5.2 with respect to any
Investment by a Loan Party, Indebtedness consisting of unsecured intercompany
loans and advances (i) incurred by any Loan Party owing to one or more other
Loan Parties, (ii) incurred by any Foreign Subsidiaries owing to any Loan Party
solely to the extent constituting a Permitted Investment made by such Loan
Party, or (iii) incurred by any Foreign Subsidiaries owing to any other Foreign
Subsidiary;

(n) Indebtedness related to commercial credit cards provided by Bank of America,
N.A. (or such other commercial bank permitted under the definition of “Bank of
America Cash Collateral Account) that, in the aggregate outstanding at any one
time, does not exceed $2,500,000, which Indebtedness may be secured by Liens
permitted pursuant to clause (t) of the definition of Permitted Liens;

(o) to the extent constituting Indebtedness, any Permitted Contingent
Obligations; and

(p) Indebtedness incurred in respect of netting services, overdraft protection
and other like services, in each case, incurred in the Ordinary Course of
Business;

(q) unsecured earn-out obligations and other similar contingent purchase price
obligations incurred in connection with a Permitted Acquisition to the extent
earned and payable and permitted pursuant to the definition of Permitted
Acquisition and the other terms of this Agreement; and

(r) other unsecured Indebtedness not to exceed $2,500,000 outstanding at any one
time.

“Permitted Investments” means each of the following:

(a) Investments (i) shown on Schedule P-1 and existing on the Agreement Date and
(ii) in Subsidiaries made prior to the Agreement Date;

(b) cash and Cash Equivalents;

(c) Investments consisting of the endorsement of negotiable instruments for
deposit or collection or similar transactions in the Ordinary Course of
Business;

(d) Investments consisting of (i) travel advances and employee relocation loans
and other employee loans and advances in the Ordinary Course of Business, and
(ii) loans to employees, officers or directors relating to the purchase of
equity securities of Loan Parties or their Subsidiaries pursuant to employee
stock purchase plans or agreements approved by Loan Parties’ Board of Directors
(or other governing body), but the aggregate of all such loans outstanding may
not exceed $500,000 at any time;

(e) Investments (including debt obligations) received in connection with the
bankruptcy or reorganization of customers or suppliers and in settlement of
delinquent obligations of, and other disputes with, customers or suppliers
arising in the Ordinary Course of Business;

 

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(f) Investments consisting of notes receivable of, or prepaid royalties and
other credit extensions, to customers and suppliers who are not Affiliates, in
the Ordinary Course of Business, provided, however, that this subpart (f) shall
not apply to Investments of Loan Parties in any Subsidiary;

(g) Investments consisting of (i) deposit accounts in which Agent has received a
Control Agreement, (ii) deposit accounts that are Excluded Accounts (subject to
any caps and applicable restrictions set forth in such definition), and
(iii) the Merrill Lynch Securities Account maintained in accordance with, and
subject to the limitations set forth in, Section 5.1(k);

(h) Investments by any Loan Party in any Subsidiary now owned or hereafter
created by such Loan Party, which Subsidiary is a Loan Party or has otherwise
provided a Guarantee of the Obligations of the Loan Parties which Guarantee is
secured by a Lien granted by such Subsidiary to Agent in all or substantially
all of its property of the type described in the Guaranty and Security Agreement
and otherwise made in compliance with Section 5.1(l);

(i) Investments by (A) any Loan Party consisting solely of cash and Cash
Equivalents in a Foreign Subsidiary; provided that at the time of the making of
such Investment and immediately after giving effect thereto (i) no Event of
Default has occurred and is continuing and (ii) Loan Parties have unrestricted
(it being understood and agreed that cash and Cash Equivalents shall not be
considered “restricted” cash for purposes of this proviso solely due to
compliance by the Loan Parties with the requirements set forth in Section
5.1(k)) cash and Cash Equivalents in an aggregate amount of not less than
$10,000,000, which cash and Cash Equivalents (x) are subject to a first priority
perfected lien in favor of Agent for the benefit of Lenders (subject to
Permitted Liens) or in the Merrill Lynch Securities Account in accordance with,
and subject to the limitations set forth in, Section 5.1(k)), (y) are held in a
deposit account that is subject to a Control Agreement or a securities account
subject to a Control Agreement or in the Merrill Lynch Securities Account in
accordance with, and subject to the limitations set forth in, Section 5.1(k) and
(z) unless the same could not be reasonably expected to reduce the amounts in
such accounts below $10,000,000 at the time of such Investment and immediately
after giving effect thereto, do not include any drawn or committed but unpaid
drafts, ACH or EFT transactions and (B) a Foreign Subsidiary in another Foreign
Subsidiary;

(j) Investments by any Loan Party consisting solely of inventory in Foreign
Subsidiaries to the extent such Investments are made in the Ordinary Course of
Business consistent with its customary practices as in effect on and immediately
prior to the Agreement Date;

(k) so long as no Default or Event of Default shall have occurred and be
continuing at the time thereof or would result therefrom, Investments consisting
solely of cash and Cash Equivalents in joint ventures or similar arrangements in
an amount not to exceed $5,000,000 in the aggregate during the term of this
Agreement;

(l) Permitted Acquisitions;

(m) Investments deemed to exist under any Swap Contracts or Capped Calls;
provided, however, that such obligations are (or were) entered into by Borrower
or an Affiliate of Borrower for the purpose of directly mitigating risks
associated with liabilities, commitments, investments, assets, or property held
or reasonably anticipated by such Person and not for purposes of speculation and
are (or were) entered into either (i) with respect to a Swap Contract or a
Capped Call, in the Ordinary Course of Business or (ii) with respect to a Capped
Call, in connection with the 2.25% Convertible Notes, the 3.25% Convertible
Notes, any Permitted 3.25% Convertible Note Refinancing permitted hereunder or
in connection with this Agreement or any of the other Loan Documents; and

 

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(n) other Investments in an amount not exceeding $5,000,000 in the aggregate.

“Permitted License” means (a) any non-exclusive license of patent rights of a
Loan Party or its Subsidiaries so long as all such Permitted Licenses are
granted to third parties in the Ordinary Course of Business, do not result in a
legal transfer of title to the licensed property, and have been granted in
exchange for fair consideration, and (b) any exclusive license of patent rights
of a Loan Party or its Subsidiaries so long as such Permitted Licenses do not
result in a legal transfer of title to the licensed property, are exclusive
solely as to discrete geographical areas outside of the United States, and have
been granted in exchange for fair consideration.

“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 or 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;

(f) Liens in favor of financial institutions arising in connection with the
Borrower’s or its Subsidiaries’ deposit accounts maintained in the Ordinary
Course of Business 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 materially 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, sublessor, licensor or sublicensor
under any lease or license 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 materially interfering with the business of the
Loan Parties or any of their Subsidiaries;

 

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(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 Leases 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 (f) of the definition of “Permitted Indebtedness”;

(q) [reserved];

(r) Liens on assets of the Loan Parties and their Subsidiaries arising in
connection with seller notes, earn-outs and other similar payment obligations
constituting Acquisition Consideration in connection with Permitted Acquisitions
so long as such Liens are subject at all times to a Subordination Agreement;

(s) Liens in favor of letter of credit issuers on the L/C Cash Collateral
Account to the extent securing obligations of the Loan Parties permitted
pursuant to clause (i) of the definition of Permitted Contingent Obligations
under the ABL Credit Facility as of the Agreement Date;

(t) Liens in favor of Bank of America, N.A. (or such other commercial bank
permitted under the definition of “Bank of America Cash Collateral Account”) on
the Bank of America Cash Collateral Account; provided that if Borrower is using
credit card services from the agent or a lender under ABL Debt Documents that
are required to be secured, Borrower shall promptly use commercially reasonable
efforts to terminate the Liens in respect of the Bank of America Cash Collateral
Account; and

(u) Liens granted under the ABL Credit Facility, in accordance with the terms of
the Intercreditor Agreement (“Permitted ABL Credit Facility Liens”).

“Permitted Priority Liens” means (a) solely with respect to the specific assets
or property covered thereby, the Liens granted pursuant to, and in accordance
with, clause (u) of the definition of “Permitted Liens ,” (b) Permitted Liens
granted over specific property pursuant to clauses (f) (solely with respect to
such applicable deposit accounts), (i) (solely with respect to the interest in
such applicable lease, sublease, license or sublicense or the assets owned by
such lessor, sublessor, licensor or sublicensor underlying

 

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same), (k) (solely with respect to the property permitted to be secured by such
Indebtedness permitted pursuant to clause (c) of the definition of “Permitted
Indebtedness”), (l) (solely with respect to the property that is part of the
Capital Lease), (m) (solely with respect to the specific assets covered by such
lease that are owned by such lessor), (n) (with respect to the goods permitted
to be consigned thereby), (p) (solely with respect to such cash held by such
insurance agency for such insurance premiums), (s) (solely with respect to the
L/C Cash Collateral Account) and (t) (solely with respect to the Bank of America
Cash Collateral Account) of the definition of “Permitted Liens”, but, in each
case, only to the extent only such Lien (i) attaches, as applicable, solely to
the assets or property so acquired in such transaction and the proceeds thereof
and (ii) has prior priority to the Permitted ABL Credit Facility Liens, and
(c) to the extent not otherwise covered by clause (b) above, non-consensual
Permitted Liens that are solely provided by operation of (and in compliance
with) Applicable Law.

“Permitted Refinancing” means Indebtedness constituting a refinancing or
extension of Indebtedness evidenced by the permitted under clause (d) of the
definition of “Permitted Indebtedness” and that (a) has an aggregate outstanding
principal amount not greater than the aggregate principal amount of the
Indebtedness being refinanced or extended, (b) has a weighted average maturity
(measured as of the date of such refinancing or extension) and maturity no
shorter than that of the Indebtedness being refinanced or extended, (c) is not
entered into as part of a sale leaseback transaction, (d) is not secured by a
Lien on any assets other than the collateral securing the Indebtedness being
refinanced or extended, (e) the obligors of which are the same as the obligors
of the Indebtedness being refinanced or extended and (f) is otherwise on terms
no less favorable to Loan Parties and their Subsidiaries, taken as a whole, than
those of the Indebtedness being refinanced or extended.

“Permitted Successor Transaction” means a transaction that satisfies all of the
following conditions: (A) the Stock of the Borrower is acquired by, or the
Borrower is merged with, a corporation (each such transaction, a “Successor
Entity Transaction”) that (i) is organized in a state of the United States that
has both a Market Cap and an Enterprise Value of at least $2,000,000,000 (as
reasonably determined by the Agent), (ii) has common Stock registered under
Section 12 of the Exchange Act and listed on a National Securities Exchange,
(iii) is current in its reporting requirements under the Exchange Act and
(iv) is in compliance with all applicable listing standards of the National
Securities Exchange on which its common stock is listed (such successor
corporation, a “Successor Entity”), (B) before, at the time of and after giving
effect to such Successor Entity Transaction, no Event of Default has occurred
and is continuing, (C) Agent (for the benefit of the Secured Parties) maintains
a first priority security interest (subject only to the Permitted Priority
Liens) in all of the Collateral of the Loan Parties, and the Successor Entity
and the Loan Parties shall take such actions and execute and deliver such
documents, instruments and agreements required by Agent to effectuate the
foregoing in this clause (i)(C), (D) in connection with any such Successor
Entity Transaction, the Successor Entity shall take such actions and execute
such documents, instruments and agreements as may be reasonably required by
Agent to assume all of the Obligations on behalf of the Borrower and all
Guarantors shall reaffirm and ratify its Guarantee of the Obligations (other
than those Obligations under the Warrant, any Stock and the Registration Rights
Agreement) and the Liens securing the Obligations (other than those Obligations
under the Warrant, any Stock and the Registration Rights Agreement) the Borrower
and such Guarantors granted under the Loan Documents to secure such Guarantees
and Obligations, in each case, in a manner reasonably satisfactory to the Agent,
(E) the Successor Entity and/or the Borrower shall take such actions requested
by the Agent or any holder of the Warrants to effectuate the bargain, intention
and agreements previously set forth in the Warrants, the Registration Rights
Agreement and the other Loan Documents, (F) before, at the time of and after
giving effect to such Successor Entity Transaction, the Successor Entity
(provided that the amounts related to the Successor Entity shall be limited to
those incurred by the Successor Entity only (and not any of its Subsidiaries)
unless such Subsidiaries (other than any Excluded Subsidiaries) have completed
and consummated the Successor Entity Subsidiary Joinder Actions), the Loan
Parties and their Subsidiaries shall have a Total Leverage Ratio on a pro forma
basis (after giving effect to the Successor Entity

 

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Transaction and any Indebtedness that will remain or be assumed after such
consummation thereof) of no greater than 2:1 and the Successor Entity and the
Loan Parties shall deliver a certificate certifying to the same and providing
such evidence and calculations thereof that may be reasonably requested by
Agent, (H) the Successor Entity both on an individual basis and together with
the Loan Parties and their Subsidiaries (on a consolidated basis), immediately
before, at the time of and immediately after giving effect to such Successor
Entity Transaction, is/are Solvent, (I) before, at the time of and after giving
effect to such Successor Entity Transaction, the representations and warranties
set forth in the Loan Documents are true, correct and complete in all material
respects (without giving effect to any double materiality) as of the date hereof
(or, if such representation or warranty is made as of such earlier specified
date, as of such earlier specified date), (J) (1) each Subsidiary of the
Successor Entity that was a Subsidiary of Endologix immediately prior to the
consummation of the Successor Entity Transaction shall comply with Section
5.1(l) and shall take such actions and execute and deliver such agreements,
instruments and other documents in connection therewith as reasonably requested
by Agent and (2) if the Subsidiaries of the Successor Entity immediately prior
to giving effect to the Successor Entity Transaction and that will remain
Subsidiaries of the Successor Entity after giving effect to the Successor Entity
Transaction are to be included in the components of the definition of “Total
Leverage Ratio” (and all components of the various definitions of the
capitalized financial terms used in such definitions and the definitions of each
such other capitalized financial term related thereto) to determine whether
clause (F) above is satisfied, such Subsidiaries of the Successor Entity (other
than any Excluded Subsidiaries) have completed and consummated the Successor
Entity Subsidiary Joinder Actions in a manner reasonably satisfactory to Agent,
and (K) the Successor Entity and the Loan Parties shall deliver a certificate
certifying that each of the foregoing conditions in this definition have been
satisfied.

“Person” means and includes any natural person, individual, partnership, joint
venture, corporation, trust, limited liability company, limited liability
partnership, 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).

“Pre-Closing Attorney’s Fees Cap” has the meaning set forth in Section 6.3.

“Principal Market” means the NASDAQ Global Select Market (or any successor to
the foregoing).

“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 “Disbursement Amounts.”

“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) such Lender’s Pro Rata Loan Share of the outstanding Loans, by
(b) the total outstanding amount of Loans held by all Lenders.

“Products” means, from time to time, any products currently manufactured, sold,
developed, tested or marketed by any Loan Party or any of a Loan Party’s
Subsidiaries.

“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.

 

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“Recall” means a Person’s Removal or Correction of a marketed product that the
FDA considers to be in violation of the laws it administers and against which
the FDA would initiate legal action (e.g., seizure).

“Refinancing ICA” has the meaning set forth in clause (ii)(A) of the definition
of “ABL Credit Facility”.

“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.

“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 Required Permit” means any and all licenses, approvals and permits
issued by the FDA, DEA or any other applicable Governmental Authority, including
without limitation Drug Applications, necessary for the testing, manufacture,
marketing or sale of any Product by any applicable Loan Party (or Loan Parties)
and its (or their) Subsidiaries as such activities are being conducted by such
Loan Party (or Loan Parties) and its (or their) Subsidiaries with respect to
such Product at such time and any drug listings and drug establishment
registrations under 21 U.S.C. Section 510, registrations issued by DEA under 21
U.S.C. Section 823 (if applicable to any Product), and those issued by State
governments for the conduct of the Loan Parties’ or any of their Subsidiaries’
business.

“Related Parties” means, with respect to any Person, such Person’s Affiliates
and the partners, directors, officers, employees, agents, trustees,
administrators, managers, attorneys, advisors and representatives of such Person
and of such Person’s Affiliates.

“Releases” 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.

“Removal” means the physical removal of a product from its point of use to some
other location for repair, modification, adjustment, relabeling, destruction or
inspection.

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

“Required Lenders” means, at any time, Lenders having Pro Rata Shares the
aggregate dollar equivalent amount of which exceeds 50% of the outstanding
Loans.

“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 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. For the avoidance of doubt, the
entry into, any payments or deliveries in respect of, and the performance,
exercise and/or settlement of the Borrower’s 2.25% Convertible Notes, 3.25%
Convertible Notes (including, for the avoidance of doubt, any Permitted 3.25%
Convertible Note Refinancing), Capped Calls, Warrants or under the ABL Credit
Facility are not Restricted Payments.

 

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“Rights Plan” has the meaning set forth in Section 3.1(rr).

“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).

“Scheduled First Amortization Payment” has the meaning set forth in Section
2.3(a).

“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 the Borrower with the SEC pursuant to the Securities Act or
the Exchange Act since January 1, 2016 (including all financial statements and
schedules 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 Notes, and the related guaranties set forth in
the Security Agreement of the Guarantors, the Warrants and the Warrant Shares.

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

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

“Solvent” means, with respect to any Person as of any date of determination,
that, as of such date, (a) the value of the assets of such Person (both at fair
value and present fair saleable value) is greater than the total amount of
liabilities (including contingent and unliquidated liabilities) of such Person,
(b) such Person is able to pay all liabilities of such Person as such
liabilities mature and (c) such Person does not have unreasonably small capital
in relation to such Person’s business as contemplated as of the Agreement Date.
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.

“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 (other than the 2.25% Convertible Notes, the
3.25% Convertible Notes, any Permitted 3.25% Convertible Note Refinancing
permitted hereunder, any Capped Call transactions, and the Warrants) to
purchase, subscribe for or otherwise acquire any other Stock, whether or not
presently convertible, exchangeable or exercisable.

 

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“Subordinated Debt” means any Indebtedness of the Loan Parties incurred pursuant
to the terms of the Subordinated Debt Documents and with the prior written
consent of Agent, all of which documents must be in form and substance
acceptable to Agent in its sole discretion. As of the Agreement Date, there is
no Subordinated Debt.

“Subordinated Debt Documents” means any documents evidencing and/or securing
Indebtedness governed by a Subordination Agreement, all of which documents must
be in form and substance acceptable to Agent in its sole discretion. As of the
Agreement Date, there are no Subordinated Debt Documents.

“Subordination Agreement” means any agreement between Agent and another creditor
of one or more Loan Parties, as the same may be amended, supplemented, restated
or otherwise modified from time to time in accordance with the terms thereof,
pursuant to which the Indebtedness owing from any Loan Party or Loan Parties
and/or the Liens securing such Indebtedness granted by any Loan Party or Loan
Parties to such creditor are subordinated in any way to the Obligations and the
Liens created under the Security Agreement, the terms and provisions of such
Subordination Agreements to have been agreed to by, and be acceptable to, Agent
in the exercise of its sole discretion.

“Subsidiary” or “Subsidiaries” means, with respect to any Person, (a) any
corporation of which an aggregate of more than fifty percent (50%) of the
outstanding capital stock having ordinary voting power to elect a majority of
the board of directors of such corporation (irrespective of whether, at the
time, capital stock of any other class or classes of such corporation shall have
or might have voting power by reason of the happening of any contingency) is at
the time, directly or indirectly, owned legally or beneficially by such Person
or one or more Subsidiaries of such Person, or with respect to which any such
Person has the right to vote or designate the vote of more than fifty percent
(50%) of such capital stock whether by proxy, agreement, operation of law or
otherwise, and (b) any partnership or limited liability company in which such
Person and/or one or more Subsidiaries of such Person shall have an interest
(whether in the form of voting or participation in profits or capital
contribution) of more than fifty percent (50%) or of which any such Person is a
general partner or may exercise the powers of a general partner. Unless the
context otherwise requires, each reference to a Subsidiary shall be a reference
to a Subsidiary of a Loan Party.

“Successor Entity” has the meaning set forth in the definition of “Permitted
Successor Transaction.”

“Successor Entity Subsidiary Joinder Actions” has the meaning set forth in the
definition of “EBITDA”.

“Successor Entity Transaction” has the meaning set forth in the definition of
“Permitted Successor Transaction.”

“Swap Contract” means any agreement, contract or transaction that constitutes a
“swap” within the meaning of Section 1a(47) of the Commodity Exchange Act, not
including Capped Calls.

“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).

 

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“Third Party Obligation” has the meaning provided therefor in the definition of
“Contingent Obligation.”

“Third Party Payor” means Medicare, Medicaid, TRICARE, and other state or
federal health care program, Blue Cross and/or Blue Shield, private insurers,
managed care plans and any other Person or entity which presently or in the
future maintains Third Party Payor Programs.

“Third Party Payor Programs” means all payment and reimbursement programs,
sponsored by a Third Party Payor, in which a Loan Party participates.

“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).

“Total Leverage Ratio” means, with respect to any measurement period, the ratio
of (a) Indebtedness reflected as liabilities on the Successor Entity’s most
recent publicly reported balance sheet as of the last day of such measurement
period to (b) EBITDA as of the last day for such measurement period; provided
that, in each case of clause (a) and clause (b), such amounts shall be limited
to those incurred by the Successor Entity only (and not any of its Subsidiaries)
unless such Subsidiaries (other than any Excluded Subsidiaries) have completed
and consummated the Successor Entity Subsidiary Joinder Actions.

“Trading Day” means any day on which the common Stock of the applicable Person
is traded for at least six hours on a National Securities Exchange.

“Transactions” means (a) the repayment of certain existing Indebtedness
(including certain of the 2.25% Convertible Notes and, in connection with any
loans funded on the Agreement Date under the Existing ABL Credit Facility or any
other obligations outstanding on the Agreement Date under the Existing ABL
Credit Facility, all of the Indebtedness and other obligations evidenced by the
Existing ABL Credit Facility and the Existing ABL Debt Documents), (b) the
funding of the Disbursement, and (c) the payment of fees, commissions, costs and
expenses in connection with each of the foregoing.

“TRICARE” means the program administered pursuant to 10 U.S.C. Section 1071 et.
seq), Sections 1320a-7 and 1320a-7a of Title 42 of the United States Code and
the regulations promulgated pursuant to such statutes.

“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.

“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.

“Volume Weighted Average Price” for any security as of any Trading Day means the
volume weighted average sale price of such security on the National Securities
Exchange on which such security is listed as reported by Bloomberg Financial
Markets or an equivalent, reliable reporting service reasonably selected by the
Agent (“Bloomberg”). Volume Weighted Average Price will be determined without
regard to after-hours trading or any other trading outside of the regular
trading hours.

 

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

“Warrants” has the meaning set forth in Section 2.8(a).

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

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 word “since” means “since 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 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

 

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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, without giving effect to any amendment, restatement, change, supplement,
waiver or other modification thereto or thereof that is not permitted by Section
5.2(x).

Section 1.3 Business Day Adjustment. Except as otherwise expressly stated herein
or in any other Loan Document, 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 Borrower shall record on its books and records the amount of the Loan,
the interest rate applicable thereto, all payments of principal and interest
thereon and the principal balance thereof from time to time outstanding.

(b) The Borrower shall establish and maintain at its address referred to in
Section 6.1, a record of ownership (the “Register”) in which the Borrower agrees
to register by book entry the interests (including any rights to receive payment
hereunder) of each Lender in the Loan and any 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 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.

(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 Disbursement) payable to such Lender in an amount equal to the unpaid
principal amount of the Loans held by such Lender (which, at the request of such
Lender, may provide separate Notes for separate or different parts of the Loans
held by such Lender). Notwithstanding anything to the contrary contained in this
Agreement, the Loans (including any Note(s) evidencing the Loans) are registered
obligations, the right, title and interest of the Lenders and their successors
and assignees in and to the Loan 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 notice, or when an Event of
Default or Default exists, with just notice (whether reasonable or not) by Agent
or any such Lender.

 

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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 and the Agent
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 changes 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.

Section 1.6 [Reserved].

Section 1.7 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.

Section 1.8 Joint Drafting and Negotiation. The parties hereto have participated
jointly in the negotiation and drafting of this Agreement. In the event an
ambiguity or question or intent or interpretation arises, this Agreement shall
be construed as if drafted jointly by the parties hereto and no presumption or
burden of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any provisions of this Agreement.

ARTICLE 2

AGREEMENT FOR THE LOAN

Section 2.1 Use of Proceeds. The proceeds of the Disbursement will be used
solely (i) to refinance certain of the existing Indebtedness (including a
certain amount of the existing 2.25% Convertible Notes and all outstanding
obligations under the Existing ABL Credit Facility and the Existing ABL Debt
Documents), (ii) to provide funds for the Borrower’s working capital and general
corporate purposes, and (iii) to pay a portion of the fees, costs and expenses
related to this Agreement.

Section 2.2 Disbursements.

(a) The 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 written notice requesting such amounts is
received by each Lender an Authorized Officer of the Borrower (and with such
written notice certifying that all such aforementioned conditions set forth in
this Section 2.2(a) are satisfied and with such written notice being in form and
substance reasonably satisfactory to each such Lender) on

 

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the Agreement Date with the proposed date of funding being required to be a
Business Day, each Lender on the Agreement Date severally and 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 “Disbursement Amount.” Amounts
borrowed under this Section 2.2(a) are referred to as the “Disbursement.”

(b) No Re-Borrowing of Disbursements or Loans. Amounts borrowed as an
Disbursement which are repaid or prepaid may not be re-borrowed under any
circumstance.

Section 2.3 Payments; Prepayments; No Call; Non-Callable Make Whole Amount.

(a) The Borrower shall pay in cash to each of the Lenders its Pro Rata Share of
the outstanding principal amount of the Loans and all other Obligations (other
than those Obligations under the Warrant, any Stock and the Registration Rights
Agreement) on the earliest of (i) the dates (and in the amounts) set forth in
the table below (as such installments may hereafter be adjusted as a result of
prepayments made pursuant to this Section 2.3 with the application of any such
prepayment being applied and adjusted as set forth in Section 2.3(e)), (ii) the
date the principal amount of the Obligations are declared to be or automatically
becomes due and payable following an Event of Default and (iii) the date
provided for in Section 5.3:

 

Payment Dates

  

Principal Amortization

Payment

April 2, 2021 (the “First Amortization Date”)

   $40,000,000.00 (the “Scheduled First Amortization Payment”)

April 2, 2022

   $40,000,000.00

Maturity Date

   $40,000,000.00 or such lesser outstanding amount of the Loans

(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. 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 Warrant Shares
have been issued to such Lender for the portion of such Warrant that was
exercised, and the accrued and unpaid interest on such Loans shall be paid by
the Borrower on the next succeeding Interest Payment Date.

(c) Notwithstanding anything to the contrary in any of the Loan Documents,
outstanding principal amounts on the Loans shall not be permitted to be prepaid,
repaid, redeemed or paid prior to the First Amortization Date except solely as
required or permitted by Section 5.3 or otherwise as set forth in this
Section 2.3(c). If any principal on Loans are prepaid, repaid, redeemed or paid
(A) prior to the First Amortization Date for any reason (such as an acceleration
of the Loans following the occurrence of an Event of Default, an exercise of any
Secured Party’s rights or remedies available under the Loan Documents, an
exercise of any rights or remedies by ABL Agent, an ABL Lender or any other
party to the ABL Debt Documents (subject to any applicable limitations thereon
set forth in clause (i) of the proviso in Section 5.4(s)), upon the consummation
of a Change in Control, pursuant to Section 5.3, by any optional prepayment or
otherwise), then the amount (in addition to the principal amount of the Loans
and any accrued and unpaid interest owed thereon) required to be prepaid,
repaid, redeemed or paid shall be the Non-Callable Make Whole Amount applicable
to the principal amount of Loans so prepaid, repaid, redeemed or paid (plus, if
In Connection with a Change in Control, the CoC Fee) or (B) on or after the
First

 

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Amortization Date but prior to the Maturity Date, In Connection with a Change in
Control, then the amount (in addition to the principal amount of the Loans and
any accrued and unpaid interest owed thereon) required to be prepaid, repaid,
redeemed or paid shall be the CoC Fee. The Non-Callable Make Whole Amount
(together with any applicable CoC Fee) shall be paid by the Borrower to the
Secured Parties based on their Pro Rata Share of the principal amount of the
Loans on the date of such prepayment, repayment, redemption or payment. The
Parties acknowledge and agree that, in light of the impracticality and extreme
difficulty of ascertaining actual damages, the Non-Callable Make Whole Amount
and any CoC Fee are intended to be a reasonable calculation of the actual
damages that would be suffered by the Secured Parties as a result of any such
prepayment, repayment, redemption or payment. The parties hereto further
acknowledge and agree that the Non-Callable Make Whole Amount and the CoC Fee
are not intended to act as a penalty or to punish the Borrower for any such
prepayment, repayment, redemption or payment. For the avoidance of doubt, other
than as set forth above in clause (B) in the second sentence of this
Section 2.3(c), prepayments of the Loans made on or after the First Amortization
Date, in whole or in part, are permitted and may be made without premium or
penalty.

(d) Each prepayment, repayment, redemption and payment by the Borrower 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 (including any Non-Callable Make Whole Amount and any CoC Fee, if
applicable) owed to the Lenders, and, (v) fifth, to all other Obligations (other
than any Obligations in respect of the Warrant, Stock underlying the Warrant and
the Registration Rights Agreement that are not at such time owing or unpaid)
owing to Agent or any Lender, 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 Pro Rata Shares.

(e) Any principal of any Loan that is prepaid, redeemed or paid pursuant to
Section 2.3(b), Section 2.3(c) or Section 5.3 shall be applied to the scheduled
payments of the Loans in the inverse order of maturity.

Section 2.4 Payment Details. All payments of the Obligations by the Borrower
hereunder and under any of the other Loan Documents shall be made without setoff
or counterclaim and shall be paid in cash in Dollars. 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 2:00 p.m. (New 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 a writing delivered
to the Borrower at least five (5) Business Days prior to the date such payment
is due. 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 on account of any Obligation of a Loan Party hereunder
or under any other Loan Document (in each case in this Section 2.5, for the
avoidance of doubt, not including Obligations in respect of the Warrant or the
Registration Rights Agreement) shall be made, in accordance with this
Section 2.5, free and clear of and without deduction or withholding 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 or withhold any Taxes from
or in respect of any sum payable hereunder or under any other Loan Document,
(i) such Loan Party shall make such deduction or withholding, (ii) such Loan
Party shall pay the full amount deducted or withheld to the relevant
Governmental Authority in accordance with Applicable

 

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Law, and (iii) to the extent that the deduction or withholding is made on
account of Indemnified Taxes, the sum payable by the applicable Loan Party shall
be increased by as much as shall be necessary so that after making the required
deduction or withholding (including deductions or withholdings 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 deduction or
withholding 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) The Borrower shall reimburse and indemnify, within ten (10) days after
receipt of demand therefor, each Lender for all Indemnified Taxes (including all
Indemnified Taxes imposed on amounts payable under this Section 2.5(c)) paid or
payable by such Lender, whether or not such Indemnified Taxes were correctly or
legally asserted. A certificate of the applicable Lender(s) setting forth the
amounts to be paid thereunder and delivered to the Borrower shall be conclusive,
absent manifest error.

(d) Any Lender that is entitled to an exemption from or reduction of withholding
Tax with respect to payments made under any Loan Document shall deliver to the
Borrower, at the time or times reasonably requested by the Borrower, such
properly completed and executed documentation reasonably requested by the
Borrower as will permit such payments to be made without withholding or at a
reduced rate of withholding. Any Lender that is entitled to an exemption from or
reduction of withholding Tax with respect to payments made under any Loan
Document shall deliver to the Borrower and the Agent, at the time or times
reasonably requested by the Borrower or the Agent, such properly completed and
executed documentation reasonably requested by the Borrower or the Agent as will
permit such payments to be made without withholding or at a reduced rate of
withholding. In addition, any Lender, if reasonably requested by the Borrower or
the Agent, shall deliver such other documentation prescribed by Applicable Law.
Notwithstanding anything to the contrary in the preceding sentence, the
completion, execution and submission of such documentation (other than such
documentation set forth below in this Section 2.5(d) shall not be required if in
the Lender’s good faith judgment such completion, execution or submission would
subject such Lender to any material unreimbursed cost or expense or would
materially prejudice the legal or commercial position of such Lender. Without
limiting the generality of the foregoing 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 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 with a properly completed and executed IRS Form
W-8ECI, W-8BEN-E, W-8IMY or other applicable forms or any other applicable
certificate or document reasonably requested by the Borrower and prescribed by
Applicable Law as a basis for claiming exemption from or a reduction in U.S.
federal withholding Tax, duly completed, together with such supplementary
documentation as may be prescribed by Applicable Law to permit the Borrower to
determine the withholding or deduction required to be made and, 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 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

 

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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 from time to time and shall
notify the Borrower 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.

(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, at the times prescribed by law or as reasonably requested by
Borrower, such documentation as is required in order for the Borrower 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 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 (including all Indemnified Taxes
imposed on amounts payable under Section 2.5(c)), 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 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 such Lender if 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 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
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 any Lender to disclose any information it
deems confidential (including its tax returns) to any Person, including the
Borrower.

Section 2.6 Interest.

(a) 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 a 360-day year for the actual number of days elapsed
in each month). Interest shall be paid in cash to the Lenders quarterly in
arrears for the preceding calendar quarter on the first Business Day of each
calendar quarter, whether by acceleration or otherwise, commencing on July 1,
2017 and on the first Business Day of each October, January, April and July
thereafter, and on the maturity (and on any date of prepayment, repayment,
redemption or payment of the principal) of the Loans (each, an “Interest Payment
Date”).

(b) As the Warrants are being issued substantially concurrently with the making
of the Loans hereunder, and as Lenders are entitled to the yield enhancement
payment described in Section 2.7(a) below, OID shall be applicable and the
parties hereto mutually agree that the amount of OID with respect to the Notes
for federal income tax purposes is $22,240,000.

 

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(c) All interest and fees under each Loan Document shall be calculated on the
basis of a 360-day year for the actual number of days elapsed.

(d) If the Obligations would otherwise constitute “applicable high yield
discount obligations” within the meaning of Section 163(i) of the Code (or any
successor provision thereof), on each Interest Payment Date ending on or after
the fifth anniversary of the Agreement Date, at Borrower’s sole discretion,
Borrower may pay in cash, on or prior to such Interest Payment Date, a minimum
amount of interest (including OID) that has been previously accrued and unpaid,
as shall be necessary to ensure the Obligations not be considered “applicable
high yield discount obligations”.

Section 2.7 Yield Enhancement Payment; Default Interest; CoC Fee.

(a) On the Agreement Date, the Borrower shall pay in cash in Dollars to such
Lender (as such Lender funding such Disbursement shall direct) a yield
enhancement payment in the amount of two and twenty-fifths of one hundred
percent (2.25%) of the principal amount of such Disbursement funded by such
Lender on the Agreement Date as consideration for providing such Disbursement,
and such payment, at the sole option of the applicable Lender, shall be deducted
from such Disbursement. Such payment shall be fully earned when paid (or when
deducted from such Disbursement) and shall not be refundable for any reason
whatsoever.

(b) At the election (which upon such election, 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) of Agent or the Required
Lenders while any Event of Default exists (or automatically while any Event of
Default under Section 5.4(a) or 5.4(d) exists), the Borrower shall pay interest
(after as well as before entry of judgment thereon to the extent permitted by
Applicable Law) on the Obligations (other than Obligations under the Warrant,
the Registration Rights Agreement and any Stock) and past due interest thereon,
if any, from and after the date of occurrence of such Event of Default, at a
rate per annum which is determined by adding (i) with respect to any Event of
Default under Section 5.4(a), ten percent (10.0%) per annum to the Interest Rate
then in effect for the Loans and (ii) with respect to any other Event of
Default, two percent (2%) per annum to the Interest Rate then in effect for the
Loans. Such interest shall be payable in cash on demand.

(c) Upon prepayment, repayment, redemption or payment of any principal of the
Loans at any time (including, for the avoidance of doubt, before, after and on
the date of the First Amortization Date but excluding, for the avoidance of
doubt, Loans paid in full on the Maturity Date) In Connection with a Change in
Control, Borrower shall pay to the Secured Parties the CoC Fee (in addition to
any principal Obligations required to be paid pursuant to Section 5.3 and any
applicable Non-Callable Make Whole Amount due pursuant to Section 2.3(c)) based
on their Pro Rata Share of the principal of the Loans on the date of such
prepayment, repayment, redemption or payment of such Loans; provided however
that if such prepayment, repayment, redemption or payment is In Connection with
a Change in Control but prior to the consummation of the Change in Control, the
CoC Fee shall be due and payable contemporaneously with the consummation of a
Change in Control. The CoC Fee shall be non-refundable upon receiving payment
thereof. The Parties acknowledge and agree that, in light of the impracticality
and extreme difficulty of ascertaining actual damages occurring In Connection
with a Change in Control, the CoC Fee 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 prepayment, repayment, redemption or payment. The parties hereto
further acknowledge and agree that the CoC Fee is not intended to act as a
penalty or to punish the Borrower for any such prepayment, repayment, redemption
or payment.

 

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Section 2.8 Delivery of Warrants.

(a) On the Agreement Date, the Borrower shall issue to the Lenders, based on
such Lenders’ Pro Rata Share, warrants to purchase 6,470,000 shares of Common
Stock at an Exercise Price of 127.5% of $7.24 per share (each as subject to any
adjustments provided for therein), each in substantially in the form of Exhibit
C attached hereto (the “Warrants”) with an expiration date of April 3, 2024.

(b) [Reserved].

(c) The Warrants issued pursuant to this Section 2.8 shall be allocated among
the Lenders as set forth on Annex A.

ARTICLE 3

REPRESENTATIONS AND WARRANTIES

Section 3.1 Representations and Warranties of the Loan Parties. The Loan
Parties, jointly and severally, represent and warrant (A) with respect to
Section 3.1(g)(i)(B), the first two sentences of Section 3.1(i), Section 3.1(y),
Section 3.1(z)(A) and (C), Section 3.1(ee), the first sentence of
Section 3.1(mm), Section 3.1(nn), Section 3.1(oo), Section 3.1(rr),
Section 3.1(ss) and Section 3.1(tt), at all times, and (B) with respect to all
other provisions of Section 3.1, (I) as of the Agreement Date and (II) as of
each date that this Agreement is amended or modified (or any date any consent or
waiver related to this Agreement is entered into or otherwise executed and
delivered) in accordance with Section 6.6(b) (but with respect to any
representation or warranty that speaks as of an earlier date, such
representation and warranty shall continue to speak only as of such earlier
date):

(a) Each Loan Party is (i) conducting its business in compliance with its
Organizational Documents and (ii) not in violation 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) Each Loan Party (i) is Solvent and (ii) has not taken 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; provided,
however, that, for the avoidance of doubt, no such representation in this
Section 3.1(c) is made in respect of any Immaterial Subsidiary.

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

(e) The obligation of the Loan Parties to make any payment under this Agreement
or the other Loan Documents (together with all charges in connection therewith)
is absolute and unconditional.

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

(g) 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

 

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(and all governmental licenses, authorizations, Permits, consents and approvals)
to (A) own its properties and conduct its business (solely with respect to
governmental licenses, authorizations, Permits, consents and approvals, except
where the failure to have such governmental licenses, authorizations, Permits,
consents and approvals could not reasonably be expected, individually or in the
aggregate, to result in a Material Adverse Effect) and (B) to (x) issue the
Securities in accordance with the Loan Documents, (y) 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
(z) 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 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 could reasonably be expected, individually or in the aggregate, to
result in a Material Adverse Effect.

(h) Other than as set forth on Schedule 3.1(h), there is not pending or, to the
knowledge of the Loan Parties, threatened, any material action, suit or other
proceeding before any Governmental Authority (i) to which any Loan Party is a
party, (ii) which purports to affect or pertain to the Loan Documents, the
Transactions or the other transaction contemplated hereby or thereby or
(iii) which has as the subject thereof any assets owned by any Loan Party or any
of its Subsidiaries, in each case which could reasonably be expected to result
in monetary judgments or relief, individually or in the aggregate, in excess of
$2,000,000. Other than as set forth on Schedule 3.1(h), there are no current or,
to the knowledge of the Loan Parties, pending, legal actions, suits or other
proceedings, in each case which could reasonably be expected to result in
monetary judgments or relief, individually or in the aggregate, in excess of $
2,000,000, 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. Other than as set forth on Schedule 3.1(h), none of the
current directors (or equivalent persons) or current officers of the Borrower
and its Subsidiaries has been involved as a defendant in securities-related
litigation or other securities-related legal proceedings during the past five
years.

(i) The execution, delivery and performance of each of this Agreement and the
other Loan Documents, including the issuance of the Securities hereunder, has
been, duly authorized by each Loan Party 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. Each of this
Agreement and the other Loan Documents has been duly executed and delivered by
each of the Loan Parties and constitutes a valid, legal and binding obligation
of each Loan Party, enforceable in accordance with its respective terms, except
as such enforceability may be limited by applicable insolvency, bankruptcy,
reorganization, moratorium or other similar laws affecting creditors’ rights
generally. The execution, delivery and performance of this Agreement and the
other 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 Documents, (C) result in the violation of any Applicable
Law, (D) result in the violation of any judgment, order, rule, regulation or
decree of any Governmental Authority, or (E) violate, conflict with or cause a
breach or a default under any agreement or instrument binding upon it, except,
with respect to clauses (C)

 

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and (E) only, as could not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect. No consent, approval,
Authorization or order of, or registration or filing with any Governmental
Authority 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 (A) the filings necessary to perfect the Liens created by the applicable
Loan Documents and (B) any necessary filings with the SEC.

(j) Other than has been obtained, no Authorization is required for (i) the
execution and delivery of this Agreement or the other Loan Documents, or
(ii) the consummation of the Transactions and the other transactions
contemplated hereby and thereby, including the issuance and exercise of the
Warrants.

(k) Each Loan Party and its Subsidiaries are in compliance with Applicable Law
except as could not reasonably be expected, individually or in the aggregate, to
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 and (ii) no Loan Party has (A) received
written notice of any revocation, non-renewal, amendment or other modification
of any of the Necessary Documents and (B) reason to believe that any of the
Necessary Documents will not be renewed in the ordinary course of 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 written license, free and clear of any Liens other than Permitted
Licenses and Permitted Liens, all Intellectual Property that is necessary for
the conduct of its business as currently conducted (the “IP”). All IP that is
registered with or issued by a Governmental Authority that is currently in the
name of a Loan Party is valid and enforceable. Each patent constituting a
Material Intangible Asset is valid and enforceable and no part of the Material
Intangible Assets has been judged invalid or unenforceable, in whole or in part;
and 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 Material Intangible Asset, the
use thereof by any Loan Party, or other rights of any Loan Party in or to any
Material Intangible Asset, and no Loan Party has received any written notice
regarding any such action, suit, other proceeding or claim. Neither the conduct
of the business of any Loan Party, nor any Loan Party, has infringed,
misappropriated or otherwise violated, or is infringing, misappropriating or
otherwise violating, any Intellectual Property of any Person, except as could
not reasonably be expected to result in a Material Adverse Effect. Other than as
set forth on Schedule 3.1(h), 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 action,
suit,

 

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other proceeding or claim. No Loan Party is a party to or bound by any options,
licenses or other agreements, written or oral, granting any right, title or
interest in or to any IP or otherwise relating to any IP, other than licenses
for computer software acquired in the ordinary course of business.

(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) [Reserved].

(r) Except as could 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.

(s) The Borrower has filed all of the SEC Documents, within the time frames
prescribed 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 to the SEC Documents. 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

 

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which such an amendment or a supplement has not been filed and made publicly
available on EDGAR (and true, correct and complete copies of such amendment or
supplement, if any, have been delivered to the Secured Parties or their
respective representatives) on or 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 consolidated financial statements of the
Borrower and its Subsidiaries included in the SEC Documents 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, 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 consolidated financial position of the Borrower and
its Subsidiaries as of the dates thereof and the consolidated results of their
operations, cash flows and changes in stockholders equity 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 10-K, and reviewed the consolidated financial statements included in
the Borrower’s most recently filed quarterly report on 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 and as required by the applicable rules and guidance from
the Public Company Accounting Oversight Board (United States), and such firm was
otherwise qualified to render such opinion under Applicable Law and the rules
and regulations of the SEC. 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 or will be 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 or by which the
Borrower or any of its Subsidiaries is bound 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 and any fees and expenses in connection therewith, (ii) liabilities
accrued for in the latest balance sheet included in the Borrower’s most recent
periodic report (on 10-Q or 10-K) filed prior to the date this representation is
made (the date of such balance sheet, the “Latest Balance Sheet Date”), (iii)
liabilities incurred in the ordinary course of business consistent with past
practice since the later of the (A) Agreement Date and (B) the Latest Balance
Sheet Date and (iv) liabilities set forth on the Schedules to this Agreement,
the Borrower and its Subsidiaries do not have any other material 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). Since December 31, 2016, there has been no
Material Adverse Effect or any event or circumstance which could 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, if any, 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

 

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preparation of financial statements in conformity with GAAP 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 (1) 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; such internal
control (including Internal Controls) over financial reporting is effective and
does not contain any material weaknesses.

(v) [Reserved].

(w) (i) No Loan Party has engaged, and to the knowledge of the Loan Parties, 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, except as for such transaction that
could not be expected, individually or in the aggregate, to have a Material
Adverse Effect, (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)
each Employee Benefit Plan is and has been operated in compliance with its terms
and all Applicable Laws, including ERISA and the Code, except for such failures
to comply that could not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect, (iv) (A) no ERISA Event has
occurred and (B) no event or condition exists or existed that could 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
could not be expected, individually or in the aggregate, to have a Material
Adverse Effect, and (v) no Loan Party maintains or has any obligation or
Liability with respect to any Foreign Benefit Plan that, individually or in the
aggregate, could be expected to have a Material Adverse Effect.

(x) As of the Agreement Date, the Borrower’s Subsidiaries are set forth in
Schedule 3.1(x) and the information set forth in Schedule 3.1(x) is true,
correct and complete.

(y) Subsequent to December 31, 2015, the Borrower has not declared or paid any
dividends or made any distribution of any kind with respect to its Stock, except
as permitted hereunder.

(z) (A) All of the issued and outstanding shares of Stock of the Borrower are
duly authorized and validly issued, fully paid and nonassessable, have been
issued in compliance with all applicable federal and state and foreign
securities laws, were not issued in violation of or subject to any

 

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preemptive rights or other rights to subscribe for or purchase securities that
have not been waived in writing. 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 (the “Warrant Shares”) (computed without regard to any
limitations on the number of shares that may be issued on exercise thereof). The
Warrants, the Warrant Shares and any other distributions required to be made now
or in the future pursuant to the Warrants (the “Warrant Distributions”) have
been duly authorized. Upon the 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 exercise 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 (pursuant to Section 4(a)(2) thereof and Rule 506 of Regulation D
thereunder) and applicable state securities laws. (B) As of the Agreement Date,
all of the Borrower’s authorized, issued and outstanding shares of Stock of the
Borrower and each of its Subsidiaries are set forth in Schedule 3.1(z), and,
except as set forth in Schedule 3.1(z), there are no (i) Stock options or other
Stock incentive plans, 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 other than under the Convertible Note Documents, (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 other than under the Convertible Note Documents 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, other
than in connection with clauses (i), (k) and (n) of the definition of “Permitted
Investments”, (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 and other than as set forth in the Loan Documents, the
ABL Debt Documents and, if such instrument is permitted hereunder to be secured,
the documents governing the Permitted 3.25% Convertible Note Refinancing). (C)
The issuance and delivery of the Warrants does not and, assuming full exercise
of the Warrants, the exercise of the Warrants, 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 Secured Parties);
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. (D) 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.

 

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(aa) Except for the Operative Documents, the Convertible Note Documents and the
agreements set forth on Schedule 3.1(aa), as of the Agreement Date there are no
Material Contracts. The consummation of the transactions contemplated by the
Loan Documents will not give rise to a right to termination in favor of any
party to any Material Contract (other than any Loan Party), except for such
Material Contracts the noncompliance with which would not reasonably be expected
to have a Material Adverse Effect.

(bb) Neither the Borrower nor its Subsidiaries are in breach or default under
any Material Contract, and, to the knowledge of the Loan Parties, no other party
to a Material Contract is in default or breach thereunder, except where any
breach or default would not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect.

(cc) 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.

(dd) Except as set forth in Schedule 3.1(dd) and except where any failures to
comply could not reasonably be expected to result in, either individually or in
the aggregate, a Material Adverse Effect, each Loan Party and each Subsidiary of
each Loan Party (a) are and 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) does not 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.

(ee) 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, 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.

(ff) 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, except for those that could not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect. Except as
set forth on Schedule 3.1(ff), or except as could not reasonably be expected to
have a Material Adverse Effect, 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

 

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or similar representative covering any Employee or otherwise binding any Loan
Party or any Subsidiary of any Loan Party, (b) to the Loan Parties’ knowledge,
no petition for certification or election of any such representative is existing
or pending with respect to any Employee, (c) to the Loan Parties’ knowledge, no
such representative has sought certification or recognition with respect to any
Employee, and (d) to the Loan Parties’ knowledge, 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. Further, all individuals who perform or have performed
services for any Loan Party or any Subsidiary of any Loan Party 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 could
not reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect. Each Loan Party and Subsidiary of any Loan Party are in material
compliance with all Applicable Laws concerning employment, including without
limitation hiring, 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 such
noncompliance that could not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect.

(gg) Schedule 3.1(gg) 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 Agreement Date, and Schedule 3.1(gg) also lists all jurisdictions of
organization and legal names of such Loan Party for the five years preceding the
Agreement Date.

(hh) [Reserved].

(ii) [Reserved].

(jj) 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 “know your customer” or
anti-money laundering 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

 

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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 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.

(kk) 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”).

(ll) Neither the Borrower nor any of its Subsidiaries nor, to the Borrower’s
knowledge, any director, officer or employee, of the Borrower or any of its
Subsidiaries, has received or otherwise obtained any material complaint,
allegation, assertion or claim, whether written or oral, regarding the
accounting or auditing practices, procedures, methodologies or methods of the
Borrower or any of its Subsidiaries or its internal accounting controls,
including any complaint, allegation, assertion or claim that the Borrower or any
of its Subsidiaries has engaged in questionable accounting or auditing
practices. No attorney representing the Borrower or any of its Subsidiaries,
whether or not employed by the Borrower or any of its Subsidiaries, has reported
evidence of a material violation of securities laws or breach of fiduciary duty
or similar violation by the Borrower or any of its Subsidiaries or any of their
respective officers, directors, employees or agents to the Borrower’s or any of
its Subsidiaries’ board of directors (or equivalent governing body) or any
committee thereof or to any director (or equivalent person) or officer of the
Borrower or any of its Subsidiaries pursuant to Section 307 of Sarbanes-Oxley,
and the SEC’s rules and regulations promulgated thereunder. There have been no
internal or SEC investigations regarding accounting or revenue recognition
discussed with, reviewed by or initiated at the direction of the chief executive
officer, the principal financial officer or the principal accounting officer (in
each case, or officer holding such equivalent position) of the Borrower or any
of its Subsidiaries, the Borrower’s or any of its Subsidiaries’ board of
directors (or equivalent governing body) or any committee thereof.

(mm) 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
Warrant Shares for resale by the holders thereof on a registration statement on
Form S-3 under the Securities Act.

(nn) 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.

(oo) 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.

(pp) 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

 

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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 could reasonably lead
to suspension or termination of trading of the Common Stock on the Principal
Market. For not less than the five years preceding the Agreement Date, (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.

(qq) 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 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.

(rr) 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. As of the Agreement Date, 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 (any such plan or arrangement, a “Rights Plan”), and
after the Agreement Date, the Borrower will not have adopted any Rights Plan
that in any way interferes with, or otherwise adversely affects, any Lender’s
(or other holder’s) exercise in full of its rights under the Warrants or
ownership of all of the Warrant Shares or that otherwise affects or applies to
any Lender (or such other holder of Warrants or Warrant Shares) in any respect
that is less favorable than its effect on the most favorably treated holder of
Stock of the Borrower under such Rights Plan.

(ss) 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 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 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.

 

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(tt) 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, other than those arising from the gross
negligence or willful misconduct of Agent or any Lender as determined by a
final, non-appealable judgment of a court of competent jurisdiction.

(uu) [Reserved].

(vv) With respect to any Product, (i) the Loan Parties and their Subsidiaries
have received, and such Product is the subject of, all Regulatory Required
Permits needed in connection with the testing, manufacture, marketing or sale of
such Product as currently being conducted by or on behalf of such Loan Parties
or Subsidiaries, except where the failure to have such Regulatory Required
Permits would not have a Material Adverse Effect, and (ii) such Product is being
tested, manufactured, marketed or sold, as the case may be, in compliance in all
material respects with all Applicable Laws and Authorizations.

(ww) None of the Loan Parties are in violation of any Healthcare Laws, except
where any such violation would not have a Material Adverse Effect.

(xx) [Reserved].

(yy) No Loan Party is participating in any Third Party Payor Program.

(zz) To the knowledge of any of the Loan Parties’ Authorized Officers, none of
the Loan Parties’ officers, directors, employees, equityholders, agents or
Affiliates has made an untrue statement of material fact or fraudulent statement
to the FDA or failed to disclose a material fact required to be disclosed to the
FDA, committed an act, made a statement, or failed to make a statement that
could reasonably be expected to provide a basis for the FDA to invoke its policy
respecting “Fraud, Untrue Statements of Material Facts, Bribery, and Illegal
Gratuities,” set forth in 56 Fed. Regulation 46191 (September 10, 1991).

(aaa) No Loan Party has received any written notice that any Governmental
Authority, including the FDA, the Office of the Inspector General of the United
States Department of Health and Human Services or the United States Department
of Justice has commenced or threatened to initiate any action against a Loan
Party, any action to enjoin a Loan Party, or any of its officers, directors,
employees, equityholders, agents or Affiliates, from conducting their businesses
at any facility owned or used by them or for any civil penalty, injunction,
seizure or criminal action, in each case, which could reasonably be expected to
result in a Material Adverse Effect.

(bbb) Borrower has not received from the FDA a Warning Letter, Form FDA-483,
“Untitled Letter,” other correspondence or notice setting forth allegedly
objectionable observations or alleged violations of laws or regulations enforced
by the FDA, or any comparable correspondence from any state or local authority
responsible for regulating drug products and establishments, or any comparable
correspondence from any foreign counterpart of the FDA, or any comparable
correspondence from any foreign counterpart of any state or local authority with
regard to any Product or the manufacture, processing, packing, or holding
thereof, in each case, which could reasonably be expected to result in a
Material Adverse Effect.

 

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(ccc) Borrower has not engaged in any Recalls, Market Withdrawals, or other
forms of product retrieval from the marketplace of any Products which could
reasonably be expected to result in a Material Adverse Effect.

(ddd) Each Product (a) is not adulterated or misbranded within the meaning of
the FDCA; (b) is not an article prohibited from introduction into interstate
commerce under the provisions of Sections 404, 505 or 512 of the FDCA; (c) has
been and/or shall be manufactured, imported, possessed, owned, warehoused,
marketed, promoted, sold, labeled, furnished, distributed and marketed, and each
service has been conducted, in accordance in all material respects with all
applicable Authorizations and Applicable Laws; and (d) has been and/or shall be
manufactured in accordance with Good Manufacturing Practices, in each case,
except where the failure to do so would not have a Material Adverse Effect.

(eee) No Loan Party is subject to any proceeding, suit or, to any Loan Party’s
knowledge, investigation by any federal, state or local government or
quasi-governmental body, agency, board or authority or any other administrative
or investigative body (including the Office of the Inspector General of the
United States Department of Health and Human Services) which would have a
Material Adverse Effect on any Loan Party;

(fff) The Loan Parties have not received any notice, and are not aware, of any
violation of applicable antitrust laws, employment or landlord-tenant laws of
any federal, state or local government or quasi-governmental body, agency, board
or other authority with respect to the Loan Parties that could reasonably be
expected to result in a Material Adverse Effect.

(ggg) None of the proceeds from the Loans have been or will be used, directly or
indirectly, for the purpose of purchasing or carrying any Margin Stock, for the
purpose of reducing or retiring any Indebtedness which was originally incurred
to purchase or carry any Margin Stock or for any other purpose which might cause
any of the Loans to be considered a “purpose credit” within the meaning of
Regulation T, U or X of the Federal Reserve Board.

(hhh) None of the written information (financial or otherwise) (other than
projections, other forward-looking information and industry information)
furnished by or on behalf of any Loan Party to Agent or any Lender in connection
with the consummation of the transactions contemplated by the Loan Documents,
contains any untrue statement of a material fact or omits to state a material
fact necessary to make the statements contained herein or therein not materially
misleading in light of the circumstances under which such statements were made.

(iii) The rate of interest paid under the Notes and the method and manner of the
calculation thereof do not violate any usury or other Applicable Laws, any of
the Organizational Documents, or any of the Loan Documents.

(jjj) The Loan Parties do not own any stock, partnership interests, limited
liability company interest or other equity securities or Subsidiaries except for
Permitted Investments.

(kkk) All information set forth in the Schedules to this Agreement is true,
accurate and complete in all material respects as of the Agreement Date and any
other subsequent date in which the Loan Parties are requested to update such
Schedules. All information set forth in the Perfection Certificate is true,
accurate and complete in all material respects as of the Agreement Date and any
other subsequent date in which the Loan Parties are requested to update such
certificate.

 

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Section 3.2 Borrower 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 of the Obligations are repaid in full and (ii) all of the Warrants have
expired or been terminated and (b) the end of the Reporting Period.

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

(a) Such Lender (i) is acquiring the Loans and the Notes (together with the
related guaranties set forth in the Security Agreement of the Guarantors)
provided by such Lender and the Warrants related to the Loans made by such
Lender hereunder and (ii) upon any exercise of such Warrants, will acquire the
Warrant Shares then-issuable upon exercise thereof 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.

(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.

(f) Such Lender is duly organized and validly existing under the laws of the
jurisdiction of its formation.

 

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(g) Each Loan Document to which such Lender is a party has been duly authorized,
executed and delivered by such Lender and constitutes the valid and legally
binding obligation of such Lender, enforceable against such Lender in accordance
with its terms, except as such enforceability may be limited by (i) applicable
insolvency, bankruptcy, reorganization, moratorium or other similar laws
affecting creditors’ rights generally, and (ii) applicable equitable principles
(whether considered in a proceeding at law or in equity).

(h) Such Lender has the requisite power and authority to enter into and perform
its obligations under each of the Loan Documents to which such Lender is a
party.

(i) Such Lender understands that the Securities are characterized as “restricted
securities” under the U.S. federal securities laws inasmuch as they are being
acquired from the Borrower (or the Guarantors, as applicable) in a transaction
not involving a public offering and that none of the Securities may be resold
and/or hedged except pursuant to an effective registration statement under the
Securities Act or an exemption from the registration requirements of the
Securities Act, including Rule 144 under the Securities Act, Section 4(a)(7) of
the Securities Act or a so-called “4[(a)] and a half” transaction.

ARTICLE 4

CONDITIONS OF DISBURSEMENT

Section 4.1 Conditions to the Disbursement. The obligation of the Lenders to
make the 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 (including the Intercreditor Agreement)
set forth on the closing checklist attached hereto as Exhibit D;

(b) all actions required to be taken by the Borrower pursuant to Section 2.8
shall have been taken;

(c) each representation and warranty by any Loan Party or any of its
Subsidiaries contained herein or in any other Loan Document is true, correct and
complete in all material respects (without duplication of any materiality
qualified contained therein) 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 were true, correct and complete in all
material respects (without duplication of any materiality qualifier contained
therein) as of such earlier date);

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

(e) all actions necessary to establish that Agent (for the benefit of itself and
the Lenders) will have perfected first priority security interests (subject only
to the prior priority of the Permitted Priority Liens and Liens in the
Collateral under the Loan Documents shall have been taken;

(f) all 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 Sections 2.7(a) and 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 the
Disbursement);

 

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(g) Agent and the Lenders shall have received at least three (3) 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;

(h) 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;

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

(j) the Lenders shall have received Notes aggregating the amount of the funded
Disbursement;

(k) the Borrower shall have delivered to the Secured Parties a letter from the
transfer agent for the Common Stock certifying the number of shares of Common
Stock outstanding as of a date within two (2) Business Days prior to the
Agreement Date;

(l) (i) Agent shall have received copies of the (A) executed payoff letter
evidencing the payoff of all Indebtedness under the Existing ABL Credit Facility
and all other Existing ABL Debt Documents and all other Indebtedness owed to
MidCap Financial Trust or its Affiliates by any Loan Party or any of its
Subsidiaries, the termination of all revolving commitments and lines of credit
and other products and services provided thereunder and the termination and
release of all Liens granted thereunder or thereto, and (B) release and
termination documents evidencing such termination of all such Liens (including
UCC-3 termination statements) and (ii) Existing ABL Agent and Existing ABL
Lenders shall have taken all actions and made all recordings and filings to
effectuate the foregoing, or shall have given Borrower and/or Agent the
authority to do so as requested by the Secured Parties; and

(m) Agent shall have received the ABL Debt Documents, which shall be in form and
substance reasonably satisfactory to the Agent and the Lenders and the Agent and
the Lenders shall have received evidence reasonably satisfactory to them that
all conditions set forth in the ABL Debt Documents to make such documents
effective and closed and to fund loans thereunder have been satisfied in all
respects.

ARTICLE 5

PARTICULAR COVENANTS AND EVENTS OF DEFAULT

Section 5.1 Affirmative Covenants.

For so long as the Obligations (other than unasserted contingent indemnification
obligations and other than those Obligations under the Warrant, any Stock and
the Registration Rights Agreement; provided that Sections 5.1(h), (p) and
(s) shall survive until the end of the Reporting Period) remain outstanding:

(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, other than as permitted under Section
5.2(i), and (ii) preserve and maintain all qualifications to do business in each
other jurisdiction not covered by clause (i) above that the failure to be so
qualified could reasonably be expected, individually or in the aggregate, to
have a Material Adverse Effect.

 

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(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 or
where failure to do so could not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect, 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 and
employees 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, in each
case, 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 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, on
behalf 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);
provided, however, that, for the avoidance of doubt, Agent need not be named on
any workers compensation or D&O policies. A true and complete listing of such
insurance, including issuers, coverages and deductibles, shall be provided to
Agent promptly following Agent’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) The Loan Parties shall promptly after knowledge (and, in any event, within
two Business Days after knowledge) notify the Agent of the occurrence of (A) any
Default or Event of Default and (B) so long as such type of notification would
not be material nonpublic information of the Borrower, any claims (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, in each case of this
clause (B), to the extent such claim, litigation, arbitration, mediation or
administrative or regulatory proceeding could reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect.

 

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(h) From the Agreement Date until the later of (y) the first date on which no
Warrants remain outstanding, and (z) the first date on which the Secured Parties
no longer own any Securities (the period ending on such latest date, the
“Reporting Period”), the Borrower and its Subsidiaries shall (i) 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 and (ii) deliver to Agent a
Compliance Certificate with each of its 10-Q and 10-K filings on the date such
filings are made with the SEC. Each of such reports in Section 5.1(h)(i) above
will comply in all material respects with the applicable requirements of the
Exchange Act and each of such reports in Section 5.1(h)(i) above and such
Compliance Certificate will not contain any untrue statement of a material fact
or omit 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. The consolidated financial statements
included in such reports will comply as to form in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto, will be prepared in accordance with GAAP,
consistently applied (subject, in the case of unaudited quarterly financial
statements, to normal year-end adjustments and lack of footnote disclosures),
and will fairly present in all material respects the consolidated financial
position of the Borrower and its Subsidiaries as of the dates thereof and the
consolidated results of their operations, cash flows and changes in stockholders
equity for the periods presented (subject, in the case of unaudited quarterly
financial statements, to normal year-end audit adjustments and lack of footnote
disclosures). The Borrower hereby agrees that, during the Reporting Period, the
Borrower shall send to each Secured Party copies of (A) 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 information to such holders of Stock (it being understood and
agreed that delivery shall be deemed to have occurred if such notices or other
information is posted to EDGAR) and (B) all other documents, reports, financial
data and other information not available on EDGAR that does not contain any
material nonpublic information of the Borrower, that any Secured Party may
reasonably request.

(i) On and after the date that an Event of Default has occurred and is
continuing, each Loan Party shall, and shall cause each of its Subsidiaries to,
with respect to each owned, leased or controlled property, at all times and
without notice, at the sole option of Agent or any Lender: (a) provide access to
such property to Agent, the Lenders and their respective representatives, as
frequently as Agent or any Lender determines to be appropriate; and (b) permit
Agent or any Lender 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 or
any Lender considers advisable, in each instance, at the Loan Parties’ sole
expense. Any Lender may accompany Agent or its representatives in connection
with such inspection.

(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 contain any untrue statement of a material fact and do not and will not 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, after knowledge of any defect of a
material fact, untrue statement of material fact, material misstatement or error
of a material fact, to Agent and the Lenders and correct any such defect, untrue
statement of material fact, material misstatement or error of a material fact
that has been discovered therein or in any Loan Document or in the execution,
acknowledgement or recordation thereof; it being acknowledged and agreed that
any projections provided to the Secured Parties are not to be viewed as facts,
are not a guarantee of financial performance, and are subject to uncertainties
and contingencies.

 

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(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 (i) deposit accounts exclusively used for payroll,
payroll taxes and other employee wage and benefit payments to or for the benefit
of the Borrower’s employees and identified to Agent by the Borrower as such,
(ii) zero balance accounts; provided that such accounts have been identified to
Agent by the Borrower as such, (iii) such other petty cash deposit accounts,
amounts on deposit in which do not exceed $100,000 in the aggregate at any one
time, (iv) escrow, trust and fiduciary accounts, (v) each account of Excluded
Foreign Subsidiaries, (vi) deposit account #XXXXX7912 of TriVascular Canada LLC
at Bank of Montreal; provided the aggregate amount on deposit in such deposit
account(s) does not exceed 1,000,000 Canadian dollars at any time, (vii) the
Bank of America Cash Collateral Account, and (viii) the L/C Cash Collateral
Accounts (such accounts in clauses (i) through (viii), the “Excluded Accounts”))
as of and after the Agreement Date; provided that (x) the Loan Parties shall
have until the date that is forty-five (45) days following the Agreement Date or
the closing date of any Permitted Acquisition, as applicable (or such later date
as may be agreed to by Agent in its sole reasonable discretion) 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 or
acquired in connection with such Permitted Acquisition, as applicable, and
(y) until the earlier of the date of (A) the date that any Person (other than
the Merrill Lynch branch where the Merrill Lynch Securities Account is
maintained) has a Lien on or “control” (as defined in the UCC) (including by way
of a Control Agreement) of the Merrill Lynch Securities Account and (B) on or
after September 1, 2017, the date that the Merrill Lynch Securities Account has
any cash, Cash Equivalents or other assets with a value in excess of $0, the
Loan Parties shall not be required to enter into a Control Agreement in respect
of the Merrill Lynch Securities Account as long as Borrower does not deposit any
additional funds, amounts or other assets of any kind into such Merrill Lynch
Securities Account after the Agreement Date and as long as promptly upon the
maturity of each tranche of the securities and Cash Equivalents in such Merrill
Lynch Securities Account, Borrower shall transfer the applicable amount of cash
invested in such matured tranche of securities or Cash Equivalents to a deposit
account or securities account over which the Agent has “control” for UCC
purposes under a Control Agreement in favor of the Agent covering such deposit
account or securities account and (z) for deposit accounts, securities accounts
and commodities accounts opened after the Agreement Date, the Loan Parties shall
have until the date that is thirty (30) days following the opening of any such
new account (or such later date as may be agreed to by Agent in its sole
reasonable discretion) to comply with this clause (k). As of the end of the last
Business Day of each calendar month, the Loan Parties shall have at least
$10,000,000 of cash and Cash Equivalents maintained in the deposit accounts or
securities accounts of the Loan Parties, in each case, subject to Control
Agreements (or, to the extent in compliance, and in accordance, with the
provisions in this Section 5.1(k), in the Merrill Lynch Securities Account) in
compliance with the foregoing provisions of this Section 5.1(k), and, upon
written request by the Agent, the Borrower shall provide Agent with written
evidence reasonably satisfactory to the Agent as of such Business Day or the
next Business Day showing compliance therewith.

(l) Promptly upon request by Agent, 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 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 (other than under the Warrant, any Stock and the Registration Rights
Agreement), (iii) to perfect and maintain the validity, effectiveness and
priority of any of the Loan Documents and the Liens intended to be created
thereby (other than, with respect to any Liens created thereby, the Warrant, any
Stock and the Registration Rights Agreement), 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 (other than, with respect to any Liens or Guarantees provided under the
Loan Documents, those Obligations under the Warrant, any Stock and the

 

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Registration Rights Agreement). Without limiting the generality of the
foregoing, the Loan Parties shall cause each of their Subsidiaries (other than
Excluded Subsidiaries) promptly after (but, in any event, (A) within fifteen
(15) days thereof for any Subsidiary that is not an Immaterial Subsidiary and
(B) within thirty (30) days thereof for any Immaterial Subsidiary) the date of
the formation or acquisition thereof, to guaranty the Obligations (other than
those Obligations under the Warrant, any Stock and the Registration Rights
Agreement) 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. Furthermore, the Borrower shall notify Agent
and the Lenders in writing promptly after (but, in any event, (A) within fifteen
(15) days thereof for any Loan Party or any Subsidiary that is not an Immaterial
Subsidiary and (B) within thirty (30) days thereof for any Immaterial
Subsidiary) the date of the issuance by or to any Loan Party (other than by the
Borrower) of any Stock of any corporation or any other Person that has “opted
into” Article 8 of the UCC (in each case, other than Excluded Property) to have
its Stock constitute “securities” under Article 8 of the UCC and each Loan Party
shall pledge, and shall cause each of its Subsidiaries (other than Excluded
Subsidiaries) to pledge, all of the Stock of each of its Subsidiaries (other
than Excluded 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 and each Excluded Domestic Holdco, directly
owned by a Loan Party, in each instance, to Agent, for the benefit of the
Secured Parties, to secure the Obligations (other than those Obligations under
the Warrant, any Stock and the Registration Rights Agreement), promptly after
formation or acquisition of such Subsidiary. The Loan Parties shall deliver, or
cause to be delivered, to Agent, appropriate resolutions, secretary
certificates, certified Organizational Documents and, if reasonably 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, to the extent applicable, substantially similar to the opinions delivered
on the Agreement Date), in each instance with respect to each Loan Party 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, the Loan Parties shall deliver, or cause to be delivered, to Agent,
irrevocable proxies and Stock powers and/or assignments, as applicable, duly
executed in blank.

(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 and Healthcare Laws or that 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 Adverse
Effect.

(n) Promptly upon becoming aware that any of the following events has occurred,
the Borrower will provide written notice to the Agent 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 which could
reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect, (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, which could reasonably be expected, individually or
in the aggregate, to have a Material Adverse Effect, or (iii) the imposition of
any 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.

(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 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 Agreement Date.

 

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(p) The Borrower shall take all actions necessary to cause the Common Stock to
remain listed on the Principal Market 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. 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 5:30 a.m. (New York City time) on the fourth (4th) Business
Day following the Agreement Date, the Borrower shall file a Form 8-K with the
SEC describing the terms of the transactions contemplated by the Loan Documents
and including as exhibits to such Form 8-K this Agreement (including the
schedules and exhibits hereto), the form of Note, the form of Warrant and the
Registration Rights Agreement (such Form 8-K, the “Announcing Form 8-K”).
Subject to the foregoing, no Loan Party shall issue any press releases or any
other public statements with respect to the transactions contemplated by any
Loan Document or disclosing the name of any Secured Party; provided, however,
that the Borrower shall be entitled, without the prior approval of any Secured
Party, to make any press release or other public disclosure with respect to such
transactions (i) in substantial conformity with the Announcing Form 8-K and
contemporaneously therewith and (ii) as is required by Applicable Law and
regulations (provided that each Secured Party shall be consulted by the Borrower
in connection with any such press release or other public disclosure prior to
its release and shall be provided with a copy thereof other than filings
required by the Exchange Act to be made with the SEC, which Borrower may make
without such consultation or notice). From and after the Borrower’s filing of
the Announcing Form 8-K, no Secured Party shall be in possession of any material
nonpublic information received from the Borrower or any of its Subsidiaries or
Affiliates or any of its or their respective officers, directors, employees,
attorneys, representatives or agents. Notwithstanding any other requirement of
this Agreement or any other Loan Document, each Loan Party shall not, and shall
cause each of its Subsidiaries and Affiliates and its and each of their
respective officers, directors, employees. Attorneys, representatives and agents
to not, provide any Secured Party with any material nonpublic information
regarding the Borrower or any of its Subsidiaries or Affiliates 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 any material nonpublic
information regarding the Borrower or any of its Subsidiaries or Affiliates
provided by, or on behalf of, the Borrower or any of its Subsidiaries or
Affiliates, or any of its or their respective officers, directors, employees,
attorneys, representatives or agents, in violation of the foregoing covenant.
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, nonpublic 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 Affiliates or any of their respective property or Stock.
Upon receipt or delivery by any 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 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 foregoing covenants by any Loan Party or any of its Subsidiaries
or 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

 

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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 or its
Subsidiaries or Affiliates without the prior approval by any Loan Party or 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, equityholders, attorneys,
representatives or agents for any such disclosure.

(r) 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.

(s) During the Reporting Period, except as otherwise provided in the Loan
Documents, the Borrower shall not in any manner issue or sell any Options or
Convertible Securities that are convertible into or exchangeable or exercisable
for shares of Common Stock at a price that varies or may vary with the market
price of the Common Stock, including by way of one or more resets to a fixed
price or increases in the number of shares of Common Stock issued or issuable,
or at a price that upon the passage of time or the occurrence of certain events
automatically is reduced or is adjusted or at the option of any Person may be
reduced or adjusted, whether or not based on a formulation of the then current
market price of the Common Stock (other than proportional adjustments as a
result of subdivisions or combinations of the Common Stock in the form of stock
splits, stock dividends, reverse stock splits, combinations or
recapitalizations). For the avoidance of doubt, this clause (s) does not
prohibit any convertible notes contemplated under clause (k) of the definition
of “Permitted Indebtedness” with a fixed conversion rate subject to
anti-dilution adjustments or other provisions related to the conversion price
and/or conversion rate that are broadly similar to the analogous provisions in
the 2.25% Convertible Note Documents or the 3.25% Convertible Note Documents or
any Permitted 3.25% Convertible Note Refinancing permitted hereunder.

(t) Within five Business Days after the filing of its 10-K or 10-Q, as the case
may be, the Loan Parties and their Subsidiaries shall deliver to Agent 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.

(u) The Borrower shall, and shall cause each Loan Party to, obtain all
Regulatory Required Permits necessary for compliance in all material respects
with Applicable Laws with respect to testing, manufacturing, developing, selling
or marketing of Products and shall, and shall cause each Loan Party to, maintain
and comply fully and completely in all respects with all such Regulatory
Required Permits, the noncompliance with which could have a Material Adverse
Effect.

(v) Each Loan Party will comply, and cause each Subsidiary to comply, with the
requirements of all Applicable Laws and Material Contracts, except to the extent
that failure to so comply could not reasonably be expected to (a) have a
Material Adverse Effect, or (b) result in any Lien upon either (i) a material
portion of the assets of any such Person in favor of any Governmental Authority,
or (ii) any Collateral (other than Permitted Liens).

 

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(w) With respect to the ABL Debt Documents, to the extent any of the ABL Lenders
(or their Affiliates) are not the Agent under this Agreement (but regardless for
purpose of the Convertible Note Documents), the Borrower shall, within two
Business Days after delivery by a Loan Party or receipt or knowledge thereof,
provide written notice to Agent of any default or event of default under any of
the ABL Debt Documents or any of the Convertible Note Documents, and of any
amendments, restatements, supplements, waivers or other modifications to (or any
consents to any events or actions under) any of the ABL Debt Documents or any of
the Convertible Note Documents or any prepayment of any of the Indebtedness
thereunder.

(x) Until the requirements in clause 4 (with respect to TriVascular Sales LLC)
and clause 6 (with respect to RMS/Endologix Sideways Merger Corp.) of Schedule
5.1(y) (and Section 5.1(y)) are satisfied, such applicable Subsidiary shall at
all times remain an Immaterial Subsidiary.

(y) Each Loan Party shall execute and deliver the documents and complete the
tasks and other actions set forth on Schedule 5.1(y), in each case, within the
time limits specified therein (or such longer period agreed to by Agent in its
sole discretion).

(z) Endologix agrees that, solely in connection with a refinancing of the ABL
Credit Facility referenced in clause (i) of the definition of “ABL Credit
Facility” whereby (1) Endologix is not entering into a new credit facility that
refinances or replaces the ABL Credit Facility referenced in clause (i) of the
definition of “ABL Credit Facility” but rather is seeking a financial
institution (or other Person) and its Affiliates that are not Deerfield ELGX
Revolver, LLC or its Affiliates to replace Deerfield ELGX Revolver, LLC and its
Affiliates as ABL Agent and as the ABL Lenders under such ABL Credit Facility
pursuant to an assignment of the agency and the loans and commitments
thereunder, and (2) the assignment documentation for the agency and the loans
and commitments thereunder requires the written consent of Endologix (even if
the terms of the ABL Credit Facility do not otherwise require such consent),
then Endologix shall advise the Agent in writing on or prior to Endologix
providing its written consent to such applicable assignment that under Section
5.4(s)(i) of this Agreement, a breach, event of default or acceleration (or an
exercise of remedies in connection with such breach or event of default) of the
ABL Financial Covenant shall not cause an Event of Default hereunder.

Section 5.2 Negative Covenants.

For so long as the Obligations (other than unasserted contingent indemnification
obligations and other than those Obligations under the Warrant, any Stock and
the Registration Rights Agreement; provided that Section 5.2(xvii) shall survive
until the end of the Reporting Period) remain outstanding:

(i) 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
that is not a Loan Party has its equity pledged to Agent, then any Person it
merges with must also have its equity pledged to Agent 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, then any Person it merges with must also have its
equity pledged to Agent 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

 

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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, and (4) Permitted Acquisitions. The Borrower shall not permit the
Borrower to establish or form any Subsidiary, unless such Subsidiary complies
with Section 5.1(l), if applicable, and such Subsidiary (if not an Excluded
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 (if not an Excluded Subsidiary) assets and to make such Subsidiary
(if not an Excluded Subsidiary) a Guarantor under the Loan Documents.

(ii) No Loan Party shall, nor shall it permit any of its Subsidiaries to,
(a) enter into any joint venture or any similar arrangement, other than as may
be permitted under Permitted Investments or (b) make any Restricted Payments,
other than (1) dividends by any direct or indirect Subsidiary of any Loan Party
(A) that are not Loan Parties to its parent or parent entities or (B) that are
Loan Parties to its parent or parent entities that are Loan Parties;
(2) dividends payable solely in common Stock; (3) repurchases of Stock of former
employees, directors or consultants so long as an Event of Default does not
exist at the time of such repurchase and would not exist after giving effect to
such repurchase, provided, however, that such repurchase does not exceed
$2,500,000 in the aggregate per fiscal year; (4) any Restricted Payments made
under Subordinated Debt Documents to the extent permitted under the terms of the
applicable Subordination Agreement; and (5) any Restricted Payments made
pursuant to the Loan Documents.

(iii) No Loan Party shall, nor shall it permit any of its Subsidiaries to,
(a) directly or indirectly 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 (b) directly or indirectly 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 or as otherwise permitted by Section 5.2(i).

(iv) 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. No
Loan Party will, or will permit any Subsidiary to, directly or indirectly,
create, assume, incur or suffer to exist any Contingent Obligations, except for
Permitted Contingent Obligations.

(v) 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 or commit to make any Acquisitions, or
any other acquisition of any of the assets of another Person other than
(A) Permitted Investments or (B) in the Ordinary Course of Business, or of any
business or division of any Person, including by way of merger, consolidation,
other combination or otherwise other than Permitted Investments, 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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(vi) [Reserved].

(vii) Except as otherwise disclosed on Schedule 5.2(vii), and except for
transactions that contain terms that are no less favorable to the applicable
Loan Party or any Subsidiary, as the case may be, than those which might be
obtained from a third party not an Affiliate of any Loan Party, no Loan Party
will, or permit any Subsidiary to, directly or indirectly, enter into or permit
to exist any transaction (including the purchase, sale, lease or exchange of any
property or the rendering of any service) with any Affiliate of any Loan Party
that is not itself a Loan Party.

(viii) No ERISA Affiliate shall cause or suffer to exist (a) any event that
could 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 (b) any other ERISA Event, which other ERISA Event could reasonably be
expected, individually or in the aggregate, to have a Material Adverse Effect.

(ix) No Loan Party shall, and no Loan Party shall permit any of its Subsidiaries
to, engage in any line of business different from those lines of business
carried on by it on the Agreement Date and businesses reasonably related
thereto.

(x) Except as permitted under Section 5.2(i), no Loan Party shall, and no Loan
Party shall permit any of its Subsidiaries to, directly or indirectly amend or
otherwise modify any of its Organizational Documents or, after the execution
thereof, any agreements or documents evidencing or contemplating any Permitted
Acquisition in any respect materially adverse to any Secured Party. No Loan
Party will, or will permit any Subsidiary to, directly or indirectly, amend or
otherwise modify any Material Contract, which amendment or modification in any
case: (a) is contrary to the terms of this Agreement or any other Loan Document;
or (b) could reasonably be expected to be materially adverse to the rights,
interests or privileges of Agent or the Lenders or their ability to enforce the
same; provided, however, that the foregoing shall not restrict (x) any changes
expressly required under the terms of the 2.25% Convertible Notes as of the
Agreement Date, the 3.25% Convertible Notes as of the Agreement Date or any
indenture governing any Permitted 3.25% Convertible Note Refinancing meeting the
requirements set forth in the definition of “Permitted 3.25% Convertible Note
Refinancing” or (y) any refinancing of the ABL Credit Facility (and related
documents), in each case of this clause (y) meeting the requirements set forth
in the definition of “ABL Credit Facility”.

(xi) No Loan Party shall, and no Loan Party shall suffer or permit any of its
Subsidiaries to, (a) make any significant change in accounting treatment or
reporting practices, except as required by GAAP, (b) change the fiscal year or
method for determining the fiscal quarters of any Loan Party or of any
Subsidiary of any Loan Party, (c) change its name as it appears in official
filings in its jurisdiction of organization or formation, or (d) change its
jurisdiction of organization or formation, in the case of clauses (c) and (d),
without at least ten (10) days’ prior written notice to Agent (or such shorter
period as may be agreed by Agent in its sole reasonable discretion).

(xii) No Loan Party shall, nor shall it permit any of its Affiliates to,
(A) declare, pay, make or set aside any amount for payment in respect of
Subordinated Debt, except for payments made in full compliance with and
permitted under the Subordination Agreement, (B) amend or otherwise modify the
terms of any Subordinated Debt, except for amendments and modifications made in
full compliance with the Subordination

 

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Agreement; or (C) declare, pay, make or set aside any amount for payment in
respect of any Indebtedness hereinafter incurred that, by its terms, or by
separate agreement, is subordinated to the Obligations, except for payments made
in full compliance with and permitted under the subordination provisions
applicable thereto.

(xiii) 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 and the
ABL Debt Documents. No Loan Party shall, and no Loan Party shall permit any of
its Subsidiaries to, directly or indirectly (y) 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, whether now
owned or hereafter acquired or (z) create or otherwise suffer to exist or become
effective any consensual encumbrance or restriction of any kind on the ability
of any Subsidiary to (1) pay any Indebtedness owed to Borrower or any of its
Subsidiaries, (2) make loans or advances to Borrower or any of its Subsidiaries
or (3) transfer any of its property or assets to Borrower or any of its
Subsidiaries, except (A) those in the Loan Documents and the ABL Debt Documents,
(B) an encumbrance or restriction consisting of customary non-assignment
provisions in leases or licenses entered into in the Ordinary Course of
Business, (C) customary provisions in joint venture agreement and other similar
agreements that restrict the transfer of ownership interests in such joint
ventures or provisions limiting the disposition or distribution of assets or
property (other than dividends on a pro rata basis based on ownership
percentage) of the applicable joint venture, which limitation is applicable only
to the assets that are the subject of such agreements; provided that such
agreement was not entered into in contravention of the terms of this Agreement,
and (D) limitations set forth in Subordinated Debt (if acceptable to the Agent
in its sole discretion).

(xiv) No Loan Party shall, and no Loan Party shall permit any of its
Subsidiaries to 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, (A) 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, (B) 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 (C) 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 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. No Loan Party will, or will
permit any Subsidiary to, directly or indirectly, knowingly enter into any
Material Contracts with any Person on the SDN List.

 

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(xv) No Loan Party shall, and no Loan Party shall permit any of its Subsidiaries
to, engage in a sale leaseback, synthetic lease or similar transaction involving
any of its assets, including pursuant to a substantially contemporaneous
transaction, whereby a Loan Party or one of its Subsidiaries sells or transfers
all or substantially all of its right, title and interest in an asset and, in
connection therewith, acquires or leases back the right to use such asset.

(xvi) No Loan Party shall, and no Loan Party shall permit any of its
Subsidiaries to, 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 or Healthcare Law, other than such violations or
liabilities that could not reasonably be expected, individually or in the
aggregate, to result in a Material Adverse Effect.

(xvii) 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, or be subject to the
restrictions imposed by, the Investment Company Act.

(xviii) 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
ABL Debt that is in violation or breach of the Intercreditor Agreement; (B) make
any amendment, restatement, supplement or modification of any ABL Debt Document
in violation or breach of the Intercreditor Agreement; provided however that,
for the avoidance of doubt, in connection with the ABL Credit Facility
referenced in clause (i) of the definition thereof, clauses (A) and (B) of this
Section 5.2(xviii) shall not prohibit Borrower from (y) refinancing such
facility in accordance with (and subject to the terms of) the definition of “ABL
Credit Facility” or (z) terminating such ABL Credit Facility (or such refinanced
facility mentioned in clause (y) above) or making any payments on such ABL
Credit Facility (or such refinanced facility mentioned in clause (y) above) at
any time so long as, in each case of the foregoing, in accordance with the terms
of such facility and in accordance with the definition of “ABL Credit Facility”
and the other applicable provisions of this Agreement and the applicable
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 ABL Debt 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 ABL Debt Documents and
the Liens granted under the Loan Documents in connection with this Section
5.2(xviii))) under the Loan Documents and such Person executes and delivers such
agreements, instruments and documents reasonably requested by Agent to
effectuate any of the foregoing.

(xix) 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 any of the ABL Debt 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

 

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conditions acceptable to Agent and the Lenders; it being understood and agreed
that the foregoing shall in no way limit the incurrence of unsecured
Indebtedness otherwise permitted hereunder that is not payment subordinated to
the ABL Debt when not also payment subordinated to the same extent to the
Obligations.

(xx) No Loan Party will, or will permit any Subsidiary to, declare, pay, make
any payment in respect of the 3.25% Convertible Notes or the 2.25% Convertible
Notes, except for: (a) regularly scheduled payments of interest and principal as
set forth in the applicable Convertible Note Documents (in addition to allowing
any cash principal payments at maturity of the applicable 3.25% Convertible
Notes and the 2.25% Convertible Notes, such amounts may also be paid in the
applicable Stock of the Borrower or through any other conversion feature that
does not effectively cause more payments to be made at maturity thereof than the
cash principal payments currently provided for in the applicable Convertible
Note Documents as of the Agreement Date), (b) in connection with any Permitted
3.25% Convertible Note Refinancing, (c) the issuance of shares of common stock
of the Borrower in connection with any conversion of the 3.25% Convertible
Notes, the 2.25% Convertible Notes or any convertible notes that are not
Disqualified Stock issued in a Permitted 3.25% Convertible Note Refinancing, and
any cash solely in lieu of fractional shares (but no other cash settlement other
than as otherwise permitted by this clause (xx)), (d) payments and conversions
(other than for any Disqualified Stock) made in connection with the repurchase
(whether for cash, upon exchange and/or for other consideration), redemption and
retirement in respect of the 2.25% Convertible Notes or 3.25% Convertible Notes
in a single or series of related transactions; provided that (1) no Event of
Default exists at the time such payments are made or would exist immediately
after giving effect thereto and (2) such cash payments are made solely (A) with
proceeds received by the Borrower from the issuance of its common Stock after
the Agreement Date for the purpose of making such payment, (B) regarding the
2.25% Convertible Notes, with the proceeds of the Loans made hereunder or the
proceeds of advances made under the ABL Credit Facility and (C) regarding the
3.25% Convertible Notes, with the proceeds of Indebtedness raised in a Permitted
3.25% Convertible Note Refinancing, with the proceeds of the Loans made
hereunder or with the proceeds of advances made under the ABL Credit Facility,
and (e) if the foregoing conditions do not otherwise permit such payment, then,
with the express prior written consent of the Agent (which may be withheld in
its sole discretion), payments in connection with the retirement, redemption and
repurchase of the 2.25% Convertible Notes or the 3.25% Convertible Notes.

(xxi) (a) No Loan Party will, or permit any Subsidiary (other than a Foreign
Subsidiary) to commingle any of its assets (including any bank accounts, cash or
Cash Equivalents) with the assets of any Person other than a Loan Party; and
(b) no Loan Party will, or permit any Subsidiary to enter into or own any
interest in a joint venture that is not itself a corporation or limited
liability company or other legal entity in respect of which the equity holders
are not liable for the obligations of such entity as a matter of law.

(xxii) No Loan Party will, or will permit any Subsidiary to, amend or otherwise
modify the terms of any Indebtedness referred to in Section 5.2(xx) above (other
than with respect to 3.25% Convertible Notes, in connection with a Permitted
3.25% Convertible Note Refinancing) if the effect of such amendment or
modification is to (a) increase the interest rate or fees on, or change the
manner or timing of payment of, such Indebtedness if in any way adverse to the
Agent or the Lenders, (b) accelerate or shorten the dates upon which payments of
principal or interest are due on, or the principal amount of, such Indebtedness,
(iii) change in a manner adverse to any Loan Party or Agent any event of

 

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default or add or make more restrictive any covenant with respect to such
Indebtedness, (iv) change the prepayment provisions of such Indebtedness or any
of the defined terms related thereto in a manner adverse to Agent or the
Lenders, or (vi) change or amend any other term if such change or amendment
would materially increase the obligations of the obligor or confer additional
material rights on the holder of such Indebtedness in a manner adverse to any
Loan Party, any Subsidiaries, Agent or Lenders; provided, however, that the
foregoing shall not restrict any changes expressly required under the terms of
the 3.25% Convertible Notes as in effect as of the Agreement Date, the 2.25%
Convertible Notes as in effect as of the Agreement Date or any changes that are
permitted to be made hereunder in connection with a Permitted 3.25% Convertible
Note Refinancing or any changes expressly required under any indenture governing
any Permitted 3.25% Convertible Note Refinancing that satisfies the conditions
and requirements set forth in the definition of “Permitted 3.25% Convertible
Note Refinancing”. The Loan Parties shall, prior to entering into any such
amendment or modification, deliver to Agent reasonably in advance of the
execution thereof, any final or execution form copy thereof.

(xxiii) Borrower shall not issue any Stock (a) senior to its shares of Common
Stock or (b) convertible into or exercisable or exchangeable for Stock senior to
its Common Stock.

Section 5.3 Change in Control.

(a) Lender’s Put Option. The Borrower, on behalf of the Loan Parties and their
Subsidiaries, shall give Agent written notice of a Change in Control 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.
Other than with respect to a Permitted Successor Transaction (in, which case, no
such Put Notice may be delivered by the Lenders), 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 (including, for the avoidance of doubt, any applicable
Non-Callable Make Whole Amount and the CoC Fee) shall be due and payable upon
the consummation of such Change in Control, 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 Change in Control (other
than a Permitted Successor Transaction), the Borrower shall make (or cause to be
made) the Final Payment (including, for the avoidance of doubt, any applicable
Non-Callable Make Whole Amount and the CoC Fee) to the Lenders as of the date of
such Put Notice. In such case of a Put Notice delivered with respect to any
Change in Control (other than a Permitted Successor Transaction), the Loan
Parties shall make arrangements satisfactory to the Agent, as determined by the
Agent in its sole discretion, that the Final Payment will be paid in full to the
Lenders, in each case, concurrently with the consummation of such Change in
Control (other than a Permitted Successor 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 Change in Control (other than a Permitted Successor
Transaction)). The Loan Parties hereby acknowledge and agree that, if the Loan
Parties or any of their Subsidiaries of Affiliates violate or breach any portion
of this Section 5.3(a), 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 Change in Control, unless, if the Lenders have
exercised their Put Right, arrangements reasonably satisfactory to the Agent for
the Final Payment (including, for the avoidance of doubt, any applicable
Non-Callable Make Whole Amount and the CoC Fee) have been made (or, as
applicable, paid) and, if the Lenders have not exercised their Put Right,
arrangements reasonably satisfactory to the Agent in respect of the Loans have
been made. The Loan Parties shall not, and shall not permit any of their
Subsidiaries to consummate any Change in Control (other than a Permitted
Successor Transaction) without complying in all respects with the applicable
provisions of this Section 5.3(a). Notwithstanding anything to the contrary in
this Agreement, for the avoidance of doubt, the Black-Scholes payments or
exercises related to a “Major Transaction” (as defined in any Warrant) that are
set forth in the Warrants are in addition to any Final Payment.

 

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(b) Borrower’s Prepayment Right. Notwithstanding anything to the contrary in
this Agreement and for the avoidance of doubt, Borrower shall be permitted to
prepay the Loans and other Obligations (other than Obligations under the Warrant
and the Registration Rights Agreement, the treatment of which are addressed
separately in such agreements) so long as (i) to the extent any such prepayment
is made prior to the First Amortization Date, the applicable Non-Callable Make
Whole Amount on the Loans so prepaid is paid at the same time in accordance with
Section 2.3(c) and (ii) if In Connection with a Change in Control, the CoC Fee
is paid at the time set forth in Section 2.7(c).

Section 5.4 General Acceleration Provision upon Events of Default. For so long
as the Obligations (other than unasserted contingent indemnification obligations
and other than those Obligations under the Warrant, any Stock and the
Registration Rights Agreement) remain outstanding, if one or more of the events
specified in this Section 5.4 shall have happened or occurred and have continued
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 but subject to the protections for
Agent set forth in Section 6.15) shall, by (subject to Section 5.5(a), which,
for the avoidance of doubt, shall not require any such notice and shall occur
automatically) written notice to the Borrower, 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, 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:

(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(c), 5.1(e), 5.1(f), 5.1(g), 5.1(h), 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),
5.1(x), 5.1(y) or 5.1(z), Section 5.2 or Section 5.3 of this Agreement or
Sections 5.2(a), 5.2(c), 5.2(d), 5.3, 5.4, 5.5, 5.7, and 5.10 of the Security
Agreement, (ii) Section 5.1 of the Security Agreement and such failure, with
respect to this Section 5.2(b)(ii) only, shall not have been cured within ten
(10) 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 or (iii) any covenant contained in any
Loan Document (other than the covenants described in Section 5.4(a), Section
5.4(b)(i) or Section 5.4(b)(ii) above and other than in respect of the Warrants
or the Registration Rights Agreement), and such failure, with respect to this
Section 5.2(b)(iii) 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.

 

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(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; it
being acknowledged and agreed that any projections provided to the Secured
Parties are not to be viewed as facts, are not a guarantee of financial
performance, and are subject to uncertainties and contingencies.

(d) (i) Any Loan Party or any of its Subsidiaries (other than Immaterial
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 (other than Immaterial Subsidiaries) shall
declare a moratorium on the payment of its debts; (iii) the commencement by any
Loan Party or any of its Subsidiaries (other than Immaterial 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 (other than Immaterial 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 (other than Immaterial
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 $1,000,000 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 could 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) there shall be any period of twenty (20) consecutive
days during which such judgment, order or decree shall not have been vacated or
discharged or there shall not be in effect (by reason of a pending appeal or
otherwise) any stay of enforcement thereof.

(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 or
is withdrawn or ceases to remain in full force or effect.

(g) 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 (which, for the avoidance of doubt, shall not apply to the
process of SEC comments in respect of share registration).

 

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(h) Any Loan Party or any Subsidiary of any Loan Party (i) shall fail to make
any payment in respect of any Indebtedness (other than the Obligations or the
ABL Debt (which is covered below in Section 5.4(s)) having an individual
principal amount (including undrawn committed or available amounts and including
amounts owing to all creditors under any combined or syndicated credit
arrangement) in excess of $3,000,000 or 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
$8,000,000 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) shall fail 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 of
the type covered in Section 5.4(h)(i) above, 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; provided however
that, notwithstanding the foregoing, any event or condition that occurs that
permits holders of convertible Indebtedness permitted hereunder to convert such
Indebtedness into Stock (other than Disqualified Stock) or such other
consideration permitted pursuant to Section 5.2(xx) pursuant to the terms of the
applicable indenture shall not constitute a Default or Event of Default
hereunder on such basis alone.

(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 or otherwise contest the validity, binding effect or
enforceability of the Loan Documents; or any Loan Document shall for any reason
(other than pursuant to the terms thereof) cease to create a valid security
interest in any of the Collateral in excess of such Collateral that has a fair
market value of $50,000 as determined by the Agent in its sole reasonable
discretion (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 (subject only to
the prior priority of the Permitted Priority Liens).

(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 Event of Default (as such term is defined in the
Warrants).

(l) The Common Stock shall cease to be registered under the Exchange Act or to
be listed on the Principal Market.

(m) The voluntary withdrawal or institution of any action or proceeding by the
FDA or similar Governmental Authority to order the withdrawal of any Product or
Product category from the market or to enjoin a Loan Party, such Loan Party’s
Subsidiaries or any representative of a Loan Party or its Subsidiaries from
manufacturing, marketing, selling or distributing any Product or Product
category that has or could reasonably be expected to have a Material Adverse
Effect, (ii) the institution of any action or proceeding by the DEA, the FDA, or
any other Governmental Authority to revoke, suspend, reject, withdraw, limit, or
restrict any Regulatory Required Permit held by a Loan Party, its Subsidiaries
or any representative of a Loan Party or its Subsidiaries, which, in each case,
has or could reasonably be expected to result in Material Adverse Effect,
(iii) the commencement of any enforcement action against a Loan Party, a Loan
Party’s Subsidiaries or any representative of a Loan Party or its Subsidiaries
(with respect to

 

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the business of a Loan Party or its Subsidiaries) by the DEA, the FDA, or any
other Governmental Authority which has or could reasonably be expected to result
in a Material Adverse Effect, or (iv) the occurrence of adverse test results in
connection with a Product which could result in Material Adverse Effect.

(n) The introduction of, or any change in, any law or regulation governing or
affecting the healthcare industry, including any Healthcare Laws, that has or
could reasonably be expected to have a Material Adverse Effect.

(o) Any Loan Party defaults under or breaches any Material Contract (after any
applicable grace period contained therein), or a Material Contract shall be
terminated by a third party or parties party thereto prior to the expiration
thereof (other than in accordance with its terms) (other than the Warrant, the
3.25% Convertible Notes, any Permitted 3.25% Convertible Note Refinancing or the
2.25% Convertible Notes, any ABL Debt or any Financing Documents (as defined in
any permitted ABL Credit Facility), or there is a loss of a material right of a
Loan Party under any Material Contract to which it is a party, in each case
which could reasonably be expected to result in a Material Adverse Effect.

(p) The occurrence of any breach or default under any terms or provisions of any
Convertible Note Document or any Subordinated Debt Document or the occurrence of
any event requiring the prepayment or mandatory redemption of any 3.25%
Convertible Note (or any Permitted 3.25% Convertible Note Refinancing thereof or
any indenture or related document governing any Permitted 3.25% Convertible Note
Refinancing), any 2.25% Convertible Note or of any Subordinated Debt; provided,
however, that, notwithstanding the foregoing, any event or condition that occurs
that permits holders of convertible Indebtedness permitted hereunder to convert
such Indebtedness into Stock (other than Disqualified Stock) or such other
consideration permitted pursuant to Section 5.2(xx) pursuant to the terms of the
applicable agreement shall not constitute a Default or Event of Default
hereunder on such basis alone.

(q) The institution by any Governmental Authority of criminal proceedings
against any Loan Party.

(r) Any Loan Party makes any payment on account of any Indebtedness that has
been subordinated to any of the Obligations, other than payments specifically
permitted by the terms of such subordination.

(s) Any Loan Party or any Subsidiary (A) fails to make any payment when due
(whether by scheduled maturity, required prepayment, acceleration, demand, or
otherwise) in respect of the ABL Debt, or (B) fails to observe or perform any
other agreement or condition relating to the ABL Debt or contained in any
instrument or agreement evidencing, securing or relating thereto, or any other
event occurs, the effect of which default or other event is to cause, or to
permit the holder or holders of such ABL Debt or the beneficiary or
beneficiaries of any Guarantee related thereto (or a trustee or agent on behalf
of such holder or holders or beneficiary or beneficiaries) to cause, such ABL
Debt to be demanded or to become due or to be repurchased, prepaid, defeased or
redeemed (automatically or otherwise), or an offer to repurchase, prepay,
defease or redeem such ABL Debt to be made, prior to its stated maturity, or
such Guarantee to become payable or cash collateral in respect thereof to be
demanded; provided that, notwithstanding the foregoing in this Section 5.4(s),
solely from a breach by any Loan Party of the minimum net revenue test set forth
in Section 6.2 of the ABL Credit Facility (or any replacement financial
covenant, if there is a financial covenant, in any refinanced ABL Credit
Facility permitted pursuant to the definition of “ABL Credit Facility”) (such
financial covenant, the “ABL Financial Covenant”), (i) if such ABL Financial
Covenant breach is under the ABL Credit Facility referenced in clause (i) of the
definition of ABL Credit Facility, such breach of the ABL Financial Covenant in
such ABL Credit Facility shall not cause an Event of Default hereunder, even if
(subject to the following proviso) the ABL Agent has

 

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accelerated the ABL Debt solely with respect to a breach of an ABL Financial
Covenant when no other event of default under the ABL Credit Facility is
existing and is exercising its remedies solely due to such breach of the ABL
Financial Covenant when no other event of default under the ABL Credit Facility
is existing; provided further that, notwithstanding anything to the contrary in
the Loan Documents, the foregoing proviso shall not limit in any way the
applicability of Section 5.4(s)(A) (including an Event of Default resulting from
the separate event of default under the ABL Credit Facility that would result
from the non-payment of any of the ABL Debt upon being accelerated due to a
breach of the ABL Financial Covenant); (ii) if such ABL Financial Covenant
breach is under the ABL Credit Facility referenced in clause (ii) of the
definition of ABL Credit Facility, and the priority of the Lien in favor of the
ABL Agent is prior to the priority of the Lien in favor of the Agent hereunder
solely with respect to certain specified asset groups (such as accounts
receivable, inventory, equipment, cash and/or related assets), such breach of
the ABL Financial Covenant in such ABL Credit Facility shall result in an Event
of Default hereunder if the effect of such breach is to cause, or to permit the
holder or holders of such ABL Debt or the beneficiary or beneficiaries of any
Guarantee related thereto (or a trustee or agent on behalf of such holder or
holders or beneficiary or beneficiaries) to cause, such ABL Debt to be demanded
or to become due or to be repurchased, prepaid, defeased or redeemed
(automatically or otherwise), or an offer to repurchase, prepay, defease or
redeem such ABL Debt to be made, prior to its stated maturity, or such Guarantee
to become payable or cash collateral in respect thereof to be demanded; and
(iii) if such ABL Financial Covenant breach is under the ABL Credit Facility
referenced in clause (ii) of the definition of ABL Credit Facility, and the
priority of the Lien in favor of the ABL Agent is prior to the priority of the
Lien in favor of the Agent hereunder with respect to all Collateral, such breach
of the ABL Financial Covenant in such ABL Credit Facility shall only result in
an Event of Default hereunder if the ABL Lenders the other holders of such ABL
Debt or the beneficiary or beneficiaries of any Guarantee related thereto (or a
trustee or agent on behalf of such holder or holders or beneficiary or
beneficiaries) have caused such ABL Debt to be demanded or to become due or to
be repurchased, prepaid, defeased or redeemed (automatically or otherwise), or
an offer to repurchase, prepay, defease or redeem such ABL Debt to be made,
prior to its stated maturity, or such Guarantee thereof to become payable or
cash collateral in respect thereof to be demanded or has actually commenced the
exercise of remedies as a secured creditor.

(t) Any provisions of the 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.

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 the Non-Callable Make Whole Amount, if applicable))
shall thereupon become immediately and automatically due and payable, 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, the Warrants, and the other Loan Documents, each Loan Party hereby
irrevocably and unconditionally constitutes and appoints Agent and any of
Agent’s 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

 

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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, in each case, (i) that any such Loan Party fails to take that are
required under such documents, agreements or instruments, (ii) during the
existence of any Event of Default, or (iii) in delivering 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 Secured Parties.

Section 5.7 Credit Bidding. The Loan Parties and the Lenders hereby irrevocably
authorize Agent based upon the written instruction of the 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 any Lender 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 or the Borrower at any time, the
Lenders will confirm in writing Agent’s authority to release any such Liens on
particular types or items of Collateral pursuant to this Section 5.7.

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):

 

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If to the Borrower or any other Loan Party:

Endologix, Inc.

2 Musick

Irvine, CA 92618

E-mail: vmahboob@endologix.com

E-mail: jtejedor@endologix.com

Attn: Vaseem Mahboob, CFO

Attn: James Tejedor, Treasury Manager

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

Stradling Yocca Carlson & Rauth, P.C.

660 Newport Center Dr # 1600

Newport Beach, CA 92660

E-mail: mlawhead@sycr.com

Attn: Mike Lawhead

Stradling Yocca Carlson & Rauth, P.C.

100 Wilshire Blvd., Fourth Floor

Santa Monica, CA 90401

E-mail: drosen@sycr.com

Attn: Dayan Rosen

If to Agent:

c/o Deerfield Management Company, L.P.

780 Third Avenue, 37th Floor

New York, NY 10017

Facsimile: 212-599-3075

E-mail: dclark@deerfield.com

Attn: David J. Clark, Esq.

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

Katten Muchin Rosenman LLP

575 Madison Avenue

New York NY 10022-2585

Facsimile: (212) 894-5877

E-mail: mark.fisher@kattenlaw.com and mark.wood@kattenlaw.com

Attn: Mark I. Fisher, 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 the 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.

 

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Section 6.3 Fees, Charges, Costs and Expenses Reimbursement. The Loan Parties
agree to pay on or prior to the Agreement Date and, within ten (10) Business
Days (or such later date as the Agent may agree in its sole discretion) after
delivery of an invoice therefor after the Agreement Date, (a) all reasonable
fees, reasonable costs and reasonable, out-of-pocket expenses of Agent and the
Lenders and of legal counsel to Agent and the Lenders of negotiation,
documentation, preparation, execution, delivery and closing, of the Loan
Documents and in connection with the consummation of the Transactions and the
other transactions contemplated hereby and thereby, (b) any consents,
amendments, waivers or other modifications to the Loan Documents or otherwise in
connection with the consummation of the Transactions and the other transactions
contemplated hereby and thereby, (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 the reasonable
out-of-pocket documented fees, costs and expenses of legal counsel to Agent and
the Lenders and reasonable out-of-pocket documented 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 the 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 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) providing any notices under the Loan
Documents that are required or recommended by Applicable Law (i) providing any
new Notes or amended and restated Notes and (j) any other actions taken after
the Agreement Date related to the Obligations or the Loan Documents. 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. Notwithstanding
anything to the contrary contained in this Section 6.3, the Loan Parties shall
only be obligated to pay the attorney’s fees provided for under clause (a) of
this Section 6.3 that are incurred solely prior to the Agreement Date (but not
thereafter) up to a maximum of $250,000 (for the avoidance of doubt, which cap
is inclusive of any attorney’s fees incurred pursuant to Section 12.14(a) of the
ABL Credit Facility prior to the date hereof by the applicable Affiliate of
Deerfield Facility Entity as the ABL Agent under the ABL Credit Facility in
connection with negotiating and closing the ABL Credit Facility) (the
“Pre-Closing Attorney’s Fees Cap”).

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
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Party hereby irrevocably submits to the exclusive jurisdiction of the state and
federal courts sitting in the City of New York, borough of Manhattan 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. 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 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.

Section 6.5 Successors and Assigns. This Agreement shall bind and inure to the
respective successors and 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 (other than in any Permitted Successor
Transaction), and any prohibited assignment by the Loan Parties shall be
absolutely void ab initio. Any Lender may assign or transfer its rights or
Obligations under the Loan Documents to an Eligible Assignee, so long as
(a) with respect to any assignment to a Person mentioned in clause (d) of the
definition of “Eligible Assignee”, the amount of such assignment is for Loans in
an aggregate principal amount not less than $5,000,000 (or, if less, the entire
remaining principal amount of Loans held by such Lender); provided that such
threshold amount shall be aggregated between such Persons that are assignees
mentioned in such clause (d) of the definition of “Eligible Assignee” that are
Affiliates of each other. Upon a Lender’s assignment of any of the Loans held by
it in accordance with this Section 6.5, such Lender shall provide notice of the
transfer to Borrower (with a copy to Agent) for recordation in the Register
pursuant to Section 1.4. Upon receipt of a notice of a permitted transfer of an
interest in a Loan, the Borrower shall record the identity of the transferee and
other relevant information in the Register and the transferee shall (to the
extent of the interests transferred to such transferee) have all the rights and
obligations of, and shall be deemed, a Lender with respect to such Loan
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 or other Obligations to any Loan Party or
any of their Affiliates without the written consent of Agent. If a Lender sells
participating interests in its Loans or other interests hereunder (any such
Person, a “Participant”), (i) such Lender’s obligations hereunder with respect
to those sold to the Participant shall remain unchanged for all purposes,
(ii) the Borrower and Agent shall continue to deal solely and directly with such
Lender in connection with such Lender’s rights and obligations hereunder with
respect to those sold to the Participant, and (iii) all amounts payable by the
Borrower shall be determined as if such Lender had not sold such participation
and shall be paid directly to such Lender.

 

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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; provided however that no such security
interest or assignment shall release such Secured Party from any of its
obligations hereunder or substitute any such holder of a security interest or
assignee for such Secured Party as a party hereto.

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.

(b) 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 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, the
Agent and the Required Lenders; provided that no such amendment, restatement,
modification, change, termination, waiver or consent to this Agreement shall,
without the consent of each Lender with Obligations directly and adversely
affected thereby, do any of the following: (i) reduce any Loan of such Lender;
(ii) postpone the Maturity Date or other scheduled final maturity date of any
Loan of such Lender, or postpone the date or reduce the amount of any scheduled
payment (but not mandatory prepayment) of principal of any Loan of such Lender;
(iii) decrease the interest rate borne by any Loan of such Lender (other than
any waiver of any increase in the interest rate applicable to any of the Loans
pursuant to Section 2.7(b)) or the amount of any premium or fees payable
hereunder; or (iv) amend this proviso of this Section 6.6 to the extent
providing for consent by all directly and adversely affected Lenders in a manner
to remove such consent.

(c) No consideration shall be offered or paid (in any form, whether cash, Stock,
other property or otherwise) to any Secured 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 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.

 

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Section 6.9 Survival; Releases of Guarantees and Liens.

(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 hereunder or thereunder, in each
case until termination of such provision in accordance with this Section 6.9,
regardless of any investigation made by any such other Party or on its behalf.
Agent and the Lenders shall not be deemed to have waived, by reason of making
the Loan, any Event of Default that may arise by reason of such representation
or warranty proving to have been false or misleading, notwithstanding that 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 the execution and delivery hereof and
thereof (and, with respect to Section 3.1(g)(i)(B), the first two sentences of
Section 3.1(i), Section 3.1 (y), Section 3.1 (z)(A) and (C), Section 3.1(ee),
the first sentence of Section 3.1(mm), Section 3.1(nn), Section 3.1(oo),
Section 3.1(rr), Section 3.1(ss) and Section 3.1 (tt), shall continue to be made
in accordance with the terms hereof and thereof, including at all times 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 any Secured Party may have had notice or knowledge of any
Default at the time of any Loan, and shall continue in full force and effect as
long as either (i) any Loan or any other Obligation hereunder shall remain
outstanding, unpaid or unsatisfied or (ii) the Maturity Date has not occurred.
Notwithstanding anything to the contrary in the Loan Documents, the obligations
of the Loan Parties under Section 2.5 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 Loans and the other Obligations, the expiration or
termination of the Warrants or the termination of this Agreement or any of the
other Loan Documents or any provision hereof or thereof. For the avoidance of
doubt and notwithstanding anything to the contrary in any Loan Documents,
(a) the making of the representations and warranties herein or in any other Loan
Document that relate to the Warrants or any securities laws shall survive the
payment in full of the Loans and any other Obligations until such time that
Warrants are fully and completely paid, performed, extinguished and terminated
in accordance with their terms, (b) all rights set forth in the Warrants and the
Registration Rights Agreement and all transactions contemplated thereby (other
than this Agreement and the other Loan Documents with respect to provisions that
are not mentioned herein or therein to survive the payment in full of the Loans)
shall continue to, and at all times, exist until (i) with respect to the
Warrants, such Warrants are fully and completely paid, performed, extinguished
and terminated in accordance with their terms and (ii) with respect to the
Registration Rights Agreement, such Registration Rights Agreement is fully and
completely terminated in accordance with its terms, (c) Sections 5.1(h), (p) and
(s) and Section 5.2(xvii) will survive until the end of the Reporting Period,
but all other affirmative and negative covenants, events of default, fees,
penalties and other provisions not expressly surviving pursuant to this
Section 6.9 shall terminate upon the payment in full of the Obligations (not
including unasserted contingent indemnification obligations or any Obligations
in respect of the Warrants, the Registration Rights Agreement or any Stock) and
(d) all Liens granted on the Collateral under any Loan Document shall remain in
effect and shall continue to secure the Obligations (but not including any
Obligations in respect of the Warrants, the Registration Rights Agreement or any
Stock) under the Loan Documents (x) until all of the Obligations (other than
unasserted contingent indemnification obligations and other than any Obligations
under the Warrants, the Registration Rights Agreement and any Stock in
connection therewith) have been paid in full in cash in accordance with such
Loan Documents and (y) other than Liens on any Collateral disposed of in a
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as otherwise agreed in writing by the Required Lenders (or such greater
percentage of Lenders required pursuant to Section 6.6) (but such release shall
only be for the Liens on such Collateral so disposed in a Permitted Disposition
or as may be agreed in writing by the Required Lenders (or such greater
percentage of Lenders required pursuant to Section 6.6)).

(c) Upon payment in full of all Obligations (other than unasserted contingent
indemnification obligations and other than any Obligations in connection with
the Warrants, the Stock underlying such Warrants and the Registration Rights
Agreement) in cash in accordance with the Loan Documents, subject to the second
sentence of Section 6.22, all Collateral shall be automatically released from
the Liens created by the Security Agreement, any other Loan Document or
otherwise and all rights of the Secured Parties in the Collateral shall
automatically terminate, all without delivery of any instrument or any
additional performance by any Person.

(d) Notwithstanding anything to the contrary contained herein or in any other
Loan Document, the Agent is hereby unconditionally authorized and instructed by
each Secured Party (without requirement of notice to or consent of any Secured
Party) to take any action to release or terminate any Lien granted under the
Loan Documents to secure the Obligations in the Collateral (it being understood
and agreed that no security interest is granted under any Loan Document or
otherwise in any Obligations, in each case, in respect of (and only in respect
of) the Warrants, the Registration Rights Agreement or any underlying Stock in
connection therewith) upon (i) payment in full of all Obligations (other than
unasserted contingent indemnification obligations and other than the Obligations
under the Warrants and the Registration Rights Agreement and any Stock) in cash
in accordance with the Loan Documents, (ii) a written agreement by the requisite
number of Lenders required by Section 6.6 and (iii) a Permitted Disposition (but
solely in the Collateral so disposed of in a Permitted Disposition and not in
any other property or assets).

(e) In each case in accordance with this Section 6.9 whereby a Lien on all or a
portion of the Collateral is released, the Agent will (and each Lender
irrevocably authorizes and instructs the Agent to), at the Borrower’s expense,
execute and deliver to the applicable Loan Party such documents as such Loan
Party may reasonably request to evidence the release of (i) all Collateral from
the Liens granted under the Loan Documents upon payment in full of all
Obligations (other than unasserted contingent indemnification obligations and
other than the Obligations under the Warrants and the Registration Rights
Agreement and any Stock) in cash in accordance with the Loan Documents, in each
case, in accordance with the terms of the Loan Documents and this Section 6.9,
(ii) Collateral permitted to be sold pursuant to clause (d)(ii) of this
Section 6.9 (but solely in such Collateral) and (iii) the Liens on that
Collateral sold pursuant to a Permitted Disposition (but solely in such
Collateral sold pursuant to such Permitted Disposition).

(f) Notwithstanding anything to the contrary in the Loan Documents and for the
avoidance of doubt, the holders of the Warrants and parties to the Registration
Rights Agreement shall be entitled to exercise all rights and remedies available
to them under law and at equity and under the Warrants and the Registration
Rights Agreement for any breaches of provisions that survive the payment in full
of the Obligations (other than the payment in full of unasserted contingent
indemnification obligations and other than Obligations under the Warrants, the
Registration Rights Agreement and any Stock).

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

 

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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, indemnify and hold harmless (the
“Indemnity”) the Secured Parties and each of their respective directors,
partners, 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 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
become subject (each, a “Loss”). The Indemnity shall not apply to the extent
that a court or arbitral tribunal of competent jurisdiction issues a final
non-appealable judgment that such Loss of an Indemnified Person resulted from
the gross negligence, bad faith 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 Taxes other than Taxes that represent losses,
claims, damages, etc. arising from any non-Tax claim.

(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 indemnifying Person. The indemnification required by
this Section 6.11 shall be made and paid by such indemnifying Person within ten
(10) Business Days of written demand by such Indemnified Person.

(c) No settlement of any Loss shall be entered into by such indemnifying Person
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.

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
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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.

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, until
all Obligations have been paid in full in accordance with the Loan Documents,
(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. 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 reasonably requested
by Agent or any of the Lenders to carry out the purposes of any Loan Document or
to preserve and protect Agent’s or the Lenders’ rights as contemplated therein.

Section 6.15 Agent.

(a) Each Lender hereby irrevocably appoints Deerfield Private Design Fund IV,
L.P. (together with any successor Agent appointed by Deerfield Private Design
Fund IV, L.P. or any successor Agent that was appointed by the Lenders or any
prior Agent) 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

 

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(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.

(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. Agent shall not be responsible for the
negligence or misconduct of any agent or attorney in fact that it selects in the
absence of gross negligence or willful misconduct as determined by a final,
non-appealable judgment of a court of competent jurisdiction.

(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
or willful misconduct in connection with its duties expressly set forth herein
as determined by a final, non-appealable judgment of a court of competent
jurisdiction), 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 the validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or
any other Loan Document (or the creation, perfection or priority of any Lien or
security interest therein), 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 Lenders as it
deems appropriate and, if it so requests, shall receive 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 Lenders and such request and any action taken or failure to act
pursuant thereto shall be binding upon each Lender.

 

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(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 and stating that such
notice is a “notice of default.” Agent shall take such action with respect to
such Event of Default or Default as may be requested by the 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 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. Except for notices,
reports and other documents expressly herein required to be furnished to the
Lenders by Agent, Agent shall not have any duty or responsibility to provide any
Lender with any credit or other information concerning the business, prospects,
operations, property, financial or other condition or creditworthiness of
Borrower or any other Loan Party which may come into the possession of Agent.

(g) Whether or not the transactions contemplated hereby are consummated, each
Lender shall indemnify upon demand Agent and its directors, officers, partners,
employees, attorneys, advisors, representatives and agents (to the extent not
reimbursed by or on behalf of any Loan Party and without limiting the obligation
of Borrower to do so), according to its applicable Pro Rata Share, from and
against any and all 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, any of Agent’s duties,
responsibilities or actions set forth in or that taken pursuant to the Loan
Documents; provided that no Lender shall be liable for any payment to any such
Person of any portion of the foregoing to the extent determined by a final,
non-appealable judgment by a court of competent jurisdiction to have resulted
from the applicable Person’s own gross negligence or willful misconduct. No
action taken in accordance with the directions of the Lenders shall be deemed to
constitute gross negligence or willful misconduct for purposes of this Section
6.15(g). Without limitation of the foregoing, each Lender shall reimburse Agent
upon demand for its ratable share of any costs or out of pocket expenses
incurred by Agent in connection with the preparation, execution, delivery,
administration, modification, amendment or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in respect of
rights or responsibilities under, this Agreement, any other Loan Document or any
document contemplated by or referred to herein or therein, to the extent that
Agent is not reimbursed for such fees, costs and expenses by or on behalf of the
Loan Parties. The undertaking in this Section 6.15(g) shall survive repayment of
the Loans and the other Obligations, any foreclosure under, or modification,
release or discharge of, any or all of the Loan Documents, termination of this
Agreement or the other Loan Documents and the resignation or replacement of
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(h) Agent may resign as Agent upon thirty (30) days’ notice to the Lenders. If
Agent resigns under this Agreement, the Lenders shall appoint from among the
Lenders a successor Agent for such successor Agent and the Lenders. If no
successor Agent is appointed prior to the effective date of the resignation of
Agent, Agent may appoint, after consulting with the Lenders, a successor Agent
from among the Lenders. Upon the acceptance of its appointment as successor
Agent hereunder, such successor Agent shall succeed to all the rights, powers
and duties of the retiring Agent and the term “Agent” shall mean such successor
Agent, and the retiring Agent’s appointment, powers and duties as Agent shall be
terminated. After any retiring Agent’s resignation hereunder as Agent, the
provisions of this Section 16.15 shall inure to its benefit 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 successor Agent has accepted appointment as
Agent by the date which is 30 days following a retiring Agent’s notice of
resignation, the retiring Agent’s resignation shall nevertheless thereupon
become effective and the Lenders shall perform all of the duties of Agent
hereunder until such time, if any, as the Lenders appoint a successor Agent as
provided for above.

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 No Fiduciary Relationship. No Secured Party has any fiduciary
relationship or duty to any Loan Party arising out of or in connection with, and
there is no agency, tenancy or joint venture relationship between the Secured
Parties and the Loan Parties by virtue of, any Loan Document or any transaction
contemplated therein.

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 Sections 2, 4 and 8.3
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 indemnitees mentioned herein), 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
pursuant to the terms of this Agreement. Thereafter, it shall be binding upon
and inure to the benefit of, each Loan Party party hereto and each Secured Party
party thereto and the indemnitees mentioned herein and, in each case, their
respective successors and permitted assigns.

 

88

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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.

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 Agent. Each
Secured Party agrees promptly to notify Agent after any such setoff and
application made by such Secured Party or its Affiliates. 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 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 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
Lender 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 or Warrants 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.

 

89

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Section 6.26 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 6.27 Confidentiality.

(a) Each of the Agent and the Lenders agrees to maintain the confidentiality of
the Information (as defined below), except that Information may be disclosed
(a) to its Affiliates and to its Related Parties (it being understood that the
Persons to whom such disclosure is made will be informed of the confidential
nature of such Information and instructed to keep such Information
confidential), (b) to the extent required or requested by any regulatory
authority purporting to have jurisdiction over such Person or its Related
Parties (including any self-regulatory authority), (c) to the extent required by
Applicable Laws or regulations or by any subpoena or similar legal process,
(d) to any Secured Party or any other party hereto, (e) in connection with the
exercise of any remedies hereunder or under any other Loan Document or any
action or proceeding relating to this Agreement or any other Loan Document or
the enforcement of rights hereunder or thereunder, (f) subject to an agreement
containing provisions substantially the same as those of this Section, to
(i) any assignee of or Participant in, or any prospective assignee of or
Participant in, any of its rights and obligations under this Agreement or the
other Loan Documents or (ii) any actual or prospective party (or its Related
Parties) to any transaction under which payments are to be made by reference to
the Loan Parties and their obligations, this Agreement, the other Loan Documents
or payments hereunder or thereunder, (g) on a confidential basis to (i) any
rating agency in connection with rating any Loan Party or its Subsidiaries or
the credit facilities provided hereunder or (ii) the CUSIP Service Bureau or any
similar agency in connection with the issuance and monitoring of CUSIP numbers
or other market identifiers with respect to the credit facilities provided
hereunder, (h) with the consent of any Loan Party or any of its Affiliates,
(i) to the extent such Information (x) becomes publicly available other than as
a result of a breach of this Section 6.27(a) or (y) becomes available to any
Secured Party or any of its Affiliates on a nonconfidential basis from a source
other than the Borrower, or (j) as provided in Section 5.1(q). In addition, the
Secured Parties may disclose the existence of this Agreement and information
about this Agreement to market data collectors, similar service providers to the
lending industry and service providers to the Secured Parties in connection with
the administration of the Loans and this Agreement and the other Loan Documents.

(b) For purposes of this Section, “Information” means all information received
from a Loan Party relating to the Loan Parties or any Subsidiary or any of their
respective businesses, other than any such information that is available to
Agent or any Lender on a nonconfidential basis prior to disclosure by such Loan
Party or any Subsidiary; provided that, notwithstanding anything to the contrary
in the Loan Documents, in the case of information received from the Borrower or
any of its Subsidiaries after the date

 

90

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hereof, such Information is both (y) clearly identified at the time of delivery
as confidential and (z) provided to the Secured Parties at a time when the
Secured Parties have requested in writing to receive material nonpublic
information. Any Person required to maintain the confidentiality of Information
as provided in this Section 6.27 shall be considered to have complied with its
obligation to do so if such Person has exercised the same degree of care to
maintain the confidentiality of such Information as such Person would accord to
its own confidential information.

(c) The Loan Parties and their Affiliates agree that they will not issue any
press release announcing the transactions contemplated hereby without the prior
written consent of the Agent, unless (and only to the extent that) the Loan
Parties or such Affiliate is required to do so under Applicable Law and, in any
event the Loan Parties and their Affiliates will provide the Agent with a copy
of, and consult with the Agent before issuing, any such press release or other
public disclosure with respect to this Agreement or the other Loan Documents or
the transactions contemplated hereby or thereby and will consider in good faith
any comments of the Agent.

Section 6.28 Intercreditor Agreement.

(a) Notwithstanding anything to the contrary in this Agreement or in any other
Loan Document: (a) the Liens granted to the Agent in favor of the Secured
Parties pursuant to the Loan Documents and the exercise of any right related to
any Collateral shall be subject, in each case, to the terms of the Intercreditor
Agreement, (b) in the event of any conflict between the express terms and
provisions of this Agreement or any other Loan Document, on the one hand, and of
the Intercreditor Agreement, on the other hand, the terms and provisions of the
Intercreditor Agreement, shall control, (c) any Collateral held by (or in the
possession or control of) the ABL Agent (or its agents or bailees) shall be held
as agent and bailee for security, Lien perfection and control purposes in favor
of Agent (for the benefit of the Secured Parties) in accordance with the terms
of the Intercreditor Agreement and the Loan Documents, and (d) each Lender (and,
by its acceptance of the benefits of any Loan Document, each other Secured
Party) hereunder authorizes and instructs Agent to execute the Intercreditor
Agreement on behalf of such Lender, and such Lender agrees to be bound by the
terms thereof.

(b) Each Lender (and, by its acceptance of the benefits of any Loan Document,
each other Secured Party) hereunder authorizes and instructs the Agent, as Agent
and on behalf of such Lender or other Secured Party, to enter into one or more
intercreditor agreements (including any Intercreditor Agreement) from time to
time pursuant to, or as contemplated by, the terms of this Agreement and agrees
that it will be bound by the terms and provisions thereof and will take no
actions contrary to the terms and provisions thereof.

[SIGNATURE PAGE FOLLOWS]

 

91

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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:

ENDOLOGIX, INC.,

a Delaware corporation

By:   /s/ Vaseem Mahboob Name:   Vaseem Mahboob Title:   Chief Financial Officer
OTHER LOAN PARTIES:

CVD/RMS ACQUISITION CORP.,

a Delaware corporation

By:   /s/ Vaseem Mahboob Name:   Vaseem Mahboob Title:   Chief Financial Officer

NELLIX, INC.,

a Delaware corporation

By:   /s/ Vaseem Mahboob Name:   Vaseem Mahboob Title:   Chief Financial Officer

TRIVASCULAR TECHNOLOGIES, INC.,

a Delaware corporation

By:   /s/ Vaseem Mahboob Name:   Vaseem Mahboob Title:   Chief Financial Officer

TRIVASCULAR, INC.,

a California corporation

By:   /s/ Vaseem Mahboob Name:   Vaseem Mahboob Title:   Chief Financial Officer

[Signature Page to Facility Agreement]

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TRIVASCULAR CANADA, LLC,

a Delaware limited liability company

By:   /s/ Vaseem Mahboob Name:   Vaseem Mahboob Title:   Chief Financial Officer

[Signature Page to Facility Agreement]

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

LENDERS: 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
INTERNATIONAL MASTER 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 DEERFIELD PARTNERS, 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
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

[Signature Page to Facility Agreement]

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AGENT: 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

[Signature Page to Facility Agreement]

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ANNEX A

DISBURSEMENT AMOUNT AND WARRANTS

 

Lender

   Disbursement Amount      % of Total
Disbursement Amount     % of Total
Warrants  

Deerfield Private Design Fund III, L.P.

   $ 40,000,000        33.33 %      33.33 % 

Deerfield Private Design Fund IV, L.P.

   $ 40,000,000        33.33 %      33.33 % 

Deerfield Partners, L.P.

   $ 17,680,000        14.73 %      14.73 % 

Deerfield International Master Fund, L.P.

   $ 22,320,000        18.60 %      18.60 %    

 

 

    

 

 

   

 

 

 

Total

   $ 120,000,000.00        100 %      100 %    

 

 

    

 

 

   

 

 

 

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EXHIBIT A

FORM OF LOAN NOTE

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE
SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE
ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS OR
(B) AN OPINION OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS
NOT REQUIRED UNDER SAID ACT OR APPLICABLE STATE SECURITIES LAWS OR (II) UNLESS
SOLD PURSUANT TO RULE 144 UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE
SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER
LOAN, FINANCING OR INDEBTEDNESS ARRANGEMENT SECURED BY THE SECURITIES.

THE FOLLOWING INFORMATION IS PROVIDED PURSUANT TO TREAS. REG. SECTION 1.1275-3:
THE BORROWER (AS DEFINED BELOW) WILL MAKE AVAILABLE ON REQUEST TO HOLDER(S) OF
THIS DEBT INSTRUMENT THE FOLLOWING INFORMATION: ISSUE PRICE, AMOUNT OF ORIGINAL
ISSUE DISCOUNT, ISSUE DATE AND YIELD TO MATURITY.

THIS LOAN NOTE IS BEING ISSUED WITH ORIGINAL ISSUE DISCOUNT IN THE AMOUNT OF
$                    .1

LOAN NOTE

 

Lender:                     

  

Principal Amount: $                    

                       , 20        

FOR VALUE RECEIVED, the undersigned, Endologix, 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 and any overdue interest from and after the Agreement Date until such
outstanding principal amount of the Loan and any overdue interest 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 Non-Callable Make Whole
Amount that is due on the Loan 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 Non-Callable Make Whole Amount) are payable in
Dollars to the Lender in the manner set forth in the Facility Agreement.

This Loan Note (this “Loan Note”) is one of the “Loan Notes” and “Notes”
referred to in, and is entitled to the benefits of, the Facility Agreement,
dated as of April 3, 2017 (as the same may be amended, restated, supplemented or
otherwise modified from time to time, the “Facility Agreement”), by and among

 

1 

NTD: number to be calculated and agreed pursuant to Section 2.7 of the Facility
Agreement.

 

EX. A - 1

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

the Borrower, the other Loan Parties party thereto, the Lenders party thereto
and Deerfield Private Design Fund IV, L.P., as agent for the Secured Parties,
and the other Loan Documents. Capitalized terms used herein without definition
are used as defined in the Facility Agreement.

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 Loan Note and
(b) contains provisions for acceleration of the maturity of the unpaid principal
amount of this Loan Note upon the happening of certain stated events and also
for prepayments pursuant to Section 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 Loan 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) thereof.

This Loan Note is assignable or transferable only to the extent such assignment
or transfer is permitted pursuant to the terms of the Facility Agreement.

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 in accordance with 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 and the Facility Agreement or the performance of the
obligations under this Note and/or the Facility Agreement. No renewal or
extension of this Note or the Facility Agreement, no delay in the enforcement of
payment of this Note or the Facility Agreement, and no delay or omission in
exercising any right or power under this Note or the Facility Agreement 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 Loan 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.

[Signature Page Follows]

 

 

EX. A - 2

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

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

 

ENDOLOGIX, INC.,

a Delaware corporation

By:

 

 

Name:

 

 

Title:

 

 

 

3

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EXHIBIT B

FORM OF PERFECTION CERTIFICATE

                    , 20    

Each of the parties signatory hereto hereby represents and warrants to (i) the
Agent (as defined in the Facility Agreement defined below) and the Lenders (as
defined in the Facility Agreement defined below) with reference to that certain
Facility Agreement dated as of the date hereof, by and among the Loan Parties
(as defined in the Facility Agreement defined below), the Lenders (as defined in
the Facility Agreement defined below) party thereto, and Deerfield Private
Design Fund IV, L.P., as the Agent (as amended, restated, supplemented or
otherwise modified, the “Facility Agreement”), and (ii) the Agent (as defined in
the Credit Agreement defined below) and the Lenders (as defined in the Credit
Agreement defined below) with reference to that certain Credit and Security
Agreement dated as of the date hereof, by and among the Borrowers (as defined in
the Credit Agreement defined below; such Borrowers, collectively with the “Loan
Parties” under the Facility Agreement, are referred to as the “Loan Parties”
herein except in clause (i) above), the Lenders (as defined in the Credit
Agreement defined below) party thereto, and Deerfield ELGX Revolver, LLC, as the
Agent (as amended, restated, supplemented or otherwise modified, the “Credit
Agreement”) (terms that are not defined herein but are defined in such Facility
Agreement and/or such Credit Agreement have the same meanings herein as
specified therein, as applicable), as follows:

1. NAMES AND OTHER ORGANIZATIONAL RELATED INFORMATION OF LOAN PARTIES AND THEIR
SUBSIDIARIES

a. The name of each Loan Party and each of its Subsidiaries, as it appears in
such Loan Party’s or Subsidiary’s current Articles of Incorporation, Certificate
of Formation or similar organizational document as in effect on this date, is:

 

Entity Name

  

Parent/Subsidiary

   Sub ☐ Parent ☐ of                        Sub ☐ Parent ☐ of
                        Sub ☐ Parent ☐ of                     

b. The federal employer identification number of each Loan Party and each of its
Subsidiaries is:

 

Loan Party/Subsidiary

  

Federal Employer Identification Number

        

 

4

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c. The Loan Parties and their Subsidiaries, respectively, are formed under the
laws of the following jurisdictions:

 

Loan Party/Subsidiary

  

State/Country

     

d. The organizational identification number of each Loan Party issued by its
respective jurisdiction of formation is:

 

Loan Party

  

Organizational Identification Number

     

e. Each Loan Party, respectively, transacts business in the following
jurisdictions (list jurisdictions other than jurisdictions of formation):

 

Loan Party

  

Jurisdiction(s)

     

f. Each Loan Party, respectively, is duly qualified to transact business as a
foreign entity in the following jurisdictions (list jurisdictions other than
jurisdictions of formation):

 

Loan Party

  

Jurisdiction(s)

        

g. The following is a list of all other names (including fictitious names,
d/b/a’s, trade names or similar names and including former legal names (as
defined in Section 9-503(a) of the UCC)) currently used by a Loan Party or any
of its Subsidiaries or used by a Loan Party or any of its Subsidiaries within
the past five years:

 

Loan Party/Subsidiary

  

Name

  

Period of Use

     

 

5

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h. The following are the names of all entities which have been merged into any
Loan Party or any of its Subsidiaries during the past five years:

 

Loan Party/Subsidiary

  

Name of Merged Entity

  

Year of Merger

     

i. The following are the names and addresses of all entities from whom any Loan
Party or any of its Subsidiaries has acquired any personal property in a
transaction not in the ordinary course of business during the past five years,
together with the date of such acquisition and the type of personal property
acquired (e.g., equipment, inventory, etc.):

 

Name

  

Address

  

Date of Acquisition

  

Type of Property

        

2. LOCATIONS OF LOAN PARTIES AND THEIR SUBSIDIARIES

a. The chief executive offices of each Loan Party and each of the Loan Parties’
Subsidiaries, respectively, are presently located at the following addresses:

 

Complete Street and Mailing Address, including County and Zip Code

  

Loan Party/Subsidiary

     

b. The books and records of each Loan Party and those of their Subsidiaries,
respectively, are located at the following additional addresses (complete this
clause b only if different from clause a above):

 

Complete Street and Mailing Address, including Zip Code

  

Loan Party/Subsidiary

  

c. The following are all the locations where a Loan Party or any of the Loan
Parties’ Subsidiaries, respectively, owns or leases, or occupies any real
property:

 

Complete Mailing Address, including Zip Code

  

Leased/ Owned/ Occupied

  

Loan Party/Subsidiary

 

6

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d. The following are all of the locations where a Loan Party or any of the Loan
Parties’ Subsidiaries, respectively, maintains any inventory, equipment or other
property:

 

Complete Address

  

Loan Party/Subsidiary

     

e. The following are the names and addresses of all warehousemen, bailees, or
other third-parties who have possession of any of the Loan Parties’ inventory or
equipment or the inventory or equipment of any of the Loan Parties’
Subsidiaries:

 

Name

  

Complete Street and Mailing Address, including
Zip Code

  

Loan Party/Subsidiary

     

f. The following is a complete list of all other offices or other facilities
(other than those described above) where a Loan Party or any of the Loan
Parties’ Subsidiaries has done business in the past 5 years.

 

Complete Address

  

Loan Party/Subsidiary

  

3. INTELLECTUAL PROPERTY

a. Set forth below is a list of all patents, copyrights, trademarks, trade names
and service marks registered or for which applications are pending in the name
of a Loan Party or any of the Loan Parties’ Subsidiaries. Please include the
name of such intellectual property, the grant date or application date, as
applicable, the registration or application number, as applicable, and the
country of such registration or application.

 

Loan Party/

Subsidiary

  

Name of Intellectual
Property

  

Registered/

Application Pending

  

Grant/

Application Date

  

Registration/

Application Number

  

Country of
Registration/

Application

              

 

7

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b. Set forth below is a list of all licenses, franchise or other agreements
relating to trademarks, patents, copyrights and other know-how to which a Loan
Party or any of the Loan Parties’ Subsidiaries is a party and that require
annual payments in excess of $25,000 individually.

4. INVESTMENT PROPERTY; INSTRUMENTS; ACCOUNTS

a. The following is a complete list of all stocks, bonds, debentures, notes,
commodity contracts and other securities (as defined in Article 8 of the Uniform
Commercial Code), owned by a Loan Party or any of the Loan Parties’
Subsidiaries:

 

Name of Issuer

  

Description and Value of Security

  

Loan Party/Subsidiary

                 

b. The following are all banks and other financial institutions, securities
intermediary or commodity intermediary at which any Loan Party or any of the
Loan Parties’ Subsidiaries maintains deposit, securities, commodities or similar
accounts, which correctly identifies the name, address and any other relevant
contact information 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:

 

Bank Name

  

Address and Other

Contact Information

  

Name in Which

Account is Held

  

Purpose of Account

  

Complete Account
Number

                       

c. The following are all securities or commodity intermediaries at which a Loan
Party or any of the Loan Parties’ Subsidiaries maintains securities accounts or
commodities accounts:

 

Securities or Commodities
Intermediary Name

  

Address and Other

Contact Information

  

Name in Which

Account is Held

  

Purpose of Account

  

Complete Account
Number

           

 

8

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d. Does any Loan Party or any of the Loan Parties’ Subsidiaries or is it
contemplated that any Loan Party or any of the Loan Parties’ Subsidiaries will
regularly receive letters of credit from customers or other third parties to
secure payments of sums owed to such company?

e. The following is a list of letters of credit naming a Loan Party or any of
the Loan Parties’ Subsidiaries as “beneficiary” thereunder:

 

LC Number

  

Name of LC Issuer

  

LC Applicant

  

Loan Party/Subsidiary

        

f. The approximate aggregate total amount of funds, amounts, and other assets of
any kind in the                      Account is $                    .

5. INDEBTEDNESS

Set forth below is a list and attached hereto are copies of, all agreements,
promissory notes, indentures and other documents relating to any indebtedness
for borrowed money of a Loan Party or any of the Loan Parties’ Subsidiaries,
including without limitation loan agreements, note indentures, letters of
credit, reimbursement agreements, mortgages and guaranties of the indebtedness
for borrowed money of others.

 

Debtor

  

Creditor

  

Amount of Indebtedness
Outstanding

  

Maturity Date

6. ENCUMBRANCES

Other than the Liens already described in Section 1.j. above, the property of
the Loan Parties and/or any of the Loan Parties’ Subsidiaries is subject to the
following Liens or encumbrances:

 

Loan Party/Subsidiary

  

Name of Holder of Lien

  

Description of Property Encumbered

7. LITIGATION; COMMERCIAL TORT CLAIMS

a. The following is a complete list of pending and threatened litigation or
claims involving amounts claimed against a Loan Party or any of the Loan
Parties’ Subsidiaries in an indefinite amount or in excess of $25,000 in each
case:

 

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b. The following are the only claims (including, without limitation, commercial
tort claims) which a Loan Party or any of the Loan Parties’ Subsidiaries has
against others (other than claims on accounts receivable), which such Loan Party
or Subsidiary is asserting or intends to assert, and in which the potential
recovery exceeds $25,000:

8. TAXES

The following tax assessments against any of the Loan Parties or any of the Loan
Parties’ Subsidiaries are currently outstanding and unpaid:

 

Assessing Authority

  

Amount and Description

  

9. INSURANCE BROKER

The following brokers handle the Loan Parties’ and the Loan Parties’
Subsidiaries’ property and liability insurance:

 

Broker

  

Contact

  

Telephone

  

Fax

  

Email

           

[remainder of page intentionally left blank]

 

10

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The Loan Parties agree to advise you of any change or modification to any of the
foregoing information or any supplemental information provided on any
continuation pages attached hereto, and, until such notice is received by you,
you shall be entitled to rely upon such information and presume it is correct.
The Loan Parties acknowledge that your acceptance of this Perfection Certificate
and any continuation pages does not imply any commitment on your part to enter
into a loan transaction with the Loan Parties, and that any such commitment may
only be made by an express written loan commitment, signed by one of your
authorized officers. The Loan Parties agree that this Perfection Certificate
shall constitute a “Loan Document” under the Facility Agreement and a “Financing
Document” under the Credit Agreement.

Dated as of the date first written above

 

LOAN PARTIES:     ENDOLOGIX, INC., a Delaware corporation     By:  
                                                                                
                                          Name:       Title:       CVD/RMS
ACQUISITION CORP., a Delaware corporation     By:  
                                                                                
                                          Name:       Title:       NELLIX, INC.,
a Delaware corporation     By:                                         
                                                                               
    Name:       Title:       TRIVASCULAR TECHNOLOGIES, INC., a Delaware
corporation     By:                                         
                                                                               
    Name:       Title:  

[Signature Page to Perfection Certificate]

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LOAN PARTIES CONTINUED:     TRIVASCULAR, INC., a California corporation     By:
                                        
                                                                               
    Name:       Title:       TRIVASCULAR CANADA, LLC,     a Delaware limited
liability company     By:                                         
                                                                               
    Name:       Title:  

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EXHIBIT C

FORM OF WARRANT

THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”),
OR ANY STATE SECURITIES LAW. THE SECURITIES 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 SECTION 4(A)(7) OF THE SECURITIES ACT OR
RULE 144 UNDER THE SECURITIES ACT OR PURSUANT TO A PRIVATE SALE EFFECTED UNDER
APPLICABLE FORMAL OR INFORMAL SEC INTERPRETATION OR GUIDANCE, SUCH AS A
SO-CALLED “4[(a)](1) AND A HALF SALE.” NOTWITHSTANDING THE FOREGOING, THE
SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER
LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.

AN INVESTMENT IN THESE SECURITIES INVOLVES A HIGH DEGREE OF RISK. HOLDERS MUST
RELY ON THEIR OWN ANALYSIS OF THE INVESTMENT AND ASSESSMENT OF THE RISKS
INVOLVED.

 

Warrant to Purchase shares

   Warrant Number:                

Warrant to Purchase Common Stock

of

Endologix, Inc.

THIS CERTIFIES that                      or any subsequent holder hereof
(“Holder”) has the right to purchase from Endologix, Inc., a Delaware
corporation (the “Company”),                      (                ) fully paid
and nonassessable shares of the Company’s common stock, $0.001 par value per
share (“Common Stock”), subject to adjustment as provided herein, at a price
equal to the Exercise Price (as defined in Section 3 below), at any time during
the Term (as defined in Section 1 below).

Holder agrees with the Company that this Warrant to Purchase Common Stock of the
Company (this “Warrant” or this “Agreement”) is issued and all rights hereunder
shall be held subject to all of the conditions, limitations and provisions set
forth herein.

1. Date of Issuance and Term.

This Warrant shall be deemed to be issued on                      (“Date of
Issuance”). The term of this Warrant begins on the Date of Issuance and ends at
5:00 p.m., New York City time, on the date that is seven (7) years after the
Date of Issuance (the “Term”). This Warrant was issued pursuant to that certain
Facility Agreement (as may be amended, restated, supplemented or otherwise

 

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modified from time to time in accordance with the terms thereof, the “Facility
Agreement”) by and among the Company and Deerfield Private Design Fund III,
L.P., Deerfield Private Design Fund IV, L.P., Deerfield Partners, L.P. and
Deerfield International Master Fund, L.P., dated as of April 3, 2017, and in
conjunction with that certain Registration Rights Agreement (as may be amended,
restated, supplemented or otherwise modified from time to time in accordance
with the terms thereof, the “Registration Rights Agreement”) by and among the
Company and Deerfield Private Design Fund III, L.P., Deerfield Private Design
Fund IV, L.P., Deerfield Partners, L.P. and Deerfield International Master Fund,
L.P., dated as of April 3, 2017.

Notwithstanding anything herein to the contrary, the Company shall not issue to
Holder, and Holder may not acquire, a number of shares of Common Stock upon
exercise of this Warrant to the extent that, upon such exercise, the number of
shares of Common Stock then beneficially owned by Holder and its Affiliates and
any other persons or entities whose beneficial ownership of Common Stock would
be aggregated with Holder’s for purposes of Section 13(d) of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”) (including shares held by
any “group” of which Holder is a member, but excluding shares beneficially owned
by virtue of the ownership of securities or rights to acquire securities that
have limitations on the right to convert, exercise or purchase similar to the
limitation set forth herein), would exceed 4.985% of the total number of shares
of Common Stock then issued and outstanding (the “4.985% Cap”); provided,
however, that the 4.985% Cap shall only apply to the extent that the Common
Stock is deemed to constitute an “equity security” pursuant to Rule 13d-1(i)
promulgated under the Exchange Act. For purposes hereof, “group” has the meaning
set forth in Section 13(d) of the Exchange Act and applicable regulations of the
Securities and Exchange Commission (the “SEC”), and the percentage held by
Holder shall be determined in a manner consistent with the provisions of
Section 13(d) of the Exchange Act. Upon the written request of Holder, the
Company shall, within two (2) Trading Days, confirm orally and in writing to
Holder the number of shares of Common Stock then outstanding.

For purposes hereof:

“Affiliate” means any person or entity that, directly or indirectly through one
or more intermediaries, controls or is controlled by or is under common control
with a person or entity, as such terms are used in and construed under Rule 144
(“Rule 144”) under the Securities Act of 1933, as amended (the “Securities
Act”). With respect to a Holder, any investment fund or managed account that is
managed on a discretionary basis by the same investment manager as such Holder
shall, for purposes hereof, be deemed to be an Affiliate of such Holder.

“Asset Sale” means a transaction covered by the provisions of clause (B) of the
definition of “Major Transaction” involving the sale or transfer of all or
substantially all of the assets of the Company (including, for the avoidance of
doubt, all or substantially all of the assets of the Company and its
Subsidiaries (as defined in the Facility Agreement), taken as a whole) in
connection with which the Company has announced its intention to liquidate and
distribute its assets to stockholders.

“Black-Scholes Value” shall mean the Black-Scholes value of this Warrant, or
applicable portion thereof, as determined by use of the Black-Scholes Option
Pricing Model using the criteria set forth on Schedule 1 hereto.

 

3

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“Business Day” means a day other than a Saturday or Sunday or any other day on
which commercial banks are authorized or required by law to close in New York
City.

“Cashless Default Exercise” shall mean an exercise of this Warrant as a
“Cashless Default Exercise” in accordance with Sections 3(c) and 11(b) hereof.

“Cashless Major Exercise” shall mean an exercise of this Warrant or portion
thereof as a “Cashless Major Exercise” in accordance with Sections 3(b) and
5(b)(i) hereof.

“Cash Out Major Transaction” means a Major Transaction in which the
consideration payable to holders of Common Stock in connection with the Major
Transaction consists solely of cash.

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

“Parent Entity” of a Person means an entity that, directly or indirectly,
controls the applicable Person and whose common stock or equivalent equity
security is quoted or listed on an Eligible Market, or, if there is more than
one such Person or Parent Entity, the Person or Parent Entity with the largest
public market capitalization as of the date of consummation of a Major
Transaction.

“Person” means an individual, a limited liability company, a partnership, a
joint venture, a corporation, a trust, an unincorporated organization, any other
entity and a government or any department or agency thereof.

“Standard Settlement Period” means the standard settlement period for equity
trades effected on securities exchanges in the United States, expressed in a
number of Trading Days, as in effect on the applicable Date of Exercise (as
defined in Section 2(b)).

“Successor Entity” means any Person purchasing the Company’s assets or Common
Stock, or any successor entity resulting from such Major Transaction, or if the
Warrant is to be exercisable for shares of capital stock of a Parent Entity (as
defined above), such Person’s Parent Entity.

“Successor Major Transaction” means either a Takeout Major Transaction or an
Asset Sale.

“Successor Major Transaction Consideration” means (i) in the case of a Takeout
Major Transaction (other than a Cash Out Major Transaction), the amount of cash
and other assets and the number of securities or other property of the Successor
Entity or other entity that would be issuable in such Major Transaction, in
respect of a number of shares equal to the Successor Major Transaction
Conversion Share Amount and (ii) in the case of an Asset Sale or a Cash Out
Major Transaction, an amount of cash equal to the Black-Scholes Value of the
Warrant.

“Successor Major Transaction Conversion Share Amount” means an amount equal to
the Black-Scholes Value of the Warrant (or such applicable portion subject to a
Successor Major Transaction Conversion), divided by the closing price of the
Common Stock on the principal securities exchange or other securities market on
which the Common Stock is then traded on the Trading Day immediately preceding
the date on which the applicable Major Transaction is consummated.

 

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“Takeout Major Transaction” means a transaction covered by the provisions of
clause (A) of the definition of “Major Transaction” in which the shares of
Common Stock of the Company are converted into the right to receive cash,
securities of another entity and/or other assets.

“Trading Day” shall mean any day on which the Common Stock is traded for any
period on the NASDAQ Global Select Market (“NasdaqGS”) or, if the NasdaqGS is
not the principal trading market for the Common Stock, on the principal
securities exchange or other securities market on which the Common Stock is then
being traded; provided, however, that during any period in which the Common
Stock is not listed or quoted on the NasdaqGS or any other securities exchange
or market, the term “Trading Day” shall mean a Business Day.

2. Exercise.

(a) Manner of Exercise. During the Term (or, in respect of a Cashless Major
Exercise, the Cashless Major Exercise Period (as defined below)), this Warrant
may be Exercised as to all or any lesser number of whole shares of Common Stock
covered hereby (the “Warrant Shares” or the “Shares”) by sending to the Company
the Exercise Form attached hereto as Exhibit A-1 (the “Exercise Form”) duly
completed and executed, and, if applicable, the full Exercise Price (as defined
below, which may be satisfied by a Cash Exercise, a Cashless Exercise or a Note
Exchange Exercise, as each is defined below) for each share of Common Stock as
to which this Warrant is Exercised, at the office of the Company, 2 Musick,
Irvine, CA 92618, Attention: Chief Financial Officer; Phone: (949) 595-7200,
Email: vmahboob@endologix.com, or at such other office or agency as the Company
may designate in writing, by overnight mail or electronic mail (any such
exercise of the Warrant being hereinafter called an “Exercise” of this Warrant).

(b) Date of Exercise. The “Date of Exercise” of the Warrant shall, in each case,
be the date that the Exercise Form attached hereto as Exhibit A-1, completed and
executed, is sent by electronic mail to the Company, provided that the Exercise
Price is satisfied as soon as practicable thereafter but in no event later than
two (2) Business Days following the date of such electronic mail. Alternatively,
the Date of Exercise shall be defined as the date the original Exercise Form is
received by the Company, if Holder has not previously sent the Exercise Form by
electronic mail. Upon delivery of the Exercise Form to the Company by electronic
mail or otherwise, Holder shall be deemed for all corporate purposes to have
become the holder of record of the Warrant Shares with respect to which this
Warrant has been Exercised, irrespective of the date such Warrant Shares are
credited to Holder’s or its designee’s Depository Trust Company (“DTC”) account
or the date of delivery of the certificates evidencing such Warrant Shares, as
the case may be; provided, however, that in the event an Exercise Form in
respect of a Cashless Major Exercise is delivered prior to the occurrence of the
applicable Major Transaction, Holder shall be deemed to have become the holder
of record of the shares issuable upon such exercise immediately prior to the
consummation of such Major Transaction and the Date of Exercise shall in such
event be deemed to have occurred on the date of the occurrence of the Major
Transaction. Holder shall not be required to physically surrender this Warrant
to the Company until Holder has purchased all of the Warrant Shares available
hereunder and the Warrant has been exercised in full, in which case Holder shall
surrender this Warrant to the Company for cancellation within three (3) Trading
Days following the date the final Exercise Form is delivered to the Company.
Execution and delivery of an Exercise Form with respect to a partial Exercise
shall have the same effect as cancellation of the original Warrant and issuance
of a New Warrant evidencing the right to purchase the remaining number of
Warrant Shares.

 

5

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(c) Delivery of Common Stock Upon Exercise. Within the earlier of (x) three (3)
Trading Days and (y) the number of Trading Days comprising the Standard
Settlement Period after any Date of Exercise (but, in the case of a Cash
Exercise, within two (2) Business Days following the Company’s receipt of the
full Exercise Price, if later) or in the case of a Cashless Default Exercise (as
defined in Section 5(b) below), within the period provided in Section 3(c), as
applicable (the “Delivery Period”), the Company shall issue and deliver (or
cause its transfer agent (the “Transfer Agent”) to issue and deliver) in
accordance with the terms hereof to or upon the order of Holder that number of
shares of Common Stock (“Exercise Shares”) for the portion of this Warrant
exercised as shall be determined in accordance herewith. Upon the Exercise of
this Warrant or any part hereof, the Company shall, at its own cost and expense,
take all necessary action, including obtaining and delivering an opinion of
counsel, to assure that the Transfer Agent shall issue stock certificates in the
name of Holder (or its nominee) or such other persons as designated by Holder
and in such denominations as Holder shall specify at Exercise, representing the
number of shares of Common Stock issuable upon such Exercise. The Company
warrants that no instructions other than these instructions have been or will be
given to the Transfer Agent and that, unless waived by Holder, this Warrant and
the Exercise Shares will be free-trading, and freely transferable, and will not
contain or be subject to a legend (or be subject to any stop transfer
instruction) restricting the resale or transferability of the Exercise Shares if
the Unrestricted Conditions (as defined below) are met.

The Company shall be responsible for paying all present or future stamp, court
or documentary, intangible, recording, filing or similar taxes that arise from
any payment or issuance made under, from the execution, delivery, performance or
enforcement of, or otherwise with respect to, this Warrant.

(d) Delivery Failure. In addition to any other remedies which may be available
to Holder, in the event that the Company fails for any reason to effect delivery
of the Exercise Shares by the end of the Delivery Period (a “Delivery Failure”),
Holder will be entitled to revoke all or part of the relevant Exercise by
delivery of a notice to such effect to the Company whereupon the Company and
Holder shall each be restored to their respective positions immediately prior to
the delivery of such notice of revocation, except that the Failure Payments
under Section 10(b) shall be payable through the date such notice of revocation
is given to the Company.

(e) Legends.

(i) Restrictive Legend. Holder understands that until such time as this Warrant,
the Exercise Shares and the Failure Payment Shares (as defined below) have been
registered under the Securities Act or otherwise may be sold pursuant to
Rule 144 or an exemption from registration under the Securities Act without any
restriction as to the number of securities as of a particular date that can then
be immediately sold, this Warrant, the Exercise Shares and the Failure Payment
Shares, as applicable, may bear a restrictive legend in substantially the
following form (and a stop-transfer order consistent therewith may be placed
against transfer of the certificates for such securities):

 

6

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

“THE SALE, TRANSFER OR ASSIGNMENT OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE ARE SUBJECT TO THE TERMS AND CONDITIONS OF A CERTAIN REGISTRATION
RIGHTS AGREEMENT DATED AS OF APRIL 3, 2017, AS AMENDED FROM TIME TO TIME, AMONG
THE COMPANY AND CERTAIN HOLDERS OF ITS OUTSTANDING SECURITIES. COPIES OF SUCH
AGREEMENT MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDER OF
RECORD OF THIS CERTIFICATE TO THE SECRETARY OF THE COMPANY.”

(ii) Removal of Restrictive Legends. This Warrant and the certificates (or
electronic book entries, if applicable) evidencing the Exercise Shares and the
Failure Payment Shares, as applicable, shall not contain or be subject to any
legend restricting the transfer thereof (including the legend set forth above in
subsection 2(e)(i)) or be subject to any stop-transfer instructions: (A) while a
registration statement (including a Registration Statement, as defined in the
Registration Rights Agreement) covering the sale or resale of such security is
effective under the Securities Act, or (B) following any sale of such Warrant,
Exercise Shares and/or Failure Payment Shares pursuant to Rule 144, or (C) if
such Warrant, Exercise Shares and/or Failure Payment Shares are eligible for
sale under Rule 144(b)(1), or (D) if such legend is not required under
applicable requirements of the Securities Act (including judicial
interpretations and pronouncements issued by the staff of the SEC)
(collectively, the “Unrestricted Conditions”). The Company shall cause its
counsel to issue a legal opinion to the Transfer Agent promptly after the
Effective Date, or at such other time as any of the Unrestricted Conditions have
been met, if required by the Transfer Agent to effect the issuance of this
Warrant, the Exercise Shares or the Failure Payment Shares, as applicable,
without a restrictive legend or removal of the legend hereunder. If any of the
Unrestricted Conditions are met at the time of issuance of this Warrant, the
Exercise Shares or the Failure Payment Shares, then such Warrant, Exercise
Shares or Failure Payment Shares, as applicable, shall be issued free of all
legends and stop-transfer instructions. The Company agrees that following the
Effective Date, or at such time as the Unrestricted Conditions are met or such
legend is otherwise no longer required under this Section 2(e), it will, no
later than the earlier of (x) three (3) Trading Days and

 

7

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(y) the number of Trading Days comprising the Standard Settlement Period
following the delivery (the “Unlegended Shares Delivery Deadline”) by Holder to
the Company or the Transfer Agent of this Warrant and a certificate representing
Exercise Shares and/or Failure Payment Shares, as applicable, issued with a
restrictive legend (such third Trading Day, the “Legend Removal Date”), deliver
or cause to be delivered to Holder this Warrant and/or a certificate (or
electronic transfer) representing such shares that is free from all restrictive
and other legends (and stop transfer instructions). For purposes hereof,
“Effective Date” shall mean the date that the first Registration Statement that
the Company is required to file pursuant to the Registration Rights Agreement
has been declared effective by the SEC.

(iii) Sale of Unlegended Shares. Holder agrees that the removal of the
restrictive legend from this Warrant and any certificates representing
securities as set forth in Section 2(e) above is predicated upon the Company’s
reliance that Holder will sell this Warrant or any Exercise Shares and/or any
Failure Payment Shares, as applicable, pursuant to either the registration
requirements of the Securities Act, including any applicable prospectus delivery
requirements, or an exemption therefrom, and that if such securities are sold
pursuant to a Registration Statement, they will be sold in compliance with the
plan of distribution set forth therein.

(f) Cancellation of Warrant. This Warrant shall be canceled upon the full
Exercise of this Warrant, and, as soon as practical after the Date of Exercise,
Holder shall be entitled to receive Common Stock for the number of shares
purchased upon such Exercise of this Warrant, and if this Warrant is not
Exercised in full, Holder shall be entitled to receive a new Warrant (containing
terms identical to this Warrant) representing any unexercised portion of this
Warrant in addition to such Common Stock; provided, however, as set forth in
Section 2(b), Holder shall not be required to physically surrender this warrant
if the Warrant is not Exercised in full.

(g) Holder of Record. Each person in whose name any Warrant for shares of Common
Stock is issued shall, for all purposes, be deemed to be Holder of record of
such shares on the Date of Exercise, irrespective of the date of delivery of the
Common Stock purchased upon the Exercise of this Warrant. Prior to the exercise
of this Warrant, nothing in this Warrant shall be construed as conferring upon
Holder any rights as a stockholder of the Company.

(h) Delivery of Electronic Shares. In lieu of delivering physical certificates
representing the Common Stock issuable upon Exercise or legend removal, or
representing Failure Payment Shares, upon written request of Holder, the Company
shall use its best efforts to cause the Transfer Agent to electronically
transmit the Common Stock issuable upon Exercise to Holder by crediting the
account of Holder’s prime broker with DTC through its Deposit/Withdrawal at
Custodian (DWAC) system. The time periods for delivery and penalties described
herein shall apply to the electronic transmittals described herein. Any delivery
not effected by electronic transmission shall be effected by delivery of
physical certificates.

(i) Buy-In. In addition to any other rights or remedies available to Holder
hereunder or otherwise at law or in equity, if the Company fails to cause its
Transfer Agent to deliver to Holder a certificate or certificates, or electronic
shares through DWAC, representing the Exercise Shares pursuant to an Exercise on
or before the last day of the Delivery Period (other than a failure caused by
any incorrect or incomplete information provided by Holder to the Company
hereunder), and if after such date Holder is required by its broker to purchase
(in an open market transaction or

 

8

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otherwise) or Holder or Holder’s brokerage firm otherwise purchases shares of
Common Stock to deliver in satisfaction of a sale by Holder of the Exercise
Shares which Holder was entitled to receive upon such Exercise (a “Buy-In”),
then the Company shall (1) pay in cash to Holder the amount by which
(x) Holder’s total purchase price (including brokerage commissions, if any) for
the shares of Common Stock so purchased exceeds (y) the amount obtained by
multiplying (A) the number of Exercise Shares that the Company was required to
deliver to Holder in connection with the Exercise at issue by (B) the price at
which the sell order giving rise to such purchase obligation was executed, and
(2) at the option of Holder, either reinstate the portion of the Warrant and
equivalent number of Exercise Shares for which such Exercise was not honored
(and refund the Exercise Price therefor, to the extent paid by Holder, and/or
reinstate the principal amount of any indebtedness used to satisfy the
applicable Exercise Price) or deliver to Holder the number of shares of Common
Stock that would have been issued had the Company timely complied with its
Exercise and delivery obligations hereunder. For example, if Holder purchases
Common Stock having a total purchase price of $11,000 to cover a Buy-In with
respect to an attempted Exercise to cover the sale of Common Stock with an
aggregate sale price giving rise to such purchase obligation of $10,000, under
clause (1) of the immediately preceding sentence the Company shall be required
to pay Holder $1,000. Holder shall provide the Company written notice indicating
the amounts payable to Holder in respect of the Buy-In, together with applicable
confirmations and other evidence reasonably requested by the Company. Nothing
herein shall limit Holder’s right to pursue any other remedies available to it
hereunder, at law or in equity including a decree of specific performance and/or
injunctive relief with respect to the Company’s failure to timely deliver
certificates representing shares of Common Stock upon Exercise of the Warrant as
required pursuant to the terms hereof.

(j) HSR Submissions. If Holder determines that, in connection with the exercise
of this Warrant, it and the Company are required to file Premerger Notification
Reports with the Federal Trade Commission (the “FTC”) and the United States
Department of Justice (“DOJ”) and observe the Waiting Period under the
Hart-Scott Rodino Antitrust Improvements Act of 1976, as amended, and the
related rules and regulations promulgated thereunder (collectively, the “HSR
Act”), the Company agrees to (i) cooperate with Holder in Holder’s preparing and
making such submission and any responses to inquiries of the FTC and DOJ;
(ii) prepare and make any submission required to be filed by the Company under
the HSR Act and respond to inquiries of the FTC and DOJ in connection therewith;
and (iii) reimburse Holder for the cost of the required filing fee for Holder’s
submission under the HSR Act. For the avoidance of doubt, Holder shall bear all
of its other costs and expenses in connection with such submission, including
any attorneys’ fees associated therewith.

3. Payment of Warrant Exercise Price for Cash Exercise or Cashless Exercise;
Cashless Major Exercise and Cashless Default Exercise.

(a) Exercise Price. The exercise price shall initially equal
$                     per share, subject to adjustment pursuant to the terms
hereof (as so adjusted, the “Exercise Price”), including but not limited to
Section 5 below.

Payment of the Exercise Price may be made by either of the following, or a
combination thereof, at the election of Holder:

 

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(i) Cash Exercise: Holder may exercise this Warrant in cash, bank or cashier’s
check or wire transfer (a “Cash Exercise”);

(ii) Cashless Exercise: In lieu of paying all or any portion of the Exercise
Price in cash, Holder, at its option, may exercise this Warrant (in whole or in
part) on a cashless basis by making appropriate notation on the applicable
Exercise Form, in which event the Company shall issue Holder a number of shares
of Common Stock computed using the following formula (a “Cashless Exercise”):

X = Y (A-B)/A

where: X = the number of shares of Common Stock to be issued to Holder.

Y = the number of shares of Common Stock for which this Warrant is being
Exercised.

A = the Market Price of one (1) share of Common Stock (for purposes of this
Section 3(a)(ii), where “Market Price,” as of any date, means the Volume
Weighted Average Price (as defined herein) of the Company’s Common Stock over
the ten (10) consecutive Trading Day period immediately preceding the Date of
Exercise or other date in question, as applicable.

B = the Exercise Price.

As used herein, the “Volume Weighted Average Price” for any security as of any
date means the volume weighted average sale price on the NasdaqGS as reported
by, or based upon data reported by, Bloomberg Financial Markets or an
equivalent, reliable reporting service mutually acceptable to and hereafter
designated by holders of a majority in interest of the Warrants and the Company
(“Bloomberg”) or, if the NasdaqGS is not the principal trading market for such
security, the volume weighted average sale price of such security on the
principal securities exchange or trading market where such security is listed or
traded as reported by Bloomberg, or, if no volume weighted average sale price is
reported for such security, then the last closing trade price of such security
as reported by Bloomberg, or, if no last closing trade price is reported for
such security by Bloomberg, the average of the bid prices of any market makers
for such security that are listed or quoted on the OTC Bulletin Board, the OTCQX
Market, the OTCQB Market or on the “pink” market of OTC Markets Group Inc. 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 Company and Holders of a
majority in interest of the Warrants being Exercised for which the calculation
of the volume weighted average price is required in order to determine the
Exercise Price of such Warrants.

(iii) Note Exchange Exercise: In lieu of paying all or any portion of the
Exercise Price in cash, Holder, at its option, may exercise this Warrant (in
whole or in part) through a reduction of an amount of principal outstanding
under any Notes in accordance with Section 2.3(b) of the Facility Agreement,
then held by Holder (a “Note Exchange Exercise”)

 

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For purposes of Rule 144 and subsection (d)(3)(ii) thereof, it is intended,
understood and acknowledged that the Common Stock issuable upon Exercise of this
Warrant in a Cashless Exercise transaction or a Note Exchange Exercise
transaction shall be deemed to have been acquired at the time this Warrant was
issued (in the case of a Cashless Exercise) or at the time the applicable Note
was issued (in the case of a Note Exchange Exercise). Moreover, it is intended,
understood and acknowledged that the holding period for the Common Stock
issuable upon Exercise of this Warrant in a Cashless Exercise transaction or a
Note Exchange Exercise transaction shall be deemed to have commenced on the date
this Warrant was issued (in the case of a Cashless Exercise) or on the date the
applicable Note was issued (in the case of a Note Exchange Exercise). As
provided in Section 2(b), Holder shall only be required to physically surrender
this Warrant in the event that Holder is exercising this Warrant in full.

(b) Cashless Major Exercise. To the extent Holder shall exercise this Warrant as
a Cashless Major Exercise pursuant to Section 5(b)(i) and 5(b)(iii) below,
Holder shall send to the Company (in any manner permitted under Section 2(a))
the Exercise Form indicating that Holder is exercising this Warrant (or any
portion thereof) pursuant to a Cashless Major Exercise, in which event the
Company shall issue a number of shares of Common Stock equal to the
Black-Scholes Value of the Warrant (or such applicable portion being exercised)
divided by the closing price of the Common Stock on the principal securities
exchange or other securities market on which the Common Stock is then traded on
the Trading Day immediately preceding the date on which the applicable Major
Transaction is consummated, or, if in respect of a Cashless Major Exercise made
after the date of consummation of the applicable Major Transaction, on the
Trading Day immediately preceding the date on which the exercise form in respect
of such Cashless Major Exercise is delivered. As provided in Section 2(b),
Holder shall only be required to physically surrender this Warrant in the event
that Holder is exercising this Warrant in full. Holder shall be permitted to
make successive Cashless Major Exercises and send successive Exercise Forms in
respect of a Cashless Major Exercise from time to time at any time during the
Cashless Major Exercise Period.

(c) Cashless Default Exercise. To the extent Holder exercises this Warrant as a
Cashless Default Exercise pursuant to Section 11(b)(i) below, Holder shall send
to the Company (in any manner permitted under Section 2(a)) the Exercise Form
indicating that Holder is exercising this Warrant pursuant to a Cashless Default
Exercise, in which event the Company shall issue to Holder, within five
(5) Trading Days of the applicable Default Notice, a number of shares of Common
Stock (which shares shall be valued at the closing price of the Common Stock on
the principal securities exchange or other securities market on which the Common
Stock is then traded on the Trading Day immediately preceding the date on which
the Exercise Form in respect of such Cashless Default Exercise is delivered)
equal to the Black-Scholes Value of the remaining unexercised portion of this
Warrant (or such portion thereof subject to such exercise) as of the date of
such Default Notice (or in the case of an Event of Default referred to in
Section 11(a)(vi), on the Trading Day immediately preceding the date the
dividend or distribution is declared or, if not first declared, is paid). As
provided in Section 2(b), the Holder shall be permitted to make successive
Cashless Default Exercises and send successive Exercise Forms in respect of a
Cashless Default Exercise, from time to time at any time from and after the date
of the applicable Default Notice through the Term of this Warrant.

 

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(d) Dispute Resolution. In the case of a dispute as to the determination of the
closing price or the Volume Weighted Average Price of the Company’s Common Stock
or the arithmetic calculation of the Exercise Price, Market Price or the
Successor Major Transaction Consideration, or the number of shares issuable upon
a Cashless Major Exercise, the Company shall submit the disputed determinations
or arithmetic calculations via electronic mail within two (2) Business Days of
receipt, or deemed receipt, of the Exercise Form or Major Transaction Early
Termination Notice, or other event giving rise to such dispute, as the case may
be, to Holder. If Holder and the Company are unable to agree upon such
determination or calculation within two (2) Business Days of such disputed
determination or arithmetic calculation being submitted to Holder, then the
Company shall, within two (2) Business Days submit via electronic mail (i) the
disputed determination of the closing price or the Volume Weighted Average Price
of the Company’s Common Stock to an independent, reputable investment bank
selected by the Company and approved by Holder, which approval shall not be
unreasonably withheld, or (ii) the disputed arithmetic calculation of the
Exercise Price, Market Price, any Successor Major Transaction Consideration or
number of shares issuable upon a Cashless Major Exercise to the Company’s
independent, outside registered public accountants. The Company shall use its
reasonable best efforts to cause the investment bank or the accountants, as the
case may be, to perform the determinations or calculations and notify the
Company and Holder of the results no later than five (5) Trading Days from the
time it receives the disputed determinations or calculations. Such investment
bank’s or accountants’ determination or calculation, as the case may be, shall
be binding upon all parties absent demonstrable error, and the Company and
Holder shall each pay one half of the fees and costs of such investment banker
or accountant. Notwithstanding the existence of a dispute contemplated by this
paragraph, if requested by Holder, the Company shall issue to Holder the
Exercise Shares not in dispute in accordance with the terms hereof.

4. Transfer and Registration.

(a) Transfer Rights. Subject to the provisions of Section 8 of this Warrant,
this Warrant may be transferred on the books of the Company, in whole or in
part, in person or by attorney, upon surrender of this Warrant properly
completed and endorsed. This Warrant shall be canceled upon such surrender and,
as soon as practicable thereafter, the person to whom such transfer is made
shall be entitled to receive a new Warrant or Warrants as to the portion of this
Warrant transferred, and Holder shall be entitled to receive a new Warrant as to
the portion hereof retained.

(b) Registrable Securities. The Common Stock issuable upon the Exercise of this
Warrant entitles Holder (and applicable assignees or transferees of such Common
Stock) to registration and other rights pursuant to the Registration Rights
Agreement.

5. Adjustments Upon Certain Events.

(a) Recapitalization or Reclassification. If the Company shall at any time
effect a stock split, payment of stock dividend, recapitalization,
reclassification or other similar transaction of such character that the shares
of Common Stock shall be changed into or become exchangeable for a larger or
smaller number of shares, then upon the effective date thereof, the number of
shares of Common Stock which Holder shall be entitled to purchase upon Exercise
of this Warrant, shall be increased or decreased, as the case may be, in direct
proportion to the increase or decrease in the number of shares of Common Stock
by reason of such stock split, payment of stock dividend,

 

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recapitalization, reclassification or similar transaction, and the Exercise
Price shall be, in the case of an increase in the number of shares,
proportionally decreased and, in the case of decrease in the number of shares,
proportionally increased. The Company shall give Holder the same notice it
provides to holders of Common Stock of any transaction described in this
Section 5(a).

(b) Rights Upon Major Transaction.

(i) Major Transaction. In the event that a Major Transaction occurs, then (1) in
the case of a Successor Major Transaction, Holder, at its option, may elect to
cause the conversion of this Warrant (a “Successor Major Transaction
Conversion”), in whole or in part, into the right to receive the Successor Major
Transaction Consideration, upon consummation of the Major Transaction, and
(2) in the case of all other Major Transactions, Holder shall have the right to
exercise this Warrant (or any portion thereof), at any time and from time to
time following the occurrence of such event, as a Cashless Major Exercise. In
the event Holder shall not have exercised any of its rights under clauses (1) or
(2) above within the applicable time periods set forth herein, then the Major
Transaction shall be treated as an Assumption (as defined below) in accordance
with Section 5(b)(ii) below unless Holder waives its rights under this Section
5(b) with respect to such Major Transaction. Each of the following events shall
constitute a “Major Transaction”:

(A) a consolidation, merger, exchange of shares, recapitalization,
reorganization, business combination or other similar event, (1) following which
the holders of Common Stock immediately preceding such consolidation, merger,
exchange, recapitalization, reorganization, combination or event either (a) no
longer hold a majority of the shares of Common Stock or (b) no longer have the
ability to elect a majority of the board of directors of the Company or (2) as a
result of which shares of Common Stock shall be changed into (or the shares of
Common Stock become entitled to receive) the same or a different number of
shares of the same or another class or classes of stock or securities of the
Company or another entity (collectively, a “Change of Control Transaction”);

(B) the sale or transfer, in one transaction or a series of related
transactions, of (I) all or substantially all of the assets of the Company
(including, for the avoidance of doubt, all or substantially all of the assets
of the Company and its Subsidiaries, taken as a whole) to any Person other than
a wholly-owned subsidiary of the Company or (II) assets of the Company
(including, for the avoidance of doubt, all or substantially all of the assets
of the Company and its Subsidiaries, taken as a whole) for a purchase price
equal to more than 50% of the Equity Value (as defined below) of the Company.
For purposes of this clause (B), “Equity Value” shall mean (I) the product of
(x) the number of issued and outstanding shares of Common Stock on the date the
Company delivers the Major Transaction Notice (defined below) multiplied by
(y) the per share closing price of the Common Stock on such date on the NasdaqGS
as reported by, or based upon data reported by, Bloomberg or, if the NasdaqGS is
not the principal trading market for such security, the closing sale price of
such security on the principal securities exchange or trading market where such
security is listed or traded as reported by Bloomberg;

 

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(C) a purchase, tender or exchange offer made to the holders of outstanding
shares of Common Stock, such that following such purchase, tender or exchange
offer a Change of Control Transaction shall have occurred;

(D) the liquidation, bankruptcy, insolvency, dissolution or winding-up (or the
occurrence of any analogous proceeding) affecting the Company;

(E) the shares of Common Stock cease to be listed, traded or publicly quoted on
the NasdaqGS and are not promptly re-listed or requoted on the New York Stock
Exchange, the NYSE MKT, the NASDAQ Global Market or the NASDAQ Capital Market;
or

(F) the Common Stock ceases to be registered under Section 12 of the Exchange
Act.

(ii) Assumption. Any assumption of Company obligations under this paragraph
shall be referred to herein as an “Assumption.” Unless otherwise provided in
writing by Holder, the Company shall not consummate a Major Transaction in which
the Company is not the surviving entity or as a result of which the Company has
a new Parent Entity, unless (A) each Person acquiring the Company’s assets or
Common Stock (or Parent Entity thereof, as applicable), or any other successor
entity resulting from such Major Transaction (in each case, a “Successor
Entity”), assumes in writing all of the obligations of the Company under this
Warrant, the Facility Agreement (but, other than with respect to the Company’s
obligations pursuant to Section 5.1(e) and 5.1(p) of the Facility Agreement and
the other provisions of the Facility Agreement that expressly survive the
repayment of the Loans (which shall be assumed in any Assumption), only if there
are outstanding Loans under the Facility Agreement immediately following the
consummation of the Major Transaction) and the Registration Rights Agreement in
accordance with the provisions of this Section 5(b)(ii) pursuant to written
agreements in form and substance reasonably satisfactory to Holder and approved
by Holder prior to the consummation of such Major Transaction (such approval not
to be unreasonably withheld or delayed), including agreements to deliver to
Holder in exchange for its Warrants a security of the Successor Entity evidenced
by a written instrument substantially similar in form and substance to the
Warrants, that, among other things, (1) is exercisable for the appropriate
number of shares of the Successor Entity’s capital stock (without regard to the
4.985% Cap or any other restriction or limitation on exercise, provided that
such instrument shall contain a limitation on exercise comparable to that
contained in the second paragraph of Section 1 of this Warrant), (2) has an
exercise price similar to the then-effective Exercise Price (taking into account
any conversion or exchange ratio applicable to the Common Stock in the Major
Transaction) and exercise price adjustment provisions similar to those in the
Warrants; or (3) entitles Holder to such additional securities or other
consideration as Holder would be entitled pursuant to Section 5(b)(i) in
connection with the Major Transaction; and (4) provides for registration rights
similar to those provided by the Registration Rights Agreement, in each case
reasonably satisfactory to Holder, and (B) the Successor Entity (including

 

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its Parent Entity) is a publicly traded corporation whose common stock is quoted
on or listed for trading on an Eligible Market. For the avoidance of doubt,
Holders’ reasonable satisfaction referred to in the immediately preceding
sentence shall be construed only to apply to confirmation that the warrant or
other comparable security and registration rights agreement delivered to Holder
upon an assumption hereunder shall conform to the requirements of this
Section 5(b)(ii), and this Section 5(b)(ii) shall not be construed as granting
consent or approval rights to Holder with respect to the terms of such Major
Transaction or to permit Holder to demand any additional consideration in
respect of this Warrant other than as provided herein. Upon the occurrence of
any Major Transaction, any Successor Entity shall succeed to, and be substituted
for (so that from and after the date of such Major Transaction, the provisions
of this Warrant and the Registration Rights Agreement referring to the “Company”
shall refer instead to the Successor Entity), and may exercise every right and
power of the Company and shall assume all of the obligations of the Company
under this Warrant with the same effect as if such Successor Entity had been
named as the Company herein. Upon consummation of the Major Transaction, the
Successor Entity shall deliver to Holder confirmation that there shall be issued
upon exercise of this Warrant at any time after the consummation of the Major
Transaction, in lieu of the shares of Common Stock (or other securities, cash,
assets or other property) issuable upon the exercise of the Warrants prior to
such Major Transaction, such shares of publicly traded common stock (or their
equivalent) of the Successor Entity, as adjusted in accordance with the
provisions of this Warrant. The provisions of this Section shall apply similarly
and equally to successive Major Transactions and shall be applied without regard
to any limitations on the exercise of this Warrant other than any applicable
beneficial ownership limitations.

(iii) Major Transaction Notice; Major Transaction Early Termination Right;
Notice of Cashless Major Exercise. At least thirty (30) days prior to the
consummation of any Major Transaction, but, in any event, within five
(5) Trading Days following the first to occur of (x) the date of the public
announcement of such Major Transaction if such announcement is made before 4:00
p.m., New York City time, or (y) the day following the public announcement of
such Major Transaction if such announcement is made on and after 4:00 p.m., New
York City time, the Company shall deliver written notice thereof via electronic
mail and overnight courier to Holder (a “Major Transaction Notice”). At any time
during the period beginning after Holder’s receipt of a Major Transaction Notice
in respect of a Successor Major Transaction and ending five (5) Trading Days
prior to the consummation of such Major Transaction (the “Early Termination
Period”), Holder may elect a Successor Major Transaction Conversion by
delivering written notice thereof (“Major Transaction Early Termination Notice”)
to the Company, which Major Transaction Early Termination Notice shall indicate
the portion of the Warrant (with reference to the number of shares of Common
Stock issuable upon a Cash Exercise of such portion, without regard to the
4.985% Cap) that Holder is electing to be treated as a Successor Major
Transaction Conversion. The portion of this Warrant subject to early termination
pursuant to this Section 5(b)(iii), shall be converted into the right to receive
the Successor Major Transaction Consideration

To the extent Holder shall elect to effect a Cashless Major Exercise in respect
of a Major Transaction, Holder shall deliver its Exercise Form in accordance
with Section 3(b), at any time and from time to time following receipt by Holder
of the Major Transaction Notice until the later of (x) the Term of this Warrant
and (y) the one-year anniversary of the applicable Major Transaction (the
“Cashless Major Exercise Period”). For the avoidance of doubt, Holder shall be
permitted to make successive Cashless Major Exercises and send successive
Exercise Forms in respect of a Cashless Major Exercise from time to time at any
time during the Cashless Major Exercise Period.

 

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(iv) Escrow; Payment of Successor Major Transaction Consideration. Following the
receipt of a Major Transaction Early Termination Notice in respect of a
Successor Major Transaction from Holder, the Company shall not effect a
Successor Major Transaction with respect to which Holder has elected a Successor
Major Transaction Conversion unless either (A) it obtains, as a condition
precedent to such Major Transaction, the written agreement of the Successor
Entity that payment of the Successor Major Transaction Consideration shall be
made to Holder concurrently with consummation of such Successor Major
Transaction, or (B) it shall place the Successor Major Transaction Consideration
into an escrow account with an independent escrow agent, and shall instruct the
escrow agent to deliver the Successor Major Transaction Consideration to Holder,
concurrently with the consummation of the Major Transaction. Notwithstanding
clauses (A) and (B) above, Holder shall be treated on a pari passu basis with,
and shall not have priority to payments to, the holders of Common Stock in
connection with a Major Transaction. For purposes of determining the amount
required to be placed in escrow pursuant to the provisions of this subsection
(iv) and without affecting the amount of the actual Successor Major Transaction
Consideration, the calculation of the price referred to in clause (1) of the
first column of Schedule 1 hereto with respect to Stock Price shall be
determined based on the Closing Market Price (as defined on Schedule I) of the
Common Stock on the Trading Day immediately preceding the date that the
Successor Major Transaction Consideration is deposited with the escrow agent.

(v) Injunction. Following the receipt of a Major Transaction Early Termination
Notice from Holder, in the event that the Company attempts to consummate a
Successor Major Transaction without either (1) placing the Successor Major
Transaction Consideration in escrow in accordance with subsection (iv) above, or
(2) obtaining the written agreement of the Successor Entity as described in
subsection (iv) above, Holder shall have the right to apply for an injunction in
any state or federal court sitting in the City of New York, Borough of Manhattan
to prevent the closing of such Major Transaction until the Successor Major
Transaction Consideration is delivered to Holder.

An early termination required by this Section 5(b) shall be made in accordance
with the provisions of Section 12. To the extent an early termination required
by this Section 5(b) is deemed or determined by a court of competent
jurisdiction to be prepayments of the Warrant by the Company, such early
termination shall be deemed to be voluntary prepayments. Notwithstanding
anything to the contrary in this Section 5, until the Successor Major
Transaction Consideration is paid in full, this Warrant may be exercised, in
whole or in part, by Holder into shares of Common Stock, or in the event the
Exercise Date is after the consummation of the Major Transaction, shares of
publicly traded common stock (or their equivalent) of the Successor Entity
pursuant to Section 5(b). The parties hereto agree that in the event of the
Company’s early termination of any portion of the Warrant under this
Section 5(b), Holder’s damages would be uncertain and difficult to estimate
because of the parties’ inability to predict future interest rates and the
uncertainty of the availability of a suitable substitute investment opportunity
for Holder. Accordingly, any premium due under this Section 5(b) is intended by
the parties to be, and shall be deemed, a commercially reasonable estimate of
Holder’s actual loss of its investment opportunity and not as a penalty.

 

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(c) Exercise Price Adjusted. As used in this Warrant, the term “Exercise Price”
shall mean the purchase price per share specified in Section 3(a) of this
Warrant, until the occurrence of an event stated in this Section 5 or otherwise
set forth in this Warrant, and thereafter shall mean said price as adjusted from
time to time in accordance with the provisions of said subsection. No adjustment
made pursuant to any provision of this Section 5 shall have the net effect of
increasing the aggregate Exercise Price payable hereunder or, except as
expressly provided in Section 5(a), otherwise increasing the Exercise Price.

(d) Adjustments: Additional Shares, Securities or Assets. In the event that at
any time, as a result of an adjustment made pursuant to this Section 5 or
otherwise, Holder shall, upon Exercise of this Warrant, become entitled to
receive shares and/or other securities or assets (other than Common Stock) then,
wherever appropriate, all references herein to shares of Common Stock shall be
deemed to refer to and include such shares and/or other securities or assets;
and thereafter the number of such shares and/or other securities or assets shall
be subject to adjustment from time to time in a manner and upon terms as nearly
equivalent as practicable to the provisions of this Section 5.

(e) Notice of Adjustments. Whenever the Exercise Price and/or number or type of
securities issuable upon Exercise is adjusted pursuant to the terms of this
Warrant, the Company shall promptly mail to Holder a notice (an “Exercise Price
Adjustment Notice”) setting forth the Exercise Price and/or number or type of
securities issuable upon Exercise after such adjustment and setting forth a
statement of the facts requiring such adjustment. The Company shall, upon the
written request at any time of Holder, furnish to Holder a like Warrant setting
forth (i) such adjustment or readjustment, (ii) the Exercise Price at the time
in effect and (iii) the number of shares of Common Stock and the amount, if any,
of other securities or property which at the time would be received upon
Exercise of the Warrant. For purposes of clarification, whether or not the
Company provides an Exercise Price Adjustment Notice pursuant to this
Section 5(e), upon the occurrence of any event that leads to an adjustment of
the Exercise Price, Holder would be entitled to receive a number of Exercise
Shares based upon the new Exercise Price, as adjusted, for exercises occurring
on or after the date of such adjustment, regardless of whether Holder accurately
refers to the adjusted Exercise Price in the Exercise Form.

6. Fractional Interests.

No fractional shares or scrip representing fractional shares shall be issuable
upon the Exercise of this Warrant, but on Exercise of this Warrant, Holder may
purchase only a whole number of shares of Common Stock. If, on Exercise of this
Warrant, Holder would be entitled to a fractional share of Common Stock or a
right to acquire a fractional share of Common Stock, such fractional share shall
be disregarded and the number of shares of Common Stock issuable upon Exercise
shall be the next higher whole number of shares.

7. Reservation of Shares.

From and after the date hereof, the Company shall at all times reserve for
issuance such number of authorized and unissued shares of Common Stock (or other
securities substituted therefor as herein above provided) as shall be sufficient
for the Exercise of this Warrant and payment of the Exercise Price. If at any
time the number of shares of Common Stock authorized and reserved for issuance

 

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is below the number of shares sufficient for the Exercise of this Warrant (a
“Share Authorization Failure”) (based on the Exercise Price in effect from time
to time), the Company will promptly take all corporate action necessary to
authorize and reserve a sufficient number of shares, including calling a special
meeting of stockholders to authorize additional shares to meet the Company’s
obligations under this Section 7, in the case of an insufficient number of
authorized shares, and using its best efforts to obtain stockholder approval of
an increase in such authorized number of shares. The Company covenants and
agrees that upon the Exercise of this Warrant, all shares of Common Stock
issuable upon such Exercise shall be duly and validly issued, fully paid and
nonassessable and not subject to preemptive rights, rights of first refusal or
similar rights of any Person. The Company covenants and agrees that all shares
of Common Stock issuable upon Exercise of this Warrant shall be approved for
listing on the NasdaqGS, or, if the NasdaqGS is not the principal trading market
for the Common Stock, such principal market on which the Common Stock is traded
or listed.

B. Restrictions on Transfer.

(a) Registration or Exemption Required. This Warrant has been issued in a
transaction exempt from the registration requirements of the Securities Act by
virtue of Section 4(a)(2) of the Securities Act and Rule 506 thereunder and
exempt from registration or qualification under applicable state securities (or
“blue sky”) laws. None of the Warrant, the Exercise Shares or Failure Payment
Shares may be pledged, transferred, sold or assigned except pursuant to an
effective registration statement or an exemption to the registration
requirements of the Securities Act and applicable state laws, including Section
4(a)(7) of the Securities Act or a so-called “4[(a)](1) and a half” transaction.

(b) Assignment. Subject to Section 8(a), Holder may sell, transfer, assign,
pledge, or otherwise dispose of this Warrant, in whole or in part. Holder shall
deliver a written notice to the Company, substantially in the form of the
Assignment attached hereto as Exhibit B, indicating the Person or Persons to
whom the Warrant shall be assigned and the respective number of warrants to be
assigned to each assignee. The Company shall effect the assignment within three
(3) Business Days of its receipt of a completed and executed form of Assignment
(the “Transfer Delivery Period”), and shall deliver to the assignee(s)
designated by Holder a Warrant or Warrants of like tenor and terms entitling
Holder to purchase the appropriate number of shares. This Warrant and the rights
evidenced hereby shall inure to the benefit of and be binding upon the
successors and assigns of Holder. The provisions of this Warrant are intended to
be for the benefit of all Holders from time to time of this Warrant, and shall
be enforceable by any such Holder. For avoidance of doubt, in the event Holder
notifies the Company that such sale or transfer is a so called “4[(a)](1) and
half” transaction, the parties hereto agree that a legal opinion from outside
counsel for Holder delivered to counsel for the Company substantially in the
form attached hereto as Exhibit C shall be the only requirement to satisfy an
exemption from registration under the Securities Act to effectuate such
“4[(a)](1) and half” transaction.

9. Noncircumvention.

The Company hereby covenants and agrees that the Company will not, by amendment
of its certificate of incorporation, bylaws or through any reorganization,
transfer of assets, consolidation, merger, scheme of arrangement, dissolution,
issue or sale of securities, or any other

 

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voluntary action, avoid or seek to avoid the observance or performance of any of
the terms of this Warrant, and will at all times in good faith carry out all the
provisions of this Warrant and take all action as may be required to protect the
rights of Holder. Without limiting the generality of the foregoing, the Company
(i) shall not increase the par value of any shares of Common Stock receivable
upon the exercise of this Warrant above the Exercise Price then in effect, and
(ii) shall take all such actions as may be necessary or appropriate in order
that the Company may validly and legally issue fully paid and nonassessable
shares of Common Stock upon the exercise of this Warrant.

10. Events of Failure; Definition of Black Scholes Value.

(a) Definition.

The occurrence of each of the following shall be considered to be an “Event of
Failure.”

(i) A Delivery Failure occurs, where a “Delivery Failure” shall be deemed to
have occurred if the Company fails to use its best efforts to deliver Exercise
Shares to Holder within any applicable Delivery Period (other than due to the
limitation contained in the second paragraph of Section 1);

(ii) A Legend Removal Failure occurs, where a “Legend Removal Failure” shall be
deemed to have occurred if the Company fails to use its best efforts to issue
this Warrant and/or Exercise Shares without a restrictive legend, or fails to
use it best efforts to remove a restrictive legend, when and as required under
Section 2(e) hereof;

(iii) a Transfer Delivery Failure occurs, where a “Transfer Delivery Failure”
shall be deemed to have occurred if the Company fails to use its best efforts to
deliver a Warrant within any applicable Transfer Delivery Period; and

(iv) a Registration Failure (as defined below).

For purpose hereof, “Registration Failure” means that (A) the Company fails to
file with the SEC on or before the Filing Deadline (as defined in the
Registration Rights Agreement) any Registration Statement required to be filed
pursuant to Section 2(a) of the Registration Rights Agreement, (B) the Company
fails to use its reasonable best efforts to obtain effectiveness with the SEC,
prior to the Registration Deadline (as defined in the Registration Rights
Agreement), and if such Registration Statement does not become effective prior
to the Registration Deadline, as soon as possible thereafter, of any
Registration Statement (as defined in the Registration Rights Agreement) that is
required to be filed pursuant to Section 2(a) of the Registration Rights
Agreement, or fails to use its reasonable best efforts to keep such Registration
Statement current and effective as required in Section 3 of the Registration
Rights Agreement, (C) the Company fails to file any additional Registration
Statement required to be filed pursuant to Section 2(a)(ii) of the Registration
Rights Agreement on or before the Additional Filing Deadline or fails to use its
reasonable best efforts to cause such new Registration Statement to become
effective on or before the Additional Registration Deadline, and if such
effectiveness does not occur within such period, as soon as possible thereafter,
(D) the Company fails to file any amendment to any Registration Statement, or
any additional Registration Statement required to be filed pursuant to
Section 3(b) of the Registration Rights Agreement within thirty (30) days of the
applicable Registration Trigger Date (as defined in the Registration Rights
Agreement), or fails to use its reasonable best efforts to cause such amendment
and/or new Registration Statement to become effective within ninety

 

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(90) days of the applicable Registration Trigger Date, and, if such
effectiveness does not occur within such period, as soon as possible thereafter,
(E) any Registration Statement required to be filed under the Registration
Rights Agreement, after its initial effectiveness and during the Registration
Period (as defined in the Registration Rights Agreement), lapses in effect or,
other than on a day during an Allowable Grace Period (as defined in the
Registration Rights Agreement), sales of all of the Registrable Securities (as
defined in the Registration Rights Agreement) cannot otherwise be made
thereunder (whether by reason of the Company’s failure to amend or supplement
the prospectus included therein in accordance with the Registration Rights
Agreement, the Company’s failure to file and use its reasonable best efforts to
obtain effectiveness with the SEC of an additional Registration Statement or
amended Registration Statement required pursuant to Sections 2(a)(ii) or 3(b) of
the Registration Rights Agreement, as applicable, or otherwise), or (F) the
Company fails to provide a commercially reasonable written response to any
comments to any Registration Statement submitted by the SEC within twenty-five
(25) days of the date that such SEC comments are received by the Company.

(b) Failure Payments; Black-Scholes Determination. The Company understands that
any Event of Failure (as defined above) could result in economic loss to Holder.
In the event that any Event of Failure occurs, as compensation to Holder for
such economic loss, the Company agrees to pay to Holder an amount payable, at
the Company’s option, either (i) in cash or (ii) in shares of Common Stock that
are valued for these purposes at the Volume Weighted Average Price on the date
of such calculation (“Failure Payments” and such shares, “Failure Payment
Shares”), in each case equal to the total economic loss of Holder determined on
a commercially reasonable basis in connection with such Event of Failure for the
relevant period (as recalculated on the first Business Day of each month
thereafter for as long as Failure Payments shall continue to accrue) from the
date of such Event of Failure until the Event of Failure is cured; provided,
however, that in the event the Company elects to make Failure Payments in
Failure Payment Shares, the Company shall issue, and Holder shall only receive,
up to such number of shares of Common Stock in respect of Failure Payments such
that Holder and any other persons or entities whose beneficial ownership of
Common Stock would be aggregated with Holder’s for purposes of Section 13(d) of
the Exchange Act (including shares held by any “group” of which Holder is a
member, but excluding shares beneficially owned by virtue of the ownership of
securities or rights to acquire securities that have limitations on the right to
convert, exercise or purchase similar to the limitation set forth herein) shall
not collectively beneficially own greater than 4.985% of the total number of
shares of Common Stock of the Company then issued and outstanding, and the
balance of such Failure Payments shall be paid in cash. For purposes of
clarification, it is agreed and understood that Failure Payments shall continue
to accrue following any Event of Default until the applicable Default Amount is
paid in full. The Company shall satisfy any Failure Payments under this Section
pursuant to Section 10(c) below. Failure Payments are in addition to any Shares
that Holder is entitled to receive upon Exercise of this Warrant.

(c) Payment of Accrued Failure Payments. The Failure Payments and Failure
Payment Shares representing accrued Failure Payments for each Event of Failure
shall be paid or issued and delivered, as the case may be, on or before the
fifth (5th) Business Day of each month following a month in which Failure
Payments accrued. Nothing herein shall limit Holder’s right to pursue actual
damages (to the extent in excess of the Failure Payments) for the Company’s
Event of Failure, and Holder shall have the right to pursue all remedies
available at law or in equity (including a decree of specific performance and/or
injunctive relief). Notwithstanding the above, if

 

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a particular Event of Failure results in an Event of Default pursuant to
Section 11 hereof, then the Failure Payment, for that Event of Failure only,
shall be considered to have been satisfied upon payment to Holder of an amount
equal to the greater of (i) the Failure Payment, or (ii) the Default Amount,
payable in accordance with Section 11.

(d) Maximum Interest Rate. Nothing contained herein or in any document referred
to herein or delivered in connection herewith shall be deemed to establish or
require the payment of a rate of interest or other charges in excess of the
maximum permitted by applicable law. In the event that the rate of interest or
dividends required to be paid or other charges hereunder exceed the maximum
permitted by such law, any payments in excess of such maximum shall be credited
against amounts owed by the Company to Holder and thereby refunded to the
Company.

11. Default.

(a) Events Of Default. Each of the following events shall be considered to be an
“Event of Default,” unless waived by Holder:

(i) Failure To Effect Registration. With respect to all Registration Failures, a
Registration Failure occurs and remains uncured for a period of more than
forty-five (45) days (or sixty (60) days in the case where the Company (i) has,
by the Filing Deadline (as defined the Registration Rights Agreement) filed a
Registration Statement (as defined in the Registration Rights Agreement)
covering this Warrant and the number of shares required by the Registration
Rights Agreement, and (ii) has responded in writing to any comments to the
Registration Statement that the Company has received from the SEC, within ten
(10) Business Days of such receipt, and nevertheless the SEC has not declared
effective a Registration Statement covering the this Warrant and the Shares by
the Registration Deadline (as defined in the Registration Rights Agreement)),
and such Registration Failure relates solely to the Company’s failure to have
the Registration Statement declared effective by the Registration Deadline (as
defined in the Registration Rights Agreement) and with respect to a Registration
Failure provided in clause (E) of the definition of “Registration Failure,” such
Registration Failure occurs and remains uncured for a period of more than
forty-five (45) days.

(ii) Failure To Deliver Common Stock. A Delivery Failure (as defined above)
occurs and remains uncured for a period of more than twenty (20) days; or at any
time, the Company announces or states in writing that it will not honor its
obligations to issue shares of Common Stock to Holder upon Exercise by Holder of
the Exercise rights of Holder in accordance with the terms of this Warrant.

(iii) Legend Removal Failure. A Legend Removal Failure (as defined above) occurs
and remains uncured for a period of twenty (20) days;

(iv) Transfer Delivery Failure. A Transfer Delivery Failure (as defined above)
occurs and remains uncured for a period of twenty (20) days;

(v) Corporate Existence; Major Transaction. (A) The Company has failed to
(1) place the Successor Major Transaction Consideration into escrow and instruct
the escrow agent to release the Successor Major Transaction Consideration to the
Holder pursuant to Section 5(b)(iii), or (2) obtain the written agreement of the
Successor Entity and cause the Successor Entity to make

 

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payment as described in Section 5(b)(iii), (B) the Successor Major Transaction
Consideration is not paid contemporaneously with the consummation of the
Successor Major Transaction, or (C) with respect to a Major Transaction that is
to be treated as an Assumption under the terms hereof, the Company has failed to
meet the Assumption requirements of Section 5(b)(i); or

(vi) Section 13 Breach. During the Dividend Restriction Period, the Company
declares or pays any dividend or distribution of any kind to the holders of
Common Stock of the Company.

(b) Mandatory Early Termination.

(i) Mandatory Early Termination Amount; Cashless Default Exercise. The Company
shall notify Holder in writing within two (2) Business Days of the occurrence of
an Event of Default. If any Events of Default shall occur then, at the option of
Holder, such option exercisable through the delivery of written notice to the
Company by such Holder (the “Default Notice”), the Company shall have the right
to terminate the outstanding amount of this Warrant and pay to Holder (a
“Mandatory Early Termination”), in full satisfaction of its obligations
hereunder by delivery of a notice to such effect to Holder within two
(2) Business Days following receipt of the Default Notice, an amount payable in
cash (the “Mandatory Early Termination Amount” or the “Default Amount”) equal to
the Black-Scholes Value of the remaining unexercised portion of this Warrant on
the date of such Default Notice (or in the case of an Event of Default referred
to in Section 11(a)(vi), on the Trading Day immediately preceding the date the
dividend or distribution is declared or, if not first declared, is paid). In the
event the Company does not exercise its right to consummate a Mandatory Early
Termination, then Holder shall have the right to exercise this Warrant, at any
time and from time to time, pursuant to a Cashless Default Exercise in
accordance with Section 3(c) above.

The Mandatory Early Termination Amount shall be payable within five (5) Business
Days following the date of the applicable Default Notice.

(ii) Liquidated Damages. The parties hereto acknowledge and agree that the sums
payable as Failure Payments or pursuant to a Mandatory Early Termination shall
constitute partial liquidated damages and not penalties. The parties further
acknowledge that (i) the amount of loss or damages likely to be incurred by
Holder is incapable or is difficult to precisely estimate, (ii) the amounts
specified bear a reasonable proportion and are not plainly or grossly
disproportionate to the probable loss likely to be incurred by Holder, and
(iii) the parties are sophisticated business parties and have been represented
by sophisticated and able legal and financial counsel and negotiated this
Agreement at arm’s length.

Upon the occurrence of an Event of Default, the Default Amount, together with
all other amounts payable hereunder, shall immediately become due and payable,
all without demand, presentment or notice, all of which hereby are expressly
waived, together with all costs, including legal fees and expenses, of
collection, and Holder shall be entitled to exercise all other rights and
remedies available at law or in equity.

(c) Posting Of Bond. In the event that any Event of Default occurs hereunder,
the Company may not raise as a legal defense (in any Lawsuit, as defined below,
or otherwise) or justification to such Event of Default any claim that such
Holder or any one associated or affiliated

 

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with such Holder has been engaged in any violation of law, unless the Company
has posted a surety bond (a “Surety Bond”) for the benefit of such Holder in the
amount of 130% of the aggregate Surety Bond Value (as defined below) of all of
Holder’s Warrants (the “Bond Amount”), which Surety Bond shall remain in effect
until the completion of litigation of the dispute and the proceeds of which
shall be payable to such Holder to the extent Holder obtains judgment.

For purposes hereof, a “Lawsuit” shall mean any lawsuit, arbitration or other
dispute resolution filed by either party herein pertaining to any of this
Warrant, the Facility Agreement, the Registration Rights Agreement or any other
Loan Document (as defined in the Facility Agreement).

“Surety Bond Value,” for the Warrants shall mean 130% of the of the
Black-Scholes Value of the remaining unexercised portion of this Warrant on the
Trading Day immediately preceding the date that such bond goes into effect.

(d) Injunction And Posting Of Bond. In the event that the Event of Default
referred to in subsection (a) of this Section 11 pertains to the Company’s
failure to deliver unlegended shares of Common Stock to Holder pursuant to a
Warrant Exercise, legend removal request, or otherwise, the Company may not
refuse such unlegended share delivery based on any claim that such Holder or any
one associated or affiliated with such Holder has been engaged in any violation
of law, unless an injunction from a court, on prior notice to Holder,
restraining and or enjoining Exercise of all or part of said Warrant shall have
been sought and obtained by the Company and the Company has posted a Surety Bond
for the benefit of such Holder in the amount of the Bond Amount, which Surety
Bond shall remain in effect until the completion of litigation of the dispute
and the proceeds of which shall be payable to such Holder to the extent Holder
obtains judgment.

(e) Remedies, Other Obligations, Breaches And Injunctive Relief. The remedies
provided in this Warrant shall be cumulative and in addition to all other
remedies available under this Warrant, the Facility Agreement, the Registration
Rights Agreement and any other Loan Document, at law or in equity (including a
decree of specific performance and/or other injunctive relief), and nothing
herein shall limit the right of Holder to pursue actual damages for any failure
by the Company to comply with the terms of this Warrant. The Company
acknowledges that a breach by it of its obligations hereunder will cause
irreparable harm to Holder and that the remedy at law for any such breach may be
inadequate. The Company therefore agrees that, in the event of any such breach
or threatened breach (including a breach or threatened breach of Section 13),
the holder of this Warrant shall be entitled, in addition to all other available
remedies, to an injunction restraining any breach, without the necessity of
showing economic loss and without any bond or other security being required.

12. Holder’s Early Terminations.

(a) Mechanics of Holder’s Early Terminations. In the event that the Company does
not deliver the applicable Successor Major Transaction Consideration or Default
Amount or the Exercise Shares in respect of an election of a Successor Major
Transaction Conversion, Cashless Major Exercise, Cashless Default or Exercise,
as the case may be, to Holder within the time period or as otherwise required
pursuant to the terms hereof, at any time thereafter Holder shall have the

 

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option, upon notice to the Company, in lieu of an election of a Successor Major
Transaction Conversion, Cashless Major Exercise, Cashless Default Exercise or
Exercise, as the case may be, to require the Company to promptly return to
Holder all or any portion of this Warrant that was submitted for election of a
Successor Major Transaction Conversion, Cashless Major Exercise, Cashless
Default Exercise or Exercise, as the case may be. Upon the Company’s receipt of
such notice, (x) the applicable election of Successor Major Transaction
Conversion, Cashless Major Exercise, Cashless Default Exercise or Exercise, as
the case may be, shall be null and void with respect to such applicable portion
of this Warrant, (y) the Company shall immediately return this Warrant, or issue
a new Warrant to Holder representing the portion of this Warrant that was
submitted for election of Successor Major Transaction Conversion, Cashless Major
Exercise, Cashless Default Exercise or Exercise, as the case may be, and (z) the
Exercise Price of this Warrant or such new Warrant shall be adjusted to the
Exercise Price as in effect on the date on which the applicable election of
Successor Major Transaction Conversion, Cashless Major Exercise, Cashless
Default Exercise or Exercise, as the case may be, is voided. Holder’s delivery
of a notice voiding an election of a Successor Major Transaction Conversion,
Cashless Major Exercise, Cashless Default Exercise or Exercise, as the case may
be, and exercise of its rights following such notice shall not affect the
Company’s obligations to make any Failure Payments which have accrued prior to
the date of such notice with respect to the Warrant subject to such notice.

13. Dividend Restrictions.

Until the earlier of the expiration of the Term and the date Holder Exercises
this Warrant in full (the “Dividend Restriction Period”), the Company shall not
declare or pay any dividend or distribution of any kind to the holders of Common
Stock of the Company.

14. Benefits of this Warrant.

Nothing in this Warrant shall be construed to confer upon any person other than
the Company and Holder any legal or equitable right, remedy or claim under this
Warrant and this Warrant shall be for the sole and exclusive benefit of the
Company and Holder.

15. Governing Law.

All questions concerning the construction, validity, enforcement and
interpretation of this Agreement shall be governed by and construed and enforced
in accordance with the internal laws of the State of New York, without regard to
the principles of conflicts of law thereof. Each party agrees that all legal
proceedings concerning the interpretations, enforcement and defense of the
transactions contemplated by this Agreement (whether brought against a party
hereto or its respective affiliates, directors, officers, stockholders,
employees or agents) shall be commenced exclusively in the state and federal
courts sitting in the City of New York, Borough of Manhattan. Each party hereby
irrevocably submits to the exclusive jurisdiction of the state and federal
courts sitting in the City of New York, borough of Manhattan for the
adjudication of any dispute hereunder or in connection herewith 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, that
such suit, action or proceeding is improper or is an inconvenient venue for such
proceeding. Each party hereby

 

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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 hereby waive all rights to a trial by jury. If either party shall
commence an action or proceeding to enforce any provisions of this Agreement,
then the prevailing party in such action or proceeding shall be reimbursed by
the other party for its reasonable attorneys’ fees and other costs and expenses
incurred with the investigation, preparation and prosecution of such action or
proceeding.

16. Loss of Warrant.

Upon receipt by the Company of evidence of the loss, theft, destruction or
mutilation of this Warrant, and (in the case of loss, theft or destruction) of
indemnity or security reasonably satisfactory to the Company, and upon surrender
and cancellation of this Warrant, if mutilated, the Company shall execute and
deliver a new Warrant of like tenor and date.

17. Notice or Demands.

Except as otherwise provided herein, notices or demands pursuant to this Warrant
to be given or made by Holder to or on the Company shall be sufficiently given
or made if sent by overnight delivery with a nationally recognized overnight
courier service, certified or registered mail, return receipt requested, postage
prepaid, and addressed, until another address is designated in writing by the
Company, to the address set forth in Section 2(a) above. To the extent any
notice or demand pursuant to this Warrant can be made by electronic mail, such
notice or demand given or made by Holder to or on the Company shall be
sufficiently given or made if it is sent by electronic mail to the addresses
that the Company shall designate in writing from time to time. Notices or
demands pursuant to this Warrant to be given or made by the Company to or on
Holder shall be sufficiently given or made if sent by overnight delivery with a
nationally recognized overnight courier service or certified or registered mail,
return receipt requested, postage prepaid, and addressed, to the address of
Holder set forth in the Company’s records, until another address is designated
in writing by Holder.

18. Construction.

Unless the context otherwise requires, (a) all references to Articles, Sections,
Schedules or Exhibits are to Articles, Sections, Schedules or Exhibits contained
in or attached to this Warrant, (b) words in the singular or plural include the
singular and plural and pronouns stated in either the masculine, the feminine or
neuter gender shall include the masculine, feminine and neuter and (c) the use
of the word “including” in this Warrant shall be by way of example rather than
limitation.

19. Signatures.

In the event that any signature to this Warrant or any amendment hereto is
delivered by electronic mail delivery of a “.pdf” format data file, such
signature shall create a valid and binding obligation of the party executing (or
on whose behalf such signature is executed) with the same force and effect as if
such “.pdf” signature page were an original thereof. Notwithstanding the
foregoing, the

 

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Company shall be obligated to deliver to Holder an original signature to this
Warrant. At the request of any party, each other party shall promptly re-execute
an original form of this Warrant or any amendment hereto and deliver the same to
the other party. No party hereto shall raise the use of electronic mail delivery
of a “.pdf” format data file to deliver a signature to this Warrant or any
amendment hereto or the fact that such signature was transmitted or communicated
through the use of electronic mail delivery of a “.pdf” format data file as a
defense to the formation or enforceability of a contract, and each party hereto
forever waives any such defense.

 

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

 

ENDOLOGIX, INC. By:  

 

  Print Name:   Title:

 

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EXHIBIT A-1

EXERCISE FORM FOR WARRANT

TO: [                    ]

CHECK THE APPLICABLE BOX:

 

☐    Cash Exercise, Cashless Exercise or Note Exchange Exercise   

The undersigned hereby irrevocably exercises Warrant Number          (the
“Warrant”) with respect to [            ] shares of Common Stock (the “Common
Stock”) of Endologix, Inc., a Delaware corporation (the “Company”). [IF
APPLICABLE: The undersigned hereby encloses $         as payment of the Exercise
Price.]

 

☐ The undersigned is exercising the Warrant with respect to [            ]
shares of Common Stock pursuant to a Cashless Exercise, and hereby makes payment
of the Exercise Price with respect to such shares in full, all in accordance
with the conditions and provisions of the Warrant applicable to such Cashless
Exercise.

 

☐ The undersigned is exercising the Warrant with respect to [            ]
shares of Common Stock pursuant to a Note Exchange Exercise. The undersigned
hereby agrees to cancel $         of principal outstanding under Notes of the
Company held by Holder in satisfaction of the Exercise Price in accordance with
the conditions and provisions of the Warrant applicable to such Note Exchange
Exercise.

 

☐   

Cashless Major Exercise

 

The undersigned hereby irrevocably exercises the Warrant with respect to
        % of the Warrant currently outstanding pursuant to a Cashless Major
Exercise in accordance with the terms of the Warrant.

 

☐   

Cashless Default Exercise

 

The undersigned hereby irrevocably exercises the Warrant pursuant to a Cashless
Default Exercise, in accordance with the terms of the Warrant.

1. The undersigned requests that any stock certificates for such shares be
issued free of any restrictive legend, if appropriate, and, if requested by the
undersigned, a warrant representing any unexercised portion hereof be issued,
pursuant to the Warrant in the name of the undersigned and delivered to the
undersigned at the address set forth below.

2. Capitalized terms used but not otherwise defined in this Exercise Form shall
have the meaning ascribed thereto in the Warrant.

Dated:                     

 

 

Signature

 

 

Print Name

 

 

Address

 

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NOTICE

The signature to the foregoing Exercise Form must correspond to the name as
written upon the face of the attached Warrant in every particular, without
alteration or enlargement or any change whatsoever.

 

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EXHIBIT B

ASSIGNMENT

(To be executed by the registered holder

desiring to transfer the Warrant)

FOR VALUE RECEIVED, the undersigned holder of the attached warrant (the
“Warrant”) hereby sells, assigns and transfers unto the person or persons below
named the right to purchase                      shares of the Common Stock of
[                    ], a Delaware corporation, evidenced by the attached
Warrant and does hereby irrevocably constitute and appoint                     
attorney to transfer the said Warrant on the books of the Company, with full
power of substitution in the premises.

 

Dated:                     

   

 

    Signature

 

Fill in for new registration of Warrant:

 

Name

 

Address

 

Please print name and address of assignee

(including zip code number)

NOTICE

The signature to the foregoing Assignment must correspond to the name as written
upon the face of the attached Warrant in every particular, without alteration or
enlargement or any change whatsoever.

 

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EXHIBIT C

FORM OF OPINION

            , 20        

[                    ]

Re: [                ] (the “Company”)

Dear Sir:

[                    ] (“[                    ]”) intends to transfer
                     Warrants (the “Warrants”) of the Company
to                     (“                    ”) without registration under the
Securities Act of 1933, as amended (the “Securities Act”). In connection
therewith, we have examined and relied upon the truth of representations
contained in an Investor Representation Letter attached hereto and have examined
such other documents and issues of law as we have deemed relevant.

Based on and subject to the foregoing, we are of the opinion that the transfer
of the Warrants by                      to                      may be effected
without registration under the Securities Act, provided, however, that the
Warrants to be transferred to                      contain a legend restricting
its transferability pursuant to the Securities Act and that transfer of the
Warrants is subject to a stop order.

The foregoing opinion is furnished only to                      and may not be
used, circulated, quoted or otherwise referred to or relied upon by you for any
purposes other than the purpose for which furnished or by any other person for
any purpose, without our prior written consent.

Very truly yours,

 

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[FORM OF INVESTOR REPRESENTATION LETTER]

            , 20        

[                    ]

Gentlemen:

                     (“        ”) has agreed to purchase                     
Warrants (the “Warrants”) of [                ] (the “Company”) from
[                     ] (“[                     ]”). We understand that the
Warrants are “restricted securities.” We represent and warrant that
                     is a sophisticated institutional investor that would
qualify as an “Accredited Investor” as defined in Rule 501 of Regulation D under
the Securities Act of 1933, as amended (the “Securities Act”).

             represents and warrants as of the date hereof as follows:

1. That it is acquiring the Warrants and the shares of common stock, $0.001 par
value per share underlying such Warrants (the “Exercise Shares”) solely for its
account for investment and not with a view to or for sale or distribution of
said Warrants or Exercise Shares or any part thereof in violation of the
Securities Act.                      also represents that the entire legal and
beneficial interests of the Warrants and Exercise Shares                      is
acquiring is being acquired for, and will be held for, its account only;

2. That the Warrants and the Exercise Shares must be held indefinitely unless
they are registered under the Securities Act or an exemption from such
registration is available.                      recognizes that the Company has
no obligation to register the Warrants, or to comply with any exemption from
such registration;

3. That neither the Warrants nor the Exercise Shares may be sold pursuant to
Rule 144 adopted under the Securities Act unless certain conditions are met;

We acknowledge that the Company will place stop orders with respect to the
Warrants and the Exercise Shares, and if a registration statement is not
effective, the Exercise Shares shall bear the following restrictive legend:

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

“THE SALE, TRANSFER OR ASSIGNMENT OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE ARE SUBJECT TO THE TERMS AND CONDITIONS OF A CERTAIN REGISTRATION
RIGHTS AGREEMENT DATED AS OF APRIL 3, 2017, AS AMENDED FROM TIME TO TIME, AMONG
THE COMPANY AND CERTAIN HOLDERS OF ITS OUTSTANDING SECURITIES. COPIES OF SUCH
AGREEMENT MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDER OF
RECORD OF THIS CERTIFICATE TO THE SECRETARY OF THE COMPANY.”

 

32

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At any time and from time to time after the date hereof,                     
shall, without further consideration, execute and deliver to
[                     ] or the Company such other instruments or documents and
shall take such other actions as they may reasonably request to carry out the
transactions contemplated hereby.

Very truly yours,

 

33

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Schedule 1

Black-Scholes Value

 

   Calculation Under Sections 3(b) and 5(b)(iii)    Calculation Under
Section 10(b) or 11(b) Remaining Term    Number of calendar days from date of
public announcement of the Major Transaction until the last date on which the
Warrant may be exercised.    Number of calendar days from the date of the Event
of Failure, or in the case of an Event of Default, the date of the Default
Notice, until the last date on which the Warrant may be exercised. Interest Rate
   A risk-free interest rate corresponding to the US$ LIBOR/Swap rate for a
period equal to the Remaining Term.    A risk-free interest rate corresponding
to the US$ LIBOR/Swap rate for a period equal to the Remaining Term. Cost to
Borrow    Zero    Zero Volatility   

If the first public announcement of the Major Transaction is made at or prior to
4:00 p.m., New York City time, the arithmetic mean of the historical volatility
for the 10, 30 and 50 Trading Day periods ending on the date of such first
public announcement, obtained from the HVT or similar function on Bloomberg.

 

If the first public announcement of the Major Transaction is made after 4:00
p.m., New York City time, the arithmetic mean of the historical volatility for
the 10, 30 and 50 Trading Day periods ending on the next succeeding Trading Day
following the date of such first public announcement, obtained from the HVT or
similar function on Bloomberg.

   The arithmetic mean of the historical volatility for the 10, 30 and 50
Trading Day periods ending on the date of such determination, obtained from the
HVT or similar function on Bloomberg. Stock Price    As selected by Holder in
its commercially reasonable discretion in order to produce a commercially
reasonable result, any of: (1) the closing price of the Common Stock on NYSE,
or, if that is not the principal trading market for the Common Stock, such
principal market on which the Common Stock is traded or listed (the “Closing
Market Price”) on the Trading Day immediately preceding the date on which a
Major Transaction is consummated, (2) the first Closing Market Price following
the first public announcement of a Major Transaction, (3) the Closing Market
Price as of the date immediately preceding the first public announcement of the
Major Transaction or (4) the cash amount payable per share of Common Stock. The
Company and Holder acknowledge and agree that any of the above will produce a
commercially reasonable result.    The volume Weighted Average Price on the date
of such determination. Dividends    Zero.    Zero. Strike Price    Exercise
Price as defined in section 3(a).    Exercise Price as defined in section 3(a).

 

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

EXHIBIT D

DEERFIELD / ENDOLOGIX

CLOSING CHECKLIST

Facility Agreement Parties:

 

Term Borrower    Endologix, Inc., a Delaware corporation Term Guarantors
(collectively with the Term Borrower, the “Loan Parties”)    See attached
Schedule A Term Lenders    Deerfield Private Design Fund IV, L.P.; Deerfield
International Master Fund, L.P.; Deerfield Partners, L.P.; and Deerfield Private
Design Fund III, L.P. Term Agent    Deerfield Private Design Fund IV, L.P.
Katten    Katten Muchin Rosenman LLP, Counsel to Term Agent SYCR    Stradling
Yocca Carlson & Rauth, P.C., Counsel to the Loan Parties

ABL Agreement Parties:

 

ABL Borrowers (also referred to as the “Credit Parties”)    Endologix, Inc., a
Delaware corporation, and as listed on attached Schedule A ABL Lender   
Deerfield ELGX Revolver, LLC ABL Agent    Deerfield ELGX Revolver, LLC Katten   
Katten Muchin Rosenman LLP, Counsel to ABL Agent SYCR    Stradling Yocca
Carlson & Rauth, P.C., Counsel to the Credit Parties

FACILITY AGREEMENT DOCUMENTS AND DELIVERABLES:

 

    

Document

  

Responsible

Party

  

Signatures

  

Status

A.    DEBT DOCUMENTS – AGREEMENTS 1.    Facility Agreement    Katten   

☐ Term Borrower

☐ Term Guarantors

☐ Term Agent

☐ Term Lenders

   Final and Executed 2.    Annexes to Facility Agreement          3.   
Disbursement Amount and Warrants    Katten    N/A    In final form 4.   
Schedules to Facility Agreement          5.    Schedule P-1—Existing Investments
   Loan
Parties/SYCR    N/A    In final form 6.    Schedule 2.4—List of Agreement Date
Lenders and Such Lenders’ Wire Instructions and Information for Notices   
Katten/Agent    N/A    In final form

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

    

Document

  

Responsible

Party

  

Signatures

  

Status

7.    Schedule 3.1(d)—Existing Liens    Loan
Parties/SYCR    N/A    In final form 8.    Schedule 3.1(f)—Existing Indebtedness
   Loan
Parties/SYCR    N/A    In final form 9.    Schedule 3.1(h)—Litigation    Loan
Parties/SYCR    N/A    In final form 10.    Schedule 3.1(m)—Real Estate    Loan
Parties/SYCR    N/A    In final form 11.    Schedule 3.1(x)—Borrower’s
Subsidiaries    Loan
Parties/SYCR    N/A    In final form 12.    Schedule 3.1(z)—Borrower’s
Outstanding Shares of Stock, Options and Warrants    Loan
Parties/SYCR    N/A    In final form 13.    Schedule 3.1(aa)—Material Contracts
   Loan
Parties/SYCR    N/A    In final form 14.    Schedule 3.1(dd)—Environmental   
Loan
Parties/SYCR    N/A    In final form 15.    Schedule 3.1(ff)—Labor Relations   
Loan
Parties/SYCR    N/A    In final form 16.    Schedule 3.1(gg)—Jurisdiction of
Organization, Legal Name, Organizational Identification Number and Chief
Executive Office    Loan
Parties/SYCR    N/A    In final form 17.    Schedule 5.1(y)—Post-Closing
Requirements    Loan
Parties/SYCR    N/A    In final form 18.    Schedule 5.2(iv)—Contingent
Obligations    Loan
Parties/SYCR    N/A    In final form 19.    Schedule 5.2(vii)—Transactions with
Affiliates    Loan
Parties/SYCR    N/A    In final form 20.    Exhibits to Facility Agreement      
   21.    Exhibit A—Form of Loan Note    Katten    N/A    In final form 22.   
Exhibit B—Form of Perfection Certificate    Katten    N/A    In final form 23.
   Exhibit C—Form of Warrant    Katten    N/A    In final form 24.    Exhibit
D—Closing Checklist    Katten    N/A    25.    Exhibit E—Form of Registration
Rights Agreement    Katten    N/A    In final form 26.    Exhibit F—Form of
Compliance Certificate    Katten    N/A    In final form 27.    Original Notes
in favor of each Term Lender    Katten    ☐ Term Borrower    Final and Executed
28.    Guaranty and Security Agreement    Katten   

☐ Term Borrower

☐ Term Guarantors

☐ Term Agent

   Final and Executed 29.    Schedules to Guaranty and Security Agreement   
SYCR      

 

4

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

    

Document

  

Responsible

Party

  

Signatures

  

Status

30.    Schedule 1–Pledged Equity and Pledged Debt Instruments    Loan
Parties/SYCR    N/A    In final form 31.    Schedule 1A—Pledged Investmetn
Property    Loan
Parties/SYCR    N/A    In final form 32.    Schedule 2—Filings and Perfection   
Loan
Parties/SYCR    N/A    In final form 33.    Schedule 3—Grantor Information   
Loan
Parties/SYCR    N/A    In final form 34.    Schedule 4—Places of
Business/Location of Collateral    Loan
Parties/SYCR    N/A    In final form 35.    Schedule 5—Commercial Tort Claims   
Loan
Parties/SYCR    N/A    In final form 36.    Perfection Certificate    Katten
(form)/Loan Parties/SYCR (substance)   

☐ Term Borrower

☐ Term Guarantors

   Final and Executed 37.    Original Warrants in favor of each Term Lender   
Katten    ☐ Term Borrower    Final and Executed 38.    Registration Rights
Agreement    Katten   

☐ Term Borrower

☐ Term Lenders

   Final and Executed 39.    UCC-1 Financing Statements for each Loan Party   
Katten    N/A    In final form 40.    Patent Security Agreement(s)    Katten   

☐ Applicable Term Borrower(s)

☐ Term Agent

   Final and Executed 41.    Schedule to Patent Security Agreement(s)    SYCR   
   In final form 42.    Trademark Security Agreement(s)    Katten   

☐ Applicable Term Borrower(s)

☐ Term Agent

   Final and Executed 43.    Schedule to Trademark Security Agreement(s)    SYCR
      In final form 44.    Receipt by ABL Agent of original Certificates for
certificated Equity Interests and Equity Interests Powers and Language in
Intercreditor Agreement that ABL Agent is holding such Collateral also on behalf
of Term Agent for the benefit of Term Agent and Term Lenders    Katten/SYCR   
   Process confirmed 45.    Executed Insurance Certificates of the Loan Parties
and their Subsidiaries evidencing liability and casualty insurance, naming Term
Agent on behalf of the Secured Parties as additional insured (liability
insurance) or lender’s loss payee (casualty insurance) and providing for 30
days’ prior written notice before any such policy may be modified or cancelled
(or 10 days’ prior written notice in the case of failure to pay any premiums
thereunder)    SYCR    ☐ Insurance Broker (for insurance certificates)    In
final form

 

5

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

    

Document

  

Responsible

Party

  

Signatures

  

Status

46.    Intercreditor Agreement    Katten   

☐ Term Borrower

☐ ABL Borrowers

☐ Term Agent

☐ Term Lenders

☐ ABL Agent

☐ ABL Lender

   Final and Executed 47.    Written notice requesting the Disbursement of the
proposed date of funding and satisfying the conditions in Section 2.2(a) of the
Facility Agreement    Loan
Parties/SYCR    ☐ Term Borrower    Final and Executed 48.   

A.     Funds Flow

   Loan
Parties/SYCR       49.    Irrevocable Proxies    Katten       Final and Executed
B.    CERTIFICATES AND MISCELLANEOUS          50.    Lien Searches and IP
Searches for Loan Parties    SYCR    N/A    Complete 51.    Secretary’s
Certificate of each Loan Party, attaching Organization Documents, resolutions,
incumbency and good standings    SYCR    See attached Schedule A    In final
form   

A.     Certificate of Incorporation or Formation

   SYCR    See attached Schedule A    See attached Schedule A   

B.     Bylaws or Operating Agreement

   SYCR    See attached Schedule A    See attached Schedule A   

C.     Resolutions

   SYCR    See attached Schedule A    See attached Schedule A   

D.     Incumbency

   SYCR    See attached Schedule A    See attached Schedule A   

E.     Good Standings

   SYCR    See attached Schedule A    See attached Schedule A 52.   

Agreement Date Officer’s Certificate from an Authorized Officer of Endologix,
Inc. certifying to each of the following:

 

a)     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

 

b)     No Default or Event of Default shall have occurred or would result from
the Disbursement or the use of the proceeds therefrom

 

c)     All of the representations and warranties in the Loan Documents are true
and correct

 

d)     All conditions set forth in Section 4.1 of the Facility Agreement have
been satisfied

   SYCR    ☐ Endologix, Inc.    Final and Executed

 

6

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

    

Document

  

Responsible

Party

  

Signatures

  

Status

53.    Solvency Certificate    SYCR    ☐ Term Borrower    Final and Executed 54.
   Legal Opinion of the Loan Parties    SYCR    ☐ SYCR    Final and Executed 55.
   Receipt by the Term Agent and the Term Lenders of any fees required to be
paid on or before the Agreement Date    Loan Parties    N/A    56.    Payment by
Loan Parties of all costs and expenses required to be paid on the Agreement Date
(including pursuant to Sections 2.7(a) and 6.3 of the Facility Agreement) to the
Term Agent    Loan Parties    N/A    57.    Receipt by Term Agent and Term
Lenders at least 3 Business Days prior to the Agreement Date all KYC and
anti-money laundering rules and regulations    Loan Parties    ☐ Loan Parties   
58.    Transfer Agent Letter as to shares outstanding    Loan Parties    ☐
Transfer Agent    Final and Executed 59.    Payoff of MidCap            

A. Payoff Letter

   Loan Parties   

☐ MidCap

☐ Loan Parties

   Final and Executed   

B. UCC-3s

   Loan Parties/MidCap    N/A    In final form   

C. DACA Terminations

   Loan Parties         

a. SVB

   Loan Parties    ☐ MidCap    Final and Executed   

b. BoA

   Loan Parties    ☐ MidCap    Final and Executed   

c. Wells Fargo

   Loan Parties    ☐ MidCap    Final and Executed   

D. Landlord Waiver Terminations

   Loan Parties         

a. Sonoma

   Loan Parties    ☐ MidCap    Final and Executed   

b. Northwestern

   Loan Parties    ☐ MidCap    Final and Executed   

c. FedEx (bailee)

   Loan Parties    ☐ MidCap    Final and Executed

 

7

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

    

Document

  

Responsible

Party

  

Signatures

  

Status

C.    POST-CLOSING ITEMS          60.   

Landlord/Bailee Waivers

 

•    2 Musick, Irvine, County of Orange, CA 92618 U.S.A.

 

•    3910 Brickway Blvd., Santa Rosa, County of Sonoma, CA 95403 U.S.A.

 

•    5025 Tuggle Road, Memphis, TN 38118

 

•    [Foreign Locations]

   Loan Parties/SYCR   

☐ Applicable Loan Parties

☐ Applicable Landlord

☐ Term Agent

☐ ABL Agent

   61.   

Account Control Agreements

 

•    Wells Fargo

 

•    Bank of America

 

•    Silicon Valley Bank

 

•    [Foreign Accounts]

   Loan Parties/SYCR   

☐ Applicable Loan Parties

☐ Applicable Bank

☐ Term Agent

☐ ABL Agent

   62.    Executed Insurance Endorsements of the Loan Parties and their
Subsidiaries evidencing liability and casualty insurance, naming Term Agent on
behalf of the Secured Parties as additional insured (liability insurance) or
lender’s loss payee (casualty insurance) and providing for 30 days’ prior
written notice before any such policy may be modified or cancelled (or 10 days’
prior written notice in the case of failure to pay any premiums thereunder)   
SYCR    ☐ Insurance Carriers (for insurance endorsements)    Final and Executed

ABL AGREEMENT DOCUMENTS AND DELIVERABLES

 

    

Document

  

Responsible

Party

  

Signatures

  

Status

A.    DEBT DOCUMENTS – AGREEMENTS 1.    Credit and Security Agreement    Katten
  

☐ ABL Borrowers

☐ ABL Agent

☐ ABL Lender

   Final and Executed 2.    Annexes to Facility Agreement          3.   

Annex A –Commitment Annex

   Katten    N/A    In final form 4.    Schedules to Facility Agreement         
5.   

Schedule 3.1—Existence, Organizational ID Numbers, Foreign Qualification, Prior
Names

   Credit Parties/SYCR    N/A    In final form 6.    Schedule 3.4—Capitalization
   Credit Parties/SYCR    N/A    In final form 7.    Schedule 3.6—Litigation   
Credit Parties/SYCR    N/A    In final form 8.    Schedule 3.15—Broker’s Fees   
Credit Parties/SYCR    N/A    In final form

 

8

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

    

Document

  

Responsible

Party

  

Signatures

  

Status

9.    Schedule 3.17—Material Contracts    Credit Parties/SYCR    N/A    In final
form 10.    Schedule 3.18—Environmental Compliance    Credit Parties/SYCR    N/A
   In final form 11.    Schedule 4.9—Notice of Litigation and Defaults    Credit
Parties/SYCR    N/A    In final form 12.    Schedule 4.22—Post-Closing Items   
Credit Parties/SYCR    N/A    In final form 13.    Schedule 5.1—Debt; Contingent
Obligations    Credit Parties/SYCR    N/A    In final form 14.    Schedule
5.2—Liens    Credit Parties/SYCR    N/A    In final form 15.    Schedule
5.7—Permitted Investments    Credit Parties/SYCR    N/A    In final form 16.   
Schedule 5.8—Affiliate Transactions    Credit Parties/SYCR    N/A    In final
form 17.    Schedule 5.11—Business Description    Credit Parties/SYCR    N/A   
In final form 18.    Schedule 5.14—Deposit Accounts and Securities Accounts   
Credit Parties/SYCR    N/A    In final form 19.    Schedule 6.2—Minimum Net
Revenue    Credit Parties/SYCR    N/A    In final form 20.    Schedule
8.2(b)—Exceptions to Healthcare Representations and Warranties    Credit
Parties/SYCR    N/A    In final form 21.    Schedule 9.1—Collateral    Credit
Parties/SYCR    N/A    In final form 22.    Schedule 9.2—Location of Collateral
   Credit Parties/SYCR    N/A    In final form 23.    Schedule
9.2(vii)—Governmental Authority Account Debtors    Credit Parties/SYCR    N/A   
In final form 24.    Exhibits to Credit Agreement          25.    Exhibit
A—Closing Checklist    Katten    N/A    26.    Exhibit B—Form of Compliance
Certificate    Katten    N/A    In final form 27.    Exhibit C—Borrowing Base
Certificate    Katten    N/A    In final form 28.    Exhibit D—Form of Notice of
Borrowing    Katten    N/A    In final form 29.    Original Notes in favor of
each ABL Lender    Katten    ☐ ABL Borrower    Final and Executed 30.    Pledge
Agreement    Katten   

☐ ABL Borrowers

☐ Pledgees

☐ ABL Agent

   Final and Executed 31.    Schedules to Pledge Agreement    SYCR       In
final form

 

9

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

    

Document

  

Responsible

Party

  

Signatures

  

Status

32.    Perfection Certificate    Katten (form)/Credit Parties/SYCR (substance)
   See above    See above 33.    UCC-1 Financing Statements for each Credit
Party    Katten    N/A    34.    Delivery of original Certificates for
certificated Equity Interests and Equity Interests Powers    Katten       See
above 35.    Executed Insurance Certificates of the Credit Parties and their
Subsidiaries evidencing liability and casualty insurance, naming the ABL Agent
on behalf of the Secured Parties as additional insured (liability insurance) or
lender’s loss payee (casualty insurance) and providing for 30 days’ prior
written notice before any such policy may be modified or cancelled (or 10 days’
prior written notice in the case of failure to pay any premiums thereunder)   
SYCR    ☐ Insurance Broker    In final form 36.    Intercreditor Agreement   
Katten    See above    See above 37.    Patent Security Agreement(s)    Katten
  

☐ Applicable ABL Borrower(s)

☐ ABL Agent

   Final and Executed 38.    Schedule to Patent Security Agreement(s)    SYCR   
   In final form 39.    Trademark Security Agreement(s)    Katten   

☐ Applicable ABL Borrower(s)

☐ ABL Agent

   Final and Executed 40.    Schedule to Trademark Security Agreement(s)    SYCR
      In final form B.    CERTIFICATES AND MISCELLANEOUS 41.    Lien Searches
and IP Searches for Credit Parties    SYCR    N/A    See above 42.   
Secretary’s Certificate of each Credit Party, attaching Organization Documents,
resolutions, incumbency and good standings    SYCR    See attached Schedule A   
In final form   

A.     Certificate of Incorporation or Formation

   SYCR    See attached Schedule A    See attached Schedule A   

B.     Bylaws or Operating Agreement

   SYCR    See attached Schedule A    See attached Schedule A   

C.     Resolutions

   SYCR    See attached Schedule A    See attached Schedule A   

D.     Incumbency

   SYCR    See attached Schedule A    See attached Schedule A

 

10

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

    

Document

  

Responsible

Party

  

Signatures

  

Status

   E. Good Standings    SYCR    See attached Schedule A    See attached Schedule
A 43.   

Agreement Date Officer’s Certificate from an Authorized Officer of Endologix,
Inc. certifying to each of the following:

 

a)    Since December 31, 2016, the absence of any MAE

 

b)    The representations and warranties of each Credit Party contained in the
Financing Documents are true, correct and complete on and as of the Closing
Date, except to the extent that any such representation or warranty relates to a
specific date in which case such representation or warranty is true and correct
as of such earlier date

 

c)    All conditions set forth in Section 7.1 of the Facility Agreement have
been satisfied

 

d)    Immediately after such borrowing and after application of the proceeds
thereof or after such issuance, the Revolving Loan Outstandings will not exceed
the Revolving Loan Limit

 

e)    Immediately before and after such advance or issuance, no Default or Event
of Default shall have occurred and be continuing

   SYCR    ☐ Endologix, Inc.    See above 44.    Solvency Certificate    SYCR   
☐ ABL Borrower    Final and Executed 45.    Borrowing Base Certificate    SYCR
   ☐ [ABL Borrower]    46.    Legal Opinion of the Credit Parties    SYCR    ☐
SYCR    Final and Executed 47.    Receipt by the ABL Agent and the ABL Lender of
any fees, costs and expenses required to be paid on or before the Closing Date
   Credit Parties    N/A    48.    Receipt by ABL Agent and ABL Lender at least
3 Business Days prior to the Agreement Date all KYC and anti-money laundering
rules and regulations    Credit Parties    ☐ Credit Parties   

 

11

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

    

Document

  

Responsible

Party

  

Signatures

  

Status

49.    Payoff of MidCap    See above    See above    See above C.   
POST-CLOSING ITEMS 50.    Landlord/Bailee Waivers    Credit Parties/SYCR    See
above    See above 51.    Account Control Agreements    Credit Parties/SYCR   
See above    See above 52.    Cortland Documentation (including KYC items)   
Cortland    TBD    53.    Setting up of Cash Dominion Mechanics    ABL Agent   
N/A    54.    Executed Insurance Endorsements of the Credit Parties and their
Subsidiaries evidencing liability and casualty insurance, naming the ABL Agent
on behalf of the Secured Parties as additional insured (liability insurance) or
lender’s loss payee (casualty insurance) and providing for 30 days’ prior
written notice before any such policy may be modified or cancelled (or 10 days’
prior written notice in the case of failure to pay any premiums thereunder)   
SYCR    ☐ Insurance Carriers    In final form

 

12

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

Schedule A

Secretary’s Certificates

 

Borrower/Guarantor

  

Loan Party/Credit Party

  

Certificate of
Formation /
Articles of
Organization

  

Operating
Agreement
/ Bylaws

  

Resolutions

  

Incumbency

  

Good
Standings

Facility

Agreement

  

ABL

Agreement

                  Borrower    Borrower    Endologix, Inc., a Delaware
corporation    Received    Received    Final and Executed    In final form   
Received Guarantor    Borrower    CVD/RMS Acquisition Corp., a Delaware
corporation    Received    Received    Final and Executed    In final form   
Received Guarantor    Borrower    Nellix, Inc., a Delaware corporation   
Received    Received    Final and Executed    In final form    Received
Guarantor    Borrower    TriVascular Technologies, Inc., a Delaware corporation
   Received    Received    Final and Executed    In final form    Received
Guarantor    Borrower    TriVascular, Inc., a California corporation    Received
   Received    Final and Executed    In final form    Received Guarantor   
Borrower    Trivascular Canada, LLC, a Delaware limited liability company   
Received    Received    Final and Executed    In final form    Received

 

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

EXHIBIT E

FORM OF REGISTRATION RIGHTS AGREEMENT

REGISTRATION RIGHTS AGREEMENT (this “Agreement”), dated as of             ,
20    , by and among Endologix, Inc., a Delaware corporation (the “Company”),
and Deerfield Private Design Fund IV, L.P., Deerfield International Master Fund,
L.P., Deerfield Partners, L.P. and Deerfield Private Design Fund III, L.P. (each
individually, a “Lender” and together, the “Lenders”).

WHEREAS:

A. In connection with the Facility Agreement, of even date herewith, by and
among the parties hereto, the other Loan Parties (as defined therein) and
Deerfield Private Design Fund IV, L.P., as agent for itself and the Lender (the
“Facility Agreement”) (i) the Company has agreed, upon the terms and subject to
the conditions contained therein, to issue and sell the Warrants (as defined
below) to the Lenders in the amounts described in the Facility Agreement, each
of which Warrants is exercisable into shares of the Company’s common stock,
$0.001 par value per share (the “Common Stock”), and (ii) the Company may issue
shares of Common Stock to satisfy obligations to pay interest due and payable
under the Facility Agreement, upon the terms and conditions and subject to the
limitations and conditions set forth therein; and

B. To induce the Lenders to execute and deliver the Facility Agreement, the
Company has agreed to provide certain registration rights under the Securities
Act of 1933, as amended, and the rules and regulations thereunder, or any
similar successor statute (collectively, the “Securities Act”), and applicable
state securities laws;

NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and each of the
Lenders hereby agree as follows:

1. DEFINITIONS.

a. As used in this Agreement, the following terms shall have the following
meanings:

(i) “Additional Filing Deadline” means, with respect to any Registration
Statements that may be required pursuant to Section 2(a)(ii), (A) the first date
or time that such Registrable Securities may then be included in a Registration
Statement if such Registration Statement

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

is required because the SEC shall have notified the Company in writing that
certain Registrable Securities were not eligible for inclusion on a previously
filed Registration Statement, or (B) if such additional Registration Statement
is required for a reason other than as described in (A) above, the twentieth
(20th) day following the date on which the Company first knows, or reasonably
should have known, that such additional Registration Statement is required.

(ii) “Additional Registration Deadline” means, with respect to any additional
Registration Statement(s) required pursuant to Section 2(a)(ii), the thirtieth
(30th) day following (A) the first date or time that such Registrable Securities
may then be included in a Registration Statement if such Registration Statement
is required because the SEC shall have notified the Company in writing that
certain Registrable Securities were not eligible for inclusion on a previously
filed Registration Statement, or (B) if such additional Registration Statement
is required for a reason other than as described in (A) above, the fortieth
(40th) day following the date on which the Company first knows, or reasonably
should have known, that such additional Registration Statement(s) is required.

(iii) “Investor” means any Lender and any transferee or assignee who agrees to
become bound by the provisions of this Agreement in accordance with Section 10
hereof.

(iv) “Exchange Act” means the Securities Exchange Act of 1934, as amended,
together with the rules and regulations promulgated thereunder, and any
successor statute.

(v) “FINRA” means the Financial Industry Regulatory Authority (or successor
thereto).

(vi) “Filing Deadline,” for the Registration Statement required pursuant to
Section 2(a)(i), shall mean the date that is thirty (30) calendar days following
the Agreement Date (as defined in the Facility Agreement), and, for each
Registration Statement required pursuant to Section 2(a)(ii) shall mean the
Additional Filing Deadline.

(vii) “Person” means and includes any natural person, 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.

(viii) “Prospectus” means (i) any prospectus (preliminary or final) included in
any Registration Statement, as may be amended or supplemented by any prospectus
supplement with respect to the terms of the offering of any portion of the
Registrable Securities covered by such Registration Statement and by all other
amendments and supplements to such prospectus, including post-effective
amendments, and all material incorporated by reference in such prospectus, and
(ii) any “free writing prospectus” as defined in Rule 405 under the Securities
Act relating to any offering of Registrable Securities pursuant to a
Registration Statement.

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(ix) “Register,” “Registered,” and “Registration” refer to a registration
effected by preparing and filing a Registration Statement or Statements in
compliance with the Securities Act and pursuant to Rule 415, and the declaration
or ordering of effectiveness of such Registration Statement by the United States
Securities and Exchange Commission (the “SEC”).

(x) “Registrable Securities,” for a given Registration, means (a) any shares of
Common Stock (the “Warrant Shares”) issued or issuable upon exercise of, or
otherwise pursuant to, the Warrants (without giving effect to any limitations on
exercise set forth in the Warrants), (b) any shares of Common Stock issued or
issuable pursuant to Section 2.6 of the Facility Agreement and Exhibit 2.6
thereto, (c) any shares of capital stock issued or issuable as a dividend on or
in exchange for or otherwise with respect to any of the foregoing, (d) any
additional shares of Common Stock issuable in connection with any anti-dilution
provisions in the Warrants, (e) any other shares of Common Stock issuable
pursuant to the terms of the Warrants, the Facility Agreement or this
Registration Rights Agreement, and (f) any securities issued or issuable upon
any stock split, dividend or other distribution, recapitalization or similar
event with respect to any of the foregoing.

(xi) “Registration Deadline” shall mean, for purposes of the Registration
Statement required pursuant to Section 2(a)(i), the earlier of (i) the date that
is seventy-five (75) days after the date that the applicable Registration
Statement is actually filed or (ii) the date that is seventy-five (75) days
after the applicable Filing Deadline and, with respect to any Registration
Statement required pursuant to Section 2(a)(ii), the Additional Registration
Deadline.

(xii) “Registration Statement(s)” means any registration statement(s) of the
Company filed under the Securities Act that covers the resale of any of the
Registrable Securities pursuant to the provisions of this Agreement, all
amendments and supplements to such Registration Statement, including
post-effective amendments, and all exhibits to, and all material incorporated by
reference in, such Registration Statement.

(xiii) “Rule 415” means Rule 415 under the Securities Act or any successor rule
providing for the offering of securities on a continuous basis

(xiv) “Warrants” means the warrants issued by the Company pursuant to the
Facility Agreement.

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2. REGISTRATION.

a. MANDATORY REGISTRATION. (i) Following the Agreement Date, the Company shall
prepare, and, on or prior to the applicable Filing Deadline, file with the SEC a
Registration Statement (the “Mandatory Registration Statement”) on Form S-3 (or,
if Form S-3 is not then available, on such form of Registration Statement as is
then available to effect a registration of the Registrable Securities, subject
to the consent of the Investors, which consent shall not be unreasonably
withheld) covering the resale of the Registrable Securities, which Registration
Statement, to the extent allowable under the Securities Act and the rules and
regulations promulgated thereunder (including Rule 416), shall state that such
Registration Statement also covers such indeterminate number of additional
shares of Common Stock as may become issuable upon exercise of or otherwise
pursuant to the Warrants or the Warrant Shares to prevent dilution resulting
from stock splits, stock dividends, stock issuances or similar transactions. The
number of shares of Common Stock initially included in such Registration
Statement shall be no less than the aggregate number of Warrant Shares that are
then issuable upon exercise of or otherwise pursuant to the Warrants, without
regard to any limitations on the Investors’ ability to exercise the Warrants.
Each Registration Statement (and each amendment or supplement thereto, and each
request for acceleration of effectiveness thereof) shall be provided to (and
shall be subject to the approval, which shall not be unreasonably withheld or
delayed, of) the Investors and their counsel prior to its filing or other
submission.

(ii) If for any reason, despite the Company’s use of its best efforts to include
all of the Registrable Securities in the Registration Statement filed pursuant
to Section 2 (a)(i) above (and subject to Section 3(q) below), the SEC does not
permit all of the Registrable Securities to be included in, or for any other
reason any Registrable Securities are not then included in, such Registration
Statement, then the Company shall prepare, and, as soon as practicable but in no
event later than the Additional Filing Deadline, file with the SEC an additional
Registration Statement covering the resale of all Registrable Securities not
already covered by an existing and effective Registration Statement for an
offering to be made on a continuous basis pursuant to Rule 415.

b. PIGGY-BACK REGISTRATIONS. If at any time prior to the expiration of the
Registration Period (as hereinafter defined) the Company shall determine (i) to
file with the SEC a registration statement under the Securities Act relating to
an offering for its own account or for the account of any other holder of its
equity securities (other than securities being registered on Form S-4 or Form
S-8 or their then equivalents relating to equity securities to be issued solely
in connection with any acquisition of any entity or business or equity
securities issuable in connection with stock option or other employee benefit
plans), and/or (ii) otherwise to effect an underwritten offering of any
securities of the Company of a type included in a then effective Registration
Statement, the Company shall send to each Investor written notice of such
determination and, if within fifteen (15) days after the effective date of such
notice, the Investor shall so request in writing, the Company shall include in
such Registration Statement and/or include in such underwritten offering, as
applicable, all or any part of such Investor’s Registrable Securities that the
Investor requests to be registered and/or included in the underwritten offering,
as applicable, except that if, in connection with any underwritten offering for
the account of the Company, the managing underwriter(s) thereof shall impose a
limitation on the number of Registrable Securities which may be included in such
offering because, in such underwriter(s)’ judgment, marketing or other factors
dictate such limitation is necessary to facilitate public distribution, then the
Company shall be obligated to include in such underwritten offering only such
limited portion of the Registrable Securities with respect to which the Investor
has requested inclusion hereunder as the underwriter(s) shall permit;

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provided, however, that the Company shall not exclude any Registrable Securities
unless the Company has first excluded all outstanding securities to be sold for
the accounts of any holders of the Company’s equity securities which are not
entitled by contract to inclusion of such securities in an underwritten offering
or are not entitled to pro rata inclusion with the Registrable Securities; and

provided, further, however, that, after giving effect to the immediately
preceding proviso, any exclusion of Registrable Securities shall be made pro
rata with holders of other securities having the contractual right to include
such securities in such underwritten offering other than holders of securities
entitled to inclusion of their securities in such underwritten offering by
reason of demand registration rights. No right to registration of Registrable
Securities under this Section 2(b) shall be construed to limit any registration
required under Section 2(a) hereof. If an Investor’s Registrable Securities are
included in an underwritten offering pursuant to this Section 2(b), then such
Investor shall, unless otherwise agreed by the Company, offer and sell such
Registrable Securities in such underwritten offering using the same underwriter
or underwriters and, subject to the provisions of this Agreement, on the same
terms and conditions as other shares of Common Stock included in such
underwritten offering. Notwithstanding anything to the contrary set forth
herein, the rights of the Investors pursuant to this Section 2(b) shall only be
available in the case of an underwritten offering or in the event the Company
fails to timely file, obtain effectiveness or maintain effectiveness of any
Registration Statement to be filed pursuant to Section 2(a) in accordance with
the terms of this Agreement.

3. OBLIGATIONS OF THE COMPANY. In connection with any registration of the
Registrable Securities hereunder, the Company shall have the following
obligations:

a. The Company shall prepare promptly, and file with the SEC as soon as
practicable after such registration obligation arises hereunder (but in no event
later than the applicable Filing Deadline), a Registration Statement with
respect to the number of Registrable Securities provided in Section 2(a), as
applicable, and thereafter use its reasonable best efforts to cause each such
Registration Statement relating to Registrable Securities to become effective as
soon as possible after such filing, but in any event shall use its reasonable
best efforts to cause each such Registration Statement relating to Registrable
Securities to become effective no later than the Registration Deadline, and
shall thereafter use its reasonable best efforts to keep the Registration
Statement current and effective pursuant to Rule 415 at all times until such
date as is the earlier of (i) the date on which all of the Registrable
Securities included in such Registration Statement have been sold and
(ii) assuming all of the Warrants will be exercised pursuant to Cash Exercises
(as defined in the Warrants), the date on which all of the Registrable
Securities included in such Registration Statement (in the opinion of counsel to
the Investors) may be immediately sold to the public without registration or
restriction (including without limitation as to volume by each holder thereof),
and without compliance with any “current public information” requirement,
pursuant to Rule 144 under the Securities Act (the “Registration Period”), which
Registration Statement (including any amendments or supplements thereto and
prospectuses contained therein), except

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for information provided in writing by an Investor pursuant to Section 4(a),
shall not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein, or necessary to make the statements
therein not misleading. In the event that Form S-3 is not available for the
registration of the resale of any Registrable Securities hereunder (but, for the
avoidance of doubt, without in any way affecting the Company’s obligation to
register the resale of the Registrable Securities on such other form as is
available, as provided in Section 2(a)), (i) the Company shall undertake to
file, within twenty (20) days of such time as such form is available for such
registration, a post-effective amendment to the Registration Statement then in
effect, or otherwise file a Registration Statement on Form S-3, registering such
Registrable Securities on Form S-3; provided that the Company shall maintain the
effectiveness of the Registration Statement then in effect until such time as a
Registration Statement (or post-effective amendment) on Form S-3 covering such
Registrable Securities has been declared effective by the SEC, and (ii) the
Company shall provide that any Registration Statement on Form S-1 filed
hereunder shall incorporate documents by reference (including by way of forward
incorporation by reference) to the maximum extent possible.

b. The Company shall prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to each Registration Statement and
the prospectus used in connection with each Registration Statement as may be
necessary to keep each Registration Statement current and effective at all times
during the Registration Period, and, during the Registration Period, shall
comply with the provisions of the Securities Act with respect to the disposition
of all Registrable Securities of the Company covered by each Registration
Statement until such time as all of such Registrable Securities have been
disposed of in accordance with the intended methods of disposition by the seller
or sellers thereof as set forth in such Registration Statement. In the event
that on any Trading Day (as defined below) (the “Registration Trigger Date”) the
number of shares available under the Registration Statements filed pursuant to
this Agreement is insufficient to cover all of the Registrable Securities issued
or issuable upon exercise of or otherwise pursuant to the Warrants, including
any additional shares of Common Stock issued in connection with any
anti-dilution provisions contained in the Warrants, without giving effect to any
limitations on the Investors’ ability to exercise the Warrants, the Company
shall amend the Registration Statements, or file a new Registration Statement
(on the short form available therefor, if applicable), or both, so as to cover
the total number of Registrable Securities so issued or issuable (without giving
effect to any limitations on exercise contained in the Warrants) as of the
Registration Trigger Date as soon as practicable, but in any event within twenty
(20) days after the Registration Trigger Date. The Company shall use its best
efforts to cause such amendment and/or new Registration Statement to become
effective as soon as practicable following the filing thereof, but in any event
the Company shall cause such amendment and/or new Registration Statement to
become effective within sixty (60) days of the Registration Trigger Date or as
promptly as practicable in the event the Company is required to increase its
authorized shares. “Trading Day” shall mean any day on which the Common Stock is
traded for any period on the NASDAQ Global Select Market (the “NasdaqGS”), or if
not the NasdaqGS, the principal securities exchange or other securities market
on which the Common Stock is then being traded.

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c. The Company shall furnish to each Investor and its legal counsel (i) promptly
after the same is prepared and publicly distributed, filed with the SEC or
received by the Company, one copy of each Registration Statement and any
amendment thereto, each preliminary prospectus and prospectus and each amendment
or supplement thereto, and, in the case of a Registration Statement referred to
in Section 2(a), each letter written by or on behalf of the Company to the SEC
or the staff of the SEC, and each item of correspondence from the SEC or the
staff of the SEC, in each case relating to such Registration Statement (other
than any portion of any thereof which contains information for which the Company
has sought or intends to seek confidential treatment or which relates to Company
matters that are in the reasonable judgment of the Company not relevant to the
Investor’s interests with respect to the Registrable Securities), and (ii) such
number of copies of a prospectus, including a preliminary prospectus, and all
amendments and supplements thereto and such other documents as an Investor may
reasonably request in order to facilitate the disposition of the Registrable
Securities owned by such Investor; provided that the Company may determine in
its reasonable judgment to provide any such copies in electronic form only. The
Company will promptly notify each of the Investors by electronic mail of the
effectiveness of each Registration Statement or any post-effective amendment.
The Company will promptly respond to any and all comments received from the SEC,
with a view towards causing each Registration Statement or any amendment thereto
to be declared effective by the SEC as soon as practicable and, as soon as
practicable, but in no event later than three (3) business days, following the
resolution or clearance of all SEC comments or, if applicable, following
notification by the SEC that any such Registration Statement or any amendment
thereto will not be subject to review, shall file a request for acceleration of
effectiveness of such Registration Statement to a time and date not later than
two (2) business days after the submission of such request. No later than the
first business day after such Registration Statement becomes effective, the
Company will file with the SEC the final prospectus included therein pursuant to
Rule 424 (or successor thereto) under the Securities Act.

d. The Company shall use its reasonable best efforts to (i) register and
qualify, in any jurisdiction where registration and/or qualification is
required, the Registrable Securities covered by the Registration Statements
under such other securities or “blue sky” laws of such jurisdictions in the
United States as the Investors shall reasonably request, (ii) prepare and file
in those jurisdictions such amendments (including post-effective amendments) and
supplements to such registrations and qualifications as may be reasonably
necessary to maintain the effectiveness thereof during the Registration Period,
(iii) take such other actions as may be reasonably necessary to maintain such
registrations and qualifications in effect at all times during the Registration
Period, and (iv) take all other actions reasonably necessary or advisable to
qualify the Registrable Securities for sale in such jurisdictions; provided,
however, that the Company shall not be required in connection therewith or as a
condition thereto to (x) qualify to do business in any jurisdiction where it
would not otherwise be required to qualify but for this Section 3(d),
(y) subject itself to general taxation in any such jurisdiction, or (z) file a
general consent to service of process in any such jurisdiction.

e. As promptly as practicable after becoming aware of such event, the Company
shall notify each Investor that holds Registrable Securities of the happening of
any event, of which the Company has knowledge, as a result of which the
prospectus included in any Registration Statement, as then in effect, includes
an untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and promptly prepare a supplement or amendment to any Registration
Statement to correct such untrue statement or omission, and deliver such number
of copies of such supplement or amendment to each Investor as such Investor may
reasonably request.

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f. The Company shall use its reasonable best efforts to prevent the issuance of
any stop order or other suspension of effectiveness of any Registration
Statement, and, if such an order is issued, to obtain the withdrawal of such
order at the earliest possible moment and to notify each Investor that holds
Registrable Securities (and, in the event of an underwritten offering, the
managing underwriters) of the issuance of such order and the resolution thereof.

g. The Company shall permit a single firm of counsel designated by the Investors
(“Legal Counsel”) to review such Registration Statement and all amendments and
supplements thereto (as well as all requests for acceleration or effectiveness
thereof), a reasonable period of time prior to their filing with the SEC (not
less than five (5) business days but not more than eight (8) business days) and
not file any documents in a form to which Legal Counsel reasonably objects and
will not request acceleration of such Registration Statement without prior
notice to Legal Counsel.

h. The Company shall hold in confidence and not make any disclosure of
information concerning an Investor provided to the Company unless (i) disclosure
of such information is necessary to comply with federal or state securities
laws, (ii) the disclosure of such information is necessary to avoid or correct a
misstatement or omission in any Registration Statement, (iii) the release of
such information is ordered pursuant to a subpoena or other order from a court
or governmental body of competent jurisdiction, or (iv) such information has
been made generally available to the public other than by disclosure in
violation of this or any other agreement. The Company agrees that it shall, upon
learning that disclosure of such information concerning any Investor is sought
in or by a court or governmental body of competent jurisdiction or through other
means, give prompt notice to such Investor prior to making such disclosure, and
allow such Investor, at its expense, to undertake appropriate action to prevent
disclosure of, or to obtain a protective order for, such information.

i. The Company shall use its reasonable best efforts to cause all the
Registrable Securities covered by each Registration Statement to be listed on
each securities exchange on which securities of the same class or series issued
by the Company are then listed, if any, if the listing of such Registrable
Securities is then permitted under the rules of such exchange, and, to arrange
for at least two market makers to register with the Financial Industry
Regulatory Authority, Inc. (“FINRA”) as such with respect to such Registrable
Securities.

j. The Company shall provide a transfer agent and registrar, which may be a
single entity, for the Registrable Securities not later than the effective date
of the initial Registration Statement.

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k. The Company shall cooperate with each Investor that holds Registrable
Securities being offered and the managing underwriter or underwriters with
respect to an applicable Registration Statement, if any, to facilitate the
timely (i) preparation and delivery of certificates (not bearing any restrictive
legends) representing Registrable Securities to be offered pursuant to such
Registration Statement, and enable such certificates to be registered in such
names and in such denominations or amounts, as the case may be, or
(ii) crediting of the Registrable Securities to be offered pursuant to a
Registration Statement to the applicable account (or accounts) with The
Depository Trust Company through its Deposit/Withdrawal At Custodian (DWAC)
system, in any such case as such Investor or the managing underwriter or
underwriters, if any, may reasonably request. Within three (3) business days
after a Registration Statement which includes Registrable Securities becomes
effective, the Company shall deliver, and shall cause legal counsel selected by
the Company to deliver, to the transfer agent for the Registrable Securities
(with copies to each Investor) an appropriate instruction and an opinion of such
counsel in the form required by the transfer agent in order to issue the
Registrable Securities free of restrictive legends.

l. At the reasonable request of an Investor, the Company shall prepare and file
with the SEC such amendments (including post-effective amendments) and
supplements to a Registration Statement and any prospectus used in connection
with the Registration Statement as may be necessary in order to change the plan
of distribution set forth in such Registration Statement.

m. The Company shall not, and shall not agree to, allow the holders of any
securities of the Company to include any of their securities (other than
Registrable Securities) in any Registration Statement filed pursuant to Section
2(a) hereof or any amendment or supplement thereto under Section 3(b) hereof
without the consent of Investors holding a majority-in-interest of the then
outstanding Registrable Securities. In addition, the Company shall not include
any securities for its own account or the account of others in any Registration
Statement filed pursuant to Section 2(a) hereof or any amendment or supplement
thereto filed pursuant to Section 3(b) hereof without the consent of Investors
holding a majority-in-interest of the then outstanding Registrable Securities.

n. Reserved.

o. The Company shall comply with all applicable laws related to a Registration
Statement and offering and sale of securities and all applicable rules and
regulations of governmental authorities in connection therewith (including the
Securities Act and the Exchange Act and the rules and regulations promulgated by
the SEC).

p. If required by the FINRA Corporate Financing Department, the Company shall
promptly effect a filing with FINRA pursuant to FINRA Rule 5110 (or successor
thereto) with respect to the public offering contemplated by resales of
securities under the Registration Statement (an “Issuer Filing”), and pay the
filing fee required by such Issuer Filing. The Company shall use its reasonable
best efforts to pursue the Issuer Filing until FINRA issues a letter confirming
that it does not object to the terms of the offering contemplated by the
Registration Statement.

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q. If at any time the SEC advises the Company in writing that the offering of
some or all of the Registrable Securities in a Registration Statement is not
eligible to be made on a delayed or continuous basis under the provisions of
Rule 415 under the Securities Act, the Company shall use its reasonable best
efforts to persuade the SEC that the offering contemplated by a Registration
Statement is a bona fide secondary offering and not an offering “by or on behalf
of the issuer” as defined in Rule 415 and that none of the Investors is an
“underwriter.” The Investors shall have the right to participate or have their
respective counsel participate in any meetings or discussions with the SEC
regarding the SEC’s position and to comment or have their respective counsel
comment on any written submission made to the SEC with respect thereto. No such
written submission shall be made to the SEC to which any Investor’s counsel
reasonably objects. In the event that, despite the Company’s reasonable best
efforts and compliance with the terms of this Section 3(q), the SEC refuses to
alter its position, the Company shall remove from the Registration Statement
such portion of the Registrable Securities as the SEC requires in writing be
removed therefrom. Any such cut-back imposed by the SEC as contemplated by this
Section 3(q) shall be imposed on a pro rata basis (based upon the Registrable
Securities held by each of the Investors), first, to the Registrable Securities
that are not Warrant Shares until all of such Registrable Securities are removed
from the Registration Statement, and only then to the Warrant Shares, unless
otherwise required by the SEC.

r. Notwithstanding anything to the contrary in Section 3(e), at any time after
the effective date of the applicable Registration Statement, the Company may
delay the disclosure of material non-public information concerning the Company
the disclosure of which at the time is not, in the good faith opinion of the
Board of Directors of the Company and its counsel, in the best interest of the
Company and not, in the opinion of counsel to the Company, otherwise required (a
“Grace Period”); provided, that the Company shall (i) promptly notify the
Investors in writing of the existence of material non-public information giving
rise to a Grace Period (provided that in each notice the Company shall not
disclose the content of such material non-public information to any Investor
unless otherwise requested in writing by such Investor) and the date on which
the Grace Period will begin, and (ii) as soon as such date may be determined,
promptly notify the Investors in writing of the date on which the Grace Period
ends; and, provided, further, that (A) no Grace Period shall exceed forty-five
(45) consecutive days, (B) during any three hundred sixty five (365) day period,
such Grace Periods shall not exceed an aggregate of seventy-five (75) days, (C)
the first day of any Grace Period must be at least ten (10) business days after
the last day of any prior Grace Period and (D) no Grace Period shall be in
effect on any day during any period beginning on (and including) the date that
is ten (10) business days prior to any issuance by the Company of Common Stock
pursuant to Section 2.7 of the Facility Agreement and Exhibit 2.7 thereto and
ending on (and including) the date that is fifteen (15) business days after such
issuance (each Grace Period that satisfies all of the requirements of this
Section 3(r) being referred to as an “Allowable Grace Period”). For purposes of
determining the length of a Grace Period above, the Grace Period shall begin on
and include the date the Investors receive the notice referred to in clause
(i) and shall end on and include the later of the date the Investors receive the
notice referred to in clause (ii) and the date referred to in such notice. The
provisions of Section 3(e) hereof shall not be applicable during the period of
any Allowable Grace Period, Failure Payments (as defined in the Warrants) shall
not accrue on any day during an Allowable Grace Period, and the unavailability
of a Registration Statement for resales of the Registrable Securities on any day
during an Allowable Grace Period shall not constitute a “Registration Failure”
(as defined in the Warrants). Upon expiration of the Grace Period, the Company
shall again be bound by the first sentence of Section 3(e) with respect to the
information giving rise thereto unless such material non-public information is
no longer applicable.

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4. OBLIGATIONS OF THE INVESTOR. In connection with the registration of the
Registrable Securities, each Investor shall have the following obligations:

a. It shall be a condition precedent to the obligations of the Company to
complete the registration pursuant to this Agreement with respect to the
Registrable Securities of an Investor that such Investor shall furnish to the
Company such information regarding itself, the Registrable Securities held by it
and the intended method of disposition of the Registrable Securities held by it
as shall be reasonably required to effect the registration of such Registrable
Securities and shall execute such documents in connection with such registration
as the Company may reasonably request. At least five (5) business days prior to
the first anticipated filing date of a Registration Statement, the Company shall
notify each Investor of the information the Company requires from such Investor.
Any such information shall not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein, or necessary to
make the statements therein not misleading. An Investor must provide such
information to the Company at least two (2) business days prior to the first
anticipated filing date of such Registration Statement if such Investor elects
to have any Registrable Securities included in the Registration Statement.

b. Each Investor, by such Investor’s acceptance of the Registrable Securities,
agrees to cooperate with the Company as reasonably requested by the Company in
connection with the preparation and filing of a Registration Statement
hereunder, unless such Investor has notified the Company in writing of such
Investor’s election to exclude all of the Investor’s Registrable Securities from
such Registration Statement.

c. In the event of an underwritten offering pursuant to Section 2(b) in which
any Registrable Securities of any Investor are to be included, such Investor
agrees to enter into and perform the Investor’s obligations under an
underwriting agreement, in usual and customary form, including customary
indemnification and contribution obligations (as applicable to selling security
holders generally), with the managing underwriter of such offering and take such
other actions as are reasonably required in order to expedite or facilitate the
disposition of such Investor Registrable Securities.

d. Each Investor agrees that, upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 3(e) or 3(f), such
Investor will immediately discontinue disposition of Registrable Securities
pursuant to the Registration Statement covering such Registrable Securities
until such Investor’s receipt of the copies of the supplemented or amended
prospectus contemplated by Section 3(e) or 3(f).

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e. Each Investor agrees that it will promptly notify the Company of any material
changes in the information set forth in a Registration Statement furnished by or
regarding such Investor, other than changes in the number of shares beneficially
owned.

5. REGISTRATION FAILURE. In the event of a Registration Failure (as defined in
the Warrants), the Investors shall be entitled to Failure Payments (as defined
in the Warrants) and such other rights as set forth in the Warrants.

6. EXPENSES OF REGISTRATION. All reasonable expenses, other than underwriting
discounts and commissions, incurred in connection with registrations, filings or
qualifications pursuant to Sections 2 and 3, including, without limitation, all
registration, listing and qualification fees, printers and accounting fees, and
the fees and disbursements of counsel for the Company shall be borne by the
Company. The Company shall also reimburse the Investors for the reasonable fees
and disbursements of Legal Counsel in the aggregate amount up to $25,000 per
registration in connection with registrations pursuant to Section 2 or 3 of this
Agreement.

7. INDEMNIFICATION. In the event any Registrable Securities are included in a
Registration Statement under this Agreement:

a. The Company will indemnify, hold harmless and defend (i) each Investor,
(ii) the directors, officers, partners, managers, members, employees, agents of
each Investor, and each Person who controls any Investor within the meaning of
the Securities Act or the Exchange Act, if any, (iii) any underwriter (as
defined in the Securities Act) for each Investor in connection with an
underwritten offering pursuant to Section 2(b) hereof, and (iv) the directors,
officers, partners, employees and each Person who controls any such underwriter
within the meaning of the Securities Act or the Exchange Act, if any (each, an
“Indemnified Person”), against any joint or several losses, claims, damages,
liabilities or expenses (collectively, together with actions, proceedings or
inquiries by any regulatory or self-regulatory organization, whether commenced
or threatened, in respect thereof, “Claims”) to which any of them may become
subject insofar as such Claims arise out of or are based upon: (i) any untrue
statement or alleged untrue statement of a material fact in any Registration
Statement, or any amendment as supplement thereto, or any filing made under
state securities laws as required hereby, or the omission or alleged omission to
state therein a material fact required to be stated or necessary to make the
statements therein not misleading; (ii) any untrue statement or alleged untrue
statement of a material fact contained in any Prospectus, or any amendment or
supplement thereto, or the omission or alleged omission to state therein any
material fact necessary to make the statements made therein, in the light of the
circumstances under which the statements therein were made, not misleading; or
(iii) any violation or alleged violation by the Company of the Securities Act,
the Exchange Act, any other law, including any state securities law, or any rule
or regulation thereunder relating to the offer or sale of the Registrable
Securities (the matters in the foregoing clauses (i) through (iii) being,
collectively, “Violations”). The Company shall reimburse the Indemnified Person,
promptly as such expenses are incurred and are due and payable, for any
reasonable legal fees and other reasonable expenses incurred by them in
connection with investigating or defending any such Claim. Notwithstanding
anything to the contrary contained herein, the indemnification agreement
contained in this Section 7(a) shall not apply to a Claim arising out of or
based upon a Violation to the extent that such Violation occurs in reliance upon
and in conformity with

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

information furnished in writing to the Company by or on behalf of any
Indemnified Person expressly for use in connection with the preparation of such
Registration Statement or any such amendment thereof or supplement thereto, or
(B) to any amounts paid in settlement of any Claim effected without the prior
written consent of the Company, which consent shall not be unreasonably withheld
or delayed. Such indemnity shall remain in full force and effect regardless of
any investigation made by or on behalf of the Indemnified Person and shall
survive the transfer of the Registrable Securities by any of the Investors
pursuant to Section 10.

b. Promptly after receipt by an Indemnified Person under this Section 7 of
notice of the commencement of any action (including any governmental action),
such Indemnified Person shall, if a Claim in respect thereof is to be made
against the Company under this Section 7, deliver to the Company a written
notice of the commencement thereof, and the Company shall have the right to
participate in, and, to the extent the Company so desires, to assume control of
the defense thereof with counsel mutually satisfactory to the Company and the
Indemnified Person, as the case may be;

provided, however, that an Indemnified Person shall have the right to retain its
own counsel with the reasonable fees and expenses to be paid by the Company, if,
in the reasonable opinion of counsel for such Indemnified Person, the
representation by such counsel of the Indemnified Person and the Company would
be inappropriate due to actual or potential differing interests between such
Indemnified Person and any other party represented by such counsel in such
proceeding. The Company shall pay for only one separate legal counsel for the
Indemnified Persons, and such legal counsel shall be selected by the Investors.
The failure to deliver written notice to the Company within a reasonable time of
the commencement of any such action shall not relieve the Company of any
liability to the Indemnified Person under this Section 7, except to the extent
that the Company is actually prejudiced in its ability to defend such action,
and shall not relieve the Company of any liability to the Indemnified Person
otherwise than pursuant to this Section 7. The Company shall not, without the
prior written consent of the Indemnified Persons, consent to entry of any
judgment or enter into any settlement or other compromise with respect to any
Claim in respect of which indemnification or contribution may be or has been
sought hereunder (whether or not any such Indemnified Party is an actual or
potential party to such action or claim) which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to the
Indemnified Persons of a full release from all liability with respect to such
Claim or which includes any admission as to fault or culpability on the part of
any Indemnified Person. The indemnification required by this Section 7 shall be
made by periodic payments of the amount thereof during the course of the
investigation or defense, as any expense, loss, damage or liability is incurred.

c. Each Investor will indemnify, hold harmless and defend (i) the Company, and
(ii) the directors, officers, partners, managers, members, employees, or agents
of the Company, if any (each, a “Company Indemnified Person”), against any
Claims to which any of them may become subject insofar as such Claims arise out
of or are based upon any violation or alleged violation by the Company of the
Securities Act, the Exchange Act, any other law, including any state securities
law, or any rule or regulation thereunder relating to the offer or sale of the
Registrable Securities, which occurs due to the inclusion by the Company in a
Registration Statement of false or

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

misleading information about an Investor, where such information was furnished
in writing to the Company by or on behalf of such Investor expressly for the
purpose of inclusion in such Registration Statement. Notwithstanding anything
herein to the contrary, the indemnity agreement contained in this Section 7(c)
shall not apply to amounts paid in settlement of any Claim if such settlement is
effected without the prior written consent of the Investors, which consent shall
not be unreasonably withheld or delayed; and provided, further, however, that an
Investor shall be liable under this Section 7(c) for only that amount of a Claim
as does not exceed the net amount of proceeds received by such Investor as a
result of the sale of Registrable Securities pursuant to such Registration
Statement.

d. Promptly after receipt by a Company Indemnified Person under this Section 7
of notice of the commencement of any action (including any governmental action),
such Company Indemnified Person shall, if a Claim in respect thereof is to be
made against any Investor under this Section 7, deliver to such Investor a
written notice of the commencement thereof, and such Investor shall have the
right to participate in, and, to the extent such Investor so desires, to assume
control of the defense thereof with counsel mutually satisfactory to such
Investor and such Company Indemnified Person.

8. CONTRIBUTION. If for any reason the indemnification provided for in Section
7(a) or 7(c) (as applicable) is unavailable to an Indemnified Person or Company
Indemnified Person (as applicable) or insufficient to hold it harmless, other
than as expressly specified therein, then the indemnifying party shall
contribute to the amount paid or payable by the Indemnified Person or Company
Indemnified Person (as applicable) as a result of the Claim in such proportion
as is appropriate to reflect the relative fault of the Indemnified Person or
Company Indemnified Person (as applicable) and the indemnifying party (provided
that the relative fault of any Company Indemnified Person shall be deemed to
include the fault of all other Company Indemnified Persons), as well as any
other relevant equitable considerations. No Person guilty of fraudulent
misrepresentation within the meaning of Section 11(f) of the Securities Act
shall be entitled to contribution from any Person not guilty of such fraudulent
misrepresentation. In no event shall the contribution obligation of an Investor
be greater in amount than the net amount of proceeds received by such Investor
as a result of the sale of Registrable Securities giving rise to such
contribution obligation pursuant to the applicable Registration Statement (net
of the aggregate amount of any damages or other amounts such Investor has
otherwise been required to pay (pursuant to Section 7(c) or otherwise) by reason
of such Investor’s untrue or alleged untrue statement or omission or alleged
omission).

9. REPORTS UNDER THE 1934 ACT. With a view to making available to the Investors
the benefits of Rule 144 promulgated under the Securities Act or any other
similar rule or regulation of the SEC that may at any time permit the Investors
to sell securities of the Company to the public without registration, the
Company agrees to:

a. make and keep public information available, as those terms are understood and
defined in Rule 144;

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

b. file with the SEC in a timely manner all reports and other documents required
of the Company under the Exchange Act so long as the Company remains subject to
such requirements and the filing of such reports and other documents is required
for the applicable provisions of Rule 144; and

c. so long as any of the Investors owns Registrable Securities, promptly upon
request, furnish to such Investor (i) a written statement by the Company that it
has complied with the reporting requirements of the Exchange Act as required for
applicable provisions of Rule 144, (ii) a copy of the most recent annual or
quarterly report of the Company and such other reports and documents so filed by
the Company and (iii) such other information as may be reasonably requested to
permit such Investor to sell such Registrable Securities pursuant to Rule 144
without registration.

10. ASSIGNMENT OF REGISTRATION RIGHTS. The rights under this Agreement shall be
automatically assignable by each Investor to any transferee of all or any
portion of the Registrable Securities if: (i) such Investor agrees in writing
with the transferee or assignee to assign such rights, and a copy of such
agreement is furnished to the Company within a reasonable time after such
assignment, (ii) the Company is, within a reasonable time after such transfer or
assignment, furnished with written notice of (a) the name and address of such
transferee or assignee, and (b) the securities with respect to which such
registration rights are being transferred or assigned, and (iii) at or before
the time the Company receives the written notice contemplated in clause (ii) of
this sentence, the transferee or assignee agrees in writing with the Company to
be bound by all of the provisions contained herein as applicable to the
Investors. In the event that the Company receives written notice from an
Investor that it has transferred all or any portion of its Registrable
Securities pursuant to this Section, the Company shall have up to ten (10) days
to file any amendments or supplements necessary to keep a Registration Statement
current and effective pursuant to Rule 415, and the commencement date of any
Event of Failure (as defined in the Warrants) or Event of Default (as defined in
the Warrants) under the Warrants caused thereby will be extended by ten
(10) days. Each Investor shall at all times comply with the restrictions on
transfer set forth in Section 8 of the Warrant (to the extent applicable to such
Investor), which provisions are hereby incorporated by reference and made a part
hereof.

11. AMENDMENT OF REGISTRATION RIGHTS. Provisions of this Agreement may be
amended and the observance thereof may be waived (either generally or in a
particular instance and either retroactively or prospectively), only with
written consent of the Company and the holders of a majority in interest of
then-outstanding Registrable Securities. Any amendment or waiver effected in
accordance with this Section 11 shall be binding upon each of the Investors and
the Company.

12. MISCELLANEOUS.

a. A Person is deemed to hold, and be a holder of, shares of Common Stock or
other Registrable Securities whenever such Person owns of record or beneficially
through a “street name” holder such shares of Common Stock or other Registrable
Securities (or the Warrants or other securities upon exercise, conversion or
exchange of which such Registrable Securities are directly or indirectly
issuable, without

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

giving effect to any limitations on exercise, conversion or exchange of the
Warrants or other securities), and solely for purposes hereof, Registrable
Securities shall be deemed outstanding to the extent they are directly or
indirectly issuable upon exercise, conversion or exchange of the Warrants or
other outstanding securities, Registrable Securities, without giving effect to
any limits on exercise, conversion or exchange of the Warrants or other
securities. If the Company receives conflicting instructions, notices or
elections from two or more Persons with respect to the same Registrable
Securities, the Company shall act upon the basis of instructions, notice or
election received from the registered owner of such Registrable Securities (or
the Warrants or other securities upon exercise, conversion or exchange of which
such Registrable Securities are directly or indirectly issuable).

b. Any notices 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 electronic mail and shall be effective five 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 electronic mail, in each case addressed to a party. The addresses for such
communications shall be:

If to the Company:

Endologix, Inc.

2 Musick

Irvine, CA 92618

Email: vmahboob@endologix.com

Attn: Vaseem Mahboob, Chief Financial Officer

With copy to:

Stradling Yocca Carlson & Rauth, P.C.

660 Newport Center Drive, Suite 1600

Newport Beach, CA 92660

Email: lcohn@sycr.com; mlawhead@sycr.com

Attn:    Lawrence B. Cohn

            Michael L. Lawhead

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

If to an Investor:

c/o Deerfield Mgmt, L.P.

780 Third Avenue, 37th Floor

New York, NY 10017

Fax: (212) 599-1248

Email:

Attn: David J. Clark, Esq.

With a copy to:

Katten Muchin Rosenman LLP

575 Madison Avenue

New York, NY 10022

Fax: (212) 940-8776

Email: mark.fisher@kattenlaw.com and mark.wood@kattenlaw.com

Attn: Mark I. Fisher, Esq.

Mark D. Wood, Esq.

Each party shall provide notice to the other party of any change in address.

c. Failure of any party to exercise any right or remedy under this Agreement or
otherwise, or delay by a party in exercising such right or remedy, shall not
operate as a waiver thereof.

d. Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State of New
York, without regard to the principles of conflicts of law thereof. Each party
agrees that all legal proceedings concerning the interpretations, enforcement
and defense of the transactions contemplated by this Agreement (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, borough of Manhattan. Each
party hereby irrevocably submits to the exclusive jurisdiction of the state and
federal courts sitting in the City of New York, Borough of Manhattan for the
adjudication of any dispute hereunder or in connection herewith 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, that
such suit, action or proceeding is improper or is an inconvenient venue for such
proceeding. 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 hereby
waive all rights to a trial by jury. If either party shall commence an action or
proceeding to enforce any provision of this Agreement, then the prevailing party
in such action or proceeding shall be reimbursed by the other party for its
reasonable attorneys’ fees and other costs and expenses incurred with the
investigation, preparation and prosecution of such action or proceeding.

e. This Agreement, the Warrants and the Facility Agreement (including all
schedules and exhibits thereto) constitute the entire agreement among the
parties hereto with respect to the subject matter hereof. This Agreement, the
Warrants and the Facility Agreement (including all schedules and exhibits
thereto) supersede all prior agreements and understandings among the parties
hereto with respect to the subject matter hereof.

f. Subject to the requirements of Section 10 hereof, this Agreement shall inure
to the benefit of and be binding upon the successors and assigns of each of the
parties hereto, and the provisions of Sections 7 and 8 hereof shall inure to the
benefit of, and be enforceable by, each Indemnified Person and Company
Indemnified Person (as applicable).

g. The headings in this Agreement are for convenience of reference only and
shall not limit or otherwise affect the meaning hereof.

h. This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original but all of which shall constitute one and the same
agreement. This Agreement, once executed by a party, may be delivered to the
other party hereto by electronic transmission of a copy of this Agreement
bearing the signature of the party so delivering this Agreement.

i. Each party shall do and perform, or cause to be done and performed, all such
further acts and things, and shall execute and deliver all such other
agreements, certificates, instruments and documents, as the other parties may
reasonably request in order to carry out the intent and accomplish the purposes
of this Agreement and the consummation of the transactions contemplated hereby.

j. The Company acknowledges that a breach by it of its obligations hereunder
will cause irreparable harm to the Investors by vitiating the intent and purpose
of the transactions contemplated hereby. Accordingly, the Company acknowledges
that the remedy at law for breach of its obligations hereunder will be
inadequate and agrees, in the event of a breach or threatened breach by the
Company of any of the provisions hereunder, that the Investors shall be
entitled, in addition to all other available remedies in law or in equity, to an
injunction or injunctions to prevent or cure breaches of the provisions of this
Agreement and to enforce specifically the terms and provisions hereof, without
the necessity of showing economic loss and without any bond or other security
being required.

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

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

l. In the event that any provision of this Agreement is invalid or unenforceable
under any applicable statute or rule of law, then such provision shall be deemed
inoperative to the extent that it may conflict therewith and shall be deemed
modified to conform with such statute or rule of law. Any provision hereof which
may prove invalid or unenforceable under any law shall not affect the validity
or enforceability of any other provision hereof.

m. In the event an Investor shall sell or otherwise transfer any of such
holder’s Registrable Securities, each transferee shall be allocated a pro rata
portion of the number of Registrable Securities included in a Registration
Statement for such transferor.

n. There shall be no oral modifications or amendments to this Agreement. This
Agreement may be modified or amended only in writing.

o. The Company shall not grant any Person any registration rights with respect
to shares of Common Stock or any other securities of the Company other than
registration rights that will not adversely affect the rights of the Investors
hereunder (including by limiting in any way the number of Registrable Securities
that could be included in any Registration Statement pursuant to Rule 415) and
shall not otherwise enter into any agreement that is inconsistent with the
rights granted to the Investors hereunder.

p. The obligations of each Investor hereunder are several and not joint with the
obligations of any other Investor, and no provision of this Agreement is
intended to confer any obligations on any Investor vis-à-vis any other Investor.
Nothing contained herein, and no action taken by any Investor pursuant hereto,
shall be deemed to constitute the Investors as a partnership, an association, a
joint venture or any other kind of entity, or create a presumption that the
Investors are in any way acting in concert or as a group with respect to such
obligations or the transactions contemplated herein.

q. Unless the context otherwise requires, (i) all references to Sections,
Schedules or Exhibits are to Sections, Schedules or Exhibits contained in or
attached to this Agreement, (ii) words in the singular or plural include the
singular and plural, and pronouns stated in either the masculine, the feminine
or neuter gender shall include the masculine, feminine and neuter, and (ii) the
use of the word “including” in this Agreement shall be by way of example rather
than limitation.

[Remainder of page left intentionally blank]

[Signature page follows]

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IN WITNESS WHEREOF, the undersigned Investors and the Company have caused this
Registration Rights Agreement to be duly executed as of the date first written
above.

 

COMPANY: ENDOLOGIX, INC., a Delaware corporation By:  
                                                                                
           Name:   Title:  

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

IN WITNESS WHEREOF, the undersigned Investors and the Company have caused this
Registration Rights Agreement to be duly executed as of the date first written
above.

 

INVESTORS: 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:  

 

Name:   James E. Flynn Title:   President 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:  

 

Name:   James E. Flynn Title:   President DEERFIELD INTERNATIONAL MASTER FUND,
L.P. By: Deerfield Mgmt, L.P., General Partner By: J.E. Flynn Capital, LLC,
General Partner By:  

 

Name:   James E. Flynn Title:   President DEERFIELD PARTNERS, L.P. By: Deerfield
Mgmt, L.P., General Partner By: J.E. Flynn Capital, LLC, General Partner By:  

 

Name:   James E. Flynn Title:   President

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

EXHIBIT F

FORM OF COMPLIANCE CERTIFICATE

_______________, 2017

Deerfield Private Design Fund IV, L.P.

c/o Deerfield Management Company, L.P.

780 Third Avenue, 37th Floor

New York, New York 10017

Ladies and Gentlemen:

The undersigned, ENDOLOGIX, INC., a Delaware corporation (“Borrower”) pursuant
to Section 5.1(h) of the Facility Agreement dated as of April 3, 2017 (as
amended, restated, supplemented or otherwise modified from time to time, the
“Facility Agreement”) between Borrower, the other Loan Parties, Deerfield
Private Design Fund IV, L.P. (in its capacity as agent for the Secured Parties,
the “Agent”) and the “Lenders” from time to time party thereto, hereby delivers
this Compliance Certificate. Capitalized terms used but not otherwise defined
herein are used herein as defined in the Facility Agreement.

Borrower hereby certifies and warrants to Agent and the Lenders that attached
hereto as Annex I is a true, correct and complete copy of its [10-Q][10-K]
filing (the “Report”) made with the United States Securities and Exchange
Commission (the “SEC”). The Report complies in all material respects with the
applicable requirements of the Exchange Act and does not contain any untrue
statement of a material fact or omit 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. The
consolidated financial statements included in the Report comply as to form in
all material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto, were prepared in
accordance with GAAP, consistently applied [(subject, in the case of unaudited
quarterly financial statements, to normal year-end adjustments and lack of
footnote disclosures)]2, and fairly present in all material respects the
consolidated financial position of the Borrower and its Subsidiaries as of the
dates hereof and the consolidated results of their operations, cash flows and
changes in stockholders equity for the periods presented [(subject, in the case
of unaudited quarterly financial statements, to normal year-end audit
adjustments and lack of footnote disclosures)]3.

 

 

 

2  The bracketed information shall only be included with a 10-Q filing, but not
with a 10-K filing.

3  The bracketed information shall only be included with a 10-Q filing, but not
with a 10-K filing.

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

Borrower further certifies to Agent and the Lenders that as of the date hereof
(a) no Default or Event of Default or (b) event of default under the ABL Debt
Documents or the Convertible Note Documents, in each case, has occurred and is
continuing or, if such a Default, Event of Default or event of default has
occurred and is continuing, set forth below is a description of the nature and
period of existence of such Default, Event of Default or event of default and
what action Borrower has taken, is undertaking and proposes to take with respect
thereto.

As of the last Business Day of each calendar month in the period covered by the
Report, the Borrower has had at least $10,000,000 of cash and Cash Equivalents
maintained in deposit accounts and securities accounts of the Borrower subject
to Control Agreements reasonably satisfactory to the Agent (or, to the extent in
compliance, and in accordance, with the provisions in Section 5.1(k) of the
Facility Agreement in the Merrill Lynch Securities Account) in compliance with
the provisions and terms of Section 5.1(k) of the Facility Agreement.

[Signature follows on next page.]

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

IN WITNESS WHEREOF, Borrower has caused this Compliance Certificate to be
executed and delivered by its Responsible Officer on the date first set forth
above.

 

ENDOLOGIX, INC., a Delaware corporation

By:

 

                                                             
                             

Name:

 

                                                             
                             

Title:

 

                                                             
                             

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

ANNEX I

TO

COMPLIANCE CERTIFICATE

[See Attached]

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

Schedule P-1

Existing Investments

 

Name of Issuer

  

Description and Value of Security

  

Loan Party/Subsidiary

Cianna Medical, Inc.    8,677 Shares of Series A Preferred Stock    Endologix,
Inc. RMS/Endologix Sideways Merger Corp.    100 Shares of Common Stock   
Endologix, Inc. ELGX International Holdings GP    Unspecified Number of
Partnership Interests    Endologix, Inc. Endologix Bermuda, L.P.    Unspecified
Number of Partnership Interests    Endologix, Inc. Endologix Singapore Private
Limited    Unspecified Number of Company Interests    Endologix, Inc. Endologix
New Zealand Co.    Unspecified Number of Company Interests    Endologix, Inc.
Endologix International Holdings B.V.    Unspecified Number of Company Interests
   Endologix Bermuda, L.P. Endologix Poland spolkda z ograniczona
odpowiedzialnoscia    Unspecified Number of Company Interests    Endologix
International Holdings B.V. Endologix International B.V.    Unspecified Number
of Company Interests    Endologix International Holdings B.V. Endologix Italia
S.r.l    Unspecified Number of Company Interests    Endologix International
Holdings B.V. TriVascular Sales LLC    1,000 Units of Membership Interests   
TriVascular, Inc. TriVascular Italia Sarl    Unspecified Number of Company
Interests    TriVascular, Inc. TriVascular Germany GmbH    Unspecified number of
Company Interests    TriVascular, Inc.

TriVascular Switzerland Sárl

   Unspecified number of Company Interests    TriVascular, Inc.

 

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

Schedule 2.4

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

 

Name of Lender

  

Wire Instructions/ Address for

Payments to Lender

  

Information for Notices

Deerfield Partners, L.P.   

Citibank, N.A. New York

ABA # 021-000-089

A/C Morgan Stanley & Co. NY

A/C # 38890774

Sub A/C Deerfield Partners, L.P.

Sub A/C # 038-036208

  

Deerfield Partners, L.P.

c/o Deerfield Management Company, L.P.

780 Third Avenue, 37th Floor

New York, NY 10017

Facsimile: 212-599-3075

E-mail: dclark@deerfield.com

Attn: David J. Clark, Esq.

 

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

 

Katten Muchin Rosenman LLP

575 Madison Avenue

New York NY 10022-2585

Facsimile: (212) 894-5877

E-mail: mark.fisher@kattenlaw.com and mark.wood@kattenlaw.com

Attn: Mark I. Fisher, Esq.

Attn: Mark D. Wood, Esq.

Deerfield International

Master Fund, L.P.

  

Citibank, N.A. New York

ABA # 021-000-089

A/C Morgan Stanley & Co. NY

A/C # 38890774

Sub A/C Deerfield International Master Fund, L.P.

Sub A/C # 038-CDFCZ3

  

Deerfield International Master Fund, L.P.

c/o Deerfield Management Company, L.P.

780 Third Avenue, 37th Floor

New York, NY 10017

Facsimile: 212-599-3075

E-mail: dclark@deerfield.com

Attn: David J. Clark, Esq.

 

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

 

Katten Muchin Rosenman LLP

575 Madison Avenue

New York NY 10022-2585

Facsimile: (212) 894-5877

E-mail: mark.fisher@kattenlaw.com and mark.wood@kattenlaw.com

Attn: Mark I. Fisher, Esq.

Attn: Mark D. Wood, Esq.

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

Name of Lender

  

Wire Instructions/ Address for

Payments to Lender

  

Information for Notices

Deerfield Private Design

Fund III, L.P.

  

Citibank, N.A. New York

ABA # 021-000-089

A/C Morgan Stanley & Co. NY

A/C # 38890774

Sub A/C Deerfield Private Design Fund III, L.P.

Sub A/C # 038CDKGC9

  

Deerfield Private Design Fund III, L.P.

c/o Deerfield Management Company, L.P.

780 Third Avenue, 37th Floor

New York, NY 10017

Facsimile: 212-599-3075

E-mail: dclark@deerfield.com

Attn: David J. Clark, Esq.

 

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

 

Katten Muchin Rosenman LLP

575 Madison Avenue

New York NY 10022-2585

Facsimile: (212) 894-5877

E-mail: mark.fisher@kattenlaw.com and mark.wood@kattenlaw.com

Attn: Mark I. Fisher, Esq.

Attn: Mark D. Wood, Esq.

Deerfield Private Design Fund IV, L.P.   

Citibank, N.A. New York

ABA # 021-000-089

A/C Morgan Stanley & Co. NY

A/C # 38890774

Sub A/C Deerfield Private Design Fund IV, L.P.

Sub A/C # 038CDNH16

  

Deerfield Private Design Fund IV, L.P.

c/o Deerfield Management Company, L.P.

780 Third Avenue, 37th Floor

New York, NY 10017

Facsimile: 212-599-3075

E-mail: dclark@deerfield.com

Attn: David J. Clark, Esq.

 

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

 

Katten Muchin Rosenman LLP

575 Madison Avenue

New York NY 10022-2585

Facsimile: (212) 894-5877

E-mail: mark.fisher@kattenlaw.com and mark.wood@kattenlaw.com

Attn: Mark I. Fisher, Esq.

Attn: Mark D. Wood, Esq.

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

Schedule 3.1(d)

Existing Liens

None.

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

Schedule 3.1(f)

Existing Indebtedness

None.

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

Schedule 3.1(h)

Litigation

Barry Lucido, etc. v. TriVascular Technologies, Inc., et al., Superior Court of
the State California, County of Sonoma, Case No. SCV 258123. The complaint
sought, among other things, rescissory and compensatory damages, and attorneys’
fees and expenses. On January 25, 2016, the defendants entered into a memorandum
of understanding with the plaintiffs providing for the settlement of all claims
in both actions. In December 2016, the defendants entered into a stipulation and
agreement of compromise, settlement and release with respect to this matter and
the dismissal thereof. The final settlement hearing is scheduled for June 2017.

Vicky Nguyen v. Endologix, Inc., et al. (Filed January 3, 2017 in the United
States District Court, Central District of California; Case No. 2:17-cv-00017);
and Kodgi Ahmed v. Endologix, Inc., et al. (Filed January 11, 2017 in the United
States District Court, Central District of California; Case No. 8:17-cv-00061).
These putative securities class actions are brought against defendants
Endologix, Inc., John McDermott, and Vaseem Mahboob. The putative class period
is August 2, 2016 through November 16, 2016. The lawsuits allege that the
defendants made misleading statements about the prospects for approval by the
FDA of the Nellix medical product in violation of Sections 10(b) and 20(a) of
the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. The
lawsuits allege that on November 16, 2016, Endologix announced that the FDA had
requested additional data from Endologix to assess Nellix for approval and that
Endologix’s stock fell approximately 20% on this news. The lawsuits seek
damages, interest, attorneys’ fees, expert fees, costs, and other relief the
Court may deem appropriate. Endologix intends to file a motion to dismiss the
lawsuits after the Court appoints a lead plaintiff and the lead plaintiff files
a consolidated complaint.

Steven M. Ortiz v. Endologix, Inc. This wage and hour class action lawsuit was
filed by former employee Steven M. Ortiz entitled Steven M. Ortiz. v. Endologix,
Inc., Orange County Superior Court Case No. 30-2016-00873893-CU-OE-CXC. The case
was filed on September 9, 2016 and involves the following claims that the
plaintiff seeks to certify as a class action: failure to pay all overtime wages
owing; failure to provide meal periods and failure to pay meal period premiums;
failure to pay all wages owed at time of termination seeking waiting time
penalties under Labor Code section 203; failure to provide accurate wage
statements; and violations of Business and Professions Code section 17200. The
case also alleges claims for penalties under the Private Attorneys General Act
of 2004. Endologix and the plaintiff held a mediation in March 2017 regarding
this matter and are negotiating the terms of a final settlement agreement.

Samuels v. TriVascular, Inc., in the United States District Court for the
Northern District of California, Civil Action No. 3:13-cv-02261-EMC. In this
action, Dr. Shaun L.W. Samuels filed a complaint asserting patent infringement
of United States Patent No. 6,007,575 (the “’575 patent”) in connection with
TriVascular’s Ovation Prime® Abdominal Stent Graft System for the treatment of
aortic abdominal aneurysms. TriVascular filed an answer and counterclaims,
asserting various defenses and asserting counterclaims. Dr. Samuels filed a
second amended complaint on August 13, 2015, adding individual defendants,
Michael A. Chobotov, Ph.D.; Robert G. Whirley, Ph.D.; and Joseph W. Humphrey,
Ph.D. TriVascular filed an answer and counterclaims on August 27, 2015,
asserting various defenses and asserting counterclaims that Dr. Samuels’s patent
is not infringed and is invalid, as well as certain breach of contract claims
based on previous agreements with Dr. Samuels. On November 3, 2015, the court
held a claim construction hearing to construe certain claims of the ‘575 patent,
and issued a claim construction order on November 12, 2015.

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

On December 17, 2015, the court then entered (based on the parties stipulation)
an order and final judgment of non-infringement of the ‘575 patent, providing
that TriVascular and the individual defendants did not infringe the ‘575 patent
and staying TriVascular’s second through fifth counterclaims pending Dr.
Samuels’s appeal of the judgment of non-infringement. On January 12, 2016,
Dr. Samuels filed a notice of appeal to the court of appeals for the federal
circuit. After briefing, the appeal was argued before a panel of the federal
circuit on November 1, 2016. On November 3, 2016, the federal circuit affirmed
the district court’s judgment summarily, without writing an opinion. The federal
circuit’s mandate was issued on December 12, 2016. TriVascular filed a motion
for attorney fees, which the district court denied on February 22, 2017. The
district court also ordered the parties to file a stipulation of dismissal of
TriVascular’s counterclaims two through five without prejudice, as well as a
stipulated final judgment disposing of the case, by March 2017. The parties
filed the foregoing stipulations and are awaiting a final disposition from the
district court.

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

Schedule 3.1(m)

Real Estate

Owned Real Property:

 

Loan Party or Subsidiary

  

Complete street and mailing address, including

zip code

N.A.

  

Leased Real Property:

 

Loan Party or Subsidiary

  

Complete street and mailing

address, including zip code

  

Landlord name and contact

information

Endologix, Inc.    2 Musick, Irvine, County of Orange, California 92618 U.S.A.
   The Northwestern Mutual Life Insurance Company Endologix International
Holdings B.V.    Burgemeester Burgerslaan 40, 5245 NH Rosmalen, The Netherlands
   N.A. TriVascular Technologies, Inc.    3910 Brickway Blvd., Santa Rosa,
County of Sonoma, CA 95403 U.S.A.    Sonoma Airport Properties LLC Endologix
Singapore Private Limited    50 Ubi Crescent #01-03 Ubi Techpark Singapore
408568    Somnotec (S) Pte Ltd., 50 Ubi Crescent #01-03 Ubi Techpark Singapore
408568

Subleased Real Property:

 

Loan Party or Subsidiary

  

Complete street and mailing

address, including zip code

  

Landlord and sublandlord

name and contact information

N.A.      

Other Real Property Operated or Occupied:

 

Loan Party or Subsidiary

  

Complete street and mailing

address, including zip code

  

Nature of use

N.A.      

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

Schedule 3.1(x)

Borrower’s Subsidiaries

 

Parent

   Percentage
ownership   

Name of

Subsidiary

  

Jurisdiction

of

Subsidiary

   Date of
formation
of
Subsidiary   

Federal

employer

ID no. of
Subsidiary

  

Organizational
identification

no. of

Subsidiary

Endologix, Inc.    100%    Nellix, Inc.    Delaware    03/20/2001    94-3398416
   3359980 Endologix, Inc.    100%    CVD/RMS Acquisition Corp.    Delaware   
12/13/1998    33-0928438    2955166 Endologix, Inc.    100%    RMS/Endologix
Sideways Merger Corp.    Delaware    05/30/2002    03-0512974    3530477
Endologix, Inc.    100%    Endologix Singapore Private Limited    Singapore   
01/13/2015    N.A.    N.A. Endologix, Inc.    100%    ELGX International
Holdings GP    Cayman Islands    07/05/2011    N.A.    N.A. Endologix, Inc.   
100%    Endologix New Zealand Co.    New Zealand    05/31/2012    N.A.    N.A.

Endologix, Inc.

ELGX International Holdings GP

   99%

1%

   Endologix Bermuda L.P.    Bermuda    07/24/2012    N.A.    N.A. Endologix
International Holdings B.V.    100%    Endologix Poland spolkda z ograniczona
odpowiedzialnoscia    Poland    03/26/2015    N.A.    N.A. Endologix Bermuda
L.P.    100%    Endologix International Holdings B.V.    The Netherlands   
08/22/2011    N.A.    N.A. Endologix International Holdings B.V.    100%   
Endologix Italia S.r.l.    Italy    06/04/2012    N.A.    N.A. Endologix
International holdings B.V.    100%    Endologix International B.V.    The
Netherlands    08/22/2011    N.A.    N.A. Endologix, Inc.    100%    TriVascular
Technologies, Inc.    Delaware    07/11/2007    87-0807313    4387054
TriVascular Technologies, Inc.    100%    TriVascular, Inc.    California   
01/05/1998    68-0402620    C2065374 TriVascular, Inc.    100%    TriVascular
Sales, LLC    Texas    08/23/2012    46-0859179    0801644988 TriVascular,
Inc.        100%    TriVascular Canada, LLC    Delaware    11/25/2014    N.A.   
5647226

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

Parent

   Percentage
ownership   

Name of

Subsidiary

  

Jurisdiction

of

Subsidiary

   Date of
formation
of
Subsidiary   

Federal

employer

ID no. of
Subsidiary

  

Organizational
identification

no. of

Subsidiary

TriVascular, Inc.    100%    TriVascular Germany GmbH    Germany    05/14/2012
   N.A.    N.A. TriVascular, Inc.    100%    TriVascular Switzerland Sarl   
Switzerland    04/30/2010    N.A.    N.A. TriVascular, Inc.    100%   
TriVascular Italia S.R.L.    Italy    04/08/2010    N.A.    N.A.

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

Schedule 3.1(z)

Borrower’s Outstanding Shares of Stock, Options and Warrants

 

Name of Issuer

  

Authorized

Securities

  

Issued and

Outstanding Securities

  

Certificated
(Yes or No)

  

Loan

Party/Subsidiary
Owner

Endologix, Inc.4    135,000,000 Shares of Common Stock, $0.001 par value   
82,925,280 Shares of Common Stock    Yes    N.A.    5,000,000 Shares of
Preferred Stock, $0.001 par value, undesignated    Zero Shares of Preferred
Stock    Yes, when issued    N.A. Nellix, Inc.    1,000 Shares of Common Stock,
$0.001 par value    100 Shares of Common Stock    Yes    Endologix, Inc. CVD/RMS
Acquisition Corp.    100 Shares of Common Stock, $0.001 par value    100 Shares
of Common Stock    Yes    Endologix, Inc. RMS/Endologix Sideways Merger Corp.   
100 Shares of Common Stock, $0.001 par value    100 Shares of Common Stock   
Yes    Endologix, Inc. TriVascular Technologies, Inc.    1,000 Shares of Common
Stock, $0.001 par value    100 Shares of Common Stock    Yes    Endologix, Inc.
ELGX International Holdings GP    Unspecified Number of Partnership Interests   
Unspecified Number of Partnership Interests    No    Endologix, Inc. Endologix
Bermuda, L.P.    Unspecified Number of Partnership Interests    Unspecified
Number of Partnership Interests    No    Endologix, Inc. Endologix Singapore
Private Limited    Unspecified Number of Company Interests    Unspecified Number
of Company Interests    No    Endologix, Inc. Endologix New Zealand Co.   
Unspecified Number of Company Interests    Unspecified Number of Company
Interests    No    Endologix, Inc. TriVascular, Inc.        100 Shares of Common
stock, $0.01 par value    100 Shares of Common Stock    No    TriVascular
Technologies, Inc.

 

4  As disclosed in the Annual Report on Form 10-K of Endologix, Inc., as filed
with the U.S. Securities and Exchange Commission on March 1, 2017, and available
on EDGAR.

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

Name of Issuer

  

Authorized

Securities

  

Issued and

Outstanding Securities

  

Certificated
(Yes or No)

  

Loan

Party/Subsidiary
Owner

Endologix International Holdings B.V.    Unspecified Number of Company Interests
   Unspecified Number of Company Interests    No    Endologix Bermuda, L.P.
Endologix Poland spolkda z ograniczona odpowiedzialnoscia    Unspecified Number
of Company Interests    Unspecified Number of Company Interests    No   
Endologix International Holdings B.V. Endologix International B.V.   
Unspecified Number of Company Interests    Unspecified Number of Company
Interests    No    Endologix International Holdings B.V. Endologix Italia S.r.l
   Unspecified Number of Company Interests    Unspecified Number of Company
Interests    No    Endologix International Holdings B.V. TriVascular Sales LLC
   1,000 Units of Membership Interests    1,000 Units of Membership Interests   
No    TriVascular, Inc. TriVascular Canada, LLC    1,000 Units of Membership
Interests    1,000 Units of Membership Interests    No    TriVascular, Inc.
TriVascular Italia Sarl    Unspecified Number of Company Interests   
Unspecified Number of Company Interests    No    TriVascular, Inc. TriVascular
Germany GmbH    Unspecified number of Company Interests    Unspecified number of
Company Interests    No    TriVascular, Inc. TriVascular Switzerland Sárl   
Unspecified number of Company Interests    Unspecified number of Company
Interests    No    TriVascular, Inc.

Options and Equity Incentive/Compensation Plans:

Equity Awards: The Borrower’s 2015 Stock Incentive Plan (the “2015 Plan”)
authorizes the grant of equity awards to purchase up to 6.8 million shares of
Common Stock. As of December 31, 2016, approximately 8.3 million shares were
reserved for issuance under outstanding stock options, including stock options
granted under equity compensation plans preceeding the 2015 Plan, and
1.3 million shares were subject to unvested restricted stock awards. The
outstanding stock options have exercise prices ranging from $1.64 to $17.60 and
a weighted average exercise price of $9.22.

Amended and Restated 2006 Employee Stock Purchase Plan (the “ESPP”): As of
December 31, 2016, approximately 4.6 million shares were available for issuance
under the ESPP.

Non-Plan Inducement Grants: In connection with its merger with TriVascular
Technologies, Inc., the Borrower issued non-plan inducement stock options to
purchase 1.3 million shares of Common Stock at an exercise price of $7.53 per
share, and non-plan inducement restricted stock units for 0.3 million shares of
Common Stock.

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

Warrants:

In connection with its merger with TriVascular Technologies, Inc., Borrower
assumed 35,094 unexercised out-of-the-money warrants of TriVascular
Technologies, Inc., 24,272 of which have an exercise price of $12.58 per share
and 10,822 of which have an exercise price of $28.21 per share.

Convertible Notes:

2.25% Convertible Notes: On December 10, 2013, Borrower issued $86.3 million
aggregate principal amount of 2.25% Convertible Notes. The initial conversion
rate of the 2.25% Convertible Notes is 41.6051 shares of Common Stock per $1,000
principal amount of 2.25% Convertible Notes, which represents an initial
conversion price of approximately $24.04 per share. The 2.25% Convertible Notes
are not convertible as of the Agreement Date.

3.25% Convertible Notes: On November 2, 2015, Borrower issued $125.0 million
aggregate principal amount of 3.25% Convertible Notes. The initial conversion
rate of the 3.25% Convertible Notes is 89.4314 shares of Common Stock per $1,000
principal amount of 3.25% Convertible Notes, which represents an initial
conversion price of approximately $11.18 per share. The 3.25% Convertible Notes
are not convertible as of the Agreement Date.

Other Rights to Securities of Borrower:

In connection with its merger with Nellix, Inc. (“Nellix”), Borrower agreed to
issue shares of Common Stock to the former stockholders of Nellix upon
Borrower’s receipt of FDA approval to sell Borrower’s Nellix EVAS System in the
United States (the “PMA Milestone”). The number of shares of Common Stock
issuable to the former stockholders of Nellix upon achievement of the PMA
Milestone shall equal the quotient obtained by dividing $15.0 million by the
average per share closing price of Common Stock on The Nasdaq Global Select
Market for each of the 30 consecutive trading days ending with the fifth trading
day immediately preceding the date of Borrower’s receipt of FDA approval to sell
Borrower’s Nellix EVAS System in the United States, subject to a stock price
floor of $4.50 per share, but not subject to a stock price ceiling.

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

Schedule 3.1(aa)

Material Contracts

 

•   Cross License Agreement dated as of October 26, 2011, by and between
Endologix, Inc. and Bard Peripheral Vascular, Inc.

 

•   Settlement Agreement, dated October 16, 2012 by and among Endologix, Inc.,
Cook Incorporated, Cook Group and Cook Medical, Inc.

 

•   Standard Industrial/Commercial Multi-Tenant Lease - Net, for 2 Musick,
Irvine, California and 35 Hammond, Irvine, dated June 12, 2013, by and between
Endologix, Inc. and The Northwestern Mutual Life Insurance Company.

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

Schedule 3.1(dd)

Environmental

None.

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

Schedule 3.1(ff)

Labor Relations

None.

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

Schedule 3.1(gg)

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

 

Loan Party

 

Jurisdiction

of

organization

 

All other
jurisdictions of

organization

of Loan

Party for 5 years

preceding the

Agreement Date

 

Legal name

 

All other legal

names of Loan

Party for 5 years
preceding the
Agreement Date

  Organizational
identification
no.  

Location of chief executive

office or sole place of business

Endologix, Inc.   Delaware   N.A.   Same as loan party name at left   N.A.  
2338745   2 Musick, Irvine, County of Orange, California 92618 U.S.A. Nellix,
Inc.   Delaware   N.A.   Same as loan party name at left   N.A.   3359980   2
Musick, Irvine, County of Orange, California 92618 U.S.A. CVD/RMS Acquisition
Corp.   Delaware   N.A.   Same as loan party name at left   N.A.   2955166   2
Musick, Irvine, County of Orange, California 92618 U.S.A. TriVascular
Technologies, Inc.   Delaware   N.A.   Same as loan party name at left   N.A.  
4387054   3910 Brickway Blvd., Santa Rosa, County of Sonoma, CA 95403 U.S.A
TriVascular, Inc.   California   N.A.   Same as loan party name at left   N.A.  
C2065374   3910 Brickway Blvd., Santa Rosa, County of Sonoma, CA 95403 U.S.A
TriVascular Canada, LLC   Delaware   N.A.   Same as loan party name at left  
N.A.   5647226   3910 Brickway Blvd., Santa Rosa, County of Sonoma, CA 95403
U.S.A

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

Schedule 5.1(y)

Post-Closing Requirements

The Loan Parties shall satisfy and complete each of the following obligations,
or provide Agent each of the items listed below, as applicable, on or before the
date indicated below, all to the satisfaction of Agent in its reasonable
discretion:

1. Within forty-five (45) days after the Agreement Date (or such later date as
Agent may agree in its sole discretion), ensure that each deposit account and
securities account (other than Excluded Accounts and other than the Merrill
Lynch Securities Account) maintained by any Loan Party shall be subject to a
Control Agreement, or any other documentation determined by Agent to be
reasonably necessary to grant a perfected security interest in the funds or
investment property maintained in any such deposit account or securities
account, each of which shall be in form and substance reasonably satisfactory to
Agent.

2. The Loan Parties shall use commercially reasonable efforts to, by the date
that is sixty (60) days following the Agreement Date (or such later date as
Agent may agree in writing in its sole discretion), provide Agent with
landlord’s agreement, consignment agreements, landlord waivers, and/or bailee
waivers (as applicable), each of which shall be reasonably satisfactory in form
and substance to Agent, for each of the following locations: (a) 3910 Brickway
Blvd., Santa Rosa, CA 95403, (b) 5025 Tuggle Road, Memphis, TN 38118 and (c) 2
Musick, Irvine, CA 92618.

3. The Loan Parties shall, by the date that is thirty (30) days after the
Agreement Date (or such later date as Agent may agree in writing in its sole
discretion), provide Agent with endorsements to the Loan Parties’ property
insurance policies naming Agent as lender loss payee and endorsements to the
Loan Parties’ liability insurance policies naming Agent as additional insured
and, in each case, notices of cancellation as set forth in Section 5.1(e).

4. The Loan Parties shall, within sixty (60) days after the Agreement Date (or
such later date as Agent may agree in writing in its sole discretion), either
(a) provide Agent with evidence reasonably satisfactory to it that Trivascular
Sales LLC has been dissolved or (b) make TriVascular Sales LLC a Guarantor and
have TriVascular Sales LLC provide a Lien in its Collateral to Agent for the
benefit of the Secured Parties and to execute and deliver all agreements,
instruments and documents and take such other actions reasonably requested by
Agent in respect thereof.

5. Within forty-five (45) days after the Agreement Date (or such later date as
Agent may agree in writing in its sole discretion), the Loan Parties shall have
made all requisite filings to cause their patents currently registered in the
name of Radiance Medical Systems (serial numbers 08/877593 (Microcapsules for
Site-Specific Delivery) and 08/965900 (Radiation Delivery Catheter) to be
registered in the name of Endologix, Inc.

6. The Loan Parties shall, within forty-five (45) days after the Agreement Date
(or such later date as Agent may agree in writing in its sole discretion), make
RMS/Endologix Sideways Merger Corp. a Guarantor and have RMS/Endologix Sideways
Merger Corp. provide a Lien in its Collateral to Agent for the benefit of the
Secured Parties and to execute and deliver all agreements, instruments and
documents and take such other actions reasonably requested by Agent in respect
thereof.

The Loan Parties’ failure to complete and satisfy any of the above obligations
on or before the date indicated above (or such later date as Agent may agree in
writing in its sole discretion), or the Loan Parties’ failure to deliver any of
the above listed items on or before the date indicated above (or such later date
as Agent may agree in writing in its sole discretion), shall constitute an
immediate and automatic Event of Default.

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

Schedule 5.2(iv)

Contingent Obligations

 

•   Base Capped Call Confirmation, dated December 4, 2013, between the Borrower
and Bank of America, N.A.

 

•   Additional Capped Call Confirmation, dated December 5, 2013, between the
Borrower and Bank of America, N.A.

The capped call transactions contemplated by the documents listed above relate
to the 2.25% Convertible Notes. The capped call transactions are expected to
reduce the potential dilution and/or offset the potential cash payments that the
Borrower may be required to make in excess of the principal amount upon
conversion of the 2.25% Convertible Notes in the event that the market price per
share of the Borrower’s common stock, as measured under the terms of the capped
call transactions, is greater than the strike price of the capped call
transactions, which initially corresponds to the $24.04 conversion price of the
2.25% Convertible Notes. The Borrower will not be required to make any cash
payments to Bank of America, N.A. upon the exercise of the options that are a
part of the capped call transactions, but rather will be entitled to receive
from Bank of America, N.A. a number of shares of the Borrower’s common stock
and/or an amount of cash based on the amount by which the market price per share
of Common Stock of the Borrower, as measured under the terms of the capped call
transactions, is greater than the strike price of the capped call transactions
during the relevant valuation period.

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

Schedule 5.2(vii)

Transactions with Affiliates

Investments of Inventory pursuant to clause (j) of the definition of Permitted
Investments.