exv10w2





Exhibit 10.2










(Working Capital Line of Credit)




LOAN AND SECURITY AGREEMENT



     This LOAN AND SECURITY AGREEMENT (this “Agreement”) dated as of October 14, 2010 (the
“Effective Date”) is between SILICON VALLEY BANK, a California corporation (“Bank”), with its
principal place of business at 3003 Tasman Drive, Santa Clara, California 95054 with a loan
production office located at 3353 Peachtree Road, NE, Suite M-10, Atlanta, Georgia 30326 and
ALIMERA SCIENCES, INC., a Delaware corporation (“Borrower”), with its principal place of business
at 6120 Windward Parkway, Suite 290, Alpharetta, Georgia 30005, and provides the terms on which
Bank shall lend to Borrower, and Borrower shall repay Bank. The parties agree as follows:



     1 ACCOUNTING AND OTHER TERMS



     Accounting terms not defined in this Agreement shall be construed following GAAP.
Calculations and determinations must be made following GAAP. Notwithstanding the foregoing, all
financial calculations (whether for pricing, covenants, or otherwise) shall be made with regard to
Borrower only and not on a consolidated basis. The term “financial statements” includes the notes
and schedules. The terms “including” and “includes” always mean “including (or includes) without
limitation,” in this or any Loan Document. Capitalized terms not otherwise defined in this
Agreement shall have the meanings set forth in Section 13. All other terms contained in this
Agreement, unless otherwise indicated, shall have the meanings provided by the Code, to the extent
such terms are defined therein.



     2 LOAN AND TERMS OF PAYMENT



     2.1 Promise to Pay. Borrower hereby unconditionally promises to pay Bank the unpaid
principal amount of all Advances hereunder with all interest, fees and finance charges due thereon
as and when due in accordance with this Agreement.



     2.1.1 Financing of Accounts.


          (a) Availability. Subject to the terms of this Agreement, Borrower may request that
Bank finance specific Eligible Accounts. Bank may, in its good faith business discretion, finance
such Eligible Accounts by extending credit to Borrower in an amount equal to the result of the
Advance Rate multiplied by the face amount of the Eligible Account (the “Advance”). Bank may, in
its sole discretion, change the percentage of the Advance Rate for a particular Eligible Account on
a case by case basis. When Bank makes an Advance, the Eligible Account becomes a “Financed
Receivable.”


          (b) Maximum Advances. The aggregate face amount of all Financed Receivables
outstanding at any time may not exceed the Facility Amount. In addition and notwithstanding the
foregoing, the aggregate amount of Advances outstanding at any time may not exceed Twenty Million
Dollars ($20,000,000.00).


          (c) Borrowing Procedure. Borrower will deliver an Invoice Transmittal for each
Eligible Account it offers. Bank may rely on information set forth in or provided with the Invoice
Transmittal. In addition, upon Bank’s request, Borrower shall deliver to Bank any contracts,
purchase orders, or other underlying supporting documentation with respect to such Eligible
Account.


          (d) Credit Quality; Confirmations. Bank may, at its option, conduct a credit check of
the Account Debtor for each Account requested by Borrower for financing hereunder in order to
approve any such 

 









 






Account Debtor’s credit before agreeing to finance such Account. Bank may also
verify directly with the respective
Account Debtors the validity, amount and other matters relating to the Accounts (including
confirmations of Borrower’s representations in Section 5.3) by means of mail, telephone or
otherwise, either in the name of Borrower or Bank from time to time in its sole discretion.


          (e) Accounts Notification/Collection. Bank may notify any Person owing Borrower money
of Bank’s security interest in the funds and verify and/or collect the amount of the Account.


          (f) Early Termination. This Agreement may be terminated prior to the Maturity Date as
follows: (i) by Borrower, effective three (3) Business Days after written notice of termination is
given to Bank; or (ii) by Bank at any time after the occurrence of an Event of Default, without
notice, effective immediately. If this Agreement is terminated (A) by Bank in accordance with
clause (ii) in the foregoing sentence, or (B) by Borrower for any reason, Borrower shall pay to
Bank a termination fee in an amount equal to (1) on or prior to the Anniversary Date, Four Hundred
Thousand Dollars ($400,000.00), and (2) after the Anniversary Date, Two Hundred Thousand Dollars
($200,000.00) (the “Early Termination Fee”). The Early Termination Fee shall be due and payable on
the effective date of such termination and thereafter shall bear interest at a rate equal to the
highest rate applicable to any of the Obligations, provided that any applicable Early Termination
Fee shall be reduced by fifty percent (50.0%) in the event that the prepayment of outstanding
Advances is made as a condition precedent to, in connection with or immediately upon the
acquisition by Borrower (whether by merger or the acquisition of all or substantially all of
Borrower’s assets) by a non-affiliated third party, provided that no Event of Default has occurred
and is continuing. Notwithstanding the foregoing, Bank agrees to waive the Early Termination Fee
if Bank agrees to refinance and redocument this Agreement under another division of Bank (in its
sole and exclusive discretion) prior to the Maturity Date.


          (g) Maturity. This Agreement shall terminate and all Obligations outstanding
hereunder shall be immediately due and payable on the Maturity Date.


          (h) Suspension of Advances. Borrower’s ability to request that Bank finance Eligible
Accounts hereunder will terminate if, in Bank’s sole discretion, there has been a material adverse
change in the business, results of operation, financial condition or the prospect of repayment of
the Obligations, or there has been any material adverse deviation by Borrower from the most recent
SEC Reports or financial projections delivered to Bank pursuant to Section 6.2(a)(iv) herein.



     2.2 Collections, Finance Charges, Remittances and Fees. The Obligations shall be
subject to the following fees and Finance Charges. Unpaid fees and Finance Charges may, in Bank’s
discretion, accrue interest and fees as described in Section 9.2 hereof.



     2.2.1 Collections. Collections will be credited to the Financed Receivable Balance
for such Financed Receivable, but if there is an Event of Default, Bank may apply Collections to
the Obligations in any order it chooses. If Bank receives a payment for both a Financed Receivable
and a non-Financed Receivable, the funds will first be applied to the Financed Receivable and, if
there is no Event of Default then existing, the excess will be remitted to Borrower, subject to
Section 2.2.6.



     2.2.2 Facility Fee. A fully earned, non-refundable facility fee of One Hundred
Thousand Dollars ($100,000.00) is due upon execution of this Agreement (the “Facility Fee”).



     2.2.3 Finance Charges. In computing Finance Charges on the Obligations under this
Agreement, all Collections received by Bank shall be deemed applied by Bank on account of the
Obligations three (3) Business Days after receipt of the Collections. Borrower will pay a finance
charge (the “Finance Charge”) on the Financed Receivable Balance which is equal to the Applicable
Rate divided by 360 multiplied by the number of days each such Financed Receivable
is outstanding multiplied by the outstanding Financed Receivable Balance. The Finance
Charge is payable when the Advance made based on such Financed Receivable is payable in accordance
with Section 2.3 hereof. After an Event of Default, the Applicable Rate will increase an
additional four percent (4.0%) per annum effective immediately upon the occurrence of such Event of
Default.



     2.2.4 Accounting. After each Reconciliation Period, Bank will provide an accounting
of the transactions for that Reconciliation Period, including the amount of all Financed
Receivables, all Collections,



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Adjustments, Finance Charges, and the Facility Fee. If Borrower does
not object to the accounting in writing within
thirty (30) days it shall be considered accurate. All Finance Charges and other interest and
fees are calculated on the basis of a 360 day year and actual days elapsed.



     2.2.5 Deductions. Bank may deduct fees, Finance Charges, Advances which become due
pursuant to Section 2.3, and other amounts due pursuant to this Agreement from any Advances made or
Collections received by Bank.



     2.2.6 Lockbox; Account Collection Services.



     (a) Borrower shall direct each Account Debtor (and each depository institution where proceeds
of Accounts are on deposit) to remit payments with respect to the Accounts to a lockbox account
established with Bank or to wire transfer payments to a cash Collateral Account that Bank controls
(collectively, the “Lockbox”). It will be considered an immediate Event of Default if the Lockbox
is not set-up and operational on or before January 15, 2011.



     (b) For any time at which such Lockbox is not established, the proceeds of the Accounts shall
be paid by the Account Debtors to an address consented to by Bank. Upon receipt by Borrower of
such proceeds, Borrower shall immediately transfer and deliver same to Bank, along with a detailed
cash receipts journal.



     (c) Provided no Event of Default exists or an event that with notice or lapse of time will be
an Event of Default, within three (3) days of receipt of any amounts by Bank (whether in the
Lockbox, directly from Borrower, or otherwise), Bank will turn over to Borrower the proceeds of the
Accounts other than Collections with respect to Financed Receivables and the amount of Collections
in excess of the amounts for which Bank has made an Advance to Borrower, less any amounts due to
Bank, such as the Finance Charge, the Facility Fee, payments due to Bank, other fees and expenses,
or otherwise; provided, however, Bank may hold such excess amount with respect to Financed
Receivables as a reserve until the end of the applicable Reconciliation Period if Bank, in its
discretion, determines that other Financed Receivable(s) may no longer qualify as an Eligible
Account at any time prior to the end of the subject Reconciliation Period.



     (d) This Section 2.2.6 does not impose any affirmative duty on Bank to perform any act other
than as specifically set forth herein. All Accounts and the proceeds thereof are Collateral and if
an Event of Default occurs, Bank may apply the proceeds of such Accounts to the Obligations.



     (e) Notwithstanding anything herein to the contrary, Bank shall waive any and all fees and/or
expenses related to the LockBox incurred or arising prior to the earlier of: (i) the initial
Advance, or (ii) January 31, 2011.



     2.2.7 Bank Expenses. Borrower shall pay all Bank Expenses (including reasonable
attorneys’ fees and expenses, plus expenses, for documentation and negotiation of this Agreement)
incurred through and after the Effective Date, when due.



     2.2.8 Unused Line Facility Fee. As compensation for Bank’s maintenance of sufficient
funds available for such purpose, Bank shall have earned a fee (the “Unused Line Facility Fee”),
which fee shall be paid monthly, in arrears, on a calendar year basis on the first day of each
month, in an amount equal to (a) commencing on the earlier to occur of (i) the Funding Date (as
defined in the Term Loan Agreement) of Term Loan B (as defined in the Term Loan Agreement) or (ii)
August 1, 2011 (the earlier to occur of (i) or (ii) being referred to herein as the “Unused Line
Facility Fee Commencement Date”), and thereafter until the date that is one (1) year after the
Unused Line Facility Fee Commencement Date, 0.0313% of the unused portion of the Availability, as
determined by Bank, and (b) on and after the date that is one (1) year from the Unused Line
Facility Fee Commencement Date, 0.0208 of the unused portion of the Availability, as determined by
Bank. Borrower shall not be entitled to any credit, rebate or repayment of any Unused Line
Facility Fee previously earned by Bank pursuant to this Section 2.2.8 notwithstanding any
termination of the within Agreement, or suspension or termination of Bank’s obligation to make
Advances hereunder.



     2.3 Repayment of Obligations; Adjustments.



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     2.3.1 Repayment. Borrower will repay each Advance on the earliest of: (a) the date on
which payment is received of the Financed Receivable with respect to which the Advance was made,
(b) the date on which the Financed Receivable is no longer an Eligible Account, (c) the date on
which any Adjustment is asserted to the Financed Receivable (but only to the extent of the
Adjustment if the Financed Receivable remains otherwise an Eligible Account), (d) the date on which
there is a breach of any warranty or representation set forth in Section 5.3, or a breach of any
covenant in this Agreement or (e) the Maturity Date (including any early termination). Each
payment will also include all accrued Finance Charges with respect to such Advance and all other
amounts then due and payable hereunder.



     2.3.2 Repayment on Event of Default. When there is an Event of Default, Borrower
will, if Bank demands (or, upon the occurrence of an Event of Default under Section 8.5,
immediately without notice or demand from Bank) repay all of the Advances. The demand may, at
Bank’s option, include the Advance for each Financed Receivable then outstanding and all accrued
Finance Charges, Early Termination Fee, attorneys’ and professional fees, court costs and expenses,
and any other Obligations.



     2.3.3 Debit of Accounts. Bank may debit any of Borrower’s deposit accounts for
payments or any amounts Borrower owes Bank hereunder. Bank shall promptly notify Borrower when it
debits Borrower’s accounts. These debits shall not constitute a set-off.



     2.3.4 Adjustments. If, at any time during the term of this Agreement, any Account
Debtor asserts an Adjustment, Borrower issues a credit memorandum, or any of the representations
and warranties in Section 5.3 or covenants in this Agreement are no longer true in all material
respects, Borrower will promptly advise Bank.



     2.4 Power of Attorney. Borrower irrevocably appoints Bank and its successors and
assigns as attorney-in-fact and authorizes Bank, to: (a) following the occurrence and during the
continuance of an Event of Default, (i) sell, assign, transfer, pledge, compromise, or discharge
all or any part of the Financed Receivables; (ii) demand, collect, sue, and give releases to any
Account Debtor for monies due and compromise, prosecute, or defend any action, claim, case or
proceeding about the Financed Receivables, including filing a claim or voting a claim in any
bankruptcy case in Bank’s or Borrower’s name, as Bank chooses; and (iii) prepare, file and sign
Borrower’s name on any notice, claim, assignment, demand, draft, or notice of or satisfaction of
lien or mechanics’ lien or similar document; and (b) regardless of whether there has been an Event
of Default, (i) notify all Account Debtors to pay Bank directly; (ii) receive and open mail
addressed to Borrower in connection with Bank’s maintenance and/or operation of the Lockbox; (iii)
endorse Borrower’s name on checks or other instruments (to the extent necessary to pay amounts owed
pursuant to this Agreement); and (iv) execute on Borrower’s behalf any instruments, documents,
financing statements to perfect Bank’s interests in the Financed Receivables and Collateral and do
all acts and things necessary or expedient, as reasonably determined solely and exclusively by
Bank, to protect or preserve, Bank’s rights and remedies under this Agreement, as directed by
Bank.



     3 CONDITIONS OF LOANS



     3.1 Conditions Precedent to Initial Advance. Bank’s agreement to make the initial
Advance is subject to the condition precedent that Bank shall have received, in form and substance
satisfactory to Bank, such documents, and completion of such other matters, as Bank may reasonably
deem necessary or appropriate, including, without limitation:


          (a) the Term Loan Agreement and all of the conditions precedent thereto;


          (b) a certificate of the Secretary of Borrower with respect to certificate of incorporation,
bylaws, incumbency and resolutions authorizing the execution and delivery of this Agreement and the
Loan Documents;


          (c) Perfection Certificate by Borrower;


          (d) a legal opinion of Borrower’s counsel (authority), in form and substance acceptable to
Bank;


          (e) Control Agreements;



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          (f) evidence satisfactory to Bank that the insurance policies required by Section 6.4 hereof
are in full force and effect, together with appropriate evidence showing lender loss payable and/or
additional insured clauses or endorsements in favor of Bank;


          (g) payment of the fees and Bank Expenses then due and payable;


          (h) Certificates of Foreign Qualification (Georgia, and others, if applicable);


          (i) long form Certificate of Good Standing/Legal Existence (Delaware); and


          (j) such other documents, and completion of such other matters, as Bank may reasonably deem
necessary or appropriate.



     3.2 Conditions Precedent to all Advances. Bank’s agreement to make each Advance,
including the initial Advance, is subject to the following:


          (a) receipt of the Invoice Transmittal;


          (b) Bank shall have (at its option) conducted the confirmations and verifications as described
in Section 2.1.1(d);


          (c) each of the representations and warranties in Section 5.3 shall be true on the date of the
Invoice Transmittal and on the effective date of each Advance and no Event of Default shall have
occurred and be continuing, or result from the Advance. Each Advance is Borrower’s representation
and warranty on that date that the representations and warranties in Section 5.3 remain true; and


          (d) each of the representations and warranties in Section 5 (other than Section 5.3) shall be
true in all material respects on the date of the Invoice Transmittal and on the effective date of
each Advance and no Event of Default shall have occurred and be continuing, or result from the
Advance. Each Advance is Borrower’s representation and warranty on that date that the
representations and warranties in Section 5 (other than Section 5.3) remain true in all material
respects.



     4 CREATION OF SECURITY INTEREST



     4.1 Grant of Security Interest. Borrower hereby grants Bank, to secure the payment
and performance in full of all of the Obligations and the performance of each of Borrower’s duties
under the Loan Documents, a continuing security interest in, and pledges to Bank, the Collateral,
wherever located, whether now owned or hereafter acquired or arising, and all proceeds and products
thereof, provided, that solely with respect to Borrower’s Intellectual Property, such security
interest shall not be effective unless or until an IP Lien Event has occurred. Borrower
represents, warrants, and covenants that the security interest granted herein shall be a first
priority security interest in the Collateral, subject only to Permitted Liens that may have
priority to Bank’s Lien to the extent permitted under this Agreement. If Borrower shall at any
time, acquire a commercial tort claim, Borrower shall promptly notify Bank in a writing signed by
Borrower of the general details thereof and grant to Bank in such writing a security interest
therein and in the proceeds thereof, all upon the terms of this Agreement, with such writing to be
in form and substance satisfactory to Bank.



     If this Agreement is terminated, Bank’s Lien in the Collateral shall continue until the
Obligations (other than inchoate indemnity obligations) are repaid in full in cash. Upon payment
in full in cash of the Obligations and at such time this Agreement has been terminated, Bank shall,
at Borrower’s sole cost and expense, release its Liens in the Collateral and all rights therein
shall revert to Borrower.



     4.2 Authorization to File Financing Statements. Borrower hereby authorizes Bank to
file financing statements, without notice to Borrower, with all appropriate jurisdictions to
perfect or protect Bank’s interest or rights hereunder, including a notice that any disposition of
the Collateral, by either Borrower or any other Person, shall be deemed to violate the rights of
Bank under the Code.



     5 REPRESENTATIONS AND WARRANTIES



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     Borrower represents and warrants as follows:



     5.1 Due Organization and Authorization. Borrower and each of its Subsidiaries are
duly existing and in good standing as Registered Organizations in their respective jurisdictions of
formation and are qualified and licensed to do business and are in good standing in any
jurisdiction in which the conduct of their respective business or ownership of property requires
that they be qualified except where the failure to do so would not reasonably be expected to have a
material adverse effect on Borrower’s business. In connection with this Agreement, Borrower has
delivered to Bank a completed certificate signed by Borrower (the “Perfection Certificate”).
Borrower represents and warrants to Bank that (a) Borrower’s exact legal name is that indicated on
the Perfection Certificate and on the signature page hereof; (b) Borrower is an organization of the
type and is organized in the jurisdiction set forth in the Perfection Certificate; (c) the
Perfection Certificate accurately sets forth Borrower’s organizational identification number or
accurately states that Borrower has none; (d) the Perfection Certificate accurately sets forth
Borrower’s place of business, or, if more than one, its chief executive office as well as
Borrower’s mailing address (if different than its chief executive office); (e) Borrower (and each
of its predecessors) has not, in the past five (5) years, changed its jurisdiction of formation,
organizational structure or type, or any organizational number assigned by its jurisdiction; and
(f) all other information set forth on the Perfection Certificate pertaining to Borrower and each
of its Subsidiaries is accurate and complete in all material respects (it being understood and
agreed that Borrower may from time to time update certain information in the Perfection Certificate
after the Effective Date to the extent permitted by one or more specific provisions in this
Agreement). If Borrower is not now a Registered Organization but later becomes one, Borrower shall
promptly notify Bank of such occurrence and provide Bank with Borrower’s organizational
identification number.



     The execution, delivery and performance by Borrower of the Loan Documents to which it is a
party have been duly authorized, and do not (i) conflict with any of Borrower’s organizational
documents, (ii) contravene, conflict with, constitute a default under or violate any material
Requirement of Law, (iii) contravene, conflict or violate any applicable order, writ, judgment,
injunction, decree, determination or award of any Governmental Authority by which Borrower or any
of its Subsidiaries or any of their property or assets may be bound or affected, (iv) require any
action by, filing, registration, or qualification with, or Governmental Approval from, any
Governmental Authority (except such Governmental Approvals which have already been obtained and are
in full force and effect), or (v) constitute an event of default under any material agreement by
which Borrower is bound. Borrower is not in default under any agreement to which it is a party or
by which it is bound in which the default would reasonably be expected to have a material adverse
effect on Borrower’s business.



     5.2 Collateral. Borrower has good title, has rights in, and the power to transfer
each item of the Collateral upon which it purports to grant a Lien hereunder, free and clear of any
and all Liens except Permitted Liens. Borrower has no deposit accounts other than the deposit
accounts with Bank, the deposit accounts, if any, described in the Perfection Certificate delivered
to Bank in connection herewith, or of which Borrower has given Bank notice and taken such actions
as are necessary to give Bank a perfected security interest therein. The Accounts are bona fide,
existing obligations of the Account Debtors. All Inventory is in all material respects of good and
marketable quality, free from material defects.



     On the Effective Date, the Collateral is not in the possession of any third party bailee (such
as a warehouse) except as disclosed in the Perfection Certificate. None of the components of the
Collateral shall be maintained at locations other than as disclosed in the Perfection Certificate
on the Effective Date or as permitted pursuant to Section 7.2. In the event that Borrower, after
the Effective Date, intends to store or otherwise deliver any portion of the Collateral to a bailee
in excess of One Hundred Thousand Dollars ($100,000.00), then Borrower will first receive the
written consent of Bank and such bailee must execute and deliver a bailee agreement in form and
substance satisfactory to Bank in its sole discretion.



     Borrower is the sole owner of the Intellectual Property which it owns or purports to own
except for (a) non-exclusive licenses granted to its customers in the ordinary course of business,
(b) over-the-counter software that is commercially available to the public, and (c) Intellectual
Property licensed to Borrower and noted on the Perfection Certificate. Each Patent which it owns
or purports to own and which is material to Borrower’s business is valid and enforceable, and no
part of the Intellectual Property which Borrower owns or purports to own and which is material to
Borrower’s business has been judged invalid or unenforceable, in whole or in part. To Borrower’s
knowledge, no claim has been made that any part of the Intellectual Property violates the rights of
any third party except to the extent such claim would not reasonably be expected to have a material
adverse effect on Borrower’s business.



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     Except as noted on the Perfection Certificate, Borrower is not a party to, nor is it bound by,
any Restricted License.



     5.3 Financed Receivables. Borrower represents and warrants for each Financed
Receivable:


          (a) Such Financed Receivable is an Eligible Account;


          (b) Borrower is the owner of and has the legal right to sell, transfer, assign and encumber
such Financed Receivable;


          (c) The correct amount is on the Invoice Transmittal and is not disputed;


          (d) Payment is not contingent on any obligation or contract and Borrower has fulfilled all its
obligations as of the Invoice Transmittal date;


          (e) Such Financed Receivable is based on an actual sale and delivery of goods and/or services
rendered, is due to Borrower, is not past due or in default, has not been previously sold,
assigned, transferred, or pledged and is free of any liens, security interests and encumbrances
other than Permitted Liens;


          (f) There are no defenses, offsets, counterclaims or agreements for which the Account Debtor
may claim any deduction or discount;


          (g) Borrower reasonably believes no Account Debtor is insolvent or subject to any Insolvency
Proceedings;


          (h) Borrower has not filed or had filed against it Insolvency Proceedings and does not
anticipate any filing;


          (i) Bank has the right to endorse and/or require Borrower to endorse all payments received on
Financed Receivables and all proceeds of Collateral; and


          (j) No representation, warranty or other statement relating to or in respect of such Financed
Receivable in any certificate or written statement given to Bank contains any untrue statement of a
material fact or omits to state a material fact necessary to make the statement contained in the
certificates or statement not misleading.



     5.4 Litigation. There are no actions or proceedings pending or, to the knowledge of
Borrower’s Responsible Officers, threatened in writing by or against Borrower or any Subsidiary in
which an adverse decision would reasonably be expected to have a material adverse effect on
Borrower’s business.



     5.5 No Material Deterioration in Financial Statements. All consolidated financial
statements for Borrower and any Subsidiaries delivered to Bank fairly present in all material
respects Borrower’s consolidated financial condition and Borrower’s consolidated results of
operations. There has not been any material deterioration in Borrower’s consolidated financial
condition since the date of the most recent SEC Reports.



     5.6 Solvency. The fair salable value of Borrower’s assets (including goodwill minus
disposition costs) exceeds the fair value of its liabilities; and Borrower is able to pay its debts
(including trade debts) as they mature.



     5.7 Regulatory Compliance. Borrower is not an “investment company” or a company
“controlled” by an “investment company” under the Investment Company Act of 1940, as amended.
Borrower is not engaged as one of its important activities in extending credit for margin stock
(under Regulations X, T and U of the Federal Reserve Board of Governors). Neither Borrower nor any
of its Subsidiaries is a “holding company” or an “affiliate” of a “holding company” or a
“subsidiary company” of a “holding company” as each term is defined and used in the Public Utility
Holding Company Act of 2005. Borrower has complied in all material respects with the Federal Fair
Labor Standards Act. Borrower has not violated any laws, ordinances or rules, the violation of
which would reasonably be expected to have a material adverse effect on Borrower’s business. None
of Borrower’s or any



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Subsidiary’s properties or assets has been used by Borrower or any Subsidiary or, to
Borrower’s knowledge, by previous Persons, in disposing, producing, storing, treating, or
transporting any hazardous substance other than in material compliance with applicable Laws.
Borrower and each of its Subsidiaries have obtained all consents, approvals and authorizations of,
made all declarations or filings with, and given all notices to, all Government Authorities that
are necessary to continue their respective businesses as currently conducted.




     5.8 Subsidiaries. Borrower does not own any stock, partnership interest or other
equity securities except for Permitted Investments.



     5.9 Tax Returns and Payments; Pension Contributions. Borrower and each Subsidiary
have timely filed all required tax returns and reports, and Borrower and each Subsidiary have
timely paid when due and payable or duly filed a valid extension therewith all foreign, federal,
state and local taxes, assessments, deposits and contributions owed by Borrower and each
Subsidiary. Borrower may defer payment of any contested taxes, provided that Borrower (a) in good
faith contests its obligation to pay the taxes by appropriate proceedings promptly and diligently
instituted and conducted, (b) notifies Bank in writing of the commencement of, and any material
development in, the proceedings, and (c) posts bonds or takes any other steps required to prevent
the governmental authority levying such contested taxes from obtaining a Lien upon any of the
Collateral that is other than a “Permitted Lien”. Borrower is unaware of any claims or adjustments
proposed for any of Borrower’s prior tax years which could result in additional taxes becoming due
and payable by Borrower. Borrower has paid all amounts necessary to fund all present pension,
profit sharing and deferred compensation plans in accordance with their terms, and Borrower has not
withdrawn from participation in, and has not permitted partial or complete termination of, or
permitted the occurrence of any other event with respect to, any such plan which could reasonably
be expected to result in any liability of Borrower, including any liability to the Pension Benefit
Guaranty Corporation or its successors or any other governmental agency.



     5.10 Full Disclosure. No written representation, warranty or other statement of
Borrower in any certificate or written statement given to Bank, as of the date such representation,
warranty, or other statement was made, taken together with all such written certificates and
written statements given to Bank, contains any untrue statement of a material fact or omits to
state a material fact necessary to make the statements contained in the certificates or statements
not misleading (it being recognized by Bank that projections and forecasts provided by Borrower in
good faith and based upon reasonable assumptions are not viewed as facts and that actual results
during the period or periods covered by such projections and forecasts may differ from the
projected or forecasted results).



     6 AFFIRMATIVE COVENANTS



     Borrower shall do all of the following:


          6.1 Government Compliance.


          (a) Maintain its and all its Subsidiaries’ legal existence and good standing in their
respective jurisdictions of formation and maintain qualification in each jurisdiction in which the
failure to so qualify would reasonably be expected to have a material adverse effect on Borrower’s
business or operations. Borrower shall comply, and have each Subsidiary comply, with all laws,
ordinances and regulations to which it is subject, noncompliance with which would have a material
adverse effect on Borrower’s business.


          (b) Obtain all of the Governmental Approvals necessary for the performance by Borrower of its
obligations under the Loan Documents to which it is a party and the grant of a security interest to
Bank in all of its property. Borrower shall promptly provide copies of any such obtained
Governmental Approvals to Bank.



     6.2 Financial Statements, Reports, Certificates.


          (a) Deliver to Bank: (i) within five (5) days of delivery, copies of all statements, reports
and notices delivered to all of Borrower’s security holders or to any holders of Subordinated Debt;
(ii) within five (5) days of filing, reports on Form 10-K, 10-Q and 8-K with the Securities and
Exchange Commission or a link thereto on Borrower’s or another website on the Internet (“SEC
Reports”); (iii) a prompt report of any legal actions pending or threatened in writing against
Borrower or any Subsidiary that would result in damages or costs to Borrower or any Subsidiary of
One Hundred Fifty Thousand Dollars ($150,000.00) or more or would reasonably be expected to



8









 








have a material adverse effect on Borrower’s business; (iv) no later than thirty (30) days
after approval thereof by Borrower’s Board of Directors, but no later than March 31st
of each calendar year, Borrower’s financial projections for the current fiscal year; (v) within
thirty (30) days after the last day of each month, copies of all monthly bank statements together
with a Compliance Certificate signed by a Responsible Officer; and (vi) budgets, sales projections,
operating plans or other financial information reasonably requested by Bank.



          (b) Allow Bank to audit Borrower’s Collateral, including, but not limited to, Borrower’s
Accounts at Borrower’s expense, upon reasonable notice to Borrower; provided, however, prior to the
occurrence of an Event of Default, Borrower shall be obligated to pay for not more than one (1)
audit per year. After the occurrence of an Event of Default, Bank may audit Borrower’s Collateral,
including, but not limited to, Borrower’s Accounts at Borrower’s expense and at Bank’s sole and
exclusive discretion and without notification and authorization from Borrower.


          (c) Upon Bank’s request, provide a written report respecting any Financed Receivable, if
payment of any Financed Receivable does not occur by its due date and include the reasons for the
delay.


          (d) Provide Bank with, as soon as available, but no later than thirty (30) days following each
Reconciliation Period, an aged listing of accounts receivable and accounts payable by invoice date,
in form acceptable to Bank.


          (e) Provide Bank with, as soon as available, but no later than thirty (30) days following each
Reconciliation Period in which Borrower’s balance sheet reports Deferred Revenue, a Deferred
Revenue report, in form acceptable to Bank.


          (f) Provide Bank with, as soon as available, but no later than thirty (30) days following each
Reconciliation Period, an aggregate cash report, in form acceptable to Bank.


          (g) Provide Bank with, as soon as available, but no later than thirty (30) days following each
Reconciliation Period, perpetual inventory reports for the Inventory valued on a first-in,
first-out basis at the lower of cost or market (in accordance with GAAP) or such other inventory
reports as are requested by Bank in its good faith business judgment, in form acceptable to Bank.


          (h) Prompt written notice of (i) any material change in the composition of the Intellectual
Property, (ii) the registration of any Copyright, including any subsequent ownership right of
Borrower in or to any Copyright, Patent or Trademark not shown in the IP Agreement, and (iii)
Borrower’s knowledge of an event that would reasonably be expected to materially and adversely
affect the value of the Intellectual Property. Upon the occurrence of an IP Lien Event, Borrower
shall deliver to Bank an updated intellectual property security agreement (in form and substance
reasonably acceptable to Bank in its discretion) in favor of Bank, covering all of the
then-existing IP Collateral.


          (j) If after the Effective Date, Borrower determines to manufacture, sell, develop, test or
market any new Iluvien Product, Borrower shall give written notice to Bank of such new Iluvien
Product following such Iluvien Product’s introduction to the general marketplace (which shall
include a brief description of such Iluvien Product, plus a list of all Required Permits relating
to such new Iluvien Product (and a copy of such Required Permits if requested by Bank) and/or
Borrower’s manufacture, sale, development, testing or marketing thereof issued or outstanding as of
the date of such notice); and further, provided, that, if Borrower shall at any time obtain any new
or additional Required Permits from the FDA or parallel state or local authorities, or foreign
counterparts of the FDA or parallel state or local authorities, with respect to any Iluvien Product
which has previously been disclosed to Bank, Borrower shall promptly give written notice to Bank of
such new or additional Required Permits (along with a copy thereof if requested by Bank).



     6.3 Taxes. Borrower shall make, and cause each Subsidiary to make, timely payment of
all federal, state, and local taxes or assessments (other than taxes and assessments which Borrower
is contesting in good faith, with adequate reserves maintained in accordance with GAAP) and will
deliver to Bank, on demand, appropriate certificates attesting to such payments.



9









 





     6.4 Insurance. Keep its business and the Collateral insured for risks and in amounts
standard for companies in Borrower’s industry, stage of development and location, and as Bank may
reasonably request. Insurance policies shall be in a form, with companies, and in customary
amounts that are reasonably satisfactory to Bank. All property policies shall have a lender’s loss
payable endorsement showing Bank as the sole lender loss payee and waive subrogation against Bank,
and all liability policies shall show, or have endorsements showing, Bank as an additional insured.
All policies (or the loss payable and additional insured endorsements) shall provide that the
insurer shall endeavor to give Bank at least twenty (20) days notice before canceling, amending, or
declining to renew its policy. At Bank’s request, Borrower shall deliver certified copies of
policies and evidence of all premium payments. Proceeds payable under any policy shall, at Bank’s
option, be payable to Bank on account of the Obligations. If Borrower fails to obtain insurance as
required under this Section 6.4 or to pay any amount or furnish any required proof of payment to
third persons and Bank, Bank may make all or part of such payment or obtain such insurance policies
required in this Section 6.4, and take any action under the policies Bank deems prudent.



     6.5 Accounts.


          (a) To permit Bank to monitor Borrower’s financial performance and condition, Borrower, and
all Borrower’s Subsidiaries, shall maintain Borrower’s and such Subsidiaries’, primary depository
and operating accounts and securities accounts with Bank and Bank’s affiliates, which accounts
shall represent at least fifty percent (50.0%) of the dollar value of Borrower’s and such
Subsidiaries’ accounts at all financial institutions.


          (b) Provide Bank five (5) days prior written notice before establishing any Collateral Account
at or with any bank or financial institution other than Bank. In addition, for each Collateral
Account that Borrower at any time maintains (including, without limitation, Borrower’s existing
deposit account no. 220-07833 maintained with J.P. Morgan Clearing Corp.), Borrower shall cause the
applicable bank or financial institution at or with which any Collateral Account is maintained to
execute and deliver a Control Agreement or other appropriate instrument with respect to such
Collateral Account to perfect Bank’s Lien in such Collateral Account in accordance with the terms
hereunder, which Control Agreement may not be terminated without the prior written consent of Bank.
The provisions of the previous sentence shall not apply to deposit accounts exclusively used for
payroll, payroll taxes and other employee wage and benefit payments to or for the benefit of
Borrower’s employees and identified to Bank by Borrower as such.



     6.6 Inventory; Returns. Keep all Inventory in good and marketable condition, free
from material defects. Returns and allowances between Borrower and its Account Debtors shall
follow Borrower’s customary practices as they exist at the Effective Date. Borrower must promptly
notify Bank of all returns, recoveries, disputes and written claims that involve more than One
Hundred Thousand Dollars ($100,000.00).



     6.7 Protection and Registration of Intellectual Property Rights.


          (a) Borrower shall: (a) except as may be reasonably determined to be appropriate by Borrower
in the ordinary course of business, protect, defend and maintain the validity and enforceability of
its Intellectual Property; (b) promptly advise Bank in writing of material infringements of its
Intellectual Property; and (c) not allow any Intellectual Property material to Borrower’s business
to be abandoned, forfeited or dedicated to the public without Bank’s written consent. If Borrower
(i) obtains any Patent, registered Trademark or servicemark, registered Copyright, registered mask
work, or any pending application for any of the foregoing, whether as owner, licensee or otherwise,
or (ii) applies for any Patent or the registration of any Trademark or servicemark, in the case of
(i) or (ii) that is not included in the IP Agreement, then Borrower shall promptly provide written
notice thereof to Bank and shall promptly execute such intellectual property security agreements
(or updates to the Exhibits to the IP Agreement if not filed at such time by Bank) and other
documents and take such other actions as Bank shall request in its good faith business judgment to
perfect and maintain a first priority perfected security interest (which will be effective as
provided herein) in favor of Bank in such property. If Borrower decides to register any Copyrights
or mask works in the United States Copyright Office, that are not included in the IP Agreement,
then Borrower shall (a) prior to an IP Lien Event, concurrently provide written notice thereof to
Bank and update all Exhibits to the IP Agreement, and (b) following the occurrence of an IP Lien
Event: (x) provide Bank with at least fifteen (15) days prior written notice of Borrower’s intent
to register such Copyrights or mask works together with a copy of the application it intends to
file with the United States Copyright Office (excluding exhibits thereto); (y) execute an
intellectual property security agreement and such other documents and take such other actions as
Bank may request in its good faith business judgment to perfect and maintain a first priority
perfected security interest in favor of Bank



10









 








in the Copyrights or mask works intended to be registered with the United States Copyright
Office; and (z) record such intellectual property security agreement with the United States
Copyright Office promptly after with filing the Copyright or mask work application(s) with the
United States Copyright Office. Borrower shall promptly provide to Bank copies of all applications
that it files for Patents or for the registration of Trademarks, servicemarks, Copyrights or mask
works, together with evidence of the recording of the intellectual property security agreement
necessary for Bank to perfect and maintain a first priority perfected security interest in such
property.



          (b) Provide written notice to Bank within ten (10) days of entering or becoming bound by any
Restricted License (other than over-the-counter software that is commercially available to the
public). Borrower shall take such steps as Bank reasonably requests to obtain the consent of, or
waiver by, any person whose consent or waiver is necessary for (i) any Restricted License to be
deemed “Collateral” as provided under this Agreement and for Bank to have a security interest in
it as provided under this Agreement that might otherwise be restricted or prohibited by law or by
the terms of any such Restricted License, whether now existing or entered into in the future, and
(ii) Bank to have the ability in the event of a liquidation of any Collateral to dispose of such
Collateral in accordance with the rights and remedies of Bank under this Agreement and the other
Loan Documents.



     6.8 Litigation Cooperation. From the date hereof and continuing through the
termination of this Agreement, make available to Bank, without expense to Bank, Borrower and its
officers, employees and agents and Borrower’s books and records, to the extent that Bank may deem
them reasonably necessary to prosecute or defend any third-party suit or proceeding instituted by
or against Bank with respect to any Collateral or relating to Borrower.



     6.9 Iluvien Sales. In the event that Borrower does not commence sales of Iluvien
Products in the United States within six (6) months following Borrower’s receipt of Iluvien FDA
Approval, Borrower shall at all times thereafter maintain on deposit at Bank unrestricted cash
equal to or greater than seventy five percent (75.0%) of the outstanding principal balance of the
Term Loans (as defined in the Term Loan Agreement).



     6.10 Consents/Waivers. Deliver to Bank within thirty (30) days after the Effective
Date: (a) a fully-executed original landlord’s consent in form and substance acceptable to Bank
with respect to each location at which Borrower leases or occupies real property or at which
Collateral is located, and (b) a fully-executed original bailee’s waiver or warehousemen’s waiver
(as applicable) in form and substance acceptable to Bank with respect to each location at which
Borrower maintains any Collateral in the possession of a third party.



     6.11 Further Assurances. Borrower shall execute any further instruments and take
further action as Bank reasonably requests to perfect or continue Bank’s security interest in the
Collateral or to effect the purposes of this Agreement.



     7 NEGATIVE COVENANTS



     Borrower shall not do any of the following without Bank’s prior written consent.



     7.1 Dispositions. Convey, sell, lease, transfer, assign, or otherwise dispose of
(collectively a “Transfer”), or permit any of its Subsidiaries to Transfer, all or any part of its
business or property, except for Transfers (a) of Inventory in the ordinary course of business; (b)
of worn-out or obsolete Equipment; (c) in connection with Permitted Liens and Permitted
Investments; and (d) of (1) non-exclusive licenses for the use of the property of Borrower or its
Subsidiaries in the ordinary course of business and (2) licenses that do not result in a legal
transfer of title of the licensed property but that may be exclusive in respects other than
territory and that may be exclusive as to territory only as to discreet geographical areas in the
European Union and Japan.



     7.2 Changes in Business, Ownership, Management or Business Locations. Engage in or
permit any of its Subsidiaries to engage in any business other than the businesses currently
engaged in by Borrower or reasonably related thereto, or have a material change in its ownership
whereby the stockholders of Borrower who were not stockholders immediately prior to the first such
transaction own more than 49% of the voting stock of Borrower immediately after giving effect to
such transaction or related series of such transactions (other than by the sale of Borrower’s
equity securities in a public offering or to venture capital investors so long as Borrower
identifies to Bank the venture capital investors prior to the closing of the investment), or
management such that any Key Person ceases to hold such office with Borrower and a replacement
satisfactory to Borrower’s Board of Directors is



11









 





not made within ninety (90) days after their departure from Borrower. Borrower shall not,
without at least ten (10) days prior written notice to Bank: (a) relocate its chief executive
office, or add any new offices or business locations, including warehouses (unless such new
offices or business locations contain less than Twenty Five Thousand Dollars ($25,000.00) in
Borrower’s assets or property), or (b) change its jurisdiction of organization, or (c) change its
organizational structure or type, or (d) change its legal name, or (e) change any organizational
number (if any) assigned by its jurisdiction of organization.




     7.3 Mergers or Acquisitions. Merge or consolidate, or permit any of its Subsidiaries
to merge or consolidate, with any other Person, or acquire, or permit any of its Subsidiaries to
acquire, all or substantially all of the capital stock or property of another Person. A Subsidiary
may merge or consolidate into another Subsidiary or into Borrower.



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



     7.5 Encumbrance. Create, incur, allow, or suffer any Lien on any of its property, or
assign or convey any right to receive income, including the sale of any Accounts, or permit any of
its Subsidiaries to do so, except for Permitted Liens, or permit any Collateral not to be subject
to the first priority security interest granted herein, or enter into any agreement, document,
instrument or other arrangement (except with or in favor of Bank) with any Person which directly or
indirectly prohibits or has the effect of prohibiting Borrower or any Subsidiary from assigning,
mortgaging, pledging, granting a security interest in or upon, or encumbering any of Borrower’s or
any Subsidiary’s Intellectual Property, except as is otherwise permitted in Section 7.1 hereof and
the definition of “Permitted Liens” herein.



     7.6 Distributions; Investments. (a) Pay any dividends (other than dividends payable
solely in common stock) or make any distribution or payment on or redeem, retire or purchase any
capital stock provided that (i) Borrower may convert any of its convertible securities into other
securities pursuant to the terms of such convertible securities or otherwise in exchange thereof,
and (ii) Borrower may repurchase the stock of current or former employees, officers, directors or
consultants pursuant to stock repurchase agreements 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
such repurchase does not exceed in the aggregate of Two Hundred Fifty Thousand Dollars ($250,000)
per fiscal year; or (b) directly or indirectly make any Investment other than Permitted
Investments, or permit any of its Subsidiaries to do so.



     7.7 Transactions with Affiliates. Directly or indirectly enter into or permit to
exist any material transaction with any Affiliate of Borrower, except for transactions that are in
the ordinary course of Borrower’s business, upon fair and reasonable terms that are no less
favorable to Borrower than would be obtained in an arm’s length transaction with a non-affiliated
Person.



     7.8 Subordinated Debt. (a) Make or permit any payment on any Subordinated Debt,
except under the terms of the subordination, intercreditor, or other similar agreement to which
such Subordinated Debt is subject, or (b) amend any provision in any document relating to the
Subordinated Debt which would increase the amount thereof or adversely affect the subordination
thereof to Obligations owed to Bank.



     7.9 Compliance. Become an “investment company” or a company controlled by an
“investment company”, under the Investment Company Act of 1940, as amended, or undertake as one of
its important activities extending credit to purchase or carry margin stock (as defined in
Regulation U of the Board of Governors of the Federal Reserve System), or use the proceeds of any
Advance for that purpose; fail to meet the minimum funding requirements of ERISA, permit a
Reportable Event or Prohibited Transaction, each as defined in ERISA, to occur; fail to comply with
the Federal Fair Labor Standards Act or violate any other law or regulation, if the violation would
reasonably be expected to have a material adverse effect on Borrower’s business, or permit any of
its Subsidiaries to do so; withdraw or permit any Subsidiary to withdraw from participation in,
permit partial or complete termination of, or permit the occurrence of any other event with respect
to, any present pension, profit sharing and deferred compensation plan which could reasonably be
expected to result in any liability of Borrower, including any liability to the Pension Benefit
Guaranty Corporation or its successors or any other governmental agency.



12









 





     8 EVENTS OF DEFAULT



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



     8.1 Payment Default. Borrower fails to pay any of the Obligations when due;



     8.2 Covenant Default. Borrower fails or neglects to perform any obligation in Section
6 or violates any covenant in Section 7 or fails or neglects to perform, keep, or observe any other
material term, provision, condition, covenant or agreement contained in this Agreement, any Loan
Documents and as to any default under such other term, provision, condition, covenant or agreement
that can be cured, has failed to cure the default within ten (10) days after the occurrence
thereof; provided, however, grace and cure periods provided under this Section 8.2 shall not apply
to financial covenants or any other covenants that are required to be satisfied, completed or
tested by a date certain;



     8.3 Impairment of Collateral. There is a material impairment in the perfection or
priority of Bank’s Lien in the Collateral or in the value of such Collateral;



     8.4 Attachment; Levy; Restraint on Business. (a) (i) The service of process seeking
to attach, by trustee or similar process, any funds of Borrower or of any entity under control of
Borrower (including a Subsidiary) on deposit with Bank or any Bank Affiliate, or (ii) a notice of
lien, levy, or assessment is filed against any of Borrower’s assets by any government agency, and
the same under subclauses (i) and (ii) hereof are not, within ten (10) days after the occurrence
thereof, discharged or stayed (whether through the posting of a bond or otherwise); provided,
however, no Advances shall be made during any ten (10) day cure period; and (b) (i) any material
portion of Borrower’s assets is attached, seized, levied on, or comes into possession of a trustee
or receiver, or (ii) any court order enjoins, restrains, or prevents Borrower from conducting any
part of its business;



     8.5 Insolvency. (a) Borrower is unable to pay its debts (including trade debts) as
they become due or otherwise becomes insolvent; (b) Borrower begins an Insolvency Proceeding; or
(c) an Insolvency Proceeding is begun against Borrower and not dismissed or stayed within forty
five (45) days (but no Advances shall be made while any of the conditions described in clause (a)
exist and/or until any Insolvency Proceeding is dismissed);



     8.6 Other Agreements. If there is a default in any agreement to which Borrower is a
party with a third party or parties resulting in a right by such third party or parties, whether or
not exercised, to accelerate the maturity of any Indebtedness in an amount in excess of One Hundred
Thousand Dollars ($100,000.00) or that would reasonably be expected to have a material adverse
effect on Borrower’s business;



     8.7 Judgments. One or more judgments, orders, or decrees for the payment of money in
an amount, individually or in the aggregate, of at least One Hundred Thousand Dollars ($100,000.00)
(not covered by independent third-party insurance as to which liability has been accepted by such
insurance carrier) shall be rendered against Borrower and shall remain unsatisfied, unvacated, or
unstayed for a period of ten (10) days after the entry thereof (provided that no Advances will be
made prior to the satisfaction, vacation, or stay of such judgment, order, or decree);



     8.8 Misrepresentations. Borrower or any Person acting for Borrower makes any
representation, warranty, or other statement now or later in this Agreement, any Loan Document or
in writing delivered to Bank or to induce Bank to enter this Agreement or any Loan Document, and
such representation, warranty, or other statement is incorrect in any material respect when made;



     8.9 Subordinated Debt. A default or breach occurs under any agreement between
Borrower and any creditor of Borrower that signed a subordination agreement, intercreditor
agreement, or other similar agreement with Bank, or any creditor that has signed such an agreement
with Bank breaches any terms of the agreement;



     8.10 Guaranty. (a) Any guaranty of any Obligations terminates or ceases for any
reason to be in full force and effect; (b) any Guarantor does not perform any obligation or
covenant under any guaranty of the Obligations; (c) any circumstance described in Sections 8.3,
8.4, 8.5, 8.7, or 8.8. occurs with respect to any Guarantor; (d) the liquidation, winding up, or
termination of existence of any Guarantor; or (e) (i) a material impairment in the perfection or
priority of Bank’s Lien in the collateral provided by Guarantor or in the value of



13









 





such collateral or (ii) a material adverse change in the general affairs, management, results
of operation, condition (financial or otherwise) or the prospect of repayment of the Obligations
occurs with respect to any Guarantor;




     8.11 Governmental Approvals. Any Governmental Approval shall have been (a) revoked,
rescinded, suspended, modified in an adverse manner or not renewed in the ordinary course for a
full term or (b) subject to any decision by a Governmental Authority that designates a hearing with
respect to any applications for renewal of any such Governmental Approval or that would reasonably
be expected to result in the Governmental Authority taking any of the actions described in clause
(a) above, and such decision or such revocation, rescission, suspension, modification or
non-renewal has, or would reasonably be expected to have, a material adverse effect on Borrower’s
business or operations;



     8.12 Withdrawals/ Recalls. (a) The institution of any proceeding by FDA or similar
Governmental Authority to order the complete withdrawal of all Iluvien Product from the U.S. market
or to enjoin Borrower or any representative of Borrower from manufacturing, marketing, selling or
distributing any Iluvien Product in the U.S, (b) the institution of any action or proceeding by the
FDA, or any other Governmental Authority to revoke, suspend, reject, withdraw, limit, or restrict
any Required Permit relating to any Iluvien Product held by Borrower or any representative of
Borrower, (c) the commencement of any enforcement action against Borrower by FDA, or any other
Governmental Authority, or (d) the recall of all Iluvien Product from the U.S. market, the
voluntary withdrawal of all Iluvien Product from the U.S. market, or actions to discontinue the
sale of all Iluvien Product in the U.S.; or



     8.12 Term Loan Agreement. An Event of Default (as such term is defined in the Term
Loan Agreement) occurs under the Term Loan Agreement.



     9 BANK’S RIGHTS AND REMEDIES



     9.1 Rights and Remedies. When an Event of Default occurs and continues Bank may,
without notice or demand, do any or all of the following:


          (a) declare all Obligations immediately due and payable (but if an Event of Default described
in Section 8.5 occurs all Obligations are immediately due and payable without any action by Bank);


          (b) stop advancing money or extending credit for Borrower’s benefit under this Agreement or
under any other agreement between Borrower and Bank;


          (c) settle or adjust disputes and claims directly with Account Debtors for amounts, on terms
and in any order that Bank considers advisable and notify any Person owing Borrower money of Bank’s
security interest in such funds and verify the amount of such account. Borrower shall collect all
payments in trust for Bank and, if requested by Bank, immediately deliver the payments to Bank in
the form received from the Account Debtor, with proper endorsements for deposit;


          (d) make any payments and do any acts it considers necessary or reasonable to protect its
security interest in the Collateral. Borrower shall assemble the Collateral if Bank requests and
make it available as Bank designates. Bank may enter premises where the Collateral is located,
take and maintain possession of any part of the Collateral, and pay, purchase, contest, or
compromise any Lien which appears to be prior or superior to its security interest and pay all
expenses incurred. Borrower grants Bank a license to enter and occupy any of its premises, without
charge, to exercise any of Bank’s rights or remedies;


          (e) apply to the Obligations any (i) balances and deposits of Borrower it holds, or (ii) any
amount held by Bank owing to or for the credit or the account of Borrower;


          (f) ship, reclaim, recover, store, finish, maintain, repair, prepare for sale, advertise for
sale, and sell the Collateral (to the extent not prohibited by Law). Bank is hereby granted a
non-exclusive, royalty-free license or other right to use, without charge and to the extent not
prohibited by Law, Borrower’s labels, Patents, Copyrights, mask works, rights of use of any name,
trade secrets, trade names, Trademarks, service marks, and advertising matter, or any similar
property as it pertains to the Collateral, in completing production of, advertising



14









 








for sale, and selling any Collateral and, in connection with Bank’s exercise of its rights
under this Section 9.1, Borrower’s rights under all licenses and all franchise agreements inure to
Bank’s benefit;



          (g) place a “hold” on any account maintained with Bank and/or deliver a notice of exclusive
control, any entitlement order, or other directions or instructions pursuant to any Control
Agreement or similar agreements providing control of any Collateral;


          (h) demand and receive possession of Borrower’s Books; and


          (i) exercise all rights and remedies available to Bank under the Loan Documents or at law or
equity, including all remedies provided under the Code (including disposal of the Collateral
pursuant to the terms thereof).



     9.2 Protective Payments. If Borrower fails to obtain insurance called for by Section
6.4 or fails to pay any premium thereon or fails to pay any other amount which Borrower is
obligated to pay under this Agreement or by any other Loan Document, Bank may obtain such insurance
or make such payment, and all amounts so paid by Bank are Bank Expenses and immediately due and
payable, bearing interest at the then highest applicable rate, and secured by the Collateral. Bank
will make reasonable effort to provide Borrower with notice of Bank obtaining such insurance at the
time it is obtained or within a reasonable time thereafter. No payments by Bank are deemed an
agreement to make similar payments in the future or Bank’s waiver of any Event of Default.



     9.3 Bank’s Liability for Collateral. So long as Bank complies with applicable law and
reasonable banking practices regarding the safekeeping of Collateral in possession or under the
control of Bank, Bank shall not be liable or responsible for: (a) the safekeeping of the
Collateral; (b) any loss or damage to the Collateral; (c) any diminution in the value of the
Collateral; or (d) any act or default of any carrier, warehouseman, bailee, or other Person.
Borrower bears all risk of loss, damage or destruction of the Collateral.



     9.4 Remedies Cumulative. Bank’s failure, at any time or times, to require strict
performance by Borrower of any provision of this Agreement or any other Loan Document shall not
waive, affect, or diminish any right of Bank thereafter to demand strict performance and compliance
herewith or therewith. No waiver hereunder shall be effective unless signed by Bank and then is
only effective for the specific instance and purpose for which it is given. Bank’s rights and
remedies under this Agreement and the other Loan Documents are cumulative. Bank has all rights and
remedies provided under the Code, by law, or in equity. Bank’s exercise of one right or remedy is
not an election, and Bank’s waiver of any Event of Default is not a continuing waiver. Bank’s
delay in exercising any remedy is not a waiver, election, or acquiescence.



     9.5 Demand Waiver. Borrower waives demand, notice of default or dishonor, notice of
payment and nonpayment, notice of any default, nonpayment at maturity, release, compromise,
settlement, extension, or renewal of accounts, documents, instruments, chattel paper, and
guarantees held by Bank on which Borrower is liable.



     10 NOTICES.



     All notices, consents, requests, approvals, demands, or other communication by any party to
this Agreement or any other Loan Document must be in writing and shall be deemed to have been
validly served, given, or delivered: (a) upon the earlier of actual receipt and three (3) Business
Days after deposit in the U.S. mail, first class, registered or certified mail return receipt
requested, with proper postage prepaid; (b) upon transmission, when sent by electronic mail (to the
email address specified herein) or facsimile transmission; (c) one (1) Business Day after deposit
with a reputable overnight courier with all charges prepaid; or (d) when delivered, if
hand-delivered by messenger, all of which shall be addressed to the party to be notified and sent
to the address, facsimile number, or email address indicated below. Bank or Borrower may change
its mailing or electronic mail address or facsimile number by giving the other party written notice
thereof in accordance with the terms of this Section 10.



15









 





	 	 	 
	If to Borrower:

	 	c/o Alimera Sciences, Inc. 

6120 Windward Parkway, Suite 290

Alpharetta, GA 30005

Attn:      Chief Financial Officer 

Fax:         (678) 990-5744

Email:     eiswirth@alimerasciences.com
	 
	 	 
	If to Bank:

	 	Silicon Valley Bank 

3353 Peachtree Road, NE, Suite M-10

Atlanta, GA 30326

Attn:       Mr. Scott McCarty 

Fax:         (404) 467-4467) 

Email:      SMccarty@svb.com
	 
	 	 
	with a copy to:

	 	Riemer & Braunstein LLP 

Three Center Plaza 

Boston, Massachusetts 02108

Attn:      David A. Ephraim, Esquire 

Fax:         (617) 880-3456

Email:     DEphraim@riemerlaw.com






     11 CHOICE OF LAW, VENUE AND JURY TRIAL WAIVER



     New York Law governs the Loan Documents without regard to principles of conflicts of law.
Borrower and Bank each submit to the exclusive jurisdiction of the State and Federal courts in New
York, New York. NOTWITHSTANDING THE FOREGOING, BANK SHALL HAVE THE RIGHT TO BRING ANY ACTION OR
PROCEEDING AGAINST BORROWER OR ITS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION WHICH BANK (IN
ACCORDANCE WITH THE PROVISIONS OF SECTION 9.1) DEEM NECESSARY OR APPROPRIATE TO REALIZE ON THE
COLLATERAL OR TO OTHERWISE ENFORCE BANK’S RIGHTS AGAINST BORROWER OR ITS PROPERTY. Borrower
expressly submits and consents in advance to such jurisdiction in any action or suit commenced in
any such court, and Borrower hereby waives any objection that it may have based upon lack of
personal jurisdiction, improper venue, or forum non conveniens and hereby consents to the granting
of such legal or equitable relief as is deemed appropriate by such court. Borrower hereby waives
personal service of the summons, complaints, and other process issued in such action or suit and
agrees that service of such summons, complaints, and other process may be made by registered or
certified mail addressed to Borrower at the address set forth in Section 10 of this Agreement and
that service so made shall be deemed completed upon the earlier to occur of Borrower’s actual
receipt thereof or three (3) days after deposit in the U.S. mails, proper postage prepaid.



     TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, BORROWER AND BANK EACH WAIVE THEIR RIGHT TO
A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION ARISING OUT OF OR BASED UPON THIS AGREEMENT, THE LOAN
DOCUMENTS OR ANY CONTEMPLATED TRANSACTION, INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER
CLAIMS. THIS WAIVER IS A MATERIAL INDUCEMENT FOR BOTH PARTIES TO ENTER INTO THIS AGREEMENT. EACH
PARTY HAS REVIEWED THIS WAIVER WITH ITS COUNSEL.



     Borrower and Bank agree that each Advance (including those made on the Effective Date) shall
be deemed to be made in, and the transactions contemplated hereunder and in any other Loan Document
shall be deemed to have been performed in, the State of New York.



     12 GENERAL PROVISIONS



     12.1 Successors and Assigns. This Agreement binds and is for the benefit of the
successors and permitted assigns of each party. Borrower may not assign this Agreement or any
rights or obligations under it without Bank’s prior written consent which may be granted or
withheld in Bank’s discretion. Bank has the right,



16









 





without the consent of or notice to Borrower, to sell, transfer, negotiate, or grant
participation in all or any part of, or any interest in, Bank’s obligations, rights and benefits
under this Agreement, the Loan Documents or any related agreement.




     12.2 Indemnification. Borrower agrees to indemnify, defend, and hold Bank and its
officers, directors, employees, agents, attorneys or any other Person affiliated with or
representing Bank (each, an “Indemnified Person”) harmless against: (a) all obligations, demands,
claims, and liabilities (collectively, “Claims”) asserted by any other party in connection with the
transactions contemplated by the Loan Documents; and (b) all losses or Bank Expenses incurred, or
paid by such Indemnified Person from, following, or arising from transactions between Bank and
Borrower (including reasonable attorneys’ fees and expenses), except for Claims and/or losses
directly caused by such Indemnified Person’s gross negligence or willful misconduct.



     12.3 Right of Set-Off. Borrower hereby grants to Bank, a lien, security interest and
right of setoff as security for all Obligations to Bank, whether now existing or hereafter arising
upon and against all deposits, credits, collateral and property, now or hereafter in the
possession, custody, safekeeping or control of Bank or any entity under the control of Bank
(including a Bank subsidiary) or in transit to any of them. At any time after the occurrence and
during the continuance of an Event of Default, without demand or notice, Bank may set off the same
or any part thereof and apply the same to any liability or obligation of Borrower even though
unmatured and regardless of the adequacy of any other collateral securing the Obligations. ANY AND
ALL RIGHTS TO REQUIRE BANK TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL
WHICH SECURES THE OBLIGATIONS, PRIOR TO EXERCISING ITS RIGHT OF SETOFF WITH RESPECT TO SUCH
DEPOSITS, CREDITS OR OTHER PROPERTY OF BORROWER, ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY
WAIVED.



     12.4 Time of Essence. Time is of the essence for the performance of all Obligations
in this Agreement.



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



     12.6 Intentionally Omitted.



     12.7 Amendments in Writing; Integration. All amendments to this Agreement must be in
writing signed by both Bank and Borrower. This Agreement and the Loan Documents represent the
entire agreement about this subject matter, and supersede prior negotiations or agreements. All
prior agreements, understandings, representations, warranties, and negotiations between the parties
about the subject matter of this Agreement and the Loan Documents merge into this Agreement and the
Loan Documents.



     12.8 Counterparts. This Agreement may be executed in any number of counterparts and
by different parties on separate counterparts, each of which, when executed and delivered, are an
original, and all taken together, constitute one Agreement.



     12.9 Survival. All covenants, representations and warranties made in this Agreement
continue in full force until this Agreement has terminated pursuant to its terms and all
Obligations (other than inchoate indemnity obligations and any other obligations which, by their
terms, are to survive the termination of this Agreement) have been satisfied. The obligation of
Borrower in Section 12.2 to indemnify Bank shall survive until the statute of limitations with
respect to such claim or cause of action shall have run.



     12.10 Confidentiality. In handling any confidential information, Bank shall exercise
the same degree of care that it exercises for its own proprietary information, but disclosure of
information may be made: (a) to Bank’s Subsidiaries or Affiliates (provided that they agree to the
terms hereof); (b) to prospective transferees or purchasers of any interest in the Advances
(provided, however, Bank shall use commercially reasonable efforts to obtain such prospective
transferee’s or purchaser’s agreement to the terms of this provision); (c) as required by law,
regulation, subpoena, or other order; (d) to Bank’s regulators or as otherwise required in
connection with Bank’s examination or audit; (e) as Bank considers appropriate in exercising
remedies under the Loan Documents; and (f) to third-party service providers of Bank so long as such
service providers have executed a confidentiality agreement with Bank with terms no less
restrictive than those contained herein. Confidential information does not include information



17









 





that either: (i) is in the public domain or in Bank’s possession when disclosed to Bank, or
becomes part of the public domain after disclosure to Bank; (through no fault of Bank) or (ii) is
disclosed to Bank by a third party, if Bank does not know that the third party is prohibited from
disclosing the information.




     Bank may use confidential information for any purpose, including, without limitation, for the
development of client databases, reporting purposes, and market analysis, so long as Bank does not
disclose Borrower’s identity or the identity of any person associated with Borrower or otherwise
render such identities determinable unless otherwise expressly permitted by this Agreement. The
provisions of the immediately preceding sentence shall survive the termination of this Agreement.
The agreements provided under this Section 12.10 supersede all prior agreements, understanding,
representations, warranties, and negotiations between the parties about the subject matter of this
Section 12.10. In respect of confidential information provided by Borrower to Bank hereunder and
Borrower’s securities, Bank agrees to comply with applicable securities laws which prohibit trading
in securities based upon material non-public information.



     13 DEFINITIONS



     13.1 Definitions. In this Agreement:



     “Account” is any “account” as defined in the Code with such additions to such term as may
hereafter be made, and includes, without limitation, all accounts receivable and other sums owing
to Borrower.



     “Account Debtor” is as defined in the Code and shall include, without limitation, any person
liable on any Financed Receivable, such as, a guarantor of the Financed Receivable and any issuer
of a letter of credit or banker’s acceptance.



     “Adjustments” are all discounts, allowances, returns, disputes, counterclaims, offsets,
defenses, rights of recoupment, rights of return, warranty claims, or short payments, asserted by
or on behalf of any Account Debtor for any Financed Receivable.



     “Advance” is defined in Section 2.1.1.



     “Advance Rate” is eighty-five percent (85.0%), net of any offsets related to each specific
Account Debtor, including, without limitation, customer deposits, consigned sales, progress
billings (including, without limitation milestone billings), and Deferred Revenue, or such other
percentage as Bank establishes under Section 2.1.1.



     “Affiliate” of any Person is a Person that owns or controls directly or indirectly the Person,
any Person that controls or is controlled by or is under common control with the Person, and each
of that Person’s senior executive officers, directors, partners and, for any Person that is a
limited liability company, that Person’s managers and members.



     “Anniversary Date” is the date that is one (1) year from the Effective Date.



     “Applicable Rate” is a per annum rate equal to the Prime Rate plus two and one-half of one
percent (2.50%).



     “Availability” is Twenty Million Dollars ($20,000,000.00).



     “Bank Expenses” are all audit fees and expenses, costs, and expenses (including reasonable
attorneys’ fees and expenses) for preparing, amending, negotiating, administering, defending and
enforcing the Loan Documents (including, without limitation, those incurred in connection with
appeals or Insolvency Proceedings) or otherwise incurred with respect to Borrower.



     “Borrower’s Books” are all Borrower’s books and records including ledgers, federal and state
tax returns, records regarding Borrower’s assets or liabilities, the Collateral, business
operations or financial condition, and all computer programs or storage or any equipment containing
such information.



     “Business Day” is any day that is not a Saturday, Sunday or a day on which Bank is closed.



18









 





     “Cash Burn” means EBITDA less the sum of (a) cash taxes, (b) unfunded capital expenditures,
(c) cash interest payments, (d) principal payments on all Indebtedness (excluding payments under
the Term Loan Agreement), (e) dividends or distributions, and (f) to the extent such payments are
not deducted in the calculation of EBITDA, license payments (excluding the Twenty Five Million
Dollar ($25,000,000.00) dSivida payment and the Two Hundred Fifty Thousand Dollar ($250,000.00) Dow
Sumitomo payment).



     “Cash Equivalents” are (a) marketable direct obligations issued or unconditionally guaranteed
by the United States or any agency or any State thereof having maturities of not more than one (1)
year from the date of acquisition; (b) commercial paper maturing no more than one (1) year after
its creation and having the highest rating from either Standard & Poor’s Ratings Group or Moody’s
Investors Service, Inc., (c) certificates of deposit issued maturing no more than one (1) year
after issue, and (d) money market funds at least ninety-five percent (95.0%) of the
assets of which constitute Cash Equivalents of the kinds described in clauses (a) through (b) of
this definition. For the avoidance of doubt, the direct purchase by Borrower, co-borrower, or any
subsidiary of Borrower of any Auction Rate Securities, or purchasing participations in, or entering
into any type of swap or other derivative transaction, or otherwise holding or engaging in any
ownership interest in any type of Auction Rate Security by Borrower, co-borrower, or any subsidiary
of Borrower shall be conclusively determined by Bank as an ineligible Cash Equivalent, and any such
transaction shall expressly violate each other provision of this agreement governing Permitted
Investments. Notwithstanding the foregoing, Cash Equivalents does not include and each Borrower
and Subsidiary is prohibited from purchasing, purchasing participations in, entering into any type
of swap or other equivalent derivative transaction, or otherwise holding or engaging in any
ownership interest in any type of debt instrument, including, without limitation, any corporate or
municipal bonds with a long-term nominal maturity for which the interest rate is reset through a
dutch auction and more commonly referred to as an auction rate security.



     “Claims” are defined in Section 12.2.



     “Code” is the Uniform Commercial Code, as the same may, from time to time, be enacted and in
effect in the State of New York; provided, that, to the extent that the Code is used to define any
term herein or in any Loan Document and such term is defined differently in different Articles or
Divisions of the Code, the definition of such term contained in Article or Division 9 shall govern;
provided further, that in the event that, by reason of mandatory provisions of law, any or all of
the attachment, perfection, or priority of, or remedies with respect to, Bank’s Lien on any
Collateral is governed by the Uniform Commercial Code in effect in a jurisdiction other than the
State of New York, the term “Code” shall mean the Uniform Commercial Code as enacted and in effect
in such other jurisdiction solely for purposes of the provisions thereof relating to such
attachment, perfection, priority, or remedies and for purposes of definitions relating to such
provisions.



     “Collateral” is any and all properties, rights and assets of Borrower described on Exhibit
A.



     “Collateral Account” is any Deposit Account, Securities Account, or Commodity Account.



     “Collections” are all funds received by Bank from or on behalf of an Account Debtor for
Financed Receivables.



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



     “Compliance Certificate” is attached as Exhibit B.



     “Contingent Obligation” is, for any Person, any direct or indirect liability, contingent or
not, of that Person for (a) any indebtedness, lease, dividend, letter of credit or other obligation
of another such as an obligation directly or indirectly guaranteed, endorsed, co-made, discounted
or sold with recourse by that Person, or for which that Person is directly or indirectly liable;
(b) any obligations for undrawn letters of credit for the account of that Person; and (c) all
obligations from any interest rate, currency or commodity swap agreement, interest rate cap or
collar agreement, or other agreement or arrangement designated to protect a Person against
fluctuation in interest rates, currency exchange rates or commodity prices; but “Contingent
Obligation” does not include endorsements in the ordinary course of business. The amount of a
Contingent Obligation is the stated or determined amount of the primary obligation for which the
Contingent Obligation is made or, if not determinable, the maximum reasonably



19









 





anticipated liability for it determined by the Person in good faith; but the amount may not
exceed the maximum of the obligations under any guarantee or other support arrangement.




     “Control Agreement” is any control agreement entered into among the depository institution at
which Borrower maintains a Deposit Account or the securities intermediary or commodity intermediary
at which Borrower maintains a Securities Account or a Commodity Account, Borrower, and Bank,
pursuant to which Bank obtains control (within the meaning of the Code) over such Deposit Account,
Securities Account, or Commodity Account.



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



     “Deferred Revenue” is all amounts received or invoiced, as appropriate, in advance of
performance under contracts and not yet recognized as revenue.



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



     “Early Termination Fee” is defined in Section 2.1.1.



     “EBITDA” shall mean (a) Net Income, plus (b) Interest Expense, plus (c) to the extent deducted
in the calculation of Net Income, depreciation expense and amortization expense, plus (d) income
tax expense.



     “Effective Date” is defined in the preamble of this Agreement.



     “Eligible Accounts” are billed Accounts in the ordinary course of Borrower’s business that
meet all Borrower’s representations and warranties in Section 5.3, have been, at the option of
Bank, confirmed in accordance with Section 2.1.1(d), and are due and owing from Account Debtors
deemed creditworthy by Bank in its sole discretion. Without limiting the fact that the
determination of which Accounts are eligible hereunder is a matter of Bank discretion in each
instance, Eligible Accounts shall not include the following Accounts (which listing may be amended
or changed in Bank’s discretion with notice to Borrower):



     (a) Accounts that the Account Debtor has not paid within ninety (90) days of invoice date
regardless of invoice payment period terms, except for the Eligible Extended Accounts;



     (b) Accounts owing from an Account Debtor which does not have its principal place of business
in the United States, unless otherwise approved by Bank in writing on a case-by-case basis in its
sole discretion;



     (c) Accounts billed and/or payable outside of the United States, unless otherwise approved by
Bank in writing on a case-by-case basis in its sole discretion;



     (d) Accounts owing from an Account Debtor to the extent that Borrower is indebted or obligated
in any manner to the Account Debtor (as creditor, lessor, supplier or otherwise — sometimes called
“contra” accounts, accounts payable, customer deposits or credit accounts), with the exception of
customary credits, adjustments and/or discounts given to an Account Debtor by Borrower in the
ordinary course of its business;



     (e) Accounts for which the Account Debtor is Borrower’s Affiliate, officer, employee, or
agent;



     (f) Accounts owing from an Account Debtor which is a United States government entity or any
department, agency, or instrumentality thereof unless Borrower has assigned its payment rights to
Bank and the assignment has been acknowledged under the Federal Assignment of Claims Act of 1940,
as amended;



     (g) Accounts for demonstration or promotional equipment, or in which goods are consigned, or
sold on a “sale guaranteed”, “sale or return”, “sale on approval”, or other terms if Account
Debtor’s payment may be conditional;



20









 





     (h) Accounts owing from an Account Debtor that has not been invoiced or where goods or
services have not yet been rendered to the Account Debtor (sometimes called memo billings or
pre-billings);



     (i) Accounts subject to contractual arrangements between Borrower and an Account Debtor where
payments shall be scheduled or due according to completion or fulfillment requirements where the
Account Debtor has a right of offset for damages suffered as a result of Borrower’s failure to
perform in accordance with the contract (sometimes called contracts accounts receivable, progress
billings, milestone billings, or fulfillment contracts);



     (j) Accounts owing from an Account Debtor the amount of which may be subject to withholding
based on the Account Debtor’s satisfaction of Borrower’s complete performance (but only to the
extent of the amount withheld; sometimes called retainage billings);



     (k) Accounts subject to trust provisions, subrogation rights of a bonding company, or a
statutory trust;



     (l) Accounts owing from an Account Debtor that has been invoiced for goods that have not been
shipped to the Account Debtor unless Bank, Borrower, and the Account Debtor have entered into an
agreement acceptable to Bank in its sole discretion wherein the Account Debtor acknowledges that
(i) it has title to and has ownership of the goods wherever located, (ii) a bona fide sale of the
goods has occurred, and (iii) it owes payment for such goods in accordance with invoices from
Borrower (sometimes called “bill and hold” accounts);



     (m) Accounts for which the Account Debtor has not been invoiced;



     (n) Accounts that represent non-trade receivables or that are derived by means other than in
the ordinary course of Borrower’s business;



     (o) Accounts subject to chargebacks or other payment deductions taken by an Account Debtor
(but only to the extent of such chargeback or payment deduction);



     (p) Accounts owing from an Account Debtor with respect to which Borrower has received Deferred
Revenue (but only to the extent of such Deferred Revenue);



     (q) Accounts in which the Account Debtor disputes liability or makes any claim (but only up to
the disputed or claimed amount), or if the Account Debtor is subject to an Insolvency Proceeding,
or becomes insolvent, or goes out of business; and



     (r) Accounts for which Bank in its good faith business judgment determines collection to be
doubtful.



     “Eligible Extended Accounts” are Accounts owing from an Account Debtor which are not more than
thirty (30) days past the due date but are outstanding no more than one hundred fifty (150) days of
the invoice date, and are otherwise Eligible Accounts and that Bank may approve on a case by case
basis in its sole and absolute discretion.



     “Equipment” is all “ equipment” as defined in the Code with such additions to such term as may
hereafter be made, and includes without limitation all machinery, fixtures, goods, vehicles
(including motor vehicles and trailers), and any interest in any of the foregoing.



     “ERISA” is the Employee Retirement Income Security Act of 1974, and its regulations.



     “Events of Default” are set forth in Section 8.



     “Excess Availability” is defined as the lesser of (a) the current sum of all Eligible Accounts
multiplied by the Advance Rate, minus the aggregate amount of outstanding Advances, and (b) Twenty
Million Dollars ($20,000,000.00) minus the aggregate amount of outstanding Advances.



     “Facility Amount” is Twenty-Five Million Dollars ($25,000,000.00).



     “Facility Fee” is defined in Section 2.2.2.



21









 





     “FDA” means the Food and Drug Administration of the United States of America or any successor
entity thereto.



     “Finance Charges” is defined in Section 2.2.3.



     “Financed Receivables” are all those Eligible Accounts, including their proceeds which Bank
finances and makes an Advance, as set forth in Section 2.1.1. A Financed Receivable stops being a
Financed Receivable (but remains Collateral) when the Advance made for the Financed Receivable has
been fully paid.



     “Financed Receivable Balance” is the total outstanding gross face amount, at any time, of any
Financed Receivable.



     “GAAP” is generally accepted accounting principles set forth in the opinions and
pronouncements of the Accounting Principles Board of the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting Standards Board or in
such other statements by such other Person as may be approved by a significant segment of the
accounting profession, which are applicable to the circumstances as of the date of determination.



     “General Intangibles” is all “general intangibles” as defined in the Code in effect on the
date hereof with such additions to such term as may hereafter be made, and includes without
limitation, all Intellectual Property, claims, income and other tax refunds, security and other
deposits, options to purchase or sell real or personal property, rights in all litigation presently
or hereafter pending (whether in contract, tort or otherwise), insurance policies (including
without limitation key man, property damage, and business interruption insurance), payments of
insurance and rights to payment of any kind.



     “Governmental Approval” is any consent, authorization, approval, order, license, franchise,
permit, certificate, accreditation, registration, filing or notice, of, issued by, from or to, or
other act by or in respect of, any Governmental Authority.



     “Governmental Authority” is any nation or government, any state or other political subdivision
thereof, any agency, authority, instrumentality, regulatory body, court, central bank or other
entity exercising executive, legislative, judicial, taxing, regulatory or administrative functions
of or pertaining to government, any securities exchange and any self-regulatory organization.



     “Guarantor” is any present or future guarantor of the Obligations.



     “Iluvien FDA Approval” means the issuance to Borrower of all necessary licenses, certificates,
accreditations, product clearances or approvals, provider numbers or provider authorizations,
marketing authorizations, other authorizations, registrations, permits, consents and/or other
Governmental Approvals by the FDA or any successor entity thereto or any other Governmental
Authority under applicable United States Law required for the manufacture, marketing and sale of
Iluvien Product(s) by Borrower.



     “Iluvien Product” means an intravitreal insert for human use that delivers fluocinolone
acetonide for the treatment of diabetic macular edema (DME).



     “Indebtedness” is (a) indebtedness for borrowed money or the deferred price of property or
services, such as reimbursement and other obligations for surety bonds and letters of credit, (b)
obligations evidenced by notes, bonds, debentures or similar instruments, (c) capital lease
obligations and (d) Contingent Obligations.



     “Indemnified Person” is defined in Section 12.2.



     “Insolvency Proceeding” is any proceeding by or against any Person under the United States
Bankruptcy Code, or any other bankruptcy or insolvency law, including assignments for the benefit
of creditors, compositions, extensions generally with its creditors, or proceedings seeking
reorganization, arrangement, or other relief.



     “Intellectual Property” means all of Borrower’s right, title, and interest in and to the
following:



22









 





     (a) its Copyrights, Trademarks and Patents;



     (b) any and all trade secrets and trade secret rights, including, without limitation, any
rights to unpatented inventions, know-how, operating manuals;



     (c) any and all source code;



     (d) any and all design rights which may be available to a Borrower;



     (e) any and all claims for damages by way of past, present and future infringement of any of
the foregoing, with the right, but not the obligation, to sue for and collect such damages for said
use or infringement of the Intellectual Property rights identified above; and



     (f) all amendments, renewals and extensions of any of the Copyrights, Trademarks or Patents.



     “Interest Expense” means for any fiscal period, interest expense (whether cash or non-cash)
determined in accordance with GAAP for the relevant period ending on such date, including, in any
event, interest expense with respect to any Advance and other Indebtedness of Borrower, including,
without limitation or duplication, all commissions, discounts, or related amortization and other
fees and charges with respect to letters of credit and bankers’ acceptance financing and the net
costs associated with interest rate swap, cap, and similar arrangements, and the interest portion
of any deferred payment obligation (including leases of all types).



     “Inventory” is all Borrower’s right, title, and interest in and to “inventory” as defined in
the Code in effect on the date hereof with such additions to such term as may hereafter be made,
and includes without limitation all of Borrower’s right, title, and interest in and to merchandise,
raw materials, parts, supplies, packing and shipping materials, work in process and finished
products, including without limitation such inventory as is temporarily out of Borrower’s custody
or possession or in transit and including any returned goods and any documents of title
representing any of the above.



     “Investment” is any beneficial ownership of (including stock, partnership interest or other
securities) any Person, or any loan, advance or capital contribution to any Person.



     “Invoice Transmittal” shows Eligible Accounts which Bank may finance and, for each such
Account, includes the Account Debtor’s, name, address, invoice amount, invoice date and invoice
number.



     “IP Agreement” is that certain Intellectual Property Security Agreement executed by Borrower
to Bank dated as of the Effective Date, provided that such Intellectual Property Security Agreement
shall not be deemed delivered to Bank or effective until the occurrence of an IP Lien Event.



     “IP Lien Event” has occurred when on any date, (a) the sum of Borrower’s unrestricted balance
sheet cash and Cash Equivalents in one or more Collateral Accounts over which Bank has obtained a
Control Agreement with respect to such Collateral Account, (b) plus Excess Availability is less
than the product of (y) six (6) times (z) the Monthly Cash Burn Amount. Upon the
occurrence of an IP Lien Event, such IP Lien Event shall stay in effect until the occurrence of an
IP Release Event.



     “IP Release Event” has occurred when with respect to an IP Lien Event, on any date, (a) the
sum of Borrower’s unrestricted balance sheet cash and Cash Equivalents in one or more Collateral
Accounts over which Bank has obtained a Control Agreement with respect to such Collateral Account,
plus (b) Excess Availability is equal to or greater than the product of (y) twelve (12)
times (z) the Monthly Cash Burn Amount.



     “Key Person” is Borrower’s President and Chief Executive Officer (who is Dan Myers, as of the
Effective Date) and Chief Operating Officer (who is Rick Eisworth, as of the Effective Date).



     “Law” means any and all federal, state, provincial, territorial, local and foreign statute,
law, judicial decision, regulation, guidance, guideline, ordinance, rule, judgment, order, decree,
code, plan, injunction, permit, concession, grant, franchise, governmental agreement and
governmental restriction, whether now or hereafter in effect, which are applicable to Borrower in
any particular circumstance.



23









 





     “Lien” is a claim, mortgage, deed of trust, levy, charge, pledge, security interest or other
encumbrance of any kind, whether voluntarily incurred or arising by operation of law or otherwise
against any property.



     “Loan Documents” are, collectively, this Agreement, the Term Loan Agreement, the Perfection
Certificate, the IP Agreement and any other intellectual property security agreement delivered by
Borrower hereunder, any subordination agreements, any note, or notes or guaranties executed by
Borrower or any Guarantor, and any other present or future agreement between Borrower and any
Guarantor and/or for the benefit of Bank in connection with this Agreement, all as amended,
restated, or otherwise modified.



     “Lockbox” is defined in Section 2.2.6.



     “Maturity Date” is October 31, 2013.



     “Monthly Cash Burn Amount” means, as of any date of determination and based on the financial
statements contained in the Borrower’s most recently filed SEC Reports and most recent Board
approved plan, the greater of (i) the average Cash Burn for the preceding three (3) months, or (ii)
the average projected Cash Burn for the succeeding three (3) months.



     “Net Income” means, for any period as of the date of determination, the net profit (or loss),
after provision for taxes, of Borrower for such period taken as a single accounting period.



     “Obligations” are Borrower’s obligation to pay when due any debts, principal, interest, Bank
Expenses, and other amounts Borrower owes Bank now or later, whether under this Agreement, the Term
Loan Agreement, or the other Loan Documents, including, without limitation, any interest accruing
after Insolvency Proceedings begin and debts, liabilities, or obligations of Borrower assigned to
Bank, and the performance of Borrower’s duties under the Loan Documents.



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



     “Perfection Certificate” is defined in Section 5.1.



     “Permits” means licenses, certificates, accreditations, product clearances or approvals,
provider numbers or provider authorizations, marketing authorizations, other authorizations,
registrations, permits, consents and approvals required in connection with the conduct of
Borrower’s or any Subsidiary’s business or to comply with any applicable Laws, including, without
limitation, drug listings and drug establishment registrations if applicable to any Iluvien
Product, and those issued by State governments for the conduct of Borrower’s or any Subsidiary’s
business.



     “Permitted Indebtedness” is:



     (a) Borrower’s indebtedness to Bank under this Agreement or the Loan Documents;



     (b) Indebtedness existing on the Effective Date which is shown on the Perfection Certificate;



     (c) Subordinated Debt;



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



     (e) Indebtedness secured by Permitted Liens; and



     (f) extensions, refinancing, modifications, amendments and restatements of any items of
Permitted Indebtedness (a) through (e) above, provided that the principal amount thereof is not
increased or the terms thereof are not modified to impose more burdensome terms upon Borrower or
its Subsidiaries, as the case may be.



     “Permitted Investments” are: (a) marketable direct obligations issued or unconditionally
guaranteed by the United States or its agency or any state maturing within one (1) year from its
acquisition, (b) commercial paper maturing no more than one (1) year after its creation and having
the highest rating from either Standard & Poor’s



24









 





Corporation or Moody’s Investors Service, Inc., (c) Bank’s certificates of deposit issued
maturing no more than one (1) year after issue, and (d) any other investments administered through
Bank and/or any Investments permitted by Borrower’s investment policy, as amended from time to
time, provided that such investment policy (and any such amendment thereto) has been approved in
writing by Bank.




     “Permitted Liens” are:



     (a) Liens arising under this Agreement or other Loan Documents;



     (b) Liens for taxes, fees, assessments or other government charges or levies, either (i) not
due and payable or (ii) being contested in good faith and for which Borrower maintains adequate
reserves on its Books, provided that no notice of any such Lien has been filed or recorded
under the Internal Revenue Code of 1986, as amended, and the Treasury Regulations adopted
thereunder;



     (c) Liens of carriers, warehousemen, suppliers, or other Persons that are possessory in nature
arising in the ordinary course of business so long as such Liens attach only to Inventory, securing
liabilities in the aggregate amount not to exceed Fifty Thousand Dollars ($50,000.00) and which are
not delinquent or remain payable without penalty or which are being contested in good faith and by
appropriate proceedings which proceedings have the effect of preventing the forfeiture or sale of
the property subject thereto;



     (d) Purchase money Liens securing no more than One Hundred Thousand Dollars ($100,000.00) in
the aggregate amount outstanding (i) on equipment acquired or held by Borrower incurred for
financing the acquisition of the equipment, or (ii) existing on equipment when acquired, if
the Lien is confined to the property and improvements and the proceeds of the equipment;



     (e) leases or subleases of real property granted in the ordinary course of Borrower’s business
(or, if referring to another Person, in the ordinary course of such Person’s business), and leases,
subleases, non-exclusive licenses or sublicenses of personal property (other than Intellectual
Property) granted in the ordinary course of Borrower’s business (or, if referring to another
Person, in the ordinary course of such Person’s business), if the leases, subleases,
licenses and sublicenses do not prohibit granting Bank a security interest therein;



     (f) Liens incurred in the extension, renewal or refinancing of the indebtedness secured by
Liens described in (a) through (e), but any extension, renewal or replacement Lien must be
limited to the property encumbered by the existing Lien and the principal amount of the
indebtedness may not increase; and



     (g) Non-exclusive licenses of Intellectual Property granted to third parties in the ordinary
course of business.



     “Person” is any individual, sole proprietorship, partnership, limited liability company, joint
venture, company, trust, unincorporated organization, association, corporation, institution, public
benefit corporation, firm, joint stock company, estate, entity or government agency.



     “Prime Rate” is the greater of (a) SVB’s most recently announced “prime rate,” even if it is
not SVB’s lowest rate, and (b) four percent (4.0%); provided that the “Prime Rate” shall not exceed
four percent (4.0%) unless and until the “prime rate” as reported in the Wall Street
Journal exceeds four percent (4.0%).



     “Reconciliation Period” is each calendar month.



     “Registered Organization” is any “registered organization” as defined in the Code with such
additions to such term as may hereafter be made.



     “Required Permit” means a Permit (a) issued or required under Laws applicable to the business
of Borrower or any of its Subsidiaries or necessary in the manufacturing, importing, exporting,
possession, ownership, warehousing, marketing, promoting, sale, labeling, furnishing, distribution
or delivery of goods or services under Laws applicable to the business of Borrower or any of its
Subsidiaries or any drug application (including without limitation, at any point in time, all
licenses, approvals and permits issued by the FDA or any other applicable Governmental Authority
necessary for the testing, manufacture, marketing or sale of any Iluvien Product by any



25









 





Borrower as such activities are being conducted by Borrower with respect to such Iluvien
Product at such time), and (b) issued by any Person from which Borrower or any of its Subsidiaries
have received an accreditation.




     “Requirement of Law” is as to any Person, the organizational or governing documents of such
Person, and any law (statutory or common), treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon
such Person or any of its property or to which such Person or any of its property is subject.



     “Responsible Officer” is each of the Chief Executive Officer, President, Chief Financial
Officer and Controller of Borrower.



     “Restricted License” is any material license or other agreement with respect to which Borrower
is the licensee (a) that prohibits or otherwise restricts Borrower from granting a security
interest in Borrower’s interest in such license or agreement or any other property, or (b) for
which a default under or termination of could interfere with Bank’s right to sell any Collateral.



     “SEC Reports” is defined in Section 6.2(a).



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



     “Subordinated Debt” is indebtedness incurred by Borrower subordinated to all of Borrower’s now
or hereafter indebtedness to Bank (pursuant to a subordination, intercreditor, or other similar
agreement in form and substance satisfactory to Bank entered into between Bank and the other
creditor), on terms acceptable to Bank.



     “Subsidiary” is, with respect to any Person, any Person of which more than fifty percent
(50.0%) of the voting stock or other equity interests (in the case of Persons other than
corporations) is owned or controlled directly or indirectly by such Person or one or more of
Affiliates of such Person.



     “Term Loan Agreement” is that certain Loan and Security Agreement among Borrower, Bank and
MidCap Financial, LLC, dated as of the Effective Date, together with all documents delivered in
connection therewith, as amended from time to time.



     “Trademarks” means any trademark and servicemark rights, whether registered or not,
applications to register and registrations of the same and like protections, and the entire
goodwill of the business of Borrower connected with and symbolized by such trademarks.



     “Unused Line Facility Fee” is defined in Section 2.2.8.



     “Unused Line Facility Fee Commencement Date” is defined in Section 2.2.8.



     “U.S.” is the United States of America.



[Signature page follows.]




26









 





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



	 	 	 	 	 
	BORROWER:





ALIMERA SCIENCES, INC.

 	 	 
	By:  	/s/ Richard S. Eiswirth, Jr.
 	 	 
	 	Name:  	Richard S. Eiswirth, Jr. 	 	 
	 	Title:  	Chief Operating Officer and Chief Financial Officer 	 	 
	 
	BANK:



SILICON VALLEY BANK

 	 	 
	By:  	/s/ Scott McCarty
 	 	 
	 	Name:  	Scott McCarty 	 	 
	 	Title:  	Vice President 	 	 



27









 






	 	 	 	 	 



EXHIBIT A





     The Collateral consists of all of Borrower’s right, title and interest in and to the
following personal property:



     All goods, Accounts (including health-care insurance receivables), Equipment, Inventory,
contract rights or rights to payment of money, leases, license agreements, franchise agreements,
General Intangibles (except as provided below), commercial tort claims, documents, instruments
(including any promissory notes), chattel paper (whether tangible or electronic), cash, deposit
accounts, fixtures, letters of credit rights (whether or not the letter of credit is evidenced by a
writing), securities, and all other investment property, supporting obligations, and financial
assets, whether now owned or hereafter acquired, wherever located; and all Borrower’s Books
relating to the foregoing, and any and all claims, rights and interests in any of the above and all
substitutions for, additions, attachments, accessories, accessions and improvements to and
replacements, products, proceeds and insurance proceeds of any or all of the foregoing.



     Notwithstanding the foregoing, the Collateral does not include any of the following, whether
now owned or hereafter acquired except to the extent that a judicial authority (including a U.S.
Bankruptcy Court) would hold that it is necessary under applicable law to have a security interest
in any of the following in order to have a perfected lien and security interest in and to the “IP
Proceeds” defined below: any 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 or domain names and, to the
extent permitted under applicable law, any applications therefor, whether registered or not; and
operating manuals, trade secret rights, clinical and non-clinical data, rights to unpatented
inventions (the “IP Collateral”); provided, however, the Collateral at all times (whether or not
the security interest in IP Collateral is effective as provided below) shall include all Accounts,
license and royalty fees and other revenues, proceeds, or income arising out of or relating to any
of the foregoing and any claims for damage by way of any past, present, or future infringement of
any of the foregoing (collectively, the “IP Proceeds”); provided, that, upon the occurrence of an
IP Lien Event (whether occurring prior to or after an IP Release Event), the Collateral shall
include all IP Collateral automatically and without any further action of the parties, and this
Agreement shall constitute a security agreement for all purposes of the Code with respect to such
IP Collateral; and provided, further, upon the occurrence of an IP Release Event, at Borrower’s
sole cost and expense, Bank shall execute and deliver to Borrower all releases, terminations and
other instruments as may be necessary to release Bank’s Lien in and to the IP Collateral, granted
herein, including, without limitation, UCC financing statement amendments and appropriate filings
with the U.S. Copyright Office and the U.S. Patent and Trademark Office.



     Pursuant to the terms of a certain negative pledge arrangement with Bank, Borrower has agreed
not to encumber any of its Intellectual Property without Bank’s prior written consent.






1









 








EXHIBIT B









SPECIALTY FINANCE DIVISION

Compliance Certificate




     I, an authorized officer of ALIMERA SCIENCES, INC. (“Borrower”) certify under the Loan
and Security Agreement (as amended, the “Agreement”) between Borrower and Silicon Valley Bank
(“Bank”) as follows (all capitalized terms used herein shall have the meaning set forth in the
Agreement):



Borrower represents and warrants for each Financed Receivable:




Each Financed Receivable is an Eligible Account;




Borrower is the owner with legal right to sell, transfer, assign and encumber such Financed
Receivable;




The correct amount is on the Invoice Transmittal and is not disputed;




Payment is not contingent on any obligation or contract and Borrower has fulfilled all its
obligations as of the Invoice Transmittal date;




Each Financed Receivable is based on an actual sale and delivery of goods and/or services rendered,
is due to Borrower, is not past due or in default, has not been previously sold, assigned,
transferred, or pledged and is free of any liens, security interests and encumbrances other than
Permitted Liens;




There are no defenses, offsets, counterclaims or agreements for which the Account Debtor may claim
any deduction or discount;




It reasonably believes no Account Debtor is insolvent or subject to any Insolvency Proceedings;




It has not filed or had filed against it Insolvency Proceedings and does not anticipate any filing;




Bank has the right to endorse and/or require Borrower to endorse all payments received on Financed
Receivables and all proceeds of Collateral; and




No representation, warranty or other statement of Borrower in any certificate or written statement
given to Bank contains any untrue statement of a material fact or omits to state a material fact
necessary to make the statement contained in the certificates or statement not misleading.




Additionally, Borrower represents and warrants as follows:




Borrower and each Subsidiary is duly existing and in good standing in its state of formation and
qualified and licensed to do business in, and in good standing in, any state in which the conduct
of its business or its ownership of property requires that it be qualified except where the failure
to do so would not reasonably be expected to have a material adverse effect on Borrower’s business.
The execution, delivery and performance of the Loan Documents have been duly authorized, and do
not conflict with Borrower’s organizational documents, nor constitute an event of default under any
material agreement by which Borrower is bound. Borrower is not in default under any agreement to
which or by which it is bound in which the default would reasonably be expected to have a material
adverse effect on Borrower’s business.




Borrower has good title to the Collateral, free of Liens except Permitted Liens. All inventory is
in all material respects of good and marketable quality, free from material defects.




1









 








Borrower is not an “investment company” or a company “controlled” by an “investment company” under
the Investment Company Act of 1940, as amended. Neither Borrower nor any of its Subsidiaries is a
“holding company” or an “affiliate” of a “holding company” or a “subsidiary company” of a “holding
company” as each term is defined and used in the Public Utility Holding Company Act of 2005.
Borrower is not engaged as one of its important activities in extending credit for margin stock
(under Regulations X, T and U of the Federal Reserve Board of Governors). Borrower has complied in
all material respects with the Federal Fair Labor Standards Act. Borrower has not violated any
laws, ordinances or rules, the violation of which would reasonably be expected to have a material
adverse effect on Borrower’s business. None of Borrower’s or any Subsidiary’s properties or assets
have been used by Borrower or any Subsidiary or, to the best of Borrower’s knowledge, by previous
Persons, in disposing, producing, storing, treating, or transporting any hazardous substance other
than legally. Borrower and each Subsidiary has timely filed all required tax returns and paid, or
made adequate provision to pay, all material taxes, except those being contested in good faith with
adequate reserves under GAAP. Borrower and each Subsidiary has obtained all consents, approvals
and authorizations of, made all declarations or filings with, and given all notices to, all
government authorities that are necessary to continue its business as currently conducted except
where the failure to obtain or make such consents, declarations, notices or filings would not
reasonably be expected to have a materially adverse effect on Borrower’s business.




Borrower is in compliance with the financial covenant set forth in Section 6.9 of the Agreement.




All other representations and warranties in the Agreement are true and correct in all material
respects on this date, and Borrower represents that there is no existing Event of Default.




IP Lien Event




Required: The sum of (a) Borrower’s unrestricted balance sheet cash and Cash Equivalents in one or
more Collateral Accounts over which Bank has obtained a Control Agreement with respect to such
Collateral Account, plus (b) Excess Availability is less than the product of (y) six (6)
times (z) the Monthly Cash Burn Amount.




	 	 	 	 	 

	A.

	 	Unrestricted cash and Cash Equivalents maintained with Bank
	 	$_____
	 
	 	 	 	 
	B.

	 	Monthly Cash Burn Amount
	 	$_____
	 
	 	 	 	 
	C.

	 	Line B multiplied by 6
	 	$_____






Is line A equal to or greater than Line C?




________ No: IP Lien Event occurred      
________ Yes: IP Lien Event did not occur ________ Not Applicable



Section 6.2(i) and (j)




The following Intellectual Property was registered (or a registration application submitted) after
the Effective Date. Set forth below is a list of material changes to the composition of the
Intellectual Property (if no registrations or material changes, state “None”).




 






 






The following is a list of all Required Permits obtained relating to such new Iluvien Product (if
no Required Permits obtained, state “None”).




 






 






2









 





Sincerely,




ALIMERA SCIENCES, INC.




 

Signature




 
Title




 
Date



1242919.8



3