Document:

Exhibit
10.2

 

Certain
information has been excluded from the exhibit because it is not material and would likely cause competitive harm to the company
if publicly disclosed. [***] indicates the redacted confidential portions of this exhibit.

 

LOAN
AND SECURITY AGREEMENT

 

THIS
LOAN AND SECURITY AGREEMENT (this “Agreement”) dated as of December 26, 2019 (the “Effective Date”)
by and among (a) SILICON VALLEY BANK, a California corporation (“Bank”), and (b) (i) MISONIX, INC.,
a Delaware corporation (“Parent”), (ii) MISONIX OPCO, INC., a New York corporation (“Misonix”),
and (iii) SOLSYS MEDICAL, LLC, a Delaware limited liability company (“Solsys”) (Parent, Misonix and
Solsys are hereinafter jointly and severally, individually and collectively, referred to as “Borrower”), 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. 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 meaning 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 outstanding principal amount of all Credit Extensions and
accrued and unpaid interest thereon as and when due in accordance with this Agreement.

 

2.2 Revolving
Line.

 

(a) Availability.
Subject to the terms and conditions of this Agreement and to deduction of Reserves, Bank shall make Advances not exceeding the
Availability Amount. Borrower agrees that it shall request an Advance on the Effective Date in an amount necessary to pay in full
(and the proceeds of which shall be used to pay in full) all outstanding Obligations of Solsys to Bank pursuant to that certain
Loan and Security Agreement between Solsys and Bank dated as of January 22, 2019. Amounts borrowed under the Revolving Line may
be repaid and, prior to the Revolving Line Maturity Date, reborrowed, subject to the applicable terms and conditions precedent
herein.

 

(b) Termination;
Repayment. The Revolving Line terminates on the Revolving Line Maturity Date, when the principal amount of all Advances, the
unpaid interest thereon, and all other Obligations relating to the Revolving Line shall be immediately due and payable.

 

2.2.1 Letters
of Credit Sublimit.

 

(a) As
part of the Revolving Line, Bank shall issue or have issued Letters of Credit denominated in Dollars or a Foreign Currency for
Borrower’s account. The aggregate Dollar Equivalent amount utilized for the issuance of Letters of Credit shall at all times
reduce the amount otherwise available for Advances under the Revolving Line. The aggregate Dollar Equivalent of the then-applicable
face amount of outstanding Letters of Credit (including drawn but unreimbursed Letters of Credit) plus any Letter of Credit Reserve
may not exceed the lesser of (i) (A) One Million Dollars ($1,000,000.00), minus (B) amounts used for Cash Management Services,
and minus (C) the FX Reduction Amount and (ii) (A) the lesser of the Revolving Line or the Borrowing Base, minus (B) the sum of
all outstanding principal amounts of any Advances (including any amounts used for Cash Management Services), and minus (C) the
FX Reduction Amount.

 

(b) If,
on the Revolving Line Maturity Date (or the effective date of any termination of this Agreement), there are any outstanding Letters
of Credit, then on such date Borrower shall provide to Bank cash collateral in an amount equal to one hundred five percent (105.0%)
for Letters of Credit denominated in Dollars or one hundred ten percent (110.0%) for Letters of Credit denominated in a Foreign
Currency, in each case of the aggregate Dollar Equivalent of the then-applicable face amount of all such Letters of Credit plus
all interest, fees, and costs due or estimated by Bank to become due in connection therewith, to secure all of the Obligations
relating to such Letters of Credit. All Letters of Credit shall be in form and substance acceptable to Bank in its sole discretion
and shall be subject to the terms and conditions of Bank’s standard Application and Letter of Credit Agreement (the “Letter
of Credit Application”). Borrower agrees to execute any further documentation in connection with the Letters of Credit
as Bank may reasonably request. Borrower further agrees to be bound by the regulations and interpretations of the issuer of any
Letters of Credit guarantied by Bank and opened for Borrower’s account or by Bank’s interpretations of any Letter
of Credit issued by Bank for Borrower’s account, and Borrower understands and agrees that Bank shall not be liable for any
error, negligence, or mistake, whether of omission or commission, in following Borrower’s instructions or those contained
in the Letters of Credit or any modifications, amendments, or supplements thereto.

  

     

     

    

 

(c) The
obligation of Borrower to immediately reimburse Bank for drawings made under Letters of Credit shall be absolute, unconditional,
and irrevocable, and shall be performed strictly in accordance with the terms of this Agreement, such Letters of Credit, and the
Letter of Credit Application.

 

(d) Borrower
may request that Bank issue a Letter of Credit payable in a Foreign Currency. If a demand for payment is made under any such Letter
of Credit, Bank shall treat such demand as an Advance to Borrower of the Dollar Equivalent of the amount thereof (plus fees and
charges in connection therewith such as wire, cable, SWIFT or similar charges).

 

(e) To
guard against fluctuations in currency exchange rates, upon the issuance of any Letter of Credit payable in a Foreign Currency,
Bank shall create a reserve (the “Letter of Credit Reserve”) under the Revolving Line in an amount equal to
a percentage (which percentage shall be determined by Bank in its sole discretion) of the then-applicable face amount of such
Letter of Credit. The amount of the Letter of Credit Reserve may be adjusted by Bank from time to time to account for fluctuations
in the exchange rate. The availability of funds under the Revolving Line shall be reduced by the amount of such Letter of Credit
Reserve for as long as such Letter of Credit remains outstanding.

 

2.2.2 Foreign
Exchange Sublimit. As part of the Revolving Line, Borrower may enter into foreign exchange contracts with Bank under which
Borrower commits to purchase from or sell to Bank a specific amount of Foreign Currency (each, a “FX Contract”)
on a specified date (the “Settlement Date”). FX Contracts shall have a Settlement Date of at least one (1)
FX Business Day after the contract date. The aggregate FX Reduction Amount at any one time may not exceed the lesser of (i) (A)
One Million Dollars ($1,000,000.00), minus (B) the sum of all amounts used for Cash Management Services, and minus (C) the aggregate
Dollar Equivalent of the then-applicable face amount of any outstanding Letters of Credit (including drawn but unreimbursed Letters
of Credit) plus any Letter of Credit Reserve and (ii) (A) the lesser of the Revolving Line or the Borrowing Base, minus (B) the
sum of all outstanding principal amounts of any Advances (including any amounts used for Cash Management Services), and minus
(C) the aggregate Dollar Equivalent of the then-applicable face amount of any outstanding Letters of Credit (including drawn but
unreimbursed Letters of Credit) plus any Letter of Credit Reserve. The amount otherwise available for Credit Extensions under
the Revolving Line shall be reduced by the FX Reduction Amount. Any amounts needed to fully reimburse Bank for any amounts not
paid by Borrower in connection with FX Contracts will be treated as Advances under the Revolving Line and will accrue interest
at the interest rate applicable to Advances.

 

2.2.3 Cash
Management Services Sublimit. Borrower may use the Revolving Line in an aggregate amount not to exceed the lesser of (i) (A)
One Million Dollars ($1,000,000.00), minus (B) the aggregate Dollar Equivalent of the then-applicable face amount of any outstanding
Letters of Credit (including drawn but unreimbursed Letters of Credit) plus any Letter of Credit Reserve, and minus (C) the FX
Reduction Amount and (ii) (A) the lesser of the Revolving Line or the Borrowing Base, minus (B) the sum of all outstanding principal
amounts of any Advances, minus the aggregate Dollar Equivalent of the then-applicable face amount of any outstanding Letters of
Credit (including drawn but unreimbursed Letters of Credit) plus any Letter of Credit Reserve, and minus (C) the FX Reduction
Amount for Bank’s cash management services, which may include merchant services, direct deposit of payroll, business credit
card, and check cashing services identified in Bank’s various cash management services agreements (collectively, the “Cash
Management Services”). Any amounts Bank pays on behalf of Borrower for any Cash Management Services will be treated
as Advances under the Revolving Line and will accrue interest at the interest rate applicable to Advances.

 

    2

     

    

 

2.3 Overadvances.
If, at any time, the sum of (a) the outstanding principal amount of any Advances (including any amounts used for Cash Management
Services), plus (b) the then-applicable face amount of any outstanding Letters of Credit (including drawn but unreimbursed Letters
of Credit) plus any Letter of Credit Reserve, plus (c) the FX Reduction Amount, exceeds the lesser of either the Revolving Line
or the Borrowing Base, Borrower shall immediately pay to Bank in cash the amount of such excess (such excess, the “Overadvance”).
Without limiting Borrower’s obligation to repay Bank any Overadvance, Borrower agrees to pay Bank interest on the outstanding
amount of any Overadvance, on demand, at a per annum rate equal to the rate that is otherwise applicable to Advances plus four
percent (4.0%).

 

2.4 Payment
of Interest on the Credit Extensions.

 

(a) Interest
Rate. Subject to Section 2.4(b), the principal amount outstanding under the Revolving Line shall accrue interest at a floating
per annum rate equal to the greater of (i) the Prime Rate and (ii) five and one-quarter of one percent (5.25%), which interest
shall be payable monthly in accordance with Section 2.4(d) below.

 

(b) Default
Rate. Immediately upon the occurrence and during the continuance of an Event of Default, Obligations shall bear interest at
a rate per annum which is four percent (4.0%) above the rate that is otherwise applicable thereto (the “Default Rate”).
Fees and expenses which are required to be paid by Borrower pursuant to the Loan Documents (including, without limitation, Bank
Expenses) but are not paid when due shall bear interest until paid at a rate equal to the highest rate applicable to the Obligations.
Payment or acceptance of the increased interest rate provided in this Section 2.4(b) is not a permitted alternative to timely
payment and shall not constitute a waiver of any Event of Default or otherwise prejudice or limit any rights or remedies of Bank.

 

(c) Adjustment
to Interest Rate. Changes to the interest rate of any Credit Extension based on changes to the Prime Rate shall be effective
on the effective date of any change to the Prime Rate and to the extent of any such change.

 

(d) Payment;
Interest Computation. Interest is payable monthly on the Payment Date of each month and shall be computed on the basis of
a 360-day year for the actual number of days elapsed. In computing interest, (i) all payments received after 2:00 p.m. Eastern
time on any day shall be deemed received at the opening of business on the next Business Day, and (ii) the date of the making
of any Credit Extension shall be included and the date of payment shall be excluded; provided, however, that if any Credit Extension
is repaid on the same day on which it is made, such day shall be included in computing interest on such Credit Extension.

 

2.5 Fees.
Borrower shall pay to Bank:

 

(a) Commitment
Fee. A fully earned, non-refundable commitment fee of One Hundred Thousand Dollars ($100,000.00), on the Effective Date;

 

(b) Anniversary
Fees. On each year anniversary of the Effective Date occurring prior to the Revolving Line Maturity Date, Borrower shall pay
to Bank a fully earned, non-refundable anniversary fee of One Hundred Thousand Dollars ($100,000.00) each (each, an “Anniversary
Fee” and, collectively, the “Anniversary Fees”). Each Anniversary Fee shall be fully earned on the
Effective Date but shall be due and payable on the earliest to occur of (i) such one (1) year anniversary of the Effective Date,
(ii) the occurrence of an Event of Default, and (iii) the termination of this Agreement;

 

(c) Termination
Fee. Upon termination of this Agreement or the termination of the Revolving Line for any reason prior to the Revolving Line
Maturity Date, in addition to the payment of any other amounts then-owing, a termination fee in an amount equal to one percent
(1.0%) of the Revolving Line at such time (the “Termination Fee”), provided that no termination fee shall be
charged if either (i) the credit facility hereunder is replaced with a new facility from Bank or (ii) Bank sells, transfers, assigns
or negotiates (but excluding grants of participation in) all of its interest in the obligations, rights and benefits under this
Agreement and the other Loan Documents to a Person (or Persons) that is not an Affiliate of Bank and Borrower terminates this
Agreement or the Revolving Line within sixty (60) days thereof (unless Borrower has consented to such sale, transfer, assignment
or negotiation). For clarity, no consent from Borrower is necessary in order to effect any sale, transfer, assignment or negotiation
of Bank’s obligations, rights and benefits under this Agreement and the other Loan Documents, and the giving or withholding
of such consent will only impact whether the Termination Fee will be waived under the circumstances set forth in clause (ii) of
the preceding sentence;

  

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(d) Unused
Revolving Line Facility Fee. Payable monthly in arrears on the last day of each month ending after the Effective Date and
thereafter prior to the Revolving Line Maturity Date, and on the Revolving Line Maturity Date, a fee (the “Unused Revolving
Line Facility Fee”) in an amount equal to one-quarter of one percent (0.25%) per annum of the average unused portion
of the Revolving Line, as determined by Bank, computed on the basis of a year with the applicable number of days as set forth
in Section 2.4(d). The unused portion of the Revolving Line, for purposes of this calculation, shall be calculated on a calendar
year basis and shall equal the difference between (i) the Revolving Line, and (ii) the average for the period of the daily closing
balance of the outstanding principal amount of any Advances (including any amounts used for Cash Management Services), plus the
sum of the aggregate amount of outstanding Letters of Credit (including drawn but unreimbursed Letters of Credit) plus any Letter
of Credit Reserve, plus the FX Reduction Amount;

 

(e) Letter
of Credit Fee. Bank’s customary fees and expenses for the issuance or renewal of Letters of Credit, upon the issuance
of such Letter of Credit, each anniversary of the issuance during the term of such Letter of Credit, and upon the renewal of such
Letter of Credit by Bank; and

 

(f) Bank
Expenses. All Bank Expenses (including reasonable attorneys’ fees and expenses for documentation and negotiation of
this Agreement) incurred through and after the Effective Date, when due (or, if no stated due date, upon demand by Bank).

 

Unless
otherwise provided in this Agreement or in a separate writing by Bank, Borrower shall not be entitled to any credit, rebate, or
repayment of any fees earned by Bank pursuant to this Agreement notwithstanding any termination of this Agreement or the suspension
or termination of Bank’s obligation to make loans and advances hereunder. Bank may deduct amounts owing by Borrower under
the clauses of this Section 2.5 pursuant to the terms of Section 2.6(c). Bank shall provide Borrower written notice of deductions
made from the Designated Deposit Account pursuant to the terms of the clauses of this Section 2.5.

 

2.6 Payments;
Application of Payments; Debit of Accounts. 

 

(a) All
payments to be made by Borrower under any Loan Document shall be made in immediately available funds in Dollars, without setoff
or counterclaim, before 2:00 p.m. Eastern time on the date when due. Payments of principal and/or interest received after 2:00
p.m. Eastern time are considered received at the opening of business on the next Business Day. When a payment is due on a day
that is not a Business Day, the payment shall be due the next Business Day, and additional fees or interest, as applicable, shall
continue to accrue until paid.

 

(b) Bank
has the exclusive right to determine the order and manner in which all payments with respect to the Obligations may be applied.
Borrower shall have no right to specify the order or the accounts to which Bank shall allocate or apply any payments required
to be made by Borrower to Bank or otherwise received by Bank under this Agreement when any such allocation or application is not
specified elsewhere in this Agreement.

 

(c) Bank
may debit any of Borrower’s deposit accounts, including the Designated Deposit Account, for principal and interest payments
or any other amounts Borrower owes Bank when due. These debits shall not constitute a set-off.

  

    4

     

    

 

2.7 Withholding.
Payments received by Bank from Borrower under this Agreement will be made free and clear of and without deduction for any
and all present or future taxes, levies, imposts, duties, deductions, withholdings, assessments, fees or other charges imposed
by any Governmental Authority (including any interest, additions to tax or penalties applicable thereto). Specifically, however,
if at any time any Governmental Authority, applicable law, regulation or international agreement requires Borrower to make any
withholding or deduction from any such payment or other sum payable hereunder to Bank, Borrower hereby covenants and agrees that
the amount due from Borrower with respect to such payment or other sum payable hereunder will be increased to the extent necessary
to ensure that, after the making of such required withholding or deduction, Bank receives a net sum equal to the sum which it
would have received had no withholding or deduction been required, and Borrower shall pay the full amount withheld or deducted
to the relevant Governmental Authority. Borrower will, upon request, furnish Bank with proof reasonably satisfactory to Bank indicating
that Borrower has made such withholding payment; provided, however, that Borrower need not make any withholding payment if the
amount or validity of such withholding payment is contested in good faith by appropriate and timely proceedings and as to which
payment in full is bonded or reserved against by Borrower. The agreements and obligations of Borrower contained in this Section
2.7 shall survive the termination of this Agreement.

 

3 CONDITIONS
OF LOANS

 

3.1 Conditions
Precedent to Initial Credit Extension. Bank’s obligation to make the initial Credit Extension 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) duly
executed original signatures to the Loan Documents;

 

(b) a
termination agreement with respect to that certain Loan and Security Agreement between Solsys and Bank dated as of January 22,
2019 and the payment in full of all outstanding Obligations of Solsys to Bank pursuant to such agreement;

 

(c) duly
executed original signatures to the Control Agreement(s);

 

(d) (i)
the Operating Documents and a long-form good standing certificate of Misonix certified by the Secretary of State of New York,
(ii) the Operating Documents and a long-form good standing certificate of Parent and Solsys certified by the Secretary of State
of Delaware and (iii) a certificate of good standing/foreign qualification certified by the Secretary of State (or equivalent
agency) of each other state in which a Borrower is qualified to conduct business, each as of a date no earlier than thirty (30)
days prior to the Effective Date;

 

(e) a
secretary’s corporate borrowing certificate of each of Parent and Misonix with respect to such Borrower’s Operating
Documents, incumbency, specimen signatures and resolutions authorizing the execution and delivery of this Agreement and the other
Loan Documents;

 

(f) a
limited liability company borrowing certificate of Solsys with respect to such Borrower’s Operating Documents, incumbency,
specimen signatures and resolutions authorizing the execution and delivery of this Agreement and the other Loan Documents;

 

(g) duly
executed original signatures to the completed Borrowing Resolutions for each Borrower;

 

(h) the
Intercreditor Agreement by SWK, together with the duly executed signatures thereto and copies of the documents evidencing Borrower’s
Indebtedness with SWK;

 

(i) certified
copies, dated as of a recent date, of financing statement searches, as Bank may request, accompanied by written evidence (including
any UCC termination statements) that the Liens indicated in any such financing statements either constitute Permitted Liens or
have been or, in connection with the initial Credit Extension, will be terminated or released;

 

(j) the
Perfection Certificate of each Borrower, together with the duly executed original signatures thereto;

  

    5

     

    

 

(k) Intellectual
Property search results for each Borrower and completed exhibits to the IP Agreement;

 

(l) a
landlord’s consent in favor of Bank for each of Borrower’s leased locations, by the respective landlord thereof, together
with the duly executed signatures thereto;

 

(m) a
bailee’s waiver in favor of Bank for each location where Borrower maintains property with a third party, by each such third
party, together with the duly executed signatures thereto;

 

(n) a
legal opinion (authority and enforceability) of Borrower’s counsel dated as of the Effective Date together with the duly
executed original signature thereto;

 

(o) evidence
satisfactory to Bank that the insurance policies and endorsements required by Section 6.7 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;

 

(p) the
completion of the Initial Audit;

 

(q) with
respect to the initial Advance, a completed Borrowing Base Report (and any schedules related thereto and including any other information
requested by Bank with respect to Borrower’s Accounts); and

 

(r) payment
of the fees and Bank Expenses then due as specified in Section 2.5 hereof.

 

3.2 Conditions
Precedent to all Credit Extensions. Bank’s obligations to make each Credit Extension, including the initial Credit Extension,
is subject to the following conditions precedent:

 

(a) timely
receipt of the Credit Extension request and any materials and documents required by Section 3.4;

 

(b) the
representations and warranties in this Agreement shall be true, accurate, and complete in all material respects on the date of
the proposed Credit Extension and on the Funding Date of each Credit Extension; provided, however, that such materiality qualifier
shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text
thereof; and provided, further that those representations and warranties expressly referring to a specific date shall be true,
accurate and complete in all material respects as of such date, and no Event of Default shall have occurred and be continuing
or result from the Credit Extension. Each Credit Extension is Borrower’s representation and warranty on that date that the
representations and warranties in this Agreement remain true, accurate, and complete in all material respects; provided, however,
that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified
by materiality in the text thereof; and provided, further that those representations and warranties expressly referring to a specific
date shall be true, accurate and complete in all material respects as of such date; and

 

(c) Bank
determines to its reasonable satisfaction that there has not been any material impairment in the general affairs, management,
results of operation, financial condition or the prospect of repayment of the Obligations, nor any material adverse deviation
by Borrower from the most recent business plan of Borrower presented to and accepted by Bank.

 

3.3 Covenant
to Deliver. Borrower agrees to deliver to Bank each item required to be delivered to Bank under this Agreement as a condition
precedent to any Credit Extension. Borrower expressly agrees that a Credit Extension made prior to the receipt by Bank of any
such item shall not constitute a waiver by Bank of Borrower’s obligation to deliver such item, and the making of any Credit
Extension in the absence of a required item shall be in Bank’s sole discretion.

  

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3.4 Procedures
for Borrowing. Subject to the prior satisfaction of all other applicable conditions to the making of an Advance (other than
under Section 2.2.1 or 2.2.3) set forth in this Agreement, to obtain an Advance, Borrower (via an individual duly authorized by
an Administrator) shall notify Bank (which notice shall be irrevocable) by electronic mail by 12:00 p.m. Eastern time on the Funding
Date of the Advance. Such notice shall be made by Borrower through Bank’s online banking program, provided, however, if
Borrower is not utilizing Bank’s online banking program, then such notice shall be in a written format acceptable to Bank
that is executed by an Authorized Signer. Bank shall have received satisfactory evidence that the Board has approved that such
Authorized Signer may provide such notices and request Advances. In connection with any such notification, Borrower must promptly
deliver to Bank by electronic mail or through Bank’s online banking program such reports and information, including without
limitation, a Borrowing Base Report, the items required pursuant to Section 6.2(b), sales journals, cash receipts journals, accounts
receivable aging reports, as Bank may reasonably request. Bank shall credit proceeds of an Advance to the Designated Deposit Account.
Bank may make Advances under this Agreement based on instructions from an Authorized Signer or without instructions if the Advances
are necessary to meet Obligations which have become due.

 

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,
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.

 

Borrower
acknowledges that it previously has entered, and/or may in the future enter, into Bank Services Agreements with Bank. Regardless
of the terms of any Bank Services Agreement, Borrower agrees that any amounts Borrower owes Bank thereunder shall be deemed to
be Obligations hereunder and that it is the intent of Borrower and Bank to have all such Obligations secured by the first priority
perfected security interest in the Collateral granted herein (which Collateral may be subject to Permitted Liens and, in the case
of Liens granted in connection with the SWK Credit Agreement, only to the extent contemplated by the Intercreditor Agreement).

 

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 (other than inchoate indemnity obligations)
and at such time as Bank’s obligation to make Credit Extensions has terminated, Bank shall, at the sole cost and expense
of Borrower, release its Liens in the Collateral and all rights therein shall revert to Borrower. In the event (x) all Obligations
(other than inchoate indemnity obligations), except for Bank Services, are satisfied in full, and (y) this Agreement is terminated,
Bank shall terminate the security interest granted herein upon Borrower providing cash collateral acceptable to Bank in its good
faith business judgment for Bank Services, if any. In the event such Bank Services consist of outstanding Letters of Credit, Borrower
shall provide to Bank cash collateral in an amount equal to (x) if such Letters of Credit are denominated in Dollars, then one
hundred five percent (105.0%); and (y) if such Letters of Credit are denominated in a Foreign Currency, then one hundred ten percent
(110.0%), of the Dollar Equivalent of the then-applicable face amount of all such Letters of Credit plus all interest, fees, and
costs due or to become due in connection therewith (as estimated by Bank in its business judgment), to secure all of the Obligations
relating to such Letters of Credit.

 

4.2 Priority
of Security Interest. Borrower represents, warrants, and covenants that the security interest granted herein is and shall
at all times continue to be a first priority perfected security interest in the Collateral (which Collateral may be subject to
Permitted Liens and, in the case of Liens granted in connection with the SWK Credit Agreement, only to the extent contemplated
by the Intercreditor Agreement) to the extent contemplated by the Intercreditor Agreement). If Borrower shall acquire a commercial
tort claim with a value in excess of Two Hundred Fifty Thousand Dollars ($250,000.00), 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 reasonably satisfactory
to Bank.

 

4.3 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. Such
financing statements may indicate the Collateral as “all assets of the Debtor” or words of similar effect, or as being
of an equal or lesser scope, or with greater detail, all in Bank’s discretion.

 

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5 REPRESENTATIONS
AND WARRANTIES

 

Borrower
represents and warrants as follows:

 

5.1 Due
Organization, Authorization; Power and Authority. Borrower is duly existing and in good standing as a Registered Organization
in its jurisdiction of formation and is qualified and licensed to do business and is in good standing in any jurisdiction in which
the conduct of its business or its ownership of property requires that it be qualified except where the failure to do so could
not reasonably be expected to have a material adverse effect on Borrower’s business. In connection with this Agreement,
each Borrower has delivered to Bank a completed certificate signed by such Borrower entitled “Perfection Certificate”
(collectively, 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 five (5) years prior to the date of the Perfection Certificate, 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 (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) conflict with, contravene, constitute a default or breach under, or result in or permit the termination or acceleration
of, 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 could reasonably be expected to have a material adverse effect on Borrower’s business.

 

5.2 Collateral.
Borrower has good title to, 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 Collateral Accounts at or with any
bank or financial institution other than Bank or Bank’s Affiliates except for the Collateral Accounts described in the Perfection
Certificate delivered to Bank in connection herewith and which Borrower has taken such actions as are necessary to give Bank a
perfected security interest therein, pursuant to the terms of Section 6.8(b). The Accounts are bona fide, existing obligations
of the Account Debtors.

 

The
Collateral is not in the possession of any third party bailee (such as a warehouse) except as otherwise provided in the Perfection
Certificate or as permitted by Section 7.2. None of the components of the Collateral shall be maintained at locations other than
as provided in the Perfection Certificate or as permitted pursuant to Section 7.2.

 

All
Inventory is in all material respects of good and marketable quality, free from material defects.

  

    8

     

    

 

Except
as noted in the Perfection Certificate, Borrower is the sole owner of the Intellectual Property which it owns or purports to own
except for non-exclusive licenses granted to its customers in the ordinary course of business. 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 the best of 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.

 

Except
as noted on the Perfection Certificate or as to which Bank has been notified in accordance with Section 6.10(c), Borrower is not
a party to, nor is it bound by, any Restricted License.

 

5.3 Accounts
Receivable; Inventory.

 

(a) For
each Account with respect to which Advances are requested, on the date each Advance is requested and made, such Account shall
be an Eligible Account.

 

(b) All
statements made and all unpaid balances appearing in all invoices, instruments and other documents evidencing the Eligible Accounts
are and shall be true and correct and all such invoices, instruments and other documents, and all of Borrower’s Books are
genuine and in all respects what they purport to be. All sales and other transactions underlying or giving rise to each Eligible
Account shall comply in all material respects with all applicable laws and governmental rules and regulations. Borrower has no
knowledge of any actual or imminent Insolvency Proceeding of any Account Debtor whose accounts are Eligible Accounts in any Borrowing
Base Report. To the best of Borrower’s knowledge, all signatures and endorsements on all documents, instruments, and agreements
relating to all Eligible Accounts are genuine, and all such documents, instruments and agreements are legally enforceable in accordance
with their terms.

 

(c) For
any item of Inventory consisting of Eligible Inventory in any Borrowing Base Report, such Inventory (i) consists of finished goods,
in good, new, and salable condition, which is not perishable, returned, consigned, obsolete, not sellable, damaged, or defective,
and is not comprised of demonstrative or custom inventory, inventory in transit, works in progress, packaging or shipping materials,
or supplies; (ii) meets all applicable governmental standards; (iii) has been manufactured in compliance with the Fair Labor Standards
Act; (iv) is not subject to any Liens, except (A) the first priority Liens granted or in favor of Bank under this Agreement or
any of the other Loan Documents, (B) Liens permitted pursuant to clause (f) of the definition of Permitted Liens so long as such
Liens only have priority over Bank’s Liens to the extent contemplated by the Intercreditor Agreement and (C) Liens permitted
pursuant to clause (g) of the definition of Permitted Liens so long as such Liens do not have superior priority to Bank’s
Liens with respect to any assets or property; and (v) is located in the United States at the locations identified by Borrower
in the Perfection Certificate where it maintains Inventory (or at any location permitted under Section 7.2) and such locations
are subject to a landlord’s consent or bailee waiver, as applicable, in form and substance acceptable to Bank in its sole
discretion; provided, however, during the period commencing on the Effective Date through and including September 30, 2020, Inventory
located at Borrower’s leased location at 1938 New Highway, Farmingdale, New York 11735 shall not be deemed ineligible under
clause (v) solely due to such location not being subject to a landlord’s consent.

 

5.4 Litigation.
 There are no actions or proceedings pending or, to the knowledge of any Responsible Officer, threatened in writing by or
against Borrower or any of its Subsidiaries that could reasonably be expected to involve more than, individually or in the aggregate,
Three Million Dollars ($3,000,000.00).

 

5.5 Financial
Statements; Financial Condition.  All consolidated financial statements for Borrower and any of its 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 financial statements submitted to Bank.

 

5.6 Solvency.
The fair salable value of Borrower’s consolidated assets (including goodwill minus disposition costs) exceeds the fair
value of Borrower’s liabilities; Borrower is not left with unreasonably small capital after the transactions in this Agreement;
and Borrower is able to pay its debts (including trade debts) as they mature.

  

    9

     

    

 

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). Borrower (a) has
complied in all material respects with all Requirements of Law, and (b) has not violated any Requirements of Law the violation
of which could reasonably be expected to have a material adverse effect on its business. None of Borrower’s or any of its
Subsidiaries’ properties or assets has 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 of its Subsidiaries have obtained all consents, approvals and authorizations of, made all declarations or filings with,
and given all notices to, all Governmental Authorities that are necessary to continue their respective businesses as currently
conducted.

 

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

 

5.9 Tax
Returns and Payments; Pension Contributions. Borrower has timely filed all required tax returns and reports, and Borrower
has timely paid all foreign, federal, state and local taxes, assessments, deposits and contributions owed by Borrower except (a)
to the extent such taxes are being contested in good faith by appropriate proceedings promptly instituted and diligently conducted,
so long as such reserve or other appropriate provision, if any, as shall be required in conformity with GAAP shall have been made
therefor, or (b) if such taxes, assessments, deposits and contributions do not, individually or in the aggregate, exceed Two Hundred
Fifty Thousand Dollars ($250,000.00).

 

To
the extent Borrower defers payment of any contested taxes, Borrower shall (i) notify Bank in writing of the commencement of, and
any material development in, the proceedings, and (ii) post bonds or take 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 in excess of Two Hundred Fifty Thousand Dollars ($250,000.00).
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 Use
of Proceeds. Borrower shall use the proceeds of the Credit Extensions solely as working capital and to fund its general business
requirements and not for personal, family, household or agricultural purposes.

 

5.11 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 the 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).

 

5.12 Definition
of “Knowledge.” For purposes of the Loan Documents, whenever a representation or warranty is made to Borrower’s
knowledge or awareness, to the “best of” Borrower’s knowledge, or with a similar qualification, knowledge or
awareness means the actual knowledge, after reasonable investigation, of any Responsible Officer.

  

    10

     

    

 

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, in all material respects,
with all laws, ordinances and regulations to which it is subject, the noncompliance with which could reasonably be expected to
have a material adverse effect on Borrower’s or any Subsidiary’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.  Provide Bank with the following:

 

(a) a
Borrowing Base Report (and any schedules related thereto and including any other information requested by Bank with respect to
Borrower’s Accounts) (i) with each request for an Advance and (ii) within thirty (30) days after the end of each month;

 

(b) (i)
monthly accounts receivable agings, aged by invoice date, (ii) monthly accounts payable agings, aged by invoice date, and outstanding
or held check registers, if any, (iii) monthly reconciliations of accounts receivable agings (aged by invoice date) and transaction
reports and (iv) monthly perpetual inventory reports for 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 the case of each of the foregoing (A) with each request for an Advance and (B) within thirty (30) days after the end of each
month;

 

(c) as
soon as available, but no later than thirty (30) days after the last day of each month, a company prepared consolidated balance
sheet and income statement covering Borrower’s consolidated operations for such month in a form reasonably acceptable to
Bank (the “Monthly Financial Statements”);

 

(d) within
thirty (30) days after the last day of each month and together with the Monthly Financial Statements, a duly completed Compliance
Certificate signed by a Responsible Officer, certifying that as of the end of such month, Borrower was in full compliance with
all of the terms and conditions of this Agreement, and setting forth calculations showing compliance with the financial covenants
set forth in this Agreement and such other information as Bank may reasonably request, including, without limitation, a statement
that at the end of such month there were no held checks;

 

(e) as
soon as available, and in any event no later than thirty (30) days following the end of each fiscal year of Borrower, and contemporaneously
with any updates or amendments thereto, (A) annual operating budgets (including income statements, balance sheets and cash flow
statements, by month), and (B) annual financial projections (on a quarterly basis), in each case as approved by the Board, together
with any related business forecasts used in the preparation of such annual financial projections;

 

(f) as
soon as available, and in any event within forty-five (45) days following the end of each fiscal quarter of Parent, Parent’s
10-Q for such fiscal quarter as filed with the SEC;

 

(g) as
soon as available, and in any event within ninety (90) days following the end of Parent’s fiscal year, Parent’s 10-K
for such fiscal year as filed with the SEC, together with an unqualified opinion on the financial statements included in the 10-K
from an independent certified public accounting firm reasonably acceptable to Bank;

 

(h) within
five (5) days of filing, copies of all periodic and other reports, proxy statements and other materials filed by Borrower and/or
any Guarantor with the SEC, any Governmental Authority succeeding to any or all of the functions of the SEC or with any national
securities exchange, or distributed to its shareholders, as the case may be. Documents required to be delivered pursuant to the
terms hereof (to the extent any such documents are included in materials otherwise filed with the SEC) may be delivered electronically
and if so delivered, shall be deemed to have been delivered on the date on which Borrower posts such documents, or provides a
link thereto, on Borrower’s website on the internet at Borrower’s website address; provided, however, Borrower shall
promptly notify Bank in writing (which may be by electronic mail) of the posting of any such documents;

  

    11

     

    

 

(i) within
five (5) days of delivery, copies of all statements, reports and notices made available to Borrower’s security holders or
to any holders of Subordinated Debt;

 

(j) prompt
written notice of any changes to the beneficial ownership information set out in Section 14 of the Perfection Certificate. Borrower
understands and acknowledges that Bank relies on such true, accurate and up-to-date beneficial ownership information to meet Bank’s
regulatory obligations to obtain, verify and record information about the beneficial owners of its legal entity customers;

 

(k) prompt
report of any legal actions pending or threatened in writing against Borrower or any of its Subsidiaries that could result in
damages or costs to Borrower or any of its Subsidiaries of, individually or in the aggregate, One Million Dollars ($1,000,000.00)
or more; and

 

(l) promptly,
from time to time, such other information regarding Borrower or compliance with the terms of any Loan Documents as reasonably
requested by Bank.

 

6.3 Accounts
Receivable.

 

(a) Schedules
and Documents Relating to Accounts. Borrower shall deliver to Bank transaction reports and schedules of collections, as provided
in Section 6.2, on Bank’s standard forms; provided, however, that Borrower’s failure to execute and deliver the same
shall not affect or limit Bank’s Lien and other rights in all of Borrower’s Accounts, nor shall Bank’s failure
to advance or lend against a specific Account affect or limit Bank’s Lien and other rights therein. If requested by Bank,
Borrower shall furnish Bank with copies (or, at Bank’s reasonable request, originals) of all contracts, orders, invoices,
and other similar documents, and all shipping instructions, delivery receipts, bills of lading, and other evidence of delivery,
for any goods the sale or disposition of which gave rise to such Accounts. In addition, Borrower shall deliver to Bank, on its
request, the originals of all instruments, chattel paper, security agreements, guarantees and other documents and property evidencing
or securing any Accounts, in the same form as received, with all necessary indorsements, and copies of all credit memos.

 

(b) Disputes.
Borrower shall promptly notify Bank of all disputes or claims relating to Accounts. Borrower may forgive (completely or partially),
compromise, or settle any Account for less than payment in full, or agree to do any of the foregoing so long as (i) Borrower does
so in good faith, in a commercially reasonable manner, in the ordinary course of business, in arm’s-length transactions,
and reports the same to Bank in the regular reports provided to Bank; (ii) no Event of Default has occurred and is continuing;
and (iii) after taking into account all such discounts, settlements and forgiveness, the sum of (A) the outstanding principal
amount of any Advances (including any amounts used for Cash Management Services), plus (B) the then-applicable face amount of
any outstanding Letters of Credit (including drawn but unreimbursed Letters of Credit) plus any Letter of Credit Reserve, plus
(C) the FX Reduction Amount, will not exceed the lesser of the Revolving Line or the Borrowing Base.

 

(c) Collection
of Accounts. Borrower shall direct Account Debtors to deliver or transmit all proceeds of Accounts into a lockbox account,
or such other “blocked account” as specified by Bank (either such account, the “Cash Collateral Account”).
Whether or not an Event of Default has occurred and is continuing, Borrower shall promptly (but, in any event, within two (2)
Business Days) deliver all payments on and proceeds of Accounts to the Cash Collateral Account. Subject to Bank’s right
to maintain a reserve pursuant to Section 6.3(d), all amounts received in the Cash Collateral Account shall be (i) when a Streamline
Period is not in effect, applied to immediately reduce the outstanding Obligations under the Revolving Line (unless Bank, in its
sole discretion, elects not to so apply such amounts), or (ii) when a Streamline Period is in effect, transferred on a daily basis
to Borrower’s operating account with Bank. Borrower hereby authorizes Bank to transfer to the Cash Collateral Account any
amounts that Bank reasonably determines are proceeds of the Accounts (provided that Bank is under no obligation to do so and this
allowance shall in no event relieve Borrower of its obligations hereunder).

  

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(d) Reserves.
Notwithstanding any terms in this Agreement to the contrary, at times when an Event of Default exists, Bank may hold any proceeds
of the Accounts and any amounts in the Cash Collateral Account that are not applied to the outstanding Obligations pursuant to
Section 6.3(c) above (including amounts otherwise required to be transferred to Borrower’s operating account with Bank when
a Streamline Period is in effect) as a reserve to be applied to any Obligations regardless of whether such Obligations are then
due and payable.

 

(e) Returns.
Provided no Event of Default has occurred and is continuing, if any Account Debtor returns any Inventory to Borrower, Borrower
shall promptly (i) determine the reason for such return, (ii) issue a credit memorandum to the Account Debtor in the appropriate
amount, and (iii) provide a copy of such credit memorandum to Bank, upon request from Bank. In the event any attempted return
occurs after the occurrence and during the continuance of any Event of Default, Borrower shall hold the returned Inventory in
trust for Bank, and immediately notify Bank of the return of the Inventory.

 

(f) Verifications;
Confirmations; Credit Quality; Notifications. Bank may, from time to time, (i) verify and confirm directly with the respective
Account Debtors the validity, amount and other matters relating to the Accounts, either in the name of Borrower or Bank or such
other name as Bank may choose, and notify any Account Debtor of Bank’s security interest in such Account and/or (ii) conduct
a credit check of any Account Debtor to approve any such Account Debtor’s credit. Notwithstanding the foregoing, so long
as no Event of Default has occurred and is continuing, Bank will notify and consult with Borrower prior to making direct contact
with an Account Debtor.

 

(g) No
Liability. Bank shall not be responsible or liable for any shortage or discrepancy in, damage to, or loss or destruction of,
any goods, the sale or other disposition of which gives rise to an Account, or for any error, act, omission, or delay of any kind
occurring in the settlement, failure to settle, collection or failure to collect any Account, or for settling any Account in good
faith for less than the full amount thereof, nor shall Bank be deemed to be responsible for any of Borrower’s obligations
under any contract or agreement giving rise to an Account. Nothing herein shall, however, relieve Bank from liability for its
own gross negligence or willful misconduct.

 

6.4 Remittance
of Proceeds. Except as otherwise provided in Section 6.3(c), deliver, in kind, all proceeds arising from the disposition of
any Collateral to the Cash Collateral Account Bank in the original form in which received by Borrower (or if not in a form that
may be transferred to the Cash Collateral Account, transferred in any manner instructed by Bank) not later than the following
Business Day after receipt by Borrower, to be applied to the Obligations (a) prior to an Event of Default, pursuant to the terms
of Section 6.3(c) hereof, and (b) after the occurrence and during the continuance of an Event of Default, pursuant to the terms
of Section 9.4 hereof; provided that, if no Event of Default has occurred and is continuing, Borrower shall not be obligated to
remit to Bank the proceeds of the sale of worn out or obsolete Equipment disposed of by Borrower in good faith in an arm’s
length transaction for an aggregate purchase price of Two Hundred Fifty Thousand Dollars ($250,000.00) or less (for all such transactions
in any fiscal year). Nothing in this Section 6.4 limits the restrictions on disposition of Collateral set forth elsewhere in this
Agreement.

 

6.5 Taxes;
Pensions. Timely file, and require each of its Subsidiaries to timely file, all required tax returns and reports and timely
pay, and require each of its Subsidiaries to timely pay, all foreign, federal, state and local taxes, assessments, deposits and
contributions owed by Borrower and each of its Subsidiaries, except for deferred payment of any taxes contested pursuant to the
terms of Section 5.9 hereof, and shall deliver to Bank, on demand, appropriate certificates attesting to such payments, and pay
all amounts necessary to fund all present pension, profit sharing and deferred compensation plans in accordance with their terms.

 

6.6 Access
to Collateral; Books and Records.  At reasonable times, on one (1) Business Day’s notice (provided no notice is required
if an Event of Default has occurred and is continuing), Bank, or its agents, shall have the right to inspect the Collateral and
the right to audit and copy Borrower’s Books. Such inspections and audits shall be conducted as frequently as Bank determines
in its sole discretion that conditions warrant. The foregoing inspections and audits shall be conducted at Borrower’s expense
and the charge therefor shall be One Thousand Dollars ($1,000.00) per person per day (or such higher amount as shall represent
Bank’s then-current standard charge for the same), plus reasonable out-of-pocket expenses. In the event Borrower and Bank
schedule an audit more than eight (8) days in advance, and Borrower cancels or seeks to or reschedules the audit with less than
eight (8) days written notice to Bank, then (without limiting any of Bank’s rights or remedies) Borrower shall pay Bank
a fee of Two Thousand Dollars ($2,000.00) plus any out-of-pocket expenses incurred by Bank to compensate Bank for the anticipated
costs and expenses of the cancellation or rescheduling.

  

    13

     

    

 

6.7 Insurance.

 

(a) Keep
its business and the Collateral insured for risks and in amounts standard for companies in Borrower’s industry and location
and as Bank may reasonably request. Insurance policies shall be in a form, with financially sound and reputable insurance companies
that are not Affiliates of Borrower, and in amounts that are satisfactory to Bank. All property policies shall have a lender’s
loss payable endorsement showing Bank as the lender loss payee. All liability policies shall show, or have endorsements showing,
Bank as an additional insured. Bank shall be named as lender loss payee and/or additional insured with respect to any such insurance
providing coverage in respect of any Collateral.

 

(b) Ensure
that proceeds payable under any property policy are, at Bank’s option, payable to Bank on account of the Obligations.

 

(c) At
Bank’s request, Borrower shall deliver certified copies of insurance policies and evidence of all premium payments. Each
provider of any such insurance required under this Section 6.7 shall agree, by endorsement upon the policy or policies issued
by it or by independent instruments furnished to Bank, that it will give Bank thirty (30) days prior written notice before any
such policy or policies shall be materially altered or canceled. If Borrower fails to obtain insurance as required under this
Section 6.7 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 6.7, and take any action under the policies Bank deems
prudent.

 

6.8 Accounts.

 

(a) Maintain
its and all of its Subsidiaries’ operating and other deposit accounts, the Cash Collateral Account and excess cash with
Bank and Bank’s Affiliates; provided, however, Borrower may maintain its accounts existing on the Effective Date that are
disclosed in the Perfection Certificate until the date that is one hundred eighty (180) days from the Effective Date so long as
such accounts do not at any time hold any excess cash of Borrower. In addition to the foregoing, Borrower shall conduct all of
its cash management, asset management, letters of credit and business credit card banking with Bank. Any Guarantor shall maintain
all depository and operating accounts and excess cash with Bank and Bank’s Affiliates.

 

(b) In
addition to and without limiting the restrictions in (a), Borrower shall provide Bank five (5) days prior written notice before
establishing any Collateral Account at or with any bank or financial institution other than Bank or Bank’s Affiliates. For
each Collateral Account that Borrower at any time maintains, Borrower shall cause the applicable bank or financial institution
(other than Bank) 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.

 

6.9 Financial
Covenants.

 

(a) Consolidated
Unencumbered Liquid Assets. Have at all times, to be tested as of the last day of each fiscal quarter, Consolidated Unencumbered Liquid
Assets of at least (i) as of any date of determination where the Market Capitalization of Parent is greater than or equal to [***]
or (ii), as of any date of determination where the aggregate Market Capitalization of Parent is less than [***], the greater of
(A) [***] or (B) an amount equal to two hundred percent (200.0%) of the Covenant Operational Burn for the prior fiscal quarter.

  

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(b) Minimum
Aggregate Revenue. Have at all times, to be tested as of the last Business Day of each fiscal quarter, Aggregate Revenue for
the following periods of at least:

  

	Period	 	Aggregate Revenue
	Trailing 9-month period ending March 31, 2020	 	[***]
	Trailing 12-month period ending June 30, 2020	 	[***]
	Trailing 12-month period ending September 30, 2020	 	[***]
	Trailing 12-month period ending December 31, 2020	 	[***]
	Trailing 12-month period ending March 31, 2021	 	[***]
	Trailing 12-month period ending June 30, 2021	 	[***]
	Trailing 12-month period ending September 30, 2021 and each 12-month period ending on the last day of each fiscal quarter thereafter	 	[***]

  

For
purposes of clarification, if Aggregate Revenue is calculated for a period that includes any period prior the consummation of
the transactions contemplated in the Merger Agreement, Aggregate Revenue will include, without duplication, the combined aggregate
of Covenant Net Sales, Covenant Royalties and any other income or revenue recognized by Parent and/or its Subsidiaries, on one
hand, and by Solsys and/or its Subsidiaries, on the other hand, for such period.

 

(c)
Minimum EBITDA. Have at all times when the aggregate Market Capitalization of Parent is less than [***], to be tested as
of the last day of each fiscal quarter, EBITDA, as tested on a consolidated basis with respect to Parent and its Subsidiaries
for the following periods of at least the following:

  

	Period	 	Minimum EBITDA
	Trailing 6-month period ending December 31, 2019	 	[***]
	Trailing 9-month period ending March 31, 2020	 	[***]
	Trailing 12-month period ending June 30, 2020	 	[***]
	Trailing 12-month period ending September 30, 2020	 	[***]
	Trailing 12-month period ending December 31, 2020	 	[***]
	Trailing 12-month period ending March 31, 2021	 	[***]
	Trailing 12-month period ending June 30, 2021 and each 12-month period ending on the last day of each calendar quarter thereafter	 	[***]

  

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Notwithstanding the foregoing, any failure of Borrower to satisfy
the requirements set forth in this Section 6.9(c) shall not otherwise constitute an Event of Default so long as Borrower maintains
Consolidated Unencumbered Liquid Assets of at least the greater of (i) $[***] or (ii) an amount equal to four hundred percent
(400.0%) of the Covenant Operational Burn for the prior Fiscal Quarter at all times until the Borrower is otherwise in compliance
with this Section 6.9(c).

 

6.10 Protection
and Registration of Intellectual Property Rights. 

 

(a) (i)
Protect, defend and maintain the validity and enforceability of the Intellectual Property that is material to Borrower’s
business; (ii) promptly advise Bank in writing of material infringements or any other event that could reasonably be expected
to materially and adversely affect the value of the Intellectual Property that is material to Borrower’s business; and (iii)
not allow any Intellectual Property material to Borrower’s business to be abandoned, forfeited or dedicated to the public
without Bank’s written consent unless the Board, in its good faith business judgment, determines it is in Borrower’s
best interest to do so.

 

(b) If
Borrower (i) obtains any Patent, registered Trademark, 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, then Borrower shall immediately provide written notice thereof to Bank and shall execute such intellectual property
security agreements and 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 in such property (except that the first priority
aspect may be subject to the security interest of SWK in certain property, but only to the extent contemplated by the Intercreditor
Agreement). If Borrower decides to register any Copyrights or mask works in the United States Copyright Office, Borrower shall:
(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 in the Copyrights or mask works intended to be registered with the United States Copyright Office (except that the first
priority aspect may be subject to the security interest of SWK in certain property, but only to the extent contemplated by the
Intercreditor Agreement); and (z) record such intellectual property security agreement with the United States Copyright Office
contemporaneously 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, Copyrights
or mask works, together with evidence of the recording of the intellectual property security agreement required for Bank to perfect
and maintain a first priority perfected security interest in such property (except that the first priority aspect may be subject
to the security interest of SWK in certain property, but only to the extent contemplated by the Intercreditor Agreement).

 

(c) Provide
written notice to Bank within thirty (30) days of entering or becoming bound by any Restricted License (other than over-the-counter
software that is commercially available to the public). With respect to any Restricted License entered into on or after the Effective
Date, 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” and for Bank to have a security interest
in it 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 Bank’s rights and remedies under this Agreement and the other Loan Documents.

 

6.11 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.

  

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6.12 Online
Banking.

 

(a) Utilize
Bank’s online banking platform for all matters requested by Bank which shall include, without limitation (and without request
by Bank for the following matters), requesting approval for exceptions, requesting Credit Extensions, and uploading financial
statements and other reports required to be delivered by this Agreement (including, without limitation, those described in Section
6.2 of this Agreement).

 

(b) Comply
with the terms of Bank’s Online Banking Agreement as in effect from time to time and ensure that all persons utilizing Bank’s
online banking platform are duly authorized to do so by an Administrator. Bank shall be entitled to assume the authenticity, accuracy
and completeness of any information, instruction or request for a Credit Extension submitted via Bank’s online banking platform
and to further assume that any submissions or requests made via Bank’s online banking platform have been duly authorized
by an Administrator.

 

6.13 Further
Assurances. Execute any further instruments and take further action as Bank reasonably requests to perfect or continue Bank’s
Lien in the Collateral or to effect the purposes of this Agreement. Deliver to Bank, within five (5) days after the same are sent
or received, copies of all correspondence, reports, documents and other filings with any Governmental Authority regarding compliance
with or maintenance of Governmental Approvals or Requirements of Law or that could reasonably be expected to have a material effect
on any of the Governmental Approvals or otherwise on the operations of Borrower or any of its Subsidiaries.

 

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 (including, without limitation, pursuant to a Division) (collectively,
“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 that is, in the reasonable
judgment of Borrower, no longer economically practicable to maintain or useful in the ordinary course of business of Borrower;
(c) consisting of Permitted Liens and Permitted Investments; (d) consisting of non-exclusive licenses for the use of the property
of Borrower or its Subsidiaries in the ordinary course of business; (e) by one Borrower to another Borrower; (f) consisting of
the cancellation of intercompany Indebtedness owed by one Borrower to another; (g) consisting of sales and dispositions among
Subsidiaries of Borrower (other than a Borrower); (h) consisting of exchanges of existing Equipment for new Equipment that is
substantially similar to the Equipment being exchanged and that has a value equal to or greater than the Equipment being exchanged,
provided that the new Equipment shall be deemed Collateral in which Bank has been granted a first priority security interest;
(i) of any Intellectual Property that is abandoned, forfeited or dedicated to the public and that the Board has, in its good faith
business judgment, determined is in Borrower’s best interest to do so; or (j) of other assets with a value not to exceed
Two Hundred Fifty Thousand Dollars ($250,000.00) in the aggregate in any fiscal year.

 

7.2 Changes
in Business, Management, Control, or Business Locations. (a) Engage in or permit any of its Subsidiaries to engage in any
business other than the businesses currently engaged in by Borrower and such Subsidiary, as applicable, or reasonably related
thereto; (b) liquidate or dissolve; (c) fail to provide notice to Bank of any Key Person departing from or ceasing to be employed
by Borrower within five (5) days after such Key Person’s departure from Borrower; or (d) permit or suffer any Change in
Control.

 

Borrower
shall not, without at least thirty (30) days prior written notice to Bank: (1) add any new offices or business locations, including
warehouses (unless such new offices or business locations contain less than One Hundred Thousand Dollars ($100,000.00) in Borrower’s
assets or property) or deliver any portion of the Collateral valued, individually or in the aggregate, in excess of One Hundred
Thousand Dollars ($100,000.00) to a bailee at a location other than to a bailee and at a location already disclosed in the Perfection
Certificate, (2) change its jurisdiction of organization, (3) change its organizational structure or type, (4) change its legal
name, or (5) change any organizational number (if any) assigned by its jurisdiction of organization. If Borrower intends to add
any new offices or business locations, including warehouses, containing in excess of One Hundred Thousand Dollars ($100,000.00)
of Borrower's assets or property, then Borrower will first cause the landlord of any such new offices or business locations, including
warehouses, to execute and deliver a landlord consent in form and substance satisfactory to Bank. If Borrower intends to deliver
any portion of the Collateral valued, individually or in the aggregate, in excess of One Hundred Thousand Dollars ($100,000.00)
to a bailee, and Bank and such bailee are not already parties to a bailee agreement governing both the Collateral and the location
to which Borrower intends to deliver the Collateral, then Borrower will first cause such bailee to execute and deliver a bailee
agreement in form and substance satisfactory to Bank.

  

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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
(including, without limitation, by the formation of any Subsidiary or pursuant to a Division). 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, permit any Collateral not to
be subject to the first priority security interest granted herein (which Collateral may be subject to Permitted Liens and, in
the case of Liens granted in connection with the SWK Credit Agreement, only to the extent contemplated by the Intercreditor Agreement)
to the extent contemplated by the Intercreditor Agreement), 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 Maintenance
of Collateral Accounts. Maintain any Collateral Account except pursuant to the terms of Section 6.8(b) hereof.

 

7.7 Distributions;
Investments. (a) Pay any dividends or make any distribution or payment or redeem, retire or purchase any capital stock or
membership interests (other than dividends or distributions made or paid to a Borrower); or (b) directly or indirectly make any
Investment (including, without limitation, by the formation of any Subsidiary) other than Permitted Investments, or permit any
of its Subsidiaries to do so.

 

7.8 Transactions
with Affiliates. Directly or indirectly enter into or permit to exist any material transaction with any Affiliate of Borrower,
except for (a) 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 and
(b) transactions with any other Borrower or a Secured Guarantor that are otherwise permitted under the terms of this Agreement.

 

7.9 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, provide for earlier or greater principal, interest, or other payments
thereon, or adversely affect the subordination thereof to Obligations owed to Bank.

 

7.10 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 Credit
Extension for that purpose; fail to meet the minimum funding requirements of ERISA, permit a Reportable Event or Prohibited Transaction,
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 could 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.

  

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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 (a) make any payment of principal or interest on any Credit Extension when due, or (b) pay any
other Obligations within three (3) Business Days after such Obligations are due and payable (which three (3) Business Day cure
period shall not apply to payments due on the Revolving Line Maturity Date). During the cure period, the failure to make or pay
any payment specified under clause (b) hereunder is not an Event of Default (but Bank will have not obligation to make any Credit
Extension during the cure period);

 

8.2 Covenant
Default.

 

(a)
 Borrower fails or neglects to perform any obligation in Sections 6.2, 6.3, 6.4, 6.5,
6.6, 6.7, 6.8, 6.9, 6.10(c), or 6.12 or violates any covenant in Section 7; or

 

(b)
 Borrower fails or neglects to perform, keep, or observe any other term, provision, condition,
covenant or agreement contained in this Agreement or any Loan Documents, and as to any default (other than those specified in
this Section 8) 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, that if the default cannot by its nature be cured within
the ten (10) day period or cannot after diligent attempts by Borrower be cured within such ten (10) day period, and such default
is likely to be cured within a reasonable time, then Borrower shall have an additional period (which shall not in any case exceed
thirty (30) days) to attempt to cure such default, and within such reasonable time period the failure to cure the default shall
not be deemed an Event of Default (but Bank will have not obligation to make any Credit Extension during the cure period). Cure
periods provided under this section shall not apply, among other things, to financial covenants or any other covenants set forth
in clause (a) above;

 

8.3 Material
Adverse Change. A Material Adverse Change occurs;

 

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 the control
of Borrower (including a Subsidiary), or (ii) a notice of lien or levy is filed against any of Borrower’s assets by any
Governmental Authority, 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, Bank will have no obligation to
make any Credit Extensions during any ten (10) day cure period; or

 

(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 all or any material part of its business;

 

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

 

8.6 Other
Agreements. There is, under any agreement to which Borrower or any Guarantor is a party with a third party or parties, (a)
any default resulting in a right by such third party or parties, whether or not exercised, to accelerate the maturity of any Indebtedness
in an amount individually or in the aggregate in excess of Two Hundred Fifty Thousand Dollars ($250,000.00); or (b) any breach
or default by Borrower or Guarantor, the result of which could have a material adverse effect on Borrower’s or any Guarantor’s
business;

  

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8.7 Judgments;
Penalties. One or more fines, penalties or final judgments, orders or decrees for the payment of money in an amount, individually
or in the aggregate, of at least Two Hundred Fifty Thousand Dollars ($250,000.00) (not covered by independent third-party insurance
as to which liability has been accepted by such insurance carrier) shall be rendered against Borrower by any Governmental Authority,
and the same are not, within ten (10) days after the entry, assessment or issuance thereof, discharged, satisfied, or paid, or
after execution thereof, stayed or bonded pending appeal, or such judgments are not discharged prior to the expiration of any
such stay (provided that Bank will have no Obligation to make Credit Extensions prior to the satisfaction, payment, discharge,
stay, or bonding of such fine, penalty, 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 any 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. Any subordination agreement, intercreditor agreement or other document, instrument, or agreement evidencing the subordination
of any Subordinated Debt shall for any reason be revoked or invalidated or otherwise cease to be in full force and effect, any
Person shall be in breach thereof or contest in any manner the validity or enforceability thereof or deny that it has any further
liability or obligation thereunder, or the Obligations shall for any reason be subordinated or shall not have the priority contemplated
by this Agreement or any applicable subordination or intercreditor 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, 8.6, 8.7, or 8.8 of this Agreement occurs with respect to any Guarantor, (d) the death, 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 any collateral provided by Guarantor or in the value of 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; or

 

8.11 SWK.
The occurrence of any Event of Default (or any replacement term) under, and as defined in, the Loan Documents (as defined
in the SWK Credit Agreement).

 

9 BANK’S
RIGHTS AND REMEDIES

 

9.1 Rights
and Remedies. Upon the occurrence and during the continuance of an Event of Default, 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) demand
that Borrower (i) deposit cash with Bank in an amount equal to (A) one hundred five percent (105.0%) of the Dollar Equivalent
of the aggregate then-applicable face amount of all Letters of Credit denominated in Dollars remaining undrawn, and (B) one hundred
ten percent (110.0%) of the Dollar Equivalent of the aggregate then-applicable face amount of all Letters of Credit denominated
in a Foreign Currency remaining undrawn (plus, in each case, all interest, fees, and costs due or to become due in connection
therewith (as estimated by Bank in its good faith business judgment)), to secure all of the Obligations relating to such Letters
of Credit, as collateral security for the repayment of any future drawings under such Letters of Credit, and Borrower shall forthwith
deposit and pay such amounts, and (ii) pay in advance all letter of credit fees scheduled to be paid or payable over the remaining
term of any Letters of Credit;

 

(d) terminate
any FX Contracts;

  

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(e) verify
the amount of, demand payment of and performance under, and collect any Accounts and General Intangibles, 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. 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;

 

(f) make
any payments and do any acts it considers necessary or reasonable to protect the Collateral and/or 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;

 

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

 

(h) subject
to any applicable provisions of the Code, ship, reclaim, recover, store, finish, maintain, repair, prepare for sale, advertise
for sale, and sell the Collateral. Bank is hereby granted a non-exclusive, royalty-free license or other right to use, without
charge, Borrower’s labels, Patents, Copyrights, mask works, rights of use of any name, trade secrets, trade names, Trademarks,
and advertising matter, or any similar property as it pertains to the Collateral, in completing production of, advertising 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;

 

(i) 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;

 

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

 

(k) 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 Power
of Attorney. Borrower hereby irrevocably appoints Bank as its lawful attorney-in-fact, exercisable following the occurrence
and during the continuation of an Event of Default, to: (a) endorse Borrower’s name on any checks, payment instruments,
or other forms of payment or security; (b) sign Borrower’s name on any invoice or bill of lading for any Account or drafts
against Account Debtors; (c) demand, collect, sue, and give releases to any Account Debtor for monies due, settle and adjust disputes
and claims about the Accounts directly with Account Debtors, and compromise, prosecute, or defend any action, claim, case, or
proceeding about any Collateral (including filing a claim or voting a claim in any bankruptcy case in Bank’s or Borrower’s
name, as Bank chooses); (d) make, settle, and adjust all claims under Borrower’s insurance policies; (e) pay, contest or
settle any Lien, charge, encumbrance, security interest, or other claim in or to the Collateral, or any judgment based thereon,
or otherwise take any action to terminate or discharge the same; and (f) transfer the Collateral into the name of Bank or a third
party as the Code permits. Borrower hereby appoints Bank as its lawful attorney-in-fact to sign Borrower’s name on any documents
necessary to perfect or continue the perfection of Bank’s security interest in the Collateral regardless of whether an Event
of Default has occurred until all Obligations have been satisfied in full and the Loan Documents have been terminated. Bank’s
foregoing appointment as Borrower’s attorney in fact, and all of Bank’s rights and powers, coupled with an interest,
are irrevocable until all Obligations have been fully repaid and performed and the Loan Documents have been terminated.

 

9.3 Protective
Payments. If Borrower fails to obtain the insurance called for by Section 6.7 or fails to pay any premium thereon or fails
to pay any other amount which Borrower is obligated to pay under this Agreement or any other Loan Document or which may be required
to preserve the Collateral, 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 rate applicable to the Obligations, and secured by the Collateral.
Bank will make reasonable efforts 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.

  

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9.4 Application
of Payments and Proceeds. If any Event of Default has occurred and is continuing (or at any time on the terms set forth in
Section 6.3(c), regardless of whether an Event of Default exists) Bank shall have the right to apply in any order any funds in
its possession, whether from Borrower account balances, payments, proceeds realized as the result of any collection of Accounts
or other disposition of the Collateral, or otherwise, to the Obligations. Bank shall pay any surplus to Borrower by credit to
the Designated Deposit Account or to other Persons legally entitled thereto; Borrower shall remain liable to Bank for any deficiency.
If Bank, directly or indirectly, enters into a deferred payment or other credit transaction with any purchaser at any sale of
Collateral, Bank shall have the option, exercisable at any time, of either reducing the Obligations by the principal amount of
the purchase price or deferring the reduction of the Obligations until the actual receipt by Bank of cash therefor.

 

9.5 Bank’s
Liability for Collateral. So long as Bank complies with reasonable banking practices regarding the safekeeping of the Collateral
in the 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.

 

9.6 No
Waiver; 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 the party granting
the waiver 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 shall not preclude Bank from exercising
any other remedy under this Agreement or other remedy available at law or in equity, 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.

 

9.7 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.

 

9.8 Borrower
Liability. Any Borrower may, acting singly, request Credit Extensions hereunder.  Each Borrower hereby appoints each
other as agent for the other for all purposes hereunder, including with respect to requesting Credit Extensions hereunder. Each
Borrower hereunder shall be jointly and severally obligated to repay all Credit Extensions made hereunder, regardless of which
Borrower actually receives said Credit Extension, as if each Borrower hereunder directly received all Credit Extensions. 
Each Borrower waives (a) any suretyship defenses available to it under the Code or any other applicable law, and (b) any
right to require Bank to: (i) proceed against any Borrower or any other person; (ii) proceed against or exhaust any security;
or (iii) pursue any other remedy.  Bank may exercise or not exercise any right or remedy it has against any Borrower or any
security it holds (including the right to foreclose by judicial or non-judicial sale) without affecting any Borrower’s liability. 
Notwithstanding any other provision of this Agreement or other related document, until such time as all Obligations are paid in
full and this Agreement has been terminated in accordance with Section 12.1, each Borrower irrevocably waives all rights that
it may have at law or in equity (including, without limitation, any law subrogating Borrower to the rights of Bank under this
Agreement) to seek contribution, indemnification or any other form of reimbursement from any other Borrower, or any other Person
now or hereafter primarily or secondarily liable for any of the Obligations, for any payment made by Borrower with respect to
the Obligations in connection with this Agreement or otherwise and all rights that it might have to benefit from, or to participate
in, any security for the Obligations as a result of any payment made by Borrower with respect to the Obligations in connection
with this Agreement or otherwise.  Any indemnification, reimbursement or any other obligation prohibited under this Section
9.8 is hereby subordinated in time and right of payment to all obligations of Borrower to Bank until such time as all Obligations
are paid in full and this Agreement has been terminated in accordance with Section 12.1.  If any payment is made to a Borrower
in contravention of this Section 9.8, such Borrower shall hold such payment in trust for Bank and such payment shall be promptly
delivered to Bank for application to the Obligations, whether matured or unmatured.

  

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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 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.

  

	If to a Borrower:	c/o Misonix, Inc.
	 	1938 New Highway
	 	Farmingdale, New York 11735
	 	Attn: Joe Dwyer
	 	Fax: (631) 980-4253
	 	Email: jdwyer@misonix.com
	 	 
	If to Bank:	Silicon Valley Bank
	 	275 Grove Street
	 	Suite 2-200
	 	Newton, Massachusetts 02466
	 	Attn:  Mr. Sam Subilia
	 	Fax: (617) 527-0177
	 	Email: SSubilia@svb.com
	 	 
	with a copy to:	Morrison & Foerster LLP
	 	200 Clarendon Street, Floor 20
	 	Boston, Massachusetts 02116
	 	Attn:  David A. Ephraim, Esquire
	 	Fax: (617) 830-0142
	 	Email: DEphraim@mofo.com

 

11 CHOICE
OF LAW, VENUE AND JURY TRIAL WAIVER

 

Except
as otherwise expressly provided in any of the Loan Documents, Massachusetts 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 Boston, Massachusetts;
provided, however, that nothing in this Agreement shall be deemed to operate to preclude Bank from bringing suit or taking other
legal action in any other jurisdiction to realize on the Collateral or any other security for the Obligations, or to enforce a
judgment or other court order in favor of Bank. 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, or subsequently provided by Borrower in accordance with, 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.

  

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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.

 

This
Section 11 shall survive the termination of this Agreement.

 

12 GENERAL
PROVISIONS

 

12.1 Termination
Prior to Maturity Date; Survival.  All covenants, representations and warranties made in this Agreement shall continue in
full force until this Agreement has terminated pursuant to its terms and all Obligations have been satisfied (other than inchoate
indemnity obligations, and any other obligations which, by their terms, are to survive the termination of this Agreement, and
any other Obligations under Bank Services Agreements that are cash collateralized in accordance with Section 4.1). So long as
Borrower has satisfied the Obligations (other than inchoate indemnity obligations, and any other obligations which, by their terms,
are to survive the termination of this Agreement, and any Obligations under Bank Services Agreements that are cash collateralized
in accordance with Section 4.1), this Agreement may be terminated prior to the Revolving Line Maturity Date by Borrower, effective
three (3) Business Days after written notice of termination is given to Bank. Those obligations that are expressly specified in
this Agreement as surviving this Agreement’s termination shall continue to survive notwithstanding this Agreement’s
termination.

 

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

 

12.3 Indemnification.
Borrower agrees to indemnify, defend and hold Bank and its directors, officers, employees, agents, attorneys, or any other
Person affiliated with or representing Bank (each, an “Indemnified Person”) harmless against: (i) all obligations,
demands, claims, and liabilities (collectively, “Claims”) claimed or asserted by any other party in connection
with the transactions contemplated by the Loan Documents; and (ii) all losses or expenses (including Bank Expenses) in any way
suffered, incurred, or paid by such Indemnified Person as a result of, following from, consequential to, 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.

 

This
Section 12.3 shall survive until all statutes of limitation with respect to the Claims, losses, and expenses for which indemnity
is given shall have run.

 

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 Correction
of Loan Documents. Bank may correct patent errors and fill in any blanks in the Loan Documents consistent with the agreement
of the parties.

  

    24

     

    

 

12.7 Amendments
in Writing; Waiver; Integration. No purported amendment or modification of any Loan Document, or waiver, discharge or termination
of any obligation under any Loan Document, shall be enforceable or admissible unless, and only to the extent, expressly set forth
in a writing signed by the party against which enforcement or admission is sought. Without limiting the generality of the foregoing,
no oral promise or statement, nor any action, inaction, delay, failure to require performance or course of conduct shall operate
as, or evidence, an amendment, supplement or waiver or have any other effect on any Loan Document. Any waiver granted shall be
limited to the specific circumstance expressly described in it, and shall not apply to any subsequent or other circumstance, whether
similar or dissimilar, or give rise to, or evidence, any obligation or commitment to grant any further waiver. 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 the Loan Documents
merge into 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, is an original, and all taken together, constitute one Agreement.

 

12.9 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 (such Subsidiaries and
Affiliates, together with Bank, collectively, “Bank Entities”); (b) to prospective transferees or purchasers
of any interest in the Credit Extensions (provided, however, Bank shall use its best efforts to obtain any 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 that is either: (i) in the public domain or in Bank’s possession when
disclosed to Bank, or becomes part of the public domain (other than as a result of its disclosure by Bank in violation of this
Agreement) after disclosure to Bank; or (ii) disclosed to Bank by a third party, if Bank does not know that the third party is
prohibited from disclosing the information.

 

Bank
Entities may use anonymous forms of confidential information for aggregate datasets, for analyses or reporting, and for any other
uses not expressly prohibited in writing by Borrower. The provisions of the immediately preceding sentence shall survive the termination
of this Agreement.

 

12.10 Electronic
Execution of Documents. The words “execution,” “signed,” “signature” and words of like
import in any Loan Document shall be deemed to include electronic signatures or the keeping of records in electronic form, each
of which shall be of the same legal effect, validity and enforceability as a manually executed signature or the use of a paper-based
recordkeeping systems, as the case may be, to the extent and as provided for in any applicable law, including, without limitation,
any state law based on the Uniform Electronic Transactions Act.

 

12.11 Right
of Setoff. Borrower hereby grants to Bank a Lien and a 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 subsidiary of Bank) 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 setoff 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.

 

12.12 Captions.
The headings used in this Agreement are for convenience only and shall not affect the interpretation of this Agreement.

 

12.13 Construction
of Agreement. The parties mutually acknowledge that they and their attorneys have participated in the preparation and negotiation
of this Agreement. In cases of uncertainty this Agreement shall be construed without regard to which of the parties caused the
uncertainty to exist.

  

    25

     

    

 

12.14 Relationship.
The relationship of the parties to this Agreement is determined solely by the provisions of this Agreement. The parties do
not intend to create any agency, partnership, joint venture, trust, fiduciary or other relationship with duties or incidents different
from those of parties to an arm’s-length contract.

 

12.15 Third
Parties. Nothing in this Agreement, whether express or implied, is intended to: (a) confer any benefits, rights or remedies
under or by reason of this Agreement on any persons other than the express parties to it and their respective permitted successors
and assigns; (b) relieve or discharge the obligation or liability of any person not an express party to this Agreement; or (c)
give any person not an express party to this Agreement any right of subrogation or action against any party to this Agreement.

 

13 DEFINITIONS

 

13.1 Definitions.
As used in the Loan Documents, the word “shall” is mandatory, the word “may” is permissive, the word
“or” is not exclusive, the words “includes” and “including” are not limiting, the singular
includes the plural, and numbers denoting amounts that are set off in brackets are negative. As used in this Agreement, the following
capitalized terms have the following meanings:

 

“Account”
is, as to any Person, any “account” of such Person as “account” is 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 such Person.

 

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

 

“Administrator”
is an individual that is named:

 

(a)
 as an “Administrator” in the “SVB Online Services” form completed
by Borrower with the authority to determine who will be authorized to use SVB Online Services (as defined in Bank’s Online
Banking Agreement as in effect from time to time) on behalf of Borrower; and

 

(b)
 as an Authorized Signer of Borrower in an approval by the Board.

 

“Advance”
or “Advances” means a revolving credit loan (or revolving credit loans) under the Revolving Line.

 

“Affiliate”
is, with respect to any Person, each other 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. For purposes of the
definition of Eligible Accounts, Affiliate shall include a Specified Affiliate.

 

“Aggregate
Revenue” means the aggregate of Covenant Net Sales, Covenant Royalties and any other income or revenue recognized by
Parent and/or its Subsidiaries.

 

“Agreement”
is defined in the preamble hereof.

 

“Anniversary
Fee” and “Anniversary Fees” are each defined in Section 2.5(b).

 

“Authorized
Signer” is any individual listed in Borrower’s Borrowing Resolution who is authorized to execute the Loan Documents,
including making (and executing if applicable) any Credit Extension request, on behalf of Borrower.

 

“Availability
Amount” is (a) the lesser of (i) the Revolving Line or (ii) the amount available under the Borrowing Base minus (b)
the aggregate Dollar Equivalent amount of all outstanding Letters of Credit (including drawn but unreimbursed Letters of Credit)
plus an amount equal to the Letter of Credit Reserve, minus (c) the FX Reduction Amount, minus (d) any amounts used for Cash Management
Services, and minus (e) the outstanding principal balance of any Advances.

  

    26

     

    

 

“Bank”
is defined in the preamble hereof.

 

“Bank
Entities” is defined in Section 12.9.

 

“Bank
Expenses” are all out-of-pocket 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 or any Guarantor.

 

“Bank
Services” are any products, credit services, and/or financial accommodations previously, now, or hereafter provided
to Borrower or any of its Subsidiaries by Bank or any Bank Affiliate, including, without limitation, any letters of credit, cash
management services (including, without limitation, merchant services, direct deposit of payroll, business credit cards, and check
cashing services), interest rate swap arrangements, and foreign exchange services as any such products or services may be identified
in Bank’s various agreements related thereto (each, a “Bank Services Agreement”) and shall include, without
limitation, any Letters of Credit pursuant to Section 2.2.1, FX Contracts pursuant to Section 2.2.2 and Cash Management Services
pursuant to Section 2.2.3.

 

“Bank
Services Agreement” is defined in the definition of Bank Services.

 

“Board”
is Borrower’s board of directors or the limited liability company equivalent thereof.

 

“Borrower”
is defined in the preamble hereof.

 

“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.

 

“Borrowing
Base” is (a) eighty-five percent (85.0%) of Eligible Accounts plus (b) the lesser of (i) fifty percent (50.0%) of the
value of Borrower’s Eligible Inventory (valued at the lower of cost or wholesale fair market value) or (ii) Five Million
Dollars ($5,000,000.00), as determined by Bank from Borrower’s most recent Borrowing Base Report (and as may subsequently
be updated by Bank based upon information received by Bank including, without limitation, Accounts that are paid and/or billed
following the date of the Borrowing Base Report); provided, however, that Bank has the right to decrease the foregoing amount
and percentages in its good faith business judgment to mitigate the impact of events, conditions, contingencies, or risks which
may adversely affect the Collateral or its value.

 

“Borrowing
Base Report” is that certain report of the value of certain Collateral in the form specified by Bank to Borrower from
time to time.

 

“Borrowing
Resolutions” are, with respect to any Person, those resolutions adopted by such Person’s board of directors (or
the limited liability company equivalent thereof), and, if required under the terms of such Person’s Operating Documents,
stockholders or other equity holders, and delivered by such Person to Bank approving the Loan Documents to which such Person is
a party and the transactions contemplated thereby, together with a certificate executed by its secretary on behalf of such Person
certifying (a) such Person has the authority to execute, deliver, and perform its obligations under each of the Loan Documents
to which it is a party, (b) that set forth as a part of or attached as an exhibit to such certificate is a true, correct, and
complete copy of the resolutions then in full force and effect authorizing and ratifying the execution, delivery, and performance
by such Person of the Loan Documents to which it is a party, (c) the name(s) of the Person(s) authorized to execute the Loan Documents,
including making (and executing if applicable) any Credit Extension request, on behalf of such Person, together with a sample
of the true signature(s) of such Person(s), and (d) that Bank may conclusively rely on such certificate unless and until such
Person shall have delivered to Bank a further certificate canceling or amending such prior certificate.

  

    27

     

    

 

“Business
Day” is any day that is not a Saturday, Sunday or a day on which Bank is closed, except that if any determination of
a “Business Day” shall relate to an FX Contract, the term “Business Day” shall mean a day on which dealings
are carried on in the country of settlement of the Foreign Currency.

 

“Cash
Collateral Account” is defined in Section 6.3(c).

 

“Cash
Equivalents” means (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) Bank’s certificates of deposit issued maturing no more than one (1)
year after issue; and (d) money market funds at least ninety-five percent (95%) of the assets of which constitute Cash Equivalents
of the kinds described in clauses (a) through (c) of this definition.

 

“Cash
Management Services” is defined in Section 2.2.3.

 

“Change
in Control” means (a) at any time, any “person” or “group” (as such terms are used in Sections
13(d) and 14(d) of the Exchange Act), shall become, or obtain rights (whether by means of warrants, options or otherwise) to become,
the “beneficial owner” (as defined in Rules 13(d)-3 and 13(d)-5 under the Exchange Act), directly or indirectly, of
forty-nine percent (49.0%) or more of the ordinary voting power for the election of directors of Parent (determined on a fully
diluted basis) other than by the sale of Parent’s equity securities in a public offering or to venture capital or private
equity investors so long as Borrower identifies to Bank the venture capital or private equity investors at least seven (7) Business
Days prior to the closing of the transaction and provides to Bank a description of the material terms of the transaction; (b)
during any period of twelve (12) consecutive months, a majority of the members of the board of directors or other equivalent governing
body of Parent cease to be composed of individuals (i) who were members of that board or equivalent governing body on the first
day of such period, (ii) whose election or nomination to that board or equivalent governing body was approved by individuals referred
to in clause (i) above constituting at the time of such election or nomination at least a majority of that board or equivalent
governing body or (iii) whose election or nomination to that board or other equivalent governing body was approved by individuals
referred to in clauses (i) and (ii) above constituting at the time of such election or nomination at least a majority of that
board or equivalent governing body; or (c) at any time, Borrower shall cease to own and control, of record and beneficially, directly
or indirectly, one hundred percent (100.0%) of each class of outstanding capital stock of each Subsidiary of Borrower free and
clear of all Liens (except Liens created by this Agreement).

 

“Claims”
is defined in Section 12.3.

 

“Code”
is the Uniform Commercial Code, as the same may, from time to time, be enacted and in effect in the Commonwealth of Massachusetts;
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 Commonwealth of Massachusetts, 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.

 

“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 that certain certificate in the form attached hereto as Exhibit B.

  

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“Consolidated
Unencumbered Liquid Assets” means any Covenant Cash Equivalent Investment owned by Parent and its Subsidiaries on a
consolidated basis which are not the subject of any Lien or other arrangement with any creditor to have its claim satisfied out
of the asset (or proceeds thereof) prior to the general creditors of Parent and such Subsidiaries other than the Lien for the
benefit of SWK.

 

“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, in each case, 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 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 of authorship
and derivative work thereof, whether published or unpublished and whether or not the same also constitutes a trade secret.

 

“Covenant
Acquisition” means any transaction or series of related transactions for the purpose of or resulting, directly or indirectly,
in (a) the acquisition of all or substantially all of the assets of a Person, or of all or substantially all of any business or
division of a Person, (b) the acquisition of in excess of fifty percent (50.0%) of the capital stock, partnership interests, membership
interests or equity of any Person, or otherwise causing any Person to become a Subsidiary, (c) the acquisition of a product license
or a product line, or (d) a merger or consolidation or any other combination (other than a merger, consolidation or combination
that effects a Disposition (as defined in the SWK Credit Agreement)) with another Person (other than a Person that is already
a Subsidiary).

 

“Covenant
Capital Lease” means, with respect to any Person, any lease of (or other agreement conveying the right to use) any real
or personal property by such Person that, in conformity with GAAP, is accounted for as a capital lease on the balance sheet of
such Person.

  

“Covenant
Cash Equivalent Investment” means, at any time, (a) any evidence of Covenant Debt, maturing not more than one year after
such time, issued or guaranteed by the United States Government or any agency thereof, (b) commercial paper, or corporate demand
notes, in each case rated at least “A-l” by Standard & Poor’s Ratings Group or “P-l” by Moody’s
Investors Service, Inc., (c) any certificate of deposit (or time deposit represented by a certificate of deposit) or banker’s
acceptance maturing not more than one year after such time, or any overnight Federal Funds transaction that is issued or sold
by a commercial banking institution that is a member of the Federal Reserve System or is a U.S. branch of a foreign banking institution
and has a combined capital and surplus and undivided profits of not less than $500,000,000.00), (d) any repurchase agreement entered
into with any commercial banking institution of the nature referred to in clause (c) above) which (i) is secured by a fully perfected
security interest in any obligation of the type described in any of clauses (a) through (c) above and (ii) has a market value
at the time such repurchase agreement is entered into of not less than one-hundred percent (100.0%) of the repurchase obligation
of such commercial banking institution thereunder, (e) money market accounts or mutual funds which invest exclusively or substantially
in assets satisfying the foregoing requirements, (f) cash, and (g) other short term liquid investments approved in writing by
Bank.

 

“Covenant
Consolidated Net Income” means, with respect to Parent and its Subsidiaries, for any period, the consolidated net income
(or loss) for such period, as determined under GAAP.

  

    29

     

    

 

“Covenant
Contingent Obligation” means any agreement, undertaking or arrangement by which any Person guarantees, endorses or otherwise
becomes or is contingently liable upon (by direct or indirect agreement, contingent or otherwise, to provide funds for payment,
to supply funds to or otherwise to invest in a debtor, or otherwise to assure a creditor against loss) any indebtedness, obligation
or other liability of any other Person (other than by endorsements of instruments in the course of collection), or guarantees
the payment of dividends or other distributions upon the shares of any other Person. The amount of any Person’s obligation
in respect of any Covenant Contingent Obligation shall be deemed to be the amount for which the Person obligated thereon is reasonably
expected to be liable or responsible.

 

“Covenant
Debt” of any Person means, without duplication, (a) all indebtedness of such Person for borrowed money, (b) all indebtedness
evidenced by bonds, debentures, notes or similar instruments, (c) all obligations of such Person as lessee under Covenant Capital
Leases which have been or should be recorded as liabilities on a balance sheet of such Person in accordance with GAAP, (d) all
obligations of such Person to pay the deferred purchase price of property or services (excluding trade accounts payable in the
ordinary course of business), other than (i) payment obligations, earn-outs and similar obligations of such Person arising in
connection with a Covenant Acquisition or (ii) royalty payments or milestone payments made or to be made by such Person from time
to time in connection with a Covenant Acquisition, (e) all indebtedness secured by a Lien on the property of such Person, whether
or not such indebtedness shall have been assumed by such Person (with the amount thereof being measured as the lesser of (x)
the aggregate unpaid amount of such indebtedness and (y) the fair market value of such property), (f) all reimbursement
obligations, contingent or otherwise, with respect to letters of credit (whether or not drawn), banker’s acceptances and
surety bonds issued for the account of such Person, other than obligations that relate to trade accounts payable in the ordinary
course of business, (g) all Covenant Hedging Obligations of such Person, (h) all Covenant Contingent Obligations of such Person
in respect of Debt of others, (i) all indebtedness of any partnership of which such Person is a general partner except to the
extent such Person is not liable for such Debt, and (j) all obligations of such Person under any synthetic lease transaction,
where such obligations are considered borrowed money indebtedness for tax purposes but the transaction is classified as an operating
lease in accordance with GAAP.

 

“Covenant
Hedging Obligation” means, with respect to any Person, any liability of such Person under any interest rate,
currency or commodity swap agreement, cap agreement or collar agreement, and any other agreement or arrangement designed to
protect a Person against fluctuations in interest rates, currency exchange rates or commodity prices. The amount of any
Person’s obligation in respect of any Covenant Hedging Obligation shall be deemed to be the incremental obligation that
would be reflected in the financial statements of such Person in accordance with GAAP.

 

“Covenant
Interest Expense” means, for Parent and its Subsidiaries, for any period, the consolidated interest expense for such
period (including all imputed interest on Covenant Capital Leases).

 

“Covenant
Net Sales” means the gross amount billed or invoiced by Parent and its Subsidiaries for Covenant Services and for the
sale of Covenant Products and (including products and services ancillary thereto) to independent customers, less deductions for
(a) quantity, trade, cash or other discounts, allowances, credits or rebates (including customer rebates) actually allowed or
taken, (b) amounts deducted, repaid or credited by reason of rejections or returns of goods and government mandated rebates, or
because of chargebacks or retroactive price reductions, (c) charges for freight, handling, postage, transportation, insurance
and other shipping charges and (d) taxes, tariffs, duties or other governmental charges or assessments (including any sales, value
added or similar taxes other than an income tax) levied, absorbed or otherwise imposed on or with respect to the production, sale,
transportation, delivery or use of pharmaceutical products. A Covenant Product or Covenant Service shall be considered sold and/or
provided when billed out or invoiced. To the extent applicable, components of Covenant Net Sales shall be determined in the ordinary
course of business in accordance with historical practice and using the accrual method of accounting in accordance with GAAP.
For the purposes of calculating Covenant Net Sales, Bank understands and agrees that (i) Affiliates of a Borrower shall not be
regarded as independent customers and (ii) Covenant Net Sales shall not include Covenant Products distributed for product development
purposes, including for use in pre-clinical trials.

 

“Covenant
Operational Burn” for any period being measured shall mean (a) the aggregate cash flow from operations of Parent and
its Subsidiaries less (b) capital expenditures and changes in net working capital (normalized for any non-recurring items); in
the case of clauses (a) and (b) for the period being measured and as determined in accordance with GAAP.

 

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“Covenant
Products” means any products manufactured, sold, developed, tested or marketed by Parent or any of its Subsidiaries,
including without limitation, those products set forth on Schedule 1 attached hereto (as updated from time to time in accordance
with Section 6.1.2 of the SWK Credit Agreement); provided, however, that if Borrower shall fail to comply with the obligations
under Section 6.1.2 of the SWK Credit Agreement to give notice to SWK and update Schedule 1 prior to manufacturing, selling, developing,
testing or marketing any new Covenant Product, any such improperly undisclosed Covenant Product shall be deemed to be included
in this definition; and provided, further, that products manufactured by Borrower for unaffiliated third parties shall not be
deemed “Covenant Products” hereunder.

 

“Covenant
Royalties” means the amount of any and all royalties, license fees and any other payments or income of any type recognized
as revenue in accordance with GAAP by Parent and its Subsidiaries with respect to the sale of Covenant Products or the provision
of services by independent licensees of Parent and/or its Subsidiaries, including any such payments characterized as a share of
net profits, any up-front or lump sum payments, any milestone payments, commissions, fees or any other similar amounts, less deductions
for amounts deducted, repaid or credited by reason of adjustments to the sales upon which royalty amounts are based, regardless
of the reason for such adjustment to such sales. For the purposes of calculating Covenant Royalties, Bank understands and agrees
that Affiliates of Borrower shall not be regarded as independent licensees.

 

“Covenant
Services” means services provided by Borrower or any Affiliate of Borrower to un-Affiliated Persons, including without
limitation any sales, laboratory analysis, testing, consulting, marketing, commercialization and any other healthcare-related
services.

 

“Credit
Extension” is any Advance, any Overadvance (for purposes of Sections 1, 2.4, 7.10, 8.1, 9.8 and 12.9 only), Letter of
Credit, FX Contract, amount utilized for Cash Management Services, or any other extension of credit by Bank for Borrower’s
benefit.

 

“Default
Rate” is defined in Section 2.4(b).

 

“Deferred
Revenue” is all amounts received or invoiced 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.

 

“Designated
Deposit Account” is the account number ending 464 (last three digits) maintained by Borrower with Bank (provided, however,
if no such account number is included, then the Designated Deposit Account shall be any deposit account of Borrower maintained
with Bank as chosen by Bank).

 

“Division”
means, in reference to any Person which is an entity, the division of such Person into two (2) or more separate Persons, with
the dividing Person either continuing or terminating its existence as part of such division, including, without limitation, as
contemplated under Section 18-217 of the Delaware Limited Liability Company Act for limited liability companies formed under Delaware
law, or any analogous action taken pursuant to any other applicable law with respect to any corporation, limited liability company,
partnership or other entity.

 

“Dollars,”
“dollars” or use of the sign “$” means only lawful money of the United States and not any other
currency, regardless of whether that currency uses the “$” sign to denote its currency or may be readily converted
into lawful money of the United States.

 

“Dollar
Equivalent” is, at any time, (a) with respect to any amount denominated in Dollars, such amount, and (b) with respect
to any amount denominated in a Foreign Currency, the equivalent amount therefor in Dollars as determined by Bank at such time
on the basis of the then-prevailing rate of exchange in San Francisco, California, for sales of the Foreign Currency for transfer
to the country issuing such Foreign Currency.

  

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“EBITDA”
means, with respect to Parent and its Subsidiaries, for any period, Covenant Consolidated Net Income for such period plus, to
the extent deducted in determining such Covenant Consolidated Net Income for such period (and without duplication), (i) Covenant
Interest Expense, (ii) income tax expense (including tax accruals), (iii) depreciation and amortization, (iv) nonrecurring cash
fees, costs and expenses incurred in connection with the Covenant Acquisitions of product licenses and product lines from a third
party, and milestone and royalty payments to any third party, in relation to any material contract or any other Covenant Acquisition
made prior to September 27, 2019, (v) non-cash expenses relating to equity-based compensation or purchase accounting, and (vi)
other non-recurring and/or non-cash expenses or charges approved by Bank.

 

“Effective
Date” is defined in the preamble hereof.

 

“Eligible
Accounts” means Accounts owing to Borrower which arise in the ordinary course of Borrower’s business that meet
all Borrower’s representations and warranties in Section 5.3, that have been, at the option of Bank, confirmed in accordance
with Section 6.3(f) of this Agreement, and are due and owing from Account Debtors deemed creditworthy by Bank in its good faith
business judgment. Bank reserves the right at any time after the Effective Date to adjust any of the criteria set forth below
and to establish new criteria in its good faith business judgment. Unless Bank otherwise agrees in writing, Eligible Accounts
shall not include:

 

(a) Accounts
(i) for which the Account Debtor is Borrower’s Affiliate, officer, employee, investor, or agent, or (ii) that are intercompany
Accounts;

 

(b) Accounts
that the Account Debtor has not paid within ninety (90) days of invoice date regardless of invoice payment period terms;

 

(c) Accounts
with credit balances over ninety (90) days from invoice date;

 

(d) Accounts
owing from an Account Debtor if fifty percent (50%) or more of the Accounts owing from such Account Debtor have not been paid
within ninety (90) days of invoice date;

 

(e) Accounts
owing from an Account Debtor (i) which does not have its principal place of business in the United States, the United Kingdom,
Ireland, Germany, France, Sweden, Italy, Belgium, Switzerland, Spain, Denmark, the Netherlands, Norway, Finland, Portugal, Austria,
Japan, Australia, New Zealand or Israel or (ii) whose billing address (as set forth in the applicable invoice for such Account)
is not in the United States, the United Kingdom, Ireland, Germany, France, Sweden, Italy, Belgium, Switzerland, Spain, Denmark,
the Netherlands, Norway, Finland, Portugal, Austria, Japan, Australia, New Zealand or Israel, unless in the case of both (i) and
(ii) such Accounts are otherwise approved by Bank in writing on a case by case basis in its sole discretion;

 

(f) Accounts
billed from and/or payable to Borrower outside of the United States (sometimes called foreign invoiced accounts);

 

(g) Accounts
in which Bank does not have a first priority, perfected security interest under all applicable laws;

 

(h) Accounts
billed and/or payable in a Currency other than Dollars;

 

(i) 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);

 

(j) Accounts
with or in respect of accruals for marketing allowances, incentive rebates, price protection, cooperative advertising and other
similar marketing credits, unless otherwise approved by Bank in writing;

  

    32

     

    

 

(k) 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;

 

(l) Accounts
with customer deposits and/or with respect to which Borrower has received an upfront payment, to the extent of such customer deposit
and/or upfront payment;

 

(m) 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;

 

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

 

(o) Accounts
subject to contractual arrangements between Borrower and an Account Debtor where payments shall be scheduled or due according
to completion or fulfillment requirements (sometimes called contracts accounts receivable, progress billings, milestone billings,
or fulfillment contracts);

 

(p) 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);

 

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

 

(r) 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 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);

 

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

 

(t) Accounts
that represent non-trade receivables or that are derived by means other than in the ordinary course of Borrower’s business;

 

(u) Accounts
for which Borrower has permitted Account Debtor’s payment to extend beyond ninety (90) days (including Accounts with a due
date that is more than ninety (90) days from invoice date);

 

(v) Accounts
arising from chargebacks, debit memos or other payment deductions taken by an Account Debtor;

 

(w) Accounts
arising from product returns and/or exchanges (sometimes called “warranty” or “RMA” accounts);

 

(x) 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 (whether voluntary or involuntary), or becomes insolvent, or goes out of business;

 

(y) Accounts
owing from an Account Debtor, whose total obligations to Borrower exceed twenty-five percent (25.0%) of all Accounts, for the
amounts that exceed that percentage, unless otherwise approved by Bank in writing on a case-by-case basis in its sole discretion;
and

 

(z) Accounts
for which Bank in its good faith business judgment determines collection to be doubtful, including, without limitation, accounts
represented by “refreshed” or “recycled” invoices.

  

    33

     

    

 

“Eligible
Inventory” means Inventory that meets all of Borrower’s representations and warranties in Section 5.3 and is otherwise
acceptable to Bank in all respects.

 

“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.

 

“Event
of Default” is defined in Section 8.

 

“Exchange
Act” is the Securities Exchange Act of 1934, as amended.

 

“Foreign
Currency” means lawful money of a country other than the United States.

 

“Funding
Date” is any date on which a Credit Extension is made to or for the account of Borrower which shall be a Business Day.

 

“FX
Business Day” is any day when (a) Bank’s Foreign Exchange Department is conducting its normal business and (b)
the Foreign Currency being purchased or sold by Borrower is available to Bank from the entity from which Bank shall buy or sell
such Foreign Currency.

 

“FX
Contract” is defined in Section 2.2.2.

 

“FX
Reduction Amount” means, with respect to a given FX Contract, the notional amount thereof multiplied by the currency
exchange risk factor for the currencies involved in the FX Contract, multiplied by the current foreign exchange spot rates, in
each instance as determined and calculated by Bank in its sole discretion.

 

“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, payment intangibles, contract rights, 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 Person providing a Guaranty in favor of Bank.

 

“Guaranty”
is any guarantee of all or any part of the Obligations, as the same may from time to time be amended, restated, modified or otherwise
supplemented.

  

    34

     

    

 

“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 12.3.

 

“Initial
Audit” is Bank’s inspection of Borrower’s Accounts, the Collateral, and Borrower’s Books, with results
satisfactory to Bank in its sole and absolute discretion.

 

“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, with respect to any Person, all of such Person’s right, title, and interest in and to the following:

 

(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 and
operating manuals;

 

(c) any
and all source code;

 

(d) any
and all design rights which may be available to such Person;

 

(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.

 

“Intercreditor
Agreement” is that certain Intercreditor Agreement dated as of the Effective Date by and between Bank and SWK and acknowledged
by Borrower, as the same may from time to time be amended, modified, supplemented, and/or restated from time to time.

 

“Inventory”
is all “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 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 interest in any Person (including stock, partnership interest or other securities), and any loan,
advance or capital contribution to any Person.

 

“IP
Agreement” is, collectively, (a) that certain Intellectual Property Security Agreement between Parent and Bank dated
as of the Effective Date, (b) that certain Intellectual Property Security Agreement between Misonix and Bank dated as of the Effective
Date and (c) that certain Intellectual Property Security Agreement between Solsys and Bank dated as of the Effective Date, in
each case as may be amended, modified or restated from time to time.

 

“Key
Person” is each of Borrower’s Chief Executive Officer and Chief Financial Officer.

 

“Letter
of Credit” means a standby letter of credit issued by Bank or another institution based upon an application, guarantee,
indemnity or similar agreement on the part of Bank as set forth in Section 2.2.1.

  

    35

     

    

 

“Letter
of Credit Application” is defined in Section 2.2.1(b).

 

“Letter
of Credit Reserve” is defined in Section 2.2.1(e).

 

“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 and any schedules, exhibits, certificates, notices, and any other documents
related to this Agreement, the IP Agreement, the Perfection Certificate, any Control Agreement, any Bank Services Agreement, any
subordination agreement, any note, or notes or guaranties executed by Borrower or any Guarantor, and any other present or future
agreement by Borrower and/or any Guarantor with or for the benefit of Bank, all as amended, restated, or otherwise modified.

 

“Market
Capitalization” means, with respect to Parent, the volume weighted average closing price per share of Parent’s
publicly traded common stock as of the end of the five trading days immediately prior to such date of determination (as quoted
by Bloomberg L.P. or, if such quote is not available, such other customary inter-dealer quotation system reasonably acceptable
to Bank) multiplied by (b) the number of outstanding shares of Parent’s publicly traded common stock publicly disclosed
in its most recent SEC filing as outstanding as of such date of determination.

 

“Material
Adverse Change” is (a) a material impairment in the perfection or priority of Bank’s Lien in the Collateral or
in the value of the Collateral; (b) a material adverse change in the business, operations, or condition (financial or otherwise)
of Borrower; or (c) a material impairment of the prospect of repayment of any portion of the Obligations.

 

“Merger
Agreement” means that certain Agreement and Plan of Merger, dated as of May 2, 2019, among Solsys, Parent, Misonix,
and the other parties thereto.

 

“Misonix”
is defined in the preamble hereof.

“Monthly Financial Statements” is defined in Section 6.2(c).

 

“Net
Cash” is (a) Borrower’s unrestricted and unencumbered cash maintained at Bank minus (b) the aggregate outstanding
principal amount of all Obligations.

 

“Obligations”
are Borrower’s obligations to pay when due any debts, principal, interest, fees, the Anniversary Fees, the Unused Revolving
Line Facility Fee, the Termination Fee, Bank Expenses, and other amounts Borrower owes Bank now or later, under this Agreement
or the other Loan Documents, including, without limitation, all obligations relating to Bank Services and interest accruing after
Insolvency Proceedings begin and debts, liabilities, or obligations of Borrower assigned to Bank, and to perform Borrower’s
duties under the Loan Documents.

 

“Operating
Documents” are, for any Person, such Person’s formation documents, as certified by the Secretary of State (or
equivalent agency) of such Person’s jurisdiction of organization on a date that is no earlier than thirty (30) days prior
to the Effective Date, and, (a) if such Person is a corporation, its bylaws in current form, (b) if such Person is a limited liability
company, its limited liability company agreement (or similar agreement), and (c) if such Person is a partnership, its partnership
agreement (or similar agreement), each of the foregoing with all current amendments or modifications thereto.

 

“Overadvance”
is defined in Section 2.3.

 

“Parent”
is defined in the preamble hereof.

 

“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.

 

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“Payment
Date” is the last calendar day of each month.

 

“Perfection
Certificate” is defined in Section 5.1.

 

“Permitted
Indebtedness” is:

 

(a) Borrower’s
Indebtedness to Bank under this Agreement and the other Loan Documents;

 

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

 

(c) Subordinated
Debt;

 

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

 

(e) Indebtedness
to SWK in an aggregate original principal amount of up to Thirty Million Ninety Five Thousand Seven Hundred Sixty One Dollars
($30,095,761.00), which amount shall be reduced on a dollar for dollar basis as such Indebtedness is repaid or otherwise satisfied;
provided that such Indebtedness shall in no circumstance include any indebtedness incurred after the Effective Date (including
any increase, refinancing, or re-borrowing of any amounts) and shall be subject to the Intercreditor Agreement;

 

(f) Indebtedness
secured by Liens permitted under clauses (a) and (c) of the definition of “Permitted Liens” hereunder;

 

(g) Indebtedness
(i) arising with respect to customary indemnification and purchase price adjustment obligations incurred in connection with any
Transfer permitted hereunder and (ii) representing customer deposits and advance payments received in the ordinary course of business
from customers for goods purchased in the ordinary course of business;

 

(h) other
unsecured Indebtedness (excluding Indebtedness in connection with cash management, asset management, letters of credit and business
credit cards) not otherwise permitted by Section 7.4 not exceeding Five Hundred Thousand Dollars ($500,000.00) in the aggregate
outstanding at any time; and

 

(i) extensions,
refinancings, modifications, amendments and restatements of any items of Permitted Indebtedness (a) through (d) 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 Subsidiary, as the case may be.

 

“Permitted
Investments” are:

 

(a) Investments
(including, without limitation, Subsidiaries) existing on the Effective Date which are shown on the Perfection Certificate;

 

(b) Investments
consisting of Cash Equivalents;

 

(c) Investments
by a Borrower in another Borrower;

 

(d) Investments
accepted in connection with Transfers permitted by Section 7.1;

 

(e) Investments
consisting of (i) travel advances and employee relocation loans and other employee loans and advances in the ordinary course of
business, and (ii) loans to employees, officers or directors relating to the purchase of equity securities of Borrower or its
Subsidiaries pursuant to employee stock purchase plans or agreements approved by the Board;

 

(f) Investments
(including debt obligations) received in connection with the bankruptcy or reorganization of customers or suppliers and in settlement
of delinquent obligations of, and other disputes with, customers or suppliers arising in the ordinary course of business;

 

    37

     

    

 

(g) Investments
consisting of notes receivable of, or prepaid royalties and other credit extensions, to customers and suppliers who are not Affiliates,
in the ordinary course of business; provided that this paragraph (g) shall not apply to Investments of Borrower in any Subsidiary;
and

 

(h) Investments
consisting of the receipt of securities received in connection with the bankruptcy or reorganization of any Person and in settlement
of delinquent obligations of, and other disputes with, such Persons arising in the ordinary course of business.

 

“Permitted
Liens” are:

 

(a) Liens
existing on the Effective Date which are shown on the Perfection Certificate or arising under this Agreement or the 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 Borrower’s 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) purchase
money Liens (i) on Equipment acquired or held by Borrower incurred for financing the acquisition of the Equipment securing no
more than Five Hundred Thousand Dollars ($500,000.00) in the aggregate amount outstanding, or (ii) existing on Equipment when
acquired, if the Lien is confined to the property and improvements and the proceeds of the Equipment;

 

(d) Liens
incurred in the extension, renewal or refinancing of the Indebtedness secured by Liens described in (a) through (c), 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;

 

(e) Liens
securing the Indebtedness to SWK described in subsection (e) of the definition of Permitted Indebtedness, but only to the extent
that such Liens are subject to the Intercreditor Agreement;

 

(f) 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;

 

(g) 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, 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;

 

(h) Liens
to secure payment of workers’ compensation, employment insurance, old-age pensions, social security and other like obligations
incurred in the ordinary course of business (other than Liens imposed by ERISA);

 

(i) deposits
to secure the performance of bids, trade contracts, leases, statutory obligations, surety and appeal bonds, performance bonds
and other obligations of a like nature, in each case in the ordinary course of business;

 

(j) easements,
reservations, rights-of-way, restrictions, minor defects or irregularities in title and other similar charges or encumbrances
affecting real property not likely to have a material adverse effect on Borrower’s business;

 

(k) non-exclusive
licenses of Intellectual Property granted to third parties in the ordinary course of business;

  

    38

     

    

 

(l) Liens
arising from attachments or judgments, orders, or decrees in circumstances not constituting an Event of Default under Sections
8.4 and 8.7;

 

(m) Liens
in favor of other financial institutions arising in connection with Borrower’s deposit and/or securities accounts held at
such institutions, provided that (i) Bank has a first priority perfected security interest in the amounts held in such deposit
and/or securities accounts (ii) such accounts are permitted to be maintained pursuant to Section 6.8 of this Agreement;

 

(n) the
filing of UCC financing statements solely as a precautionary measure in connection with operating leases so long as such Liens
are limited to leased equipment and the proceeds thereof;

 

(o) Liens
on assets of a Borrower in favor of another Borrower; and

 

(p) any
Lien arising under conditional sale, title retention, consignment or similar arrangements for the sale of goods in the ordinary
course of business; provided that such Lien attaches only to the goods subject to such sale, title retention, consignment or similar
arrangement.

 

“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 rate of interest per annum from time to time published in the money rates section of The Wall Street Journal
or any successor publication thereto as the “prime rate” then in effect; provided that, in the event such rate of
interest is less than zero, such rate shall be deemed to be zero for purposes of this Agreement; and provided further that if
such rate of interest, as set forth from time to time in the money rates section of The Wall Street Journal, becomes unavailable
for any reason as determined by Bank, the “Prime Rate” shall mean the rate of interest per annum announced by Bank
as its prime rate in effect at its principal office in the State of California (such Bank announced Prime Rate not being intended
to be the lowest rate of interest charged by Bank in connection with extensions of credit to debtors); provided that, in the event
such rate of interest is less than zero, such rate shall be deemed to be zero for purposes of this Agreement.

 

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

 

“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.

 

“Reserves”
means, as of any date of determination, such amounts as Bank may from time to time establish and revise in its good faith business
judgment, reducing the amount of Advances and other financial accommodations which would otherwise be available to Borrower (a)
to reflect events, conditions, contingencies or risks which, as determined by Bank in its good faith business judgment, do or
may adversely affect (i) the Collateral or any other property which is security for the Obligations or its value (including without
limitation any increase in delinquencies of Accounts), (ii) the assets, business or prospects of Borrower or any Guarantor, or
(iii) the security interests and other rights of Bank in the Collateral (including the enforceability, perfection and priority
thereof); or (b) to reflect Bank’s reasonable belief that any collateral report or financial information furnished by or
on behalf of Borrower or any Guarantor to Bank is or may have been incomplete, inaccurate or misleading in any material respect;
or (c) in respect of any state of facts which Bank reasonably determines constitutes an Event of Default or may, with notice
or passage of time or both, constitute an Event of Default.

 

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

  

    39

     

    

 

“Restricted
License” is any material license or other material 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 reasonably be expected to interfere with Bank’s
right to sell any Collateral.

 

“Revolving
Line” is an aggregate principal amount equal to Twenty Million Dollars ($20,000,000.00).

 

“Revolving
Line Maturity Date” is the date that is three (3) years from the Effective Date.

 

“SEC”
shall mean the Securities and Exchange Commission, any successor thereto, and any analogous Governmental Authority.

 

“Secured
Guarantor” is any Guarantor with respect to which Bank has a first priority security interest (provided that the collateral
granted by such Guarantor may be subject to Permitted Liens) in all of such Guarantor’s personal property and assets.

 

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

 

“Settlement
Date” is defined in Section 2.2.2.

 

“Solsys”
is defined in the preamble hereof.

 

“Specified
Affiliate” is any Person (a) more than ten percent (10.0%) of whose aggregate issued and outstanding equity or ownership
securities or interests, voting, non-voting or both, are owned or held directly or indirectly, beneficially or of record, by Borrower,
and/or (b) whose equity or ownership securities or interests representing more than ten percent (10.0%) of such Person’s
total outstanding combined voting power are owned or held directly or indirectly, beneficially or of record, by Borrower.

 

“Streamline
Period” is on and after the Effective Date, provided no Event of Default has occurred and is continuing, the period
(a) commencing on the first day of the month following the day that Borrower provides to Bank a written report that Borrower has
at all times during the immediately preceding calendar month maintained Net Cash, as determined by Bank in its reasonable discretion,
of greater than Zero Dollars ($0.00) (the “Threshold Amount”); and (b) terminating on the earlier to occur
of (i) the occurrence of an Event of Default, or (ii) the first day thereafter in which Borrower fails to maintain the Net Cash,
as determined by Bank in its reasonable discretion, of greater than the Threshold Amount. Upon the termination of a Streamline
Period, Borrower must maintain Net Cash greater than the Threshold Amount each consecutive day for two (2) consecutive months
as determined by Bank in its reasonable discretion, prior to entering into a subsequent Streamline Period. Borrower shall give
Bank prior written notice of Borrower’s election to enter into any such Streamline Period, and each such Streamline Period
shall commence on the first day of the monthly period following the date Bank determines, in its reasonable discretion, that Net
Cash of greater than the Threshold Amount has been achieved.

 

“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, as to any Person, a corporation, partnership, limited liability company or other entity of which shares of stock or other
ownership interests having ordinary voting power (other than stock or such other ownership interests having such power only by
reason of the happening of a contingency) to elect a majority of the board of directors or other managers of such corporation,
partnership or other entity are at the time owned, or the management of which is otherwise controlled, directly or indirectly
through one or more intermediaries, or both, by such Person. Unless the context otherwise requires, each reference to a Subsidiary
herein shall be a reference to a Subsidiary of Borrower or Guarantor.

 

“SWK”
is SWK Funding LLC, a Delaware limited liability company.

  

    40

     

    

 

“SWK
Credit Agreement” means that certain Amended and Restated Credit Agreement by and among Parent, Solsys and SWK dated
as of September 27, 2019, as in effect on the Effective Date or as amended with the prior written consent of Bank.

 

“Termination
Fee” is defined in Section 2.5(c).

 

“Threshold
Amount” is defined in the definition of Streamline Period.

 

“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.

 

“Transfer”
is defined in Section 7.1.

 

“Unused
Revolving Line Facility Fee” is defined in Section 2.5(d).

 

[Signature
page follows.]

  

    41

     

    

 

IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as a sealed instrument under the laws of the
Commonwealth of Massachusetts as of the Effective Date.

 

	 	BORROWER:
	 	 
	 	MISONIX,  INC.
	 	 
	 	By	/s/ Joseph P. Dwyer
	 	 
	 	Name:	 Joseph P. Dwyer
	 	 
	 	Title:	 CFO
	 	 
	 	MISONIX OPCO, INC.
	 	 
	 	By	 /s/ Joseph P. Dwyer
	 	 
	 	Name:	Joseph P. Dwyer
	 	 
	 	Title:	CFO
	 	 
	 	SOLSYS MEDICAL, LLC
	 	 
	 	By: Misonix, Inc.
	 	Its: Sole member
	 	 
	 	By	 /s/ Joseph P. Dwyer
	 	 
	 	Name:	 Joseph P. Dwyer
	 	 
	 	Title:	 CFO
	 	 
	 	BANK:
	 	 
	 	SILICON VALLEY BANK
	 	 
	 	By	/s/ Sam Subilia
	 	 
	 	Name:	Sam Subilia
	 	 
	 	Title:	DirectorExhibit 2.4(b)(vii)

 

 

[*****] Text omitted for confidential treatment. The redacted
information has been excluded because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.

 

 

 

Dated December 30, 2019

 

 

 

 

 

 

 

JANSSEN BIOTECH, INC.

 

 

 

- and -

 

 

 

XBIOTECH INC.

 

 

 

 

 

 

 

__________________________________________

 

IP NON-ASSERTION AND LICENSE AGREEMENT

 

__________________________________________

 

 

 

 

 

     

    
 

    

 

CONTENTS

 

PAGE

 

	1.   INTERPRETATION	4
	2.   NON-ASSERTION
    AND GRANT OF LICENSES	10
	3.   SUB-LICENSING	12
	4.   REGISTRATION
    OF LICENSES	13
	5.   NO
    REPRESENTATIONS OR WARRANTIES	13
	6.   PROSECUTION
    AND MAINTENANCE OF PATENTS	14
	7.   INFRINGEMENT,
    INVALIDITY CLAIMS AND THIRD PARTY CLAIMS	16
	8.   CONFIDENTIALITY	20
	9.   TERM	23
	10.   TERMINATION	23
	11.   EFFECT
    OF EXPIRY OR TERMINATION	24
	12.   ASSIGNMENT
    AND TRANSFER	24
	13.   ANNOUNCEMENTS	26
	14.   REMEDIES
    AND WAIVERS	27
	15.   NOTICES	27
	16.   NO
    PARTNERSHIP	29
	17.   COSTS
    AND EXPENSES	29
	18.   COUNTERPARTS	29
	19.   NO
    RIGHTS IN THE COMPOUND	29
	20.   NO
    CONFLICTING OBLIGATION	29
	21.   ENTIRE
    AGREEMENT	29
	22.   INVALIDITY	30
	23.   FURTHER
    ASSURANCE	30

 

     

    
 

    

 

	24.   THIRD
    PARTY BENEFICIARIES	30
	25.   GOVERNING
    LAW	30

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

     

    	 	4

    

 

THIS
AGREEMENT is made the 30th day of December, 2019

 

BETWEEN:

 

		(1)	JANSSEN BIOTECH, INC., a Pennsylvania corporation (“Janssen”) with its principal office at 800/850
Ridgeview Drive, Horsham, Pennsylvania, 19044, United States; and

 

		(2)	XBIOTECH INC., a corporation existing under the laws of the Province of British Columbia (“XBiotech”)
with its principal office at 5217 Winnebago Lane, Austin, TX 78744, United States,

 

each a “Party”
and together the “Parties”.

 

		WHEREAS:	

 

		(A)	As of before the Commencement Date (as defined below), XBiotech owns all right, title, and interest in and to Core Bermekimab
Patents, Other Bermekimab Patents, and General IL-1α Patents.

 

		(B)	Pursuant to the Asset Purchase Agreement (the “Purchase Agreement”) between Janssen and XBiotech, dated
as of December 7, 2019, Janssen agreed to purchase all of XBiotech’s and its Affiliates’ right, title and interest
in, to and under the Core Bermekimab Patents and Other Bermekimab Patents (the “Acquisition”).

 

		(C)	As a result of the Acquisition, and subject to the rights granted in this Agreement, at the Commencement Date, Janssen will
own all right, title and interest in, to and under the Core Bermekimab Patents and Other Bermekimab Patents, and XBiotech will
remain the owner of all right, title and interest in, to and under the General IL-1α Patents.

 

		(D)	The Parties wish to allay applicable development and Infringement concerns through the intellectual property non-assertion
obligations and license rights provided in this Agreement.

 

NOW
IT IS HEREBY AGREED as follows:

 

		1.	INTERPRETATION

 

		1.1	Any capitalized term used in this Agreement but not otherwise defined herein shall have the meaning ascribed thereto in the
Purchase Agreement. In this Agreement the following words and expressions shall have the following meanings:

 

	“Affiliate”	of any Person means another Person that directly or indirectly, through one or more intermediaries, Controls, is Controlled by or is under common Control with, such first Person;
	 	 
	“Applicable Law”	means any applicable law, statute, rule, regulation ordinance, code, or any judgment, order (whether executive, legislative, judicial or otherwise), writ, injunction, decree, decision or other requirement of any Governmental Entity;
	 	 

 

     

    	 	5

    

	“Business Day”	means any day other than (a) a Saturday or Sunday or (b) a day on which banking institutions located in New York City are permitted or required by applicable Law to remain closed;
	 	 
	“Commencement Date”	means the Closing Date as defined in the Purchase Agreement;
	 	 
	“Commercially Reasonable Efforts”	means, with respect to each Party’s obligations under this Agreement, including such Party’s [*****] those reasonable, good faith efforts normally used by such Party to accomplish similar objectives under similar circumstances for similar products or product candidates owned or controlled by such Party, or to which such Party has similar rights, which product or product candidate is of similar market potential in such country and is at a similar stage in its development or product life, taking into account all relevant scientific, technical, operational, commercial, economic and other factors that may affect the development, marketing approval, manufacturing or exploitation of a product or Patent, including (as applicable): actual and potential issues of safety, efficacy and/or stability; expected and actual product profile (including product modality, category and mechanism of action); stage of development or life cycle status; actual and projected Development, Marketing Approval, manufacturing, and Exploitation costs, timelines and budgets; any issues regarding the ability to manufacture or have manufactured the Product; the likelihood of obtaining Marketing Approvals; the timing of such approvals; labelling or anticipated labelling; the then-current competitive environment and the likely competitive environment at the time of projected entry into the market, including the expected and actual competitiveness of alternative products; past performance of the product or similar products; present and future market potential; existing or projected pricing, sales, reimbursement and profitability; and expected and actual proprietary position, strength and duration of patent protection and anticipated regulatory or other exclusivity as such Party would normally use to accomplish a similar objective under similar circumstances;
	 	 
	[*****] Text omitted for confidential treatment. The redacted information has been excluded because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.

                     

	“Compound”	means the monoclonal antibody known as bermekimab (MABp1), the sequence of which is set forth in Schedule 1.1(c) of the Purchase Agreement;

 

     

    	 	6

    

 

	“Confidential Information”	has the meaning given in Sections 8.1 and 8.2;
	 	 
	“Core Bermekimab Patents”	means all Patents as set forth in Schedule A, and to the extent not set forth in Schedule A, shall mean all continuations, continuations-in-part, divisions, renewals, patent term extensions (including any supplemental protection certificates), re-examinations or reissues of such Patents set forth in Schedule A;   
	 	 
	“Dataset”	means, with respect to Janssen, the dataset generated in the course of development, testing, and clinical studies directed to the Compound; and with respect to Xbiotech, the dataset generated in the course of development, testing, and clinical studies directed to the New Antibody;
	 	 
	“Disclosing Party”	has the meaning given in Section 8.1;
	 	 
	“Exploit”	
        means, with respect to products or services covered by Licensed
        Rights:

         

        (i) to research and develop, including by conducting pre-clinical
        studies, clinical trials and any other steps required for regulatory approval;

         

        (ii) to manufacture or to perform any step in the process of
        manufacturing, including any steps involved in fabrication, testing, packaging and assembly (including the planning, purchasing
        of materials for, production, processing, storage, packaging, labelling, leafleting, warehousing, quality control testing, waste
        disposal, quality release and sample retention);

         

        (ii) to keep (whether for disposal or otherwise);

         

        (iii)
        to promote, market, distribute, import, export, sell (including lease), dispose and supply; and/or

         

        (iv) to offer to do or have done any of the foregoing in (i)
        to (iii),

         

        and “Exploited” and “Exploitation”
        shall be construed accordingly;

         

	“General IL-Iα  Patents” 	means all Patents as set forth in Schedule C, and to the extent not set forth in Schedule C, shall mean all continuations, continuations-in-part, divisions, renewals, patent term extensions (including any supplemental protection certificates), re-examinations or reissues of such Patents set forth in Schedule C;   

 

     

    	 	7

    

 

	“Governmental Entity”	means any court, administrative body, local authority or other governmental or quasi-governmental entity with competent jurisdiction, any supra-national, national, federal, state, municipal, provincial or local governmental, regulatory or administrative authority, agency, commission, court, tribunal, arbitral body, self-regulated entity, securities exchange, private body exercising any regulatory, taxing, importing or other governmental or quasi-governmental authority or other governmental entity, which has or claims to have competent jurisdiction over the relevant Person or its business, property, assets or operations;
	 	 
	“Granted  Rights” 	means the (i) Licensed Rights and (ii) non-assertion rights granted under Section 2 of this Agreement, collectively;
	 	 
	“Group”	means the XBiotech Group and/or the Janssen Group (as the context requires);
	 	 
	“Infringement”	means any actual, threatened, or suspected infringement (direct or indirect) or unauthorized use;
	 	 
	“Intellectual Property Rights”	has the meaning given in the Purchase Agreement; 
	 	 
	“Invalidity Claim”	means any actual or threatened claim by a Person alleging invalidity or unenforceability or challenging entitlement to, or ownership of, any of the Licensed Rights, whether such claim is made in connection with the defense of an infringement or unauthorized use action or otherwise, including, in all cases, any post-grant opposition, re-issue, and re-examination, any contested case (including inter partes review, post-grant review, interference or derivation) or other similar proceedings before national or supranational intellectual property offices, including the U.S. Patent and Trademark Office, the European Patent Office and the World Intellectual Property Organisation;
	 	 
	“Janssen Group”	means Janssen and its Affiliates from time to time;
	 	 
	“Know-how”	means all non-public forms and types of financial, business, scientific, technical, economic or engineering information, including patterns, plans, compilations, program devices, formulas, designs, prototypes, methods, techniques, processes, procedures, programs or codes, whether tangible or intangible, and whether or how stored, compiled or memorialized physically, electronically, graphically, photographically or in writing if (a) the owner thereof has taken reasonable measures to keep such information secret and (b) the information derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable through proper means by, another person who can obtain economic value from the disclosure or use of the information, including all Intellectual Property Rights meeting the definition of “trade secret” as set forth in the Defend Trade Secrets Act;
	 	 

 

     

    	 	8

    

 

	“Licensed Rights”	
        means:

         

        (a) in respect of any licenses granted by Janssen, Other Bermekimab
        Patents; and

         

        (b) in respect of any licenses granted by XBiotech, General
        IL-1α Patents and all Know-How used in or related to the Business to the extent not included in the Purchased Assets;

         

	“Licensee”	
        means:

         

        (a)
        in respect of any licenses granted to XBiotech (including the licenses in Section 2.2), XBiotech; and

         

        (b)
        in respect of any licenses granted to Janssen (including the licenses in Section 2.3), Janssen;

         

	“Licensor”	
        means:

         

        (a)
        in respect of any licenses granted by Janssen (including the licenses in Section 2.2), Janssen; and

         

        (b)
        in respect of any licenses granted by XBiotech (including the licenses in Section 2.3), XBiotech;

         

	“Other Bermekimab Patents” 	means all Patents as set forth in Schedule B, and to the extent not set forth in Schedule B, shall mean all continuations, continuations-in-part, divisions, renewals, patent term extensions (including any supplemental protection certificates), re-examinations or reissues of such Patents set forth in Schedule B;
	 	 
	“Patents”	has the meaning given in the Purchase Agreement;
	 	 
	“Receiving Party”	shall have the meaning given to it in Section 8.1;
	 	 
	“Representatives”	shall have the meaning given to it in Section 8.2.2;
	 	 

 

     

    	 	9

    

 

	“Sub-license” 	shall have the meaning given to it in Section 3;
	 	 
	“Working Hours”	means 9.30 a.m. to 5.30 p.m. on a Business Day.
	 	 
	“XBiotech Group”	means XBiotech and its Affiliates from time to time;

 

		1.2	In
                                         this Agreement, unless otherwise specified:

 

		1.2.1	headings to Sections are for convenience only and do not affect the interpretation of this Agreement;

 

		1.2.2	a reference to any statute, regulation or statutory provision shall be construed as a reference to the same as it may have
been, or may from time to time be, consolidated, amended, modified, extended or re-enacted except to the extent that any such amendment,
modification, extension or re-enactment after the date of this Agreement would increase or extend the liability of any Person under
or pursuant to this Agreement;

 

		1.2.3	references to a “Person” shall be construed so as to include any individual, firm, company, corporation,
body corporate, government, state or agency of a state, local or municipal authority or government body or any joint venture, association
or partnership (whether or not having separate legal personality);

 

		1.2.4	a “subsidiary” means a Subsidiary as defined in the Purchase Agreement;

 

		1.2.5	any question as to whether a Person “Controls” another (including for the purposes of the definition of
“Affiliate”) shall be determined in accordance with the Purchase Agreement (and “Controlled”
shall be construed accordingly);

 

		1.2.6	references to times of day are to New York time; and

 

		1.2.7	the use of the words “includes” or “including” shall be deemed to say also “without
limitation”.

 

		2.	NON-ASSERTION AND GRANT OF LICENSES

 

		2.1	The Agreement shall take effect on the Commencement Date.

 

		2.2	Janssen hereby:

 

(a) agrees that neither it, its
Affiliates, nor any entity which receives rights from Janssen as permitted in Section 12 [*****] against XBiotech, its exclusive
licensees or any entity which receives all or substantially all of XBiotech’s or XBiotech’s Affiliates’ rights,
as permitted in Section 12, in [*****] any [*****] for the [*****], to the extent such [*****] is permitted under the Purchase
Agreement provided that XBiotech shall not transfer its rights under this Section 2.2(a) in a manner that allows XBiotech
to retain substantially the same rights that it transfers to such transferee subsequent to such transfer;

 

 

[*****] Text omitted for confidential treatment. The redacted information has
been excluded because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.

     

    	 	10

    

 

(b)
grants to XBiotech during the Term a non-exclusive, worldwide, royalty-free and fully paid-up, transferable (as provided
in Section 12), sub-licensable (as provided in Section 3) license to Exploit any New Antibody, to the extent permitted under the
Purchase Agreement, under the Licensed Rights (excluding, for the avoidance of doubt, the Core Bermekimab Patents); and

 

(c)
agrees that if Janssen, its Affiliates, or any entity which receives rights from Janssen as permitted in Section 12 [*****]
in the [*****] years following the Commencement Date that [*****] from XBiotech pursuant to the Purchase Agreement (including from
a Third Party through any of the Assumed Contracts) and that is existing as of the Commencement Date, and the [*****] commenced
by XBiotech on [*****] and the [*****] commenced by XBiotech on [*****] and including, with respect to the [*****] after the Commencement
Date then none of Janssen, its Affiliates, or any entity which receives rights from Janssen as permitted in Section 12 [*****]
against XBiotech, its exclusive licensees or any entity which receives all or substantially all of XBiotech’s or XBiotech’s
Affiliates’ rights, as permitted in Section 12 for [*****] to the extent such [*****] is permitted under the Purchase Agreement
provided that XBiotech shall not transfer its rights under this Section 2.2(a) in a manner that allows XBiotech to retain
substantially the same rights that it transfers to such transferee subsequent to such transfer.

 

		2.3	XBiotech hereby grants to Janssen during the Term a non-exclusive, worldwide, royalty-free and fully paid-up, transferable
(as provided in Section 12), sub-licensable (as provided in Section 3) license to Exploit the Licensed Rights, provided, with respect
to Know-How, that Janssen shall not transfer such rights in a manner that allows Janssen to retain substantially the same rights
that it transfers to such transferee subsequent to such transfer.

 

[*****] Text omitted for confidential treatment. The redacted
information has been excluded because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.

 

 

 

 

 

     

    	 	11

    

 

		2.4	To the extent that in connection with any XBiotech agreement that is in force as of the Commencement Date (including where
such agreement is subsequently amended, restated, substituted, or otherwise modified) with a Third Party, XBiotech at any time
Controls a Patent, other than a Core Bermekimab Patent or an Other Bermekimab Patent, having any claim which recites the Compound
or the CDRs of the Compound and not a non-Compound anti-IL-1a antibody as a limitation
(such Patent, a “Contingent Bermekimab Patent”), XBiotech, to the extent it has the right to do so, hereby grants
to Janssen an exclusive (with respect to claims which recite the Compound or the CDRs of the Compound and not a non-Compound anti-IL-1a
antibody as a limitation) or non-exclusive (with respect to other claims of such Contingent Bermekimab Patent), worldwide, royalty-free
and fully paid-up, transferable (as provided in Section 12), sub-licensable (as provided in Section 3) license to Exploit such
Contingent Bermekimab Patent. If XBiotech does not have the right to grant Janssen a license in accordance with this Section 2.4,
XBiotech agrees to use Commercially Reasonable Efforts to obtain any necessary consent or rights from such Third Party to license
such Contingent Bermekimab Patent to Janssen, subject to Janssen paying any applicable license fees or other consideration required
to procure such rights.

 

		2.5	To the extent that any claim in a Patent within the General IL-1α Patents is granted after the Commencement Date, including
any such claims arising out of patent term extensions (including any supplemental protection certificates), re-examinations or
reissues of General IL-1α Patents, which would be infringed by the Compound or a method of using the Compound, XBiotech hereby
grants to Janssen an exclusive (with respect to claims which recite the Compound or the CDRs of the Compound and not a non-Compound
anti-IL-1a antibody as a limitation) or non-exclusive (with respect to other claims of
such Patent within the General IL-1α Patents), worldwide, royalty-free and fully paid-up, transferable (as provided in Section
12), sub-licensable (as provided in Section 3) license to Exploit the Patent containing such claim. To the extent that any claim
in a Patent within the Other Bermekimab Patents or Core Bermekimab Patents is granted after the Commencement Date, including any
such claims arising out of patent term extensions (including any supplemental protection certificates), re-examinations or reissues
of Other Bermekimab Patents, is reasonably necessary to Exploit any New Antibody, Janssen hereby grants to XBiotech a non-exclusive,
worldwide, royalty-free and fully paid-up, transferable (as provided in Sections 12), sub-licensable (as provided in Section 3)
license to Exploit the Patent containing such claim.

 

		2.6	To the extent that from the Commencement Date until [*****] years after the Commencement Date, either Party [*****] and that,
[*****] would be [*****] with respect to a [*****] or (ii) [*****] with respect to a [*****] then such Party [*****] with the other
Party [*****] pursuant to which the [*****] that it and its Affiliates, and any entity which receives rights from such [*****]
or its Affiliates, as permitted in Section 12, [*****] as applicable, subject to terms of the Purchase Agreement.

 

[*****] Text omitted for confidential treatment. The redacted
information has been excluded because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.

 

 

     

    	 	12

    

 

		2.7	Only those licenses expressly granted in this Agreement or the Purchase Agreement have effect. No license or other Intellectual
Property Rights are granted by implication, estoppel or any other method that is not express.

 

		2.8	In accordance with Section 5.6 of the Purchase Agreement, XBiotech hereby grants Janssen a paid-up, royalty-free, exclusive,
worldwide license under its rights in Dermatology to any Patents that claim a New Antibody as a composition of matter or a method
of using a New Antibody solely for purposes of ensuring that any Third-Party product containing such New Antibody will not be manufactured
or commercialized for use in a Dermatology indication. Said license shall expire [*****] years from the Commencement Date.

 

		3.	SUB-LICENSING

 

		3.1	Each Party in its role as Licensee or as a recipient of non-assertion rights under Section 2 shall be entitled to sub-license
or sub-contract its non-assertion and license rights under this Agreement to any member of such Party’s Group or Third Parties
engaged by such Party solely to provide research, development, and/or manufacturing services in furtherance of, as applicable,
such Party’s Exploitation of the Granted Rights, without the prior written consent of Licensor provided that:

 

		3.1.1	the provisions of the agreement under which a Party in its role as Licensee or as a recipient of non-assertion rights under
Section 2 sub-licenses or sub-contracts its rights under this Agreement (the “Sub-license”) are in writing and
obligate the sub-licensee or sub-contractor to comply with all terms and conditions of this Agreement (except those provisions
which, by their clear meaning, are not applicable to a sub-licensee or sub-contractor, as applicable);

 

		3.1.2	the Sub-license prohibits further sub-licensing and sub-contracting by the sub-licensee or sub-contractor without the prior
written consent of the other Party in its role as Licensor or as the grantor of non-assertion rights in Section 2;

 

		3.1.3	the Sub-license imposes obligations of confidentiality on the sub-licensee or sub-contractor which are no less onerous than
those set out in Section 8;

 

		3.1.4	the Sub-license shall terminate if this Agreement expires or is terminated; and

 

		3.1.5	any act of the sub-licensee or sub-contractor which would if committed by a Party in its role as Licensee or as a recipient
of non-assertion rights under Section 2 be a breach of this Agreement shall be treated for the purposes of this Agreement as an
equivalent breach by that Party in its role as Licensee or as a recipient of non-assertion rights under Section 2 of the terms
of this Agreement.

 

[*****] Text omitted for confidential treatment. The redacted
information has been excluded because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.

 

     

    	 	13

    

 

		3.2	Except as provided in Section 3.1, a Party in its role as Licensee or as a recipient of non-assertion rights granted in Section
2 of this agreement, shall not sub-license or sub-contract its rights under this Agreement without the prior written consent of
the other Party in its role as Licensor or as the grantor of non-assertion rights in Section 2, not to be unreasonably withheld
or delayed. For the sake of clarity, XBiotech shall be entitled to exclusively sub-license or exclusively subcontract its license
and non-assertion rights under Section 2.2(a) to one or more Third Parties for purposes of permitting such Third Parties to Exploit
any New Antibody to the extent such Exploitation is permitted under the Purchase Agreement and provided that XBiotech shall
not sub-license or subcontract its rights under Section 2.2(a) in a manner that allows XBiotech to retain substantially the same
rights that it sub-licenses or subcontracts to such sub-licensee or subcontractor subsequent to such sub-license or subcontract.

 

		4.	REGISTRATION OF LICENSES

 

Each Party has the right to request
the registration of the licenses at the competent national or supranational intellectual property offices at its own cost. Licensor
agrees to issue Licensee all necessary powers and to effect all necessary signatures for this purpose. All registered materials
shall be reviewed by the non-submitting Party and provided with an opportunity to redact the licenses sought for registration.

 

		5.	NO REPRESENTATIONS OR WARRANTIES

 

		5.1	Nothing in this Agreement shall be or shall be deemed to be a representation or warranty by Licensor as to:

 

		5.1.1	the existence, ownership, validity, enforceability or value of the Licensed Rights and/or the rights granted under this Agreement;
or

 

		5.1.2	the suitability or usefulness of the Licensed Rights for any particular purpose, including the development, use and/or Exploitation
thereof.

 

		5.2	EXCEPT FOR THE EXPRESS WARRANTIES SET FORTH HEREIN, NEITHER PARTY MAKES ANY REPRESENTATIONS OR GRANTS ANY WARRANTIES, EXPRESS
OR IMPLIED, EITHER IN FACT OR BY OPERATION OF LAW, BY STATUTE OR OTHERWISE, AND TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW,
EACH PARTY SPECIFICALLY DISCLAIMS ANY OTHER WARRANTIES, WHETHER WRITTEN OR ORAL OR EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OF
QUALITY, MERCHANTABILITY OR FITNESS FOR A PARTICULAR USE OR PURPOSE OR ANY WARRANTY AS TO THE VALIDITY OF ANY INTELLECTUAL PROPERTY
RIGHT OR THE NON-INFRINGEMENT OF ANY INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES. FOR THE AVOIDANCE OF DOUBT, THE FOREGOING SHALL
NOT BE DEEMED TO LIMIT OR IMPAIR THE REPRESENTATIONS AND WARRANTIES OF THE PARTIES SET FORTH IN THE PURCHASE AGREEMENT OR THE OTHER
TRANSACTION DOCUMENTS, AS DEFINED IN SECTION 21.1 OF THIS AGREEMENT.

 

     

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		6.	PROSECUTION AND MAINTENANCE OF PATENTS

 

		6.1	Janssen shall have the sole right, but not the obligation, to institute, prosecute or cause to be prosecuted (such institution,
prosecution or causation of prosecution collectively, “Prosecution”), and control any action or proceeding relating
to such Prosecution, at its expense and discretion, in any jurisdiction in the world, all Core Bermekimab Patents.

 

		6.2	Janssen shall have the sole right, but not the obligation, to institute, prosecute or cause to be prosecuted, and control any
action or proceeding relating to such Prosecution, at its expense and discretion, in any jurisdiction in the world, all Other Bermekimab
Patents; provided that (i) Janssen shall notify XBiotech in writing of any substantive action it intends to take or not
take in the prosecution of the Other Bermekimab Patents at least sixty (60) days in advance of any deadline for taking or not taking
such action and (ii) [*****]. For the avoidance of doubt, [*****] Janssen shall have the final decision-making authority in the
prosecution of the Other Bermekimab Patents under this Section 6.2.

 

		6.3	XBiotech shall have the sole right, but not the obligation, to institute, prosecute or cause to be prosecuted, and control
any action or proceeding relating to such Prosecution, at its expense and discretion, in any jurisdiction in the world, all General
IL-1α Patents; provided that (i) XBiotech shall notify Janssen in writing of any substantive action it intends to take
or not take in the prosecution of the General IL-1α Patents at least sixty (60) days in advance of any deadline for taking
or not taking such action and (ii) XBiotech shall consider Janssen’s comments in good faith and shall use Commercially Reasonable
Efforts to not take positions or make claims, arguments or statements that may have an adverse or negative impact on Janssen’s
rights in the General IL-1α Patents, prior to taking or not taking such action at its sole discretion, subject to the provisions
set forth in this Section 6.3. For the avoidance of doubt, after giving consideration to Janssen’s comments pursuant to this
Section 6.3, XBiotech shall have the final decision-making authority in the prosecution of the General IL-1α Patents under
this Section 6.3.

 

[*****] Text omitted for confidential treatment. The redacted
information has been excluded because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.

 

 

 

     

    	 	15

    

 

		6.4	If Janssen intends not to proceed with the filing, prosecution or maintenance of substantially all claims of a Patent within
the Other Bermekimab Patents to which Janssen has the right to transfer the control of prosecution of in a particular jurisdiction
or group of jurisdictions, Janssen shall give XBiotech at least sixty (60) days’ notice of this intention and such Patent
within the Other Bermekimab Patents right shall become a Janssen waived patent (a “Janssen Waived Patent”).
If XBiotech intends not to proceed with the filing, prosecution, or maintenance of substantially all claims of a Patent within
the General IL-1α Patents to which XBiotech has the right to transfer the control of prosecution of in a particular jurisdiction
or group of jurisdictions, XBiotech shall give Janssen at least sixty (60) days’ notice of this intention and such Patent
within the General 1L-1a Patents shall become a XBiotech waived patent (an “XBiotech Waived Patent”). With respect
to each Janssen Waived Patent, XBiotech shall have the right, but not the obligation, to prosecute or cause to be prosecuted, and
control further prosecution of that right as if such Janssen Waived Patent was a General IL-1α Patent in accordance with Section
6.3 provided that upon and after XBiotech’s exercise of such right, (i) Janssen or one of its licensees agrees to
be joined as party to the action if required by an applicable court, or may otherwise join in Janssen’s discretion; (ii)
Janssen agrees to provide Commercially Reasonable Efforts to assist XBiotech to cause any necessary party to join the action; and
(iii) XBiotech agrees that it will not, directly or through any Third Party, take positions or make claims, arguments or statements
that are adverse to or may have a negative impact on the Compound. With respect to each XBiotech Waived Patent, Janssen shall have
the right, but not the obligation, to prosecute or cause to be prosecuted, and control further prosecution of that right as if
such XBiotech Waived Patent was an Other Bermekimab Patent in accordance with Section 6.2 provided that upon and after Janssen’s
exercise of such right, (i) XBiotech or one of its licensees agrees to be joined as party to the action if required by an applicable
court, or may otherwise join in XBiotech’s discretion; (ii) XBiotech agrees to provide Commercially Reasonable Efforts to
assist Janssen to cause any necessary party to join the action; and (iii) Janssen agrees that it will not, directly or through
any Third Party, take positions or make claims, arguments or statements that are adverse to or may have a negative impact on any
New Antibody. Janssen will use Commercially Reasonable Efforts to assist XBiotech in assuring that XBiotech has the power and authority
to control the prosecution of each Janssen Waived Patent. XBiotech will use Commercially Reasonable Efforts to assist Janssen in
assuring that Janssen has the power and authority to control the prosecution of each XBiotech Waived Patent.

 

		6.5	Notwithstanding anything else in this Agreement with respect to the Other Bermekimab Patents, if a Non-Dermatological Indication
becomes a Specified Indication pursuant to the Purchase Agreement, then XBiotech shall not have the rights provided under 6.4 for
any Other Bermekimab Patent claiming the relevant Specified Indication.

 

		7.	INFRINGEMENT, INVALIDITY CLAIMS AND THIRD PARTY CLAIMS

 

Infringement 

 

		7.1	If at any time during the Term of this Agreement a Party becomes aware of any Infringement of any of the Licensed Rights (whether
such Party is the Licensor or Licensee of such Licensed Right), that Party shall promptly provide to the other Party in writing
a notice (an “Infringement Notice”) describing all information in its possession relating to the Infringement
that it has the right to provide without breaching any obligation of confidentiality to a Third Party.

 

     

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		7.2	Janssen shall have sole control of all aspects of any action or proceeding relating to any Infringement of Core Bermekimab
Patents, including determining, at its sole discretion, whether or not to institute any such action or proceeding, its prosecution,
defense or settlement (but for the avoidance of doubt shall have no obligation to bring or defend any such action or proceeding),
and any award of damages or costs obtained from any such action or proceeding, or any sum obtained pursuant to a settlement of
any such action or proceeding, shall accrue solely to the benefit of Janssen. Janssen shall be responsible for its own costs of
legal or other representation in respect of any such action or proceeding. On no account shall XBiotech institute any such action
or proceeding, without the prior written consent, of Janssen.

 

		7.3	Subject to Section 7.4 of this Agreement, Janssen, with respect to Other Bermekimab Patents, and XBiotech, with respect to
General IL-1α Patents, shall solely have control of all aspects of any action or proceeding relating to any Infringement of
the applicable Patents, including determining, at its sole discretion, whether or not to institute any such action or proceeding,
its prosecution, defense or settlement (but for the avoidance of doubt shall have no obligation to bring or defend any such action
or proceeding), and any award of damages or costs obtained from any such action or proceeding, or any sum obtained pursuant to
a settlement of any such action or proceeding, shall accrue solely to the benefit of the controlling Party. Each Party will use
Commercially Reasonable Efforts to not take positions or make claims, arguments or statements that may have an adverse or negative
impact on the other Party’s Licensed Rights. Each Party shall be responsible for its own costs of legal or other representation
in respect of any such action or proceeding. Except as provided in Section 7.4, on no account shall XBiotech, with respect to Other
Bermekimab Patents, or Janssen, with respect to General IL-1α Patents, institute any such action or proceeding, without the
prior written consent of the other Party.

 

		7.4	Solely with respect to Section 7.3 above, if either Party does not, within ninety (90) days after its receipt or delivery of
an Infringement Notice under Section 7.1 or ten (10) days before the expiration date for filing an appropriate suit or responding
to or taking any action (as applicable), initiate and prosecute any legal action to enforce or defend at least one claim of an
applicable Patent included in the Licensed Rights with respect to an Infringement action (the “Non-Enforcing Party”),
then the other Party shall have the right, but not the obligation, to commence such a suit or take such an action to enforce or
defend the applicable Patent included in the Licensed Rights (the “Enforcing Party”).  In such event, the
Non-Enforcing Party shall take appropriate actions in order to enable the Enforcing Party to commence a suit or take the actions
set forth in the preceding sentence.  Prior to settling any such suit or action, the Enforcing Party shall notify the Non-Enforcing
Party in writing as to the material terms of such proposed settlement and shall not execute such settlement without the Non-Enforcing
Party’s written consent if the Non-Enforcing Party identifies to the Enforcing Party in reasonable detail a material risk
of a material negative impact on the Licensed Rights, taking into account the potential impact on the value of the Compound or
New Antibody (as applicable) worldwide as a result of such settlement. Prior to the Enforcing Party commencing such a suit or action,
the Enforcing Party shall consider in good faith any reasonable business concerns of which the Non-Enforcing Party notifies the
Enforcing Party in writing within ninety (90) days after the Non-Enforcing Party’s receipt or delivery of notice under Section
7.1.  If either Party identifies to the other Party in reasonable detail a material risk of a material negative impact on
the Licensed Rights resulting directly from such a suit or action, taking into account the potential impact on the value of the
Compound or New Antibody (as applicable) worldwide, then the other Party shall not commence any such suit or action. If the Enforcing
Party recovers monetary damages in such claim, suit or action, such recovery shall be allocated as such: Non-Enforcing Party costs
in providing assistance pursuant to this Section 7.4 shall be reimbursed by the Enforcing Party and any remaining recovery in excess
of such costs in conducting the litigation shall go to the Enforcing Party.

 

     

    	 	17

    

 

		7.5	Notwithstanding anything else in this Agreement with respect to the Other Bermekimab Patents, if a Non-Dermatological Indication
becomes a Specified Indication pursuant to the Purchase Agreement, then XBiotech shall not have the rights provided under 7.4 for
any Other Bermekimab Patent claiming the relevant Specified Indication.

 

INVALIDITY CLAIMS 

 

		7.6	If at any time during the Term of this Agreement a Party becomes aware of any Invalidity Claim in respect of any Licensed Rights,
that Party shall promptly provide to the other Party in writing a notice (an “Invalidity Notice”) describing
all information in its possession relating to the Invalidity Claim that it has the right to provide without breaching any obligation
of confidentiality to a Third Party.

 

		7.7	Janssen shall have control of all aspects of any action or proceeding relating to the defense of any Invalidity Claim of Core
Bermekimab Patents, including determining, at its sole discretion, whether or not to institute or participate in any such action
or proceeding, its prosecution, defense or settlement (but for the avoidance of doubt shall have no obligation to bring or defend
any such action or proceeding), and any award of damages or costs obtained from any such action or proceeding, or any sum obtained
pursuant to a settlement of any such action or proceeding, shall accrue solely to the benefit of Janssen. Janssen shall be responsible
for its own costs of legal or other representation in respect of any such action or proceeding. On no account shall XBiotech institute
any such action or proceeding, without the prior written consent, of Janssen.

 

		7.8	Subject to Section 7.9 of this Agreement, Janssen, with respect to Other Bermekimab Patents, and XBiotech, with respect to
General IL-1α Patents, shall solely have control of all aspects of any action or proceeding relating to the defense of any
Invalidity Claim of the applicable Patents, including determining, at its sole discretion, whether or not to institute or participate
in any such action or proceeding, its prosecution, defense or settlement (but for the avoidance of doubt shall have no obligation
to bring or defend any such action or proceeding), and any award of damages or costs obtained from any such action or proceeding,
or any sum obtained pursuant to a settlement of any such action or proceeding shall accrue solely to the benefit of the controlling
Party. Each Party will use Commercially Reasonable Efforts to not take positions or make claims, arguments or statements that may
have an adverse or negative impact on the other Party’s Licensed Rights. Each Party shall be responsible for its own costs
of legal or other representation in respect of any such action or proceeding. Except as provided in Section 7.9, on no account
shall XBiotech, with respect to Other Bermekimab Patents, or Janssen, with respect to General IL-1α Patents, institute any
such action or proceeding, without the prior written consent of the other Party.

 

     

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		7.9	Solely with respect to Section 7.8 above, if either Party does not, within ninety (90) days after its receipt or delivery of
an Invalidity Notice under Section 7.6 or ten (10) days before the expiration date for filing an appropriate suit or responding
to or taking any action (as applicable), initiate and prosecute any legal action to defend the Licensed Rights with respect to
at least one Invalidity Claim of an applicable Patent (the

“Non-Defending Party”), then the other Party (the “Defending Party”) shall have the right, but not the
obligation, to commence such a suit or take such an action to enforce or defend the applicable Patent included in the Licensed
Rights.  In such event, the Non-Defending Party shall take appropriate actions in order to enable the Defending Party to commence
a suit or take the actions set forth in the preceding sentence.  Prior to settling any such suit or action related to such
Invalidity Claim, the Defending Party shall notify the Non-Defending Party in writing as to the material terms of such proposed
settlement and shall not execute such settlement without the Non-Defending Party’s written consent if the Non-Defending Party
identifies to the Defending Party in reasonable detail a material risk of a material negative impact on the Licensed Rights, taking
into account the potential impact on the value of the Compound or New Antibody (as applicable) worldwide as a result of such settlement.
Prior to the Defending Party commencing such a suit or action, the Defending Party shall consider in good faith any reasonable
business concerns, of which the Non-Defending Party notifies the Defending Party in writing within ninety (90) days after the Non-Defending
Party’s receipt or delivery of notice under Section 7.6. If either Party identifies to the other Party in reasonable
detail a material risk of a material negative impact on the Licensed Rights resulting directly from such a suit or action, taking
into account the potential impact on the value of the Compound or New Antibody (as applicable) worldwide, then the other Party
shall not commence any such suit or action. If Defending Party recovers monetary damages in such claim, suit or action, such recovery
shall be allocated as such: Non-Defending Party costs in providing assistance pursuant to this Section 7.9 shall be reimbursed
by the Defending Party and any remaining recovery in excess of such costs in conducting the litigation shall go to the Defending
Party.

 

		7.10	Notwithstanding anything else in this Agreement with respect to the Other Bermekimab Patents, if a Non-Dermatological Indication
becomes a Specified Indication pursuant to the Purchase Agreement, then XBiotech shall not have the rights provided under 7.9 for
any Other Bermekimab Patent claiming the relevant Specified Indication.

 

		7.11	Each Party agrees that at no time through expiration of the Patents included within the Seller Intellectual Property or General
IL-1a Patents shall it or any member of its Group challenge or oppose, or commence any
action challenging or opposing, directly or indirectly, or assist any other Person or Third Party in challenging or opposing, directly
or indirectly, the validity and/or enforceability of any rights of the other Party or any member of its Group in such Patents.

 

     

    	 	19

    

 

Conduct
of litigation 

 

		7.12	If a Party initiates (the “Lead Party”) any enforcement or defense action with respect to Infringement or
the defense of any Invalidity Claim as permitted pursuant to this Section 7:

 

		7.12.1	the other Party shall use Commercially Reasonable Efforts to assist the Lead Party in such action (including using reasonable
best efforts to ensure that an inventor, under its control, does not take a contrary position to a previous statement made by such
inventor, provided that such inventor shall not be required to make statements that are not factual) at the Lead Party’s
sole expense, including, where necessary, joining any lawsuit or proceeding initiated to defend such Infringement or Invalidity
Claim;

 

		7.12.2	the Lead Party shall give the other Party reasonable notice of any substantial change in the scope of the Patent in suit as
a result of an Infringement or the defense of any Invalidity Claim; and

 

		7.12.3	the other Party shall not make any admission as to liability and shall not agree to any settlement or compromise of any action
or proceeding relating to any such Infringement or Invalidity Claim.

 

		7.13	If a Party has the right to institute or defend any action or proceeding pursuant to this Section 7 (the “Entitled
Party”) but Applicable Law does not permit the Entitled Party to institute or defend such action or proceeding (including,
for the avoidance of doubt, where Applicable Law requires that a Party instituting or defending an action must hold the relevant
regulatory license), to the extent permitted by Applicable Law, the other Party (the “Conducting Party”) shall
institute or defend such action or proceeding on behalf of, and at the direction of, the Entitled Party, subject to the Conducting
Party being indemnified and secured to its reasonable satisfaction by the Entitled Party against all liabilities which may be incurred
and all costs and expenses being borne by the Entitled Party.

 

THIRD PARTY CLAIMS

 

		7.14	If any action, suit or proceeding is brought against a Party or any Affiliate or sub-licensee of a Party alleging that its
use of the Licensed Rights infringes the intellectual property rights of a Third Party, each of the Parties shall have the right
but not the obligation to defend itself in such action, suit or proceeding at its sole expense. The Parties shall cooperate with
each other in any defense of any such suit, action or proceeding. The Parties shall give each other prompt written notice of the
commencement of any such suit, action or proceeding, or receipt of any claim of infringement, and shall promptly furnish each other
a copy of each communication relating to the alleged infringement.

 

     

    	 	20

    

 

		7.15	Neither Party shall compromise, litigate, settle or otherwise dispose of any such suit, action or proceeding without the other
Party’s advice and prior written consent, provided that the Party not having the right to defend the suit shall not
unreasonably withhold its consent to any settlement that does not have a material adverse effect on its rights, obligations or
benefits, either under this Agreement or otherwise.

 

		7.16	The Party first having actual notice of any claim, action or proceeding referenced in Section 7.14 shall promptly notify the
other Party in writing, setting forth in reasonable detail, to its knowledge, the facts related to any such claim, action or proceeding.
The Parties shall promptly discuss proposed responses thereto.

 

		8.	CONFIDENTIALITY

 

		8.1	In this Agreement, “Confidential Information” shall, subject to Section 8.2, mean, as specified below, all
information, Know-how and data obtained pursuant to or in connection with this Agreement, whether oral, in writing or in any other
form, disclosed before, on or after the date of this Agreement by one Party (the “Disclosing Party”) to the
other Party (the “Receiving Party”). For clarity, Know-how that is within the scope of the Licensed Rights granted
by XBiotech to Janssen is the Confidential Information of XBiotech as the Disclosing Party. Information provided by the Disclosing
Party to the Receiving Party will be Confidential Information as defined in this Section 8:

 

		8.1.1	if a reasonable person in the place of the Receiving Party would reasonably believe that such information was confidential
information;

 

		8.1.2	if it is clearly marked or labelled by the Disclosing Party as confidential in nature if disclosed in written or any other
tangible form; and/or

 

		8.1.3	if it is specified by the Disclosing Party at the time of disclosure as being confidential if disclosed orally by the Disclosing
Party to the Receiving Party.

 

		8.2	In this Agreement, “Confidential Information” shall not include any information which the Receiving Party
can demonstrate:

 

		8.2.1	was generally available to the public or otherwise part of the public domain at the time of its disclosure to the Receiving
Party;

 

		8.2.2	is in or has come into the public domain through no fault of the Receiving Party, its officers, members of its Group, employees,
agents, sub-licensees or sub-contractors (“Representatives”);

 

		8.2.3	is already in the lawful knowledge and possession of the Receiving Party prior to first receiving it from the Disclosing Party,
or was otherwise developed independently by the Receiving Party, as evidenced by written records or other documentary proof of
actual knowledge by the Receiving Party; and/or

 

		8.2.4	is obtained by the Receiving Party from a Third Party without any obligation of confidentiality and such Third Party is in
lawful possession of such information and is not in breach of any contractual or legal obligation to maintain the confidentiality
of such information, as evidenced by written records or other documentary proof of such Third Party’s disclosure to the Receiving
Party.

 

     

    	 	21

    

 

		8.3	The Receiving Party shall, and shall cause its Representatives to, keep confidential and shall not publish or otherwise use
or disclose to any Third Party any Confidential Information received from the Disclosing Party except as set out in Section 8.4
below.

 

		8.4	The Receiving Party may:

 

		8.4.1	use Confidential Information received from the Disclosing Party solely to the extent that such use is necessary for the purpose
of exercising its rights and/or performing its obligations under this Agreement;

 

		8.4.2	disclose Confidential Information received from the Disclosing Party to its Representatives solely to the extent necessary
to enable the Receiving Party to exercise its rights and/or perform its obligations under this Agreement or as required for the
proper discharge of its reporting, regulatory or other compliance, administrative, governance or similar duties or obligations,
provided that the Receiving Party shall procure that its Representatives (i) do not further disclose the Confidential Information
to any Third Party or use it for any purpose other than as set forth in Section 8.4.1 and (ii) are bound by terms of confidentiality
equivalent to those in this Section 8;

 

		8.4.3	disclose any part of the Confidential Information received from the Disclosing Party to its professional advisors, attorneys,
auditors and bankers provided that the Receiving Party shall be liable for any failure by its professional advisors, attorneys,
auditors or bankers to keep such information confidential; and

 

8.4.4     
disclose any part of the Confidential Information received from the Disclosing Party to the extent required by Applicable
Law to be included as results of clinical trials posted on clinicaltrial.gov, clinicalstudyresults.org and on any other registry
with requirements consistent with the registration and publication guidelines of the International Committee of Medical Journal
Editors, solely to the extent required. All data and information posted on clinicaltrial.gov, clinicalstudyresults.org or any other
registry will be subject to prior review by the other Party.

 

		8.5	The Receiving Party may disclose any Confidential Information received from the Disclosing Party to any governmental or other
regulatory agencies to comply with Applicable Law or regulations, provided the Receiving Party provides to the Disclosing Party
prompt prior written notice of its obligation to make such disclosure and takes reasonable and lawful actions to avoid or minimize
the degree of such disclosure.

 

		8.6	If the Receiving Party discloses or becomes aware of any unauthorized use or disclosure of Confidential Information received
from the Disclosing Party it shall promptly notify the Disclosing Party and promptly take all reasonable steps to prevent further
unauthorized use or disclosure.

 

     

    	 	22

    

 

		8.7	The restrictions contained in this Section 8 shall continue to apply for a period of ten (10) years after the expiry or termination
of this Agreement or for so long as such information remains confidential, whichever is earlier.

 

		8.8	For the avoidance of doubt, Janssen’s use of the Know-how licensed to it pursuant to Section 2.3 in accordance with the
terms of such license shall in no way be deemed to violate the provisions of this Section 8, so long as Janssen discloses any such
Know-how in connection with the exercise of its rights as permitted under this Agreement and pursuant to a binding enforceable
agreement: (i) informing such Person of the confidential nature of such Know-How; (ii) restricting the use of such Know-How to:
(A) the subject matter of such agreement or (B) such Persons who have a professional obligation to maintain the confidentiality
of such Know-How; and (iii) requiring each Person to whom the disclosure is made to maintain the confidentiality of such Know-How
with terms no less stringent than those in this Section 8.

 

		9.	TERM

 

		9.1	This Agreement shall come into force on the Commencement Date and, unless terminated earlier in accordance with the provisions
of Section 10 of this Agreement, shall continue in force so long as any of the Parties’ Granted Rights are valid and in force
and effect anywhere in the world (the “Term”).

 

		10.	TERMINATION

 

		10.1	Either Party (the “terminating Party”) may terminate the license granted by such terminating Party in Section
2 with immediate effect by giving the other Party (the “non-terminating Party”) written notice of termination
if:

 

		10.1.1	the non-terminating Party commits a material breach of Sections 2.2, 2.3, 2.5, 3, 6, 7, 8 or 12 of this Agreement (examples
of a material breach of such Sections shall include but not be limited to the non-terminating Party: (i) publishing or otherwise
using or disclosing to any Third Party any significant Confidential Information received from the terminating Party (other than
in compliance with Section 8); and (ii) assigning its rights under the Agreement in a manner that does not comply with Section
12.3 or 12.4) and has not cured such breach after notice from the terminating Party requesting cure of the breach as specified
below; and provided that the terminating Party has given the non-terminating Party the following opportunities to remedy
such breach:

 

		(a)	the written notice of breach will detail the specific obligation under this Agreement that is alleged to have been breached;
the manner of such alleged breach; and the steps to be taken in order to remedy such breach; and

 

		(b)	without prejudice to the right of the terminating Party to seek urgent relief, the terminating Party has provided the non-terminating
Party with a reasonable amount of time (but no more than ninety (90) days) in which (A) to complete any steps that might be
taken to remedy the breach, as stated in the notification of breach; or (B) if completion of those steps is not possible within
a 90-day period, to commence those steps required as stated in the notification of breach, on the condition that the non-terminating
Party continues to perform those steps with due diligence and the breach can be cured within a mutually agreeable period of time.

 

     

    	 	23

    

 

		10.2	All rights and licenses granted to Licensee under or pursuant to this Agreement are, and will otherwise be deemed to be, for
purposes of Section 365(n) of the United States Bankruptcy Code, 11 U.S.C. §§ 101 et seq. (the “Code”)
and any similar laws in any other country, licenses of rights to “intellectual property” as defined under Section 101
of the Code. Licensee of such rights under this Agreement, will retain and may fully exercise all of its protections, rights and
elections under the Code and any similar laws in any other country. All rights, powers and remedies provided for in this Section 10.2
are in addition to and not in substitution for any and all other rights, powers and remedies now or hereafter existing at law or
in equity (including under the Code and any similar laws in any other country). If voluntary or involuntary proceedings by or against
a Party are instituted in bankruptcy under any insolvency law, or a receiver or custodian is appointed for such Party, or proceedings
are instituted by or against such Party for corporate reorganization, dissolution, liquidation or winding up of such Party, which
proceedings, if involuntary, shall not have been dismissed within sixty (60) days after the date of filing, or if such Party makes
an assignment for the benefit of creditors, or substantially all of the assets of such Party are seized or attached and not released
within sixty (60) days thereafter, the other Party may immediately terminate this Agreement effective upon notice of such termination.

 

		10.3	For the avoidance of doubt, the right to terminate this Agreement in accordance with this Section is not exclusive of any rights,
powers and remedies provided by law.

 

		11.	EFFECT OF EXPIRY OR TERMINATION

 

		11.1	Upon the expiry or termination of this Agreement for whatever reason:

 

		11.1.1	the licenses and non-assertion rights granted under Section 2 (together with all corresponding sub-licenses) shall immediately
terminate and each Licensee shall, and shall procure that its sub-licensees and sub-contractors shall, forthwith cease all activities
for which a license is granted under this Agreement;

 

		11.1.2	each Receiving Party shall use Commercially Reasonable Efforts to promptly (a) return to the Disclosing Party or destroy all
hard copies of Confidential Information; and (b) delete and make no attempts to recover all soft copies of Confidential Information,
in each case disclosed to the Receiving Party by or on behalf of the Disclosing Party whether in the possession or control of the
Receiving Party or any of its Representatives (notwithstanding the foregoing, the Receiving Party may retain copies of Confidential
Information stored on backup disks or in backup storage facilities automatically produced in the ordinary course of business; any
Confidential Information so retained will be held subject to the confidentiality and use limitations set forth in Section 8).

 

     

    	 	24

    

 

		11.2	Expiry or termination of this Agreement shall not affect any rights or liabilities accrued under this Agreement prior to such
expiry or termination.

 

		12.	ASSIGNMENT AND TRANSFER

 

		12.1	This Agreement shall be binding on and shall inure for the benefit of the successors of the Parties.

 

		12.2	Subject to Sections 3, 12.3 12.4, 12.5 and 12.6, neither Party may assign, transfer, charge or dispose in any way of any of
its rights or obligations under this Agreement, or part thereof (or purport to do any such thing) to a Third Party that is not
an Affiliate without the other Party’s prior written consent.

 

		12.3	XBiotech shall not transfer its rights under Section 2.2 to a Third Party except to: (i) an Affiliate, (ii) a successor
in all of XBiotech’s rights in the Granted Rights, (iii) exclusive licensees of XBiotech’s rights in the Granted Rights
or (iv) Persons performing services or activities in support of any of XBiotech’s rights in the Granted Rights. Janssen has
the right to transfer its rights in the Granted Rights without restriction; provided that Janssen shall not transfer its
rights under Section 2.3 to a Third Party in a manner that allows Janssen to retain substantially the same rights that it transfers
to such Third Party subsequent to such transfer.

 

		12.4	Subject to Section 12.3, each Licensor may grant licenses, assign or otherwise transfer any right, title or interest in any
of the respective rights under which they grant a non-exclusive license to the other party pursuant to this Agreement and Janssen
may grant licenses, assign or otherwise transfer any right, title or interest in any of the Core Bermekimab Patents that are the
subject of the non-assertion rights granted in Section 2.2, provided that any such grant is made subject to the terms and
conditions of this Agreement, and further provided that such Licensor procures that licensee, assignee or transferee complies
with and is bound by the provisions of this Agreement as if such licensee, assignee or transferee were a party to this Agreement,
including the licenses or, in respect of the Core Bermekimab Patents, the non-assertion rights granted by such Licensor under Section
2, provided that any act of licensee, assignee or transferee which would if committed by such Licensor be a breach of this
Agreement shall be treated for the purposes of this Agreement as an equivalent breach by such licensee, assignee or transferee
of the terms of this Agreement.

 

		12.5	Each Party in its role as Licensor or as the grantor of non-assertion rights in Section 2 may assign its rights under this
Agreement to any member of its Group. Such Party acknowledges and agrees:

 

		12.5.1	that any such assignment will be in respect of the whole of this Agreement and not any part thereof;

 

		12.5.2	that any such assignment would not reduce the scope of any non-assertion rights or rights licensed to the other Party in its
role as Licensee or as recipient of non-assertion rights under Section 2 of this Agreement;

 

     

    	 	25

    

 

		12.5.3	to provide the other Party in its role as Licensee or as recipient of non-assertion rights under Section 2 if this Agreement
with notice of such assignment promptly after completion of such assignment; and

 

		12.5.4	such Party in its role as Licensor or as the grantor of non-assertion rights in Section 2 shall procure that the assignee shall
assume the obligations of such Party, including the licenses and non-assertion provisions granted by such Party under Section 2,
provided that any act of the assignee which would if committed by such Party be a breach of this Agreement shall be treated
for the purposes of this Agreement as an equivalent breach by such assignee of the terms of this Agreement.

 

		12.6	Each Party in its role as Licensee or as a recipient of non-assertion rights under Section 2 may assign its rights under this
Agreement to a member of its Group. Such Party acknowledges and agrees:

 

		12.6.1	that any such assignment will be in respect of the whole of this Agreement and not any part thereof;

 

		12.6.2	that any such assignment would not expand the scope of any non-assertion rights or rights licensed by the other Party in its
role as Licensor or grantor of non-assertion rights under Section 2 of this Agreement;

 

		12.6.3	to provide the other Party in its role as Licensor or grantor of non-assertion rights under Section 2 of this Agreement with
notice of such assignment promptly after completion of such assignment; and

 

		12.6.4	that such Party in its role as Licensee or as a recipient of non-assertion rights under Section 2 shall procure that the assignee
shall assume the obligations of such Party, provided that any act of the assignee which would if committed by such Party
be a breach of this Agreement shall be treated for the purposes of this Agreement as an equivalent breach by such assignee of the
terms of this Agreement.

 

		13.	ANNOUNCEMENTS

 

		13.1	Subject to Section 13.2 of this Agreement and Section 5.9 of the Purchase Agreement, no announcement concerning this Agreement
or any ancillary matter shall be made by any Party without the prior written approval of the other Party, such approval not to
be unreasonably withheld or delayed.

 

		13.2	A Party may make an announcement concerning this Agreement (or any aspect of it) if and only to the extent required by:

 

		(i)	the Applicable Laws of any relevant jurisdiction; or

 

		(ii)	any Governmental Entity or any Tax Authority to which any Party is subject or submits, wherever situated whether or not the
requirement has the force of law;

 

     

    	 	26

    

 

		13.3	in which case the Party concerned shall take all such steps as may be reasonable and practicable in the circumstances to agree
to the contents of such announcement with the other Party before making such announcement.

 

		14.	REMEDIES AND WAIVERS

 

		14.1	No delay or omission by any Party in exercising any right, power or remedy provided by law or under this Agreement or any document
referred to in it shall:

 

		(i)	impair or affect such right, power or remedy; or

 

		(ii)	operate as a waiver of it.

 

		14.2	The failure of any Party to exercise any right, power or remedy provided under this Agreement or otherwise available in respect
hereof at law or in equity, or to insist upon compliance by any other Party with its obligations hereunder, shall not constitute
a waiver by such Party of its right to exercise any such or other right, power or remedy or to demand such compliance.

 

		14.3	The rights, powers and remedies provided in this Agreement are cumulative and not exclusive of any rights, powers and remedies
provided by law unless otherwise stated herein.

 

		15.	NOTICES

 

		15.1	Any notice or other communication given or made under, or in connection with the matters contemplated by, this Agreement shall
only be effective if it is in writing. Such writing may be delivered to a Party by courier or in portable document (.pdf) format
by electronic mail which becomes effective upon acknowledgement by the receiving Party.

 

		15.2	Any such notice or communication shall be sent to a Party at its address and for the attention of the individual set out below:

 

		(a)	for the attention of the individual set out below:

 

	 	Name of Party	Address
	 	Janssen Biotech, Inc.	
        Janssen Biotech, Inc.

        800 Ridgeview Drive

        Horsham, PA 19044

         

	 	 	Attention: President
	 	
         

         

        With copies, which shall not constitute notice, to:
	
         

         

        Johnson & Johnson

Law Department

One Johnson & Johnson Plaza

New Brunswick, NJ 08933

 

     

    	 	27

    

 

	 	
        Name of Party
	
        Address:

        Attention: General Counsel, Pharmaceuticals

         

         

        Cravath, Swaine & Moore LLP

        Worldwide Plaza

        825 Eighth Avenue

        New York, New York 10019

         

        Attention: Robert I. Townsend, III, Esq.

          Jenny Hochenberg, Esq

         

	 	 	 
	 	XBiotech, Inc. 	
        XBiotech. Inc.

        5217 Winnebago Lane

        Austin, Texas 78744

         

	 	 	Attention: John Simard
	 	
         

         

        With a copy, which shall not constitute notice, to:
	
         

         

        Bryan Cave Leighton Paisner LLP

        120 Broadway, Suite 300

        Santa Monica, California 90401

         

        Attention:
        David G. Andersen

	 	 	 

 

PROVIDED
THAT a Party may change its notice details by giving notice to the other Party of the change in accordance with this Section
15. That notice shall become effective on the date falling five (5) Business Days after the notification has been received or
such later date as may be specified in the notice.

 

		15.3	Any notice or communication given or made under, or in connection with the matters contemplated by, this Agreement shall, in
the absence of earlier receipt, be deemed to have been duly given as follows:

 

		(i)	if delivered personally, on delivery;

 

		(ii)	if sent by overnight courier service, two (2) clear Business Days after the date of dispatch; and

 

		(iii)	if sent by any other method permitted by this Section, three (3) clear Business Days after the date of posting.

 

		15.4	Any notice or communication given or made under, or in connection with the matters contemplated by, this Agreement outside
Working Hours in the place to which it is addressed shall be deemed not to have been given until the start of the next period of
Working Hours in such place.

 

     

    	 	28

    

 

		16.	NO PARTNERSHIP

 

		16.1	Nothing in this Agreement and no action taken by the Parties shall constitute a partnership, association, joint venture or
other co-operative entity between the Parties.

 

		17.	COSTS AND EXPENSES

 

		17.1	Except as otherwise stated in this Agreement, each Party shall pay its own costs and expenses in relation to the preparation,
execution and carrying into effect of this Agreement and all other documents entered into pursuant to, or in connection with, it.

 

		18.	COUNTERPARTS

 

		18.1	This Agreement may be executed (including by PDF copy) in any number of counterparts, and by Licensor and Licensee on separate
counterparts, but shall not be effective until each Party has executed at least one counterpart.

 

		18.2	Each counterpart shall constitute an original of this Agreement, but the counterparts shall together constitute but one and
the same instrument.

 

		19.	no rights in the compound

 

		19.1	Notwithstanding anything in this Agreement, for the avoidance of doubt, no rights whatsoever to the Compound are conveyed by
any provision of this Agreement.

 

		20.	NO CONFLICTing obligation

 

		20.1	After the Commencement Date, each Party agrees that it will not enter into any agreement that conflicts with, results in a
material breach of, or constitutes a default under, such Party’s obligations under Section 2 of this Agreement.

 

		21.	ENTIRE AGREEMENT

 

		21.1	This Agreement, the Purchase Agreement, and any other agreements entered into pursuant to this Agreement or the Purchase Agreement
(the “Transaction Documents”), constitute the whole and only agreement between the Parties relating to the Acquisition
and, save if and only to the extent expressly repeated in any of the Transaction Documents, supersedes and extinguishes any prior
drafts, agreements, undertakings, representations, warranties and arrangements of any nature whatsoever, whether or not in writing,
relating thereto.

 

		21.2	This Agreement may only be amended by a document signed by each of the Parties. For this purpose, an amendment to this Agreement
shall include any addition, deletion, supplement or replacement, howsoever effected.

 

		21.3	The Parties acknowledge and agree that any amendment to this Agreement between the date hereof and the Closing Date is subject
to the written consent of each Party.

 

     

    	 	29

    

 

		22.	INVALIDITY

 

		22.1	If, at any time any provision of this Agreement is or becomes illegal, invalid or unenforceable in any respect under the law
of any jurisdiction, that shall not affect or impair:

 

		22.1.1	the legality, validity or enforceability in that jurisdiction of any other provision of this Agreement; or

 

		22.1.2	the legality, validity or enforceability under the law of any other jurisdiction of that or any other provision of this Agreement.

 

		23.	FURTHER ASSURANCE

 

		23.1	Each Party agrees to execute, acknowledge and deliver such further instruments, and to do all such other acts, as may be necessary
or appropriate in order to carry out the purposes and intent of this Agreement.

 

		24.	THIRD PARTY beneficiaries

 

		24.1	The Parties acknowledge and agree that this Agreement is for the sole benefit of the Parties.

 

		25.	GOVERNING LAW

 

		25.1	This Agreement shall be governed by and construed in accordance with the laws of the state of New York, regardless of the laws
that might otherwise govern under applicable principles of conflicts of laws thereof.

 

 

     

    	 	30

    

 

IN WITNESS of which this Agreement has been duly executed
by the Parties on the date first written above.

 

	Janssen Biotech, Inc. 	 	 
	 	 	 	 
	/s/ Austin Clayton	 	 	 
	Name:  Austin Clayton	 	Name:	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	XBiotech, Inc. 	 	 
	 	 	 	 
	 	 	 	 
	/s/ John Simard	 	 	 
	Name:  John Simard	 	Name:	 

 

 

 

 

 

 

 

 

[Signature Page to IP License Agreement]

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