Document:

cori_Ex10_1

		
			Exhibit 10.1
		

		
			 
		

		
			[*] Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.
		

		
			 
		

		
			SUPPLY AGREEMENT
		

		
			 
		

		
			This is an agreement (“AGREEMENT”), made and entered into between the BUYER and SELLER (“PARTY,” collectively “PARTIES”). 
		

		
			 
		

		
			1  PARTIES and OTHER RELEVANT ENTITIES
		

		
			The Procter & Gamble Manufacturing Company, One Procter & Gamble Plaza, Cincinnati, Ohio 45202 (“BUYER”).
		

		
			 
		

		
			Corium International, Inc., 235 Constitution Drive, Menlo Park, California 94025 (“SELLER”).
		

		
			 
		

		
			“AFFILIATE” means, with respect to any person as of the date on which, or at any time during the period for which, the determination of affiliation is being made, any other person: (a) directly or indirectly controlling the party in question, (b) directly or indirectly being controlled by the party in question, or (c) being controlled by another PARTY that also controls the party in question. As used in the preceding sentence, “controlled” and “controlling” as used with respect to any PARTY mean, through direct or indirect beneficial ownership of more than 50% of the voting or equity interest in another PARTY, the power to direct or cause the direction of the management and policies of such other PARTY.
		

		
			 
		

		
			“LICENSE AGREEMENT” means the License Agreement entered into between Corium International and The Procter & Gamble Company on June 13, 2005, and as amended thereafter by the PARTIES.
		

		
			 
		

		
			“QUALITY AGREEMENT” means the Quality Agreement entered into between Corium International and The Procter & Gamble Company on September 24, 2015, and as amended thereafter by the PARTIES.
		

		
			 
		

		
			2  PURCHASE & SALE OBLIGATIONS
		

		
			 
		

		
			2.1.       QUANTITY AND PLANNING
		

		
			(i)         SELLER will sell to BUYER and BUYER shall purchase Oral Care layer as set forth in Exhibit 2.1 (“GOODS”) in accordance with the AGREEMENT. In accordance with current practices, BUYER shall provide SELLER with a non-binding [*] purchase forecast for GOODS, detailing the volumes for each product by month, including requirements for launch quantities, retail product, sampling and promotions. [*] prior to the start of each succeeding calendar quarter, BUYER shall provide SELLER a new non-binding purchase forecast for GOODS detailing the projected volumes for each consecutive[*] period (each a “ROLLING FORECAST”).  By way of example, on each [*], a ROLLING FORECAST will be submitted for the [*] period beginning on [*]; on each [*], a ROLLING FORECAST will be submitted for the [*] period beginning on [*]; and on each [*], a ROLLING FORECAST will be submitted for the [*] period beginning on [*]; and on [*], a ROLLING FORECAST will be submitted for the [*] period beginning on [*].
		

		
			 
		

		
			(ii)         SELLER and BUYER will collaborate to set the master production schedule based on BUYER’s forecasts. The PARTIES will endeavor to accommodate fluctuations in BUYER’s demand.  The ROLLING FORECASTS as submitted above will dictate the average [*] volumes for the upcoming [*] and all PURCHASE ORDERS, as defined below, submitted during that quarter will be at the corresponding price for that CAPACITY WINDOW, regardless of the actual [*] PURCHASE ORDER levels. A CAPACITY WINDOW (“CAPACITY WINDOW”) is the set of volume ranges of production available for the order of GOODS as set forth in Exhibit 3.1.  So long as the average [*] volumes within a [*] submitted in PURCHASE ORDERS during any given calendar [*] remain within the CAPACITY WINDOW determined by the ROLLING FORECAST submitted prior to that [*], the PARTIES agree to “smooth out” the manufacture of the GOODS to meet BUYER’s delivery schedule as provided in the [*] PURCHASE ORDERS and to maximize the efficiency of SELLER’s production staffing schedule. For the avoidance of doubt, if BUYER submits a [*] PURCHASE ORDER for GOODS outside of the amount in the CAPACITY WINDOW, SELLER will accept such PURCHASE ORDER if the total average [*] volumes remain within the applicable CAPACITY WINDOW.
		

		
			 
		

		
			
		

		
			

		 

		

			1

		

		

			*Confidential Treatment Requested

		

 

		

		
			(iii)         Additionally, BUYER will submit PURCHASE ORDERS on a [*] basis in accordance with Section 2.2, which shall include [*] of firm production orders and [*] of estimated planned orders in the system. The firm
		

		
			production orders combined with the planned orders will constitute BUYER’s authorization to SELLER to purchase the raw materials necessary to fill the orders for the corresponding periods. Should the materials ordered in a [*] period not be used within [*], BUYER will purchase the excess materials from SELLER at SELLER’s actual cost. Based on the master production schedule, SELLER will confirm delivery timing in accordance with the PURCHASE ORDERS placed by BUYER.   The minimum order quantity is a production lot size of [*] (“MINIMUM ORDER”). The maximum production capacity is [*] per week (“MAXIMUM ORDER”).
		

		
			 
		

		
			2.2.       PURCHASE ORDERS
		

		
			BUYER will order GOODS from SELLER by means of purchase orders, releases or other means of ordering (collectively “PURCHASE ORDERS”). Upon SELLER’s acceptance of each PURCHASE ORDER, each PURCHASE ORDER is binding upon SELLER and BUYER, and the terms of this AGREEMENT are incorporated by reference.  Each PURCHASE ORDER from BUYER to SELLER shall specify the exact quantity of GOODS requested and the scheduled delivery date for such quantity (“Delivery Date”). The PARTIES will agree to packaging and shipping instructions.  Each PURCHASE ORDER for GOODS shall be in compliance with Section 2.1.  In no event will a Delivery Date requested by BUYER be less than [*] after the date the PURCHASE ORDER is received by SELLER, except with the prior written consent of SELLER.  SELLER shall acknowledge each PURCHASE ORDER within [*] after receipt.  SELLER shall manufacture and supply GOODS in accordance with the terms of accepted PURCHASE ORDERS issued and the terms and conditions of this AGREEMENT.  Once accepted by SELLER, BUYER may cancel or reschedule PURCHASE ORDERS for GOODS only with SELLER’s prior written approval.  SELLER shall deliver GOODS at the times specified in BUYER’s PURCHASE ORDERS, unless such orders have been rejected by SELLER. 
		

		
			 
		

		
			2.3.       REDUCTION OR DISCONTINUANCE OF PURCHASES
		

		
			SELLER acknowledges and agrees that BUYER may deem it necessary, from time to time, to reduce or discontinue purchases of the GOODS covered by this AGREEMENT because of (i) product or packaging reformulation; (ii) process change; (iii) changes in technology; (iv) changes in the LAWS governing the GOODS, the sale or distribution of the GOODS; (v) changes in the sale or distribution of the GOODS; (vi) the discontinuance of the product incorporating the GOODS; (vii) divestiture of the business in which the GOODS reside; (viii) BUYER’s exercise of its right to relocate production in accordance with the LICENSE AGREEMENT; or (ix) any other similar reasons.  In such event BUYER shall provide SELLER with reasonable, but not less than [*], prior written notice of any such reduction or discontinuance, and BUYER shall be entitled to thereupon reduce or discontinue further purchases of GOODS from SELLER hereunder without any penalty, liability or further obligation.
		

		
			 
		

		
			2.4.       SPECIFICATIONS
		

		
			Specifications are those detailed technical descriptions of the GOODS that are agreed upon by the PARTIES (“SPECIFICATIONS”) and once agreed upon are entered into the BUYER’s specification system. From time to time, BUYER may request that the SPECIFICATIONS be revised, supplemented or otherwise amended by giving written notice to SELLER. Any change to the SPECIFICATIONS shall be agreed in writing between the PARTIES, and such agreement will include, but not be limited to, agreeing on the implications (if any) on the price of the GOODS and the cost of validation of any such alteration.  Any changes to the SPECIFICATIONS shall be made in accordance with Section 7.7. Any SPECIFICATIONS revised in accordance with this AGREEMENT shall become effective [*] after BUYER and SELLER have agreed upon the proposed revision (“CHANGE DATE”). 
		

		
			 
		

		
			If a change in the SPECIFICATIONS is requested by either PARTY as the result of BUYER or SELLER being approached by or sued by a third party concerning an allegation of patent infringement relating to the development, manufacture, use, distribution, or sale of the GOODS (“THIRD PARTY IP CLAIM”), the PARTIES shall first follow the procedure described above for considering any proposed change to the SPECIFICATIONS.  If, following such process, the PARTIES have not agreed to change the SPECIFICATIONS as requested by either PARTY upon receiving notice within a reasonable time, but not to exceed [*] then BUYER shall be entitled to: (i) terminate this AGREEMENT at any reasonable time thereafter, with immediate effect subject to Sections 3.3.1, 4.4, and 4.5, (ii) purchase the GOODS from other suppliers in which case the obligations of BUYER and SELLER hereunder shall be reduced accordingly, or (iii) continue to purchase under this AGREEMENT. Notwithstanding the foregoing, if after good faith discussions the PARTIES, with their respective legal counsel, mutually determine, as a result of such THIRD PARTY IP CLAIM, to discontinue the manufacture and sale of the GOODS, the PARTIES may mutually decide to terminate this AGREEMENT.
		

		
			

		 

		

			2

		

		

			*Confidential Treatment Requested

		

 

		

		
			 
		

		
			2.5.       RETURN OF GOODS
		

		
			Upon receipt of GOODS, BUYER shall inspect such GOODS for conformance with the SPECIFICATIONS.  Any GOODS not rejected within [*] of DELIVERY thereof will be deemed accepted; provided, however, that such acceptance of GOODS shall not constitute a waiver of any claim BUYER may have under this AGREEMENT, including, but not limited to, claims under Section 5.
		

		
			 
		

		
			If any GOODS or parts thereof are i) not in conformance with the SPECIFICATIONS or ii) not in compliance with Section 5.1 or Section 5.2, BUYER will give SELLER written notice within the [*] time limit provided under this Section 2.5 and, upon such notice, BUYER is entitled to return to SELLER, any such GOODS or parts thereof at SELLER’s expense. Upon SELLER’s receipt of such notice from BUYER with respect to rejected GOODS, (i) SELLER will rework or replace defective GOODS and materials, at no additional cost to BUYER; (ii) BUYER may return such GOODS for credit to BUYER, at the full PRICE, plus the actual expenses incurred by BUYER in returning the GOODS to SELLER (such as packaging and transportation costs); or (iii) SELLER and BUYER may agree to alternative solutions; however, BUYER is always free to elect either (i) or (ii) above. In the event of any dispute regarding whether any GOODS rejected by BUYER fail to conform to the SPECIFICATIONS, the PARTIES shall submit such GOODS for testing by an independent laboratory to determine whether such GOODS do or do not conform to the SPECIFICATIONS.  The non-prevailing PARTY shall pay the fees for such testing and the costs associated with shipping the GOODS to the laboratory for testing.  The rights and remedies set forth in this Section 2.5 are not exclusive and nothing herein shall limit the rights and remedies either PARTY may have under this AGREEMENT or at LAW.
		

		
			 
		

		
			2.6.       SUPPLY OF MATERIALS: FULL SERVICE AND FREE ISSUE
		

		
			 
		

		
			2.6.1     SUPPLY OF MATERIALS
		

		
			SELLER will provide the materials obtained from qualified suppliers as identified in the QUALITY AGREEMENT required for the manufacturing of the GOODS in accordance with the SPECIFICATIONS (“FULL SERVICE MATERIALS”, “FULL SERVICE”). At BUYER’s option and subject to SELLER’s approval, BUYER may supply, or arrange for supply of certain raw materials forming a part of the GOODS or used in the MANUFACTURING (“FREE ISSUE MATERIALS”) from third parties.
		

		
			 
		

		
			2.6.2     BILL OF MATERIALS
		

		
			The bill of materials contains a list of all raw materials, sub-assemblies, intermediate assemblies, and sub-components or parts and the respective quantities required to manufacture the GOODS (“BILL OF MATERIALS”). In the case of:
		

		
			(i)          FULL SERVICE, SELLER creates the BILL OF MATERIALS, orders and pays for the FULL SERVICE MATERIALS and charges BUYER on the basis of the BILL OF MATERIALS.
		

		
			(ii)         FREE ISSUE, SELLER creates the BILL OF MATERIALS, and BUYER orders and pays for the FREE ISSUE MATERIALS. 
		

		
			 
		

		
			2.6.3      EXCLUSIVE USE; RISK OF LOSS
		

		
			SELLER will use FREE ISSUE MATERIALS exclusively for SELLER’s performance under this AGREEMENT. The risk of loss for FREE ISSUE MATERIALS will pass to SELLER in accordance with DDP INCOTERMS 2010.
		

		
			 
		

		
			2.7.       SCRAP AND LOSS RATES FOR MATERIALS
		

		
			The PARTIES acknowledge that some scrap or loss of FULL SERVICE MATERIALS is inevitable.  PRICE to BUYER will not change with respect to scrap and loss of FULL SERVICE MATERIALS incurred by SELLER in connection with the manufacturing of the GOODS. 
		

		
			
		

		
			

		 

		

			3

		

		

			*Confidential Treatment Requested

		

 

		

		
			2.7.1       SCRAP OR LOSS CAUSED BY A PARTY’S ACTS OR OMISSIONS
		

		
			SELLER will bear the cost for any damage to or loss of FREE ISSUE MATERIALS or FULL SERVICE MATERIALS to the extent resulting from any negligent act or omission of SELLER while such materials are under SELLERS’s control, SELLER’s subcontractors or their respective employees. BUYER will bear the cost for any damage to or loss of FREE ISSUE MATERIALS to the extent resulting from any negligent act or omission of BUYER, BUYER’s subcontractors or their respective employees or other representatives.
		

		
			 
		

		
			2.8.        QUALITY ASSURANCE
		

		
			SELLER’s use or release of any FULL SERVICE MATERIALS, FREE ISSUE MATERIALS or Goods shall be subject to the provisions of the QUALITY AGREEMENT.  
		

		
			 
		

		
			2.9.        RETAIN SAMPLES
		

		
			SELLER, at SELLER’s expense, will retain from each roll of GOODS manufactured samples of [*] in accordance with the QUALITY AGREEMENT for a period required according to Section 2.8 and will provide BUYER with duplicate samples. 
		

		
			 
		

		
			2.10.       AUTHORITY INQUIRIES
		

		
			SELLER and BUYER will promptly inform each other upon learning of any proposed inspection or visit or after commencement of any unannounced inspection or visit to the facilities related specifically to GOODS by any governmental authority, including without limitation, any health authority or any environmental regulatory authority having jurisdiction over such manufacturing facility, and will follow Section 17.3 of the QUALITY AGREEMENT.
		

		
			 
		

		
			2.11.       QUALITY ASSURANCE AUDITS 
		

		
			SELLER will comply with the QUALITY AGREEMENT which sets forth the quality management systems in accordance with industry standards or best practices and contains audit provisions as agreed between the PARTIES (collectively “QUALITY STANDARDS”). 
		

		
			 
		

		
			2.12.       NOTICE OF NON-COMPLIANT GOODS
		

		
			Subject to Section 2.5, SELLER will comply with the QUALITY AGREEMENT.
		

		
			 
		

		
			2.13.       RECALLS
		

		
			 
		

		
			2.13.1     NOTICE OF WITHDRAWAL OR RECALL
		

		
			If any governmental authority having jurisdiction over the GOODS or the products into which the GOODS are incorporated requires BUYER to recall the product into which the GOODS are incorporated, BUYER shall immediately notify SELLER and review with SELLER the basis for the recall.  BUYER shall make the final determination regarding the need for any voluntary withdrawal, and, subject to applicable legal requirements, the manner of conducting any voluntary withdrawal or mandatory recall.
		

		
			 
		

		
			2.13.2     COSTS OF FINISHED PRODUCT WITHDRAWAL OR RECALL
		

		
			BUYER will be responsible for all costs associated with any withdrawal or recall of BUYER’s FINISHED PRODUCTS incorporating the GOODS. Subject to Section 6.5, SELLER will reimburse BUYER for that portion of any actual expenses incurred in conducting a withdrawal or recall of BUYER’s FINISHED PRODUCTS incorporating the GOODS to the extent that such withdrawal or recall is attributable to (i) a failure of the GOODS to meet the SPECIFICATIONS, (ii) any other breach by SELLER of its representations, warranties, or other obligations under this AGREEMENT, or (iii) SELLER’s gross negligence, intentional or willful misconduct. In the event that a withdrawal or recall is attributable to SELLER’s gross negligence, intentional or willful misconduct, SELLER shall reimburse BUYER for any and all damages, losses, expenses, and costs incurred in connection with conducting such withdrawal or recall, including indirect, incidental, special, punitive, and consequential damages. For purposes of this AGREEMENT, “gross negligence” shall mean any act or failure to act (whether sole, joint or concurrent) which is in reckless disregard of or indifference to the harmful consequences of such action.
		

		
			
		

		
			

		 

		

			4

		

		

			*Confidential Treatment Requested

		

 

		

		
			In the event that scientific testing and investigation costs are incurred in order to determine whether or not SELLER bears any responsibility for the withdrawal or recall, BUYER shall pay for such testing, subject to reimbursement as described above if is determined that SELLER bears some portion of the responsibility for the withdrawal or recall.
		

		
			 
		

		
			2.14.      INVENTORY COUNT REQUIREMENTS
		

		
			Within [*] of the end of each calendar quarter, SELLER will provide BUYER with a report of the inventory of all FREE ISSUE MATERIALS available at the end of the preceding quarter.
		

		
			 
		

		
			2.15.      ADDITIONAL EQUIPMENT AND CAPACITY
		

		
			SELLER will purchase and install the additional capacity required (“EQUIPMENT”) to manufacture GOODS upon mutual agreement on qualification terms.  SELLER will acquire and retain title to and risk of loss for the EQUIPMENT and will be responsible for maintenance and/or replacement.  Once the EQUIPMENT is qualified by BUYER, the MAXIMUM ORDER quantity available to BUYER will be increased to a production lot size of [*]. 
		

		
			 
		

		
			3  PRICE AND TRANSACTION TAXES
		

		
			 
		

		
			3.1.       PRICE AND DUE DATE FOR PAYMENT
		

		
			The price(s) for the GOODS excluding TRANSACTION TAXES is in accordance with the CAPACITY WINDOW established pursuant to Section 2.1 and the PRICE tiers as set forth in Exhibit 3.1 (“PRICE”). 
		

		
			 
		

		
			The PRICE shall be fixed for the AGREEMENT PERIOD. 
		

		
			 
		

		
			The GOODS will be shipped FCA SELLER’s Facility INCOTERMS® 2010 (“DELIVERY”).  Payment will be made in US DOLLARS.  SELLER’s invoices will separately state any transportation charges and will include the freight bill and bill of lading.
		

		
			 
		

		
			The due date for any payments under this AGREEMENT is [*] from the date the accurate invoice is received at the location as designated by BUYER. Notwithstanding the foregoing, if BUYER fails to object to an invoice within [*] of receipt thereof, the due date for payment shall be [*] from the date such invoice is received.  In no event will payment occur prior to BUYER’s receipt of the GOODS, or if required, prior to the date where BUYER obtains government approval for payment, whichever is later.   SELLER will comply with BUYER’s reasonable invoicing requirements effective after receipt thereof in writing, which may be amended from time to time, so long as such requirements and payment commitments are not inconsistent with this AGREEMENT. Subject to the foregoing, BUYER may withhold payment if SELLER’s invoice is inaccurate or does not meet BUYER’s invoicing requirements as advised by BUYER. Each invoice submitted by SELLER will describe the GOODS and the corresponding quantity and charges.
		

		
			 
		

		
			3.2.       TRANSACTION TAXES
		

		
			 
		

		
			TRANSACTION TAXES mean any taxes, fees, expenses, costs and charges imposed by a governmental or regulatory authority such as, without limitation, any sales, use, excise, value-added, services, consumption, and other taxes and duties, the taxable incident of which occurs at, upon or after the earlier of BUYER’s receipt of title of, SELLER’s invoicing for and BUYER’s payment for the GOODS and do not include import/export duties, levies or charges or customs related expenses.  Upon request, each PARTY will provide the other PARTY with documentation required by any tax authority regarding the reporting, filing and potential recovery of TRANSACTION TAXES.  BUYER is entitled to withhold payment of the TRANSACTION TAXES until SELLER provides BUYER such documentation.  Upon request, BUYER will provide SELLER with any resale certificates, exemption certificates or other information relating to TRANSACTION TAXES.  If a withholding tax applies to payments made by BUYER under this AGREEMENT, then BUYER is entitled to deduct such withholding tax from the PRICE on SELLER’s account.  The SELLER is solely responsible for any costs and tax on goods and services used and consumed by the SELLER in providing the services or the goods under this AGREEMENT, the taxable incident of which occurs prior to or upon BUYER’s receipt of title of goods.
		

		
			
		

		
			

		 

		

			5

		

		

			*Confidential Treatment Requested

		

 

		

		
			3.3.       PRICE CHANGE MANAGEMENT
		

		
			The PRICE is a fixed PRICE for the PERIOD except and to the extent set forth in Section 3.3.1 below.
		

		
			 
		

		
			3.3.1      RECONCILIATION IN CASE OF PRICE BRACKETS
		

		
			[*] prior to the beginning of each [*], the PARTIES will review the ROLLING FORECAST and agree on the appropriate PRICE tier from Exhibit 3.1 for the respective calendar quarter.  Within [*] after the end of each [*], the actual shipped volumes will be compared to the applicable PRICE tier in Exhibit 3.1 to determine if an adjustment in PRICE is required; provided, however, that such a price tier adjustment shall not be made, unless BUYER gives SELLER appropriate notice as set forth in Exhibit 3.1 binding the BUYER to purchase GOODS at the corresponding higher volume.
		

		
			 
		

		
			4  CONTRACT PERIOD AND TERMINATION
		

		
			 
		

		
			4.1.       CONTRACT PERIOD
		

		
			This AGREEMENT starts on May 1, 2017 (“EFFECTIVE DATE”) and ends on March 31, 2022 (“PERIOD”), unless earlier terminated in accordance with this AGREEMENT. 
		

		
			 
		

		
			Upon written agreement of the PARTIES, the term of this AGREEMENT may be extended, upon the same terms and conditions as contained herein other than PRICE and the terms of Exhibit 7.4, and subject to agreement on PRICE and the terms of Exhibit 7.4, for [*] (“RENEWAL PERIOD”) by providing written notice to SELLER at least [*] prior to the expiration of the PERIOD.  The PERIOD and the RENEWAL PERIOD may hereinafter be referred to collectively as the “PERIOD”.
		

		
			 
		

		
			4.2.       TERMINATION FOR CAUSE
		

		
			If (i) SELLER breaches any material term of this AGREEMENT, and fails to cure such breach as promptly as practicable but in any event within [*] of notice of such breach by BUYER; or (ii) SELLER becomes unable to pay its bills as they become due in the ordinary course, a trustee or receiver of SELLER’s property is appointed and has not been removed within [*] of such appointment, SELLER makes an assignment for the benefit of creditors, a petition in bankruptcy is filed by or against SELLER, which has not been withdrawn within [*] of such filing or SELLER terminates or liquidates its business; then BUYER is entitled to terminate this AGREEMENT at any reasonable time thereafter with immediate effect and without any penalty, liability or further obligation.  In the event that BUYER breaches any material term of this AGREEMENT, and fails to cure such breach as promptly as practicable but in any event within [*] of notice of such breach by SELLER, then SELLER is entitled to terminate this AGREEMENT at any reasonable time thereafter with immediate effect and without any penalty, liability or further obligation.
		

		
			 
		

		
			4.3.       OPTION TO TERMINATE
		

		
			Either PARTY may terminate this AGREEMENT at any time after March 31, 2021, with a minimum of [*] advance written notice to the other PARTY, for any reason whatsoever.  Following the notice of termination given under this Section 4.3, SELLER will fully cooperate with BUYER to facilitate the timely and orderly transition of production capability to BUYER or a third party designated by BUYER upon the effective date of termination.  In the event that BUYER desires technical or other assistance from SELLER following the effective date of termination hereunder, SELLER would make such assistance available at its standard rate for similar services.
		

		
			 
		

		
			4.4.       EFFECT OF TERMINATION
		

		
			Termination or expiration of this AGREEMENT shall not relieve either PARTY of any liability or obligation (including payment obligations for raw materials ordered in accordance with BUYER’s forecasts pursuant to Section 2.1 (iii) and for GOODS in accordance with accepted PURCHASE ORDERS pursuant to Section 2.2) it may have to the other arising out of, or related to, acts or omissions occurring prior to such termination or expiration. In case of termination or expiration of this AGREEMENT by BUYER, SELLER shall make available for BUYER’s immediate removal any of BUYER’s property then in the possession of SELLER or any of its subcontractors, or under SELLER’s or any of its subcontractors’ control. SELLER in no case shall be entitled to any payment, compensation or indemnity for loss of goodwill, anticipated sales or prospective profits, or because of expenditures, investments or other matters. Notwithstanding the foregoing, termination for SELLER’s uncured material breach according to Section 4.2 (i) shall not relieve BUYER of any liability or obligation for the payment of GOODS in accordance with BUYER’s accepted PURCHASE ORDERS subject to Section 2.5.
		

		
			 
		

		
			
		

		
			

		 

		

			6

		

		

			*Confidential Treatment Requested

		

 

		

		
			4.5.       BUYER’S OBLIGATIONS FOR UNSHIPPED GOODS AND MATERIALS
		

		
			In case of a change of the SPECIFICATIONS in accordance with Section 2.4:
		

		
			 
		

		
			4.5.1      BUYER will purchase any GOODS manufactured by SELLER in accordance with an accepted PURCHASE ORDER, unless BUYER demonstrates that such GOODS are i) not in conformance with the SPECIFICATIONS applicable at the time the PURCHASE ORDER has been accepted by SELLER or ii) not in compliance with the warranties under Section 5.1 or Section 5.2.
		

		
			 
		

		
			4.5.2      BUYER will purchase any FULL SERVICE MATERIALS that are purchased by SELLER in accordance with Section 2.1 (iii) and that can no longer be used in the manufacture of the GOODS as a result of the change of the SPECIFICATIONS at SELLER’s book value at the time of the CHANGE DATE.
		

		
			 
		

		
			5  REPRESENTATIONS, WARRANTIES AND OTHER OBLIGATIONS
		

		
			 
		

		
			5.1.       REPRESENTATIONS AND WARRANTIES RELATING TO THE GOODS
		

		
			SELLER represents and warrants that at the time when title passes to BUYER, and for [*] thereafter, the GOODS and any parts thereof (article(s), chemical or other component(s) or composition(s)):
		

		
			 
		

		
			(i)       are in full conformance with the SPECIFICATIONS;
		

		
			(ii)      are, to the best of SELLER’s knowledge, safe for BUYER’s intended use as tooth whitening strips;
		

		
			(iii)     are free from latent and patent defects; and
		

		
			(iv)     are in compliance with all applicable LAWS.
		

		
			 
		

		
			SELLER’s representations and warranties with respect to each DELIVERY of the GOODS shall survive as follows: (i) as to the GOODS themselves the representations and warranties set forth in Section 5.1(i) through (iv) shall survive for a period of [*] from DELIVERY; (ii) for GOODS incorporated into the product being produced by or for BUYER (“FINISHED PRODUCT”) within [*] of DELIVERY the representations and warranties set forth in Section 5.1(i) through (iv) will survive for [*] from DELIVERY; (iii) for the GOODS themselves not incorporated into products within [*] of DELIVERY or for the GOODS incorporated into FINISHED PRODUCT more than [*] after DELIVERY, only the warranty set forth in Section 5.1(iii) shall remain in effect and only as to latent defects. For warranty claims related to an asserted latent defect, BUYER shall have the burden of establishing that the defect existed as of DELIVERY of GOODS to BUYER, and that the GOODS have been stored in accordance with the applicable MSDS sheets for such GOODS.  For warranty claims that GOODS incorporated into FINISHED PRODUCT, are not in compliance with an applicable warranty, the BUYER shall first establish that the claimed defect is as to the GOODS and not some other aspect of the product. 
		

		
			 
		

		
			Any other of SELLER’s representations, warranties, covenants and other obligations set forth in this AGREEMENT shall be subject to all applicable statutes of limitation, similar statutes and other similar defenses provided by law or equity.  
		

		
			 
		

		
			5.2.       TITLE AND LIENS
		

		
			At the time when risk of loss passes to BUYER, SELLER will pass to BUYER good and marketable title to the GOODS, free and clear of all liens, claims, security interests, pledges, charges, mortgages, deeds of trusts, options, or other encumbrances of any kind (“LIENS”). 
		

		
			 
		

		
			5.3.       INTELLECTUAL PROPERTY RIGHTS
		

		
			Intellectual Property rights (as defined in the LICENSE AGREEMENT) shall continue to be exclusively governed by the LICENSE AGREEMENT.
		

		
			 
		

		
			

		 

		

			7

		

		

			*Confidential Treatment Requested

		

 

		

		
			 
		

		
			5.4.       PRODUCTION PROCESS AND/OR RAW MATERIAL CHANGES
		

		
			SELLER will not make any change to the raw and pack material feedstock, the production process, equipment or location(s) relating to the manufacturing of the GOODS without BUYER’s prior written consent, not to be unreasonably withheld or delayed. 
		

		
			 
		

		
			5.5.       MATERIAL, PRODUCT OR EQUIPMENT DISPOSAL
		

		
			If SELLER disposes any item, that is associated with BUYER’s products, other than manufacturing equipment, or that incorporates intellectual property owned by the BUYER (“BUYER’s IP RIGHTS”), then SELLER will ensure any such item is made unsalvageable and will not subcontract the disposal without prior written consent of BUYER.  SELLER is responsible for taking all reasonable steps to prevent the counterfeiting of BUYER’s products or the infringement of BUYER’s IP RIGHTS relating to SELLER’s performance under this AGREEMENT.  In addition, upon expiration or termination of this AGREEMENT, SELLER will provide BUYER with an inventory of any item or equipment that incorporates BUYER’s IP RIGHTS. Such inventory report will include the unique asset identification number; BUYER’s purchase order number; the purchase price; the current fair market value; and the specific location of each asset.
		

		
			 
		

		
			5.6.       CHILD LABOR AND FORCED LABOR
		

		
			SELLER will not employ children, prison labor, indentured labor, bonded labor or use corporal punishment or other forms of mental and physical coercion as a form of discipline. In the absence of any national or local law, an individual of less than 15 years of age is considered as a child. If local LAWS set the minimum age below 15 years of age, but is in accordance with exceptions under International Labor Organization Convention 138, the lower age will apply. BUYER is entitled to conduct unannounced inspections and appropriate audits of books and records of all of SELLER’s premises and any other premises employed in connection with SELLER’s performance under this AGREEMENT to verify SELLER’s compliance with this paragraph. 
		

		
			 
		

		
			5.7.       CORPORATE AUTHORITY
		

		
			Each PARTY represents and warrants that this AGREEMENT has been duly authorized, executed and delivered on its behalf and that this AGREEMENT does not conflict with any other agreement into which a respective PARTY has entered.  
		

		
			 
		

		
			5.8.       COMPLIANCE WITH LAWS
		

		
			 
		

		
			5.8.1     GENERAL COMPLIANCE WITH LAWS
		

		
			SELLER will and will cause any person or entity acting on its behalf to fully comply with all applicable governmental, legal, regulatory and professional requirements, including but not limited to anti-money laundering, anti-corruption and anti-bribery laws (including, without limitation, the Foreign Corrupt Practices Act, the UK Bribery Act and Proceeds of Crime Act, and commercial bribery laws) (collectively "LAWS").  Unless exempt, SELLER will (i) comply with (i) 41 CFR §§ 60-1.4(a), 60-300.5(a) and 60-741.5(a), prohibiting discrimination against (a) qualified individuals based on their status as protected veterans or individuals with disabilities, and (b) all individuals based on their race, color, religion, sex, sexual orientation, gender identification or national origin; (ii) in accordance with 41 CFR §§ 60-1.4(a), 60-300.5(a) and 60-741.5(a), take affirmative action to employ and advance in employment individuals without regard to race, color, religion, sex, sexual orientation, gender identification, national origin, protected veteran status or disability; and (iii) comply with 41 CFR § 61-300.10 regarding veterans’ employment reports and 29 CFR Part 471, Appendix A to Subpart A regarding posting a notice of employee rights.   SELLER will promptly notify BUYER if SELLER (i) receives any notice, demand, summons or complaint from any governmental or regulatory authority, agency or other body relating to the subject matter of this AGREEMENT, and will take all steps, at SELLER's expense, to resolve any issues as promptly as practicable or any request or demand in violation of the LAWS or (ii) violates any LAWS.
		

		
			 
		

		
			 
		

		
			

		 

		

			8

		

 

		

		
			 
		

		
			5.8.2     ANTI-CORRUPTION COMPLIANCE
		

		
			In addition to any other measures necessary to comply with LAWS as described above, SELLER will not and will ensure that any person or entity acting on its behalf will neither (i) offer to pay, pay, promise to pay, or authorize the payment of money or anything of value nor (ii) give or offer any “facilitating” or “grease” payments (i.e. payments given or offered in order to expedite or secure the performance of a routine government action) whether or not those payments may be considered lawful under the applicable anti-bribery laws to any (a) officer, employee or any person acting in an official capacity for or on behalf of a government or an entity owned or controlled by a government, or of a public international organization; or (b) political party or their officials; (c) candidate for a political office (“PUBLIC OFFICIAL”) in order to influence any act or decision of the PUBLIC OFFICIAL in his or her official capacity or to secure any other improper advantage in order to obtain or retain business or obtain any other business advantage. 
		

		
			 
		

		
			5.8.3 COMPLIANCE WITH INTERNATIONAL SANCTIONS
		

		
			SELLER represents and warrants that (i) SELLER has no direct or indirect ownership by any party that is subject to international sanctions imposed by the UN, EU or US whether by means of a designated list (including OFAC’s SDN list and the BIS lists) or otherwise; (ii) there is no management control of SELLER by any party that is subject to international sanctions imposed by the UN, EU or US whether by means of a designated list (including OFAC’s SDN list and the BIS lists) or otherwise; and (iii) SELLER has no activity with Iran.  SELLER represents and warrants that in the event of any change to any of the above, SELLER will inform BUYER in writing without undue delay, and in the event SELLER breaches any of the above representations and warranties, or fails to so notify BUYER of any change, BUYER may terminate this AGREEMENT with immediate effect and without any penalty, liability or other obligation.
		

		
			 
		

		
			5.9.       INSURANCE REQUIREMENTS
		

		
			SELLER will maintain insurance coverage as set forth in this Section 5.9 with underwriters having an A. M. Best rating of “A VIII” or better or an equivalent rating.  SELLER will provide BUYER with a copy of Certificate(s) of Insurance.  SELLER will cause its subcontractors to maintain reasonable insurance coverage.  All insurance policies will provide for a [*] prior written notice to BUYER in the event of termination, cancellation, non-renewal or a material change to SELLER’s insurance coverage.  All insurance policies are primary without right of contribution from any of BUYER’s insurance carriers.  SELLER is responsible for all deductibles relating to SELLER’s insurance coverage.
		

		
			SELLER will carry:
		

		
			 
		

		
			(1) Commercial General Liability [*] with a [*] and a [*];    
		

		
			 
		

		
			(2) Workers' Compensation or its equivalent covering injuries in the course of employment as required by the LAWS of the location where the work is performed, and if the work is performed in the United States of America, Employers' Liability coverage with a [*]; and
		

		
			 
		

		
			(3) Automobile Liability Insurance coverage with a [*], or as required by the LAWS of the location where SELLER uses owned or non-owned vehicles.
		

		
			 
		

		
			The Commercial General Liability and Automobile Liability policies will include BUYER, its parent, its AFFILIATEs and subsidiaries as additional insured to be stated explicitly on the Certificate(s) of Insurance.  To the extent legally permissible, SELLER hereby irrevocably and unconditionally waives and will cause its insurers to irrevocably and unconditionally waive any rights of subrogation for claims against BUYER, its parent, its AFFILIATEs and subsidiaries to be documented to BUYER’s satisfaction.
		

		
			 
		

		
			5.10.      OWNERSHIP OF INTELLECTUAL PROPERTY
		

		
			Intellectual Property ownership (as defined in the LICENSE AGREEMENT) shall continue to be exclusively governed by the LICENSE AGREEMENT.
		

		
			 
		

		
			
		

		
			

		 

		

			9

		

		

			*Confidential Treatment Requested

		

 

		

		
			6  INDEMNIFICATION
		

		
			 
		

		
			6.1.       SELLER'S INDEMNIFICATION OF BUYER
		

		
			SELLER shall, in addition to SELLER’s obligation to indemnify BUYER, its parent, its AFFILIATEs and subsidiaries and their respective agents, officers, directors and employees (“BUYER INDEMNITEE”) by law, in equity or otherwise, at its own expense, at BUYER’s option defend, indemnify and hold harmless BUYER INDEMNITEE from and against all third-party claims, allegations, demands, liabilities, obligations, charges, fines, losses, damages, penalties, interest, costs and expenses, including, without limitation, reasonable legal fees, experts’ fees, and expenses and any amounts paid in settlement (collectively “CLAIMS”), to the extent directly attributable to, arising from or relating to any of the following:  (i) SELLER’s breach of this AGREEMENT; (ii) gross negligence, bad faith, intentional or willful misconduct of SELLER or SELLER’s subcontractors or their respective employees or other representatives; or (iii) bodily injury, death or damage to personal property arising out of or relating to SELLER’s negligence in its performance under this AGREEMENT.
		

		
			 
		

		
			6.2.       INDEMNIFICATION PROCEDURE FOR THIRD PARTY CLAIMS
		

		
			Within [*] after BUYER’s determination (including but not limited to the identification of the root cause for a third party CLAIM) that a third party legal proceeding against BUYER INDEMNITEE may entitle the BUYER INDEMNITEE to seek indemnification under Section 6.1, BUYER will notify SELLER in writing. Upon BUYER’s request, and SELLER’s agreement that the matter is one for which it is responsible to indemnify BUYER INDEMNITEE, SELLER will assume, at its own expense, the defense of any such third party legal proceedings with reputable counsel reasonably acceptable to BUYER and is entitled to settle any such third party legal proceedings with BUYER’s prior written consent, not to be unreasonably withheld or delayed. BUYER, at SELLER’s cost, will reasonably cooperate with SELLER in the defense of such action as SELLER may reasonably request. SELLER will pay any damages assessed against BUYER INDEMNITEE in accordance with this AGREEMENT. For the avoidance of doubt, CLAIMS related to intellectual property infringement or misappropriation are subject to Section 6.3
		

		
			 
		

		
			6.3.       INTELLECTUAL PROPERTY INFRINGEMENT INDEMNIFICATION
		

		
			Intellectual Property (as defined in the LICENSE AGREEMENT) infringement (if any), and related indemnification (if any) by a PARTY including related procedures, shall continue to be exclusively governed by the LICENSE AGREEMENT. 
		

		
			 
		

		
			6.4.       INDEMNIFICATION PROCEDURE FOR THIRD PARTY INTELLECTUAL PROPERTY CLAIMS
		

		
			Indemnification Procedures for Third Party Claims (as defined in the LICENSE AGREEMENT) shall continue to be exclusively governed by the LICENSE AGREEMENT.
		

		
			 
		

		
			6.5.       LIABILITY OF PARTIES
		

		
			IN NO EVENT WILL EITHER PARTY BE LIABLE TO THE OTHER FOR LOSS OF PROFITS, OR INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES, WHETHER OR NOT FORESEEABLE, ARISING OUT OF THIS AGREEMENT IN EXCESS OF [*]; PROVIDED HOWEVER, THAT THE FOREGOING LIMITATION OF LIABILITY SHALL NOT APPLY TO (A) CLAIMS ARISING OUT OF OR RELATING TO BAD FAITH, GROSS NEGLIGENCE, INTENTIONAL OR WILLFUL MISCONDUCT OF A PARTY, ITS EMPLOYEES OR OTHER REPRESENTATIVES; (B) THIRD-PARTY CLAIMS, INCLUDING CLAIMS FOR PERSONAL INJURY OR PROPERTY DAMAGE; (C) ANY DAMAGES TO BUYER’S PERSONAL PROPERTY.
		

		
			 
		

		
			SELLER’s compliance with the Section 5.9 entitled INSURANCE REQUIREMENTS shall not relieve SELLER of any liability to BUYER arising under any other provision of this AGREEMENT except to the extent that such monies recovered are paid to BUYER to reduce SELLER’s obligations to BUYER. SELLER shall be liable for any and all deductibles it may incur in connection with any of the policies listed in the Section 5.9 entitled INSURANCE REQUIREMENTS.
		

		
			 
		

		
			
		

		
			

		 

		

			10

		

		

			 

		

		

			*Confidential Treatment Requested

		

 

		

		
			7  MISCELLANEOUS
		

		
			 
		

		
			7.1.       CONFIDENTIALITY
		

		
			Section 12 of the LICENSE AGREEMENT shall continue to apply to this AGREEMENT and its subject matter.
		

		
			 
		

		
			7.2.       PUBLIC DISCLOSURES
		

		
			Except as required by LAWS or with BUYER’s prior written consent, SELLER (i) will not disclose the existence or the terms and conditions of this AGREEMENT or the existence of a relationship between the PARTIES to any
		

		
			party, and (ii) will not use BUYER’s, its parents’, its AFFILIATES’ or subsidiaries’ corporate names or trademarks.
		

		
			 
		

		
			7.3.       FORCE MAJEURE
		

		
			Acts of God, fires, floods, weather, epidemics, war, or other cause(s), in each case that are beyond the reasonable control of a PARTY, not reasonably foreseeable, not caused by acts or omissions of the PARTY affected and that could not have been avoided through a work-around plan, which prevent SELLER from providing or procuring the GOODS, BUYER from receiving or using GOODS or either PARTY from performing under this AGREEMENT (“FORCE MAJEURE EVENT”), will suspend the affected PARTY’s respective obligations under this AGREEMENT during the period required to remove such FORCE MAJEURE EVENT.  The affected PARTY will promptly notify the other PARTY of the FORCE MAJEURE EVENT and its cause. If the affected PARTY is SELLER, then BUYER, upon notice of the FORCE MAJEURE EVENT is entitled to purchase the GOODS from other suppliers in which case the obligations of BUYER and SELLER under this AGREEMENT, if any will be reduced accordingly.  If the affected PARTY is SELLER and the period of the FORCE MAJEURE EVENT lasts longer than [*], then BUYER is entitled, at any time thereafter, while such FORCE MAJEURE EVENT continues, to terminate this AGREEMENT without any penalty, liability or further obligation therefore, immediately upon notice to the SELLER, or purchase the GOODS from other suppliers in which case the obligations, of BUYER and SELLER under this AGREEMENT, if any will be reduced accordingly.  If the affected PARTY is SELLER, then SELLER will allocate its supply of the GOODS to BUYER so that the percentage reduction in SELLER’s supply of Goods to BUYER is no greater than the overall percentage reduction in the total quantity of Goods that SELLER is able to supply as a result of the Force Majeure Event.  Upon BUYER’S request and upon timings requested by BUYER, SELLER will develop, test and then submit to BUYER for BUYER’s approval a supply assurance plan.
		

		
			 
		

		
			7.4.       ASSIGNMENT
		

		
			SELLER will not delegate, subcontract, transfer or assign this AGREEMENT or any of its rights or obligations, whether in whole or in part, without the prior written consent of BUYER, not to be unreasonably withheld or delayed.  In no case will SELLER delegate, subcontract, transfer or assign any of its obligations to any party that is subject to international sanctions imposed by the UN, EU or US whether by means of a designated list (including OFAC’s SDN list and the BIS lists) or otherwise.  Notwithstanding the foregoing, SELLER may assign this AGREEMENT in the event of a sale by SELLER of substantially all of its business to which this AGREEMENT relates without BUYER’s prior written consent except in the event that the buyer is any of the entities identified in Exhibit 7.4 hereto, which Exhibit may be amended from time to time to add or delete identified entities, or otherwise in accordance with Section 4.1.  Any assignment or transfer of this AGREEMENT, pursuant to the preceding sentences, by SELLER, or its successors or assigns, shall include a covenant in writing to BUYER by such assignee or successor agreeing to be bound by all of the terms and conditions of this AGREEMENT applicable to SELLER.  BUYER is entitled, without restriction, to delegate, subcontract, transfer or assign this AGREEMENT or any of its rights or obligations, whether in whole or in part, without the prior written consent of SELLER.  
		

		
			 
		

		
			7.5.       CHANGE IN CONTROL
		

		
			To the extent legally permissible, SELLER will provide BUYER reasonable notice in writing prior to any change in in control of SELLER (“CHANGE IN CONTROL”).  
		

		
			In case of a CHANGE IN CONTROL, BUYER is entitled to terminate this AGREEMENT, in whole or in part, without any penalty, liability or further obligation with [*] prior written notice to SELLER, and SELLER will provide reasonable transition services to BUYER.
		

		
			 
		

		
			 
		

		
			

		 

		

			11

		

		

			 

		

		

			*Confidential Treatment Requested

		

 

		

		
			 
		

		
			7.6.       INDEPENDENT CONTRACTOR STATUS
		

		
			The PARTIES are independent contractors with respect to each other, and nothing in this AGREEMENT will be construed to place the PARTIES in the relationship of partners, joint ventures, fiduciaries or agents.  Neither PARTY is granted any right or any authority to assume or to create an obligation or to bind the other PARTY.  SELLER will perform under this AGREEMENT with trained personnel and SELLER acknowledges that BUYER has no labor relationship with, right, power, authority or duty to select, hire, manage, discharge, supervise or direct any of SELLER’s employees, agents, subcontractors or their employees.  
		

		
			 
		

		
			7.7.        MODIFICATION AND WAIVER
		

		
			An amendment, modification, waiver, or discharge of this AGREEMENT is only valid if it is in writing and signed by an authorized representative of the PARTY against which such amendment, modification, waiver, or discharge is sought to be enforced and specifically references this Section 7.7.    No waiver of any breach, or the failure of a PARTY to enforce any of the terms of the AGREEMENT, will affect that PARTY’s right to enforce the terms of this AGREEMENT.  Any other modification, amendment or waiver of any provision of this AGREEMENT is null and void.
		

		
			 
		

		
			7.8.        ENTIRETY AND AGREEMENT PRECEDENCE
		

		
			This Agreement, which includes the schedules, exhibits, attachments and annexes attached hereto or incorporated by reference and made part of this AGREEMENT or subsequently incorporated in this Agreement, constitutes the entire understanding and agreement between the Parties regarding the manufacture and supply of GOODS and supersedes all prior or contemporaneous agreements, oral or written, made between the Parties relating to such subject matter. If there is a conflict between this AGREEMENT and any of the PARTIES’ PURCHASE ORDERS, releases, delivery schedules, invoices, general terms and conditions of trade and other similar preprinted forms that purport to govern the same matter as set forth in this AGREEMENT, then this AGREEMENT prevails, except as otherwise set forth in Section 7.7 entitled MODIFICATION AND WAIVER.  
		

		
			 
		

		
			7.9.        SEVERABILITY
		

		
			If any provision of this AGREEMENT is declared void, invalid or unlawful by any court or tribunal of competent jurisdiction, then such provision will be deemed severed from the remainder of this AGREEMENT and the balance will remain in full force and effect.  The PARTIES will undertake to replace such provision with valid and enforceable provisions, which, in their commercial effect, approximate as closely as possible the intentions of the PARTIES as expressed in the void, invalid or unlawful provision.
		

		
			 
		

		
			7.10.       NOTICES
		

		
			All notices will be given in writing or to the extent legally permissible signed facsimile or electronic copy and will be deemed received upon receipt by the following contacts:
		

		
			 
		

		
			SELLER:          Corium International, Inc,
		

		
			235 Constitution Drive
		

		
			Menlo Park, California 94025
		

		
			Attention: VP, Corporate Development.
		

		
			 
		

		
			BUYER:            Carlos Capmany
		

		
			The Procter & Gamble Manufacturing Company
		

		
			11520 Reed Hartman Highway
		

		
			Cincinnati, Ohio 45241.
		

		
			 
		

		
			7.11.       FACSIMILE AND ELECTRONIC SIGNATURES AND COPIES
		

		
			To the extent legally permissible, signed facsimile or an electronic copy of the signed AGREEMENT will bind the PARTIES to the same extent as original documents.  Each PARTY will not challenge the validity or enforceability of this AGREEMENT solely because the other PARTY provides only for a facsimile signature or an electronic signature.  Upon BUYER's request, the PARTIES will execute this AGREEMENT with physical signature(s) which will bind the PARTIES for the PERIOD even if executed after the EFFECTIVE DATE.
		

		
			 
		

		
			 
		

		
			

		 

		

			12

		

		

			 

		

 

		

		
			 
		

		
			7.12.       GOVERNING LAW, CONSTRUCTION AND LANGUAGE
		

		
			This AGREEMENT is governed by and interpreted for any and all purposes in accordance with the internal laws of the State of New York, applicable to contracts made and to be performed wholly within such state, without reference to principles of conflicts of laws.  The courts sitting in, or having principal jurisdiction over the State of New York have exclusive jurisdiction of all disputes under this AGREEMENT and the PARTIES agree that such court is the proper forum for the determination of any dispute arising out of or relating to this AGREEMENT.  The PARTIES irrevocably agree that service of process upon it by certified mail-return receipt requested, addressed to it at its address set forth on the Section 7.10, will constitute good and effective service for all purposes.
		

		
			If this AGREEMENT is translated, the English language version will govern.  The application of the United Nations Convention on International Sale of Goods and/or the Sales of Goods Act (Ontario, Canada) is explicitly excluded.  No trade usage will be used to explain or supplement this AGREEMENT.  
		

		
			 
		

		
			7.13.       SURVIVAL PROVISIONS
		

		
			The expiration or termination of this AGREEMENT will not affect the terms of this AGREEMENT that expressly provide that they will survive expiration or termination or which out of necessity must survive expiration or termination.
		

		
			 
		

		
			7.14.       INSPECTION AND AUDIT RIGHTS OF THE BUYER
		

		
			BUYER may, upon [*] prior written notice, request in writing and SELLER, will permit its books and records directly related to amounts invoiced, paid, or due under this AGREEMENT, to be examined, no more than once in any [*] period, except in the case of a serious incident requiring an immediate inspection and audit, during normal business hours, by an independent auditor appointed by BUYER and reasonably acceptable to SELLER, to verify the accuracy of the invoices or payments pursuant to this AGREEMENT.  Any such audit shall be at BUYER’S expense unless the audit reveals overcharges from SELLER to BUYER which are greater than [*] of what the correct charges would have been in which case SELLER will reimburse BUYER for the costs of such audit.  If the audit reveals any overpayment for GOODS, SELLER will reimburse BUYER for such overpayment within [*] of completion of the audit, and if the audit reveals any underpayment for GOODS, BUYER will pay any shortfall within [*] of the completion of such audit.  Any information provided by SELLER in connection with any audit shall be considered Confidential Information (as defined in the LICENSE AGREEMENT) of SELLER.
		

		
			 
		

		
			7.15.       EXCLUSIVITY
		

		
			Exclusivity (as defined in the LICENSE AGREEMENT) shall continue to be exclusively governed by the LICENSE AGREEMENT.
		

		
			 
		

		
			BUYER and SELLER have caused their respective duly authorized representatives to execute this AGREEMENT, acting as agent(s) as set forth herein.
		

		
			 
		

			
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						BUYER:  The Procter & Gamble Manufacturing Company

					
					
						 

					
					
						SELLER:  Corium International

				
	
					
						 

					
					
						 

					
					
						 

				
	
					
						By:

					
					
						/s/ Ana Elena Marziano

					
					
						 

					
					
						By:

					
					
						/s/ Christina Dickerson

				
	
					
						Printed Name: Ana Elena Marziano

					
					
						 

					
					
						Printed Name: Christina Dickerson

				
	
					
						 

					
					
						 

					
					
						 

				
	
					
						DATE:  April 25, 2017

					
					
						 

					
					
						DATE:  April 25, 2017

					
						 

					
						 

				

		
			 
		

		
			
		

		
			

		 

		

			13

		

		

			 

		

		

			*Confidential Treatment Requested

		

 

		

		
			EXHIBIT 2.1 – GOODS
		

		
			 
		

		
			 
		

			
					
						 

					
					
						 

					
					
						 

				
	
					
						BUYER’s
Material Code
(“GCAS”)

					
					
						SELLER’s
Material
Code

					
					
						Description

				
	
					
						[*]

					
					
						[*]

					
					
						[*]

				
	
					
						[*]

					
					
						[*]

					
					
						[*]

				
	
					
						[*]

					
					
						[*]

					
					
						[*]

				
	
					
						[*]

					
					
						[*]

					
					
						[*]

				
	
					
						[*]

					
					
						[*]

					
					
						[*]

				
	
					
						[*]

					
					
						[*]

					
					
						[*]

				

		
			 
		

		
			
		

		
			

		 

		

			14

		

		

			 

		

		

			*Confidential Treatment Requested

		

 

		

		
			EXHIBIT 3.1 – PRICE
		

		
			 
		

		
			Pricing for 5/1/2017 to 4/30/2018 ([*])*
		

		
			 
		

			
					
						Pricing Tier

					
					
						Volume Tier

					
						 

					
						Meters Ordered
(Feet Ordered)
[*] Average

					
					
						Price per Meter 

				
	
					
						[*]

					
						 

					
						[*]

					
						[*]

					
						 

					
						[*]

					
						[*]

					
					
						[*]

					
						 

					
						[*]

					
						[*]

					
						 

					
						[*]

					
						[*]

					
						 

					
						[*]

					
						[*]

					
					
						[*]

					
						 

					
						[*]

					
						[*]

					
						 

				
	
					
						[*]

					
					
						[*]

					
						[*]

					
					
						[*]

					
					
						[*]

					
					
						[*]

				
	
					
						[*]

					
					
						[*]

					
						[*]

					
					
						[*]

					
					
						[*]

					
					
						[*]

				
	
					
						[*]

					
					
						[*]

					
						[*]

					
					
						[*]

					
					
						[*]

					
					
						[*]

				
	
					
						[*]

					
					
						[*]

					
						[*]

					
					
						[*]

				

		
			*[*]
		

		
			[*]
		

		
			[*]
		

		
			[*]
		

		
			[*]
		

		
			[*]
		

		
			[*]
		

		
			
		

		
			

		 

		

			15

		

		

			 

		

		

			*Confidential Treatment Requested

		

 

		

		
			Pricing for 5/1/2018 to 3/31/2022 ([*])*
		

		
			 
		

			
					
						Pricing Tier

					
					
						Volume Tier

					
						 

					
						Meters Ordered
(Feet Ordered)
[*] Average

					
					
						Price per Meter

				
	
					
						 

					
					
						[*]

					
						 

					
						[*]

					
						[*]

					
						 

					
						[*]

					
						[*]

					
					
						[*]

					
						 

					
						[*]

					
						[*]

					
						 

					
						[*]

					
						[*]

					
						 

					
						[*]

					
						[*]

					
					
						[*]

					
						 

					
						[*]

					
						[*]

					
						 

				
	
					
						[*]

					
					
						[*]

					
						[*]

					
					
						[*]

					
					
						[*]

					
					
						[*]

				
	
					
						[*]

					
					
						[*]

					
						[*]

					
					
						[*]

					
					
						[*]

					
					
						[*]

				
	
					
						[*]

					
					
						[*]

					
						[*]

					
					
						[*]

					
					
						[*]

					
					
						[*]

				
	
					
						[*]

					
					
						[*]

					
						[*]

					
					
						[*]

					
					
						[*]

					
					
						[*]

				

		
			*[*]
		

		
			 
		

		
			[*]
		

		
			[*]
		

		
			[*]
		

		
			[*]
		

		
			[*]
		

		
			[*]
		

		
			
		

		
			

		 

		

			16

		

		

			 

		

		

			*Confidential Treatment Requested

		

 

		

		
			EXHIBIT 7.4 – ASSIGNEES REQUIRING CONSENT
		

		
			 
		

		
			 
		

		
			[*]
		

		
			[*]
		

		
			[*]
		

		
			[*]
		

		
			[*]
		

		
			[*]
		

		
			[*]
		

		
			 
		

		
			 
		

		
			

		 

		

			17

		

		

			 

		

		

			*Confidential Treatment Requested

		

 

		

		
			AMENDMENT
		

		
			 
		

		
			This amendment to the AGREEMENT ("AMENDMENT") is entered into by and between The Procter & Gamble Manufacturing Company, One Procter &  Gamble Plaza, Cincinnati, Ohio 45202, United States of America ("BUYER"), and Corium International, Inc., 235 Constitution Drive, Menlo Park, California 94025, United States of America ("SELLER").
		

		
			 
		

		
			BUYER and SELLER previously entered into a purchase agreement ("AGREEMENT") dated as of May 1, 2017. BUYER and SELLER wish to amend the AGREEMENT as set forth in this AMENDMENT.
		

		
			 
		

		
			Now, therefore,  for good and valuable consideration,  the receipt and sufficiency of which are hereby acknowledged, BUYER and SELLER agree as follows:
		

		
			 
		

		
			1.  AMENDMENT
		

		
			The AGREEMENT is amended as follows:
		

		
			 
		

		
			Section 1.01.
		

		
			Section 4.3 of the AGREEMENT is deleted and hereby replaced with the following section:
		

		
			 
		

		
			OPTION TO TERMINATE
		

		
			Either PARTY may terminate this AGREEMENT with a minimum of [*] advance written notice, and such notice may be given at any time after March 31, 2021, to the other PARTY,  for any reason whatsoever. Following the notice of termination given under this Section 4.3, SELLER will fully cooperate with BUYER to facilitate the timely and orderly transition of production capability to BUYER or a third party designated by BUYER upon the effective date of termination.  In the event that BUYER desires technical or other assistance from SELLER following the effective date of termination hereunder, SELLER would make such assistance available at its standard rate for similar services.
		

		
			 
		

		
			2.  RATIFICATION
		

		
			BUYER and SELLER hereby ratify the AGREEMENT and affirm that, except as expressly amended by this AMENDMENT, the AGREEMENT will continue in full force and effect in accordance with the terms and conditions.  Capitalized terms used in this AMENDMENT but not defined herein will have the meaning given in the AGREEMENT.
		

		
			 
		

		
			3.  GOVERNING LAW
		

		
			This AMENDMENT will be governed by and construed in accordance with the laws governing the AGREEMENT.
		

		
			 
		

		
			IN WITNESS WHEREOF the PARTIES hereto have entered into this AMENDMENT effective as of May 5, 2017.
		

		
			 
		

			
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						BUYER:  The Procter & Gamble Manufacturing Company

					
					
						 

					
					
						SELLER:  Corium International, Inc.

				
	
					
						 

					
					
						 

					
					
						 

				
	
					
						By:

					
					
						/s/ Scott Kadish

					
					
						 

					
					
						By:

					
					
						/s/ Christina Dickerson

				
	
					
						Printed Name: Scott Kadish

					
					
						 

					
					
						Printed Name: Christina Dickerson

				
	
					
						 

					
					
						 

					
					
						 

				
	
					
						DATE:  May 11, 2017

					
					
						 

					
					
						DATE:  May 11, 2017

				

		
			 
		

		 

		

			*Confidential Treatment RequestedSECURITY
AGREEMENT

 

This
SECURITY AGREEMENT, dated as of May ____, 2017 (this “Agreement”), is among Advanced Medical Isotope Corporation,
a Delaware corporation (the “Debtor”) and each holder of the Debtor’s 7.5% Original Issue Discount Senior
Secured Convertible Debenture due twelve months following its issuance, in the original aggregate principal amount of $___________
(the “Debenture”) signatory hereto, its endorsees, transferees and assigns (collectively, the “Secured
Parties”), which Secured Parties as of the date hereof are set forth on Schedule SP attached hereto.

 

W
I T N E S S E T H:

 

WHEREAS,
pursuant to the Exchange Agreement (as defined in the Debenture), the Secured Parties have severally agreed to extend the loans
to the Debtor evidenced by the Debenture; and

 

WHEREAS,
in order to induce the Secured Parties to extend the loans evidenced by the Debenture, the Debtor has agreed to execute and deliver
to the Secured Parties this Agreement and to grant the Secured Parties, pari passu with each other Secured Party (and also
pari passu with the holders of certain 7.5% Original Issue Discount Senior Secured Convertible Debenture issued by the Debtor
on or about May __, 2017 pursuant to a securities purchase agreement (hereinafter, referred to as “Additional Secured
Parties”)) and through the Agent (as defined in Section 18 hereof), a security interest in certain property of the Debtor
to secure the prompt payment, performance and discharge in full of all of the Debtor’s obligations under the Debenture.

 

NOW,
THEREFORE, in consideration of the agreements herein contained and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows:

 

1.       Certain
Definitions. As used in this Agreement, the following terms shall have the meanings set forth in this Section 1. Terms used
but not otherwise defined in this Agreement that are defined in Article 9 of the UCC (such as “account”, “chattel
paper”, “commercial tort claim”, “deposit account”, “document”, “equipment”,
“fixtures”, “general intangibles”, “goods”, “instruments”, “inventory”,
“investment property”, “letter-of-credit rights”, “proceeds” and “supporting obligations”)
shall have the respective meanings given such terms in Article 9 of the UCC.

 

(a)       “Collateral”
means the collateral in which the Agent on behalf of the Secured Parties is granted a security interest by this Agreement and
which shall include the following personal property of the Debtor, whether presently owned or existing or hereafter acquired or
coming into existence, wherever situated, and all additions and accessions thereto and all substitutions and replacements thereof,
and all proceeds, products and accounts thereof, including, without limitation, all proceeds from the sale or transfer of the
Collateral and of insurance covering the same and of any tort claims in connection therewith:

 

    	1 

    	 

    

 

(i)       All
goods, including, without limitation, (A) all machinery, equipment, computers, motor vehicles, trucks, tanks, boats, ships, appliances,
furniture, special and general tools, fixtures, test and quality control devices and other equipment of every kind and nature
and wherever situated, together with all documents of title and documents representing the same, all additions and accessions
thereto, replacements therefor, all parts therefor, and all substitutes for any of the foregoing and all other items used and
useful in connection with any Debtor’s businesses and all improvements thereto; and (B) all inventory;

 

(ii)       All
contract rights and other general intangibles, including, without limitation, all partnership interests, membership interests,
stock or other securities, rights under any of the Organizational Documents, licenses, distribution and other agreements, computer
software (whether “off-the-shelf”, licensed from any third party or developed by the Debtor), computer software development
rights, leases, franchises, customer lists, quality control procedures, grants and rights, goodwill, Intellectual Property and
income tax refunds;

 

(iii)       All
accounts, together with all instruments, all documents of title representing any of the foregoing, all rights in any merchandising,
goods, equipment, motor vehicles and trucks which any of the same may represent, and all right, title, security and guaranties
with respect to each account, including any right of stoppage in transit;

 

 (iv)        All documents, letter-of-credit rights, instruments and chattel paper;

 

 (v)         All commercial tort claims;

 

(vi)        All
deposit accounts and all cash (whether or not deposited in such deposit accounts);

 

 (vii)       All investment property;

 

 (viii)      All supporting obligations; and

 

(ix)        All
files, records, books of account, business papers, and computer programs; and

 

(x)         the
products and proceeds of all of the foregoing Collateral set forth in clauses (i)-(ix) above.

 

Without
limiting the generality of the foregoing, the “Collateral” shall include any shares of capital stock and/or
other equity interests of any other direct or indirect subsidiary, whether now in existence or formed in the future, of the Debtor,
and all certificates representing such shares and/or equity interests and all rights, options, warrants, stock, other securities
and/or equity interests that may hereafter be received, receivable or distributed in respect of, or exchanged for, any of the
foregoing and all rights arising under or in connection with the such securities, including, but not limited to, all dividends,
interest and cash.

 

    	2 

    	 

    

 

Notwithstanding
the foregoing, nothing herein shall be deemed to constitute an assignment of any asset which, in the event of an assignment, becomes
void by operation of applicable law or the assignment of which is otherwise prohibited by applicable law (in each case to the
extent that such applicable law is not overridden by Sections 9-406, 9-407 and/or 9-408 of the UCC or other similar applicable
law); provided, however, that to the extent permitted by applicable law, this Agreement shall create a valid security
interest in such asset and, to the extent permitted by applicable law, this Agreement shall create a valid security interest in
the proceeds of such asset.

 

(b)       “Intellectual
Property” means the collective reference to all rights, priorities and privileges relating to intellectual property,
whether arising under United States, multinational or foreign laws or otherwise, including, without limitation, (i) all copyrights
arising under the laws of the United States, any other country or any political subdivision thereof, whether registered or unregistered
and whether published or unpublished, all registrations and recordings thereof, and all applications in connection therewith,
including, without limitation, all registrations, recordings and applications in the United States Copyright Office, (ii) all
letters patent of the United States, any other country or any political subdivision thereof, all reissues and extensions thereof,
and all applications for letters patent of the United States or any other country and all divisions, continuations and continuations-in-part
thereof, (iii) all trademarks, trade names, corporate names, company names, business names, fictitious business names, trade dress,
service marks, logos, domain names and other source or business identifiers, and all goodwill associated therewith, now existing
or hereafter adopted or acquired, all registrations and recordings thereof, and all applications in connection therewith, whether
in the United States Patent and Trademark Office or in any similar office or agency of the United States, any State thereof or
any other country or any political subdivision thereof, or otherwise, and all common law rights related thereto, (iv) all trade
secrets arising under the laws of the United States, any other country or any political subdivision thereof, (v) all rights to
obtain any reissues, renewals or extensions of the foregoing, (vi) all licenses for any of the foregoing, and (vii) all causes
of action for infringement of the foregoing.

 

(c)       “Majority
in Interest” means, at any time of determination, the majority in interest (based on then-outstanding principal amount
of the Debenture at the time of such determination) of the Secured Parties.

 

(d)       “Necessary
Endorsement” means undated stock powers endorsed in blank or other proper instruments of assignment duly executed and
such other instruments or documents as the Agent (as that term is defined below) may reasonably request.

 

    	3 

    	 

    

 

(e)       “Obligations”
means all of the liabilities and obligations (primary, secondary, direct, contingent, sole, joint or several) due or to become
due, or that are now or may be hereafter contracted or acquired, or owing to, of the Debtor to the Secured Parties, including,
without limitation, all obligations under this Agreement, the Debenture and any other instruments, agreements or other documents
executed and/or delivered in connection herewith or therewith, in each case, whether now or hereafter existing, voluntary or involuntary,
direct or indirect, absolute or contingent, liquidated or unliquidated, whether or not jointly owed with others, and whether or
not from time to time decreased or extinguished and later increased, created or incurred, and all or any portion of such obligations
or liabilities that are paid, to the extent all or any part of such payment is avoided or recovered directly or indirectly from
any of the Secured Parties as a preference, fraudulent transfer or otherwise as such obligations may be amended, supplemented,
converted, extended or modified from time to time. Without limiting the generality of the foregoing, the term “Obligations”
shall include, without limitation: (i) principal of, and interest on the Debenture and the loans extended pursuant thereto; (ii)
any and all other fees, indemnities, costs, obligations and liabilities of the Debtor from time to time under or in connection
with this Agreement, the Debenture and any other instruments, agreements or other documents executed and/or delivered in connection
herewith or therewith; and (iii) all amounts (including but not limited to post-petition interest) in respect of the foregoing
that would be payable but for the fact that the obligations to pay such amounts are unenforceable or not allowable due to the
existence of a bankruptcy, reorganization or similar proceeding involving the Debtor.

 

(f)       “Organizational
Documents” means with respect to the Debtor, the documents by which the Debtor was organized (such as a certificate
of incorporation, certificate of limited partnership or articles of organization, and including, without limitation, any certificates
of designation for preferred stock or other forms of preferred equity) and which relate to the internal governance of the Debtor
(such as bylaws, a partnership agreement or an operating, limited liability or members agreement).

 

(g)       “Pledged
Interests” shall have the meaning ascribed to such term in Section 4(i).

 

(h)       “UCC”
means the Uniform Commercial Code of the State of New York and or any other applicable law of any state or states which has jurisdiction
with respect to all, or any portion of, the Collateral or this Agreement, from time to time. It is the intent of the parties that
defined terms in the UCC should be construed in their broadest sense so that the term “Collateral” will be construed
in its broadest sense. Accordingly if there are, from time to time, changes to defined terms in the UCC that broaden the definitions,
they are incorporated herein and if existing definitions in the UCC are broader than the amended definitions, the existing ones
shall be controlling.

 

2.       Grant
of Security Interest in Collateral. As an inducement for the Secured Parties to extend the loans as evidenced by the Debenture
and to secure the complete and timely payment, performance and discharge in full, as the case may be, of all of the Obligations,
the Debtor hereby unconditionally and irrevocably pledges, grants and hypothecates to the Agent, on behalf of the Secured Parties,
a security interest in and to, a lien upon and a right of set-off against all of their respective right, title and interest of
whatsoever kind and nature in and to, the Collateral (a “Security Interest” and, collectively, the “Security
Interests”).

 

    	4 

    	 

    

 

3.       Delivery
of Certain Collateral. Contemporaneously or prior to the execution of this Agreement, the Debtor shall deliver or cause to
be delivered to the Agent any and all certificates and other instruments or documents representing any of the other Collateral,
in each case, together with all Necessary Endorsements.

 

4.       Representations,
Warranties, Covenants and Agreements of the Debtor. Except as set forth under the corresponding section of the disclosure
schedules delivered to the Secured Parties concurrently herewith (the “Disclosure Schedules”), which Disclosure
Schedules shall be deemed a part hereof, the Debtor represents and warrants to, and covenants and agrees with, the Secured Parties
as follows:

 

(a)       The
Debtor has the requisite corporate, partnership, limited liability company or other power and authority to enter into this Agreement
and otherwise to carry out its obligations hereunder. The execution, delivery and performance by the Debtor of this Agreement
and the filings contemplated therein have been duly authorized by all necessary corporate action on the part of the Debtor and
no further action is required by the Debtor. This Agreement has been duly executed by the Debtor. This Agreement constitutes the
legal, valid and binding obligation of the Debtor, enforceable against the Debtor in accordance with its terms except as such
enforceability may be limited by applicable bankruptcy, insolvency, reorganization and similar laws of general application relating
to or affecting the rights and remedies of creditors and by general principles of equity.

 

(b)       The
Debtor has no place of business or offices where their respective books of account and records are kept (other than temporarily
at the offices of its attorneys or accountants) or places where Collateral is stored or located, except as set forth on Schedule
A attached hereto. Except as specifically set forth on Schedule A, the Debtor is the record owner of the real property
where such Collateral is located, and there exist no mortgages or other liens on any such real property except for Permitted Liens
(as defined in the Debenture). Except as disclosed on Schedule A, none of such Collateral is in the possession of any consignee,
bailee, warehouseman, agent or processor.

 

(c)       Except
for Permitted Liens (as defined in the Debenture) and except as set forth on Schedule B attached hereto, the Debtor is
the sole owner of the Collateral (except for non-exclusive licenses granted by any Debtor in the ordinary course of business),
free and clear of any liens, security interests, encumbrances, rights or claims, and are fully authorized to grant the Security
Interests. Except as set forth on Schedule C attached hereto, there is not on file in any governmental or regulatory authority,
agency or recording office an effective financing statement, security agreement, license or transfer or any notice of any of the
foregoing (other than those that will be filed in favor of the Secured Parties pursuant to this Agreement) covering or affecting
any of the Collateral. Except as set forth on Schedule C attached hereto and except pursuant to this Agreement, as long
as this Agreement shall be in effect, the Debtor shall not execute and shall not knowingly permit to be on file in any such office
or agency any other financing statement or other document or instrument (except to the extent filed or recorded in favor of the
Secured Parties pursuant to the terms of this Agreement).

 

    	5 

    	 

    

 

(d)       No
written claim has been received that any Collateral or the Debtor’s use of any Collateral violates the rights of any third
party. There has been no adverse decision to the Debtor’s claim of ownership rights in or exclusive rights to use the Collateral
in any jurisdiction or to the Debtor’s right to keep and maintain such Collateral in full force and effect, and there is
no proceeding involving said rights pending or, to the best knowledge of the Debtor, threatened before any court, judicial body,
administrative or regulatory agency, arbitrator or other governmental authority.

 

(e)       The
Debtor shall at all times maintain its books of account and records relating to the Collateral at its principal place of business
and its Collateral at the locations set forth on Schedule A attached hereto and may not relocate such books of account
and records or tangible Collateral unless it delivers to the Secured Parties at least 30 days prior to such relocation (i) written
notice of such relocation and the new location thereof (which must be within the United States) and (ii) evidence that appropriate
financing statements under the UCC and other necessary documents have been filed and recorded and other steps have been taken
to perfect the Security Interests to create in favor of the Agent, on behalf of the Secured Parties, a valid, perfected and continuing
perfected first priority lien in the Collateral.

 

(f)       This
Agreement creates in favor of the Agent, on behalf of the Secured Parties, a valid security interest in the Collateral, subject
only to Permitted Liens (as defined in the Debenture) securing the payment and performance of the Obligations. Upon making the
filings described in the immediately following paragraph, all security interests created hereunder in any Collateral which may
be perfected by filing Uniform Commercial Code financing statements shall have been duly perfected. Except for the filing of the
Uniform Commercial Code financing statements referred to in the immediately following paragraph, the recordation of the Intellectual
Property Security Agreement (as defined in Section 4(p) hereof) with respect to copyrights and copyright applications in the United
States Copyright Office referred to in paragraph (mm), the execution by all applicable parties and delivery of deposit account
control agreements satisfying the requirements of Section 9-104(a)(2) of the UCC with respect to each deposit account of the Debtor,
and the delivery of the certificates and other instruments provided in Section 3, no action is necessary to create, perfect or
protect the security interests created hereunder. Without limiting the generality of the foregoing, except for the filing of said
financing statements, the recordation of said Intellectual Property Security Agreement, and the execution and delivery of said
deposit account control agreements, no consent of any third parties and no authorization, approval or other action by, and no
notice to or filing with, any governmental authority or regulatory body is required for (i) the execution, delivery and performance
of this Agreement, (ii) the creation or perfection of the Security Interests created hereunder in the Collateral or (iii) the
enforcement of the rights of the Agent and the Secured Parties hereunder.

 

    	6 

    	 

    

 

(g)       The
Debtor hereby authorizes the Agent to file one or more financing statements under the UCC, with respect to the Security Interests,
with the proper filing and recording agencies in any jurisdiction deemed proper by it.

 

(h)       The
execution, delivery and performance of this Agreement by the Debtor does not (i) violate any of the provisions of any Organizational
Documents of the Debtor or any judgment, decree, order or award of any court, governmental body or arbitrator or any applicable
law, rule or regulation applicable to the Debtor or (ii) conflict with, or constitute a default (or an event that with notice
or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or
cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing
the Debtor’s debt or otherwise) or other understanding to which the Debtor is a party or by which any property or asset
of the Debtor is bound or affected. If any, all required consents (including, without limitation, from stockholders or creditors
of the Debtor) necessary for the Debtor to enter into and perform its obligations hereunder have been obtained.

 

(i)       The
ownership and other equity interests in partnerships and limited liability companies (if any) included in the Collateral (the
“Pledged Interests”) by their express terms do not provide that they are securities governed by Article 8 of
the UCC and are not held in a securities account or by any financial intermediary.

 

(j)       Except
for Permitted Liens (as defined in the Debenture), the Debtor shall at all times maintain the liens and Security Interests provided
for hereunder as valid and perfected first priority liens and security interests in the Collateral in favor of the Agent, on behalf
of the Secured Parties, until this Agreement and the Security Interest hereunder shall be terminated pursuant to Section 14 hereof.
The Debtor hereby agrees to defend the same against the claims of any and all persons and entities. The Debtor shall safeguard
and protect all Collateral for the account of the Agent, on behalf of the Secured Parties. At the request of the Agent, the Debtor
will sign and deliver to the Agent on behalf of the Secured Parties at any time or from time to time one or more financing statements
pursuant to the UCC in form reasonably satisfactory to the Agent and will pay the cost of filing the same in all public offices
wherever filing is, or is deemed by the Agent to be, necessary or desirable to effect the rights and obligations provided for
herein. Without limiting the generality of the foregoing, the Debtor shall pay all fees, taxes and other amounts necessary to
maintain the Collateral and the Security Interests hereunder, and the Debtor shall obtain and furnish to the Agent from time to
time, upon demand, such releases and/or subordinations of claims and liens which may be required to maintain the priority of the
Security Interests hereunder.

 

(k)       The
Debtor will not transfer, pledge, hypothecate, encumber, license, sell or otherwise dispose of any of the Collateral (except for
non-exclusive licenses granted by the Debtor in its ordinary course of business and sales of inventory by the Debtor in its ordinary
course of business) without the prior written consent of the Agent.

 

    	7 

    	 

    

 

(l)       The
Debtor shall keep and preserve its equipment, inventory and other tangible Collateral in good condition, repair and order and
shall not operate or locate any such Collateral (or cause to be operated or located) in any area excluded from insurance coverage.

 

(m)       The
Debtor shall maintain with financially sound and reputable insurers, insurance with respect to the Collateral, including
Collateral hereafter acquired, against loss or damage of the kinds and in the amounts customarily insured against by entities
of established reputation having similar properties similarly situated and in such amounts as are customarily carried under
similar circumstances by other such entities and otherwise as is prudent for entities engaged in similar businesses but in
any event sufficient to cover the full replacement cost thereof. The Debtor shall cause each insurance policy issued in
connection herewith to provide, and the insurer issuing such policy to certify to the Agent, that (a) the Agent will be named
as lender loss payee and additional insured under each such insurance policy; (b) if such insurance be proposed to be
cancelled or materially changed for any reason whatsoever, such insurer will promptly notify the Agent and such cancellation
or change shall not be effective as to the Agent for at least thirty (30) days after receipt by the Agent of such notice,
unless the effect of such change is to extend or increase coverage under the policy; and (c) the Agent will have the right
(but no obligation) at its election to remedy any default in the payment of premiums within thirty (30) days of notice from
the insurer of such default. If no Event of Default (as defined in the Debenture) exists and if the proceeds arising out of
any claim or series of related claims do not exceed $100,000, loss payments in each instance will be applied by the
Debtor to the repair and/or replacement of property with respect to which the loss was incurred to the extent reasonably
feasible, and any loss payments or the balance thereof remaining, to the extent not so applied, shall be payable to the
Debtor; provided, however, that payments received by the Debtor after an Event of Default occurs and is
continuing or in excess of $100,000 for any occurrence or series of related occurrences shall be paid to the Agent on behalf
of the Secured Parties and, if received by the Debtor, shall be held in trust for the Secured Parties and immediately paid
over to the Agent unless otherwise directed in writing by the Agent. Copies of such policies or the related certificates, in
each case, naming the Agent as lender loss payee and additional insured shall be delivered to the Agent at least annually and
at the time any new policy of insurance is issued.

 

(n)       The
Debtor shall, within ten (10) days of obtaining knowledge thereof, advise the Secured Parties promptly, in sufficient detail,
of any material adverse change in the Collateral, and of the occurrence of any event which would have a material adverse effect
on the value of the Collateral or on the Secured Parties’ security interest, through the Agent, therein.

 

    	8 

    	 

    

 

(o)       The
Debtor shall promptly execute and deliver to the Agent such further deeds, mortgages, assignments, security agreements, financing
statements or other instruments, documents, certificates and assurances and take such further action as the Agent may from time
to time request and may in its sole discretion deem necessary to perfect, protect or enforce the Agent’s security interest
in the Collateral including, without limitation, if applicable, the execution and delivery of a separate security agreement with
respect to the Debtor’s Intellectual Property (“Intellectual Property Security Agreement”) in which the
Agent, on behalf of the Secured Parties, has been granted a security interest hereunder, substantially in a form reasonably acceptable
to the Agent, which Intellectual Property Security Agreement, other than as stated therein, shall be subject to all of the terms
and conditions hereof.

 

(p)       The
Debtor shall permit the Agent and its representatives and agents to inspect the Collateral during normal business hours and upon
reasonable prior notice, and to make copies of records pertaining to the Collateral as may be reasonably requested by the Agent
from time to time.

 

(q)       The
Debtor shall take all steps reasonably necessary to diligently pursue and seek to preserve, enforce and collect any rights, claims,
causes of action and accounts receivable in respect of the Collateral.

 

(r)       The
Debtor shall promptly notify the Secured Parties in sufficient detail upon becoming aware of any attachment, garnishment, execution
or other legal process levied against any Collateral and of any other information received by the Debtor that may materially affect
the value of the Collateral, the Security Interest or the rights and remedies of the Agent or the Secured Parties hereunder.

 

(s)       All
information heretofore, herein or hereafter supplied to the Secured Parties by or on behalf of the Debtor with respect to the
Collateral is accurate and complete in all material respects as of the date furnished.

 

(t)       The
Debtor shall at all times preserve and keep in full force and effect their respective valid existence and good standing and any
rights and franchises material to its business.

 

(u)       The
Debtor will not change its name, type of organization, jurisdiction of organization, organizational identification number (if
it has one), legal or corporate structure, or identity, or add any new fictitious name unless it provides at least 30 days prior
written notice to the Secured Parties of such change and, at the time of such written notification, the Debtor provides any financing
statements or fixture filings necessary to perfect and continue the perfection of the Security Interests granted and evidenced
by this Agreement.

 

(v)       Except
in the ordinary course of business, the Debtor may not consign any of its inventory or sell any of its inventory on bill and hold,
sale or return, sale on approval, or other conditional terms of sale without the consent of the Agent which shall not be unreasonably
withheld.

 

    	9 

    	 

    

 

(w)       The
Debtor may not relocate its chief executive office to a new location without providing 30 days prior written notification thereof
to the Agent and each of the Secured Parties and so long as, at the time of such written notification, the Debtor provides any
financing statements or fixture filings necessary to perfect and continue the perfection of the Security Interests granted and
evidenced by this Agreement.

 

(x)       The
Debtor was organized and remains organized solely under the laws of the state set forth next to the Debtor’s name in Schedule
D attached hereto, which Schedule D sets forth the Debtor’s organizational identification number or, if the Debtor
does not have one, states that one does not exist.

 

(y)       (i)
The actual name of the Debtor is the name set forth in Schedule D attached hereto; (ii) the Debtor does not have any trade
names except as set forth on Schedule E attached hereto; (iii) the Debtor has not used any name other than that stated
in the preamble hereto or as set forth on Schedule E for the preceding five years; and (iv) no entity has merged into the
Debtor or been acquired by the Debtor within the past five years except as set forth on Schedule E.

 

(z)       At
any time and from time to time that any Collateral consists of instruments, certificated securities or other items that require
or permit possession by the secured party to perfect the security interest created hereby, the Debtor shall deliver such Collateral
to the Agent.

 

(aa)
The Debtor, in its capacity as issuer, hereby agrees to comply with any and all orders and instructions of Agent regarding the
Pledged Interests consistent with the terms of this Agreement without the further consent of the Debtor as contemplated by Section
8-106 (or any successor section) of the UCC. Further, the Debtor agrees that it shall not enter into a similar agreement (or one
that would confer “control” within the meaning of Article 8 of the UCC) with any other person or entity.

 

(bb)
The Debtor shall cause all tangible chattel paper constituting Collateral to be delivered to the Agent, or, if such delivery is
not possible, then to cause such tangible chattel paper to contain a legend noting that it is subject to the security interest
created by this Agreement. To the extent that any Collateral consists of electronic chattel paper, the Debtor shall cause the
underlying chattel paper to be “marked” within the meaning of Section 9-105 of the UCC (or successor section thereto).

 

(cc)
If there is any investment property or deposit account included as Collateral that can be perfected by “control” through
a deposit account control agreement, the Debtor shall cause such a deposit account control agreement, in form and substance in
each case satisfactory to the Agent, to be entered into and delivered to the Agent for the benefit of the Secured Parties as of
the Closing Date or such later date as the Agent may direct the Debtor.

 

    	10 

    	 

    

 

(dd)
To the extent that any Collateral consists of letter-of-credit rights, the Debtor shall cause the issuer of each underlying letter
of credit to consent to an assignment of the proceeds thereof to the Secured Parties.

 

(ee)
To the extent that any Collateral is in the possession of any third party, the Debtor shall join with the Agent in notifying such
third party of the Secured Parties’ security interest in such Collateral and shall use its best efforts to obtain an acknowledgement
and agreement from such third party with respect to the Collateral, in form and substance reasonably satisfactory to the Agent.

 

(ff)
If the Debtor shall at any time hold or acquire a commercial tort claim, the Debtor shall promptly notify the Agent and other
Secured Parties in a writing signed by the Debtor of the particulars thereof and grant to the Agent, on behalf of the Secured
Parties, in such writing a security interest therein and in the proceeds thereof, all upon the terms of this Agreement, with such
writing to be in form and substance satisfactory to the Agent.

 

(gg)
The Debtor shall immediately provide written notice to the Agent and other Secured Parties of any and all accounts which arise
out of contracts with any governmental authority and, to the extent necessary to perfect or continue the perfected status of the
Security Interests in such accounts and proceeds thereof, shall execute and deliver to the Agent an assignment of claims for such
accounts and cooperate with the Agent in taking any other steps required, in its judgment, under the Federal Assignment of Claims
Act or any similar federal, state or local statute or rule to perfect or continue the perfected status of the Security Interests
in such accounts and proceeds thereof.

 

(hh)
The Debtor does not currently have any direct or indirect subsidiaries. Each Debtor shall cause each subsidiary of such Debtor
formed after the date hereof to immediately become a party hereto (an “Additional Debtor”), by executing and delivering
an Additional Debtor Joinder in substantially the form of Annex A attached hereto and comply with the provisions hereof
applicable to the Debtors. Concurrent therewith, the Additional Debtor shall deliver replacement schedules for, or supplements
to all other Schedules to (or referred to in) this Agreement, as applicable, which replacement schedules shall supersede, or supplements
shall modify, the Schedules then in effect. The Additional Debtor shall also deliver such opinions of counsel, authorizing resolutions,
good standing certificates, incumbency certificates, organizational documents, financing statements and other information and
documentation as the Agent may reasonably request. Upon delivery of the foregoing to the Agent, the Additional Debtor shall be
and become a party to this Agreement with the same rights and obligations as the Debtors, for all purposes hereof as fully and
to the same extent as if it were an original signatory hereto and shall be deemed to have made the representations, warranties
and covenants set forth herein as of the date of execution and delivery of such Additional Debtor Joinder, and all references
herein to the “Debtors” shall be deemed to include each Additional Debtor.

 

    	11 

    	 

    

 

(ii)
Without limiting the generality of the other obligations of the Debtor hereunder, the Debtor shall promptly (i) cause to be registered
at the United States Copyright Office all of its material copyrights, (ii) cause the security interest contemplated hereby with
respect to all Intellectual Property registered at the United States Copyright Office or United States Patent and Trademark Office
to be duly recorded at the applicable office, and (iii) give the Agent notice whenever it acquires (whether absolutely or by license)
or creates any additional material Intellectual Property.

 

(jj)
The Debtor will from time to time, promptly execute and deliver all such further instruments and documents, and take all such
further action as may be necessary or desirable, or as the Agent may reasonably request, in order to perfect and protect any security
interest granted or purported to be granted hereby or to enable the Agent, on behalf of the Secured Parties, to exercise and enforce
the rights and remedies hereunder and with respect to any Collateral or to otherwise carry out the purposes of this Agreement.

 

(kk)
Schedule F attached hereto lists all of the patents, patent applications, trademarks, trademark applications, registered
copyrights, and domain names owned by the Debtor as of the date hereof. Schedule F lists all material licenses in favor
of the Debtor for the use of any patents, trademarks, copyrights and domain names as of the date hereof. All material patents
and trademarks of the Debtor have been duly recorded at the United States Patent and Trademark Office and all material copyrights
of the Debtor have been duly recorded at the United States Copyright Office.

 

(ll)
Except as set forth on Schedule G attached hereto, none of the account debtors or other persons or entities obligated on
any of the Collateral is a governmental authority covered by the Federal Assignment of Claims Act or any similar federal, state
or local statute or rule in respect of such Collateral.

 

5.       Effect
of Pledge on Certain Rights. If any of the Collateral subject to this Agreement consists of nonvoting equity or ownership
interests (regardless of class, designation, preference or rights) that may be converted into voting equity or ownership interests
upon the occurrence of certain events (including, without limitation, upon the transfer of all or any of the other stock or assets
of the issuer), it is agreed that the pledge of such equity or ownership interests pursuant to this Agreement or the enforcement
of any of Agent’s rights hereunder shall not be deemed to be the type of event which would trigger such conversion rights
notwithstanding any provisions in the Organizational Documents or agreements to which the Debtor is subject or to which the Debtor
is party.

 

6.       Defaults.
The following events shall be “Events of Default”:

 

(a)       The
occurrence of an Event of Default (as defined in the Debenture) under the Debenture;

 

(b)       Any
representation or warranty of the Debtor in this Agreement shall prove to have been incorrect in any material respect when made;

 

    	12 

    	 

    

 

(c)       The
failure by the Debtor to observe or perform any of its obligations hereunder for five (5) days after delivery to the Debtor of
notice of such failure by or on behalf of a Secured Party unless such default is capable of cure but cannot be cured within such
time frame and the Debtor is using best efforts to cure same in a timely fashion; or

 

(d)       If
any provision of this Agreement shall at any time for any reason be declared to be null and void, or the validity or enforceability
thereof shall be contested by the Debtor, or a proceeding shall be commenced by the Debtor, or by any governmental authority having
jurisdiction over the Debtor, seeking to establish the invalidity or unenforceability thereof, or the Debtor shall deny that the
Debtor has any liability or obligation purported to be created under this Agreement.

 

7.       Duty
To Hold In Trust. Upon the occurrence of any Event of Default and at any time thereafter, the Debtor shall, upon receipt of
any revenue, income, dividend, interest or other sums subject to the Security Interests, whether payable pursuant to the Debenture
or otherwise, or of any check, draft, note, trade acceptance or other instrument evidencing an obligation to pay any such sum,
hold the same in trust for the Agent for the benefit of the Secured Parties and shall forthwith endorse and transfer any such
sums or instruments, or both, to the Agent for the benefit of the Secured Parties pro-rata in proportion to their respective then-currently
outstanding principal amount of Debenture for application to the satisfaction of the Obligations.

 

8.       Rights
and Remedies Upon Default.

 

(a)       Upon
the occurrence of any Event of Default and at any time thereafter, the Secured Parties, acting through the Agent, shall have the
right to exercise all of the remedies conferred hereunder and under the Debenture, and the Agent shall have all the rights and
remedies of a secured party under the UCC. Without limitation, the Agent, for the benefit of the Secured Parties, shall have the
following rights and powers:

 

(i)       The
Agent shall have the right to take possession of the Collateral and, for that purpose, enter, with the aid and assistance of any
person, any premises where the Collateral, or any part thereof, is or may be placed and remove the same, and each Debtor shall
assemble the Collateral and make it available to the Agent at places which the Agent shall reasonably select, whether at the Debtor’s
premises or elsewhere, and make available to the Agent, without rent, all of the Debtor’s respective premises and facilities
for the purpose of the Agent taking possession of, removing or putting the Collateral in saleable or disposable form.

 

(ii)       Upon
notice to the Debtor by the Agent, all rights of the Debtor to exercise the voting and other consensual rights which it would
otherwise be entitled to exercise and all rights of each Debtor to receive the dividends and interest which it would otherwise
be authorized to receive and retain, shall cease. Upon such notice, Agent shall have the right to receive, for the benefit of
the Secured Parties, any interest, cash dividends or other payments on the Collateral and, at the option of Agent, to exercise
in such Agent’s discretion all voting rights pertaining thereto.Without limiting the generality of the foregoing, Agent
shall have the right (but not the obligation) to exercise all rights with respect to the Collateral as it were the sole and absolute
owner thereof, including, without limitation, to vote and/or to exchange, at its sole discretion, any or all of the Collateral
in connection with a merger, reorganization, consolidation, recapitalization or other readjustment concerning or involving the
Collateral or the Debtor or any of its direct or indirect subsidiaries.

 

    	13 

    	 

    

 

(iii)       The
Agent shall have the right to operate the business of the Debtor using the Collateral and shall have the right to assign, sell,
lease or otherwise dispose of and deliver all or any part of the Collateral, at public or private sale or otherwise, either with
or without special conditions or stipulations, for cash or on credit or for future delivery, in such parcel or parcels and at
such time or times and at such place or places, and upon such terms and conditions as the Agent may deem commercially reasonable,
all without (except as shall be required by applicable statute and cannot be waived) advertisement or demand upon or notice to
the Debtor or right of redemption of the Debtor, which are hereby expressly waived. Upon each such sale, lease, assignment or
other transfer of Collateral, the Agent, for the benefit of the Secured Parties, may, unless prohibited by applicable law which
cannot be waived, purchase all or any part of the Collateral being sold, free from and discharged of all trusts, claims, right
of redemption and equities of the Debtor, which are hereby waived and released.

 

(iv)       The
Agent shall have the right (but not the obligation) to notify any account debtors and any obligors under instruments or accounts
to make payments directly to the Agent, on behalf of the Secured Parties, and to enforce the Debtor’s rights against such
account debtors and obligors.

 

(v)       The
Agent, for the benefit of the Secured Parties, may (but is not obligated to) direct any financial intermediary or any other person
or entity holding any investment property to transfer the same to the Agent, on behalf of the Secured Parties, or its designee.

 

(vi)       The
Agent may (but is not obligated to) transfer any or all Intellectual Property registered in the name of the Debtor at the United
States Patent and Trademark Office and/or Copyright Office into the name of the Secured Parties or any designee or any purchaser
of any Collateral.

 

(b)       The
Agent shall comply with any applicable law in connection with a disposition of Collateral and such compliance will not be considered
adversely to affect the commercial reasonableness of any sale of the Collateral. The Agent may sell the Collateral without giving
any warranties and may specifically disclaim such warranties. If the Agent sells any of the Collateral on credit, the Debtor will
only be credited with payments actually made by the purchaser. In addition, the Debtor waives any and all rights that it may have
to a judicial hearing in advance of the enforcement of any of the Agent’s rights and remedies hereunder, including, without
limitation, its right following an Event of Default to take immediate possession of the Collateral and to exercise its rights
and remedies with respect thereto.

 

    	14 

    	 

    

 

(c)       For
the purpose of enabling the Agent to further exercise rights and remedies under this Section 8 or elsewhere provided by agreement
or applicable law, the Debtor hereby grants to the Agent, for the benefit of the Agent and the Secured Parties, an irrevocable,
nonexclusive license (exercisable without payment of royalty or other compensation to the Debtor) to use, license or sublicense
following an Event of Default, any Intellectual Property now owned or hereafter acquired by the Debtor, and wherever the same
may be located, and including in such license access to all media in which any of the licensed items may be recorded or stored
and to all computer software and programs used for the compilation or printout thereof.

 

9.       Applications
of Proceeds. The proceeds of any such sale, lease or other disposition of the Collateral hereunder or from payments made on
account of any insurance policy insuring any portion of the Collateral shall be applied first, to the expenses of retaking, holding,
storing, processing and preparing for sale, selling, and the like (including, without limitation, any taxes, fees and other costs
incurred in connection therewith) of the Collateral, to the reasonable attorneys’ fees and expenses incurred by the Agent
in enforcing the Secured Parties’ rights hereunder and in connection with collecting, storing and disposing of the Collateral,
and then to satisfaction of the Obligations pro rata among the Secured Parties and Additional Secured Parties (based on then-
outstanding principal amounts of Debenture at the time of any such determination), and to the payment of any other amounts required
by applicable law, after which the Secured Parties and Additional Secured Parties shall pay to the Debtor any surplus proceeds.
If, upon the sale, license or other disposition of the Collateral, the proceeds thereof are insufficient to pay all amounts to
which the Secured Parties and Additional Secured Parties are legally entitled, the Debtor will be liable for the deficiency, together
with interest thereon, at the rate of 18% per annum or the lesser amount permitted by applicable law (the “Default Rate”),
and the reasonable fees of any attorneys employed by the Secured Parties and Additional Secured Parties to collect such deficiency.
To the extent permitted by applicable law, the Debtor waives all claims, damages and demands against the Secured Parties and Additional
Secured Parties arising out of the repossession, removal, retention or sale of the Collateral, unless due solely to the gross
negligence or willful misconduct of the Secured Parties and Additional Secured Parties as determined by a final judgment (not
subject to further appeal) of a court of competent jurisdiction.

 

10.       Costs
and Expenses. The Debtor agrees to pay all reasonable out-of-pocket fees, costs and expenses incurred in connection with any
filing required hereunder, including without limitation, any financing statements pursuant to the UCC, continuation statements,
partial releases and/or termination statements related thereto or any expenses of any searches reasonably required by the Agent.
The Debtor shall also pay all other claims and charges which in the reasonable opinion of the Agent is reasonably likely to prejudice,
imperil or otherwise affect the Collateral or the Security Interests therein. The Debtor will also, upon demand, pay to the Agent
the amount of any and all reasonable expenses, including the reasonable fees and expenses of its counsel and of any experts and
agents, which the Agent, for the benefit of the Secured Parties, may incur in connection with the creation, perfection, protection,
satisfaction, foreclosure, collection or enforcement of the Security Interest and the preparation, administration, continuance,
amendment or enforcement of this Agreement and pay to the Agent the amount of any and all reasonable expenses, including the reasonable
fees and expenses of its counsel and of any experts and agents, which the Agent, for the benefit of the Secured Parties, and the
Secured Parties may incur in connection with (i) the enforcement of this Agreement, (ii) the custody or preservation of, or the
sale of, collection from, or other realization upon, any of the Collateral, or (iii) the exercise or enforcement of any of the
rights of the Secured Parties under the Debenture. Until so paid, any fees payable hereunder shall be added to the principal amount
of the Debenture and shall bear interest at the Default Rate.

 

    	15 

    	 

    

 

11.       Responsibility
for Collateral. The Debtor assume all liabilities and responsibility in connection with all Collateral, and the Obligations
shall in no way be affected or diminished by reason of the loss, destruction, damage or theft of any of the Collateral or its
unavailability for any reason. Without limiting the generality of the foregoing, (a) neither the Agent nor any Secured Party (i)
has any duty (either before or after an Event of Default) to collect any amounts in respect of the Collateral or to preserve any
rights relating to the Collateral, or (ii) has any obligation to clean-up or otherwise prepare the Collateral for sale, and (b)
the Debtor shall remain obligated and liable under each contract or agreement included in the Collateral to be observed or performed
by the Debtor thereunder. Neither the Agent nor any Secured Party shall have any obligation or liability under any such contract
or agreement by reason of or arising out of this Agreement or the receipt by the Agent or any Secured Party of any payment relating
to any of the Collateral, nor shall the Agent or any Secured Party be obligated in any manner to perform any of the obligations
of the Debtor under or pursuant to any such contract or agreement, to make inquiry as to the nature or sufficiency of any payment
received by the Agent or any Secured Party in respect of the Collateral or as to the sufficiency of any performance by any party
under any such contract or agreement, to present or file any claim, to take any action to enforce any performance or to collect
the payment of any amounts which may have been assigned to the Agent or to which the Agent or any Secured Party may be entitled
at any time or times.

 

12.       Security
Interests Absolute. All rights of the Secured Parties and all obligations of the Debtor hereunder, shall be absolute and unconditional,
irrespective of: (a) any lack of validity or enforceability of this Agreement, the Debenture or any agreement entered into in
connection with the foregoing, or any portion hereof or thereof; (b) any change in the time, manner or place of payment or performance
of, or in any other term of, all or any of the Obligations, or any other amendment or waiver of or any consent to any departure
from the Debenture or any other agreement entered into in connection with the foregoing; (c) any exchange, release or nonperfection
of any of the Collateral, or any release or amendment or waiver of or consent to departure from any other collateral for, or any
guarantee, or any other security, for all or any of the Obligations; (d) any action by the Secured Parties to obtain, adjust,
settle and cancel in its sole discretion any insurance claims or matters made or arising in connection with the Collateral; or
(e) any other circumstance which might otherwise constitute any legal or equitable defense available to the Debtor, or a discharge
of all or any part of the Security Interests granted hereby. Until the Obligations shall have been paid and performed in full,
the rights of the Secured Parties shall continue even if the Obligations are barred for any reason, including, without limitation,
the running of the statute of limitations or bankruptcy. The Debtor expressly waives presentment, protest, notice of protest,
demand, notice of nonpayment and demand for performance. In the event that at any time any transfer of any Collateral or any payment
received by the Secured Parties hereunder shall be deemed by final order of a court of competent jurisdiction to have been a voidable
preference or fraudulent conveyance under the bankruptcy or insolvency laws of the United States, or shall be deemed to be otherwise
due to any party other than the Secured Parties, then, in any such event, the Debtor’s obligations hereunder shall survive
cancellation of this Agreement, and shall not be discharged or satisfied by any prior payment thereof and/or cancellation of this
Agreement, but shall remain a valid and binding obligation enforceable in accordance with the terms and provisions hereof. The
Debtor waives all right to require the Secured Parties to proceed against any other person or entity or to apply any Collateral
which the Secured Parties may hold at any time, or to marshal assets, or to pursue any other remedy. The Debtor waives any defense
arising by reason of the application of the statute of limitations to any obligation secured hereby.

 

    	16 

    	 

    

 

13.       Term
of Agreement. This Agreement and the Security Interests shall terminate on the date on which all payments under the Debenture
have been indefeasibly paid in full and all other Obligations have been paid or discharged; provided, however, that all indemnities
of the Debtor contained in this Agreement (including, without limitation, Annex A hereto) shall survive and remain operative and
in full force and effect regardless of the termination of this Agreement.

 

14.       Power
of Attorney; Further Assurances.

 

(a)       The
Debtor authorizes the Agent, and does hereby make, constitute and appoint the Agent and its officers, agents, successors or assigns
with full power of substitution, as the Debtor’s true and lawful attorney-in-fact, with power, in the name of the Agent
or the Debtor, to, after the occurrence and during the continuance of an Event of Default, (i) endorse any note, checks, drafts,
money orders or other instruments of payment (including payments payable under or in respect of any policy of insurance) in respect
of the Collateral that may come into possession of the Agent; (ii) to sign and endorse any financing statement pursuant to the
UCC or any invoice, freight or express bill, bill of lading, storage or warehouse receipts, drafts against debtors, assignments,
verifications and notices in connection with accounts, and other documents relating to the Collateral; (iii) to pay or discharge
taxes, liens, security interests or other encumbrances at any time levied or placed on or threatened against the Collateral; (iv)
to demand, collect, receipt for, compromise, settle and sue for monies due in respect of the Collateral; (v) to transfer any Intellectual
Property or provide licenses respecting any Intellectual Property; and (vi) generally, at the option of the Agent, and at the
expense of the Debtor, at any time, or from time to time, to execute and deliver any and all documents and instruments and to
do all acts and things which the Agent deems necessary to protect, preserve and realize upon the Collateral and the Security Interests
granted therein in order to effect the intent of this Agreement and the Debenture all as fully and effectually as the Debtor might
or could do, including, without limitation, the filing, in its sole discretion, of one or more financing or continuation statements
and amendments thereto, relative to any of the Collateral, which financing statements may (but need not) describe the Collateral
as “all assets” or “all personal property” or words of like import; and the Debtor hereby ratifies all
that said attorney shall lawfully do or cause to be done by virtue hereof. This power of attorney is coupled with an interest
and shall be irrevocable for the term of this Agreement and thereafter as long as any of the Obligations shall be outstanding.
The designation set forth herein shall be deemed to amend and supersede any inconsistent provision in the Organizational Documents
or other documents or agreements to which the Debtor is subject or to which the Debtor is a party. Without limiting the generality
of the foregoing, after the occurrence and during the continuance of an Event of Default, each Secured Party is specifically authorized
to execute and file any applications for or instruments of transfer and assignment of any patents, trademarks, copyrights or other
Intellectual Property with the United States Patent and Trademark Office and the United States Copyright Office.

 

    	17 

    	 

    

 

 

(b)       On
a continuing basis, the Debtor will make, execute, acknowledge, deliver, file and record, as the case may be, with the proper
filing and recording agencies in any jurisdiction, including, without limitation, the jurisdictions indicated on Schedule C
attached hereto, all such instruments, and take all such action as may reasonably be deemed necessary or advisable, or as
reasonably requested by the Agent, to perfect the Security Interests granted hereunder and otherwise to carry out the intent and
purposes of this Agreement, or for assuring and confirming to the Agent the grant or perfection of a perfected security interest
in all the Collateral under the UCC.

 

(c)       The
Debtor hereby irrevocably appoints the Agent as the Debtor’s attorney- in-fact, with full authority in the place and instead
of the Debtor and in the name of the Debtor, from time to time in the Agent’s discretion, to take any action and to execute
any instrument which the Agent may deem necessary or advisable to accomplish the purposes of this Agreement, including the filing,
in its sole discretion, of one or more financing or continuation statements and amendments thereto, relative to any of the Collateral
without the signature of the Debtor where permitted by law, which financing statements may (but need not) describe the Collateral
as “all assets” or “all personal property” or words of like import, and ratifies all such actions taken
by the Agent. This power of attorney is coupled with an interest and shall be irrevocable for the term of this Agreement and thereafter
as long as any of the Obligations shall be outstanding.

 

15.       Notices.
All notices, requests, demands and other communications hereunder shall be subject to the notice provision of the Exchange Agreement
(as such term is defined in the Debenture).

 

16.       Other
Security. To the extent that the Obligations are now or hereafter secured by property other than the Collateral or by the
guarantee, endorsement or property of any other person, firm, corporation or other entity, then the Agent shall have the right,
in its sole discretion, to pursue, relinquish, subordinate, modify or take any other action with respect thereto, without in any
way modifying or affecting any of the Secured Parties’ rights and remedies hereunder.

 

17.       Appointment
of Agent. The Secured Parties hereby appoint Magna Equities II, LLC to act as their agent (“Agent”) for
purposes of exercising any and all rights and remedies of the Secured Parties hereunder. The Agent shall have the rights, responsibilities
and immunities set forth in Annex A hereto.

 

    	18 

    	 

    

 

 

18.       Miscellaneous.

 

(a)       No
course of dealing between the Debtor and the Secured Parties, nor any failure to exercise, nor any delay in exercising, on the
part of the Secured Parties, any right, power or privilege hereunder or under the Debenture shall operate as a waiver thereof;
nor shall any single or partial exercise of any right, power or privilege hereunder or thereunder preclude any other or further
exercise thereof or the exercise of any other right, power or privilege.

 

(b)       All
of the rights and remedies of the Agent, on behalf of the Secured Parties, with respect to the Collateral, whether established
hereby or by the Debenture or by any other agreements, instruments or documents or by law shall be cumulative and may be exercised
singly or concurrently.

 

(c)       This
Agreement, together with the exhibits and schedules hereto, contain the entire understanding of the parties with respect to the
subject matter hereof and supersede all prior agreements and understandings, oral or written, with respect to such matters, which
the parties acknowledge have been merged into this Agreement and the exhibits and schedules hereto. No provision of this Agreement
may be waived, modified, supplemented or amended except in a written instrument signed, in the case of an amendment, by the Debtor
and the Agent (or, in the event that the Agent no longer holds the Debenture, in a written instrument signed by the Debtor and
the Majority in Interest), or, in the case of a waiver, by the party against whom enforcement of any such waived provision is
sought.

 

(d)       If
any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal,
void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full
force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially
reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated
by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that
they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.

 

(e)       No
waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing
waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof,
nor shall any delay or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right.

 

    	19 

    	 

    

 

(f)       This
Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns. The Debtor
may not assign this Agreement or any rights or obligations hereunder without the prior written consent of each Secured Party (other
than by merger). Any Secured Party may assign any or all of its rights under this Agreement to any Person (as defined in the Exchange
Agreement) to whom such Secured Party assigns or transfers any Obligations, provided such transferee agrees in writing to be bound,
with respect to the transferred Obligations, by the provisions of this Agreement that apply to the “Secured Parties.”

 

(g)       Each
party shall take such further action and execute and deliver such further documents as may be necessary or appropriate in order
to carry out the provisions and purposes of this Agreement.

 

(h)       Except
to the extent mandatorily governed by the jurisdiction or situs where the Collateral is located, all questions concerning the
construction, validity, enforcement and interpretation of this Agreement shall be governed by and construed and enforced in accordance
with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof. Except to the extent
mandatorily governed by the jurisdiction or situs where the Collateral is located, the Debtor agrees that all proceedings concerning
the interpretations, enforcement and defense of the transactions contemplated by this Agreement and the Debentures (whether brought
against a party hereto or its respective affiliates, directors, officers, shareholders, partners, members, employees or agents)
shall be commenced exclusively in the state and federal courts sitting in the City of New York, Borough of Manhattan. Except to
the extent mandatorily governed by the jurisdiction or situs where the Collateral is located, the Debtor hereby irrevocably submits
to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan for the adjudication
of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby
irrevocably waives, and agrees not to assert in any proceeding, any claim that it is not personally subject to the jurisdiction
of any such court, that such proceeding is improper. Each party hereto hereby irrevocably waives personal service of process and
consents to process being served in any such proceeding by mailing a copy thereof via registered or certified mail or overnight
delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees
that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be
deemed to limit in any way any right to serve process in any manner permitted by law. Each party hereto hereby irrevocably waives,
to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or
relating to this Agreement or the transactions contemplated hereby.

 

(i)       This
Agreement may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original and,
all of which taken together shall constitute one and the same Agreement. In the event that any signature is delivered by facsimile
transmission, such signature shall create a valid binding obligation of the party executing (or on whose behalf such signature
is executed) the same with the same force and effect as if such facsimile signature were the original thereof.

 

    	20 

    	 

    

 

(j)       The
Debtor shall indemnify, reimburse and hold harmless the Agent and the Secured Parties and their respective partners, members,
shareholders, officers, directors, employees and agents (and any other persons with other titles that have similar functions)
(collectively, “Indemnitees”) from and against any and all losses, claims, liabilities, damages, penalties,
suits, costs and expenses, of any kind or nature, (including fees relating to the cost of investigating and defending any of the
foregoing) imposed on, incurred by or asserted against such Indemnitee in any way related to or arising from or alleged to arise
from this Agreement or the Collateral, except any such losses, claims, liabilities, damages, penalties, suits, costs and expenses
which result from the gross negligence or willful misconduct of the Indemnitee as determined by a final, nonappealable decision
of a court of competent jurisdiction. This indemnification provision is in addition to, and not in limitation of, any other indemnification
provision in the Debentures, the Exchange Agreement (as such term is defined in the Debentures) or any other agreement, instrument
or other document executed or delivered in connection herewith or therewith.

 

(k)       Nothing
in this Agreement shall be construed to subject Agent or any Secured Party to liability as a partner in the Debtor or any if its
direct or indirect subsidiaries that is a partnership or as a member in the Debtor or any of its direct or indirect subsidiaries
that is a limited liability company, nor shall Agent or any Secured Party be deemed to have assumed any obligations under any
partnership agreement or limited liability company agreement, as applicable, of the Debtor or any of its direct or indirect subsidiaries
or otherwise, unless and until any such Secured Party exercises its right to be substituted for the Debtor as a partner or member,
as applicable, pursuant hereto.

 

(l)       To
the extent that the grant of the security interest in the Collateral and the enforcement of the terms hereof require the consent,
approval or action of any partner or member, as applicable, of the Debtor or any direct or indirect subsidiary of the Debtor or
compliance with any provisions of any of the Organizational Documents, the Debtor hereby grants such consent and approval and
waive any such noncompliance with the terms of said documents.

 

[SIGNATURE
PAGES FOLLOW]

 

    	21 

    	 

    

 

IN
WITNESS WHEREOF, the parties hereto have caused this Security Agreement to be duly executed on the day and year first above written.

 

	ADVANCED
    MEDICAL ISOTOPE CORPORATION	 
	 	 	 
	By:		 
	Name:	Michael
    Korenko	 
	Title: 	CEO	 

 

[SIGNATURE
PAGE OF HOLDERS FOLLOWS]

 

    	22 

    	 

    

 

[SIGNATURE
PAGE OF HOLDERS TO ADMD SA]

 

	 	 
	Name
    of Investing Entity:	 
	 	 
	Signature
    of Authorized Signatory of Investing entity:	 
	 	 
	Name
    of Authorized Signatory:	 
	 	 
	Title
    of Authorized Signatory:	 
	 	 
	Signature
    of Authorized Signatory of Investing entity:	 
	 	 
	Name
    of Authorized Signatory:	 
	 	 
	Title
    of Authorized Signatory:	 

 

[SIGNATURE
PAGE OF HOLDERS FOLLOWS]

 

    	23 

    	 

    

 

ANNEX
A

 to

 SECURITY

AGREEMENT

 

THE
AGENT

 

1.       Appointment.
The Secured Parties (all capitalized terms used herein and not otherwise defined shall have the respective meanings provided in
the Security Agreement to which this Annex A is attached (the “Agreement”)), by their acceptance of the benefits
of the Agreement, hereby designate Magna Equities II, LLC (“Agent”) as the Agent to act as specified herein
and in the Agreement. Each Secured Party shall be deemed irrevocably to authorize the Agent to take such action on its behalf
under the provisions of the Agreement and any other Transaction Document (as such term is defined in the Exchange Agreement) and
to exercise such powers and to perform such duties hereunder and thereunder as are specifically delegated to or required of the
Agent by the terms hereof and thereof and such other powers as are reasonably incidental thereto. The Agent may perform any of
its duties hereunder by or through its agents or employees.

 

2.       Nature
of Duties. The Agent shall have no duties or responsibilities except those expressly set forth in the Agreement. Neither
the Agent nor any of its partners, members, shareholders, officers, directors, employees or agents shall be liable for any action
taken or omitted by it as such under the Agreement or hereunder or in connection herewith or therewith, be responsible for the
consequence of any oversight or error of judgment or answerable for any loss, unless caused solely by its or their gross negligence
or willful misconduct as determined by a final judgment (not subject to further appeal) of a court of competent jurisdiction.
The duties of the Agent shall be mechanical and administrative in nature; the Agent shall not have by reason of the Agreement
or any other Transaction Document a fiduciary relationship in respect of any Debtor or any Secured Party; and nothing in the Agreement
or any other Transaction Document, expressed or implied, is intended to or shall be so construed as to impose upon the Agent any
obligations in respect of the Agreement or any other Transaction Document except as expressly set forth herein and therein.

 

3.       Lack
of Reliance on the Agent. Independently and without reliance upon the Agent, each Secured Party, to the extent it deems appropriate,
has made and shall continue to make (i) its own independent investigation of the financial condition and affairs of the Debtor
in connection with such Secured Party’s investment in the Debtor, the creation and continuance of the Obligations, the transactions
contemplated by the Transaction Documents, and the taking or not taking of any action in connection therewith, and (ii) its own
appraisal of the creditworthiness of the Debtor, and of the value of the Collateral from time to time, and the Agent shall have
no duty or responsibility, either initially or on a continuing basis, to provide any Secured Party with any credit, market or
other information with respect thereto, whether coming into its possession before any Obligations are incurred or at any time
or times thereafter. The Agent shall not be responsible to the Debtor or any Secured Party for any recitals, statements, information,
representations or warranties herein or in any document, certificate or other writing delivered in connection herewith, or for
the execution, effectiveness, genuineness, validity, enforceability, perfection, collectibility, priority or sufficiency of the
Agreement or any other Transaction Document, or for the financial condition of the Debtor or the value of any of the Collateral,
or be required to make any inquiry concerning either the performance or observance of any of the terms, provisions or conditions
of the Agreement or any other Transaction Document, or the financial condition of the Debtor, or the value of any of the Collateral,
or the existence or possible existence of any default or Event of Default under the Agreement, the Debentures or any of the other
Transaction Documents.

 

    	 	 	 

    	 

    

 

4.       Certain
Rights of the Agent. The Agent shall have the right to take any action with respect to the Collateral, on behalf of all of
the Secured Parties. To the extent practical, the Agent shall request instructions from the Secured Parties with respect to any
material act or action (including failure to act) in connection with the Agreement or any other Transaction Document, and shall
be entitled to act or refrain from acting in accordance with the instructions of a Majority in Interest; if such instructions
are not provided despite the Agent’s request therefor, the Agent shall be entitled to refrain from such act or taking such
action, and if such action is taken, shall be entitled to appropriate indemnification from the Secured Parties in respect of actions
to be taken by the Agent; and the Agent shall not incur liability to any person or entity by reason of so refraining. Without
limiting the foregoing, (a) no Secured Party shall have any right of action whatsoever against the Agent as a result of the Agent
acting or refraining from acting hereunder in accordance with the terms of the Agreement or any other Transaction Document, and
the Debtor shall have no right to question or challenge the authority of, or the instructions given to, the Agent pursuant to
the foregoing and (b) the Agent shall not be required to take any action which the Agent believes (i) could reasonably be expected
to expose it to personal liability or (ii) is contrary to this Agreement, the Transaction Documents or applicable law.

 

5.       Reliance.
The Agent shall be entitled to rely, and shall be fully protected in relying, upon any writing, resolution, notice, statement,
certificate, telex, teletype or telecopier message, cablegram, radiogram, order or other document or telephone message signed,
sent or made by the proper person or entity, and, with respect to all legal matters pertaining to the Agreement and the other
Transaction Documents and its duties thereunder, upon advice of counsel selected by it and upon all other matters pertaining to
this Agreement and the other Transaction Documents and its duties thereunder, upon advice of other experts selected by it. Anything
to the contrary notwithstanding, the Agent shall have no obligation whatsoever to any Secured Party to assure that the Collateral
exists or is owned by the Debtor or is cared for, protected or insured or that the liens granted pursuant to the Agreement have
been properly or sufficiently or lawfully created, perfected, or enforced or are entitled to any particular priority.

 

    	 	 	 

    	 

    

 

6.       Indemnification.
To the extent that the Agent is not reimbursed and indemnified by the Debtor, the Secured Parties will jointly and severally
reimburse and indemnify the Agent, in proportion to their initially purchased respective principal amounts of Debentures, from
and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever which may be imposed on, incurred by or asserted against the Agent in performing its duties hereunder
or under the Agreement or any other Transaction Document, or in any way relating to or arising out of the Agreement or any other
Transaction Document except for those determined by a final judgment (not subject to further appeal) of a court of competent jurisdiction
to have resulted solely from the Agent’s own gross negligence or willful misconduct. Prior to taking any action hereunder
as Agent, the Agent may require each Secured Party to deposit with it sufficient sums as it determines in good faith is necessary
to protect the Agent for costs and expenses associated with taking such action.

 

 7.        Resignation by the Agent.

 

(a)       The
Agent may resign from the performance of all its functions and duties under the Agreement and the other Transaction Documents
at any time by giving 30 days’ prior written notice (as provided in the Agreement) to the Debtor and the Secured Parties.
Such resignation shall take effect upon the appointment of a successor Agent pursuant to clauses (b) and (c) below.

 

(b)       Upon
any such notice of resignation, the Secured Parties, acting by a Majority in Interest, shall appoint a successor Agent hereunder.

 

(c)       If
a successor Agent shall not have been so appointed within said 30-day period, the Agent shall then appoint a successor Agent who
shall serve as Agent until such time, if any, as the Secured Parties appoint a successor Agent as provided above. If a successor
Agent has not been appointed within such 30-day period, the Agent may petition any court of competent jurisdiction or may interplead
the Debtor and the Secured Parties in a proceeding for the appointment of a successor Agent, and all fees, including, but not
limited to, extraordinary fees associated with the filing of interpleader and expenses associated therewith, shall be payable
by the Debtor on demand.

 

8.       Rights
with respect to Collateral. Each Secured Party agrees with all other Secured Parties and the Agent (i) that it shall
not, and shall not attempt to, exercise any rights with respect to its security interest in the Collateral, whether pursuant to
any other agreement or otherwise (other than pursuant to this Agreement), or take or institute any action against the Agent or
any of the other Secured Parties in respect of the Collateral or its rights hereunder (other than any such action arising from
the breach of this Agreement) and (ii) that such Secured Party has no other rights with respect to the Collateral other than as
set forth in this Agreement and the other Transaction Documents. Upon the acceptance of any appointment as Agent hereunder by
a successor Agent, such successor Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and
duties of the retiring Agent and the retiring Agent shall be discharged from its duties and obligations under the Agreement. After
any retiring Agent’s resignation or removal hereunder as Agent, the provisions of the Agreement including this Annex A shall
inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00273-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00273-of-00352.parquet"}]]