Document:

Exhibit 10.48

 

WARRANT CERTIFICATE

 

THIS WARRANT CERTIFICATE AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR QUALIFIED UNDER ANY STATE OR FOREIGN SECURITIES LAWS AND MAY NOT BE OFFERED FOR SALE, SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED OR ASSIGNED UNLESS (I) A REGISTRATION STATEMENT COVERING SUCH SHARES IS EFFECTIVE UNDER THE SECURITIES ACT AND IS QUALIFIED UNDER APPLICABLE STATE AND FOREIGN LAW OR (II) THE TRANSACTION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS UNDER THE SECURITIES ACT AND THE QUALIFICATION REQUIREMENTS UNDER APPLICABLE STATE AND FOREIGN LAW.

 

THIS WARRANT CERTIFICATE AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF IS SUBJECT TO THE APPLICABLE TERMS OF THE LLC AGREEMENT (AS DEFINED HEREIN).  NO SALE, ASSIGNMENT, CONVEYANCE, GIFT, PLEDGE, HYPOTHECATION, ENCUMBRANCE OR OTHER TRANSFER OF THIS WARRANT CERTIFICATE OR THE SECURITIES ISSUABLE UPON EXERCISE HEREOF MAY BE MADE EXCEPT IN ACCORDANCE WITH THE APPLICABLE PROVISIONS OF THE LLC AGREEMENT. A COPY OF THE LLC AGREEMENT SHALL BE FURNISHED WITHOUT CHARGE BY THE COMPANY TO THE HOLDER HEREOF UPON REQUEST.

 

	
Warrant   Certificate No.:
    	
[·]
    
	
 
    	
 
    
	
Issue   Date:
    	
August 28,   2015
    

 

FOR VALUE RECEIVED, Kadmon Holdings, LLC, a Delaware limited liability company (the “Company”), hereby certifies that [·]or any of its registered assigns (collectively, the “Holder”) is entitled to purchase from the Company an aggregate number of duly authorized, validly issued, fully paid and nonassessable shares of the Company’s Common Units equal to the Warrant Units Issuable (defined below) at the applicable per unit Exercise Price (defined below), all subject to the terms, conditions and adjustments set forth below in this Warrant Certificate.  Certain capitalized terms used herein are defined in Section 1.

 

This Warrant Certificate has been issued pursuant to the terms of the Credit Agreement, dated as of August 28, 2015 (as amended or otherwise modified from time to time, the “Credit Agreement”), among Kadmon Pharmaceuticals, LLC (“Pharma”), as the borrower, the guarantors party thereto and Perceptive Credit Opportunities Fund, LP, PCOF Partners Capital Fund, LP, and GoldenTree Credit Opportunities, LP (“GoldenTree”), as the lenders.

 

Section 1.              Definitions.  The following terms when used herein have the following meanings: 

 

“Additional Compensation” has the meaning set forth in Section 13(a).

 

“Additional Compensation Shares” has the meaning set forth in Section 13(a).

 

GT

 

 

“Aggregate Exercise Price” means, with respect to any exercise of this Warrant Certificate for Warrant Units, an amount equal to the product of (i) the number of Warrant Units in respect of which this Warrant Certificate is then being exercised pursuant to Sections 3, multiplied by (ii) the Exercise Price in effect as of the applicable Exercise Date in accordance with the terms of this Warrant Certificate.

 

“Anticipated Sale” has the meaning set forth in Section 3(j). 

 

“Arbiter” has the meaning set forth in Section 3(k).

 

“Bloomberg” has the meaning set forth within the definition of VWAP. 

 

“Board” means the board of directors or board of managers of the Company.

 

“Business Day” means any day, except a Saturday, Sunday or legal holiday, on which banking institutions in the city of New York, New York are authorized or obligated by law or executive order to close.

 

“Cashless Exercise” has the meaning set forth in Section 3(b).

 

“Common Units” means the Company’s Class A Units (as defined in the LLC Agreement) and any capital stock or other equity interest into which such Common Units shall have been converted, exchanged or reclassified following the date hereof.

 

“Common Units Deemed Outstanding” means, at any time of determination, calculated assuming that the aggregate equity value of the Company is $900,000,000, the sum of (i) the number of Common Units actually outstanding at such time, plus (ii) the number of Common Units issuable upon exercise of in-the-money Options actually outstanding at such time, plus  (iii) the number of Common Units issuable upon conversion or exchange of in-the-money Convertible Securities actually outstanding at such time (treating as actually outstanding any in- the-money Convertible Securities issuable upon exercise of such in-the-money Options actually outstanding at such time), in each case, regardless of whether such Options or Convertible Securities are actually exercisable at such time; provided that Common Units Deemed Outstanding at any given time shall not include shares owned or held by or for the account of the Company or any of its wholly owned subsidiaries.

 

“Company” has the meaning set forth in the preamble.

 

“Convertible Debt Documents” means that certain Third Amended and Restated Senior Secured Convertible Credit Agreement, dated as of the date hereof, among Pharma, the guarantors from time to time party thereto, Macquarie US Trading LLC, as Administrative Agent, and the lenders from time to time party thereto and that certain Second Lien Convertible PIK Notes due 2019, dated as of the date hereof, issued by Pharma to the purchasers party thereto.

 

“Convertible Securities” means any debt, equity or other securities that are, directly or indirectly, convertible into or exchangeable for Common Units.

 

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“Credit Agreement” has the meaning set forth in the preamble.

 

“Credit Agreement Warrant Certificate” means each Warrant Certificate (as defined in the Credit Agreement) delivered pursuant to Section 6.01(g)(iv) of the Credit Agreement, as amended, replaced, supplemented, divided, combined or otherwise modified pursuant to the terms thereof.

 

“Deemed Per Share Equity Value” means, as of any time of determination, the quotient of (x) $900,000,000 divided by (y) all Common Units Deemed Outstanding.

 

“Delivery Deadline” means (i) in the case of Warrant Units to be issued upon exercise of this Warrant Certificate, five (5) Business Days after delivery of an Exercise Certificate in respect of such exercise, (ii) in the case Unlegended Shares requested by the Holder to be issued upon satisfaction of the Unrestricted Conditions, ten (10) Business Days after delivery of such request by the Holder pursuant to Section 12(a)(iii), and (iii) in the case of Additional Compensation Shares, five (5) Business Days following the last day of each calendar month during which an Event of Failure occurred or was continuing, as provided in Section 13(b).

 

“Delivery Failure” means the failure by the Company, for any reason, to deliver Warrant Units, Unlegended Shares or Additional Compensations Shares, as the case may be, to the Holder or its designee on or prior to the applicable Delivery Deadline for such shares.

 

“DTC” means the Depository Trust Company.

 

“DWAC” has the meaning set forth in Section 3(i).

 

“Early Redemption” has the meaning set forth in Section 14.

 

“Event of Default” means any of the following events or circumstances: (i) the occurrence of a Section 6 Failure that remains uncured for a period of more than sixty (60) days,  (ii) the occurrence of any Delivery Failure that remains uncured for a period of more than sixty (60) days, (iii) the occurrence of a Transfer Delivery Failure that remains uncured for a period of thirty (30) days, (iv) the failure of the Company to pay any Additional Compensation payable in cash when due pursuant to Section 13(b), or (v) a breach by the Company, at any time after it has converted into a corporation, of any of its obligations under Sections 3(f), (h), (i) or  (j) hereof, in each case, that has not been cured or waived on or before the fifth (5th) Business Day following written notice thereof to the Company from the Holder.

 

“Event of Failure” means (i) the occurrence of a Delivery Failure, (ii) the occurrence of a Transfer Delivery Failure or (iii) the occurrence of a Section 6 Failure.

 

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

 

“Exercise Certificate” has the meaning set forth in Section 3(a)(i).

 

“Exercise Date” means, for any given exercise of this Warrant Certificate, whether in whole or in part, the date on which the conditions to such exercise as set forth in Section 3 shall have been satisfied at or prior to 5:00 p.m., Eastern time, on a Business Day, including, without

 

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limitation, the receipt by the Company of the Exercise Certificate and the applicable Aggregate Exercise Price.

 

“Exercise Period” has the meaning set forth in Section 2(a).

 

“Exercise Price” means, subject to adjustment pursuant to Sections 4(a) and 4(b)(i)(2), a price per Warrant Unit equal to (i) if a Qualified Public Offering has occurred prior to the Exercise Price being set in accordance with the following clause (ii), 85% of the price per Warrant Unit in such offering, or (ii) if the Holder has elected (in its sole discretion) upon written notice to the Company during any Recurring Period prior to the occurrence of a Qualified Public Offering, the lesser of (x) 85% of the Deemed Per Share Equity Value, and (y) the lowest price per Warrant Unit in any equity financing for cash raised by the Company after the Issue Date.

 

“Expiry Date” has the meaning set forth in Section 2(a). 

 

“Failure Notice” has the meaning set forth in Section 13(a).

 

“Fair Market Value” means, (i) as of any particular Trading Day, (x) the VWAP of the Common Units for such day or (y) if there have been no sales of the Common Units on any Trading Market on any such day, the average of the highest bid and lowest asked prices for the Common Units on all applicable Trading Markets at the end of such day, or (ii) if at any time the Common Units are not listed, quoted or otherwise available for trading, the “Fair Market Value” of the Common Units shall be the fair market value per share as determined jointly by the Board and the Requisite Holders.

 

“FAST” has the meaning set forth in Section 3(i).

 

“Fundamental Change” means any event or circumstance that constitutes or results in  (i) a Change in Control, as defined in the Credit Agreement (as in effect as of the date hereof) or (ii)  the liquidation, bankruptcy, dissolution or winding-up (or the occurrence of any analogous proceeding) of the Company.

 

“GoldenTree” has the meaning set forth in the preamble. 

 

“Holder” has the meaning set forth in the preamble.

 

“Initial Amount” means $[·].

 

“Inspectors” has the meaning set forth in Section 6(c)(viii). 

 

“Issue Date” has the meaning set forth in the preamble.

 

“Legend Removal Failure” means the failure of the Company to comply with  Section 12(a)(iii).

 

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“LLC Agreement” means the Second Amended and Restated Limited Liability Company Agreement of Kadmon Holdings, LLC, dated as of June 27, 2014, as amended from time to time.

 

“Loan” has the meaning set forth in the Credit Agreement (as in effect on the date hereof).

 

“Nasdaq” means The Nasdaq Stock Market, Inc.

 

“Options” means any warrants or other rights or options to subscribe for or purchase Common Units or Convertible Securities.

 

“OTC Bulletin Board” means the National Association of Securities Dealers, Inc. OTC Bulletin Board.

 

“Person” means any individual, sole proprietorship, partnership, limited liability company, corporation, joint venture, trust, incorporated organization or government or department or agency thereof.

 

“Pharma” has the meaning set forth in the preamble. 

 

“Purchase Rights” has the meaning set forth in Section 5.

 

“Qualified IPO” means a sale, in a firm commitment underwritten public offering pursuant to a Registration Statement, of Common Units, as a result of which offering the Company receives gross cash proceeds of at least $50,000,000.

 

“Records” has the meaning set forth in Section 6(c)(viii).

 

“Recurring Period” means, until a Qualified Public Offering has occurred, (i) the period from July 1, 2016 through August 31, 2016 and (ii) each period from July 1 through August 31 and from January 1 through the last day of February thereafter until the seventh anniversary of the Issue Date.

 

“Redemption Amount” has the meaning set forth in Section 14. 

 

“Redemption Notice” has the meaning set forth in Section 14.

 

“Registration Statement” means any registration statement of the Company under the Securities Act that covers any Common Units, including the prospectus, all amendments and supplements to such Registration Statement, including post-effective amendments, all exhibits and all materials incorporated by reference in such Registration Statement.

 

“Requisite Holders” means, at any time of determination, Persons that, in the aggregate, own or otherwise hold more than fifty percent (50%) of the Warrant Units issuable upon exercise of all outstanding Credit Agreement Warrant Certificates at such time of determination.

 

“Rule 144” has the meaning set forth in Section 3(b).

 

“SEC” means the Securities and Exchange Commission or any successor thereto.

 

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“Section 4 Event” has the meaning set forth in Section 4(b)(i).

 

“Section 6 Failure” means the occurrence of a breach by the Company of its obligations under Section 6 hereof (including the Company’s failure to register the Holder’s Warrant Units pursuant to the customary piggyback rights to be granted to the Holder pursuant to Section 6(a)) that remains uncured for a period of more than five (5) Business Days following written notice thereof to the Company from the Holder.

 

“Securities Act” means the Securities Act of 1933, as amended. 

 

“Substitute Property” has the meaning set forth in Section 4(b)(i)(1).

 

“Trading Day” means a day on which the principal Trading Market is open for trading.

 

“Trading Market” means, with respect to the Common Units, Nasdaq or, if the Common Units are not listed on Nasdaq, such other principal US exchange or market (including the OTC Bulletin Board) on which the Common Units are quoted or available for trading.

 

“Transfer Agent” has the meaning set forth in Section 3(c)(ii).

 

“Transfer Delivery Failure” means the failure of the Company to effect a transfer of this Warrant Certificate as provided pursuant to Section 8 within five (5) Business Days following delivery by the Holder of an Assignment in substantially the form attached hereto as Exhibit B.

 

“Unrestricted Conditions” has the meaning set forth in Section 12(a)(ii).

 

“VWAP” means, for any security as of any day or period of days (as the case may be), the volume weighted average sale price on Nasdaq as reported by, or based upon data reported by Bloomberg Financial Markets or an equivalent, reliable reporting service reasonably acceptable to the Holder and the Company (collectively, “Bloomberg”) or, if Nasdaq is not the principal trading market for such security, the volume weighted average sale price of such security on the principal securities exchange or trading market where such security is listed or traded as reported by Bloomberg or, if no volume weighted average sale price is reported for such security by Bloomberg, then the last closing trade price of such security as reported by Bloomberg, or, if no last closing trade price is reported for such security by Bloomberg, the average of the bid prices of any market makers for such security that are listed in the over the counter market by the Financial Industry Regulatory Authority, Inc. or on the OTC Bulletin Board (or any successor) or in the “pink sheets” (or any successor) by the OTC Markets Group, Inc.; provided that if VWAP cannot be calculated for such security on such date in the manner provided above, the VWAP shall be the Fair Market Value as determined jointly by the Board and the Requisite Holders.

 

“Warrant Certificate” means this Warrant Certificate and all subsequent warrant certificates issued upon division, combination or transfer of, or in substitution for, this Warrant Certificate.

 

“Warrant Register” has the meaning set forth in Section 7.

 

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“Warrant Unit” means (i) a Common Unit or other capital stock or equity interest of the Company (or its successors) or (ii) upon the occurrence of a Section 4(b) Event, the Substitute Property received in respect of a Common Unit in such Section 4(b) Event by the holders of Common Units, in each case (for purposes of clauses (i) and (ii) hereof) then purchasable upon exercise of this Warrant Certificate in accordance with the terms hereof.

 

“Warrant Units Issuable” means, as of any time of determination, such number of Warrant Units as has an aggregate Exercise Price equal to the Initial Amount.

 

Section 2.              Term of Warrant Certificate; Cash Payments to Holder, etc.

 

(a)           Subject to the terms and conditions hereof, at any time or from time to time (i) on or after the earliest to occur of (x) the occurrence of a Qualified IPO, (y) the occurrence of a Fundamental Change and (z) July 1, 2016 and (ii) prior to 5:00 p.m., Eastern time, on the day that is the seventh anniversary of the Issue Date or, if such day is not a Business Day, on the next preceding Business Day (such day, as the case may be, being the “Expiry Date”), the Holder of this Warrant Certificate may exercise this Warrant Certificate for all or any part of the Warrant Units purchasable hereunder, subject to adjustment as provided herein (such period during which the Holder may exercise this Warrant Certificate being the “Exercise Period”).  Notwithstanding the termination of the Holder’s right to exercise this Warrant Certificate after the Exercise Period, any other obligations of a party hereto that are due but unpaid or unperformed as of (and including) the last day of the Exercise Period shall continue to be payable or performable, as the case may be, until satisfied in full.

 

(b)           Any term or provision of this Warrant Certificate to the contrary notwithstanding, so long as any principal amount of any indebtedness remains outstanding under the Convertible Debt Documents,  the Company shall not make any cash payments to the Holder in respect of this Warrant Certificate; provided that the Company covenants and agrees that it will not amend, restate, extend or otherwise modify any Convertible Debt Document if the effect of such amendment, restatement, extension or modification, directly or indirectly, would be to both (i) extend the final maturity date (or equivalent) of any such principal amount of indebtedness outstanding under any Convertible Debt Document and (ii) cause the time when such cash payments would be permitted to be made to the Holder in respect of this Warrant Certificate to be extended beyond the original final maturity date (or equivalent) of such principal amount of indebtedness as in effect on the Issue Date.  Any amounts otherwise payable hereunder that cannot be paid by the Company as a result of outstanding indebtedness under any Convertible Debt Document shall (without duplication hereunder) accrue interest at a rate of 17% per annum from the date such payment would otherwise be due and payable hereunder until the date such payment is actually made.

 

Section 3.              Exercise of Warrant Certificate.

 

(a)           Exercise Procedure. This Warrant Certificate may be exercised from time to time on any Business Day during the Exercise Period, for all or any part of the unexercised Warrant Units, upon:

 

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(i)            delivery to the Company at its then principal executive office of (A) this Warrant Certificate and (B) an Exercise Certificate in the form attached hereto as Exhibit A (each, an “Exercise Certificate”), duly completed (including specifying the number of Warrant Units to be purchased) and executed; and

 

(ii)           payment to the Company of the Aggregate Exercise Price in accordance with Section 3(b).

 

(b)           Payment of the Aggregate Exercise Price. Payment of the Aggregate Exercise Price shall be made, at the option of the Holder as expressed in the Exercise Certificate, by any of the following methods:

 

(i)            by delivery to the Company of a certified or official bank check payable to the order of the Company or by wire transfer of immediately available funds to an account designated in writing by the Company, in the amount of such Aggregate Exercise Price;

 

(ii)           by instructing the Company to withhold a number of Warrant Units then issuable upon exercise of this Warrant Certificate with an aggregate Fair Market Value as of the Exercise Date equal to such Aggregate Exercise Price;

 

(iii)          by surrendering to the Company (x) Warrant Units previously acquired by the Holder with an aggregate Fair Market Value as of the Exercise Date equal to such Aggregate Exercise Price or (y)  any debt of the Company (including Common Units) having a value as of the Exercise Date equal to the Aggregate Exercise Price (which value shall be the principal amount thereof plus accrued and unpaid interest); or

 

(iv)          any combination of the foregoing.

 

In the event of any withholding of Warrant Units or surrender of other equity securities pursuant to Section 3(b)(ii), (iii) or (iv) (solely to the extent of such withholding or surrender, a “Cashless Exercise”) where the number of shares whose value is equal to the Aggregate Exercise Price is not a whole number, the number of shares withheld by or surrendered to the Company shall be rounded up to the nearest whole share and the Company shall make a cash payment to the Holder (by delivery of a certified or official bank check or by wire transfer of immediately available funds) based on the incremental fraction of a share being so withheld by or surrendered to the Company in an amount equal to the product of (x) such incremental fraction of a share being so withheld or surrendered multiplied by (y) in the case of Common Units, the Fair Market Value per Warrant Share as of the Exercise Date, and, in all other cases, the value thereof as of the Exercise Date determined in accordance with Section 3(b)(iii)(y).

 

To the extent permitted by applicable law, for purposes of Rule 144 under the Securities Act (“Rule 144”), it is acknowledged and agreed that (i) the Warrant Units issuable upon any exercise of this Warrant Certificate in any Cashless Exercise transaction shall be deemed to have been acquired on the Issue Date, and (ii) the holding period for any Warrant Units issuable upon the exercise of this Warrant Certificate in any Cashless Exercise transaction shall be deemed to have commenced on the Issue Date.

 

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(c)                                  Delivery of Stock Certificates.

 

(i)                                     With respect to any exercise of this Warrant Certificate by the Holder, upon receipt by the Company of an Exercise Certificate and delivery of the Aggregate Exercise Price (in accordance with Section 3(b)), the Company shall, on or before the applicable Delivery Deadline, issue and deliver (or cause its Transfer Agent to issue and deliver) in accordance with the terms hereof to the Holder that number Warrant Units for the portion of this Warrant Certificate so exercised on such date, together with cash in lieu of any fraction of a share, as provided in Section 3(d). The stock certificate or certificates so delivered shall be, to the extent possible, in such denomination or denominations as the exercising Holder shall reasonably request in the Exercise Certificate and shall be registered in the name of the Holder or, subject to compliance with Section 8, such other Person’s name as shall be designated in the Exercise Certificate.  This Warrant Certificate shall be deemed to have been exercised and such certificate or certificates of Warrant Units shall be deemed to have been issued, and the Holder or any other Person so designated to be named therein shall be deemed to have become a holder of record of such Warrant Units for all purposes, as of the Exercise Date.

 

(ii)                                  Upon the exercise of this Warrant Certificate in whole or in part, the Company shall, at its own cost and expense, take all necessary action, including obtaining and delivering an opinion of counsel, to assure that the Company’s transfer agent (if any) (the “Transfer Agent”) shall issue Warrant Units in the name of the Holder (or its nominee) or such other Persons as designated by the Holder (in compliance with Section 8) and in such denominations to be specified in the applicable Exercise Certificate.

 

(iii)                               In addition to any other remedies which may be available to the Holder pursuant to Section 14 or otherwise, in the event of any Delivery Failure relating to the issuance of Warrant Units upon exercise of this Warrant Certificate, the Holder will be entitled to revoke all or part of the relevant Exercise Certificate by delivery of a notice to such effect to the Company whereupon the Company and the Holder shall each be restored to their respective positions immediately prior to the delivery of such Exercise Certificate, except that Additional Compensation shall be payable through the date notice of revocation or rescission is given to the Company as provided in Section 13.

 

(d)                                 Fractional Shares.  The Company shall not be required to issue a fractional Warrant Share upon exercise of any Warrant Certificate. As to any fraction of a Warrant Share that the Holder would otherwise be entitled to purchase upon such exercise, the Company shall pay to such Holder an amount in cash (by delivery of a certified or official bank check or by wire transfer of immediately available funds) equal to the product of (i) such fraction multiplied by (ii) the Fair Market Value of one Warrant Share on the Exercise Date.

 

(e)                                  Surrender of this Warrant Certificate; Delivery of New Warrant Certificate.

 

(i)                                     In case any exercise of this Warrant Certificate is in part only, a new Warrant Certificate or Warrant Certificates, dated the date hereof, of like tenor and exercise terms and conditions and covering (in the aggregate on the face or faces thereof) the number of Warrant Units equal (without giving effect to any subsequent adjustment thereof) to the number of Warrant Units set forth on the face of this Warrant Certificate (as adjusted pursuant to the

 

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terms hereof through the applicable exercise date) minus the number of such Common Units designated by the applicable Holder upon such exercise.

 

(f)                                   Valid Issuance of Warrant Certificate and Warrant Units; Payment of Taxes.  With respect to the exercise of this Warrant Certificate, the Company hereby represents, covenants and agrees:

 

(i)                                     This Warrant Certificate is, and any Warrant Certificate issued in substitution for or replacement of this Warrant Certificate shall be, upon issuance, duly authorized and validly issued.

 

(ii)                                  All Warrant Units issuable upon the exercise of this Warrant Certificate (or any substitute or replacement Warrant Certificate) pursuant to the terms hereof shall be, upon issuance, and the Company shall take all such actions as may be necessary or appropriate in order that such Warrant Units are, validly issued, fully paid and non-assessable, issued without violation of any preemptive or similar rights of any stockholder of the Company and free and clear of all taxes, liens and charges.

 

(iii)                               The Company shall take all such actions as may be necessary to ensure that all such Warrant Units are issued without violation by the Company of any applicable law or governmental regulation or any requirements of any foreign or domestic securities exchange upon which Common Units or other securities constituting Warrant Units may be listed at the time of such exercise (except for official notice of issuance which shall be immediately delivered by the Company upon each such issuance).

 

(iv)                              The Company shall cause the Warrant Units, immediately upon such exercise, to be listed on any Trading Market upon which Common Units or other securities constituting Warrant Units are listed at the time of such exercise.

 

(v)                                 The Company shall pay all expenses in connection with the issuance or delivery of Warrant Units upon exercise of this Warrant Certificate; provided that notwithstanding any other provision hereof, the Company shall not be responsible for the payment of any taxes, levies or other similar charges in respect of the issuance or delivery of the Warrant Units upon exercise of this Warrant Certificate other than any and all stamp, excise or similar taxes imposed by a governmental authority that may be payable in respect of such issuance or delivery.

 

(g)                                  Conditional Exercise. Notwithstanding any other provision hereof, if an exercise of any portion of this Warrant Certificate is to be made in connection with a public offering, a Fundamental Change or any sale of the Company (pursuant to a merger, sale of stock, or otherwise), such exercise may, at the election of the Holder, be conditioned upon the consummation of such transaction, in which case such exercise shall not be deemed to be effective until immediately prior to the consummation of such transaction.

 

(h)                                 Reservation of Shares. During the Exercise Period, the Company shall at all times reserve and keep available out of its authorized but unissued Common Units or other securities constituting Warrant Units, solely for the purpose of issuance upon the exercise of this Warrant Certificate, the maximum number of Warrant Units issuable upon the exercise of this

 

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Warrant Certificate, and the par value per Warrant Share shall at all times be less than or equal to the applicable Exercise Price. The Company shall not increase the par value of any Warrant Units receivable upon the exercise of this Warrant Certificate above the Exercise Price then in effect, and shall take all such actions as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Common Units upon the exercise of this Warrant Certificate.

 

(i)                                     Delivery of Electronic Shares. In the event that the Transfer Agent is participating in the DTC Fast Automated Securities Transfer (“FAST”) program, upon written request of the Holder and in lieu of delivering physical certificates representing any Common Units (including any Warrant Units) to be delivered under or in connection with this Warrant Certificate, the Company shall use its commercially reasonable best efforts to cause the Transfer Agent to electronically transmit such Common Units to the Holder by crediting the account of the Holder’s prime broker with the DTC through its Deposit Withdrawal Agent Commission (“DWAC”) system. The time periods for delivery and penalties described herein shall apply to the electronic transmittals described herein. Any delivery not effected by electronic transmission shall be effected by delivery of physical certificates.

 

(j)                                    Make Whole.  In addition to any other rights available to the Holder, if as a result of a Delivery Failure in respect of Warrant Units the Holder is required by its broker to purchase (in an open market transaction or otherwise) or the Holder’s brokerage firm otherwise purchases Common Units to deliver in satisfaction of a sale anticipated to be made by the Holder of all or portion of such Warrant Units which are the subject of such Delivery Failure (an “Anticipated Sale”), then the Company shall (i) pay in cash to the Holder the amount by which (x) the Holder’s total purchase price (including brokerage commissions, if any) for the Common Units so purchased exceeds (y) an amount equal to the product of (A) the number of Warrant Units that the Holder anticipated to sell in such Anticipated Sale, multiplied by (B) the Exercise Price that would have been payable for such Warrant Units, and (ii) at the option of the Holder, either reinstate the portion of this Warrant Certificate and equivalent number of Warrant Units in respect of which such Delivery Failure occurred or deliver to the Holder the number of Warrant Units that would have been issued had the Company timely complied with its obligations hereunder to issue such Warrant Units upon such exercise. The Holder shall provide the Company written notice indicating the amounts payable to the Holder, together with applicable confirmations and other evidence reasonably requested by the Company. Nothing herein shall limit the Holder’s right to receive Additional Compensation pursuant to Section 13 or pursue any other remedies available to it hereunder at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to any Delivery Failure.

 

(k)                                 Dispute Resolution. In the case of any dispute as to the determination of any closing sales price or VWAP of the Company’s Common Units, the arithmetic calculation of the Exercise Price or any other computation required to be made hereunder, in the event the Holder and the Company are unable to settle such dispute within five (5) Business Days, then either party may elect to submit the disputed matter(s) to KPMG or another independent banking, accounting or other knowledgeable financial services firm mutually agreeable to the Requisite Holders and the Company for resolution (the “Arbiter”). The Arbiter’s determination of such disputed matter(s) shall be binding upon all parties absent demonstrable error, and the Company and the Holder shall each pay one half of the fees and costs of the Arbiter.

 

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Section 4.                                          Adjustment to Exercise Price and Number of Warrant Units. In order to prevent dilution or enlargement of the purchase rights granted under this Warrant Certificate, the Exercise Price and the number of Warrant Units issuable upon exercise of this Warrant Certificate shall be subject to adjustment from time to time as provided in this Section 4.

 

(a)                                 Adjustment to Exercise Price and Warrant Units Upon Dividend, Subdivision or Combination of Common Units. If the Company shall, at any time or from time to time after the date the Exercise Price has been established, (i) pay a dividend or make any other distribution upon the Common Units or any other capital stock of the Company payable in Common Units or in Options or Convertible Securities, or (ii) subdivide (by any stock split, recapitalization or otherwise) its outstanding Common Units into a greater number of units, the Exercise Price in effect immediately prior to any such dividend, distribution or subdivision shall be proportionately reduced and the number of Warrant Units issuable upon exercise of this Warrant Certificate shall be proportionately increased. If the Company at any time combines (by combination, reverse stock split or otherwise) its outstanding Common Units into a smaller number of units, the Exercise Price in effect immediately prior to such combination shall be proportionately increased and the number of Warrant Units issuable upon exercise of this Warrant Certificate shall be proportionately decreased. Any adjustment under this Section 4(a) shall become effective at the close of business on the date the dividend, subdivision or combination becomes effective.  Any term or provision hereof to the contrary notwithstanding, the Company shall not take or permit to occur any action or event described in this clause (a) unless it has given at least five (5) Business Days prior written notice (prepared in reasonable detail) thereof to the Holder.

 

(b)                                 Adjustment to Exercise Price and Warrant Units Upon Reorganization, Reclassification, Consolidation or Merger.

 

(i)                                     Unless the Holder otherwise provides its prior written consent (in its sole discretion), in the event of any (A) capital reorganization of the Company, (B) reclassification of the stock of the Company (other than a change in par value or from par value to no par value or from no par value to par value or as a result of a stock dividend or subdivision, split-up or combination of units), (C) Fundamental Change, (D) conversion of the Company to a corporation or (E) other similar transaction (other than any such transaction covered by  Section 4(d)), in each case which entitles the holders of Common Units to receive (either directly or upon subsequent liquidation) stock, securities or assets with respect to or in exchange for Common Units (collectively, a “Section 4(b) Event”):

 

(1)                                 this Warrant Certificate shall, immediately after giving effect to any such Section 4(b) Event, (x) remain outstanding and (y) thereafter be exercisable for Warrant Units Issuable consisting of the stock, other securities or assets of the Company or of the successor Person resulting from such Section 4(b) Event (collectively, “Substitute Property”); and

 

(2)                                 if necessary, appropriate adjustment shall be made with respect to the Holder’s rights under this Warrant Certificate to insure that the provisions of this Section 4 shall thereafter be applicable, as nearly as possible, to this Warrant Certificate in relation to any Substitute Property thereafter acquirable upon exercise of this Warrant Certificate.

 

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The provisions of this Section 4(b) shall similarly apply to successive Section 4(b) Events.

 

(ii)                                  Notwithstanding anything to the contrary contained herein, with respect to any Section 4(b) Event or other transaction contemplated by this Section 4, the Holder shall have the right to elect, prior to the consummation of such event or transaction, to exercise its rights under Section 3 instead of giving effect to Section 4(b)(i).

 

(c)                                  Certain Events. If any event of the type contemplated by the provisions of this Section 4 but not expressly provided for by such provisions occurs, then the Board shall make an appropriate adjustment in the Exercise Price and the number of Warrant Units issuable upon exercise of this Warrant Certificate so as to protect the rights of the Holder in a manner consistent with the provisions of this Section 4; provided that, without the consent of the Holder, no such adjustment pursuant to this Section 4(c) shall increase the Exercise Price or decrease the number of Warrant Units issuable to an extent greater than would result from the implementation of the adjustments provided pursuant to this Section 4.

 

(d)                                 Certificate as to Adjustment.

 

(i)                                     As promptly as reasonably practicable following any adjustment of the Exercise Price, but in any event not later than three Business Days thereafter, the Company shall furnish to the Holder a certificate of an executive officer setting forth in reasonable detail such adjustment and the facts upon which it is based and certifying the calculation thereof.

 

(ii)                                  As promptly as reasonably practicable following the receipt by the Company of a written request by the Holder, but in any event not later than three Business Days thereafter, the Company shall furnish to the Holder a certificate of an executive officer certifying the Exercise Price then in effect and the number of Warrant Units or the amount, if any, of other units of stock, securities or assets then issuable upon exercise of this Warrant Certificate.

 

(e)                                  Notices. In the event that the Company shall take a record of the holders of its Common Units (or other capital stock or securities at the time issuable upon exercise of this Warrant Certificate):

 

(i)                                     for the purpose of entitling or enabling them to receive any dividend or other distribution, to vote at a meeting (or by written consent), to receive any right to subscribe for or purchase any units of capital stock of any class or any other securities, or to receive any other security; or

 

(ii)                                  approving or enabling any capital reorganization of the Company, any reclassification of the Common Units of the Company or any Fundamental Change;

 

then, and in each such case, the Company shall send or cause to be sent to the Holder at least thirty (30) days prior to the applicable record date or the applicable expected effective date, as the case may be, for the event, a written notice specifying, as the case may be, (A) the record date for such dividend, distribution, meeting or consent or other right or action, and a description of such dividend, distribution or other right or action to be taken at such meeting or by written consent, or (B) the effective date on which such Fundamental Change is proposed to take place,

 

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and the date, if any is to be fixed, as of which the books of the Company shall close or a record shall be taken with respect to which the holders of record of Common Units (or such other capital stock or securities at the time issuable upon exercise of this Warrant Certificate) shall be entitled to exchange their Common Units (or such other capital stock or securities) for securities or other property deliverable upon such Fundamental Change, and the amount per share and character of such exchange applicable to this Warrant Certificate and the Warrant Units.

 

Section 5.                                          Purchase Rights. In addition to any adjustments pursuant to Section 4, if at any time the Company grants, issues or sells (other than in an Excluded Issuance) any Common Units, Options, Convertible Securities or rights to purchase capital stock, securities or other property pro rata to the record holders of Common Units (the “Purchase Rights”), then the Holder shall be entitled (but not required) to acquire, upon the same terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder would have acquired (determined on a pro rata basis) if the Holder had held the number of Warrant Units acquirable upon complete exercise of this Warrant Certificate immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of Common Units are to be determined for the grant, issue or sale of such Purchase Rights.

 

Section 6.                                          Registration Rights.

 

(a)                                 Piggyback Rights.  If a Qualified IPO has been consummated, the Company shall grant customary piggyback registration rights to the Holder on substantially the same terms as those granted to the Company’s members pursuant to the LLC Agreement.

 

(b)                                 Rule 144 Compliance.  With a view to making available to the Holder the benefits of Rule 144 under the Securities Act and any other rule or regulation of the SEC that may at any time permit a holder to sell securities of the Company to the public without registration or pursuant to a Registration Statement, the Company shall at all times after a Qualified Public Offering:

 

(i)        make and keep public information available, as those terms are understood and defined in Rule 144 under the Securities Act;

 

(ii)          use reasonable best efforts to file with the SEC in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act; and

 

(iii)           furnish to the Holder so long as the Holder owns this Warrant Certificate or Warrant Units, promptly upon request, a written statement by the Company as to its compliance with the reporting requirements of Rule 144 under the Securities Act and of the Securities Act and the Exchange Act, a copy of the most recent annual or quarterly report of the Company, and such other reports and documents so filed or furnished by the Company as such Holder may reasonably request in connection with the sale thereof without registration and otherwise facilitate such sale by the Holder in reliance on Rule 144 including by obtaining, at the Company’s expense, any opinions of counsel that may be necessary in connection therewith (provided that the Holder provides, at Holder’s expense, any information or certifications reasonably requested in connection therewith).

 

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(c)                                  Preservation of Rights. After the Issue Date, the Company shall not grant any registration rights to third parties which are more favorable than the rights granted hereunder without granting the same rights to the Holder.

 

Section 7.                                          Warrant Register. The Company shall keep and properly maintain at its principal executive offices a register (the “Warrant Register”) for the registration of this Warrant Certificate and any transfers thereof.  The Company may deem and treat the Person in whose name this Warrant Certificate is registered on such register as the Holder thereof for all purposes, and the Company shall not be affected by any notice to the contrary, except any assignment, division, combination or other transfer of this Warrant Certificate effected in accordance with the provisions of this Warrant Certificate.

 

Section 8.                                          Transfer of Warrant Certificate.

 

(a)                                 Subject to Section 12 and Section 8(b) hereof, this Warrant Certificate and all rights hereunder are transferable, in whole or in part, by the Holder without charge to the Holder, upon surrender of this Warrant Certificate to the Company at its then principal executive offices with a properly completed and duly executed Assignment in the form attached hereto as  Exhibit B, together with funds sufficient to pay any transfer, stamp, excise, and other similar taxes in connection with the making of such transfer.

 

(b)                                 Any transfer or exchange of a Warrant Certificate or any Warrant Units must be made in strict compliance with the provisions of Section 9 of the LLC Agreement (subject to the proviso to the second following sentence). The certificates evidencing the Warrant Units shall bear all legends required under the LLC Agreement to the extent not in conflict with Section 12(a)(ii) hereof. The Company and the Holder each hereby acknowledges that this Warrant Certificate and the Warrant Units are subject to the provisions of the LLC Agreement; provided that any amendment or other modification after the Issue Date that would adversely affect the Holder’s rights of transfer or exchange shall require the Holder’s prior written consent. The Holder hereby agrees not to transfer the Warrant Units to any Person other than a Permitted Transferee (as that term is defined in the LLC Agreement) without the Company’s consent, such consent not to be unreasonably withheld or delayed. Notwithstanding the foregoing, the Company acknowledges and agrees that the Holder may transfer this Warrant Certificate to (i) affiliates and limited partners of the Holder, (ii) members or stockholders, as applicable, of the Company or any of their respective affiliates or (iii) subject to the consent of the Company, not to be unreasonably withheld, one or more institutional investors.

 

(c)                                  Upon such compliance, surrender and delivery and, if required, such payment, the Company shall execute and deliver a new Warrant Certificate or Warrant Certificates in the name of the assignee or assignees and in the denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant Certificate evidencing the portion of this Warrant Certificate, if any, not so assigned and this Warrant Certificate shall promptly be cancelled. In connection with any transfer, the aggregate Warrant Units Issuable pursuant to the replacement Warrant Certificate(s) issued to the assignor and the Warrant Certificate(s) issued to the assignee(s) shall equal the amount of Warrant Units Issuable pursuant to the Warrant Certificate of the assignor immediately prior to such transfer.

 

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(d)                                 The Holder agrees, in connection with the exercise of this Warrant Certificate, to enter into a customary lock-up arrangement prohibiting sales of the applicable Warrant Units for up to 180 days following a Qualified Public Offering. Following a Qualified Public Offering, with the exception of any such lock-up and restrictions under applicable law, there shall be no restrictions on the transfer of this Warrant Certificate or the Warrant Units.

 

Section 9.                                          The Holder Not Deemed a Stockholder; Limitations on Liability. Except as otherwise specifically provided herein (including Section 4(c)(viii)), prior to the issuance to the Holder of the Warrant Units to which the Holder is then entitled to receive upon the due exercise of this Warrant Certificate, the Holder shall not be entitled to vote or receive dividends or be deemed the holder of units of capital stock of the Company for any purpose, nor shall anything contained in this Warrant Certificate be construed to confer upon the Holder, as such, any of the rights of a stockholder of the Company or any right to vote, give or withhold consent to any corporate action (whether any reorganization, issue of stock, reclassification of stock, consolidation, merger, conveyance or otherwise), receive notice of meetings, receive dividends or subscription rights, or otherwise. In addition, nothing contained in this Warrant Certificate shall be construed as imposing any liabilities on the Holder to purchase any securities (upon exercise of this Warrant Certificate or otherwise) or as a stockholder of the Company, whether such liabilities are asserted by the Company or by creditors of the Company. Notwithstanding this Section 9, the Company shall provide the Holder with copies of the same notices and other information given to the stockholders of the Company generally, contemporaneously with the giving thereof to the stockholders.

 

Section 10.                                   Replacement on Loss; Division and Combination.

 

(a)                                 Replacement of Warrant Certificate on Loss. Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant Certificate and upon delivery of an indemnity reasonably satisfactory to it (it being understood that a written indemnification agreement or affidavit of loss of the Holder shall be a sufficient indemnity) and, in case of mutilation, upon surrender of such Warrant Certificate for cancellation to the Company, the Company at its own expense shall execute and deliver to the Holder, in lieu hereof, a new Warrant Certificate of like tenor and exercisable for an equivalent number of Warrant Units as this Warrant Certificate so lost, stolen, mutilated or destroyed; provided that, in the case of mutilation, no indemnity shall be required if this Warrant Certificate in identifiable form is surrendered to the Company for cancellation.

 

(b)                                 Division and Combination of Warrant Certificate.  Subject to compliance with the applicable provisions of this Warrant Certificate as to any transfer or other assignment which may be involved in such division or combination, this Warrant Certificate may be divided or, following any such division of this Warrant Certificate, subsequently combined with other Warrant Certificates, upon the surrender of this Warrant Certificate or Warrant Certificates to the Company at its then principal executive offices, together with a written notice specifying the names and denominations in which new Warrant Certificates are to be issued, signed by the respective Holders or their agents or attorneys. Subject to compliance with the applicable provisions of this Warrant Certificate as to any transfer or assignment which may be involved in such division or combination, the Company shall at its own expense execute and deliver a new Warrant Certificate or Warrant Certificates in exchange for this Warrant Certificate or Warrant

 

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Certificates so surrendered in accordance with such notice. Such new Warrant Certificate or Warrant Certificates shall be of like tenor to the surrendered Warrant Certificate or Warrant Certificates and shall be exercisable in the aggregate for an equivalent number of Warrant Units as this Warrant Certificate or Warrant Certificates so surrendered in accordance with such notice.

 

Section 11.                                   No Impairment; “Most Favored Nation” Status.

 

(a)                                 Company shall not, by amendment of its Certificate of Incorporation or Bylaws, through any shareholders, voting or similar agreement, or through any reorganization (including conversion to a corporation), transfer of assets, consolidation, merger, dissolution, issue or sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed by it hereunder, but shall at all times in good faith assist in the carrying out of all the provisions of this Warrant Certificate and in the taking of all such action as may be necessary or appropriate in order to protect the exercise rights of the Holder against dilution or other impairment, consistent with the tenor and purpose of this Warrant Certificate.

 

(b)                                 Without limiting the foregoing, the Company agrees that it will not take any action, nor will it permit any action to be taken or event to occur, that would result in any of the relative rights or preferences of the Warrant Units (or any holder thereof in its capacity as such) being treated disproportionately adverse as compared to the relative rights and preferences of the Common Units (or any holder thereof in its capacity as such), including, without limitation, in respect of relative priority, liquidation rights or preferences, or rights in respect of dividends or distributions.

 

Section 12.                                   Compliance with the Securities Act.

 

(a)                                 Agreement to Comply with the Securities Act, etc.

 

(i)                                     Legend. The Holder, by acceptance of this Warrant Certificate, agrees to comply in all respects with the provisions of this Section 12 and the restrictive legend requirements set forth on the face of this Warrant Certificate and further agrees that such Holder shall not offer, sell or otherwise dispose of this Warrant Certificate or any Warrant Units to be issued upon exercise hereof except under circumstances that will not result in a violation of the Securities Act.  Subject to clause (ii) below, this Warrant Certificate and all Warrant Units issued upon exercise of this Warrant Certificate (unless registered under the Securities Act) shall be stamped or imprinted with legends in substantially the following form:

 

“THIS WARRANT CERTIFICATE AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR QUALIFIED UNDER ANY STATE OR FOREIGN SECURITIES LAWS AND MAY NOT BE OFFERED FOR SALE, SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED OR ASSIGNED UNLESS (I) A REGISTRATION STATEMENT COVERING SUCH UNITS IS EFFECTIVE   UNDER THE ACT AND IS QUALIFIED UNDER

 

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APPLICABLE STATE AND FOREIGN LAW OR (II) THE TRANSACTION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS UNDER THE ACT AND THE QUALIFICATION REQUIREMENTS UNDER APPLICABLE STATE AND FOREIGN LAW AND, IF THE COMPANY REQUESTS, AN OPINION SATISFACTORY TO THE COMPANY TO SUCH EFFECT HAS BEEN RENDERED BY COUNSEL.”

 

“THIS WARRANT CERTIFICATE AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF IS SUBJECT TO THE APPLICABLE TERMS OF THE LLC AGREEMENT (AS DEFINED HEREIN). NO SALE, ASSIGNMENT, CONVEYANCE, GIFT, PLEDGE, HYPOTHECATION, ENCUMBRANCE OR OTHER TRANSFER OF THIS WARRANT CERTIFICATE OR THE SECURITIES ISSUABLE UPON EXERCISE HEREOF MAY  BE MADE EXCEPT IN ACCORDANCE WITH THE APPLICABLE PROVISIONS OF THE LLC AGREEMENT. A COPY OF THE LLC AGREEMENT SHALL BE FURNISHED WITHOUT CHARGE BY THE COMPANY TO THE HOLDER HEREOF UPON REQUEST.”

 

(ii)                                  Removal of Restrictive Legends. Neither this Warrant Certificate nor any certificates evidencing Warrant Units or any other Common Units issuable or deliverable under or in connection with this Warrant Certificate shall contain any legend restricting the transfer thereof (including the legends set forth above in clause (i) above) in any of the following circumstances, subject to Section 8(d),: (A) at any time following a Qualified Public Offering or otherwise while a Registration Statement  covering the sale or resale of Warrant Units is effective under the Securities Act, (B) following any sale of this Warrant Certificate, any Warrant Units or any other Common Units issued or delivered to the Holder under or in connection herewith pursuant to Rule 144, (C) if this Warrant Certificate, Warrant Units or any other such Common Units are eligible for sale under Rule 144(b)(1), or (D) if such legend is not required under applicable requirements of the Securities Act (including judicial interpretations and pronouncements issued by the staff of the SEC); provided that the conditions to the removal of the legend referred to in the next following paragraph have also been satisfied (collectively, the “Unrestricted Conditions”). The Company shall cause its counsel to issue a legal opinion to the Transfer Agent if required by such Transfer Agent to effect the issuance of Warrant Units or any other Common Units issuable or deliverable under or in connection with this Warrant Certificate, as applicable, without a restrictive legend or removal of the applicable legends hereunder.  If the Unrestricted Conditions are met at the time of issuance of this Warrant Certificate, the Warrant Units or such other Common Units, then this Warrant Certificate, Warrant Units or other Common Units, as the case may be, shall be issued free of all legends.

 

Notwithstanding the foregoing, this Warrant Certificate (and any certificates evidencing Warrant Units or any other Common Units issuable or deliverable under or in connection with this Warrant Certificate) shall continue to bear a legend substantially similar to the second legend set forth in Section 12(a)(i)  for so long as this Warrant Certificate (or such Warrant Units or other Common Units) are subject to transfer restrictions pursuant to the LLC Agreement (or, prior to

 

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the occurrence of any event described in Section 12(a)(ii), the shareholders agreement contemplated by the LLC Agreement)).

 

(iii)                               Replacement Warrant Certificate. The Company agrees that at such time as the Unrestricted Conditions have been satisfied it shall promptly (but in any event within 5 Business Days ) following written request from the Holder issue a replacement Warrant Certificate or replacement Warrant Units or replacement units in respect of such other Common Units, as the case may be, free of all restrictive legends.

 

(iv)                              Sale of Unlegended Units. The Holder agrees that the removal of the restrictive legend from this Warrant Certificate and any certificates representing securities as set forth in Section 12(a)(ii) above is predicated upon the Company’s reliance that the Holder will sell this Warrant Certificate or any such securities pursuant to either an effective registration statement or otherwise pursuant to the requirements of the Securities Act, including any applicable prospectus delivery requirements, or an exemption therefrom, and that if such securities are sold pursuant to a registration statement, they will be sold in compliance with the plan of distribution set forth therein.

 

(b)                                 Representations of the Holder. In connection with the issuance of this Warrant Certificate, the Holder specifically represents, as of the date hereof, to the Company by acceptance of this Warrant Certificate as follows:

 

(i)                                     The Holder is an “accredited investor” as defined in Rule 501 of Regulation D promulgated under the Securities Act. The Holder is acquiring this Warrant Certificate and the Warrant Units to be issued upon exercise hereof for investment for its own account and not with a view towards, or for resale in connection with, the public sale or distribution of this Warrant Certificate or the Warrant Units, except pursuant to sales registered or exempted under the Securities Act.

 

(ii)                                  The Holder understands and acknowledges that this Warrant Certificate and the Warrant Units to be issued upon exercise hereof are “restricted securities” under the federal securities laws inasmuch as they are being acquired from the Company in a transaction not involving a public offering and that, under such laws and applicable regulations, such securities may be resold without registration under the Securities Act only in certain limited circumstances.  In addition, the Holder represents that it is familiar with Rule 144, as presently in effect, and understands the resale limitations imposed thereby and by the Securities Act.

 

(iii)                               The Holder acknowledges that it can bear the economic and financial risk of its investment for an indefinite period, and has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of the investment in this Warrant Certificate and the Warrant Units. The Holder has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the offering of this Warrant Certificate and the business, properties, prospects and financial condition of the Company.

 

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Section 13.                                   Events of Failure.

 

(a)                                 Failure of Payment, etc. For so long as any Event of Failure continues, the Company hereby agrees to pay additional compensation (“Additional Compensation”) to the Holder (which, the parties agree, is to be treated as liquidated damages and not as a penalty) in the form of a per annum fee accruing at a rate of 17% per annum on an amount equal to the excess of  (i) the Initial Amount less (ii) the aggregate Exercise Price of all Warrant Units that have been issued upon any exercise of this Warrant Certificate at any time prior to the date on which the Holder delivers written notice to the Company of the occurrence of such Event of Failure (a “Failure Notice”). Additional Compensation shall continue to accrue until such Event of Failure has been cured or waived. Additional Compensation shall be paid in cash (if permissible) or, at the Company’s option, by increasing the Initial Amount by an amount equal to such accrued Additional Compensation (“Additional Compensation Units”). Additional Compensation is in addition to any Warrant Units that the Holder is entitled to receive upon exercise of this Warrant Certificate.

 

(b)                                 Payment of Accrued Additional Compensation. Additional Compensation shall be payable, whether in cash or by increase to the Initial Amount, as the case may be, on or before the fifth (5th) Business Day following the last day of each calendar month during which an Event of Failure has occurred or continued. Nothing herein shall limit the Holder’s right to pursue a claim for specific performance or injunctive relief. Notwithstanding the above, if a particular Event of Failure results in an Event of Default pursuant to Section 14 hereof, then the Additional Compensation in respect of such Event of Failure shall be considered to have been satisfied upon payment to the Holder of an amount equal to the greater of (i) the Additional Compensation and (ii) the Redemption Amount payable in accordance with Section 14.

 

Section 14.                                   Early Redemption. Upon the occurrence and during the continuance of any Event of Default, or at any time following the last day of the fifty first (51st) calendar month following the Issue Date, at the option of the Holder exercised by way of delivery of written notice to the Company (a “Redemption Notice”), the Holder shall have the right to terminate this Warrant Certificate and demand a redemption of the Warrant Units representing the then unexercised portion of this Warrant Certificate (an “Early Redemption”); provided that, in the event no Redemption Notice has been delivered prior to the last day of the Exercise Period, a Redemption Notice shall be deemed to have been delivered by the Holder on such last day for all purposes of this Section 14 (and without need of any further action on the part of the Holder). Upon the Holder’s election to cause an Early Redemption the Company shall be obligated to pay to the Holder, in full satisfaction of the Company’s obligations hereunder, an amount (the “Redemption Amount”) equal to the sum of (i) all accrued and unpaid Additional Compensation, if any, plus (ii) the product of (x) the number of Warrant Units representing the remaining unexercised portion of this Warrant Certificate (without duplication of any Additional Compensation Units, if any, covered in clause (i) above) multiplied by (y) the VWAP for the Company’s Common Units determined as of the date of such Redemption Notice. The Redemption Amount shall be payable in cash within three (3) Business Days following the date of delivery of the Default Notice. To the extent the Redemption Amount is not paid in full when due, the unpaid portion thereof shall accrue interest at a rate of 17% per annum until paid in full.

 

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Section 15.                                   Notices. All notices, requests, consents, claims, demands, waivers and other communications hereunder shall be in writing and shall be deemed to have been given: (i) when delivered by hand (with written confirmation of receipt); (ii) when received by the addressee if sent by a nationally recognized overnight courier (receipt requested); (iii) on the date sent by facsimile or e-mail of a PDF document (with confirmation of transmission) if sent during normal business hours of the recipient, and on the next Business Day if sent after normal business hours of the recipient; or (iv) on the third day after the date mailed, by certified or registered mail, return receipt requested, postage prepaid. Such communications must be sent to the respective parties at the addresses indicated below (or at such other address for a party as shall be specified in a notice given in accordance with this Section 15).

 

	
If to the Company:
    	
Kadmon   Holdings, LLC
    
	
 
    	
450   East 29th Street 
    
	
 
    	
New   York, NY  10016
    
	
 
    	
Attention:   Steven N. Gordon
    
	
 
    	
Facsimile:   (212) 355-7855
    
	
 
    	
E-mail:   Steve@Kadmon.com
    
	
 
    
	
 
    	
with   a copy (which shall not constitute effective notice) to:
    
	
 
    	
 
    
	
 
    	
DLA   Piper LLP (US)
    
	
 
    	
1251   Avenue of the Americas 
    
	
 
    	
New   York, NY 10020 
    
	
 
    	
Attention:
    	
Sidney   Burke 
    
	
 
    	
Facsimile:
    	
212.335.4501
    
	
 
    	
E-mail:   sidney.burke@dlapiper.com
    
	
 
    	
 
    
	
If to the Holder:
    	
[·]
    
	
 
    	
Attention:   [·]
    
	
 
    	
E-mail:   [·]
    
	
 
    	
 
    
	
 
    	
with   a copy (which shall not constitute effective notice) to:
    
	
 
    	
[·]
    
	
 
    	
Attention:
    	
[·]
    
	
 
    	
Facsimile:
    	
[·]
    
	
 
    	
E-mail:
    	
[·]
    
					

 

Section 16.                                   Cumulative Remedies. Except to the extent expressly provided in Section 8 to the contrary, the rights and remedies provided in this Warrant Certificate are cumulative and are not exclusive of, and are in addition to and not in substitution for, any other rights or remedies available at law, in equity or otherwise.

 

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Section 17.                                   Equitable Relief. Each of the Company and the Holder acknowledges that a breach or threatened breach by such party of any of its obligations under this Warrant Certificate would give rise to irreparable harm to the other party hereto for which monetary damages would not be an adequate remedy and hereby agrees that in the event of a breach or a threatened breach by such party of any such obligations, the other party hereto shall, in addition to any and all other rights and remedies that may be available to it in respect of such breach, be entitled to equitable relief, including a restraining order, an injunction, specific performance and any other relief that may be available from a court of competent jurisdiction. The Holder and the Company further acknowledge and agree that (i) sums payable hereunder, including in respect of Additional Compensation or the Redemption Amount, are meant to be treated as liquidated damages and not penalties, (ii) the amount of loss or damages likely to be incurred by the Holder as a result of the Company’s breach of any its obligations hereunder is incapable or is difficult to precisely estimate, (iv) the amounts payable hereunder (and calculations in respect thereof) are reasonable and are not plainly or grossly disproportionate to the probable loss likely to be incurred by the Holder, and (v) the parties hereto are sophisticated business parties and have been represented by sophisticated and able legal and financial counsel and negotiated this Agreement at arm’s length.

 

Section 18.                                   Entire Agreement. This Warrant Certificate constitutes the sole and entire agreement of the parties to this Warrant Certificate with respect to the subject matter contained herein, and supersedes all prior and contemporaneous understandings and agreements, both written and oral, with respect to such subject matter.

 

Section 19.                                   Successor and Assigns.  This Warrant Certificate and the rights evidenced hereby shall be binding upon and shall inure to the benefit of the parties hereto and the successors of the Company and the successors and permitted assigns of the Holder. Such successors and/or permitted assigns of the Holder shall be deemed to be a “Holder” for all purposes hereunder.

 

Section 20.                                   No Third-Party Beneficiaries.  This Warrant Certificate is for the sole benefit of the Company and the Holder and their respective successors and, in the case of the Holder, permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other Person any legal or equitable right, benefit or remedy of any nature whatsoever, under or by reason of this Warrant Certificate.

 

Section 21.                                   Headings. The headings in this Warrant Certificate are for reference only and shall not affect the interpretation of this Warrant Certificate.

 

Section 22.                                   Amendment and Modification; Waiver. Except as otherwise provided herein, this Warrant Certificate may only be amended, modified or supplemented by an agreement in writing signed by the Company and the Holder. No waiver by the Company or the Holder of any of the provisions hereof shall be effective unless explicitly set forth in writing and signed by the party so waiving. No waiver by any party shall operate or be construed as a waiver in respect of any failure, breach or default not expressly identified by such written waiver, whether of a similar or different character, and whether occurring before or after that waiver. No failure to exercise, or delay in exercising, any rights, remedy, power or privilege arising from this Warrant Certificate shall operate or be construed as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.

 

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Section 23.                                   Severability. If any term or provision of this Warrant Certificate is invalid, illegal or unenforceable in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other term or provision of this Warrant Certificate or invalidate or render unenforceable such term or provision in any other jurisdiction.

 

Section 24.                                   Governing Law. This Warrant Certificate shall be governed by and construed in accordance with the internal laws of the State of New York without giving effect to any choice or conflict of law provision or rule (whether of the State of New York or any other jurisdiction) that would cause the application of laws of any jurisdiction other than those of the State of New York.

 

Section 25.                                   Submission to Jurisdiction. Any legal suit, action or proceeding arising out of or based upon this Warrant Certificate or the transactions contemplated hereby may be instituted in the federal courts of the United States of America or the courts of the State of New York in each case located in the city of New York and County of New York, and each party irrevocably submits to the exclusive jurisdiction of such courts in any such suit, action or proceeding. Service of process, summons, notice or other document by certified or registered mail to such party’s address set forth herein shall be effective service of process for any suit, action or other proceeding brought in any such court. The parties irrevocably and unconditionally waive any objection to the laying of venue of any suit, action or any proceeding in such courts and irrevocably waive and agree not to plead or claim in any such court that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum.

 

Section 26.                                   Waiver of Jury Trial. EACH OF THE COMPANY AND THE HOLDER  ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS WARRANT CERTIFICATE IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES AND, THEREFORE, EACH SUCH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LEGAL ACTION ARISING OUT OF OR  RELATING TO THIS WARRANT CERTIFICATE OR THE TRANSACTIONS CONTEMPLATED HEREBY.

 

Section 27.                                   Counterparts. This Warrant Certificate may be executed in counterparts, each of which shall be deemed an original, but all of which together shall be deemed to be one and the same agreement.  A signed copy of this Warrant Certificate delivered by facsimile, e-mail or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Warrant Certificate.

 

Section 28.                                   No Strict Construction. This Warrant Certificate shall be construed without regard to any presumption or rule requiring construction or interpretation against the party drafting an instrument or causing any instrument to be drafted.

 

[SIGNATURE PAGE FOLLOWS]

 

23

 

IN WITNESS WHEREOF, the Company has duly executed this Warrant Certificate on the Issue Date.

 

	
 
    	
KADMON   HOLDINGS, LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

Accepted and agreed,

 

[·]

 

 

	
By
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    

 

24Exhibit 10.49

 

EXECUTION VERSION

 

EXCHANGE AGREEMENT

 

BY AND AMONG

 

KADMON HOLDINGS, LLC,

 

KADMON PHARMACEUTICALS, LLC

 

AND

 

THE INVESTORS LISTED ON ANNEX I

 

June 8, 2016

 

 

Table of Contents

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
ARTICLE I DEFINITIONS
    	
1
    
	
 
    	
 
    	
 
    
	
ARTICLE II EXCHANGE; CLOSING
    	
1
    
	
 
    	
 
    	
 
    
	
2.1
    	
Exchange
    	
1
    
	
 
    	
 
    	
 
    
	
2.2
    	
Closing
    	
2
    
	
 
    	
 
    	
 
    
	
ARTICLE III REPRESENTATIONS AND WARRANTIES   OF HOLDINGS AND THE COMPANY
    	
3
    
	
 
    	
 
    	
 
    
	
3.1
    	
Power and Authority
    	
3
    
	
 
    	
 
    	
 
    
	
3.2
    	
Authorization; Enforceability
    	
4
    
	
 
    	
 
    	
 
    
	
3.3
    	
Capitalization
    	
4
    
	
 
    	
 
    	
 
    
	
3.4
    	
Financial Statements
    	
4
    
	
 
    	
 
    	
 
    
	
3.5
    	
Junior Notes
    	
5
    
	
 
    	
 
    	
 
    
	
3.6
    	
Compliance
    	
5
    
	
 
    	
 
    	
 
    
	
3.7
    	
Disclosure
    	
5
    
	
 
    	
 
    	
 
    
	
3.8
    	
Reliance by the Investors
    	
5
    
	
 
    	
 
    	
 
    
	
3.9
    	
No Side Agreements
    	
5
    
	
 
    	
 
    	
 
    
	
ARTICLE IV REPRESENTATIONS AND WARRANTIES   OF THE INVESTORS
    	
6
    
	
 
    	
 
    	
 
    
	
4.1
    	
No Public Sale or Distribution
    	
6
    
	
 
    	
 
    	
 
    
	
4.2
    	
Investor Status
    	
6
    
	
 
    	
 
    	
 
    
	
4.3
    	
Transfer or Resale
    	
6
    
	
 
    	
 
    	
 
    
	
4.4
    	
Validity; Enforcement
    	
7
    
	
 
    	
 
    	
 
    
	
4.5
    	
ERISA
    	
7
    
	
 
    	
 
    	
 
    
	
ARTICLE V COVENANTS
    	
8
    
	
 
    	
 
    	
 
    
	
5.1
    	
Expenses
    	
8
    
	
 
    	
 
    	
 
    
	
5.2
    	
Restrictive Legends
    	
8
    
	
 
    	
 
    	
 
    
	
5.3
    	
Board Matters
    	
8
    
	
 
    	
 
    	
 
    
	
ARTICLE VI INDEMNIFICATION
    	
10
    
	
 
    	
 
    	
 
    
	
ARTICLE VII CONDITIONS TO CLOSING;   TERMINATION
    	
11
    
	
 
    	
 
    	
 
    
	
7.1
    	
Conditions to the Obligations   of the Investors
    	
11
    
	
 
    	
 
    	
 
    
	
7.2
    	
Termination
    	
12
    
	
 
    	
 
    	
 
    
	
7.3
    	
Effect of Termination
    	
12
    

 

 

	
ARTICLE VIII MISCELLANEOUS PROVISIONS
    	
13
    
	
 
    	
 
    	
 
    
	
8.1
    	
Amendment
    	
13
    
	
 
    	
 
    	
 
    
	
8.2
    	
Extension; Waiver
    	
13
    
	
 
    	
 
    	
 
    
	
8.3
    	
No Third Party Beneficiaries
    	
13
    
	
 
    	
 
    	
 
    
	
8.4
    	
Successors and Assigns
    	
13
    
	
 
    	
 
    	
 
    
	
8.5
    	
Entire Agreement
    	
13
    
	
 
    	
 
    	
 
    
	
8.6
    	
Notices
    	
14
    
	
 
    	
 
    	
 
    
	
8.7
    	
Governing Law; Choice or   Jurisdiction and Venue
    	
15
    
	
 
    	
 
    	
 
    
	
8.8
    	
Waiver of Jury Trial
    	
15
    
	
 
    	
 
    	
 
    
	
8.9
    	
Remedies
    	
16
    
	
 
    	
 
    	
 
    
	
8.10
    	
Severability
    	
16
    
	
 
    	
 
    	
 
    
	
8.11
    	
Replacement of Certificates
    	
16
    
	
 
    	
 
    	
 
    
	
8.12
    	
Termination of the Credit   Agreement
    	
16
    
	
 
    	
 
    	
 
    
	
8.13
    	
Counterparts; Facsimile   Signatures
    	
17
    
	
 
    	
 
    	
 
    
	
8.14
    	
Incorporation of Recitals,   Annexes, Exhibits and Schedules
    	
17
    
	
 
    	
 
    	
 
    
	
8.15
    	
Interpretation; Construction
    	
17
    
	
 
    	
 
    	
 
    
	
8.16
    	
Headings
    	
18
    

 

	
Exhibit A
    	
Form of Joinder
    	
 
    
	
Exhibit B
    	
Form of Preferred   Stock COD
    	
 
    
	
Exhibit C
    	
Form of Registration   Rights Agreement
    	
 
    

 

ii

 

EXCHANGE AGREEMENT

 

This EXCHANGE AGREEMENT (this “Agreement”), dated as of June 8, 2016, is by and among KADMON HOLDINGS, LLC, a Delaware limited liability company (“Holdings”), KADMON PHARMACEUTICALS, LLC, a Pennsylvania limited liability company (the “Company”), and each investor identified on the signature pages hereto (collectively, the “Investors” and each, an “Investor”).

 

WHEREAS, the Company, Holdings, the other guarantors party thereto, the Investors, and Macquarie US Trading LLC, as administrative agent, collateral agent and custodian (in such capacity, the “Administrative Agent”) are party to that certain Third Amended and Restated Senior Secured Convertible Credit Agreement, dated as of August 28, 2015 (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”).

 

WHEREAS, pursuant to the terms of the Credit Agreement, each Investor has advanced a loan (collectively, the “Loans” and each, a “Loan”) to the Company in the outstanding principal amounts set forth opposite such Investor’s name on Annex I.

 

WHEREAS, pursuant to the terms of the Credit Agreement, the Loans may be converted, at each Investor’s election, to fully paid and non-assessable Equity Interests of Holdings.

 

WHEREAS, Holdings intends to convert from a limited liability company to a corporation and, thereafter, consummate a firm-commitment underwritten initial public offering of its Common Stock (the “Holdings IPO”).

 

WHEREAS, subject to the terms and conditions set forth in this Agreement, the Investors desire to convert their Loans pursuant to the terms of the Credit Agreement, as provided for and as otherwise set forth herein.

 

NOW, THEREFORE, in consideration of the premises and the mutual benefits to be derived from this Agreement and the representations, warranties, covenants, agreements and conditions contained herein, the parties hereto hereby agree as set forth below.

 

ARTICLE I
 DEFINITIONS

 

Capitalized terms used herein shall have the respective meanings assigned to such terms in Annex II. Capitalized terms used herein but not defined in Annex II shall have the meanings assigned to such terms in the Credit Agreement.

 

ARTICLE II
 EXCHANGE; CLOSING

 

2.1                               Exchange.

 

(a)                                 Subject to ARTICLE VII and the other terms and conditions of this Agreement, at the Closing the Loans shall be converted as set forth below:

 

 

(i)                                     Each Investor’s Allocable Share of the Converted Unregistered Common Amount shall automatically be converted into shares of Common Stock in accordance with the terms of the Credit Agreement; provided that, notwithstanding anything to the contrary contained in the Credit Agreement, with respect to the conversion contemplated by this Section 2.1(a)(i), (i) the “Conversion Price” shall be an amount equal to the Adjusted Conversion Price, (ii) the “Conversion Date” shall be the Closing Date, (iii) this Agreement shall constitute the “Conversion Notice,” and (iv) the “Conversion Amount” shall be an amount equal to the Converted Unregistered Common Amount.

 

(ii)                                  Each Investor’s Allocable Share of Converted Registered Common Amount shall automatically be converted into shares of Common Stock in accordance with the terms of the Credit Agreement; provided that, notwithstanding anything to the contrary contained in the Credit Agreement, with respect to the conversion contemplated by this Section 2.1(a)(ii), (i) the “Conversion Price” shall be an amount equal to the Adjusted Registered Conversion Price, (ii) the “Conversion Date” shall be the Closing Date, (iii) this Agreement shall constitute the “Conversion Notice,” and (iv) the “Conversion Amount” shall be an amount equal to the Converted Registered Common Amount.

 

(iii)                               Each Investor’s Allocable Share of the Converted Preferred Amount shall automatically be converted into shares of Preferred Stock at a conversion price of $1,000 per share.

 

(iv)                              In consideration of the make-whole payable with respect to the outstanding Loans in connection with specific prepayment events, the Investors shall be paid an aggregate amount equal to the Make-Whole Amount. Each Investor’s Allocable Share of the Make-Whole Amount shall be paid through the delivery to such Investor of the number of newly issued shares of Common Stock obtained by dividing the Make-Whole Amount by the Adjusted Conversion Price.

 

(b)                                 Each Investor hereby agrees, and the Administrative Agent hereby acknowledges, that after giving effect to the transactions described in Section 2.1(a), all Loans and accrued interest thereon shall be deemed paid in full and no longer outstanding.

 

(c)                                  At the Closing, the transactions described in Section 2.1(a) shall be deemed to occur concurrently with the consummation of the Holdings IPO.

 

2.2                               Closing.

 

(a)                                 The transactions described in Section 2.1(a) shall take place at the offices of DLA Piper LLP, 1251 Avenue of the Americas, New York, New York 10020 at a closing (the “Closing”) on the Closing Date.

 

(b)                                 At the Closing, Holdings shall deliver or cause to be delivered to the Investors:

 

2

 

(i)                                     A signed counterpart to each Related Agreement to which Holdings or the Company is a party;

 

(ii)                                  A certificate, dated as of the Closing Date, signed by a duly authorized officer of each of Holdings and the Company, certifying that the conditions set forth in Sections 7.1(a), 7.1(b), 7.1(c), 7.1(g), 7.1(h), 7.1(i), and 7.1(j) have been satisfied;

 

(iii)                               Certificates evidencing (x) the number of shares of Common Stock issuable upon the conversions described in Sections 2.1(a)(i), 2.1(a)(ii), and 2.1(a)(iv), together with payment in lieu of any fraction of a share, as provided in Section 15.03 of the Credit Agreement, and (y) the number of shares of Preferred Stock issuable upon the conversion described in Section 2.1(a)(iii), together with payment in lieu of any fraction of a share;

 

(iv)                              A Certificate of the Secretary of Holdings, dated as of the Closing Date, (i) certifying the resolutions adopted by the Board approving the transactions contemplated by this Agreement and the Related Agreements and the issuance of the Common Stock and Preferred Stock contemplated by Section 2.1(a), (ii) certifying the current versions of the Charter and By-laws of Holdings, in each case as amended, restated and/or supplemented, and (iii) certifying as to the signatures and authority of persons signing this Agreement and the Related Agreements on behalf of each of Holdings and the Company; and

 

(v)                                 A stamped copy of the Preferred Stock COD, as filed with the Secretary of State of the State of Delaware.

 

(c)                                  At the Closing, each Investor, severally and not jointly, shall deliver or cause to be delivered to Holdings a signed counterpart to each Related Agreement to which such Investor is a party.

 

ARTICLE III
 REPRESENTATIONS AND WARRANTIES OF HOLDINGS AND THE COMPANY

 

Each of Holdings and the Company represents and warrants to each Investor, as of the date hereof, as set forth below:

 

3.1                               Power and Authority.

 

Each of Holdings and the Company (a) is duly organized and validly existing under the laws of its jurisdiction of organization, (b) has all requisite corporate or other organizational power, and has all governmental licenses, authorizations, consents and approvals necessary to own its assets and carry on its business as now being or as proposed to be conducted except to the extent that failure to have the same could not reasonably be expected to have a Material Adverse Effect, (c) is qualified to do business and is in good standing in all jurisdictions in which the nature of the business conducted by it makes such qualification necessary except to the extent that failure to have the same could not reasonably be expected to have a Material Adverse Effect,

 

3

 

and (d) has full power and authority to perform its obligations under this Agreement and each Related Agreement to which it is a party.

 

3.2                               Authorization; Enforceability.

 

The transactions contemplated by this Agreement and each Related Agreement are within each of Holdings’ and the Company’s corporate or other organizational powers and have been duly authorized by all necessary corporate or other organizational action and, if required, by all necessary stockholder or member action. This Agreement has been duly executed and delivered by each of Holdings and the Company and constitutes, and each of the other Related Agreements to which Holdings and the Company is a party when executed and delivered by Holdings and the Company will constitute, a legal, valid and binding obligation of Holdings and the Company, enforceable against Holdings and the Company in accordance with its terms, except as such enforceability may be limited by (a) bankruptcy, insolvency, reorganization, moratorium or similar laws of general applicability affecting the enforcement of creditors’ rights and (b) the application of general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).

 

3.3                               Capitalization.

 

(a)                                 Except as set forth on Schedule 3.3 hereto, neither Holdings nor the Company has outstanding any Equity Interests or securities convertible or exchangeable for any Equity Interests or containing any profit participation features, and neither Holdings nor the Company has any outstanding rights (including preemptive rights, rights of first refusal or first offer) or options to subscribe for or purchase its Equity Interests or any securities convertible into or exchangeable for its Equity Interests. Neither Holdings nor the Company is subject to any obligation (contingent or otherwise) to repurchase or otherwise acquire or retire any Equity Interests or other warrants, options or other rights to acquire its Equity Interests. Schedule 3.3 hereto describes all Equity Interests issued by Holdings and all warrants, options or other rights to acquire its Equity Interests on or prior to the date hereof.

 

(b)                                 When issued pursuant to this Agreement, the Common Stock and Preferred Stock issuable pursuant to Section 2.1(a), will be duly authorized, duly and validly issued, fully paid and nonassessable, free and clear of all liens and will not be subject to preemptive or similar rights of the holders of Equity Interests of Holdings. No vote or approval of any class or series of capital stock or any Equity Interests in Holdings is necessary to approve the issuance of the Common Stock and Preferred Stock contemplated by Section 2.1(a).

 

3.4                               Financial Statements.

 

The Historical Financial Statements present fairly, in all material respects, the financial position and results of operations and cash flows of Holdings and its subsidiaries as of the dates and for the periods reported therein in accordance with GAAP, subject, in the case of any such unaudited financial statements, to changes resulting from audit and normal year-end adjustments. Neither Holdings nor any of its subsidiaries has any contingent liabilities or unusual forward or long-term commitments not disclosed in the Historical Financial Statements or the notes thereto,

 

4

 

which, in any such case, are material in relation to the business, operations, condition (financial or otherwise), performance or property of Holdings and its subsidiaries taken as a whole.

 

3.5                               Junior Notes.

 

The conversion of the Junior Notes into shares of Common Stock, to be effective as of the Closing Date, will be on terms no more favorable to the holders of the Junior Notes than is provided to the Investors with respect to the transactions contemplated by Section 2.1(a)(i).

 

3.6                               Compliance.

 

Except as would not, individually or in the aggregate, reasonably be expected to have or result in a Material Adverse Effect, (a) neither Holdings nor any of its subsidiaries is in violation of any order of any court, arbitrator or governmental body, and (b) neither Holdings nor any of its subsidiaries is or has been in violation of any statute, rule or regulation of any Governmental Authority.

 

3.7                               Disclosure.

 

Each of Holdings and the Company has disclosed to the Investors all matters that, to its knowledge, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect. None of the reports, financial statements, certificates or other information furnished in writing by or on behalf of the Holdings or the Company to the Investors in connection with the negotiation of this Agreement and the other Related Agreements or delivered hereunder or thereunder (as modified or supplemented by other information so furnished) contains any material misstatement of material fact or omits to state any material fact necessary to make the statements therein, taken as a whole, in the light of the circumstances under which they were made, not misleading.

 

3.8                               Reliance by the Investors.

 

Each of Holdings and the Company acknowledges that the Investors will rely upon the truth and accuracy of, and Holdings’ and the Company’s compliance with, the representations, warranties, agreements, covenants, acknowledgements and understandings of Holdings and the Company set forth herein.

 

3.9                               No Side Agreements.

 

Neither Holdings nor the Company is a party to any side letter or other agreement or arrangement (other than the Credit Agreement and the other Loan Documents) with any Person with respect to the Loans or the transactions contemplated by this Agreement.

 

5

 

ARTICLE IV
 REPRESENTATIONS AND WARRANTIES OF THE INVESTORS

 

Each Investor represents and warrants as of the date hereof and as of the Closing Date, as set forth below.

 

4.1                               No Public Sale or Distribution.

 

The Investor is acquiring the Common Stock (excluding the Common Stock issued pursuant to Section 2.1(a)(ii)) and the Preferred Stock for its own account and not with a view towards, or for resale in connection with, the public sale or distribution thereof in a manner that would violate the Securities Act or the “Blue Sky” laws of any state of the United States or the applicable laws of any other jurisdiction; provided, however, that by making the representations herein, the Investor does not agree to hold any of the Common Stock or the Preferred Stock for any minimum or other specific term and reserves the right to dispose of the Common Stock and the Preferred Stock at any time in accordance with or pursuant to a registration statement or an exemption under the Securities Act.

 

4.2                               Investor Status.

 

The Investor is one of the following: (i) an “accredited investor” as defined in Rule 501(a) under the Securities Act; (ii) a “qualified institutional buyer” as defined in Rule 144A under the Securities Act (“QIB”); or (iii) a non-”U.S. person” (as defined under Regulation S) that is purchasing the Common Stock and the Preferred Stock in an “offshore transaction” (as defined in Regulation S) in compliance with Regulation S and with laws applicable to such persons in jurisdictions outside of the United States.

 

4.3                               Transfer or Resale.

 

The Investor understands that: (i) the Common Stock and the Preferred Stock (and the shares of Common Stock issuable upon conversion thereof) have not been registered under the Securities Act or any state securities laws and (in the case of the Preferred Stock) will not be registered under the Securities Act or any state securities law; and (ii) the Investor agrees that if it decides to offer, sell or otherwise transfer any of the Common Stock, Preferred Stock or shares of Common Stock issuable upon conversion thereof, such securities may be offered, sold or otherwise transferred only: (A) to Holdings or any of its Subsidiaries, (B) pursuant to a registration statement which has been declared effective under the Securities Act, (C) for so long as such securities are eligible for resale pursuant to Rule 144A under the Securities Act, to a Person it reasonably believes is a QIB that purchases for its own account or for the account of a QIB to whom notice is given that the transfer is being made in reliance on Rule 144A under the Securities Act, (D) pursuant to Regulation S, (E) to an institutional “accredited investor” within the meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act that is acquiring such securities for its own account, or for the account of such an institutional “accredited investor,” for investment purposes and not with a view to, or for offer or sale in connection with, any distribution in violation of the Securities Act, (F) pursuant to an exemption from registration provided under Section 4(a)(7) of the Securities Act or (G) pursuant to an exemption from registration provided by Rule 144 under the Securities Act or any other available exemption from

 

6

 

the registration requirements of the Securities Act. The Investor acknowledges that Holdings reserves the right prior to any offer, sale or other transfer pursuant to clause (E), (F) or (G) in the immediately preceding sentence to require the delivery of opinions of counsel, certifications and/or other information satisfactory to Holdings in its reasonable discretion. The Investor acknowledges and agrees that (i) a restrictive legend to the effect of the foregoing may be placed on the certificates representing the Common Stock and Preferred Stock to be issued pursuant to this Agreement, (ii) a notation shall be made in the appropriate records of Holdings indicating that such Common Stock and Preferred Stock is subject to restrictions on transfer and, if Holdings should at some time in the future engage the services of a stock transfer agent, appropriate stop transfer restrictions will be issued to such stock transfer agent, and (iii) such Common Stock and Preferred Stock may be subject to additional transfer restrictions to the extent provided in any lock-up agreement between the Investor and the managing underwriters for the Holdings IPO. In connection with any transfer of the Preferred Shares by the Investor to an Affiliate of the Investor, the Investor shall provide written notice to the Company that the transferee is an Affiliate of the Investor and specify the number of Preferred Shares so transferred and such transferee shall, as a condition to such transfer, agree that upon any transfer by it to an Affiliate of such transferee it shall deliver written notice to the Company of the Affiliate status of such transferee and the number of Preferred Shares so transferred. The Investor understands that no active trading market currently exists for the Common Stock or the Preferred Stock, Holdings does not intend to list the Preferred Stock on any national securities exchange and an active market may not develop for the Common Stock or the Preferred Stock. Notwithstanding anything to the contrary contained in this Section 4.3, all references to “Common Stock” contained in this Section 4.3 specifically exclude the Common Stock issued pursuant to Section 2.1(a)(ii).

 

4.4                               Validity; Enforcement.

 

This Agreement has been duly and validly authorized, executed and delivered on behalf of the Investor and constitutes the legal, valid and binding obligation of the Investor, enforceable against the Investor in accordance with its terms, except as such enforceability may be limited by (a) bankruptcy, insolvency, reorganization, moratorium or similar laws of general applicability affecting the enforcement of creditors’ rights and (b) the application of general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).

 

4.5                               ERISA.

 

(a)                                 Either (i) the Investor is not purchasing or holding the Common Stock and the Preferred Stock (or any interest in such securities) with the assets of (A) an employee benefit plan that is subject to Title I of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), (B) a plan, individual retirement account or other arrangement that is subject to Section 4975 of the Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder (the “Code”), (C) an entity whose underlying assets are considered to include “plan assets” of any of the foregoing by reason of such plan’s, account’s or arrangement’s investment in such entity, or (D) a governmental, church, non-U.S. or other plan that is subject to any federal, state, local, non-U.S. or other laws, or rules or regulations that are similar to such provisions of ERISA or

 

7

 

the Code (collectively, “Similar Laws”); or (ii) the purchase and holding of the Common Stock and the Preferred Stock by the Investor, throughout the period that it holds such securities, and the disposition of such securities or an interest therein will not constitute (i) a non-exempt prohibited transaction under Section 406 of ERISA or Section 4975 of the Code, or (ii) a violation under any applicable Similar Laws.

 

(b)                                 Each Investor acknowledges that Holdings will rely upon the accuracy and truthfulness of the foregoing representations and hereby consents to such reliance.

 

ARTICLE V
 COVENANTS

 

5.1                               Expenses.

 

Promptly after written demand therefore, Holdings and the Company shall pay each Investor’s documented out-of-pocket fees and expenses relating to the negotiation of this Agreement and each Related Agreement and the transactions contemplated hereby and thereby and the Holdings IPO, including reasonably incurred legal fees and expenses of Akin Gump Strauss Hauer & Feld LLP. Notwithstanding the foregoing, the Company shall not be responsible for the fees and expenses of Skadden, Arps, Slate, Meagher & Flom LLP or any other counsel (other than Akin Gump Strauss Hauer & Feld LLP) in excess of $50,000.

 

5.2                               Restrictive Legends.

 

Except with respect to any “control” securities (as such term is understood with respect to Rule 144 under the Securities Act), at the earliest possible time when such legend is no longer required pursuant to applicable law but in any event no later than the date that is one (1) year after the Closing Date, Holdings shall remove any restrictive legend on the certificates representing the Common Stock and Preferred Stock to be issued pursuant to this Agreement.

 

5.3                               Board Matters.

 

(a)                                 From the date of this Agreement and for so long as GoldenTree Asset Management LP and its affiliates (collectively, “GTAM”) collectively beneficially own at least 7.5% of the then-outstanding Common Stock (taking into account (a) the exercise of all other options, warrants and other equity-linked securities held by GTAM and (b) the conversion of the Preferred Stock held by GTAM) (such amount, the “Threshold Amount”), GTAM will have the right, at its option, to designate one (1) director to the Board (the “GTAM Designee”) or one (1) observer to the Board (the “GTAM Observer”) (provided that such GTAM Designee is acceptable to Holdings in the good faith reasonable discretion of the Board) by providing notice to the Company naming the GTAM Designee or GTAM Observer.

 

(b)                                 For so long as GTAM beneficially owns at least the Threshold Amount, within 2 business days’ of GTAM providing notice to Holdings naming a GTAM Designee, Holdings shall and shall cause the Board and any applicable committee or subcommittee of the Board to take all corporate action necessary to appoint the GTAM

 

8

 

Designee to the Board as of the date that is 2 business days after the date of GTAM providing such notice, in each case with a term expiring at the next annual meeting of stockholders at which directors are to be elected (the “Stockholders Meeting”). For so long as GTAM beneficially owns at least the Threshold Amount, Holdings shall and shall cause the Board and any applicable committee or subcommittee of the Board to (i) include the GTAM Designee (or any GTAM Replacement Designee (as defined below)) as a nominee for election to the Board on the slate of nominees recommended by the Board and any applicable committee or subcommittee of the Board in Holdings’ proxy statement and on its proxy card relating to the Stockholders Meeting, (ii) use its commercially reasonable efforts to cause the election of the GTAM Designee to the Board at any Stockholders Meeting, including by recommending that Holdings’ stockholders vote in favor of the GTAM Designee and otherwise supporting the GTAM Designee in a manner no less rigorous and favorable than the manner in which Holdings supports the Board’s other nominees to the Board and (iii) appoint the GTAM Designee (or GTAM Replacement Designee) to each committee and subcommittee of the Board (including any such committee and subcommittee which may subsequently be created) on which such person desires to serve, subject to applicable restrictions under the corporate governance listing standards of the New York Stock Exchange. For so long as GTAM beneficially owns at least the Threshold Amount, if the GTAM Designee (or any GTAM Replacement Designee) is unable or unwilling to serve as a director, resigns as a director (including as the result of a failure to receive the requisite vote at a Stockholders Meeting) or is removed as a director, then GTAM shall have the ability to designate a substitute designee (a “GTAM Replacement Designee”) to fill such vacancy created by the departure of the GTAM Designee by providing notice to Holdings, and Holdings shall and shall cause the Board and any applicable committee or subcommittee of the Board to take all corporate action necessary to appoint the GTAM Replacement Designee to the Board as of the date that is 2 business days after the date of GTAM providing such notice, in each case with a term expiring at the Stockholders Meeting. Each GTAM Designee or GTAM Replacement Designee that serves as a member of the Board (or committee or subcommittee of the Board) shall have the same rights and benefits, including with respect to insurance, indemnification, exculpation, compensation and fees, as are applicable to all independent directors of Holdings (or, in the case of services as a member of a committee or subcommittee of Holdings, as are applicable to the other members of such committee or subcommittee). Notwithstanding anything to the contrary, GTAM shall not have the right to have a GTAM Designee included in the Board’s slate nominated for election to the Board if the election of such GTAM Designee would cause more than one representative of GTAM to be serving on the Board.

 

(c)                                  The GTAM Observer shall be entitled to (i) attend (in person, telephonically or by such other means as is normally available to members of the Board) all meetings (both regular and special) of the Board and each committee and subcommittee of the Board (including executive or similar sessions), in a nonvoting capacity only, (ii) receive written notice of, and agendas for, all meetings (both regular and special) of the Board and each committee and subcommittee of the Board (including proposed minutes of previous meetings if not previously ratified) at the same time as members of the Board receive such notice and agendas, (iii) if the Board or any committee or subcommittee of the Board proposes to take any action by written consent in lieu of a meeting, receive (A) a draft of such written consent at the same time and in the same manner as if the GTAM

 

9

 

Observer were a member of the Board or such committee or subcommittee of the Board and (B) a copy of such written consent when sent to members of the Board or such committee or subcommittee of the Board for execution and (iv) receive all other documents, notices, presentations, minutes, reports, consents, resolutions and written materials provided to members of the Board and each committee and subcommittee of the Board. The GTAM Observer may contact any member of the Board and each committee and subcommittee of the Board to discuss pending actions and any other matters in such body’s discretion. The GTAM Observer shall not be deemed a director of Holdings. For the avoidance of doubt, the GTAM Observer shall not (i) have voting rights or the right to participate in any action by written consent, (ii) have the right to call special meetings of the Board, nor (iii) be counted for purposes of determining the size of the Board or whether a quorum has been obtained. Holdings shall pay the GTAM Observer’s reasonable out-of-pocket expenses (including the reasonable cost of airfare, meals and lodging) in connection with the GTAM Observer’s in-person attendance at such meetings. For so long as GTAM beneficially owns at least the Threshold Amount, in the event that the GTAM Observer is unable or unwilling to attend any meetings of the Board or any committee or subcommittee thereof as set forth in this section, or GTAM wishes to replace the GTAM Observer, GTAM may designate an alternate observer by providing notice to the Company (the “Alternate Observer”). The term “GTAM Observer” herein shall also refer to any Alternate Observer that is actually attending any meeting of the Board or any committee or subcommittee thereof in the place of the applicable GTAM Observer. Notwithstanding anything to the contrary in this Agreement, Holdings reserves the right to withhold any information and to exclude the GTAM Observer from the portion of any meeting (i) to the extent that the access to such information or attendance at such portion of any meeting violates the attorney-client privilege between Holdings and its counsel in respect of any investigation, action or proceeding involving Holdings or any of its affiliates (it being understood that Holdings cannot exercise its right to withhold information and/or exclude the GTAM Observer upon the mere presence of Holdings’ legal counsel at a meeting), as determined by counsel for Holdings, or (ii) any portion of any meeting or information at which or in which the obligations of Holdings (or any of its affiliates) under the Loan Documents (as defined in the Term Loan Agreement), or any other obligations of Holdings (or any of its affiliates) to GTAM, are discussed. Holdings shall provide the GTAM Observer with redacted information to the extent the foregoing sentence applies. Notwithstanding anything to the contrary, the GTAM Observer (or Alternate Observer) shall not be entitled to attend any meeting or receive any notice or other information pursuant to this Section 5.3(c) unless and until such person has entered into a confidentiality agreement reasonably acceptable to the Company.

 

ARTICLE VI
 INDEMNIFICATION

 

Holdings and the Company shall, notwithstanding any termination of this Agreement, indemnify and hold harmless, the Administrative Agent, each Investor, each Investor’s and the Administrative Agent’s respective members, stockholders, officers, directors, agents and employees and each Person who controls such Investor or the Administrative Agent (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act), to the fullest extent permitted by applicable law, from and against any and all Losses, as incurred, arising out

 

10

 

of or based on (i) any misrepresentation or breach of any representation or warranty made by Holdings or the Company in this Agreement or any Related Agreement or any other certificate, instrument or document contemplated hereby or thereby, (ii) any breach of any agreement or obligation by Holdings or the Company of this Agreement or any Related Agreement, or (iii) any untrue or alleged untrue statement of a material fact contained in the Registration Statement, any Prospectus or any form of Holdings prospectus or in any amendment or supplement thereto or in any Holdings preliminary prospectus, or arising out of or relating to any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of any Prospectus or form of prospectus or supplement thereto, in the light of the circumstances under which they were made) not misleading, except to the extent that such untrue statements, alleged untrue statements, omissions or alleged omissions are based solely upon information regarding any Investor furnished in writing to Holdings by such Investor or its agent for use therein.

 

ARTICLE VII
 CONDITIONS TO CLOSING; TERMINATION

 

7.1                               Conditions to the Obligations of the Investors.

 

The obligations of the Investors to consummate the transactions contemplated by this Agreement are subject to the satisfaction or written waiver by the Investors (to the extent such condition can be waived), at or prior to the Closing, of each of the following conditions:

 

(a)                                 The Holdings IPO, with minimum gross proceeds of $75,000,000, the net proceeds of which shall only be used as described in the draft prospectus for such offering previously provided to the Investors, shall have been consummated.

 

(b)                                 The representations and warranties of Holdings and the Company shall be true and correct in all material respects (except for any representations and warranties that are already qualified as to “materiality” or “Material Adverse Effect,” which representations and warranties shall be true and correct in all respects) at and as of the Closing Date as if made on the Closing Date, except for the representations and warranties of Holdings and the Company set forth in Sections 3.2, 3.3, and 3.7 and 3.9, which shall be true and correct in all respects at and as of the Closing Date as if made on the Closing Date.

 

(c)                                  Each of Holdings and the Company shall have performed or complied in all material respects with all obligations and covenants required by this Agreement to be performed or complied with by Holdings or the Company, as applicable, at or prior to the Closing.

 

(d)                                 Each Investor shall have received each of the closing deliverables listed in Section 2.2(b).

 

(e)                                  Holdings shall have duly filed the Preferred Stock COD with the Secretary of State of the State of Delaware and the Preferred Stock COD shall have become effective.

 

11

 

(f)                                   Holdings and the Company shall have paid or reimbursed the documented out-of-pocket fees and expenses of each Investor relating to the negotiation of this Agreement and each Related Agreement and the transactions contemplated hereby and thereby, including reasonably incurred legal fees and expenses.

 

(g)                                  From the date of this Agreement, there shall not have occurred any Material Adverse Effect, nor shall any event or events have occurred that, individually or in the aggregate, with or without the lapse of time, would reasonable be expected to result in a Material Adverse Effect.

 

(h)                                 The Registration Statement, including the Prospectus, amendments and supplements to such Registration Statement or Prospectus, including pre- and post-effective amendments, all exhibits thereto, and all material incorporated by reference or deemed to be incorporated by reference in the Registrations Statement shall not include any untrue statement of material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.

 

(i)                                     The Junior Notes shall have converted into shares of Common Stock at a conversion price equal to eighty percent (80%) of the initial public offering price per share in the Holdings IPO and on terms no more favorable to the holders of the Junior Notes than is provided to the Investors with respect to the transactions contemplated by Section 2.1(a)(i).

 

(j)                                    The shares of Common Stock issued to the Investors pursuant to Section 2.1(a)(ii) shall have been registered for sale pursuant to the Registration Statement.

 

7.2                               Termination.

 

This Agreement may be terminated and the transactions contemplated by this Agreement abandoned, at any time prior to the Closing:

 

(a)                                 By the Investors, upon written notice from all Investors to Holdings and the Company, if the Holdings IPO is not consummated within 90 days of the date of this Agreement; or

 

(b)                                 By the mutual written consent of the parties hereto.

 

7.3                               Effect of Termination.

 

In the event of termination in accordance with Section 7.2, this Agreement will forthwith become void and there will be no liability on the part of any party hereto, except for the provisions of this Section 7.3 and Section 5.1, ARTICLE VI and ARTICLE VIII, each of which shall survive termination.

 

12

 

ARTICLE VIII
 MISCELLANEOUS PROVISIONS

 

8.1                               Amendment.

 

This Agreement shall not be altered or otherwise amended except pursuant to an instrument in writing signed by each party hereto.  Notwithstanding the foregoing, an amendment to the provisions of Section 5.3 shall only require the consent of GTAM.

 

8.2                               Extension; Waiver.

 

At any time, the parties may (a) extend the time for the performance of any of the obligations or other acts of the other parties; (b) waive any inaccuracies in the representations and warranties contained in this Agreement or in any document delivered pursuant to this Agreement; or (c) waive compliance with any of the agreements or conditions contained in this Agreement. Any agreement on the part of a party to any such extension or waiver shall be valid only if set forth in an instrument in writing signed on behalf of such party, and no such waiver shall be deemed to extend to any prior or subsequent default, misrepresentation, or breach of warranty or covenant hereunder or affect in any way any rights arising by virtue of any prior or subsequent occurrence thereof.  Notwithstanding the foregoing, a waiver of compliance with any of the agreements of Section 5.3 shall only require the consent of GTAM.

 

8.3                               No Third Party Beneficiaries.

 

Except as expressly set forth herein, this Agreement shall not confer any rights or remedies upon any Person other than the parties hereto and their respective successors and permitted assigns, personal representatives, heirs and estates, as the case may be.

 

8.4                               Successors and Assigns.

 

All the terms and provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns, personal representatives, heirs and estates, as the case may be. Neither this Agreement nor any rights hereunder shall be assigned in whole or in part by Holdings or the Company without the prior written consent of the Investors. This Agreement and the rights and obligations of an Investor hereunder (other than the rights and obligations provided under Section 5.3, which shall be personal to GTAM and non-assignable) may be assigned to any Person who executes an Assignment and Acceptance Agreement in the form attached as Exhibit I to the Credit Agreement and a joinder to this Agreement in the form attached hereto as Exhibit A; provided that the Company is given written notice of such proposed assignment at least two Business Days prior to such assignment.

 

8.5                               Entire Agreement.

 

This Agreement, the Related Agreements and the other agreements and documents referenced herein (including, but not limited to, the Schedules and the Exhibits (in their executed form)) contain all of the agreements among the parties hereto with respect to the transactions

 

13

 

contemplated hereby and supersede all prior agreements or understandings whether written or oral, among the parties with respect thereto.

 

8.6                               Notices.

 

All notices, amendments, waivers or other communications pursuant to this Agreement shall be in writing and shall be deemed to have been duly given if personally delivered, sent by e-mail or facsimile, sent by nationally recognized overnight courier or mailed by registered or certified mail with postage prepaid, return receipt requested, to the parties hereto at the following addresses (or at such other address for a party as shall be specified by like notice):

 

(a)                    if to Holdings or the Company, to:

 

450 East 29th Street

New York, NY 10016

Telephone: (212) 308-6000

Fax: (212) 355-7855

Attention: Steven N. Gordon, Esq.

Email: Steve@Kadmon.com

 

with a copy (which shall not constitute notice) to:

 

DLA Piper LLP

1251 Avenue of the Americas

New York, NY 10020

Telephone: (212) 335-4509

Fax: (212) 884-8729

Attention: Sidney Burke

Email: sidney.burke@dlapiper.com

 

(b)                    if to any Investor, to the address set forth below such Investor’s name on Annex I.

 

with a copy (which shall not constitute notice) to:

 

Akin Gump Strauss Hauer & Feld LLP

One Bryant Park

New York, NY 10036

Telephone: (212) 872-1010

Fax: (212) 872-1002

Attention: David J. D’Urso

Email: ddurso@akingump.com

 

Any such notice or communication shall be deemed to have been given and received (a) when delivered, if personally delivered; (b) when sent, if sent by email on a Business Day (or, if not sent on a Business Day, on the next Business Day after the date sent by email); (c) on the next Business Day after dispatch, if sent by nationally recognized, overnight courier guaranteeing

 

14

 

next Business Day delivery and (d) on the fifth Business Day following the date on which the piece of mail containing such communication is posted, if sent by mail.

 

8.7                               Governing Law; Choice or Jurisdiction and Venue.

 

THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE DOMESTIC LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE CONFLICTS OF LAWS OR PRINCIPLES THEREOF THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF NEW YORK. WITH RESPECT TO ANY LAWSUIT OR PROCEEDING ARISING OUT OF OR BROUGHT WITH RESPECT TO THIS AGREEMENT, ANY RELATED AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY OR THEREBY, EACH OF THE PARTIES HERETO IRREVOCABLY (a) SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE UNITED STATES FEDERAL AND NEW YORK STATE COURTS LOCATED IN THE COUNTY OF NEW YORK IN THE STATE OF NEW YORK; (b) WAIVES ANY OBJECTION IT MAY HAVE AT ANY TIME TO THE LAYING OF VENUE OF ANY PROCEEDING BROUGHT IN ANY SUCH COURT; (c) WAIVES ANY CLAIM THAT SUCH PROCEEDING HAS BEEN BROUGHT IN AN INCONVENIENT FORUM; AND (d) FURTHER WAIVES THE RIGHT TO OBJECT, WITH RESPECT TO SUCH PROCEEDINGS, THAT SUCH COURT DOES NOT HAVE JURISDICTION OVER SUCH PART.

 

8.8                               Waiver of Jury Trial.

 

EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY OF ANY ACTION, PROCEEDING OR COUNTERCLAIM BASED UPON OR ARISING OUT OF THIS AGREEMENT, THE RELATED AGREEMENTS OR ANY DEALINGS BETWEEN THE PARTIES HERETO RELATING TO THE SUBJECT MATTER HEREOF OR THEREOF. EACH OF THE PARTIES HERETO ALSO WAIVES ANY BOND OR SURETY OR SECURITY UPON SUCH BOND THAT MIGHT, BUT FOR THIS WAIVER, BE REQUIRED OF THE OTHER PARTY. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS AGREEMENT OR THE RELATED AGREEMENTS, INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. EACH OF THE PARTIES HERETO ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO THIS AGREEMENT. EACH OF THE PARTIES HERETO FURTHER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED OR HAD THE OPPORTUNITY TO REVIEW THIS WAIVER WITH ITS RESPECTIVE LEGAL COUNSEL, AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH SUCH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

 

15

 

8.9                               Remedies.

 

The parties hereto shall each have and retain all rights and remedies existing in their favor under this Agreement, at law or equity, including, without limitation, rights to bring actions for specific performance and/or injunctive or other equitable relief (including, without limitation, the remedy of rescission) to enforce or prevent a breach or violation of any provision of this Agreement. All such rights and remedies shall, to the extent permitted by applicable law, be cumulative and the existence, assertion, pursuit or exercise of any thereof by a party shall not preclude such party from exercising or pursuing any other rights or remedies available to it.

 

8.10                        Severability.

 

It is the desire and intent of the parties that the provisions of this Agreement be enforced to the fullest extent permissible under the laws and public policies applied in each jurisdiction in which enforcement is sought. Accordingly, if any particular provision of this Agreement shall be adjudicated by a court of competent jurisdiction to be invalid, prohibited or unenforceable for any reason, such provision, as to such jurisdiction, shall be ineffective, without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction. Notwithstanding the foregoing, if such provision could be more narrowly drawn so as not to be invalid, prohibited or unenforceable in such jurisdiction, it shall, as to such jurisdiction, be so narrowly drawn, without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction.

 

8.11                        Replacement of Certificates.

 

If any certificate or instrument evidencing any of the shares of Common Stock or shares of Preferred Stock is mutilated, lost, stolen or destroyed, Holdings shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof, or in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory to Holdings of such loss, theft or destruction and the execution by the holder thereof of a customary lost certificate or note affidavit of that fact and an agreement to indemnify and hold harmless Holdings for any Losses in connection therewith.

 

8.12                        Termination of the Credit Agreement.

 

Effective upon consummation of the transactions described in Section 2.1(a), (i) all outstanding indebtedness (including, without limitation, for principal, interest and fees) and other Obligations of each Obligor under or relating to the Loan Documents shall be considered paid and satisfied in full and irrevocably discharged, terminated and released, (ii) all security interests and other liens granted to or held by the Administrative Agent or the Investors in the Collateral as security for the Obligations (the “Property”), if any, shall be automatically satisfied, released and discharged, without recourse, representation, warranty or other assurance of any kind, (iii) the Credit Agreement and the other Loan Documents shall terminate and be of no further force or effect, (iv) the Administrative Agent shall file UCC termination statements terminating the liens of the Administrative Agent for the benefit of the Investors on the Property of any Obligor securing the Obligations, (v) the Administrative Agent shall deliver to the Company

 

16

 

agreements releasing the Administrative Agent’s security interests in intellectual property of the Obligors and (vi) the Company (and its designees) shall be authorized and directed, without further notice, to deliver a copy of this Agreement to any bank, landlord, warehouseman, insurance company, insurance broker or other person for the purpose of evidencing the termination and release of all security interests and liens granted to or held by the Administrative Agent or the Investors in the assets and Property of the Obligors pursuant to the Loan Documents, and thereafter, any contract, agreement, control, blocked account or deposit account agreement, collateral access agreement, warehousemen waiver, commitment to deliver insurance certificates and proceeds and the like executed by any Obligor in favor of the Administrative Agent or the Investors pursuant to the Loan Documents shall be automatically terminated, without further action or consent by the Administrative Agent or the Investors. Further, after the Closing Date, the Administrative Agent agrees to take all reasonable additional steps (at the expense of the Company) reasonably requested by the Company in writing as may be necessary to release their security interests in the Property securing the Obligations, except for any such steps that (x) would expose the Administrative Agent or any of the Investors or any officer of the Administrative Agent or any of the Investors to personal liability or (y) would be contrary to applicable law. Notwithstanding anything to the contrary, this Section 8.12 shall not affect any rights of the Administrative Agent or any Investor or the obligations of the Company or any other Obligor under the Loan Documents that expressly survive repayment of the Obligations and the termination of the Loan Documents.

 

8.13                        Counterparts; Facsimile Signatures.

 

This Agreement may be executed in any number of counterparts, and each such counterpart shall be deemed to be an original instrument, but all such counterparts taken together shall constitute one agreement. Facsimile or other electronic counterparts to this Agreement shall be acceptable and binding.

 

8.14                        Incorporation of Recitals, Annexes, Exhibits and Schedules.

 

The recitals, Annexes, Exhibits and Schedules identified in this Agreement are incorporated herein by reference and made a part hereof.

 

8.15                        Interpretation; Construction.

 

(a)                                 The term “Agreement” means this agreement together with all Schedules and Exhibits hereto, as the same may from time to time be amended, modified, supplemented or restated in accordance with the terms hereof. Unless the context otherwise requires, words importing the singular shall include the plural, and vice versa. The use in this Agreement of the term “including” means “including, without limitation.” The words “herein,” “hereof,” “hereunder,” “hereby,” “hereto,” “hereinafter,” and other words of similar import refer to this Agreement as a whole, including the schedules and exhibits, as the same may from time to time be amended, modified, supplemented or restated, and not to any particular article, section, subsection, paragraph, subparagraph or clause contained in this Agreement. All references to articles, sections, subsections, clauses, paragraphs, schedules, annexes and exhibits mean such provisions of this Agreement and the Schedules, Annexes and Exhibits attached to this Agreement, except where otherwise stated. The use

 

17

 

herein of the masculine, feminine or neuter forms shall also denote the other forms, as in each case the context may require.

 

(b)                                 The language used in this Agreement shall be deemed to be the language chosen by the parties to express their mutual intent, and no rule of strict construction shall be applied against any party.

 

8.16                        Headings.

 

The section headings contained in this Agreement are inserted for convenience only and shall not affect in any way the meaning or interpretation of this Agreement.

 

*******

 

18

 

IN WITNESS WHEREOF, each of the undersigned has duly executed this Exchange Agreement as of the date first written above.

 

	
 
    	
COMPANY:
    
	
 
    	
 
    
	
 
    	
KADMON   PHARMACEUTICALS, LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Steven N. Gordon
    
	
 
    	
 
    	
Name:
    	
Steven N. Gordon
    
	
 
    	
 
    	
Title:
    	
Executive Vice   President and General Counsel
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
HOLDINGS:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
KADMON   HOLDINGS, LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Steven N. Gordon
    
	
 
    	
 
    	
Name:
    	
Steven N. Gordon
    
	
 
    	
 
    	
Title:
    	
Executive Vice   President and General Counsel
    

 

[Signature Page to Exchange Agreement]

 

 

	
 
    	
INVESTORS:
    
	
 
    	
 
    
	
 
    	
MACQUARIE   BANK LIMITED
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Robert Trevena
    
	
 
    	
 
    	
Name:
    	
Robert Trevena
    
	
 
    	
 
    	
Title:
    	
Division Director
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    	
/s/ Fiona Smith
    
	
 
    	
 
    	
Fiona Smith
    
	
 
    	
 
    	
Division Director
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    	
Signed in Sydney, POA   Ref:
    
	
 
    	
 
    	
#2090 dated 26 Nov 2015
    
						

 

[Signature Page to Exchange Agreement]

 

 

	
 
    	
SPCP   GROUP, LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Michael A. Gatto
    
	
 
    	
 
    	
Name:
    	
Michael A. Gatto
    
	
 
    	
 
    	
Title:
    	
Authorized Signatory
    

 

[Signature Page to Exchange Agreement]

 

 

	
 
    	
SAN   BERNARDINO COUNTY EMPLOYEES RETIREMENT ASSOCIATION
    
	
 
    	
 
    
	
 
    	
By:   GoldenTree Asset Management, LP
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Karen Weber
    
	
 
    	
 
    	
Name:
    	
Karen Weber
    
	
 
    	
 
    	
Title:
    	
Director   - Bank Debt
    
	
 
    	
 
    
	
 
    	
GOLDENTREE   2004 TRUST
    
	
 
    	
 
    
	
 
    	
By:   GoldenTree Asset Management, LP,
    
	
 
    	
its   Investment Advisor
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Karen Weber
    
	
 
    	
 
    	
Name:
    	
Karen Weber
    
	
 
    	
 
    	
Title:
    	
Director   - Bank Debt
    
	
 
    	
 
    
	
 
    	
GT   NM, L.P.
    
	
 
    	
 
    
	
 
    	
By:   GoldenTree Asset Management, LP
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Karen Weber
    
	
 
    	
 
    	
Name:
    	
Karen Weber
    
	
 
    	
 
    	
Title:
    	
Director   - Bank Debt
    
	
 
    	
 
    
	
 
    	
GN3   SIP LIMITED
    
	
 
    	
 
    
	
 
    	
By:   GoldenTree Asset Management, LP
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Karen Weber
    
	
 
    	
 
    	
Name:
    	
Karen Weber
    
	
 
    	
 
    	
Title:
    	
Director   - Bank Debt
    
	
 
    	
 
    
	
 
    	
STELLAR   PERFORMER GLOBAL SERIES: SERIES G — GLOBAL CREDIT
    
	
 
    	
 
    
	
 
    	
By:   GoldenTree Asset Management, LP
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Karen Weber
    
	
 
    	
 
    	
Name:
    	
Karen Weber
    
	
 
    	
 
    	
Title:
    	
Director   - Bank Debt
    

 

[Signature Page to Exchange Agreement]

 

 

	
Acknowledged   and Agreed:
    
	
 
    
	
MACQUARIE   US TRADING LLC,
    
	
as   Administrative Agent
    
	
 
    
	
By:
    	
/s/ Joshua Karlin
    	
 
    	
/s/ Anita Chiu
    
	
 
    	
Name:
    	
Joshua Karlin
    	
 
    	
Anita Chiu
    
	
 
    	
Title:
    	
Authorized Signatory
    	
 
    	
Associate Director
    

 

[Signature Page to Exchange Agreement]

 

 

Annex I

 

	
Investor
    	
 
    	
Principal
   Amount of
   Loans(1)
    	
 
    	
Allocable Share
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Macquarie Bank Limited

Address for Notices:
   c/o Macquarie Group
   125 West 55th Street
   New York, NY 10019
   Fax: (212) 231-0629
   Attn: Portfolio Administration
   Email: loan.admin@macquarie.com
    	
 
    	
$
    	
3,204,302.74
    	
 
    	
4.305209955
    	
%
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
SPCP Group, LLC

Address for Notices:
   Two Greenwich Plaza
   Greenwich, CT
   Tel: (203) 542-4200
   Fax: (203) 542-5212
   Attn: Credit Admin
   Email: CreditAdmin@silverpointcapital.com
    	
 
    	
$
    	
20,839,977.07
    	
 
    	
28.000000006
    	
%
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
San Bernardino County Employees Retirement   Association

Address for Notices:
   c/o GoldenTree Asset Management LP
   300 Park Avenue
   New York, NY 10022
   Tel: (212) 847-3460
   Fax: (212) 847-3496
   Attn: Peter Alderman, General Counsel
   Email: palderman@goldentree.com
    	
 
    	
$
    	
3,026,128.92
    	
 
    	
4.065820682
    	
%
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Goldentree 2004 Trust

Address for Notices:
   c/o GoldenTree Asset Management LP
   300 Park Avenue
   New York, NY 10022
   Tel: (212) 847-3460
   Fax: (212) 847-3496
   Attn: Peter Alderman, General Counsel
   Email: palderman@goldentree.com
    	
 
    	
$
    	
36,650,155.68
    	
 
    	
49.242105968
    	
%
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
GT NM, L.P.

Address for Notices:
   c/o GoldenTree Asset Management LP
   300 Park Avenue
   New York, NY 10022
   Tel: (212) 847-3460
   Fax: (212) 847-3496
   Attn: Peter Alderman, General Counsel
   Email: palderman@goldentree.com
    	
 
    	
$
    	
1,385,366.42
    	
 
    	
1.861338889
    	
%
    

 

(1)  Calculated as of May 20, 2016 and without giving effect to any accrued and unpaid interest thereon.

 

Annex I-1

 

	
GN3 SIP Limited
    Address for Notices:

Address for Notices:
   c/o GoldenTree Asset Management LP
   300 Park Avenue
   New York, NY 10022
   Tel: (212) 847-3460
   Fax: (212) 847-3496
   Attn: Peter Alderman, General Counsel
   Email: palderman@goldentree.com
    	
 
    	
$
    	
7,367,477.65
    	
 
    	
9.898733264
    	
%
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Stellar Performer Global Series: Series G —   Global Credit

Address for Notices:
   c/o GoldenTree Asset Management LP
   300 Park Avenue
   New York, NY 10022
   Tel: (212) 847-3460
   Fax: (212) 847-3496
   Attn: Peter Alderman, General Counsel
   Email: palderman@goldentree.com
    	
 
    	
$
    	
1,955,081.04
    	
 
    	
2.626791236
    	
%
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
TOTAL
    	
 
    	
$
    	
74,428,489.52
    	
 
    	
100.000000000
    	
%
    

 

Annex I-2

 

Annex II

 

DEFINITIONS

 

The following terms used in this Agreement shall have the respective meanings set forth below.

 

“Adjusted Conversion Price” means the conversion price per share of Common Stock, initially set at $12.00, subject to adjustment as provided in Section 15.04 of the Credit Agreement; provided, however, that in the event of the Holdings IPO, the Adjusted Conversion Price shall be adjusted to be the lesser of the then-Conversion Price and eighty percent (80%) of the initial public offering price per share in such offering.

 

“Adjusted Registered Conversion Price” means the conversion price per share of Common Stock issued pursuant to Section 2.1(a)(ii), equal to the initial public offering price per share in the Holdings IPO (but no greater than $12.00 per share, subject to adjustment as provided in Section 15.04 of the Credit Agreement).

 

“Administrative Agent” is defined in the recitals.

 

“Agreement” is defined in the introductory paragraph.

 

“Allocable Share” means, with respect to each Investor, such Investor’s pro rata share of Loans outstanding, equal to the percentage set forth opposite such Investor’s name in the column “Allocable Share” on Annex I.

 

“Alternate Observer” is defined in Section 5.3(c).

 

“Board” means the Board of Directors (or equivalent governing body) of Holdings.

 

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

 

“Closing” is defined in Section 2.2(a).

 

“Closing Date” means the date and time of the Closing of the transactions described in Section 2.1(a), which shall occur on the day that all conditions precedent set forth in ARTICLE VII are satisfied or waived by the applicable parties.

 

“Common Stock” means the common stock of Holdings following the Incorporation Transaction.

 

“Company” is defined in the introductory paragraph.

 

“Converted Registered Common Amount” means an amount equal to the product of (x) 125% and (y) $20,000,000.

 

“Converted Unregistered Common Amount” means an amount equal to $25,000,000.

 

Annex II-1

 

“Converted Preferred Amount” means an amount equal to $30,000,000.

 

“Credit Agreement” is defined in the recitals.

 

“Equity Interest” means all units, stock, shares, options, warrants, convertible securities, general or limited partnership interests, membership interests or other equivalents (regardless of how designated) of or in a corporation, partnership, limited liability company or equivalent entity whether voting or nonvoting, including common stock, preferred stock or any other “equity security” (as such term is defined in Rule 3a11-1 of the General Rules and Regulations promulgated by the Securities and Exchange Commission under the Exchange Act).

 

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

 

“Governmental Authority” means any nation, government, branch of power (whether executive, legislative or judicial), state, province or municipality or other political subdivision thereof and any entity exercising executive, legislative, judicial, monetary, regulatory or administrative functions of or pertaining to government, including without limitation regulatory authorities, governmental departments, agencies, commissions, bureaus, officials, ministers, courts, bodies, boards, tribunals and dispute settlement panels, and other law-, rule- or regulation-making organizations or entities of any state, territory, county, city or other political subdivision of the United States.

 

“GTAM” is defined in Section 5.3(a).

 

“GTAM Designee” is defined in Section 5.3(a).

 

“GTAM Observer” is defined in Section 5.3(a).

 

“GTAM Replacement Designee” is defined in Section 5.3(b).

 

“Historical Financial Statements” means, (i) the audited financial statements of Holdings and its subsidiaries for the fiscal year ended December 31, 2015, consisting of balance sheets and the related consolidated statements of income and cash flows for such fiscal year, and (ii) the unaudited financial statements of Holdings and its subsidiaries as of the most recent fiscal quarter ended after the date of the most recent audited financial statements, consisting of balance sheets and the related consolidated statements of income and cash flows for the three, six or nine month period, as applicable, ending on such date.

 

“Holdings” is defined in the introductory paragraph.

 

“Holdings IPO” is defined in the recitals.

 

“Incorporation Transaction” means the conversion of Holdings into a corporation pursuant to a Certificate of Conversion to be filed by Holdings with the Secretary of State of the State of Delaware on or prior to the Closing Date.

 

“Investors” is defined in the introductory paragraph.

 

Annex II-2

 

“Loans” is defined in the recitals.

 

“Losses” means any and all losses, claims, damages, liabilities, settlement costs and expenses, including reasonable attorneys’ fees.

 

“Make-Whole Amount” means (a) if the Closing occurs on or before June 15, 2016, then $7,200,000; (b) if the Closing occurs after June 15, 2016 but on or before June 30, 2016, then $7,200,000 plus $28,307 for each day after June 15, 2016 through and including the Closing Date; (c) if the Closing occurs after June 30, 2016 but on or before July 31, 2016, then $7,624,611 plus $11,064 for each day after June 30, 2016 through and including the Closing Date; and (d) if the Closing occurs after July 31, 2016 but on or before August 31, 2016, then $7,967,614 plus $11,212 for each day after July 31, 2016 through and including the Closing Date.

 

“Material Adverse Effect” means a material adverse change in or effect on (i) the business, condition (financial or otherwise), operations, prospects, performance or property of Holdings and its subsidiaries, taken as a whole, other than any event, fact, circumstance or condition (each, an “Event”) arising out of or resulting from (a) any adverse change to the United States or global economy in general; (b) any adverse change in general to the industries in which Holdings and its subsidiaries operate; (c) any change in general regulatory or political conditions, including any outbreak, engagement, or escalation of hostilities, acts of war or terrorist activities or changes imposed by a Governmental Authority associated with additional security; (d) any change in any Laws; (e) the announcement or pendency of the transactions contemplated by this Agreement (including the Holdings IPO); and (f) any change in the financial, banking, or securities markets (including any suspension of trading in, or limitation on prices for, securities on the New York Stock Exchange or Nasdaq Stock Market) or any change in the general national economic or financial conditions; provided, that any such change described in clause (a), (b), (c) or (f) does not affect the operations or financial condition of Holdings and its subsidiaries, taken as a whole, in a materially disproportionate manner, (ii) the ability of Holdings or the Company to perform its obligations under this Agreement or any Related Agreement, or (iii) the legality, validity, binding effect or enforceability of this Agreement or any Related Agreement.

 

“Person” means any individual, corporation, company, voluntary association, partnership, limited liability company, joint venture, trust, unincorporated organization or Governmental Authority or other entity of whatever nature.

 

“Preferred Stock” means the 5% Convertible Preferred Stock of Holdings, par value $0.001 per share, having the rights and preferences set forth in the Preferred Stock COD.

 

“Preferred Stock COD” means the Certificate of Designation governing the Preferred Stock, the agreed form of which is attached hereto as Exhibit B.

 

“Proceeding” means any action, claim, suit, investigation or proceeding (including a partial proceeding, such as a disposition), whether commenced or threatened in writing.

 

“Prospectus” means the prospectus included in the Registration Statement (including, without limitation, a prospectus that includes any information previously omitted from a

 

Annex II-3

 

prospectus filed as part of an effective registration statement in reliance upon Rule 430A promulgated under the Securities Act), as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Common Stock covered by the Registration Statement, including any prospectus with respect to the Common Stock issued pursuant to Section 2.1(a)(ii), and all other amendments and supplements to the Prospectus including post-effective amendments, and all material incorporated by reference or deemed to be incorporated by reference in such Prospectus.

 

“Registration Rights Agreement” means the registration rights agreement, in the form attached hereto as Exhibit C, to be entered into on the Closing Date by Holdings and the Investors.

 

“Registration Statement” means each registration statement required to be filed with the SEC in connection with the Holdings IPO, including (in each case) the Prospectus, amendments and supplements to such registration statement or Prospectus, including pre- and post-effective amendments, all exhibits thereto, and all material incorporated by reference or deemed to be incorporated by reference in such registration statement.

 

“Related Agreements” means the Registration Rights Agreement.

 

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

 

“Junior Notes” means the Company’s outstanding 13.0% Second-Lien Convertible PIK Notes Due 2019.

 

“Securities Act” means the Securities Act of 1933, and the rules and regulations of the SEC promulgated thereunder, as amended from time to time.

 

“Stockholders Meeting” is defined in Section 5.3(b).

 

“Term Loan Agreement” means that certain Credit Agreement, dated as of August 28, 2015, among the Company, the guarantors party thereto from time to time, the lenders party thereto from time to time, and Perceptive Credit Opportunities Fund, LP as collateral representative (as amended, restated, supplemented or otherwise modified from time to time).

 

“Threshold Amount” is defined in Section 5.3(a).

 

Annex II-4

 

Exhibit A

 

(Form of Joinder Agreement)

 

By executing this JOINDER AGREEMENT, the undersigned hereby agrees to become a party to the Exchange Agreement dated as of June 8, 2016 by and among Kadmon Holdings, LLC, Kadmon Pharmaceuticals, LLC and the Investors (as defined therein) party thereto, and he/she/it will have all the rights and obligations of an Investor provided under such Exchange Agreement.

 

	
Dated:
    	
 
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
[NAME]
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    
	
 
    	
Title:
    
	
 
    	
 
    
	
 
    	
Address:
    
	
 
    	
Email:
    
	
 
    	
Facsimile:
    

 

 

Exhibit B

 

(Form of Certificate of Designations of the Preferred Stock)

 

Attached.

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