Document:

Security Agreement

 Exhibit 10.68 
  
 SECURITY AGREEMENT 
  
 This Security Agreement is made as of April 29, 2005 by and among LAURUS MASTER FUND, LTD., a Cayman Islands corporation (“Laurus”),
ACCENTIA BIOPHARMACEUTICALS, INC., a Florida corporation (“the Parent”), and each party listed on Exhibit A attached hereto (each an “Eligible Subsidiary” and collectively, the “Eligible
Subsidiaries”) the Parent and each Eligible Subsidiary, each a “Company” and collectively, the “Companies”). 
  
 BACKGROUND 
  
 The Companies have requested that Laurus make advances available to the Companies; and 
  
 Laurus has agreed to make such advances on the terms and conditions set forth in this Agreement. 
  
 AGREEMENT 
  
 NOW, THEREFORE, in consideration of the mutual covenants and undertakings and the terms and conditions contained herein, the
parties hereto agree as follows: 
  
 1. General Definitions and
Terms; Rules of Construction. 
  
 (a) General
Definitions. Capitalized terms used in this Agreement shall have the meanings assigned to them in Annex A. 
  
 (b) Accounting Terms. Any accounting terms used in this Agreement which are not specifically defined shall have the meanings customarily given them
in accordance with GAAP and all financial computations shall be computed, unless specifically provided herein, in accordance with GAAP consistently applied. 
  
 (c) Other Terms. All other terms used in this Agreement and defined in the UCC, shall have the meaning given therein unless otherwise defined
herein. 
  
 (d) Rules of Construction. All Schedules,
Addenda, Annexes and Exhibits hereto or expressly identified to this Agreement are incorporated herein by reference and taken together with this Agreement constitute but a single agreement. The words “herein”, “hereof” and
“hereunder” or other words of similar import refer to this Agreement as a whole, including the Exhibits, Addenda, Annexes and Schedules thereto, as the same may be from time to time amended, modified, restated or supplemented, and not to
any particular section, subsection or clause contained in this Agreement. Wherever from the context it appears appropriate, each term stated in either the singular or plural shall include the singular and the plural, and pronouns stated in the
masculine, feminine or neuter gender shall include the masculine, the feminine and the neuter. The term “or” is not exclusive. The term “including” (or any form thereof) shall not be limiting or exclusive. All references to
statutes and related regulations shall include any amendments of same and any successor statutes and regulations. All references in this 

  

 
Agreement or in the Schedules, Addenda, Annexes and Exhibits to this Agreement to sections, schedules, disclosure schedules, exhibits, and attachments shall
refer to the corresponding sections, schedules, disclosure schedules, exhibits, and attachments of or to this Agreement. All references to any instruments or agreements, including references to any of this Agreement or the Ancillary Agreements shall
include any and all modifications or amendments thereto and any and all extensions or renewals thereof. 
  
 2. Loan Facility. 
  
 (a) Loans. 
  
 (i) Subject to the terms and conditions set forth herein and in the Ancillary Agreements, Laurus may make loans (the
“Loans”) to Companies from time to time during the Term which, in the aggregate at any time outstanding, will not exceed the lesser of (x) (I) the Capital Availability Amount minus (II) such reserves as Laurus may reasonably in its
good faith judgment deem proper and necessary from time to time (the “Reserves”) and (y) an amount equal to (I) the Accounts Availability, plus (II) the Inventory Availability, plus the Stock Availability, minus (IV) the Reserves.
The amount derived at any time from Section 2(a)(i)(y)(I) plus Section 2(a)(i)(y)(II) plus Section 2(a)(i)(y)(III) minus 2(a)(i)(y)(IV) shall be referred to as the “Formula Amount.” The Companies shall, jointly
and severally, execute and deliver to Laurus on the Closing Date the Revolving Note and a Minimum Borrowing Note evidencing the Loans funded on the Closing Date. From time to time thereafter, the Companies shall jointly and severally execute and
deliver to Laurus immediately prior to the final funding of each additional $2,000,000 tranche of Loans allocated to any Minimum Borrowing Note issued after the date hereof (calculated on a cumulative basis for each such tranche) an additional
Minimum Borrowing Note evidencing such tranche, substantially in the form of the Minimum Borrowing Note delivered by the Companies to Laurus on the Closing Date. Notwithstanding anything herein to the contrary, whenever during the Term the
outstanding balance on the Minimum Borrowing Note shall be less than the Minimum Borrowing Amount (such amount being referred to herein as the “Transferable Amount”) to the extent that the outstanding balance on the Revolving Note
should equal or exceed $1,000,000, that portion of the balance of the Revolving Note that exceeds $1,000,000, but does not exceed the Transferable Amount, shall be segregated from the outstanding balance under the Revolving Note and allocated to and
aggregated with the then existing balance of the next unissued serialized Minimum Borrowing Note (the “Next Unissued Serialized Note”); provided that such segregated amount shall remain subject to the terms and conditions of such
Revolving Note until a new serialized Minimum Borrowing Note is issued as set forth below. The Next Unissued Serialized Note shall remain in book entry form until the balance thereunder shall equal the Minimum Borrowing Amount, at which time a new
serialized Minimum Borrowing Note in the face amount equal to the Minimum Borrowing Amount will be issued and registered as set forth in the Registration Rights Agreement (and the outstanding balance under the Revolving Note shall at such time be
correspondingly reduced in the amount equal to the Minimum Borrowing Amount as a result of the issuance of such new serialized Minimum Borrowing Note). 
  
 (ii) Notwithstanding the limitations set forth above, if requested by any Company, Laurus retains the right to lend to such Company from
time to time such amounts in excess of such limitations as Laurus may determine in its sole discretion. 
  

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 (iii) The Companies acknowledge that the exercise of Laurus’ discretionary rights
hereunder may result during the Term in one or more increases or decreases in the advance percentages used in determining Accounts Availability, Inventory Availability and/or Stock Availability and each of the Companies hereby consent to any such
increases or decreases which may limit or restrict advances requested by the Companies. 
  
 (iv) If any interest, fees, costs or charges payable to Laurus hereunder are not paid when due, each of the Companies shall thereby be
deemed to have requested, and Laurus is hereby authorized at its discretion to make and charge to the Companies’ account, a Loan as of such date in an amount equal to such unpaid interest, fees, costs or charges. 
  
 (v) If any Company at any time fails to perform or observe
any of the covenants contained in this Agreement or any Ancillary Agreement, Laurus may, but need not, upon prior written notice to the Company, perform or observe such covenant on behalf and in the name, place and stead of such Company (or, at
Laurus’ option, in Laurus’ name) and may, but need not, upon prior written notice to the Company, take any and all other actions which Laurus may deem necessary to cure or correct such failure (including the payment of taxes, the
satisfaction of Liens, the performance of obligations owed to Account Debtors, lessors or other obligors, the procurement and maintenance of insurance, the execution of assignments, security agreements and financing statements, and the endorsement
of instruments). The amount of all monies expended and all costs and expenses (including attorneys’ fees and legal expenses) incurred by Laurus in connection with or as a result of the performance or observance of such agreements or the taking
of such action by Laurus shall be charged to the Companies’ account as a Loan and added to the Obligations. To facilitate Laurus’ performance or observance of such covenants by each Company, each Company hereby irrevocably appoints Laurus,
or Laurus’ delegate, acting alone, as such Company’s attorney in fact (which appointment is coupled with an interest) with the right (but not the duty) from time to time to create, prepare, complete, execute, deliver, endorse or file in
the name and on behalf of such Company any and all instruments, documents, assignments, security agreements, financing statements, applications for insurance and other agreements and writings required to be obtained, executed, delivered or endorsed
by such Company. 
  
 (vi) Laurus will account to
Company Agent monthly with a statement of all Loans and other advances, charges and payments made pursuant to this Agreement, and such account rendered by Laurus shall be deemed final, binding and conclusive unless Laurus is notified by Company
Agent in writing to the contrary within thirty (30) days of the date each account was rendered specifying the item or items to which objection is made. 
  
 (vii) During the Term, the Companies may borrow and prepay Loans in accordance with the terms and conditions hereof. 
  
 (viii) If any Eligible Account is not paid by the Account
Debtor within ninety (90) days after the date that such Eligible Account was invoiced or if any Account Debtor asserts a deduction, dispute, contingency, set-off, or counterclaim with respect to any Eligible Account, (a “Delinquent
Account”), the Companies shall jointly and severally (i) reimburse Laurus for the amount of the Loans made with respect to such Delinquent Account plus an adjustment fee in an amount equal to one-half of one percent (0.50%) of the gross
face amount of 

  

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such Eligible Account or (ii) immediately replace such Delinquent Account with an otherwise Eligible Account. 
  
 (b) Receivables Purchase. Following the occurrence and during the
continuance of an Event of Default, Laurus may, at its option, elect to convert the credit facility contemplated hereby to an accounts receivable purchase facility. Upon such election by Laurus (subsequent notice of which Laurus shall provide to
Company Agent), the Companies shall be deemed to hereby have sold, assigned, transferred, conveyed and delivered to Laurus, and Laurus shall be deemed to have purchased and received from the Companies, all right, title and interest of the Companies
in and to all Accounts which shall at any time constitute Eligible Accounts (the “Receivables Purchase”). All outstanding Loans hereunder shall be deemed obligations under such accounts receivable purchase facility. The conversion
to an accounts receivable purchase facility in accordance with the terms hereof shall not be deemed an exercise by Laurus of its secured creditor rights under Article 9 of the UCC. Immediately following Laurus’ request, the Companies shall
execute all such further documentation as may be required by Laurus to more fully set forth the accounts receivable purchase facility herein contemplated, including, without limitation, Laurus’ standard form of accounts receivable purchase
agreement and account debtor notification letters, but any Company’s failure to enter into any such documentation shall not impair or affect the Receivables Purchase in any manner whatsoever. 
  
 (c) Minimum Borrowing Amount. After a registration statement
registering the Registrable Securities has been declared effective by the Securities and Exchange Commission (“SEC”), conversions of the Minimum Borrowing Amount into the Common Stock may be initiated as set forth in the respective
Minimum Borrowing Note. From and after the date upon which any outstanding principal of the Minimum Borrowing Amount (as evidenced by the first Minimum Borrowing Note) is converted into Common Stock (the “First Conversion Date”),
(i) corresponding amounts of all outstanding Loans (not attributable to the then outstanding Minimum Borrowing Amount) existing on or made after the First Conversion Date will be aggregated in accordance with Section 2(a)(i) and (ii) the Companies
will issue a new (serialized) Minimum Borrowing Note to Laurus in accordance with Section 2(a)(i), and (iii) the Parent shall prepare and file a subsequent registration statement with the SEC to register such subsequent Minimum Borrowing Note as set
forth in the Registration Rights Agreement. 
  
 3. Repayment of
the Loans. The Companies (a) may prepay the Obligations from time to time in accordance with the terms and provisions of the Notes (and Section 17 hereof if such prepayment is due to a termination of this Agreement); (b) shall repay on the
expiration of the Term (i) the then aggregate outstanding principal balance of the Loans together with accrued and unpaid interest, fees and charges and; (ii) all other amounts owed Laurus under this Agreement and the Ancillary Agreements; and (c)
subject to Section 2(a)(ii), shall repay on any day on which the then aggregate outstanding principal balance of the Loans are in excess of the Formula Amount at such time, Loans in an amount equal to such excess (the “Excess
Amount”); provided that, to the extent that the Companies fail to repay in full the Excess Amount within three days from the date such Excess Amount shall have first occurred, in addition to all other rights and remedies
available to Laurus hereunder and under the Ancillary Agreements, Laurus shall have the right, but not the obligation, to sell, transfer or otherwise dispose of such Collateral as may be pledged to Laurus from time to time pursuant to the
O’Donnell Stock Pledge Agreement to the extent necessary to generate cash proceeds sufficient 

  

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to repay in full, and Laurus shall apply such cash proceeds in repayment of, such Excess Amount plus such other costs and expenses incurred by Laurus as a
result thereof. Any payments of principal, interest, fees or any other amounts payable hereunder or under any Ancillary Agreement shall be made prior to 12:00 noon (New York time) on the due date thereof in immediately available funds. 

 
 4. Procedure for Loans. Company Agent may by written notice request
a borrowing of Loans prior to 12:00 noon (New York time) on the Business Day of its request to incur, on the next Business Day, a Loan. Together with each request for a Loan (or at such other intervals as Laurus may request), Company Agent shall
deliver to Laurus a Borrowing Base Certificate in the form of Exhibit B attached hereto, which shall be certified as true and correct by the Chief Executive Officer or Chief Financial Officer of Company Agent together with all supporting
documentation relating thereto. All Loans shall be disbursed from whichever office or other place Laurus may designate from time to time and shall be charged to the Companies’ account on Laurus’ books. The proceeds of each Loan made by
Laurus shall be made available to Company Agent on the Business Day following the Business Day so requested in accordance with the terms of this Section 4 by way of credit to the applicable Company’s operating account maintained with such bank
as Company Agent designated to Laurus. Any and all Obligations due and owing hereunder may be charged to the Companies’ account and shall constitute Loans. 
  

5. Interest and Payments. 
  
 (a) Interest. 
  
 (i) Except as modified by Section 5(a)(iii) below, the Companies shall jointly and severally pay interest at the Contract Rate on the
unpaid principal balance of each Loan until such time as such Loan is collected in full in good funds in dollars of the United States of America. 
  
 (ii) Interest and payments shall be computed on the basis of actual days elapsed in a year of 360 days. At Laurus’ option, Laurus may
charge the Companies’ account for said interest. 
  
 (iii) Effective upon the occurrence of any Event of Default and for so long as any Event of Default shall be continuing, the Contract Rate shall automatically be increased as set forth in the Notes (such increased rate, the “Default
Rate”), and all outstanding Obligations, including unpaid interest, shall continue to accrue interest from the date of such Event of Default at the Default Rate applicable to such Obligations. 
  
 (iv) In no event shall the aggregate interest payable
hereunder exceed the maximum rate permitted under any applicable law or regulation, as in effect from time to time (the “Maximum Legal Rate”), and if any provision of this Agreement or any Ancillary Agreement is in contravention of
any such law or regulation, interest payable under this Agreement and each Ancillary Agreement shall be computed on the basis of the Maximum Legal Rate (so that such interest will not exceed the Maximum Legal Rate). 
  

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 (v) The Companies shall jointly and severally pay principal, interest and all other
amounts payable hereunder, or under any Ancillary Agreement, without any deduction whatsoever, including any deduction for any set-off or counterclaim. 
  
 (b) Payments; Certain Closing Conditions. 
  
 (i) Closing/Annual Payments. Upon execution of this Agreement by each Company and Laurus, the Companies shall jointly and severally
pay to Laurus Capital Management, LLC a closing payment in an amount equal to three and three-quarters percent (3.75%) of the Capital Availability Amount. Such payment shall be deemed fully earned on the Closing Date and shall not be subject to
rebate or proration for any reason. 
  
 (ii)
Overadvance Payment. Without affecting Laurus’ rights hereunder in the event the Loans exceed the Formula Amount (each such event, an “Overadvance”), all such Overadvances shall bear additional interest at a rate equal
to one percent (1%) per month of the amount of such Overadvances for all times such amounts shall be in excess of the Formula Amount. All amounts that are incurred pursuant to this Section 5(b)(ii) shall be due and payable by the Companies monthly,
in arrears, on the first business day of each calendar month and upon expiration of the Term. 
  
 (iii) Financial Information Default. Without affecting Laurus’ other rights and remedies, in the event any Company fails to
deliver the financial information required by Section 11 on or before the date required by this Agreement, the Companies shall jointly and severally pay Laurus an aggregate fee in the amount of $500.00 per week (or portion thereof) for each such
failure until such failure is cured to Laurus’ satisfaction or waived in writing by Laurus. All amounts that are incurred pursuant to this Section 5(b)(iv) shall be due and payable by the Companies monthly, in arrears, on the first business of
each calendar month and upon expiration of the Term. 
  
 (iv) Expenses. The Companies shall jointly and severally reimburse Laurus for its expenses (including reasonable legal fees and expenses) incurred in connection with the preparation and negotiation of this Agreement and the Ancillary
Agreements, and expenses incurred in connection with Laurus’ due diligence review of each Company and its Subsidiaries and all related matters. Amounts required to be paid under this Section 5(b)(iv) together with amounts required to be paid
pursuant to Section 2(d) of the Securities Purchase Agreement between the Parent and Laurus dated as of the date hereof (as amended, modified or supplemented from time to time, the “Securities Purchase Agreement”) will be paid on the
Closing Date and shall be $37,500 for such expenses referred to in this Section 5(b)(iv); provided that, to the extent that the need exists to engage outside counsel in connection with the transactions described herein, such additional
reasonable fees and expenses shall also be reimbursed, on a joint and several basis, by the Companies to Laurus. 
  
 (v) O’Donnell Stock Pledge Agreement. On or prior to the Closing Date, the Parent shall cause The Francis E. O’Donnell,
Jr. Irrevocable Trust No. 1 (the “O’Donnell Trust”) to pledge 1,500,000 shares of common stock of Star Scientific, Inc. held by the O’Donnell Trust pursuant to a stock pledge agreement in form and substance satisfactory to

  

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Laurus in its sole discretion (as amended, modified and/or or supplemented from time to time, the “O’Donnell Stock Pledge Agreement”).
 
  
 (vi) Subordination. On or
prior to the Closing Date, the Parent shall cause McKesson as holder of certain of the Parent’s outstanding debt obligations, to enter into a subordination agreement in respect of such debt obligations in form and substance satisfactory to
Laurus (as amended, modified and/or or supplemented from time to time, “McKesson Subordination Agreement”). 
  
 (vii) Refinancing. On or prior to the Closing Date, all indebtedness under the Revolving Credit Agreement dated as of March 30,
2004 between Missouri State Bank and Trust Company (“MSB”) and the Parent (as amended, modified and/or supplemented, the “Existing Credit Agreement”) shall have been repaid in full and all commitments in respect
thereof shall have been terminated and all Liens and guaranties in connection therewith shall have been terminated (and all appropriate releases, termination statements or other instruments of assignment with respect thereto shall have been
obtained) to the reasonable satisfaction of Laurus. Laurus shall have received satisfactory evidence (including satisfactory pay-off letters, mortgage releases, intellectual property releases and UCC-3 termination statements) that the matters set
forth in the immediately preceding sentence have been satisfied as of the Closing Date. 
  
 (viii) Series E Preferred Stock Consent. On or prior to the Closing Date, the Parent shall have provided Laurus with evidence
reasonably satisfactory to Laurus that the requisite consent of the holder’s of the Parent’s Series E preferred stock has been obtained in respect of the consummation of the transactions described herein, including, without limitation, the
granting to Laurus of registration rights pursuant to the terms of the Registration Rights Agreement. 
  
 6. Security Interest. 
  
 (a) To secure the prompt payment to Laurus of the Obligations, each Company hereby assigns, pledges and grants to Laurus a continuing security interest in
and Lien upon all of the Collateral. All of each Company’s Books and Records relating to the Collateral shall, until delivered to or removed by Laurus, be kept by such Company in trust for Laurus until all Obligations have been paid in full.
Each confirmatory assignment schedule or other form of assignment hereafter executed by each Company shall be deemed to include the foregoing grant, whether or not the same appears therein. 
  
 (b) Each Company hereby (i) authorizes Laurus to file any financing
statements, continuation statements or amendments thereto that (x) indicate the Collateral (1) as all assets and personal property of such Company or words of similar effect, regardless of whether any particular asset comprised in the Collateral
falls within the scope of Article 9 of the UCC of such jurisdiction, or (2) as being of an equal or lesser scope or with greater detail, and (y) contain any other information required by Part 5 of Article 9 of the UCC for the sufficiency or filing
office acceptance of any financing statement, continuation statement or amendment, (ii) ratifies its authorization for Laurus to have filed any initial financial statements, or amendments thereto if filed prior to the date hereof and (iii) agrees to
actively assist Laurus in the preparation 

  

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and filing of grants and assignments of such Company’s Intellectual Property with the United States Patent and Trademark Office to the extent deemed
necessary or prudent by Laurus in its sole discretion to properly perfect Laurus’ security interest in such Intellectual Property. Each Company acknowledges that it is not authorized to file any financing statement or amendment or termination
statement with respect to any financing statement without the prior written consent of Laurus and agrees that it will not do so without the prior written consent of Laurus, subject to such Company’s rights under Section 9-509(d)(2) of the UCC.

  
 (c) Each Company hereby grants to Laurus an irrevocable,
non-exclusive license (exercisable upon the termination of this Agreement due to an occurrence and during the continuance of an Event of Default without payment of royalty or other compensation to such Company) to use, transfer, license or
sublicense any Intellectual Property now owned, licensed to, or hereafter acquired by such Company, and wherever the same may be located, and including in such license access to all media in which any of the licensed items may be recorded or stored
and to all computer and automatic machinery software and programs used for the compilation or printout thereof, and represents, promises and agrees that any such license or sublicense is not and will not be in conflict with the contractual or
commercial rights of any third Person; provided, that such license will terminate on the termination of this Agreement and the payment in full of all Obligations. Notwithstanding the foregoing, it is agreed and understood that the Parent and its
Subsidiaries may, without the prior approval of Laurus, grant licenses for the use of its Intellectual Property to third parties pursuant to agreements to develop, conduct trials, commercialize, manufacture and/or market any of its technologies,
products, pharmaceuticals, and or devices; provided that (i) such licenses and agreements, as the case may be, are in the ordinary course of business of the Parent and/or its Subsidiaries and consistent with past practice and (ii) the Parent’s
and/or its Subsidiary’s interest in such licenses and agreements, as the case may be, are each subject to and covered by Laurus’ security interest hereunder. 
  
 7. Representations, Warranties and Covenants Concerning the Collateral. Each Company represents, warrants (each of
which such representations and warranties shall be deemed repeated upon the making of each request for a Loan and made as of the time of each and every Loan hereunder) and covenants as follows: 
  
 (a) all of the Collateral (i) is owned by it free and clear of all Liens
(including any claims of infringement) except those in Laurus’ favor and Permitted Liens and (ii) is not subject to any agreement prohibiting the granting of a Lien or requiring notice of or consent to the granting of a Lien. 
  
 (b) it shall not encumber, mortgage, pledge, assign or grant any Lien in any
Collateral or any other assets to anyone other than Laurus and except for Permitted Liens. 
  
 (c) the Liens granted pursuant to this Agreement, upon completion of the filings and other actions listed on Schedule 7(c) (which, in the case of all filings and other documents referred to in said Schedule,
have been delivered to Laurus in duly executed form) constitute valid perfected security interests in all of the Collateral in favor of Laurus as security for the prompt and complete payment and performance of the Obligations, enforceable in
accordance with the terms hereof against any and all of its creditors and purchasers and such security interest is prior to all other Liens in existence on the date hereof. 
  

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 (d) no effective security agreement, mortgage, deed of trust, financing statement, equivalent security or
Lien instrument or continuation statement covering all or any part of the Collateral is or will be on file or of record in any public office, except those relating to Permitted Liens. 
  
 (e) it shall not dispose of any of the Collateral whether by sale, lease or otherwise except for the sale of Inventory in
the ordinary course of business and for the disposition or transfer in the ordinary course of business during any fiscal year of obsolete and worn-out Equipment having an aggregate fair market value of not more than $75,000 and only to the extent
that (i) the proceeds of any such disposition are used to acquire replacement Equipment which is subject to Laurus’ first priority security interest or are used to repay Loans or to pay general corporate expenses, or (ii) following the
occurrence of an Event of Default which continues to exist the proceeds of which are remitted to Laurus to be held as cash collateral for the Obligations. 
  
 (f) it shall defend the right, title and interest of Laurus in and to the Collateral against the claims and demands of all Persons whomsoever, and take
such actions, including (i) all actions necessary to grant Laurus “control” of any Investment Property, Deposit Accounts, Letter-of-Credit Rights or electronic Chattel Paper owned by it, with any agreements establishing control to be in
form and substance satisfactory to Laurus, (ii) the prompt (but in no event later than five (5) Business Days following Laurus’ request therefor) delivery to Laurus of all original Instruments, Chattel Paper, negotiable Documents and
certificated Stock owned by it (in each case, accompanied by stock powers, allonges or other instruments of transfer executed in blank), (iii) notification of Laurus’ interest in Collateral at Laurus’ request, and (iv) the institution of
litigation against third parties as shall be prudent in order to protect and preserve its and/or Laurus’ respective and several interests in the Collateral. 
  
 (g) it shall promptly, and in any event within five (5) Business Days after the same is acquired by it, notify Laurus of any
commercial tort claim (as defined in the UCC) acquired by it and unless otherwise consented by Laurus, it shall enter into a supplement to this Agreement granting to Laurus a Lien in such commercial tort claim. 
  
 (h) it shall place notations upon its Books and Records and any of its
financial statements to disclose Laurus’ Lien in the Collateral. 
  
 (i) if it retains possession of any Chattel Paper or Instrument with Laurus’ consent, upon Laurus’ request such Chattel Paper and Instruments shall be marked with the following legend: “This writing and obligations evidenced
or secured hereby are subject to the security interest of Laurus Master Fund, Ltd.” Notwithstanding the foregoing, upon the reasonable request of Laurus, such Chattel Paper and Instruments shall be delivered to Laurus. 
  
 (j) it shall perform in a reasonable time all other steps requested by Laurus
to create and maintain in Laurus’ favor a valid perfected first Lien in all Collateral subject only to Permitted Liens. 
  
 (k) it shall notify Laurus promptly and in any event within three (3) Business Days after obtaining knowledge thereof (i) of any event or circumstance
that, to its knowledge, 

  

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would cause Laurus to consider any then existing Account and/or Inventory as no longer constituting an Eligible Account or Eligible Inventory, as the case
may be; (ii) of any material delay in its performance of any of its obligations to any Account Debtor; (iii) of any assertion by any Account Debtor of any material claims, offsets or counterclaims; (iv) of any allowances, credits and/or monies
granted by it to any Account Debtor; (v) of all material adverse information relating to the financial condition of an Account Debtor; (vi) of any material return of goods; and (vii) of any loss, damage or destruction of any of the Collateral.

  
 (l) all Eligible Accounts (i) represent complete bona fide
transactions which require no further act under any circumstances on its part to make such Accounts payable by the Account Debtors, (ii) are not subject to any present, future contingent offsets or counterclaims, and (iii) do not represent bill and
hold sales, consignment sales, guaranteed sales, sale or return or other similar understandings or obligations of any Affiliate or Subsidiary of such Company. It has not made, nor will it make, any agreement with any Account Debtor for any extension
of time for the payment of any Account, any compromise or settlement for less than the full amount thereof, any release of any Account Debtor from liability therefor, or any deduction therefrom except a discount or allowance for prompt or early
payment or reasonable marketing expenses allowed by it in the ordinary course of its business consistent with historical practice and as previously disclosed to Laurus in writing. 
  
 (m) it shall keep and maintain its Equipment in good operating condition, except for ordinary wear and tear, and shall make
all necessary repairs and replacements thereof so that the value and operating efficiency shall at all times be maintained and preserved. It shall not permit any such items to become a Fixture to real estate or accessions to other personal property.

  
 (n) it shall maintain and keep all of its Books and Records
concerning the Collateral at its executive offices listed in Schedule 12(aa). 
  
 (o) it shall maintain and keep the tangible Collateral at the addresses listed in Schedule 12(bb), provided, that it may change such locations or open a new location, provided that it provides Laurus at least
thirty (30) days prior written notice of such changes or new location and (ii) prior to such change or opening of a new location where Collateral having a value of more than $75,000 will be located, it executes and delivers to Laurus such agreements
deemed reasonably necessary or prudent by Laurus, including landlord agreements, mortgagee agreements and warehouse agreements, each in form and substance satisfactory to Laurus, to adequately protect and maintain Laurus’ security interest in
such Collateral. 
  
 (p) Schedule 7(p) lists all banks and
other financial institutions at which it maintains deposits and/or other accounts, and such Schedule correctly identifies the name, address and telephone number of each such depository, the name in which the account is held, a description of the
purpose of the account, and the complete account number. It shall not establish any depository or other bank account with any financial institution (other than the accounts set forth on Schedule 7(p)) without Laurus’ prior written
consent. 
  

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 (q) All Inventory manufactured by it in the United States of America shall be produced in accordance with
the requirements of the Federal Fair Labor Standards Act of 1938, as amended and all rules, regulations and orders related thereto or promulgated thereunder. 
  
 8. Payment of Accounts. 
  
 (a) Each Company will irrevocably direct all of its present and future Account Debtors and other Persons obligated to make payments constituting
Collateral to make such payments directly to the lockboxes maintained by such Company (the “Lockboxes”) with Missouri State Bank and Trust Company or such other financial institution accepted by Laurus in writing as may be selected
by such Company (the “Lockbox Bank”) pursuant to the terms of the certain agreements among one or more Companies, Laurus and/or the Lockbox Bank dated as of April 29, 2005. On or prior to the Closing Date, each Company shall and
shall cause the Lockbox Bank to enter into all such documentation acceptable to Laurus pursuant to which, among other things, the Lockbox Bank agrees to: (a) sweep the Lockbox on a daily basis and deposit all checks received therein to an account
designated by Laurus in writing and (b) comply only with the instructions or other directions of Laurus concerning the Lockbox. All of each Company’s invoices, account statements and other written or oral communications directing, instructing,
demanding or requesting payment of any Account of any Company or any other amount constituting Collateral shall conspicuously direct that all payments be made to the Lockbox or such other address as Laurus may direct in writing. If, notwithstanding
the instructions to Account Debtors, any Company receives any payments, such Company shall immediately remit such payments to Laurus in their original form with all necessary endorsements. Until so remitted, such Company shall hold all such payments
in trust for and as the property of Laurus and shall not commingle such payments with any of its other funds or property. 
  
 (b) At Laurus’ election, following the occurrence of an Event of Default which is continuing, Laurus may notify each Company’s Account Debtors
of Laurus’ security interest in the Accounts, collect them directly and charge the collection costs and expenses thereof to Company’s and the Eligible Subsidiaries joint and several account. 
  
 9. Collection and Maintenance of Collateral. 
  
 (a) Laurus may verify each Company’s Accounts from time to time, but not
more often than once every three (3) months, unless an Event of Default has occurred and is continuing, utilizing an audit control company or any other agent of Laurus. 
  
 (b) Proceeds of Accounts received by Laurus will be deemed received on the Business Day after Laurus’ receipt of such
proceeds in good funds in dollars of the United States of America to an account designated by Laurus. Any amount received by Laurus after 12:00 noon (New York time) on any Business Day shall be deemed received on the next Business Day. 

 
 (c) As Laurus receives the proceeds of Accounts of any Company, it shall
(i) apply such proceeds, as required, to amounts outstanding under the Notes, and (ii) remit all such remaining proceeds (net of interest, fees and other amounts then due and owing to Laurus 

  

 11 

 
hereunder) to Company Agent (for the benefit of the applicable Companies) upon request (but no more often than twice a week). Notwithstanding the foregoing,
following the occurrence and during the continuance of an Event of Default, Laurus, at its option, may (a) apply such proceeds to the Obligations in such order as Laurus shall elect, (b) hold all such proceeds as cash collateral for the Obligations
and each Company hereby grants to Laurus a security interest in such cash collateral amounts as security for the Obligations and/or (c) do any combination of the foregoing. 
  
 10. Inspections and Appraisals. At all times during normal business hours, and, prior to the occurrence of an Event
of Default, upon twenty four (24) hours prior notice, Laurus, and/or any agent of Laurus shall have the right to (a) have access to, visit, inspect, review, evaluate and make physical verification and appraisals of each Company’s properties and
the Collateral, (b) inspect, audit and copy (or take originals if necessary) and make extracts from each Company’s Books and Records, including management letters prepared by the Accountants, and (c) discuss with each Company’s directors,
principal officers, and independent accountants, each Company’s business, assets, liabilities, financial condition, results of operations and business prospects. Each Company will deliver to Laurus any instrument necessary for Laurus to obtain
records from any service bureau maintaining records for such Company. If any internally prepared financial information, including that required under this Section is unsatisfactory in any manner to Laurus, Laurus may request that the Accountants
review the same. 
  
 11. Financial Reporting. Company Agent
will deliver, or cause to be delivered, to Laurus each of the following, which shall be in form and detail acceptable to Laurus: 
  
 (a) As soon as available, and in any event within ninety (90) days after the end of each fiscal year of the Parent, each Company’s audited financial
statements with a report of independent certified public accountants of recognized standing selected by the Parent and acceptable to Laurus (the “Accountants”), which annual financial statements shall be without qualification and
shall include each Company’s balance sheet as at the end of such fiscal year and the related statements of each Company’s income, retained earnings and cash flows for the fiscal year then ended, prepared, if Laurus so requests, on a
consolidating and consolidated basis to include all Subsidiaries and Affiliates of each Company, all in reasonable detail and prepared in accordance with GAAP, together with (i) if and when available, copies of any management letters prepared by the
Accountants; and (ii) a certificate of the Parent’s President, Chief Executive Officer or Chief Financial Officer stating that such financial statements have been prepared in accordance with GAAP and whether or not such officer has knowledge of
the occurrence of any Default or Event of Default hereunder and, if so, stating in reasonable detail the facts with respect thereto; 
  
 (b) As soon as available and in any event within forty five (45) days after the end of each quarter, an unaudited/internal balance sheet and statements of
income, retained earnings and cash flows of each Company as at the end of and for such quarter and for the year to date period then ended, prepared, if Laurus so requests, on a consolidating and consolidated basis to include all Subsidiaries and
Affiliates of each Company, in reasonable detail and stating in comparative form the figures for the corresponding date and periods in the previous year, all prepared in accordance with GAAP, subject to year-end adjustments and accompanied by a

  

 12 

 
certificate of the Parent’s President, Chief Executive Officer or Chief Financial Officer, stating (i) that such financial statements have been prepared
in accordance with GAAP, subject to year-end audit adjustments, and (ii) whether or not such officer has knowledge of the occurrence of any Default or Event of Default hereunder not theretofore reported and remedied and, if so, stating in reasonable
detail the facts with respect thereto; 
  
 (c) Within thirty (30)
days after the end of each month (or more frequently if Laurus so requests), agings of each Company’s Accounts, unaudited trial balances and their accounts payable and a calculation of each Company’s Accounts, Eligible Accounts, Inventory
and/or Eligible Inventory, provided, however, that if Laurus shall request the foregoing information more often than as set forth in the immediately preceding clause, each Company shall have thirty (30) days from each such request to comply with
Laurus’ demand; and 
  
 (d) Promptly after (i) the filing
thereof, copies of the Parent’s most recent registration statements and annual, quarterly, monthly or other regular reports which the Parent files with the SEC, and (ii) the issuance thereof, copies of such financial statements, reports and
proxy statements as the Parent shall send to its stockholders. 
  
 12. Additional Representations and Warranties. Each Company hereby represents and warrants to Laurus as follows: 
  
 (a) Organization, Good Standing and Qualification. It and each of its Subsidiaries is a corporation, partnership or limited liability company, as
the case may be, duly organized, validly existing and in good standing under the laws of its jurisdiction of organization. It and each of its Subsidiaries has the corporate, limited liability company or partnership, as the case may be, power and
authority to own and operate its properties and assets and, insofar as it is or shall be a party thereto, to (i) execute and deliver this Agreement and the Ancillary Agreements, (ii) to issue the Notes and the shares of Common Stock issuable upon
conversion of the Notes (the “Note Shares”), (iii) to issue the Warrants and the shares of Common Stock issuable upon conversion of the Warrants (the “Warrant Shares”), and to (iv) carry out the provisions of this
Agreement and the Ancillary Agreements and to carry on its business as presently conducted. It and each of its Subsidiaries is duly qualified and is authorized to do business and is in good standing as a foreign corporation, partnership or limited
liability company, as the case may be, in all jurisdictions in which the nature or location of its activities and of its properties (both owned and leased) makes such qualification necessary, except for those jurisdictions in which failure to do so
has not had, or could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. 
  
 (b) Subsidiaries. Each of its direct and indirect Subsidiaries, the direct owner of each such Subsidiary and its percentage ownership thereof, is
set forth on Schedule 12(b). 
  
 (c) Capitalization;
Voting Rights. 
  
 (i) The authorized capital
stock of the Parent, as of the date hereof consists of 425,000,000 shares, of which (i) 300,000,000 are shares of Common Stock, par value $0.001 per share, 10,865,645 shares of which are issued and outstanding, (ii) 10,000,000 are shares of Series A
preferred stock, par value $1.00 per share of which 6,183,000 shares of Series 

  

 13 

 
A preferred stock are issued and outstanding, (iii) 30,000,000 are shares of Series B preferred stock, par value $1.00 per share of which 8,074,263 shares of
Series B preferred stock are issued and outstanding, (iv) 10,000,000 are shares of Series C preferred stock, par value $1.00 per share of which 7,500,000 shares of Series C preferred stock are issued and outstanding, (v) 15,000,000 are shares of
Series D preferred stock, par value $1.00 per share of which 9,728,201 shares of Series D preferred stock are issued and outstanding, and (vi) 60,000,000 are shares of Series E preferred stock, par value $1.00 per share of which 32,054,606 shares of
Series E preferred stock are issued and outstanding. The authorized, issued and outstanding capital stock of each Subsidiary of each Company is set forth on Schedule 12(c). 
  
 (ii) Except as disclosed on Schedule 12(c), other than: (i) the shares reserved for issuance under
the Parent’s stock option plans; and (ii) shares which may be issued pursuant to this Agreement and the Ancillary Agreements, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first
refusal), proxy or stockholder agreements, or arrangements or agreements of any kind for the purchase or acquisition from the Parent of any of its securities. Except as disclosed on Schedule 12(c), neither the offer or issuance of any of the
Notes or the Warrants, or the issuance of any of the Note Shares or the Warrant Shares, nor the consummation of any transaction contemplated hereby will result in a change in the price or number of any securities of the Parent outstanding, under
anti-dilution or other similar provisions contained in or affecting any such securities. 
  
 (iii) All issued and outstanding shares of the Parent’s Common Stock: (i) have been duly authorized and validly issued and are fully
paid and nonassessable; and (ii) were issued in compliance with all applicable state and federal laws concerning the issuance of securities. 
  
 (iv) The rights, preferences, privileges and restrictions of the shares of the Common Stock are as stated in the Parent’s Certificate
of Incorporation (the “Charter”). The Note Shares and the Warrant Shares have been duly and validly reserved for issuance. When issued in compliance with the provisions of this Agreement and the Parent’s Charter, the Securities
will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances; provided, however, that the Securities may be subject to restrictions on transfer under state and/or federal securities laws as set
forth herein or as otherwise required by such laws at the time a transfer is proposed. 
  
 (d) Authorization; Binding Obligations. All corporate, partnership or limited liability company, as the case may be, action on its and its Subsidiaries’ part (including their respective officers and
directors) necessary for the authorization of this Agreement and the Ancillary Agreements, the performance of all of its and its Subsidiaries’ obligations hereunder and under the Ancillary Agreements on the Closing Date and, the authorization,
issuance and delivery of the Notes and the Warrant has been taken or will be taken prior to the Closing Date. This Agreement and the Ancillary Agreements, when executed and delivered and to the extent it is a party thereto, will be its and its
Subsidiaries’ valid and binding obligations enforceable against each such Person in accordance with their terms, except: 
  
 (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws of general application affecting enforcement
of creditors’ rights; and 
  

 14 

 (ii) general principles of equity that restrict the availability of equitable or legal
remedies. 
  
 The issuance of the Notes and the subsequent conversion of the Notes
into Note Shares are not and will not be subject to any preemptive rights or rights of first refusal that have not been properly waived or complied with. The issuance of the Warrants and the subsequent exercise of the Warrants for Warrant Shares are
not and will not be subject to any preemptive rights or rights of first refusal that have not been properly waived or complied with. 
  
 (e) Liabilities. Neither it nor any of its Subsidiaries has any liabilities, except current liabilities incurred in the ordinary course of business
and liabilities disclosed in any Exchange Act Filings. 
  
 (f)
Agreements; Action. Except as set forth on Schedule 12(f), as disclosed in any Exchange Act Filings or, prior to consummation of the initial public offering of Common Stock, as disclosed in any Securities Act Filings: 
  
 (i) There are no agreements, understandings, instruments,
contracts, proposed transactions, judgments, orders, writs or decrees to which it or any of its Subsidiaries is a party or to its knowledge by which it is bound which may involve: (i) obligations (contingent or otherwise) of, or payments to, it or
any of its Subsidiaries in excess of $50,000 (other than obligations of, or payments to, it or any of its Subsidiaries arising from purchase or sale agreements entered into in the ordinary course of business); or (ii) the transfer or license of any
patent, copyright, trade secret or other proprietary right to or from it (other than licenses arising from the purchase of “off the shelf” or other standard products); or (iii) provisions restricting the development, manufacture or
distribution of its or any of its Subsidiaries’ products or services; or (iv) indemnification by it or any of its Subsidiaries with respect to infringements of proprietary rights. 
  
 (ii) Except as set forth in the Parent’s quarterly unaudited financial statements for its fiscal
quarter ended December 31, 2004, since September 30, 2004 (the “Balance Sheet Date”) neither it nor any of its Subsidiaries has: (i) declared or paid any dividends, or authorized or made any distribution upon or with respect to any
class or series of its capital stock; (ii) incurred any indebtedness for money borrowed or any other liabilities (other than ordinary course obligations) individually in excess of $50,000 or, in the case of indebtedness and/or liabilities
individually less than $50,000, in excess of $100,000 in the aggregate; (iii) made any loans or advances to any Person not in excess, individually or in the aggregate, of $100,000, other than ordinary advances for travel expenses; or (iv) sold,
exchanged or otherwise disposed of any of its assets or rights, other than the sale of its Inventory in the ordinary course of business. 
  
 (iii) For the purposes of subsections (i) and (ii) of this Section 12(f), all indebtedness, liabilities, agreements, understandings,
instruments, contracts and proposed transactions involving the same Person (including Persons it or any of its applicable Subsidiaries has reason to believe are affiliated therewith or with any Subsidiary thereof) shall be aggregated for the purpose
of meeting the individual minimum dollar amounts of such subsections. 
  

 15 

 (iv) the Parent maintains disclosure controls and procedures (“Disclosure
Controls”) designed to ensure that information required to be disclosed by the Parent in the reports that it files or submits under the Exchange Act is recorded, processed, summarized, and reported, within the time periods specified in the
rules and forms of the SEC. 
  
 (v) The Parent
makes and keeps books, records, and accounts, that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of its assets. It maintains internal control over financial reporting (“Financial Reporting
Controls”) designed by, or under the supervision of, its principal executive and principal financial officers, and effected by its board of directors, management, and other personnel, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP, including that: 
  
 (1) transactions are executed in accordance with management’s general or specific authorization; 
  
 (2) unauthorized acquisition, use, or disposition of the
Parent’s assets that could have a material effect on the financial statements are prevented or timely detected; 
  
 (3) transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that its receipts
and expenditures are being made only in accordance with authorizations of the Parent’s management and board of directors; 
  
 (4) transactions are recorded as necessary to maintain accountability for assets; and 
  
 (5) the recorded accountability for assets is compared with
the existing assets at reasonable intervals, and appropriate action is taken with respect to any differences. 
  
 (vi) There is no weakness in any of its Disclosure Controls or Financial Reporting Controls that is required to be disclosed in any of the
Exchange Act Filings, except as so disclosed. 
  
 (g)
Obligations to Related Parties. Except as set forth on Schedule 12(g), neither it nor any of its Subsidiaries has any obligations to their respective officers, directors, stockholders or employees other than: 
  
 (i) for payment of salary for services rendered and for
bonus payments; 
  
 (ii) reimbursement for
reasonable expenses incurred on its or its Subsidiaries’ behalf; 
  

 16 

 (iii) for other standard employee benefits made generally available to all employees
(including stock option agreements outstanding under any stock option plan approved by its and its Subsidiaries’ Board of Directors, as applicable); and 
  

(iv) obligations listed in its and each of its Subsidiary’s financial statements or disclosed in any of the Parent’s Exchange
Act Filings. 
  
 Except as described above or set forth on Schedule 12(g),
none of its or any of its Subsidiaries’ officers, directors or, to the best of its knowledge, key employees or stockholders, any of its Subsidiaries or any members of their immediate families, are indebted to it or any of its Subsidiaries,
individually or in the aggregate, in excess of $50,000 or have any direct or indirect ownership interest in any Person with which it or any of its Subsidiaries is affiliated or with which it or any of its Subsidiaries has a business relationship, or
any Person which competes with it or any of its Subsidiaries, other than passive investments in publicly traded companies (representing less than one percent (1%) of such company) which may compete with it or any of its Subsidiaries. Except as
described above, none of its officers, directors or stockholders, or any member of their immediate families, is, directly or indirectly, interested in any material contract with it or any of its Subsidiaries and no agreements, understandings or
proposed transactions are contemplated between it or any of its Subsidiaries and any such Person. Except as set forth on Schedule 12(g), neither it nor any of its Subsidiaries is a guarantor or indemnitor of any indebtedness of any other
Person. 
  
 (h) Changes. Since the Balance Sheet Date,
except as disclosed in any Exchange Act Filing or in any Schedule to this Agreement or to any of the Ancillary Agreements, there has not been: 
  
 (i) any change in its or any of its Subsidiaries’ business, assets, liabilities, condition (financial or otherwise), properties,
operations or prospects, which, individually or in the aggregate, has had, or could reasonably be expected to have, a Material Adverse Effect; 
  
 (ii) any resignation or termination of any of its or its Subsidiaries’ officers, key employees or groups of employees; 
  
 (iii) any material change, except in the ordinary course of
business, in its or any of its Subsidiaries’ contingent obligations by way of guaranty, endorsement, indemnity, warranty or otherwise; 
  
 (iv) any damage, destruction or loss, whether or not covered by insurance, which has had, or could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect; 
  
 (v) any waiver by it or any of its Subsidiaries of a valuable right or of a material debt owed to it; 
  
 (vi) any direct or indirect material loans made by it or any of its Subsidiaries to any of its or any of its Subsidiaries’
stockholders, employees, officers or directors, other than advances made in the ordinary course of business; 
  

 17 

 (vii) any material change in any compensation arrangement or agreement with any employee,
officer, director or stockholder; 
  
 (viii) any
declaration or payment of any dividend or other distribution of its or any of its Subsidiaries’ assets; 
  
 (ix) any labor organization activity related to it or any of its Subsidiaries; 
  
 (x) any debt, obligation or liability incurred, assumed or
guaranteed by it or any of its Subsidiaries, except those for immaterial amounts and for current liabilities incurred in the ordinary course of business; 
  
 (xi) any sale, assignment or transfer of any Intellectual Property or other intangible assets; 
  
 (xii) any change in any material agreement to which it or
any of its Subsidiaries is a party or by which either it or any of its Subsidiaries is bound which, either individually or in the aggregate, has had, or could reasonably be expected to have, individually or in the aggregate, a Material Adverse
Effect; 
  
 (xiii) any other event or condition
of any character that, either individually or in the aggregate, has had, or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect; or 
  
 (xiv) any arrangement or commitment by it or any of its Subsidiaries to do any of the acts described in
subsection (i) through (xiii) of this Section 12(h). 
  
 (i)
Title to Properties and Assets; Liens, Etc. Except as set forth on Schedule 12(i), it and each of its Subsidiaries has good and marketable title to their respective properties and assets, and good title to its leasehold interests, in
each case subject to no Lien, other than Permitted Liens. 
  
 All facilities,
Equipment, Fixtures, vehicles and other properties owned, leased or used by it or any of its Subsidiaries are in good operating condition and repair and are reasonably fit and usable for the purposes for which they are being used. Except as set
forth on Schedule 12(i), it and each of its Subsidiaries is in compliance with all material terms of each lease to which it is a party or is otherwise bound. 
  
 (j) Intellectual Property. 
  

(i) It and each of its Subsidiaries owns or possesses sufficient legal rights to all Intellectual Property necessary for their
respective businesses as now conducted and, to its knowledge as presently proposed to be conducted, without any known infringement of the rights of others. There are no outstanding options, licenses or agreements of any kind relating to its or any
of its Subsidiary’s Intellectual Property, nor is it or any of its Subsidiaries bound by or a party to any options, licenses or agreements of any kind with respect to the Intellectual 

  

 18 

 
Property of any other Person other than such licenses or agreements arising from the purchase of “off the shelf” or standard products. 

 
 (ii) Neither it nor any of its Subsidiaries has received
any communications alleging that it or any of its Subsidiaries has violated any of the Intellectual Property or other proprietary rights of any other Person, nor is it or any of its Subsidiaries aware of any basis therefor. 
  
 (iii) Neither it nor any of its Subsidiaries believes it is
or will be necessary to utilize any inventions, trade secrets or proprietary information of any of its employees made prior to their employment by it or any of its Subsidiaries, except for inventions, trade secrets or proprietary information that
have been rightfully assigned to it or any of its Subsidiaries. 
  
 (k) Compliance with Other Instruments. Neither it nor any of its Subsidiaries is in violation or default of (x) any term of its Charter or Bylaws, or (y) any provision of any indebtedness, mortgage, indenture, contract, agreement or
instrument to which it is party or by which it is bound or of any judgment, decree, order or writ, which violation or default, in the case of this clause (y), has had, or could reasonably be expected to have, either individually or in the aggregate,
a Material Adverse Effect. The execution, delivery and performance of and compliance with this Agreement and the Ancillary Agreements to which it is a party, and the issuance of the Notes and the other Securities each pursuant hereto and thereto,
will not, with or without the passage of time or giving of notice, result in any such material violation, or be in conflict with or constitute a default under any such term or provision, or result in the creation of any Lien upon any of its or any
of its Subsidiary’s properties or assets or the suspension, revocation, impairment, forfeiture or non-renewal of any permit, license, authorization or approval applicable to it or any of its Subsidiaries, their businesses or operations or any
of their assets or properties. 
  
 (l) Litigation. Except
as set forth on Schedule 12(l), there is no action, suit, proceeding or investigation pending or, to its knowledge, currently threatened against it or any of its Subsidiaries that prevents it or any of its Subsidiaries from entering into this
Agreement or the Ancillary Agreements, or from consummating the transactions contemplated hereby or thereby, or which has had, or could reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect, or could
result in any change in its or any of its Subsidiaries’ current equity ownership, nor is it aware that there is any basis to assert any of the foregoing. Neither it nor any of its Subsidiaries is a party to or subject to the provisions of any
order, writ, injunction, judgment or decree of any court or government agency or instrumentality. There is no action, suit, proceeding or investigation by it or any of its Subsidiaries currently pending or which it or any of its Subsidiaries intends
to initiate. 
  

 19 

 (m) Tax Returns and Payments. It and each of its Subsidiaries has timely filed all tax returns
(federal, state and local) required to be filed by it. All taxes shown to be due and payable on such returns, any assessments imposed, and all other taxes due and payable by it and each of its Subsidiaries on or before the Closing Date, have been
paid or will be paid prior to the time they become delinquent. Except as set forth on Schedule 12(m), neither it nor any of its Subsidiaries has been advised: 
  
 (i) that any of its returns, federal, state or other, have been or are being audited as of the date hereof;
or 
  
 (ii) of any adjustment, deficiency,
assessment or court decision in respect of its federal, state or other taxes. 
  
 Neither it nor any of its Subsidiaries has any knowledge of any liability of any tax to be imposed upon its properties or assets as of the date of this Agreement that is not adequately provided for. 
  
 (n) Employees. Except as set forth on Schedule 12(n), neither
it nor any of its Subsidiaries has any collective bargaining agreements with any of its employees. There is no labor union organizing activity pending or, to its knowledge, threatened with respect to it or any of its Subsidiaries. Except as
disclosed in the Exchange Act Filings or on Schedule 12(n), neither it nor any of its Subsidiaries is a party to or bound by any currently effective employment contract, deferred compensation arrangement, bonus plan, incentive plan, profit
sharing plan, retirement agreement or other employee compensation plan or agreement. To its knowledge, none of its or any of its Subsidiaries’ employees, nor any consultant with whom it or any of its Subsidiaries has contracted, is in violation
of any term of any employment contract, proprietary information agreement or any other agreement relating to the right of any such individual to be employed by, or to contract with, it or any of its Subsidiaries because of the nature of the business
to be conducted by it or any of its Subsidiaries; and to its knowledge the continued employment by it and its Subsidiaries of their present employees, and the performance of its and its Subsidiaries contracts with its independent contractors, will
not result in any such violation. Neither it nor any of its Subsidiaries is aware that any of its or any of its Subsidiaries’ employees is obligated under any contract (including licenses, covenants or commitments of any nature) or other
agreement, or subject to any judgment, decree or order of any court or administrative agency that would interfere with their duties to it or any of its Subsidiaries. Neither it nor any of its Subsidiaries has received any notice alleging that any
such violation has occurred. Except for employees who have a current effective employment agreement with it or any of its Subsidiaries, none of its or any of its Subsidiaries’ employees has been granted the right to continued employment by it
or any of its Subsidiaries or to any material compensation following termination of employment with it or any of its Subsidiaries. Except as set forth on Schedule 12(n), neither it nor any of its Subsidiaries is aware that any officer, key
employee or group of employees intends to terminate his, her or their employment with it or any of its Subsidiaries, as applicable, nor does it or any of its Subsidiaries have a present intention to terminate the employment of any officer, key
employee or group of employees. 
  
 (o) Registration Rights and
Voting Rights. Except as set forth on Schedule 12(o) and except as disclosed in Exchange Act Filings (including, without limitation, the Form S-1 filed in connection with the proposed initial public offering of Common Stock), 

  

 20 

 
neither it nor any of its Subsidiaries is presently under any obligation, and neither it nor any of its Subsidiaries has granted any rights, to register any
of its or any of its Subsidiaries’ presently outstanding securities or any of its securities that may hereafter be issued. Except as set forth on Schedule 12(o) and except as disclosed in Exchange Act Filings (including, without
limitation, the Form S-1 filed in connection with the proposed initial public offering of Common Stock), to its knowledge, none of its or any of its Subsidiaries’ stockholders has entered into any agreement with respect to its or any of its
Subsidiaries’ voting of equity securities. 
  
 (p)
Compliance with Laws; Permits. Neither it nor any of its Subsidiaries is in violation of the Sarbanes-Oxley Act of 2002 or any SEC related regulation or rule or any rule of the Principal Market promulgated thereunder or any other applicable
statute, rule, regulation, order or restriction of any domestic or foreign government or any instrumentality or agency thereof in respect of the conduct of its business or the ownership of its properties which has had, or could reasonably be
expected to have, either individually or in the aggregate, a Material Adverse Effect. No governmental orders, permissions, consents, approvals or authorizations are required to be obtained and no registrations or declarations are required to be
filed in connection with the execution and delivery of this Agreement or any Ancillary Agreement and the issuance of any of the Securities, except such as have been duly and validly obtained or filed, or with respect to any filings that must be made
after the Closing Date, as will be filed in a timely manner. It and each of its Subsidiaries has all material franchises, permits, licenses and any similar authority necessary for the conduct of its business as now being conducted by it, the lack of
which could, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. 
  
 (q) Environmental and Safety Laws. Neither it nor any of its Subsidiaries is in violation of any applicable statute, law or regulation relating to
the environment or occupational health and safety, and to its knowledge, no material expenditures are or will be required in order to comply with any such existing statute, law or regulation. Except as set forth on Schedule 12(q), no
Hazardous Materials (as defined below) are used or have been used, stored, or disposed of by it or any of its Subsidiaries or, to its knowledge, by any other Person on any property owned, leased or used by it or any of its Subsidiaries. For the
purposes of the preceding sentence, “Hazardous Materials” shall mean: 
  
 (i) materials which are listed or otherwise defined as “hazardous” or “toxic” under any applicable local, state,
federal and/or foreign laws and regulations that govern the existence and/or remedy of contamination on property, the protection of the environment from contamination, the control of hazardous wastes, or other activities involving hazardous
substances, including building materials; and 
  
 (ii) any petroleum products or nuclear materials. 
  
 (r)
Valid Offering. Assuming the accuracy of the representations and warranties of Laurus contained in this Agreement, the offer and issuance of the Securities will be exempt from the registration requirements of the Securities Act of 1933, as
amended (the “Securities Act”), and will have been registered or qualified (or are exempt from registration and qualification) under the registration, permit or qualification requirements of all applicable state securities laws.

  

 21 

 (s) Full Disclosure. It and each of its Subsidiaries has provided Laurus with all information
requested by Laurus in connection with Laurus’ decision to enter into this Agreement, including all information each Company and its Subsidiaries believe is reasonably necessary to make such investment decision. Neither this Agreement, the
Ancillary Agreements nor the exhibits and schedules hereto and thereto nor any other document delivered by it or any of its Subsidiaries to Laurus or its attorneys or agents in connection herewith or therewith or with the transactions contemplated
hereby or thereby, contain any untrue statement of a material fact nor omit to state a material fact necessary in order to make the statements contained herein or therein, in light of the circumstances in which they are made, not misleading. Any
financial projections and other estimates provided to Laurus by it or any of its Subsidiaries were based on its and its Subsidiaries’ experience in the industry and on assumptions of fact and opinion as to future events which it or any of its
Subsidiaries, at the date of the issuance of such projections or estimates, believed to be reasonable. 
  
 (t) Insurance. It and each of its Subsidiaries has general commercial, product liability, fire and casualty insurance policies with coverages which
it believes are customary for companies similarly situated to it and its Subsidiaries in the same or similar business. 
  
 (u) Financial Statements. The Parent has furnished Laurus with copies of: (i) its annual audited financial statements for its fiscal year ended
September 30, 2004; and (ii) its quarterly unaudited financial statements for its fiscal quarters ended December 31, 2004 and March 31, 2005 (collectively, the “Financial Statements”). Except as set forth on Schedule 12(u),
each Financial Statement was, at the time of its preparation, in substantial compliance with the requirements of its respective form and none of the Financial Statements (and the notes thereto), as of their respective preparation dates, contained
any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. Such Financial
Statements have been prepared in accordance with GAAP applied on a consistent basis during the periods involved (except (i) as may be otherwise indicated in such financial statements or the notes thereto or (ii) in the case of unaudited interim
statements, to the extent they may not include footnotes or may be condensed) and fairly present in all material respects the financial condition, the results of operations and cash flows of the Parent and its Subsidiaries, on a consolidated basis,
as of, and for, the periods presented in each such Financial Statement. 
  
 (v) Listing. The Parent has prepared in all material respects the listing application in respect of its Common Stock to be, upon consummation of the initial public offering of Common Stock, listed on the Principal Market and the
Parent reasonably believes that it and such listing application shall satisfy all requirements for such listing on the Principal Market, and once listed on the Principal Market, the Parent shall do all things necessary for the continuation of such
listing. The Parent has not received any notice that its Common Stock will not be listed on the Principal Market upon consummation of the initial public offering of Common Stock or that its Common Stock shall not meet all requirements for such
listing. 
  
 (w) No Integrated Offering. Neither it, nor
any of its Subsidiaries nor any of its Affiliates, nor any Person acting on its or their behalf, has directly or indirectly made any offers or sales of any security or solicited any offers to buy any security (other than an offering to Laurus under
a Securities Purchase Agreement) under circumstances that would cause the 

  

 22 

 
offering of the Securities pursuant to this Agreement or any Ancillary Agreement to be integrated with prior offerings by it for purposes of the Securities
Act which would prevent it from issuing the Securities pursuant to Rule 506 under the Securities Act, or any applicable exchange-related stockholder approval provisions, nor will it or any of its Affiliates or Subsidiaries take any action or steps
that would cause the offering of the Securities to be integrated with other offerings. 
  
 (x) Stop Transfer. The Securities are restricted securities as of the date of this Agreement. Neither it nor any of its Subsidiaries will issue any stop transfer order or other order impeding the sale and
delivery of any of the Securities at such time as the Securities are registered for public sale or an exemption from registration is available, except as required by state and federal securities laws. 
  
 (y) Dilution. It specifically acknowledges that the Parent’s
obligation to issue the shares of Common Stock upon conversion of the Notes and exercise of the Warrants is binding upon the Parent and enforceable regardless of the dilution such issuance may have on the ownership interests of other shareholders of
the Parent. 
  
 (z) Patriot Act. It certifies that, to the
best of its knowledge, neither it nor any of its Subsidiaries has been designated, nor is or shall be owned or controlled, by a “suspected terrorist” as defined in Executive Order 13224. It hereby acknowledges that Laurus seeks to comply
with all applicable laws concerning money laundering and related activities. In furtherance of those efforts, it hereby represents, warrants and covenants that: (i) none of the cash or property that it or any of its Subsidiaries will pay or will
contribute to Laurus has been or shall be derived from, or related to, any activity that is deemed criminal under United States law; and (ii) no contribution or payment by it or any of its Subsidiaries to Laurus, to the extent that they are within
its or any such Subsidiary’s control shall cause Laurus to be in violation of the United States Bank Secrecy Act, the United States International Money Laundering Control Act of 1986 or the United States International Money Laundering Abatement
and Anti-Terrorist Financing Act of 2001. It shall promptly notify Laurus if any of these representations, warranties and covenants ceases to be true and accurate regarding it or any of its Subsidiaries. It shall provide Laurus with any additional
information regarding it and each Subsidiary thereof that Laurus deems necessary or convenient to ensure compliance with all applicable laws concerning money laundering and similar activities. It understands and agrees that if at any time it is
discovered that any of the foregoing representations, warranties and covenants are incorrect, or if otherwise required by applicable law or regulation related to money laundering or similar activities, Laurus may undertake appropriate actions to
ensure compliance with applicable law or regulation, including but not limited to segregation and/or redemption of Laurus’ investment in it. It further understands that Laurus may release confidential information about it and its Subsidiaries
and, if applicable, any underlying beneficial owners, to proper authorities if Laurus, in its sole discretion, determines that it is in the best interests of Laurus in light of relevant rules and regulations under the laws set forth in subsection
(ii) above. 
  
 (aa) Company Name; Locations of Offices,
Records and Collateral. Schedule 12(aa) sets forth each Company’s name as it appears in official filings in the state of its organization, the type of entity of each Company, the organizational identification number issued by each
Company’s state of organization or a statement that no such number has been issued, 

  

 23 

 
each Company’s state of organization, and the location of each Company’s chief executive office, corporate offices, warehouses, other locations of
Collateral and locations where records with respect to Collateral are kept (including in each case the county of such locations) and, except as set forth in such Schedule 12(aa), such locations have not changed during the preceding twelve
months. As of the Closing Date, during the prior five years, except as set forth in Schedule 12(aa), no Company has been known as or conducted business in any other name (including trade names). Each Company has only one state of
organization. 
  
 (bb) ERISA. Based upon the Employee
Retirement Income Security Act of 1974 (“ERISA”), and the regulations and published interpretations thereunder: (i) neither it nor any of its Subsidiaries has engaged in any Prohibited Transactions (as defined in Section 406 of
ERISA and Section 4975 of the Code); (ii) it and each of its Subsidiaries has met all applicable minimum funding requirements under Section 302 of ERISA in respect of its plans; (iii) neither it nor any of its Subsidiaries has any knowledge of any
event or occurrence which would cause the Pension Benefit Guaranty Corporation to institute proceedings under Title IV of ERISA to terminate any employee benefit plan(s); (iv) neither it nor any of its Subsidiaries has any fiduciary responsibility
for investments with respect to any plan existing for the benefit of persons other than its or such Subsidiary’s employees; and (v) neither it nor any of its Subsidiaries has withdrawn, completely or partially, from any multi-employer pension
plan so as to incur liability under the Multiemployer Pension Plan Amendments Act of 1980. 
  
 13. Covenants. Each Company, as applicable, covenants and agrees with Laurus as follows: 
  
 (a) Stop-Orders. It shall advise Laurus, promptly after it receives notice of issuance by the SEC, any state securities commission or any other
regulatory authority of any stop order or of any order preventing or suspending any offering of any securities of the Parent, or of the suspension of the qualification of the Common Stock of the Parent for offering or sale in any jurisdiction, or
the initiation of any proceeding for any such purpose. 
  
 (b)
Listing. On or prior to the date of consummation of the initial public offering of Common Stock, it shall promptly secure the listing of the shares of Common Stock issuable upon conversion of the Notes and exercise of the Warrants on the
Principal Market. On and after the date of the initial listing of the shares of Common Stock on the Principal Market, the Parent shall maintain such listing of its Common Stock on the Principal Market, and will comply in all material respects with
the Parent’s reporting, filing and other obligations under the bylaws or rules of the National Association of Securities Dealers (“NASD”) and such exchanges, as applicable. 
  
 (c) Market Regulations. It shall notify the SEC, NASD and applicable
state authorities, in accordance with their requirements, of the transactions contemplated by this Agreement, and shall take all other necessary action and proceedings as may be required and permitted by applicable law, rule and regulation, for the
legal and valid issuance of the Securities to Laurus and promptly provide copies thereof to Laurus. 
  
 (d) Reporting Requirements. It shall timely file with the SEC all reports required to be filed pursuant to the Exchange Act and refrain from
terminating its status as an 

  

 24 

 
issuer required by the Exchange Act to file reports thereunder even if the Exchange Act or the rules or regulations thereunder would permit such termination.

  
 (e) Use of Funds. It shall use the proceeds of the
Loans (i) to repay in full all of its obligations owing to MSB under the Existing Credit Agreement and (ii) for general working capital purposes only. 
  
 (f) Access to Facilities. It shall, and shall cause each of its Subsidiaries to, permit any representatives designated by Laurus (or any successor
of Laurus), upon reasonable notice and during normal business hours, at Company’s expense and accompanied by a representative of Company Agent (provided that no such prior notice shall be required to be given and no such representative shall be
required to accompany Laurus in the event Laurus believes such access is necessary to preserve or protect the Collateral or following the occurrence and during the continuance of an Event of Default), to: 
  
 (i) visit and inspect any of its or any such
Subsidiary’s properties; 
  
 (ii) examine
its or any such Subsidiary’s corporate and financial records (unless such examination is not permitted by federal, state or local law or by contract) and make copies thereof or extracts therefrom; and 
  
 (iii) discuss its or any such Subsidiary’s affairs,
finances and accounts with its or any such Subsidiary’s directors, officers and Accountants. 
  
 Notwithstanding the foregoing, neither it nor any of its Subsidiaries shall provide any material, non-public information to Laurus unless Laurus signs a confidentiality agreement and otherwise complies with Regulation
FD, under the federal securities laws. 
  
 (g) Taxes. It
shall, and shall cause each of its Subsidiaries to, promptly pay and discharge, or cause to be paid and discharged, when due and payable, all lawful taxes, assessments and governmental charges or levies imposed upon it and its Subsidiaries’
income, profits, property or business, as the case may be; provided, however, that any such tax, assessment, charge or levy need not be paid currently if (i) the validity thereof shall currently and diligently be contested in good faith by
appropriate proceedings, (ii) such tax, assessment, charge or levy shall have no effect on the Lien priority of Laurus in the Collateral, and (iii) if it and/or such Subsidiary, as applicable, shall have set aside on its and/or such
Subsidiary’s books adequate reserves with respect thereto in accordance with GAAP; and provided, further, that it shall, and shall cause each of its Subsidiaries to, pay all such taxes, assessments, charges or levies forthwith upon the
commencement of proceedings to foreclose any lien which may have attached as security therefor. 
  
 (h) Insurance. It shall bear the full risk of loss from any loss of any nature whatsoever with respect to the Collateral. It and each of its
Subsidiaries shall keep its assets which are of an insurable character insured by financially sound and reputable insurers against loss or damage by fire, explosion and other risks customarily insured against by companies in similar business
similarly situated as it and its Subsidiaries; and it and its Subsidiaries shall maintain, with financially sound and reputable insurers, insurance against other hazards and risks and liability to persons and property to the extent and in the manner
which it and/or such 

  

 25 

 
Subsidiary thereof reasonably believes is customary for companies in similar business similarly situated as it and its Subsidiaries and to the extent
available on commercially reasonable terms. It and each of its Subsidiaries will jointly and severally bear the full risk of loss from any loss of any nature whatsoever with respect to the assets pledged to Laurus as security for its obligations
hereunder and under the Ancillary Agreements. At its own cost and expense in amounts and with carriers reasonably acceptable to Laurus, it and each of its Subsidiaries shall (i) keep all their insurable properties and properties in which they have
an interest insured against the hazards of fire, flood, sprinkler leakage, those hazards covered by extended coverage insurance and such other hazards, and for such amounts, as is customary in the case of companies engaged in businesses similar to
it or the respective Subsidiary’s including business interruption insurance; (ii) maintain a bond in such amounts as is customary in the case of companies engaged in businesses similar to it and its Subsidiaries’ insuring against larceny,
embezzlement or other criminal misappropriation of insured’s officers and employees who may either singly or jointly with others at any time have access to its or any of its Subsidiaries assets or funds either directly or through governmental
authority to draw upon such funds or to direct generally the disposition of such assets; (iii) maintain public and product liability insurance against claims for personal injury, death or property damage suffered by others; (iv) maintain all such
worker’s compensation or similar insurance as may be required under the laws of any state or jurisdiction in which it or any of its Subsidiaries is engaged in business; and (v) furnish Laurus with (x) copies of all policies and evidence of the
maintenance of such policies at least thirty (30) days before any expiration date, (y) excepting its and its Subsidiaries’ workers’ compensation policy, endorsements to such policies naming Laurus as “co-insured” or
“additional insured” and appropriate loss payable endorsements in form and substance satisfactory to Laurus, naming Laurus as lenders loss payee, and (z) evidence that as to Laurus the insurance coverage shall not be impaired or
invalidated by any act or neglect of any Company or any of its Subsidiaries and the insurer will provide Laurus with at least thirty (30) days notice prior to cancellation. It shall instruct the insurance carriers that in the event of any loss
thereunder, the carriers shall make payment for such loss to Laurus and not to any Company or any of its Subsidiaries and Laurus jointly. If any insurance losses are paid by check, draft or other instrument payable to any Company and/or any of its
Subsidiaries and Laurus jointly, Laurus may endorse, as applicable, such Company’s and/or any of its Subsidiaries’ name thereon and do such other things as Laurus may deem advisable to reduce the same to cash. Laurus is hereby authorized
to adjust and compromise claims. All loss recoveries received by Laurus upon any such insurance may be applied to the Obligations, in such order as Laurus in its sole discretion shall determine or shall otherwise be delivered to Company Agent for
the benefit of the applicable Company and/or its Subsidiaries. Any surplus shall be paid by Laurus to Company Agent for the benefit of the applicable Company and/or its Subsidiaries, or applied as may be otherwise required by law. Any deficiency
thereon shall be paid, as applicable, by Companies and their Subsidiaries to Laurus, on demand. 
  
 (i) Intellectual Property. It shall, and shall cause each of its Subsidiaries to, maintain in full force and effect its corporate existence, rights
and franchises and all licenses and other rights to use Intellectual Property owned or possessed by it and reasonably deemed to be necessary to the conduct of its business. 
  
 (j) Properties. It shall, and shall cause each of its Subsidiaries to, keep its properties in good repair, working
order and condition, reasonable wear and tear excepted, and 

  

 26 

 
from time to time make all needful and proper repairs, renewals, replacements, additions and improvements thereto; and it shall, and shall cause each of its
Subsidiaries to, at all times comply with each provision of all leases to which it is a party or under which it occupies property if the breach of such provision could reasonably be expected to have a Material Adverse Effect. 
  
 (k) Confidentiality. It shall not, and shall not permit any of its
Subsidiaries to, disclose, and will not include in any public announcement, the name of Laurus, unless expressly agreed to by Laurus or unless and until such disclosure is required by law or applicable regulation, and then only to the extent of such
requirement. Notwithstanding the foregoing, each Company and its Subsidiaries may disclose Laurus’ identity and the terms of this Agreement to its current and prospective debt and equity financing sources. 
  
 (l) Required Approvals. It shall not, and shall not permit any of its
Subsidiaries to, without the prior written consent of Laurus, (i) create, incur, assume or suffer to exist any indebtedness (exclusive of trade debt) whether secured or unsecured other than (w) each Company’s indebtedness to Laurus, (x)
indebtedness in such maximum amounts as set forth on Schedule 13(l)(i) attached hereto and made a part hereof, (y) in respect of TEAMM, indebtedness in the aggregate principal amount not to exceed $7,000,000 at any time (including the
aggregate principal amount of outstanding indebtedness owed to Harbinger pursuant to the Harbinger Debt Documentation); provided that (I) no Event of Default has occurred and is continuing at such time, (II) such indebtedness if secured, shall only
be secured by TEAMM’s assets, (III) the terms and conditions of such indebtedness are no more onerous than the terms and conditions of the Harbinger Debt Documentation and (IV) the maturity date of such indebtedness shall be no earlier than six
months following expiration of the Term and (z) indebtedness incurred in connection with arrangements otherwise permitted pursuant to Section 13(l)(v)(y) below; provided that indebtedness under this clause (z) shall only be permitted to be secured
by Intellectual Property, General Intangibles and/or contract rights which are directly subject of such arrangement; (ii) cancel any debt owing to it in excess of $150,000 in the aggregate during any 12 month period; (iii) assume, guarantee, endorse
or otherwise become directly or contingently liable in connection with any obligations of any other Person, except (w) the endorsement of negotiable instruments by it or its Subsidiaries for deposit or collection or similar transactions in the
ordinary course of business, (x) in respect of each Subsidiary of the Parent, so long as each such Subsidiary is designated as either a co-borrower hereunder or has entered into such guaranty and security documentation required by Laurus, including,
without limitation, to grant to Laurus a first priority perfected security interest in substantially all of such Subsidiary’s assets to secure the Obligations, (y) in respect of TEAMM, the guarantee by the Parent of TEAMM’s indebtedness
not to exceed $7,000,000 in the aggregate to (I) Harbinger pursuant to the Harbinger Debt Documentation and (II) each other creditor of TEAMM pursuant to documentation reasonably satisfactory to Laurus; provided that (A) no Event of Default has
occurred and is continuing both before and after giving effect to such guarantee and (B) such new TEAMM indebtedness is otherwise permitted under Section 13(l)(i)(y) and (z) in respect of Biovest; provided that (I) no Event of Default has occurred
and is continuing both before and after giving effect to the incurrence of such direct and/or contingent liability and (II) the aggregate amount of such indebtedness of Biovest subject of such direct and/or contingent liability shall not exceed in
aggregate amount, when added to the aggregate amount of indebtedness permitted under Section 13(l)(v)(z)(I) below which is outstanding at the time of determination, the fair market value of the assets of Biovest as reasonably determined by the

  

 27 

 
Parent in which the Parent has been granted a first priority security interest; (iv) directly or indirectly declare, pay or make any dividend or distribution
on any class of its Stock or apply any of its funds, property or assets to the purchase, redemption or other retirement of any of its or its Subsidiaries’ Stock outstanding on the date hereof, or issue any preferred stock; provided that (x) the
Parent shall be permitted to pay dividends to the holder’s of the Parent’s Series E preferred stock up to such amounts and at such times as are contractually required pursuant to the terms and conditions of the documentation governing such
Series E preferred stock as in effect on the date hereof and (y) the purchase and/or redemption of no more than 4,300,000 shares of Series E preferred stock shall be permitted in connection with the McKesson Restructuring Payment to the extent such
McKesson Restructuring Payment is otherwise permitted hereunder; (v) purchase or hold beneficially any Stock or other securities or evidences of indebtedness of, make or permit to exist any loans or advances to, or make any investment or acquire any
interest whatsoever in, any other Person, including any partnership or joint venture, except (u) travel advances, (v) loans to its and its Subsidiaries’ officers and employees not exceeding at any one time an aggregate of $10,000, (w) loans to
its existing Subsidiaries so long as such Subsidiaries are designated as either a co-borrower hereunder or has entered into such guaranty and security documentation required by Laurus, including, without limitation, to grant to Laurus a first
priority perfected security interest in substantially all of such Subsidiary’s assets to secure the Obligations, (x) loans to TEAMM; provided that, the aggregate amount of all such loans shall not exceed at any time outstanding (A) prior to
consummation of the Initial Public Offering, $15,000,000, of which $12,000,000 is outstanding on the date hereof and (B) on and after consummation of the Initial Public Offering and to the extent Laurus shall not have been granted a first priority
perfected security interest in substantially all of TEAMM’s assets to secure the Obligations, $20,000,000, of which $12,000,000 is outstanding on the date hereof; provided further that all loans from the Company to TEAMM shall be evidenced by
an intercompany note in form and substance reasonably satisfactory to Laurus and shall be subject to a first priority perfected security interest in favor of Laurus to secure the Obligations, (y) in relation to arrangements relating to the
acquisition, licensing or commercialization of pharmaceutical products, as well as other medical and similar products or devices; provided that (I) such arrangements are in the ordinary course of business of the Company and are consistent with past
practice, (II) no Event of Default has occurred and is continuing both before and after giving effect to such arrangement and (III) Laurus shall have been granted a first priority perfected security interest in all of the Company’s rights under
such arrangement to secure the Obligations and (z) loans or advances to, or investments in, (I) Biovest, provided that (A) the Parent shall hold directly or indirectly no less than seventy percent (70%) of all issued and outstanding voting equity
interests of Biovest at such time, (B) the aggregate amount of all such investments shall not exceed at any time outstanding the maximum amount of investments contractually required pursuant to the Investment Agreement dated as of April 9, 2003
between the Parent and Biovest as in effect on the date hereof (subject to the anti-dilution related rights granted to the Parent permitting it to invest a discounted amount to offset the dilutive effect of future equity issuances by Biovest as set
forth in the Agreement, dated as of June 16, 2003, between the Parent and Biovest as in effect on the date hereof) and (C) the aggregate amount of all such loans shall not exceed at any time, when added to the aggregate amount of the indebtedness of
Biovest outstanding and guaranteed by the Parent at the time of determination, the fair market value of the assets of Biovest as reasonably determined by the Parent in which the Parent has been granted a first priority security interest; provided
that such loans from the Parent to Biovest shall be evidenced by an 

  

 28 

 
intercompany note in form and substance reasonably satisfactory to Laurus and shall be subject to a first priority perfected security interest in favor of
Laurus to secure the Obligations and (II) IMOR-Analytica; provided that the aggregate amount of all such loans and investments shall not exceed at any time outstanding (A) prior to consummation of the Initial Public Offering, $500,000 and (B) on and
after consummation of the Initial Public Offering, $2,000,000; (vi) create or permit to exist any Subsidiary, other than any Subsidiary in existence on the date hereof and listed in Schedule 12(b) unless such new Subsidiary is a wholly-owned
Subsidiary and is designated by Laurus as either a co-borrower or guarantor hereunder and such Subsidiary shall have entered into all such documentation required by Laurus, including, without limitation, to grant to Laurus a first priority perfected
security interest in substantially all of such Subsidiary’s assets to secure the Obligations; (vii) directly or indirectly, prepay any indebtedness (other than to Laurus and in the ordinary course of business), or repurchase, redeem, retire or
otherwise acquire any indebtedness (other than to Laurus and in the ordinary course of business); provided that the Parent shall be permitted to apply proceeds received from the Initial Public Offering to repay its obligations owed to (A) McKesson
pursuant to the Subordinated Debt Documentation to the extent not in excess of $6,100,000 and (B) Harbinger pursuant to the Harbinger Debt Documentation to the extent not in excess of $7,000,000; (viii) enter into any merger, consolidation or other
reorganization with or into any other Person or acquire all or a portion of the assets or Stock of any Person or permit any other Person to consolidate with or merge with it, unless (1) such Company is the surviving entity of such merger or
consolidation, (2) no Event of Default shall exist immediately prior to and after giving effect to such merger or consolidation, (3) such Company shall have provided Laurus copies of all documentation relating to such merger or consolidation and (4)
such Company shall have provided Laurus with at least thirty (30) days’ prior written notice of such merger or consolidation; (ix) materially change the nature of the business in which it is presently engaged; (x) become subject to (including,
without limitation, by way of amendment to or modification of) any agreement or instrument which by its terms would (under any circumstances) restrict its or any of its Subsidiaries’ right to perform the provisions of this Agreement or any of
the Ancillary Agreements; (xi) change its fiscal year or make any changes in accounting treatment and reporting practices without prior written notice to Laurus except as required by GAAP or in the tax reporting treatment or except as required by
law; (xii) enter into any transaction with any employee, director or Affiliate, except in the ordinary course on arms-length terms; (xiii) bill Accounts under any name except the present name of such Company; or (xiv) sell, lease, transfer or
otherwise dispose of any of its properties or assets, or any of the properties or assets of its Subsidiaries, except for (1) the sale of Inventory in the ordinary course of business and (2) the disposition or transfer in the ordinary course of
business during any fiscal year of obsolete and worn-out Equipment and only to the extent that (x) the proceeds of any such disposition are used to acquire replacement Equipment which is subject to Laurus’ first priority security interest or
are used to repay Loans or to pay general corporate expenses, or (y) following the occurrence of an Event of Default which continues to exist, the proceeds of which are remitted to Laurus to be held as cash collateral for the Obligations.

  
 (m) Reissuance of Securities. The Parent shall reissue
certificates representing the Securities without the legends set forth in Section 39 below at such time as: 
  
 (i) the holder thereof is permitted to dispose of such Securities pursuant to Rule 144(k) under the Securities Act; or 
  

 29 

 (ii) upon resale subject to an effective registration statement after such Securities are
registered under the Securities Act. 
  
 The Parent agrees to cooperate with
Laurus in connection with all resales pursuant to Rule 144(d) and Rule 144(k) and provide legal opinions necessary to allow such resales provided the Parent and its counsel receive reasonably requested representations from Laurus and broker, if any.

  
 (n) Opinion. On the Closing Date, it shall deliver to
Laurus an opinion acceptable to Laurus from the Company’s in house counsel. Each Company will provide, at the Companies’ joint and several expense, such other legal opinions in the future as are reasonably necessary for the conversion of
the Notes and the exercise of the Warrants. 
  
 (o) Legal Name,
etc. It shall not, without providing Laurus with 30 days prior written notice, change (i) its name as it appears in the official filings in the state of its organization, (ii) the type of legal entity it is, (iii) its organization identification
number, if any, issued by its state of organization, (iv) its state of organization or (v) amend its certificate of incorporation, by-laws or other organizational document. 
  
 (p) Compliance with Laws. The operation of each of its and each of its Subsidiaries’ business is and shall
continue to be in compliance in all material respects with all applicable federal, state and local laws, rules and ordinances, including to all laws, rules, regulations and orders relating to taxes, payment and withholding of payroll taxes, employer
and employee contributions and similar items, securities, employee retirement and welfare benefits, employee health and safety and environmental matters. 
  
 (q) Notices. It and each of its Subsidiaries shall promptly inform Laurus in writing of: (i) the commencement of all proceedings and investigations
by or before and/or the receipt of any notices from, any governmental or nongovernmental body and all actions and proceedings in any court or before any arbitrator against or in any way concerning any event which could reasonably be expected to have
singly or in the aggregate, a Material Adverse Effect; (ii) any change which has had, or could reasonably be expected to have, a Material Adverse Effect; (iii) any Event of Default or Default; and (iv) any default or any event which with the passage
of time or giving of notice or both would constitute a default under any agreement for the payment of money to which it or any of its Subsidiaries is a party or by which it or any of its Subsidiaries or any of its or any such Subsidiary’s
properties may be bound the breach of which would have a Material Adverse Effect. 
  
 (r) Margin Stock. It shall not permit any of the proceeds of the Loans made hereunder to be used directly or indirectly to “purchase” or “carry” “margin stock” or to repay
indebtedness incurred to “purchase” or “carry” “margin stock” within the respective meanings of each of the quoted terms under Regulation U of the Board of Governors of the Federal Reserve System as now and from time to
time hereafter in effect. 
  
 (s) Offering Restrictions.
Except as previously disclosed in the Financial Statements or in the Exchange Act Filings, or stock or stock options granted to its employees or directors, neither it nor any of its Subsidiaries shall, prior to the full repayment or conversion of

  

 30 

 
the Notes (together with all accrued and unpaid interest and fees related thereto), (x) enter into any equity line of credit agreement or similar agreement
or (y) issue, or enter into any agreement to issue, any securities with a variable/floating conversion and/or pricing feature which are or could be (by conversion or registration) free-trading securities (i.e. common stock subject to a registration
statement) that, in any case, results or could potentially result in a conversion price for Common Stock below 110% of the issuance price of Common Stock in connection with the initial public offering of Common Stock, as reasonably determined by
Laurus. It is agreed and understood that the Parent shall be permitted, without prior Laurus consent but subject to the restrictions set forth in this Section 13(s), to consummate, equity issuances of Common Stock in addition to the Initial Public
Offering to the extent the fair market value of the Common Stock subject of all such equity issuances, as reasonably determined by Laurus, is not at any time in excess of $25,000,000. 
  
 (t) Authorization and Reservation of Shares. The Parent shall at all times have authorized and reserved a sufficient
number of shares of Common Stock to provide for the conversion of the Notes and exercise of the Warrants. 
  
 (u) Right of Consultation. 
  
 It hereby agrees to exercise commercially reasonable efforts to consult Laurus in respect of any additional indebtedness and/or the sale or issuance of any equity
interests of any Company and/or any of its Subsidiaries (an “Additional Financing”) to be issued by any Company and/or any of its Subsidiaries prior to the incurrence of such Additional Financing. 
  
 (v) Prohibition of Amendments to Subordinated Debt Documentation
and Harbinger Debt Documentation. It shall not, and shall not permit any of its Subsidiaries to, without the prior written consent of Laurus, amend, modify or in any way alter the terms of any of the Subordinated Debt Documentation or
Harbinger Debt Documentation unless such amendment, modification, alteration or other action contemplated by this clause (v) could not reasonably be expected to be adverse to the interests of Laurus in any material respect. 
  
 (w) Prohibition of Grant of Collateral for Subordinated Debt Documentation
and Harbinger Debt Documentation. It shall not, and shall not permit any of its Subsidiaries to, without the prior written consent of Laurus, grant or permit any of its Subsidiaries to grant to any Person any Collateral of such Company or
any collateral of any of its Subsidiaries as security for any obligation arising under the Subordinated Debt Documentation or the Harbinger Debt Documentation. 
  

(x) Prohibitions of Payment Under Subordinated Debt Documentation, Harbinger Debt Documentation and MacInnis Promisory Note. Neither it nor any
of its Subsidiaries shall, without the prior written consent of Laurus, make any payments in respect of the indebtedness evidenced by the Subordinated Debt Documentation, the Harbinger Debt Documentation or the promissory note issued by the Parent
to Alan MacInnis, dated as of                          (the “MacInnis Promissory Note”), other than as
expressly required by the terms thereof; provided that the Parent shall be permitted to apply proceeds received from the Initial 

  

 31 

 
Public Offering or other financing permitted hereunder to repay its obligations owed to (i) McKesson pursuant to the Subordinated Debt Documentation to the
extent not in excess of $6,100,000, (ii) Harbinger pursuant to the Harbinger Debt Documentation to the extent not in excess of $7,000,000 and (iii) Alan MacInnis McKesson pursuant to the MacInnis Promissory Note to the extent not in excess of
$350,000. 
  
 (y) Conversion of Preferred Stock. On or
prior to the date of consummation of the Initial Public Offering, the Parent shall cause the holders of its existing Series A Convertible Preferred Stock, Series B Convertible Preferred Stock, Series C Convertible Preferred Stock, Series D
Convertible Preferred Stock, Series E Convertible Preferred Stock and its existing convertible note holders to convert their respective outstanding preferred stock and debt obligations into Common Stock of the Company. 
  
 (z) McKesson Restructuring Payment. For the avoidance of doubt, to the
extent that no Event of Default has occurred and is continuing, the Parent shall be permitted to make the McKesson Restructuring Payment in accordance with the terms of the McKesson Restructuring Agreement as in effect on the date hereof.

  
 14. Further Assurances. At any time and from time to
time, upon the written request of Laurus and at the sole expense of Companies, each Company shall promptly and duly execute and deliver any and all such further instruments and documents and take such further action as Laurus may reasonably request
(a) to obtain the full benefits of this Agreement and the Ancillary Agreements, (b) to protect, preserve and maintain Laurus’ rights in the Collateral and under this Agreement or any Ancillary Agreement, and/or (c) to enable Laurus to exercise
all or any of the rights and powers herein granted or any Ancillary Agreement. 
  
 15. Representations, Warranties and Covenants of Laurus. Laurus hereby represents, warrants and covenants to each Company as follows: 
  
 (a) Requisite Power and Authority. Laurus has all necessary power and authority under all applicable provisions of
law to execute and deliver this Agreement and the Ancillary Agreements and to carry out their provisions. All corporate action on Laurus’ part required for the lawful execution and delivery of this Agreement and the Ancillary Agreements have
been or will be effectively taken prior to the Closing Date. Upon their execution and delivery, this Agreement and the Ancillary Agreements shall be valid and binding obligations of Laurus, enforceable in accordance with their terms, except (a) as
limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws of general application affecting enforcement of creditors’ rights, and (b) as limited by general principles of equity that restrict the availability of
equitable and legal remedies. 
  
 (b) Investment
Representations. Laurus understands that the Securities are being offered pursuant to an exemption from registration contained in the Securities Act based in part upon Laurus’ representations contained in this Agreement, including, without
limitation, that Laurus is an “accredited investor” within the meaning of Regulation D under the Securities Act. Laurus has received or has had full access to all the information it considers necessary or appropriate to make an informed
investment decision with respect to the Notes to be issued to it under this Agreement and the Securities acquired by it upon the conversion of the Notes. 
  

 32 

 (c) Laurus Bears Economic Risk. Laurus has substantial experience in evaluating and investing in
private placement transactions of securities in companies similar to the Parent so that it is capable of evaluating the merits and risks of its investment in the Parent and has the capacity to protect its own interests. Laurus must bear the economic
risk of this investment until the Securities are sold pursuant to (i) an effective registration statement under the Securities Act, or (ii) an exemption from registration is available. 
  
 (d) Investment for Own Account. The Securities are being issued to Laurus for its own account for investment only,
and not as a nominee or agent and not with a view towards or for resale in connection with their distribution. 
  
 (e) Laurus Can Protect Its Interest. Laurus represents that by reason of its, or of its management’s, business and financial experience,
Laurus has the capacity to evaluate the merits and risks of its investment in the Notes, and the Securities and to protect its own interests in connection with the transactions contemplated in this Agreement, and the Ancillary Agreements. Further,
Laurus is aware of no publication of any advertisement in connection with the transactions contemplated in the Agreement or the Ancillary Agreements. 
  
 (f) Accredited Investor. Laurus represents that it is an accredited investor within the meaning of Regulation D under the Securities Act and that,
as of the date of this Agreement, Laurus (i) owns and invests on a discretionary basis at least $100,000,000 in securities of issuers that are not affiliated with Laurus and (ii) has an audited net worth of at least $25,000,000 according to its
latest audited annual financial statements. 
  
 (g)
Shorting. Neither Laurus nor any of its Affiliates or investment partners has, will, or will cause any Person, to directly engage in “short sales” of the Parent’s Common Stock as long as any Minimum Borrowing Note shall be
outstanding. 
  
 (h) Patriot Act. Laurus certifies that, to
the best of Laurus’ knowledge, Laurus has not been designated, and is not owned or controlled, by a “suspected terrorist” as defined in Executive Order 13224. Laurus seeks to comply with all applicable laws concerning money laundering
and related activities. In furtherance of those efforts, Laurus hereby represents, warrants and covenants that: (i) none of the cash or property that Laurus will use to make the Loans has been or shall be derived from, or related to, any activity
that is deemed criminal under United States law; and (ii) no disbursement by Laurus to any Company to the extent within Laurus’ control, shall cause Laurus to be in violation of the United States Bank Secrecy Act, the United States
International Money Laundering Control Act of 1986 or the United States International Money Laundering Abatement and Anti-Terrorist Financing Act of 2001. Laurus shall promptly notify the Company Agent if any of these representations ceases to be
true and accurate regarding Laurus. Laurus agrees to provide the Company any additional information regarding Laurus that the Company deems necessary or convenient to ensure compliance with all applicable laws concerning money laundering and similar
activities. Laurus understands and agrees that if at any time it is discovered that any of the foregoing representations are incorrect, or if otherwise required by applicable law or regulation related to money laundering similar activities, Laurus
may undertake appropriate actions to ensure compliance with applicable law or regulation, including but not limited to segregation and/or redemption of Laurus’ investment in the Parent. Laurus further understands that the Parent may 

  

 33 

 
release information about Laurus and, if applicable, any underlying beneficial owners, to proper authorities if the Parent, in its sole discretion,
determines that it is in the best interests of the Parent in light of relevant rules and regulations under the laws set forth in subsection (ii) above. 
  
 (i) Limitation on Acquisition of Common Stock. Notwithstanding anything to the contrary contained in this Agreement, any Ancillary Agreement, or
any document, instrument or agreement entered into in connection with any other transaction entered into by and between Laurus and any Company (and/or Subsidiaries or Affiliates of any Company), Laurus shall not acquire stock in the Parent
(including, without limitation, pursuant to a contract to purchase, by exercising an option or warrant, by converting any other security or instrument, by acquiring or exercising any other right to acquire, shares of stock or other security
convertible into shares of stock in the Parent, or otherwise, and such options, warrants, conversion or other rights shall not be exercisable) to the extent such stock acquisition would cause any interest (including any original issue discount)
payable by any Company to Laurus not to qualify as portfolio interest, within the meaning of Section 881(c)(2) of the Internal Revenue Code of 1986, as amended (the “Code”) by reason of Section 881(c)(3) of the Code, taking into
account the constructive ownership rules under Section 871(h)(3)(C) of the Code (the “Stock Acquisition Limitation”). The Stock Acquisition Limitation shall automatically become null and void without any notice to any Company upon
the earlier to occur of either (a) the Parent’s delivery to Laurus of a Notice of Redemption (as defined in the Notes) or (b) the existence of an Event of Default at a time when the average closing price of the Common Stock as reported by
Bloomberg, L.P. on the Principal Market for the immediately preceding five trading days is greater than or equal to 150% of the Fixed Conversion Price (as defined in the Notes). 
  
 16. Power of Attorney. Each Company hereby appoints Laurus, or any other Person whom Laurus may designate as such
Company’s attorney, with power to: (i) endorse such Company’s name on any checks, notes, acceptances, money orders, drafts or other forms of payment or security that may come into Laurus’ possession; (ii) sign such Company’s name
on any invoice or bill of lading relating to any Accounts, drafts against Account Debtors, schedules and assignments of Accounts, notices of assignment, financing statements and other public records, verifications of Account and notices to or from
Account Debtors; (iii) verify the validity, amount or any other matter relating to any Account by mail, telephone, telegraph or otherwise with Account Debtors; (iv) do all things necessary to carry out this Agreement, any Ancillary Agreement and all
related documents; and (v) on or after the occurrence and during the continuation of an Event of Default, notify the post office authorities to change the address for delivery of such Company’s mail to an address designated by Laurus, and to
receive, open and dispose of all mail addressed to such Company. Each Company hereby ratifies and approves all acts of the attorney. Neither Laurus, nor the attorney will be liable for any acts or omissions or for any error of judgment or mistake of
fact or law, except for gross negligence or willful misconduct. This power, being coupled with an interest, is irrevocable so long as Laurus has a security interest and until the Obligations have been fully satisfied. 
  
 17. Term of Agreement. Laurus’ agreement to make Loans and extend
financial accommodations under and in accordance with the terms of this Agreement or any Ancillary Agreement shall continue in full force and effect until the expiration of the Term. At Laurus’ election following the occurrence of an Event of
Default, Laurus may terminate this Agreement. The termination of the Agreement shall not affect any of Laurus’ rights hereunder 

  

 34 

 
or any Ancillary Agreement and the provisions hereof and thereof shall continue to be fully operative until all transactions entered into, rights or
interests created and the Obligations have been irrevocably disposed of, concluded or liquidated. Notwithstanding the foregoing, Laurus shall release its security interests at any time after thirty (30) days notice upon irrevocable payment to it of
all Obligations if each Company shall have (i) provided Laurus with an executed release of any and all claims which such Company may have or thereafter have under this Agreement and all Ancillary Agreements and (ii) paid to Laurus an early payment
fee in an amount equal to (1) five percent (5%) of the Capital Availability Amount if such payment occurs prior to the first anniversary of the Closing Date, (2) four percent (4%) of the Capital Availability Amount if such payment occurs on or after
the first anniversary of the Closing Date and prior to the second anniversary of the Closing Date and (3) three percent (3%) of the Capital Availability Amount if such termination occurs thereafter during the Term; such fee being intended to
compensate Laurus for its costs and expenses incurred in initially approving this Agreement or extending same. Such early payment fee shall be due and payable jointly and severally by the Companies to Laurus upon termination by acceleration of this
Agreement by Laurus due to the occurrence and continuance of an Event of Default. 
  
 18. Termination of Lien. The Liens and rights granted to Laurus hereunder and any Ancillary Agreements and the financing statements filed in connection herewith or therewith shall continue in full force and
effect, notwithstanding the termination of this Agreement or the fact that any Company’s account may from time to time be temporarily in a zero or credit position, until all of the Obligations have been indefeasibly paid or performed in full
after the termination of this Agreement. Laurus shall not be required to send termination statements to any Company, or to file them with any filing office, unless and until this Agreement and the Ancillary Agreements shall have been terminated in
accordance with their terms and all Obligations indefeasibly paid in full in immediately available funds. Upon the indefeasible payment in full of the Obligations and the termination of this Agreement and the Ancillary Agreements, Laurus agrees to
promptly file UCC-3 termination statements at the joint and several expense of the Companies to the extent reasonably required to evidence the foregoing. 
  
 19. Events of Default. The occurrence of any of the following shall constitute an “Event of Default”: 
  
 (a) failure to make payment of any of the Obligations when required
hereunder, and, in any such case, such failure shall continue for a period of three (3) days following the date upon which any such payment was due; provided that the failure to make payment of any Obligations arising solely as a result of (i) the
reclassification by Laurus of the Reserves pursuant to Section 2(a)(i) or (ii) decreases by Laurus in the advance percentages used in determining Accounts Availability, Inventory Availability and/or Stock Availability pursuant to Section 2(a)(iii)
shall not constitute an “Event of Default” unless such failure shall continue for a period of six (6) business days following the date upon which any such payment was due; 
  
 (b) failure by any Company or any of its Subsidiaries to pay any taxes when due unless such taxes are being contested in
good faith by appropriate proceedings and with respect to which adequate reserves have been provided on such Company’s and/or such Subsidiary’s books; 
  

 35 

 (c) failure to perform under, and/or committing any breach of, in any material respect, this Agreement or
any covenant contained herein, which failure or breach shall continue without remedy for a period of fifteen (15) days after the occurrence thereof; 
  
 (d) any representation, warranty or statement made by any Company or any of its Subsidiaries hereunder, in any Ancillary Agreement, any certificate,
statement or document delivered pursuant to the terms hereof, or in connection with the transactions contemplated by this Agreement should prove to be false or misleading in any material respect on the date as of which made or deemed made;

  
 (e) the occurrence of any default (or similar term) in the
observance or performance of any other agreement or condition relating to any indebtedness or contingent obligation of any Company or any of its Subsidiaries (including, without limitation, the contingent obligations evidenced by the O’Donnell
Stock Pledge Agreement and the indebtedness evidenced by the Subordinated Debt Documentation) beyond the period of grace (if any), the effect of which default is to cause, or permit the holder or holders of such indebtedness or beneficiary or
beneficiaries of such contingent obligation to cause, such indebtedness to become due prior to its stated maturity or such contingent obligation to become payable; 
  
 (f) attachments or levies in excess of $50,000 in the aggregate are made upon any Company’s assets or a judgment is
rendered against any Company’s property involving a liability of more than $50,000 which shall not have been vacated, discharged, stayed or bonded within thirty (30) days from the entry thereof; 
  
 (g) any change in any Company’s or any of its Subsidiary’s
condition or affairs (financial or otherwise) which in Laurus’ reasonable, good faith opinion, could reasonably be expected to have a Material Adverse Effect; 
  
 (h) any Lien created hereunder or under any Ancillary Agreement for any reason ceases to be or is not a valid and perfected
Lien having a first priority interest; 
  
 (i) any Company or any
of its Subsidiaries shall (i) apply for, consent to or suffer to exist the appointment of, or the taking of possession by, a receiver, custodian, trustee or liquidator of itself or of all or a substantial part of its property, (ii) make a general
assignment for the benefit of creditors, (iii) commence a voluntary case under the federal bankruptcy laws (as now or hereafter in effect), (iv) be adjudicated a bankrupt or insolvent, (v) file a petition seeking to take advantage of any other law
providing for the relief of debtors, (vi) acquiesce to without challenge within ten (10) days of the filing thereof, or failure to have dismissed within thirty (30) days, any petition filed against it in any involuntary case under such bankruptcy
laws, or (vii) take any action for the purpose of effecting any of the foregoing; 
  
 (j) any Company or any of its Subsidiaries shall admit in writing its inability, or be generally unable, to pay its debts as they become due or cease operations of its present business; 
  
 (k) any Company or any of its Subsidiaries directly or indirectly sells,
assigns, transfers, conveys, or suffers or permits to occur any sale, assignment, transfer or conveyance of any assets of such Company or any interest therein, except as permitted herein; 
  

 36 

 (l) any “Person” or “group” (as such terms are defined in Sections 13(d) and 14(d) of
the Exchange Act, as in effect on the date hereof) is or becomes the “beneficial owner” (as defined in Rules 13(d)-3 and 13(d)-5 under the Exchange Act), directly or indirectly, of 35% or more on a fully diluted basis of the then
outstanding voting equity interest of the Parent (other than a “Person” or “group” that beneficially owns 35% or more of such outstanding voting equity interests of the Parent on the date hereof) or (ii) the Board of Directors of
the Parent shall cease to consist of a majority of the Parent’s board of directors on the date hereof (or directors appointed by a majority of the board of directors in effect immediately prior to such appointment); 
  
 (m) the indictment or threatened indictment of any Company or any of its
Subsidiaries or any executive officer of any Company or any of its Subsidiaries under any criminal statute, or commencement or threatened commencement of criminal or civil proceeding against any Company or any of its Subsidiaries or any executive
officer of any Company or any of its Subsidiaries pursuant to which statute or proceeding penalties or remedies sought or available include forfeiture of any of the property of any Company or any of its Subsidiaries that could reasonably be expected
to be adverse to the interests of Laurus in any material respect; 
  
 (n) an Event of Default shall occur under and as defined in any Note, in any other Ancillary Agreement, the Securities Purchase Agreement or any Related Agreement referred to in the Securities Purchase Agreement; 
  
 (o) any Company or any of its Subsidiaries shall breach any term or provision
of any Ancillary Agreement to which it is a party, in any material respect which breach is not cured within any applicable cure or grace period provided in respect thereof (if any); 
  
 (p) any Company or any of its Subsidiaries attempts to terminate, challenges the validity of, or its liability under this
Agreement or any Ancillary Agreement, or any proceeding shall be brought to challenge the validity, binding effect of any Ancillary Agreement or any Ancillary Agreement ceases to be a valid, binding and enforceable obligation of such Company or any
of its Subsidiaries (to the extent such Persons are a party thereto); 
  
 (q) on or after the consummation of an initial public offering of Common Stock, an SEC stop trade order or Principal Market trading suspension of the Common Stock shall be in effect for five (5) consecutive days or five (5) days during a
period of ten (10) consecutive days, excluding in all cases a suspension of all trading on a Principal Market, provided that the Parent shall not have been able to cure such trading suspension within thirty (30) days of the notice thereof or list
the Common Stock on another Principal Market within sixty (60) days of such notice; 
  
 (r) The Parent’s failure to deliver Common Stock to Laurus pursuant to and in the form required by the Notes and this Agreement, if such failure to deliver Common Stock shall not be cured within two (2) Business
Days or any Company is required to issue a replacement Note to Laurus and such Company shall fail to deliver such replacement Note within seven (7) Business Days; or 
  

 37 

 (s) any Company, or any of its Subsidiaries shall take or participate in any action which would be
prohibited under the provisions of any of the Subordinated Debt Documentation or make any payment on the indebtedness evidenced by the Subordinated Debt Documentation to a Person that was not entitled to receive such payments under the subordination
provisions of applicable Subordinated Debt Documentation. 
  
 20.
Remedies. Following the occurrence of an Event of Default, Laurus shall have the right to demand repayment in full of all Obligations, whether or not otherwise due. Until all Obligations have been fully and indefeasibly satisfied, Laurus
shall retain its Lien in all Collateral. Laurus shall have, in addition to all other rights provided herein and in each Ancillary Agreement, the rights and remedies of a secured party under the UCC, and under other applicable law, all other legal
and equitable rights to which Laurus may be entitled, including the right to take immediate possession of the Collateral, to require each Company to assemble the Collateral, at Companies’ joint and several expense, and to make it available to
Laurus at a place designated by Laurus which is reasonably convenient to both parties and to enter any of the premises of any Company or wherever the Collateral shall be located, with or without force or process of law, and to keep and store the
same on said premises until sold (and if said premises be the property of any Company, such Company agrees not to charge Laurus for storage thereof), and the right to apply for the appointment of a receiver for such Company’s property. Further,
Laurus may, at any time or times after the occurrence of an Event of Default, sell and deliver all Collateral held by or for Laurus at public or private sale for cash, upon credit or otherwise, at such prices and upon such terms as Laurus, in
Laurus’ sole discretion, deems advisable or Laurus may otherwise recover upon the Collateral in any commercially reasonable manner as Laurus, in its sole discretion, deems advisable. The requirement of reasonable notice shall be met if such
notice is mailed postage prepaid to Company Agent at Company Agent’s address as shown in Laurus’ records, at least ten (10) days before the time of the event of which notice is being given. Laurus may be the purchaser at any sale, if it is
public. In connection with the exercise of the foregoing remedies, Laurus is granted permission to use all of each Company’s Intellectual Property. The proceeds of sale shall be applied first to all costs and expenses of sale, including
attorneys’ fees, and second to the payment (in whatever order Laurus elects) of all Obligations. After the indefeasible payment and satisfaction in full of all of the Obligations, and after the payment by Laurus of any other amount required by
any provision of law, including Section 9-608(a)(1) of the UCC (but only after Laurus has received what Laurus considers reasonable proof of a subordinate party’s security interest), the surplus, if any, shall be paid to Company Agent (for the
benefit of the applicable Companies) or its representatives or to whosoever may be lawfully entitled to receive the same, or as a court of competent jurisdiction may direct. The Companies shall remain jointly and severally liable to Laurus for any
deficiency. In addition, the Companies shall jointly and severally pay Laurus a liquidation fee (“Liquidation Fee”) in the amount of five percent (5%) of the actual amount collected in respect of each Account outstanding at any time
during a Liquidation Period”. For purposes hereof, “Liquidation Period” means a period: (i) beginning on the earliest date of (x) an event referred to in Section 19(i) or 19(j), or (y) the cessation of any Company’s
business; and (ii) ending on the date on which Laurus has actually received all Obligations due and owing it under this Agreement and the Ancillary Agreements. The Liquidation Fee shall be paid on the date on which Laurus collects the applicable
Account by deduction from the proceeds thereof. Each Company and Laurus acknowledge that the actual damages that would be incurred by Laurus after the occurrence of an Event of Default would be difficult to quantify and that such Company 

  

 38 

 
and Laurus have agreed that the fees and obligations set forth in this Section and in this Agreement would constitute fair and appropriate liquidated damages
in the event of any such termination. 
  
 21. Waivers. To
the full extent permitted by applicable law, each Company hereby waives (a) presentment, demand and protest, and notice of presentment, dishonor, intent to accelerate, acceleration, protest, default, nonpayment, maturity, release, compromise,
settlement, extension or renewal of any or all of this Agreement and the Ancillary Agreements or any other notes, commercial paper, Accounts, contracts, Documents, Instruments, Chattel Paper and guaranties at any time held by Laurus on which such
Company may in any way be liable, and hereby ratifies and confirms whatever Laurus may do in this regard; (b) all rights to notice and a hearing prior to Laurus’ taking possession or control of, or to Laurus’ replevy, attachment or levy
upon, any Collateral or any bond or security that might be required by any court prior to allowing Laurus to exercise any of its remedies; and (c) the benefit of all valuation, appraisal and exemption laws. Each Company acknowledges that it has been
advised by counsel of its choices and decisions with respect to this Agreement, the Ancillary Agreements and the transactions evidenced hereby and thereby. 
  
 22. Expenses. The Companies shall jointly and severally pay all of Laurus’ out-of-pocket costs and expenses, including reasonable fees and
disbursements of in-house or outside counsel and appraisers, in connection with the preparation, execution and delivery of this Agreement and the Ancillary Agreements, and in connection with the prosecution or defense of any action, contest,
dispute, suit or proceeding concerning any matter in any way arising out of, related to or connected with this Agreement or any Ancillary Agreement. The Companies shall also jointly and severally pay all of Laurus’ reasonable fees, charges,
out-of-pocket costs and expenses, including fees and disbursements of counsel and appraisers, in connection with (a) the preparation, execution and delivery of any waiver, any amendment thereto or consent proposed or executed in connection with the
transactions contemplated by this Agreement or the Ancillary Agreements, (b) Laurus’ obtaining performance of the Obligations under this Agreement and any Ancillary Agreements, including, but not limited to, the enforcement or defense of
Laurus’ security interests, assignments of rights and Liens hereunder as valid perfected security interests, (c) any attempt to inspect, verify, protect, collect, sell, liquidate or otherwise dispose of any Collateral, (d) any appraisals or
re-appraisals of any property (real or personal) pledged to Laurus by any Company or any of its Subsidiaries as Collateral for, or any other Person as security for, the Obligations hereunder and (e) any consultations in connection with any of the
foregoing. The Companies shall also jointly and severally pay Laurus’ customary bank charges for all bank services (including wire transfers) performed or caused to be performed by Laurus for any Company or any of its Subsidiaries at any
Company’s or such Subsidiary’s request or in connection with any Company’s loan account with Laurus. All such costs and expenses together with all filing, recording and search fees, taxes and interest payable by the Companies to
Laurus shall be payable on demand and shall be secured by the Collateral. If any tax by any Governmental Authority is or may be imposed on or as a result of any transaction between any Company and/or any Subsidiary thereof, on the one hand, and
Laurus on the other hand, which Laurus is or may be required to withhold or pay, the Companies hereby jointly and severally indemnifies and holds Laurus harmless in respect of such taxes, and the Companies will repay to Laurus the amount of any such
taxes which shall be charged to the Companies’ account; and until the Companies shall furnish Laurus with indemnity therefor (or supply Laurus with 

  

 39 

 
evidence satisfactory to it that due provision for the payment thereof has been made), Laurus may hold without interest any balance standing to each
Company’s credit and Laurus shall retain its Liens in any and all Collateral. 
  
 23. Assignment By Laurus. Laurus may assign any or all of the Obligations together with any or all of the security therefor to any Person which is not a competitor of any Company and any such transferee shall
succeed to all of Laurus’ rights with respect thereto. Upon such transfer, Laurus shall be released from all responsibility for the Collateral to the extent same is assigned to any transferee. Laurus may from time to time sell or otherwise
grant participations in any of the Obligations and the holder of any such participation shall, subject to the terms of any agreement between Laurus and such holder, be entitled to the same benefits as Laurus with respect to any security for the
Obligations in which such holder is a participant. Each Company agrees that each such holder may exercise any and all rights of banker’s lien, set-off and counterclaim with respect to its participation in the Obligations as fully as though such
Company were directly indebted to such holder in the amount of such participation. 
  
 24. No Waiver; Cumulative Remedies. Failure by Laurus to exercise any right, remedy or option under this Agreement, any Ancillary Agreement or any supplement hereto or thereto or any other agreement between or
among any Company and Laurus or delay by Laurus in exercising the same, will not operate as a waiver; no waiver by Laurus will be effective unless it is in writing and then only to the extent specifically stated. Laurus’ rights and remedies
under this Agreement and the Ancillary Agreements will be cumulative and not exclusive of any other right or remedy which Laurus may have. 
  
 25. Application of Payments. Each Company irrevocably waive the right to direct the application of any and all payments at any time or times
hereafter received by Laurus from or on such Company’s behalf and each Company hereby irrevocably agrees that Laurus shall have the continuing exclusive right to apply and reapply any and all payments received at any time or times hereafter
against the Obligations hereunder in such manner as Laurus may deem advisable notwithstanding any entry by Laurus upon any of Laurus’ books and records. 
  
 26. Indemnity. Each Company hereby jointly and severally indemnify and hold Laurus, and its respective affiliates, employees, attorneys and agents
(each, an “Indemnified Person”), harmless from and against any and all suits, actions, proceedings, claims, damages, losses, liabilities and expenses of any kind or nature whatsoever (including attorneys’ fees and disbursements
and other costs of investigation or defense, including those incurred upon any appeal) which may be instituted or asserted against or incurred by any such Indemnified Person as the result of credit having been extended, suspended or terminated under
this Agreement or any of the Ancillary Agreements or with respect to the execution, delivery, enforcement, performance and administration of, or in any other way arising out of or relating to, this Agreement, the Ancillary Agreements or any other
documents or transactions contemplated by or referred to herein or therein and any actions or failures to act with respect to any of the foregoing, except to the extent that any such indemnified liability is finally determined by a court of
competent jurisdiction to have resulted solely from such Indemnified Person’s gross negligence or willful misconduct. NO INDEMNIFIED PERSON SHALL BE RESPONSIBLE OR LIABLE TO ANY COMPANY OR TO ANY OTHER PARTY OR TO ANY SUCCESSOR, ASSIGNEE OR
THIRD PARTY BENEFICIARY OR ANY OTHER PERSON 

  

 40 

 
ASSERTING CLAIMS DERIVATIVELY THROUGH SUCH PARTY, FOR INDIRECT, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED AS A RESULT OF CREDIT
HAVING BEEN EXTENDED, SUSPENDED OR TERMINATED UNDER THIS AGREEMENT OR ANY ANCILLARY AGREEMENT OR AS A RESULT OF ANY OTHER TRANSACTION CONTEMPLATED HEREUNDER OR THEREUNDER. 
  
 27. Revival. The Companies further agree that to the extent any Company makes a payment or payments to Laurus, which
payment or payments or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside and/or required to be repaid to a trustee, receiver or any other party under any bankruptcy act, state or federal law, common
law or equitable cause, then, to the extent of such payment or repayment, the obligation or part thereof intended to be satisfied shall be revived and continued in full force and effect as if said payment had not been made. 
  
 28. Borrowing Agency Provisions. 
  
 (a) Each Company hereby irrevocably designates Company Agent to be its
attorney and agent and in such capacity to borrow, sign and endorse notes, and execute and deliver all instruments, documents, writings and further assurances now or hereafter required hereunder, on behalf of such Company, and hereby authorizes
Laurus to pay over or credit all loan proceeds hereunder in accordance with the request of Company Agent. 
  
 (b) The handling of this credit facility as a co-borrowing facility with a borrowing agent in the manner set forth in this Agreement is solely as an
accommodation to the Companies and at their request. Laurus shall not incur any liability to any Company as a result thereof. To induce Laurus to do so and in consideration thereof, each Company hereby indemnifies Laurus and holds Laurus harmless
from and against any and all liabilities, expenses, losses, damages and claims of damage or injury asserted against Laurus by any Person arising from or incurred by reason of the handling of the financing arrangements of the Companies as provided
herein, reliance by Laurus on any request or instruction from Company Agent or any other action taken by Laurus with respect to this Paragraph 28. 
  
 (c) All Obligations shall be joint and several, and the Companies shall make payment upon the maturity of the Obligations by acceleration or otherwise,
and such obligation and liability on the part of the Companies shall in no way be affected by any extensions, renewals and forbearance granted by Laurus to any Company, failure of Laurus to give any Company notice of borrowing or any other notice,
any failure of Laurus to pursue to preserve its rights against any Company, the release by Laurus of any Collateral now or thereafter acquired from any Company, and such agreement by any Company to pay upon any notice issued pursuant thereto is
unconditional and unaffected by prior recourse by Laurus to any Company or any Collateral for such Company’s Obligations or the lack thereof. 
  
 (d) Each Company expressly waives any and all rights of subrogation, reimbursement, indemnity, exoneration, contribution or any other claim which such
Company may now or hereafter have against the other or other Person directly or contingently liable for the Obligations, or against or with respect to any other’s property (including, without limitation, any 

  

 41 

 
property which is Collateral for the Obligations), arising from the existence or performance of this Agreement, until all Obligations have been indefeasibly
paid in full and this Agreement has been irrevocably terminated. 
  
 (e) Each Company represents and warrants to Laurus that (i) Companies have one or more common shareholders, directors and officers, (ii) the businesses and corporate activities of Companies are closely related to, and substantially benefit,
the business and corporate activities of Companies, (iii) the financial and other operations of Companies are performed on a combined basis as if Companies constituted a consolidated corporate group, (iv) Companies will receive a substantial
economic benefit from entering into this Agreement and will receive a substantial economic benefit from the application of each Loan hereunder, in each case, whether or not such amount is used directly by any Company and (v) all requests for Loans
hereunder by the Company Agent are for the exclusive and indivisible benefit of the Companies as though, for purposes of this Agreement, the Companies constituted a single entity. 
  
 29. Notices. Any notice or request hereunder may be given to any Company, Company Agent or Laurus at the respective
addresses set forth below or as may hereafter be specified in a notice designated as a change of address under this Section. Any notice or request hereunder shall be given by registered or certified mail, return receipt requested, hand delivery,
overnight mail or telecopy (confirmed by mail). Notices and requests shall be, in the case of those by hand delivery, deemed to have been given when delivered to any officer of the party to whom it is addressed, in the case of those by mail or
overnight mail, deemed to have been given three (3) Business Days after the date when deposited in the mail or with the overnight mail carrier, and, in the case of a telecopy, when confirmed. 
  
 Notices shall be provided as follows: 
  

					
	 If to Laurus:
	  	Laurus Master Fund, Ltd.
	 	  	c/o Laurus Capital Management, LLC
	 	  	825 Third Avenue, 14th Fl.
	 	  	New York, New York 10022
	 	  	Attention:	  	John E. Tucker, Esq.
	 	  	Telephone:	  	(212) 541-4434
	 	  	Telecopier:	  	(212) 541-5800

  

					
	 If to any Company,
 or Company Agent:
	  	Accentia Biopharmaceuticals, Inc.
	 	  	324 South Hyde Park Ave., Suite 350
	 	  	Tampa, Florida 33606
			
	 	  	Attention:	  	Chief Financial Officer
	 	  	Telephone:	  	813-864-2554
	 	  	Facsimile:	  	813-258-1659

  

 42 

 
or such other address as may be designated in writing hereafter in accordance with this Section 29 by such Person. 
  
 30. Governing Law, Jurisdiction and Waiver of Jury Trial. 

 
 (a) THIS AGREEMENT AND THE ANCILLARY AGREEMENTS SHALL BE GOVERNED BY AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. 
  
 (b) EACH COMPANY HEREBY CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS LOCATED IN THE COUNTY OF NEW YORK, STATE OF NEW
YORK SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN ANY COMPANY, ON THE ONE HAND, AND LAURUS, ON THE OTHER HAND, PERTAINING TO THIS AGREEMENT OR ANY OF THE ANCILLARY AGREEMENTS OR TO ANY MATTER ARISING OUT OF
OR RELATED TO THIS AGREEMENT OR ANY OF THE ANCILLARY AGREEMENTS; PROVIDED, THAT LAURUS AND EACH COMPANY ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF THE COUNTY OF NEW YORK, STATE OF NEW
YORK; AND FURTHER PROVIDED, THAT NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE LAURUS FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO COLLECT THE OBLIGATIONS, TO REALIZE ON THE COLLATERAL
OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF LAURUS. EACH COMPANY EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND EACH
COMPANY HEREBY WAIVES ANY OBJECTION WHICH IT MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS. EACH COMPANY HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH
ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO COMPANY AGENT AT THE ADDRESS SET FORTH IN SECTION 29 AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON
THE EARLIER OF COMPANY AGENT’S ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE PREPAID. 
  
 (c) THE PARTIES DESIRE THAT THEIR DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE
BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER ARISING IN CONTRACT, TORT, OR OTHERWISE BETWEEN LAURUS, AND/OR ANY
COMPANY ARISING OUT OF, CONNECTED WITH, RELATED OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN 

  

 43 

 
CONNECTION WITH THIS AGREEMENT, ANY ANCILLARY AGREEMENT OR THE TRANSACTIONS RELATED HERETO OR THERETO. 
  
 31. Limitation of Liability. Each Company acknowledges and understands
that in order to assure repayment of the Obligations hereunder Laurus may be required to exercise any and all of Laurus’ rights and remedies hereunder and agrees that, except as limited by applicable law, neither Laurus nor any of Laurus’
agents shall be liable for acts taken or omissions made in connection herewith or therewith except for actual bad faith. 
  
 32. Entire Understanding; Maximum Interest. This Agreement and the Ancillary Agreements contain the entire understanding among each Company and
Laurus as to the subject matter hereof and thereof and any promises, representations, warranties or guarantees not herein contained shall have no force and effect unless in writing, signed by each Company’s and Laurus’ respective officers.
Neither this Agreement, the Ancillary Agreements, nor any portion or provisions thereof may be changed, modified, amended, waived, supplemented, discharged, cancelled or terminated orally or by any course of dealing, or in any manner other than by
an agreement in writing, signed by the party to be charged. Nothing contained in this Agreement, any Ancillary Agreement or in any document referred to herein or delivered in connection herewith shall be deemed to establish or require the payment of
a rate of interest or other charges in excess of the maximum rate permitted by applicable law. In the event that the rate of interest or dividends required to be paid or other charges hereunder exceed the maximum rate permitted by such law, any
payments in excess of such maximum shall be credited against amounts owed by the Companies to Laurus and thus refunded to the Companies. 
  
 33. Severability. Wherever possible each provision of this Agreement or the Ancillary Agreements shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of this Agreement or the Ancillary Agreements shall be prohibited by or invalid under applicable law such provision shall be ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining provisions thereof. 
  
 34. Survival. The representations, warranties, covenants and agreements made herein shall survive any investigation made by Laurus and the closing of the transactions contemplated hereby to the extent provided
therein. All statements as to factual matters contained in any certificate or other instrument delivered by or on behalf of the Companies pursuant hereto in connection with the transactions contemplated hereby shall be deemed to be representations
and warranties by the Companies hereunder solely as of the date of such certificate or instrument. All indemnities set forth herein shall survive the execution, delivery and termination of this Agreement and the Ancillary Agreements and the making
and repaying of the Obligations. 
  
 35. Captions. All
captions are and shall be without substantive meaning or content of any kind whatsoever. 
  
 36. Counterparts; Telecopier Signatures. This Agreement may be executed in one or more counterparts, each of which shall constitute an original and all of which taken 

  

 44 

 
together shall constitute one and the same agreement. Any signature delivered by a party via telecopier transmission shall be deemed to be any original
signature hereto. 
  
 37. Construction. The parties
acknowledge that each party and its counsel have reviewed this Agreement and that the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this
Agreement or any amendments, schedules or exhibits thereto. 
  
 38. Publicity. Each Company hereby authorizes Laurus to make appropriate announcements of the financial arrangement entered into by and among each Company and Laurus, including, without limitation, announcements which are commonly
known as tombstones, in such publications and to such selected parties as Laurus shall in its sole and absolute discretion deem appropriate, or as required by applicable law. 
  
 39. Joinder. It is understood and agreed that any Person that desires to become a Company hereunder, or is required
to execute a counterpart of this Agreement after the date hereof pursuant to the requirements of this Agreement or any Ancillary Agreement, shall become a Company hereunder by (a) executing a Joinder Agreement in form and substance satisfactory to
Laurus, (b) delivering supplements to such exhibits and annexes to this Agreement and the Ancillary Agreements as Laurus shall reasonably request and (c) taking all actions as specified in this Agreement as would have been taken by such Company had
it been an original party to this Agreement, in each case with all documents required above to be delivered to Laurus and with all documents and actions required above to be taken to the reasonable satisfaction of Laurus. 
  
 40. Legends. The Securities shall bear legends as follows; 

 
 (a) The Notes shall bear substantially the following legend: 

 
 “THIS NOTE AND THE COMMON STOCK ISSUABLE UPON CONVERSION OF THIS
NOTE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE, STATE SECURITIES LAWS. THIS NOTE AND THE COMMON STOCK ISSUABLE UPON CONVERSION OF THIS NOTE MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS NOTE OR SUCH SHARES UNDER SAID ACT AND APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO ACCENTIA BIOPHARMACEUTICALS, INC. THAT SUCH REGISTRATION IS NOT
REQUIRED.” 
  

 45 

 (b) Any shares of Common Stock issued pursuant to conversion of the Notes or exercise of the Warrants,
shall bear a legend which shall be in substantially the following form until such shares are covered by an effective registration statement filed with the SEC: 
  

“THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE, STATE
SECURITIES LAWS. THESE SHARES MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO ACCENTIA BIOPHARMACEUTICALS, INC. THAT SUCH REGISTRATION IS NOT REQUIRED.” 
  
 (c) The Warrants shall bear substantially the following legend: 
  

“THIS WARRANT AND THE COMMON SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY APPLICABLE STATE SECURITIES LAWS. THIS WARRANT AND THE COMMON SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS WARRANT OR
THE UNDERLYING SHARES OF COMMON STOCK UNDER SAID ACT AND APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO ACCENTIA BIOPHARMACEUTICALS, INC. THAT SUCH REGISTRATION IS NOT REQUIRED.” 
  
 [Balance of page intentionally left blank; signature page follows.]

  

 46 

 IN WITNESS WHEREOF, the parties have executed this Security Agreement as of the date first written above.

  

			
	ACCENTIA BIOPHARMACEUTICALS, INC.
		
	 By: 
	 	    /s/ Francis E. O’Donnell, Jr.

			
	 Name: 
	 	 Francis E. O’Donnell, Jr.

			
	 Title: 
	 	   CEO

	
	THE ANALYTICA GROUP, INC.

			
		
	 By: 
	 	    /s/ Francis E. O’Donnell, Jr.

			
	 Name: 
	 	 Francis E. O’Donnell, Jr.

			
	 Title: 
	 	 

			
	
	LAURUS MASTER FUND, LTD.

			
		
	 By: 
	 	 /s/ Eugene Grin

			
	 Name: 
	 	 Eugene Grin

			
	 Title: 
	 	 Director

  

 47 

 Annex A - Definitions 
  
 “Account Debtor” means any Person who is or may be obligated with respect to, or on account of, an Account.

  
 “Accountants” has the meaning given to such
term in Section 11(a). 
  
 “Accounts” means all
“accounts”, as such term is defined in the UCC, now owned or hereafter acquired by any Person, including: (a) all accounts receivable, other receivables, book debts and other forms of obligations (other than forms of obligations evidenced
by Chattel Paper or Instruments) (including any such obligations that may be characterized as an account or contract right under the UCC); (b) all of such Person’s rights in, to and under all purchase orders or receipts for goods or services;
(c) all of such Person’s rights to any goods represented by any of the foregoing (including unpaid sellers’ rights of rescission, replevin, reclamation and stoppage in transit and rights to returned, reclaimed or repossessed goods); (d)
all rights to payment due to such Person for Goods or other property sold, leased, licensed, assigned or otherwise disposed of, for a policy of insurance issued or to be issued, for a secondary obligation incurred or to be incurred, for energy
provided or to be provided, for the use or hire of a vessel under a charter or other contract, arising out of the use of a credit card or charge card, or for services rendered or to be rendered by such Person or in connection with any other
transaction (whether or not yet earned by performance on the part of such Person); and (e) all collateral security of any kind given by any Account Debtor or any other Person with respect to any of the foregoing. 
  
 “Accounts Availability” means the amount of Loans against
Eligible Accounts Laurus may from time to time make available to Company Agent up to eighty-five percent (85%) of the net face amount of Eligible Accounts based on Accounts of the Companies. 
  
 “Affiliate” means, with respect to any Person, (a) any other
Person (other than a Subsidiary) which, directly or indirectly, is in control of, is controlled by, or is under common control with such Person or (b) any other Person who is a director or officer (i) of such Person, (ii) of any Subsidiary of such
Person or (iii) of any Person described in clause (a) above. For the purposes of this definition, control of a Person shall mean the power (direct or indirect) to direct or cause the direction of the management and policies of such Person whether by
contract or otherwise. 
  
 “Ancillary Agreements”
means the Notes, the Warrants, the Registration Rights Agreements, the McKesson Subordination Agreement, each Security Document and all other agreements, instruments, documents, mortgages, pledges, powers of attorney, consents, assignments,
contracts, notices, security agreements, trust agreements and guarantees whether heretofore, concurrently, or hereafter executed by or on behalf of any Company, any of its Subsidiaries or any other Person or delivered to Laurus, relating to this
Agreement or to the transactions contemplated by this Agreement or otherwise relating to the relationship between or among any Company and Laurus, as each of the same may be amended, supplemented, restated or otherwise modified from time to time.

  

 “Available Minimum Borrowing” has the meaning given such term in Section 2(a)(i).

  
 “Balance Sheet Date” has the meaning given
such term in Section 12(f)(ii). 
  
 “Biovest”
means Biovest International, Inc., a Delaware corporation and non-wholly owned subsidiary of the Parent. 
  
 “Books and Records” means all books, records, board minutes, contracts, licenses, insurance policies, environmental audits, business
plans, files, computer files, computer discs and other data and software storage and media devices, accounting books and records, financial statements (actual and pro forma), filings with Governmental Authorities and any and all records and
instruments relating to the Collateral or otherwise necessary or helpful in the collection thereof or the realization thereupon. 
  
 “Business Day” means a day on which Laurus is open for business and that is not a Saturday, a Sunday or other day on which banks are
required or permitted to be closed in the State of New York. 
  
 “Capital Availability Amount” means $5,000,000. 
  
 “Charter” has the meaning given such term in Section 12(c)(iv). 
  
 “Chattel Paper” means all “chattel paper,” as such term is defined in the UCC, including electronic chattel paper, now owned or
hereafter acquired by any Person. 
  
 “Closing
Date” means the date on which any Company shall first receive proceeds of the initial Loans or the date hereof, if no Loan is made under the facility on the date hereof. 
  
 “Code” has the meaning given such term in Section 15(i). 
  
 “Collateral” means all of each Company’s property and
assets, whether real or personal, tangible or intangible, and whether now owned or hereafter acquired, or in which it now has or at any time in the future may acquire any right, title or interests including all of the following property in which it
now has or at any time in the future may acquire any right, title or interest: 
  
 (a) all Inventory; 
  
 (b) all
Equipment; 
  
 (c) all Fixtures; 
  
 (d) all General Intangibles; 
  
 (e) all Accounts; 
  
 (f) all Deposit Accounts, other bank accounts and all funds on deposit
therein; 
  

 2 

 (g) all Investment Property; 
  
 (h) all Stock; 
  
 (i) all Chattel Paper; 
  
 (j) all Letter-of-Credit Rights; 
  
 (k) all Instruments; 
  
 (l) all commercial tort claims set forth on Schedule 1(A); 
  

(m) all Books and Records; 
  
 (n) all Intellectual Property; 
  
 (o) all Supporting Obligations including letters of credit and guarantees issued in support of Accounts, Chattel Paper, General Intangibles and Investment
Property; 
  
 (p) (i) all money, cash and cash equivalents and
(ii) all cash held as cash collateral to the extent not otherwise constituting Collateral, all other cash or property at any time on deposit with or held by Laurus for the account of any Company (whether for safekeeping, custody, pledge,
transmission or otherwise); and 
  
 (q) all products and Proceeds
of all or any of the foregoing, tort claims and all claims and other rights to payment including (i) insurance claims against third parties for loss of, damage to, or destruction of, the foregoing Collateral and (ii) payments due or to become due
under leases, rentals and hires of any or all of the foregoing and Proceeds payable under, or unearned premiums with respect to policies of insurance in whatever form. 
  
 “Common Stock” means the shares of stock representing the Parent’s common equity interests.

  
 “Company Agent” means Accentia
Biopharmaceuticals, Inc. 
  
 “Contract Rate” has
the meaning given such term in the respective Note. 
  
 “Default” means any act or event which, with the giving of notice or passage of time or both, would constitute an Event of Default. 
  
 “Deposit Accounts” means all “deposit accounts” as such term is defined in the UCC, now or hereafter held in the name of any
Person, including, without limitation, the Lockboxes. 
  
 “Disclosure Controls” has the meaning given such term in Section 12(f)(iv). 
  
 “Documents” means all “documents”, as such term is defined in the UCC, now owned or hereafter acquired by any Person, wherever
located, including all bills of lading, dock 

  

 3 

 
warrants, dock receipts, warehouse receipts, and other documents of title, whether negotiable or non-negotiable. 
  
 “Eligible Accounts” means each Account of each Company which
conforms to the following criteria: (a) shipment of the merchandise or the rendition of services has been completed; (b) no return, rejection or repossession of the merchandise has occurred; (c) merchandise or services shall not have been rejected
or disputed by the Account Debtor and there shall not have been asserted any offset, defense or counterclaim; (d) continues to be in full conformity with the representations and warranties made by such Company to Laurus with respect thereto; (e)
Laurus is, and continues to be, satisfied with the credit standing of the Account Debtor in relation to the amount of credit extended; (f) there are no facts existing or threatened which are likely to result in any adverse change in an Account
Debtor’s financial condition; (g) is documented by an invoice in a form approved by Laurus and shall not be unpaid more than ninety (90) days from invoice date; (h) not more than twenty-five percent (25%) of the unpaid amount of invoices due
from such Account Debtor, other than from McKesson or Cardinal Health, remains unpaid more than ninety (90) days from invoice date; (i) is not evidenced by chattel paper or an instrument of any kind with respect to or in payment of the Account
unless such instrument is duly endorsed to and in possession of Laurus or represents a check in payment of an Account; (j) the Account Debtor is located in the United States; provided, however, Laurus may, from time to time, in the
exercise of its sole discretion and based upon satisfaction of certain conditions to be determined at such time by Laurus, deem certain Accounts as Eligible Accounts notwithstanding that such Account is due from an Account Debtor located outside of
the United States; (k) Laurus has a first priority perfected Lien in such Account and such Account is not subject to any Lien other than Permitted Liens; (l) does not arise out of transactions with any employee, officer, director, stockholder or
Affiliate of any Company; (m) is payable to such Company; (n) does not arise out of a bill and hold sale prior to shipment and does not arise out of a sale to any Person to which such Company is indebted; (o) is net of any returns, discounts,
claims, credits and allowances; (p) if the Account arises out of contracts between such Company, on the one hand, and the United States, on the other hand, any state, or any department, agency or instrumentality of any of them, such Company has so
notified Laurus, in writing, prior to the creation of such Account, and there has been compliance with any governmental notice or approval requirements, including compliance with the Federal Assignment of Claims Act; (q) is a good and valid account
representing an undisputed bona fide indebtedness incurred by the Account Debtor therein named, for a fixed sum as set forth in the invoice relating thereto with respect to an unconditional sale and delivery upon the stated terms of goods sold by
such Company or work, labor and/or services rendered by such Company; (r) does not arise out of progress billings prior to completion of the order; (s) the total unpaid Accounts from such Account Debtor, other than from McKesson or Cardinal Health,
does not exceed twenty-five percent (25%) of all Eligible Accounts; (t) such Company’s right to payment is absolute and not contingent upon the fulfillment of any condition whatsoever; (u) such Company is able to bring suit and enforce its
remedies against the Account Debtor through judicial process; (v) does not represent interest payments, late or finance charges owing to such Company, and (w) is otherwise satisfactory to Laurus as determined by Laurus in the exercise of its sole
discretion. In the event any Company requests that Laurus include within Eligible Accounts certain Accounts of one or more of such Company’s acquisition targets, Laurus shall at the time of such request consider such inclusion, but any such
inclusion shall be at the sole option of Laurus and shall at all times be subject to the execution and delivery to Laurus of all 

  

 4 

 
such documentation (including, without limitation, guaranty and security documentation) as Laurus may require in its sole discretion. 
  
 “Eligible Inventory” means Inventory owned by a Company
which Laurus, in its sole and absolute discretion, determines: (a) is subject to a first priority perfected Lien in favor of Laurus and is subject to no other Liens whatsoever (other than Permitted Liens); (b) is located on premises with respect to
which Laurus has received a landlord or mortgagee waiver acceptable in form and substance to Laurus; (c) is not in transit; (d) is in good condition and meets all standards imposed by any governmental agency, or department or division thereof having
regulatory Governmental Authority over such Inventory, its use or sale including the Federal Fair Labor Standards Act of 1938 as amended, and all rules, regulations and orders thereunder; (e) is currently either usable or salable in the normal
course of such Company’s business; (f) is not placed by such Company on consignment or held by such Company on consignment from another Person; (g) is in conformity with the representations and warranties made by such Company to Laurus with
respect thereto; (h) is not subject to any licensing, patent, royalty, trademark, trade name or copyright agreement with any third parties; (i) does not require the consent of any Person for the completion of manufacture, sale or other disposition
of such Inventory and such completion, manufacture or sale does not constitute a breach or default under any contract or agreement to which such Company is a party or to which such Inventory is or may be subject; (j) is not work-in-process; (k) is
covered by casualty insurance acceptable to Laurus and under which Laurus has been named as a lender’s loss payee and additional insured; and (l) not to be ineligible for any other reason. 
  
 “Eligible Subsidiary” means each Subsidiary of the Parent
set forth on Exhibit A hereto, as the same may be updated from time to time with Laurus’ written consent. 
  
 “Eligible Stock” means the shares of common stock of Star Scientific, Inc. pledged by the O’Donnell Trust in support of the
Obligations pursuant to the O’Donnell Stock Pledge Agreement to the extent freely tradeable. 
  
 “Equipment” means all “equipment” as such term is defined in the UCC, now owned or hereafter acquired by any Person, wherever
located, including any and all machinery, apparatus, equipment, fittings, furniture, Fixtures, motor vehicles and other tangible personal property (other than Inventory) of every kind and description that may be now or hereafter used in such
Person’s operations or that are owned by such Person or in which such Person may have an interest, and all parts, accessories and accessions thereto and substitutes and replacements therefor. 
  
 “ERISA” has the meaning given such term in Section 12(bb).

  
 “Event of Default” means the occurrence of
any of the events set forth in Section 19. 
  
 “Exchange
Act” means the Securities Exchange Act of 1934, as amended. 
  
 “Exchange Act Filings” means the Parent’s filings under the Exchange Act made prior to the date of this Agreement. 
  

 5 

 “Existing Credit Agreement” has the meaning given such term in Section 5(b)(vii).

  
 “Financial Reporting Controls” has the
meaning given such term in Section 12(f)(v). 
  
 “Financial Statements” has the meaning given such term in Section 12(u). 
  
 “Fixtures” means all “fixtures” as such term is defined in the UCC, now owned or hereafter acquired by any Person. 

 
 “Formula Amount” has the meaning given such term in
Section 2(a)(i). 
  
 “GAAP” means generally
accepted accounting principles, practices and procedures in effect from time to time in the United States of America. 
  
 “General Intangibles” means all “general intangibles” as such term is defined in the UCC, now owned or hereafter acquired by
any Person including all right, title and interest that such Person may now or hereafter have in or under any contract, all Payment Intangibles, customer lists, Licenses, Intellectual Property, interests in partnerships, joint ventures and other
business associations, permits, proprietary or confidential information, inventions (whether or not patented or patentable), technical information, procedures, designs, knowledge, know-how, Software, data bases, data, skill, expertise, experience,
processes, models, drawings, materials, Books and Records, Goodwill (including the Goodwill associated with any Intellectual Property), all rights and claims in or under insurance policies (including insurance for fire, damage, loss, and casualty,
whether covering personal property, real property, tangible rights or intangible rights, all liability, life, key-person, and business interruption insurance, and all unearned premiums), uncertificated securities, choses in action, deposit accounts,
rights to receive tax refunds and other payments, rights to received dividends, distributions, cash, Instruments and other property in respect of or in exchange for pledged Stock and Investment Property, and rights of indemnification. 
  
 “Goods” means all “goods”, as such term is defined
in the UCC, now owned or hereafter acquired by any Person, wherever located, including embedded software to the extent included in “goods” as defined in the UCC, manufactured homes, standing timber that is cut and removed for sale and
unborn young of animals. 
  
 “Goodwill” means all
goodwill, trade secrets, proprietary or confidential information, technical information, procedures, formulae, quality control standards, designs, operating and training manuals, customer lists, and distribution agreements now owned or hereafter
acquired by any Person. 
  
 “Governmental
Authority” means any nation or government, any state or other political subdivision thereof, and any agency, department or other entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to
government. 
  
 “Harbinger” means Harbinger
Mezzanine Partners, L.P., a Delaware limited partnership. 
  

 6 

 “Harbinger Debt Documentation” shall mean the Loan Agreement, dated as of August 9, 2002
between Harbinger and TEAMM and each other document entered into in connection therewith (each as amended, modified and/or supplemented from time to time). 
  
 “IMOR-Analytica” means IMOR-Analytica GmbH, a corporation organized under the laws of Germany and wholly-owned subsidiary of The
Analytica Group, Inc., a wholly-owned subsidiary of the Parent. 
  
 “Initial Public Offering” means the underwritten public sale of shares of Common Stock pursuant to a registration statement declared effective by the SEC resulting in the receipt by the Parent of net cash proceeds
(calculated before underwriting discounts and commissions) of no less than $30,000,000. 
  
 “Instruments” means all “instruments”, as such term is defined in the UCC, now owned or hereafter acquired by any Person, wherever located, including all certificated securities and all
promissory notes and other evidences of indebtedness, other than instruments that constitute, or are a part of a group of writings that constitute, Chattel Paper. 
  
 “Intellectual Property” means any and all patents, trademarks, service marks, trade names, copyrights,
trade secrets, Licenses, information and other proprietary rights and processes. 
  
 “Inventory” means all “inventory”, as such term is defined in the UCC, now owned or hereafter acquired by any Person, wherever located, including all inventory, merchandise, goods and other
personal property that are held by or on behalf of such Person for sale or lease or are furnished or are to be furnished under a contract of service or that constitute raw materials, work in process, finished goods, returned goods, or materials or
supplies of any kind, nature or description used or consumed or to be used or consumed in such Person’s business or in the processing, production, packaging, promotion, delivery or shipping of the same, including all supplies and embedded
software. 
  
 “Inventory Availability” means the
amount of Loans against Eligible Inventory Laurus may from time to time make available to Companies up to the lesser of (a) fifty percent (50%) of the value of Companies’ Eligible Inventory (calculated on the basis of the lower of cost or
market, on a first-in first-out basis) and (b) $750,000. 
  
 “Investment Property” means all “investment property”, as such term is defined in the UCC, now owned or hereafter acquired by any Person, wherever located. 
  
 “Letter-of-Credit Rights” means “letter-of-credit
rights” as such term is defined in the UCC, now owned or hereafter acquired by any Person, including rights to payment or performance under a letter of credit, whether or not such Person, as beneficiary, has demanded or is entitled to demand
payment or performance. 
  
 “License” means any
rights under any written agreement now or hereafter acquired by any Person to use any trademark, trademark registration, copyright, copyright registration or invention for which a patent is in existence or other license of rights or interests now
held or hereafter acquired by any Person. 
  

 7 

 “Lien” means any mortgage, security deed, deed of trust, pledge, hypothecation,
assignment, security interest, lien (whether statutory or otherwise), charge, claim or encumbrance, or preference, priority or other security agreement or preferential arrangement held or asserted in respect of any asset of any kind or nature
whatsoever including any conditional sale or other title retention agreement, any lease having substantially the same economic effect as any of the foregoing, and the filing of, or agreement to give, any financing statement under the UCC or
comparable law of any jurisdiction. 
  
 “Loans”
has the meaning given such term in Section 2(a)(i) and shall include all other extensions of credit hereunder and under any Ancillary Agreement. 
  
 “Lockboxes” has the meaning given such term in Section 8(a). 
  
 “Material Adverse Effect” means a material adverse effect on (a) the business, assets, liabilities,
condition (financial or otherwise), properties, operations or prospects of any Company or any of its Subsidiaries (taken individually and as a whole), (b) any Company’s or any of its Subsidiary’s ability to pay or perform the Obligations
in accordance with the terms hereof or any Ancillary Agreement, (c) the value of the Collateral, the Liens on the Collateral or the priority of any such Lien or (d) the practical realization of the benefits of Laurus’ rights and remedies under
this Agreement and the Ancillary Agreements. 
  
 “McKesson” means the McKesson Corporation, a Delaware corporation. 
  
 “McKesson Restructuring Agreement” shall mean the agreement dated as of February 9, 2005 between the Parent and McKesson addressing the (i) repayment of all obligations owing to McKesson, (ii) the
termination of the Biologics Distribution Agreement, dated as of February 27, 2004 between the Parent and McKesson (the “BD Agreement”) and settle the $3,000,000 deposit (the “McKesson Deposit”) held by the Parent
in connection the BD Agreement and (iii) redemption and/or repurchase of all shares of the Parent’s Series E preferred stock held by McKesson at the time of such redemption/repurchase. 
  
 “McKesson Restructuring Payment” shall mean the maximum
amount required to be paid pursuant to the terms of the McKesson Restructuring Agreement to (i) repay all indebtedness owed by the Parent and its Subsidiaries to McKesson, (ii) terminate the BD Agreement and settle the McKesson Deposit and (iii)
redeem and/or repurchase all shares of the Parent’s Series E preferred stock held by McKesson at the time of such redemption/ repurchase, which amount shall not exceed $14,200,000. 
  
 “McKesson Subordination Agreement” has the meaning given such term in Section 5(b)(vi). 
  
 “Minimum Borrowing Amount” means $2,500,000. 
  
 “Minimum Borrowing Notes” means that certain Secured
Convertible Minimum Borrowing Note dated as of the Closing Date made by the Companies in favor of Laurus evidencing the Minimum Borrowing Amount and each other Secured Convertible Minimum Borrowing Note made by the Companies in favor of Laurus which
evidences the Minimum 

  

 8 

 
Borrowing Amount, as each of the same may be amended, supplemented, restated and/or otherwise modified from time to time. 
  
 “MSB” has the meaning given such term in Section 5(b)(vii).

  
 “NASD” has the meaning given such term in
Section 13(b). 
  
 “Next Unissued Serialized
Note” has the meaning given such term in Section 2(a)(i). 
  
 “Note Shares” has the meaning given such term in Section 12(a). 
  
 “Notes” means the Minimum Borrowing Notes and the Revolving Note made by Companies in favor of Laurus in connection with the transactions contemplated hereby, as each of the same may be amended,
supplemented, restated and/or otherwise modified from time to time. 
  
 “Obligations” means all Loans, all advances, debts, liabilities, obligations, covenants and duties owing by each Company and each of its Subsidiaries to Laurus (or any corporation that directly or indirectly controls or is
controlled by or is under common control with Laurus) of every kind and description (whether or not evidenced by any note or other instrument and whether or not for the payment of money or the performance or non-performance of any act), direct or
indirect, absolute or contingent, due or to become due, contractual or tortious, liquidated or unliquidated, whether existing by operation of law or otherwise now existing or hereafter arising including any debt, liability or obligation owing from
any Company and/or each of its Subsidiaries to others which Laurus may have obtained by assignment or otherwise and further including all interest (including interest accruing at the then applicable rate provided in this Agreement after the maturity
of the Loans and interest accruing at the then applicable rate provided in this Agreement after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, whether or not a claim for
post-filing or post-petition interest is allowed or allowable in such proceeding), charges or any other payments each Company and each of its Subsidiaries is required to make by law or otherwise arising under or as a result of this Agreement, the
Ancillary Agreements or otherwise, together with all reasonable expenses and reasonable attorneys’ fees chargeable to the Companies’ or any of their Subsidiaries’ accounts or incurred by Laurus in connection therewith. 
  
 “O’Donnell Stock Pledge Agreement” has the meaning
given such term in Section 5(b)(vi). 
  
 “O’Donnell
Trust” has the meaning given such term in Section 5(b)(vi). 
  
 “Payment Intangibles” means all “payment intangibles” as such term is defined in the UCC, now owned or hereafter acquired by any Person, including, a General Intangible under which the Account Debtor’s
principal obligation is a monetary obligation. 
  

 9 

 “Permitted Liens” means (a) Liens of carriers, warehousemen, artisans, bailees,
mechanics and materialmen incurred in the ordinary course of business securing sums not overdue; (b) Liens incurred in the ordinary course of business in connection with worker’s compensation, unemployment insurance or other forms of
governmental insurance or benefits, relating to employees, securing sums (i) not overdue or (ii) being diligently contested in good faith provided that adequate reserves with respect thereto are maintained on the books of the Companies and their
Subsidiaries, as applicable, in conformity with GAAP; (c) Liens in favor of Laurus; (d) Liens for taxes (i) not yet due or (ii) being diligently contested in good faith by appropriate proceedings, provided that adequate reserves with respect thereto
are maintained on the books of the Companies and their Subsidiaries, as applicable, in conformity with GAAP; and which have no effect on the priority of Liens in favor of Laurus or the value of the assets in which Laurus has a Lien; (e) Purchase
Money Liens securing Purchase Money Indebtedness to the extent permitted in this Agreement and (f) Liens specified on Schedule 2 hereto. 
  
 “Person” means any individual, sole proprietorship, partnership, limited liability partnership, joint venture, trust, unincorporated
organization, association, corporation, limited liability company, institution, public benefit corporation, entity or government (whether federal, state, county, city, municipal or otherwise, including any instrumentality, division, agency, body or
department thereof), and shall include such Person’s successors and assigns. 
  
 “Principal Market” means the NASD Over The Counter Bulletin Board, NASDAQ SmallCap Market, NASDAQ National Market System, American Stock Exchange or New York Stock Exchange (whichever of the foregoing
is at the time the principal trading exchange or market for the Common Stock). 
  
 “Proceeds” means “proceeds”, as such term is defined in the UCC and, in any event, shall include: (a) any and all proceeds of any insurance, indemnity, warranty or guaranty payable to any
Company or any other Person from time to time with respect to any Collateral; (b) any and all payments (in any form whatsoever) made or due and payable to any Company from time to time in connection with any requisition, confiscation, condemnation,
seizure or forfeiture of any Collateral by any governmental body, governmental authority, bureau or agency (or any person acting under color of governmental authority); (c) any claim of any Company against third parties (i) for past, present or
future infringement of any Intellectual Property or (ii) for past, present or future infringement or dilution of any trademark or trademark license or for injury to the goodwill associated with any trademark, trademark registration or trademark
licensed under any trademark License; (d) any recoveries by any Company against third parties with respect to any litigation or dispute concerning any Collateral, including claims arising out of the loss or nonconformity of, interference with the
use of, defects in, or infringement of rights in, or damage to, Collateral; (e) all amounts collected on, or distributed on account of, other Collateral, including dividends, interest, distributions and Instruments with respect to Investment
Property and pledged Stock; and (f) any and all other amounts, rights to payment or other property acquired upon the sale, lease, license, exchange or other disposition of Collateral and all rights arising out of Collateral. 
  
 “Purchase Money Indebtedness” means (a) any indebtedness
incurred for the payment of all or any part of the purchase price of any fixed asset, including indebtedness under capitalized leases, (b) any indebtedness incurred for the sole purpose of financing or refinancing 

  

 10 

 
all or any part of the purchase price of any fixed asset, and (c) any renewals, extensions or refinancings thereof (but not any increases in the principal
amounts thereof outstanding at that time). 
  
 “Purchase
Money Lien” means any Lien upon any fixed assets that secures the Purchase Money Indebtedness related thereto but only if such Lien shall at all times be confined solely to the asset the purchase price of which was financed or refinanced
through the incurrence of the Purchase Money Indebtedness secured by such Lien and only if such Lien secures only such Purchase Money Indebtedness. 
  
 “Registration Rights Agreements” means that certain Minimum Borrowing Note Registration Rights Agreement dated as of the Closing Date by
and between the Parent and Laurus and each other registration rights agreement by and between the Parent and Laurus, as each of the same may be amended, modified and supplemented from time to time. 
  
 “Revolving Note” means that certain Secured Revolving Note
dated as of the Closing Date made by the Companies in favor of Laurus in the original principal amount of $5,000,000, as the same may be amended, supplemented, restated and/or otherwise modified from time to time. 
  
 “SEC” means the Securities and Exchange Commission.

  
 “Securities” means the Notes and the Warrants
and the shares of Common Stock which may be issued pursuant to conversion of such Notes in whole or in part or exercise of such Warrants. 
  
 “Securities Act” has the meaning given such term in Section 12(r). 
  
 “Securities Act Filings” means the Parent’s filings under the Securities Act made prior to the date of
this Agreement. 
  
 “Securities Purchase
Agreement” has the meaning provided in Section 5(b)(iv). 
  
 “Security Documents” means all security agreements, mortgages, cash collateral deposit letters, pledges and other agreements which are executed by any Company, any of its Subsidiaries or the O’Donnell Trust in favor of
Laurus. 
  
 “Software” means all
“software” as such term is defined in the UCC, now owned or hereafter acquired by any Person, including all computer programs and all supporting information provided in connection with a transaction related to any program. 
  
 “Stock” means all certificated and uncertificated shares,
options, warrants, membership interests, general or limited partnership interests, participation 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 SEC under the Securities Exchange Act of 1934).

  

 11 

 “Stock Availability” means the amount of Loans against Eligible Stock that Laurus may
from time to time make available to the Companies up to fifty percent (50%) of the value of the O’Donnell Trust’s Eligible Stock as determined by reference at such time to the most recent closing market price of the Eligible Stock on the
NASDAQ National Market as reported by Bloomberg, L.P. 
  
 “Subordinated Debt Documentation” means, collectively, the “Accentia Assumption of Debt and Security Agreement” dated as of December 31, 2003 between the Parent, certain of its Subsidiaries and McKesson, together
with all other documentation entered into in connection therewith or related thereto, each as amended, modified, restated and/or supplemented from time to time. 
  

“Subsidiary” means, with respect to any Person, (i) any other Person whose shares of stock or other ownership interests having
ordinary voting power (other than stock or other ownership interests having such power only by reason of the happening of a contingency) to elect a majority of the directors or other governing body of such other Person, are owned, directly or
indirectly, by such Person or (ii) any other Person in which such Person owns, directly or indirectly, more than 50% of the equity interests at such time; provided that (x) for so long as each of Accent RX, Inc., a Florida corporation (
“Accent”) and Biovax, Inc, a Delaware corporation (“Biovax” and, together with Accent, the “Inactive Subsidiaries” and each an “Inactive Subsidiary”) holds no significant assets or
liabilities and does not engage in any business activities, the defined term “Subsidiary” as used in this Agreement and the Ancillary Agreements shall not include such Inactive Subsidiary; (it being understood and agreed that if such
Inactive Subsidiary shall at any time after the date hereof hold significant assets or liabilities or engage in any business activities, such Inactive Subsidiary shall thereafter be deemed a Subsidiary hereunder and shall otherwise be subject to all
terms, agreements, representations, warranties and covenants otherwise applicable to Subsidiaries under this Agreement and the Ancillary Agreements) and (y) the defined term “Subsidiary” as used in this Agreement and the Ancillary
Agreements shall not include each of Biovest and IMOR-Analytica. 
  
 “Supporting Obligations” means all “supporting obligations” as such term is defined in the UCC. 
  
 “TEAMM” means TEAMM Pharmaceuticals, Inc., a Florida corporation and wholly-owned subsidiary of the Parent. 
  
 “Term” means the Closing Date through the close of business
on the day immediately preceding the third anniversary of the Closing Date, subject to acceleration at the option of Laurus upon the occurrence of an Event of Default hereunder or other termination hereunder. 
  
 “Transferable Amount” has the meaning given such term in
Section 2(a)(i). 
  
 “UCC” means the Uniform
Commercial Code as the same may, from time to time be in effect in the State of New York; provided, that in the event that, by reason of mandatory provisions of law, any or all of the attachment, perfection or priority of, or remedies with respect

  

 12 

 
to, Laurus’ Lien on any Collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than the State of New York, the term
“UCC” shall mean the Uniform Commercial Code as in effect in such other jurisdiction for purposes of the provisions of this Agreement relating to such attachment, perfection, priority or remedies and for purposes of definitions related to
such provisions; provided further, that to the extent that UCC is used to define any term herein or in any Ancillary Agreement and such term is defined differently in different Articles or Divisions of the UCC, the definition of such term contained
in Article or Division 9 shall govern. 
  
 “Warrant
Shares” has the meaning given such term in Section 12(a). 
  
 “Warrants” means that certain Common Stock Purchase Warrant dated as of the Closing Date made by the Parent in favor of Laurus and each other warrant made by the Parent in favor Laurus, as each of the same may be amended,
restated, modified and/or supplemented from time to time. 
  

 13 

 Exhibit A 
  

Eligible Subsidiaries 
  
 The Analytica Group, Inc. 
  

 Exhibit B 
  

Borrowing Base Certificate 
  
 [To be inserted] 
  

 15 

 Schedule 1 (a) 
  
 Accentia Biopharmaceuticals, Inc. 
  
 Item 1. Jones/Redmond—Declaratory Judgment 
  

			
	Case Name:	  	 R. Scott Jones and David Redmond v. Accentia
 Biopharmaceuticals, Inc.

		
	Case No.:	  	04-CA-011502
		
	Court:	  	 Circuit Court
 Tampa, Florida.

 Schedule 2 
  
 Liens and general security interest in favor of Harbinger Mezzanine Partners, LLC. 
  
 Liens and general security interest in favor of McKesson 

 Schedule 7(c) 
  
 NONE 

 Accentia Biopharmaceuticals, Inc. 
 Schedule 7 (p) 
  

											
	Analytica:	  	 	  	 	  	 	  	 	  	 
						
	 Closed
	  	Closed	  	Closed	  	 	  	 	  	 
	 Morgan Stanley
 Active Assets Account
 ABA:021000089
 Further cr. to MSDW: 323 055652 246
 300 Linden
Oaks
 Suite 200
 Rochester, NY 14625
 (585) 385-5100
	  	 Bank of America
 Payroll Account
 ABA: 026009593
 Acct: 0054 8795 0221
 9000 Southside Blvd.
 Jacksonville, FL 32256
 Henry Ledesma

(813) 224-5280
 (813) 224-5390
Fax
	  	 Bank of America
 Operating Account
 ABA: 026009593
 Acct: 0054 8795 9656
 100 N. Westshore Blvd.
 Tampa, FL 33609
 Henry Ledesma
 (813) 224-5280
 (813) 224-5390 Fax
	  	 First Commercial Bank
 Operating Account
 ABA: 063113824
 Acct: 1022334
 4600 West Kennedy Blvd.
 Tampa, FL 33609
 Barbara or Nick
 (813) 287-0500
 (813) 639-0271 Fax
	  	 First Commercial Bank
 Payroll Account
 ABA: 063113824
 Acct: 1022326
 4600 West Kennedy Blvd.
 Tampa, FL 33609
 Barbara or Nick
 (813) 287-0500
 (813) 639-0271 Fax
	  	 Missouri State Bank
 Lockbox Account
 ABA:081001714
 Acct: 8802373
 12452 Olive Street Road
 Creve Coeur, NO 63141
 Kelli Kimack
 (314)434-3200
 (314) 434-3203
Fax

				
	Accentia Biopharmaceuticals, Inc.	  	 	  	 	  	 
						
	 Missouri State Bank
 Operating Account
 ABA:081001714
 Acct: 8802332
 12452 Olive Street Road
 Creve Coeur, NO 63141
 Kelli Kimack
 (314)434-3200
 (314) 434-3203
Fax
	  	 Missouri State Bank
 Lockbox Account
 ABA:081001714
 Acct: 8802357
 12452 Olive Street Road
 Creve Coeur, NO 63141
 Kelli
Kimack
 (314)434-3200
 (314)
434-3203 Fax
	  	 Missouri State Bank
 Payroll Account
 ABA:081001714
 Acct: 8802340
 12452 Olive Street Road
 Creve Coeur, NO 63141
 Kelli Kimack
 (314)434-3200
 (314) 434-3203
Fax
	  	 	  	 	  	 
						
	 Bank of America
 Operating Account
 ABA: 026009593
 Acct: 0034 4889 6404

100 N. Westshore Blvd.
 Tampa, FL 33609
 Henry Ledesma
 (813) 224-5280
 (813) 224-5390 Fax
	  	 First Commercial Bank
 Operating Account
 ABA:063113824
 Acct: 1021974
 4600 West Kennedy Blvd.
 Tampa, FL 33609
 Barbara or Nick
 (813) 287-0500
 (813) 639-0271 Fax
	  	 First Commercial Bank
 Payroll Account
 ABA: 063113824
 Acct: 1022318
 4600 West Kennedy Blvd.
 Tampa, FL 33609
 Barbara or Nick
 (813) 287-0500
 (813) 639-0271 Fax
	  	 Missouri State Bank
 Operating Account
 ABA:081001714
 Acct: 8801714
 12452 Olive Street Road
 Creve Coeur, NO 63141
 Kelli Kimack
 (314)434-3200
 (314) 434-3203 Fax
	  	 Missouri State Bank
 Lockbox Account
 ABA:081001714
 Acct: 8802365
 12452 Olive Street Road
 Creve Coeur, NO 63141
 Kelli Kimack
 (314)434-3200
 (314) 434-3203
Fax
	  	 
						
	TEAMM:	  	 	  	 	  	 	  	 	  	 
						
	 First Citizens Bank
 Operating Account
 ABA: 053100300
 Acct: 8171229 130
 3128 Smoketree CL
 Raleigh, NC
 Billy Sulton
 (919) 380-5806
 (919) 716-7363 Fax
	  	 Missouri State Bank
 Lockbox Account
 ABA: 081001714
 Acct: 8802399
 12452 Olive Street Road
 Creve Coeur, NO 63141
 Kelli
Kimack
 (314)434-3200
 (314)
434-3203 Fax
	  	 	  	 	  	 	  	 

 Accentia Biopharmaceuticals, Inc. 
 Listing of Locations 
 Schedule 12(aa) 
  
 Accentia Biopharmaceuticals, Inc. 
 324 S Hype Park Avenue 
 Suite 350 
 Tampa, FL 33606 
 State of Incorporation: Florida 
 ID: 04-3639490 
  
 The Analytica Group, Inc. 
 450 Park Avenue South 
 New York, NY 10016 
 State of Incorporation: FL 
 ID: 36-4511029 
  
 TEAMM Pharmaceuticals, Inc. 
 2501 Aerial Center Parkway #100 
 Morrisville, NC 27560 
 State of Incorporation: FL 
 ID: 56-2216274 

 Schedule 12(b) 
  
 Parent: Accentia Biopharmaceuticals, Inc. 
  
 The Analytica Group, Inc. – 100% owned subsidiary of Accentia Biopharmaceuticals, Inc. 
  
 TEAMM Pharmaceuticals, Inc. – 100% owned subsidiary of Accentia Biopharmaceuticals, Inc. 

 Accentia Biopharmaceuticals, Inc. 
 Stock Ledger Summary 
 Schedule 12 C 
  
  

					
	 	  	Issued

	  	Authorized

	 Accentia Biopharmaceuticals, Inc.
	  	 	  	 
	 Common
	  	10,867,886	  	300,000,000
	 Series A
	  	6,183,000	  	10,000,000
	 Series B
	  	8,074,263	  	30,000,000
	 Series C
	  	7,500,000	  	10,000,000
	 Series D
	  	9,735,657	  	15,000,000
	 Series E
	  	38,169,605	  	60,000,000
			
	 TEAMM Pharmaceuticals, Inc.
	  	 	  	 
	 Common
	  	100	  	100
			
	 The Analytica Group, Inc.
	  	 	  	 
	 Common
	  	100	  	100

  
 Options / Warrants outside of
stock option plan: 
  

			
	 Type

	  	# of Options

	 Series B Preferred Stock Option
	  	2,000,000
	 Series C Preferred Stock Option
	  	1,500,000
	 Series D Preferred Stock Warrant
	  	90,000
	 Series E Preferred Stock Warrant
	  	5,534,394
	 Common Stock Warrants
	  	695,000
	 Biovest Convertible Debt
	  	1,051,717

  
 The transaction with Laurus will
be included in the definition of FULLY DILUTED COMMON SHARES for purposes of determining the number of shares of common stock to be issued to the holders of the company’s Series E Preferred Convertible Stock upon the conversion thereof pursuant
to Article IV 1(d)(i). 

 Schedule 12(f) 
  
 NONE 

 Accentia Biopharmaceuticals, Inc. 
 Schedule 12 (g) 
  
 NONE 

 Accentia Biopharmaceuticals, Inc. 
 Debt Listing with Security Position 
 Schedule 12 (i) 
  

						
	 Lender

	  	 Amount
 Due

	  	 Security Position

	 McKesson - Term Note
	  	$	3,900,000	  	Second lien against all assets of Accentia and subs
	 McKesson - Revolver
	  	 	2,190,703	  	”            ”            ”           
 ”            ”            ”
			
	 Harbinger Mezzanine Partners
	  	 	7,000,000	  	First lien for $5 million against Teamm Pharma assets; Accentia guarantee
	 	  	
	
	  	 
	 Total
	  	 	13,090,703	  	 
	 	  	
	
	  	 

 CURRENT LITIGATION SUMMARY 
  
 Schedule 12 (l) 
  
 Accentia Biopharmaceuticals, Inc. 
  
 Item 1. We’re Litigation-Landlord/Tenant 
  

			
	Case Name:	    	Huntington Quadrangle 2 LLC, successor in interest to We’re Associates Company v. American Prescription Providers of New York, Inc., American Prescription Providers, Inc., Accent Rx,
Inc., and Accentia, Inc., Index No. 09294/04.
		
	Case No.:	    	09294/04
		
	Court:	    	 Supreme Court
 Suffolk County
 State of New York.

	
	Item 2. Jones/Redmond—Declaratory Judgment
		
	Case Name:	    	 R. Scott Jones and David Redmond v. Accentia
 Biopharmaceuticals, Inc.

		
	Case No.:	    	04-CA-011502
		
	Court:	    	 Circuit Court
 Tampa, Florida.

  
 Analytica International, Inc.

  
 No pending litigation 
  
 Teamm Pharmaceuticals, Inc. 
  
 No pending litigation 

 Schedule 12(m) 
  
 NONE 

 Accentia, Inc. 
 Summary of Compensation 
 Schedule 12 (n) 
  
  

																							
	 Entity

	  	 Employees with
 Employment Contracts

	  	 Current
 Annual Salary

	  	 Length of Severance
 as of 3/31/05

	  	 Total
 Severance
 Commitment

	  	compensation commitment through end of contract

	  	  	  	  	  	04/05 - 3/06

	  	04/06 - 03/07

	  	04/07 - 03/08

	  	04/08 - 03/09

	  	04/09 - 03/10

	  	thereafter

	 AL - New York
	  	Steve Arikian	  	$	426,825	  	24 months	  	$	853,650	  	486,825	  	529,508	  	576,458	  	628,104	  	370,995	  	0
	 AL - New York
	  	John Doyle	  	$	353,925	  	24 months	  	$	707,850	  	353,925	  	389,318	  	428,249	  	471,074	  	280,682	  	0
	 AL - New York
	  	Roman Casciano	  	$	206,000	  	12 months	  	$	206,000	  	0	  	0	  	0	  	0	  	0	  	0
											
	 Accentia
	  	Sam Duffey	  	$	275,000	  	12 months	  	$	275,000	  	275,000	  	275,000	  	275,000	  	275,000	  	206,250	  	0
	 Accentia
	  	Frank O’Donnell	  	$	1	  	12 months	  	$	1	  	1	  	1	  	1	  	1	  	1	  	0
	 Accentia
	  	Alan Pearce	  	$	250,000	  	12 months	  	$	250,000	  	250,000	  	250,000	  	250,000	  	250,000	  	187,500	  	0
	 Accentia
	  	Jim McNulty	  	$	170,000	  	12 months	  	$	170,000	  	170,000	  	170,000	  	170,000	  	170,000	  	127,500	  	0
											
	 TEAMM
	  	Marty Baum	  	$	426,825	  	24 months	  	$	853,650	  	426,825	  	469,508	  	516,458	  	426,078	  	0	  	0
	 TEAMM
	  	Nick Leb	  	$	177,160	  	18 months	  	$	265,740	  	162,397	  	0	  	0	  	0	  	0	  	0
	 TEAMM
	  	Gary Cantrell	  	$	183,340	  	18 months	  	$	275,010	  	168,062	  	0	  	0	  	0	  	0	  	0

  
 No collective bargaining agreements exist 

 Schedule 12(o) 
  
 Registration rights granted to holders of Series E Preferred Stock 
  
 Registration rights granted to holders of Series B Preferred Stock 

 HAZARDOUS CHEMICAL LISTING 
  
 Schedule 12 (q) 
  
 NONE 
  

 1 

 Schedule 12(u) 
  
 NONE 

 Schedule 13 l (i) 
  
 All of indebtedness included in the financial statements 
  
 All indebtedness permitted in security agreement 

 April         , 2005 
  
 Accentia Biopharmaceuticals, Inc. 
 324 S. Hyde Park Avenue, Suite 350 
 Tampa, FL 33606 
  
 Analytica International, Inc. 
 450 Park Avenue South 
 New York, NY 10016 
  

	 	Re:	Overadvance Letter 

  
 Dear Mr. : 
  
 Reference is hereby
made to that certain Security Agreement (the “Security Agreement”) dated as of April         , 2005 by and among Accentia Biopharmaceuticals, Inc., a Florida corporation
(“Accentia”), The Analytica Group, Inc., a Florida corporation and such other subsidiaries of Accentia named in that certain Security Agreement or which hereafter become a party thereto (collectively, the “Company”)
and Laurus Master Fund, Ltd. (“Laurus”). Capitalized terms used but not defined herein shall have the meanings ascribed them in the Security Agreement. Laurus is hereby notifying you of its decision to exercise the discretion
granted to it pursuant to Section 2(a)(ii) of the Security Agreement to make a Loan to the Company in excess of the Formula Amount in effect on the date hereof (the “Overadvance”). The Overadvance is equal to an aggregate principal
amount of $            . 
  
 In connection with making the Overadvance, for a period of 180 days from the date hereof (the “Period”), Laurus hereby waives compliance with Section 3 of the Security Agreement, but solely as such
provision relates to the immediate repayment requirement for Overadvances. Laurus further agrees that solely for such Period (but not thereafter), the Overadvance shall not trigger an Event of Default under Section 19(a) of the Security Agreement,
provided however that the Overadvance rate set forth in Section 5(b)(ii) of the Security Agreement (the “Overadvance Rate”) shall applied to the amount of such Overadvance for all times such amounts shall be in excess of the Formula
Amount and such interest shall be payable monthly, in arrears, commencing on May 1, 2005 and continuing thereafter on the first business day of each consecutive calendar month. All other terms and provisions of the Security Agreement and the
Ancillary Agreements remain in full force and effect. 
  
 This
letter may not be amended or waived except by an instrument in writing signed by the Company and Laurus. This letter may be executed in any number of counterparts, each of 

 
which shall be an original and all of which, when taken together, shall constitute one agreement. Delivery of an executed signature page of this letter by
facsimile transmission shall be effective as delivery of a manually executed counterpart hereof or thereof, as the case may be. This letter shall be governed by, and construed in accordance with, the laws of the State of New York. This letter sets
forth the entire agreement between the parties hereto as to the matters set forth herein and supersede all prior communications, written or oral, with respect to the matters herein. 
  
 If the foregoing meets with your approval please signify your acceptance of the terms hereof by signing below. 

 

			
	 LAURUS MASTER FUND, LTD.

		
	 By:
	 	 
	 Name:
	 	Eugene Grin
	 Title:
	 	Director

  
 Agreed and
accepted on the date hereof 
  

			
	 ACCENTIA BIOPHARMACEUTICALS, INC.

		
	 By:
	 	 
	 Name:
	 	 
	 Title:
	 	 
	
	 THE ANALYTICA GROUP, INC.

		
	 By:
	 	 
	 Name:
	 	 
	 Title:
	 	 

  

 ACCENTIA BIOPHARMACEUTICALS, INC. AND CERTAIN OF ITS SUBSIDIARIES 
 MASTER SECURITY AGREEMENT 
  

	To:	Laurus Master Fund, Ltd. 

 c/o M&C Corporate Services
Limited 
 P.O. Box 309 GT 
 Ugland House 
 South Church Street 
 George Town 
 Grand Cayman, Cayman Islands 
  
 Date: April 29, 2005 
  
 To Whom It May Concern: 
  
 1. To secure the payment of all Obligations (as hereafter defined), Accentia Biopharmaceuticals, Inc., a Florida corporation (the “Parent”),
each of the other undersigned parties (other than Laurus Master Fund, Ltd., (“Laurus”)) and each other entity that is required to enter into this Master Security Agreement (each an “Assignor” and, collectively, the
“Assignors”) hereby assigns and grants to Laurus a continuing security interest in all of the following property now owned or at any time hereafter acquired by such Assignor, or in which such Assignor now has or at any time in the future
may acquire any right, title or interest (the “Collateral”): all cash, cash equivalents, accounts, accounts receivable, deposit accounts (including, without limitation, the Lockbox Deposit Accounts), inventory, equipment, goods, documents,
instruments (including, without limitation, promissory notes), contract rights, general intangibles (including, without limitation, payment intangibles and an absolute right to license on terms no less favorable than those current in effect among
such Assignor’s affiliates), chattel paper, supporting obligations, investment property (including, without limitation, all partnership interests, limited liability company membership interests and all other equity interests owned by any
Assignor), letter-of-credit rights, trademarks, trademark applications, tradestyles, patents, patent applications, copyrights, copyright applications and other intellectual property in which such Assignor now has or hereafter may acquire any right,
title or interest, all proceeds and products thereof (including, without limitation, proceeds of insurance) and all additions, accessions and substitutions thereto or therefor. In the event any Assignor wishes to finance the acquisition in the
ordinary course of business of any hereafter acquired equipment and has obtained a written commitment from an unrelated third party financing source to finance such equipment, Laurus shall release its security interest on such hereafter acquired
equipment so financed by such third party financing source. Except as otherwise defined herein, all capitalized terms used herein shall have the meanings provided such terms in the Securities Purchase Agreement referred to below and the Security
Agreement referred to below, as applicable. 
  
 2. The term
“Obligations” as used herein shall mean and include all debts, liabilities and obligations owing by each Assignor to Laurus arising under, out of, or in connection with: (i) that certain Securities Purchase Agreement dated as of the date
hereof by and between the Parent and Laurus (the “Securities Purchase Agreement”), (ii) the Related Agreements referred to in the Securities Purchase Agreement, (iii) that certain Security Agreement dated as of the date hereof 

 
by and among the Parent, certain Subsidiaries of the Parent and Laurus (the “Security Agreement”) and (iv) the Ancillary Agreements referred to in
the Security Agreement (the Securities Purchase Agreement, each Related Agreement, the Security Agreement and each Ancillary Agreement, as each may be amended, modified, restated or supplemented from time to time, collectively, the
“Documents”), and in connection with any documents, instruments or agreements relating to or executed in connection with the Documents or any documents, instruments or agreements referred to therein or otherwise, and in connection with any
other indebtedness, obligations or liabilities of each such Assignor to Laurus, whether now existing or hereafter arising, direct or indirect, liquidated or unliquidated, absolute or contingent, due or not due and whether under, pursuant to or
evidenced by a note, agreement, guaranty, instrument or otherwise, including, without limitation, obligations and liabilities of each Assignor for post-petition interest, fees, costs and charges that accrue after the commencement of any case by or
against such Assignor under any bankruptcy, insolvency, reorganization or like proceeding (collectively, the “Debtor Relief Laws”) in each case, irrespective of the genuineness, validity, regularity or enforceability of such Obligations,
or of any instrument evidencing any of the Obligations or of any collateral therefor or of the existence or extent of such collateral, and irrespective of the allowability, allowance or disallowance of any or all of the Obligations in any case
commenced by or against any Assignor under any Debtor Relief Law. 
  
 3. Each Assignor hereby jointly and severally represents, warrants and covenants to Laurus that: 
  
 (a) it is a corporation, partnership or limited liability company, as the case may be, validly existing, in good standing and formed under
the respective laws of its jurisdiction of formation set forth on Schedule A, and each Assignor will provide Laurus thirty (30) days’ prior written notice of any change in any of its respective jurisdiction of formation; 
  
 (b) its legal name is as set forth in its Certificate of
Incorporation or other organizational document (as applicable) as amended through the date hereof and as set forth on Schedule A, and it will provide Laurus thirty (30) days’ prior written notice of any change in its legal name; 
  
 (c) its organizational identification number (if applicable)
is as set forth on Schedule A hereto, and it will provide Laurus thirty (30) days’ prior written notice of any change in its organizational identification number; 
  
 (d) it is the lawful owner of its Collateral and it has the sole right to grant a security interest therein
and will defend the Collateral against all claims and demands of all persons and entities; 
  
 (e) it will keep its Collateral free and clear of all attachments, levies, taxes, liens, security interests and encumbrances of every kind
and nature (“Encumbrances”), except (i) Encumbrances securing the Obligations, (ii) Encumbrances securing indebtedness of each such Assignor not to exceed $50,000 in the aggregate for all such Assignors so long as all such Encumbrances are
removed or otherwise released to Laurus’ satisfaction within ten (10) days of the creation thereof and (iii) Encumbrances 

 
set forth on Schedule 12(i) to the Security Agreement and Schedule 4.9 to the Securities Purchase Agreement; 
  
 (f) it will, at its and the other Assignors’ joint and
several cost and expense keep the Collateral in good state of repair (ordinary wear and tear excepted) and will not waste or destroy the same or any part thereof other than ordinary course discarding of items no longer used or useful in its or such
other Assignors’ business; 
  
 (g) except as
otherwise expressly permitted in the Security Agreement and/or the Securities Purchase Agreement, it will not, without Laurus’ prior written consent, sell, exchange, lease or otherwise dispose of any Collateral, whether by sale, lease or
otherwise, except for the sale of inventory in the ordinary course of business and for the disposition or transfer in the ordinary course of business during any fiscal year of obsolete and worn-out equipment or equipment no longer necessary for its
ongoing needs, having an aggregate fair market value of not more than $100,000 and only to the extent that: 
  
 (i) the proceeds of each such disposition are used to acquire replacement Collateral which is subject to Laurus’ first priority
perfected security interest, or are used to repay the Obligations or to pay general corporate expenses; or 
  
 (ii) following the occurrence of an Event of Default which continues to exist the proceeds of which are remitted to Laurus to be held as
cash collateral for the Obligations; 
  
 (h) it
will insure or cause the Collateral to be insured in Laurus’ name (as an additional insured and loss payee) against loss or damage by fire, theft, burglary, pilferage, loss in transit and such other hazards as Laurus shall specify in amounts
and under policies by insurers acceptable to Laurus and all premiums thereon shall be paid by such Assignor and the policies delivered to Laurus. If any such Assignor fails to do so, Laurus may procure such insurance and the cost thereof shall be
promptly reimbursed by the Assignors, jointly and severally, and shall constitute Obligations; 
  
 (i) it will at all reasonable times allow Laurus or Laurus’ representatives free access to and the right of inspection of the
Collateral; 
  
 (j) such Assignor (jointly and
severally with each other Assignor) hereby indemnifies and saves Laurus harmless from all loss, costs, damage, liability and/or expense, including reasonable attorneys’ fees, that Laurus may sustain or incur to enforce payment, performance or
fulfillment of any of the Obligations and/or in the enforcement of this Master Security Agreement or in the prosecution or defense of any action or proceeding either against Laurus or any Assignor concerning any matter growing out of or in
connection with this Master Security Agreement, and/or any of the Obligations and/or any of the Collateral except to the extent caused by Laurus’ own gross negligence or willful misconduct (as determined by a court of competent jurisdiction in
a final and nonappealable decision); and 

 (k) On or prior to the Closing Date (or such later date as may be agreed by Laurus in
writing), each Assignor will (x) irrevocably direct all of its present and future Account Debtors (as defined below) and other persons or entities obligated to make payments constituting Collateral to make such payments directly to the lockboxes
maintained by such Assignor (the “Lockboxes”) with Missouri State Bank and Trust Company or such other financial institution accepted by Laurus in writing as may be selected by the Parent (the “Lockbox Bank”) (each such direction
pursuant to this clause (x), a “Direction Notice”) and (y) provide Laurus with copies of each Direction Notice, each of which shall be agreed to and acknowledged by the respective Account Debtor. The Lockbox Bank shall agree to deposit the
proceeds of such payments immediately upon receipt thereof in those certain deposit accounts maintained at the Lockbox Bank and evidenced by the account name of (i) Accentia and the account number of 8802365, (ii) Analytica and the account number of
8802373, (iii) TEAMM and the account number of 0693002 or (iv) such other deposit account accepted by Laurus in writing (collectively, the “Lockbox Deposit Account”). On or prior to the Closing Date, the Parent shall and shall cause the
Lockbox Bank to enter into all such documentation acceptable to Laurus pursuant to which, among other things, the Lockbox Bank agrees to, following notification by Laurus (which notification Laurus shall only give following the occurrence and during
the continuance of an Event of Default), comply only with the instructions or other directions of Laurus concerning the Lockbox and the Lockbox Deposit Account. All of each Assignor’s invoices, account statements and other written or oral
communications directing, instructing, demanding or requesting payment of any Account (as hereinafter defined) of any such Assignor or any other amount constituting Collateral shall conspicuously direct that all payments be made to the Lockbox or
such other address as Laurus may direct in writing. If, notwithstanding the instructions to Account Debtors, any Assignor receives any payments, such Assignor shall immediately remit such payments to the Lockbox Deposit Account in their original
form with all necessary endorsements. Until so remitted, the Assignors shall hold all such payments in trust for and as the property of Laurus and shall not commingle such payments with any of its other funds or property. For the purpose of this
Master Security Agreement, (x) ”Accounts” shall mean all “accounts”, as such term is defined in the Uniform Commercial Code as in effect in the State of New York on the date hereof, now owned or hereafter acquired by any Assignor
and (y) “Account Debtor” shall mean any person or entity who is or may be obligated with respect to, or on account of, an Account. 
  
 4. The occurrence of any of the following events or conditions shall constitute an “Event of Default” under this Master Security Agreement:

  
 (a) any covenant or any other term or
condition of this Master Security Agreement is breached in any material respect and such breach, to the extent subject to cure, shall continue without remedy for a period of fifteen (15) days after the occurrence thereof; 
  
 (b) any representation or warranty, or statement made or
furnished to Laurus under this Master Security Agreement by any Assignor or on any Assignor’s behalf 

 
should prove to any time be false or misleading in any material respect on the date as of which made or deemed made; 
  
 (c) the loss, theft, substantial damage, destruction, sale
or encumbrance to or of any of the Collateral or the making of any levy, seizure or attachment thereof or thereon except to the extent: 
  
 (i) such loss is covered by insurance proceeds which are used to replace the item or repay Laurus; or 
  
 (ii) said levy, seizure or attachment does not secure
indebtedness in excess of $100,000 in the aggregate for all Assignors and such levy, seizure or attachment has been removed or otherwise released within ten (10) days of the creation or the assertion thereof; 
  
 (d) an Event of Default shall have occurred under and as
defined in any Document. 
  
 5. Upon the occurrence of any Event
of Default and at any time thereafter, Laurus may declare all Obligations immediately due and payable and Laurus shall have the remedies of a secured party provided in the Uniform Commercial Code as in effect in the State of New York, this Agreement
and other applicable law. Upon the occurrence of any Event of Default and at any time thereafter, Laurus will have the right to take possession of the Collateral and to maintain such possession on any Assignor’s premises or to remove the
Collateral or any part thereof to such other premises as Laurus may desire. Upon Laurus’ request, each Assignor shall assemble or cause the Collateral to be assembled and make it available to Laurus at a place designated by Laurus. If any
notification of intended disposition of any Collateral is required by law, such notification, if mailed, shall be deemed properly and reasonably given if mailed at least ten (10) days before such disposition, postage prepaid, addressed to the
applicable Assignor either at such Assignor’s address shown herein or at any address appearing on Laurus’ records for such Assignor. Any proceeds of any disposition of any of the Collateral shall be applied by Laurus to the payment of all
expenses in connection with the sale of the Collateral, including reasonable attorneys’ fees and other legal expenses and disbursements and the reasonable expenses of retaking, holding, preparing for sale, selling, and the like, and any balance
of such proceeds may be applied by Laurus toward the payment of the Obligations in such order of application as Laurus may elect, and each Assignor shall be liable for any deficiency. For the avoidance of doubt, following the occurrence and during
the continuance of an Event of Default, Laurus shall have the immediate right to withdraw any and all monies contained in any deposit account in the name of any Assignor and controlled by Laurus and apply same to the repayment of the Obligations (in
such order of application as Laurus may elect). 
  
 6. If any
Assignor defaults in the performance or fulfillment of any of the terms, conditions, promises, covenants, provisions or warranties on such Assignor’s part to be performed or fulfilled under or pursuant to this Master Security Agreement, Laurus
may, at its option without waiving its right to enforce this Master Security Agreement according to its terms, immediately or at any time thereafter and without notice to any Assignor, perform or fulfill the same or cause the performance or
fulfillment of the same for each Assignor’s joint and 

 
several account and at each Assignor’s joint and several cost and expense, and the cost and expense thereof (including reasonable attorneys’ fees)
shall be added to the Obligations and shall be payable on demand with interest thereon at the highest rate permitted by law, or, at Laurus’ option, debited by Laurus from any other deposit accounts in the name of any Assignor and controlled by
Laurus. 
  
 7. Each Assignor appoints Laurus, any of Laurus’
officers, employees or any other person or entity whom Laurus may designate as such Assignor’s attorney, with power to execute such documents in each such Assignor’s behalf and to supply any omitted information and correct patent errors in
any documents executed by any Assignor or on any Assignor’s behalf; to file financing statements against such Assignor covering the Collateral (and, in connection with the filing of any such financing statements, describe the Collateral as
“all assets and all personal property, whether now owned and/or hereafter acquired” (or any substantially similar variation thereof)); to sign such Assignor’s name on public records; and to do all other things Laurus deem necessary to
carry out this Master Security Agreement. Each Assignor hereby ratifies and approves all acts of the attorney and neither Laurus nor the attorney will be liable for any acts of commission or omission, nor for any error of judgment or mistake of fact
or law other than gross negligence or willful misconduct (as determined by a court of competent jurisdiction in a final and non-appealable decision). This power being coupled with an interest, is irrevocable so long as any Obligations remains
unpaid. 
  
 8. No delay or failure on Laurus’ part in
exercising any right, privilege or option hereunder shall operate as a waiver of such or of any other right, privilege, remedy or option, and no waiver whatever shall be valid unless in writing, signed by Laurus and then only to the extent therein
set forth, and no waiver by Laurus of any default shall operate as a waiver of any other default or of the same default on a future occasion. Laurus’ books and records containing entries with respect to the Obligations shall be admissible in
evidence in any action or proceeding, shall be binding upon each Assignor for the purpose of establishing the items therein set forth and shall constitute prima facie proof thereof. Laurus shall have the right to enforce any one or more of the
remedies available to Laurus, successively, alternately or concurrently. Each Assignor agrees to join with Laurus in executing such documents or other instruments to the extent required by the Uniform Commercial Code in form satisfactory to Laurus
and in executing such other documents or instruments as may be required or deemed necessary by Laurus for purposes of affecting or continuing Laurus’ security interest in the Collateral. 
  
 9. THIS MASTER SECURITY AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS. All of the rights, remedies, options, privileges and elections given to Laurus
hereunder shall inure to the benefit of Laurus’ successors and assigns. The term “Laurus” as herein used shall include Laurus, any parent of Laurus’, any of Laurus’ subsidiaries and any co-subsidiaries of Laurus’
parent, whether now existing or hereafter created or acquired, and all of the terms, conditions, promises, covenants, provisions and warranties of this Agreement shall inure to the benefit of each of the foregoing, and shall bind the
representatives, successors and assigns of each Assignor. 

 10. Each Assignor hereby consents and agrees that the state of federal courts located in the County of
New York, State of New York shall have exclusive jurisdiction to hear and determine any claims or disputes between Assignor, on the one hand, and Laurus, on the other hand, pertaining to this Master Security Agreement or to any matter arising out of
or related to this Master Security Agreement, provided, that Laurus and each Assignor acknowledges that any appeals from those courts may have to be heard by a court located outside of the County of New York, State of New York, and further provided,
that nothing in this Master Security Agreement shall be deemed or operate to preclude Laurus from bringing suit or taking other legal action in any other jurisdiction to collect, the Obligations, to realize on the Collateral or any other security
for the Obligations, or to enforce a judgment or other court order in favor of Laurus. Each Assignor expressly submits and consents in advance to such jurisdiction in any action or suit commenced in any such court, and each Assignor hereby waives
any objection which it may have based upon lack of personal jurisdiction, improper venue or forum non conveniens. Each Assignor hereby waives personal service of the summons, complaint and other process issues in any such action
or suit and agrees that service of such summons, complaint and other process may be made by registered or certified mail addressed to such assignor at the address set forth on the signature lines hereto and that service so made shall be deemed
completed upon the earlier of such Assignor’s actual receipt thereof or three (3) days after deposit in the U.S. mails, proper postage prepaid. 
  
 The parties desire that their disputes be resolved by a judge applying such applicable laws. Therefore, to achieve the best combination of the benefits of
the judicial system and of arbitration, the parties hereto waive all rights to trial by jury in any action, suite, or proceeding brought to resolve any dispute, whether arising in contract, tort, or otherwise between Laurus, and/or any Assignor
arising out of, connected with, related or incidental to the relationship established between them in connection with this Master Security Agreement or the transactions related hereto. 
  
 11. It is understood and agreed that any person or entity that desires to become an Assignor hereunder, or is required to
execute a counterpart of this Master Security Agreement after the date hereof pursuant to the requirements of any Document, shall become an Assignor hereunder by (x) executing a Joinder Agreement in form and substance satisfactory to Laurus, (y)
delivering supplements to such exhibits and annexes to such Documents as Laurus shall reasonably request and (z) taking all actions as specified in this Master Security Agreement as would have been taken by such Assignor had it been an original
party to this Master Security Agreement, in each case with all documents required above to be delivered to Laurus and with all documents and actions required above to be taken to the reasonable satisfaction of Laurus. 
  
 12. All notices from Laurus to any Assignor shall be sufficiently given if
mailed or delivered to such Assignor’s address set forth below. 

			
	Very truly yours,
	ACCENTIA BIOPHARMACEUTICALS, INC.
		
	 By:
	 	 /s/ Francis E. O’Donnell, Jr.

			
	 Name:
	 	 Francis E. O’Donnell, Jr.

	 Title:
	 	 CEO

	 Address:
	 	 

			
	
	THE ANALYTICA GROUP, INC.
		
	By:	 	 /s/ Francis E. O’Donnell, Jr.

			
	 Name:
	 	 Francis E. O’Donnell, Jr.

	 Title:
	 	 
	 Address:
	 	 

			
	
	ACKNOWLEDGED:
	
	LAURUS MASTER FUND, LTD.
		
	By:	 	 /s/ Eugene Grin

			
	 Name:
	 	 Eugene Grin

	 Title:
	 	 Director

 TABLE OF CONTENTS 
  
 SCHEDULE A 
  

					
	 Entity

	 	 Jurisdiction of Formation

	 	 Federal Identification Number

	Accentia Biopharmaceuticals, Inc.	 	Florida	 	04-3639490
	The Analytica Group, Inc	 	Florida	 	36-4511029Secured Convertible Term Note

 Exhibit 10.69 
  
 THIS NOTE AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE SECURITIES LAWS. THIS NOTE AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF THIS NOTE MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS NOTE UNDER SAID
ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO ACCENTIA BIOPHARMACEUTICALS, INC. THAT SUCH REGISTRATION IS NOT REQUIRED. 
  
 SECURED CONVERTIBLE TERM NOTE 
  
 FOR VALUE RECEIVED, ACCENTIA BIOPHARMACEUTICALS, INC., a Florida (the “Company”), promises to pay to LAURUS
MASTER FUND, LTD., c/o M&C Corporate Services Limited, P.O. Box 309 GT, Ugland House, South Church Street, George Town, Grand Cayman, Cayman Islands, Fax: 345-949-8080 (the “Holder”) or its registered assigns or successors in
interest, the sum of Five Million Dollars ($5,000,000), together with any accrued and unpaid interest hereon, on April 29, 2006 (the “Maturity Date”) if not sooner indefeasibly paid in full; provided, however, if the
Parent shall have consummated the initial public offering of Common Stock on or prior to March 31, 2006, the Maturity Date shall be April 29, 2008. 
  
 Capitalized terms used herein without definition shall have the meanings ascribed to such terms in that certain Securities Purchase Agreement dated as of
the date hereof by and between the Company and the Holder (as amended, modified and/or supplemented from time to time, the “Purchase Agreement”). 
  
 The following terms shall apply to this Secured Convertible Term Note (this “Note”): 
  
 ARTICLE I 
 CONTRACT RATE AND AMORTIZATION 
  
 1.1 Contract Rate. Subject to Sections 4.2 and 5.10, interest payable on the outstanding principal amount of this Note (the “Principal Amount”) shall accrue at a rate per annum equal to the
greater of (i) “prime rate” published in The Wall Street Journal from time to time (the “Prime Rate”), plus four percent (4.0%) and (ii) ten percent (10.0%) (the “Contract Rate”). The Contract Rate
shall be increased or decreased as the case may be for each increase or decrease in the Prime Rate in an amount equal to such increase or decrease in the Prime Rate; each change to be effective as of the day of the change in the Prime Rate. Subject
to Section 1.2, the Contract Rate shall not at any time be less than ten percent (10.0%). Interest shall be (i) calculated on the basis of a 360 day year, and (ii) payable monthly, in arrears, commencing on May 4, 2005, on the first business day of
each consecutive calendar month thereafter through and including the Maturity Date, and on the Maturity Date, whether by acceleration or otherwise. 
  
 1.2 Contract Rate Adjustments and Payments. The Contract Rate shall be calculated on the last business day of each calendar month hereafter (other
than for increases or 

  

 
decreases in the Prime Rate which shall be calculated and become effective in accordance with the terms of Section 1.1) until the Maturity Date (each a
“Determination Date”) and shall be subject to adjustment as set forth herein. If (i) the Company shall have registered the shares of the Common Stock underlying the conversion of this Note and each Warrant on a registration
statement declared effective by the Securities and Exchange Commission (the “SEC”), and (ii) the market price (the “Market Price”) of the Common Stock as reported by Bloomberg, L.P. on the Principal Market for the
five (5) trading days immediately preceding a Determination Date exceeds the then applicable Fixed Conversion Price by at least twenty-five percent (25%), the Contract Rate for the succeeding calendar month shall automatically be reduced by 200
basis points (200 b.p.) (2%) for each incremental twenty-five percent (25%) increase in the Market Price of the Common Stock above the then applicable Fixed Conversion Price. Notwithstanding the foregoing (and anything to the contrary contained
herein), in no event shall the Contract Rate at any time be less than zero percent (0%). 
  
 1.3 Principal Payments. Amortizing payments of the aggregate principal amount outstanding under this Note at any time (the “Principal Amount”) shall be made by the Company on October 1, 2005
and on the first business day of each succeeding month thereafter through and including the Maturity Date (each, an “Amortization Date”). Subject to Article III below, commencing on the first Amortization Date, the Company shall
make monthly payments to the Holder on each Repayment Date, each such payment in the amount of $161,290.32 together with any accrued and unpaid interest on such portion of the Principal Amount plus any and all other unpaid amounts which are then
owing under this Note, the Purchase Agreement and/or any other Related Agreement (collectively, the “Monthly Amount”). Any outstanding Principal Amount together with any accrued and unpaid interest and any and all other unpaid
amounts which are then owing by the Company to the Holder under this Note, the Purchase Agreement and/or any other Related Agreement shall be due and payable on the Maturity Date. 
  
 ARTICLE II 
 CONVERSION AND REDEMPTION 
  
 2.1 Payment of
Monthly Amount. 
  
 (a) Payment in Cash or
Common Stock. If the Monthly Amount (or a portion of such Monthly Amount if not all of the Monthly Amount may be converted into shares of Common Stock pursuant to Section 3.2) is required to be paid in cash pursuant to Section 2.1(b), then the
Company shall pay the Holder an amount in cash equal to the Monthly Amount (or such portion of such Monthly Amount to be paid in cash) due and owing to the Holder on the Amortization Date. If the Monthly Amount (or a portion of such Monthly Amount
if not all of the Monthly Amount may be converted into shares of Common Stock pursuant to Section 3.2) is required to be paid in shares of Common Stock pursuant to Section 2.1(b), the number of such shares to be issued by the Company to the Holder
on such Amortization Date (in respect of such portion of the Monthly Amount converted into shares of Common Stock pursuant to Section 2.1(b)), shall be the number determined by dividing (i) the portion of the Monthly Amount converted into shares of
Common Stock, by (ii) the then applicable Fixed Conversion Price. For purposes hereof, subject to Section 3.6 hereof, the initial “Fixed Conversion Price” means $3.30; provided that, on the date of consummation of the
initial public offering of Common Stock, the “Fixed Conversion Price” shall be adjusted to an amount equal to eighty-five 

  

 2 

 
percent (85%) of the issuance price of the Common Stock issued in connection with such initial public offering of Common Stock (the “IPO Price”).

  
 (b) Monthly Amount Conversion
Conditions. Subject to Sections 2.1(a), 2.2, and 3.2 hereof, the Holder shall convert into shares of Common Stock all or a portion of the Monthly Amount due on each Amortization Date if the following conditions (the “Conversion
Criteria”) are satisfied: (i) the average closing price of the Common Stock as reported by Bloomberg, L.P. on the Principal Market for the five (5) trading days immediately preceding such Amortization Date shall be greater than or equal to
125% of the Fixed Conversion Price and (ii) the amount of such conversion does not exceed twenty five percent (25%) of the aggregate dollar trading volume of the Common Stock for the period of twenty-two (22) trading days immediately preceding such
Amortization Date. If subsection (i) of the Conversion Criteria is met but subsection (ii) of the Conversion Criteria is not met as to the entire Monthly Amount, the Holder shall convert only such part of the Monthly Amount that meets subsection
(ii) of the Conversion Criteria. Any portion of the Monthly Amount due on an Amortization Date that the Holder has not been able to convert into shares of Common Stock due to the failure to meet the Conversion Criteria, shall be paid in cash by the
Company within three (3) business days of such Amortization Date. 
  
 2.2 No Effective Registration. Notwithstanding anything to the contrary herein, none of the Company’s obligations to the Holder may be converted into Common Stock unless (a) an effective current Registration Statement (as
defined in the Registration Rights Agreement) covering the shares of Common Stock to be issued in connection with satisfaction of such obligations exists and (b) no Event of Default (as hereinafter defined) exists and is continuing, unless such
Event of Default is cured within any applicable cure period or otherwise waived in writing by the Holder. 
  
 2.3 Optional Redemption in Cash. The Company may prepay this Note (“Optional Redemption”) by paying to the Holder a sum of money
equal to one hundred thirty percent (130%) of the Principal Amount outstanding at such time together with accrued but unpaid interest thereon and any and all other sums due, accrued or payable to the Holder arising under this Note, the Purchase
Agreement or any other Related Agreement (the “Redemption Amount”) outstanding on the Redemption Payment Date (as defined below). The Company shall deliver to the Holder a written notice of redemption (the “Notice of
Redemption”) specifying the date for such Optional Redemption (the “Redemption Payment Date”), which date shall be seven (7) business days after the date of the Notice of Redemption (the “Redemption
Period”). A Notice of Redemption shall not be effective with respect to any portion of this Note for which the Holder has previously delivered a Notice of Conversion (as hereinafter defined) or for conversions elected to be made by the
Holder pursuant to Section 3.3 during the Redemption Period. The Redemption Amount shall be determined as if the Holder’s conversion elections had been completed immediately prior to the date of the Notice of Redemption. On the Redemption
Payment Date, the Redemption Amount must be paid in good funds to the Holder. In the event the Company fails to pay the Redemption Amount on the Redemption Payment Date as set forth herein, then such Redemption Notice will be null and void.

  

 3 

 ARTICLE III 
 HOLDER’S CONVERSION RIGHTS 
  
 3.1 Optional Conversion. Subject to the terms set forth in this Article III, the Holder shall have the right, but not the obligation, to convert all or any portion of the issued and outstanding Principal Amount and/or accrued
interest and fees due and payable into fully paid and nonassessable shares of Common Stock at the Fixed Conversion Price. The shares of Common Stock to be issued upon such conversion are herein referred to as, the “Conversion
Shares.” 
  
 3.2 Conversion Limitation.
Notwithstanding anything contained herein to the contrary, the Holder shall not be entitled to convert pursuant to the terms of this Note an amount that would be convertible into that number of Conversion Shares which would (a) exceed the difference
between (i) 4.99% of the outstanding shares of Common Stock and (ii) the number of shares of Common Stock beneficially owned by the Holder or (b) exceed twenty five percent (25%) of the aggregate dollar trading volume of the Common Stock for the
five (5) day trading periods up to and including the delivery date of a Notice of Conversion to the Borrower. For purposes of the immediately preceding sentence, beneficial ownership shall be determined in accordance with Section 13(d) of the
Exchange Act and Regulation 13d-3 thereunder. 
  
 3.3 The
Conversion Shares limitation described in this Section 3.2 shall automatically become null and void without any notice to the Company upon the occurrence and during the continuance of an Event of Default, or upon 75 days prior notice to the Company.
Notwithstanding anything contained herein to the contrary, the provisions of this Section 3.2 are irrevocable and may not be waived by the Holder or the Company. 
  
 3.4 Mechanics of Holder’s Conversion. In the event that the Holder elects to convert this Note into Common
Stock, the Holder shall give notice of such election by delivering an executed and completed notice of conversion in substantially the form of Exhibit A hereto (appropriate completed) (“Notice of Conversion”) to the Company and such
Notice of Conversion shall provide a breakdown in reasonable detail of the Principal Amount, accrued interest and fees that are being converted. On each Conversion Date (as hereinafter defined) and in accordance with its Notice of Conversion, the
Holder shall make the appropriate reduction to the Principal Amount, accrued interest and fees as entered in its records and shall provide written notice thereof to the Company within two (2) business days after the Conversion Date. Each date on
which a Notice of Conversion is delivered or telecopied to the Company in accordance with the provisions hereof shall be deemed a Conversion Date (the “Conversion Date”). Pursuant to the terms of the Notice of Conversion, the
Company will issue instructions to the transfer agent accompanied by an opinion of counsel within one (1) business day of the date of the delivery to the Company of the Notice of Conversion and shall cause the transfer agent to transmit the
certificates representing the Conversion Shares to the Holder by crediting the account of the Holder’s designated broker with the Depository Trust Corporation (“DTC”) through its Deposit Withdrawal Agent Commission
(“DWAC”) system within three (3) business days after receipt by the Company of the Notice of Conversion (the “Delivery Date”). In the case of the exercise of the conversion rights set forth herein the conversion
privilege shall be deemed to have been exercised and the Conversion Shares issuable upon such conversion shall be deemed to have been issued upon the date of receipt by the Company of the Notice of 

  

 4 

 
Conversion. The Holder shall be treated for all purposes as the record holder of the Conversion Shares, unless the Holder provides the Company written
instructions to the contrary. 
  
 3.5 Late Payments. The
Company understands that a delay in the delivery of the Conversion Shares in the form required pursuant to this Article beyond the Delivery Date could result in economic loss to the Holder. As compensation to the Holder for such loss, in addition to
all other rights and remedies which the Holder may have under this Note, applicable law or otherwise, the Company shall pay late payments to the Holder for any late issuance of Conversion Shares in the form required pursuant to this Article II upon
conversion of this Note, in the amount equal to $500 per business day after the Delivery Date. The Company shall make any payments incurred under this Section in immediately available funds upon demand. 
  
 3.6 Conversion Mechanics. The number of shares of Common Stock to be
issued upon each conversion of this Note shall be determined by dividing that portion of the principal and interest and fees to be converted, if any, by the then applicable Fixed Conversion Price. In the event of any conversions of a portion of the
outstanding Principal Amount pursuant to this Article III, such conversions shall be deemed to constitute conversions of the outstanding Principal Amount applying to Monthly Amounts for the remaining Amortization Dates in chronological order.

  
 3.7 Adjustment Provisions. The Fixed Conversion Price
and number and kind of shares or other securities to be issued upon conversion determined pursuant to this Note shall be subject to adjustment from time to time upon the occurrence of certain events during the period that this conversion right
remains outstanding, as follows: 
  
 (a)
Reclassification. If the Company at any time shall, by reclassification or otherwise, change the Common Stock into the same or a different number of securities of any class or classes, this Note, as to the unpaid Principal Amount and accrued
interest thereon, shall thereafter be deemed to evidence the right to purchase an adjusted number of such securities and kind of securities as would have been issuable as the result of such change with respect to the Common Stock (i) immediately
prior to or (ii) immediately after, such reclassification or other change at the sole election of the Holder. 
  
 (b) Stock Splits, Combinations and Dividends. If the shares of Common Stock are subdivided or combined into a greater or smaller
number of shares of Common Stock, or if a dividend is paid on the Common Stock or any preferred stock issued by the Company in shares of Common Stock, the Fixed Conversion Price shall be proportionately reduced in case of subdivision of shares or
stock dividend or proportionately increased in the case of combination of shares, in each such case by the ratio which the total number of shares of Common Stock outstanding immediately after such event bears to the total number of shares of Common
Stock outstanding immediately prior to such event. 
  
 (c) Share Issuances. Subject to the provisions of this Section 3.6, if the Company shall at any time prior to the conversion or repayment in full of the Principal Amount issue any shares of Common Stock or securities convertible into
Common Stock to a Person other than the Holder (except (i) pursuant to Sections 3.6(a) or (b) above; (ii) pursuant to options, warrants, or other obligations to issue shares outstanding on the date hereof as disclosed 

  

 5 

 
to the Holder in writing; or (iii) pursuant to options that may be issued under any employee incentive stock option and/or any qualified stock option plan
adopted by the Company) for a consideration per share (the “Offer Price”) less than the Fixed Conversion Price in effect at the time of such issuance, then the Fixed Conversion Price shall be immediately reset to such lower Offer
Price. For purposes hereof, the issuance of any security of the Company convertible into or exercisable or exchangeable for Common Stock shall result in an adjustment to the Fixed Conversion Price upon the issuance of such securities. 
  
 (d) Computation of Consideration. For purposes of any
computation respecting consideration received pursuant to Section 3.6(c) above, the following shall apply: 
  
 (i) in the case of the issuance of shares of Common Stock for cash, the consideration shall be the amount of such cash. 
  
 3.8 Reservation of Shares. During the period the conversion right
exists, the Company will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of Conversion Shares upon the full conversion of this Note and the Warrant. The Company represents that upon
issuance, the Conversion Shares will be duly and validly issued, fully paid and non-assessable. The Company agrees that its issuance of this Note shall constitute full authority to its officers, agents, and transfer agents who are charged with the
duty of executing and issuing stock certificates to execute and issue the necessary certificates for the Conversion Shares upon the conversion of this Note. 
  
 3.9 Registration Rights. The Holder has been granted registration rights with respect to the Conversion Shares as set forth in the Registration
Rights Agreement. 
  
 3.10 Issuance of New Note. Upon any
partial conversion of this Note, a new Note containing the same date and provisions of this Note shall, at the request of the Holder, be issued by the Company to the Holder for the principal balance of this Note and interest which shall not have
been converted or paid. Subject to the provisions of Article IV of this Note, the Company shall not pay any costs, fees or any other consideration to the Holder for the production and issuance of a new Note. 
  
 3.11 Further Conversion Limitation. Notwithstanding anything contained
herein to the contrary, the Holder shall not be entitled pursuant to the terms of this Note to convert any amounts that would be convertible into Conversion Shares prior to the earlier to occur of (i) two hundred seventy (270) days after the date
hereof and (i) one hundred eighty (180) days after the date of the initial public offering of Common Stock. The Conversion Shares limitation described in this Section 3.10 shall automatically become null and void without any notice to any Company
upon the occurrence and during the continuance of an Event of Default. 
  
 3.12 Additional Conversion. If the Company shall have registered the shares of the Common Stock underlying the conversion of this Note and each Warrant on a registration statement declared effective by the SEC, then, if (i) the
average closing price of the Common Stock as reported by Bloomberg, L.P. on the Principal Market for five consecutive (5) trading days (the “Determination Date”) shall be greater than or equal to 125% of the IPO Price, then upon
receipt of written notice from the Company that a Determination Date has occurred (the 

  

 6 

 
“Determination Date Notice”) the Holder shall convert into Common Stock an amount equal to twenty per cent (20%) of the average dollar
trading volume for the consecutive five trading days immediately preceding the date of the Determination Date Notice (the “Maximum Amount”). Notwithstanding the immediately foregoing, the Maximum Amount shall not exceed twenty
percent (20%) of the aggregate dollar trading volume of the Common Stock for the period of twenty (20) trading days immediately preceding the Determination Notice Date (the “Aggregate Maximum Amount”). In determining the Maximum
Amount, any Maximum Amount conversion required hereunder shall be aggregated with all Maximum Amount conversions required under this Note and the Secured Convertible Minimum Borrowing Note between Laurus and the Company; in no event shall the Holder
convert, pursuant to this Section 3.12 any amount in excess of the Aggregate Maximum Amount. Conversions made pursuant to this Section 3.12 shall be deemed to be effective on the date of written Determination Date Notice hereunder. The Company shall
not give Holder more than one Determination Date Notice during any consecutive five (5) trading day period, and no more than two (2) Determination Date Notices in any calendar month. Any principal amount of this Note that is converted pursuant to
this Section 3.12 shall be deemed to constitute payments of outstanding principal. 
  
 ARTICLE IV 
 EVENTS OF DEFAULT 
  
 4.1 Events of Default. The occurrence of any of the following events set forth in this Section 4.1 shall constitute
an event of default (“Event of Default”) hereunder: 
  
 (a) Failure to Pay. The Company fails to pay when due any installment of principal, interest or other fees hereon in accordance herewith, or the Company fails to pay any of the other Obligations (under and as
defined in the Master Security Agreement) when due, and, in any such case, such failure shall continue for a period of three (3) days following the date upon which any such payment was due. 
  
 (b) Breach of Covenant. The Company or any of its
Subsidiaries breaches any covenant or any other term or condition of this Note in any material respect and such breach, if subject to cure, continues for a period of fifteen (15) days after the occurrence thereof. 
  
 (c) Breach of Representations and Warranties. Any
representation, warranty or statement made or furnished by the Company or any of its Subsidiaries in this Note, the Purchase Agreement or any other Related Agreement shall at any time be false or misleading in any material respect on the date as of
which made or deemed made. 
  
 (d) Default
Under Other Agreements. the occurrence of any default (or similar term) in the observance or performance of any other agreement or condition relating to any indebtedness or contingent obligation of any Company or any of its Subsidiaries
(including, without limitation, the contingent obligations evidenced by the O’Donnell Stock Pledge Agreement and the indebtedness evidenced by the Subordinated Debt Documentation) beyond the period of grace (if any), the effect of which default
is to cause, or permit the holder or 

  

 7 

 
holders of such indebtedness or beneficiary or beneficiaries of such contingent obligation to cause, such indebtedness to become due prior to its stated
maturity or such contingent obligation to become payable 
  
 (e) Material Adverse Effect. Any change or the occurrence of any event which could reasonably be expected to have a Material Adverse Effect; 
  
 (f) Bankruptcy. The Company or any of its Subsidiaries shall (i) apply for, consent to or suffer to
exist the appointment of, or the taking of possession by, a receiver, custodian, trustee or liquidator of itself or of all or a substantial part of its property, (ii) make a general assignment for the benefit of creditors, (iii) commence a voluntary
case under the federal bankruptcy laws (as now or hereafter in effect), (iv) be adjudicated a bankrupt or insolvent, (v) file a petition seeking to take advantage of any other law providing for the relief of debtors, (vi) acquiesce to, without
challenge within ten (10) days of the filing thereof, or failure to have dismissed, within thirty (30) days, any petition filed against it in any involuntary case under such bankruptcy laws, or (vii) take any action for the purpose of effecting any
of the foregoing; 
  
 (g) Judgments.
Attachments or levies in excess of $50,000 in the aggregate are made upon the Company or any of its Subsidiary’s assets or a judgment is rendered against the Company’s property involving a liability of more than $50,000 which shall not
have been vacated, discharged, stayed or bonded within thirty (30) days from the entry thereof; 
  
 (h) Insolvency. The Company or any of its Subsidiaries shall admit in writing its inability, or be generally unable, to pay its
debts as they become due or cease operations of its present business; 
  
 (i) Change in Control. The occurrence of a Change of Control. A “Change of Control” shall arise when any “Person” or “group” (as such terms are defined in Sections 13(d) and 14(d)
of the Exchange Act, as in effect on the date hereof) is or becomes the “beneficial owner” (as defined in Rules 13(d)-3 and 13(d)-5 under the Exchange Act), directly or indirectly, of 35% or more on a fully diluted basis of the then
outstanding voting equity interest of the Parent (other than a “Person” or “group” that beneficially owns 35% or more of such outstanding voting equity interests of the Parent on the date hereof) or (ii) the Board of Directors of
the Parent shall cease to consist of a majority of the Parent’s board of directors on the date hereof (or directors appointed by a majority of the board of directors in effect immediately prior to such appointment); 
  
 (j) Indictment; Proceedings. The indictment or
threatened indictment of the Company or any of its Subsidiaries or any executive officer of the Company or any of its Subsidiaries under any criminal statute, or commencement or threatened commencement of criminal or civil proceeding against the
Company or any of its Subsidiaries or any executive officer of the Company or any of its Subsidiaries pursuant to which statute or proceeding penalties or remedies sought or available include forfeiture of any of the property of the Company or any
of its Subsidiaries that could reasonably be expected to be adverse to the interests of Laurus in any material respect; 
  

 8 

 (k) The Purchase Agreement, Related Agreements, Security Agreement and other Ancillary
Agreements. (i) An Event of Default shall occur under and as defined in the Purchase Agreement, any other Related Agreement, the Security Agreement or any Ancillary Agreements referred to in the Security Agreement, (ii) the Company or any of its
Subsidiaries shall breach any term or provision of the Purchase Agreement or any other Related Agreement in any material respect and such breach, if capable of cure, continues unremedied for a period of fifteen (15) days after the occurrence
thereof, (iii) the Company or any of its Subsidiaries attempts to terminate, challenges the validity of, or its liability under, the Purchase Agreement or any Related Agreement, (iv) any proceeding shall be brought to challenge the validity, binding
effect of the Purchase Agreement or any Related Agreement or (v) the Purchase Agreement or any Related Agreement ceases to be a valid, binding and enforceable obligation of the Company or any of its Subsidiaries (to the extent such persons or
entities are a party thereto); 
  
 (l) Stop
Trade. On or after the consummation of an initial public offering of Common Stock, an SEC stop trade order or Principal Market trading suspension of the Common Stock shall be in effect for five (5) consecutive days or five (5) days during a
period of ten (10) consecutive days, excluding in all cases a suspension of all trading on a Principal Market, provided that the Company shall not have been able to cure such trading suspension within thirty (30) days of the notice thereof or list
the Common Stock on another Principal Market within sixty (60) days of such notice; or 
  
 (m) Failure to Deliver Common Stock or Replacement Note. The Company’s failure to deliver Common Stock to the Holder pursuant
to and in the form required by this Note and the Purchase Agreement and, if such failure to deliver Common Stock shall not be cured within two (2) business days or the Company is required to issue a replacement Note to the Holder and the Company
shall fail to deliver such replacement Note within seven (7) business days. 
  
 (n) Violation of Subordinated Debt Documentation. The Parent, or any of its Subsidiaries shall take or participate in any action which would be prohibited under the provisions of any of the Subordinated Debt
Documentation (as defined in the Security Agreement) or make any payment on the indebtedness evidenced by the Subordinated Debt Documentation (as defined in the Security Agreement) to a Person that was not entitled to receive such payments under the
subordination provisions of applicable Subordinated Debt Documentation (as defined in the Security Agreement). 
  
 4.2 Default Interest. Following the occurrence and during the continuance of an Event of Default, the Company shall pay additional interest on this
Note in an amount equal to one and one half percent (1.5%) per month, and all outstanding obligations under this Note, the Purchase Agreement and each other Related Agreement, including unpaid interest, shall continue to accrue interest at such
additional interest rate from the date of such Event of Default until the date such Event of Default is cured or waived. 
  
 4.3 Default Payment. Following the occurrence and during the continuance of an Event of Default, the Holder, at its option, may demand repayment in
full of all obligations and liabilities owing by Company to the Holder under this Note, the Purchase Agreement and/or any other Related Agreement and/or may elect, in addition to all rights and remedies of the 

  

 9 

 
Holder under the Purchase Agreement and the other Related Agreements and all obligations and liabilities of the Company under the Purchase Agreement and the
other Related Agreements, to require the Company to make a Default Payment (“Default Payment”). The Default Payment shall be 130% of the outstanding principal amount of the Note, plus accrued but unpaid interest, all other fees then
remaining unpaid, and all other amounts payable hereunder. The Default Payment shall be applied first to any fees due and payable to the Holder pursuant to this Note, the Purchase Agreement, and/or the other Related Agreements, then to accrued and
unpaid interest due on this Note and then to the outstanding principal balance of this Note. The Default Payment shall be due and payable immediately on the date that the Holder has exercised its rights pursuant to this Section 4.3. 
  
 ARTICLE V 
 MISCELLANEOUS 
  
 5.1 Conversion Privileges. The conversion privileges set forth in Article III shall remain in full force and effect immediately from the date hereof until the date this Note is indefeasibly paid in full and
irrevocably terminated. 
  
 5.2 Cumulative Remedies. The
remedies under this Note shall be cumulative. 
  
 5.3 Failure
or Indulgence Not Waiver. No failure or delay on the part of the Holder hereof in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or
privilege preclude other or further exercise thereof or of any other right, power or privilege. All rights and remedies existing hereunder are cumulative to, and not exclusive of, any rights or remedies otherwise available. 
  
 5.4 Notices. Any notice herein required or permitted to be given shall
be in writing and shall be deemed effectively given: (a) upon personal delivery to the party notified, (b) when sent by confirmed telex or facsimile if sent during normal business hours of the recipient, if not, then on the next business day, (c)
five days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (d) one day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of
receipt. All communications shall be sent to the Company at the address provided in the Purchase Agreement executed in connection herewith, and to the Holder at the address provided in the Purchase Agreement for such Holder, with a copy to John E.
Tucker, Esq., 825 Third Avenue, 14th Floor, New York, New York 10022, facsimile number (212) 541-4434, or at such
other address as the Company or the Holder may designate by ten days advance written notice to the other parties hereto. A Notice of Conversion shall be deemed given when made to the Company pursuant to the Purchase Agreement. 
  
 5.5 Amendment Provision. The term “Note” and all references
thereto, as used throughout this instrument, shall mean this instrument as originally executed, or if later amended or supplemented, then as so amended or supplemented, and any successor instrument as such successor instrument may be amended or
supplemented. 
  

 10 

 5.6 Assignability. This Note shall be binding upon the Company and its successors and assigns, and
shall inure to the benefit of the Holder and its successors and assigns, and may be assigned by the Holder in accordance with the requirements of the Security Agreement. The Company may not assign any of its obligations under this Note without the
prior written consent of the Holder, any such purported assignment without such consent being null and void. 
  
 5.7 Cost of Collection. In case of any Event of Default under this Note, the Company shall pay the Holder reasonable costs of collection, including
reasonable attorneys’ fees. 
  
 5.8 Governing Law,
Jurisdiction and Waiver of Jury Trial. 
  
 (a) THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. 
  
 (b) THE COMPANY HEREBY CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS LOCATED IN THE COUNTY OF NEW
YORK, STATE OF NEW YORK SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN THE COMPANY, ON THE ONE HAND, AND THE HOLDER, ON THE OTHER HAND, PERTAINING TO THIS NOTE OR ANY OF THE OTHER RELATED AGREEMENTS OR TO ANY
MATTER ARISING OUT OF OR RELATED TO THIS NOTE OR ANY OF THE RELATED AGREEMENTS; PROVIDED, THAT THE COMPANY ACKNOWLEDGES THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF THE COUNTY OF NEW YORK, STATE OF NEW
YORK; AND FURTHER PROVIDED, THAT NOTHING IN THIS NOTE SHALL BE DEEMED OR OPERATE TO PRECLUDE THE HOLDER FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO COLLECT THE OBLIGATIONS, TO REALIZE ON THE COLLATERAL
OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF THE HOLDER. THE COMPANY EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH THE COMPANY HEREBY WAIVES ANY OBJECTION WHICH IT MAY HAVE BASED UPON LACK
OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS. THE COMPANY HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINT AND
OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO THE COMPANY AT THE ADDRESS SET FORTH IN THE PURCHASE AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF THE COMPANY’S ACTUAL RECEIPT THEREOF OR
THREE (3) DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE PREPAID. 
  
 (c) THE COMPANY DESIRES THAT ITS DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM 

  

 11 

 
AND OF ARBITRATION, THE COMPANY HERETO WAIVES ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER ARISING
IN CONTRACT, TORT, OR OTHERWISE BETWEEN THE HOLDER AND THE COMPANY ARISING OUT OF, CONNECTED WITH, RELATED OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH THIS NOTE, ANY OTHER RELATED AGREEMENT OR THE TRANSACTIONS
RELATED HERETO OR THERETO. 
  
 5.8 Severability. In the
event that any provision of this Note is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with
such statute or rule of law. Any such provision which may prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision of this Note. 
  
 5.9 Maximum Payments. Nothing contained herein shall be deemed to establish or require the payment of a rate of
interest or other charges in excess of the maximum permitted by applicable law. In the event that the rate of interest required to be paid or other charges hereunder exceed the maximum rate permitted by such law, any payments in excess of such
maximum rate shall be credited against amounts owed by the Company to the Holder and thus refunded to the Company. 
  
 5.10 Security Interest. The Holder has been granted a security interest in (i) certain assets of the Companies as more fully described in the
Security Agreement and the Master Security Agreement (ii) the equity interests of certain Subsidiaries of the Parent pursuant to the Stock Pledge Agreement dated as of the date hereof and (iii) the equity interests of Star Scientific, Inc. held by
The Francis E. O’Donnell, Jr. Irrevocable Trust No. 1 pursuant to the O’Donnell Stock Pledge Agreement dated as of the date hereof. The obligations of the Companies under this Note are guaranteed by certain Subsidiaries of the Parent,
pursuant to the Subsidiaries Guaranty dated as of the date hereof. 
  
 5.11 Construction. Each party acknowledges that its legal counsel participated in the preparation of this Note and, therefore, stipulates that the rule of construction that ambiguities are to be resolved against the drafting party
shall not be applied in the interpretation of this Note to favor any party against the other. 
  
 [Balance of page intentionally left blank; signature page follows] 
  

 12 

 IN WITNESS WHEREOF, the Company has caused this Secured Convertible Term Note to be signed in its
name effective as of this 29th day of April 2005. 
  

			
	ACCENTIA BIOPHARMACEUTICALS, INC.
		
	 By:
	 	 /s/ Francis E. O’ Donnell, Jr.

	 Name:
	 	 Francis E. O’ Donnell, Jr.

	 Title:
	 	 CEO

  

	
	 WITNESS:

	
	  

  

 13 

 EXHIBIT A 
  
 NOTICE OF CONVERSION 
  

(To be executed by the Holder in order to convert all or part of 
 the Secured Convertible Term Note into Common Stock) 
  
 [Name and Address of Company] 
  
 The undersigned hereby
converts $                 of the principal due on [specify applicable Repayment Date] under the Secured Convertible Term Note dated as of April 29, 2005 (the
“Note”) issued by ACCENTIA BIOPHARMACEUTICALS, INC. (the “Company”) by delivery of shares of Common Stock of the Company (“Shares”) on and subject to the conditions set forth in the Note.

  

					
	 1.      Date of Conversion
	 	 	    	 
			
	 2.      Shares To Be Delivered:
	 	 	    	 

  

			
	 [HOLDER]

		
	 By:
	 	 
	 Name:
	 	 
	 Title:

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00085-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00085-of-00352.parquet"}]]