Document:

Exhibit 10.1

LOAN AND   SECURITY AGREEMENT Dated as of October 2, 2019 by and among NEOS   THERAPEUTICS, INC. NEOS THERAPEUTICS BRANDS, LLC, and NEOS THERAPEUTICS, LP,   as Borrowers, NEOS THERAPEUTICS COMMERCIAL, LLC, and PHARMAFAB TEXAS, LLC, as   Loan Party Obligors, the Lenders from time to time party hereto, and ENCINA   BUSINESS CREDIT, LLC, as Agent 10679733v18 10/1/2019 5:25 PM 7528.013 

    

 

TABLE OF   CONTENTS Page DEFINITIONS.   ..............................................................................................................................   1 1. 1.1. 1.2. 1.3. Certain Defined Terms.   ....................................................................................................   1 Accounting Terms and Determinations. .......................................................................   19 Other Definitional Provisions and References.   ............................................................ 20 2.   LOANS..........................................................................................................................................   21 2.1. 2.2. 2.3. 2.4. 2.5. 2.6. 2.7. 2.8. 2.9. 2.10. 2.11. 2.12. Amount of   Loans.............................................................................................................   21 Protective Advances; Overadvances   .............................................................................   21 Notice of Borrowing; Manner of Revolving Loan Borrowing   .................................... 22 Swingline Loans   ..............................................................................................................   23 Repayments   .....................................................................................................................   24 Voluntary Termination of Loan Facilities ....................................................................   24 Obligations   Unconditional..............................................................................................   24 Reversal of Payments......................................................................................................   25 Notes   .................................................................................................................................   25 Defaulting Lenders .........................................................................................................   25 Appointment of Borrower   Representative....................................................................   26 Joint and Several Liability   .............................................................................................   27 3. INTEREST AND FEES; LOAN   ACCOUNT............................................................................   29 3.1. 3.2. 3.3. 3.4. 3.5. 3.6. Interest   .............................................................................................................................   29 Fees   ...................................................................................................................................   29 Computation of Interest and Fees .................................................................................   30 Loan Account; Monthly Accountings   ...........................................................................   30 Further Obligations; Maximum Lawful Rate ..............................................................   30 Certain Provisions Regarding LIBOR Loans; Replacement of   Lenders................... 30 4. CONDITIONS PRECEDENT.   ...................................................................................................   31 4.1. 4.2. Conditions to Initial   Loans.............................................................................................   31 Conditions to all Loans   ...................................................................................................   32 5. COLLATERAL.   ..........................................................................................................................   33 5.1. 5.2. 5.3. 5.4. Grant of Security Interest   ..............................................................................................   33 Possessory Collateral   ......................................................................................................   33 Further   Assurances.........................................................................................................   34 UCC Financing Statements   ............................................................................................   34 6. CERTAIN PROVISIONS REGARDING ACCOUNTS, INVENTORY, COLLECTIONS AND   APPLICATIONS OF PAYMENTS..................................................................................   34 6.1. 6.2. 6.3. 6.4. 6.5. 6.6. 6.7. Lock Boxes and Blocked Accounts   ................................................................................   34 Application of Payments ................................................................................................   35 Notification;   Verification................................................................................................   36 Power of Attorney. ..........................................................................................................   36   Disputes............................................................................................................................   37 Invoices ............................................................................................................................   37   Inventory..........................................................................................................................   37 7. REPRESENTATIONS, WARRANTIES AND AFFIRMATIVE COVENANTS..................   38 7.1. Existence and Authority   .................................................................................................   38 -i- 

    

 

7.2. 7.3. 7.4.   7.5. 7.6. 7.7. 7.8. 7.9. 7.10. 7.11. Names; Trade Names and Styles   ...................................................................................   38 Title to Collateral; Third Party Locations; Permitted Liens   ...................................... 39 Accounts and Chattel Paper   ..........................................................................................   39 Electronic Chattel Paper   ................................................................................................   39 Capitalization; Investment   Property.............................................................................   40 Commercial Tort   Claims................................................................................................   41 Jurisdiction of Organization; Location of Collateral   .................................................. 41 Financial Statements   and Reports; Solvency   ............................................................... 41 Tax   Returns and Payments; Pension Contributions ...................................................   42 Compliance with Laws; Intellectual Property; Licenses; Compliance with   Health Care Laws; Health Care Permits.   .................................................................................   43 Litigation..........................................................................................................................   44 Use of   Proceeds................................................................................................................   44 Insurance   .........................................................................................................................   44 Financial, Collateral and Other Reporting / Notices   ................................................... 45 Litigation Cooperation   ...................................................................................................   47 Maintenance of Collateral, Etc   ......................................................................................   47 Material Contracts..........................................................................................................   47 No Default   ........................................................................................................................   47 No Material Adverse   Change.........................................................................................   47 Full   Disclosure.................................................................................................................   47 Sensitive Payments..........................................................................................................   48 Term Loan   Debt..............................................................................................................   48 Access to Collateral, Books and Records   ...................................................................... 48   Intentionally Omitted   ........................................................................ 49   Lender Meetings .............................................................................................................   49 Interrelated Business   ......................................................................................................   49 Post-Closing Matters ......................................................................................................   49 7.12. 7.13. 7.14. 7.15. 7.16. 7.17. 7.18. 7.19. 7.20. 7.21. 7.22. 7.23.   7.24. 7.25. 7.26. 7.27. 7.28. 8. NEGATIVE COVENANTS   ........................................................................................................   50 8.1. 8.2. 8.3. 8.4. 8.5. 8.6. 8.7. 8.8. 8.9. 8.10. 8.11. 8.12. Fundamental   Changes   ....................................................................................................   50 Asset Sales........................................................................................................................   50 Investments and Loans   ...................................................................................................   50 Indebtedness ....................................................................................................................   50 Liens   .................................................................................................................................   50 Restricted Payments   .......................................................................................................   51   Business............................................................................................................................   51 Payments on Certain Indebtedness   ...............................................................................   51 Transactions With Affiliates   ..........................................................................................   51 Modifications to Governing Documents   ....................................................................... 51   Burdensome   Restrictions................................................................................................   51 Modifications to Term Loan Documents ......................................................................   52 9. FINANCIAL COVENANTS   .......................................................................................................   52 9.1. 9.2. Fixed Charge Coverage Ratio........................................................................................   52 Capital Expenditure Limitation   ....................................................................................   52 10. RELEASE, LIMITATION OF LIABILITY AND INDEMNITY...........................................   52 10.1. 10.2. 10.3.   Release..............................................................................................................................   52 Limitation of Liability ....................................................................................................   52   Indemnity.........................................................................................................................   52 -ii- 

    

 

11. EVENTS OF   DEFAULT AND REMEDIES.   ............................................................................   53 11.1. 11.2. 11.3. Events of Default   .............................................................................................................   53 Remedies with Respect to Lending Commitments/Acceleration, Etc.   ....................... 56 Remedies with Respect to Collateral   .............................................................................   56 12. LOAN GUARANTY. ...................................................................................................................   62 12.1. 12.2. 12.3. 12.4. 12.5. 12.6. 12.7. 12.8. 12.9. 12.10. 12.11.   Guaranty..........................................................................................................................   62 Guaranty of Payment   .....................................................................................................   62 No Discharge or Diminishment of Loan   Guaranty...................................................... 62 Defenses   Waived .............................................................................................................   63 Rights of Subrogation   .....................................................................................................   63 Reinstatement; Stay of Acceleration   .............................................................................   63   Information......................................................................................................................   64 Termination .....................................................................................................................   64 Maximum Liability   .........................................................................................................   64 Contribution ....................................................................................................................   64 Liability Cumulative   .......................................................................................................   65 13. PAYMENTS FREE OF TAXES; OBLIGATION TO WITHHOLD; PAYMENTS ON ACCOUNT OF   TAXES.   .............................................................................................................   65 AGENT .........................................................................................................................................   67 14. 14.1. 14.2. 14.3. 14.4. 14.5. 14.6. 14.7. 14.8. 14.9. 14.10. 14.11.   14.12. 14.13. 14.14.   Appointment....................................................................................................................   67 Rights as a Lender   ..........................................................................................................   67 Duties and Obligations   ...................................................................................................   67   Reliance............................................................................................................................   68 Actions through Sub-Agents   ..........................................................................................   68 Resignation   ......................................................................................................................   68 Non-Reliance   ...................................................................................................................   69 Not Partners or Co-Venturers; Agent as Representative of the Secured   Parties ..... 70 Credit   Bidding.................................................................................................................   71 Certain Collateral Matters   .............................................................................................   71 Restriction on Actions by Lenders   ................................................................................   72 Expenses...........................................................................................................................   72 Notice of Default or Event of Default   ............................................................................   72 Liability of Agent   ............................................................................................................   72 15. GENERAL PROVISIONS.   .........................................................................................................   73 15.1. 15.2. 15.3. 15.4. 15.5. 15.6. 15.7. 15.8. 15.9. 15.10. 15.11. 15.12.   15.13. 15.14. Notices.   .............................................................................................................................   73 Severability ......................................................................................................................   74 Integration   .......................................................................................................................   75 Waivers ............................................................................................................................   75   Amendments....................................................................................................................   75 Time of Essence   ...............................................................................................................   76 Expenses, Fee and Costs Reimbursement   ..................................................................... 76   Benefit of Agreement;   Assignability..............................................................................   76 Assignments   .....................................................................................................................   77 Participations ..................................................................................................................   78 Headings;   Construction..................................................................................................   78 USA PATRIOT Act Notification   ...................................................................................   78 Counterparts; Fax/Email Signatures   ............................................................................   78 GOVERNING LAW .......................................................................................................   79 -iii- 

    

 

15.15. CONSENT   TO JURISDICTION; WAIVER OF JURY TRIAL; CONSENT TO SERVICE OF   PROCESS...............................................................................................   79 Publication   .......................................................................................................................   79   Confidentiality.................................................................................................................   80 15.16. 15.17. -iv- 

    

 

Perfection   Certificate Annex I Annex II Annex III Exhibit A Exhibit B Exhibit C Exhibit   D Exhibit E Exhibit F Exhibit G Description of Certain Terms Reporting   Commitment Schedule Form of Notice of Borrowing Closing Checklist Client User   Form Authorized Accounts Form Form of Account Debtor Notification Form of   Compliance Certificate Form of Assignment and Assumption Agreement -v- 

    

 

Loan and   Security Agreement This Loan and Security Agreement (as it may be amended,   restated or otherwise modified from time to time, this "Agreement")   is entered into on October 2, 2019, by and among NEOS THERAPEUTICS, INC., a   Delaware corporation ("Company"), NEOS THERAPEUTICS BRANDS, LLC, a   Delaware limited liability company ("NT Brands"), NEOS   THERAPEUTICS, LP, a Texas limited partnership ("NT LP"; together   with Company, NT Brands and each other Person who joins this Agreement as a   borrower from time to time, each a "Borrower" and collectively the   "Borrowers"), NEOS THERAPEUTICS COMMERCIAL, LLC, a Delaware limited   liability company ("NT Commercial"), and PHARMAFAB TEXAS, LLC, a   Texas limited liability company ( "NT PharmaFab"), as Loan Party   Obligors (as defined herein), the Lenders party hereto from time to time and   ENCINA BUSINESS CREDIT, LLC, as agent for the Lenders (in such capacity,   "Agent"). The Schedules and Exhibits to this Agreement are an   integral part of this Agreement and are incorporated herein by reference. 1.   DEFINITIONS. 1.1. Certain Defined Terms. Unless otherwise defined herein, the   following terms are used herein as defined in the UCC: Accounts, Account   Debtor, As-Extracted Collateral, Certificated Security, Chattel Paper,   Commercial Tort Claims, Debtor, Deposit Accounts, Documents, Electronic   Chattel Paper, Equipment, Farm Products, Financing Statement, Fixtures,   General Intangibles, Goods, Health -Care-Insurance Receivables, Instruments,   Inventory, Letter -of-Credit Rights, Money, Payment Intangible, Proceeds,   Secured Party, Securities Accounts, Security Agreement, Supporting   Obligations and Tangible Chattel Paper. As used in this Agreement, the   following terms have the following meanings: "ABLSoft" means the   electronic and/or internet-based system approved by Agent for the purpose of   making notices, requests, deliveries, communications and for the other   purposes contemplated in this Agreement or otherwise approved by Agent,   whether such system is owned, operated or hosted by Agent, any of its   Affiliates or any ot her Person. "ABL Priority Collateral" means   "ABL Priority Collateral" as defined in the Term Loan Intercreditor   Agreement. "Accounts Advance Rate" means the percentage set forth   in Section 1(b)(i) of Annex I. "Affiliate" means, with respect to   any Person, any other Person in control of, controlled by, or under common   control with the first Person, and any other Person who has a substantial   interest, direct or indirect, in the first Person or any of its Affiliates,   including, any officer or director of the first Person or any of its   Affiliates (and if that Person is an individual, any member of the immediate   family (including parents, siblings, spouse, children, stepchildren, nephews,   nieces and grandchildren) of such individual and any trust whose principal   beneficiary is such individual or one or more members of such immediate   family and any Person who is controlled by any such member or trust);   provided, that neither Agent, any Lender nor any of their respective   Affiliates shall be deemed an "Affiliate" of Borrower for any   purposes of this Agreement. For the purpose of this definition, a   "substantial interest" shall mean the direct or indirect legal or   beneficial ownership of more than ten (10%) percent of any class of equity or   similar interest. -1- 

    

 

"Agent"   means Encina in its capacity as agent for the Lenders hereunder, and any   successor agent. "Agent Fee Letter" means that certain fee letter   agreement dated as of the Closing Date between Agent and Borrowers.   "Agent-Related Persons" means Agent, together with its Affiliates,   officers, directors, employees, members, managers, attorneys, and agents.   "Agent Professionals" means attorneys, accountants, appraisers,   auditors, business valuation experts, liquidation agents, collection agencies,   auctioneers, enviro nmental engineers or consultants, turnaround consultants,   and other professionals and experts retained by Agent. "Agreement"   and "this Agreement" has the meaning set forth in the preamble to   this Agreement. "Approved Electronic Communication" means each   notice, demand, communication, information, document and other material   transmitted, posted or otherwise made or communicated by e-mail, facsimile,   ABLSoft or any other equivalent electronic service, whether owned, operated   or hosted by Agent, any of its Affiliates or any other Person, that any party   is obligated to, or otherwise chooses to, provide to Agent pursuant to this   Agreement or any other Loan Document, including any financial statement,   financial and other report, notice, request, certificate and ot her   information or material; provided, that Approved Electronic Communications   shall not include any notice, demand, communication, information, document or   other material that Agent specifically instructs a Person to deliver in   physical form. "Assignment of Claims Act", means the Assignment of   Claims Act of 1940, as amended, currently codified at 31 U.S.C. 3727 and 41   U.S.C. 6305, and includes the prior historica lly referenced Federal   Anti-Claims Act (31 U.S.C. 3727) and the Federal Anti-Assignment Act (41   U.S.C. 6305). "Approved Fund" means any Person (other than a   natural person) that is (or will be) engaged in making, purchasing, holding   or otherwise investing in commercial loans and similar extensions of credit in   the ordinary course of business, in each case that is administered, managed ,   advised or underwritten by (a) a Lender, (b) an Affiliate of a Lender or (c)   an entity or an Affiliate of an entity that administers or manages a Lender.   "Assignee" has the meaning set forth in Section 15.9(a).   "Assignment and Assumption" means an assignment and assumption   agreement substantially in the form of Exhibit G. "Availability   Block" means $1,000,000 or such lesser amount agreed to by Agent in   writing from time to time in its sole discretion . "Bankruptcy   Code" means the United States Bankruptcy Code (11 U.S.C. § 101 et seq.).   "Base Rate" means, for any day, the greatest of (a) the Federal   Funds Rate plus 1⁄2%, (b) the LIBOR Rate (which rate shall be calculated based   upon a one (1) month period and shall be determined on a daily basis), (c)   one percent (1.0%), and (d) the rate of interest announced, from time to   time, within Wells Fargo Bank, N.A. at its principal office in San Francisco   as its "prime rate", with the understanding that the "prime   rate" is one of Wells Fargo Bank, N.A.’s base rates (not necessarily the   lowest of such rates) and serves as the basis upon which effective rates of   interest are calculated -2- 

    

 

for those loans   making reference thereto and is evidenced by the recording thereof after its   announcement in such internal publications as Wells Fargo Bank, N.A. may   designate (or, if such rate ceases to be so published, as quoted from such   other generally available and recognizable source as Agent may select).   "Base Rate Loan" means any Loan which bears interest at or by   reference to the Base Rate. "Blocked Account" has the meaning set   forth in Section 6.1. "Borrower" and "Borrowers" has the   meaning set forth in the preamble to this Agreement. "Borrower   Representative" means Company, in such capacity pursuant to the   provisions of Section 2.11, or any permitted successor Borrower   Representative selected by Borrowers and approved by Lender. "Borrowing   Base" means, as of any date of determination, the Dollar Equivalent   Amount as of such date of determination of (a) the aggregate amount of   Eligible Accounts multiplied by the Accounts Advance Rate, minus (b) all   Reserves which Agent has established pursuant to Section 2.1(b) (including   those to be established in connection with any requested Revolving Loan).   "Borrowing Base Certificate" means the detailed calculation of the   Borrowing Base (delivered electronically in an acceptable format) from time   to time delivered in accordance with Annex II. "Business Day" means   a day other than a Saturday or Sunday or any other day on which Agent or   banks in New York are authorized to close and, in the case of a Business Day   which relates to a LIBOR Loan, any day on which dealings are carried on in   the London Interbank Eurodollar market. "Capital Expenditures"   means all expenditures which, in accordance with GAAP, would be required to   be capitalized and shown on the consolidated balance sheet of Borrowers, but   excluding (a) expenditures made in connection with the acquisition,   replacement, substitution or restoration of assets to the extent financed (i)   from insurance proceeds (or other similar recoveries) paid on account of the   loss of or damage to the assets being replaced or restored or (ii) with cash   awards of compensation arising from the taking by eminent domain or   condemnation of the assets being replaced, (b) leasehold improvement   expenditures for which any Loan Party is actually reimbursed by the lessor,   sublessor or sublessee, (c) transaction fees and expenses incurred with any   issuance of debt or equity (including any initial public offering) to t he   extent capitalized, and (d) expenditures incurred under operating leases that   are required to be capitalized in accordance with GAAP (which are often   referred to as "right to use assets"). "Closing Date"   means October 2, 2019. "Code" means the Internal Revenue Code of   1986, as amended. "Collateral" means all property and interests in   property in or upon which a security interest, mortgage, pledge or other Lien   is granted pursuant to this Agreement or the other Loan Documents, including   all of the property of each Loan Party Obligor described in Section 5.1, but   excluding any Excluded Property. "Collections" has the meaning set   forth in Section 6.1. -3- 

    

 

"Commitment"   and "Commitments" means, individually or collectively as required   by the context, the Revolving Loan Commitment. "Commitment   Schedule" means the Commitment Schedule attached hereto as Annex III.   "Company" has the meaning set forth in the Preamble to this   Agreement. "Compliance Certificate" means a compliance certificate   substantially in the form of Exhibit F hereto to be signed by the Chief   Financial Officer or President of Borrower Representative . "Confidential   Information" means confidential information that any Loan Party   furnishes to the Agent pursuant to any Loan Document concerning any Loan   Party's business, but does not include any such information once such   information has become, or if such information is, generally available to the   public or available to the Agent (or other applicable Person) from a source   other than the Loan Parties which is not, to the Agent's knowledge, bound by   any confidentiality agreement in respect thereof. "Default" means   any event or circumstance which with notice or passage of time, or both,   would constitute an Event of Default. "Default Rate" has the   meaning set forth in Section 3.1. "Defaulting Lender" means any   Lender that (a) has failed, within one Business Day of the date required to be   funded or paid, to (i) fund any portion of its L oans or (ii) pay over to   Agent or any other Lender any other amount required to be paid by it   hereunder, (b) has notified Borrower Representative or Agent in writing, or   it or its parent has made a public statement, to the effect that it does not   intend or expect to comply with any of its funding obligations under this   Agreement or generally under other agreements in which it or its parent   commits to extend credit, (c) has failed, within two Business Days after   request by Agent, acting in good faith, to pro vide a certification in   writing from an authorized officer of such Lender that it will comply with   its obligations (and is financially able to meet such obligations) to fund   prospective Loans under this Agreement, provided that such Lender shall cease   to be a Defaulting Lender pursuant to this clause (c) upon Agent's receipt of   such certification in form and substance satisfactory to Agent, (d) had an   involuntary proceeding commenced or an involuntary petition filed seeking (i)   liquidation, reorganization o r other relief in respect of such Lender or its   parent or its or its parent’s debts, or of a substantial part of its or its   parent’s assets, under any federal, state or foreign bankruptcy, insolvency,   receivership or similar Law now or hereafter in effect or (ii) the   appointment of a receiver, trustee, custodian, sequestrator, conservator or   similar official for such Lender or its parent or for a substantial part of   its or its parent’s assets, or (e) shall have or whose parent shall have (i)   voluntarily commenced any proceeding or filed any petition seeking   liquidation, reorganization or other relief under any federal, state or   foreign bankruptcy, insolvency, receivership or similar Law now or hereafter   in effect, (ii) consented to the institution of, or fail to contest in a   timely and appropriate manner, any proceeding or petition described in clause   (d) of this definition, (iii) applied for or consented to the appointment of   a receiver, trustee, custodian, sequestrator, conservator or similar official   for i t or a substantial part of its assets, (iv) filed an answer admitting   the material allegations of a petition filed against it in any such   proceeding, (v) made a general assignment for the benefit of creditors or   (vi) taken any action for the purpose of effecting any of the foregoing.   "Dilution" means, as of any date of determination, a percentage,   based upon the experience of the immediately prior twelve (12) months, that   is the result of dividing the Dollar Equivalent Amount of (a) bad debt   write-downs, discounts, advertising allowances, credits, or other -4- 

    

 

dilutive items   with respect to a Borrower's Accounts during such period by (b) such   Borrower's billings with respect to Accounts during such period.   "Dilution Ineligibles" means, as of any date of determination, an   amount in respect of "program dilution" to account for wholesale   and/or similar distributor service agreement fees, customer chargebacks, cash   discounts and other similar items which are accrued as liabilities on the   books and records of the Company and its Subsidiaries on a monthly basis.   "Dilution Reserve" has the meaning set forth in Section 1(b)(i) of   Annex I. "Division" in reference to any Person which is an entity,   means the division of such Person into two (2) or more separate Persons, with   the dividing Person either continuing or terminating its existence as part of   such division, including as contemplated under Secti on 18-217 of the   Delaware Limited Liability Act for limited liability companies formed under   Delaware law, or any analogous action taken pursuant to any other applicable   law with respect to any corporation, limited liability company, partnership   or other entity. The word "Divide" when capitalized, shall have a   correlative meaning. "Dollar Equivalent Amount" means, at any time,   (a) as to any amount denominated in Dollars, the amount hereof at such time,   and (b) as to any amount denominated in a currency other than Dollars, the   equivalent amount in Dollars as determined by Agent at such time that such   amount could be converted into Dollars by Agent according to prevailing   exchange rates selected by Agent. "Dollars" or "$" means   United States Dollars. "E-Signature" means the process of attaching   to or logically associating with an Approved Electronic Communication an   electronic symbol, encryption, digital signature or proce ss (including the   name or an abbreviation of the name of the party transmitting the Approved   Electronic Communication) with the intent to sign, authenticate or accept   such Approved Electronic Communication. "Early Payment/Termination   Premium" has the meaning set forth in Section 3.2(b). "EBITDA"   means, for the applicable period, for the Loan Parties on a consolidated   basis, the sum of (a) Net Income, plus (b) Interest Expense deducted in the   calculation of such Net Income, plus (c) taxes on income, whether paid,   payable or accrued, deducted in the calculation of such Net Income, plus (d)   depreciation expense deducted in the calculation of such Net Income, plus (e)   amortization expense deducted in the calculation of such Net Income, plus (f)   any other non-cash charges that have been deducted in the calculation of such   Net Income, plus (g) transaction fees and expenses incurred in connection   with the transactions contemplated by this Agreement in an aggregate amount   not to exceed $500,000, minus (h) any other non-cash gains that have been   added in the calculation of such Net Income. "Eligible Account"   means, at any time of determination and subject to the criteria below, an   Account of a Borrower, which was generated and billed by a Borrower in the   Ordinar y Course of Business, and which Agent, in its Permitted Discretion,   deems to be an Eligible Account. The net amount of an Eligible Account (or   Eligible Accounts in the aggregate) at any time shall be the face amount of   such Eligible Account(s) as originally billed minus all customer deposits,   unapplied cash collections and other Proceeds of such Account(s) received   from or on behalf of the Account Debtor(s) thereunder as of such date and any   and all returns, rebates, discounts (which may, at Agent's option, be   calculated on shortest terms), credits, allowances or excise taxes of any   nature at any time issued, owing, claimed by Account Debtor(s), granted,   outstanding or payable in connection with such Account(s) at such time,   including without limitation Di lution Ineligibles. Without limiting the -5- 

    

 

generality of   the foregoing, the following Accounts shall not be Eligible Accounts without   Agent's prior approval: (i) the Account Debtor or any of its Affiliates is an   Affiliate of any Loan Party; (ii) it remains unpaid longer than the earlier   to occur of (A) the number of days after the original invoice date set forth   in Section 4(a) of Annex I or (B) the number of days after the original   invoice due date set forth in Section 4(b) of Annex I; (iii) the Account   Debtor or its Affiliates are past any of the applicable dates referenced in   clause (ii) above on other Accounts owing to a Borrower comprising more than   twenty-five (25%) percent of all of the Accounts owing to a Borrower by such   Account Debtor or its Affiliates; (iv) all Accounts owing by the Account   Debtor or its Affiliates which represent more than (A) 55% of all otherwise   Eligible Accounts with respect to Accounts owing by Amerisource Bergen Corp.,   (B) 40% of all otherwise Eligible Accounts with respect to Accounts owing by   each of McKesson Corp. and Cardinal Health, Inc. or (C) 10% of all otherwise   Eligible Accounts with respect to Accounts owing by any other Account Debtor;   provided, that Accounts which are deemed to be ineligible solely by reason of   this clause (iv) shall be considered Eligible Accounts to the extent of the   amount thereof which does not exceed the applicable percentage set forth   above of all otherwise Eligible Accounts; (v) a covenant, representation or   warranty contained in this Agreement or any other Loan Document with respect to   such Account (including any of the representations set forth in Section 7.4)   has been breached and such breach continues uncured; (vi) the Account is   subject to any contra relationship, counterclaim, dispute or set-off;   provided, that Accounts which are deemed to be ineligible by reason of this   clause (vi) shall be considered ineligible only to the extent of such   applicable contra relationship, counterclaim, dispute or set-off; (vii) the   Account Debtor's chief executive office or principal place o f business is   located outside of the United States; (viii) it is payable in a currency   other than Dollars; (ix) it (a) is not absolutely owing to a Borrower or (b)   arises from a sale on a bill-and-hold, guarantied sale, sale-or-return,   sale-on-approval, consignment, retainage or any other repurchase or return   basis or (c) consist of progress billings or other advance billings that are   due prior to the completion of performance by a Borrower of the subject   contract for goods or services; (x)the Account Debtor is the United States of   America or any state or political subdivision (or any department, agency or   instrumentality thereof), unless such Borrower has complied with the   Assignment of Claims Act or other applicable similar state or local law in a   manner reasonably satisfactory to Agent; (xi) it is not at all times subject   to Agent's duly perfected, first -priority security interest or is subject to   any other Lien that is not a Permitted Lien, or the goods giving rise to such   Account were, at the time of sale, subject to any Li en that is not a   Permitted Liens; -6- 

    

 

(xii) it is   evidenced by Chattel Paper or an Instrument of any kind (unless such Chattel   Paper or Instrument is delivered to Agent in accordance with Section 5.2) or   has been reduced to judgment; (xiii)the Account Debtor's total indebtedness   to Borrowers exceeds the amount of any credit limit established by Borrowers   or Agent or the Account Debtor is otherwise deemed not to be creditworthy by   Agent in its Permitted Discretion; provided, that Accounts which are deemed   to be ineligible solely by reason of this clause (xiii) shall be considered   Eligible Accounts to the extent the amount of such Accounts does not exceed   the lower of such credit limits; (xiv) there are facts or circumstances   existing, or which could reasonably be anticipated to occur, which could   result in a material adverse change in the Account Debtor's financial   condition or impair or delay the collectability of all or any portion of such   Account; (xv) Agent has not been furnished with all documents and other   information pertaining to such Account which Agent has reasonably requested,   or which any Borrower is obligated to deliver to Agent, pursuant to this   Agreement; (xvi) Any Borrower has made an agreement with the Account Debtor   to extend the time of payment thereof beyond the time periods set forth in   clause (ii) above; (xvii)Any Borrower has posted a surety or other bond in   respect of the contract or transaction under which such Account arose;   (xviii) the Account Debtor is subject to any proceeding seeking liquidation,   reorganization or other relief with respect to it or its debts under any   bankruptcy, insolvency or other similar applicable law; (xix) the sale giving   rise to such Account is on cash in advance or cash on delivery terms; (xx)   the goods giving rise to such Account have been sold by a Borrower to the   Account Debtor outside such Borrower’s Ordinary Course of Business or the   services giving rise to such Account have been performed by Borrower outside   such Borrower’s Ordinary Course of Business; (xxi) Accounts with respect to   which (i) the goods giving rise to such Account have not been shipped and   billed to the Account Debtor, or (ii) the services giving rise to such   Account have not been performed and billed to the Account Debtor ; or   (xxii)the Account Debtor on such Accounts is located in any jurisdiction   which adopts a statute or other requirement that any Person that obtains   business from within such jurisdiction or is otherwise subject to such   jurisdiction’s tax law must file a "Business Activity Report" (or   other applicable report) or make any required filing s in a timely manner in   order to enforce its claims in such jurisdiction’s courts or arising under   such jurisdiction’s laws; provided, however, that such Accounts shall   nonetheless be Eligible Accounts if such Borrower has filed a "Business   Activity Report" (or other applicable report or required filing).   "Encina" means Encina Business Credit, LLC, a Delaware limited   liability company. "Enforcement Action" means any action to enforce   any Obligations or Loan Documents or to exercise any rights or remedies   relating to any Collateral, whether by judicial action, -7- 

    

 

self-help,   notification of Account Debtors, setoff or recoupment, credit bid, deed in   lieu of foreclosure, action in any proceeding seeking liquidation,   reorganization or other relief with respect to it or its debts under any   bankruptcy, insolvency or other similar applicable law or otherwise.   "ERISA" means the Employee Retirement Income Security Act of 1974   and all rules, regulations and orders promulgated thereunder. "ERISA   Affiliate" means any trade or business (whether or not incorporated)   under common control with a Loan Party within the meaning of Section 414(b)   or (c) of the Code (and Sections 414(m) and (o) of the Code for purposes of   provisions relating to Section 412 of the Code and Section 302 of ERISA).   "ERISA Event" means: (a) a Reportable Event with respect to a   Pension Plan; (b) the withdrawal of any Loan Party or any ERISA Affiliate   from a Pension Plan subject to Section 4063 of ERISA during a plan year in   which such entity was a "substantial employer" as defined in   Section 4001(a)(2) of ERISA or a cessation of operations that is treated as   such a withdrawal under Section 4062(e) of ERISA; (c) a complete or partial   withdrawal by a Loan Party or any ERISA Affiliate from a Multiemployer Plan   or notification that a Multiemployer Plan is in reorganization; (d) the   filing of a notice of intent to terminate, the treatment of a Pension Plan   amendment as a termination under Section 4041 or 4041A of ERISA; (e) the   institution by the PBGC of proceeding s to terminate a Pension Plan; (f) any   event or condition which constitutes grounds under Section 4042 of ERISA for   the termination of, or the appointment of a trustee to administer, any   Pension Plan; (g) the determination that any Pension Plan is considered an   at-risk plan or a plan in endangered or critical status within the meaning of   Sections 430, 431 and 432 of the Code or Sections 303, 304 and 305 of ERISA;   or (h) the imposition of any liability under Title IV of ERISA, other than   for PBGC premiums due but not delinquent under Section 4007 of ERISA, upon a   Loan Party or any ERISA Affiliate. "Event of Default" has the meaning   set forth in Section 11.1. "Excess Availability" means the amount,   as determined by Agent, calculated at any date, equal to (a) the lesser of   (i) the Maximum Revolving Facility Amount, minus Reserves, and (ii) the   Borrowing Base, minus (b) the sum of (i) the outstanding balance of all   Revolving Loans plus (ii) fees and expenses which are due and payable by any   Borrower under this Agreement but which have not been paid or charged to the   Loan Account. "Excluded Property" has the meaning set forth in Section   5.1. "Excluded Taxes" means any of the following Taxes imposed on   or with respect to a Recipient or required to be withheld or deducted from a   payment to a Recipient: (a) Taxes imposed on or measured by net income   (however denominated), franchise Taxes, and branch profits Taxes, in each   case, imposed as a result of such Recipient being organized under the laws   of, or having its principal office or, in the case of Agent or any Lender,   its Lending Office located in, the jurisdiction imposing such Tax (or any   political subdivision thereof); (b) in the case of a Non -U.S. Recipient (as   defined in Section 13(e)), U.S. federal withholding Taxes imposed on amounts   payable to or for the account of such Non-U.S. Recipient with respect to an   applicable interest in a Loan or Commitment pursuant to a law in effect on   the date on which Non -U.S. Recipient becomes a party to this Agreement or   acquires a participation, except in each case to the extent that, pursuant to   Section 13 amounts with respect to such Taxes were payable to such Non -U.S.   Recipient assignor (or Lender granting such participation) immediately before   such assignment or grant of p articipation; (c) United States federal   withholding Taxes that would not have been imposed but for such Recipient's failure   to comply with Section 13(e) (except where the failure to comply with Section   13(e) was the result of a change in law, ruling, regulation, treaty,   directive, or interpretation thereof by a Governmental -8- 

    

 

Authority after   the date the Recipient became a party to this Agreement or a Participant) and   (d) any U.S. federal withholding Taxes imposed pursuant to FATCA.   "FATCA" means Sections 1471 through 1474 of the Code, as of the   date of this Agreement (or any amended or successor version that is   substantively comparable and not materially more onerous to comply with) and   any current or future regulations or official interpretations thereof.   "FDA" means the US Food and Drug Administration. "Financing   Lease" means any financing lease which is or should be capitalized on   the balance sheet of the lessee thereunder in accordance with GAAP.   "FIRREA" means the Financial Institutions Reform, Recovery and   Enforcement Act of 1989, as amended. "Fiscal Year" means the fiscal   year of Borrowers which ends on December 31 of each year. "Fixed Charge   Coverage Ratio" means the ratio, determined in a manner acceptable to   Agent in its Permitted Discretion, of (a) EBITDA for the most recently ended   twelve-month period for which financial statements have been delivered under   Section 7.15(b) , minus unfinanced Capital Expenditures of the Loan Parties   on a consolidated basis for such period, to (b) Fixed Charges for such   period. "Fixed Charges" means, for the period in question, on a   consolidated basis, the sum of (a) all principal payments scheduled or   required to be made during or with respect to such period in respect of   Indebtedness of the Loan Parties, plus (b) all Interest Expense of the Loan   Parties for such period paid or required to be paid in cash attributable to   such period, plus (c) all taxes of the Loan Parties paid or required to be   paid for such period and plus (d) all cash distributions, dividends,   redemptions and other cash payments made or required to be made during such   period with respect to equity securities or subordinated debt issued by any   Loan Party. "Foreign Subsidiary" means a Subsidiary that is a   "controlled foreign corporation" under Section 957 of the Code,   such that a guaranty by such Subsidiary of the Obligations or a Lien on the assets   of such Subsidiary or a pledge of more than 65% of the voting equity of such   Subsidiary, in each case to secure the Obligations, would result in material   tax liability to Borrowers. "FRB" means the Board of Governors of   the Federal Reserve System or any successor thereto. "GAAP" means   generally accepted accounting principles set forth from time to time in the   opinions and pronouncements of the Accounting Principles Board and the   American Institute of Certified Public Accountants and statements and pronouncements   of the Financial Accounting Standards Board (or agencies with similar   functions of comparable stature and authority within the United States   accounting profession) which are applicable to the circumstances as of the   date of determination, in each case consistently applied. "Governing   Documents" means, with respect to any Person, the certificate of   incorporation, articles of incorporation, certificate of formation,   certificate of limited partnership, by - laws, operating agreement, limited   liability company agreement, limited partnership agreement or other similar   governance document of such Person. "Governmental Authority" means   the government of the United States of America or any other nation, or of any   political subdivision thereof, whether state or local, and any agency, -9- 

    

 

authority,   instrumentality, regulatory body, court, centra l bank or other entity   exercising executive, legislative, judicial, taxing, regulatory or   administrative powers or functions of or pertaining to government (including   any supra-national bodies such as the European Union or the European Central   Bank) and having jurisdiction over this account. "Guaranty" or   "Guarantied", as applied to any Indebtedness, liability or other   obligation, means (a) a guaranty, directly or indirectly, in any manner,   including by way of endorsement (other than endorsements of negotiable   instruments for collection in the Ordinary Course of Business), of any part   or all of such Indebtedness, liability or obligation and (b) an agreement,   contingent or otherwise, and whether or not constituting a guaranty,   assuring, or intended to assure, the payment or performance (or payment of   damages in the event of non -performance) of any part or all of such   Indebtedness, liability or obligation by any means (including the purchase of   securities or obligations, the purchase or sale of property or services or   the supplying of funds). "Health Care Laws" means all laws relating   to the provision and/or administration of, and/or payment for, healthcare   products or services, including, without limitation, applicable laws with   respect to (in each case, to the extent applicable): (a) health care fraud   and abuse (including without limitation the following statutes, as amended,   modified or supplemented from time to time and any successor statutes thereto   and regulations promulgated from time to time thereunder: the federal   Anti-Kickback Statute (42 U.S.C. § 1320a -7b(b)); the Stark Law (42 U.S.C. §   1395nn); the civil False Claims Act (31 U.S.C. § 3729 et seq.); 42 U.S.C. §§   1320a -7, 1320a-7b; the Medicare Prescription Drug, Improvement, and   Modernization Act of 2 003 (Pub. L. No. 108-173)); and any state,   commonwealth or local laws similar to any of the foregoing; (b) Medicare,   Medicaid or other programs which are sponsored or maintained by a govern mental   payor; (c) quality, safety certification and accreditation standards and   requirements; (d) HIPAA; (e) prescription drug, medical device or controlled   substances registration, approval, importation, sale, use, distribution,   compounding, dispensing, transporting, purchasing, storage, tracking,   marketing and security, including state pharmacy and controlled substance   laws, the Federal Food, Drug, and Cosmetic Act, the Controlled Substances   Act, the Prescription Drug Marketing Act of 1987, and Food and Drug Administration   rules and regulation; (f) the provision of free or discounted care or   services; and (g) the conditions of participation or enrollment as a   provider/supplier in and Laws governing health programs administered by or   paid for, in whole or in part by , governmental payors. "Health Care   Permits" means any and all Permits issued or required under applicable   Health Care Laws. "HIPAA" means the (a) Health Insurance   Portability and Accountability Act of 1996; (b) the Health Information   Technology for Economic and Clinical Health Act (Title XIII of the American   Recovery and Reinvestment Act of 2009); and (c) any state, commonwealth and   local laws regulating the privacy and/or security of individually   identifiable health information, including state laws providing for   notification of breach of privacy or security of individually identifiable   health information, in each case with respect to the laws described in   clauses (a), (b) and (c) of this definition, as the same may be amended,   modified or supplemented from time to time, any successor statutes thereto,   any and all rules or regulations promulgated from time to time thereunder.   "Indebtedness" means (without duplication), with respect to any   Person, (a) all obligations or liabilities, contingent or otherwise, for   borrowed money, (b) all obligations represented by promissory notes, bonds,   debentures or the like, or on which interest charges are customarily paid,   (c) all liabilities secured by any Lien on property owned or acquired,   whether or not such liability shall have been assumed, (d) all obligations of   such Person under conditional sale or other title - retention agreements   relating to property or assets purchased by such Person, (e) all obligations   of such Person issued or assumed as the deferred purchase price of property   or services (excluding trade payables which are not one-hundred twenty (120)   days past the invoice date incurred in the O rdinary -10- 

    

 

Course of   Business, but including the maximum potential amount payable under any earn   -out or similar obligations), (f) all Financing Leases of such Person, (g)   all obligations (contingent or otherwise) of such Person as an account party   or applicant in respect of letters of credit and bankers' acceptances or in   respect of financial or other hedging obligations, (h) all equity interests   issued by such Person subject to repurchase or redemption at any time on or   prior to the Scheduled Maturity Date, other than voluntary repurchases or   redemptions that are at the sole option of such Person, (i) all principal   outstanding under any synthetic lease, off -balance sheet loan or similar   financing product and (j) all Guaranties, endorsements (other than for   collection in the Ordinary Course of Business) and other contingent   obligations in respect of the obligations of others. "Indemnified   Taxes" means (a) Taxes, other than Excluded Taxes, imposed on or with   respect to any payment made by or on account of any obligation of any Loan   Party under any Loan Document and (b) to the extent not otherwise described   in clause (a), Other Taxes. "Intellectual Property" means the   collective reference to all rights, priorities and privileges relating to   intellectual property, whether arising under United States, multinational or   foreign laws or otherwise, including copyrights, copyright licenses, patents,   patent licenses, trademarks and trademark licenses and all rights to sue at   law or in equity for any infringement or other impairment thereof, including   the right to receive all proceeds and damages therefrom. "Interest   Expense" means, for the applicable period, for the Loan Parties on a   consolidated basis, total interest expense (including interest attributable   to Financing Lea ses in accordance with GAAP) and fees with respect to   outstanding Indebtedness. "Investment Property" means the   collective reference to (a) all "investment property" as such term   is defined in Section 9-102 of the UCC, (b) all "financial assets"   as such term is defined in Section 8-102(a)(9) of the UCC and (c) whether or   not constituting "investment property" as so defined, all Pledged   Equity. "Issuers" means the collective reference to each issuer of   Investment Property. "Lender" means each Person listed on the   Commitment Schedule and any other Person that shall have become a Lender hereunder   pursuant to an Assignment and Assumption, other than any such Person that   ceases to be a Lender hereunder pursuant to an Assignment and Assumption.   Unless the context expressly provides otherwise, "Lender" shall   include the Swingline Lender. "LIBOR Loan" means any Loan which   bears interest at a rate determined by reference to the LIBOR Rate.   "LIBOR Rate" means, for any calendar month, the rate (expressed as   a percentage per annum and rounded upward, if necessary, to the next nearest   1/100 of 1%) for deposits in Dollars, for a one-month period, that appears on   Bloomberg Screen US000 1M (or the successor thereto) as the London interbank   offered rate for deposits in Dollars as of 11:00 a.m., London time, as of two   Business Days prior to the first day of such calendar month (and, in no event   shall the LIBOR Rate shall be less than 1.50%), which determination shall be   made by Agent and shall be conclusive in the absence of manifest error. For   the sake of clarity, the LIBOR Rate shall be adjusted monthly on the first   day of each month. "Lien" means any mortgage, deed of trust,   pledge, hypothecation, assignment, charge, deposit arrangement, encumbrance,   easement, lien (statutory or other), security interest or other security   arrangement and any other preference, priority, or preferential arrangement   in the nature of a security interest of any kind or nature whatsoever,   including any conditional sale contract or other -11- 

    

 

title-retention   agreement, the interest of a lessor under a Financing Lease and any synthetic   or other financing lease having substantially the same economic effect as any   of the f oregoing. "Loan Account" has the meaning set forth in   Section 3.4. "Loan Documents" means, collectively, this Agreement   (including the Perfection Certificate(s) and all other attachments, annexes   and exhibits hereto) and all notes, guaranties, security agreements,   mortgages, certificates, pledge agreements, landlord's agreements, Lock Box   and Blocked Account agreements, the Term Loan Intercreditor Agreement and all   other agreements, documents and instruments now or hereafter executed or   delivered by any Bor rower, any Loan Party, or any Other Obligor in   connection with, or to evidence the transactions contemplated by, this   Agreement. "Loan Guaranty" means the obligations of Obligors   pursuant to Section 12. "Loan Party" means, individually, each   Borrower and each Subsidiary; and "Loan Parties" means,   collectively, each Borrower and all Subsidiaries. "Loan Party Obligor"   means, individually, each Borrower, or any Obligor that is a Loan Party and   each Person identified in the Preamble as a Loan Party Obligor; and   "Loan Party Obligors" means, collectively, each Borrower, and each   Loan Party Obligor. "Loans" means, collectively, the Revolving   Loans (including any Protective Advances and Overadvances) and the Swingline   Loans. "Lock Box" has the meaning set forth in Section 6.1.   "Material Adverse Effect" means any event, act, omission, condition   or circumstance which, which individually or in the aggregate, has or could   reasonably be expected to have a material adverse effect on (a) the business,   operations, properties, assets or financial condition of the Company and its   Subsidiaries, taken as a whole, (b) the ability of any Loan Party or any   Other Obligor, as applicable, to perform any of its obligations under any of   the Loan Documents, (c) the validity or enforceability of, or Lender's rights   and remedies under, any of the Loan Documents, (d) the ability of Agent and   Lenders realize upon Collateral in which Agent has previously perfected a   Lien or (e) the existence, perfection or priority of any security interest   granted in any Loan Document and covering Collateral in which Agent has   previously perfected a Lien . "Material Contract" means has the   meaning set forth in Section 7.18. "Maturity Date" means the   earlier of (i) Scheduled Maturity Date, (ii) the Termination Date, or (iii)   such earlier date as the Obligations may be accelerated by Agent in   accordance with the terms of this Agreement (including pursuant to Section   11.2). "Maximum Lawful Rate" has the meaning set forth in Section   3.5. "Maximum Liability" has the meaning set forth in Section 12.9.   "Maximum Revolving Facility Amount" means the amount set forth in   Section 1(a) of Annex I. "Medicaid" means, collectively, the health   care assistance program established by Title XIX of the Social Security Act   (42 U.S.C. § 1396 et seq.) and any statutes succeeding thereto, and all laws   pertaining to such program, including (a) all federal statutes affecting such   program; (b) all state and commonwealth statutes and plans for medical   assistance enacted in connection with such program and federal rules and   regulations promulgated in connection with such program; and (c) all -12- 

    

 

applicable provisions   of all rules, regulations and legally binding manuals, orders and   administrative and reimbursement requirements of all Governmental Authorities   promulgated in connection with such program, in each case as the same may be   amended, supplemented or otherwise modified from time to time.   "Medicare" means, collectively, the health insurance program for   the aged and disabled established by Title XVIII of the Social Security Act   (42 U.S.C. § 1395 et seq.) and any statutes succeeding thereto, and all laws   pertaining to such program including (a) all federal statutes (whether set   forth in Title XVIII of the Social Security Act (42 U.S.C. § 1395 et seq.) or   elsewhere) affecting such program; and (b) all applicable provisions of all   rules, regulations and legally binding manuals, orders, administrative and   reimbursement requirements of all Governmental Authori ties promulgated in   connection with such program, in each case as the same may be amended,   supplemented or otherwise modified from time to time. "Minimum Excess   Availability Amount" means $2,500,000. "Multiemployer Plan"   means any employee benefit plan of the type described in Section 4001(a)(3)   of ERISA, to which a Loan Party or any ERISA Affiliate makes or is obligated   to make contributions, or during the preceding five plan years, has made or   been obligated to make contributions. "Net Income" means, for the   applicable period, for Borrowers individually or for the Loan Parties on a   consolidated basis, as applicable, the net income (or loss) of Borrowers individually   or of the Loan Parties on a consolidated basis, as applicable, for such   period, excluding any gains or non-cash losses from dispositions, any   extraordinary gains or extraordinary non -cash losses and any gains or   non-cash losses from discontinued operations, in each case of Borrowers   individually or of the Loan Parties on a consolidated basis, as applicable,   for such period. "Non-Consenting Lender" has the meaning set forth   in Section 15.5(b). "Non-Paying Guarantor" has the meaning set   forth in Section 12.10. "Non-U.S. Recipient" has the meaning set   forth in Section 13(e)(ii). "Notice of Borrowing" has the meaning   set forth in Section 2.3. "NT Brands" has the meaning set forth in   the Preamble to this Agreement. "NT Commercial" has the meaning set   forth in the Preamble to this Agreement. "NT LP" has the meaning   set forth in the Preamble to this Agreement. "NT PharmaFab" has the   meaning set forth in the Preamble to this Agreement. "Obligations"   means all present and future Loans, advances, debts, liabilities, fees,   expenses, obligations, guaranties, covenants, duties and indebtedness at an y   time owing by any Borrower or any Loan Party Obligor to Agent and Lenders,   whether evidenced by this Agreement, any other Loan Document or otherwise,   whether arising from an extension of credit, guaranty, indemnification or   otherwise, whether direct or indirect (including those acquired by assignment   and any participation by any Lender in any Borrower's indebtedness owing to   others), whether absolute or contingent, whether due or to become due and   whether arising before or after the commencement of a proceeding under the   Bankruptcy Code or any similar statute. -13- 

    

 

"Obligor"   means any guarantor, endorser, acceptor, surety or other Person liable on, or   with respect to, any of the Obligations or who is the owner of any property   which is security for any of the Obligations, other than Borrower.   "Ordinary Course of Business" means, in respect of any transaction   involving any Person, the ordinary course of business of such Person, as   conducted by such Person as of the Closing Date and any practices that are   utilized to improve past practices or to conform with customary operating   procedures for a similar business, as reasonably determined by such Person.   "Other Obligor" means any Obligor other than any Loan Party   Obligor. "Other Taxes" means all present or future stamp, court or   documentary, property, excise, intangible, recording, filing or similar Taxes   that arise from any payment made under, from the execution, delivery,   performance, enforcement or registration of, from the receip t or perfection   of a security interest under, or otherwise with respect to, any Loan Document.   "Overadvances" has the meaning set forth in Section 2.2(b).   "Participant" has the meaning set forth in Section 15.10(b).   "Paying Guarantor" has the meaning set forth in Section 12.10.   "Payment Conditions" means, as to the making of (i) any payment or   distribution of any dividends or other distributions on Company's stock or   other equity interest, or (ii) any prepayment in respect of the Term Loan   Debt, the satisfaction as of the making of each such payment or distribution,   and after giving pro forma effect thereto, of each of the following   conditions: (a) no Default or Event of Default has occurred and is   continuing, (b) the Fixed Charge Coverage Ratio, calculated for the twelve   consecutive calendar months most recently ended for which the monthly financial   statements of Borrowers and the related Compliance Certificate are required   to have been delivered to Agent pursuant to Section 7.15, is greater than   1.1:1.0, and (c) Excess Availability is greater than $2,500,000.   "PBGC" means the Pension Benefit Guaranty Corporation.   "Pension Act" means the Pension Protection Act of 2006.   "Pension Funding Rules" means the rules of the Code and ERISA   regarding minimum required contributions (including any installment payment   thereof) to Pension Plans and Multiemployer Plans and set forth in, with   respect to plan years ending prior to the effective date of the Pension Act,   Section 412 of the Code and Section 302 of ERISA, each as in effect prior to   the Pension Act and, thereafter, Section 412, 430, 431, 432 and 436 of the   Code and Sections 302, 303, 304 and 305 of ERISA, and any sections of the   Code or ERISA related thereto that are enacted after the date of this   Agreement. "Pension Plan" means any employee pension benefit plan   (including a Multiemployer Plan) that is maintained or is contributed to by a   Loan Party and any ERISA Affiliate and is either covered by Title IV of ERISA   or is subject to the minimum funding standards unde r Section 412 of the   Code. "Perfection Certificate" means the Perfection Certificate   completed by Borrowers and Obligors and attached hereto and incorporated   herein by this reference, and any supplements or updates thereto delivered to   Lender in accordance herewith. -14- 

    

 

"Permitted   Discretion" means a determination made by Agent in good faith and in the   exercise of reasonable (from the perspective of an asset-based secured   lender) business judgment. "Permitted Indebtedness" means: (a) the   Obligations; (b) the Indebtedness existing on the date hereof described in Section   7 of the Perfection Certificate; in each case along with extensions,   refinancings, modifications, amendments and restatements thereof; provided,   that (i) the principal amount thereof is not increased, (ii) if secured by a   Permitted Lien, no additional collateral beyond that existing as of the   Closing Date is granted to secure such Indebtedness; (iii) if such   Indebtedness is subordinated to any or all of the Obligations, the applicable   subordination terms shall not be modified without the prior written consent of   Agent and (iv) the terms thereof are not modified to impose more burdensome   terms upon any Loan Party; (c) Financing Leases and purchase-money   Indebtedness secured by Permitted Liens in an aggregate amount not exceeding   $8,000,000 at any time outstanding; (d) Indebtedness arising under operating   leases in the Ordinary Course of Business; (e) Indebtedness incurred as a   result of endorsing negotiable instruments received in the Ordinary Course of   Business; (f) the Term Loan Debt to the extent subject to, and permitted by,   the Term Loan Intercreditor Agreement; (g) to the extent constituting   Indebtedness, Indebtedness incurred in connection with the financing of   insurance premiums; and (h) other unsecured Indebtedness in an aggregate   principal amount not exceeding $250,000 at any time outstanding.   "Permitted Investments" means: (a)investments outstanding on the   Closing Date described in Section 1 of the Perfection Certificate; (b)   investments by any Loan Party in any other Loan Party or any Subsidiary of a   Loan Party in equity interests; provided, that (A) any such equity interests   held by a Loan Party Obligor shall be pledged as required pursuant to this   Agreement and B) the aggregate amount of investments by Loan Parties in   Subsidiaries that are not Loan Parties (together with outstanding   intercompany loans permitted under clause (c) below and outstanding   Guaranties permitted under clause (d) below) shall not exceed $500,000 at any   time outstanding); (c) loans or advances made by any Loan Party to any   Subsidiary and made by any Subsidiary to a Loan Party or any other   Subsidiary; provided, that (A) any such loans and advances made by a Loan   Party and evidenced by a promissory note shall be pledged pursuant to this   Agreement and (B) the principal amount of such loans and advances made by   Loan Parties to Subsidiaries that are not Loan Parties (together with   outstanding investments permitted by clause (b) above and outstanding   Guaranties permitted under clause (d) below) shall not exceed $250,000 at any   time outstanding); -15- 

    

 

(d) Guaranties   constituting Indebtedness permitted by Section 8.4; provided, that the   aggregate principal amount of Indebtedness of Subsidiaries that are not Loan   Parties that i s guaranteed by any Loan Party (together with outstanding   investments permitted under clause (b) above and outstanding intercompany   loans permitted under clause (c) above) shall not exceed $250,000 at any time   outstanding); (e) loans and advances to directors, employees and officers of   any Loan Party Obligor and its Subsidiaries for bona fide business purposes   in the Ordinary Course of Business, in an aggregate amount not to exceed   $50,000 at any time outstanding; (f) leases of real or personal property in   the Ordinary Course of Business and in accordance with the terms and conditions   of this Agreement; and (g) investments constituting deposits described in   Permitted Liens. "Permitted Liens" means: (a) purchase-money   security interests in specific items of Equipmen t securing Permitted   Indebtedness described under clause (c) of the definition of Permitted   Indebtedness; (b) liens for taxes, fees, assessments, or other governmental   charges or levies, either not delinquent or being contested in good faith by   appropri ate proceedings (which proceedings have the effect of preventing the   enforcement of such lien) for which adequate reserves in accordance with GAAP   are being maintained provided the same have no priority over any of Agent's   security interests; (c) liens of materialmen, mechanics, carriers, or other   similar liens arising in the Ordinary Course of Business and securing   obligations which are not delinquent or are being contested in good faith by   appropriate proceedings (which proceedings have the effect of p reventing the   enforcement of such lien) for which adequate reserves in accordance with GAAP   are being maintained; (d) liens which constitute banker's liens, rights of   set -off, or similar rights as to deposit accounts or other funds maintained   with a bank or other financial institution (but only to the extent such   banker's liens, rights of set-off or other rights are in respect of customary   service charges relative to such deposit accounts and other funds, and not in   respect of any loans or other extensio ns of credit by such bank or other   financial institution to any Loan Party); (e)cash deposits or pledges of an   aggregate amount not to exceed $50,000 to secure the payment of worker's   compensation, unemployment insurance, or other social security benefits or   obligations, public or statutory obligations, surety or appeal bonds, bid or   performance bonds, or other obligations of a like nature incurred in the   Ordinary Course of Business; (f) judgment Liens in respect of judgments that   do not constitute a n Event of Default; (g) easements, zoning restrictions,   rights-of-way and similar encumbrances on real property imposed by law or   arising in the Ordinary Course of Business that do not secure any monetary   obligations and do not materially detract from the value of the affected   property or interfere with the ordinary conduct of business of Company or any   Subsidiary; (h) any Lien in existence on the Closing Date and described in   Section 7 of the Perfection Certificate and any Lien granted as a replacement   o r substitute therefor; provided, that any such replacement or substitute   Lien (i) does not secure an aggregate amount of Indebtedness, if any, -16- 

    

 

greater than   that secured on the Closing Date and (ii) does not encumber any property   other than the property subject thereto on the Closing Date; (i) Liens on the   assets of the Loan Parties securing the Term Loan Debt to the extent such   Liens are subject to, and permitted by, the Term Loan Intercreditor   Agreement; (j) Liens in favor of customs and revenue authorities arising as a   matter of law to secure payment of customs duties in connection with the   importation of goods; and (k) other Liens securing obligations in an   aggregate principal amount not to exceed $25,000 at any time outstanding.   "Permits" means all permits, licenses, registrations, certificates,   qualifications, accreditations, approvals or similar rights required to be   obtained, from any Governmental Authority. "Person" means any   individual, sole proprietorship, partnership, joint venture, limited   liability company, trust, unincorporated organization, association,   corporation, government or any agency or political division thereof, or any   other entity. "Plan" means any employee benefit plan within the   meaning of Section 3(3) of ERISA (including a Pension Plan) maintained for   employees of any Loan Party or any such plan to which any Loan Party (or with   respect to any plan subject to Section 412 of the Code or Section 302 or   Title IV of ERISA, any ERISA Affiliate) is required to contribute on behalf   of any of its employees. "Pledged Equity" means the equity interests   listed on Sections 1(f) and 1(g) of the Perfection Certificate, together with   any other equity interests, certificates, options, or rights or instruments   of any nature whatsoever in respect of the equity interests of any Person   that may be issued or granted to, or held by, any Loan Party Obligor while   this Agreement is in effect, and including, to the extent attributable to, or   otherwise related to, such pledged equity interests, all of such Loan Party   Obligor's (a) interests in the profits and losses of each Issuer, (b) rights   and interests to receive distributions of each Issuer's assets and properties   and (c) rights and interests, if any, to participate in the management of   each Issuer related to such pledged equity interests. "Pro Rata Share"   means with respect to all matters relating to any Lender the percentage   obtained by dividing (i) the Loan Commitment of that Lender by (ii) the   aggregate Loan Commitments of all Lenders, in each case as any such   percentages may be adjusted by assignments pursuant to an Assignment and   Assumption "Protective Advances" has the meaning set forth in   Section 2.2(a). "Recipient" means any Agent, any Lender, any   Participant, or any other recipient of any payment to be made by or on   account of any Obligation of any Loan Party under this Agreement or any other   Loan Document, as applicable. "Register" has the meaning set forth   in Section 15.9(c). "Released Parties" has the meaning set forth in   Section 10.1. "Replacement Lender" has the meaning set forth in   Section 3(c). "Reportable Event" means any of the events set forth   in Section 4043(c) of ERISA, other than events for which the thirty-day   notice period has been waived. -17- 

    

 

"Required   Lenders" means at any time Lenders (other than Defaulting Lenders) then   holding at least fifty-one (51%) percent of the sum of the aggregate Loan   Commitment then in effect ; provided, that if there are two or more Lenders,   then Required Lender s shall include at least two Lenders (Lenders that are   Affiliates or Approved Funds of one another being considered as one Lender   for purposes of this proviso). "Reserves" has the meaning set forth   in Section 2.1(b). "Restricted Accounts" means Deposit Accounts (a)   established and used (and at all times will be used) solely for the purpose   of paying current payroll obligations of Loan Parties (and which do not (and   will not at any time) contain any deposits other than those necessary to fund   current payroll), in each case in the Ordinary Course of Business, or (b)   maintained (and at all times will be maintained) solely in connection with an   employee benefit plan, but solely to the extent that all funds on deposit   therein are solely held for the benefit of, a nd owned by, employees (and   will continue to be so held and owned) pursuant to such plan.   "Restricted Payment" means any payment, dividend or other   distribution (whether in cash, securities or other property) with respect to   any equity interests in Company , any Loan Party or any Subsidiary, or any   payment, dividend or other distribution (whether in cash, securities or other   property), including any sinking fund or similar deposit, on account of the   purchase, redemption, retirement, acquisition, cancellation or termination of   any such equity interests in any of Company, any Loan Party or any Subsidiary   or any option, warrant or other right to acquire any such equity interests in   any of Company, any Loan Party or any Subsidiary. "Revolving Loan   Commitment" means (a) as to any Lender, the aggregate commitment of such   Lender to make Revolving Loans as set forth in the Commitment Schedule or in   the most recent Assignment and Assumption to which it is a party (as adjusted   to reflect any assignments as permitted hereunder) and (b) as to all Lenders,   the aggregate commitment of all Lenders to make Revolving Loans, which   aggregate commitment shall be in an amount equal to the Maximum Revolving   Facility Amount. "Revolving Loans" has the meaning set forth in Section   2.1(a). "Revolving Loan Funding Account" shall mean account number   maintained by Company at First Republic Bank, or such other replacement   account acceptable to Agent and designated as the "Revolving Loan   Funding Account" for purposes of this Agr eement, which shall be subject   to a first-priority security interest in favor of Agent and shall be the   account into which all disbursements of Revolving Loan proceeds shall be   funded. "Scheduled Maturity Date" means the date set forth in   Section 6 of Annex I. "Securities Act" means the Securities of Act   of 1933, as amended. "Settlement" has the meaning set forth in   Section 2.4(c). "Settlement Date" has the meaning set forth in   Section 2.4(c). "SPS" means Specialty Pharmaceutical Services, a   subsidiary of Cardinal Health. "Stated Rate" has the meaning set   forth in Section 3.5. "Subsidiary" means any corporation or other   entity of which a Person owns, directly or indirectly, through one or more   intermediaries, more than 50% of the capital stock or other equi ty -18- 

    

 

interest at the   time of determination. Unless the context indicates otherwise, references to   a Subsidiary shall be deemed to refer to a Subsidiary of Borrower.   "Swingline Lender" means Encina Business Credit SPV, LLC, in its   capacity as lender of Swingline Loans hereunder. "Swingline Loans"   has the meaning set forth in Section 2.4(a). "Taxes" means all   present or future taxes, levies, imposts, duties, deductions, withholdings   (including backup withholding), assessments, fees or other charges impose d   by any Governmental Authority, including any interest, additions to tax or   penalties applicable thereto. "Termination Date" means the date on   which all of the Obligations have been paid in full in cash and all of Agent   and Lenders' lending commitments un der this Agreement and under each of the   other Loan Documents have been terminated. "Term Loan Facility   Agreement" means that certain Facility Agreement, dated as of May 11,   2016, among Borrower, Deerfield Private Design Fund III, L.P. and Deerfield   Specia l Situations Fund, L.P., as amended, restated, supplemented, or   otherwise modified from time to time. "Term Loan Debt" means   Indebtedness outstanding under the Term Loan Documents. As of the Closing   Date, the aggregate outstanding principal amount of the Term Loan Debt is   $45,000,000. "Term Loan Debt Documents" means the Term Loan   Facility Agreement and the other "Loan Documents" as defined in the   Term Loan Facility Agreement. "Term Loan Intercreditor Agreement"   means that certain Intercreditor Agreement, dated as of the Closing Date, by   and among Agent, Deerfield Private Design Fund III, L.P., Deerfield Special   Situations Fund, L.P., and Deerfield Mgmt, L.P., and acknowledged by the Loan   Parties. "Term Loan Notes" means the "Notes" as defined   in the Term Loan Facility Agreement. "Term Loan Priority   Collateral" means "Term Loan Priority Collateral" as defined   in the Term Loan Intercreditor Agreement. "UCC" means, at any given   time, the Uniform Commercial Code as adopted and in effect at such time in   the State of Illinois or other applicable jurisdiction. 1.2. Accounting Terms   and Determinations. Unless otherwise specified herein, all accounting terms   used herein shall be interpreted, all accounting determinations hereunder   (including determinations made pursuant to the exhibits hereto) shall be   made, and all financial statements required to be delivered hereunder shall   be prepared on a consolidated basis in accordance with GAAP consistently   applied. If at any time any change in GAAP would affect the computation of   any financial ratio or financial requirement set forth in any Loan Document,   and either Borrower Representative or Agent shall so request, Required   Lenders and Borrower Representative shall negotiate in good faith to amend   such ratio or requirement to preserve the original intent thereof in light of   such change in GAAP; provided that, until so amended, (a) such ratio or   requirement shall continue to be computed in accordance with GAAP prior to   such change therein and (b) Borrower Representative shall provide to Agent   and Lenders financial statements and other documents required under this   Agreement and the other Loan Documents which include a reconciliation between   calculations of such ratio or requirement made before and after -19- 

    

 

 

giving effect   to such change in GAAP. Notwithstanding any other provision contained herein,   all terms of an accounting or financial nature used herein shall be   construed, and all c omputations of amounts and ratios referred to herein   shall be made, without giving effect to any election under Statement of   Financial Accounting Standards 159 (Codification of Accounting Standards 825   -10) to value any Indebtedness or other liabilities of any Loan Party at   "fair value", as defined therein. Notwithstanding anything to the   contrary contained in the paragraph above or the definitions of Capital   Expenditures or Financing Leases, in the event of a change in GAAP after the   Closing Date requiring all leases to be capitalized, only those leases   (assuming for purposes of this paragraph that they were in existence on the   Closing Date) that would constitute Financing Leases on the Closing Date   shall be considered Financing Leases (and all other such le ases shall   constitute operating leases) and all calculations and deliverables under this   Agreement or the other Loan Documents shall be made in accordance therewith   (other than the financial statements delivered pursuant to this Agreement;   provided that all such financial statements delivered to Agent and Lenders in   accordance with the terms of this Agreement after the date of such change in   GAAP shall contain a schedule showing the adjustments necessary to reconcile   such financial statements with GAAP as i n effect immediately prior to such   change). 1.3. Other Definitional Provisions and References. References in   this Agreement to "Articles", "Sections",   "Annexes", "Exhibits" or "Schedules" shall be   to Articles, Sections, Annexes, Exhibits or Schedules of or to this Agreement   unless otherwise specifically provided. Any term defined herein may be used   in the singular or plural. "Include", "includes" and   "including" shall be deemed to be followed by "without   limitation". "Or" shall be construed to mean   "and/or". Except as otherwise specified or limited herein,   references to any Person include the successors and assigns of such Person.   References "from" or "through" any date mean, unless   otherwise specified, "from and including" or "through and   including", respectively. No provision of any Loan Documents shall be   construed against any party by reason of such party having, or being deemed   to have, drafted the provision. Unless otherwise specified herein, the   settlement of all payments and fundings hereunder between or among the   parties hereto shall be made in lawful money of the United States and in   immediately available funds. Time is of the essence for each performance   obligation of the Loan Parties under this Agreement and each Loan Document.   All amounts used for purposes of financial calculations required to be made   herein shall be without duplication. References to any statute or act shall   include all related current regulations and al l amendments and any successor   statutes, acts and regulations. References to any agreement, instrument or   document (a) shall include all schedules, exhibits, annexes and other   attachments thereto and (b) shall be construed as referring to such   agreement, instrument or other document as from time to time amended, amended   and restated, restated, supplemented or otherwise modified (subject to any   restrictions on such amendments, restatements, supplements or modifications   set forth herein or in any other Loan Document). The words "asset"   and "property" shall be construed to have the same meaning and   effect and to refer to any and all tangible and intangible assets and   properties, including cash, securities, accounts and contract rights. Unless   otherwise specified herein Dollar ($) baskets set forth in the   representations and warranty, covenants and event of default provisions of   this Agreement (and other similar baskets) are calculated as of each date of   measurement by the Dollar Equivalent Amount thereof as o f such date of   measurement. Reference to a Loan Party’s "knowledge" or similar   concept means actual knowledge of a senior officer, or knowledge that a senior   officer would have obtained if he or she had engaged in good faith and   diligent performance of his or her duties, including reasonably specific   inquiries of employees or agents and a good faith attempt to ascertain the   matter. -20- 

    

 

2. LOANS. 2.1.   Amount of Loans . (a) Revolving Loans. Subject to the terms and conditions of   this Agreement, each Lender with a Revolving Loan Commitment will severally   (and not jointly), from time to time prior to the Maturity Date, at Borrower   Representative's request, make revolving loans to Borrowers ("Revolving   Loans"); provided, that after giving effect to each such Revolving Loan,   (A) the outstanding balance of all Revolving Loans will not exceed the lesser   of (x) the Maximum Revolving Facility Amount minus the amount of Reserves   established against the Maximum Revolving Facility Amount in accordance with   Section 2.1(b) and (y) the Borrowing Base minus the Availability Block, and   (B) the sum of each Lender's outstanding balance of Revolving Loans will not   exceed such Lender's Revolving Loan Commitment. All Revolving Loans shall be   made in and repayable in Dollars. (b) Reserves. Agent may, with notice to   Borrower Representative, from time to time establish and revise reserves against   the Borrowing Base and the Maximum Revolving Facility Amount in such amounts   and of such types as Agent deems appropriate in its Permitted Discretion   ("Reserves") to reflect (i) events, conditions, contingencies or   risks which affect or could reasonably be expected to materially adversely   affect (A) the Collateral or its value, or the enforceability, perfection or   priority of the security interests and other rights of Agent in the   Collateral or (B) the assets and business of any Borrower or any Loan Party   Obligor (including the Dilution Reserve), (ii) Agent's good faith belief that   any Collateral report or financial information furnished by or on behalf of   any Borrower or any Loan Party Obligor to Agent is or may have been   incomplete, inaccurate or misleading in any material respect, (iii) any fact   or circumstance which Agent determines in good faith constitutes, or could   reasonably be expected to constitute, a Default or Event of Default, or (iv)   past due Taxes, or (v) any other similar events or circumstances which Agent   determines in good faith make the establishment or revision of a Reserve   prudent. In no event shall the establishment of a Reserve in respect of a   particular actual or contingent liability obligate Agent to make advances to   pay such liability or otherwise obligate Agent with respect thereto. Without   limiting the generality of the foregoing, it is agreed and understood that   Agent shall establish a Reserve in an amount equal to two (2) months of   servicing fees payable to SPS (or any similar third party logistics provider   utilized by the Loan Parties). 2.2. Protective Advances; Overadvances. (a)   Notwithstanding any contrary provision of this Agreement or any other Loan   Document, at any time (i) after the occurrence and during the continuance of   a Default or Event of Default or (ii) that any of the other applicable   conditions precedent set forth in Section 4 or otherwise are not satisfied,   Agent is authorized by each Borrower and each Lender, from time to time, in   Agent's sole discretion, to make such Revolving Loans to, or for the benefit   of, any Borrower, as Agent in its sole discretion deems necessary or   desirable (1) to preserve or protect the Collateral, or any portion thereof,   or (2) to enhance the likelihood of repayment of the Obligations (the   Revolving Loans described in this Section 2.2 shall be referred to as   "Protective Advances"). Notwithstanding any contrary provision of   this Agreement or any other Loan Document, Agent may disburse the proceeds of   any Protective Advance to any Borrower or to such other Person(s) as Agent   determines in its sole discretion. All Protective Advances shall be payable   immediately upon demand. Notwithstanding the foregoing, (i) the aggregate   amount of all Protective Advances outstanding at any time shall not exceed an   amount equal to ten percent (10%) of the Maximum Revolving Facility Amount   and (ii) after giving effect to any such Protective Advances, the outstanding   balance of all Revolving Loans will not exceed the Maximum Revolving Facility   Amount. (b) Notwithstanding any contrary provision of this this Agreement, at   the request of Borrower Representative, Agent may in its sole discretion (but   with absolutely no obligation), make Revolving Loans to any Borrower, on   behalf of the Lenders with a Revolving Loan Commitment, in -21- 

    

 

amounts that   exceed Excess Availability (any such excess Revolving Loans are herein   referred to herein, collectively, as "Overadvances"); provided,   that, no Overadvance shall result in a Default due to any Borrower's failure   to comply with Section 2.1(a) for so long as such Overadvance remains   outstanding in accordance with the terms of this paragraph, but solely with   respect to the amount of such Overadvance. Overadvances may be made even if   the conditions precedent set forth in Section 4.2 have not been satisfied.   The authority of Agent to make Overadvances is limited to an aggregate amount   not to exceed an amount equal to ten percent (10%) of the Maximum Revolving   Facility Amount at any time. No Overadvance may remain outstanding for more   than thirty (30) days and no Overadvance shall cause any Lender's outstanding   balance of Revolving Loans to exceed its Revolving Commitment. Required   Lenders may, at any time, revoke Agent's authorization to make Overadvances, provided   that any such revocation must be in writing and shall become effective   prospectively upon Agent's receipt thereof. (c) Upon the making of any   Protective Advance or Overadvance (whether before or after the occurrence of   a Default), each Lender with a Revolving Loan Commitment shall be deemed,   without further action by any party hereto, to have unconditionally and   irrevocably purchased from Agent, without recourse or warranty, an undivided   interest and participation in such Protective Advance or Overadvance, as   applicable, in proportion to its Pro Rata Share of the Revolving Loan   Commitment. Agent may, at any time, require the applicable Lenders to fund   their participations. From and after the date, if any, on which any Lender is   required to fund its participation in any Protective Advance or Overadvance,   as applicable, purchased hereunder, Agent shall promptly distribute to such   Lender, such Lender's Pro Rata Share of all payments of principal and   interest and all proceeds of Collateral received by such Agent in respect of   such Loan. Each Lender acknowledges and agrees that (i) Agent may elect to   fund a Protective Advance or Overadvance through one or more of its   Affiliates (including, without limitation, Encina Business Credit SPV, LLC)   on behalf of Agent for administrative convenience and (ii) any such funding   shall constitute a Protective Advance or Overadvance, as applicable, as if   made by Agent subject to the terms and conditions of this Agreement. 2.3.   Notice of Borrowing; Manner of Revolving Loan Borrowing. (a) Borrower   Representative shall request each Revolving Loan by submitting such request   by ABLSoft (or, if requested by Agent, by delivering, in writing or by an   Approved Electronic Communication, a Notice of Borrowing substantially in the   form of Exhibit A hereto) (each such request a "Notice of   Borrowing"). Subject to the terms and conditions of this Agreement,   Agent shall, except as provided in Section 2.2, deliver the amount of the   Revolving Loan requested in the Notice of Borrowing for credit to the   Revolving Loan Funding Account by wire transfer of immediately available   funds (i) on the same day if the Notice of Borrowing is received by Agent on   or before 10:00 a.m. Central Time on a Business Day or (ii) on the   immediately following Business Day if the Notice of Borrowing is received by   Agent after 10:00 a.m. Central Time on a Business Day or on a day that is not   a Business Day. Agent shall charge to the Revolving Loan Agent's usual and   customary fees for the wire transfer of each Loan. (b)Promptly following   receipt of a Notice of Borrowing in accordance with this Section, Agent shall   advise each Lender of the details thereof and of the amount of such Lender's   Revolving Loan to be made as part of the requested borrowing. Each Lender   shall make each Revolving Loan to be made by such Lender hereunder on the   proposed date thereof by wire transfer of immediately available funds by   12:00 p.m., Central Time, to the account of Agent most recently designated by   it for such purpose by notice to the Lenders in an amount equal to such   Lender's Pro Rata Share. Unless Agent shall have received notice from a   Lender prior to the proposed date of any borrowing that such Lender will not   make available to Agent such Lender's share of such borrowing, Agent may assume   that such Lender has made (or will make) such share available on such date in   accordance with this Section and may, in reliance upon such assumption, make   available to Borrowers a corresponding amount. In such event, if a Lender has   not in fact made its share of the applicable borrowing available to Agent,   then the applicable Lender and Borrowers severally agree to pay to Agent   forthwith on demand such corresponding amount with interest thereon, for each   day from and including the date such amount is -22- 

    

 

made available   to Borrowers to but excluding the date of payment to Agent, at the interest   rate applicable to such Revolving Loans. If such Lender pays such amount to   Agent, then such amount shall constitute such Lender's Revolving Loan   included in such borrowing. 2.4. Swingline Loans. (a) Agent, Swingline Lender   and the Lenders agree that in order to facilitate the administration of this   Agreement and the other Loan Documents, promptly after Borrower   Representative requests a Revolving Loan, the Swingline Lender may elect to   have the terms of this Section 2.4 apply to such borrowing request by   advancing, on behalf of the Lenders with a Revolving Loan Commitment and in   the amount requested, same day funds to Borrowers (each such Loan made solely   by the Swingline Lender pursuant to this Section 2.4 is referred to in this   Agreement as a "Swingline Loan"), with settlement among them as to   the Swingline Loans to take place on a periodic basis as set forth in Section   2.4(c). Each Borrower hereby authorizes the Swingline Lender to, and   Swingline Lender shall, subject to the terms and conditions set forth herein   (but without any further written notice required), deliver the amount of the   Swingline Loan requested to the applicable Funding Account (i) on the same   day if the Notice of Borrowing is received by Agent on or before 10:00 a.m.   Central Time on a Business Day or (ii) on the immediately following Business   Day if the Notice of Borrowing is received by Agent after 10:00 a.m. Central   Time on a Business Day or on a day that is not a Business Day. The aggregate   amount of Swingline Loans outstanding at any time shall not exceed an amount   equal to ten percent (10%) of the Maximum Revolving Facility Amount.   Swingline Lender shall not make any Swingline Loan if the requested Swingline   Loan exceeds Excess Availability (before giving effect to such Swingline   Loan). (b) Upon the making of a Swingline Loan (whether before or after the   occurrence of a Default and regardless of whether a Settlement has been   requested with respect to such Swingline Loan), each Lender with a Revolving   Commitment shall be deemed, without further action by any party hereto, to   have unconditionally and irrevocably purchased from the Swingline Lender,   without recourse or warranty, an undivided interest and participation in such   Swingline Loan in proportion to its Pro Rata Share of the Revolving   Commitment. The Swingline Lender may, at any time, require the applicable   Lenders to fund their participations. From and after the date, if any, on   which any Lender is required to fund its participation in any Swingline Loan   purchased hereunder, Agent shall promptly distribute to such Lender, such   Lender's Pro Rata Share of all payments of principal and interest and all   proceeds of Collateral received by such Agent in respect of such Loan. (c)   Agent, on behalf of Swingline Lender, shall request settlement (a   "Settlement") with respect to Swingline Loans with the Lenders   holding a Revolving Commitment on at least a weekly basis or on any date that   Agent elects, by notifying the applicable Lenders of such requested   Settlement by facsimile, telephone, or e-mail no later than 12:00 p.m.   Central Time on the date of such requested Settlement (the "Settlement   Date"). Each applicable Lender (other than the Swingline Lender) shall   transfer the amount of such Lender's Pro Rata Share of the outstanding   principal amount of the Swingline Loan with respect to which Settlement is   requested to Agent, to such account of Agent as Agent may designate, not   later than 2:00 p.m., Central Time, on such Settlement Date. Settlements may   occur during the existence of an event of Default and whether or not the   applicable conditions precedent set forth in Section 4.2 have then been   satisfied. Such amounts transferred to Agent shall be applied against the   amounts of the Swingline Lender's Swingline Loans and, together with such   Swingline Lender's Pro Rata Share of such Swingline Loan, shall constitute   Revolving Loans of such Lenders, respectively. If any such amount is not   transferred to Agent by any applicable Lender on such Settlement Date, the   Swingline Lender shall be entitled to recover such amount on demand from such   Lender together with interest thereon. -23- 

    

 

2.5.   Repayments. (a) Revolving Loans. If at any time for any reason whatsoever   (including as a result of currency fluctuations) the outstanding balance of   all Revolving Loans exceeds the lesser of (i) the Maximum Revolving Facility   Amount minus the amount of Reserves established against the Maximum Revolving   Facility Amount and (ii) the Borrowing Base minus the Availability Block,   then, Borrowers will immediately pay to Agent such amounts as shall cause   Borrowers to eliminate such excess. (b) Maturity Date Payments.All remaining   outstanding monetary Obligations (including, all accrued and unpaid fees   described in Section 3.2) shall be payable in full on the Maturity Date.   2.6.Voluntary Termination of Loan Facilities. Borrower Representative may, on   at least five (5) Business Days prior written notice received by Agent,   permanently terminate the Loan facilities by repaying all of the outstanding   Obligations, including all principal, interest and fees with respect to the   Revolving Loans, and an Early Payment/Termination Premium in the amount   specified in Section 3.2(b). From and after such date of termination, Agent   shall have no obligation whatsoever to extend any additional Loans, and all   of its lending commitments hereunder shall be terminated. 2.7. Obligations   Unconditional. (a) The payment and performance of all Obligations shall   constitute the absolute and unconditional obligations of each Loan Party   Obligor, and shall be independent of any defense or right of set-off,   recoupment or counterclaim that any Loan Party Obligor or any other Person   might otherwise have against Agent, any Lender or any other Person. All   payments required by this Agreement or the other Loan Documents shall be made   in Dollars (unless payment in a different currency is expressly provided   otherwise in the applicable Loan Document) and paid free of any deductions or   withholdings for any taxes or other amounts and without abatement, diminution   or set-off. If any Loan Party Obligor is required by applicable law to make   such a deduction or withholding from a payment under this Agreement or under   any other Loan Document, such Loan Party Obligor shall pay to Agent such   additional amount as shall be necessary to ensure that, after the making of   such deduction or withholding, Agent receives (free from any liability in   respect of any such deduction or withholding) a net sum equal to the sum   which it would have received and so retained had no such deduction or   withholding been made or required to be made. Each Loan Party Obligor shall   (a) pay the full amount of any deduction or withholding that it is required   to make by law, to the relevant authority within the payment period set by   applicable law and (b) promptly after any such payment, deliver to Agent an   original (or certified copy) official receipt issued by the relevant   authority in respect of the amount withheld or deducted or, if the relevant   authority does not issue such official receipts, such other evidence of   payment of the amount withheld or deducted as is reasonably acceptable to   Agent. (b) If, at any time and from time to time after the Closing Date (or   at any time before or after the Closing Date with respect to the Dodd-Frank   Wall Street Reform and Consumer Protection Act and all requests, rules,   regulations, guidelines or directives thereunder or issued in connection   therewith), (a) any change in any existing law, regulation, treaty or   directive or in the interpretation or application thereof, (b) any new law,   regulation, treaty or directive enacted or application thereof or (c)   compliance by Agent with any request or directive (whether or not having the   force of law) from any Governmental Authority, central bank or comparable   agency (i) subjects Agent or any Lender to any tax, levy, impost, deduction,   assessment, charge or withholding of any kind whatsoever with respect to any   Loan Document, or changes the basis of taxation of payments to Agent or any   Lender of any amount payable thereunder (except for net income taxes, or   franchise taxes imposed in lieu of net income taxes, imposed generally by   federal, state, local or other taxing authorities with respect to interest or   fees -24- 

    

 

payable   hereunder or under any other Loan Document or changes in the rate of tax on   the overall net income of Agent, any Lender or their respective members) or   (ii) imposes, modifies or deems applicable any reserve (including any reserve   imposed by the FRB, but excluding any reserve included in the determination   of the LIBOR Rate), special deposit or similar requirement against assets of,   deposits with or for the account of, or credit extended by Agent or any   Lender or imposes on Agent or any Lender any other condition affecting its   LIBOR Loans or its obligation to make LIBOR Loans, the result of which is to   increase the cost to (or to impose a cost on) Agent or any Lender of making   or maintaining any LIBOR Loan or (iii) imposes on Agent or any Lender any   other condition or increased cost in connection with the transactions   contemplated thereby or participations therein, and the result of any of the   foregoing is to increase the cost to Agent or any Lender of making or   continuing any Loan or to reduce any amount receivable hereunder or under any   other Loan Documents, then, in each such case, Borrowers shall promptly pay   to Agent or such Lender, when notified to do so by Agent or such Lender, any   additional amounts necessary to compensate Agent or such Lender, on an   after-tax basis, for such additional cost or reduced amount as determined by   Agent or such Lender. Each such notice of additional amounts payable pursuant   to this Section 2.7(b) submitted by Agent or any Lender, as applicable, to   Borrower Representative shall, absent manifest error, be final, conclusive   and binding for all purposes. (c) This Section 2.7 shall remain operative   even after the Termination Date and shall survive the payment in full of all   of the Loans. 2.8.Reversal of Payments. To the extent that any payment or   payments made to or received by Agent or any Lender pursuant to this   Agreement or any other Loan Document are subsequently invalidated, declared   to be fraudulent or preferential, set aside or required to be repaid to any   trustee, receiver or other Person under any state, federal or other   bankruptcy or other such applicable law, then, to the extent thereof, such   amounts (and all Liens, rights and remedies relating thereto) shall be   revived as Obligations (secured by all such Liens) and continue in full force   and effect under this Agreement and under the other Loan Documents as if such   payment or payments had not been received by Agent or such Lender. This   Section 2.8 shall remain operative even after the Termination Date and shall   survive the payment in full of all of the Loans. 2.9. Notes. The Loans and   Commitments shall, at the request of any Lender, be evidenced by one or more   promissory notes in form and substance reasonably satisfactory to such   Lender. However, if such Loans are not so evidenced, such Loans may be   evidenced solely by entries upon the books and records maintained by Agent.   2.10. Defaulting Lenders. Notwithstanding any provision of this Agreement to   the contrary, if any Lender becomes a Defaulting Lender, the following   provisions shall apply for so long as such Lender is a Defaulting Lender: (a)   Unused Line Fees pursuant to Section 3.2(a) shall cease to accrue on the   unfunded portion of the Revolving Commitment of such Defaulting Lender; (b)   Any amount payable to a Defaulting Lender hereunder (whether on account of   principal, interest, fees or otherwise) shall, in lieu of being distributed   to such Defaulting Lender, be retained by Agent in a segregated account and,   subject to any applicable requirements of law, be applied at such time or   times as may be determined by Agent (i) first, to the payment of any amounts   owing by such Defaulting Lender to Agent hereunder, (ii) second, to the   funding of any Revolving Loan in respect of which such Defaulting Lender has   failed to fund its portion thereof as required by this Agreement, as   determined by Agent, (iii) third, if so determined by Agent and Borrowers,   held in such account as cash collateral for future funding obligations of the   Defaulting Lender under this Agreement, (iv) fourth, pro rata, to the payment   of any amounts owing to Borrowers or the Lenders as a result of any judgment   of a court of competent jurisdiction obtained by Borrowers or any Lender   against such Defaulting Lender as a result of such Defaulting Lender's breach   of its obligations under this Agreement, and (v) fifth, to such -25- 

    

 

Defaulting   Lender or as otherwise directed by a court of competent jurisdiction;   provided, that if such payment is made at a time when the conditions set   forth in Section 4.2 are satisfied, such payment shall be applied solely to   prepay the Loans of all Revolving Lenders that are not Defaulting Lenders pro   rata prior to being applied to the prepayment of any Loans, or reimbursement   obligations owed to, any Defaulting Lender. (c) No Defaulting Lender shall   have any right to approve or disapprove any amendment, waiver, consent or any   other action the Lenders or the Required Lenders have taken or may take hereunder,   provided that any waiver, amendment or modification requiring the consent of   all Lenders or each directly affected Lender which affects such Defaulting   Lender differently than other affected Lenders shall require the consent of   such Defaulting Lender. 2.11. Appointment of Borrower Representative. (a)   Each Borrower hereby irrevocably appoints and constitutes Borrower   Representative as its agent and attorney-in-fact to request and receive Loans   in the name or on behalf of such Borrower and any other Borrowers, deliver   Notices of Borrowing, and Borrowing Base Certificates, give instructions with   respect to the disbursement of the proceeds of the Loans, giving and   receiving all other notices and consents hereunder or under any of the other   Loan Documents and taking all other actions (including in respect of   compliance with covenants) in the name or on behalf of any Borrower or   Borrowers pursuant to this Agreement and the other Loan Documents. Lender may   disburse the Loans to such bank account of Borrower Representative or a   Borrower or otherwise make such Loans to a Borrower, in each case as Borrower   Representative may designate or direct, without notice to any other Borrower.   Notwithstanding anything to the contrary contained herein, Lender may at any   time and from time to time require that Loans to or for the account of any   Borrower be disbursed directly to an operating account of such Borrower. (b)   Borrower Representative hereby accepts the appointment by Borrowers to act as   the agent and attorney-in-fact of Borrowers pursuant to this Section 2.11.   Borrower Representative shall ensure that the disbursement of any Loans that   are at any time requested by or to be remitted to or for the account of a   Borrower requested on behalf of a Borrower hereunder, shall be remitted or   issued to or for the account of such Borrower. (c)   EachBorrowerherebyirrevocablyappointsandconstitutesBorrower Representative as   its agent to receive statements on account and all other notices from Lender   with respect to the Obligations or otherwise under or in connection with this   Agreement and the other Loan Documents. (d) Any notice, election,   representation, warranty, agreement or undertaking made or delivered by or on   behalf of any Borrower by Borrower Representative shall be deemed for all   purposes to have been made or delivered by such Borrower, as the case may be,   and shall be binding upon and enforceable against such Borrower to the same   extent as if made or delivered directly by such Borrower. (e) No resignation   by or termination of the appointment of Borrower Representative as agent and   attorney-in-fact as aforesaid shall be effective, except after ten (10)   Business Days’ prior written notice to Lender. If the Borrower Representative   resigns under this Agreement, Borrowers shall be entitled to appoint a   successor Borrower Representative (which shall be a Borrower and shall be   reasonably acceptable to Lender as such successor). Upon the acceptance of   its appointment as successor Borrower Representative hereunder, such   successor Borrower Representative shall succeed to all the rights, powers and   duties of the retiring Borrower Representative and the term "Borrower   Representative" shall mean such successor Borrower Representative for   all purposes of this Agreement and the other Loan Documents, and the retiring   or terminated Borrower Representative’s appointment, powers and duties as   Borrower Representative shall be thereupon terminated. -26- 

    

 

2.12. Joint and   Several Liability (b) Joint and Several. Each Borrower hereby agrees that   such Borrower is jointly and severally liable for the full and prompt payment   (whether at stated maturity, by acceleration or otherwise) and performance   of, all Obligations owed or hereafter owing to Agent and Lenders by each   other Borrower. Each Borrower agrees that its obligation hereunder shall not   be discharged until payment and performance, in full, of the Obligations has   occurred, and that its obligations under this Section 2.12 shall be absolute   and unconditional, irrespective of, and unaffected by, (i) the genuineness,   validity, regularity, enforceability or any future amendment of, or change   in, this Agreement, any other Loan Document or any other agreement, document   or instrument to which any Borrower is or may become a party; (ii) the   absence of any action to enforce this Agreement (including this Section 2.12)   or any other Loan Document or the waiver or consent by Agent or any Lender   with respect to any of the provisions thereof; (iii) the existence, value or   condition of, or failure to perfect Agent's Lien against, any security for   the Obligations or any action, or the absence of any action, by Agent in   respect thereof (including the release of any such security); (iv) the   insolvency of any Loan Party or Other Obligor; or (v) any other action or   circumstances that might otherwise constitute a legal or equitable discharge   or defense of a surety or guarantor. (c) Waivers by Borrowers. To the extent   permitted by applicable laws, each Borrower expressly waives all rights it   may have now or in the future under any statute, or at common law, or at law   or in equity, or otherwise, to compel Agent to marshal assets or to proceed   in respect of the Obligations against any other Loan Party or Other Obligor,   any other party or against any security for the payment and performance of   the Obligations before proceeding against, or as a condition to proceeding   against, such Borrower. It is agreed among each Borrower, Agent and Lenders   that the foregoing waivers are of the essence of the transaction contemplated   by this Agreement and the other Loan Documents and that, but for the   provisions of this Section 2.12 and such waivers, Agent and Lenders would   decline to enter into this Agreement. (d) Benefit of Joint and Several   Obligations. Each Borrower agrees that the provisions of this Section 2.12   are for the benefit of Agent and Lenders and their successors, transferees,   endorsees and assigns, and nothing herein contained shall impair, as between   any other Borrower, Agent and any Lender, the obligations of such other   Borrower under the Loan Documents. (e)Subordination of Subrogation, Etc.   Notwithstanding anything to the contrary in this Agreement or in any other   Loan Document, each Borrower hereby expressly and irrevocably subordinates to   payment of the Obligations any and all rights at law or in equity to   subrogation, reimbursement, exoneration, contribution, indemnification or set   off and any and all defenses available to a surety, guarantor or   accommodation co-obligor with respect to any other Loan Party or any Other   Obligor until the Obligations are indefeasibly paid in full in cash. Each   Borrower acknowledges and agrees that this subordination is intended to   benefit Agent and Lenders and shall not limit or otherwise affect such   Borrower's liability hereunder or the enforceability of this Section 2.12,   and that Agent and Lenders and their successors and assigns are intended   third party beneficiaries of the waivers and agreements set forth in this   Section 2.12(d). -27- 

    

 

(f) Election of   Remedies. If Agent may, under applicable law, proceed to realize its benefits   under any of the Loan Documents giving Agent a Lien upon any Collateral,   whether owned by any Borrower or by any other Person, either by judicial   foreclosure or by non-judicial sale or enforcement, Agent may, at its sole   option, determine which of its remedies or rights it may pursue without   affecting any of its rights and remedies under this Section 2.12. If, in the   exercise of any of its rights and remedies, Agent shall forfeit any of its   rights or remedies, including its right to enter a deficiency judgment   against any Borrower or any other Person, whether because of any applicable   laws pertaining to "election of remedies" or the like, each   Borrower hereby consents to such action by Agent and waives any claim based   upon such action, even if such action by Agent shall result in a full or   partial loss of any rights of subrogation that each Borrower might otherwise   have had but for such action by Agent. (g) Contribution with Respect to   Guaranty Obligations. (i) To the extent that any Borrower shall make a   payment under this Section 2.12 of all or any of the Obligations (other than   Loans made to that Borrower for which it is primarily liable) (a   "Guarantor Payment") that, taking into account all other Guarantor   Payments then previously or concurrently made by any other Borrower, exceeds   the amount that such Borrower would otherwise have paid if each Borrower had   paid the aggregate Obligations satisfied by such Guarantor Payment in the   same proportion that such Borrower's "Allocable Amount" (as defined   below) (as determined immediately prior to such Guarantor Payment) bore to   the aggregate Allocable Amounts of each of the Borrowers as determined   immediately prior to the making of such Guarantor Payment, then, following   indefeasible payment in full in cash of the Obligations and termination of   the Commitments, such Borrower shall be entitled to receive contribution and   indemnification payments from, and be reimbursed by, each other Borrower for   the amount of such excess, pro rata based upon their respective Allocable   Amounts in effect immediately prior to such Guarantor Payment. (ii) As of any   date of determination, the "Allocable Amount" of any Borrower shall   be equal to the maximum amount of the claim that could then be recovered from   such Borrower under this Section 2.12 without rendering such claim voidable   or avoidable under Section 548 of Chapter 11 of the Bankruptcy Code or under   any applicable state Uniform Fraudulent Transfer Act, Uniform Fraudulent   Conveyance Act or similar statute or common law. (iii) This Section 2.12(f)   is intended only to define the relative rights of Borrowers and nothing set   forth in this Section 2.12(f) is intended to or shall impair the obligations   of Borrowers, jointly and severally, to pay any amounts as and when the same   shall become due and payable in accordance with the terms of this Agreement,   including Section 2.12(a). Nothing contained in this Section 2.12(f) shall   limit the liability of any Borrower to pay the Loans made directly or   indirectly to that Borrower and accrued interest, fees and expenses with   respect thereto for which such Borrower shall be primarily liable. (iv) The   parties hereto acknowledge that the rights of contribution and   indemnification hereunder shall constitute assets of each Borrower to which   such contribution and indemnification is owing. (v) The rights of the   indemnifying Borrowers against other Loan Parties under this Section 2.12(f)   shall be exercisable upon the full and indefeasible payment of the   Obligations and the termination of the Commitments. (h) Liability Cumulative.   The liability of Borrowers under this Section 2.12 is in addition to and shall   be cumulative with all liabilities of each Borrower to Agent and Lenders   under this Agreement and the other Loan Documents to which such Borrower is a   party or in respect of any -28- 

    

 

Obligations or   obligation of the other Borrower, without any limitation as to amount, unless   the instrument or agreement evidencing or creating such other liability   specifically provides to the contrary. 3. INTEREST AND FEES; LOAN ACCOUNT.   3.1. Interest. All Loans and other monetary Obligations shall bear interest   at the interest rate(s) set forth in Section 3 of Annex I, and accrued   interest shall be payable (a) on the first day of each month in arrears, (b)   upon a prepayment of Loan in accordance with Section 2.6, and (c) on the   Maturity Date; provided, that after the occurrence and during the   continuation of an Event of Default, all Loans and other monetary Obligations   shall bear interest at a rate per annum equal to two (2) percentage points   (2.00%) in excess of the rate otherwise applicable thereto (the "Default   Rate"), and all such interest shall be payable on demand. Changes in the   interest rate shall be effective as of the first day of each month based on   the LIBOR Rate or Base Rate, as applicable, in effect on such date. Subject   to Section 3.6 and so long as no Event of Default shall have occurred and be   continuing, all Loans shall constitute LIBOR Loans. Upon the occurrence and   during the continuance of an Event of Default, at the election of Agent or   Required Lenders, all Loans shall constitute Base Rate Loans. 3.2. Fees.   Borrowers shall pay Agent the following fees on the dates provided therefor,   which fees are in addition to all fees and other sums payable by Borrowers or   any other Person to Agent under this Agreement or under any other Loan Document   and, in each case, are not refundable once paid: (a) Unused Line Fee. An   unused line fee (the "Unused Line Fee"), for the ratable benefit of   the Lenders, equal to one half of one percent (0.50%) per annum of the amount   by which (i) the Maximum Revolving Facility Amount, calculated without giving   effect to any Reserves applied to the Maximum Revolving Facility Amount,   exceeds (ii) the average daily outstanding principal balance of the Revolving   Loans during the immediately preceding month (or part thereof), which fee   shall be deemed to be fully earned and payable, in arrears, on the first day   of each month until the Termination Date. (b) Early Payment/Termination   Premium. In the event that, for any reason (including as a result of any   voluntary or mandatory prepayment of the Loans, any acceleration of the Loans   resulting from an Event of Default, any foreclosure and sale of Collateral,   or any sale of Collateral in any bankruptcy or insolvency proceeding), all or   any portion of the Lenders' commitment to make Revolving Loans is terminated   prior to the Scheduled Maturity Date, in each case pursuant to Section 2.6,   Section 11.2 or otherwise, then in each such case, in addition to the payment   of the principal amount and all unpaid accrued interest and other amounts due   thereon, Borrowers immediately shall be required to pay to Agent, for the   ratable benefit of the Lenders, a premium (each, an "Early   Payment/Termination Premium") (as liquidated damages and compensation   for the cost of the Lenders being prepared to make funds available under this   Agreement with respect to such Loans during the scheduled term of this   Agreement) in an amount equal to the Applicable Percentage (as defined below)   of the amount of any such Revolving Loan commitment termination, as applicable.   In each such case, the "Applicable Percentage" shall be (A) two   percent (2.0%), if such event occurs on or before the date that is twelve   months following the Closing Date, (B) one percent (1.0%) if such event   occurs after the date that is twelve months following the Closing Date, but   on or before the date that is twenty-four months following the Closing Date,   and (C) one-half of one percent (0.5%) if such event occurs after the date   that is twenty four months following the Closing Date, but on or before the   Scheduled Maturity Date. Each Borrower acknowledges and agrees that (x) the   provisions of this paragraph shall remain in full force and effect   notwithstanding any rescission by Agent of an acceleration with respect to   all or any portion of the Obligations pursuant to Section 11.2 or otherwise,   (y) payment of any Early Payment/Termination Premium under this paragraph   constitutes liquidated damages and not a penalty and (z) the actual amount of   damages to Lenders or profits lost by Lenders as a result of such early   payment or termination would be impracticable and extremely difficult to   ascertain, and the Early -29- 

    

 

Payment/Termination   Premium under this paragraph is provided by mutual agreement of Borrowers and   Lenders as a reasonable estimation and calculation of such lost profits or   damages of Borrowers and Lenders. 3.3. Computation of Interest and Fees. All   interest and fees shall be calculated daily on the outstanding monetary   Obligations based on the actual number of days elapsed in a year of 360 days.   3.4. Loan Account; Monthly Accountings. Agent shall maintain a loan account   for Borrowers reflecting all outstanding Loans, along with interest accrued   thereon and such other items reflected therein (the "Loan Account"),   and shall provide Borrower Representative with a monthly accounting   reflecting the activity in the Loan Account, viewable by Borrowers on   ABLSoft. Each accounting shall be deemed correct, accurate and binding on   Borrowers and an account stated (except for reverses and reapplications of   payments made and corrections of errors discovered by Agent), unless Borrower   Representative notifies Agent in writing to the contrary within ninety (90)   days after such account is rendered, describing the nature of any alleged errors   or omissions. However, Agent's failure to maintain the Loan Account or to   provide any such accounting shall not affect the legality or binding nature   of any of the Obligations. Interest, fees and other monetary Obligations due   and owing under this Agreement may, in Agent's discretion, be charged to the   Loan Account, and will thereafter be deemed to be Revolving Loans and will   bear interest at the same rate as other Revolving Loans. 3.5. Further   Obligations; Maximum Lawful Rate. With respect to all monetary Obligations   for which the interest rate is not otherwise specified herein (whether such   Obligations arise hereunder or under any other Loan Document, or otherwise),   such Obligations shall bear interest at the rate(s) in effect from time to   time with respect to the Revolving Loans and shall be payable upon demand by   Agent. In no event shall the interest charged with respect to any Loan or any   other Obligation exceed the maximum amount permitted under applicable law.   Notwithstanding anything to the contrary herein or elsewhere, if at any time   the rate of interest payable or other amounts hereunder or under any other   Loan Document (the "Stated Rate") would exceed the highest rate of   interest or other amount permitted under any applicable law to be charged (the   "Maximum Lawful Rate"), then for so long as the Maximum Lawful Rate   would be so exceeded, the rate of interest and other amounts payable shall be   equal to the Maximum Lawful Rate; provided, that if at any time thereafter   the Stated Rate is less than the Maximum Lawful Rate, Borrowers shall, to the   extent permitted by applicable law, continue to pay interest and such other   amounts at the Maximum Lawful Rate until such time as the total interest and   other such amounts received is equal to the total interest and other such   amounts which would have been received had the Stated Rate been (but for the   operation of this provision) the interest rate payable or such other amounts   payable. Thereafter, the interest rate and such other amounts payable shall   be the Stated Rate unless and until the Stated Rate again would exceed the   Maximum Lawful Rate, in which event this provision shall again apply. In no   event shall the total interest or other such amounts received by Agent exceed   the amount which it could lawfully have received had the interest and other   such amounts been calculated for the full term hereof at the Maximum Lawful   Rate. If, notwithstanding the prior sentence, Agent has received interest or   other such amounts hereunder in excess of the Maximum Lawful Rate, such   excess amount shall be applied to the reduction of the principal balance of   the Loans or to other Obligations (other than interest) payable hereunder,   and if no such principal or other Obligations are then outstanding, such   excess or part thereof remaining shall be paid to Borrowers. In computing   interest payable with reference to the Maximum Lawful Rate applicable to any   Lender, such interest shall be calculated at a daily rate equal to the   Maximum Lawful Rate divided by the number of days in the year in which such   calculation is made. 3.6. Certain Provisions Regarding LIBOR Loans;   Replacement of Lenders. (a) Inadequate or Unfair Basis. If Agent or any   Lender reasonably determines (which determination shall be binding and   conclusive on Borrowers) that, by reason of circumstances affecting the   interbank Eurodollar market, adequate and reasonable means do not exist for   ascertaining -30- 

    

 

the applicable   LIBOR Rate, then Agent or such Lender shall promptly notify Borrower   Representative (and Agent, if applicable) thereof and, so long as such   circumstances shall continue, (i) Agent and/or such Lender shall be under no   obligation to make any LIBOR Loans and (ii) on the last day of the current   calendar month, each LIBOR Loan shall, unless then repaid in full,   automatically convert to a Base Rate Loan. (b) Change in Law. If any change   in, or the adoption of any new, law, treaty or regulation, or any change in   the interpretation of any applicable law or regulation by any Governmental   Authority charged with the administration thereof, would make it (or in the   good faith judgment of Agent or the applicable Lender cause a substantial   question as to whether it is) unlawful for Agent or such Lender to make,   maintain or fund LIBOR Loans, then Agent or such Lender shall promptly notify   Borrower Representative and, so long as such circumstances shall continue,   (i) Agent or such Lender shall have no obligation to make any LIBOR Loan and   (ii) on the last day of the current calendar month for each LIBOR Loan (or,   in any event, on such earlier date as may be required by the relevant law,   regulation or interpretation), such LIBOR Loan shall, unless then repaid in   full, automatically convert to a Base Rate Loan. (c) If any Borrower becomes   obligated to pay additional amounts to any Lender pursuant to Section 2.7(b),   or any Lender gives notice of the occurrence of any circumstances described   in Section 2.7(b), or if Lender becomes a Defaulting Lender, Borrowers may   designate another Person engaged in the making of commercial loans in the   ordinary course of business which is acceptable to Agent in its sole   discretion (such other Person being called a "Replacement Lender")   to purchase the Loans and Commitments of such Lender and such Lender's rights   hereunder, without recourse to or warranty by, or expense to, such Lender,   for a purchase price equal to the outstanding principal amount of the Loans   payable to such Lender plus any accrued but unpaid interest on such Loans and   all accrued but unpaid fees owed to such Lender and any other amounts payable   to such Lender under this Agreement, and to assume all the obligations of   such Lender hereunder, and, upon such purchase and assumption (pursuant to an   Assignment and Assumption), such Lender shall no longer be a party hereto or   have any rights hereunder (other than rights with respect to indemnities and   similar rights applicable to such Lender prior to the date of such purchase   and assumption) and shall be relieved from all obligations to Borrowers   hereunder, and the hereunder. Replacement Lender shall succeed to the rights   and obligations of such Lender (d) contrary, if Agent LIBOR   Discontinuation.Notwithstanding anything contained herein to the reasonably   determines after the Closing Date that the LIBOR Rate has been discontinued   or is no longer available as a benchmark interest rate, Agent shall select a   comparable successor rate in its reasonable discretion (in consultation with   the Borrowers), which successor rate shall be applied in a manner consistent   with market practice taking into account the benchmark interest rates   applicable to funding sources for the Lenders, and will promptly so notify   each Lender. 4. CONDITIONS PRECEDENT. 4.1. Conditions to Initial Loans. Each   Lender's obligation to fund the initial Loans under this Agreement is subject   to the following conditions precedent (as well as any other conditions set   forth in this Agreement or any other Loan Document), all of which must be   satisfied in a manner acceptable to Agent (and applicable, pursuant to   documentation which in each case is in form and substance acceptable Agent):   as to (a) each Loan Party Obligor shall have duly executed and/or delivered,   or, as applicable, shall have caused such other applicable Persons to have   duly executed and or delivered, to Agent such agreements, instruments,   documents, proxies, financial statements, projections, lien searches, -31- 

    

 

legal opinions,   title insurances, assessments, appraisals, and certificates as Agent may   require, including such other agreements, instruments, documents, proxies,   financial statements, projections, lien searches, legal opinions, title   insurance, assessments, appraisals, and certificates listed on the closing   checklist attached hereto as Exhibit B; (b) Agent shall have completed its   business and legal due diligence pertaining to the Loan Parties and their   respective businesses and assets, with results thereof satisfactory to Agent   in its sole discretion; (c) each Lender's obligations and commitments under   this Agreement shall have been approved by such Lender's Credit Committee;   (d) after giving effect to such Loans, as well as to the payment of all trade   payables older than sixty days past due and the consummation of all   transactions contemplated hereby to occur on the Closing Date, closing costs   and any book overdraft, Excess Availability shall be no less than $2,500,000;   (e) since December 31, 2018, no event shall have occurred which has had, or   could reasonably be expected to have, a Material Adverse Effect on any Loan   Party; and (f) Borrowers shall have paid to Agent all fees due on the date   hereof, and shall have paid or reimbursed Agent for all of Agent's costs,   charges and expenses incurred through the Closing Date (and in connection   herewith, Borrowers hereby irrevocably authorizes Agent to charge such fees,   costs, charges and expenses as Revolving Loans). 4.2. Conditions to all   Loans. No Lender shall be obligated to fund any Loans, unless the following   conditions are satisfied: (a) Borrower Representative shall have provided to   Agent such information as Agent may reasonably request in order to determine   the Borrowing Base (including the items set forth in Section 7.15(a), (b) and   (c) (as applicable)), as of such borrowing or issue date, after giving effect   to such Loans; (b) each of the representations and warranties set forth in   this Agreement and in the other Loan Documents shall be true and correct in   all material respects (without duplication of any materiality provision or   qualifier contained therein) as of the date such Loan is made (or, to the   extent any representations or warranties are expressly made solely as of an   earlier date, such representations and warranties shall be true and correct   in all material respects (without duplication of any materiality provision or   qualifier thereto; contained therein) as of such earlier date), both before   and after giving effect (c) effect thereto; and no Default or Event of Default   shall be in existence, both before and after giving (d) no event shall have   occurred or circumstance shall exist that has or could reasonably be expected   to have a Material Adverse Effect. Each request (or deemed request) by   Borrowers for funding of a Loan shall constitute a representation by each   Borrower that the foregoing conditions are satisfied on the date of such   request and on the date of such funding or issuance. As an additional   condition to any funding, issuance or grant, Agent shall have received such   other information, documents, instruments and agreements as it may reasonably   request in connection therewith. -32- 

    

 

5. COLLATERAL.   5.1. Grant of Security Interest. To secure the full payment and performance   of all of the Obligations, each Loan Party Obligor hereby collaterally   assigns to Agent and grants to Agent, for itself and on behalf of the   Lenders, a continuing security interest in all property of each Loan Party   Obligor, whether tangible or intangible, real or personal, now or hereafter   owned, existing, acquired or arising and wherever now or hereafter located,   and whether or not eligible for lending purposes, including: (a) all Accounts   (whether or not Eligible Accounts) and all Goods whose sale, lease or other   disposition by any Loan Party Obligor has given rise to Accounts and have   been returned to, or repossessed or stopped in transit by, any Loan Party   Obligor; (b) all Chattel Paper (including Electronic Chattel Paper),   Instruments, Documents, and General Intangibles (including all patents,   patent applications, trademarks, trademark applications, trade names, trade   secrets, goodwill, copyrights, copyright applications, registrations,   licenses, software, franchises, customer lists, tax refund claims, claims   against carriers and shippers, guaranty claims, contracts rights, payment   intangibles, security interests, security deposits and rights to   indemnification); (c) all Inventory; (d) all Goods (other than Inventory),   including Equipment, Health-Care-Insurance Receivables, vehicles, and   Fixtures; (e) all Investment Property, including all rights, privileges,   authority, and powers of each Loan Party Obligor as an owner or as a holder   of Pledged Equity, including all economic rights, all control rights,   authority and powers, and all status rights of each Loan Party Obligor as a   member, equity holder or shareholder, as applicable, of each Issuer and any   rights related to any Loan Party Obligors' capital account within the Issuer   in respect of Investment Property; (f) all Deposit Accounts, bank accounts,   deposits, money and cash; (g) all Letter-of-Credit Rights; (h) all Commercial   Tort Claims listed in Section 2 of the Perfection Certificate; (i) all   Supporting Obligations; (j) all life insurance policies; (k) all leases; (l)   [Reserved]; (m) any other property of any Loan Party Obligor now or hereafter   in the possession, custody or control of Agent or any agent or any parent,   Affiliate or Subsidiary of Agent, any Lender or any Participant with Lender   in the Loans, for any purpose (whether for safekeeping, deposit, collection,   custody, pledge, transmission or otherwise); and (n) all additions and   accessions to, substitutions for, and replacements, products and Proceeds of   the foregoing property, including proceeds of all insurance policies insuring   the foregoing property (including hazard, flood and credit insurance), and   all of each Loan Party Obligor's books and records relating to any of the   foregoing and to any Loan Party's business. Notwithstanding anything to the   contrary contained herein, the security interests granted under this   Agreement or any other Loan Document shall not extend to (a) any permit or   license issued by a Governmental Authority to any Loan Party or any agreement   to which any Loan Party is a party, in each case, only to the extent and for   so long as the terms of such permit, license or agreement or any requirement   of applicable law, validly prohibit the creation by such Loan Party of a   security interest in such permit, license or agreement in favor of the Lender   (after giving effect to Sections 9-406(d), 9-407(a), 9-408(a) or 9-409 of the   UCC (or any successor provision or provisions) or any other applicable law   (including the Code) or principles of equity); (b) any intent-to-use   trademark application, to the extent and for so long as creation by a pledgor   of a security interest therein would result in the loss, termination,   invalidity, cancellation, unenforceability or abandonment by such pledgor of   any material rights therein; and (c) the Restricted Accounts (the forgoing,   collectively, the "Excluded Property"; provided, however, that   Excluded Property shall not include any Proceeds, substitutions or   replacements of any Excluded Property referred to in clauses (a), (b) or (c)   (unless such Proceeds, substitutions or replacements would constitute   Excluded Property referred to in clauses (a), (b) or (c))). 5.2. Possessory   Collateral. Promptly, but in any event no later than five Business Days after   any Loan Party Obligor's receipt of any portion of the Collateral evidenced   by an agreement, Instrument or Document, including any Tangible Chattel Paper   and any Investment Property consisting of certificated securities, to the   extent permitted by the Term Loan Intercreditor Agreement, such Loan Party   Obligor shall deliver the original thereof to Agent together with an   appropriate endorsement or other specific evidence of assignment thereof to   Agent (in form and substance acceptable to Agent). If an endorsement or   assignment of any such items shall not be made for any reason, to the extent   Agent is -33- 

    

 

permitted to do   so by the Term Loan Intercreditor Agreement, Agent is hereby irrevocably   authorized, as attorney and agent-in-fact (coupled with an interest) for each   Loan Party Obligor, to endorse or assign the same on such Loan Party   Obligor's behalf. 5.3. Further Assurances.Each Loan Party Obligor shall, at   its own cost and expense, promptly and duly take, execute, acknowledge and   deliver (or cause each other applicable Person to take, execute, acknowledge   and deliver) all such further acts, documents, agreements and instruments as   Agent may from time to time reasonably request in order to (a) carry out the   intent and purposes of the Loan Documents and the transactions contemplated   thereby, (b) establish, create, preserve, protect and perfect a first   priority lien (subject only to Permitted Liens) in favor of Agent in all the   ABL Priority Collateral (wherever located) from time to time owned by the   Loan Party Obligors and a second priority lien (subject only to Permitted   Liens) in favor of Agent in all the Term Loan Priority Collateral (wherever   located) from time to time owned by the Loan Party Obligors (including   appraisals of real property in compliance with FIRREA), (c) cause Company and   each Subsidiary of any Borrower to guaranty all of the Obligations, all   pursuant to documentation that is in form and substance reasonably   satisfactory to Agent and (d) facilitate the collection of the Collateral.   Without limiting the foregoing, each Loan Party Obligor shall, at its own   cost and expense, promptly and duly take, execute, acknowledge and deliver   (or cause each other applicable Person to take, execute, acknowledge and   deliver) to Agent all promissory notes, security agreements, agreements with   landlords, mortgagees and processors and other bailees, subordination and   intercreditor agreements and other agreements, instruments and documents, in   each case in form and substance reasonably acceptable to Agent, as Agent may   reasonably request from time to time to perfect, protect and maintain Agent's   security interests in the Collateral, including the required priority   thereof, and to fully carry out the transactions contemplated by the Loan   Documents. 5.4. UCC Financing Statements. Each Loan Party Obligor authorizes   Agent to file, transmit or communicate, as applicable, from time to time, UCC   Financing Statements, along with amendments and modifications thereto, in all   filing offices selected by Agent, listing such Loan Party Obligor as the   Debtor and Agent as the Secured Party, and describing the collateral covered   thereby in such manner as Agent may elect, including using descriptions such   as "all personal property of debtor" or "all assets of   debtor," or words of similar effect, in each case without such Loan Party   Obligor's signature. Each Loan Party Obligor also hereby ratifies its   authorization for Agent to have filed, in any filing office, any Financing   Statements filed prior to the date hereof. 6. CERTAIN PROVISIONS REGARDING   ACCOUNTS, INVENTORY, COLLECTIONS AND APPLICATIONS OF PAYMENTS. 6.1. Lock   Boxes and Blocked Accounts. Each Loan Party Obligor hereby represents and   warrants that all Deposit Accounts and all other depositary and other   accounts maintained by each Loan Party Obligor as of the Closing Date are   described in Section 3 of the Perfection Certificate, which description   includes for each such account the name of the Loan Party Obligor maintaining   the account, the name of the financial institution at which the account is   maintained, the account number and the purpose of the account. After the   Closing Date, no Loan Party Obligor shall open any new Deposit Account or any   other depositary or other account without the prior written consent of Agent   and without updating Section 3 of the Perfection Certificate to reflect such   Deposit Account or other account. No Deposit Account or other account of any   Loan Party Obligor shall at any time constitute a Restricted Account other   than accounts expressly indicated on Section 3 of the Perfection Certificate   as being Restricted Accounts (and each Loan Party Obligor hereby represents   and warrants that each such account shall at all times meet the requirements   set forth in the definition of Restricted Account to qualify as a Restricted   Account). Each Loan Party Obligor will, at its expense, establish (and revise   from time to time as Agent may require) procedures acceptable to Agent, in   Agent's sole discretion, for the collection of checks, wire transfers and all   other proceeds of all of such Loan Party Obligor's Accounts and other   Collateral ("Collections"), which shall include (a) directing all   Account Debtors to send all Account proceeds directly to a post office box   designated by Agent either in the name of such Loan Party Obligor -34- 

    

 

(but as to   which Agent has exclusive access) or, at Agent's option, in the name of Agent   (a "Lock Box") and (b) depositing all Collections received by such   Loan Party Obligor into one or more bank accounts maintained in the name of   such Loan Party Obligor (but as to which Agent has exclusive access) or, at   Agent's option, in the name of Agent (each, a "Blocked Account"),   under an arrangement acceptable to Agent with a depository bank acceptable to   Agent, pursuant to which all funds deposited into each Blocked Account are to   be transferred to Agent in such manner, and with such frequency, as Agent   shall specify, and/or (c) a combination of the foregoing. Each Loan Party   Obligor agrees to execute, and to cause its depository banks and other   account holders to execute, such Lock Box and Blocked Account control   agreements and other documentation as Agent shall require from time to time   in connection with the foregoing, all in form and substance acceptable to   Agent, and in any event such arrangements and documents must be in place on   the date hereof with respect to accounts in existence on the date hereof, or   prior to any such account being opened with respect to any such account   opened after the date hereof, in each case excluding Restricted Accounts.   Prior to the Closing Date, Borrowers shall deliver to Agent a complete and   executed Authorized Accounts form regarding each Borrower's operating   account(s) into which the proceeds of Loans are to be paid in the form of   Exhibit D annexed hereto. 6.2. Application of Payments.All amounts paid to or   received by Agent in respect of monetary Obligations, from whatever source   (whether from any Borrower or any other Loan Party Obligor pursuant to such   other Loan Party Obligor's guaranty of the Obligations, any realization upon   any Collateral or otherwise) shall be applied by Agent to the Obligations in   such order as Agent may elect, and absent such election shall be applied as   follows: (i) FIRST, to reimburse Agent for all out-of-pocket costs and   expenses, and all indemnified losses, incurred by Agent which are   reimbursable to Agent in accordance with this Agreement or any of the other   Loan Documents; (ii) SECOND, to any accrued but unpaid interest on any   Protective Advances; (iii) THIRD, to the outstanding principal of any Protective   Advances; (iv) FOURTH, to any accrued but unpaid fees owing to Agent and   Lenders under this Agreement and/or any other Loan Documents; (v) FIFTH, to   any unpaid accrued interest on the Obligations; (vi) SIXTH, to the   outstanding principal of the Loans; and (vii) SEVENTH, to the payment of any   other outstanding Obligations; and after payment in full in cash of all of   the outstanding monetary Obligations, any further amounts paid to or received   by Agent in respect of the Obligations (so long as no monetary Obligations   are outstanding) shall be paid over to Borrowers or such other Person(s) as   may be legally entitled thereto. For purposes of determining the Borrowing   Base, such amounts will be credited to the Loan Account and the Collateral   balances to which they relate upon Agent's receipt of an advice from Agent's   Bank (set forth in Section 5 of Annex I) that such items have been credited   to Agent's account at Agent's Bank (or upon Agent's deposit thereof at   Agent's Bank in the case of payments received by Agent in kind), in each case   subject to final payment and collection. However, for purposes of computing   interest on the Obligations, such items shall be deemed applied by Agent   three (3) Business Days after Agent 's receipt of advice of deposit thereof   at Agent's Bank. -35- 

    

 

6.3.   Notification; Verification.Agent or its designee may, from time to time:(a)   in connection with any field examination or collateral audit (in consultation   with the Loan Parties), or otherwise at any time during the continuance of an   Event of Default, verify directly with the Account Debtors of the Loan Party   Obligors (or by any manner and through any medium Agent considers advisable)   the validity, amount and other matters relating to the Accounts and Chattel   Paper of the Loan Party Obligors, by means of mail, telephone or otherwise,   either in the name of the applicable Loan Party Obligor or Agent or such   other name as Agent may choose; (b) when an Event of Default has occurred and   is continuing, notify Account Debtors of the Loan Party Obligors that Agent   has a security interest in the Accounts of the Loan Party Obligors and direct   such Account Debtors to make payment thereof directly to Agent; each such   notification to be sent on the letterhead of such Loan Party Obligor and   substantially in the form of Exhibit E annexed hereto; and (c) following the   occurrence and during the continuance of a Default or Event of Default,   demand, collect or enforce payment of any Accounts and Chattel Paper (but   without any duty to do so) and, in furtherance of the foregoing, each Loan   Party Obligor hereby authorizes Account Debtors to make payments directly to   Agent and to rely on notice from Agent without further inquiry. Agent may on   behalf of each Loan Party Obligor endorse all items of payment received by   Agent that are payable to such Loan Party Obligor for the purposes described   above. 6.4. Power of Attorney. Without limiting any of Agent's and the other   Lenders' other rights under this Agreement or any other Loan Document, each   Loan Party Obligor hereby grants to Agent an irrevocable power of attorney,   coupled with an interest, authorizing and permitting Agent (acting through   any of its officers, employees, attorneys or agents), at Agent's option but   without obligation, with or without notice to such Loan Party Obligor, and at   each Loan Party Obligor's expense, to do any or all of the following, in such   Loan Party Obligor's name or otherwise, subject, in each case, to the terms   of the Term Loan Intercreditor Agreement: (a) at any time, when an Event of   Default has occurred or is continuing, (i) execute on behalf of such Loan   Party Obligor any documents that Agent may, in its sole discretion, deem   advisable in order to perfect, protect and maintain Agent's security   interests, and priority thereof, in the Collateral and to fully consummate   all the transactions contemplated by this Agreement and the other Loan   Documents (including such Financing Statements and continuation Financing   Statements, and amendments or other modifications thereto, as Agent shall   deem necessary or appropriate) and to notify Account Debtors of the Loan   Party Obligors in the manner contemplated by Section 6.3, (ii) endorse such   Loan Party Obligor's name on all checks and other forms of remittances   received by Agent, (iii) pay any sums required on account of such Loan Party   Obligor's taxes or to secure the release of any Liens therefor, (iv) pay any   amounts necessary to obtain, or maintain in effect, any of the insurance   described in Section 7.14, (v) receive and otherwise take control in any   manner of any cash or non-cash items of payment or Proceeds of Collateral,   (vi) receive, open and dispose of all mail addressed to such Loan Party   Obligor at any post office box or lockbox maintained by Agent for such Loan   Party Obligor or at any other business premises of Agent and (vii) endorse or   assign to Agent on such Loan Party Obligor's behalf any portion of Collateral   evidenced by an agreement, Instrument or Document if an endorsement or   assignment of any such items is not made by such Loan Party Obligor pursuant   to Section 5.2; and (b)at any time, after the occurrence and during the   continuance of an Event of Default, (i) execute on behalf of such Loan Party   Obligor any document exercising, transferring or assigning any option to   purchase, sell or otherwise dispose of or lease (as lessor or lessee) any   real or personal property which is part of the Collateral or in which Agent   has an interest, (ii) execute on behalf of such Loan Party Obligor any   invoices relating to any Accounts, any draft against any Account Debtor, any   proof of claim in bankruptcy, any notice of Lien or claim, and any assignment   or satisfaction of mechanic's, materialman's or other Lien, (iii) execute on   behalf of such Loan Party Obligor any notice to any Account Debtor, (iv) pay,   contest or settle any Lien, charge, encumbrance, security interest and   adverse claim in or to any of the Collateral, or any judgment based thereon,   or otherwise take any action -36- 

    

 

to terminate or   discharge the same, (v) grant extensions of time to pay, compromise claims   relating to, and settle Accounts, Chattel Paper and General Intangibles for   less than face value and execute all releases and other documents in   connection therewith, (vi) settle and adjust, and give releases of, any   insurance claim that relates to any of the Collateral and obtain payment   therefor, (vii) instruct any third party having custody or control of any   Collateral or books or records belonging to, or relating to, such Loan Party   Obligor to give Agent the same rights of access and other rights with respect   thereto as Agent has under this Agreement or any other Loan Document, (viii)   change the address for delivery of such Loan Party Obligor's mail, (ix) vote   any right or interest with respect to any Investment Property, and (x)   instruct any Account Debtor to make all payments due to any Loan Party   Obligor directly to Agent. Any and all sums paid, and any and all costs,   expenses, liabilities, obligations and reasonable attorneys' fees (internal   and external counsel) of Agent with respect to the foregoing shall be added   to and become part of the Obligations, shall be payable on demand, and shall   bear interest at a rate equal to the highest interest rate applicable to any   of the Obligations. Each Loan Party Obligor agrees that Agent's rights under   the foregoing power of attorney and any of Agent's other rights under this   Agreement or the other Loan Documents shall not be construed to indicate that   Agent or any Lender is in control of the business, management or properties   of any Loan Party Obligor. 6.5. Disputes. Each Loan Party Obligor shall   promptly notify Agent of all disputes or claims in excess of $250,000   relating to its Accounts and Chattel Paper. Each Loan Party Obligor agrees that   it will not, without Agent's prior written consent, compromise or settle any   of its Accounts or Chattel Paper for less than the full amount thereof, grant   any extension of time for payment of any of its Accounts or Chattel Paper,   release (in whole or in part) any Account Debtor or other person liable for   the payment of any of its Accounts or Chattel Paper or grant any credits,   discounts, allowances, deductions, return authorizations or the like with   respect to any of its Accounts or Chattel Paper; except (unless otherwise   directed by Agent during the existence of a Default or an Event of Default)   such Loan Party Obligor may take any of such actions in the Ordinary Course   of Business consistent with past practices, provided that Borrower   Representative promptly reports the same to Agent. 6.6. Invoices. At Agent's   request during an Event of Default, each Loan Party Obligor will cause all   invoices and statements that it sends to Account Debtors or other third   parties to be marked and authenticated, in a manner reasonably satisfactory   to Agent, to reflect Agent's security interest therein and payment   instructions (including, but not limited to, in a manner to meet the   requirements of Section 9-404(a)(2) of the UCC). 6.7. Inventory. (a) Returns.   No Loan Party Obligor will accept returns of any Inventory from any Account   Debtor except in the Ordinary Course of Business. In the event the value of   returned Inventory in any one calendar month exceeds $250,000 (collectively   for all Loan Party Obligors), Borrower Representative will immediately notify   Agent (which notice shall specify the value of all such returned Inventory,   the reasons for such returns, and the locations and the condition of such   returned Inventory). Returned Inventory shall be segregated and not commingled   with other Inventory of the Loan Party Obligors. (b) Third Party Locations.No   Loan Party Obligor will, without Agent's prior written consent, at any time,   store any Inventory valued in excess of $250,000 with any warehouseman or   other third party other than as set forth in Section 1(d) of the Perfection   Certificate. (c)Sale on Return, etc. No Loan Party Obligor will, without   Agent's prior written consent, at any time, sell any Inventory on a   sale-or-return, guarantied sale, consignment, or other contingent basis. -37-   

    

 

(d) Fair Labor   Standards Act. Each Loan Party Obligor represents, warrants and covenants   that, at all times, all of the Inventory of each Loan Party Obligor has been,   at all times will be, produced only in accordance with the Fair Labor   Standards Act of 1938 and all rules, regulations and orders promulgated   thereunder. 7. REPRESENTATIONS, WARRANTIES AND AFFIRMATIVE COVENANTS. To   induce Agent and the Lenders to enter into this Agreement, each Loan Party   Obligor represents, warrants and covenants as follows (it being understood   and agreed that (a) each such representation and warranty (i) will be made as   of the date hereof and be deemed remade as of each date on which any Loan is   made (except to the extent any such representation or warranty expressly   relates only to any earlier or specified date, in which case such   representation or warranty will be made as of such earlier or specified date)   and (ii) shall not be affected by any knowledge of, or any investigation by,   Agent or any Lender and (b) each such covenant shall continuously apply with   respect to all times commencing on the date hereof and continuing until the   Termination Date): 7.1. Existence and Authority. Each Loan Party is duly   organized, validly existing and in good standing under the laws of its   jurisdiction of organization (which jurisdiction is identified in Section   1(a) of the Perfection Certificate) and is qualified to do business in each   jurisdiction in which the operation of its business requires that it be   qualified (which each such jurisdiction is identified in Section 1(a) of the   Perfection Certificate) or, if such Loan Party is not so qualified, such Loan   Party may cure any such failure without losing any of its rights, incurring   any liens or material penalties, or otherwise affecting Agent's rights. Each   Loan Party has all requisite power and authority to own and operate its   properties, to carry on its business as now conducted and as proposed to be   conducted, to enter into the Loan Documents to which it is a party and to   carry out the transactions contemplated thereby. The execution, delivery and   performance by each Loan Party Obligor of this Agreement and all of the other   Loan Documents to which such Loan Party Obligor is a party have been duly and   validly authorized, do not violate such Loan Party Obligor's Governing   Documents or any law or any material agreement or instrument or any court   order which is binding upon any Loan Party or its property, do not constitute   grounds for acceleration of any Indebtedness or obligation under any material   agreement or instrument which is binding upon any Loan Party or its property,   and do not require the consent of any Person. Each Loan Party Obligor shall   reserve and maintain all of its leases, licenses, permits, franchises   qualifications, and rights that are necessary and desirable in the Ordinary   Course of Business. No Loan Party is required to obtain any government   approval, consent, or authorization from, or to file any declaration or   statement with, any Governmental Authority in connection with or as a   condition to the execution, delivery or performance of any of the Loan   Documents. This Agreement and each of the other Loan Documents have been duly   executed and delivered by, and are enforceable against, each of the Loan   Party Obligors who have signed them, in accordance with their respective   terms, subject to applicable bankruptcy, insolvency, reorganization,   moratorium or other laws affecting creditors’ rights generally and subject to   general principles of equity, regardless of whether considered in a   proceeding in equity or at law. Section 1(f) of the Perfection Certificate   sets forth the ownership of all of Company's Subsidiaries. 7.2. Names; Trade   Names and Styles. The name of each Loan Party Obligor set forth on Section   1(b) of the Perfection Certificate is its correct and complete legal name as   of the date hereof, and no Loan Party Obligor has used any other name at any   time in the past five years, or at any time will use any other name, in any   tax filing made in any jurisdiction. Listed in Section 1(b) of the Perfection   Certificate are all prior names used by each Loan Party Obligor at any time   in the past five years and all of the present and prior trade names used by   any Loan Party Obligor at any time in the past five years. Borrower   Representative shall give Agent at least thirty days' prior written notice   (and will deliver an updated Section 1(b) of the Perfection Certificate to   reflect the same) before it or any other Loan Party Obligor changes its legal   name or does business under any other name. -38- 

    

 

7.3. Title to   Collateral; Third Party Locations; Permitted Liens. Each Loan Party Obligor   has, and at all times will continue to have, good and marketable title to all   of the Collateral. The Collateral now is, and at all times will remain, free   and clear of any and all Liens, except for Permitted Liens. Upon filing of   UCC-1s, Agent now has, and will at all times continue to have, a   first-priority perfected and enforceable security interest in all of the ABL   Priority Collateral, subject only to the Permitted Liens, and a   second-priority perfected and enforceable security interest in all of the   Term Loan Priority Collateral, subject only to the Permitted Liens, and each   Loan Party Obligor will at all times defend Agent and the Collateral against   all claims of others. Except as otherwise disclosed in writing to Agent by   Borrowers, none of the Collateral which is Equipment is, or will at any time,   be affixed to any real property in such a manner, or with such intent, as to   become a fixture. Except for leases or subleases as to which Borrowers have   delivered to Agent a landlord's waiver in form and substance reasonably   satisfactory to Agent (unless waived by Agent in its sole discretion;   provided, that such waiver may be conditioned upon Agent establishing a rent   or other similar Reserve satisfactory to Agent in its sole discretion), no   Loan Party Obligor is or will be a lessee or sublessee under any real   property lease or sublease. Except for warehouses as to which Borrowers have   delivered to Agent a warehouseman's waiver in form and substance reasonably   satisfactory to Agent (unless waived by Agent in its sole discretion;   provided, that such waiver may be conditioned upon Agent establishing a rent   or other similar Reserve satisfactory to Agent in its sole discretion), no   Loan Party Obligor is or will at any time be a bailor of any Goods at any   warehouse or otherwise. Prior to causing or permitting any Collateral valued   in excess of $50,000 (other than mobile equipment such as laptop computers in   the possession of Borrower’s employees or agents) to at any time be located   upon premises in which any third party (including any landlord, warehouseman,   or otherwise) has an interest, Borrower Representative shall notify Agent and   the applicable Loan Party Obligor shall cause each such third party to   execute and deliver to Agent, in form and substance reasonably acceptable to   Agent, such waivers, collateral access agreements, and subordinations as   Agent shall specify, so as to, among other things, ensure that Agent's rights   in the Collateral are, and will at all times continue to be, superior to the   rights of any such third party and that Agent has access to such Collateral.   Each applicable Loan Party Obligor will keep at all times in full force and   effect, and will comply at all times with all the terms of, any lease of real   property where any of the Collateral now or in the future may be located.   7.4. Accounts and Chattel Paper. As of each date reported by Borrowers, all   Accounts which any Borrower has then reported to Agent as then being Eligible   Accounts comply in all respects with the criteria for eligibility set forth   in the definition of Eligible Accounts. All such Accounts, and all Chattel   Paper owned by any Loan Party Obligor, are genuine and in all respects what   they purport to be, arise out of a completed, bona fide and unconditional and   non-contingent sale and delivery of goods or rendition of services by a   Borrower in the Ordinary Course of Business and in accordance with the terms   and conditions of all purchase orders, contracts or other documents relating   thereto, each Account Debtor thereunder had the capacity to contract at the   time any contract or other document giving rise to such Accounts and Chattel   Paper were executed, and the transactions giving rise to such Accounts and   Chattel Paper comply with all applicable laws and governmental rules and   regulations. 7.5. Electronic Chattel Paper.To the extent that any Loan Party   Obligor obtains or maintains any Electronic Chattel Paper, such Loan Party   Obligor shall at all times create, store and assign the record or records   comprising the Electronic Chattel Paper in such a manner that (a) a single   authoritative copy of the record or records exists which is unique,   identifiable and except as otherwise provided below, unalterable, (b) the   authoritative copy identifies Agent as the assignee of the record or records,   (c) the authoritative copy is communicated to and maintained by Agent or its   designated custodian, (d) copies or revisions that add or change an   identified assignee of the authoritative copy can only be made with the   participation of Agent, (e) each copy of the authoritative copy and any copy   of a copy is readily identifiable as a copy that is not the authoritative   copy and (f) any revision of the authoritative copy is readily identifiable   as an authorized or unauthorized revision. -39- 

    

 

7.6.   Capitalization; Investment Property. (a) No Loan Party, directly or   indirectly, owns, or shall at any time own, any capital stock or other equity   interests of any other Person except as set forth in Sections 1(f) and 1(g)   of the Perfection Certificate, which Sections list all Investment Property   owned by each Loan Party Obligor. (b) None of the Pledged Equity has been   issued or otherwise transferred in violation of the Securities Act, or other   applicable laws of any jurisdiction to which such issuance or transfer may be   subject. The Pledged Equity pledged by each Loan Party Obligor hereunder   constitutes all of the issued and outstanding equity interests of each Issuer   owned by such Loan Party Obligor. (c) All of the Pledged Equity has been duly   and validly issued and is fully paid and non-assessable, and the holders   thereof are not entitled to any preemptive, first refusal or other similar   rights. There are no outstanding options, warrants or similar agreements,   documents, or instruments with respect to any of the Pledged Equity. (d) Each   Loan Party Obligor has caused each Issuer to amend or otherwise modify its   Governing Documents, books, records, and related agreements, documents and   instruments, as applicable, to reflect the rights and interests of Agent   hereunder, and to the extent required to enable and empower Agent to exercise   and enforce its rights and remedies hereunder in respect of the Pledged Equity   and other Investment Property. (e) Each Loan Party Obligor will take any and   all actions reasonably requested by Agent, from time to time, subject to the   terms of the Term Loan Intercreditor Agreement, to (i) cause Agent to obtain   exclusive control of any Investment Property in a manner reasonably   acceptable to Agent and (ii) obtain from any Issuers and such other Persons   as Agent shall specify, for the benefit of Agent, written confirmation of   Agent's exclusive control over such Investment Property and take such other   actions as Agent may request to perfect Agent's security interest in any   Investment Property. For purposes of this Section 7.6, subject to the terms   of the Term Loan Intercreditor Agreement, Agent shall have control (on a   second priority basis) of Investment Property if (A) pursuant to Section 5.2,   such Investment Property consists of certificated securities and the   applicable Loan Party Obligor delivers such certificated securities to Agent   (with all appropriate endorsements), (B) such Investment Property consists of   uncertificated securities and either (x) the applicable Loan Party Obligor   delivers such uncertificated securities to Agent or (y) the Issuer thereof   agrees, pursuant to documentation in form and substance reasonably satisfactory   to Agent, that it will comply with instructions originated by Agent without   further consent by the applicable Loan Party Obligor and (C) such Investment   Property consists of security entitlements and either (x) Agent becomes the   entitlement holder thereof or (y) the appropriate securities intermediary   agrees, pursuant to documentation in form and substance reasonably   satisfactory to Agent, that it will comply with entitlement orders originated   by Agent without further consent by the applicable Loan Party Obligor. Each   Loan Party Obligor that is a limited liability company or a partnership   hereby represents and warrants that it has not, and at no time will, elect   pursuant to the provisions of Section 8-103 of the UCC to provide that its   equity interests are securities governed by Article 8 of the UCC. (f) No Loan   Party owns, or has any present intention of acquiring, any "margin   security" or any "margin stock" within the meaning of   Regulations T, U or X of the Board of Governors of the Federal Reserve System   (herein called "margin security" and "margin stock").   None of the proceeds of the Loans will be used, directly or indirectly, for   the purpose of purchasing or carrying, or for the purpose of reducing or   retiring any Indebtedness which was originally incurred to purchase or carry,   any margin security or margin stock or for any other purpose which might   constitute the transactions contemplated hereby a "purpose credit"   within the meaning of said Regulations T, U or X, or cause this Agreement to   violate any other regulation of the Board of Governors of the Federal Reserve   System or the Exchange Act, or any rules or regulations promulgated under   such statutes. -40- 

    

 

(g) No Loan   Party Obligor shall vote to enable, or take any other action to cause or to   permit, any Issuer (other than Company) to issue any equity interests of any   nature, or to issue any other securities or interests convertible into or   granting the right to purchase or exchange for any equity interests of any   nature of any Issuer. (h)Subject to the terms of the Term Loan Intercreditor   Agreement, no Loan Party Obligor shall take, or fail to take, any action that   would in any manner impair the value or the enforceability of Agent's Lien on   any of the Investment Property, or any of Agent's rights or remedies under   this Agreement or any other Loan Document with respect to any of the   Investment Property. (i) In the case of any Loan Party Obligor which is an   Issuer, subject to the terms of the Term Loan Intercreditor Agreement, such Issuer   agrees that the terms of Section 11.3(g)(iii) shall apply to such Loan Party   Obligor with respect to all actions that may be required of it pursuant to   such Section 11.3(g)(iii) regarding the Investment Property issued by it. (j)   Each Loan Party Obligor has made all capital contributions heretofore   required to be made to the respective Issuer in respect of any Investment   Property constituting limited liability company interests and no additional   capital contributions are required to be made in respect of the respective   limited liability company interests. 7.7. Commercial Tort Claims. No Loan   Party Obligor has any Commercial Tort Claim with a value in excess of Fifty   Thousand Dollars ($50,000.00) pending other than those listed in Section 2 of   the Perfection Certificate, and each Loan Party Obligor shall promptly (but   in any case, no later than five Business Days thereafter) notify Agent in   writing upon incurring or otherwise obtaining a Commercial Tort Claim after   the date hereof against any third party. Such notice shall constitute such   Loan Party Obligor's authorization to amend such Section 2 to add such   Commercial Tort Claim and shall automatically be deemed to amend such Section   2 to include such Commercial Tort Claim. 7.8. Jurisdiction of Organization;   Location of Collateral. Sections 1(c) and 1(d) of the Perfection Certificate   set forth (a) each place of business of each Loan Party Obligor (including   its chief executive office), (b) all locations where all Inventory,   Equipment, and other Collateral owned by each Loan Party Obligor is kept and   (c) whether each such Collateral location and place of business (including   each Loan Party Obligor's chief executive office) is owned by a Loan Party or   leased (and if leased, specifies the complete name and notice address of each   lessor). No Collateral is located outside the United States or in the   possession of any lessor, bailee, warehouseman or consignee, except as   expressly indicated in Sections 1(c) and 1(d) of the Perfection Certificate.   Each Loan Party Obligor will give Agent at least thirty (30) days' prior   written notice before changing its jurisdiction of organization, opening any   additional place of business, changing its chief executive office or the   location of its books and records, or moving any of the Collateral to a   location other than one of the locations set forth in Sections 1(c) and 1(d)   of the Perfection Certificate, and will execute and deliver all Financing   Statements, landlord waivers, collateral access agreements, mortgages, and   all other agreements, instruments and documents which Agent shall require in   connection therewith prior to making such change, all in form and substance   reasonably satisfactory to Agent. Without the prior written consent of Agent,   no Loan Party Obligor will at any time (i) change its jurisdiction of   organization or (ii) allow any Collateral to be located outside of the   continental United States of America. 7.9. Financial Statements and Reports;   Solvency. (a) All financial statements delivered to Agent and Lenders by or   on behalf of any Loan Party have been, and at all times will be, prepared in   conformity with GAAP and fairly reflect in all material respects the   financial condition of each Loan Party covered thereby, at the times and for   the periods therein stated. -41- 

    

 

(b) As of the   date hereof (after giving effect to the Loans to be made on the date hereof,   and the consummation of the transactions contemplated hereby), and as of each   other day that any Loan is made (after giving effect thereof), (i) the fair   saleable value of all of the assets and properties of each Loan Party,   individually, exceeds the aggregate liabilities and Indebtedness of each such   Loan Party (including contingent liabilities), (ii) each Loan Party,   individually, is solvent and able to pay its debts as they come due, (iii)   each Loan Party, individually, has sufficient capital to carry on its   business as now conducted and as proposed to be conducted, (iv) no Loan Party   is contemplating either the liquidation of all or any substantial portion of   its assets or property, or the filing of any petition under any state,   federal, or other bankruptcy or insolvency law and (v) no Loan Party has   knowledge of any Person contemplating the filing of any such petition against   any Loan Party. 7.10. Tax Returns and Payments; Pension Contributions. Each   Loan Party has timely filed all tax returns and reports required by   applicable law, has timely paid all applicable federal and material state   Taxes, assessments, deposits and contributions owing by such Loan Party and will   timely pay all such items in the future as they became due and payable. Each   Loan Party may, however, defer payment of any contested taxes; provided, that   such Loan Party (a) in good faith contests its obligation to pay such Taxes   by appropriate proceedings promptly and diligently instituted and conducted,   (b) notifies Agent in writing of the commencement of, and any material   development in, the proceedings, (c) posts bonds or takes any other steps   required to keep the contested taxes from becoming a Lien upon any of the   Collateral and (d) maintains adequate reserves therefor in conformity with   GAAP. No Loan Party is aware of any claims or adjustments proposed for any   prior tax years that could result in additional taxes becoming due and   payable by any Loan Party. Each Plan is in compliance in all material   respects with the applicable provisions of ERISA, the Code and other   applicable laws. Each Plan that is intended to be a qualified plan under   Section 401(a) of the Code has received a favorable determination letter or   opinion letter from the Internal Revenue Service to the effect that the form   of such Plan is qualified under Section 401(a) of the Code and the trust   related thereto has been determined by the Internal Revenue Service to be   exempt from federal income tax under Section 501(a) of the Code, or an   application for such a letter is currently being processed by the Internal   Revenue Service. To the knowledge of each Loan Party, nothing has occurred   that would prevent or cause the loss of such tax-qualified status. There are   no pending or, to the best knowledge of any Loan Party, threatened claims,   actions or lawsuits, or action by any Governmental Authority, with respect to   any Plan that could reasonably be expected to result in liabilities individually   or in the aggregate in excess of $50,000 of any Loan Party. There has been no   prohibited transaction or violation of the fiduciary responsibility rules   with respect to any Plan that has resulted or could reasonably be expected to   result in liabilities individually or in the aggregate of any Loan Party in   excess of $50,000. No ERISA Event has occurred, and no Loan Party is aware of   any fact, event or circumstance that could reasonably be expected to   constitute or result in an ERISA Event with respect to any Pension Plan, in   each case that could reasonably be expected to result in liabilities   individually or in the aggregate in excess of $50,000. Each Loan Party and   each ERISA Affiliate has met all applicable requirements under the Pension   Funding Rules in respect of each Pension Plan, and no waiver of the minimum   funding standards under the Pension Funding Rules has been applied for or   obtained, in each case except as could not reasonably be expected to result   in liabilities individually or in the aggregate to the Loan Parties in excess   of $50,000. As of the most recent valuation date for any Pension Plan, the   funding target attainment percentage (as defined in Section 430(d)(2) of the   Code) is sixty (60%) or higher and no Loan Party knows of any facts or circumstances   that could reasonably be expected to cause the funding target attainment   percentage for any such plan to drop below sixty (60%) as of the most recent   valuation date. No Loan Party or any ERISA Affiliate has incurred any   liability to the PBGC other than for the payment of premiums, and there are   no premium payments which have become due that are unpaid, except as could   not reasonably be expected to result in liabilities individually or in the   aggregate to the Loan Parties in excess of $50,000. No Loan Party or any   ERISA Affiliate has engaged in a transaction that could be subject to Section   4069 or Section 4212(c) of ERISA except as could not reasonably be expected   to result in liabilities individually or in the aggregate to the Loan Parties   in excess of $50,000. No Pension Plan has been terminated by the plan   administrator thereof or by the PBGC, and no event or circumstance has   occurred or exists that could reasonably be expected to cause the -42- 

    

 

PBGC to   institute proceedings under Title IV of ERISA to terminate any Pension Plan,   except as could not reasonably be expected to result in liabilities   individually or in the aggregate to the Loan Parties in excess of $50,000.   7.11. Compliance with Laws; Intellectual Property; Licenses; Compliance with   Health Care Laws; Health Care Permits. (a) Each Loan Party has complied, and   will continue at all times to comply, in all material respects with all   provisions of all applicable laws and regulations, including those relating   to the ownership of real or personal property, the conduct and licensing of   each Loan Party's business, the payment and withholding of Taxes, ERISA and   other employee matters, and safety and environmental matters. (b) No Loan   Party has received written notice of default or violation, or is in default   or violation, with respect to any judgment, order, writ, injunction, decree,   demand or assessment issued by any court or any federal, state, local,   municipal or other Governmental Authority relating to any aspect of any Loan   Party's business, affairs, properties or assets. No Loan Party has received   written notice of or been charged with, or is, to the knowledge of any Loan   Party, under investigation with respect to, any violation in any material   respect of any provision of any applicable law. (c) No Loan Party Obligor   owns any Intellectual Property, except as set forth in Section 4 of the   Perfection Certificate. Except as set forth in Section 4 of the Perfection   Certificate, none of the Intellectual Property owned by any Loan Party   Obligor is the subject of any licensing or franchise agreement pursuant to   which such Loan Party Obligor is the licensor or franchisor. Each Loan Party   Obligor shall promptly (but in any event within thirty (30) days thereafter)   notify Agent in writing of any additional Intellectual Property rights   acquired or arising after the Closing Date and shall submit to Agent a   supplement to Section 4 of the Perfection Certificate to reflect such   additional rights; provided, that such Loan Party Obligor's failure to do so   shall not impair Agent's security interest therein. Each Loan Party Obligor   shall execute a separate Security Agreement granting Agent a security   interest in such Intellectual Property (whether owned on the Closing Date or   thereafter), in form and substance reasonably acceptable to Agent and   suitable for registering such security interest in such Intellectual Property   with the United States Patent and Trademark Office and/or United States   Copyright Office, as applicable; provided, that such Loan Party Obligor's   failure to do so shall not impair Agent's security interest therein. Each   Loan Party owns or has, and will at all times continue to own or have, the   valid right to use all material patents, trademarks, copyrights, software,   computer programs, equipment designs, network designs, equipment   configurations, technology and other Intellectual Property used, marketed and   sold in such Loan Party's business, and each Loan Party is in compliance, and   will continue at all times to comply, in all material respects with all   licenses, user agreements and other such agreements regarding the use of   Intellectual Property. Except in relation with matters that have otherwise   been settled, no Loan Party has any knowledge that, or has received any notice   claiming that, any of such Intellectual Property infringes upon or violates   the rights of any other Person. (d) Each Loan Party has and will continue at   all times to have, all federal, state, local and other licenses and permits   required to be maintained in connection with such Loan Party's business   operations, and all such licenses and permits are valid and in full force and   effect. Each Loan Party has, and will continue at all times to have, complied   with the requirements of such licenses and permits in all material respects,   and has received no written notice of any pending or threatened proceedings   for the suspension, termination, revocation or limitation thereof. No Loan   Party is aware of any facts or conditions that could reasonably be expected   to cause or permit any of such licenses or permits to be voided, revoked or   withdrawn. (e) Each Loan Party is in compliance in all material respects with   all Health Care Laws applicable to it, its assets, business or operations.   -43- 

    

 

(f) Each Loan   Party holds all Health Care Permits necessary for it to own, lease, sublease   or operate its assets or to conduct its business or operations as presently   conducted. All such Health Care Permits are in full force and effect and   there is and has been no default under, violation of, or other noncompliance   with the terms and conditions of any such Health Care Permit except as would   not reasonably be expected to result in a Material Adverse Effect. No   Governmental Authority has taken, or to the knowledge of any Loan Party   intends to take, action to suspend, revoke, terminate, place on probation,   materially restrict or not renew any material Health Care Permit of any Loan   Party. 7.12. Litigation. Section 1(e) of the Perfection Certificate discloses   all claims, proceedings, litigation or investigations pending or (to the best   of each Loan Party Obligor's knowledge) threatened against any Loan Party as   of the Closing Date. There is no claim, suit, litigation, proceeding or   investigation pending or (to the best of each Loan Party Obligor's knowledge)   threatened by or against or affecting any Loan Party in any court or before   any Governmental Authority (or any basis therefor known to any Loan Party   Obligor) which could reasonably be expected to result, either separately or   in the aggregate, in liability in excess of $500,000 for the Loan Parties, in   any Material Adverse Effect, or in any material impairment in the ability of   any Loan Party to carry on its business in substantially the same manner as   it is now being conducted. 7.13. Use of Proceeds. All proceeds of all Loans   shall be used by Borrowers solely (a) to pay the fees, costs, and expenses   incurred in connection with this Agreement, the other Loan Documents and the   transactions contemplated hereby and thereby, (b) for Borrowers' working   capital purposes and general corporate purposes and (c) for such other   purposes as specifically permitted pursuant to the terms of this Agreement.   All proceeds of all Loans will be used solely for lawful business purposes.   7.14. Insurance. (a) Each Loan Party will at all times carry property,   liability and other insurance, with insurers reasonably acceptable to Agent,   in such form and amounts, and with such deductibles and other provisions, as   Agent shall reasonably require, but in any event, in such amounts and against   such risks as is usually carried by companies engaged in similar business and   owning similar properties in the same general areas in which such Loan Party   operates, and each Borrower will provide Agent with evidence reasonably   satisfactory to Agent that such insurance is, at all times, in full force and   effect. A true and complete listing of such insurance as of the Closing Date,   including issuers, coverages and deductibles, is set forth in Section 5 of the   Perfection Certificate. Each property insurance policy shall name Agent as   secondary lender loss payee and mortgagee, if applicable, and shall contain a   secondary lender's loss payable endorsement, and a secondary mortgage   endorsement, if applicable, and each liability insurance policy shall name   Agent as an additional insured, and each business interruption insurance   policy shall be collaterally assigned on a second Lien basis to Agent, all in   form and substance reasonably satisfactory to Agent. All policies of   insurance shall provide that they may not be cancelled or changed without at   least thirty (30) days' (or, with respect to nonpayment of premiums, ten (10)   days’) prior written notice to Agent, and shall otherwise be in form and   substance reasonably satisfactory to Agent. Borrower Representative shall   advise Agent promptly of any policy cancellation, non-renewal, reduction, or   material amendment with respect to any insurance policies maintained by any   Loan Party or any receipt by any Loan Party of any notice from any insurance   carrier regarding any intended or threatened cancellation, non-renewal,   reduction or material amendment of any of such policies, and Borrower   Representative shall promptly deliver to Agent copies of all notices and   related documentation received by any Loan Party in connection with the same.   (b) Borrower Representative shall deliver to Agent no later than fifteen (15)   days prior to the expiration of any then current insurance policies,   insurance certificates evidencing renewal of all such insurance policies   required by this Section 7.14. Borrower Representative shall deliver to   Agent, upon Agent 's request, certificates evidencing such insurance coverage   in such form as Agent shall specify. -44- 

    

 

 

(c) IF ANY LOAN   PARTY AT ANY TIME OR TIMES HEREAFTER SHALL FAIL TO OBTAIN OR MAINTAIN ANY OF   THE POLICIES OF INSURANCE REQUIRED ABOVE (AND PROVIDE EVIDENCE THEREOF TO   AGENT) OR TO PAY ANY PREMIUM RELATING THERETO, THEN AGENT, WITHOUT WAIVING OR   RELEASING ANY OBLIGATION OR DEFAULT BY ANY BORROWER HEREUNDER, MAY (BUT SHALL   BE UNDER NO OBLIGATION TO) OBTAIN AND MAINTAIN SUCH POLICIES OF INSURANCE AND   PAY SUCH PREMIUMS AND TAKE SUCH OTHER ACTIONS WITH RESPECT THERETO AS AGENT   DEEMS ADVISABLE UPON NOTICE TO BORROWER REPRESENTATIVE.SUCH INSURANCE, IF   OBTAINED BY AGENT, MAY, BUT NEED NOT, PROTECT ANY LOAN PARTY'S INTERESTS OR   PAY ANY CLAIM MADE BY OR AGAINST ANY LOAN PARTY WITH RESPECT TO THE   COLLATERAL. SUCH INSURANCE MAY BE MORE EXPENSIVE THAN THE COST OF INSURANCE   ANY LOAN PARTY MAY BE ABLE TO OBTAIN ON ITS OWN AND MAY BE CANCELLED ONLY   UPON THE APPLICABLE LOAN PARTY PROVIDING EVIDENCE THAT IT HAS OBTAINED THE   INSURANCEASREQUIREDABOVE. ALLSUMSDISBURSEDBYAGENTIN CONNECTION WITH ANY SUCH   ACTIONS, INCLUDING COURT COSTS, EXPENSES, OTHER CHARGES RELATING THERETO AND   REASONABLE INTERNAL AND EXTERNAL ATTORNEY COSTS, SHALL CONSTITUTE LOANS   HEREUNDER, SHALL BE PAYABLE ON DEMAND BY BORROWERS TO AGENT AND, UNTIL PAID,   SHALL BEAR INTEREST AT THE HIGHEST RATE THEN APPLICABLE TO LOANS HEREUNDER.   7.15. Financial, Collateral and Other Reporting / Notices. Each Loan Party   has kept, and will at all times keep, adequate records and books of account   with respect to its business activities and the Collateral in which proper   entries are made in accordance with GAAP reflecting all its financial   transactions. The information provided in the Perfection Certificate is   correct and complete in all respects. Each Loan Party Obligor will cause to   be prepared and furnished to Agent, in each case in a form and in such detail   as is acceptable to Agent the following items (the items to be provided under   this Section 7.15 shall be delivered to Agent by posting on ABLSoft or, if   requested by Agent, by another form of Approved Electronic Communication or   in writing): (a) Annual Financial Statements. Not later than ninety (90) days   after the close of each Fiscal Year, unqualified, audited financial   statements of the Loan Parties on a consolidated basis as of the end of such   Fiscal Year, including balance sheet, income statement, and statement of cash   flow for such Fiscal Year, in each case on a consolidated and consolidating   basis, certified by a firm of independent certified public accountants of   recognized standing selected by Borrowers but acceptable to Agent, together   with a copy of any management letter issued in connection therewith.   Concurrently with the delivery of such financial statements, Borrower   Representative shall deliver to Agent a Compliance Certificate, indicating   whether (i) Borrowers are in compliance with each of the covenants specified   in Section 9, and setting forth a detailed calculation of such covenants and   (ii) any Default or Event of Default is then in existence; (b) Interim   Financial Statements. Not later than thirty (30) days after the end of each   month, commencing with the month ending August 31, 2019, including the last   month of each Fiscal Year, unaudited interim financial statements of the Loan   Parties on a consolidated basis as of the end of such month and of the   portion of such Fiscal Year then elapsed, including balance sheet, income   statement, statement of cash flow, and results of their respective operations   during such month and the then-elapsed portion of the Fiscal Year, together   with comparative figures for the same periods in the immediately preceding   Fiscal Year and the corresponding figures from the budget for the Fiscal Year   covered by such financial statements, in each case on a consolidated and   consolidating basis, certified by the principal financial officer of Borrower   Representative as prepared in accordance with GAAP and fairly presenting the   consolidated financial position and results of operations of each Loan Party   for such month and period subject only to changes from ordinary course   year-end audit adjustments and except that such statements need not contain   footnotes. Concurrently with the delivery of such financial -45- 

    

 

statements,   Borrower Representative shall deliver to Agent a Compliance Certificate,   indicating whether (i) Borrowers are in compliance with each of the covenants   specified in Section 9, and setting forth a detailed calculation of such   covenants, and (ii) any Default or Event of Default is then in existence; (c)   Borrowing Base / Collateral Reports / Insurance Certificates / Perfection   Certificates / Other Items. The items described on Annex II hereto by the   respective dates set forth therein. (d) Projections, Etc. Not later than   sixty (60) days prior to the end of each Fiscal Year, monthly business   projections for the following Fiscal Year for the Loan Parties on a   consolidated and consolidating basis, which projections shall include for   each such period Borrowing Base projections, profit and loss projections,   balance sheet projections, income statement projections and cash flow   projections; (e) Shareholder Reports, Etc. Promptly after the sending or   filing thereof, as the case may be, copies of any proxy statements, financial   statements or reports which each Loan Party has made available to its   shareholders and copies of any regular, periodic and special reports or   registration statements which any Loan Party files with the Securities and   Exchange Commission or any Governmental Authority which may be substituted   therefor, or any national securities exchange; (f) ERISA Reports.Copies of   any annual report to be filed pursuant to the requirements of ERISA in   connection with each plan subject thereto promptly upon request by Agent and   in addition, each Loan Party shall promptly notify Agent upon having   knowledge of any ERISA Event; and (g) Intentionally Omitted. (h) Notification   of Certain Changes. Promptly (and in no case later than the earlier of (i)   three Business Days after the occurrence of any of the following and (ii)   such other date that such information is required to be delivered pursuant to   this Agreement or any other Loan Document) notification to Agent in writing   of (A) the occurrence of any Default or Event of Default, (B) the occurrence   of any event that has had, or may have, a Material Adverse Effect, (C) any change   in any Loan Party's chief financial officer or chief executive officer, (D)   any investigation, action, suit, proceeding or claim (or any material   development with respect to any existing investigation, action, suit,   proceeding or claim) relating to any Loan Party, any officer or director of a   Loan Party, the Collateral or which may result in a Material Adverse Effect,   (E) any material loss or damage to the Collateral, (F) any event or the   existence of any circumstance that has resulted in, or could reasonably be   expected to result in, a Material Adverse Effect, any Default, or any Event   of Default, or which would make any representation or warranty previously   made by any Loan Party to Agent untrue in any material respect or constitute   a material breach if such representation or warranty was then being made, (G)   any actual or alleged breaches of any Material Contract or termination or   threat to terminate any Material Contract or any material amendment to or   modification of a Material Contract, or the execution of any new Material   Contract by any Loan Party and (H) any change in any Loan Party's certified   independent accountant. In the event of each such notice under this Section   7.15(h), Borrower Representative shall give notice to Agent of the action or   actions that each Loan Party has taken, is taking, or proposes to take with   respect to the event or events giving rise to such notice obligation. (i)   Notices of Product Recall. Promptly (and in no case later than one Business   Day after the occurrence thereof) notification to Agent in writing of the   occurrence of any product recall or similar event to remove any drug or other   products sold by any Loan Party from the market, together with a written   statement describing such event in reasonable detail. -46- 

    

 

(j) Notices   Under Material Contracts. Promptly upon any delivery to Loan Party or any of   their Subsidiaries of any material notices under any Material Contract, a   written statement describing such event, with copies of such amendments,   notices or new contracts, delivered to Agent, and a description of any   actions being taken pursuant thereto. (k) Other Information. Promptly upon   request, such other data and information (financial and otherwise) as Agent,   from time to time, may reasonably request, bearing upon or related to the   Collateral or each Loan Party's and each Other Obligor's business or   financial condition or results of operations. 7.16. Litigation Cooperation.   Should any third-party suit, regulatory action, or any other judicial,   administrative, or similar proceeding be instituted by or against Agent or   any Lender with respect to any Collateral or in any manner relating to any   Loan Party, this Agreement, any other Loan Document or the transactions   contemplated hereby, each Loan Party Obligor shall, without expense to Agent   or any Lender, make available each Loan Party, such Loan Party's officers,   employees and agents, and any Loan Party's books and records, without charge,   to the extent that Agent or such Lender may deem them reasonably necessary in   order to prosecute or defend any such suit or proceeding. 7.17. Maintenance   of Collateral, Etc.Each Loan Party Obligor will maintain all of the   Collateral in good working condition, ordinary wear and tear excepted, and no   Loan Party Obligor will use the Collateral for any unlawful purpose. 7.18.   Material Contracts. Except as expressly disclosed in Section 1(h) of the   Perfection Certificate, no Loan Party is (a) a party to any contract which   has had or could reasonably be expected to have a Material Adverse Effect or   (b) in default in the performance, observance or fulfillment of any of the   obligations, covenants or conditions contained in (x) any contract to which   it is a party or by which any of its assets or properties is bound, which default,   individually or in the aggregate, could reasonably be expected to have a   Material Adverse Effect or result in liabilities in excess of $500,000 or (y)   any Material Contract. Except for the contracts and other agreements listed   in Section 1(h) of the Perfection Certificate, no Loan Party is party, as of   the Closing Date, to any (i) employment agreements covering the management of   any Loan Party, (ii) collective bargaining agreements or other labor   agreements covering any employees of any Loan Party, (iii) agreements for   managerial, consulting or similar services to which any Loan Party is a party   or by which it is bound, (iv) agreements regarding any Loan Party, its assets   or operations or any investment therein to which any of its equity holders is   a party, (v) patent licenses, trademark licenses, copyright licenses or other   lease or license agreements to which any Loan Party is a party, either as   lessor or lessee, or as licensor or licensee, (vi) distribution, marketing or   supply agreements to which any Loan Party is a party, (vii) customer   agreements to which any Loan Party is a party (in each case with respect to   any contract of the type described in the preceding clauses (i), (iii), (iv),   (v), (vi) and (vii) requiring payments of more than $500,000 in the aggregate   in any Fiscal Year), (viii) partnership agreements to which any Loan Party is   a partner, limited liability company agreements to which any Loan Party is a   member or manager, or joint venture agreements to which any Loan Party is a   party, (ix) real estate leases, or (x) any other contract to which any Loan   Party is a party, in each case with respect to this clause (x) the breach,   nonperformance or cancellation of which, could reasonably be expected to have   a Material Adverse Effect; (each such contract and agreement, described in   the preceding clauses (i) to (x), a "Material Contract"). 7.19. No   Default. No Default or Event of Default has occurred and is continuing. 7.20.   No Material Adverse Change. Since December 31, 2018, no event has occurred   which has had, or could reasonably be expected to have, a Material Adverse   Effect on any Loan Party. 7.21. Full Disclosure.Excluding projections and   other forward-looking information, pro forma financial information and   information of a general economic or industry nature, no report, notice, -47-   

    

 

certificate,   information or other statement delivered or made (including, in electronic   form) by or on behalf of any Loan Party, any Other Obligor or any of their   respective Affiliates to Agent or Lender in connection with this Agreement or   any other Loan Document contains or will at any time contain any untrue   statement of a material fact, or omits or will at any time omit to state any   material fact necessary to make any statements contained herein or therein   not misleading in light of the circumstances in which they were made. Except   for matters of a general economic or political nature which do not affect any   Loan Party or any Other Obligor uniquely, there is no fact presently known to   any Loan Party Obligor which has not been disclosed to Agent, which has had   or could reasonably be expected to have, individually or in the aggregate, a   Material Adverse Effect. Any projections and other forward-looking   information and pro forma financial information contained in such materials   were prepared in good faith based upon assumptions that were believed by such   Loan Party to be reasonable at the time prepared and at the time furnished in   light of conditions and facts then known (it being recognized that such   projections and other forward-looking information and pro forma financial   information are not to be viewed as facts and that actual results during the   period or periods covered by any such projections or information may differ   from the projected results, and such differences may be material). 7.22.   Sensitive Payments.No Loan Party (a) hasmade or will at any time make any   contributions, payments or gifts to or for the private use of any   governmental official, employee or agent where either the payment or the   purpose of such contribution, payment or gift is illegal under the applicable   laws of the United States or the jurisdiction in which made or any other   applicable jurisdiction, (b) has established or maintained or will at any   time establish or maintain any unrecorded fund or asset for any purpose or   made any false or artificial entries on its books, (c) has made or will at   any time make any payments to any Person with the intention that any part of   such payment was to be used for any purpose other than that described in the   documents supporting the payment or (d) has engaged in or will at any time   engage in any "trading with the enemy" or other transactions   violating any rules or regulations of the Office of Foreign Assets Control or   any similar applicable laws, rules or regulations. 7.23. Term Loan Debt. (a)   Borrower Representative has furnished Agent a true, correct and complete copy   of each of the Term Loan Documents. No statement or representation made in   any of the Term Loan Documents by any Borrower or any other Loan Party or, to   any Borrower Representative 's knowledge, any other Person, contains any   untrue statement of a material fact or omits to state any material fact   required to be stated therein or necessary in order to make the statements   made therein, in light of the circumstances under which they are made, not   misleading in any material respect as of the time that such statement or   representation is made. Each of the representations and warranties of the   Loan Parties set forth in each of the Term Loan Documents are true and   correct in all material respects. No portion of the Term Loan Debt is, or at   any time shall be, (i) secured by any assets of any of the Loan Parties or   any other Person or any equity issued by any of the Loan Parties or any other   Person (except to the extent expressly permitted by the Term Loan   Intercreditor Agreement) or (ii) guaranteed by any Person(except to the   extent expressly permitted by the Term Loan Intercreditor Agreement). (b)The   provisions of the Term Loan Intercreditor Agreement are enforceable against   each holder of the Term Loan Debt, subject to applicable bankruptcy,   insolvency, reorganization, moratorium or other laws affecting creditors’   rights generally and subject to general principles of equity, regardless of   whether considered in a proceeding in equity or at law. Each Borrower and   each other Loan Party Obligor acknowledges that Agent is entering into this   Agreement and extending credit and making the Loans in reliance upon the Term   Loan Intercreditor Agreement and this Section 7.23. 7.24. Access to   Collateral, Books and Records. At reasonable times and upon reasonable prior   notice, Agent and its representatives or agents shall have the right to   inspect the Collateral and to examine and copy each Loan Party's books and   records. Each Loan Party Obligor agrees to give Agent access to any or all of   such Loan Party Obligor's, and each of its Subsidiaries', premises to enable   Agent -48- 

    

 

to conduct such   inspections and examinations. Such inspections and examinations shall be at   Borrowers’ expense and the charge therefor shall be $1,200 per person per day   (or such higher amount as shall represent Agent's then current standard   charge), plus out-of-pocket expenses. Agent may, at Borrowers’ expense, use   each Loan Party's personnel, computer and other equipment, programs, printed   output and computer readable media, supplies and premises for the collection,   sale or other disposition of Collateral to the extent Agent, in its sole   discretion, deems appropriate. Each Loan Party Obligor hereby irrevocably   authorizes all accountants and third parties to disclose and deliver to   Agent, at Borrowers’ expense, all financial information, books and records,   work papers, management reports and other information in their possession   regarding the Loan Parties. Without limiting the foregoing, each Loan Party   Obligor hereby authorizes Agent as an "authorized user" under its   third party logistics arrangements with SPS (or any replacement thereof) and   agrees that Agent shall have all powers and access rights incidental thereto,   in each case to take such actions as may be necessary for Agent to view all   activities and reports through any applicable portal associated with such   third party logistics and related services. In furtherance of the foregoing   authorization, each Loan Party Obligor will, and will cause each Subsidiary   to, execute and deliver, or cause to be executed and delivered, to Agent such   documents, agreements and instruments, and will take or cause to be taken   such further actions for which Agent may, from time to time, reasonably   request to become an "authorized user" in respect of such portal,   all in form and substance reasonably satisfactory to Agent and at the expense   of the Borrowers. 7.25. Intentionally Omitted. 7.26. Lender Meetings. Upon   the request of Agent or the Required Lenders (which request, so long as no   Event of Default shall have occurred and be continuing, shall not be made   more than once during each fiscal quarter), participate in a telephonic   meeting with the Agents and the Lenders at such time as may be agreed to by   Borrower Representative and such Agent or the Required Lenders. 7.27.   Interrelated Business. Loan Parties make up a related organization of various   entities constituting a single economic and business enterprise so that Loan   Parties share an identity of interests such that any benefit received by any   one of them benefits the others. From time to time each of the Loan Parties   may render services to or for the benefit of the other Loan Parties, purchase   or sell and supply goods to or from or for the benefit of the others, make   loans, advances and provide other financial accommodations to or for the   benefit of the other Loan Parties (including inter alia, the payment by such   Loan Parties of creditors of the other Loan Parties and guarantees by such   Loan Parties of indebtedness of the other Loan Parties and provides   administrative, marketing, payroll and management services to or for the   benefit of the other Loan Parties). Loan Parties have the same centralized   accounting and legal services, certain common officers and directors and   generally do not provide stand-alone consolidating financial statements to   creditors. 7.28. Post-Closing Matters. Loan Party Obligors shall satisfy the   following requirements on or before the date specified below or such later   date to be determined by Agent, at its sole option, each of which shall be   completed or provided in form and substance reasonably satisfactory to Agent.   The failure to satisfy any such requirement on or before the date when due   (or within such longer period as Agent may agree at its sole option) shall be   an Event of Default, except as otherwise agreed to by Agent at its sole   option: (a) Within thirty (30) days after the Closing Date, loss payable,   additional insured and notice of cancellation, as applicable, endorsements   (on a second priority basis) with respect to the insurance required by   Section 7.14 and a duly executed collateral assignment of business   interruption insurance as collateral security (on a second priority basis),   in each case, in form and substance satisfactory to Agent; and -49- 

    

 

(b) Within   sixty (60) days after the Closing Date, a control agreement with respect to   each of the bank and securities accounts of the Loan Parties (other than any   Restricted Accounts) that are not subject to control agreements as of the   Closing Date, in form and substance satisfactory to Agent. 8. NEGATIVE   COVENANTS. No Loan Party Obligor shall, and no Loan Party Obligor shall   permit any other Loan Party to: 8.1. Fundamental Changes. Merge, Divide, or   consolidate with another Person, form any new Subsidiary, including by any   Division thereof, acquire any interest in any Person, or wind-up its business   operations or cease substantially all or any material portion of its normal   business operations, dissolve or liquidate, except for the following: (a) any   Borrower may merge or consolidate with any other Borrower; (b) any Person   (other than a Borrower) may merge into any Subsidiary in a transaction in   which the surviving entity is a Subsidiary and, if any party to such merger   is a Loan Party, such surviving entity is (or becomes) a Subsidiary that is a   Loan Party concurrently with such merger; and (c) any Subsidiary of a   Borrower may dissolve, liquidate or wind up its affairs at any time; provided   that such dissolution, liquidation or winding-up, as applicable, could not   reasonably be expected to have a Material Adverse Effect or otherwise result   in a Default or Event of Default hereunder. 8.2. Asset Sales. Sell, transfer,   return, or dispose of any Collateral or other assets (including pursuant to   any Division), in each case with an aggregate fair market value in excess of   $250,000 in any Fiscal Year, except: (a) sales, transfers and dispositions of   (i) Inventory in the Ordinary Course of Business and (ii) used, obsolete,   worn out or surplus Equipment or property no longer material to the operation   of a Loan Party's business and in the ordinary course of business; (b) sales,   transfers and dispositions constituting an Investment permitted by Section   8.3; and (c) dispositions resulting from any casualty or other insured damage   to, or any taking under power of eminent domain or by condemnation or similar   proceeding of, any property or asset of (i) Company or any Subsidiary or (ii)   a customer or other Person being held by Company or any Subsidiary. 8.3.   Investments and Loans. Purchase, hold or acquire any capital stock, evidences   of Indebtedness or other equity interests (including any option, warrant or   other right to acquire any of the foregoing) of, make any loans or advances   to, Guaranty any obligations of, or make or permit to exist any investment   in, any other Person, or purchase or otherwise acquire (in one transaction or   a series of transactions) any assets of any other Person constituting a business   unit (whether through purchase of assets, merger, Division or otherwise),   except for Permitted Investments. 8.4. Indebtedness. Incur any Indebtedness   other than Permitted Indebtedness. 8.5. Liens. Create, incur, assume or   suffer to exist any Lien or other encumbrance of any nature whatsoever or   authorize under the UCC of any jurisdiction a Financing Statement naming the   Loan Party as debtor, or execute any security agreement authorizing any   secured party thereunder to file such Financing Statement, other than in   favor of Agent to secure the Obligations, on any of its assets whether now or   hereafter owned, other than Permitted Liens. -50- 

    

 

8.6. Restricted   Payments. Pay or declare any Restricted Payments, except that (a) Company and   each Loan Party may declare and pay non-cash dividends with respect to its   common stock payable solely in additional shares of its common stock, (b)   Subsidiaries of Company may declare and pay dividends ratably with respect to   their equity interests to any other Loan Party as the holder of such equity   interests, and (c) Company may declare and pay cash dividends with respect to   its common stock so long as the Payment Conditions have been satisfied. 8.7.   Business. Engage, directly or indirectly, in a business other than the   business which is being conducted on the date hereof and businesses   reasonably related or incidental thereto, wind up its business operations or   cease substantially all, or any material portion, of its normal business   operations, or suffer any material disruption, interruption or discontinuance   of a material portion of its normal business operations. 8.8. Payments on   Certain Indebtedness. Pay, or make any distributions for the payment of, (a)   any voluntary prepayment of principal with respect to the Term Loan Debt   unless (i) the Payment Conditions are satisfied or waived by Agent or (ii) if   the Payment Conditions are not satisfied or waived by Agent, such voluntary   prepayment is funded within a commercially reasonable time following an issuance   of equity interests of Company with proceeds that have been designated or   certificated by Borrower Representative as proceeds of such issuance, or (b)   any principal or other amount on any Indebtedness that is contractually   subordinated to Agent, in violation of the applicable subordination or   intercreditor agreement. 8.9. Transactions With Affiliates. Enter into any   transaction with an Affiliate of such Loan Party, other than any transaction   entered into in the Ordinary Course of Business, consistent with past   practices and on terms and conditions at least as favorable to such Loan   Party as would reasonably be obtained by such Loan Party at that time in a   comparable arm's-length transaction with a person other than an Affiliate and   which transaction has been disclosed in writing to the Lender prior to the   entry thereof. 8.10. Modifications to Governing Documents. Agree, consent,   permit or otherwise undertake to amend or otherwise modify any of the terms   or provisions of any Loan Party Obligor's Governing Documents, except for   such amendments or other modifications required by applicable law or that are   not materially adverse to Lender and then, only to the extent such amendments   or other modifications are fully disclosed in writing to Agent no less than   five (5) Business Days prior to being effectuated; provided, that any change   to any jurisdiction of organization, or entering into any transaction which   has the effect of changing any jurisdiction of organization, shall be made in   compliance with Section 7.8. 8.11. Burdensome Restrictions. (a)Enter into any   covenant or other agreement that restricts or is intended to restrict it from   pledging or granting a security interest in, mortgaging, assigning,   encumbering or otherwise creating a Lien on any of its property, whether,   real or personal, tangible or intangible, existing or hereafter acquired, in   favor of Agent to secure the Obligations, other than (a) in connection with   any document or instrument governing Liens permitted pursuant to clause (a)   of the definition of Permitted Liens, provided that any such restriction   contained therein relates only to the asset or assets subject to such   Permitted Lien, and (b) the Term Loan Documents subject to the Term Loan   Intercreditor Agreement. (b) Create or otherwise cause or suffer to exist or   become effective any encumbrance or restriction (other than any Loan Document   or the Term Loan Documents subject to the Term Loan Intercreditor Agreement)   of any kind on the ability of any such Person to pay or make any dividends or   distributions to any Loan Party, to pay any of the Obligations, to make loans   or advances or to transfer any of its property or assets to any Loan Party.   -51- 

    

 

8.12.   Modifications to Term Loan Documents. Agree, consent, permit or otherwise   undertake to amend, waive or otherwise modify any of the terms or provisions   of any Term Loan Document in violation of the Term Loan Intercreditor   Agreement. 8.13. Funds Maintained in Revolving Loan Funding Account.   Transfer, move or otherwise utilize any funds maintained in the Revolving   Loan Funding Account except for working capital and other general corporate   purposes in the Ordinary Course of Business. 9. FINANCIAL COVENANTS. Each   Loan Party Obligor shall at all times comply with the following Financial   Covenants: 9.1. Fixed Charge Coverage Ratio. Borrowers shall not permit   Excess Availability at any time to be less than the Minimum Excess   Availability Amount, unless as of the last day of the most recent month for   which the monthly financial statements of Borrowers and the related   Compliance Certificate are required to have been delivered to Lender pursuant   to Section 7.15, the Fixed Charge Coverage Ratio for the twelve consecutive   calendar month period then ended is greater than 1:10 to 1:00. 9.2.Capital   Expenditure Limitation. The Loan Parties shall not make any Capital   Expenditures if, after giving effect to such Capital Expenditures, the   aggregate cost of all Capital Expenditures of the Loan Parties would exceed   $5,400,000 during any Fiscal Year. 10. RELEASE, LIMITATION OF LIABILITY AND   INDEMNITY. 10.1. Release. Each Borrower and each other Loan Party Obligor on   behalf of itself and its successors, assigns, heirs and other legal   representatives, hereby absolutely, unconditionally and irrevocably releases,   remises and forever discharges Agent and each Lender and any and all   Participants and Affiliates, and their respective successors and assigns, and   their respective directors, members, managers, officers, employees, attorneys   and agents, including without limitation each Agent-Related Person, and any   other Person affiliated with or representing Agent or any Lender   (collectively, the "Released Parties") of and from any and all   liability, including all actual or potential claims, demands or causes of   action of any kind, nature or description whatsoever, whether arising in law   or equity or under contract or tort or under any state or federal law or   otherwise, which any Borrower or any Loan Party or any of their successors,   assigns or other legal representatives has had, now has or has made claim to   have against any of the Released Parties for or by reason of any act,   omission, matter, cause or thing whatsoever, including any liability arising   from acts or omissions pertaining to the transactions contemplated by this   Agreement and the other Loan Documents, whether based on errors of judgment   or mistake of law or fact, from the beginning of time to and including the   Closing Date, whether such claims, demands and causes of action are matured   or known or unknown. Notwithstanding any provision in this Agreement to the   contrary, this Section 10.1 shall remain operative even after the Termination   Date and shall survive the payment in full of all of the Loans. Such release   is made on the date hereof and remade upon each request for a Loan by any   Borrower or Borrower Representative. 10.2. Limitation of Liability. In no   circumstance will any of the Released Parties be liable for lost profits or   other special, punitive, or consequential damages. Notwithstanding any   provision in this Agreement to the contrary, this Section 10.2 shall remain   operative even after the Termination Date and shall survive the payment in   full of all of the Loans. 10.3. Indemnity. (a) Each Loan Party Obligor hereby   agrees to indemnify the Released Parties and hold them harmless from and   against any and all claims, debts, liabilities, demands, obligations,   actions, causes of action, penalties, costs and expenses (including internal   and external attorneys' fees), of every nature, character and description,   which the Released Parties may sustain or incur based upon or arising -52- 

    

 

out of any of   the transactions contemplated by this Agreement or any other Loan Documents   or any of the Obligations, any Collateral relating thereto, any drafts   thereunder and any errors or omissions relating thereto, or any other matter,   cause or thing whatsoever occurred, done, omitted or suffered to be done by   Agent or any Lender relating to any Loan Party or the Obligations (except any   such amounts sustained or incurred solely as the result of the gross   negligence or willful misconduct of such Released Parties, as finally   determined by a court of competent jurisdiction). Notwithstanding any   provision in this Agreement to the contrary, this Section 10.3 shall remain   operative even after the Termination Date and shall survive the payment in   full of all of the Loans. (b) To the extent that any Loan Party Obligor fails   to pay any amount required to be paid by it to Agent (or any Released Party   of Agent) under paragraph (a) above, each Lender severally agrees to pay to   Agent (or such Released Party), such Lender's Pro Rata Share (determined as   of the time that the applicable unreimbursed expense or indemnity payment is   sought) of such unpaid amount (it being understood that any such payment by   the Lenders shall not relieve any Loan Party of any default in the payment   thereof); provided that the unreimbursed expense or indemnified loss, claim,   damage, penalty, liability or related expense, as the case may be, was   incurred by or asserted against Agent in its capacity as such. 11. EVENTS OF   DEFAULT AND REMEDIES. 11.1. Events of Default. The occurrence of any of the   following events shall constitute an "Event of Default": (a)   Payment. If any Loan Party Obligor or any Other Obligor fails to pay to   Agent, when due, any principal or interest payment or any other monetary   Obligation required under this Agreement or any other Loan Document; (b)   Breaches of Representations and Warranties. If any warranty, representation,   statement, report or certificate made or delivered to Agent or any Lender by   or on behalf of any Loan Party or any Other Obligor is untrue or misleading   in any material respect (except where such warranty or representation is   already qualified by Material Adverse Effect, materiality, dollar thresholds   or similar qualifications, in which case such warranty or representation   shall be accurate in all respects); (c) Breaches of Covenants. (i) If any   Loan Party or any Other Obligor defaults in the due observance or performance   of any covenant, condition or agreement contained in Section 5.2, 6.1, 6.6,   6.7, 7.2 (limited to the last sentence of Section 7.2), 7.3, 7.7, 7.8,   7.11(c), 7.13, 7.14, 7.15, 7.24, 7.25, 7.26, 7.27, 8 or 9; or (ii) If any   Loan Party or any Other Obligor defaults in the due observance or performance   of any covenant, condition or agreement contained in any provision of this   Agreement or any other Loan Document and not addressed in clauses Sections   11.1(a), (b) or (c)(i), and the continuance of such default unremedied for a   period of ten Business Days; provided, that such ten Business Day grace   period shall not be available for any default that is not reasonably capable   of being cured within such period or for any intentional default; (d)   Judgment.If one or more judgments aggregating in excess of $250,000 is   obtained against any Loan Party or any Other Obligor which remains unstayed   for more than thirty (30) days or is enforced; (e) Cross-Default. If any   default occurs with respect to any Indebtedness (other than the Obligations   or the Term Loan Debt) of any Loan Party or any Other Obligor if (i) such   default -53- 

    

 

shall consist   of the failure to pay such Indebtedness in excess of $250,000 when due,   whether by acceleration or otherwise or (ii) the effect of such default is to   permit the holder, with or without notice or lapse of time or both, to   accelerate the maturity of any such Indebtedness or to cause such   Indebtedness to become due prior to the stated maturity thereof (without   regard to the existence of any subordination or intercreditor agreements);   (f) Dissolution. The dissolution, termination of existence, insolvency or   business failure or suspension or cessation of business as usual of any Loan   Party or any Other Obligor (or of any general partner of any Loan Party or   any Other Obligor if it is a partnership); (g) Voluntary Bankruptcy or   Similar Proceedings.If any Loan Party or any Other Obligor shall apply for or   consent to the appointment of a receiver, trustee, custodian or liquidator of   it or any of its properties, admit in writing its inability to pay its debts   as they mature, make a general assignment for the benefit of creditors, be adjudicated   a bankrupt or insolvent or be the subject of an order for relief under the   Bankruptcy Code or under any bankruptcy or insolvency law of a foreign   jurisdiction, or file a voluntary petition in bankruptcy, or a petition or an   answer seeking reorganization or an arrangement with creditors or to take   advantage of any bankruptcy, reorganization, insolvency, readjustment of   debt, dissolution or liquidation law or statute, or an answer admitting the   material allegations of a petition filed against it in any proceeding under   any such law, or take or permit to be taken any action in furtherance of or   for the purpose of effecting any of the foregoing; (h) Involuntary Bankruptcy   or Similar Proceedings. The commencement of an involuntary case or other   proceeding against any Loan Party or any Other Obligor seeking liquidation,   reorganization or other relief with respect to it or its debts under any   bankruptcy, insolvency or other similar applicable law or seeking the   appointment of a trustee, receiver, liquidator, custodian or other similar   official of it or any substantial part of its property, or if an order for   relief is entered against any Loan Party or any Other Obligor under any   bankruptcy, insolvency or other similar applicable law as now or hereafter in   effect; provided, that if such commencement of proceedings is involuntary,   such action shall not constitute an Event of Default unless such proceedings   are not dismissed within sixty (60) days after the commencement of such   proceedings, though Agent and Lenders shall have no obligation to make Loans   during such forty-five day period or, if earlier, until such proceedings are   dismissed; (i) Revocation or Termination of Guaranty or Security Documents.   The actual or attempted revocation or termination of, or limitation or denial   of liability under, any guaranty of any of the Obligations, or any security   document securing any of the Obligations, by any Loan Party or Other Obligor;   (j) Term Loan Debt. (i) A Default or Event of Default (as such terms are   defined in the Term Loan Documents) with respect to the Term Loan Debt or the   occurrence of any condition or event that results in the Term Loan Debt   becoming due prior to its scheduled maturity as of the Closing Date or   permits any holder or holders of the Term Loan Debt or any trustee or agent   on its or their behalf to cause the Term Loan Debt to become due, or require   the prepayment, repurchase, redemption of defeasance thereof, prior to its   scheduled maturity as of the Closing Date; or (ii) If any Loan Party or Other   Obligor makes any payment on account of the Term Loan Debt other than   payments which are not prohibited by the applicable provisions pertaining   thereto, or if any holder of the Term Loan Debt attempts to limit or   terminate any applicable provisions set forth in the Term Loan Intercreditor   Agreement; -54- 

    

 

(k) Criminal   Indictment or Proceedings. If there is any indictment of any Loan Party, any   Loan Party's officers, any Other Obligor or any Other Obligor's officers   under any criminal statute or commencement of criminal proceedings against   any such Person; (l) Change of Control. If (i) any Person (or two or more   Persons acting in concert) shall have acquired beneficial ownership, directly   or indirectly of more than fifty percent (50%) of the outstanding voting   equity interests of Company on a fully diluted basis; (ii) during any period   of twelve (12) consecutive months, a majority of the members of the board of   directors of Company cease to be composed of individuals (1) who were members   of that board or equivalent governing body on the first day of such period,   (2) whose election or nomination to that board was approved by individuals   referred to in clause (1) above constituting at the time of such election or   nomination at least a majority of that board, or (3) whose election or   nomination to that board was approved by individuals referred to in clauses   (1) and (2) above constituting at the time of such election or nomination at   least a majority of that board; (iii) Company ceases to, directly or   indirectly, own and control 100% of each class of the outstanding equity   interests of each other Loan Party; or (iv) a "change of control"   or similar event occurs under the Term Loan Debt Documents; (m) Reserved. (n)   Invalid Liens. If any Lien purported to be created by any Loan Document shall   cease to be a valid perfected first priority Lien (subject only to any   priority accorded by law to Permitted Liens) on any material portion of the   ABL Priority Collateral, or second priority Lien (subject only to any   priority accorded by law to Permitted Liens) on any material portion of the   Term Loan Priority Collateral, or any Loan Party or any Other Obligor shall   assert in writing that any Lien purported to be created by any Loan Document   is not a valid perfected first-priority lien (subject only to any priority   accorded by law to Permitted Liens) on the assets or properties comprising   ABL Priority Collateral purported to be covered thereby or second-priority   lien (subject only to any priority accorded by law to Permitted Liens) on the   assets or properties comprising Term Loan Priority Collateral purported to be   covered thereby, as applicable; (o) Termination of Loan Documents. If any of   the Loan Documents shall cease to be in full force and effect (other than as   a result of the discharge thereof in accordance with the terms thereof or by   written agreement of all parties thereto); (p) Liquidation Sales. The   determination by any Loan Party to employ an agent or other third party or   otherwise engage any Person or solicit proposals for the engagement of any   Person in connection with the proposed liquidation of all or a material   portion of its assets or store locations; (q) Loss of Collateral. The (i)   uninsured loss, theft, damage or destruction of any of the Collateral (other   than returned products destroyed by Borrowers in the Ordinary Course of   Business), (ii) the insured loss, theft, damage or destruction of any of the   Collateral in an amount in excess of $250,000 in the aggregate for all such   events during any Fiscal Year, or (iii) except as permitted hereby, the sale,   lease or furnishing under a contract of service of, any of the Collateral.   (r) Plans. (i) An ERISA Event occurs with respect to a Pension Plan or   Multiemployer Plan which has resulted or could reasonably be expected to   result in liability of any Loan Party or any Subsidiary under Title IV of   ERISA to the Pension Plan, Multiemployer Plan or the PBGC in an aggregate   amount in excess of $250,000, (ii) the existence of any Lien under Section   430(k) or Section 6321 of the Code or Section 303(k) or Section 4068 of ERISA   on any assets of a Loan Party, or (iii) a Loan Party or any ERISA Affiliate   fails to pay when due, after the expiration of any applicable grace period,   any installment payment with respect to its withdrawal liability under   Section 4201 of ERISA under a Multiemployer Plan in an aggregate amount in   excess of $250,000. -55- 

    

 

(s) FDA   Matters. If any Governmental Authority issues any injunction or other order   that prohibits any Loan Party from marketing, selling or manufacturing any of   any Loan Party's products currently approved by the FDA or any future   products of any Loan Party once approved by the FDA (collectively, the   "Commercial Products") if sales of such products covered by such   injunction or order accounted for more than 50% of net sales revenue of   Company and its Subsidiaries for the most recently ended four fiscal quarter   periods, and such injunction or other prohibition shall continue to be in   force or otherwise effective for more than sixty (60) consecutive calendar   days; provided, however, that with respect to manufacturing, if there is one   or more alternative manufacturers of the Commercial Product manufacturing on   Company's or its Subsidiaries' behalf that is not enjoined or otherwise   prohibited from manufacturing the Commercial Product and are able to deliver   product on Company's or its Subsidiaries' behalf in a manner that is   consistent with prior levels without a commercial distribution delay, it   shall not be an Event of Default under this clause (s) if Company or any of   its Subsidiaries are enjoined or otherwise prohibited from manufacturing the   Commercial Product. (t) Product Recall. The occurrence of any product recall   or similar event to remove any drugs or other products sold by any Loan Party   from the market, in each case to the extent such product recall results in   (i) a Material Adverse Effect or (ii) any set-off in excess of $500,000 in   the aggregate by Account Debtors against then outstanding Accounts. 11.2.   Remedies with Respect to Lending Commitments/Acceleration, Etc. Upon the   occurrence of an Event of Default, Agent may (in its sole discretion), or at   the direction of Required Lenders, shall, (a) terminate all or any portion of   its commitment to lend to or extend credit to Borrowers under this Agreement   and/or any other Loan Document, without prior notice to any Loan Party and/or   (b) demand payment in full of all or any portion of the Obligations (whether   or not payable on demand prior to such Event of Default), together with the   Early Payment/Termination Premium in the amount specified in Section 3.2(b)   and/or (c) take any and all other and further actions and avail itself of any   and all rights and remedies available to Agent under this Agreement, any   other Loan Document, under law or in equity. Notwithstanding the foregoing   sentence, upon the occurrence of any Event of Default described in Section 11.1(g)   or Section 11.1(h), without notice, demand or other action by Agent all of   the Obligations (including the Early Payment/Termination Premium in the   amount specified in Section 3.2(b)) shall immediately become due and payable   whether or not payable on demand prior to such Event of Default. 11.3.   Remedies with Respect to Collateral. Without limiting any rights or remedies   Agent or any Lender may have pursuant to this Agreement, the other Loan   Documents, under applicable law or otherwise, upon the occurrence and during   the continuation of an Event of Default, subject to the terms of the   Intercreditor Agreement: (a) Any and All Remedies. Agent may take any and all   actions and avail itself of any and all rights and remedies available to   Agent under this Agreement, any other Loan Document, under law or in equity,   and the rights and remedies herein and therein provided shall be cumulative   and not exclusive of any rights or remedies provided by applicable law or   otherwise. (b) Collections; Modifications of Terms. Agent may, but shall be   under no obligation to: (i) notify all appropriate parties that the   Collateral, or any part thereof, has been assigned to, or is subject to a   security interest in favor of, Agent; (ii) demand, sue for, collect and give   receipts for and take all necessary or desirable steps to collect any   Collateral or Proceeds in its or any Loan Party Obligor's name, and apply any   such collections against the Obligations as Agent may elect; (iii) take   control of any Collateral and any cash and non-cash Proceeds of any   Collateral; (iv) enforce, compromise, extend, renew settle or discharge any   rights or benefits of each Loan Party Obligor with respect to or in and to   any Collateral, or deal with the Collateral as Agent may deem advisable; and   (v) make any compromises, exchanges, substitutions or surrenders of   Collateral Agent deems necessary or proper in its reasonable discretion,   including extending the time of payment, permitting payment in installments,   or -56- 

    

 

otherwise   modifying the terms or rights relating to any of the Collateral, all of which   may be effected without notice to, consent of, or any other action of any   Loan Party and without otherwise discharging or affecting the Obligations,   the Collateral or the security interests granted to Agent under this   Agreement or any other Loan Document. (c) Insurance. Agent may file proofs of   loss and claim with respect to any of the Collateral with the appropriate   insurer, and may endorse in its own and each Loan Party Obligor's name any   checks or drafts constituting Proceeds of insurance. Any Proceeds of   insurance received by Agent may be applied by Agent against payment of all or   any portion of the Obligations as Agent may elect in its reasonable   discretion. (d) Possession and Assembly of Collateral.Agent may take   possession of the Collateral and/or, without removal, render each Loan Party   Obligor's Equipment unusable. Upon Agent's request, each Loan Party Obligor   shall assemble the Collateral and make it available to Agent at one or more   places designated by Agent. (e) Set-off. Agent may and, without any notice   to, consent of or any other action by any Loan Party (such notice, consent or   other action being expressly waived), set-off or apply (i) any and all   deposits (general or special, time or demand, provisional or final) at any   time held by or for the account of Agent or any Affiliate of Agent and (ii)   any Indebtedness at any time owing by Agent or any Affiliate of Agent or any   Participant in the Loans to or for the credit or the account of any Loan   Party Obligor to the repayment of the Obligations, irrespective of whether   any demand for payment of the Obligations has been made. (f) Disposition of   Collateral. (i) Sale, Lease, etc. of Collateral. Agent may, without demand,   advertising or notice, all of which each Loan Party Obligor hereby waives   (except as the same may be required by the UCC or other applicable law and is   not waivable under the UCC or such other applicable law), at any time or   times in one or more public or private sales or other dispositions, for cash,   on credit or otherwise, at such prices and upon such terms as determined by   Agent (provided such price and terms are commercially reasonable within the   meaning of the UCC to the extent such sale or other disposition is subject to   the UCC requirements that such sale or other disposition must be commercially   reasonable), (A) sell, lease, license or otherwise dispose of any and all   Collateral and/or (B) deliver and grant options to a third party to purchase,   lease, license or otherwise dispose of any and all Collateral. Agent may   sell, lease, license or otherwise dispose of any Collateral in its   then-present condition or following any preparation or processing deemed   necessary by Agent in its reasonable discretion. Agent may be the purchaser   at any such public or private sale or other disposition of Collateral, and in   such case Agent may make payment of all or any portion of the purchase price   therefor by the application of all or any portion of the Obligations due to   Agent to the purchase price payable in connection with such sale or   disposition. Agent may, if it deems it reasonable, postpone or adjourn any   sale or other disposition of any Collateral from time to time by an   announcement at the time and place of the sale or disposition to be so   postponed or adjourned without being required to give a new notice of sale or   disposition; provided, that Agent shall provide the applicable Loan Party   Obligor with written notice of the time and place of such postponed or   adjourned sale or disposition. Each Loan Party Obligor hereby acknowledges   and agrees that Agent's compliance with any requirements of applicable law in   connection with a sale, lease, license or other disposition of Collateral   will not be considered to adversely affect the commercial reasonableness of   any sale, lease, license or other disposition of such Collateral. (ii)   Deficiency. Each Loan Party Obligor shall remain liable for all amounts of   the Obligations remaining unpaid as a result of any deficiency of the Proceeds   of the sale, -57- 

    

 

lease, license   or other disposition of Collateral after such Proceeds are applied to the   Obligations as provided in this Agreement. (iii) Warranties; Sales on Credit.   Agent may sell, lease, license or otherwise dispose of the Collateral without   giving any warranties and may specifically disclaim any and all warranties,   including but not limited to warranties of title, possession, merchantability   and fitness. Each Loan Party Obligor hereby acknowledges and agrees that   Agent's disclaimer of any and all warranties in connection with a sale,   lease, license or other disposition of Collateral will not be considered to   adversely affect the commercial reasonableness of any such disposition of the   Collateral. If Agent sells, leases, licenses or otherwise disposes of any of   the Collateral on credit, Borrowers will be credited only with payments   actually made in cash by the recipient of such Collateral and received by   Agent and applied to the Obligations. If any Person fails to pay for   Collateral acquired pursuant this Section 11.3(f) on credit, Agent may   re-offer the Collateral for sale, lease, license or other disposition. (g)   Investment Property; Voting and Other Rights; Irrevocable Proxy. (i) All   rights of each Loan Party Obligor to exercise any of the voting and other   consensual rights which it would otherwise be entitled to exercise in   accordance with the terms hereof with respect to any Investment Property, and   to receive any dividends, payments, and other distributions which it would   otherwise be authorized to receive and retain in accordance with the terms   hereof with respect to any Investment Property, shall immediately, at the   election of Agent (without requiring any notice) cease, and all such rights   shall thereupon become vested solely in Agent, and Agent (personally or   through an agent) shall thereupon be solely authorized and empowered, without   notice, to (A) transfer and register in its name, or in the name of its   nominee, the whole or any part of the Investment Property, it being   acknowledged by each Loan Party Obligor that any such transfer and   registration may be effected by Agent through its irrevocable appointment as   attorney-in-fact pursuant to Section 11.3(g)(ii) and Section 6.4, (B)   exchange certificates or instruments representing or evidencing Investment   Property for certificates or instruments of smaller or larger denominations,   (C) exercise the voting and all other rights as a holder with respect to all   or any portion of the Investment Property (including all economic rights, all   control rights, authority and powers, and all status rights of each Loan   Party Obligor as a member or as a shareholder (as applicable) of the Issuer),   (D) collect and receive all dividends and other payments and distributions   made thereon, (E) notify the parties obligated on any Investment Property to   make payment to Agent of any amounts due or to become due thereunder, (F)   endorse instruments in the name of each Loan Party Obligor to allow   collection of any Investment Property, (G) enforce collection of any of the   Investment Property by suit or otherwise, and surrender, release, or exchange   all or any part thereof, or compromise or renew for any period (whether or   not longer than the original period) any liabilities of any nature of any   Person with respect thereto, (H) consummate any sales of Investment Property   or exercise any other rights as set forth in Section 11.3(f), (I) otherwise   act with respect to the Investment Property as though Agent was the outright   owner thereof and (J) exercise any other rights or remedies Agent may have   under the UCC, other applicable law or otherwise. (ii)   EACHLOANPARTYOBLIGORHEREBYIRREVOCABLY CONSTITUTES AND APPOINTS AGENT AS ITS   PROXY AND ATTORNEY-IN-FACT FOR SUCH LOAN PARTY OBLIGOR WITH RESPECT TO ALL OF   EACH SUCH LOAN PARTY OBLIGOR'S INVESTMENT PROPERTY WITH THE RIGHT, DURING THE   CONTINUANCE OF AN EVENT OF DEFAULT, WITHOUT NOTICE, TO TAKE ANY OF THE   FOLLOWING ACTIONS: (A) TRANSFER AND REGISTER IN AGENT'S NAME, OR IN THE NAME   OF ITS NOMINEE, THE WHOLE OR ANY PART OF THE INVESTMENT PROPERTY, (B) VOTETHE   PLEDGED EQUITY, WITH FULL POWER OF SUBSTITUTION TO DO SO, (C) RECEIVE AND   COLLECT ANY DIVIDEND OR ANY -58- 

    

 

OTHER PAYMENT   OR DISTRIBUTION IN RESPECT OF, OR IN EXCHANGE FOR, THE INVESTMENT PROPERTY OR   ANY PORTION THEREOF, TO GIVE FULL DISCHARGE FOR THE SAME AND TO INDORSE ANY   INSTRUMENT MADE PAYABLE TO ANY LOAN PARTY OBLIGOR FOR THE SAME, (D) EXERCISE   ALL OTHER RIGHTS, POWERS, PRIVILEGES, AND REMEDIES (INCLUDING ALL ECONOMIC   RIGHTS, ALL CONTROL RIGHTS, AUTHORITY AND POWERS, AND ALL STATUS RIGHTS OF   EACH LOAN PARTY OBLIGOR AS A MEMBER OR AS A SHAREHOLDER (AS APPLICABLE) OF   THE ISSUER) TO WHICH A HOLDER OF THE PLEDGED COLLATERAL WOULD BE ENTITLED   (INCLUDING, WITH RESPECT TO THE PLEDGED EQUITY, GIVING OR WITHHOLDING WRITTEN   CONSENTS OF MEMBERS OR SHAREHOLDERS, CALLING SPECIAL MEETINGS OF MEMBERS OR   SHAREHOLDERS, AND VOTING AT SUCH MEETINGS), AND (E) TAKE ANY ACTION AND TO   EXECUTE ANY INSTRUMENT WHICH AGENT MAY DEEM NECESSARY OR ADVISABLE TO   ACCOMPLISH THE PURPOSES OF THIS AGREEMENT. THE APPOINTMENT OF AGENT AS PROXY   AND ATTORNEY-IN-FACT IS COUPLED WITH AN INTEREST AND SHALL BE VALID AND   IRREVOCABLE UNTIL (x) ALL OF THE OBLIGATIONS HAVE BEEN INDEFEASIBLY PAID IN   FULL IN CASH IN ACCORDANCE WITH THE PROVISIONS OF THIS AGREEMENT AND THE   OTHER LOAN DOCUMENTS, (y) AGENT AND LENDERS HAVE NO FURTHER OBLIGATIONS UNDER   THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, AND (z) THE COMMITMENTS UNDER THIS   AGREEMENT HAVE EXPIRED OR HAVE BEEN TERMINATED (IT BEING UNDERSTOOD AND   AGREED THAT SUCH OBLIGATIONS WILL BE AUTOMATICALLY REINSTATED IF AT ANY TIME   PAYMENT, IN WHOLE OR IN PART, OF ANY OF THE OBLIGATIONS IS RESCINDED OR MUST   OTHERWISE BE RESTORED OR RETURNED BY AGENT OR ANY LENDER FOR ANY REASON   WHATSOEVER, INCLUDING AS A PREFERENCE, FRAUDULENT CONVEYANCE, OR OTHERWISE   UNDER ANY BANKRUPTCY, INSOLVENCY, OR SIMILAR LAW, ALL AS THOUGH SUCH PAYMENT   HAD NOT BEEN MADE; IT BEING FURTHER UNDERSTOOD THAT IN THE EVENT PAYMENT OF   ALL OR ANY PART OF THE OBLIGATIONS IS RESCINDED OR MUST BE RESTORED OR   RETURNED,ALL REASONABLE OUT-OF-POCKET COSTS AND EXPENSES (INCLUDING ALL   REASONABLE INTERNAL AND EXTERNAL ATTORNEYS' FEES AND DISBURSEMENTS) INCURRED   BY AGENT AND LENDERS IN DEFENDING AND ENFORCING SUCH REINSTATEMENT SHALL HEREBY   BE DEEMED TO BE INCLUDED AS A PART OF THE OBLIGATIONS). SUCH APPOINTMENT OF   AGENT AS PROXY AND AS ATTORNEY-IN-FACT SHALL BE VALID AND IRREVOCABLE AS   PROVIDED HEREIN NOTWITHSTANDING ANY LIMITATIONS TO THE CONTRARY SET FORTH IN   ANY GOVERNING DOCUMENTS OF ANY LOAN PARTY OBLIGOR, ANY ISSUER, OR OTHERWISE.   (iii) In order to further effect the foregoing transfer of rights in favor of   Agent, during the continuance of an Event of Default, each Loan Party Obligor   hereby authorizes and instructs each Issuer of Investment Property pledged by   such Loan Party Obligor to comply with any instruction received by such   Issuer from Agent without any other or further instruction from such Loan   Party Obligor, and each Loan Party Obligor acknowledges and agrees that each   Issuer shall be fully protected in so complying, and to pay any dividends,   distributions, or other payments with respect to any of the Investment   Property directly to Agent. (iv) Upon exercise of the proxy set forth herein,   all prior proxies given by any Loan Party Obligor with respect to any of the   Pledged Equity or other Investment Property, other than to Agent, are hereby   revoked, and no subsequent proxies, other than to Agent will be given with   respect to any of the Pledged Equity or any of the other Investment Property   unless Agent otherwise subsequently agrees in writing. Agent, as proxy, will   be empowered and may exercise the irrevocable proxy to vote the Pledged   Equity and the other Investment Property at -59- 

    

 

any and all   times during the existence of an Event of Default, including, at any meeting   of shareholders or members, as the case may be, however called, and at any   adjournment thereof, or in any action by written consent, and may waive any   notice otherwise required in connection therewith. To the fullest extent   permitted by applicable law, Agent shall have no agency, fiduciary or other   implied duties to any Loan Party Obligor, any Issuer, any Loan Party or any   other Person when acting in its capacity as such proxy or attorney-in-fact.   Each Loan Party Obligor hereby waives and releases any claims that it may   otherwise have against Agent with respect to any breach, or alleged breach,   of any such agency, fiduciary or other duty. (v) Any transfer to Agent or its   nominee, or registration in the name of Agent or its nominee, of the whole or   any part of the Investment Property shall be made solely for purposes of   effectuating voting or other consensual rights with respect to the Investment   Property in accordance with the terms of this Agreement and is not intended   to effectuate any transfer of ownership of any of the Investment Property.   Notwithstanding the delivery by Agent of any instruction to any Issuer or any   exercise by Agent of an irrevocable proxy or otherwise, Agent shall not be   deemed the owner of, or assume any obligations or any liabilities whatsoever   of the owner or holder of, any Investment Property unless and until Agent   expressly accepts such obligations in a duly authorized and executed writing   and agrees in writing to become bound by the applicable Governing Documents   or otherwise becomes the owner thereof under applicable law (including   through a sale as described in Section 11.3(f)). The execution and delivery   of this Agreement shall not subject Agent to, or transfer or pass to Agent,   or in any way affect or modify, the liability of any Loan Party Obligor under   the Governing Documents of any Issuer or any related agreements, documents,   or instruments or otherwise. In no event shall the execution and delivery of   this Agreement by Agent, or the exercise by Agent of any rights hereunder or   assigned hereby, constitute an assumption of any liability or obligation   whatsoever of any Loan Party Obligor to, under, or in connection with any of   the Governing Documents of any Issuer or any related agreements, documents,   or instruments or otherwise. (vi) Compliance with the Securities Act as now   in effect or as hereafter amended, or any similar statute hereafter adopted   with similar purpose or effect, as well as any applicable "Blue   Sky" or other state securities laws, if applicable to the Collateral or   the portion thereof being sold, may require strict limitations as to the   manner in which the Agent or any subsequent transferee may dispose of the   Collateral. With respect to any disposition as to which the Securities Act or   analogous state securities laws is applicable, each Loan Party Obligor hereby   waives any objection to sale in a compliant manner, and agrees that the Agent   has no obligation to obtain the maximum possible price for the Collateral so   long as the Agent proceeds in a commercially reasonable manner. Without   limiting the generality of the foregoing, each Loan Party Obligor agrees that   in conducting a disposition of the Collateral as to which the Securities Act   or analogous state securities laws applies, Agent may seek to sell the   Collateral by private placement, and may restrict bidders and prospective   purchasers to those who are willing to represent that they are purchasing for   investment only and not for distribution and who otherwise satisfy   qualifications designed to ensure compliance with the Securities Act and   analogous state securities laws and those that may be established in the   Issuer’s Governing Documents. Each Loan Party Obligor acknowledges that in   order to protect Agent's interest, it may be necessary to sell the Collateral   at a price less than the maximum price attainable if a sale were delayed or   were made in another manner, including, without limitation, a public offering   under the Securities Act. In order to address these potential compliance   requirements, Agent may solicit offers to purchase the Collateral from a   limited number of bidders reasonably believed by Agent to be institutional   investors or accredited investors. If Agent solicits offers in a commercially   reasonable manner, then acceptance by Agent of one or more of the offers   shall be deemed to be a commercially reasonable method of disposition of the   Collateral and Agent will not be responsible or liable for selling all or any   portion of the Collateral at a price that Agent deems in good faith to be   reasonable. Agent is under no obligation to delay a disposition of any -60- 

    

 

portion of the   Collateral that are securities under the Securities Act or applicable "Blue   Sky" or other state securities law for the period of time necessary to   permit any Loan Party Obligor or the Issuer to register the securities for   public sale under the Securities Act or under applicable "Blue Sky"   or other state securities laws, even if a Loan Party Obligor or the Issuer   agrees to do so. In addition, to the extent not prohibited by applicable law,   each Loan Party Obligor waives any right to prior notice (except to the   extent expressly provided in this Agreement) or judicial hearing in   connection with the taking possession or the disposition of any of the   Collateral, including any right which Loan Party Obligor otherwise would   have. (vii) To the extent permitted under applicable law, Agent is not   required to conduct any foreclosure sale of the Investment Property or any   portion thereof. (viii) Agent, at its option, may obtain the appointment of a   receiver to take possession of the Investment Property and, at the option of   Agent, a receiver may be empowered (i) to collect, receive and enforce all   distributions, (ii) to exercise the rights of Agent as provided in this   Agreement, (iii) to collect all other amounts owed to any Loan Party Obligor   in respect of the Investment Property as and when due to any Loan Party   Obligor, (iv) to otherwise collect, sell or dispose of the Investment   Property, (v) to exercise all rights in and under the Investment Property;   and (vi) to turn over all net proceeds to Agent. Each Loan Party Obligor   irrevocably and unconditionally agrees that a receiver may be appointed by a   court to take the actions listed above without regard to the adequacy of the   security for the Obligations, and the actions of the receiver may be taken in   the name of the receiver, any Loan Party Obligor or Agent. (ix) Agent may   elect to conduct a sale of an economic interest in any Investment Property   constituting limited liability company interests that does not result in the   purchaser being admitted as a substitute limited liability company member in   the Issuer, and that any sale or dispositions made in good faith will be   considered commercially reasonable, notwithstanding the possibility that a   substantially higher price might be realized if the purchaser were able to be   admitted as a substitute limited liability company member rather than the   holder of only an economic interest in the Issuer. (x) Agent may disclose to   prospective purchasers all of the information relating to the Investment   Property (and the applicable Issuer) that is in the Agent's possession or   otherwise available to the Agent. (xi) Each Loan Party Obligor hereby   authorizes and instructs their respective Issuer to comply with any   instruction received by it from Agent in writing that (i) states that an   Event of Default has occurred and is continuing and (ii) is otherwise in accordance   with the terms of the provisions of this Agreement as to Investment Property,   without any other or further instructions from the respective Loan Party   Obligor, and such Loan Party Obligor agrees that Issuer be fully protected in   so complying. (h) Election of Remedies. Agent shall have the right in Agent's   sole discretion to determine which rights, security, Liens or remedies Agent   may at any time pursue, foreclose upon, relinquish, subordinate, modify or   take any other action with respect to, without in any way impairing,   modifying or affecting any of Agent's other rights, security, Liens or   remedies with respect to any Collateral or any of Agent's rights or remedies   under this Agreement or any other Loan Document. (i) Agent's Obligations.   Each Loan Party Obligor agrees that Agent shall not have any obligation to   preserve rights to any Collateral against prior parties or to marshal any   Collateral of any kind for the benefit of any other creditor of any Loan   Party Obligor or any other Person. Agent shall not be responsible to any Loan   Party Obligor or any other Person for loss or damage resulting from Agent's   -61- 

    

 

failure to   enforce its Liens or collect any Collateral or Proceeds or any monies due or   to become due under the Obligations or any other liability or obligation of   any Loan Party Obligor to Agent. (j) Waiver of Rights by Loan Party   Obligors.Except as otherwise expressly provided for in this Agreement or by   non-waivable applicable law, each Loan Party waives (i) presentment, demand   and protest and notice of presentment, dishonor, notice of intent to   accelerate, notice of acceleration, protest, default, nonpayment, maturity,   release, compromise, settlement, extension or renewal of any or all   commercial paper, accounts, contract rights, documents, instruments, chattel   paper and guaranties at any time held by Agent on which any Loan Party   Obligor may in any way be liable, and hereby ratifies and confirms whatever   Agent may do in this regard, (ii) all rights to notice and a hearing prior to   Agent's taking possession or control of, or to Agent's replevy, attachment or   levy upon, the Collateral or any bond or security which might be required by   any court prior to allowing Agent to exercise any of its remedies and (iii)   the benefit of all valuation, appraisal, marshaling and exemption laws. If   any notice of a proposed sale or other disposition of any part of the   Collateral is required under applicable law, each Loan Party Obligor agrees   that ten (10) calendar days prior notice of the time and place of any public   sale and of the time after which any private sale or other disposition is to   be made is commercially reasonable. 12. LOAN GUARANTY. 12.1. Guaranty. Each   Loan Party Obligor hereby agrees that it is jointly and severally liable for,   and absolutely and unconditionally guaranties to Agent, for the ratable   benefit of the Lenders, the prompt payment when due, whether at stated   maturity, upon acceleration or otherwise, and at all times thereafter, all of   the Obligations and all costs and expenses, including all court costs and   attorneys' and paralegals' fees (including internal and external counsel and   paralegals) and expenses of Agent or any Lender in endeavoring to collect all   or any part of the Obligations from, or in prosecuting any action against,   any Borrower, any Loan Party Obligor or any Other Obligor of all or any part   of the Obligations (and such costs and expenses paid or incurred shall be   deemed to be included in the Obligations). Each Loan Party Obligor further   agrees that the Obligations may be extended or renewed in whole or in part   without notice to or further assent from it, and that it remains bound upon   its guaranty notwithstanding any such extension or renewal. All terms of this   Loan Guaranty apply to and may be enforced by or on behalf of any branch or   Affiliate of Agent that extended any portion of the Obligations. 12.2.   Guaranty of Payment.This Loan Guaranty is a guaranty of payment and not of   collection. Each Loan Party Obligor waives any right to require Agent to sue   or otherwise take action against any Borrower, any other Loan Party Obligor,   any Other Obligor, or any other Person obligated for all or any part of the   Obligations, or otherwise to enforce its payment against any Collateral   securing all or any part of the Obligations. 12.3.No Discharge or   Diminishment of Loan Guaranty. (a) Except as otherwise expressly provided for   herein, the obligations of each Loan Party Obligor hereunder are   unconditional and absolute and not subject to any reduction, limitation,   impairment or termination for any reason (other than the indefeasible payment   in full in cash of all of the Obligations), including: (i) any claim of   waiver, release, extension, renewal, settlement, surrender, alteration, or   compromise of any of the Obligations, by operation of law or otherwise; (ii)   any change in the corporate existence, structure or ownership of any Borrower   or any Obligor; (iii) any insolvency, bankruptcy, reorganization or other   similar proceeding affecting any Borrower or any Obligor or their respective   assets or any resulting release or discharge of any obligation of any   Borrower or any Obligor; or (iv) the existence of any claim, setoff or other   rights which any Loan Party Obligor may have at any time against any   Borrower, any Obligor, Agent, or any other Person, whether in connection   herewith or in any unrelated transactions. -62- 

    

 

(b) The   obligations of each Loan Party Obligor hereunder are not subject to any   defense or setoff, counterclaim, recoupment, or termination whatsoever by   reason of the invalidity, illegality or unenforceability of any of the   Obligations or otherwise, or any provision of applicable law or regulation   purporting to prohibit payment by any Borrower or any Obligor of the   Obligations or any part thereof. (c) Further, the obligations of any Loan   Party Obligor hereunder shall not be discharged or impaired or otherwise   affected by: (i) the failure of Agent to assert any claim or demand or to   enforce any remedy with respect to all or any part of the Obligations; (ii)   any waiver or modification of or supplement to any provision of any agreement   relating to the Obligations; (iii) any release, non-perfection or invalidity   of any indirect or direct security for all or any part of the Obligations or all   or any part of any obligations of any Obligor; (iv) any action or failure to   act by Agent with respect to any Collateral; or (v) any default, failure or   delay, willful or otherwise, in the payment or performance of any of the   Obligations, or any other circumstance, act, omission or delay that might in   any manner or to any extent vary the risk of such Loan Party Obligor or that   would otherwise operate as a discharge of any Loan Party Obligor as a matter   of law or equity (other than the indefeasible payment in full in cash of all   of the Obligations). 12.4. Defenses Waived. To the fullest extent permitted   by applicable law, each Loan Party Obligor hereby waives any defense based on   or arising out of any defense of any Loan Party Obligor or the unenforceability   of all or any part of the Obligations from any cause, or the cessation from   any cause of the liability of any Loan Party Obligor, other than the   indefeasible payment in full in cash of all of the Obligations. Without   limiting the generality of the foregoing, each Loan Party Obligor irrevocably   waives acceptance hereof, presentment, demand, protest and, to the fullest   extent permitted by law, any notice not provided for herein, as well as any   requirement that at any time any action be taken by any Person against any   Borrower, any Obligor, or any other Person. Each Loan Party Obligor confirms   that it is not a surety under any state law and shall not raise any such law   as a defense to its obligations hereunder. Agent may, at its election,   foreclose on any Collateral held by it by one or more judicial or nonjudicial   sales, accept an assignment of any such Collateral in lieu of foreclosure or   otherwise act or fail to act with respect to any Collateral, compromise or   adjust any part of the Obligations, make any other accommodation with any   Borrower or any Obligor or exercise any other right or remedy available to it   against any Borrower or any Obligor, without affecting or impairing in any   way the liability of any Loan Party Obligor under this Loan Guaranty except   to the extent the Obligations have been fully and indefeasibly paid in cash.   To the fullest extent permitted by applicable law, each Loan Party Obligor   waives any defense arising out of any such election even though that election   may operate, pursuant to applicable law, to impair or extinguish any right of   reimbursement or subrogation or other right or remedy of any Loan Party   Obligor against any Borrower or any Obligor or any security. 12.5. Rights of   Subrogation. No Loan Party Obligor will assert any right, claim or cause of   action, including a claim of subrogation, contribution or indemnification   that it has against any Borrower or any Obligor, or any Collateral, until the   Termination Date. 12.6. Reinstatement; Stay of Acceleration. If at any time   any payment of any portion of the Obligations is rescinded or must otherwise   be restored or returned upon the insolvency, bankruptcy or reorganization of   any Borrower or any other Person, or otherwise, each Loan Party Obligor's   obligations under this Loan Guaranty with respect to that payment shall be   reinstated at such time as though the payment had not been made and whether   or not Agent is in possession of this Loan Guaranty. If acceleration of the   time for payment of any of the Obligations is stayed upon the insolvency,   bankruptcy or reorganization of any Borrower, all such amounts otherwise   subject to acceleration under the terms of any agreement relating to the   Obligations shall nonetheless be payable by the Loan Party Obligors forthwith   on demand by Agent. This Section 12.6 shall remain operative even after the   Termination Date and shall survive the payment in full of all of the Loans.   -63- 

    

 

12.7.   Information. Each Loan Party Obligor assumes all responsibility for being and   keeping itself informed of each Borrower's financial condition and assets,   and of all other circumstances bearing upon the risk of nonpayment of the   Obligations and the nature, scope and extent of the risks that each Loan   Party Obligor assumes and incurs under this Loan Guaranty, and agrees that   Agent shall not have any duty to advise any Loan Party Obligor of information   known to it regarding those circumstances or risks. 12.8. Termination.To the   maximum extent permitted by law, each Loan Party Obligor hereby waives any   right to revoke this Loan Guaranty as to future Obligations. If such a   revocation is effective notwithstanding the foregoing waiver, each Loan Party   Obligor acknowledges and agrees that (a) no such revocation shall be   effective until written notice thereof has been received by Agent, (b) no   such revocation shall apply to any Obligations in existence on the date of   receipt by Agent of such written notice (including any subsequent   continuation, extension, or renewal thereof, or change in the interest rate,   payment terms or other terms and conditions thereof), (c) no such revocation   shall apply to any Obligations made or created after such date to the extent   made or created pursuant to a legally binding commitment of Agent, (d) no   payment by any Borrower, any other Loan Party Obligor, or from any other   source, prior to the date of Agent's receipt of written notice of such   revocation shall reduce the maximum obligation of any Loan Party Obligor   hereunder and (e) any payment, by any Borrower or from any source other than   a Loan Party Obligor which has made such a revocation, made subsequent to the   date of such revocation, shall first be applied to that portion of the Obligations   as to which the revocation is effective and which are not, therefore,   guarantied hereunder, and to the extent so applied shall not reduce the   maximum obligation of any Loan Party Obligor hereunder. 12.9. Maximum   Liability. The provisions of this Loan Guaranty are severable, and in any   action or proceeding involving any state corporate law, or any state, federal   or foreign bankruptcy, insolvency, reorganization or other law affecting the   rights of creditors generally, if the obligations of any Loan Party Obligor   under this Loan Guaranty would otherwise be held or determined to be   avoidable, invalid or unenforceable on account of the amount of such Loan   Party Obligor's liability under this Loan Guaranty, then, notwithstanding any   other provision of this Loan Guaranty to the contrary, the amount of such   liability shall, without any further action by the Loan Party Obligors, Agent   or any Lender, be automatically limited and reduced to the highest amount   that is valid and enforceable as determined in such action or proceeding   (such highest amount determined hereunder being the relevant Loan Party   Obligor's "Maximum Liability"). This Section 12.09 with respect to   the Maximum Liability of each Loan Party Obligor is intended solely to   preserve the rights of Agent and the Lenders to the maximum extent not   subject to avoidance under applicable law, and no Loan Party Obligor or any   other Person shall have any right or claim under this Section with respect to   such Maximum Liability, except to the extent necessary so that the   obligations of any Loan Party Obligor hereunder shall not be rendered   voidable under applicable law. Each Loan Party Obligor agrees that the   Obligations may at any time and from time to time exceed the Maximum   Liability of each Loan Party Obligor without impairing this Loan Guaranty or   affecting the rights and remedies of Agent hereunder; provided, that nothing   in this sentence shall be construed to increase any Loan Party Obligor's   obligations hereunder beyond its Maximum Liability. 12.10. Contribution. In   the event any Loan Party Obligor shall make any payment or payments under   this Loan Guaranty or shall suffer any loss as a result of any realization   upon any collateral granted by it to secure its obligations under this Loan   Guaranty (such Loan Party Obligor a "Paying Guarantor"), each other   Loan Party Obligor (each a "Non-Paying Guarantor") shall contribute   to such Paying Guarantor an amount equal to such Non-Paying Guarantor's   "Applicable Percentage" of such payment or payments made, or losses   suffered, by such Paying Guarantor. For purposes of this Section 12.10, each   Non-Paying Guarantor's "Applicable Percentage" with respect to any   such payment or loss by a Paying Guarantor shall be determined as of the date   on which such payment or loss was made by reference to the ratio of (x) such   Non-Paying Guarantor's Maximum Liability as of such date (without giving   effect to any right to receive, or obligation to make, any contribution   hereunder) or, if such Non-Paying Guarantor's Maximum Liability has not been   determined, the aggregate amount of all monies received by such Non--64- 

    

 

Paying   Guarantor from any Borrower after the date hereof (whether by loan, capital   infusion or by other means) to (y) the aggregate Maximum Liability of all   Loan Party Obligors hereunder (including such Paying Guarantor) as of such   date (without giving effect to any right to receive, or obligation to make,   any contribution hereunder), or to the extent that a Maximum Liability has   not been determined for any Loan Party Obligor, the aggregate amount of all   monies received by such Loan Party Obligors from any Borrower after the date   hereof (whether by loan, capital infusion or by other means). Nothing in this   provision shall affect any Loan Party Obligor's several liability for the   entire amount of the Obligations (up to such Loan Party Obligor's Maximum   Liability). Each of the Loan Party Obligors covenants and agrees that its   right to receive any contribution under this Loan Guaranty from a Non-Paying   Guarantor shall be subordinate and junior in right of payment to the payment   in full in cash of all of the Obligations. This provision is for the benefit   of Agent and the Lenders and the Loan Party Obligors and may be enforced by   any one, or more, or all of them, in accordance with the terms hereof. 12.11.   Liability Cumulative. The liability of each Loan Party Obligor under this   Section 12 is in addition to and shall be cumulative with all liabilities of   each Loan Party Obligor to Agent and the Lenders under this Agreement and the   other Loan Documents to which such Loan Party Obligor is a party or in   respect of any obligations or liabilities of the other Loan Parties, without   any limitation as to amount, unless the instrument or agreement evidencing or   creating such other liability specifically provides to the contrary. 13.   PAYMENTS FREE OF TAXES; OBLIGATION TO WITHHOLD; PAYMENTS ON ACCOUNT OF TAXES.   (a) Any and all payments by or on account of any obligation of the Loan Party   Obligors hereunder or under any other Loan Document shall to the extent   permitted by applicable laws be made free and clear of and without reduction   or withholding for any Taxes. If, however, applicable laws require the Loan   Party Obligors to withhold or deduct any Tax, such Tax shall be withheld or   deducted in accordance with such laws as the case may be, upon the basis of   the information and documentation to be delivered pursuant to subsection (e)   below. (b) If any Loan Party Obligor shall be required by applicable law to   withhold or deduct any Taxes from any payment, then (i) such Loan Party   Obligor shall withhold or make such deductions as are required based upon the   information and documentation it has received pursuant to subsection (e)   below, (ii) such Loan Party Obligor shall timely pay the full amount withheld   or deducted to the relevant Governmental Authority in accordance with the   applicable law and (iii) to the extent that the withholding or deduction is   made on account of Indemnified Taxes, the sum payable by the Loan Party Obligors   shall be increased as necessary so that after any required withholding or the   making of all required deductions (including deductions applicable to   additional sums payable under this Section) the Recipient receives an amount   equal to the sum it would have received had no such withholding or deduction   been made. Upon request by Agent or other Recipient, Borrower Representative   shall deliver to Agent or such other Recipient, as the case may be, the   original or a certified copy of a receipt issued by such Governmental   Authority evidencing such payment of Indemnified Taxes, a copy of any return   required by applicable law to report such payment or other evidence of such   payment reasonably satisfactory to Agent or such other Recipient, as the case   may be. (c) Without limiting the provisions of subsections (a) and (b) above,   the Loan Party Obligors shall timely pay any Other Taxes to the relevant   Governmental Authority in accordance with applicable law. (d) Without   limiting the provisions of subsections (a) through (c) above, each Loan Party   Obligor shall, and does hereby, on a joint and several basis, indemnify   Agent, each Lender and each other Recipient (and their respective directors,   officers, employees, affiliates and agents) and shall make payment in respect   thereof within ten days after demand therefor, for the full amount of any   Indemnified -65- 

    

 

Taxes and Other   Taxes (including Indemnified Taxes and Other Taxes imposed or asserted on or   attributable to amounts payable under this Section) paid or incurred by   Agent, any Lender or any other Recipient on account of, or in connection with   any Loan Document or a breach by a Loan Party Obligor thereof, and any   penalties, interest and related expenses and losses arising therefrom or with   respect thereto (including the fees, charges and disbursements of any   internal or external counsel or other tax advisor for Agent, any Lender or   any other Recipient (or their respective directors, officers, employees,   affiliates, and agents)), whether or not such Indemnified Taxes or Other   Taxes were correctly or legally imposed or asserted by the relevant   Governmental Authority. A certificate as to the amount of any such payment or   liability delivered to Borrower Representative shall be conclusive absent manifest   error. Notwithstanding any provision in this Agreement to the contrary, this   Section 13 shall remain operative even after the Termination Date and shall   survive the payment in full of all of the Loans. (e) Each Lender shall   deliver to Borrower Representative and each Lender and each Participant shall   deliver to Agent, at the time or times prescribed by applicable laws, such   properly completed and executed documentation prescribed by applicable laws   or by the taxing authorities of any jurisdiction and such other reasonably   requested information as will permit Borrower Representative or Agent, as the   case may be, to determine (x) whether or not payments made hereunder or under   any other Loan Document are subject to Taxes, (y) if applicable, the required   rate of withholding or deduction and (z) such Lender's or Participant's   entitlement to any available exemption from, or reduction of, applicable   Taxes in respect of all payments to be made to such Recipient by the Loan   Party Obligors pursuant to this Agreement or otherwise to establish such   Recipient's status for withholding tax purposes in the applicable   jurisdiction; provided, that each Recipient shall only be required to deliver   such documentation as it may legally provide. Without limiting the generality   of the foregoing, if a Borrower is resident for tax purposes in the United   States: (i) each Lender (or Participant) that is a "United States   person" within the meaning of Section 7701(a)(30) of the Code shall   deliver to Borrower Representative and Agent (or any Lender granting a   participation as applicable) an executed original of Internal Revenue Service   Form W-9 or such other documentation or information prescribed by applicable   law or reasonably requested by Borrower Representative or Agent (or Lender granting   a participation) as will enable Borrower Representative or Agent (or Lender   granting a participation) as the case may be, to determine whether or not   such Lender (or Participant) is subject to backup withholding or information   reporting requirements under the Code; (ii) each Lender (or Participant) that   is not a "United States person" within the meaning of Section   7701(a)(30) of the Code (a "Non-U.S. Recipient") shall deliver to   Borrower Representative and Agent (or any Lender granting a participation in   case the Non-U.S. Recipient is a Participant) on or prior to the date on   which such Non-U.S. Person becomes a party to this Agreement or a Participant   (and from time to time thereafter upon the reasonable request of Borrower   Representative or Agent but only if such Non-U.S. Recipient is legally   entitled to do so), whichever of the following is applicable: (A) executed   originals of Internal Revenue Service Form W-8BEN claiming eligibility for   benefits of an income tax treaty to which the United States is a party; (B)   executed originals of Internal Revenue Service Form W-8ECI; (C) executed   originals of Internal Revenue Service Form W-8IMY and all required supporting   documentation; (D) each Non-U.S. Recipient claiming the benefits of the   exemption for portfolio interest under section 881(c) of the Code, shall   provide (x) a certificate to the effect that such Non-U.S. Recipient is not   (1) a "bank" within the meaning of section 881(c)(3)(A) of the   Code, (2) a "10 percent shareholder" of Borrowers within the meaning   of section 881(c)(3)(B) of the Code, or (3) a "controlled foreign   corporation" described in section 881(c)(3)(C) of the Code and (y)   executed originals of Internal Revenue Service Form W-8BEN; and/or (E)   executed originals of any other form prescribed by applicable exemption from   or a reduction in United supplementary documentation as may be law (including   FATCA) as a basis for claiming States Federal withholding tax together with   such prescribed by applicable law to permit Borrower -66- 

    

 

Representative   or Agent to determine the withholding or deduction required to be made. Each   Non-U.S. Recipient shall promptly notify Borrower Representative and Agent   (or any Lender granting a participation if the Non-U.S. Recipient is a   Participant) of any change in circumstances which would modify or render   invalid any claimed exemption or reduction. 14. AGENT 14.1. Appointment. Each   of the Lenders hereby irrevocably appoints Agent as its agent and authorizes   Agent to take such actions on its behalf, including execution of the other   Loan Documents, and to exercise such powers as are delegated to Agent by the   terms of the Loan Documents, together with such actions and powers as are   reasonably incidental thereto. Without limiting the generality of the foregoing,   Agent shall have the sole and exclusive authority to (a) act as the   disbursing and collecting agent for Lenders with respect to all payments and   collections arising in connection with the Loan Documents; (b) execute and   deliver as Agent, each Loan Document, including the Term Loan Intercreditor   Agreement and any other intercreditor or subordination agreement, and accept   delivery of each Loan Document; (c) make Loans, for itself or on behalf of   Lenders, as provided in the Loan Documents, (d) act as collateral agent for   Lenders for purposes of perfecting and administering Liens under the Loan   Documents, and for all other purposes stated therein and execute or file any   and all financing or similar statements or notices, amendments, renewals,   supplements, documents, instruments, proofs of claim, notices and other   written agreements with respect to the Loan Documents; (e) manage, supervise   or otherwise deal with Collateral; (f) exclusively receive, apply, and   distribute payments and proceeds of the Collateral as provided in the Loan   Documents, (g) open and maintain such bank accounts and cash management   arrangements as Agent deems necessary and appropriate in accordance with the   Loan Documents, (h) take any Enforcement Action or otherwise exercise any   rights or remedies with respect to any Collateral or under any Loan   Documents, applicable law or otherwise, including the determination of   eligibility of Accounts and Inventory, the necessity and amount of Reserves   and all other determinations and decisions relating to ordinary course   administration of the credit facilities contemplated hereunder; and (i) incur   and pay such expenses as Agent may deem necessary or appropriate for the   performance and fulfillment of its functions and powers pursuant to the Loan   Documents, whether or not any Loan Party is obligated to reimburse Agent or   Lenders for such expenses pursuant to the Loan Documents or otherwise. The   provisions of this Article are solely for the benefit of Agent and the   Lenders, and the Loan Parties shall not have rights as a third-party   beneficiary of any of such provisions. It is understood and agreed that the   use of the term "agent" as used herein or in any other Loan   Documents (or any similar term) with reference to Agent is not intended to   connote any fiduciary or other implied (or express) obligations arising under   agency doctrine of any applicable law. Instead, such term is used as a matter   of market custom, and is intended to create or reflect only an administrative   relationship between independent contracting parties. 14.2. Rights as a   Lender. The Person serving as Agent hereunder, if it is a Lender, shall have   the same rights and powers in its capacity as a Lender as any other Lender   and may exercise the same as though it were not Agent, and such Person and   its Affiliates may accept deposits from, lend money to and generally engage   in any kind of business with any Loan Party or any Subsidiary or any   Affiliate thereof as if it were not Agent hereunder without notice to or   consent of the other Lenders. 14.3. Duties and Obligations. Agent shall not   have any duties or obligations except those expressly set forth in the Loan   Documents. Without limiting the generality of the foregoing, (a) Agent shall   not be subject to any fiduciary or other implied duties, regardless of   whether a Default has occurred and is continuing, (b) Agent shall not have   any duty to take any discretionary action or exercise any discretionary   powers, except discretionary rights and powers expressly contemplated by the   Loan Documents that Agent is required to exercise as directed in writing by   the Required Lenders, and, (c) except as expressly set forth in the Loan   Documents, Agent shall not have any duty to disclose, and shall not be liable   for the failure to disclose, any information relating to any Loan Party or   any Subsidiary that is communicated to or obtained by the Person serving as   Agent or any of its Affiliates in any -67- 

    

 

capacity. Agent   shall not be liable for any action taken or not taken by it with the consent   or at the request of the Required Lenders or in the absence of its own gross   negligence or willful misconduct as determined by a final nonappealable   judgment of a court of competent jurisdiction. Agent shall be deemed not to   have knowledge of any Default unless and until written notice thereof is   given to Agent by a Borrower or a Lender, and Agent shall not be responsible   for or have any duty to ascertain or inquire into (i) any statement, warranty   or representation made in or in connection with any Loan Document, (ii) the   contents of any certificate, report or other document delivered hereunder or   in connection with any Loan Document, (iii) the performance or observance of   any of the covenants, agreements or other terms or conditions set forth in   any Loan Document, (iv) the validity, enforceability, effectiveness or   genuineness of any Loan Document or any other agreement, instrument or   document, (v) the creation, perfection or priority of Liens on the Collateral   or the existence of the Collateral, or (vi) the satisfaction of any condition   set forth in Article IV or elsewhere in any Loan Document, other than to   confirm receipt of items expressly required to be delivered to Agent. Agent   shall be under no obligation to any Lender to ascertain or to inquire as to   the observance or performance of any of the agreements contained in, or   conditions of, this Agreement or any other Loan Document, or to inspect the   books and records or properties of any Loan Party. 14.4. Reliance. Agent   shall be entitled to rely upon, and shall not incur any liability for relying   upon, any notice, request, certificate, consent, statement, instrument,   document or other writing believed by it to be genuine and to have been   signed or sent by the proper Person. Agent also may rely upon any statement   made to it orally or by telephone and believed by it to be made by the proper   Person, and shall not incur any liability for relying thereon. Agent may   consult with and employ Agent Professionals, and shall be entitled to act   upon, and shall be fully protected in any action taken in good faith reliance   upon, any advice given by an Agent Professional (who may be counsel for any   Borrower), independent accountants and other experts selected by it, and   shall not be liable for any action taken or not taken by it in accordance   with the advice of any such counsel, accountants or experts. Agent shall be   fully justified in failing or refusing to take any action under this   Agreement or any other Loan Document, unless Agent shall first receive such   advice or concurrence of the Lenders as it deems appropriate and until such   instructions are received, Agent shall act, or refrain from acting, as it   deems advisable. If Agent so requests, it shall first be indemnified to its   reasonable satisfaction by the Lenders against any and all liability and   expense that may be incurred by it by reason of taking or continuing to take   any such action. Agent shall in all cases be fully protected in acting, or in   refraining from acting, under this Agreement or any other Loan Document in   accordance with a request or consent of the Required Lenders and such request   and any action taken or failure to act pursuant thereto shall be binding upon   all of the Lenders. 14.5. Actions through Sub-Agents. Agent may perform any   and all of its duties and exercise its rights and powers by or through any   one or more sub-agents appointed by Agent. Agent may also perform its duties   through employees and other Agent-Related Persons. Agent shall not be   responsible for the negligence or misconduct of any sub-agent, employee or   Agent Professional that it selects as long as such selection was made without   gross negligence or willful misconduct. Agent and any such sub-agent may   perform any and all of its duties and exercise its rights and powers through   their respective Affiliates and other related parties. The exculpatory   provisions of the preceding paragraphs shall apply to any such sub-agent and   to the related parties of Agent and any such sub-agent, and shall apply to   their respective activities in connection with the syndication of the credit   facilities provided for herein as well as activities as Agent. 14.6.   Resignation.Subject to the appointment and acceptance of a successor Agent as   provided in this paragraph, Agent may resign at any time by notifying the   Lenders and Borrower Representative. Upon any such resignation, the Required   Lenders shall have the right, in consultation with Borrower Representative,   to appoint a successor. If no successor shall have been so appointed by the   Required Lenders and shall have accepted such appointment within thirty (30)   days after the retiring Agent gives notice of its resignation, then the   retiring Agent may, on behalf of the Lenders, appoint a successor Agent. Upon   the acceptance of its appointment as Agent hereunder by its successor, such   -68- 

    

 

successor shall   succeed to and become vested with all the rights, powers, privileges and   duties of the retiring Agent, and the retiring Agent shall be discharged from   its duties and obligations hereunder and under the other Loan Documents. The   fees payable by Borrowers to a successor Agent shall be the same as those   payable to its predecessor, unless otherwise agreed by Borrower   Representative and such successor. Notwithstanding the foregoing, in the   event no successor Agent shall have been so appointed and shall have accepted   such appointment within thirty (30) days after the retiring Agent gives   notice of its intent to resign, the retiring Agent may give notice of the   effectiveness of its resignation to the Lenders and Borrower Representative,   whereupon, on the date of effectiveness of such resignation stated in such   notice, (a) the retiring Agent shall be discharged from its duties and   obligations hereunder and under the other Loan Documents, provided that,   solely for purposes of maintaining any security interest granted to the Agent   under any Loan Document for the benefit of the Lenders, the retiring Agent   shall continue to be vested with such security interest as collateral agent   for the benefit of the Lenders and, in the case of any Collateral in the possession   of Agent, shall continue to hold such Collateral, in each case until such   time as a successor Agent is appointed and accepts such appointment in   accordance with this paragraph (it being understood and agreed that the   retiring Agent shall have no duly or obligation to take any further action   under any Loan Document, including any action required to maintain the   perfection of any such security interest), and (b) the Required Lenders shall   succeed to and become vested with all the rights, powers, privileges and   duties of the retiring Agent, provided that (i) all payments required to be   made hereunder or under any other Loan Document to the Agent for the account   of any Person other than Agent shall be made directly to such Person and (ii)   all notices and other communications required or contemplated to be given or   made to Agent shall also directly be given or made to each Lender. Following   the effectiveness of the Agent's resignation from its capacity as such, the   provisions of this Article, as well as any exculpatory, reimbursement and   indemnification provisions set forth in any other Loan Document, shall   continue in effect for the benefit of such retiring Agent, its sub-agents and   their respective related parties in respect of any actions taken or omitted   to be taken by any of them while it was acting as Agent and in respect of the   matters referred to in the proviso under clause (a) above. 14.7.   Non-Reliance. (a) Each Lender acknowledges and agrees that none of the   Agent-Related Persons has made any representation or warranty to it, and that   no act by Agent hereinafter taken, including any review of the affairs of   Borrowers and their respective Subsidiaries or Affiliates, shall be deemed to   constitute any representation or warranty by any Agent-Related Person to any   Lender. Each Lender further acknowledges the extensions of credit made   hereunder are commercial loans and not investments in a business enterprise   or securities. Each Lender further represents that it is engaged in making,   acquiring or holding commercial loans in the ordinary course of its business   and has, independently and without reliance upon any Agent-Related Person,   any arranger of this credit facility or any amendment thereto or any other   Lender and based on such due diligence, documents and information as it has   deemed appropriate, made its own appraisal of and investigation into the   business, prospects, operations, property, financial and other condition and   creditworthiness of any Borrower or any other Person party to a Loan   Document, and all applicable laws relating to the transactions contemplated   hereby, and made its own credit analysis and decision to enter into this   Agreement as a Lender, and to make, acquire or hold Loans hereunder. Each   Lender shall, independently and without reliance upon any Agent-Related   Person, any arranger of this credit facility or any amendment thereto or any   other Lender and based on such documents and information (which may contain   material, non-public information within the meaning of the United States securities   laws concerning any Borrower and its Affiliates) as it shall from time to   time deem appropriate, continue to make its own credit analysis and decisions   in taking or not taking action under or based upon this Agreement, any other   Loan Document, any related agreement or any document furnished hereunder or   thereunder , and to make such investigations as it deems necessary to inform   itself as to the business, prospects, operations, property, financial and   other condition and creditworthiness of any Borrower or any other Person   party to a Loan Document and in deciding whether or to the extent to which it   will continue as a Lender or assign or otherwise transfer its rights,   interests and obligations hereunder. Except for notices, reports, and other   documents expressly herein required to be furnished to -69- 

    

 

 

the Lenders by   Agent, Agent shall not have any duty or responsibility to provide any Lender   with any credit or other information concerning the business, prospects,   operations, property, financial and other condition or creditworthiness of   any Borrower or any other Person party to a Loan Document that may come into   the possession of any of the Agent-Related Persons. Each Lender acknowledges   that Agent does not have any duty or responsibility, either initially or on a   continuing to provide such Lender with any credit or other information with   respect to any Borrower, its Affiliates or any of their respective business,   legal, financial or other affairs, and irrespective of whether such   information came into Agent's or its Affiliates’ or representatives’ possession   before or after the date on which such Lender became a party to this   Agreement. (b) Each Lender hereby agrees that (i) it has requested a copy of   each appraisal, audit or field examination report prepared by or on behalf of   Agent; (ii) Agent (A) makes no representation or warranty, express or   implied, as to the completeness or accuracy of any such report or any of the   information contained therein or any inaccuracy or omission contained in or   relating to any such report and (B) shall not be liable for any information   contained in any such report; (iii) such reports are not comprehensive audits   or examinations, and that any Person performing any field examination will   inspect only specific information regarding the Loan Parties and will rely   significantly upon the Loan Parties' books and records, as well as on   representations of the Loan Parties' personnel and that Agent undertakes no   obligation to update, correct or supplement such reports; (iv) it will keep   all such reports confidential and strictly for its internal use, not share   any such report with any Loan Party or any other Person except as otherwise   permitted pursuant to this Agreement; and (v) without limiting the generality   of any other indemnification provision contained in this Agreement, (A) it   will hold Agent and any such other Person preparing any such report harmless   from any action the indemnifying Lender may take or conclusion the   indemnifying Lender may reach or draw from any such report in connection with   any extension of credit that the indemnifying Lender has made or may make to   any Borrower, or the indemnifying Lender's participation in, or the   indemnifying Lender's purchase of, a Loan or Loans; and (B) it will pay and   protect, and indemnify, defend, and hold Agent and any such other Person   preparing any such report harmless from and against, the claims, actions,   proceedings, damages, costs, expenses, and other amounts (including   reasonable attorneys' fees of both internal and external counsel) of Agent or   any such other Person as the direct or indirect result of any third parties   who might obtain all or part of any such report through the indemnifying   Lender. 14.8. Not Partners or Co-Venturers; Agent as Representative of the   Secured Parties. (a) The Lenders are not partners or co-venturers, and no   Lender shall be liable for the acts or omissions of, or (except as otherwise   set forth herein in the case of Agent) authorized to act for, any other   Lender. Agent shall have the exclusive right on behalf of the Lenders to   enforce the payment of the principal of and interest on any Loan after the   date such principal or interest has become due and payable pursuant to the   terms of this Agreement. (b) In its capacity, Agent is a   "representative" of the Lenders within the meaning of the term   "secured party" as defined in the UCC. Each Lender authorizes Agent   to enter into each of the Loan Documents to which it is a party and to take   all action contemplated by such documents. Each Lender agrees that no Lender   (other than Agent) shall have the right individually to seek to realize upon   the security granted by any Loan Document, it being understood and agreed   that such rights and remedies may be exercised solely by Agent for the   benefit of the Lenders upon the terms of the Loan Documents. In the event that   any Collateral is hereafter pledged by any Person as collateral security for   the Obligations, Agent is hereby authorized, and hereby granted a power of   attorney, to execute and deliver on behalf of the Lenders any Loan Documents   necessary or appropriate to grant and perfect a Lien on such Collateral in   favor of Agent on behalf of the Lenders. (c) Agent hereby appoints each other   Lender as its agent (and each Lender hereby accepts such appointment) for the   purpose of perfecting Agent’s Liens in assets which, in accordance with -70- 

    

 

Article 8 or   Article 9, as applicable, of the UCC can be perfected by possession or   control. Should any Lender obtain possession or control of any such   Collateral, such Lender shall notify Agent thereof, and, promptly upon   Agent’s request therefor shall deliver possession or control of such   Collateral to Agent or in accordance with Agent’s instructions. Agent shall   have no obligation whatsoever to any of the Lenders (i) to verify or assure   that the Collateral exists or is owned by any Borrower or its Subsidiaries or   is cared for, protected, or insured or has been encumbered, (ii) to verify or   assure that Agent’s Liens have been properly or sufficiently or lawfully   created, perfected, protected, or enforced or are entitled to any particular   priority, (iii) to verify or assure that any particular items of Collateral   meet the eligibility criteria applicable in respect thereof, (iv) to impose,   maintain, increase, reduce, implement or eliminate any particular reserve   hereunder or to determine whether the amount of any reserve is appropriate or   not, or (v) to exercise at all or in any particular manner or under any duty   of care, disclosure or fidelity, or to continue exercising, any of the   rights, authorities and powers granted or available to Agent pursuant to any   of the Loan Documents, it being understood and agreed that in respect of the   Collateral, or any act, omission, or event related thereto, subject to the   terms and conditions contained herein, 14.9. Credit Bidding. The Loan Parties   and the Lenders hereby irrevocably authorize Agent, based upon the   instruction of the Required Lenders, to Credit Bid and purchase (either   directly or through one or more acquisition vehicles) all or any portion of   the Collateral (and the Loan Parties shall approve Agent as a qualified   bidder and such Credit Bid as qualified bid) at any sale thereof conducted by   Agent, based upon the instruction of the Required Lenders, under any   provisions of the UCC, as part of any sale or investor solicitation process   conducted by any Loan Party, any interim receiver, receiver, receiver and   manager, administrative receiver, trustee, agent or other Person pursuant or   under any insolvency laws; provided, however, that (i) the Required Lenders   may not direct Agent in any manner that does not treat each of the Lenders   equally, without preference or discrimination, in respect of consideration   received as a result of the Credit Bid, (ii) the acquisition documents shall   be commercially reasonable and contain customary protections for minority   holders such as among other things, anti-dilution and tag-along rights, (iii)   the exchanged debt or equity securities must be freely transferable, without   restriction (subject to applicable securities laws) and (iv) reasonable   efforts shall be made to structure the acquisition in a manner that causes   the governance documents pertaining thereto to not impose any obligations or   liabilities upon the Lenders individually (such as indemnification   obligations). Agent, based upon the instruction of the Required Lenders, may   accept non-cash consideration, including debt and equity securities issued by   any entities used to consummate such Credit Bid or purchase and in connection   therewith Agent may reduce the Obligations owed to the Lenders (ratably based   upon the proportion of their Obligations credit bid in relation to the   aggregate amount of Obligations so credit bid) based upon the value of such   non-cash consideration. For purposes of the preceding sentence, the term   "Credit Bid" shall mean, an offer submitted by Agent (on behalf of   the Lender group), based upon the instruction of the Required Lenders, to   acquire the property of any Loan Party or any portion thereof in exchange for   and in full and final satisfaction of all or a portion (as determined by   Agent, based upon the instruction of the Required Lenders) of the claims and   Obligations under this Agreement and other Loan Documents. 14.10. Certain   Collateral Matters. The Lenders irrevocably authorize Agent, at its option and   in its discretion, (a) to release any Lien granted to or held by Agent under   any Loan Document (i) upon termination of the Commitments and payment in full   of all Loans and all other obligations of Borrowers hereunder; (ii)   constituting property sold or to be sold or disposed of as part of or in   connection with any disposition permitted hereunder (including the release of   any guarantor); or (iii) subject to Section 15.5 if approved, authorized or   ratified in writing by the Required Lenders; or (ii) to subordinate its   interest in any Collateral to any holder of a Lien on such Collateral which   is permitted by clause (a) of the definition of Permitted Liens (it being   understood that Agent may conclusively rely on a certificate from Borrower   Representative in determining whether the Indebtedness secured by any such   Lien is permitted hereunder). Upon request by Agent at any time, the Lenders   will confirm in writing Agent's authority to release, or subordinate its   interest in, particular types or items of Collateral pursuant to this Section   14.10. Agent may, and at the direction of Required Lenders shall, give   blockage notices in connection with any -71- 

    

 

subordinated   debt and each Lender hereby authorizes Agent to give such notices. Each Lender   further agrees that it will not act unilaterally to deliver such notices.   14.11. Restriction on Actions by Lenders. Each Lender agrees that it shall   not, without the express written consent of Agent, and shall, upon the   written request of Agent (to the extent it is lawfully entitled to do so),   set off against the Obligations, any amounts owing by such Lender to a Loan   Party or any deposit accounts of any Loan Party now or hereafter maintained   with such Lender. Each of the Lenders further agrees that it shall not,   unless specifically requested to do so in writing by Agent, take or cause to   be taken, any action, including the commencement of any legal or equitable   proceedings to foreclose any loan or otherwise enforce any security interest   in any of the Collateral or to enforce all or any part of this Agreement or   the other Loan Documents. All Enforcement Actions under this Agreement and   the other Loan Documents against the Loan Parties or any third party with   respect to the Obligations or the Collateral may only be taken by Agent (at   the direction of the Required Lenders or as otherwise permitted in this   Agreement) or by its agents at the direction of Agent. 14.12. Expenses. Agent   is authorized and directed to deduct and retain sufficient amounts from payments   or proceeds of the Collateral received by Agent to reimburse Agent for such   out-of-pocket costs and expenses prior to the distribution of any amounts to   Lenders. In the event Agent is not reimbursed for such costs and expenses by   a Loan Party, each Lender hereby agrees that it is and shall be obligated to   pay to Agent such Lender’s ratable share thereof. Without limitation of the   foregoing, each Lender shall reimburse Agent upon demand for such Lender’s   ratable share of any costs or out of pocket expenses (including Agent   Professional fees and expenses) incurred by Agent in connection with the   preparation, execution, delivery, administration, modification, amendment, or   enforcement (whether through negotiations, legal proceedings or otherwise)   of, or legal advice in respect of rights or responsibilities under, this   Agreement or any other Loan Document to the extent that Agent is not   reimbursed for such expenses by or on behalf of Borrowers. The undertaking in   this Section shall survive the payment of all Obligations hereunder and the   resignation or replacement of Agent. 14.13. Notice of Default or Event of   Default. Agent shall not be deemed to have knowledge or notice of the   occurrence of any Default or Event of Default, except with respect to   defaults in the payment of principal, interest, fees, and expenses required   to be paid to Agent for the account of the Lenders and, except with respect   to Events of Default of which Agent has actual knowledge, unless Agent shall   have received written notice from a Lender or Borrower referring to this   Agreement, describing such Default or Event of Default, and stating that such   notice is a "notice of default." Agent will promptly notify the   Lenders of its receipt of any such notice or of any Event of Default of which   Agent has actual knowledge. If any Lender obtains actual knowledge of any   Event of Default, such Lender promptly shall notify the other Lenders and   Agent of such Event of Default. Agent shall take such action with respect to   such Default or Event of Default as may be requested by the Required Lenders   in accordance with this Agreement; provided, that unless and until Agent has   received any such request, Agent may (but shall not be obligated to) take   such action, or refrain from taking such action, with respect to such Default   or Event of Default as it shall deem advisable. 14.14. Liability of Agent.   None of the Agent-Related Persons shall (a) be liable for any action taken or   omitted to be taken by any of them under or in connection with this Agreement   or any other Loan Document or the transactions contemplated hereby (except   for its own gross negligence or willful misconduct), or (b) be responsible in   any manner to any of the Lenders for any recital, statement, representation   or warranty made by any Borrower or any of their respective Subsidiaries or   Affiliates, or any officer or director thereof, contained in this Agreement   or in any other Loan Document, or in any certificate, report, statement or   other document referred to or provided for in, or received by Agent under or   in connection with, this Agreement or any other Loan Document, or the   validity, effectiveness, genuineness, enforceability or sufficiency of this   Agreement or any other Loan Document, or for any failure of any Borrower, or   any of their respective Subsidiaries or any other party to any Loan Document   to perform its obligations hereunder or thereunder. No Agent-Related Person   shall be under any -72- 

    

 

obligation to   any Lenders to ascertain or to inquire as to the observance or performance of   any of the agreements contained in, or conditions of, this Agreement or any   other Loan Document, or to inspect the books and records or properties of any   Borrower or their respective Subsidiaries. 15. GENERAL PROVISIONS. 15.1.   Notices. (a) Notice by Approved Electronic Communications.Agent and each of   its Affiliates is authorized to transmit, post or otherwise make or   communicate, in its sole discretion (but shall not be required to do so), by   Approved Electronic Communications in connection with this Agreement or any   other Loan Document and the transactions contemplated therein. Agent is   hereby authorized to establish procedures to provide access to and to make   available or deliver, or to accept, notices, documents and similar items by   posting to ABLSoft. All uses of ABLSoft and other Approved Electronic   Communications shall be governed by and subject to, in addition to the terms   of this Agreement, the separate terms, conditions and privacy policy posted   or referenced in such system (or such terms, conditions and privacy policy as   may be updated from time to time, including on such system) and any related   contractual obligations executed by Agent and Loan Parties in connection with   the use of such system. Each of the Loan Parties, the Lenders and Agent   hereby acknowledges and agrees that the use of ABLSoft and other Approved   Electronic Communications is not necessarily secure and that there are risks   associated with such use, including risks of interception, disclosure and   abuse and each indicates it assumes and accepts such risks by hereby   authorizing Agent and each of its Affiliates to transmit Approved Electronic   Communications. ABLSoft and all Approved Electronic Communications shall be   provided "as is" and "as available". None of Agent or any   of its Affiliates or related persons warrants the accuracy, adequacy or   completeness of ABLSoft or any other electronic platform or electronic   transmission and disclaims all liability for errors or omissions therein. No   warranty of any kind is made by Agent or any of its Affiliates or related   persons in connection with ABLSoft or any other electronic platform or   electronic transmission, including any warranty of merchantability, fitness   for a particular purpose, non-infringement of third-party rights or freedom   from viruses or other code defects. Each Borrower and each other Loan Party   executing this Agreement agrees that Agent has no responsibility for   maintaining or providing any equipment, software, services or any testing   required in connection with ABLSoft, any Approved Electronic Communication or   otherwise required for ABLSoft or any Approved Electronic Communication.   Prior to the Closing Date, Borrower Representative shall deliver to Agent a   complete and executed Client User Form regarding Borrowers’ use of ABLSoft in   the form of Exhibit C annexed hereto. No Approved Electronic Communications   shall be denied legal effect merely because it is made electronically.   Approved Electronic Communications that are not readily capable of bearing   either a signature or a reproduction of a signature may be signed, and shall   be deemed signed, by attaching to, or logically associating with such   Approved Electronic Communication, an E-Signature, upon which Agent and the   Loan Parties may rely and assume the authenticity thereof. Each Approved   Electronic Communication containing a signature, a reproduction of a   signature or an E-Signature shall, for all intents and purposes, have the   same effect and weight as a signed paper original. Each E-Signature shall be   deemed sufficient to satisfy any requirement for a "signature" and   each Approved Electronic Communication shall be deemed sufficient to satisfy   any requirement for a "writing", in each case including pursuant to   this Agreement, any other Loan Document, the UCC, the Federal Uniform   Electronic Transactions Act, the Electronic Signatures in Global and National   Commerce Act and any substantive or procedural law governing such subject   matter. Each party or beneficiary hereto agrees not to contest the validity   or enforceability of an Approved Electronic Communication or E-Signature   under the provisions of any applicable law requiring certain documents to be   in writing or signed; provided, that nothing herein shall limit such party's   or beneficiary's right to contest whether an Approved Electronic   Communication or E-Signature has been altered after transmission. -73- 

    

 

(b) All Other   Notices. All notices, requests, demands and other communications under or in   respect of this Agreement or any transactions hereunder, other than those   approved for or required to be delivered by Approved Electronic   Communications (including via ABLSoft or otherwise pursuant to Section   15.1(a)), shall be in writing and shall be personally delivered or mailed (by   prepaid registered or certified mail, return receipt requested), sent by   prepaid recognized overnight service, or by email to the applicable party at   its address or email address indicated below, courier If to Agent: ENCINA   BUSINESS CREDIT, LLC, as Agent 123 N Wacker Suite 2400 Chicago, IL 60606   Attention: Thomas Sullivan with a copy to: GOLDBERG KOHN LTD. 55 East Monroe,   Suite 3300 Chicago, Illinois 60613 Attention: Jeffrey Dunlop If to Borrower Representative,   any Borrower or any other Loan Party: NEOS THERAPEUTICS, INC. 2940 N. Hwy   360, Suite 400 Grand Prairie, Texas 75050 Attention: Richard Eisenstadt with   a copy to: GOODWIN PROCTER LLP 53 State Street Boston, Massachusetts 02109   Attention: Mark Smith or, as to each party, at such other address as shall be   designated by such party in a written notice to the other party delivered as   aforesaid. All such notices, requests, demands and other communications shall   be deemed given (i) when personally delivered, (ii) three Business Days after   bein g deposited in the mails with postage prepaid (by registered or   certified mail, return receipt requested), (iii) one Business Day after being   delivered to the overnight courier service, if prepaid and sent overnight   delivery, addressed as aforesaid and with all charges prepaid or billed to   the account of the sender or (iv) when sent by email transmission to an email   address designated by such addressee and the sender receives a confirmation   of transmission. 15.2. Severability. If any provision of this Agreement or   any other Loan Document is held invalid or unenforceable, either in its   entirety or by virtue of its scope or application to given circumstances,   such provision shall thereupon be deemed modified only to the extent   necessary to render same valid, or not applicable to given circumstances, or   excised from this Agreement or such other Loan -74- 

    

 

Document, as   the situation may require, and this Agreement and the other Loan Documents   shall be construed and enforced as if such provision had been included herein   as so modified in scope or application, or had not been included herein or   therein, as the case may be. 15.3. Integration. This Agreement and the other   Loan Documents represent the final, entire and complete agreement between   each Loan Party that is a party hereto and thereto and Agent and supersede   all prior and contemporaneous negotiations, oral representations and   agreements, all of which are merged and integrated into this Agreement.THERE   ARE NO ORAL UNDERSTANDINGS, REPRESENTATIONS OR AGREEMENTS BETWEEN THE PARTIES   THAT ARE NOT SET FORTH IN THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS. 15.4.   Waivers. The failure of Agent and the Lenders at any time or times to require   any Loan Party to strictly comply with any of the provisions of this   Agreement or any other Loan Documents shall not waive or diminish any right   of Agent later to demand and receive strict compliance therewith. Any waiver   of any default shall not waive or affect any other default, whether prior or   subsequent, and whether or not similar. None of the provisions of this   Agreement or any other Loan Document shall be deemed to have been waived by   any act or knowledge of Agent or its agents or employees, but only by a   specific written waiver signed by an authorized officer of Agent and any   necessary Lenders and delivered to Borrowers. Once an Event of Default shall   have occurred, it shall be deemed to continue to exist and not be cured or   waived unless specifically waived in writing by an authorized officer of   Agent and Required Lenders and delivered to Borrowers. Each Loan Party   Obligor waives demand, protest, notice of protest and notice of default or   dishonor, notice of payment and nonpayment, release, compromise, settlement, extension   or renewal of any commercial paper, Instrument, Account, General Intangible,   Document, Chattel Paper, Investment Property or guaranty at any time held by   Agent on which such Loan Party Obligor is or may in any way be liable, and   notice of any action taken by Agent, unless expressly required by this   Agreement, and notice of acceptance hereof. 15.5. Amendments. (a) No   amendment, modification or waiver of, or consent with respect to, any   provision of this Agreement or the other Loan Documents shall in any event be   effective unless the same shall be in writing and acknowledged by the   Required Lenders, and then any such amendment, modification, waiver or   consent shall be effective only in the specific instance and for the specific   purpose for which given; provided, that, except to the extent set forth in   Section 14.9 hereof, no amendment, modification, waiver or consent shall (i)   extend or increase the Commitment of any Lender without the written consent   of such Lender, (ii) extend the date scheduled for payment of any principal   (excluding mandatory prepayments) of or interest on the Loans or any fees   payable hereunder without the written consent of each Lender directly   affected thereby, (iii) reduce the principal amount of any Loan, the rate of   interest thereon or any fees payable hereunder, without the consent of each   Lender directly affected thereby; (iv) amend or modify the definitions of   Borrowing Base or Eligible Accounts, or any components thereof (including,   without limitation, any advance rates), without the written consent of each   Lender; or (v) release any guarantor from its obligations under any Guaranty,   other than as part of or in connection with any disposition permitted   hereunder, or release or subordinate its liens on all or any substantial part   of the Collateral granted under any of the other Loan Documents (except as   permitted by Section 14.10), change the definition of Required Lenders, any   provision of Section 6.2, any provision of this Section 15.4, the provisions   of Section 14.9 or reduce the aggregate Pro Rata Share required to effect an   amendment, modification, waiver or consent, without, in each case set forth   in this clause (v), the written consent of all Lenders. No provision of   Section 14 or other provision of this Agreement affecting Agent in its   capacity as such shall be amended, modified or waived without the consent of   Agent. (b) If, in connection with any proposed amendment, modification,   waiver or termination requiring the consent of all Lenders, the consent of   the Required Lenders is obtained, but the consent of other Lenders whose   consent is required is not obtained (any such Lender whose consent is not   -75- 

    

 

obtained being   referred to as a "Non-Consenting Lender"), then, so long as Agent   is not a Non-Consenting Lender, Agent and/or a Person or Persons reasonably   acceptable to Agent shall have the right to purchase from such Non-Consenting   Lenders, and such Non-Consenting Lenders agree that they shall, upon Agent's   request, sell and assign to Agent and/or such Person or Persons, all of the   Loans and Commitments of such Non-Consenting Lenders for an amount equal to   the principal balance of all such Loans and Commitments held by such   Non-Consenting Lenders and all accrued interest, fees, expenses and other amounts   then due with respect thereto through the date of sale, such purchase and   sale to be consummated pursuant to an executed Assignment and Assumption.   15.6. Time of Essence. Time is of the essence in the performance by each Loan   Party Obligor of each and every obligation under this Agreement and the other   Loan Documents. 15.7. Expenses, Fee and Costs Reimbursement. Each Borrower   hereby agrees to promptly pay (a) all out of pocket costs and expenses of   Agent (including the out of pocket fees, costs and expenses of internal and   external legal counsel to, and appraisers, accountants, consultants and other   professionals and advisors retained by or on behalf of, Agent) in connection   with (i) all loan proposals and commitments pertaining to the transactions contemplated   hereby (whether or not such transactions are consummated), (ii) the   examination, review, due diligence investigation, documentation, negotiation,   and closing of the transactions contemplated by the Loan Documents (whether   or not such transactions are consummated), (iii) the creation, perfection and   maintenance of Liens pursuant to the Loan Documents, (iv) the performance or   enforcement by Agent of its rights and remedies under the Loan Documents (or   determining whether or how to perform or enforce such rights and remedies),   (v) the administration of the Loans (including usual and customary fees for   wire transfers and other transfers or payments received by Agent on account   of any of the Obligations) and Loan Documents, (vi) any amendments, modifications,   consents and waivers to and/or under any and all Loan Documents (whether or   not such amendments, modifications, consents or waivers are consummated),   (vii) any periodic public record searches conducted by or at the request of   Agent (including, title investigations and public records searches), pending   litigation and tax lien searches and searches of applicable corporate,   limited liability company, partnership and related records concerning the   continued existence, organization and good standing of certain Persons),   (viii) protecting, storing, insuring, handling, maintaining, auditing,   examining, valuing or selling any Collateral, (ix) any litigation, dispute,   suit or proceeding relating to any Loan Document and (x) any workout,   collection, bankruptcy, insolvency and other enforcement proceedings under   any and all of the Loan Documents (it being agreed that (A) such costs and   expenses may include the costs and expenses of workout consultants,   investment bankers, financial consultants, appraisers, valuation firms and   other professionals and advisors retained by or on behalf of Agent (B) each   Lender shall also be entitled to reimbursement for all out of pocket costs   and expense of the type described in this clause (x), provided that, to the   extent of an actual or reasonably perceived conflict of interest, such   reimbursement shall be limited to one additional counsel for the Lenders as a   whole), and (b) without limiting the preceding clause (a), all out of pocket   costs and expenses of Agent in connection with Agent's reservation of funds   in anticipation of the funding of the initial Loans to be made hereunder. Any   fees, costs and expenses owing by any Borrower or other Loan Party Obligor   hereunder shall be due and payable within five (5) days after written demand   therefor. 15.8.Benefit of Agreement; Assignability.The provisions of this   Agreement shall be binding upon and inure to the benefit of the respective   successors, assigns, heirs, beneficiaries and representatives of each   Borrower, each other Loan Party Obligor party hereto, Agent and each Lender;   provided, that neither each Borrower nor any other Loan Party Obligor may   assign or transfer any of its rights under this Agreement without the prior   written consent of Agent and each Lender, and any prohibited assignment shall   be void. No consent by Agent or any Lender to any assignment shall release   any Loan Party Obligor from its liability for any of the Obligations. Each   Lender shall have the right to assign all or any of its rights and   obligations under the Loan Documents to one or more other Persons in   accordance with Section 15.9, and each Loan Party Obligor agrees to execute   all agreements, instruments, and documents requested by any Lender in   connection with such assignment. Notwithstanding any -76- 

    

 

provision of   this Agreement or any other Loan Document to the contrary, a Lender may at   any time pledge or grant a security interest in all or any portion of its   rights under this Agreement and the other Loan Documents to secure any obligations   of such Lender, including any pledge or grant to secure obligations to a   Federal Reserve Bank. 15.9. Assignments. (a) Any Lender may at any time   assign to one or more Persons (any such Person, an "Assignee") all   or any portion of such Lender's Loans and Commitments, with the prior written   consent of Agent and, so long as no Event of Default exists, Borrower   Representative (which consents shall not be unreasonably withheld or delayed   and shall not be required for an assignment by a Lender to a Lender (other   than a Defaulting Lender) or an Affiliate of a Lender (other than an   Affiliate of a Defaulting Lender) or an Approved Fund (other than an Approved   Fund of a Defaulting Lender)). Except as Agent may otherwise agree, any such   assignment shall be in a minimum aggregate amount equal to $1,000,000 or, if   less, the remaining Commitment and Loans held by the assigning Lender   (provided, that an assignment to a Lender, an Affiliate of a Lender or an   Approved Fund shall not be subject to the foregoing minimum assignment   limitations). The Loan Parties and Agent shall be entitled to continue to   deal solely and directly with such Lender in connection with the interests so   assigned to an Assignee until Agent shall have received and accepted an   effective Assignment and Assumption executed, delivered and fully completed   by the applicable parties thereto and a processing fee of $3,500.   Notwithstanding anything herein to the contrary, no assignment may be made to   any equity holder of a Loan Party, any Affiliate of any equity holder of a   Loan Party, any Loan Party, any holder of Term Loan Debt of a Loan Party   (other than as a result of exercising the purchase option under Section 3 of   the Intercreditor Agreement), any holder of any debt that is secured by liens   or security interests that have been contractually subordinated to the liens   and security interests securing the Obligations, or any Affiliate of any of   the foregoing Persons without the prior written consent of Agent, which   consent may be withheld in Agent's sole discretion and, in any event, if   granted, may be conditioned on such terms and conditions as Agent shall   require in its sole discretion, including, without limitation, a limitation   on the aggregate amount of Loans and Commitments which may be held by such   Person and/or its Affiliates and/or limitations on such Person's and/or its   Affiliates' voting and consent rights and/or rights to attend Lender meetings   or obtain information provided to other Lenders. Any attempted assignment not   made in accordance with this Section 15.10 shall be null and void. Each   Borrower shall be deemed to have granted its consent to any assignment   requiring its consent hereunder unless Borrower Representative has expressly   objected to such assignment within five (5) Business Days after notice   thereof. (b) From and after the date on which the conditions described in   Section 15.10(a) above have been met, (i) such Assignee shall be deemed   automatically to have become a party hereto and, to the extent that rights   and obligations hereunder have been assigned to such Assignee pursuant to the   applicable Assignment and Assumption, shall have the rights and obligations   of a Lender hereunder and (ii) the assigning Lender, to the extent that   rights and obligations hereunder have been assigned by it pursuant to the   applicable Assignment and Assumption, shall be released from its rights   (other than its indemnification rights) and obligations hereunder. Upon the   request of the Assignee (and, as applicable, the assigning Lender) pursuant   to an effective Assignment and Assumption, Borrowers shall execute and   deliver to Agent for delivery to the Assignee (and, as applicable, the   assigning Lender) a promissory note in the principal amount of the Assignee's   Pro Rata Share of the aggregate Revolving Loan Commitment (and, as   applicable, a promissory note in the principal amount of the Pro Rata Share   of the aggregate Revolving Commitment retained by the assigning Lender). Upon   receipt by Agent of such promissory note(s), the assigning Lender shall   return to Borrowers any prior promissory note held by it. (c) Agent shall, as   a non-fiduciary agent of Borrowers, maintain a copy of each Assignment and   Assumption delivered and accepted by it and register (the   "Register") for the recordation of names and addresses of the   Lenders and the Commitment of each Lender and principal and stated interest   of each Loan owing to each Lender from time to time and whether such Lender   is the original -77- 

    

 

Lender or the   Assignee. No assignment shall be effective unless and until the Assignment   and Assumption is accepted and registered in the Register. All records of   transfer of a Lender's interest in the Register shall be conclusive, absent   manifest error, as to the ownership of the interests in the Loans. Agent   shall not incur any liability of any kind with respect to any Lender with   respect to the maintenance of the Register. Each Lender granting a   participation shall, as a non-fiduciary agent of the Borrowers, maintain a   register containing information similar to that of the Register in a manner   such that the loans hereunder are in "registered form" for the   purposes of the Code. This Section and Section 19.1.2 shall be construed so   that the Loans are at all times maintained in "registered form" for   the purpose of the Code and any related regulations (and any successor   provisions). 15.10. Participations. Anything in this Agreement or any other   Loan Document to the contrary notwithstanding, any Lender may, at any time   and from time to time, without in any manner affecting or impairing the   validity of any Obligations, sell to one or more Persons participating   interests in its Loans, commitments or other interests hereunder or under any   other Loan Document (any such Person, a "Participant"). In the event   of a sale by a Lender of a participating interest to a Participant, (a) such   Lender's obligations hereunder and under the other Loan Documents shall   remain unchanged for all purposes, (b) Borrowers and such Lender shall   continue to deal solely and directly with each other in connection with such   Lender's rights and obligations hereunder and under the other Loan Documents   and (c) all amounts payable by Borrowers shall be determined as if such   Lender had not sold such participation and shall be paid directly to such Lender;   provided, that a Participant shall be entitled to the benefits of Section 13   as if it were a Lender if Borrower Representative is notified of the   Participation and the Participant complies with Section 13. Each Borrower   agrees that if amounts outstanding under this Agreement or any other Loan   Document are due and payable (as a result of acceleration or otherwise), each   Participant shall be deemed to have the right of set-off in respect of its   participating interest in amounts owing under this Agreement and the other   Loan Documents to the same extent as if the amount of its participating   interest were owing directly to it as a Lender under this Agreement;   provided, that such right of set-off shall not be exercised without the prior   written consent of such Lender and shall be subject to the obligation of each   Participant to share with such Lender its share thereof. Each Borrower also   agrees that each Participant shall be entitled to the benefits of Section   15.9 as if it were a Lender. Notwithstanding the granting of any such   participating interests, (i) Borrowers shall look solely to the applicable   Lender for all purposes of this Agreement, the Loan Documents and the   transactions contemplated hereby, (ii) Borrowers shall at all times have the   right to rely upon any amendments, waivers or consents signed by the   applicable Lender as being binding upon all of the Participants and (iii) all   communications in respect of this Agreement and such transactions shall   remain solely between Borrowers and the applicable Lender (exclusive of   Participants) hereunder. If a Lender grants a participation hereunder, such   Lender shall maintain, as a non-fiduciary agent of Borrowers, a register as   to the participations granted and transferred under this Section containing   the same information specified in Section 15.9 on the Register as if each   Participant were a Lender to the extent required to cause the Loans to be in   registered form for the purposes of Sections 163(F), 165(J), 871, 881, and   4701 of the Code. 15.11. Headings; Construction. Section and subsection   headings are used in this Agreement only for convenience and do not affect   the meanings of the provisions that they precede. 15.12. USA PATRIOT Act   Notification. Agent hereby notifies the Loan Parties that pursuant to the   requirements of the USA PATRIOT Act, it may be required to obtain, verify and   record certain information and documentation that identifies such Person,   which information may include the name and address of each such Person and   such other information that will allow Agent to identify such Persons in   accordance with the USA PATRIOT Act. 15.13.Counterparts; Fax/Email   Signatures. This Agreement may be executed in any number of counterparts, all   of which shall constitute one and the same agreement. This Agreement may -78-   

    

 

be executed by   signatures delivered by facsimile or electronic mail, each of which shall be   fully binding on the signing party. 15.14. GOVERNING LAW.THIS AGREEMENT,   ALONG WITH ALL OTHER LOAN DOCUMENTS (UNLESS EXPRESSLY PROVIDED OTHERWISE IN   SUCH OTHER LOAN DOCUMENT) SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE   WITH THE LAW OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE   PERFORMED THEREIN WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES. FURTHER, THE   LAW OF THE STATE OF NEW YORK SHALL APPLY TO ALL DISPUTES OR CONTROVERSIES   ARISING OUT OF OR CONNECTED TO OR WITH THIS AGREEMENT AND ALL SUCH OTHER LOAN   DOCUMENTS WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES. 15.15. CONSENT TO   JURISDICTION; WAIVER OF JURY TRIAL; CONSENT TO SERVICE OF PROCESS. ANY LEGAL   ACTION, SUIT OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN   DOCUMENT SHALL BE BROUGHT EXCLUSIVELY IN THE COURTS OF THE STATE OF ILLINOIS   IN THE COUNTY OF COOK OR IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN   DISTRICT OF ILLINOIS OR IN ANY OTHER COURT (IN ANY JURISDICTION) SELECTED BY   THE AGENT IN ITS SOLE DISCRETION, AND EACH BORROWER AND EACH OTHER LOAN PARTY   OBLIGOR HEREBY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY   AND UNCONDITIONALLY, THE JURISDICTION OF THE AFOREMENTIONED COURTS. EACH   BORROWER AND EACH OTHER LOAN PARTY OBLIGOR HEREBY EXPRESSLY AND IRREVOCABLY   WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION,   INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF   FORUM NON CONVENIENS, OR BASED ON 28 U.S.C. § 1404, WHICH IT MAY NOW OR   HEREAFTER HAVE TO THE BRINGING AND ADJUDICATION OF ANY SUCH ACTION, SUIT OR   PROCEEDING IN ANY OF THE AFOREMENTIONED COURTS AND AMENDMENTS TO THE GRANTING   OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY THE COURT. EACH   BORROWER AND EACH OTHER LOAN PARTY OBLIGOR HEREBY WAIVES ANY RIGHT TO A TRIAL   BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM CONCERNING ANY RIGHTS UNDER   THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR UNDER ANY AMENDMENT, WAIVER,   INSTRUMENT, DOCUMENT OR OTHER AGREEMENT DELIVERED OR WHICH IN THE FUTURE MAY   BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH, OR ARISING FROM ANY   FINANCING RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT OR ANY   OTHER LOAN DOCUMENT OR THE OTHER TRANSACTION DOCUMENTS, AND AGREES THAT ANY   SUCH ACTION, PROCEEDING OR COUNTERCLAIM SHALL BE TRIED BEFORE A COURT AND NOT   BEFORE A JURY. EACH BORROWER AND EACH OTHER LOAN PARTY OBLIGOR HEREBY WAIVES   PERSONAL SERVICE OF ANY AND ALL PROCESS UPON ANY BORROWER OR ANY OTHER LOAN   PARTY OBLIGOR AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY   CERTIFIED MAIL (RETURN RECEIPT REQUESTED) DIRECTED TO BORROWER'S’ NOTICE   ADDRESS (ON BEHALF OF BORROWERS OR SUCH LOAN PARTY OBLIGOR) SET FORTH IN   SECTION 15.1 AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED FIVE DAYS   AFTER THE SAME SHALL HAVE BEEN SO DEPOSITED IN THE MAIL, OR, AT THE AGENT'S   OPTION, BY SERVICE UPON ANY BORROWER OR ANY OTHER LOAN PARTY OBLIGOR IN ANY   OTHER MANNER PROVIDED UNDER THE RULES OF ANY SUCH COURTS. 15.16. Publication.   Each Borrower and each other Loan Party Obligor consents to the publication   by Agent of a tombstone, press releases or similar advertising material   relating to the financing transactions contemplated by this Agreement, and   Agent reserves the right to provide to industry trade organizations   information necessary and customary for inclusion in league table -79- 

    

 

measurements,   provided, that such publication and sharing of information shall be subject   to the prior satisfaction of SEC reporting obligations of each Borrower, if   any. 15.17. Confidentiality. Agent and each Lender agree to use commercially   reasonable efforts not to disclose Confidential Information to any Person   without the prior consent of Borrower Representative; provided, that nothing   herein contained shall limit any disclosure of the tax structure of the   transactions contemplated hereby, or the disclosure of any information (a) to   the extent required by applicable law, statute, rule, regulation or judicial   process or in connection with the exercise of any right or remedy under any   Loan Document, or as may be required in connection with the examination,   audit or similar investigation of Agent or any of its Affiliates, (b) to   examiners, auditors, accountants or any regulatory authority, (c) to the   officers, partners, managers, directors, employees, agents and advisors   (including independent auditors, lawyers and counsel) of Agent and each Lender   or any of their respective Affiliates, (d) in connection with any litigation   or dispute which relates to this Agreement or any other Loan Document to   which Agent or any Lender is a party or is otherwise subject, (e) to a   subsidiary or Affiliate of Agent or any Lender, (f) to any assignee or   participant (or prospective assignee or participant) which agrees to be bound   by this Section 15.17 and (g) to any lender or other funding source of Agent   or any Lender (each reference to Agent and Lender in the foregoing clauses   shall be deemed to include (i) the actual and prospective assignees and   participants referred to in clause (f) and the lenders and other funding   sources referred to in clause (g), as applicable for purposes of this Section   15.17), and further provided, that in no event shall Agent or any Lender be   obligated or required to return any materials furnished by or on behalf of   any Borrower or any other Loan Party or Obligor. The obligations of Agent and   Lenders under this Section 15.17 shall supersede and replace the obligations   of Agent and Lenders under any confidentiality letter or provision in respect   of this financing or any other financing previously signed and delivered by   Agent or any Lender to any Borrower or any of its Affiliates. 15.18. Term Loan   Intercreditor Agreement. Notwithstanding anything herein to the contrary,   each of (i) the Obligations of the Loan Parties under this Agreement, (ii)   the Lien and security interest granted to Agent for the benefit of the   Lenders pursuant to this Agreement (including priority thereof), (iii) the   release of Collateral from the Lien granted and created hereby and (iv) the   exercise of any right or remedy by Agent hereunder are, in each case, subject   to the provisions of the Term Loan Intercreditor Agreement. In the event of   any conflict or inconsistency between the provisions of the Term Loan   Intercreditor Agreement and this Agreement, the provisions of the Term Loan   Intercreditor Agreement shall control. [Signature page follows] -80- 

    

 

IN WITNESS   WHEREOF, each Borrower, each other Loan Party Obligor party hereto, Agent and   each Lender have signed this Agreement as of the date first set forth above.   Agent: ENCINA BUSINESS CREDIT, LLC By: /s/ Jean R. Elie Name: Jean R. Elie   Its: Authorized Signatory Lenders: ENCINA BUSINESS CREDIT SPV, LLC By: /s/   Jean R. Elie Name: Jean R. Elie Its: Authorized Signatory Signature Page to   Loan and Security Agreement 

    

 

Borrowers: NEOS   THERAPEUTICS, INC. By: /s/ Gerald McLaughlin Name: Gerald McLaughlin Its:   Chief Executive Officer and President NEOS THERAPEUTICS BRANDS, LLC By: /s/   Gerald McLaughlin Name: Gerald McLaughlin Its: Chief Executive Officer and   President NEOS THERAPEUTICS, LP By: /s/ Gerald McLaughlin Name: Gerald   McLaughlin Its: Sole Manager Signature Page to Loan and Security Agreement 

    

 

Loan Party   Obligors: NEOS THERAPEUTICS COMMERCIAL, LLC By: /s/ Gerald McLaughlin Name:   Gerald McLaughlin Its: Chief Executive Officer and President PHARMAFAB TEXAS,   LLC By: /s/ Gerald McLaughlin Name: Gerald McLaughlin Its: Sole Manager   Signature Page to Loan and Security Agreement 

    

 

Perfection   Certificate See attached. Perfection Certificate Page 1 

    

 

Perfection   Certificate 2FWREHU 2, 2019 Reference is hereby made to that certain Loan and   Security Agreement (as it may be amended, restated or otherwise modified from   time to time, this "Agreement") entered into on 2FWREHU 2, 2019, by   and among ENCINA BUSINESS CREDIT, LLC ("Agent"), the Lenders party   thereto, Neos Therapeutics, Inc., a Delaware corporation   ("Company"; together with each other Person party thereto as a   Borrower, each a "Borrower" and collectively the "Borrowers"),   and each Subsidiary of Company party thereto as a Loan Party Obligor   (together with Borrowers, each a "Loan Party" and collectively the   "Loan Parties"). Capitalized terms used herein and not otherwise   defined shall have the meanings ascribed to them in the Agreement. Any terms   (whether capitalized or lower case) used in this Perfection Certificate that   are defined in the UCC shall be construed and defined as set forth in the UCC   unless otherwise defined herein or in the Agreement; provided that to the   extent that the UCC is used to define any term used herein and if such term   is defined differently in different Articles of the UCC, the definition of   such term contained in Article 9 of the UCC shall govern. Each of the   undersigned hereby certifies to Agent and each of the other Lenders as   follows as of the date hereof: 1. Loan Party Information: (a) Jurisdictions   of Formation; Foreign Business Qualifications: Each Loan Party is (i) the   type of entity disclosed next to its name below, (ii) duly formed and validly   existing under the laws of the jurisdiction disclosed next to its name below   and (iii) qualified to do business in the jurisdictions disclosed next to its   name below. Except as indicated below, no Loan Party has changed its   jurisdiction of organization at any time during the past four months.   ACTIVE/99933240.10 LOAN PARTY ENTITY TYPE AND JURISDICTION OF FORMATION   FOREIGN BUSINESS QUALIFICATIONS Neos Therapeutics, Inc. Corporation, Delaware   None Neos Therapeutics Commercial, LLC LLC, Delaware None Neos Therapeutics   Brands, LLC LLC, Delaware None PharmaFab Texas, LLC LLC, Texas None Neos   Therapeutics, LP LP, Texas None 

    

 

(b) Names: The   exact legal name of each Loan Party, as such name appears in its certified   certificate of incorporation, articles of incorporation, certificate of   formation, or any other organizational document, is set forth below. Also set   forth below next to the name of each Loan Party is (i) a list of any other   prior legal names such Loan Party has had in the past five years, together   with the date of the relevant name change, (ii) a list of all other names   used by such Loan Party in connection with any business or organization to   which such Loan Party became the successor by merger, consolidation,   acquisition, change in form, nature or jurisdiction of organization or   otherwise or on any filings with the Internal Revenue Service, in each case,   at any time in the past five years, and (iii) a list of all of the present   and prior trade names used by such Loan Party at any time in the past five   years. (c) Collateral Locations: Set forth below is a list of all real   property locations owned or leased by each Loan Party Obligor, including (i)   the Collateral located on, and uses of, such real property, (ii) the   addresses of each parcel of real property and (iii) whether owned or leased   (and if leased, the complete name and notice address of the lessor). Except   as described below, no Loan Party Obligor has entered into any leases,   subleases, tenancies, franchise agreements, licenses or other occupancy arrangements   as owner, lessor, sublessor, licensor, franchisor or grantor with respect to   any real property and no Loan Party Obligor has any leases which require the   consent of the landlord, tenant or other party thereto to the transactions   contemplated by the Loan Documents. ACTIVE/99933240.10 LOAN PARTY OBLIGOR   COLLATERAL DESCRIPTION/USE (indicate if any fixtures) COLLATERAL LOCATION OR   PLACE OF BUSINESS (INCLUDING CHIEF EXECUTIVE OFFICE) OWNER/LE SSOR (IF   LEASED) Neos Therapeutics, LP Inventory Manufacturing equipment 2940 N. Hwy,   360 Suites 100, 200 and 400* Neos (Owner) LOAN PARTY LEGAL NAME PRIOR LEGAL   NAMES OTHER NAMES EXISTING/PRIOR TRADE NAMES Neos Therapeutics, Inc. None   None None Neos Therapeutics Commercial, LLC None None None Neos Therapeutics   Brands, LLC None None None PharmaFab Texas, LLC None None None Neos   Therapeutics, LP None None None 

    

 

(Lessor)   Leasing Financial LLC (Lessor) (Lessor) ACTIVE/99933240.10 Lab equipment   Leasehold improvements Computer equipment and s/w IP Cash Grand Prairie, TX   75050 * Corporate offices Neos Therapeutics, LP Manufacturing equipment Lab   equipment Computer equipment (certain pieces only) 2940 N. Hwy, 360 Suites   100, 200 and 400 Grand Prairie, TX 75050 Essex Capital Corporation Neos   Therapeutics, LP Forklift 2940 N. Hwy, 360 Suites 100 and 200 Grand Prairie,   TX 75050 N J Malin - Raymond Corporation (Lessor) Neos Therapeutics, LP Lab   equipment 2940 N. Hwy, 360 Suites 100 and 200 Grand Prairie, TX 75050 DeLage   Landen Services (Lessor) Neos Therapeutics, Inc. Neos Therapeutics   Commercial, LLC Neos Therapeutics Brands, LLC PharmaFab Texas, LLC Neos   Therapeutics, LP Office, manufacturing facility, laboratory 2940 N. Hwy, 360   Suite 100, 200 and 400 Grand Prairie, TX 75050 GDI Portfolio I Acquisition,   Neos Therapeutics, Inc. Neos Therapeutics Commercial, LLC Neos Therapeutics   Brands, LLC PharmaFab Texas, LLC Neos Therapeutics, LP Office space 787   Sentry Park West, Viva 16, Suite 130 Blue Bell, PA 19422 16-18 KPG III   Sentry, LLC Neos Therapeutics, Inc. Neos Therapeutics Commercial, LLC Neos   Therapeutics Brands, LLC PharmaFab Texas, LLC Neos Therapeutics, LP Computer   equipment and s/w 787 Sentry Park West, Viva 16, Suite 130 Blue Bell, PA   19422 Neos (Owner) 

    

 

(d) Collateral   in Possession of Lessor, Bailee, Consignee or Warehouseman: Set forth below   is a list of all third parties with possession of any Collateral (including   Inventory and Equipment) of any Loan Party Obligor, including (i) the name   and address of such third party, (ii) a description of the Collateral in such   third party's possession, and (iii) the location of such Collateral. (e)   Litigation: Set forth below is a description of all claims, proceedings,   litigation or investigations pending or (to the best of each Loan Party Obligor's   knowledge) threatened against any Loan Party. None (f)Capitalization of Loan   Parties: Attached hereto as Exhibit A is a corporate organizational chart   that lists each Loan Party and each of their respective Subsidiaries, and   indicates whether any of the Loan Parties is inactive and has de minimis   assets. Set forth below is a true and correct list of all of the issued and   outstanding Equity Interests of each Loan Party and its Subsidiaries and the   record and beneficial owners of such Equity Interests, along with the   certificate number representing such Equity Interests. ACTIVE/99933240.10   Loan Party Equityholder Equity Description Percentage of Outstanding Equity   Issued by Loan Party Certificate (Indicate No.) Neos Therapeutics, Inc.   Publicly traded company Common shares 100% Not available Neos Therapeutics   Commercial, LLC Neos Therapeutics, Inc. LLC Interest 100% Not applicable Neos   Therapeutics Brands, LLC Neos Therapeutics, Inc. LLC Interest 100% Not   applicable LOAN PARTY OBLIGOR ADDRESS OF COLLATERAL BAILEE/ CONSIGNEE/   WAREHOUSEMAN DESCRIPTION OF COLLATERAL Neos Therapeutics, LP Cardinal Health   dba Specialty Pharmaceutical Services 15 Ingram Blvd. La Vergne, TN 37086 3PL   (warehouseman) Inventory AR records 

    

 

(g) Other   Equity Interests and Investment Property: Set forth below is a list of all   Investment Property owned by any Loan Party Obligor, including any Equity   Interests not described above in Section 1(f). (h) Material Contracts: Set   forth below is a list of all Material Contracts of any Loan Party. See   attached Schedule 1(h). (g) Extraordinary Transactions: Except for those   purchases, mergers, acquisitions, consolidations, and other transactions   described below, all of the Collateral has been originated by each Loan Party   in the ordinary course of business or consists of goods which have been   acquired by such Loan Party in the ordinary course of business from a person   in the business of selling goods of that kind. None 2. Commercial Tort   Claims: Set forth below is a true and correct list of all commercial tort   claims held by any Loan Party, including a brief description thereof   containing the case name and parties. None 3. Deposit Accounts / Other   accounts: ACTIVE/99933240.10 Loan Party Obligor Description Neos   Therapeutics, Inc. Short term investment of excess cash or cash equivalents   PharmaFab Texas, LLC Neos Therapeutics, Inc. LLC Interest 100% Not applicable   Neos Therapeutics, LP Neos Therapeutics, Inc. Partnership Interest 99% Not   applicable Neos Therapeutics, LP PharmaFab Texas, LLC Partnership Interest 1%   Not applicable 

    

 

Set forth below   is a list of all Deposit Accounts, Securities Accounts, Commodity Accounts,   Securities Entitlements and Commodity Contracts and all other depositary,   securities, commodity and other accounts maintained by each Loan Party   Obligor as of the date hereof, including for each such account (i) the name   of the Loan Party Obligor maintaining the account, (ii) the name of the   financial institution, securities intermediary, commodity intermediary or   other Person at which the account is maintained, (iii) the account number and   the purpose of the account and (iv) whether the account is a "Restricted   Account". 4. Intellectual Property: (a) Patents and Patent Applications:   Set forth below is a complete and correct list of all patents and   applications for patents owned by any Loan Party Obligor. (b) Trademarks and   Trademark Applications: Set forth below is a complete and correct list of all   trademarks and applications for trademarks owned by any Loan Party Obligor.   ACTIVE/99933240.10 Loan Party Obligor Patent Registration Number Registration   Date Patent Application Number Application Date See attached schedule 4(a)   Loan Party Obligor Name of Financial Institution Account Number (* indicates   account is approved for funding of loan proceeds) Purpose of Account Is the   Account a "Restricted Account" as defined in the Loan Agreement   (Yes or No?) Neos Therapeutics, Inc. US Bank Investment No Neos Therapeutics,   Inc. First Republic Bank Checking No Neos Therapeutics, LP First Republic   Bank Checking No Neos Therapeutics, LP First Republic Bank Funding No Neos   Therapeutics, LP First Republic Bank Lock Box No Neos Therapeutics Brands,   LLC First Republic Bank Lock Box No 

    

 

(c) Copyrights   and Copyright Applications: Set forth below is a complete and correct list of   all copyrights and applications for copyrights owned by any Loan Party   Obligor. (d) Intellectual Property Licenses: Set forth below is a complete   and correct list of all Intellectual Property licenses entered into by any   Loan Party Obligor pursuant to which (i) any Loan Party Obligor has provided   any license or other rights in Intellectual Property owned or controlled by   such Loan Party Obligor to any other Person (other than non-exclusive   software licenses granted in the ordinary course of business) or (ii) any   Person has granted to any Loan Party Obligor any license or other rights in   Intellectual Property owned or controlled by such Person that is material to   the business of such Loan Party, including any Intellectual Property that is   incorporated in any Inventory or other product marketed, sold, licensed, or   distributed by such Loan Party Obligor. (i) License Agreement by and between   Neos Therapeutics, Inc. and Actavis Laboratories FL, Inc. dated October 17,   2017 (Adzenys XR-ODT) License Agreement by and between Neos Therapeutics,   Inc. and Teva Pharmaceuticals USA, Inc. dated December 21, 2018 (Cotempla   XR-ODT) (ii) License Agreement by and between Shire LLC and Neos   Therapeutics, Inc. dated July 23, 2014 (Adzenys XR-ODT) License Agreement by   and between Shire LLC and Neos Therapeutics, Inc. dated March 6, 2017   (Adzenys ER) Exclusive License Agreement by and between NeuRx Pharmaceuticals   LLC and Neos Therapeutics, Inc. dated October 233, 2018 (NRX-101) 5.   Insurance: ACTIVE/99933240.10 Loan Party Obligor Copyright Title Copyright   Registration Date Copyright Registration Number Copyright Application Number   None Loan Party Obligor Trademark Title Trademark Application Number   Trademark Registration Number Date of Application Date of Registration See   attached schedule 4(b) 

    

 

A true and   complete listing of all insurance carried by any Loan Party as of the date   hereof, including issuers, coverages and deductibles, is set forth below. See   attached Schedule 5. 6. Other Assets: A Loan Party Obligor owns the following   kinds of assets: Aircraft: Yes No x Letter-of-Credit Rights: Yes No x   Indebtedness (including as evidenced by promissory notes, instruments (other   than checks to be deposited in the ordinary course of business), tangible   chattel paper, and/or electronic chattel paper): Yes No x Vessels, boats or   ships: Yes No x Railroad rolling stock: Yes No x Motor Vehicles or similar   titled collateral. Yes No x If the answer is yes to any of these other types   of assets, please describe on Exhibit B. 7. Existing Indebtedness: Set forth below   is a complete and correct list of all existing Indebtedness of any Loan   Party: ACTIVE/99933240.10 Debt Exit Fee Gross Debt Deerfield Deerfield   Private Design Fund III 30,000,000 500,159 30,500,159 Deerfield Special   Situations Fund LP 15,000,000 250,080 15,250,080 Total Deerfield 45,000,000   750,239 45,750,239 Financing Leases Essex Lease Sch 1 145,939 145,939 Essex   Lease Sch 2 1,135,623 1,135,623 N J Malin - Raymond Leasing Corporation   67,693 67,693 DeLage Landen Financial Services 388,750 388,750 Total   financing leases 1,738,005 - 1,738,005 

    

 

ACTIVE/99933240.10   Earnouts Cornerstone Biopharma, Inc. 1,000,000 1,000,000 Total Debt   47,738,005 750,239 48,488,244 

    

 

IN WITNESS   WHEREOF, the undersigned have signed this Perfection Certificate as of the   date first set forth above. NEOS THERAPEUTICS, INC. By rtd.rtf:. Title: Chief   Executi ve Officer NEOS THERAPEUTICS COMMERCIAL, LLC rJ-ds 'Y/1. By Name:   Gerald McLaugh lin Title: Ch i ef Executive Officer NEOS THERAPEUTICS BR   ANDS, LLC By: C[k Nam e: Geral d McLaughlin Title: Chief Executive Officer   PHARMAFAB TEXAS, LLC By 9k Name: erald McLaugh lm Title: Sole Manager NEOS   THERAPEUTICS, LP By: PharmaFab Texas, LLC, Its Genera l Patiner By: ilkbcrh   Name: Gera ld McLaugh li n Title: Sole Manager ACTI VE/99933240.1 0 

    

 

 

Exhibit A   CORPORATE ORGANIZATIONAL CHART ACTIVE/99933240.10 

    

 

Neos hold all   cash received from funding less working capital intercompany transfers. 100%   100% 100% Inactive Holds investment in LP Inactive 99% Sales of NT Brand   products Deminimus assets 1% LP includes the following: Payroll for all   employees All contract Manufacturing All current operations 75-2822938 Neos   Therapeutics, LP 75-2822937 PharmaFab, Texas, LLC (General Partner)   35-2542235 Neos Therapeutics Brands LLC 37-1793424 Neos Therapeutics   Commercial LLC 27-0395455 Neos Therapeutics, Inc 

    

 

Exhibit B   DESCRIPTION OF OTHER ASSETS 12 ACTIVE/99933240.10 

    

 

Schedule 1(h) –   Material Agreements Out licenses: License Agreement between Neos   Therapeutics, Inc. and Actavis Laboratories FL, Inc. dated October 17, 2017   (Adzenys XR-ODT) License Agreement between Neos Therapeutics, Inc. and Teva   Pharmaceuticals USA, Inc. dated December 21, 2018 (Cotempla XR-ODT) In   licenses: License Agreement between Shire LLC and Neos Therapeutics, Inc.   dated July 23, 2014 (Adzenys XR-ODT) License Agreement between Shire LLC and   Neos Therapeutics, Inc. dated March 6, 2017 (Adzenys ER) Exclusive License   Agreement between NeuRx Pharmaceuticals LLC and Neos Therapeutics, Inc. dated   October 23, 2018 (NRX-101) Asset Purchase Agreements: Asset Purchase   Agreement by and between Neos Therapeutics, Inc. and Cornerstone BioPharma,   Inc. dated August 28, 2014 Settlement Agreements: Settlement Agreement by and   between Shire LLC and Neos Therapeutics, Inc. dated July 23, 2014 Settlement   Agreement by and between Neos Therapeutics, Inc. and Actavis Laboratories FL,   Inc. dated October 17, 2017 Settlement Agreement by and between Neos   Therapeutics, Inc and Teva Pharmaceuticals USA, Inc. dated December 21, 2018   Leases: Commercial Lease Agreement by and between Riverside Business Green   and Neos Therapeutics, LP dated June 29, 1999, as amended Employment Agreements:   Amended and Restated Employment Agreement by and between Neos Therapeutics,   Inc. and Richard I. Eisenstadt dated July 10, 2015 Employment Agreement dated   June 27, 2018 by and between Neos Therapeutics, Inc. and Gerald McLaughlin   Debt: Facility Agreement between Neos Therapeutics, Inc. and Deerfield (as   lenders), including Amendments One, Two and Three ACTIVE/100087486.1 

    

 

Guaranty and   Security Agreement between Neos Therapeutics, Inc. and Deerfield (as lenders)   dated May 11, 2016 Intellectual Property Security Agreement between Neos   Therapeutics, Inc. and Deerfield (as lenders) dated May 11, 2016 Supply   Agreements: Supply Agreement by and between Neos Therapeutics, Inc. and   Coating Place, Inc. dated August 28, 2014 Supply Agreement by and between   Johnson Matthey Inc. and Neos Therapeutics, LP dated January 1, 2019 Supply   Agreement by and between Noramco, Inc. and Neos Therapeutics, LP dated   December 1, 2017 Neos/Amaray Manufacturing Agreement dated March 21, 2017   Distribution Agreement: Exclusive Distribution Agreement by and between   Cardinal Health and Neos Therapeutics, Inc. dated October 13, 2014, as   amended. Wholesale Purchase and Distribution Service Agreements: Distribution   Services Agreement by and between Cardinal Health and Neos Therapeutics, LP   dated April 28, 2016, as amended Cardinal Health Wholesale Purchase Agreement   by and between Neos Therapeutics, LP and Cardinal Health dated April 27, 2016   Core Distribution Agreement by and between McKesson Corporation and Neos Therapeutics,   LP effective April 1, 2016, as amended Distribution Services Agreement by and   between AmerisourceBergen Drug Corporation and Neos Therapeutics, LP dated   April 21, 2016, as amended (Branded) Master Distribution Services Agreement   by and between AmerisourceBergen Drug Corporation and Neos Therapeutics, LP   dated January 1, 2015 (Generic) PRxO Generics Program Addendum to Master   Distribution Services Agreement Master Services Agreement by and between   AmerisourceBergen Global Manufacturing Services GmbH and Neos Therapeutics,   Inc. dated January 1, 2015 (Generic) PRxO Generics Program Addendum to Master   Services Agreement Rebate Agreements: Rebate Agreement by and between   CaremarkPCS Health, L.L.C. and Neos Therapeutics, LP dated April 15, 2016, as   amended ACTIVE/100087486.1 

    

 

Preferred   Savings Grid Rebate Program Agreement by and between Express Scripts, Inc.   and Neos Therapeutics dated November 6, 2017, as amended Commercial Inflation   Agreement by and between Express Scripts, Inc. and Neos Therapeutics dated   November 6, 2017, as amended National Rebate Agreement by and between the   Secretary of Health and Human Services and Neos Therapeutics, LP dated May 9,   2018 National Rebate Agreement by and between the Secretary of Health and Human   Services and Neos Therapeutics Brands, LLC dated May 9, 2018 Pharmaceutical   Pricing Agreement by and between the Secretary of Health and Human Services   and Neos Therapeutics dated January 27, 2015 Master Agreement by and between   the Secretary of Veterans Affairs and Neos Therapeutics, LP Pharmaceutical   Pricing Agreement by and between the Secretary of Veterans Affairs and Neos   Therapeutics, LP Master Agreement by and between the Secretary of Veterans   Affairs and Neos Therapeutics Brands, LLC dated June 7, 2016, as amended and   modified Pharmaceutical Pricing Agreement by and between the Secretary of   Veterans Affairs and Neos Therapeutics Brands, LLC dated June 7, 2016, as   amended and modified ACTIVE/100087486.1 

    

 

10783479v2   7/19/2019 9:16 AM ACTIVE/100087489.3 7528.013 Loan Party Obligor Patent   Registration Number Registration Date Patent Application Number Application   Date Neos Therapeutics, LP 8,318,210 11/27/2012 11/068,124 02/28/2005 Neos   Therapeutics, LP 9,522,120 12/20/2016 14/045,671 10/03/2013 Neos   Therapeutics, LP PCT/US06/06670 (PCT) 02/24/2006 Neos Therapeutics, LP   2599585 05/20/2014 2599585 (Canada) 02/24/2006 Neos Therapeutics, LP 295500   02/02/2012 2007010541 (Mexico) 02/24/2006 Neos Therapeutics, LP 8,840,924   09/22/2014 12/717,251 03/04/2010 Neos Therapeutics, LP 8,313,770 11/20/2012   12/130,762 05/30/2008 Neos Therapeutics, LP PCT/US08/65408 (PCT) 05/30/2008   Neos Therapeutics, LP 2,689,101 01/22/2013 2,689,101 (Canada) 05/30/2008 Neos   Therapeutics, LP 8,470,375 06/25/2013 12/985,340 01/05/2011 Neos   Therapeutics, LP 8,512,759 08/20/2013 13/490,697 06/07/2012 Neos   Therapeutics, LP 9,057,675 06/16/2015 13/904,739 05/29/2013 Neos   Therapeutics, LP 13/210,829 08/16/2011 Neos Therapeutics, LP PCT/US12/44698   06/28/2012 Neos Therapeutics, LP 8,709,491 04/29/2014 13/947,881 07/22/2013   Neos Therapeutics, LP 9,017,731 04/28/2015 13/844,537 03/15/2013 Neos   Therapeutics, LP 9,265,737 02/23/2016 14/661,639 03/18/2015 Neos   Therapeutics, LP 9,839,619 12/12/2017 13/844,555 03/15/2013 Neos Therapeutics,   LP 13/844,628 03/15/2013 Neos Therapeutics, LP 9,072,680 07/07/2015   13/844,584 03/15/2013 Neos Therapeutics, LP 9,089,496 07/28/2015 13/947,907   07/22/2013 Neos Therapeutics, LP 13/947,861 07/22/2013 Neos Therapeutics, LP   13/844,510 03/15/2013 Neos Therapeutics, LP 12805240.4 (EP) 06/28/2012 Neos   Therapeutics, LP PCT/US17/59256 (PCT) 10/31/2017 Neos Therapeutics, LP   2017353921 (AU) 04/29/2019 

    

 

ACTIVE/100087489.3   Neos Therapeutics, LP 17868418.9 (EP) 04/29/2019 Neos Therapeutics, LP   10-2019-7015402 (KR) 05/29/2019 Neos Therapeutics, LP 16/346,850 05/01/2019   Neos Therapeutics, LP PCT/US12/45255 (PCT) 07/02/2012 

    

 

Schedule 4(b)   Trademarks Loan Party Obligor Trademark Title Trademark Application Number   Trademark Registration Number Date of Application Date of Registration Neos   Therapeutics, LP Adzenys 85/949275 5045871 06/03/2013 09/20/2016 Neos   Therapeutics, Inc. Adzenys ER 87/599332 5628952 09/07/2017 12/11/2018 Neos   Therapeutics, Inc. Adzenys XR-ODT 86/847760 5147879 12/14/2015 02/21/2017   Neos Therapeutics, Inc. Alumbria 87/482500 06/09/2017 Neos Therapeutics, Inc.   Alumbria XR-ODT 88/471408 06/13/2019 Neos Therapeutics, Inc. Cotempla   87/160228 09/06/2016 Neos Therapeutics, Inc. Cotempla XR-ODT 86/847780   5387222 12/14/2015 01/23/2018 Neos Therapeutics, LP DTRS 78/671913 3514099   07/16/2005 10/07/2008 Neos Therapeutics, LP Dynamic Time Release Suspension   78/671915 3514100 07/16/2005 10/07/2008 Neos Therapeutics, Inc. Logo   86/847757 5111115 12/14/2015 12/27/2016 Neos Therapeutics, LP Neos   Therapeutics 85/947902 5281476 05/31/2013 09/05/2017 Neos Therapeutics, LP   Neos Therapeutics 77/202145 3951112 06/09/2007 04/26/2011 Neos Therapeutics,   Inc. Vozentez 87/160248 09/02/2016 

    

 

Schedule 5 -   Insurance ACTIVE/100087490.1 Issuer Coverage Aggregate Deductable Federal   Insurance Co. General Liability $2,000,000 $5,000 Federal Insurance Co.   Property – In Transit $500,000 $10,000 Federal Insurance Co. BPP and EDP   $43,300,000 $10,000 Federal Insurance Co. Business Income $30,000,000 24 hrs   Federal Insurance Co. Schedule Equipment $55,375 $10,000 Federal Insurance   Co. Business Auto $1,000,000 $500 Federal Insurance Co. Workers Comp   $1,000,000 $0 Federal Insurance Co. Umbrella $5,000,000 Lloyds of London   Products $10,000,000 $100,000 XL Specialty Primary D&O $10,000,000   $1,500,000 AIG 1st Excess D&O $5,000,000 xs $10MM Old Republic 2nd Excess   D&O $5,000,000 xs $15MM AIG 3rd Excess D&O $5,000,000 xs $20MM AWAC   4th Excess D&O $5,000,000 xs $25MM Nationwide 5th Excess D&O   $5,000,000 xs $30MM Chubb 6th Excess D&O Side A $15,000,000 xs $35MM   Chubb EPL $3,000,000 $50,000 Chubb Fiduciary $3,000,000 $0 Chubb Crime   $5,000,000 $25,000 

    

 

Annex I   Description of Certain Terms Annex I - 1 1. Loan Limits for Revolving Loans   (a) Maximum Revolving Facility Amount $25,000,000 (b) Advance Rates   (i)Accounts Advance Rate Eighty-five percent (85%); provided, that if   Dilution that has not been accounted for in Dilution Ineligibles exceeds five   percent (5%), Agent may, at its option, (A) reduce such advance rate by the   number of full or partial percentage points comprising such excess or (B)   establish a Reserve on account of such excess (the "Dilution   Reserve"). 2. Interest Rates (a) Revolver Four and one-half percent   (4.50%) per annum in excess of the LIBOR Rate Three and one-half percent   (3.50%) per annum in excess of the Base Rate 3. Maximum Days Eligible   Accounts (a) Maximum days after original invoice date for Eligible Accounts   Ninety (90) days with respect to Eligible Accounts arising from the sale of   any branded Inventory One-hundred twenty (120) days with respect to Eligible   Accounts arising from the sale of any generic Inventory (b)Maximum days after   original invoice due date for Eligible Accounts Sixty (60) days 4. Lender's   Bank Wells Fargo Bank, National Association (which bank may be changed from   time to time by notice from Agent to Borrower Representative) 5. Scheduled Maturity   Date May 11, 2022 

    

 

Annex II Agent   and Lenders shall be provided with each of the documents set forth below at   the following times, in form satisfactory to Agent: Annex II - 1 Weekly (no   later than the 2nd Business Day of each week), or more frequently if Agent   requests (a) A summary and a detailed aging, by total, of Borrowers'   Accounts, sales journals, collection journals, credit registers and any other   records, with respect to Borrowers' Accounts (delivered electronically in an   acceptable format). (b) A detailed calculation of the Borrowing Base   (delivered electronically in an acceptable format), as of the end of such   week and reflecting the outstanding principal balance of the Loans as of the   last day of such week. Monthly (no later than 30 days after the end of each   month) (c) A summary and a detailed aging, by total, of Borrowers' Accounts,   together with reconciliation to the weekly Borrowing Base submitted closest   to such date and support documentation for any reconciling items noted   (delivered electronically in an acceptable format). (d) A summary aging, by   vendor, of each Loan Party's accounts payable and a listing by vendor, of any   held and/or outstanding checks (delivered electronically in an acceptable   format). (e) Notice of all claims, offsets, or disputes asserted by Account   Debtors with respect to Borrowers' Accounts. (f) A detailed calculation of   the Accounts of Borrowers that are not eligible for the Borrowing Base   (delivered electronically in an acceptable format). (g) A monthly Account   roll-forward with respect to Borrowers' Accounts, in a format acceptable to   Agent in its discretion, tied to the beginning and ending Account balances of   Borrowers' month-end accounts receivable aging (delivered electronically in   an acceptable format). (h) A reconciliation of Accounts summary aging and   trade accounts payable summary aging to each of (i) Borrowers' general   ledger, and (ii) their monthly financial statements including any book   reserves related to each category (delivered electronically in an acceptable   format). (i) A reconciliation of the loan statement provided to Borrowers by   Agent for such month to each of (i) Borrowers' general ledger, (ii) their   monthly financial statements and (iii) the Borrowing Base submitted closest   to such date, together with support documentation for any reconciling items   noted (delivered electronically in an acceptable format). (j) A detailed   calculation of the Borrowing Base (delivered electronically in an acceptable   format) based upon the reports provided in (c) through (i) above, for such   month and reflecting the outstanding principal balance of the Loans as of the   last day of such month. Promptly upon the request of Agent (k) Copies of   invoices together with corresponding shipping and delivery documents, and   credit memos together with corresponding supporting documentation, with   respect to invoices and credit memos in excess of an amount determined in the   sole discretion of Agent, from time to time. 

    

 

Annex II - 2   Bi-Annually (in January and in July of each calendar year) (l) A detailed   list of each Loan Party's customers, with address and contact information.   (m) A detailed list of each Loan Party's vendors, with address and contact   information. (n) An updated Perfection Certificate, true and correct in all   material respects as of the date of delivery, accompanied by a certificate   executed by an officer of Borrower Representative and substantially in the   form of Annex IV hereto (it being understood and agreed that no such update   shall serve to cure any existing Event of Default, including any Event of   Default resulting from any failure to provide any such disclosure to Agent on   an earlier date or any breach of any earlier made representation and/or   warranty). Promptly upon (but in no event later than two (2) Business Days   after) delivery or receipt, as applicable, thereof (o) Copies of any and all   written notices (including notices of default or acceleration), reports and   other deliveries received by or on behalf of any Loan Party from or sent by   or on behalf of any Loan Party to, any holder, agent or trustee with respect   to any Indebtedness that is contractually subordinated to the Obligations (in   such holder's, agent's or trustee's capacity as such). 

    

 

Annex III   Revolving Loan Commitments Annex III - 1 Encina Business Credit SPV, LLC   $25,000,000 Total $25,000,000 

    

 

Exhibit A FORM   OF NOTICE OF BORROWING [letterhead of Borrower Representative] ENCINA   BUSINESS CREDIT, LLC, as Agent 123 N Wacker Suite 2400 Chicago, IL 60606   Attention: Loan Operations Ladies and Gentlemen: Please refer to the Loan and   Security Agreement dated as of October 2, 2019 (as amended, restated or   otherwise modified from time to time, the "Loan Agreement") among   the undersigned, as Borrower Representative, the Borrowers (as defined   therein) the Loan Party Obligors (as defined therein) party thereto, the   Lenders party thereto and ENCINA BUSINESS CREDIT, LLC, as Agent for the   Lenders. Capitalized terms used herein and not otherwise defined sha ll have   the meanings ascribed thereto in the Loan Agreement. This notice is given   pursuant to Section 2.3 of the Loan Agreement and constitutes a   representation by Borrower Representative, for itself and on behalf of each   Borrower, that the conditions specified in Section 4 of the Loan Agreement   have been satisfied. Without limiting the foregoing, (i) each of the   representations and warranties set forth in the Loan Agreement and in the   other Loan Documents is true and correct in all respects as of the dat e   hereof (or to the extent any representations or warranties are expressly made   solely as of an earlier date, such representations and warranties shall be   true and correct as of such earlier date), both before and after giving   effect to the Loans requested hereby, and (ii) no Default or Event of Default   is in existence, both before and after giving effect to the Loans requested   hereby. Borrower Representative hereby requests a borrowing, on behalf of   each Borrower, under the Loan Agreement as follows: The aggregate amount of the   proposed borrowing is $[______________].The requested borrowing date for the   proposed borrowing (which is a Business Day) is [______________], [____].   Borrower Representative has caused this Notice of Borrowing to be executed   and delivered by its officer thereunto duly authorized on [_____________].   NEOS THERAPEUTICS, INC., as Borrower Representative By: Title: Ex. A-1 

    

 

Exhibit B   CLOSING CHECKLIST [Attached] Ex. B-1 

    

 

Exhibit C   CLIENT USER FORM ENCINA BUSINESS CREDIT, LLC ABLSoft – Client User Form   Borrowers Names:Neos Therapeutics, Inc. Neos Therapeutics Brands, LLC Neos   Therapeutics, LP Borrower Number: Loan and Security Agreement Date: October   2, 2019 I, being an authorized signer of the above borrower, as Borrower   Representative, refer to the above Loan and Security Agreement (as amended,   restated or otherwise modified from time to time, the "Loan   Agreement") between the Borrowers named above, the Lenders party thereto   and ENCINA BUSINESS CREDIT, LLC, as Agent. This is the Client User Form, used   to determined client access to ABLSoft. Terms defined in the Loan Agreement   have the same meaning when used in this Client User Form. Being duly   authorized by Borrower Representative, on behalf of Borrowers, I confirm that   the following individuals have been authorized by Borrower to have access to   ABLSoft: NEOS THERAPEUTICS, INC., as Borrower Representative By Name: Title:   Date: Ex. C-1 First Name Last Name Email Address Phone Number 

    

 

Exhibit D   AUTHORIZED ACCOUNTS FORM ENCINA BUSINESS CREDIT, LLC Authorized Accounts Form   Borrowers Names:Neos Therapeutics, Inc. Neos Therapeutics Brands, LLC Neos   Therapeutics, LP Borrower Number: Loan and Security Agreement Date: October   2, 2019 I, being an authorized signer of NEOS THERAPEUTICS, INC., as Borrower   Representative, refer to the above Loan and Security Agreement (as amended,   restated or otherwise modified from time to time, the "Loan   Agreement") between the Borrowers named above, the Lenders party thereto   and ENCINA BUSINESS CREDIT, LLC, as agent ("Agent"). This is the   Authorized Accounts Form, referring to authorized operating bank accounts of   Borrower. Terms defined in the Loan Agreement have the same meaning when used   in this Authorized Accounts Form. Being duly authorized by Borrower   Representative, I confirm that the following operating bank accounts of   Borrowers are the accounts into which the proceeds of any Loan may be paid:   NEOS THERAPEUTICS, INC., as Borrower Representative By: Authorized Signer   Name: Title: Date: Ex. D-1 Bank Routing Number Account number Account name 

    

 

Exhibit E FORM   OF ACCOUNT DEBTOR NOTIFICATION [Date] VIA CERTIFIED MAIL, RETURN RECEIPT   REQUESTED [Account Debtor] [Address] Re: Loan Transaction with ENCINA   BUSINESS CREDIT, LLC Ladies and Gentlemen: Please be advised that we have   entered into certain financing arrangements (along with any other financing   agreements that we may enter into with Agent in the future, the   "Financing Arrangements") with ENCINA BUSINESS CREDIT, LLC   ("Agent"), as Agent for certain Lenders, pursuant to which we have   granted to Agent a security interest in, among other things, any and all   Accounts and Chattel Paper (as those terms are defined in the Uniform   Commercial Code) owing by you to us, whether now existing or hereafter   arising. You are authorized and directed to respond to any inquiries that   Agent may direct to you from time to time pertaining to the validity, amount   and other matters relating to such Accounts and Chattel Paper. In the event   that Agent requests that payment for any Accounts and/or Chattel Paper be   made directly to Agent, you are hereby authorized and directed to comply with   such instructions, without further authorization or instruction from us. This   authorization and directive shall be continuing advises you, in writing, that   this authorization is no longer in force. and irrevocable until Agent Very   truly yours, [BORROWER] By: Name: Its: cc: ENCINA BUSINESS CREDIT, LLC as   Agent 123 N Wacker Suite 2400 Chicago, IL 60606 Attention: Thomas Sullivan   Ex. E-1 

    

 

Exhibit F FORM   OF COMPLIANCE CERTIFICATE [letterhead of Borrower Representative] To: ENCINA   BUSINESS CREDIT, LLC, as Agent 123 N Wacker Suite 2400 Chicago, IL 60606   Attention: Thomas Sullivan Re: Compliance Certificate dated Ladies and   Gentlemen: Reference is made to that certain Loan and Security Agreement   dated as of October 2, 2019 (as amended, restated or otherwise modified from   time to time, the "Loan Agreement") by and among ENCINA BUSINESS   CREDIT, LLC ("Agent"), the Lenders party thereto, NEOS THERAPEUTICS,   INC., a Delaware corporation ("Borrower Representative"), the other   Borrowers (as defined therein) party thereto, the Loan Party Obligors (as   defined therein) party thereto. Capitalized terms used in this Compliance   Certificate have the meanings set forth in the Loan Agreement unless   specifically defined herein. Pursuant to Section 7.15 of the Loan Agreement,   the undersigned Chief Financial Officer of Borrower Representative hereby   certifies on behalf of each Borrower (solely in his capacity as an officer or   Borrower Representative and not in his individual capacity) that: 1. The   financial statements of Borrowers for the -month period ending attached   hereto have been prepared in accordance with GAAP and fairly present the   financial condition of Borrowers for the periods and as of the dates   specified therein. 2. As of the date hereof, there does not exist any Default   or Event of Default. 3. Borrowers are in compliance with the applicable   financial covenants contained in Section 9 of the Loan Agreement for the   periods covered by this Compliance Certificate. Attached hereto are   statements of all relevant facts and computations in reasonable detail   sufficient to evidence Borrowers’ compliance with such financial covenants,   which computations were made in accordance with GAAP. IN WITNESS WHEREOF,   this Compliance Certificate is executed by the undersigned this day of , .   NEOS THERAPEUTICS, INC., as Borrower Representative By: Name: Title: Chief   Financial Officer Ex. F-1 

    

 

Exhibit G FORM   OF ASSIGNMENT AND ASSUMPTION Dated [_ , 201_] Reference is made to the Loan   and Security Agreement dated as of October 2, 2019 among NEOS THERAPEUTICS,   INC., a Delaware corporation ("Borrower Representative"), the other   Borrowers (as defined therein) party thereto, the Loan Party Obligors (as   defined therein) party thereto, the lenders party thereto as   "Lenders" and Encina Business Credit, LLC, as agent (   "Agent") for the Lenders (as amended, restated, supplemented or   otherwise modified from time to time, the "Loan Agreement"). Terms   defined in the Loan Agreement are used herein as the rein defined.   [____________], solely in its capacity as a Lender under the Loan Agreement   (the "Assignor"), and [__________] (the "Assignee") agree   as follows: 1. The Assignor hereby sells and assigns to the Assignee, without   recourse, representation or warranty (except as expressly set forth elsewhere   herein), and the Assignee hereby purchases and assumes from the Assignor, on   the Effective Date (as defined below), an interest as set forth in Exhibit A   attached hereto (the "Assigned Interest") in and to (i) all of the   Assignor's right, title and interest with respect to the Loans set forth in   Exhibit A, (ii) all of the Assignor's right, title and interest with respect   to the Revolving Loan Commitment of Assignor as set forth in Exhibit A and   (iii) to the extent related thereto, all of the Assignor's rights and   obligations, solely as a Lender, under the Loan Agreement and any other Loan   Document (including, without limitation, (A) the outstanding principal amount   of the Loans made by the Assignor and assigned to Assignee hereunder, and (B)   the Assignor's pro rata share of the obligations owing by each Loan Party   under the Loan Agreement and the Loan Documents).The Assigned Interest   (expressed as a percentage) in the Loans and the Revolving Loan Commitment is   set forth in Exhibit A. 2. The Assignor (i) represents and warrants as of the   date hereof that its Revolving Loan Commitment, or if its Revolving Loan   Commitment shall have been terminated, the outstanding principal amount of   its Revolving Loans , is set forth in Exhibit A (without giving effect to   assignments thereof which have not yet become effective); (ii) represents and   warrants that it is the legal and beneficial owner of the interest it is   assigning hereunder; (iii) makes no representation or warranty and assumes no   responsibility with respect to any statements, warranties or representations   made by or in connection with the Loan Agreement or any other Loan Document   or the execution, legality, validity, enforceability, genuineness,   sufficiency or value o f the Loan Agreement or any other Loan Document, or   any other instrument or document furnished pursuant thereto; and (iv) makes   no representation or warranty and assumes no responsibility with respect to   the financial condition of any Loan Party or the performance or observance by   any Loan Party of any of its obligations under the Loan Agreement, any other   Loan Document or any other instrument or document furnished pursuant thereto.   3. The Assignee represents and warrants that it has become a party hereto   sole ly in reliance upon its own independent investigation of the financial   and other circumstances surrounding the Loan Parties, the Collateral, the   Loans, the Revolving Loan Commitments and all aspects of the transactions   evidenced by or referred to in the Lo an Documents, or has otherwise   satisfied itself thereto, and that it is not relying upon any representation,   warranty or statement (except any such representation, warranty or statement   expressly set forth in this Assignment and Assumption) of the Assignor in   connection with the assignment made under this Assignment and Assumption. The   Assignee further acknowledges that the Assignee will, independently and   without reliance upon Agent, the Assignor or any other Lender and based upon   the Assignee's review of such documents and Ex. G-1 

    

 

information as   the Assignee deems appropriate at the time, make and continue to make its own   credit decisions in entering into this Assignment and Assumption and taking   or not taking action under the Loan Documents. The Assignor shall have no   duty or responsibility either initially or on a continuing basis to make any   such investigation or any such appraisal on behalf of the Assignee or to   provide the Assignee with any credit or other information with respect   thereto, whether coming int o its possession before the making of the initial   extension of credit under the Loan Agreement or at any time or times   thereafter. 4. The Assignee represents and warrants to the Assignor that it   has experience and expertise in the making of loans such as the Loans or with   respect to the other types of credit which may be extended under the Loan   Agreement; that it has acquired its Assigned Interest for its own account and   not with any intention of selling all or any portion of such interest; and   that it has received, reviewed and approved copies of all Loan Documents. 5.   The Assignor shall not be responsible to the Assignee for the execution, effectiveness,   accuracy, completeness, legal effect, genuineness, validity, enforceability,   collectibility or sufficiency of any of the Loan Documents or for any   representations, warranties, recitals or statements made therein or in any   written or oral statement or in any financial or other statements,   instruments, reports, certificates or any other documents made or furnished   or made available by the Assignor to the Assignee or by or on behalf of the   Loan Parties to the Assignor or the Assignee in connection with the Loan   Documents and the transactions contemplated thereby or for the financial   condition or business affairs of the Loan Parties or any other Person liable   for the payment of any Loans or payment of amounts owed in connection with   other extensions of credit under the Loan Agreement or the value of the   Collateral or any other matter. The Assignor shall not be require d to   ascertain or inquire as to the performance or observance of any of the terms,   conditions, provisions, covenants or agreements contained in any of the Loan   Documents or as to the use of the proceeds of the Loans or other extensions   of credit under the Loan Agreement or as to the existence or possible   existence of any Event of Default. 6. Each party to this Assignment and   Assumption represents and warrants to the other party to this Assignment and   Assumption that it has full power and authority to enter int o this   Assignment and Assumption and to perform its obligations under this   Assignment and Assumption in accordance with the provisions set forth herein,   that this Assignment and Assumption has been duly authorized, executed and   delivered by such party and that this Assignment and Assumption constitutes a   legal, valid and binding obligation of such party, enforceable in accordance   with its terms, except as enforceability may be limited by applicable   bankruptcy, moratorium or other similar laws affecting creditors' rights   generally and by general equitable principles. 7. Each party to this   Assignment and Assumption represents and warrants that the making and   performance by it of this Assignment and Assumption do not and will not   violate any law or regulation of the jurisdiction of its organization or any   other law or regulation applicable to it. 8. Each party to this Assignment   and Assumption represents and warrants that all consents, licenses,   approvals, authorizations, exemptions, registrations, filings, opinions a nd   declarations from or with any agency, department, administrative authority,   statutory corporation or judicial entity necessary for the validity or   enforceability of its obligations under this Assignment and Assumption have   been obtained, and no governmental authorizations other than any already   obtained are required in connection with its execution, delivery and performance   of this Assignment and Assumption. Ex. G-2 

    

 

9. The Assignor   represents and warrants that it is the legal and beneficial owner of the   interest being assigned and that such interest is free and clear of any lien,   security interest or other encumbrance. 10. The Assignor makes no   representation or warranty and assumes no responsibility with respect to the   operations, condition (financial or otherwise), bu siness or assets of the   Loan Parties or the performance or observance by the Loan Parties of any of   their obligations under the Loan Agreement or any other Loan Document. 11.   The Assignee appoints and authorizes Agent to take such action as agent on   its behalf and to exercise such powers under the Loan Documents as are   delegated to Agent by the terms thereof, together with such powers as are   reasonably incidental thereto. 12. The Assignee agrees that it will perform   in accordance with their terms all of the obligations which by the terms of   the Loan Agreement and the other Loan Documents are required to be performed   by it as a Lender. 13. The Assignee confirms that it has received all   documents and information it has deemed appropriate to make its own credit   analysis and decision to enter into this Assignment and Assumption. 14. The   Assignee specifies as its address for notices the office set forth beneath   its name on the signature pages hereof. 15. The effective date for this   Assignment and Assumption (the "Effective Date") shall be the date   that is the latest of (a) the execution of this Assignment and Assumption,   (b) the delivery of this Assignment and Assumption to Agent for acceptance,   and (c) the date on which the Assignor has received the payment, in   immediately available funds, by the Assignee of $[_____________], which   amount represents the purchase price for the Assigned Interest. 16. Upon   acceptance of this Assignment and Assumption by Agent, as of the Effective   Date (i) the Assignee shall, in addition to the rights and ob ligations under   the Loan Agreement and the other Loan Documents held by it immediately prior   to the Effective Date, have the rights and obligations under the Loan   Agreement and the other Loan Documents that have been assigned to it pursuant   to this Assignment and Assumption, and (ii) the Assignor shall, to the extent   provided in this Assignment and Assumption, relinquish its rights and be   released from its obligations under the Loan Agreement and the other Loan   Documents that have been assigned by the Assig nor to the Assignee pursuant   to this Assignment and Assumption. 17. Upon acceptance of this Assignment and   Assumption by Agent, from and after the Effective Date, Agent shall make all   payments under the Loan Agreement in respect of the rights assigned hereby   (including, without limitation, all payments of principal, interest and fees   with respect thereto) to the Assignee. If the Assignor receives or collects   any payment of interest or fees attributable to the interests assigned to   Assignee by this Assignment a nd Assumption which has accrued after the   Effective Date, the Assignor shall distribute to the Assignee such payment.   If the Assignee receives or collects any payment of interest or fees which is   not attributable to the interests assigned to the Assignee by this Assignment   and Assumption or which has accrued on or prior to the Effective Date, the   Assignee shall distribute to the Assignor such payment. 18. This Assignment   and Assumption shall be delivered and accepted in and shall be deemed to be a   contract made under and governed by the internal laws of the State of   Illinois (but Ex. G-3 

    

 

giving effect   to federal laws applicable to national banks) applicable to contracts made   and to be performed entirely within such state, without regard to conflict of   laws principles. [rest of page intentionally left blank; signature page   follows] Ex. G-4 

    

 

IN WITNESS   WHEREOF, the parties hereto have caused their officers to execute this   Assignment and Assumption as of the Effective Date. duly authorized   [ASSIGNOR] By Name Title NOTICE ADDRESS AND PAYMENT INSTRUCTIONS FOR ASSIGNOR   Telephone No. ( ) - Telecopy No.( ) - [ASSIGNEE] By Name Title NOTICE ADDRESS   AND PAYMENT INSTRUCTIONS FOR ASSIGNEE Telephone No. ( ) - Telecopy No.( ) -   Ex. G-5 

    

 

ACCEPTED this   day of , 201 ENCINA BUSINESS CREDIT, LLC, as Agent By Name Title ] Ex. G-6 

    

 

Consented to   this day of , 201_ [NEOS THERAPEUTICS, INC., as Borrower Representative] By:   Name: Title: Ex. G-7 

    

 

EXHIBIT A   Borrowers: Neos Therapeutics, Inc. Neos Therapeutics Brands, LLC Neos   Therapeutics, LP Description of Loan Agreement: Loan and Security Agreement,   dated as of October 2, 2019 among Borrowers, the other Loan Party Obligors   party thereto, the lenders party thereto as "Lenders" and Encina   Business Credit, LLC as agent ("Agent") for the Lenders (as   amended, restated, supplemented or otherwise modified from time to time).   Assigned Interests: Ex. G-8 Assignor's Interest Prior to Assignment Assigned   Interests Assignor's Remaining Interest After Assignment Assignee's Pro Rata   Shares Revolving Loans and Revolving Loan CommitmentsExhibit 10.2

Execution   Version FOURTH AMENDMENT TO FACILITY AGREEMENT This FOURTH AMENDMENT TO   FACILITY AGREEMENT (this “Amendment”) is entered into as of October 2, 2019,   by and among NEOS THERAPEUTICS, INC., a Delaware corporation (the   “Borrower”), NEOS THERAPEUTICS COMMERCIAL, LLC, a Delaware limited liability   company (“Commercial”), NEOS THERAPEUTICS BRANDS, LLC, a Delaware limited   liability company (“Brands”), NEOS THERAPEUTICS, LP, a Texas limited   partnership (“Neos LP”), PHARMAFAB TEXAS, LLC, a Texas limited liability   company (“PharmaFab”, together with Commercial, Brands and Neos LP, each   individually a “Guarantor”, and collectively, the “Guarantors”), DEERFIELD   PRIVATE DESIGN FUND III, L.P. (“DPDF”), DEERFIELD SPECIAL SITUATIONS FUND,   L.P. (“DSSF”, and together with DPDF collectively referred to as the   “Lenders”), and DEERFIELD MGMT, L.P., as collateral agent for itself, the   Lenders and the other Secured Parties (in such capacity, together with its   successors and assigns in such capacity, “Collateral Agent” and together with   the Borrower, the Guarantors and Agent, collectively, the “Parties”). W I T N   E S E T H: WHEREAS, the Borrower and the Lenders have entered into that   certain Facility Agreement, dated as of May 11, 2016 (together with all   exhibits and schedules thereto (as in effect on such date and without giving   effect to any amendments, restatements supplements or other modifications   thereto, the “Original Facility Agreement”) and as the same has been amended,   restated, supplemented and/or otherwise modified from time to time to (and   not including) the date hereof, including by (i) that certain First Amendment   to Facility Agreement, dated as of June 1, 2017, by and among the Borrower,   the Guarantors party thereto and the Lenders, (ii) that certain Second Amendment   to Facility Agreement, dated as of November 5, 2018, by and among the   Borrower, the Guarantors party thereto and the Lenders, and (iii) that   certain Third Amendment to Facility Agreement, dated as of March 26, 2019, by   and among the Borrower, the Guarantors party thereto and the Lenders, the   “Facility Agreement”); WHEREAS, the Borrower and the Guarantors are entering   into a new asset-based revolving credit facility (the “ABL Facility”)   pursuant to that certain Loan and Security Agreement, dated as of the date   hereof, by and among the Borrower, as a borrower, Brands, as a borrower, Neos   LP, as a borrower, Commercial, as an obligor, PharmaFab, as an obligor, the   “Lenders” party thereto from time to time and Encina Business Credit, LLC, as   agent for such “Lenders”, which is not permitted pursuant to the terms of the   Facility Agreement, WHEREAS, the Borrower has requested that the Collateral   Agent and the Lenders amend certain provisions of the Facility Agreement,   including to permit the ABL Facility, and, subject to certain terms and   limitations and the satisfaction of the conditions set forth herein, the   Collateral Agent and the Lenders are willing to do so, on the terms set forth   herein; and NOW, THEREFORE, in consideration of the mutual agreements, provisions   and covenants contained herein, and for other good and valuable   consideration, the receipt and sufficiency of which are hereby acknowledged,   the Parties agree as follows: 141565389 

    

 

SECTION 1.   Defined Terms. Capitalized terms used herein (including in the preamble and   recitals above) but not otherwise defined herein shall have the respective   meanings ascribed to such terms in the Amended Facility Agreement (as defined   below). SECTION 2.Amendments. Subject to the full and complete satisfaction   of the conditions precedent set forth in Section 3 of this Amendment, as of   the Fourth Amendment Effective Date (as defined below): (a) The Facility   Agreement is hereby amended to delete the stricken text (indicated textually   in the same manner as the following example: stricken text) and to add the   double-underlined text (indicated textually in the same manner as the   following example: double-underlined text) as set forth in Exhibit A-I   attached hereto (the “Amended Facility Agreement”); provided that, for   purposes of completeness and to address certain prior amendments,   restatements, supplements and modifications to the Original Facility   Agreement that were only conceptual in nature that needed to be actually   incorporated into the Amended Facility Agreement, the changes set forth in   the Amended Facility Agreement attached as Exhibit A-I are compared against   the Original Facility Agreement (without giving effect to any prior   amendments, restatements, supplements or other modifications to the Original   Facility Agreement) and with the Amended Facility Agreement instead   incorporating any prior amendment, restatement, supplement or other   modification that occurred from the date of the Original Facility Agreement   until the date immediately prior to the date of this Amendment that are still   applicable as of the date of this Amendment. (b) The Schedules to the   Facility Agreement are hereby amended and restated in their entirety in the   form attached hereto as Exhibit A-II; (c) The Schedules to the Security   Agreement are hereby amended and restated in their entirety in the form   attached hereto as Exhibit A-III; and (d)The Perfection Certificate is hereby   provided by the Loan Party Obligors on the date hereof in the form attached   hereto as Exhibit A-IV (the “Fourth Amendment Perfection Certificate”). (e)   The Perfection Certificate to be executed and delivered by the Loan Party   Obligors pursuant to the Amended Facility Agreement after the date hereof is   to be in the form attached hereto as Exhibit A-V (the “Post-Fourth Amendment   Perfection Certificate”). SECTION 3. SECTION 3. Conditions. The effectiveness   of the amendments set forth in Section 2 of this Amendment is subject to the   full and complete satisfaction of the following conditions precedent (such   date of satisfaction, the “Fourth Amendment Effective Date”): (a) the   execution and delivery of this Amendment by Borrower, the Guarantors, the   Lenders and the Collateral Agent; (b)the representations and warranties in   Section 4 of this Amendment being true, complete and correct in all material   respects (without duplication of any materiality qualifier contained therein)   as of the date hereof and as of the Fourth Amendment Effective Date, except   to 2 141565389 

    

 

the extent that   such representation or warranty expressly relates to an earlier date (in   which event such representations and warranties are true, complete and   correct in all material respects (without duplication of any materiality   qualifier contained therein) as of such earlier date); (c) no Default or   Event of Default has occurred and is continuing (or would result after giving   effect to the transactions contemplated by this Amendment and the other Loan   Documents, the Equity Documents and the ABL Documents); (d) the receipt in   cash by the Secured Parties of the payment of all fees, costs and expenses   incurred thereby on or prior to the date of this Amendment that are required   to be reimbursed pursuant to Section 2.9 and Section 6.3 of the Facility   Agreement or Section 6 of this Amendment and all other fees, costs and   expenses incurred in connection with this Amendment (and the transactions   contemplated hereby) by the Secured Parties (including, in each case, all   reasonable attorneys’ fees of the Secured Parties and any estimates of   post-closing fees, costs and expenses (including all reasonable attorneys’   fees) expected to be incurred by the Secured Parties in connection with this   Amendment); (e) the receipt by the Collateral Agent and the Lenders of a fully   executed copy of each of the ABL Documents in form and substance reasonably   satisfactory to the Collateral Agent and the Lenders; (f) receipt by the   Collateral Agent and the Lenders of a certificate from an authorized officer   of each Loan Party Obligor in form and substance satisfactory to the   Collateral Agent and the Lenders: (i) attesting to the resolutions of such   Loan Party Obligor’s board of directors or equivalent governing body   authorizing its execution, delivery, and performance of this Amendment, the   Amended Facility Agreement, the other Loan Documents and the ABL Documents,   in each case to which it is a party, (ii) authorizing specific officers of   such Loan Party Obligor to execute the same, attesting to the incumbency and   signatures of such specific officers of such Loan Party Obligor,   (iii)attesting to copies of each Loan Party Obligor’s Organizational   Documents, as amended, modified, or supplemented to the date hereof, which   Organizational Documents shall be (A) certified by an authorized officer of   such Loan Party Obligor, and (B) with respect to Organizational Documents   that are charter documents, certified as of a recent date (not more than   thirty (30) days prior to the Fourth Amendment Effective Date) by the   appropriate governmental official, (iv) attesting to certificates of status   with respect to each Loan Party Obligor, dated within ten (10) days of the   Fourth Amendment Effective Date, such certificates to be issued by the   appropriate officer of the jurisdiction of organization of such Loan Party   Obligor, which certificates shall indicate that such Loan Party Obligor is in   good standing in such jurisdiction, and 3 141565389 

    

 

(v)attesting to   certificates of status with respect to each Loan Party Obligor, each dated   within thirty (30) days of the Fourth Amendment Effective Date, such   certificates to be issued by the appropriate officer of the jurisdictions   (other than the jurisdiction of organization of such Loan Party Obligor) in   which such Loan Party Obligor’s failure to be duly qualified or licensed   would constitute a Material Adverse Effect, which certificates shall indicate   that such Loan Party is in good standing in such jurisdictions; (g) an   opinion letter from counsel to the Loan Party Obligors with respect to the transactions   contemplated by this Amendment, the Amended Facility Agreement and the other   Loan Documents, in form and substance satisfactory to the Collateral Agent   and the Lenders; (h) the receipt by the Collateral Agent and the Lenders of   all items on the closing checklist attached hereto as Exhibit B; and (i) the   receipt by the Collateral Agent and the Lenders of all other documents,   agreements, instruments and other information reasonably requested by the   Collateral Agent or any Lender. SECTION 4. Representations and Warranties.   Each Loan Party Obligor party hereto hereby represents and warrants to each   Secured Party as follows as of the date hereof and the Fourth Amendment   Effective Date: (a) Each Loan Party Obligor is validly existing as a   corporation, limited liability company or limited partnership, as applicable,   and is in good standing under the laws of the jurisdiction of its   incorporation, organization or formation, as applicable. Each Loan Party   Obligor (i) has full power and authority (and all governmental licenses,   authorizations, permits (including all Health Care Permits and other   Permits), consents and approvals) to (A) own its properties and conduct its   business and (B) to (x) enter into, and perform its obligations under, this   Amendment (including the Amended Facility Agreement), the other Loan   Documents and the ABL Documents, and (y) consummate the transactions   contemplated under this Amendment (including the Amended Facility Agreement)   and the other Loan Documents and the ABL Documents, and (ii) is duly   qualified as a foreign corporation, limited liability company or limited   partnership, as applicable, and licensed and in good standing, under the laws   of each jurisdiction where its ownership, lease or operation of property or   the conduct of its business requires such qualification or license, in each   case of this clause (ii), where the failure to be so qualified, licensed or   in good standing could reasonably be expected, individually or in the   aggregate, to result in a Material Adverse Effect. (b) The execution,   delivery and performance of this Amendment (including the Amended Facility   Agreement), the other Loan Documents, and ABL Documents, in each case, have   been duly authorized by each Loan Party Obligor and no further consent or   authorization is required by any Loan Party Obligor, any Loan Party Obligor’s   board of directors (or other equivalent governing body) or the holders of any   Loan Party Obligor’s Stock. Each of this Amendment and the ABL Documents has   been duly executed and delivered by each of the Loan Party Obligors and   constitutes a valid, legal and binding obligation of each Loan Party Obligor,   enforceable in accordance with its terms, except as such enforceability may   be limited by applicable insolvency, bankruptcy, reorganization, moratorium   or other similar laws affecting 4 141565389 

    

 

creditors’   rights generally (whether enforcement is sought by proceedings in equity or   at law). On and after the Fourth Amendment Effective Date, each of this   Amendment (including the Amended Facility Agreement), the other applicable   Loan Documents and the ABL Documents has been duly executed and delivered by   each of the Loan Party Obligors and constitutes a valid, legal and binding   obligation of each Loan Party Obligor, enforceable in accordance with its   terms, except as such enforceability may be limited by applicable insolvency,   bankruptcy, reorganization, moratorium or other similar laws affecting   creditors’ rights generally (whether enforcement is sought by proceedings in   equity or at law). The execution, delivery and performance of this Amendment   (including the Amended Facility Agreement), the other Loan Documents, and the   ABL Documents by each Loan Party Obligor party hereto and the consummation of   the transactions contemplated hereby and thereby will not (A) conflict with   or result in a breach or violation of any of the terms or provisions of, or   constitute a default under, or result in the creation or imposition of any   Lien (other than pursuant to (i) the Loan Documents (as amended hereby, as   applicable) and (ii) to the extent permitted by the Amended Facility   Agreement, the ABL Documents) upon any assets of any such Loan Party Obligor   pursuant to, any agreement, document or instrument to which such Loan Party   Obligor is a party or by which any Loan Party Obligor is bound or to which   any of the assets or property of any Loan Party Obligor is subject, except,   with respect to this clause (A), as could not reasonably be expected,   individually or in the aggregate, to have a Material Adverse Effect, (B)   result in any violation of or conflict with the provisions of such Loan Party   Obligor’s Organizational Documents, (C) result in the violation of any   Applicable Law, (D) result in the violation of any judgment, order, rule,   regulation or decree of any Governmental Authority, or (E) violate, conflict   with or cause a breach or default under any agreement or instrument binding   upon it, except, with respect to clauses (C) and (E) only, as could not   reasonably be expected, individually or in the aggregate, to have a Material   Adverse Effect. No consent, approval, Authorization or order of, or   registration or filing with any Governmental Authority is required for (i)   the execution, delivery and performance of this Amendment (including the Amended   Facility Agreement), the other Loan Documents and the ABL Documents and (ii)   the consummation by any Loan Party Obligor of the transactions contemplated   hereby and thereby. (c) No brokerage or finder’s fees or commissions are or   will be payable by any Loan Party Obligor or any of its Affiliates or   representatives to any broker, financial advisor or consultant, finder,   placement agent, investment banker, bank or other Person with respect to the   transactions contemplated by this Amendment, the other Loan Documents or the   ABL Documents (other than a reasonable brokerage fee payable by the Loan   Party Obligors to Gemini Financial Advisors in connection with the   transactions contemplated by this Amendment and the ABL Documents to occur on   the Fourth Amendment Effective Date). The Secured Parties shall have no   obligation with respect to any fees or with respect to any claims made by or   on behalf of other Persons for fees of a type contemplated in this Section   5(c) that may be due in connection with the transactions contemplated hereby.   (d) Each of the representations and warranties of any of the Loan Party   Obligors and any of its Subsidiaries set forth in the Amended Facility   Agreement and the other Loan Documents are true, complete and correct in all   material respects (without duplication of any materiality qualifier contained   therein) as of the date hereof and as of the Fourth Amendment Effective Date,   except to the extent that such representation or warranty expressly relates   to an earlier date (in which event such representations and warranties were   true, complete and correct in all material respects (without duplication of   any materiality qualifier contained therein) as of such earlier date). 5   141565389 

    

 

(e) No Default   or Event of Default has occurred and is continuing (or would result after   giving effect to the transactions contemplated by this Amendment, the other   Loan Documents and the ABL Documents). (f) No injunction, writ, restraining   order, or other order of any nature prohibiting, directly or indirectly, the   consummation of the transactions contemplated by this Amendment, the Amended   Facility Agreement, the other Loan Documents or the ABL Documents has been   issued and remains in force by any Governmental Authority against any Loan   Party Obligor or any Secured Party. (g) (i) This Amendment has been entered   into without force or duress of the free will of each Loan Party Obligor,   (ii) each Loan Party Obligor’s decision to enter into this Amendment is a   fully informed decision, and (iii) each Loan Party Obligor is aware of all   legal and other ramifications of such decision. (h) In executing this   Amendment, no Loan Party Obligor is relying on any representations or   warranties, either written or oral, express or implied, made to any Loan   Party Obligor by any other party hereto or any Secured Party. (i) Attached   hereto as Exhibit C is a true, correct and complete copy of each of the ABL   Documents, each of which has not been (and is not currently being   contemplated as of the Fourth Amendment Effective Date to be) amended,   restated, supplemented, changed or otherwise modified in any manner. SECTION   5. SEC Filing. The Borrower will timely comply with Section 5.1(xiii) of the   Amended Facility Agreement with respect to the transactions contemplated by   this Amendment, the Amended Facility Agreement and the ABL Documents   (including, without limitation, the exhibits, annexes and other documents   attached hereto and thereto). SECTION 6.Fees, Costs and Expense   Reimbursement.In connection with the Collateral Agent and the Lenders party   hereto agreeing to enter into this Amendment and provide the accommodations   hereunder, the Loan Party Obligors agree to pay on the date of this Amendment   all fees, costs and expenses (including attorneys’ fees) incurred by the   Secured Parties in connection with this Amendment, any other Loan Document   and the ABL Documents and the transactions contemplated hereby and thereby.   SECTION 7. Captions. Captions used in this Amendment are for convenience only   and shall not modify or affect the interpretation or construction of this   Amendment or any of its provisions. SECTION 8. Counterparts. This Amendment   may be executed in several counterparts, and by each party hereto on separate   counterparts, each of which and any photocopies, facsimile copies and other   electronic methods of transmission thereof shall be deemed an original, but   all of which together shall constitute one and the same agreement. SECTION 9.   Severability. If any provision of this Amendment shall be invalid, illegal or   unenforceable in any respect under any Applicable Law, the validity, legality   and enforceability of the remaining provisions hereof shall not in any way be   affected or impaired thereby. The 6 141565389 

    

 

parties hereto   shall endeavor in good faith negotiations to replace the invalid, illegal or   unenforceable provisions with valid provisions the economic effect of which   comes as close as possible to that of the invalid, illegal or unenforceable   provision. SECTION 10. Entire Agreement. The Facility Agreement, as amended   hereby, together with all other Loan Documents, contains the entire   understanding among the parties hereto with respect to the matters covered   thereby and supersedes any and all other written and oral communications, negotiations,   commitments and writings with respect thereto. SECTION 11.Successors;   Assigns.This Amendment shall be binding upon the Borrower, the other Loan   Party Obligors, the Lenders and the Collateral Agent and their respective   successors and permitted assigns, and shall inure to the benefit of the   Borrower, the other Loan Party Obligors, the Lenders, the Collateral Agent   and the other Secured Parties and the successors and assigns of the Lenders,   the Collateral Agent and the other Secured Parties. No other Person shall be   a direct or indirect legal beneficiary of, or have any direct or indirect   cause of action or claim in connection with, this Amendment or any of the   other Loan Documents. No Loan Party Obligor may assign or transfer any of its   rights or obligations under this Amendment without the prior written consent   of the Collateral Agent and each Lender, and any prohibited assignment or   transfer shall be absolutely void ab initio. SECTION12. Governing Law.   ALLQUESTIONSCONCERNINGTHE CONSTRUCTION, VALIDITY, ENFORCEMENT AND   INTERPRETATION OF THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED AND   ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO   CONTRACTS MADE AND TO BE PERFORMED IN SUCH STATE. SECTION 6.4 OF THE AMENDED   FACILITY AGREEMENT IS INCORPORATED HEREIN, MUTATIS MUTANDIS. SECTION 13.   Reaffirmation and Ratification; No Novation. Each Loan Party Obligor party   hereto as debtor, grantor, pledgor, guarantor, assignor, or in any other   similar capacity in which such Person grants Liens in its property or   otherwise acts as accommodation party or guarantor, as the case may be   pursuant to the Loan Documents, hereby (i) ratifies and reaffirms all of its   payment and performance obligations, contingent or otherwise, under the   Amended Facility Agreement (including the Facility Agreement as amended   hereby) and each other Loan Document to which it is a party (after giving   effect hereto) and (ii) to the extent such Person granted Liens or security   interests in any of its property pursuant to any Loan Documents (including as   amended hereby, as applicable) as security for or otherwise guaranteed the   Obligations under or with respect to the Loan Documents (including as amended   hereby, as applicable), ratifies and reaffirms such guarantee and grant (and   the validity and enforceability thereof) of Liens and confirms and agrees and   acknowledges that such Liens and security interests, and all Collateral   heretofore pledged as security for such obligations, continue to be and   remain collateral for such obligations from and after the date hereof and   from and after the Fourth Amendment Effective Date. Each Loan Party Obligor   party hereto hereby consents to this Amendment and acknowledges that the   Amended Facility Agreement (including the Facility Agreement as amended   hereby) and each other Loan Document remains in full force and effect and is   hereby ratified and reaffirmed. The execution and delivery of this Amendment   shall not operate as a waiver of any right, power or remedy of the Collateral   Agent, the Lenders or any other Secured Party, constitute a waiver of any   provision of the Facility Agreement, the Amended Facility Agreement   (including the Facility Agreement as 7 141565389 

    

 

amended hereby)   or any other Loan Document or serve to effect a novation of the obligations   (including the Obligations). For the avoidance of doubt, this Amendment is   not intended by the parties to be, and shall not be construed to be, a   novation of the Facility Agreement (including the Amended Facility Agreement)   and the other Loan Documents or an accord and satisfaction in regard thereto.   SECTION 14. Effect on Loan Documents. (a) The Facility Agreement, as amended   hereby, and each of the other Loan Documents, shall be and remain in full   force and effect in accordance with their respective terms and hereby are   ratified and confirmed in all respects. The execution, delivery, and   performance of this Amendment shall not operate, except with respect to the   waivers, modifications and amendments expressly set forth herein, as a waiver   of, consent to, or a modification or amendment of, any right, power, or   remedy of any Secured Party under the Facility Agreement or any other Loan   Document. Except for the amendments to the Loan Documents expressly set forth   herein or contemplated hereby, the Facility Agreement and the other Loan   Documents shall remain unchanged and in full force and effect. The   amendments, modifications and other agreements set forth herein or contemplated   hereby are limited to the specified provisions of this Amendment (including   the Amended Facility Agreement), shall not apply with respect to any facts or   occurrences other than those on which the same are based, shall neither   excuse future non-compliance with this Amendment, the Amended Facility   Agreement (including the Facility Agreement as amended hereby) and the other   Loan Documents nor operate as a waiver of any Default or Event of Default,   shall not operate as a consent to any further or other matter under this   Amendment, the Amended Facility Agreement (including the Facility Agreement   as amended hereby) and the other Loan Documents and shall not be construed as   an indication that any waiver of covenants or any other provision of this   Amendment, the Amended Facility Agreement (including the Facility Agreement   as amended hereby) or any other Loan Document will be agreed to, it being   understood that the granting or denying of any waiver which may hereafter be   requested by Borrower or any other Loan Party Obligor remains in the sole and   absolute discretion of the Collateral Agent and the Lenders. (b) Upon and   after the Fourth Amendment Effective Date, each reference in the Facility   Agreement to “this Agreement”, “hereunder”, “herein”, “hereof” or words of   like import referring to the Facility Agreement, and each reference in the   other Loan Documents to “the Facility Agreement”, “thereunder”, “therein”,   “thereof” or words of like import referring to the Facility Agreement, shall   mean and be a reference to the Amended Facility Agreement. (c) To the extent   that any of the terms and conditions in any of the Loan Documents shall   contradict or be in conflict with any of the terms or conditions of the   Amended Facility Agreement, as applicable, such terms and conditions are   hereby deemed modified and amended accordingly to reflect the terms and   conditions of the Amended Facility Agreement (effective as of the Fourth   Amendment Effective Date). (d) Document. This Amendment (including the   Amended Facility Agreement) is a Loan 8 141565389 

    

 

SECTION 15.   Guarantors’ Acknowledgment and Agreement. Although the Guarantors party   hereto have been informed of the matters set forth herein and have agreed to   the same, each such Guarantor understands, acknowledges and agrees that none   of the Secured Parties has any obligations to inform such Guarantor of such   matters in the future or to seek its acknowledgment or agreement to future   amendments, restatements, supplements, changes, modifications, waivers or consents,   and nothing herein shall create such a duty. SECTION 16. Release. (a) As of   the date of this Amendment and the Fourth Amendment Effective Date, each Loan   Party Obligor, for itself and on behalf of its successors, assigns,   Subsidiaries and such Loan Party Obligor’s and its Subsidiaries’ officers,   directors (and any equivalent governing body), employees, agents,   representatives, advisors, consultants, accountants and attorneys, and any   Person acting for or on behalf of, or claiming through it (collectively, the   “Releasing Persons”), hereby waives, releases, remises and forever discharges   each Secured Party, each of their respective Affiliates and successors in   title, and past, present and future officers, directors, employees, limited   partners, general partners, investors, attorneys, assigns, subsidiaries,   shareholders, trustees, agents and other professionals of the foregoing   entities and all other Persons and entities to whom any Secured Party would   be liable if such Persons were found to be liable to such Releasing Persons   (each a “Releasee” and collectively, the “Releasees”), from any and all past,   present and future claims, suits, liens, lawsuits, amounts paid in   settlement, debts, deficiencies, disbursements, demands, obligations,   liabilities, causes of action, damages, losses, costs and expenses of any   kind or character, whether based in equity, law, contract, tort, implied or   express warranty, strict liability, criminal or civil statute or common law   (each a “Claim” and collectively, the “Claims”), whether known or unknown,   fixed or contingent, direct, indirect, or derivative, asserted or unasserted,   matured or unmatured, foreseen or unforeseen, past or present, liquidated or   unliquidated, suspected or unsuspected, which such Releasing Persons ever had   from the beginning of the world until (and including) the day that is the   later of (i) the date hereof and (ii) the Fourth Amendment Effective Date,   against any such Releasing Person which relates, directly or indirectly, to   the Facility Agreement, the Amended Facility Agreement, any other Loan   Document, any Equity Document, any ABL Document, the Stock owned by any   Releasee or to any acts or omissions of any such Releasee with respect to the   Facility Agreement, the Amended Facility Agreement, any other Loan Document,   any Equity Document, any ABL Document or any Stock owned by any Releasee, or   to the lender-borrower relationship evidenced by the Amended Facility   Agreement (including the Facility Agreement as amended hereby) and the other   Loan Documents (including as amended hereby, as applicable) or the Stock   holder relationship evidenced by the Equity Documents. (b) As to each and   every Claim released hereunder, each Loan Party Obligor hereby agrees,   represents and warrants that it has received the advice of legal counsel with   regard to the releases contained herein, and having been so advised,   specifically waives the benefit of the provisions of Section 1542 of the   Civil Code of California which provides as follows: “A GENERAL RELEASE DOES   NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN   HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM   OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.”   9 141565389 

    

 

As to each and   every Claim released hereunder, each Loan Party Obligor also waives the   benefit of each other similar provision of applicable federal, state or   foreign law (including without limitation the laws of the State of New York),   if any, pertaining to general releases after having been advised by legal   counsel to such Loan Party Obligor with respect thereto. (c) Each Loan Party   Obligor acknowledges that it may hereafter discover facts different from or   in addition to those now known or believed to be true with respect to such   Claims and agrees that this Amendment shall be and remain effective in all   respects notwithstanding any such differences or additional facts. Each Loan   Party Obligor understands, acknowledges and agrees that the release set forth   above in this Section 16 may be pleaded as a full and complete defense and   may be used as a basis for an injunction against any action, suit or other   proceeding which may be instituted, prosecuted or attempted in breach of the   provisions of such release. (d) Each Loan Party Obligor hereby agrees,   represents, and warrants that (i) neither such Loan Party Obligor nor any   other Releasing Person has voluntarily, by operation of law or otherwise,   assigned, conveyed, transferred or encumbered, either directly or indirectly,   in whole or in part, any right to or interest in any of the Claims released   pursuant to this Section 16; (ii)(A) this Amendment (including the Amended   Facility Agreement) has been entered into (1) without force or duress and (2)   of the free will of each such Person, and (B) the decision of such   undersigned to enter into this Amendment (including the Amended Facility   Agreement) is a fully informed decision and such undersigned is aware of all   legal and other ramifications of each such decision; and (iii) such Loan   Party Obligor has (A) read and understands this Amendment (including the   release granted in this Section 16 and the Amended Facility Agreement), (B)   consulted with and been represented by independent legal counsel of its own   choosing in negotiations for and the preparation of this Amendment (including   the Amended Facility Agreement), (C) read this Amendment (including the   Amended Facility Agreement) in full and final form, and (D) been advised by   its counsel of its rights and obligations under this Amendment (including the   Amended Facility Agreement). (d) Each Loan Party Obligor, for itself and on   behalf of each other Releasing Person, hereby absolutely, unconditionally and   irrevocably covenants and agrees with and in favor of each Releasee above   that it will not sue (at law, in equity, in any regulatory proceeding or   otherwise) any Releasee on the basis of any Claim released, remised and   discharged by such Person pursuant to the above release in this Section 16.   Each Loan Party Obligor further agrees that it shall not dispute the validity   or enforceability of the this Amendment, the Facility Agreement, the Amended   Facility Agreement, any of the other Loan Documents, or any Equity Document,   or any of its obligations hereunder or thereunder, or the creation, validity,   perfection, priority, enforceability or the extent of the Collateral Agent’s   security interest or Lien on any item of Collateral under the Facility   Agreement, the Amended Facility Agreement, the Security Agreement and the   other Loan Documents or the providing of any “control” (within the meaning of   Articles 8 and 9 under the applicable UCC) under any Control Agreement or any   other Loan Document. If any Loan Party Obligor or any other Releasing Person   breaches or otherwise violates the foregoing covenant and provisions, such   Loan Party Obligor, for itself and its Releasing Persons, agrees to pay, in   addition to such other damages as any Releasee may sustain as a result 10   141565389 

    

 

IN WITNESS   WHEREOF, the Parties have executed this Amendment as of the date first set   forth above. BORROWER: NEOS THERAPEUTICS, INC., a Delaware corporation By:   /s/ Gerald McLaughlin Name: Gerald McLaughlin Title: Chief Executive Officer   and President GUARANTORS: NEOS THERAPEUTICS COMMERCIAL, LLC, a Delaware   limited liability company By: /s/ Gerald McLaughlin Name: Gerald McLaughlin   Title: Chief Executive Officer and President NEOS THERAPEUTICS BRANDS, LLC, a   Delaware limited liability company By: /s/ Gerald McLaughlin Name: Gerald McLaughlin   Title: Chief Executive Officer and President NEOS THERAPEUTICS, LP, a Texas   limited partnership By: PharmaFab Texas, LLC, its general partner By: /s/   Gerald McLaughlin Name: Gerald McLaughlin Title: Sole Manager [Signature Page   to Fourth Amendment to Facility Agreement] 

    

 

PHARMAFAB   TEXAS, LLC, a Texas limited liability company By: /s/ Gerald McLaughlin Name:   Gerald McLaughlin Title: Sole Manager [Signature Page to Fourth Amendment to   Facility Agreement] 

    

 

COLLATERAL   AGENT: DEERFIELD MGMT, L.P. By: J.E. Flynn Capital, LLC, General Partner By:   /s/ David J. Clark Name: David J. Clark Title: Authorized Signatory LENDERS:   DEERFIELD PRIVATE DESIGN FUND III, L.P. By: By: Partner Deerfield Mgmt III,   L.P., its General Partner J.E. Flynn Capital III, LLC, its General By: /s/   David J. Clark Name: David J. Clark Title: Authorized Signatory DEERFIELD   SPECIAL SITUATIONS FUND, L.P. By: By: Deerfield Mgmt., L.P., its General   Partner J.E. Flynn Capital, LLC, its General Partner By: /s/ David J. Clark   Name: David J. Clark Title: Authorized Signatory [Signature Page to Fourth   Amendment to Facility Agreement] 

    

 

EXHIBIT A-I   Amended Facility Agreement 141565389 

    

 

 

Conformed Copy   Through Fourth Amendment FACILITY AGREEMENT dated as of May 11, 2016 between   Neos Therapeutics, Inc., a Delaware corporation and the lenders set forth on   the signature page of this Agreement 141540134 

    

 

TABLE OF   CONTENTS Page ARTICLE 1   DEFINITIONS...........................................................................................................   1 Section 1.1 Section 1.2 Section 1.3 Section 1.4 Section 1.5 Section 1.6   General Definitions .....................................................................................   1 Interpretation   .............................................................................................   21 Business Day Adjustment .........................................................................   23 Loan Records   ............................................................................................   23 Accounting Terms and Principles   ............................................................. 23 Officers   .....................................................................................................   24 ARTICLE 2 AGREEMENT FOR THE LOAN   ...........................................................................   24 Section 2.1 Section 2.2 Section 2.3 Section 2.4 Section 2.5 Section 2.6   Section 2.7 Section 2.8 Section 2.9 Use of   Proceeds.........................................................................................   24 Disbursement   ............................................................................................   24   Payment.....................................................................................................   25 Payments   ...................................................................................................   29 Taxes .........................................................................................................   29 [Reserved]   .................................................................................................   31 Interest.......................................................................................................   31 Default Interest; Late Payment   Fee........................................................... 31 Fee   .............................................................................................................   31 ARTICLE 3 REPRESENTATIONS, WARRANTIES AND CERTAIN AFFIRMATIVE COVENANTS   ......................................................................................................   32 Section 3.1 Representations, Warranties and Certain Affirmative Covenants   of the Loan   Parties.........................................................................................   32 Borrower and other Loan Party Obligors Acknowledgment ....................   50 Representations and Warranties of the   Lenders........................................ 50 Section 3.2 Section 3.3   ARTICLE 4 CONDITIONS OF DISBURSEMENT   ................................................................... 51   Section 4.1 Conditions to the Disbursement ................................................................   51 ARTICLE 5 PARTICULAR COVENANTS AND EVENTS OF DEFAULT   ............................ 52 Section 5.1 Section 5.2 Section 5.3 Section   5.4 Section 5.5 Section 5.6 Section 5.7 Section 5.8 Affirmative Covenants   ..............................................................................   52 Negative Covenants   ..................................................................................   62 Financial Covenants   ..................................................................................   68 General Acceleration Provision upon Events of Default   .......................... 68 Automatic Acceleration on Dissolution or   Bankruptcy ............................ 72 Recovery of Amounts   Due........................................................................   72 Power of   Attorney.....................................................................................   72 Credit   Bidding...........................................................................................   74 ARTICLE 6 MISCELLANEOUS   ................................................................................................   74 Section 6.1 Section 6.2 Section 6.3 Notices   ......................................................................................................   74 Waiver of Notice   .......................................................................................   75 Reimbursement of Legal and Other Expenses   .......................................... 76 i 141540134 

    

 

Section 6.4   Section 6.5 Section 6.6 Section 6.7 Section 6.8 Section 6.9 Section 6.10   Section 6.11 Section 6.12 Section 6.13 Section 6.14 Section 6.15 Governing   Law   .........................................................................................   76 Successors and   Assigns.............................................................................   77 Entire Agreement   ......................................................................................   78 Severability ...............................................................................................   78 Counterparts   ..............................................................................................   78 Survival   .....................................................................................................   78 No Waiver   .................................................................................................   79 Indemnity   ..................................................................................................   79 No Usury   ...................................................................................................   80 Further   Assurances....................................................................................   80 Confidentiality ..........................................................................................   80 Intercreditor Agreement   ............................................................................   81 ii 141540134 

    

 

FACILITY   AGREEMENT FACILITY AGREEMENT (this “Agreement”), dated as of May 11, 2016,   between Neos Therapeutics, Inc., a Delaware corporation (the “Borrower”), and   the lenders set forth on the signature page of this Agreement (together with   their successors and permitted assigns, the “Lenders” and, together with the   Borrower, the “Parties”). W I T N E S S E T H: WHEREAS, the Borrower wishes   to borrow from the Lenders a maximum of Sixty Million Dollars ($60,000,000)   for the purpose described in Section 2.1; and WHEREAS, the Lenders desire to   make loans to the Borrower for such purpose. NOW, THEREFORE, in consideration   of the mutual agreements set forth herein, the Parties agree as follows:   ARTICLE 1 DEFINITIONS Section 1.1 General Definitions. Unless otherwise   defined herein, (y) the following terms are used herein as defined in the   UCC: Accounts, Account Debtor, As-Extracted Collateral, Certificated   Security, Chattel Paper, Commercial Tort Claims, Commodity Account, Commodity   Contract, Continuation Statement, Debtor, Deposit Account, Documents,   Electronic Chattel Paper, Equipment, Farm Products, Financing Statement,   Fixtures, General Intangibles, Goods, Health-Care-Insurance Receivables,   Instruments, Inventory, Letter-of-Credit Rights, Money, Payment Intangible,   Proceeds, Secured Party, Securities Account, Security Entitlement, Supporting   Obligations and Tangible Chattel Paper, and (z) capitalized terms used herein   without definition shall have the meaning set forth in Exhibit 2.3 and the   Notes. Wherever used in this Agreement, the Exhibits or the Schedules attached   hereto, unless the context otherwise requires, the following terms have the   following meanings: “2019 10-K” has the meaning set forth in Section 2.3(a).   “2019 Principal Payment” has the meaning set forth in Section 2.3(a)(ii).   “2019 Threshold” has the meaning set forth in Section 2.3(a)(iii). “2020   10-K” has the meaning set forth in Section 2.3(a). “2020 Principal Payment”   has the meaning set forth in Section 2.3(a)(iii). “2020 Threshold” has the   meaning set forth in Section 2.3(a)(iii). “2021 Principal Payment” has the   meaning set forth in Section 2.3(a)(iv). “2022 Principal Payment” has the   meaning set forth in Section 2.3(a)(v). 141540134 

    

 

“4.985% Cap”   has the meaning given to it in the Notes or Exhibit 2.3 (as applicable). “ABL   Agent” has the meaning ascribed to it in the definition “ABL Agreement”. “ABL   Agreement” means that certain Loan and Security Agreement, dated as of the   Fourth Amendment Date, by and among the Borrower, as a borrower, Neos   Therapeutics Brands, LLC, a Delaware limited liability company, as a   borrower, Neos Therapeutics, LP, a Texas limited partnership, as a borrower,   Neos Therapeutics Commercial, LLC, a Delaware limited liability company, as   an obligor, Pharmafab Texas, LLC, a Texas limited liability company, as an   obligor the “Lenders” party thereto from time to time and Encina Business   Credit, LLC, as agent for such “Lenders” (the “ABL Agent”), as amended,   restated, supplemented or otherwise modified from time to time in accordance   and compliance with this Agreement and the Intercreditor Agreement. "ABL   Debt" means Indebtedness outstanding under the ABL Documents that is   expressly permitted to be incurred pursuant to clause (vi) of the definition   of “Permitted Indebtedness”. “ABL Documents” means the “ABL Loan Documents”   (as defined in the Intercreditor Agreement). “ABL Facility” has the meaning   given to it in clause (vi) of the definition of “Permitted Indebtedness”. “ABL   Priority Collateral” means “ABL Priority Collateral” as defined in the   Intercreditor Agreement. “Additional Amounts” has the meaning given to it in   Section 2.5(a) hereof. “Affiliate” means, with respect to any Person, any   other Person that directly or indirectly: (a) owns more than 10% of the legal   or beneficial ownership interest of such Person or any of its Affiliates; (b)   controls, or is controlled by, or is under common control with, such Person   or any of its Affiliates; (c)is a general partner, or managing member of such   Person or any of its Affiliates; or (d)any officer or director of the such   Person or any of its Affiliates (and if that Person is an individual, any   member of the immediate family (including parents, siblings, spouse,   children, stepchildren, nephews, nieces and grandchildren) of such individual   and any trust whose principal beneficiary is such individual or one or more   members of such immediate family and any Person who is controlled by any such   member or trust). 2 141540134 

    

 

A Person shall   be deemed to be “controlled by” any other Person if such Person possesses,   directly or indirectly, power to vote ten percent (10%) or more of the   securities (on a fully diluted basis) having ordinary voting power for the   election of directors or managers or power to direct or cause the direction   of the management or policies of such Person whether by contract or   otherwise. Unless expressly stated otherwise herein, no Secured Party shall   be deemed an Affiliate of the Borrower or any of its Subsidiaries.   Notwithstanding the foregoing, for purposes of the Conversion Cap and the   4.985% Cap and to the extent the term Affiliate is otherwise used in the   Notes or Exhibit 2.3, “Affiliate” shall have the meaning ascribed to such term   in the Notes or Exhibit 2.3 (as applicable). “Agreed Disclosure Process” has   the meaning set forth in Section 5.1(xiii). “Agreement” has the meaning set   forth in the preamble. “Agreement Date” means the date of this Agreement.   “Amendment Date Accrued Interest Amount” shall have the meaning provided   therefor in the First Amendment. “Announcing Form 8-K” has the meaning set   forth in Section 5.1(xiii). “Applicable Laws” means, with respect to any   Person, the common law and any federal, state, local, foreign, multinational   or international laws, statutes, codes, treaties, standards, rules and   regulations, guidelines, ordinances, orders, judgments, writs, injunctions,   decrees (including administrative or judicial precedents or authorities) and   the interpretation or administration thereof by, and other determinations,   directives, requirements or requests of, any Governmental Authority, in each   case whether or not having the force of law and that are applicable to or   binding upon such Person or any of its property or Products or to which such   Person or any of its property or Products is subject. “Authorizations” has   the meaning set forth in Section 3.1(q). “Bankruptcy Code” means title 11 of   the United States Code, as in effect from time to time. “Borrower” has the   meaning set forth in the preamble. “Business Day” means a day on which banks   are open for business in The City of New York. "Capital   Expenditures" means all expenditures which, in accordance with GAAP,   would be required to be capitalized and shown on the consolidated balance   sheet of the Borrower and its Subsidiaries, but excluding (a) expenditures   made in connection with the acquisition, replacement, substitution or   restoration of assets to the extent financed (i) from insurance proceeds (or   other similar recoveries) paid on account of the loss of or damage to the   assets being replaced or restored or (ii) with cash awards of compensation   arising from the taking by eminent domain or condemnation of the assets being   replaced, (b) leasehold improvement 3 141540134 

    

 

expenditures   for which any Loan Party is actually reimbursed by the lessor, sublessor or   sublessee, (c) transaction fees and expenses incurred with any issuance of   debt or equity (including any initial public offering) to the extent   capitalized, and (d) expenditures incurred under operating leases that are   required to be capitalized in accordance with GAAP (which are often referred   to as “right to use assets”). “Change of Control” means (a) any “Person” or   “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange   Act) other than the holders of Borrower’s voting stock on the Agreement Date   or their Controlled Investment Affiliates, is or shall at any time become the   “beneficial owner” (as defined in Rule 13(d)-3 and 13(d)-5 under the Exchange   Act), directly or indirectly, of greater than 50% of the voting interest in   Borrower’s stock, (b) a sale of substantially all of the assets of Borrower   and its Subsidiaries, or (c) the occurrence of a “Change of Control”, “Change   in Control”, “Fundamental Change” or concepts of similar import under the ABL   Documents. “Code” means the Internal Revenue Code of 1986, as amended, and   any Treasury Regulations promulgated thereunder. “Collateral” has the meaning   given to it in the Security Agreement. “Collateral Agent” means Deerfield   Mgmt, L.P., in its capacity as collateral agent for the Secured Parties,   together with its successors and assigns in such capacity, under the Security   Agreement and certain other Loan Documents. “Commercial Products” has the   meaning given to it in Section 5.4(i). “Common Stock” means the common stock,   par value $0.001 per share, of the Borrower. "Compliance   Certificate" means a compliance certificate substantially in the form of   Exhibit C hereto to be signed by the Chief Financial Officer or President of   the Borrower. “Control Agreement” means, with respect to any Deposit Account,   Securities Account, Commodity Account, Security entitlement or Commodity   Contract, an agreement, in form and substance reasonably satisfactory to   Collateral Agent, among Collateral Agent, the financial institution or other   Person at which such account is maintained or with which such entitlement or   contract is carried and the Loan Party Obligor maintaining such account or   owning such entitlement or contract, effective to grant “control” (within the   meaning of Articles 8 and 9 under the applicable UCC) over such account to   Collateral Agent (for the benefit of the Secured Parties), including, without   limitation, any definition provided for such defined term in the Security   Agreement. “controlled by” has the meaning set forth in the definition of   “Affiliate”. “Controlled Investment Affiliate” means as to any Person, any   other Person that (a) directly or indirectly, is in control of, is controlled   by, or is under common control with, such Person and (b) is organized by such   Person primarily for the purpose of making equity or debt investments in one   or more companies. 4 141540134 

    

 

“Conversion   Cap” has the meaning given to such term in the Notes. “Conversion Shares”   means “Conversion Shares” as defined in, and issued upon conversion of, the   Notes. “Daily Issuance Shares” has the meaning given to such term in Exhibit   2.3. “Default” means any event which, at the giving of notice, lapse of time   or fulfillment of any other applicable condition (or any combination of the   foregoing), would constitute an Event of Default. “Disbursement” and   “Disbursement Request” have the meaning given to them in Section 2.2.   “Division” in reference to any Person which is an entity, means the division   of such Person into two (2) or more separate Persons, with the dividing   Person either continuing or terminating its existence as part of such   division, including as contemplated under Section 18-217 of the Delaware   Limited Liability Company Act for limited liability companies formed under   Delaware law, or any analogous action taken pursuant to any other Applicable   Law with respect to any corporation, limited liability company, partnership   or other entity. The word "Divide" when capitalized, shall have a   correlative meaning. “Dollars” and the “$” sign mean the lawful currency of   the United States of America. “EBITDA” means, for the applicable period, for   the Loan Parties on a consolidated basis, the sum of (a) Net Income, plus (b)   Interest Expense deducted in the calculation of such Net Income, plus (c)   taxes on income, whether paid, payable or accrued, deducted in the   calculation of such Net Income, plus (d) depreciation expense deducted in the   calculation of such Net Income, plus (e) amortization expense deducted in the   calculation of such Net Income, plus (f) any other non-cash charges that have   been deducted in the calculation of such Net Income, plus (g) transaction   fees and expenses incurred in connection with the transactions contemplated   by this Agreement in an aggregate amount not to exceed $500,000, minus (h)   any other non-cash gains that have been added in the calculation of such Net   Income. “Eligible Market” means the New York Stock Exchange, the NYSE   American, the NASDAQ Capital Market, the NASDAQ Global Market or the NASDAQ   Global Select Market or, in each case, any successor thereto. “Employee   Benefit Plan” has the meaning set forth in Section 3.1(s) hereof.   "ERISA" means the Employee Retirement Income Security Act of 1974   and all rules, regulations and orders promulgated thereunder. "ERISA   Affiliate" means any trade or business (whether or not incorporated)   under common control with a Loan Party within the meaning of Section 414(b)   or (c) of the Code (and Sections 414(m) and (o) of the Code for purposes of   provisions relating to Section 412 of the Code and Section 302 of ERISA). 5   141540134 

    

 

"ERISA   Event" means: (a) a Reportable Event with respect to a Pension Plan; (b)   the withdrawal of any Loan Party or any ERISA Affiliate from a Pension Plan   subject to Section 4063 of ERISA during a plan year in which such entity was   a "substantial employer" as defined in Section 4001(a)(2) of ERISA   or a cessation of operations that is treated as such a withdrawal under   Section 4062(e) of ERISA; (c) a complete or partial withdrawal by a Loan   Party or any ERISA Affiliate from a Multiemployer Plan or notification that a   Multiemployer Plan is in reorganization; (d) the filing of a notice of intent   to terminate, the treatment of a Pension Plan amendment as a termination   under Section 4041 or 4041A of ERISA; (e) the institution by the PBGC of   proceedings to terminate a Pension Plan; (f) any event or condition which   constitutes grounds under Section 4042 of ERISA for the termination of, or   the appointment of a trustee to administer, any Pension Plan; (g) the   determination that any Pension Plan is considered an at-risk plan or a plan   in endangered or critical status within the meaning of Sections 430, 431 and   432 of the Code or Sections 303, 304 and 305 of ERISA; or (h) the imposition   of any liability under Title IV of ERISA, other than for PBGC premiums due   but not delinquent under Section 4007 of ERISA, upon a Loan Party or any   ERISA Affiliate. “Essex” means Essex Capital Corporation. “Event of Default”   has the meaning given to it in Section 5.4. “Excess Availability” has the   meaning given to it in the ABL Agreement as in effect on the Fourth Amendment   Date. “Exchange Act” means the Securities Exchange Act of 1934, as amended,   including the rules and regulations promulgated thereunder. “Excluded Taxes”   means with respect to any Lender, (a) Taxes imposed on (or measured by) such   Lender’s net income, franchise Taxes and branch profit Taxes, in each case   (i) imposed by the jurisdiction (or any political subdivision thereof) under   the laws of which such Lender is organized or incorporated or in which the   applicable lending office of such Lender is located, or (ii) that are Other   Connection Taxes, (b) any United States federal withholding Tax imposed on   amounts payable to such Lender under the laws in effect at the time such   Lender becomes a party to this Agreement or such Lender changes its lending   office, except to the extent such Lender acquired its interest in the Loan   from a transferor that was entitled, immediately before such transfer, to   receive such Additional Amounts with respect to such withholding Tax pursuant   to Section 2.5(a), (c) any United States withholding Tax imposed on amounts   payable to such Lender as a result of such Lender’s failure to comply with   Section 2.5(d) other than as a result of such Lender’s legal inability to   comply with Section 2.5(d) as a result of a change in law occurring   subsequent to the date such Lender became a party to this Agreement, or (d)   any United States withholding Tax imposed on amounts payable to such Lender   due to such Lender’s non-compliance with FATCA. “Excluded Transaction” means   any of the following transactions: The entering into any collaborative   arrangement, licensing, joint venture, partnership, royalty agreement or   similar agreements or other research, development manufacturing or other   commercial exploitation arrangements relating to Borrower or any Subsidiary’s   Intellectual 6 141540134 

    

 

Property or   other assets (provided, that Borrower has a reasonable basis for believing   that the downstream economics potentially to be received by Borrower and its   Subsidiaries in connection with such collaborative arrangement, licensing,   joint venture, partnership, royalty agreement or similar agreements or other   research, development, manufacturing or other commercial exploitation   arrangements relating to the IP, when combined with the potential downstream   economics of rights in the IP retained by Borrower and its Subsidiaries are   adequate to enable Borrower to timely satisfy all obligations of the Borrower   and its Subsidiaries under this Agreement), including, without limitation,   but subject to the conditions set forth above, (1) any grant to any entity   engaged in, or owned by an entity engaged in, the pharmaceutical or   biotechnology industry of a license or option to obtain a license to any of   Borrower’s or any Subsidiary’s Intellectual Property or other assets,   provided that Borrower or a Subsidiary directly receives from such entity all   consideration paid or payable by such entity in consideration of such grant,   which consideration may, but need not, include (without limitation) upfront,   milestone, royalty and profit-sharing payments, (2) any grant of a license or   option to obtain a license to any entity that intends to research, develop,   commercialize or manufacture Products or services covered by such Intellectual   Property or other assets whether directly or through Borrower, any Subsidiary   or another entity, and (3) any arrangement or transfers of assets for the   manufacture, research, promotion and development of Borrower’s or any   Subsidiary’s Products and clinical trial management, and data analysis and   similar activities in support of Borrower’s or any Subsidiary’s development   programs. “Exhibit 2.3” means that certain Exhibit 2.3 attached to this   Agreement (may be amended, restated, supplemented or otherwise modified from   time to time). “Existing Lenders” means, collectively, Hercules and Essex.   “Existing Loan Documents” means that certain Loan and Security Agreement   dated March 28, 2014, between Borrower, Pharmafab Texas, LLC and Neos   Therapeutics, LP and Hercules and that certain Third Amended and Restated   Subordinated Promissory Note dated December 31, 2013, by and between Borrower   and Essex, each as amended, amended and restated, supplemented, extended or   otherwise modified from time to time. “Exit Payment” has the meaning given to   it in Section 2.3(c). “FATCA” means Sections 1471 through 1474 of Agreement   (or any amended or successor version that is materially more onerous to   comply with), any current the Code as of the date of this substantially   comparable and not or future regulations or official interpretations thereof   and any agreement entered into pursuant to Section 1471(b)(1) of the Code and   any intergovernmental agreements entered into in connection with the   foregoing. “FDA” means the US Food and Drug Administration. "Financing   Lease" means any financing lease which is or should be capitalized on   the balance sheet of the lessee thereunder in accordance with GAAP.   "FIRREA" means the Financial Institutions Reform, Recovery and Enforcement   Act of 1989, as amended. 7 141540134 

    

 

“First   Amendment” means the First Amendment to Facility Agreement dated as of June   1, 2017, by and among Borrower, the Guarantors party thereto and the Lenders   party thereto. "Fiscal Year" means the fiscal year of the Borrower   which ends on December 31 of each year. “Fixed Charge Coverage Ratio” means   the ratio, determined in a manner reasonably acceptable to the Lenders, of   (a) EBITDA for the most recently ended twelve-month period for which   financial statements have been delivered or publicly filed (or are required   to have been delivered or publicly filed) under Section 5.1(v), minus   unfinanced Capital Expenditures of the Loan Parties on a consolidated basis   for such period, to (b) Fixed Charges for such period. “Fixed Charges” means,   for the period in question, on a consolidated basis, the sum of (a) all   principal payments scheduled or required to be made during or with respect to   such period in respect of Indebtedness of the Loan Parties, plus (b) all   Interest Expense of the Loan Parties for such period paid or required to be   paid in cash attributable to such period, plus (c) all taxes of the Loan   Parties paid or required to be paid for such period, and plus (d) all cash   distributions, dividends, redemptions and other cash payments made or   required to be made during such period with respect to equity securities or   subordinated debt issued by any Loan Party. “Form 8-K” means a current report   on Form 8-K under the Exchange Act. “Fourth Amendment” means the Fourth Amendment   to Facility Agreement dated as of October 2, 2019 among the Borrower, the   Guarantors (as defined in the Security Agreement) party thereto and Lenders.   “Fourth Amendment Date” means October 2, 2019. “Fourth Amendment Perfection   Certificate” means the Perfection Certificate dated as of the Fourth   Amendment Date executed by the Loan Party Obligors in the form attached as   Exhibit A-IV to the Fourth Amendment. “Freely Tradeable Shares” has the   meaning given to such term in Exhibit 2.3. “GAAP” means generally accepted   accounting principles consistently applied as set forth in the opinions and   pronouncements of the Accounting Principles Board and the American Institute   of Certified Public Accountants and statements and pronouncements of the   Financial Accounting Standards Board (or agencies with similar functions of   comparable stature and authority within the accounting profession).   “Governmental Authority” means any government, quasi-governmental agency,   governmental department, ministry, cabinet, commission, board, bureau,   agency, court, tribunal, regulatory authority, instrumentality, judicial,   legislative, fiscal, or administrative or public body or entity, whether   domestic or foreign, federal, state or local, having jurisdiction over the   matter or matters and Person or Persons in question, including, but not   limited to the FDA. “Guarantor” means each Subsidiary of the Borrower or   other Person who provides a guaranty of the Obligations under the Security   Agreement or other Loan Document. 8 141540134 

    

 

"Guaranty",   as applied to any Indebtedness, liability or other obligation, means (a) a   guaranty, directly or indirectly, in any manner, including by way of   endorsement (other than endorsements of negotiable instruments for collection   in the Ordinary Course of Business), of any part or all of such Indebtedness,   liability or obligation and (b) an agreement, contingent or otherwise, and   whether or not constituting a guaranty, assuring, or intended to assure, the   payment or performance (or payment of damages in the event of   non-performance) of any part or all of such Indebtedness, liability or   obligation by any means (including the purchase of securities or obligations,   the purchase or sale of property or services or the supplying of funds).   “Health Care Laws” means all laws relating to the provision and/or   administration of, and/or payment for, healthcare products or services,   including, without limitation, Applicable Laws with respect to (in each case,   to the extent applicable): (a) health care fraud and abuse (including without   limitation the following statutes, as amended, modified or supplemented from   time to time and any successor statutes thereto and regulations promulgated   from time to time thereunder: the federal Anti-Kickback Statute (42 U.S.C. §   1320a-7b(b)); the Stark Law (42 U.S.C. § 1395nn); the civil False Claims Act   (31 U.S.C. § 3729 et seq.); 42 U.S.C. §§ 1320a-7, 1320a-7b; the Medicare   Prescription Drug, Improvement, and Modernization Act of 2003 (Pub. L. No.   108-173)); and any state, commonwealth or local laws similar to any of the   foregoing; (b) Medicare, Medicaid or other programs which are sponsored or   maintained by a governmentalpayor;(c)quality,safety requirements; (d) HIPAA;   (e) prescription certificationandaccreditationstandardsand drug, medical   device or controlled substances use,distribution,compounding,dispensing,   registration,approval, importation,sale, transporting, purchasing, storage,   tracking, marketing and security, including state pharmacy and controlled   substance laws, the Federal Food, Drug, and Cosmetic Act, the Controlled   Substances Act, the Prescription Drug Marketing Act of 1987, and Food and   Drug Administration rules and regulation; (f) the provision of free or   discounted care or services; and (g) the conditions of participation or   enrollment as a provider/supplier in and Applicable Laws governing health   programs administered by or paid for, in whole or in part by, governmental   payors. “Health Care Permits” means any and all Permits issued or required under   applicable Health Care Laws. “Hercules” means, collectively, Hercules   Technology III, L.P. and Hercules Technology Growth Capital, Inc. “HIPAA”   means the (a) Health Insurance Portability and Accountability Act of 1996;   (b) the Health Information Technology for Economic and Clinical Health Act   (Title XIII of the American Recovery and Reinvestment Act of 2009); and (c)   any state, commonwealth and local laws regulating the privacy and/or security   of individually identifiable health information, including state laws   providing for notification of breach of privacy or security of individually   identifiable health information, in each case with respect to the laws   described in clauses (a), (b) and (c) of this definition, as the same may be   amended, modified or supplemented from time to time, any successor statutes   thereto, any and all rules or regulations promulgated from time to time   thereunder. “Indebtedness” means the following: 9 141540134 

    

 

(i) all   obligations, liabilities or indebtedness, contingent or otherwise, for   borrowed money; (ii) the deferred purchase price of assets or services (other   than trade payables which are not one-hundred twenty (120) days past the   invoice date incurred in the Ordinary Course of Business, but including the   maximum potential amount payable under any earn-out or similar obligations)   which in accordance with GAAP would be shown to be a liability (or on the   liability side of a balance sheet); (iii) all guarantees of Indebtedness,   Guaranties, endorsements (other than for collection in the Ordinary Course of   Business) and other contingent obligations in respect of the obligations of   others; (iv) all letters of credit issued or acceptance facilities   established for the account of (or issued on behalf of) the Borrower and any   of its Subsidiaries, including without duplication, all drafts drawn   thereunder, and bankers' acceptances, and financial and other hedging   obligations; (v) all capitalized lease obligations; (vi) all indebtedness of   another Person secured by any Lien on any property of the Borrower or its   Subsidiaries, whether or not such indebtedness has been assumed or is   recourse (with the amount thereof, in the case of any such indebtedness that   has not been assumed by the Borrower or its Subsidiaries, being measured as   the lower of (x) fair market value of such property and (y) the amount of the   indebtedness secured); (vii) all obligations and indebtedness created or   arising under any conditional sale or title retention agreement; (viii) all   obligations represented by promissory notes, bonds, debentures or the like,   or on which interest charges are customarily paid; (ix) all Financing Leases   of such Person; (x) all Stock issued subject to repurchase or redemption at   any time on or prior to the Maturity Date, other than voluntary repurchases   or redemptions that are at the sole option of the Person issuing such Stock;   and (xi) all principal outstanding under any synthetic lease, off-balance   sheet loan or similar financing product. “Indemnified Person” has the meaning   given to it in Section 6.11. “Indemnified Taxes” means all Taxes including   Other Taxes, other than Excluded Taxes, imposed on or with respect to any   payment made by or on account of any obligation of a Loan Party Obligor under   any Loan Document. 10 141540134 

    

 

“Indemnity” has   the meaning given to it in Section 6.11. “Intercreditor Agreement” means that   certain Intercreditor Agreement, dated as of the Fourth Amendment Date, by   and among Encina Business Credit, LLC, a Delaware limited liability company,   in its capacity as agent for the “Lenders” under the ABL Agreement, Deerfield   Private Design Fund III, L.P., Deerfield Special Situations Fund, L.P., and   Deerfield Mgmt, L.P., and acknowledged by the Loan Party Obligors. “Interest   Expense” means, for the applicable period, for the Loan Parties on a   consolidated basis, total interest expense (including interest attributable   to Financing Leases in accordance with GAAP) and fees with respect to   outstanding Indebtedness. “Interest Payment Shares” means any shares of Common   Stock issued or issuable in satisfaction of any interest payment otherwise   due and payable in cash, in accordance with Section 2.7 and Exhibit 2.3   (provided, that, for purposes of Exhibit 2.3, “Interest Payment Shares” has   the meaning given to such term in such Exhibit 2.3). “Interest Rate” means   12.95% per annum. "Investment Property" means the collective   reference to (a) all "investment property" as such term is defined   in Section 9-102 of the UCC, (b) all "financial assets" as such   term is defined in Section 8-102(a)(9) of the UCC and (c) whether or not   constituting "investment property" as so defined, all Pledged   Equity. “IP”, “Company IP” and “Intellectual Property” have the meaning given   to it in Section 3.1(m). “IRS” means the United States Internal Revenue   Service. “Issuers” means the collective reference to each of the issuers of   Investment Property. “Lenders” has the meaning set forth in the preamble.   “License” means any license of Intellectual Property. “Lien” means any lien   (statutory or otherwise), pledge, mortgage, security interest, deed of trust,   charge, assignment, hypothecation, title retention, deposit arrangement,   easement, encumbrance or other security arrangement and any other preference,   priority, or preferential arrangement in the nature of a security interest of   any kind or whatsoever, including any conditional sale contract or other   title-retention agreement, the interest of a lessor under a Financing Lease   and any synthetic or other financing lease having substantially the same economic   effect as any of the foregoing. “Loan” means the loans made by the Lenders to   the Borrower pursuant to Section 2.2 in the aggregate principal amount of   Sixty Million Dollars ($60,000,000) or, as the context may require, the   principal amount thereof from time to time outstanding. 11 141540134 

    

 

“Loan   Documents” means this Agreement (including the Fourth Amendment Perfection   Certificate and all other attachments, schedules, annexes and exhibits   hereto), the Notes, the Security Agreement, Intellectual Property security   agreements, the Control Agreements, the First Amendment, the Second   Amendment, the Registration Rights Agreement, the Second Amendment   Registration Rights Agreement, the Third Amendment, the Fourth Amendment, the   Intercreditor Agreement (and any other subordination or intercreditor   agreement entered into by any of the Lenders with respect to any Indebtedness   permitted under the Loan Documents), any collateral assignment, all   Post-Fourth Amendment Perfection Certificates, and any other amendment,   restatement, supplement, modification, waiver, consent, agreement, document   or instrument executed by the Borrower or any Subsidiary and delivered in   connection with any of the foregoing and dated the Agreement Date or   subsequent thereto, whether or not specifically mentioned herein or therein;   provided, for the avoidance of doubt that shares of Common Stock, including   any Interest Payment Shares, Principal Payment Shares and Conversion Shares,   are excluded from “Loan Documents.” “Loan Party” means, individually, the   Borrower and each of its Subsidiaries; and “Loan Parties” means,   collectively, the Borrower and all of its Subsidiaries. “Loan Party Obligor”   means, individually, the Borrower, each Guarantor and each Obligor; and “Loan   Party Obligors” means, collectively, the Borrower and each other Loan Party   Obligor. “Loss” has the meaning given to it in Section 6.11. “Material   Adverse Effect” means any event, act, omission, condition or circumstance   which, which individually or in the aggregate, has or could reasonably be   expected to have a material adverse effect on (a) the business, operations,   properties, assets or financial condition or assets of the Borrower and its   Subsidiaries (taken as a whole), (b) the validity or enforceability of, or   any Secured Party’s rights or remedies under, any Loan Document, (c) the   ability of the Borrower and its Subsidiaries (taken as a whole) to timely   perform any of its obligations under the Loan Documents (including the   Obligations) when due, (d) the rights and remedies of the Secured Parties   under any Loan Document, including any ability of any Secured Party to   realize upon the Collateral, or (e) the existence, perfection or priority of   any security interest or Lien granted in any Loan Document and covering   Collateral in which Collateral Agent has previously perfected a security   interest or Lien. "Material Contract" has the meaning given to it   in Section 3.1(ee). “Maturity Date” has the meaning given to it in Section   2.3(a)(v). “Medicaid” means, collectively, the health care assistance program   established by Title XIX of the Social Security Act (42 U.S.C. § 1396 et   seq.) and any statutes succeeding thereto, and all Applicable Laws pertaining   to such program, including (a) all federal statutes affecting such program;   (b) all state and commonwealth statutes and plans for medical assistance   enacted in connection with such program and federal rules and regulations   promulgated in connection with such program; and (c) all applicable   provisions of all rules, regulations and legally binding manuals, orders and   administrative and reimbursement requirements of all 12 141540134 

    

 

Governmental   Authorities promulgated in connection with such program, in each case as the   same may be amended, supplemented or otherwise modified from time to time.   “Medicare” means, collectively, the health insurance program for the aged and   disabled established by Title XVIII of the Social Security Act (42 U.S.C. §   1395 et seq.) and any statutes succeeding thereto, and all Applicable Laws   pertaining to such program including (a) all federal statutes (whether set   forth in Title XVIII of the Social Security Act (42 U.S.C. § 1395 et seq.) or   elsewhere) affecting such program; and (b) all applicable provisions of all rules,   regulations and legally binding manuals, orders, administrative and   reimbursement requirements of all Governmental Authorities promulgated in   connection with such program, in each case as the same may be amended,   supplemented or otherwise modified from time to time. "Multiemployer   Plan" means any employee benefit plan of the type described in Section   4001(a)(3) of ERISA, to which a Loan Party or any ERISA Affiliate makes or is   obligated to make contributions, or during the preceding five plan years, has   made or been obligated to make contributions. “NASDAQ” means the Nasdaq Stock   Market (or any successor thereto). “Necessary Disclosure” has the meaning set   forth in Section 5.1(xiii). “Net Income” means, for the applicable period,   for the Loan Parties on a consolidated basis, the net income (or loss) of the   Loan Parties on a consolidated basis for such period, excluding any gains or   non-cash losses from dispositions, any extraordinary gains or extraordinary   non-cash losses and any gains or non-cash losses from discontinued   operations, in each case of the Loan Parties on a consolidated basis for such   period. “Net Product Sales” means, in respect of any period, the net product   sales of the Borrower’s Products (representing the gross product sales, less   gross to net sales adjustments) as disclosed in the Borrower’s financial   statements prepared in accordance with GAAP and included in the periodic   report for such period timely filed with the SEC. “No Call Expiration Date”   means, with respect to a prepayment of principal upon the occurrence of a   Change of Control as required pursuant to Section 2.3(b), May 11, 2020, and   with respect to any other prepayment, December 31, 2020. “Notes” means the   Amended and Restated Senior Secured Convertible Notes issued to the Lenders   evidencing the Loan in substantially the form of Exhibit A attached to the   Second Amendment, as amended by the Third Amendment and as may be further   amended, restated, supplemented, replaced or otherwise modified from time to   time. “Obligations” means all Loans and Disbursements, interests, fees   (including any Prepayment Fees and Make Whole Interest and the Exit Payment),   expenses, costs, liabilities, indebtedness and other obligations (monetary   (including post-petition interest, costs, fees, expenses and other amounts,   whether allowed or not) or otherwise) of (or owed by) the Borrower, the other   Loan Party Obligors or any other Person under or in connection with the Loan   Documents, in each case howsoever created, arising or evidenced, whether   direct or 13 141540134 

    

 

indirect   (including those acquired by assignment), absolute or contingent, now or   hereafter existing, or due or to become due. “Obligor” means any guarantor,   endorser, acceptor, surety or other Person liable on, or with respect to, any   of the Obligations or who is the owner of any property which is security for   any of the Obligations, other than the Borrower. "Ordinary Course of   Business" means, in respect of any transaction involving any Person, the   Ordinary Course of Business of such Person, as conducted by such Person as of   the Fourth Amendment Date and any practices that are utilized to improve past   practices or to conform with customary operating procedures for a similar   business, as reasonably determined by such Person. “Organizational Documents”   means for any Person as of any date, such Person’s charter, constitutional or   constituent documents, formation documents and/or certificate of   incorporation (or equivalent thereof), and each certificate of change of   name, and, (a) if such Person is a corporation, its bylaws or memorandum and   articles of association (or equivalent thereof) in current form, (b) if such   Person is a limited liability company, its limited liability company   agreement or its shareholders agreement (or similar agreement), and (c) if   such Person is a partnership, its partnership agreement (or similar   agreement), each of the foregoing with all current amendments or   modifications thereto. “Other Connection Taxes” means with respect to any   Lender, Taxes imposed as a result of a present or former connection between   such Lender and the jurisdiction imposing such Tax (except a connection   arising from such Lender having executed, delivered, become a party to,   performed its obligations or received a payment under, received or perfected   a security interest under, engaged in any transaction pursuant to or enforced   any Loan Document, or sold or assigned an interest in any Loan Document).   "Other Obligor" means any Obligor other than any Loan Party Obligor.   “Other Taxes” means any and all present or future stamp, court or   documentary, intangible, recording, filing or similar Taxes arising from any   payment made hereunder or from the execution, delivery, registration or   enforcement of, or otherwise with respect to, any Loan Document except any   such Taxes that are Other Connection Taxes imposed with respect to an   assignment (other than an assignment made in connection with the exercise of   remedies following an Event of Default). “Paragraph IV Certification” means a   certification by an applicant filing an ANDA or 505(b)(2) NDA referencing a   drug listed in Approved Drug Products with Therapeutic Equivalence   Evaluations to the FDA that the patent relating to such listed drug is   invalid or will not be infringed upon by the manufacture, use or sale of the   drug product for which the ANDA or 505(b)(2) NDA is submitted. “Parties” has   the meaning set forth in the preamble. "PBGC" means the Pension   Benefit Guaranty Corporation. 14 141540134 

    

 

"Pension   Act" means the Pension Protection Act of 2006. "Pension Funding   Rules" means the rules of the Code and ERISA regarding minimum required   contributions (including any installment payment thereof) to Pension Plans   and Multiemployer Plans and set forth in, with respect to plan years ending   prior to the effective date of the Pension Act, Section 412 of the Code and   Section 302 of ERISA, each as in effect prior to the Pension Act and,   thereafter, Section 412, 430, 431, 432 and 436 of the Code and Sections 302,   303, 304 and 305 of ERISA, and any sections of the Code or ERISA related   thereto that are enacted after the date of this Agreement. "Pension   Plan" means any employee pension benefit plan (including a Multiemployer   Plan) that is maintained or is contributed to by a Loan Party and any ERISA   Affiliate and is either covered by Title IV of ERISA or is subject to the   minimum funding standards under Section 412 of the Code. “Perfection   Certificate” means the Fourth Amendment Perfection Certificate and any Post-Fourth   Amendment Perfection Certificate, as the context may so require.   “Permits”meansallpermits,licenses,registrations,certificates,qualifications,   accreditations, approvals or similar rights required to be obtained, from any   Governmental Authority. “Permitted Indebtedness” means: (i) The Obligations;   (ii) of Business; Indebtedness arising under operating leases in the Ordinary   Course (iii) Indebtedness in respect of purchase money financing and capital   lease obligations that are Financing Leases covering existing and   newly-acquired Equipment, including for the acquisition, installation,   qualification and validation of such Equipment up to an aggregate amount   outstanding at any time of $8,000,000; (iv)   Indebtednessincurredasaresultofendorsingnegotiable instruments received in   the Ordinary Course of Business; (v) other unsecured Indebtedness not to   exceed $250,000 in the aggregate at any time outstanding; (vi) Indebtedness   in respect of a revolving credit facility in an aggregate principal amount   not to exceed $25,000,000 evidenced by the ABL Agreement (the “ABL   Facility”), to the extent subject to, and permitted by, and in full   compliance with, the Intercreditor Agreement; (vii) the Indebtedness existing   on the Fourth Amendment Date described in Section 7 of the Fourth Amendment   Perfection Certificate; in each 15 141540134 

    

 

case, along   with extensions, refinancings, modifications, amendments and restatements   thereof; provided, that (i) the principal amount thereof is not increased, (ii)   if secured by a Permitted Lien, no additional collateral beyond that existing   as of the Fourth Amendment Date is granted to secure such Indebtedness; (iii)   if such Indebtedness is subordinated to any or all of the Obligations, the   applicable subordination terms are not amended, restated, supplemented or   otherwise modified without the prior written consent of the Required Lenders,   and (iv) the terms thereof are not amended, restated, supplemented or   otherwise modified to impose more burdensome terms upon any Loan Party; and   (viii) to the extent constituting Indebtedness, Indebtedness incurred in   connection with the financing of insurance premiums in the Ordinary Course of   Business of the Loan Parties. "Permitted Investments" means: (i)   investments outstanding on the Fourth Amendment Date described in Section   1(g) of the Fourth Amendment Perfection Certificate; (ii) investments by any   Loan Party in any other Loan Party or any Subsidiary of a Loan Party in   equity interests; provided, that (a) any such equity interests held by a Loan   Party Obligor shall be pledged as required pursuant to this Agreement and/or   the Security Agreement, as applicable, and (b) the aggregate amount of   investments by Loan Parties in Subsidiaries that are not Loan Parties   (together with outstanding intercompany loans permitted under clause (iii)   below of this definition and outstanding Guaranties permitted under clause   (iv) below of this definition) shall not exceed $500,000 at any time   outstanding); (iii) loans or advances made by any Loan Party to any   Subsidiary and made by any Subsidiary to a Loan Party or any other   Subsidiary; provided, that (a) any such loans and advances made by a Loan   Party and evidenced by a promissory note shall be pledged pursuant to this   Agreement and (b) the principal amount of such loans and advances made by   Loan Parties to Subsidiaries that are not Loan Parties (together with   outstanding investments permitted by clause (ii) above of this definition and   outstanding Guaranties permitted under clause (iv) below of this definition)   shall not exceed $250,000 at any time outstanding); (iv) Guaranties   constituting Permitted Indebtedness; provided, that the aggregate principal   amount of Indebtedness of Subsidiaries that are not Loan Parties that is   guaranteed by any Loan Party (together with outstanding investments permitted   under clause (ii) above of this definition and outstanding intercompany loans   permitted under clause (iii) above of this definition) shall not exceed   $250,000 at any time outstanding); (v) loans and advances to directors,   employees and officers of any Loan Party Obligor and its Subsidiaries for   bona fide business purposes in the 16 141540134 

    

 

Ordinary Course   of Business, in an aggregate amount not to exceed $50,000 at any time   outstanding; (vi) leases of real or personal property in the Ordinary Course   of Business and in accordance with the terms and conditions of this   Agreement; and (vii) investments constituting deposits described in Permitted   Liens. “Permitted Liens” means: (i) purchase-money security interests in   specific items of Equipment securing Permitted Indebtedness described under   clause (iii) of the definition of Permitted Indebtedness; (ii)liens for   taxes, fees, assessments, or other governmental charges or levies, either not   delinquent or being contested in good faith by appropriate proceedings (which   proceedings have the effect of preventing the enforcement of such lien) for   which adequate reserves in accordance with GAAP are being maintained provided   the same have no priority over any of the Collateral Agent's security   interests; (iii) liens of materialmen, mechanics, carriers, or other similar   liens arising in the Ordinary Course of Business and securing obligations   which are not delinquent or are being contested in good faith by appropriate   proceedings (which proceedings have the effect of preventing the enforcement   of such lien) for which adequate reserves in accordance with GAAP are being   maintained; (iv)liens which constitute banker's liens, rights of set-off, or   similar rights as to deposit accounts or other funds maintained with a bank   or other financial institution (but only to the extent such banker's liens,   rights of set-off or other rights are in respect of customary service charges   relative to such deposit accounts and other funds, and not in respect of any   loans or other extensions of credit by such bank or other financial   institution to any Loan Party); (v)cash deposits or pledges of an aggregate   amount not to exceed $50,000 to secure insurance, or other obligations,   surety the payment of worker's compensation, unemployment social security   benefits or obligations, public or statutory or appeal bonds, bid or   performance bonds, or other obligations of a like nature incurred in the   Ordinary Course of Business; (vi) judgment Liens in respect of judgments that   do not constitute an Event of Default; (vii) easements, zoning restrictions,   rights-of-way and similar encumbrances on real property imposed by law or   arising in the Ordinary Course of Business that do not secure any monetary   obligations and do not materially detract from the value of the affected   property or interfere with the ordinary conduct of business of the Borrower   or any Subsidiary; 17 141540134 

    

 

(viii) any Lien   in existence on the Fourth Amendment Date and described in Section 7 of the   Fourth Amendment Perfection Certificate and any Lien granted as a replacement   or substitute therefor; provided, that any such replacement or substitute   Lien (i) does not secure an aggregate amount of Indebtedness, if any, greater   than that secured on the Fourth Amendment Date and (ii) does not encumber any   property other than the property subject thereto on the Fourth Amendment   Date; (ix)Liens on the assets of the Loan Party Obligors securing the ABL   Debt to the extent such Liens are subject to, and permitted by, and are in   compliance with, the Intercreditor Agreement; (x) other Liens securing   obligations in an aggregate principal amount not to exceed $25,000 at any   time outstanding; and (xi) Liens in favor of customs and revenue authorities   arising as a matter of law to secure payment of customs duties in connection   with the importation of goods in the Ordinary Course of Business of the Loan   Parties. “Person” means and includes any natural person, individual,   partnership, limited partnership, joint venture, corporation, trust, limited   liability company, limited company, joint stock company, unincorporated   organization, government entity or any political subdivision or agency   thereof, or any other entity. “Pledged Equity” means the equity interests and   other Stock listed on Sections 1(f) and 1(g) of any Perfection Certificate,   together with any other equity interests, Stock, certificates, options, or   rights or instruments of any nature whatsoever in respect of the equity   interests and Stock of any Person that may be issued or granted to, or held   by, any Loan Party Obligor while this Agreement is in effect, and including,   to the extent attributable to, or otherwise related to, such pledged equity   interests and Stock, all of such Loan Party Obligor's (a) interests in the   profits and losses of each Issuer, (b) rights and interests to receive   distributions of each Issuer's assets and properties and (c) rights and   interests, if any, to participate in the management of each Issuer related to   such pledged equity interests and Stock. “Post-Fourth Amendment Perfection   Certificate” means a completed Perfection Certificate executed by any Loan   Party Obligor in the form attached to the Fourth Amendment as Exhibit A-V,   and any supplements or updates thereto delivered to the Collateral Agent or   any of the Lenders in accordance with this Agreement. “Prepayment Fees and   Make Whole Interest” has the meaning set forth in Section 2.3(b). “Principal   Market” means the NASDAQ Global Market (or any successor to the foregoing).   “Principal Payment Shares” means any shares of Common Stock (i.e., Daily   Issuance Shares)_issued or issuable in satisfaction of any principal payment   otherwise due and payable in cash, in accordance with Section 2.3(f) and   Exhibit 2.3. 18 141540134 

    

 

“Pro Rata   Share” means, with respect to any Lender, the applicable percentage set forth   on Schedule I to the Second Amendment or such other percentage as the Lenders   shall unanimously determine; provided that the Lenders shall notify the   Borrower of such determination at least three (3) days prior to the   effectiveness of such other percentage. “Products” means any item or any   service that is designed, created, manufactured, managed, performed or   otherwise offered by or on behalf of any of the Loan Parties or any of their   Subsidiaries. “Register” has the meaning set forth in Section 1.4(b).   “Registration Rights Agreement” has the meaning provided therefor in the   Notes. "Reportable Event" means any of the events set forth in   Section 4043(c) of ERISA, other than events for which the thirty-day notice   period has been waived. “Reporting Period” has the meaning given to it in   Section 5.1(xiv). “Required Lenders” means, at any time, Lenders holding   Loans representing more than 50% of the sum of the Loans outstanding.   "Restricted Accounts" means Deposit Accounts (a) established and   used (and at all times will be used) solely for the purpose of paying current   payroll obligations of Loan Parties (and which do not (and will not at any   time) contain any deposits other than those necessary to fund current   payroll), in each case, in the Ordinary Course of Business, or (b) maintained   (and at all times will be maintained) solely in connection with an employee   benefit plan, but solely to the extent that all funds on deposit therein are   solely held for the benefit of, and owned by, employees (and will continue to   be so held and owned) pursuant to such plan. "Restricted Payment"   means any payment, dividend or other distribution (whether in cash,   securities or other property) with respect to any equity interests in the   Borrower, any Loan Party or any Subsidiary, or any payment, dividend or other   distribution (whether in cash, securities or other property), including any   sinking fund or similar deposit, on account of the purchase, redemption,   retirement, acquisition, cancellation or termination of any such equity   interests in any of the Borrower, any Loan Party or any Subsidiary or any   option, warrant or other right to acquire any such equity interests in any of   the Borrower, any Loan Party or any Subsidiary. “Rights Plan” has the meaning   set forth in Section 3.1(ss). “SEC” means the United States Securities and   Exchange Commission. “Second Amendment” means the Second Amendment to   Facility Agreement dated as of November 5, 2018 among the Borrower,   Guarantors and Lenders. “Second Amendment Date” means November 5, 2018. 19   141540134 

    

 

“Second   Amendment Principal Payment” has the meaning set forth in Section 2.3(a)(i)   hereto. “Second Amendment Registration Rights Agreement” means that certain   Registration Rights Agreement dated as of November 5, 2018 by and among the   Borrower and the Lenders in the form attached as Exhibit C to the Second   Amendment, as it may be amended, restated, modified and supplemented from   time to time. “SEC Reports” has the meaning set forth in Section 3.1(pp).   “Secured Parties” means Collateral Agent, the Lenders and all Indemnified   Persons. “Securities” means, collectively the Notes (including the guaranties   thereof by the Guarantors), any Conversion Shares, any Principal Payment   Shares and any Interest Payment Shares(. “Securities Act” means the   Securities Act of 1933, as amended, including the rules and regulations   promulgated thereunder. “Security Agreement” means the Guaranty and Security   Agreement of even date herewith among Borrower, its Subsidiaries, Collateral   Agent and Lenders. "SPS" means Specialty Pharmaceutical Services, a   subsidiary of Cardinal Health. “Stock” means (a) all shares of capital stock   (whether denominated as common stock or preferred stock), equity interests,   beneficial, partnership or membership interests, joint venture interests,   participations or other ownership or profit interests in or equivalents   (regardless of how designated) of or in a Person (other than an individual),   whether voting or non-voting; and (b) all securities convertible into or   exchangeable for any other Stock and all warrants, options or other rights to   purchase, subscribe for or otherwise acquire any other Stock, whether or not   presently convertible, exchangeable or exercisable. “Subsidiary” or   “Subsidiaries” means, as to any Person, any Person of which securities or   other ownership interests having ordinary voting power to elect a majority of   the board of directors or other Persons performing similar functions are at   the time directly or indirectly owned by such Person. Unless the context   otherwise requires, each reference to Subsidiaries herein shall be a   reference to Subsidiaries of the Borrower. “Tax Affiliate” means (a) the   Borrower and its Subsidiaries and (b) any Affiliate of the Borrower with   which the Borrower files or is required to file consolidated, combined or   unitary tax returns. “Tax Return” has the meaning set forth in Section   3.1(o). “Taxes” means all present or future taxes, levies, imposts, stamp or   other duties, deductions, assessments, fees or other charges or withholdings   imposed by any Governmental Authority, together with any interest, additions   to tax or penalties applicable thereto. 20 141540134 

    

 

“Term Loan   Priority Collateral” means “Term Loan Priority Collateral” as defined in the   Intercreditor Agreement. “Term Priority Deposit Account” means “Term Priority   Deposit Account” as defined in the Intercreditor Agreement. “Trading Day”   means any day on which the Common Stock are traded for any period on the   Principal Market; provided, however, that during any period in which Common   Stock are not listed or quoted on an Eligible Market or any other United   States securities exchange or trading market, the term “Trading Day” means   any Business Day. “Third Amendment” means the Third Amendment to Facility   Agreement dated as of March 29, 2019 among the Borrower, the Guarantors (as   defined in the Security Agreement) party thereto and Lenders. “UCC” means, at   any given time, the Uniform Commercial Code as adopted and in effect at such   time in the State of New York or other applicable jurisdiction. Section 1.2   Interpretation. In this Agreement and the other Loan Documents, unless the   context otherwise requires, all words and personal pronouns relating thereto   shall be read and construed as the number and gender of the party or parties   requires and the verb shall be read and construed as agreeing with the   required word and pronoun. The division of this Agreement and the other Loan   Documents into Articles and Sections and the use of headings and captions is   for convenience of reference only and shall not modify or affect the   interpretation or construction of this Agreement or any of its provisions.   The words “herein,” “hereof,” “hereunder,” “hereinafter” and “hereto” and   words of similar import refer to this Agreement (or other applicable Loan   Document) as a whole and not to any particular Article or Section hereof (or   thereof). The use in any of the Loan Documents of the word “include” or   “including,” when following any general statement, term or matter, shall not   be construed to limit such statement, term or matter to the specific items or   matters set forth immediately following such word or to similar items or   matters, whether or not non-limiting language (such as “without limitation”   or “but not limited to” or words of similar import) is used with reference   thereto, but rather shall be deemed to refer to all other items or matters   that fall within the broadest possible scope of such general statement, term   or matter. References in this Agreement to a specified Article, Exhibit,   Section or Schedule shall be construed as a reference to that specified   Article, Exhibit, Section or Schedule of this Agreement. Any reference to any   of the Loan Documents means such document as the same shall be amended,   restated, supplemented or otherwise modified and from time to time in effect.   The term “or” has, except where otherwise indicated, the inclusive meaning   represented by the phrase “and/or.” The term “documents” and “agreements”   include any and all instruments, documents, agreements, certificates,   indentures, notices and other writings, however evidenced. The references to   “asset” (or “assets”) and “property” (or “properties”) in the Loan Documents   are meant to be mean the same and are used throughout the Loan Documents   interchangeably, and such words shall be deemed to refer to any and all   tangible and intangible assets and properties, including cash, securities,   Stock, accounts and contract rights. Unless otherwise specified herein or   therein, all terms defined in any Loan Document shall have the defined   meanings when used in any certificate or other document made or delivered   pursuant hereto or thereto. The meanings of defined terms shall be equally 21   141540134 

    

 

applicable to   the singular and plural forms of the defined terms. Terms (including   uncapitalized terms) not otherwise defined herein and that are defined in the   UCC shall have the meanings therein described. In the computation of periods   of time from a specified date to a later specified date, the word “from”   means “from and including;” the words “to” and “until” each mean “to but   excluding,” and the word “through” means “to and including.” If any provision   of this Agreement or any other Loan Document refers to any action taken or to   be taken by any Person, or which such Person is prohibited from taking,   unless otherwise expressly stated, such provision shall be interpreted to   encompass any and all means, direct or indirect, of taking, or not taking,   such action. References to any statute or regulation may be made by using   either the common or public name thereof or a specific cite reference and,   except as otherwise provided with respect to FATCA, are to be construed as   including all statutory and regulatory provisions related thereto or   consolidating, amending, replacing, supplementing or interpreting the statute   or regulation, and any reference to any law or regulation, shall, unless   otherwise specified, refer to such law or regulation as amended, modified or   supplemented from time to time. Whenever any reference is made in any Loan   Document to any Person such reference shall be construed to include such   Person’s permitted successors and permitted assigns. Unless otherwise   specified, all references in any Loan Document to times of day shall be   references to New York City time. Notwithstanding anything to the contrary in   any Loan Document, any reference to “Organizational Document” or   “Organizational Documents” of any Loan Party or any of its Subsidiaries in   any Loan Document shall mean such written documents, agreements and   arrangements that are in effect on the date hereof, without giving effect to   any amendment, restatement, change, supplement, waiver or other modification   thereto or thereof that is not expressly permitted by Section 5.2(xiii). The   terms “shall” and “will” are used interchangeably in this Agreement and the   other Loan Documents and mean for the Loan Parties and their Subsidiaries to   have an absolute obligation to perform or do (or not perform or not do) a   certain action or event, as the context may require. The payment, prepayment,   redemption or repayment of any principal, interest, fees, amounts and/or   other Obligations under this Agreement or the other Loan Documents shall be   made in cash in Dollars unless expressly stated otherwise herein or therein.   Any reference to “payment in full,” “payment in full in cash,” “paid in   full,” “paid in full in cash,” “repaid in full,” “repaid in full in cash,”   “prepaid in full,” “prepaid in full in cash,” “redeemed in full,” “redeemed   in full in cash” or any other term or word of similar effect used in this   Agreement or any other Loan Document with respect to the Loans or the   Obligations shall mean all Obligations (including any Prepayment Fees and   Make Whole Interest and the Exit Payment) (excluding contingent claims for   indemnification to the extent no claim giving rise thereto has been asserted)   have been repaid in full in cash (or, as applicable, partially paid in cash   and partially satisfied through the issuance of Conversion Shares, Principal   Payment Shares and/or Interest Payment Shares in accordance and compliance   with the terms and provisions of the Notes, this Agreement and the other Loan   Documents, but, for the avoidance of doubt, solely to the extent that, after   giving effect to both the payment in cash and such payment through the   issuance of Conversion Shares, Principal Payment Shares and/or Interest   Payment Shares, the full amount of all such Obligations have been fully and   completely satisfied) and have been fully performed; provided that reference   otherwise to “payment”, “paid”, “repaid”, “prepaid”, “redeem”, “purchase”,   “defease”, “prepayment” or “redemption” or any term or word of similar effect   used in this Agreement or any other Loan Document with respect to the Loans   or the Obligations shall mean in cash and not by conversion into Conversion   Shares. Any action or 22 141540134 

    

 

event that is   prohibited by the terms of the Loan Documents shall mean that such action or   event is not expressly and directly permitted to be taken or consummated   under the Loan Documents. Section 1.3 Business Day Adjustment. Except as   otherwise expressly stated herein or in any other Loan Document (and except   on the Maturity Date or any date of acceleration of any of the Obligations,   which in each such case, such payment or performance shall be due and payable   or performed on or prior to such day regardless of whether such day is a   Business Day), if the day by which any payment or other performance is due to   be made is not a Business Day, that payment or performance shall be made by   the next succeeding Business Day unless that next succeeding Business Day falls   in a different calendar month, in which case that payment or other   performance shall be made by the Business Day immediately preceding the day   by which such payment or other performance is due to be made; provided that   interest will continue to accrue each additional day in connection therewith.   Section 1.4 Loan Records. (a) The Borrower shall record on its books and   records the amount of the Loan, the interest rate applicable, all payments of   principal and interest thereon and the principal balance thereof from time to   time outstanding. (b)The Borrower shall establish and maintain at its address   referred to in Section 6.1, a record of ownership (the “Register”) in which   the Borrower agrees to register by book entry the interests (including any   rights to receive payment hereunder) of each Lender in the Loan, and any   assignment of any such interest, and accounts in the Register in accordance   with its usual practice in which it shall record (1) the names and addresses   of the Lenders (and any change thereto pursuant to this Agreement), (2) the   amount of the Loan and each funding of any participation therein, (3) the   amount of any principal, interest, fee or other amount due and payable or   paid, and (4) any other payment received by the Lenders from the Borrower and   its application to the Loan. (c) Notwithstanding anything to the contrary   contained in this Agreement, the Loan (including any Notes evidencing the   Loan) is a registered obligation, the right, title and interest of the   Lenders and their assignees in and to the Loan shall be transferable only   upon notation of such transfer in the Register and no assignment thereof   shall be effective until recorded therein. This Section 1.4 shall be   construed so that the Loan is at all times maintained in “registered form”   within the meaning of Sections 163(f), 871(h)(2) and 881(c)(2) of the Code   and Treasury Regulations Section 5f.103-1(c). (d) The Borrower and the   Lenders shall treat each Person whose name is recorded in the Register as a   Lender for all purposes of this Agreement. Information contained in the   Register with respect to any Lender shall be available for access by the   Borrower or such Lender at any reasonable time and from time to time upon   reasonable prior written notice, or when an Event of Default exists, with   just notice (whether reasonable or not) by any such Lender. Section 1.5   Accounting Terms and Principles. All accounting determinations required to be   made pursuant hereto shall, unless expressly otherwise provided herein, be   made 23 141540134 

    

 

in accordance   with GAAP. No change in the accounting principles used in the preparation of   any financial statement hereafter adopted by the Borrower or its Subsidiaries   shall be given effect for purposes of measuring compliance with any provision   of this Agreement or otherwise determining any relevant ratios and baskets   which govern whether any action is permitted hereunder unless the Borrower   and the Required Lenders agree to modify such provisions to reflect such   changes in GAAP, and unless such provisions are modified, all financial   statements and similar documents provided hereunder shall be provided   together with a reconciliation between the calculations and amounts set forth   therein before and after giving effect to such change in GAAP.   Notwithstanding any other provision contained herein or in any other Loan   Document, all terms of an accounting or financial nature used herein and in   the other Loan Documents shall be construed, and all computations of amounts   and ratios referred to herein and in the other Loan Documents shall be made,   without giving effect to (a) any election under Statement of Financial   Accounting Standards No. 159 (Codification of Accounting Standards 825 10)   (or any other Codification of Accounting Standards or Statement of Financial   Accounting Standard having a similar result or effect) to value any   Indebtedness or other liabilities of any Loan Party or any Subsidiary at   “fair value,” as defined therein, or (b) any treatment of Indebtedness in   respect of convertible debt instruments under Codification of Accounting   Standards 470-20 (or any other Codification of Accounting Standards or   Statement of Financial Accounting Standard having a similar result or effect)   to value any such Indebtedness in a reduced or bifurcated manner as described   therein, and such Indebtedness shall at all times be valued at the full   stated principal amount thereof. A breach of a financial covenant contained   in Section 5.3 shall be deemed to have occurred as of the last day of any   specified measurement period, regardless of when the financial statements   reflecting such breach are delivered to any Secured Party. Section 1.6   Officers.Any document, agreement or instrument delivered under the Loan   Documents that is signed by an officer of a Loan Party shall be conclusively   presumed to have been authorized by all necessary corporate, partnership   and/or other action on the part of such Loan Party and such officer shall be   conclusively presumed to have acted on behalf of such Loan Party in such Person’s   capacity as an officer of such Loan Party and not in any individual capacity.   ARTICLE 2 AGREEMENT FOR THE LOAN Section 2.1 Use of Proceeds. The proceeds of   the Loan will be used for repayment of existing Indebtedness to the Existing   Lenders, for working capital and for general corporate purposes. All proceeds   of all Loans will be used solely for lawful business purposes. Section 2.2   Disbursement. Subject to the conditions set forth in Article 4 and this   Section 2.2, the Lenders shall disburse Loans to the Borrower   (“Disbursement”) on the date of this Agreement upon receipt from the Borrower   of a written request (“Disbursement Request”) for the Disbursement and   stating that no Event of Default has occurred and is continuing. The Lenders   shall fulfill the Disbursement in accordance with their respective   allocations set forth on Schedule 1 hereto. 24 141540134 

    

 

On the Second   Amendment Date, Borrower issued to each Lender party to the Second Amendment,   a Note evidencing the Loan made (or held) by such Lender and giving effect to   the amendment and restatement (but not novation) of the “Senior Secured   Convertible Note” (in the form of Exhibit B attached to the First Amendment   before giving effect to such amendment and restatement) then held by such   Lender (including the Loan evidenced thereby) as provided in the Second   Amendment, in substantially the form of Exhibit A attached to the Second   Amendment (as amended by the Third Amendment and as may be further amended,   restated, supplemented or otherwise modified from time to time). The   Obligations evidenced by the Notes are permitted to be converted by the   Lenders holding such Notes pursuant to the terms thereof. Section 2.3   Payment. (a) follows: Borrowers shall repay the outstanding principal amount   of the Loan as (i)$7,500,000 of the outstanding principal amount of the Loan   shall be repaid on the Effective Date (as defined in the Second Amendment)   (the “Second Amendment Principal Payment”); (ii) $7,500,000 of the   outstanding principal amount of the Loan shall be repaid on May 11, 2019 (the   “2019 Principal Payment); (iii) $15,000,000 of the outstanding principal   amount of the Loan shall be repaid on May 11, 2020 (the “2020 Principal   Payment”); provided, however, that (A) if the Borrower’s Net Product Sales   for the year ending December 31, 2019 exceed $75,000,000 (the “2019   Threshold”), then the 2020 Principal Payment shall be deferred to, and shall   be due and payable on, May 11, 2021 and (B) if the 2020 Principal Payment is   so deferred and the Borrower’s Net Product Sales for the year ending December   31, 2020 exceed $100,000,000 (the “2020 Threshold”), then the 2020 Principal   Payment shall be further deferred to, and shall be due and payable on, the   Maturity Date; (iv) $15,000,000 of the outstanding principal amount of the   Loan shall be repaid on May 11, 2021 (the “2021 Principal Payment”) (in   addition to the 2020 Principal Payment that may then be due and payable); and   (v) all outstanding principal and interest and all other outstanding   Obligations shall be due and payable on May 11, 2022 (the principal portion   of such payment, the “2022 Principal Payment” and such date, the “Maturity   Date”). Subject to Sections 2.3(b) and 2.3(c) the Borrowers (i) may prepay   the Obligations in whole or in part at any time and from time to time and   (ii) shall prepay all of the outstanding Obligations upon the occurrence of a   Change of Control. The amount of any prepayment of the Obligations shall be   allocated among the Lenders in accordance with their respective Pro Rata   Shares. 25 141540134 

    

 

For purposes of   Section 2.3(a)(iii), any deferral of the 2020 Principal Payment pursuant to   clause (A) of such provision shall become effective (if at all) upon the   timely filing of the Borrower’s Annual Report on Form 10-K for the year   ending December 31, 2019 (the “2019 10-K”) and any further deferral of the   2020 Principal Payment pursuant to clause (B) of such provision shall become   effective (if at all) upon the timely filing of the Borrower’s Annual Report   on Form 10-K for the year ending December 31, 2020 (the “2020 10-K”) and, in   each case, delivery to the Lenders of a certificate of the Chief Financial   Officer of the Borrower, certifying that the Net Product Sales for the annual   period covered by the applicable 10-K are as set forth in such 10-K and   exceed the 2019 Threshold or 2020 Threshold, as applicable. In the event that   the Borrower fails to timely file the 2019 10-K with the SEC, the Net Product   Sales for the year ending December 31, 2019 shall be deemed to be less than   the 2019 Threshold, and in the event that the Borrower fails to timely file   the 2020 10-K with the SEC, the Net Product Sales for the year ending   December 31, 2020 shall be deemed to be less than the 2020 Threshold. (b) If   the Obligations are paid, repaid, redeemed or prepaid (in cash, satisfied   through the issuance of Freely Tradeable Shares or other Stock or otherwise)   in whole or in part for any reason (other than through the conversion by the   Lenders of principal into Conversion Shares pursuant to the Notes), whether   voluntary or involuntary and whether (A) before, at the time of or after (1)   the Maturity Date, (2) any acceleration of any of the Obligations, (3) the   filing of any voluntary or involuntary bankruptcy petition, (4) an   insolvency, (5) the occurrence of an Event of Default, (6) a foreclosure or   (7) a sale or disposition, (B) in connection with a Change of Control or (C)   by any other method, manner, action, event, circumstance, situation,   procedure or process, such payment, repayment, redemption or prepayment shall   be accompanied at the same time (without notice or further action by any   Person) by a cash payment by the Loan Party Obligors to the Lenders based on   the Lenders’ respective Pro Rata Shares of (i) the amount of all accrued and   unpaid interest on the principal amount of the Loans and Notes prepaid   through the date of such payment, repayment, redemption or prepayment, plus   (ii) a fee in the amount of 6.25% of the amount of principal paid, repaid,   redeemed or prepaid, if such payment, repayment, redemption or prepayment   occurs on or before December 31, 2021, plus (iii) an amount equal to the   amount of all interest which, absent such payment, repayment, redemption or   prepayment, would have accrued on the principal amount of the Loans and Notes   paid, repaid, redeemed or prepaid from the date of such payment, repayment,   redemption or prepayment through the No Call Expiration Date, if such   payment, repayment, redemption or prepayment occurs on or prior to the No   Call Expiration Date (the amounts payable pursuant to clauses (i), (ii) and   (iii) of this Section 2.3(b), collectively, the “Prepayment Fees and Make   Whole Interest”). Notwithstanding anything to the contrary contained herein,   if any Loan Party Obligor elects to pay, repay, redeem or prepay principal   (in whole or in part) through the issuance of Freely Tradeable Shares in   accordance with Exhibit 2.3, (A) for purposes of determining whether such   payment, repayment, redemption or prepayment occurred prior to the No Call   Expiration Date or December 31, 2021, as applicable, such payment, repayment,   redemption or prepayment shall be deemed to have occurred on the date the   applicable Share Issuance Notice (as defined in Exhibit 2.3) is delivered;   (B) the amounts payable pursuant to clauses (i), (ii) and (iii) of this   Section 2.3(b) in respect of such payment, repayment, redemption or   prepayment shall be determined on a daily basis, based on the Principal   Credit Amount (as defined in Exhibit 2.3) for each Principal Share 26   141540134 

    

 

Issuance   Closing Date (as defined in Exhibit 2.3) relating to the applicable Issuance   Period (as defined in Exhibit 2.3); and (C) the sum of the Prepayment Fees   and Make Whole Interest in respect of such payments, repayments, redemptions   or prepayments shall be due and payable in cash on the second Trading Day   following the expiration of the applicable Issuance Period. The Loan Party   Obligors shall provide Lenders two (2) Business Days prior written notice of   any voluntary payment, repayment, redemption or prepayment of the Obligations   (a “Prepayment Notice”). In the event any Loan Party Obligor elects to make a   voluntary payment, repayment, redemption or prepayment, the Loan Party   Obligors shall file with the SEC a Current Report on Form 8-K disclosing its delivery   of a Prepayment Notice, no later than 8:35 a.m., New York City time, on the   Trading Day immediately following the date the applicable Prepayment Notice   is sent by any Loan Party Obligor. The Loan Party Obligors and the other   Parties acknowledge and agree that, in light of the impracticality and   extreme difficulty of ascertaining actual damages, the Prepayment Fees and   Make Whole Interest set forth in this Section 2.3(b) are intended to be a   reasonable calculation of the actual damages that would be suffered by the   Secured Parties as a result of any such payment, repayment, redemption or   prepayment. The parties hereto further acknowledge and agree that the   Prepayment Fees and Make Whole Interest set forth in this Section 2.3(b) are   not intended to act as a penalty or to punish the Borrower or any other Loan   Party Obligor for any such payment, repayment, redemption or prepayment.   (c)Notwithstanding anything to the contrary in the Loan Documents (and in   addition to the amounts payable pursuant to Section 2.3(b)), effective as of   the date hereof, there shall be a fully due and owing non-refundable exit   payment in cash in a total amount equal to $750,238.93 (the “Exit Payment”),   which Exit Payment shall be deemed an Obligation and shall be deemed to have   been fully earned as of the date hereof. The Loan Party Obligors’ obligation   to pay the Exit Payment will not be subject to any counterclaim or setoff   for, or be otherwise affected by, any claim or dispute that any Loan Party   Obligor may have. The Exit Payment shall be paid in cash immediately without   notice or further action by the Loan Party Obligors in cash to the Lenders   based on their respective Pro Rata Shares upon the earliest to occur of (i)   the date when the remaining Loans are due, payable, paid, repaid, redeemed,   prepaid or converted (in each case, whether in cash, in Freely Tradeable   Shares, other Stock or otherwise, whether voluntary or involuntary and   whether (A) before, at the time of or after (1) the Maturity Date, (2) any   acceleration of any of the Obligations, (3) the filing of any voluntary or   involuntary bankruptcy petition, (4) an insolvency, (5) the occurrence of an   Event of Default, (6) a foreclosure or (7) a sale or disposition, (B) in the   connection with a Change of Control or (C) by any other method, manner,   action, event, circumstance, situation, procedure or process) in an amount   that causes (or such lesser amount of outstanding Loans that are so due,   payable, paid, repaid, redeemed, prepaid or converted that the Required   Lenders have agreed to cause) the principal amount of remaining Loans   outstanding to be (or a payment, repayment, redemption, prepayment or   conversion is required to be made that would cause such Loans, if such   payment, repayment, redemption, prepayment or conversion would have been made   to be) less than $10,000,000 (or, solely with respect to after May 11, 2021   (and to the extent applicable), such lesser amount after giving effect to the   2021 Principal Payment made in accordance and compliance with (and on the   exact date set forth in) Section 2.3(a)(iv)), including, 27 141540134 

    

 

without   limitation, when the principal amount of the remaining Loans have been paid,   repaid, redeemed, prepaid or converted in full; (ii) the Maturity Date, (iii)   the date of any acceleration of any of the Obligations, (iii) the date of any   filing of any voluntary or involuntary bankruptcy petition, (iv) the date of   any insolvency, the date of any foreclosure or (vi) the date any Change of   Control occurs. The Loan Party Obligors and the other Parties acknowledge and   agree that the Collateral Agent and the Lenders would not have entered into   this Agreement (including the Fourth Amendment) or the other Loan Documents   without the Loan Party Obligors agreeing to pay the Exit Payment in the   aforementioned instances. The Loan Party Obligors and the other Parties   further acknowledge and agree that the Exit Payment set forth in this Section   2.3(c) is not intended to act as a penalty or to punish the Borrower or any   other Loan Party Obligors for any such payment, repayment, redemption,   prepayment or conversion (or the requirement for such payment, repayment,   redemption or conversion to be due, payable or made). (d) Each payment by the   Borrower and the other Loan Party Obligors to the Secured Parties in respect   of the Obligations shall be applied (i) first, ratably to all fees, costs and   expenses (including any attorneys’ fees) owed to any Secured Party under the   Loan Documents, but only to the extent such fees, costs and expenses have   been invoiced and are due and payable, (ii) second, ratably to accrued and   unpaid interest owed to the Lenders and any other Secured Parties, (iii)   third, ratably to the outstanding principal amount of the Loans owed to the   Lenders (including any Prepayment Fees and Make Whole Interest with respect   thereto and any applicable Exit Payment with respect thereto), and, (iv)   fourth, to all other Obligations owing to any Secured Party; provided that   voluntary prepayments of principal shall be applied against, and reduce,   principal payments in the order specified in Section 2.3(e); and, provided,   further, that during the continuance of a Default or an Event of Default,   payments shall be applied as determined by the Required Lenders in their sole   discretion. (e)Any conversions of the Loans (and Notes evidencing such Loans)   by any Lender into Conversion Shares (as defined in the Notes) and any   prepayments of principal by the Borrower or any other Loan Party Obligor   (whether in cash, through the issuance of Freely Tradeable Shares in   accordance with Section 2.3(f) and Exhibit 2.3 or otherwise) shall be applied   against, and reduce, principal repayments required pursuant to Section 2.3(a)   with respect to each applicable Lender’s Loans (and Notes evidencing such   Loans) in the order set forth in Section 2.3(a), in each case, as of the date   of the applicable Conversion Notice (as defined in the Notes), applicable   Principal Share Issuance Closing Date or applicable cash prepayment until the   earlier to occur of (A) the time such principal repayment obligation has been   satisfied in full (whether by repayment or as a result of Conversions (as   defined in the Notes) by the Lenders), and (B) 5:00 p.m. (New York City time)   on the Trading Day immediately preceding the date such principal repayment is   due (i.e. following the earlier of clause (A) and clause (B) such conversion   or prepayment would be applied against the next principal repayment   requirement pursuant to Section 2.3(a)). (f) The Borrower may elect in lieu   of paying in cash the principal payment otherwise due and payable hereunder   on an applicable payment date set forth in Section 28 141540134 

    

 

2.3(a), to   satisfy such principal payments in Freely Tradeable Shares pursuant to the   terms of Exhibit 2.3. The Borrower’s right to make such election shall not   apply to the payment of the amounts described in Section 2.3(b) or Section   2.3(c), which shall only be payable in cash. Section 2.4Payments. All   payments by the Borrower or any other Loan Party Obligor hereunder and under   any of the Loan Documents shall be made without setoff or counterclaim.   Payments of any amounts due or payable to the Lenders, the other Secured   Parties and other Persons under this Agreement shall be made in Dollars in   immediately available funds prior to 1:00 p.m. New York City time on such   date that any such payment is due or payable, at such bank or places as the   Lenders shall from time to time designate in writing at least 5 Business Days   prior to the date such payment is due. The Borrower and the other Loan Party   Obligors shall pay all and any costs (administrative or otherwise) imposed by   banks, clearing houses, or any other financial institution, in connection   with making any payments under any of the Loan Documents. Section 2.5 Taxes.   (a) Any and all payments hereunder or under any other Loan Document shall be   made, in accordance with this Section 2.5, free and clear of and without   deduction for any and all present or future Taxes except as required by   Applicable Law. If Borrower or any other Loan Party Obligor shall be required   by Applicable Law to deduct any Taxes from or in respect of any sum payable   hereunder or under any other Loan Document, (i) Borrower or such other Loan   Party Obligor shall make such deductions, (ii) Borrower or such other Loan   Party Obligor shall pay the full amount deducted to the relevant Governmental   Authority in accordance with Applicable Law, and (iii) to the extent that the   deduction is made on account of Indemnified Taxes, the sum payable shall be   increased by as much as shall be necessary so that after making all required   deductions(including deductions for Taxes applicable to additional sums   payable under this Section 2.5), each Lender shall receive an amount equal to   the sum it would have received had no such deductions been made (any and all   such additional amounts payable shall hereinafter be referred to as the   “Additional Amounts”). Within thirty (30) days after the date of any payment   of such Taxes, each Loan Party Obligor shall furnish to the applicable Lender   the original or a certified copy of a receipt evidencing payment thereof or   other evidence of such payment reasonably satisfactory to such Lender. (b)   Each Loan Party Obligor agrees to pay and authorizes each Lender to pay in   its name (but without duplication), all Other Taxes. If any Loan Party   Obligor directly pays such Other Taxes within 30 days after the date of any   payment of Other Taxes, such Loan Party Obligor shall furnish to the   applicable Lender the original or a certified copy of a receipt evidencing   payment thereof or other evidence of such payment reasonably satisfactory to   such Lender. (c) applicable receipt of Without duplication with respect to   any Additional Amounts, the Loan Party Obligor shall reimburse and indemnify,   within 10 days after demand therefor, each Lender for all Indemnified Taxes   (including all Indemnified Taxes imposed on amounts payable under this   Section 2.5(c)) paid by such 29 141540134 

    

 

Lender, whether   or not such Indemnified Taxes were correctly or legally asserted. A   certificate of the applicable Lender(s) setting forth the amounts to be paid   thereunder and delivered to Borrower or the applicable Loan Party Obligor   shall be conclusive, absent manifest error. (d) Each Lender that is a “United   States person” (as such term is defined in Section 7701(a)(30) of the Code)   for United States federal income tax purposes shall, on or before the date on   which the Lender becomes a party to this Agreement, provide to Borrower a   properly completed and executed IRS Form W-9 certifying that such Lender is   not subject to backup withholding tax. Each Lender that is not a United   States person for United States federal income tax purposes (a “Foreign   Lender”) and is entitled to an exemption from or reduction of United States   withholding tax with respect to payments under this Agreement shall, on or   before the date on which the Lender becomes a party to this Agreement,   provide Borrower with a properly completed and executed IRS Form W-8ECI,   W-8BEN, W-BENE, W-8IMY or other applicable forms (together with any required   supporting documentation), or any other applicable certificate or document   reasonably requested by the Borrower, and, if such Foreign Lender is relying   on the portfolio interest exception of Section 871(h) or Section 881(c) of   the Code (or any successor provision thereto), shall also provide the   Borrower with a certificate (a “Portfolio Interest Certificate”) representing   that such Foreign Lender is not a “bank” for purposes of Section 881(c) of   the Code (or any successor provision thereto), is not a 10% holder of the   Borrower described in Section 871(h)(3)(B) of the Code (or any successor   provision thereto), and is not a controlled foreign corporation receiving   interest from a related person (within the meaning of Sections 881(c)(3)(C)   and 864(d)(4) of the Code, or any successor provisions thereto). Each Lender   shall provide new forms (or successor forms) as reasonably requested by   Borrower from time to time and shall notify Borrower in writing within a   reasonable time after becoming aware of any event requiring a change in the   most recent forms previously delivered by such Lender to Borrower. If the   Foreign Lender is a partnership and one or more direct or indirect partners   of such Foreign Lender are claiming the portfolio interest exemption, such   Foreign Lender may provide a Portfolio Interest Certificate on behalf of such   direct or indirect partner. (e) If a payment to a Lender under this Agreement   would be subject to United States withholding tax imposed by FATCA if such   Lender were to fail to comply with the applicable reporting requirements of   FATCA, such Lender shall deliver to Borrower, at the times prescribed by law   or as reasonably requested by Borrower, such documentation as is required in   order for Borrower to comply with its obligations under FATCA, to determine   that such Lender has or has not complied with its obligations under FATCA, or   to determine the amount to deduct and withhold from such payment. (f)If a   Lender determines in its sole discretion, exercised in good faith, that it   has received a refund from a Governmental Authority relating to Taxes in   respect of which the Borrower paid Additional Amounts or made a payment   pursuant to Sections 2.5(b) or 2.5(c) then, provided no Event of Default has   occurred and is continuing, such Lender shall promptly pay such refund   (limited to the amount paid by the Borrower under Section 2.5 with respect to   the Taxes refunded) to the Borrower, net of all out-of-pocket 30 141540134 

    

 

expense   (including Taxes) of such Lender incurred in obtaining such refund or making   such payment; provided that the Borrower, upon the request of such Lender,   agrees to repay the amount paid over to the Borrower (plus any penalties,   interest or other charges imposed by the relevant Governmental Authority) to   such Lender if such Lender is required to repay such refund to such   Governmental Authority. Notwithstanding anything to the contrary in this   Section 2.5(f), in no event shall a Lender be required to pay any amount to   the Borrower pursuant to this Section 2.5(f), the payment of which would   place the Lender in a less favorable net after-Tax position than the Lender   would have been in if the Tax subject to indemnification and giving rise to   such refund had not been deducted, withheld or otherwise imposed and the   indemnification payments or Additional Amount with respect to such Tax had   never been paid. Nothing in this Section 2.5(f) shall require any Lender to   disclose any information it deems confidential (including, without   limitation, its tax returns) to any Person, including Borrower. Section 2.6   [Reserved]. Section 2.7 Interest. The outstanding principal amount of the   Loans and Notes shall bear interest at the Interest Rate (calculated on the   basis of a 360 day year for the actual number of days elapsed). Interest,   including any interest on principal that is repaid through the conversion of   the Loans (and Notes evidencing such Loans), shall be paid quarterly in   arrears commencing on June 1, 2016 and on the first Business Day of each   September, December, March and June thereafter (each, an “Interest Payment   Date”) and on the Maturity Date. The Borrower may elect in lieu of paying in   cash any accrued and unpaid interest due and payable hereunder on an applicable   Interest Payment Date to satisfy such interest payment obligation in Freely   Tradeable Shares pursuant to the terms of Exhibit 2.3. The Borrower’s right   to make such election shall not apply to the payment of the amount described   in clause (iii) of Section 2.3(b), which shall only be payable in cash.   Section 2.8 Default Interest; Late Payment Fee.Without limiting the remedies   available to the Secured Parties under the Loan Documents or otherwise, to   the maximum extent permitted by Applicable Law, if an Event of Default occurs   and is continuing, at the Required Lender’s election, the amount outstanding   under and in respect of the Loans and Notes (which shall include all   outstanding principal thereunder, together with any interest and other   amounts due and payable with respect to the Notes and not paid when due) and   all other Obligations, shall bear interest at the rate per annum equal to the   Interest Rate plus 5.00%. In addition to the foregoing, the Borrower shall   pay a late fee on any amount or Obligation (other than principal) not paid   when due (including after giving effect to any grace period provided   hereunder) equal to 10% of such overdue amount. Section 2.9 Fee. In   consideration of Lenders’ agreement to extend the Loan to Borrower, Borrower   shall pay to Lenders on the Agreement Date, a yield enhancement payment in   the amount of $1,350,000, which yield enhancement payment will be deducted by   Lenders from the Disbursement. Borrower agrees to reimburse the Secured   Parties for reasonable, documented out-of-pocket expenses for attorneys,   accountants and other professional advisors, and other reasonable documented   out-of-pocket expenses incurred by the Secured Parties (i) in connection with   their due diligence, negotiation and documentation of the transactions   contemplated by the Loan Documents (including their review, negotiation and   documentation of 31 141540134 

    

 

any   post-closing obligations of the Borrower and the other Loan Party Obligor)   and (ii) in connection with all amendments and modifications thereto, whether   or not consummated. At the applicable Lender’s election such reimbursable   amounts may be deducted from the Disbursement. The provisions of this Section   2.9 supersede and replace in its entirety that certain Expense Reimbursement   Agreement, dated as of April 7, 2016, Neos Therapeutics, Inc. and Deerfield   Management Company, L.P. (Series C). ARTICLE 3 REPRESENTATIONS, WARRANTIES   AND CERTAIN AFFIRMATIVE COVENANTS Section 3.1Representations, Warranties and   Certain Affirmative Covenants of the Loan Parties. The Borrower and the other   Loan Parties jointly and severally represent, warrant and convent to the Secured   Parties as follows (it being understood and agreed that (I) each such   representation and warranty (A) made (or deemed to be made) pursuant to any   Loan Document prior to the Fourth Amendment Date, were, are and continue to   be true, correct and complete as of each date such representation or warranty   was made (or deemed to be made), (B) will be made as of the Fourth Amendment   Date and be remade (and deemed to be remade) as of (w) the date of any Loan   or other extension of credit under this Agreement or any other Loan Document,   (x) the date of effectiveness of any amendment, restatement, supplement,   change or other modification to this Agreement (or of any waiver of any   provision of this Agreement or consent to any departure from the terms of   this Agreement), (y) solely with respect to any new Loan Party Obligor that   joins this Agreement or other Loan Document after the Agreement Date, the   date such new Loan Party joins this Agreement, and (z) each other date that   it is agreed by the applicable Parties that the representations and   warranties set forth in this Section 3.1 shall be remade or deemed made   (provided that, to the extent any such representation or warranty expressly   relates only to any earlier or specified date, then such representation or   warranty will be made as of such earlier or specified date) and (C) shall not   be affected by any knowledge of, or any investigation by, any Secured Party   and (II) each such covenant shall continuously apply at all times from the   Agreement Date until payment in full of the Obligations: (a) Existence and   Authority.Each Loan Party is duly organized, validly existing and in good   standing under the laws of its jurisdiction of organization (which   jurisdiction is identified in Section 1(a) of the Fourth Amendment Perfection   Certificate or a Post-Fourth Amendment Perfection Certificate, as applicable)   and is qualified to do business in each jurisdiction in which the operation   of its business requires that it be qualified (which each such jurisdiction   is identified in Section 1(a) of the Fourth Amendment Perfection Certificate   or a Post-Fourth Amendment Perfection Certificate, as applicable) or, if such   Loan Party is not so qualified, such Loan Party may cure any such failure   without losing any of its rights, incurring any liens or material penalties,   or otherwise affecting the Collateral Agent or any other Secured Party’s   rights. Each Loan Party has all requisite power and authority to own and   operate its properties, to carry on its business as now conducted and as   proposed to be conducted, to enter into the Loan Documents to which it is a   party and to carry out the transactions contemplated hereby and thereby. The   execution, delivery and performance by each Loan Party Obligor of this   Agreement and all of the other Loan Documents to which such Loan Party   Obligor is a party have been duly and validly authorized, do not violate such   Loan Party Obligor’s 32 141540134 

    

 

Organizational   Documents or any law or any material agreement, document or instrument or any   court order which is binding upon any Loan Party or its property, do not   constitute grounds for acceleration of any Indebtedness or obligation under   any material agreement, document or instrument which is binding upon any Loan   Party or its property, and do not require the consent of any Person. Each   Loan Party Obligor shall reserve and maintain all of its leases, licenses,   permits (including Permits), franchises qualifications, and rights that are   necessary and desirable in the Ordinary Course of Business. No Loan Party is   required to obtain any government approval, permit (including Permit),   consent, or authorization from, or to file any declaration or statement with,   any Governmental Authority in connection with or as a condition to the   execution, delivery or performance of any of the Loan Documents. This   Agreement and each of the other Loan Documents have been duly executed and   delivered by, and are enforceable against, each of the Loan Party Obligors   who have signed them, in accordance with their respective terms, subject to   applicable bankruptcy, insolvency, reorganization, moratorium or other laws   affecting creditors’ rights generally and subject to general principles of   equity, regardless of whether considered in a proceeding in equity or at law.   Section 1(f) of the Fourth Amendment Perfection Certificate or a Post-Fourth   Amendment Perfection Certificate, as applicable sets forth the ownership of   all of the Borrower’s Subsidiaries. (b) No Defaults. No Default or Event of   Default has occurred and is continuing (or would result after giving effect   to any transactions contemplated by the Loan Documents and the ABL   Documents). (c)Solvency.The Borrower and each of its Subsidiaries (i) are   each individually solvent and each able to pay its debts as they come due,   (ii) have not admitted their inability in writing to pay their debts as they   come due, (iii) have not taken action (and none of the Borrower or any of its   Subsidiaries are contemplating taking action), and no such action has been   taken by (or, to the knowledge of the Borrower or any of its Subsidiaries,   has been or is contemplated to be taken by) a third party, for the Borrower’s   or any Subsidiary’s winding up, dissolution, or liquidation or similar   executory or judicial proceeding or for the appointment of a liquidator,   custodian, receiver, trustee, administrator or other similar officer for the   Borrower, any Subsidiary or any material portion of or all of their assets or   revenues or for the filing of a petition against the Borrower or any of its   Subsidiaries or any of its or their assets under any state, federal or other   bankruptcy or insolvency law, and (iv) each, individually, have sufficient   capital to carry on each of their businesses as now conducted and as proposed   to be conducted. The fair saleable value of all of the assets and properties   of each Loan Party, individually, exceeds the aggregate liabilities and   Indebtedness of each such Loan Party (including contingent liabilities). (d)   No Liens. No Lien exists on the Borrower’s or any Subsidiary’s assets, except   for Permitted Liens. (e) Obligations are Absolute. The obligation of the   Borrower and the other Loan Party Obligors to make any payment under this   Agreement and the other Loan Documents (together with all charges in   connection therewith) is absolute and unconditional. 33 141540134 

    

 

(f) No   Indebtedness.No Indebtedness of the Borrower or any Subsidiary exists other   than Permitted Indebtedness. (g) Good Standing; Power and Authority. The   Borrower is validly existing as a corporation in good standing under the laws   of the state of Delaware. The Borrower and its Subsidiaries have full power   and authority to own their properties, conduct their business and enter into   the Loan Documents and to consummate the transactions contemplated under the   Loan Documents and the ABL Documents, and are duly qualified to do business   as a foreign entity and are in good standing in each jurisdiction where the   failure to be so qualified could reasonably be expected to result in a   Material Adverse Effect. (h) Actions, Suits, Hearings and Proceedings. There   is no pending or, to the knowledge of the Borrower and its Subsidiaries,   threatened in writing, any action, suit, hearings or other proceeding before   any Governmental Authority (a) to which the Borrower or any of its   Subsidiaries is a party or (b) which has as the subject thereof any assets   owned by the Borrower or any of its Subsidiaries, except, in each case, as   would not reasonably be expected to result in a Material Adverse Effect.   Except as set forth on Schedule 3.1(h), there are no current or, to the   knowledge of the Borrower or any of its Subsidiaries, pending, legal,   governmental or regulatory enforcement actions, suits or other proceedings to   which the Borrower or any of its Subsidiaries or any of their assets is   subject, except as would not reasonably be expected to result in a Material   Adverse Effect. (i) Enforceability; No Conflict; No Consents.The Loan   Documents have been duly authorized, executed and delivered by the Borrower   and each Subsidiary a party thereto, and constitute the valid, legal and   binding obligation of the Borrower and its Subsidiaries party thereto,   enforceable in accordance with their terms, except as such enforceability may   be limited by applicable insolvency, moratorium or other similar laws   affecting creditors’ enforcement is sought by proceedings in equity or at   law). bankruptcy, reorganization, rights generally (whether The execution,   delivery and performance of the Loan Documents by the Borrower and its   Subsidiaries and the consummation of the transactions herein and therein   contemplated will not (A) conflict with or result in a breach or violation of   any of the terms or provisions of, or constitute an event of default under,   or result in the creation or imposition of any Lien (other than pursuant to   the Loan Documents) upon any assets of the Borrower or any of its   Subsidiaries pursuant to, any agreement to which the Borrower or any   Subsidiary is a party or by which the Borrower or any of its Subsidiaries are   bound or to which any of the assets of the Borrower or any Subsidiary is   subject, except to the extent that no Material Adverse Effect would   reasonably be expected to result therefrom, (B) result in any violation of or   conflict with the provisions of the Organizational Documents, (C) result in   the violation of any material Applicable Law or (D) result in the violation   of any judgment, order, rule, regulation or decree of any Governmental   Authority. No consent, approval, permit (including Permit), authorization or   order of, or registration or filing with any Governmental Authority or other   party or Person is required for the execution, delivery and performance of   any of the Loan Documents or for the consummation by the Borrower and its   Subsidiaries of the transactions contemplated hereby or thereby, except 34   141540134 

    

 

for (a) such   registrations and filings contemplated by the Security Agreement, (b) as have   been obtained or made prior to the Agreement Date or (c) the failure of which   to obtain or make would not reasonably be expected to result in a Material   Adverse Effect. The Borrower and its Subsidiaries party thereto have the   power and authority to enter into the Loan Documents and to consummate the   transactions contemplated under the Loan Documents. (j) set forth on Names;   Trade Names and Styles. The name of each Loan Party Obligor Section 1(b) of   the Fourth Amendment Perfection Certificate is its true, correct and complete   legal name as of the Fourth Amendment Date, and no Loan Party Obligor has   used any other name at any time in the past five years prior to the Fourth   Amendment Date, or at any time will use any other name, in any tax filing   made in any jurisdiction. Listed in Section 1(b) of the Fourth Amendment   Perfection Certificate are all prior names used by each Loan Party Obligor at   any time in the past five years prior to the Fourth Amendment Date and all of   the present and prior trade names used by any Loan Party Obligor at any time   in the past five years prior to the Fourth Amendment Date. (k) Necessary   Permits and Documents; Compliance with Laws and Orders. The Borrower and each   of its Subsidiaries holds or has applied for, and is operating in good   standing and in compliance in all material respects with, all franchises,   grants, authorizations, licenses, permits (including Permits), easements,   consents, certificates and orders of any Governmental Authority required for   the conduct of its business (collectively, “Necessary Documents”). All   Necessary Documents are valid and in full force and effect. Neither the   Borrower nor any of its Subsidiaries has (i) received written notice of any   revocation or modification of any of the Necessary Documents and (ii) any   reason to believe that any of the Necessary Documents will not be renewed in the   Ordinary Course of Business (or will be voided, revoked or withdrawn). Each   of the Borrower and its Subsidiaries are in compliance in all material   respects with all applicable federal, state, local and foreign laws,   regulations, orders and decrees applicable to the conduct of its business.   (l) Marketable Title; Valid Leases. The Borrower and its Subsidiaries have   good and marketable title to all of their assets free and clear of all Liens   except Permitted Liens. To Borrower’s and its Subsidiaries’ knowledge, except   as could not reasonably be expected to have a Material Adverse Effect, the   property held under lease by the Borrower or any Subsidiary is held under   valid, subsisting and enforceable leases with only such exceptions with   respect to any particular lease as do not interfere in any material respect   with the conduct of the business of the Borrower or any Subsidiary.   (m)Intellectual Property. Other than as disclosed in any Paragraph IV   Certification made in connection with a new drug application, the Borrower   and its Subsidiaries own or, where a license is required, have the right to   use pursuant to a valid and enforceable written license, implied license or   other legally enforceable right, all of the Intellectual Property (as defined   below) that they have publicly described as being owned or licensed by them   (the “Company IP”) or, to the knowledge of the Borrower and its Subsidiaries,   that is necessary for the conduct of their business as currently 35 141540134   

    

 

conducted (the   “IP”). To the knowledge of the Borrower and its Subsidiaries, other than as   disclosed in any Paragraph IV Certification made in connection with a new   drug application, the Company IP that is registered with or issued by a   Governmental Authority is enforceable; there is no outstanding, pending or,   to the knowledge of the Borrower and its Subsidiaries, threatened in writing   action, suit, other proceeding or claim by any third person challenging or   contesting the validity, scope, use, ownership, enforceability, or other   rights of the Borrower or any Subsidiary in or to any Company IP and neither   the Borrower nor any Subsidiary has received any written notice regarding,   any such action, suit, or other proceeding. Each Loan Party owns or has, and   will at all times continue to own or have, the valid right to use all   material patents, trademarks, copyrights, software, computer programs,   equipment designs, network designs, equipment configurations, technology and   other Intellectual Property used, marketed and sold in such Loan Party's   business, and each Loan Party is in compliance, and will continue at all   times to comply, in all material respects with all licenses, user agreements   and other such agreements regarding the use of Intellectual Property. To the   knowledge of the Borrower, other than as disclosed in any Paragraph IV   Certification made in connection with a new drug application, neither the   Borrower nor any Subsidiary has infringed or misappropriated any material   rights of others. There is no pending or, to the knowledge of Borrower or any   of its Subsidiaries, threatened in writing action, suit, other proceeding or   claim by others that the Borrower or any Subsidiary infringes upon, violates   or uses the Intellectual Property rights of others without authorization, and   neither the Borrower nor any Subsidiary has received any written notice   regarding, any such action, suit, other proceeding or claim. Except as set   forth on Schedule 3.1(m), neither the Borrower nor any Subsidiary is a party   to or bound by any material licenses with respect to IP other than licenses   for computer software acquired in the Ordinary Course of Business. Except as   set forth in Section 4 of the Fourth Amendment Perfection Certificate or the   Post-Fourth Amendment Perfection Certificate, as applicable, none of the   Intellectual Property owned by any Loan Party Obligor is the subject of any   licensing or franchise agreement pursuant to which such Loan Party Obligor is   the licensor or franchisor. No Loan Party Obligor owns any Intellectual   Property, except as set forth in Section 4 of the Fourth Amendment Perfection   Certificate or the Post-Fourth Amendment Perfection Certificate, as   applicable. The term “Intellectual Property” as used herein means (i) all   patents, patent applications, patent disclosures and inventions (whether   patentable or unpatentable and whether or not reduced to practice), (ii) all   trademarks, service marks, trade dress, trade names, slogans, logos, and   corporate names and Internet domain names, together with all of the goodwill   associated with each of the foregoing, (iii) copyrights, copyrightable works,   and licenses, (iv) registrations and applications for registration for any of   the foregoing, (v) computer software (including but not limited to source   code and object code), data, databases, and documentation thereof, (vi) trade   secrets and other confidential information, (vii) other intellectual   property, and (viii) copies and tangible embodiments of the foregoing (in   whatever form and medium). (n) Compliance with Organizational Documents and   Material Agreements. Neither the Borrower nor any of its Subsidiaries is (i)   in violation of the Organizational Documents, or (ii) except as could not   reasonably be expected to have a Material Adverse Effect, in breach of or otherwise   in default under any agreement under which it may be bound, or to which any   of its assets is subject. 36 141540134 

    

 

(o) Tax   Matters.All federal and state income and franchise and all other material Tax   returns, reports and statements (collectively, the “Tax Returns”) required to   be filed by any Tax Affiliates or extensions have been timely filed with the   appropriate Governmental Authorities, all such Tax Returns are true, correct   and complete in all material respects, and all Taxes, assessments and other   governmental charges and impositions reflected therein and all other material   Taxes, assessments and other governmental charges otherwise due and payable   have been paid prior to the date on which any liability may be added thereto   for non-payment thereof; except that a Tax Affiliate may defer payment of any   contested taxes; provided, that such Tax Affiliate (a) in good faith contests   its obligation to pay such Taxes by appropriate proceedings promptly and   diligently instituted and conducted, (b) notifies the Secured Parties in   writing of the commencement of, and any material development in, the   proceedings, (c) posts bonds or takes any other steps required to keep the   contested taxes from becoming a Lien upon any of the Collateral and (d)   maintains adequate reserves therefor in conformity with GAAP. As of the   Fourth Amendment Date, no income or franchise Tax Return or other material   Tax Return of the Borrower or any other Tax Affiliate is under audit by any   Governmental Authority, and no Tax Affiliate has received written notice from   any Governmental Authority of any audit or examination or any assertion of   any material claim for Taxes. No Loan Party is otherwise aware of any claims   or adjustments proposed for any prior tax years that could result in   additional taxes becoming due and payable by any Tax Affiliate. No Tax   Affiliate has participated in a “listed transaction” within the meaning of   Treasury Regulation Section 1.6011-4(b) or has been a member of an   affiliated, combined or unitary group other than the group of which a Tax   Affiliate is the common parent. (p) Retaining Rights to Develop, License,   Market and Sell Services. Other than as set forth in Schedule 3.1(p), neither   the Borrower nor any Subsidiary has granted rights to develop, license,   market or sell its services to any other Person, and are not bound by any   agreement that affects the exclusive right of the Borrower or any Subsidiary   to develop, license, market or sell its services. (q) Governmental, Law and   Authorizations Compliance.Other than as set forth in Schedule 3.1(q), each of   the Borrower and its Subsidiaries: (A) is, and will continue at all times to   be, in compliance with all Applicable Laws (including those relating to the   ownership of real or personal property, the conduct and licensing of each   Loan Party's business, the payment and withholding of Taxes, ERISA and other   employee matters, and safety and environmental matters) in all material   respects; (B) has not received any warning letter or other correspondence or   notice from any Governmental Authority alleging or asserting noncompliance   with any Applicable Laws or any licenses, certificates, approvals,   clearances, authorizations, permits and supplements or amendments thereto   required in connection with the business of the Borrower or its Subsidiaries   by any Applicable Laws (together, the “Authorizations”); (C) possesses and   complies in all material respects with the Authorizations, which are valid   and in full force and effect (other than those Authorizations for which   applications have been submitted but which have not yet been issued), in each   case of this clause (C), except as would not reasonably be expected to result   in a Material Adverse Effect; (D) has not received written notice that any   Governmental Authority has taken, is taking or intends to take 37 141540134 

    

 

action to   limit, suspend, modify or revoke any Authorization; (E) has filed, obtained,   maintained or submitted all reports, documents, forms, notices, applications,   records, claims, submissions and supplements or amendments as required by any   Applicable Laws or Authorizations as and when required, except, in each case   of this clause (E), as would not reasonably be expected to result in a   Material Adverse Effect. No Loan Party has received written notice of default   or violation, or is in default or violation, with respect to any judgment,   order, writ, injunction, decree, demand or assessment issued by any court or   any federal, state, local, municipal or other Governmental Authority relating   to any aspect of any Loan Party's business, affairs, properties or assets. No   Loan Party has received written notice of or been charged with, or is, to the   knowledge of any Loan Party, under investigation with respect to, any   violation in any material respect of any provision of any Applicable Law. (r)   Financial Statements and Reports. All financial statements included in the   SEC Reports, or delivered to the Secured Parties by or on behalf of any Loan   Party, have been, and at all times will be, prepared in conformity with GAAP   and fairly present in all material respects the financial condition, results   of operations and cash flows of the Loan Parties covered thereby, at the   times and for the periods therein stated. (s) ERISA; Employee Benefit Plans;   Pension Contribution. (i) To the knowledge of the Borrower and its   Subsidiaries, no “prohibited transaction” as defined under Section 406 of   ERISA or Section 4975 of the Code that is not exempt under ERISA Section 408   or Section 4975 of the Code, under any applicable regulations and published   interpretations thereunder or under any applicable prohibited transaction,   individual or class exemption issued by the Department of Labor, has occurred   with respect to any Employee Benefit Plan, except as for such transaction   that would not reasonably be expected to have a Material Adverse Effect, (ii)   at no time within the last seven (7) years has the Borrower or any ERISA   Affiliate maintained, sponsored, participated in, contributed to or has or   had any liability or obligation in respect of any Employee Benefit Plan   subject to Section 302 of ERISA, Title IV of ERISA, or Section 412 of the   Code or any “multiemployer plan” as defined in Section 3(37) of ERISA, (iii)   no Employee Benefit Plan represents any current or future liability for   retiree health, life insurance, or other retiree welfare benefits except as   may be required by the Consolidated Omnibus Budget Reconciliation Act of   1985, as amended, or similar state law, (iv) each Employee Benefit Plan is   and has been operated in compliance in all material respects with its terms   and all Applicable Laws, including but not limited to ERISA and the Code, (v)   no event has occurred (including a “reportable event” as such term is defined   in Section 4043 of ERISA) and no condition exists that would subject the   Borrower to any tax, fine, lien, penalty or liability imposed by ERISA, the   Code or other Applicable Law, except for any such tax, fine, lien, penalty or   liability that would not reasonably be expected to, individually or in the   aggregate, have a Material Adverse Effect and (vi) the Borrower does not have   any obligations under any collective bargaining agreement. Each Employee   Benefit Plan is in compliance in all material respects with the applicable   provisions of ERISA, the Code and other Applicable Laws. Each Employee   Benefit Plan that is intended to be a qualified plan under Section 401(a) of   the Code has received a favorable determination letter or opinion letter from   the IRS to the effect that the form of such Employee Benefit Plan is   qualified under Section 401(a) of the Code and the trust 38 141540134 

    

 

related thereto   has been determined by the IRS to be exempt from federal income tax under   Section 501(a) of the Code, or an application for such a letter is currently   being processed by the IRS. To the knowledge of any Loan Party, nothing has   occurred that would prevent or cause the loss of such tax-qualified status.   There are no pending or, to the best knowledge of any Loan Party, threatened   claims, actions or lawsuits, or action by any Governmental Authority, with   respect to any Employee Benefit Plan that could reasonably be expected to   result in liabilities individually or in the aggregate in excess of $50,000   of any Loan Party. There has been no prohibited transaction or violation of   the fiduciary responsibility rules with respect to any Employee Benefit Plan   that has resulted or could reasonably be expected to result in liabilities   individually or in the aggregate of any Loan Party in excess of $50,000. No   ERISA Event has occurred, and no Loan Party is aware of any fact, event or   circumstance that could reasonably be expected to constitute or result in an   ERISA Event with respect to any Pension Plan, in each case that could   reasonably be expected to result in liabilities individually or in the   aggregate in excess of $50,000. Each Loan Party and each ERISA Affiliate has   met all applicable requirements under the Pension Funding Rules in respect of   each Pension Plan, and no waiver of the minimum funding standards under the   Pension Funding Rules has been applied for or obtained, in each case except   as could not reasonably be expected to result in liabilities individually or   in the aggregate to the Loan Parties in excess of $50,000. As of the most   recent valuation date for any Pension Plan, the funding target attainment   percentage (as defined in Section 430(d)(2) of the Code) is sixty (60%) or   higher and no Loan Party knows of any facts or circumstances that could   reasonably be expected to cause the funding target attainment percentage for   any such plan to drop below sixty (60%) as of the most recent valuation date.   No Loan Party or any ERISA Affiliate has incurred any liability to the PBGC   other than for the payment of premiums, and there are no premium payments   which have become due that are unpaid, except as could not reasonably be   expected to result in liabilities individually or in the aggregate to the   Loan Parties in excess of $50,000. No Loan Party or any ERISA Affiliate has   engaged in a transaction that could be subject to Section 4069 or Section   4212(c) of ERISA except as could not reasonably be expected to result in   liabilities individually or in the aggregate to the Loan Parties in excess of   $50,000. No Pension Plan has been terminated by the plan administrator   thereof or by the PBGC, and no event or circumstance has occurred or exists   that could reasonably be expected to cause the PBGC to institute proceedings   under Title IV of ERISA to terminate any Pension Plan, except as could not reasonably   be expected to result in liabilities individually or in the aggregate to the   Loan Parties in excess of $50,000. As used in this clause (s), “Employee   Benefit Plan” means any “employee benefit plan” within the meaning of Section   3(3) of ERISA (including a Pension Plan), and all Stock purchase, Stock   option, Stock-based severance, employment, change-in-control, medical,   disability, fringe benefit, bonus, incentive, deferred compensation, employee   loan and all other employee benefit plans, agreements, programs, policies or   other arrangements, whether or not subject to ERISA, under which (A) any   current or former employee, director or independent contractor of the   Borrower or any of its Subsidiaries has any present or future right to   benefits and which are contributed to, sponsored by or maintained by the   Borrower or any of its respective Subsidiaries, (B) the Borrower or any of   its Subsidiaries has had or has any present or future obligation or liability   on behalf of 39 141540134 

    

 

any such   employee, director or independent contractor; “ERISA” means the Employee   Retirement Income Security Act of 1974, as amended; and “ERISA Affiliate”   means any member of the Borrower’s controlled group as defined in Code   Section 414 (b), (c), (m) or (o). (t) Borro wer ’s S ubsi diaries .The   Borrower’s Subsidiaries are set forth in Schedule 3.1(t). (u) Compliance with   Health Care Laws. Other than as set forth in Schedule 3.1(u), each of   Borrower and its Subsidiaries is in compliance in all material respects with   all Health Care Laws applicable to it, its assets, business or operations.   (v) Health Care Permits.Each of Borrower and its Subsidiaries holds all   Health Care Permits necessary for it to own, lease, sublease or operate its   assets or to conduct its business or operations as presently conducted. All   such Health Care Permits are in full force and effect and there is and has   been no default under, violation of, or other noncompliance with the terms   and conditions of any such Health Care Permit, except as would not reasonably   be expected to result in a Material Adverse Effect. No Governmental Authority   has taken, or to the knowledge of Borrower or any of its Subsidiaries intends   to take, action to suspend, revoke, terminate, place on probation, materially   restrict or not renew any material Health Care Permit of Borrower or any of   its Subsidiaries. (w) Title to Collateral; Third Party Locations; Permitted   Liens. Each Loan Party Obligor has, and at all times will continue to have,   good and marketable title to all of the Collateral. The Collateral now is,   and at all times will remain, free and clear of any and all Liens, except for   Permitted Liens. The Collateral Agent (for the benefit of the Secured   Parties) now has, and will at all times continue to have, a first-priority   (subject only to Liens of the type set forth in clause (i) of the definition   of “Permitted Liens”) perfected and enforceable security interest and Lien in   all of the Term Loan Priority Collateral, and a second-priority (or, after   the Payment in Full (as defined in the Intercreditor Agreement) of the ABL   Priority Debt (as defined in the Intercreditor Agreement, a first-priority)   (subject only to Liens of the type set forth in clause (i) of the definition   of “Permitted Liens”) perfected and enforceable security interest and Lien in   all of the ABL Priority Collateral, and each Loan Party Obligor will at all   times defend the Collateral Agent and the Collateral against all claims of   others. Except as otherwise disclosed in writing to the Secured Parties by   the Borrower, none of the Collateral which is Equipment is, or will at any   time, be affixed to any real property in such a manner, or with such intent,   as to become a fixture. Except for leases or subleases as to which the   applicable Loan Party has delivered to the Secured Parties a landlord’s   waiver in form and substance reasonably satisfactory to the Required Lenders   (unless waived in writing by the Required Lenders in their sole discretion),   no Loan Party Obligor is or will be a lessee or sublessee under any real   property lease or sublease. Except for warehouses as to which the applicable   Loan Party has delivered to the Secured Parties a warehouseman's waiver in   form and substance reasonably satisfactory to the Required Lenders (unless   waived in writing by the Required Lenders in their sole discretion), no Loan   Party Obligor is or will at any time be a bailor of any goods at any   warehouse or otherwise. 40 141540134 

    

 

Prior to   causing or permitting any Collateral valued in excess of $50,000 (other than   mobile equipment such as laptop computers in the possession of the applicable   Loan Party’s employees or agents) to at any time be located upon premises in   which any third party (including any landlord, warehouseman, or otherwise)   has an interest, the Borrower shall notify the Secured Parties and the   applicable Loan Party Obligor shall cause each such third party to execute   and deliver to the Secured Parties, in form and substance reasonably   acceptable to the Required Lenders, such waivers, collateral access   agreements, and subordinations as the any Secured Party shall specify, so as   to, among other things, ensure that the Secured Parties’ rights and interests   in the Collateral are, and will at all times continue to be, superior to the   rights and interests of any such third party or Person and that the Secured   Parties have access to such Collateral. Each applicable Loan Party Obligor   will keep at all times in full force and effect, and will comply at all times   with all the terms of, any lease of real property where any of the Collateral   now or in the future may be located. (x) Health Care Proceedings, Audits and   Permits. Other than as set forth on Schedule 3.1(x), there are no pending   (or, to the knowledge of Borrower, threatened in writing) audits, actions,   hearings or proceedings (collectively, “Proceedings”) against or affecting   Borrower or any of its Subsidiaries relating to any actual or alleged   non-compliance with any Health Care Law. There exist no restrictions,   deficiencies, required plans of correction or other such remedial measures   with respect to any material Health Care Permit of Borrower or any of its   Subsidiaries. (y) ABL Debt and ABL Documents. The Borrower has furnished the   Secured Parties with a true, correct and complete copy of each of the ABL   Documents (in each case, including all certificates, schedules, exhibits,   annexes, amendments, restatements, supplements, modifications, waivers,   consents, extensions, forbearances, assignments and all other reports,   notices, agreements, instruments and documents delivered pursuant thereto or   in connection therewith). No statement, representation, warranty or   certification made in any of the ABL Documents by the Borrower or any other   Loan Party or, to the Loan Parties’ knowledge, any other Person, contains any   untrue statement of a material fact or omits to state any material fact   required to be stated therein or necessary in order to make the statements   made therein, in light of the circumstances under which they are made, not misleading   in any material respect as of the time that such statement, representation,   warranty or certification is made (or deemed made). Each of the   representations, warranties and certifications of the Loan Parties set forth   in each of the ABL Documents are true, correct and complete in all material   respects (without giving effect to any double materiality). No portion of the   ABL Debt is, or at any time shall be, (i) secured by any assets of any of the   Loan Parties or any other Person or any Stock issued by any of the Loan   Parties or any other Person (except to the extent expressly permitted by the   Intercreditor Agreement) or (ii) guaranteed by any Person (except to the   extent expressly permitted by the Intercreditor Agreement). The provisions of   the Intercreditor Agreement are enforceable against each of the “ABL Lender   Parties” (as defined in the Intercreditor Agreement) and each other holder of   the ABL Debt, subject to applicable bankruptcy, insolvency, reorganization,   moratorium or other laws affecting creditors’ rights generally and subject to   general principles of equity, regardless of whether considered in a   proceeding in equity or at law. The Borrower and each other 41 141540134 

    

 

Loan Party   acknowledges that the Collateral Agent and the Lenders are entering into the   Fourth Amendment and the other Loan Documents and continuing to allow the   Loans to remain outstanding in reliance upon the Intercreditor Agreement and   this Section 3.1(y). (z) Electronic Chattel Paper.To the extent that any Loan   Party Obligor obtains or maintains any Electronic Chattel Paper, such Loan   Party Obligor shall at all times create, store and assign the record or   records comprising the Electronic Chattel Paper in such a manner that (a) a   single authoritative copy of the record or records exists which is unique,   identifiable and except as otherwise provided below, unalterable, (b) the   authoritative copy identifies the Collateral Agent (for the benefit of the   Secured Parties) as the assignee of the record or records, (c) the   authoritative copy is communicated to and maintained by the Collateral Agent   or its designated custodian (for the benefit of the Secured Parties), (d)   copies or revisions that add or change an identified assignee of the   authoritative copy can only be made with the participation of the Collateral   Agent, (e) each copy of the authoritative copy and any copy of a copy is   readily identifiable as a copy that is not the authoritative copy and (f) any   revision of the authoritative copy is readily identifiable as an authorized   or unauthorized revision. (aa) Capitalization; Investment Property. (i) No   Loan Party, directly or indirectly, owns, or shall at any time own, any   capital stock or other Stock of any other Person except as set forth in   Sections 1(f) and 1(g) of the Fourth Amendment Perfection Certificate, which   Sections list all Investment Property owned by each Loan Party. (ii) None of   the Pledged Equity has been issued or otherwise transferred in violation of   the Securities Act, or other Applicable Laws of any jurisdiction to which   such issuance or transfer may be subject. The Pledged Equity pledged by each   Loan Party Obligor under the Loan Documents constitutes all of the issued and   outstanding Stock of each Issuer owned by such Loan Party Obligor. (iii) All   of the Pledged Equity has been duly and validly issued and is fully paid and   non-assessable, and the holders thereof are not entitled to any preemptive,   first refusal or other similar rights. There are no outstanding options,   warrants or similar agreements, documents, or instruments with respect to any   of the Pledged Equity. (iv) Each Loan Party Obligor has caused each Issuer to   amend or otherwise modify its Organizational Documents, books, records, and   related agreements, documents and instruments, as applicable, to reflect the   rights and interests of the Collateral Agent (for the benefit of the Secured   Parties) under the Security Agreement and the other Loan Documents, and to   the extent required to enable and empower the Collateral Agent and the other   Secured Parties to exercise and enforce its and their rights and remedies   under the Loan Documents in respect of the Pledged Equity and other   Investment Property. 42 141540134 

    

 

(v) Each Loan   Party Obligor will take any and all actions reasonably requested by any   Secured Party, from time to time, to (i) cause the Collateral Agent (for the   benefit of the Secured Parties) to obtain exclusive control of any Investment   Property in a manner reasonably acceptable to the Collateral Agent and the   Required Lenders and (ii) obtain from any Issuers and such other Persons as   the Collateral Agent or the Required Lenders shall specify, for the benefit   of the Collateral Agent and the other Secured Parties, written confirmation   of the Collateral Agent's (for the benefit of the Secured Parties) exclusive   control over such Investment Property and take such other actions as the   Collateral Agent may request to perfect the Collateral Agent's (for the   benefit of the Secured Parties) security interest and Lien in any Investment   Property. For purposes of this Section 3.1(aa), the Collateral Agent (for the   benefit of the Secured Parties) shall have exclusive control of Investment   Property if (A) pursuant to Section 5.5 of the Security Agreement and the other   applicable provisions of the Security Agreement, such Investment Property   consists of certificated securities and the applicable Loan Party Obligor   delivers such certificated securities to the Collateral Agent (with all   appropriate endorsements and transfer forms executed and delivered in blank),   (B) such Investment Property consists of uncertificated securities and either   (x) the applicable Loan Party Obligor delivers such uncertificated securities   to the Collateral Agent or (y) the Issuer thereof agrees, pursuant to   documentation in form and substance reasonably satisfactory to the Collateral   Agent and the Required Lenders, that it will comply with instructions   originated by the Collateral Agent without further consent by the applicable   Loan Party Obligor and (C) such Investment Property consists of security   entitlements and either (x) the Collateral Agent (for the benefit of the   Secured Parties) becomes the entitlement holder thereof or (y) the   appropriate securities intermediary agrees, pursuant to documentation in form   and substance reasonably satisfactory to the Collateral Agent and the   Required Lenders, that it will comply with entitlement orders originated by   the Collateral Agent without further consent by the applicable Loan Party   Obligor. Each Loan Party Obligor that is a limited liability company or a   partnership hereby represents, warrants and covenants that it has not, and at   no time will, elect pursuant to the provisions of Section 8-103 of the UCC to   provide that its equity interests or other Stock are securities governed by   Article 8 of the UCC. (vi) No Loan Party owns, or has any present intention   of acquiring, any "margin security" or any "margin stock"   within the meaning of Regulations T, U or X of the Board of Governors of the   Federal Reserve System (herein called "margin security" and   "margin stock"). None of the proceeds of the Loans or Notes will be   used, directly or indirectly, for the purpose of purchasing or carrying, or   for the purpose of reducing or retiring any Indebtedness which was originally   incurred to purchase or carry, any margin security or margin stock or for any   other purpose which might constitute the transactions contemplated hereby a   "purpose credit" within the meaning of said Regulations T, U or X,   or cause this Agreement to violate any other regulation of the Board of   Governors of the Federal Reserve System or the Exchange Act, or any rules or   regulations promulgated under such statutes. 43 141540134 

    

 

(vii) No Loan   Party Obligor shall vote to enable, or take any other action to cause or to   permit, any Issuer (other than the Borrower) to issue any equity interests or   other Stock of any nature, or to issue any other securities or interests   convertible into or granting the right to purchase or exchange for any equity   interests or other Stock of any nature of any Issuer. (viii) The Borrower   shall not, and shall not permit any of its Subsidiaries to, take, or fail to   take, any action that would in any manner impair the value or the   enforceability of the Collateral Agent's Lien on any of the Investment   Property, or any of the Collateral Agent's or other Secured Party’s rights or   remedies under this Agreement or any other Loan Document with respect to any   of the Investment Property. (ix) In the case of any Loan Party Obligor which   is an Issuer, such Issuer agrees that the terms of Section 6.3 of the   Security Agreement shall apply to such Loan Party Obligor with respect to all   actions that may be required of it pursuant to such Section 6.3 regarding the   Investment Property issued by it. (x)Each Loan Party Obligor has made all   capital contributions heretofore required to be made to the respective Issuer   in respect of any Investment Property constituting limited liability company   interests and no additional capital contributions are required to be made in   respect of the respective limited liability company interests. (bb)   Commercial Tort Claims. No Loan Party Obligor has any Commercial Tort Claim   with a value in excess of Fifty Thousand Dollars ($50,000.00) pending other   than those listed in Section 2 of the Fourth Amendment Perfection Certificate   or the Post-Fourth Amendment Perfection Certificate, as applicable, and each   Loan Party Obligor shall promptly (but in any case, no later than five   Business Days thereafter) notify the Secured Parties in writing upon   incurring or otherwise obtaining a Commercial Tort Claim after the date   hereof against any third party. Such notice shall constitute such Loan Party   Obligor's authorization to amend such Section 2 of the Fourth Amendment   Perfection Certificate or the Post-Fourth Amendment Perfection Certificate,   as applicable, to add such Commercial Tort Claim and shall automatically be   deemed to amend such Section 2 of the Fourth Amendment Perfection Certificate   or the Post-Fourth Amendment Perfection Certificate, as applicable to include   such Commercial Tort Claim. (cc)Jurisdiction of Organization; Location of   Collateral.Section 1(c) and Section 1(d) of the Fourth Amendment Perfection   Certificate or the Post-Fourth Amendment Perfection Certificate, as   applicable set forth (i) each place of business of each Loan Party Obligor   (including its chief executive office), (ii) all locations where all   Inventory, Equipment, and other Collateral owned by each Loan Party Obligor   is kept and (iii) whether each such Collateral location and place of business   (including each Loan Party Obligor's chief executive office) is owned by a   Loan Party or leased (and if leased, specifies the complete name and notice   address of each lessor). No Collateral is located outside the United States   or in the possession of any lessor, bailee, warehouseman or consignee, except   as expressly indicated in Section 1(c) and Section 1(d) of the Fourth 44   141540134 

    

 

Amendment   Perfection Certificate or the Post-Fourth Amendment Perfection Certificate,   as applicable. Each Loan Party Obligor will give the Secured Parties at least   thirty (30) days' prior written notice before changing its jurisdiction of   organization, opening any additional place of business, changing its chief   executive office or the location of its books and records, or moving any of   the Collateral to a location other than one of the locations set forth in   Section 1(c) and Section 1(d) of the Fourth Amendment Perfection Certificate   or the Post-Fourth Amendment Perfection Certificate, as applicable, and will   execute and deliver all Financing Statements, landlord waivers, collateral   access agreements, mortgages, and all other agreements, instruments and documents   which any Secured Party shall require in connection therewith prior to making   such change, all in form and substance reasonably satisfactory to the Secured   Parties. Without the prior written consent of the Collateral Agent and the   Lenders, no Loan Party Obligor will at any time (i) change its jurisdiction   of organization or (ii) allow any Collateral to be located outside of the   continental United States of America. (dd) Section 1(e) of the Fourth   Amendment Perfection Certificate discloses all claims, proceedings,   litigation or investigations pending or (to the best of each Loan Party   Obligor's knowledge) threatened against any Loan Party as of the Fourth   Amendment Date. There is no claim, suit, litigation, proceeding or   investigation pending or (to the best of each Loan Party Obligor's knowledge)   threatened by or against or affecting any Loan Party in any court or before   any Governmental Authority (or any basis therefor known to any Loan Party   Obligor) which could reasonably be expected to result, either separately or   in the aggregate, in liability in excess of $500,000 for the Loan Parties, in   any Material Adverse Effect, or in any material impairment in the ability of   any Loan Party to carry on its business in substantially the same manner as   it is now being conducted. (ee) Material Contracts. Except as expressly   disclosed in Section 1(h) of the Fourth Amendment Perfection Certificate, no   Loan Party is (i) a party to any contract which has had or could reasonably   be expected to have a Material Adverse Effect or (ii) in default in the   performance, observance or fulfillment of any of the obligations, covenants   or conditions contained in (A) any contract to which it is a party or by   which any of its assets or properties is bound, which default, individually   or in the aggregate, could reasonably be expected to have a Material Adverse   Effect or result in liabilities in excess of $500,000 or (B) any Material   Contract. Except for the contracts and other agreements listed in Section   1(h) of the Fourth Amendment Perfection Certificate, no Loan Party is party,   as of the Fourth Amendment Date, to any (1) employment agreements covering   the management of any Loan Party, (2) collective bargaining agreements or   other labor agreements covering any employees of any Loan Party, (3)   agreements for managerial, consulting or similar services to which any Loan   Party is a party or by which it is bound, (4) agreements regarding any Loan   Party, its assets or operations or any investment therein to which any of its   equity holders is a party, (5) patent licenses, trademark licenses, copyright   licenses or other lease or license agreements to which any Loan Party is a   party, either as lessor or lessee, or as licensor or licensee, (6)   distribution, marketing or supply agreements to which any Loan Party is a   party, (7) customer agreements to which any Loan Party is a party (in each   case with respect to any contract of the type described in the preceding   clauses (1), (3), (4), (5), (6) 45 141540134 

    

 

and (7)   requiring payments of more than $500,000 in the aggregate in any Fiscal   Year), (8) partnership agreements to which any Loan Party is a partner,   limited liability company agreements to which any Loan Party is a member or   manager, or joint venture agreements to which any Loan Party is a party, (9)   real estate leases, or (10) any other contract to which any Loan Party is a   party, in each case with respect to this clause (10) the breach,   nonperformance or cancellation of which, could reasonably be expected to have   a Material Adverse Effect (each such contract and agreement, described in the   preceding clauses (1) to (10), a "Material Contract"). (ff) No   Material Adverse Change. Since December 31, 2018, no event has occurred which   has had, or could reasonably be expected to have, a Material Adverse Effect   on any Loan Party. (gg) Full Disclosure. Excluding projections and other   forward-looking information, pro forma financial information and information   of a general economic or industry nature, no report, notice, certificate,   information or other statement delivered or made (including, in electronic   form) by or on behalf of any Loan Party, any Other Obligor or any of their   respective Affiliates to any Secured Party in connection with this Agreement   or any other Loan Document contains or will at any time contain any untrue   statement of a material fact, or omits or will at any time omit to state any   material fact necessary to make any statements contained herein or therein   not misleading in light of the circumstances in which they were made. Except   for matters of a general economic or political nature which do not affect any   Loan Party or any Other Obligor uniquely, there is no fact presently known to   any Loan Party Obligor which has not been disclosed to the Collateral Agent   and the Lenders, which has had or could reasonably be expected to have,   individually or in the aggregate, a Material Adverse Effect. Any projections   and other forward-looking information and pro forma financial information   contained in such materials were prepared in good faith based upon   assumptions that were believed by such Loan Party to be reasonable at the   time prepared and at the time furnished in light of conditions and facts then   known (it being recognized that such projections and other forward-looking   information and pro forma financial information are not to be viewed as facts   and that actual results during the period or periods covered by any such   projections or information may differ from the projected results, and such   differences may be material). (hh) Sensitive Payments. No Loan Party (i) has   made or will at any time make any contributions, payments or gifts to or for   the private use of any governmental official, employee or agent where either   the payment or the purpose of such contribution, payment or gift is illegal   under the applicable laws of the United States or the jurisdiction in which   made or any other applicable jurisdiction, (ii) has established or maintained   or will at any time establish or maintain any unrecorded fund or asset for   any purpose or made any false or artificial entries on its books, (iii) has   made or will at any time make any payments to any Person with the intention   that any part of such payment was to be used for any purpose other than that   described in the documents supporting the payment or (iv) has engaged in or   will at any time engage in any "trading with the enemy" or other   transactions violating any rules or regulations of the Office of Foreign   Assets Control or any similar applicable laws, rules or regulations. 46 141540134   

    

 

(ii) Access to   Collateral, Books and Records. At reasonable times and upon reasonable prior   notice, each Secured Party and its representatives and agents shall have the   right to inspect the Collateral and to examine and copy each Loan Party's   books and records. Each Loan Party Obligor agrees to give the Collateral   Agent access to any or all of such Loan Party Obligor's, and each of its   Subsidiaries', premises to enable each Secured Party to conduct such   inspections and examinations. Such inspections and examinations shall be at   the Loan Party Obligors’ sole expense and the charge therefor shall be $1,200   per person per day (or such higher amount as shall represent such Secured   Party’s then current standard charge), plus out-of-pocket expenses. Each   Secured Party may, at the Loan Party Obligors’ sole expense, use each Loan   Party's personnel, computer and other equipment, programs, printed output and   computer readable media, supplies and premises for the collection, sale or   other disposition of Collateral to the extent such Secured Party, in its sole   discretion, deems appropriate. Each Loan Party Obligor hereby irrevocably   authorizes all accountants and third parties to disclose and deliver to the   Secured Parties, at the Loan Party Obligors’ sole expense, all financial   information, books and records, work papers, management reports and other   information in their possession regarding the Loan Parties. Without limiting   the foregoing, each Loan Party Obligor hereby authorizes the Collateral Agent   and each other Secured Party as an "authorized user" under its   third party logistics arrangements with SPS (or any replacement thereof) and   agrees that the Collateral Agent and such other Secured Parties shall have   all powers and access rights incidental thereto, in each case to take such   actions as may be necessary for the Collateral Agent and such other Secured   Parties to view all activities and reports through any applicable portal   associated with such third party logistics and related services. In   furtherance of the foregoing authorization, each Loan Party Obligor will, and   will cause each Subsidiary to, execute and deliver, or cause to be executed   and delivered, to the Secured Parties such documents, agreements and   instruments, and will take or cause to be taken such further actions for   which any Secured Party may, from time to time, reasonably request to become   an "authorized user" in respect of such portal, all in form and   substance reasonably satisfactory to such Secured Party and at the sole   expense of the Loan Party Obligors. (jj) Interrelated Business.Loan Parties   make up a related organization of various entities constituting a single   economic and business enterprise so that Loan Parties share an identity of   interests such that any benefit received by any one of them benefits the   others. From time to time each of the Loan Parties may render services to or   for the benefit of the other Loan Parties, purchase or sell and supply goods   to or from or for the benefit of the others, make loans, advances and provide   other financial accommodations to or for the benefit of the other Loan   Parties (including inter alia, the payment by such Loan Parties of creditors   of the other Loan Parties and guarantees by such Loan Parties of indebtedness   of the other Loan Parties and provides administrative, marketing, payroll and   management services to or for the benefit of the other Loan Parties). Loan   Parties have the same centralized accounting and legal services, certain   common officers and directors and generally do not provide stand-alone   consolidating financial statements to creditors. (kk) Deposit Accounts and   Other Accounts.(i) All Deposit Accounts, Securities Accounts and Commodity   Accounts and all other depositary, securities, 47 141540134 

    

 

 

commodity and   other accounts maintained by each Loan Party Obligor as of the Fourth   Amendment Date are described in Section 3 of the Fourth Amendment Perfection   Certificate, which description includes for each such account the name of the   Loan Party Obligor maintaining the account, the name of the financial   institution at which the account is maintained, the account number and the   purpose of the account, (ii) the only collection Deposit Accounts, lockbox   accounts and Deposit Accounts of the Loan Parties into which proceeds of   revolving loans under the ABL Documents are directly funded (or that   otherwise would constitute ABL Priority Collateral under the Intercreditor   Agreement) are those Deposit Accounts maintained at First Republic Bank   (routing number 321081669) with account numbers 800-0189-5342 and   800-0344-6432, (iii) other than those Deposit Accounts specifically   referenced in clause (ii) above, all Deposit Accounts and all other   depositary and other accounts (including Securities Accounts) of the Loan Parties   are Term Priority Deposit Accounts (or, with respect to clause (B) below,   Term Priority Collateral) under the Intercreditor Agreement (including (A)   all Deposit Accounts maintained at First Republic Bank (routing number   321081669) with account numbers 800-0026-2197 and 800-0013-0444, and (B) the   Securities Account maintained at US Bank (routing number 091000022) with   account number Neos: CAG4420, and (iv) all Deposit Accounts and all other   depositary and other accounts indicated on Section 3 of any Perfection   Certificate as a Restricted Account or an Excluded Account (as defined in the   Security Agreement) meet at all time the requirements set forth in both the   definition of Restricted Account and the definition of Excluded Account (as   defined in the Security Agreement). (1) All Deposit Accounts, Securities   Accounts and Commodity Accounts and all other depositary, securities,   commodity and other accounts (other than Restricted Accounts) of the Loan   Party Obligors are subject to a Control Agreement in favor of the Collateral   Agent (for the benefit of the Secured Parties) at all times, and (2) the   Collateral Agent (for the benefit of the Secured Parties) has (I) “control”   (as defined in 8-106 and 9-104 of the UCC) of all such accounts, (II) a first   priority security interest and Lien on all of the Term Priority Deposit   Accounts and (III) a second priority (or, after the Payment in Full (as   defined in the Intercreditor Agreement) of the ABL Priority Debt (as defined   in the Intercreditor Agreement), first priority) security interest and Lien   on all of the ABL Priority Deposit Accounts. (ll) Insurance. A true, correct   and complete listing of all insurance covered by Section 5.1(xvi)(A) as of   the Fourth Amendment Date, including issuers, coverages and deductibles, is   set forth in Section 5 of the Fourth Amendment Perfection Certificate. (mm)   Fair Labor Standards Act. All of the Inventory of each Loan Party has at all   times been, and at all times will be, produced only in accordance with the   Fair Labor Standards Act of 1938 and all rules, regulations and orders   promulgated thereunder. (nn) Accounts and Chattel Paper. (i) All Accounts of   any Loan Party Obligor, and all Chattel Paper owned by any Loan Party   Obligor, (A) are genuine and in all respects what they purport to be, and (B)   arise out of a completed, bona fide and unconditional and non-contingent sale   and delivery of goods or rendition of services by a Loan Party Obligor in the   Ordinary Course of Business and in accordance with the terms and conditions   of all purchase orders, contracts or other documents relating thereto, 48   141540134 

    

 

(ii) each   Account Debtor under each such purchase order, contract and other document   had the capacity to contract at the time any purchase order, contract or   other document giving rise to such Accounts and Chattel Paper were executed   and/or delivered, and (iii) the transactions giving rise to such Accounts and   Chattel Paper comply with all Applicable Laws and governmental rules and   regulations. (oo) Issuance of Shares. The Conversion Shares issuable upon any   conversion of the Notes, and any Principal Payment Shares and Interest   Payment Shares issuable pursuant to this Agreement (including Exhibit 2.3)   are duly authorized and when issued upon any such conversion or in accordance   with Exhibit 2.3, as applicable, will be duly and validly issued, fully paid   and non-assessable, free and clear of all Liens imposed by the Borrower, and   will not be issued in violation of, or subject to, any preemptive or similar   rights of any Person. The Borrower has reserved from its duly authorized   capital stock the Conversion Shares issuable pursuant to the Notes (without   regard to the 4.985% Cap or the Conversion Cap). (pp) SEC Reports. The   Borrower has filed all reports, schedules, forms, statements and other   documents required to be filed by it under the Securities Act and the   Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the   two years preceding the date this representation is made (the foregoing materials,   including the exhibits thereto and documents incorporated by reference   therein, being collectively referred to herein as the “SEC Reports”). As of   their respective dates, the SEC Reports complied in all material respects   with the requirements of the Securities Act and the Exchange Act, as   applicable, and none of the SEC Reports, when filed, contained any untrue   statement of a material fact or omitted to state a material fact required to   be stated therein or necessary in order to make the statements therein, in   the light of the circumstances under which they were made, not misleading.   (qq) Exemption from Registration. Neither the Borrower, nor any of its   Affiliates, nor any Person acting on its or their behalf, has offered or   issued any of the Securities by any form of general solicitation or general   advertising (as those terms are used in Regulation D promulgated under the   Securities Act). Assuming the accuracy of the Lenders’ representations and   warranties set forth in Section 3.3, no registration under the Securities Act   is required for the offer and issuance of the Securities by the Borrower to   the Lenders as contemplated hereby. The transactions contemplated hereby,   including the issuance and sale of the Securities, subject to the Exchange   Cap (as defined in the Notes), do not contravene, or require stockholder   approval pursuant to, the rules and regulations of NASDAQ. Neither the   Borrower, nor any of its Affiliates, nor any Person acting on its behalf has,   directly or indirectly, made any offers or sales of any security or solicited   any offers to buy any security, under circumstances that would cause this   offering and issuance of the Securities to be integrated with prior or   contemporaneous offerings by the Borrower (i) for purposes of the Securities Act   and which would require the registration of any such securities under the   Securities Act, or (ii) for purposes of any applicable stockholder approval   provisions of NASDAQ. The Conversion Shares, Principal Payment Shares and   Interest Payment Shares have been approved for listing on the Principal   Market. 49 141540134 

    

 

(rr)Certain   Fees. No brokerage or finder’s fees or commissions are or will be required to   be paid by the Borrower or any of its Affiliates or representatives to any   broker, financial advisor or consultant, finder, placement agent, investment   banker, bank or other Person with respect to the transactions contemplated by   the Loan Documents. The Lenders shall have no obligation with respect to any   fees or with respect to any claims made by or on behalf of other Persons for   fees of a type contemplated in this Section 3.1(rr) that may be due in   connection with the transactions contemplated by the Loan Documents. (ss)   Protective Plans. The Borrower and the Borrower’s board of directors have   taken all necessary action, if any, in order to render inapplicable any   control share acquisition, business combination or other similar   anti-takeover provision under the Borrower’s certificate of incorporation,   bylaws or the laws of the State of Delaware that is or could become   applicable to any of the Lenders as a result of the transactions contemplated   hereby or by the Notes, or any of the other Loan Documents and the Borrower’s   fulfilling its obligations with respect hereto and thereto, including the   Borrower’s issuance of the Securities. The Borrower has not adopted a   stockholders rights plan (or “poison pill”) or similar arrangement relating   to accumulations of beneficial ownership of common stock of the Borrower or a   change in control of the Borrower (such a plan or arrangement, a “Rights   Plan”), and after the Agreement Date (or any permitted transferee’s) exercise   in full of its rights under the Notes or otherwise with respect to any   Conversion Shares, Principal Payment Shares or Interest Payment Shares. (tt)   Perfection Certificate. The information in each Perfection Certificate is   true, correct and complete in all respects. Section 3.2Borrower and other   Loan Party Obligors Acknowledgment. The Borrower and each other Loan Party   Obligor hereby acknowledges that it has made the representations and   warranties referred to in Section 3.1 with the intention of persuading the   Collateral Agent and the Lenders to enter into the Loan Documents and that   the Collateral Agent and the Lenders have entered into the Loan Documents on   the basis of, and in full reliance on, each of such representations and   warranties and such representations and warranties shall survive the   execution of this Agreement until the Obligations are repaid in full. Section   3.3 Representations and Warranties of the Lenders. Each Lender represents and   warrants to the Borrower as of the Agreement Date that: (a) Such Lender is   duly organized and validly existing under the laws of the jurisdiction of its   formation. (b)Each Loan Document to which it is a party has been duly   authorized, executed and delivered by such Lender and constitutes the valid   and legally binding obligation of such Lender, enforceable in accordance with   its terms, except as such enforceability may be limited by (i) applicable   insolvency, bankruptcy, reorganization, moratorium or other similar laws   affecting creditors’ rights generally, and (ii) applicable equitable   principles (whether considered in a proceeding at law or in equity). 50   141540134 

    

 

(c) Such Lender   has full power and authority to make each Disbursement and to enter into and   perform its other obligations under each of the Loan Documents and carry out   the other transactions contemplated thereby. (d) Such Lender understands that   the Securities are being offered, sold, issued and delivered to it in   reliance upon specific provisions of federal and applicable state securities   laws, and that the Borrower is relying upon the truth and accuracy of the   representations, warranties, agreements, acknowledgments and understandings   of the Lenders set forth herein for purposes of qualifying for exemptions   from registration under the Securities Act and applicable state securities   laws. (e) Such Lender has such knowledge, sophistication and experience in business   and financial matters so as to be capable of evaluating the merits and risks   of the investment in the Securities, and has so evaluated the merits and   risks of such investment. (f) Such Lender is an “accredited investor” as that   term is defined in Rule 501(a) of Regulation D. (g) Such Lender understands   that the Securities will be subject to restrictions on transfer, and bear   restrictive legends, as (and only to the extent) set forth in the Notes.   ARTICLE 4 CONDITIONS OF DISBURSEMENT Section 4.1 Conditions to the   Disbursement. The obligation of the Lenders to make the Disbursement shall be   subject to the fulfillment of the following conditions: (a)The Lenders shall   have received executed counterparts of the Loan Documents from the Borrower   and its Subsidiaries, and the other documents and deliveries set forth on the   Closing Checklist attached hereto as Exhibit C; (b) No Event of Default shall   have occurred and be continuing; (c) All of the representations and   warranties set forth in Section 3.1 shall be true and correct in all material   respects (except for representations or warranties which relate to a specific   date, in which case such representations and warranties shall have been true   and correct in all material respects as of such date); and (d) All existing   Indebtedness of Borrower to the Existing Lenders pursuant to the Existing   Loan Documents shall be satisfied with the proceeds of the Loans on the   Agreement Date. 51 141540134 

    

 

ARTICLE 5   PARTICULAR COVENANTS AND EVENTS OF DEFAULT Section 5.1Affirmative   Covenants.Unless the Required Lenders shall otherwise agree: (i)Maintain   Existence and Qualification.The Borrower shall, and shall cause its   Subsidiaries to, maintain its existence and qualify and remain qualified to   do its business as currently conducted, except for any merger or dissolution   of a Subsidiary in accordance with Section 5.2(i) and except where the   failure to so qualify would not reasonably be expected to result in a Material   Adverse Effect. (ii) Compliance with Laws. The Borrower shall, and shall   cause its Subsidiaries to, comply in all material respects with all   Applicable Laws. (iii) Authorizations. TheBorrowershall,andshallcauseits   Subsidiaries to, obtain and keep in full force and effect all Authorizations,   except where the failure to do so would not reasonably be expected to result   in a Material Adverse Effect. (iv) Notices of Default, Proceedings, Material   Adverse Effect Occurrences, Etc.; Additional Information Requests.The   Borrower shall, and shall cause its Subsidiaries to, promptly (but in no case   later than the earlier of (y) within three (3) Business Days after the   occurrence thereof and (z) such other date that such information is required   to be delivered pursuant to this Agreement or any other Loan Document) notify   the Secured Parties of the occurrence of (i) any Default or Event of Default   (including any noncompliance with any of the financial covenants specified in   Section 5.3 or the minimum cash balance specified in Section 5.1(vii)), (ii)   any claims, litigation, arbitration, mediation or administrative or   regulatory proceedings that are instituted or threatened in writing against   the Borrower or any of its Subsidiaries in which an adverse decision would reasonably   be expected to result in a Material Adverse Effect, and (iii) any event or   the existence of any circumstance that has resulted in, or could reasonably   be expected to result in, a Material Adverse Effect. Promptly upon such   request, the Borrower shall, and shall cause its Subsidiaries to, provide to   the Secured Parties such data and information (financial and otherwise) as   any Secured Party, from time to time, may reasonably request, including any   information bearing upon or related to the Collateral or each Loan Party's   and each Other Obligor's business or financial condition or results of   operations. (v) Financial Statements, SEC Reports, Etc. The Borrower will,   and will cause its Subsidiaries to, at all times keep, adequate records and   books of account with respect to its business activities and the Collateral   in which proper entries are made in accordance with GAAP reflecting all its   financial transactions. . Promptly (and, in any event, within two (2)   Business Days) after the sending or 52 141540134 

    

 

filing thereof,   as the case may be, the Borrower shall, and shall cause its Subsidiaries to,   provide to the Secured Parties financial statements, proxy statements or   reports which each Loan Party has made available to its stockholders and   copies of any regular, periodic and special reports or registration   statements which any Loan Party files with the SEC or any Governmental   Authority which may be substituted therefor, or any national securities   exchange If the Borrower is required to file reports pursuant to Section 13   or 15(d) of the Exchange Act, the Borrower will, and will cause its   Subsidiaries to, (I) timely file with the SEC (subject to appropriate   extensions made under Rule 12b-25 of the Exchange Act) any annual reports, quarterly   reports and other periodic reports required to be filed by Borrower pursuant   to Section 13 or 15(d) of the Exchange Act and (II) concurrently with the   delivery of such annual and quarterly reports, deliver to the Collateral   Agent and the Lenders a Compliance Certificate, indicating whether (i) the   Loan Parties are in compliance with each of the financial covenants specified   in Section 5.3 and the minimum cash balance specified in Section 5.1(vii),   and setting forth a detailed calculation of such covenants, and (ii) any   Default or Event of Default is then in existence. Any material information   and calculations contained in each Compliance Certificate shall be included   with (by inclusion directly in or in an exhibit to) the related annual or   quarterly report (as applicable) that is filed with the SEC. The Borrower   will, and will cause its Subsidiaries to, provide to the Secured Parties   copies of all documents, reports, financial data and other information not   available on the SEC EDGAR system and not containing any material non-public   information generally prepared in the ordinary course of the Borrower’s   business that any Secured Party may reasonably request. If the Borrower is   not required to file (and is not voluntarily filing) annual reports, quarterly   reports and other periodic reports pursuant to Section 13 or 15(d) of the   Exchange Act, the Borrower will, and will cause its Subsidiaries to, provide   to the Secured Parties the following items: (A) Annual Financial   Statements.Not later than ninety (90) days after the close of each Fiscal   Year, unqualified, audited financial statements of the Loan Parties on a   consolidated basis as of the end of such Fiscal Year, including balance   sheet, income statement, and statement of cash flow for such Fiscal Year, in   each case on a consolidated and consolidating basis, certified by a firm of   independent certified public accountants of recognized standing selected by   the Borrower but acceptable to the Collateral Agent and the Lenders, together   with a copy of any management letter issued in connection therewith.   Concurrently with the delivery of such financial statements, the Borrower   shall deliver to the Collateral Agent and the Lenders a Compliance   Certificate, indicating whether (i) the Loan Parties are in compliance with   each of the financial covenants specified in Section 5.3 (and the minimum   cash balance specified in Section 5.1(vii)), and setting forth a detailed   calculation of such covenants, and (ii) any Default or Event of Default is   then in existence; and 53 141540134 

    

 

(B) Interim   Financial Statements.Not later than thirty (30) days after the end of each   month, commencing with the month ending August 31, 2019, including the last   month of each Fiscal Year, unaudited interim financial statements of the Loan   Parties on a consolidated basis as of the end of such month and of the   portion of such Fiscal Year then elapsed, including balance sheet, income   statement, statement of cash flow, and results of their respective operations   during such month and the then-elapsed portion of the Fiscal Year, together   with comparative figures for the same periods in the immediately preceding   Fiscal Year and the corresponding figures from the budget for the Fiscal Year   covered by such financial statements, in each case on a consolidated and   consolidating basis, certified by the principal financial officer of the   Borrower as prepared in accordance with GAAP and fairly presenting the   consolidated financial position and results of operations of each Loan Party   for such month and period subject only to changes from ordinary course year   end audit adjustments and except that such statements need not contain   footnotes. Concurrently with the delivery of such financial statements, the   Borrower shall deliver to the Collateral Agent and the Lenders a Compliance   Certificate, indicating whether (i) the Loan Parties are in compliance with   each of the financial covenants specified in Section 5.3 (and the minimum   cash balance specified in Section 5.1(vii)), and setting forth a detailed   calculation of such covenants, and (ii) any Default or Event of Default is   then in existence. All the financial statements covered in this Section   5.1(v) (for the avoidance of doubt, whether or not the Borrower is required   to file reports pursuant to Section 13 or 15(d) of the Exchange Act) shall   (1) in the case of annual financial statements, contain an unqualified   opinion of independent registered public accountants, and (2) not include any   explanatory paragraph expressing substantial doubt as to going concern   status. (vi) Expense Reimbursement. The Borrower shall, and shall cause the   other Loan Party Obligors to, reimburse the Secured Parties on the Agreement   Date (and any date of any amendment, restatement, supplement, modification,   extension or waiver of (or consent with respect to any departure from) any   Loan Document, including the Fourth Amendment Date) for all reasonable   documented out-of-pocket costs, fees and expenses, including reasonable   documented out-of-pocket attorneys’ fees and expenses, in connection with the   negotiation, documentation and closing of this Agreement and the other Loan   Documents. (vii) Minimum Cash Balance. The Borrower shall at all times   maintain cash on deposit in accounts subject to a Control Agreement in favor   of the Collateral Agent (for the benefit of the Secured Parties) of not less   than $5,000,000. (viii) ABL Documents, Deliverables and Reports. The Borrower   shall, and shall cause its Subsidiaries to, promptly (and, in any event,   within two 54 141540134 

    

 

Business Days)   (A) notify each Secured Party of the occurrence of any breaches, defaults or   events of default under, and any amendments, restatements, supplements,   changes, consents, waivers, forbearances, joinders or other modifications to   the ABL Documents or the entering into after the Fourth Amendment Date of any   ABL Documents and provide copies of any documentation related to the   foregoing, and (B) deliver to each Secured Party true, correct and complete   copies of any material notices, documents, instruments, agreements or other   material written information provided or received pursuant to, or in   connection with, the ABL Facility (including those delivered to the Borrower,   any of its Subsidiaries that are guarantors of the Obligations or any of   their respective Affiliates by any lender (or any agent of any lender) under   the ABL Facility). (ix) Perfection Certificate Updates. The Borrower shall,   and shall cause its Subsidiaries to, provide to the legal counsel of the   Secured Parties, bi-annually in January and July of each calendar year, a new   or updated Post-Fourth Amendment Perfection Certificate, true, correct and   complete in all material respects as of the date of delivery, accompanied by   a certificate executed by an officer of each Loan Party Obligor and   substantially in the form attached as Exhibit A-V to the Fourth Amendment (it   being understood and agreed that no such update shall serve to cure or waive   any existing Event of Default, including any Event of Default resulting from   any failure to provide any such disclosure to a Secured Party on an earlier   date or any breach of any earlier made representation and/or warranty). (x)   Litigation Cooperation. Should any third-party suit, regulatory action, or   any other judicial, administrative, or similar proceeding be instituted by or   against the Collateral Agent or any Lender with respect to any Collateral or   in any manner relating to any Loan Party, this Agreement, any other Loan   Document or the transactions contemplated hereby or thereby, the Borrower   shall, and shall cause each of its Subsidiaries to, without expense to any   Secured Party, make available each Loan Party, such Loan Party's officers,   employees and agents, and any Loan Party's books and records, without charge,   to the extent that any Secured Party may deem them reasonably necessary in   order to prosecute or defend any such suit or proceeding. (xi) Reservation of   Common Stock. On and after the Second Amendment Date, the Borrower shall at   all times reserve and keep available, free of preemptive rights, a sufficient   number of shares of Common Stock for the purpose of enabling the Borrower to   issue Conversion Shares pursuant to the Notes (without regard to the 4.985%   Cap or the Conversion Cap). (xii) Blue Sky Filings.The Borrower shall take   such action as is reasonably necessary in order to obtain an exemption for,   or to qualify the Securities for, issuance and sale to the Lenders under   applicable securities or “Blue Sky” laws of the states of the United States,   and shall provide evidence of such actions promptly upon request of any   Lender. 55 141540134 

    

 

(xiii)Disclosure;   No MNPI. At or prior to 5:30 a.m. (New York City time) on the first Business   Day following the Fourth Amendment Date, the Borrower shall file one or more   Form 8-Ks with the SEC describing the terms of the transactions contemplated   by the Fourth Amendment and the ABL Documents and including as exhibits to   such Form 8-K the Fourth Amendment (including the schedules and exhibits   thereto, and this Agreement, as amended by the Fourth Amendment) and the ABL   Documents (such Form 8-K(s), collectively, the “Announcing Form 8-K”). Upon   the filing of the Announcing Form 8-K, the Borrower and its Subsidiaries   shall have disclosed all material, non-public information (if any) provided   or made available to any Secured Party (or any Secured Party’s Affiliates or   any of their respective equity holders, officers, directors (or equivalent   person), employees, attorneys, accountants, advisors, consultants, agents   and/or representatives) by the Borrower or any of its Affiliates of their   respective equity holders, officers, directors (or equivalent person),   employees, attorneys, accountants, advisors, consultants, agents or   representatives in connection with the transactions contemplated by this   Amendment, the Loan Documents, the ABL Documents or otherwise on or prior to   the Fourth Amendment Date. At or prior to 5:30 a.m. (New York City time) on   the first Business Day following the entering into of any other material Loan   Document or ABL Document, the Borrower shall file a Form 8-K with the SEC   describing the terms of thereof and any other material transactions occurring   in connection therewith. Unless required by Applicable Law or a rule of the   Principal Market, the Borrower shall not make, and shall cause each of its   Subsidiaries to not make, any public announcement regarding the transactions   contemplated the Fourth Amendment or the ABL Documents prior to the Fourth   Amendment Date. Each Loan Party shall not, and shall cause each of its   Subsidiaries and its and each of their respective officers, directors,   employees. Attorneys, representatives and agents to not, provide any Secured   Party or any of its Affiliates with any material nonpublic information   regarding the Borrower or any of its Subsidiaries from and after the filing   of the Announcing Form 8-K with the SEC without the express prior written   consent of such Secured Party. Each Loan Party hereby acknowledges and agrees   that, notwithstanding the provisions of Section 6.14, no Secured Party (nor   any of such Secured Party’s Affiliates, agents or representatives) shall have   any duty of trust or confidence with respect to, or any obligation not to   trade in any securities while aware of, any material nonpublic information   regarding the Borrower (A) provided by, or on behalf of, the Borrower, any of   its Subsidiaries, any of their respective Affiliates or any of their   respective officers, directors (or equivalent Persons), employees, attorneys,   accountants, consultants, representatives or agents, in violation of any of   the representations, covenants, provisions or agreements set forth in this   Section 5.1(xiii) or (B) otherwise possessed (or continued to be possessed)   by any Secured Party (or any Affiliate, agent or representative thereof) as a   result of any breach or violation of any representation, covenant, provision   or agreement set forth in this Section 5.1(xiii). Subject to the foregoing,   no Loan Party shall (and no Loan Party shall permit any of its Subsidiaries   to) issue any press releases or any other public statements with respect to   the transactions contemplated by any 56 141540134 

    

 

Loan Document   or any ABL Document or disclosing the name of any Secured Party or any of its   Affiliates; provided, however, that the Borrower shall be entitled, without   the prior approval of any Secured Party, to make any press release or other   public disclosure with respect to such transactions (A) in substantial   conformity with the Announcing Form 8-K and contemporaneously therewith and   (B) as is required by Applicable Law and regulations (provided that each Secured   Party shall be consulted by the Borrower in connection with any such press   release or other public disclosure prior to its release and shall be provided   with a copy thereof). Notwithstanding anything to the contrary herein, in the   event that any Loan Party believes that a notice or communication to any   Secured Party or any of its Affiliates contains material, nonpublic   information relating to any Loan Party, any of its Subsidiaries or Affiliates   or any of their respective property or Stock, the Borrower shall so indicate   to the Secured Parties contemporaneously with delivery of such notice or   communication, and such indication shall provide the Secured Parties the   means to refuse to receive such notice or communication; and in the absence   of any such indication, the Secured Parties, the other holders of the   Securities and their respective Affiliates and representatives shall be   allowed to presume that all matters relating to such notice or communication   do not constitute material, nonpublic information relating to any Loan Party,   any of its Subsidiaries or Affiliates or any of their respective property or   Stock. Upon receipt or delivery by any Loan Party or any of its Subsidiaries   of any notice in accordance with the terms of the Loan Documents, unless the   Borrower has in good faith determined that the matters relating to such   notice do not constitute material, nonpublic information relating to any Loan   Party or any of its Subsidiaries or its Affiliates or their respective   property or Stock, the Loan Parties shall within one Business Day after any   such receipt or delivery publicly disclose such material, nonpublic   information. In the event of a breach of any of the foregoing covenants by   any Loan Party, any of the Subsidiaries or its Affiliates, or any of its or   their respective officers, directors (or equivalent Persons), employees,   attorneys, accountants, consultants, representatives or agents, in addition   to any other remedies provided in the Loan Documents or otherwise available   at law or in equity, the Secured Parties shall have the right to make a   public disclosure in the form of a press release, public advertisement or   otherwise, of the applicable material nonpublic information regarding the   Loan Parties, their Subsidiaries, their Affiliates and/or their respective   property or Stock without the prior approval by any Loan Party, its   Subsidiaries or Affiliates, or any of its or their respective officers,   directors (or equivalent Persons), employees, stockholders, attorneys,   accountants, consultants, representatives or agents, and no Secured Party   (nor any of its Affiliates, agents or representatives) shall have any   liability to any Loan Party, any of its Subsidiaries or Affiliates or any of   its or their respective officers, directors (or equivalent persons), employees,   stockholders, attorneys, accountants, consultants, representatives or agents   for any such disclosure. Notwithstanding the foregoing, to the extent the   Borrower reasonably and in good faith determines that it is necessary to   disclose material non-public information to a Secured Party for purposes   relating to any of the Loan Documents (a “Necessary Disclosure”), the 57   141540134 

    

 

Borrower shall   inform counsel to such Secured Party (which shall be Katten Muchin Rosenman   LLP (Attn: Mark D. Wood) or such other counsel as shall have been designated   in writing by such Secured Party) of such determination without disclosing   the applicable material non-public information, and the Borrower and such   counsel on behalf of the applicable Secured Party shall endeavor to agree   upon a process for making such Necessary Disclosure to the applicable Secured   Party or its representatives that is mutually acceptable to such Secured   Party and the Borrower (an “Agreed Disclosure Process”). Thereafter, the   Borrower shall be permitted to make such Necessary Disclosure (only) in   accordance with the Agreed Disclosure Process. (xiv) Reporting. From the   Second Amendment Date until the first Business Day on which (A) no Notes are   convertible into shares of Common Stock of the Borrower, other than by virtue   of the 4.985% Cap thereunder, and (B) the Borrower is not, and will not   become (upon the satisfaction of conditions, passage of time or both),   entitled to satisfy interest or principal through the issuance of Common   Stock (the “Reporting Period”), (A) the Borrower shall timely (without giving   effect to any extensions pursuant to Rule 12b-25 of the Exchange Act) file   all reports required to be filed with the SEC pursuant to the Exchange Act,   and (B) the Borrower shall not take any action that would reasonably be   expected to result in the termination of the registration of its Common Stock   under the Exchange Act or otherwise terminate its status as an issuer   required to file reports under the Exchange Act, even if the securities laws   would otherwise permits any such termination. None of such reports, when   filed, will contained any untrue statement of a material fact or omit to   state a material fact required to be stated therein or necessary in order to   make the statements therein, in the light of the circumstances under which   they were made, not misleading and, without limiting the foregoing, the Net   Product Sales reflected in any such reports shall be accurate. All financial   statements filed by the Borrower with the SEC during the Reporting Period   shall fairly present the consolidated financial position of the Borrower and   its Subsidiaries as of the dates thereof and the consolidated results of   their operations and cash flows for the periods presented and shall have been   prepared in accordance with U.S. generally accepted accounting principles,   consistently applied (subject, in the case of unaudited quarterly financial   statements, to normal year-end adjustments that are not material individually   or in the aggregate and lack of footnote disclosures). The Borrower shall   take all actions necessary to cause its Common Stock to remain listed on the   Principal Market during the Reporting Period. The Borrower shall not, and   shall cause each of its Subsidiaries not to, take any action that would   reasonably be expected to result in the delisting or suspension or   termination of trading of the Common Stock of the Borrower on the Principal   Market. (xv) Further Assurances. The Borrower shall, and shall cause each of   its Subsidiaries to, at the Borrower’s and its Subsidiaries’ own cost and   expense, promptly and duly take, execute, acknowledge and deliver (or cause   each other applicable Person to take, execute, acknowledge and deliver) all   such further acts, 58 141540134 

    

 

documents,   agreements and instruments as any Secured Party may from time to time   reasonably request in order to (a) carry out the intent and purposes of the   Loan Documents and the transactions contemplated hereby and thereby, (b)   establish, create, preserve, protect and perfect a first priority security   interest and Lien (subject only to Liens of the type set forth in clause (i)   of the definition of “Permitted Liens”) in favor of the Collateral Agent (for   the benefit of the Secured Parties) in all the Term Loan Priority Collateral   (wherever located) from time to time owned by the Loan Party Obligors and a   second priority (or, after the Payment in Full (as defined in the   Intercreditor Agreement) of the ABL Priority Debt (as defined in the   Intercreditor Agreement), first priority) security interest and Lien (subject   only to Liens of the type set forth in clause (i) of the definition of   “Permitted Liens”) in favor of the Collateral Agent (for the benefit of the   Secured Parties) in all the ABL Priority Collateral (wherever located) from   time to time owned by the Loan Party Obligors (including appraisals of real   property in compliance with FIRREA), (c) cause the Borrower and each   Subsidiary of the Borrower to guaranty (including Guaranty) all of the   Obligations, all pursuant to documentation that is in form and substance   reasonably satisfactory to the Required Lenders and (d) facilitate the   collection of the Collateral. Without limiting the foregoing, each Loan Party   Obligor shall, at its own cost and expense, promptly and duly take, execute,   acknowledge and deliver (or cause each other applicable Person to take,   execute, acknowledge and deliver) to Collateral Agent all promissory notes,   security agreements, agreements with landlords, mortgagees and processors and   other bailees, subordination and intercreditor agreements and other   agreements, instruments and documents, in each case in form and substance   reasonably acceptable to the Required Lenders, as any Secured Party may   reasonably request from time to time to perfect, protect and maintain the   Collateral Agent's (for the benefit of the Secured Parties) security   interests and Liens in the Collateral, including the required priority   thereof, and to fully carry out the transactions contemplated by the Loan   Documents. (xvi) Insurance. (A) The Borrower will, and will cause each of its   Subsidiaries to, at all times carry property, liability and other insurance,   with insurers reasonably acceptable to the Secured Parties, in such form and   amounts, and with such deductibles and other provisions, as the Secured   Parties shall reasonably require, but in any event, in such amounts and   against such risks as is usually carried by companies engaged in similar   business and owning similar properties in the same general areas in which   such Loan Party operates, and the Borrower will (and the Borrower will cause   each of its Subsidiaries to) provide the Secured Parties with evidence   reasonably satisfactory to the Secured Parties that such insurance is, at all   times, in full force and effect. Each property insurance policy shall name   the Collateral Agent (for the benefit of the Secured Parties) as lender loss   payee and mortgagee, if applicable, and shall contain a lender's loss payable   endorsement, and a mortgage endorsement, if applicable, and each liability   insurance policy shall name the Collateral Agent (for the benefit 59   141540134 

    

 

of the Secured   Parties) as an additional insured, and each business interruption insurance   policy shall be collaterally assigned to the Collateral Agent (for the   benefit of the Secured Parties), all in form and substance reasonably   satisfactory to the Collateral Agent and the Required Lenders. All policies   of insurance shall provide that they may not be cancelled or changed without   at least thirty (30) days' (or, with respect to nonpayment of premiums, ten   (10) days’) prior written notice to the Secured Parties, and shall otherwise   be in form and substance reasonably satisfactory to the Collateral Agent and   the Required Lenders. The Borrower shall advise the Secured Parties promptly   of any policy cancellation, non-renewal, reduction, or material amendment   with respect to any insurance policies maintained by any Loan Party or any   receipt by any Loan Party of any notice from any insurance carrier regarding   any intended or threatened cancellation, non-renewal, reduction or material   amendment of any of such policies, and the Borrower shall promptly deliver to   the Secured Parties copies of all notices and related documentation received   by any Loan Party in connection with the same. (B) The Borrower shall deliver   to the Secured Parties no later than fifteen (15) days prior to the   expiration of any then current insurance policies, insurance certificates   evidencing renewal of all such insurance policies required by this Section   5.1(xvi). The Borrower shall deliver to a Secured Party, upon such Secured   Party’s request, certificates and endorsements evidencing such insurance   coverage in such form as such Secured Party shall specify. (C) IF ANY LOAN   PARTY AT ANY TIME OR TIMES HEREAFTER SHALL FAIL TO OBTAIN OR MAINTAIN ANY OF   THE POLICIES OF INSURANCE REQUIRED ABOVE (AND PROVIDE EVIDENCE THEREOF TO THE   SECURED PARTIES) OR TO PAY ANY PREMIUM RELATING THERETO, THEN ANY SECURED   PARTY, WITHOUT WAIVING OR RELEASING ANY OBLIGATION OR DEFAULT BY ANY LOAN   PARTY HEREUNDER, MAY (BUT SHALL BE UNDER NO OBLIGATION TO) OBTAIN AND   MAINTAIN SUCH POLICIES OF INSURANCE AND PAY SUCH PREMIUMS AND TAKE SUCH OTHER   ACTIONS WITH RESPECT THERETO AS SUCH SECURED PARTY DEEMS ADVISABLE UPON   NOTICE TO THE BORROWER. SUCHINSURANCE,IFOBTAINEDBYA SECURED PARTY, MAY, BUT   NEED NOT, PROTECT ANY LOAN PARTY'S INTERESTS OR PAY ANY CLAIM MADE BY OR   AGAINST ANY LOAN PARTY WITH RESPECT TO THE COLLATERAL. SUCH INSURANCE MAYBE   MORE EXPENSIVE THAN THE COST OF INSURANCE ANY LOAN PARTY MAY BE ABLE TO   OBTAIN ON ITS OWN AND MAY BE CANCELLED ONLY UPON THE APPLICABLE LOAN PARTY   PROVIDING EVIDENCE THAT IT HAS OBTAINED THE 60 141540134 

    

 

INSURANCE AS   REQUIRED ABOVE.ALL SUMS DISBURSED BY ANY SECURED PARTY IN CONNECTION WITH ANY   SUCH ACTIONS, INCLUDING COURT COSTS, EXPENSES, OTHER CHARGESRELATING THERETO   AND REASONABLE COSTS,SHALL THELOAN INTERNALANDEXTERNALATTORNEY   CONSTITUTEOBLIGATIONS UNDER DOCUMENTS, SHALL BE PAYABLE ON DEMAND BY ANY   SECURED PARTY TO ANY LOAN PARTY AND, UNTIL PAID, SHALL BEAR INTEREST AT THE   HIGHEST RATE THEN APPLICABLE TO LOANS AND OTHER OBLIGATIONS UNDER THE LOAN   DOCUMENTS. (xvii) Invoices. At any Secured Party’s request during an Event of   Default, the Borrower will (and will cause each of its Subsidiaries to) cause   all invoices and statements that it sends to Account Debtors or other third   parties to be marked and authenticated, in a manner reasonably satisfactory   to the Secured Parties, to reflect the Collateral Agent's (for the benefit of   the Secured Parties) security interest and Lien therein and payment   instructions (including, but not limited to, in a manner to meet the   requirements of Section 9-404(a)(2) of the UCC). (xviii) Name Changes. The   Borrower shall, and shall cause each of its Subsidiaries, give the Secured   Parties at least thirty (30) days’ prior written notice (and will deliver an   updated Section 1(b) of the applicable Perfection Certificate to reflect the   same) before the Borrower or any other Loan Party Obligor changes its legal   name or does business under any other name. (xix) Intellectual Property. The   Borrower shall, and shall cause each of its Subsidiaries to, (A) promptly   (but in any event within thirty (30) days thereafter) notify the Secured   Parties in writing of any additional Intellectual Property rights acquired or   arising after the Fourth Amendment Date and shall submit to the Secured   Parties a supplement to Section 4 of the applicable Perfection Certificate to   reflect such additional rights; provided, that the Borrower’s or such   Subsidiary’s failure to do so shall not impair the Collateral Agent’s (for   the benefit of the Secured Parties) security interest or Lien therein, and   (B) execute a separate security agreement granting the Collateral Agent (for   the benefit of the Secured Parties) a security interest and Lien in such   Intellectual Property (whether owned on the Fourth Amendment Date or   thereafter), in form and substance reasonably acceptable to the Secured   Parties and suitable for registering such security interest in such   Intellectual Property with the United States Patent and Trademark Office   and/or United States Copyright Office, as applicable; provided, that the   Borrower’s or such Subsidiary’s failure to do so shall not impair the   Collateral Agent’s (for the benefit of the Secured Parties) security interest   or Lien therein. (xx) Deposit Accounts and Other Accounts. The Borrower   shall, and shall cause each other Loan Party Obligor, to have at all times   (A) all Deposit 61 141540134 

    

 

Accounts,   Securities Accounts, Commodity Accounts and all other depositary, securities,   commodity and other accounts (other than Restricted Accounts) of the Loan   Party Obligors be subject to a Control Agreement in favor of the Collateral   Agent (for the benefit of the Secured Parties), and (B) the Collateral Agent   (for the benefit of the Secured Parties) have (I) “control” (as defined in   8-106 and 9-104 of the UCC) of all such accounts, (II) a first priority   security interest and Lien on all of the Term Priority Deposit Accounts and   (III) a second priority (or, after the Payment in Full (as defined in the   Intercreditor Agreement) of the ABL Priority Debt (as defined in the   Intercreditor Agreement), first priority) security interest and Lien on all   of the ABL Priority Deposit Accounts. (xxi) Post-Closing. The Borrower shall,   and shall cause each of its Subsidiaries to, satisfy the following   requirements on or before the date specified below or such later date to be   determined by the Required Lenders and the Collateral Agent, at their sole   option and sole discretion, each of which shall be completed or provided in   form and substance reasonably satisfactory to the Required Lenders and the   Collateral Agent. For the avoidance of doubt, the failure to satisfy any such   requirement on or before the date when due (or within such longer period as   the Required Lenders and the Collateral Agent may agree at their sole option   and their sole discretion) shall be an immediate Event of Default: (A) within   thirty (30) days after the Fourth Amendment Date, first priority loss   payable, additional insured and notice of cancellation, as applicable,   endorsements with respect to the insurance required by Section 5.1(xvi)(A)   and a duly executed first priority collateral assignment of business   interruption insurance as collateral security, in each case, in form and   substance satisfactory to the Required Lenders and the Collateral Agent; (B)   within thirty (30) days after the Fourth Amendment Date, a Control Agreement   with respect to each Securities Accounts, Commodity Accounts, Commodity   Contracts of the Loan Parties of the Deposit Accounts, Securities   Entitlements and (other than any Restricted Accounts) that are not subject to   Control Agreements as of the Fourth Amendment Date, in form and substance   satisfactory to the Required Lenders and the Collateral Agent with the   “control” (as defined in Section 8-106 and Section 9-104 of the UCC) and the   priority required by this Agreement; and (C) Within five (5) days after the   Fourth Amendment Date, a legal opinion from Baker Botts L.L.P. in form and   substance reasonably satisfactory to the Required Lenders and the Collateral   Agent. Section 5.2 Negative Covenants. Unless the Required Lenders shall   otherwise agree: (i) Fundamental Changes. The Borrower shall not, and shall   not permit any of its Subsidiaries to, (a) liquidate, provided that a   Subsidiary may 62 141540134 

    

 

merge into the   Borrower (so long as the Borrower is the surviving entity) or any other   Subsidiary (so long as if any party to such merger is a Loan Party, the   surviving entity is (or becomes) a Loan Party concurrently with such merger),   or dissolve (unless such Subsidiary ceases to own any operating assets or   conduct business and such dissolution could not reasonably be expected to   have a Material Adverse Effect or otherwise result in a Default or Event of   Default hereunder), wind-up its business operations or cease substantially   all or any material portion of its normal business operations, (b) enter into   any merger, consolidation or reorganization, unless the Borrower or a   Subsidiary is the surviving corporation, or (c) divide (or otherwise split or   Divide) itself or themselves into two or more limited liability companies or   other entities or Persons. The Borrower shall not establish any Subsidiary   (including any Subsidiaries, limited liability companies, other entities or   other Persons for which any Loan Party divides (including Divides) or splits itself   into) or acquire any interest in any Person. (ii) JV and Royalty   Arrangements; Management Arrangements; Distributions and Restricted   Payments.The Borrower shall not, and shall not permit any of its   Subsidiaries, to, (a) except for Excluded Transactions, enter into any   partnership, joint venture, syndicate, pool, profit-sharing or royalty   agreement or other combination, or engage in any transaction with any   stockholder of the Borrower, any Affiliate of the Borrower or any equity   holder of such Affiliate, whereby its income or profits are, or might be,   shared with another Person other than a wholly owned Subsidiary (other than   royalty agreements with owners of IP resulting from the challenge of any   Paragraph IV Certification made in connection with a new drug application),   (b) enter into any management contract or similar arrangement whereby a   substantial part of its business is managed by another Person, or (c)   distribute, or permit the distribution of, any of its assets, including its   intangibles, to any stockholder of the Borrower, any Affiliate of the   Borrower or any equity holder of such Affiliate or pay or declare any   Restricted Payments other than (w) as may be required under an Employee   Benefit Plan (as defined in Section 3.1(s)), (x) any Tax distributions by any   Subsidiary to permit Borrower to pay any Tax liabilities with respect to the   income of such Subsidiary, (y) subject to compliance with the other   provisions of this Agreement and the other Loan Documents, the Borrower and   each Loan Party may declare and pay non-cash dividends with respect to its   common stock payable solely in additional shares of its common stock, and (z)   Subsidiaries of the Borrower may declare and pay dividends ratably with   respect to their Stock to any other Loan Party as the holder of such Stock.   (iii) Liens; Disposition of Loan Documents Rights and Obligations. The   Borrower shall not, and shall not permit any of its Subsidiaries to, (a)   create, incur, assume or suffer to exist any Lien or other encumbrance of any   nature whatsoever or authorize under the UCC of any jurisdiction a Financing   Statement naming any such Person as debtor, or execute any security agreement   authorizing any secured party thereunder to file such Financing Statement,   other than in favor of the Collateral Agent to secure the Obligations, on any   of its assets whether now or hereafter owned, except Permitted Liens, or (b)   assign, sell, transfer or 63 141540134 

    

 

otherwise   dispose of, any Loan Document, or its rights and obligations hereunder or   thereunder. (iv) Indebtedness. The Borrower shall not, and shall not permit   any of its Subsidiaries to, create, incur, assume, guarantee or be liable   with respect to any Indebtedness, other than Permitted Indebtedness. (v)   Acquisitions. The Borrower shall not, and shall not permit any of its   Subsidiaries to, acquire any assets (other than assets acquired in the   Ordinary Course of Business), directly or indirectly, in one or more related   transactions, for a consideration, in cash or other property (valued at its   fair market value) greater than $500,000. (vi) Asset Sales and Other   Dispositions. The Borrower shall not, and shall not permit any of its   Subsidiaries to, sell, return, dispose or otherwise transfer any Collateral   or any of their respective other assets (including pursuant to any division   or Division) other than: (A) sales, transfers and dispositions of (1)   Inventory in the Ordinary Course of Business and (2) used, obsolete, worn out   or surplus Equipment or property no longer material to the operation of a   Loan Party's business and in the Ordinary Course of Business; (B) sales,   transfers and dispositions constituting an investment permitted by Section   5.2(ix); (C)dispositions resulting from any casualty or other insured damage   to, or any taking under power of eminent domain or by condemnation or similar   proceeding of, any property or asset of (1) the Borrower or any of its   Subsidiaries or (2) a customer or other Person being held by the Borrower or   any of its Subsidiaries; (D) and (E) other sales, returns, dispositions or   other transfers having an aggregate fair market value not to exceed $250,000   per Fiscal Year. (vii) ABL Debt Actions. The Borrower shall not and shall not   permit any of its Subsidiaries to, (A) make any payment, or take any action,   with respect to the Indebtedness under the ABL Facility that is in violation   or breach of the Intercreditor Agreement; (B) make any amendment,   restatement, supplement, modification, waiver, consent or extension of any   ABL Documents in violation or breach of the Intercreditor Agreement; or (C)   join any Subsidiary or any Affiliate of the Borrower or any of its   Subsidiaries as a borrower, guarantor or obligor, or have such Person pledge   or grant a Lien on any of its property or assets, under the ABL Documents,   unless, in each case, the same Person becomes a guarantor of the Obligations   in the same capacity (and/or pledges and grants Liens on the same property or   assets (and with no Person having priority in between the Liens 64 141540134 

    

 

granted under   the ABL Documents and the Liens granted under the Loan Documents in   connection with this Section 5.2(vii)) under the Loan Documents and such   Person executes and delivers such agreements, instruments and documents   reasonably requested by the Secured Parties to effectuate any of the   foregoing. (viii) Anti-Layering. Notwithstanding anything to the contrary in   this Agreement or in any other Loan Documents, the Borrower shall not, and   shall not permit any of its Subsidiaries, to create, incur or suffer to exist   any Indebtedness which is subordinated or junior (either in respect of Lien   priority or in right of payment or any combination thereof) to the   Indebtedness under the ABL Facility unless such Indebtedness is expressly subordinated   or junior to the Obligations (both in terms of Lien priority and in right of   payment) on terms and conditions reasonably acceptable to the Secured   Parties. (ix)Investments and Loans.The Borrower shall not, and shall not   permit any of its Subsidiaries to, purchase, hold or acquire any capital   stock, evidences of Indebtedness or other Stock (including any option,   warrant or other right to acquire any of the foregoing) of, make any loans or   advances to, Guaranty any obligations of, or make or permit to exist any   investment in, any other Person, or purchase or otherwise acquire (in one   transaction or a series of transactions) any assets of any other Person   constituting a business unit (whether through purchase of assets, merger,   division (including a Division) or otherwise), except for Permitted   Investments. (x) Nature of Business. The Borrower shall not, and shall not   permit any of its Subsidiaries to, engage, directly or indirectly, in a   business other than the business which is being conducted on the Fourth   Amendment Date and businesses reasonably related or incidental thereto, wind   up its business operations or cease substantially all, or any material   portion, of its normal business operations, or suffer any material   disruption, interruption or discontinuance of a material portion of its   normal business operations. (xi) Payments on Certain Indebtedness. The   Borrower shall not, and shall not permit any Subsidiary to, pay, or make any   distributions for the payment of, any principal or other amount on (a) any   ABL Debt in violation of the Intercreditor Agreement or (b) any Indebtedness   that is contractually subordinated to any of the Obligations, in violation of   the applicable subordination or intercreditor agreement related thereto.   (xii) Transactions with Affiliates. The Borrower shall not, and shall not   permit any of its Subsidiaries to, enter into any transaction with an   Affiliate of such Loan Party, other than any transaction entered into in the   Ordinary Course of Business, consistent with past practices and on terms and   conditions at least as favorable to such Loan Party as would reasonably be   obtained by such Loan Party at that time in a comparable arm's-length   transaction with a Person other than an 65 141540134 

    

 

Affiliate and   which transaction has been disclosed in writing to the Secured Parties prior   to the entry thereof. (xiii)Modifications to Governing Documents. The   Borrower shall not, and shall not permit any of its Subsidiaries to, agree,   consent, permit or otherwise undertake to amend or otherwise modify any of   the terms or provisions of any Loan Party Obligor's Organizational Documents,   except for such amendments or other modifications required by Applicable Law   or that are not materially adverse to any Secured Party, and then, only to   the extent such amendments or other modifications are fully disclosed in   writing to the Secured Parties no less than five (5) Business Days prior to   being effectuated; provided, that any change to any jurisdiction of   organization, or entering into any transaction which has the effect of   changing any jurisdiction of organization, shall be made in compliance with   Section 3.1(cc). (xiv) Burdensome Restrictions. The Borrower shall not, and   shall not permit any of its Subsidiaries to: (A) enter into any covenant or   other agreement that restricts or is intended to restrict it from pledging or   granting a security interest in, mortgaging, assigning, encumbering or   otherwise creating a Lien on any of its property, whether, real or personal,   tangible or intangible, existing or hereafter acquired, in favor of the   Collateral Agent to secure the Obligations, other than (a) in connection with   any document or instrument governing Liens permitted pursuant to clause (i)   of the definition of “Permitted Liens”, provided that any such restriction   contained therein relates only to the asset or assets subject to such   Permitted Lien, and (b) the ABL Documents subject to the Intercreditor   Agreement; or (B) create or otherwise cause or suffer to exist or become   effective any encumbrance or restriction (other than any Loan Document or the   ABL Documents subject to the Intercreditor Agreement) of any kind on the   ability of any such Person to pay or make any dividends or distributions to   any Loan Party, to pay any of the Obligations, to make loans or advances or   to transfer any of its property or assets to any Loan Party. (xv) Deposit   Accounts; Cash and Other Asset Deposits. (A) After the Fourth Amendment Date,   the Borrower shall not, and the Borrower shall not permit any of its   Subsidiaries to, open any new Deposit Account or any other depositary or   other account without both (1) the prior written consent of the Required   Lenders and (2) updating Section 3 of the applicable Perfection Certificate   to reflect such Deposit Account or other depositary or other account. 66   141540134 

    

 

(B) The   Borrower shall not, and the Borrower shall not permit any of its Subsidiaries   to, deposit (or otherwise hold, maintain or keep) in any ABL Priority Deposit   Account (as defined in the Intercreditor Agreement) or any other Deposit   Account (other than a Term Priority Deposit Account) (1) any Term Loan   Priority Collateral, (2) any amounts held, maintained or kept in any Term   Priority Deposit Account, (3) any proceeds of any Term Loan Priority   Collateral, (4) any proceeds of the sale or other disposition of any Stock in   the Borrower or any of its Affiliates (including, without limitation and for   the avoidance of doubt cash and other amounts which are held in any Term   Priority Deposit Account as of the Fourth Amendment Date or at any time after   the Fourth Amendment Date), (5) any proceeds from third party sources that   are outside the ordinary course of business of the Borrower, any other Loan   Party Obligor and/or their Subsidiaries, or (6) any proceeds or amounts of   loans, credit extensions or other advances under the Loan Documents. (xvi)   Disputes. The Borrower will not, and will not permit any of its Subsidiaries   to, without the Required Lenders’ prior written consent, compromise or settle   any of its Accounts or Chattel Paper for less than the full amount thereof,   grant any extension of time for payment of any of its Accounts or Chattel   Paper, release (in whole or in part) any Account Debtor or other Person   liable for the payment of any of its Accounts or Chattel Paper or grant any   credits, discounts, allowances, deductions, return authorizations or the like   with respect to any of its Accounts or Chattel Paper; except (unless   otherwise directed by the Collateral Agent or the Required Lenders during the   existence of a Default or an Event of Default) such Loan Party Obligor may   take any of such actions in the Ordinary Course of Business consistent with   past practices, provided that the Borrower promptly reports the same to the   Secured Parties. (xvii) Inventory. (A) Returns. The Borrower will not, and   will not permit any of its Subsidiaries to, accept returns of any Inventory   from any Account Debtor except in the Ordinary Course of Business. The   Borrower will not, and will not permit any of its Subsidiaries to, commingle   any returned Inventory with any other Inventory of the Loan Parties, and   instead the Borrower will, and will cause its Subsidiaries to, keep any   returned Inventory segregated and separate from the other Inventory of the Loan   Parties. (B)Third Party Locations. The Borrower will not, and will not permit   any of its Subsidiaries to, without the Required Lenders prior written   consent, at any time, store any Inventory valued in excess of $250,000 with   any warehouseman or other third party other than as set forth in Section 1(d)   of the applicable Perfection Certificate. 67 141540134 

    

 

(C)Sale on   Return, etc. The Borrower will not, and will not permit any of its   Subsidiaries to, without the Required Lenders’ prior written consent, at any   time, sell or otherwise dispose of any Inventory on a sale-or-return,   guarantied sale, consignment, or other contingent basis. Section 5.3   Financial Covenants. (a) Fixed Charge Coverage Ratio. The Borrower shall not,   and shall not allow any of its Subsidiaries to, permit Excess Availability at   any time to be less than $2,500,000, unless as of the last day of the most   recently completed month, the Fixed Charge Coverage Ratio for the twelve   consecutive calendar month period then ended is greater than 1:10 to 1:00.   (b) Capital Expenditure Limitation. The Borrower shall not, and shall not   permit any of its Subsidiaries to, make any Capital Expenditures if, after   giving effect to such Capital Expenditures, the aggregate cost of all Capital   Expenditures of the Loan Parties would exceed $5,400,000 during any Fiscal   Year. Section 5.4 General Acceleration Provision upon Events of Default. If   one or more of the events specified in this Section 5.4 shall have happened   or occurred and be continuing beyond the applicable cure period (each, an   “Event of Default”), the Required Lenders, by (subject to Section 5.5, which,   for the avoidance of doubt, shall not require any such notice and shall occur   automatically) written notice to the Borrower, may declare the outstanding   principal of, and accrued and unpaid interest on, all of the Loans and Notes   or any part of any of them (together with any other amounts accrued or   payable under the Loan Documents) and other Obligations (including any   Prepayment Fees and Make Whole Interest and the Exit Payment) to be, and the   same shall thereupon become, immediately due and payable, without any further   notice and without any presentment, demand, or protest of any kind, all of   which are hereby expressly waived by the Borrower and each other Loan Party,   and take any further action available at law or in equity, including, without   limitation, the sale of the Loan and Notes and such other Obligations and all   other rights and remedies acquired in connection with the Loan and Notes and   such other Obligations: (a) Payment Defaults. The Borrower, any other Loan   Party Obligor or any Other Obligor shall have failed to make payment of (i)   principal or interest under the Notes or other Loan Documents or (ii) any   other Obligations under the Loan Documents when due and payable. (b) Certain   Covenant Defaults. (i) Any Loan Party or any Other Obligor defaults in the   due observance or performance of any covenant, condition or agreement   contained in Sections 2.1 3.1(w), 3.1(aa), 3.1(bb), 3.1(cc), 3.1(hh),   3.1(ii), 5.1, 5.2, 5.3 or 6.13 of this Agreement or any provision under any   Note, the Security Agreement or the Fourth Amendment; or (ii) any Loan Party   or any Other Obligor defaults in the due observance or performance of any   covenant, condition or agreement contained in any provision of this Agreement   or any other Loan Document and not addressed in Section 5.4(a), (b)(i), or   (c) and, solely with respect to this clause (ii), the continuance of such   default unremedied for a period of ten Business Days; provided, that such ten   Business 68 141540134 

    

 

Day grace   period shall not be available for any default that is not reasonably capable   of being cured within such period or for any intentional default; (c)   Representation, Warranty, Statement, Report and Certification Defaults. Any   representation, warranty, statement, report or certificate made or delivered   to any Secured Party by or on behalf of any Loan Party or any Other Obligor   under the Loan Documents or otherwise shall have been incorrect, false or   misleading in any material respect (except to the extent that such   representation, warranty, statement, report or certificate is qualified by   reference to materiality or Material Adverse Effect, materiality, dollar   thresholds or similar qualifications, in which case such representation,   warranty, statement, report or certificate shall be accurate in all   respects). (d) Bankruptcy, Insolvency, Appointment of Receiver, Etc.   Defaults. (i) The Borrower, any other Loan Party or any Other Obligor shall   generally be unable to pay its debts as such debts become due in the Ordinary   Course of Business, or shall admit in writing its inability to pay its debts   as they come due or shall make a general assignment for the benefit of   creditors; (ii) the Borrower, any other Loan Party or any Other Obligor shall   declare a moratorium on the payment of its debts; (iii) the commencement by   the Borrower, any other Loan Party or any Other Obligor of proceedings to be   adjudicated bankrupt or insolvent, or the consent by by the Borrower, any   other Loan Party or any Other Obligor to the commencement of bankruptcy or   insolvency proceedings against it or such other Person, or the filing by the   Borrower, any other Loan Party or any Other Obligor of a petition or answer   or consent seeking reorganization, intervention or other similar relief under   any Applicable Law, or the consent by the Borrower, any other Loan Party or   any Other Obligor to the filing of any such petition or to the appointment of   an intervenor, receiver, liquidator, assignee, trustee, sequestrator (or   other similar official) of all or substantially all of its or their assets;   (iv) the commencement against the Borrower, any other Loan Party or any Other   Obligor of a proceeding in any court of competent jurisdiction under any   bankruptcy or other applicable law (as now or hereafter in effect) seeking   its liquidation, winding up, dissolution, reorganization, arrangement,   adjustment, or the appointment of an intervenor, receiver, liquidator,   assignee, trustee, sequestrator (or other similar official), and any such   proceeding shall continue undismissed, or any order, judgment or decree   approving or ordering any of the foregoing shall continue unstayed or   otherwise in effect, for a period of forty-five (45) days; (v) the making by   the Borrower, any other Loan Party or any Other Obligor of an assignment for   the benefit of creditors. (e) Money Judgment Defaults.One or more judgments   aggregating in Obligor which excess of $250,000 is obtained against any Loan   Party or any Other remains unstayed for more than thirty (30) days or is   enforced. (f)Governmental Authority Authorization Defaults. Any material   authorization of a Governmental Authority necessary for the execution,   delivery or performance of any Loan Document or for the validity or   enforceability of any of the Obligations under any Loan Document is not given   or is withdrawn or ceases to remain in full force or effect. 69 141540134 

    

 

(g)Invalidity   or Unenforceability of Guaranties and Loan Documents Defaults. (i) Any Loan   Party or Other Obligor shall attempt to revoke, terminate, or otherwise limit   or deny liability under any guaranty of any of the Obligations, or any   security document securing any of the Obligations, (ii) the validity of any   Loan Document shall be contested by the Borrower, any other Loan Party or any   of their Affiliates, or (iii) any Applicable Law shall render any Loan   Document invalid or unenforceable or shall cause the Obligations to cease to   be in full force and effect. (h) Cross-Default to Indebtedness other than ABL   Debt. Any default occurs with respect to any Indebtedness (other than the   Obligations or the ABL Debt) of any Loan Party or any Other Obligor if (i)   such default shall consist of the failure to pay such Indebtedness in excess   of $250,000 when due, whether by acceleration or otherwise or (ii) the effect   of such default is to permit the holder, with or without notice or lapse of   time or both, to accelerate the maturity of any such Indebtedness or to cause   such Indebtedness to become due prior to the stated maturity thereof (without   regard to the existence of any subordination or intercreditor agreements).   (i) Commercial Products Injunctions and Orders Defaults. If any Governmental   Authority issues any injunction or other order that prohibits Borrower or its   Subsidiaries from marketing, selling or manufacturing any of Borrower’s or   its Subsidiaries’ Products currently approved by the FDA or any future   products of Borrower or its Subsidiaries once approved by the FDA   (collectively, the “Commercial Products”) if sales of such Products covered   by such injunction or order accounted for more than 50% of net sales revenue   of Borrower and its Subsidiaries for the most recently ended four fiscal   quarter periods, and such injunction or other prohibition shall continue to   be in force or otherwise effective for more than 60 consecutive calendar   days; provided, however, that with respect to manufacturing, if there is one   or more alternative manufacturers of the Commercial Product manufacturing on   Borrower’s or its Subsidiaries’ behalf that is not enjoined or otherwise   prohibited from manufacturing the Commercial Product and are able to deliver   product on Borrower’s or its Subsidiaries’ behalf in a manner that is   consistent with prior levels without a commercial distribution delay, it   shall not be an Event of Default under this clause (i) if the Borrower or any   of its Subsidiaries are enjoined or otherwise prohibited from manufacturing   the Commercial Product. (j) ABL Debt Cross-Defaults (i) A Default or Event of   Default (as each such term is defined in the Term Loan Documents on the   Fourth Amendment Date and any date thereafter) or any similar term or event   shall occur with respect to the ABL Debt; or (ii) the occurrence of any   condition or event that results in the ABL Debt becoming due prior to its scheduled   maturity as of the Fourth Amendment Date or permits any holder or holders of   the ABL Debt or any trustee or agent on its or their behalf to cause the ABL   Debt to become due, or require the prepayment, repurchase, redemption of   defeasance thereof, prior to its scheduled maturity as of the Fourth   Amendment Date. (k) Intercreditor Agreement Defaults.Any Loan Party or Other   Obligor makes any payment on account of the ABL Debt other than payments   which are not prohibited by the applicable provisions of the Intercreditor   Agreement, this Agreement 70 141540134 

    

 

and the other   Loan Documents pertaining thereto, or if any holder (or agent or   representative of such holder) of any ABL Debt attempts to limit or terminate   any applicable provisions set forth in the Intercreditor Agreement. (l)   Dissolution, Termination, Insolvency, Suspension, Cessation, Etc. of Business   Defaults. The dissolution, termination of existence, insolvency or business   failure or suspension or cessation of business as usual of any Loan Party or   any Other Obligor (or of any general partner of any Loan Party or any Other   Obligor if it is a partnership). (m) Criminal Indictment Defaults. There is   any indictment of any Loan Party, any Loan Party's officers, any Other   Obligor or any Other Obligor's officers under any criminal statute or   commencement of criminal proceedings against any such Person. (n) Perfected   and Priority Liens Defaults. Any Lien purported to be created by any Loan   Document shall cease to be a valid perfected first priority Lien (subject   only to any priority accorded by law to Permitted Liens) on any material   portion of the Term Loan Priority Collateral, or second priority (or, after   the Payment in Full (as defined in the Intercreditor Agreement) of the ABL   Priority Debt (as defined in the Intercreditor Agreement), first priority) Lien   (subject only to any priority accorded by law to Permitted Liens) on any   material portion of the ABL Priority Collateral, or any Loan Party or any   Other Obligor shall assert in writing that any Lien purported to be created   by any Loan Document is not a valid perfected first-priority Lien (subject   only to any priority accorded by law to Permitted Liens) on the assets or   properties comprising Term Loan Priority Collateral purported to be covered   thereby or second-priority (or, after the Payment in Full (as defined in the   Intercreditor Agreement) of the ABL Priority Debt (as defined in the   Intercreditor Agreement), first-priority) Lien (subject only to any priority   accorded by law to Permitted Liens) on the assets or properties comprising   ABL Priority Collateral purported to be covered thereby, as applicable.   (o)Ineffectiveness of Loan Documents Defaults. Any of the Loan Documents   shall cease to be in full force and effect (other than as a result of the   discharge thereof in accordance with the terms thereof or by written   agreement of all parties thereto). (p) Employment of Persons for Proposed   Liquidation of Assets or Store Locations Defaults. Any Loan Party shall   determine to employ an agent or other third party or otherwise engage any   Person or solicit proposals for the engagement of any Person in connection   with the proposed liquidation of all or a material portion of its assets or   store locations. (q)Uninsured Collateral Losses or Sale, Lease or Furnishing   of Collateral Defaults. The (i) uninsured loss, theft, damage or destruction   of any of the Collateral (other than returned products destroyed by the   Borrower in the Ordinary Course of Business), (ii) the insured loss, theft,   damage or destruction of any of the Collateral in an amount in excess of   $250,000 in the aggregate for all such events during any Fiscal Year, 71   141540134 

    

 

or (iii) except   as permitted hereby, the sale, lease or furnishing under a contract of   service of, any of the Collateral. (r) ERISA Defaults. (i) An ERISA Event occurs   with respect to a Pension Plan or Multiemployer Plan which has resulted or   could reasonably be expected to result in liability of any Loan Party or any   Subsidiary under Title IV of ERISA to the Pension Plan, Multiemployer Plan or   the PBGC in an aggregate amount in excess of $250,000, (ii) the existence of   any Lien under Section 430(k) or Section 6321 of the Code or Section 303(k)   or Section 4068 of ERISA on any assets of a Loan Party, or (iii) a Loan Party   or any ERISA Affiliate fails to pay when due, after the expiration of any   applicable grace period, any installment payment with respect to its   withdrawal liability under Section 4201 of ERISA under a Multiemployer Plan   in an aggregate amount in excess of $250,000. (s) Material Product Recall   Defaults. Any product recall or similar event to remove any drugs or other   products sold by any Loan Party from the market occurs, in each case to the   extent such product recall results in a Material Adverse Effect. (t) Change   of Control Defaults.The occurrence of any Change of Control. Section 5.5   Automatic Acceleration on Dissolution orBankruptcy. Notwithstanding any other   provisions of this Agreement, if an Event of Default under Section 5.4(d)   shall occur, the principal of the Loans and Notes (together with interest and   any other amounts owed, accrued or payable under this Agreement and the other   Loan Documents and the other Obligations, including any Prepayment Fees and   Make Whole Interest and the Exit Payment) shall thereupon become immediately   due and payable without any presentment, demand, protest or notice of any   kind, all of which are hereby expressly waived by the Borrower and each other   Loan Party. Section 5.6 Recovery of Amounts Due. If any amount payable   hereunder is not paid as and when due, the Borrower and each other Loan Party   hereby authorizes the Secured Parties to proceed, to the fullest extent   permitted by Applicable Law, without prior notice, by right of set-off,   banker’s lien or counterclaim, against any moneys or other assets of the   Borrower and the other Loan Parties to the full extent of all amounts payable   to the Secured Parties. Section 5.7 Power of Attorney. Without limiting any   of the Secured Parties’ other rights and remedies under this Agreement or any   other Loan Document or at law or in equity or otherwise, each Loan Party   Obligor hereby grants to the Collateral Agent and the other Secured Parties   an irrevocable power of attorney, coupled with an interest, authorizing and   permitting the Collateral Agent and the other Secured Parties (acting through   any of its officers, employees, attorneys or agents), at the Collateral   Agent's or such other Secured Party’s option but without obligation, with or   without notice to such Loan Party Obligor, and at each Loan Party Obligor's   expense, to do any or all of the following, in such Loan Party Obligor's name   or otherwise: (a) at any time, when an Event of Default has occurred or is   continuing, (i) execute and deliver on behalf of such Loan Party Obligor any   agreements, instruments and documents that the Collateral Agent or any other   Secured Party may, in its sole 72 141540134 

    

 

discretion,   deem advisable in order to perfect, protect and maintain the Collateral   Agent's security interests and Liens, and priority thereof, in the Collateral   and to fully consummate all the transactions contemplated by this Agreement   and the other Loan Documents (including any Financing Statements and   Continuation Statements, and amendments or other modifications thereto, as   the Collateral Agent or any other Secured Party shall deem necessary or   appropriate) and to notify Account Debtors of the Loan Party Obligors that   the Collateral Agent (for the benefit of the Secured Parties) has a security   interest and Lien in the Accounts of the Loan Party Obligors and, subject to   the terms of the Intercreditor Agreement, direct such Account Debtors to make   payment thereof directly to the Collateral Agent or such other Secured Party,   (ii) endorse such Loan Party Obligor's name on all checks and other forms of   remittances received by any Secured Party, (iii) pay any sums required on   account of such Loan Party Obligor's taxes or to secure the release of any   Liens therefor, (iv) pay any amounts necessary to obtain, or maintain in   effect, any of the insurance described in Section 5.1(xvi), (v) receive and   otherwise take control in any manner of any cash or non-cash items of payment   or Proceeds of Collateral, (vi) receive, open and dispose of all mail   addressed to such Loan Party Obligor at any post office box or lockbox   maintained by (or for the benefit of) any Secured Party for such Loan Party   Obligor or at any other business premises of any Loan Party or any Secured   Party and (vii) endorse or assign to the Collateral Agent (for the benefit of   the Secured Parties) on such Loan Party Obligor's behalf any portion of   Collateral evidenced by an agreement, Instrument or Document if an   endorsement or assignment of any such items is not made by such Loan Party   Obligor pursuant to the Security Agreement; and (b) at any time, after the   occurrence and during the continuance of an Event of Default, (i) execute and   deliver on behalf of such Loan Party Obligor any agreement, instrument or   document exercising, transferring or assigning any option to purchase, sell   or otherwise dispose of or lease (as lessor or lessee) any real or personal   property which is part of the Collateral or in which any Secured Party has an   interest, (ii) execute and deliver on behalf of such Loan Party Obligor any   invoices relating to any Accounts, any draft against any Account Debtor, any   proof of claim in bankruptcy, any notice of Lien or claim, and any assignment   or satisfaction of mechanic's, materialman's or other Lien, (iii) subject to   the terms of the Intercreditor Agreement, execute and deliver on behalf of   such Loan Party Obligor any notice to any Account Debtor, (iv) pay, contest   or settle any Lien, charge, encumbrance, security interest and adverse claim   in or to any of the Collateral, or any judgment based thereon, or otherwise   take any action to terminate or discharge the same, (v) grant extensions of   time to pay, compromise claims relating to, and settle Accounts, Chattel   Paper and General Intangibles for less than face value and execute all   releases and other documents in connection therewith, (vi) settle and adjust,   and give releases of, any insurance claim that relates to any of the   Collateral and obtain payment therefor, (vii) instruct any third party having   custody or control of any Collateral or books or records belonging to, or   relating to, such Loan Party Obligor to give the Secured Parties the same   rights of access and other rights with respect thereto as such Secured   Parties have under this Agreement or any other Loan Document, (viii) change   the address for delivery of such Loan Party Obligor's mail, (ix) vote any   right or interest with respect to any Investment Property, and (x) subject to   the terms of the Intercreditor 73 141540134 

    

 

Agreement,   instruct any Account Debtor to make all payments due to any Loan Party   Obligor directly to a Secured Party. (c)Any and all sums paid, and any and   all costs, expenses, liabilities, obligations and attorneys' fees (internal   and external counsel) of any Loan Party with respect to the foregoing shall   be added to and become part of the Obligations, shall be payable on demand,   and shall bear interest at a rate equal to the highest interest rate   applicable to any of the Obligations. Each Loan Party Obligor agrees that   each Secured Party’s rights under the foregoing power of attorney and any of   such Secured Party's other rights under this Agreement or any of the other   Loan Documents or in respect of any of the Securities shall not be construed   to indicate that any Secured Party is in control of the business, management   or properties of any Loan Party Obligor or any of its Subsidiaries. Section   5.8 Credit Bidding. The Loan Parties and the Lenders hereby irrevocably   authorize the Collateral Agent, based upon the written instruction of the   Required Lenders, to (a) credit bid and in such manner purchase (either   directly or through one or more acquisition vehicles) all or any portion of   the Collateral at any sale thereof conducted under the provisions of the   Bankruptcy Code, including under Section 363 of the Bankruptcy Code or any   similar laws in any other jurisdictions to which a Loan Party is subject, or   (b) credit bid and in such manner purchase (either directly or through one or   more acquisition vehicles) all or any portion of the Collateral at any other   sale or foreclosure conducted by (or with the consent or at the direction of)   the Collateral Agent (whether by judicial action or otherwise) in accordance   with Applicable Law. In connection with any such credit bid and purchase, the   Obligations owed to the Lenders shall be entitled to be, and shall be, credit   bid on a ratable basis (with Obligations with respect to contingent or   unliquidated claims being estimated for such purpose if the fixing or   liquidation thereof would not unduly delay the ability of Collateral Agent to   credit bid and purchase at such sale or other disposition of the Collateral   and, if such claims cannot be estimated without unduly delaying the ability   of the Collateral Agent to credit bid, then such claims shall be disregarded,   not credit bid, and not entitled to any interest in the asset or assets   purchased by means of such credit bid) and the Lenders whose Obligations are   credit bid shall be entitled to receive interests (ratably based upon the   proportion of their Obligations credit bid in relation to the aggregate   amount of Obligations so credit bid) in the asset or assets so purchased (or   in the Stock of the acquisition vehicle or vehicles that are used to   consummate such purchase). Except as provided above and otherwise expressly   provided for herein or in the other Loan Documents, the Collateral Agent will   not execute nor deliver a release of any Lien on any Collateral. Upon request   by the Collateral Agent or the Borrower at any time, the Lenders will confirm   in writing Collateral Agent’s authority to release any such Liens on   particular types or items of Collateral pursuant to this Section 5.8. ARTICLE   6 MISCELLANEOUS Section 6.1 Notices. Any notices required or permitted to be   given under the terms hereof shall be sent by certified or registered mail   (return receipt requested) or delivered personally or by courier (including a   recognized overnight delivery service) or by facsimile or by 74 141540134 

    

 

electronic mail   and shall be effective five (5) days after being placed in the mail, if   mailed by regular United States mail, or upon receipt, if delivered   personally or by courier (including a recognized overnight delivery service)   or by facsimile, or when received by electronic mail in each case addressed   to a party. The addresses for such communications shall be the following (or   such other addresses provided by written notice to the parties hereto from time   to time): If to the Borrower or any other Loan Party: Neos Therapeutics, Inc.   2940 N. Hwy 360, Suite 400 Grand Prairie, TX 75050 Fax: (972) 408-1143   E-mail: reisenstadt@neostx.com Attention: Richard Eisenstadt With a copy to:   Goodwin Procter LLP 100 Northern Avenue Boston, MA 02210 Fax: (617) 801-8835   Email: adodson@goodwinprocter.com Attention: Anna E. Dodson, Esq. If to the   Collateral Agent or the Lenders: Deerfield Management Company, L.P. 780 Third   Avenue, 37th Floor New York, NY 10017 Fax: 212-599-3075 Email:   dclark@deerfield.com Attn: David J. Clark With a copy to: Katten Muchin   Rosenman LLP 2029 Century Park East, Suite 2600 Los Angeles, CA 90067 Fax:   (310) 788-4471 and (312) 577-8858 Email: kristopher.ring@katten.com and   mark.wood@katten.com Attn: Kristopher Ring and Mark Wood Section 6.2 Waiver   of Notice. Whenever any notice is required to be given to the Lenders or the   Borrower under any of the Loan Documents, a waiver thereof in writing signed   by the Person or Persons entitled to such notice, whether before or after the   time stated therein, shall be deemed equivalent to the giving of such notice.   75 141540134 

    

 

Section   6.3Reimbursement of Legal and Other Expenses. The Loan Parties agree to pay   on or prior to the Fourth Amendment Date and, within ten (10) Business Days   after delivery of an invoice therefor, after the Fourth Amendment Date, (a)   all fees, costs and expenses of the Secured Parties of negotiation,   preparation, execution, delivery, filing and administration of the Loan   Documents the ABL Documents and any amendments, restatements, supplements,   waivers, consents, forbearances or other modifications thereto, (b) all fees,   costs and expenses of legal counsel to the Secured Parties in connection with   the negotiation, preparation, execution, delivery, filing and administration   of the Loan Documents, the ABL Documents and any amendments, restatements,   supplements, waivers, consents, forbearances or other modifications thereto   and any other agreements, instruments, documents or matters requested by the   Borrower or any other Loan Party related thereto, (c) all fees, costs and   expenses of creating and perfecting (and providing first priority) Liens in   favor of Collateral Agent on behalf of the Secured Parties pursuant to any Loan   Document, including filing and recording fees, expenses and Taxes, search   fees, insurance premiums, and fees, costs, expenses and disbursements of   legal counsel to the Secured Parties and of legal counsel providing any   opinions that any Secured Party may request in respect of any Loan Documents   or the Liens created pursuant to the Loan Documents, (d) all fees, costs and   expenses incurred by any Secured Party (including legal counsel, agents and   representatives of each Secured Party) in connection with the custody or   preservation of any of the Collateral, the Notes and the Securities, (e) all   fees, costs and expenses (including fees, costs and expenses of legal counsel   to the Secured Parties and fees, costs and expenses of accountants, advisors   and consultants) incurred by any Secured Party and its legal counsel relating   to efforts to protect, evaluate, assess or dispose of any of the Collateral,   the Notes or the Securities, (f) all fees, costs and expenses, including   fees, costs and expenses of legal counsel to Collateral Agent and the Lenders   and all fees, costs and expenses of accountants, advisors and consultants and   costs of settlement, incurred by the Collateral Agent and Lenders in   enforcing any of the Loan Documents or any Obligations of, or in collecting   any payments due from, any Loan Party or any of its Subsidiaries hereunder or   under the other Loan Documents (including in connection with the sale of,   collection from, or other realization upon any of the Collateral or the   enforcement of the Loan Documents) or in connection with any refinancing or   restructuring of the credit arrangements provided under this Agreement or the   other Loan Documents in the nature of a “work-out” or pursuant to any   proceeding or event of the type set forth in Section 5.4(d) (or any similar   proceeding or event), and (g) the cost and expense of purchasing insurance   that the Loan Parties or any of their Subsidiaries fail to obtain as required   by the Loan Documents. Without limiting any of the foregoing provisions of   this Section 6.3, any action taken by any Loan Party or any of its   Subsidiaries under or with respect to any Loan Document, even if required   under any Loan Document or at the request of the Collateral Agent or any   other Secured Party, shall be at the sole expense of such Loan Party, and   neither Collateral Agent nor any other Secured Party shall be required under   any Loan Document to reimburse any Loan Party or any Subsidiary of any Loan   Party therefor. Section 6.4 Governing Law.All questions concerning the   construction, validity, enforcement and interpretation of this 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 to be performed in   such State. Each party agrees that all legal proceedings concerning the   interpretations, enforcement and defense of the transactions contemplated by   this Agreement (whether brought against a party hereto or its respective   affiliates, directors, officers, shareholders, employees or agents) shall be   commenced exclusively in the state and federal 76 141540134 

    

 

courts sitting   in the City of New York. Each party hereby irrevocably submits to the   exclusive jurisdiction of the state and federal courts sitting in the City of   New York, borough of Manhattan for the adjudication of any dispute hereunder   or in connection herewith or with any transaction contemplated hereby or   discussed herein, and hereby irrevocably waives, and agrees not to assert in   any suit, action or proceeding, any claim that it is not personally subject   to the jurisdiction of any such court, that such suit, action or proceeding   is improper or is an inconvenient venue for such proceeding. Each party   hereby irrevocably waives personal service of process and consents to process   being served in any such suit, action or proceeding by mailing a copy thereof   via registered or certified mail to such party at the address in effect for   notices to it under this Agreement and agrees that such service shall   constitute good and sufficient service of process and notice thereof. Nothing   contained herein shall be deemed to limit in any way any right to serve   process in any other manner permitted by law. TO THE FULLEST EXTENT PERMITTED   BY APPLICABLE LAW, THE PARTIES HEREBY WAIVE ALL RIGHTS TO A TRIAL BY JURY IN   ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT   OR THE OTHER LOAN DOCUMENTS. Section 6.5 Successors and Assigns. (a) This   Agreement shall bind and inure to the respective successors and permitted   assigns of the Parties, except that (a) none the Borrower, the other Loan   Party Obligors and the Other Obligors may assign or otherwise transfer all or   any part of its rights or obligations under the Loan Documents without the   prior written consent of the Lenders and any such prohibited assignment or   transfer is absolutely void ab initio; and (b) absent a Default or an Event   of Default the Lenders may not assign or otherwise transfer all or part of   their rights under the Loan Documents to any Person other than an investment   fund managed by Deerfield Management, L.P. or any Affiliate or related fund   of any of the Secured Parties, without the prior written consent of the   Borrower (which consent shall not be unreasonably withheld). Before any   Lender assigns all or any part of its rights under this Agreement or the   Notes to a party other than an investment fund managed by Deerfield   Management, L.P. (or any Affiliate or related fund of any of the Secured   Parties), or there are more than five (5) Lenders, the Parties shall   negotiate in good faith to amend this Agreement to appoint an administrative   agent providing such agent and the Parties with rights and duties customary   among syndicated credit facilities. Upon a Lender’s assignment of a Note in   accordance with the foregoing sentence, such Lender shall provide notice of a   permitted transfer to Borrower for recordation in the Register pursuant to   Section 1.4. Upon receipt of a notice of a transfer of an interest in a Note,   Borrower shall record the identity of the transferee and other relevant   information in the Register and the transferee shall (to the extent of the   interests transferred to such transferee) have all the rights and obligations   of, and shall be deemed, a Lender hereunder. (b) The Loan Parties acknowledge   and agree that the Securities may be pledged by a holder thereof in   connection with a bona fide margin agreement or other loan, financing or   Indebtedness secured by the Securities. The pledge of Securities shall not be   deemed to be a transfer, sale or assignment of the Securities under the Loan   Documents, and no such holder effecting any such pledge of Securities shall   be required to provide any Loan Party or any of its Subsidiaries with any   notice thereof or otherwise 77 141540134 

    

 

make any   delivery (including of any legal opinion) to any Loan Party pursuant to any   Loan Document. The Loan Parties hereby agree to execute and deliver such   documentation as a pledgee of the Securities may reasonably request in   connection with a pledge of the Securities to such pledgee by a holder of   Securities. Section 6.6 EntireAgreement. TheLoanDocumentscontaintheentire   understanding of the Parties with respect to the matters covered thereby and   supersede any and all other written and oral communications, negotiations,   commitments and writings with respect thereto (including, without limitation,   any agreement on the reimbursement of costs, etc. referenced in Section 2.9).   The provisions of this Agreement may be waived, modified, supplemented or   amended only by an instrument in writing signed by the authorized officer of   each of Borrower and the Required Lenders. Section 6.7 Severability. If any   provision of this Agreement shall be invalid, illegal or unenforceable in any   respect under any law, the validity, legality and enforceability of the   remaining provisions shall not in any way be affected or impaired thereby.   The Parties shall endeavor in good faith negotiations to replace the invalid,   illegal or unenforceable provisions with valid provisions the economic effect   of which comes as close as possible to that of the invalid, illegal or unenforceable   provision. Section 6.8 Counterparts. This Agreement may be executed in   several counterparts, and by each Party on separate counterparts, each of   which and any photocopies and facsimile copies thereof shall be deemed an   original, but all of which together shall constitute one and the same   agreement. Section 6.9 Survival. (a) This Agreement and all agreements,   representations and warranties made in the Loan Documents, and in any   document, certificate or statement delivered pursuant thereto or in connection   therewith shall be considered to have been relied upon by the other Parties   and shall survive the execution and delivery of this Agreement and the making   of the Loan hereunder, and shall continue in force until payment in full of   the Obligations (other than inchoate indemnification or reimbursement   obligations or other obligations which, by their terms, survive termination   of this Agreement), and the Lenders shall not be deemed to have waived, by   reason of making the Loan, any Event of Default that may arise by reason of   such representation or warranty proving to have been false or misleading,   notwithstanding that the Lenders may have had notice or knowledge of any such   Event of Default or may have had notice or knowledge that such representation   or warranty was false or misleading at the time the Disbursement was made.   (b) The obligations of the Borrower under Sections 1.4 and 2.5 and the   obligations of the Borrower and the Lenders under this Article 6 shall   survive and remain in full force and effect regardless of the consummation of   the transactions contemplated hereby, the repayment of the Loan, or the   termination of this Agreement or any provision hereof. 78 141540134 

    

 

Section 6.10No   Waiver. Neither the failure of, nor any delay on the part of, any Party in   exercising any right, power or privilege hereunder, or under any agreement,   document or instrument mentioned herein, shall operate as a waiver thereof,   nor shall any single or partial exercise of any right, power or privilege   hereunder, or under any agreement, document or instrument mentioned herein,   preclude other or further exercise thereof or the exercise of any other   right, power or privilege; nor shall any waiver of any right, power,   privilege or default hereunder, or under any agreement, document or   instrument mentioned herein, constitute a waiver of any other right, power,   privilege or default or constitute a waiver of any default of the same or of   any other term or provision. No course of dealing and no delay in exercising,   or omission to exercise, any right, power or remedy accruing to the Lenders   upon any default under this Agreement, or any other agreement shall impair   any such right, power or remedy or be construed to be a waiver thereof or an   acquiescence therein; nor shall the action of the Lenders in respect of any   such default, or any acquiescence by it therein, affect or impair any right,   power or remedy of the Lenders in respect of any other default. All rights   and remedies herein provided are cumulative and not exclusive of any rights   or remedies otherwise provided by law. Section 6.11Indemnity. (a) The   Borrower, each Loan Party and Other Obligor shall, at all times, indemnify   and hold each Secured Party harmless (the “Indemnity”) and each of their   respective directors, partners, officers, employees, agents, counsel and   advisors (each, an “Indemnified Person”) in connection with any losses,   claims (including the reasonable documented out-of-pocket attorneys’ fees   incurred in defending against such claims), damages, liabilities, penalties,   or other expenses arising out of, or relating to, the Loan Documents, the   extension of credit hereunder or the Loan or the use of the Loan, which an   Indemnified Person may incur or to which an Indemnified Person may become subject,   but excluding all Taxes (each, a “Loss”). The Indemnity shall not apply to   the extent that a court or arbitral tribunal of competent jurisdiction issues   a final judgment that such Loss resulted from the gross negligence or willful   misconduct of any Indemnified Person. The Indemnity is independent of and in   addition to any other agreement of Borrower under any Loan Document to pay   any amount to the Secured Parties, and any exclusion of any obligation to pay   any amount under this subsection shall not affect the requirement to pay such   amount under any other section hereof or under any other agreement. (b)   Promptly after receipt by an Indemnified Person under this Section 6.11 of   notice of the commencement of any action (including any governmental action),   such Indemnified Person shall, if a Loss in respect thereof is to be made   against the indemnifying person under this Section 6.11, deliver to Borrower   a written notice of the commencement thereof, and Borrower shall have the   right to participate in, and, to the extent Borrower so desires, to assume   control of the defense thereof. (c) An Indemnified Person shall have the   right to retain its own counsel with the documented reasonable fees and   out-of-pocket expenses to be paid by the indemnifying person, if, in the   reasonable opinion of counsel for the Indemnified Person, the representation   by such counsel of the Indemnified Person and Borrower would be inappropriate   due to actual or potential differing interests between such Indemnified 79   141540134 

    

 

Person and any   other party represented by such counsel in such proceeding. The Borrower   shall pay for only one separate such legal counsel for all of the Indemnified   Persons. The failure of an Indemnified Person to deliver written notice to   the Borrower within a reasonable time of the commencement of any such action   shall not relieve the Borrower of any liability to the Indemnified Person   under this Section 6.11, except to the extent that Borrower is actually   prejudiced in its ability to defend such action. The indemnification required   by this Section 6.11 shall be made by periodic payments of the amount thereof   during the course of the investigation or defense, as such expense, loss,   damage or liability is incurred and is due and payable. (d)In no circumstance   will any of the Indemnified Persons be liable for lost profits or other   special, punitive, or consequential damages. Notwithstanding any provision in   this Agreement or any other Loan Document to the contrary, this Section 6.11   shall remain operative even after the payment in full of the Obligations.   Section 6.12No Usury. The Loan Documents are hereby expressly limited so that   in no contingency or event whatsoever, whether by reason of acceleration or   otherwise, shall the amount paid or agreed to be paid to the Lenders for the   Loan exceed the maximum amount permissible under applicable law. If from any   circumstance whatsoever fulfillment of any provision hereof, at the time   performance of such provision shall be due, shall involve transcending the   limit of validity prescribed by law, then, ipso facto, the obligation to be   fulfilled shall be reduced to the limit of such validity, and if from any   such circumstance the Lenders shall ever receive anything which might be   deemed interest under applicable law that would exceed the highest lawful   rate, such amount that would be deemed excessive interest shall be applied to   the reduction of the principal amount owing on account of the Loan, or if   such deemed excessive interest exceeds the unpaid balance of principal of the   Loan, such deemed excess shall be refunded to the Borrower. All sums paid or   agreed to be paid to the Lenders for the Loan shall, to the extent permitted   by applicable law, be deemed to be amortized, prorated, allocated and spread   throughout the full term of the Loan until payment in full so that the deemed   rate of interest on account of the Loan is uniform throughout the term   thereof. The terms and provisions of this Section shall control and supersede   every other provision of this Agreement and the Notes. Section 6.13Further   Assurances.From time to time, the Borrower and the other Loan Party Obligors   shall perform (and shall cause their Subsidiaries to perform) any and all   acts and execute and deliver to the Secured Parties such additional   agreements, instruments and documents as may be reasonably requested by any   Secured Party to carry out the purposes of any Loan Document or to preserve   and protect the Secured Parties’ rights and remedies as contemplated herein   and therein. Section 6.14Confidentiality. Subject to Section 5.1(xiii),   Lenders agree that they will hold any confidential information they may   receive from Borrower in connection with the Loan Documents in confidence,   unless such confidential information (a) is known or becomes known to the   public in general (other than as a result of a breach of this Section 6.14 by   Lenders), (b) is or has been independently developed or conceived by Lenders   without use of Borrower’s confidential information, or (c) is or has been made   known or disclosed to Lender by a third party without a breach of any   obligation of confidentiality such third party may have to 80 141540134 

    

 

Borrower;   provided, however, that Lenders may disclose confidential information (i) to   their attorneys, accountants, consultants, and other professionals to the   extent necessary to obtain their services in connection with this Agreement   and the other Loan Documents; (ii) to any prospective purchaser of any Loan   from Lenders, if a transfer to such prospective purchaser is permitted and   such prospective purchaser agrees to be bound by the provisions of this   Section 6.14; (iii) to any existing or prospective Affiliate, partner,   member, shareholder or wholly owned subsidiary of a Lender in the Ordinary   Course of Business, provided that Lenders inform such Person that such   information is confidential and direct such Person to maintain the   confidentiality of such information; (iv) as may otherwise be required by   law, regulation or legal process; (v) to any Person in connection with any   legal proceeding to which it is a party; or (vi) as provided in Section   5.1(xiii). Section 6.15Intercreditor Agreement. (a)Notwithstanding anything   to the contrary in this Agreement or in any other Loan Document: (i) the Liens   granted to the Collateral Agent in favor of the Secured Parties pursuant to   the Loan Documents and the exercise of any right related to any collateral   hereunder or thereunder shall be subject, in each case, to the terms of the   Intercreditor Agreement, (ii) in the event of any conflict between the   express terms and provisions of this Agreement or any other Loan Document, on   the one hand, and of the Intercreditor Agreement, on the other hand, the   terms and provisions of the Intercreditor Agreement shall control, (iii) any   collateral (including the Collateral) under the Loan Documents held by (or in   the possession or control of) the ABL Agent (as defined in the Intercreditor   Agreement) (or its agents or bailees) shall be held as agent and bailee for   security, Lien perfection and control purposes in favor of the Collateral   Agent (for the benefit of the Secured Parties) in accordance with the terms   of the Intercreditor Agreement and the Loan Documents, and (iv) each Lender   hereunder authorizes and instructs the Collateral Agent to execute the   Intercreditor Agreement on behalf of such Lender, and such Lender agrees to   be bound by the terms thereof. (b) Each Lender hereunder authorizes and   instructs the Collateral Agent, as the Collateral Agent and on behalf of such   Lender, to enter into one or more intercreditor agreements (including the   Intercreditor Agreement) from time to time pursuant to, or as contemplated   by, the terms of this Agreement and agrees that it will be bound by the terms   and provisions thereof and will take no actions contrary to the terms and   provisions thereof. (c) Notwithstanding anything herein to the contrary, each   of (i) the Obligations of the Loan Parties under this Agreement, (ii) the   Lien and security interest granted to the Collateral Agent for the benefit of   the Secured Parties pursuant to this Agreement and the other Loan Documents   (including priority thereof), (iii) the release of Collateral from the Lien   granted and created by the Loan Documents and (iv) the exercise of any right   or remedy by the Collateral Agent under the Loan Documents are, in each case,   subject to the provisions of the Intercreditor Agreement. In the event of any   conflict or inconsistency between the provisions of the Intercreditor   Agreement and this Agreement, the provisions of the Intercreditor Agreement   shall control. 81 141540134 

    

 

[SIGNATURE PAGE   FOLLOWS] 82 141540134 

    

 

IN WITNESS   WHEREOF, the Lenders and the Borrower have caused this Agreement to be duly   executed as of the date set forth above. BORROWER: NEOS THERAPEUTICS By:   Name: Title: LENDERS: DEERFIELD PRIVATE DESIGN FUND III, L.P. By: Deerfield   Mgmt III, L.P., General Partner By: J.E. Flynn Capital III, LLC, General   Partner By: Name: Title: DEERFIELD SPECIAL SITUATIONS FUND, L.P. By:   Deerfield Mgmt, L.P., General Partner By: J.E. Flynn Capital, LLC, General   Partner By: Name: Title: 83 141540134 

    

 

SCHEDULE 1   Schedule 1-1 141540134 LENDER ALLOCATION OF DISBURSEMENTS AND PAYMENTS   Deerfield Private Design Fund III, L.P. 66 2/3% Deerfield Special Situations   Fund, L.P. 33 1/3% 

    

 

Exhibit 2.3   Share Payment Provisions If the Borrower elects, in lieu of paying in cash   any principal or interest due and payable under Section 2.3 or Section 2.7 of   the Facility Agreement (the “Agreement”), as applicable, to satisfy any such   amounts due through the issuance of Freely Tradeable Shares (as defined   below), pursuant to Section 2.3 or Section 2.7 of the Agreement, the   following terms shall apply: 1. Defined Terms. Capitalized terms used in this   Exhibit 2.3 and not otherwise defined herein shall have the meanings set   forth in the Agreement. To the extent there is any conflict between terms   defined in this Exhibit 2.3 and the use of such terms in any other Loan   Document, for purposes of this Exhibit 2.3 and Section 2.3, such terms shall   have the meanings set forth herein. For purposes of this Exhibit, the   following terms shall have the following meanings: “2019 Principal Payment   Date” has the meaning set forth in Section 5(d) of this Exhibit. “Applicable   Trading Period” has the meaning set forth in Section 4(b) of this Exhibit.   “Bloomberg” means Bloomberg Financial Markets or an equivalent, reliable   reporting service mutually acceptable to and designated by the Borrower and   the Required Lenders. “Convertible Securities” means any stock or securities   (other than Options) directly or indirectly convertible into or exchangeable   or exercisable for shares of Common Stock. “Credit Amount” means any Interest   Credit Amount or any Principal Credit Amount, as applicable. “Delisting   Event” means any of the following: (i) the Common Stock is not listed on a   Principal Market (as defined in the Notes), (ii) trading in the Common Stock   on the Principal Market is suspended, or (iii) the Borrower is not in   compliance with any rule or regulation, which non-compliance would result in   the suspension or cessation of the trading or listing of the Common Stock on   the Principal Market. “Failure Amount” has the meaning set forth in Section 8   of this Exhibit. “Floor Price” has the meaning set forth in Section 3 of this   Exhibit. “Freely Tradeable Shares” means any shares of Common Stock which, at   the time of issuance thereof, (i) are duly authorized, validly issued, fully   paid and non-assessable; (ii) are eligible for resale by the Lenders, without   limitation or restriction (including any volume limitation, but excluding any   current public information requirement for so long as such current public   information requirement is satisfied) under state or Federal securities laws,   pursuant to Rule 144 under the Securities Act; and (iii) do not bear, and are   not subject to, any restrictive legend, stop transfer or similar restriction.   Ex.2.3-1 141540134 

    

 

“Interest   Credit Amount” has the meaning set forth in Section 4(a) of this Exhibit.   “Interest Payment Shares” means a number of shares of Common Stock equal to   the applicable Share Issuance Amount divided by the Interest Payment Share   Price. “Interest Payment Share Price” means 93% of the lesser of (i) the Last   Bid Price prior to the Interest Payment Date and (ii) the arithmetic average   of the Volume Weighted Average Price on each of the ten (10) consecutive   Trading Days immediately preceding the Interest Payment Date. “Issuance   Period” means, with respect to a Share Issuance Notice pursuant to which the   Borrower elects to repay principal, the period commencing on the third   Trading Day following delivery of the Share Issuance Notice and ending at the   completion of ten (10) consecutive Trading Days (including such initial   Trading Day) thereafter; provided, that in the event of the occurrence of a   Share Delivery Failure during any Issuance Period, such Issuance Period shall   be deemed to have ended at the completion of the date on which such Share   Delivery Failure has occurred and, provided, further, that the Issuance   Period shall be deemed to have ended at such time during an Issuance Period   as Partial Reference Date Shares are issuable in accordance with Section 4(b)   of this Exhibit 2.3. “Last Bid Price” means, with respect to any security as   of any time of determination, the last (closing) bid price on the Principal   Market as reported by, or based upon data reported by, Bloomberg. “Market   Capitalization” means, as of any date of determination, the product of (i)   the number of issued and outstanding shares of Common Stock as of such date   (exclusive of any shares of Common Stock issuable directly or indirectly upon   exercise of any Options or conversion of the Notes or any other Convertible   Securities), multiplied by (ii) the closing price per share of Common Stock   as of the preceding Trading Day on the Principal Market, as reported by, or   based upon data reported by, Bloomberg. “Options” means any rights, warrants,   options or restricted stock options to subscribe for or purchase shares of   Common Stock or Convertible Securities. “Partial Reference Date Shares” has   the meaning set forth in Section 4(b) of this Exhibit. “Principal Credit   Amount” has the meaning set forth in Section 4(b) of this Exhibit. “Principal   Market” means the principal securities exchange or trading market for the   Common Stock. “Principal Share Issuance Closing Date” has the meaning set   forth in Section 4(b) of this Exhibit. “Principal Share Issuance Notice” has   the meaning set forth in Section 3 of this Exhibit. “Reference Date” has the   meaning set forth in Section 4(b) of this Exhibit. Ex.2.3-2 141540134 

    

 

“Share Delivery   Failure” has the meaning set forth in Section 8 of this Exhibit. “Share   Issuance Amount” has the meaning set forth in Section 3 of this Exhibit.   “Share Issuance Closing Date” has the meaning set forth in Section 4(b) of   this Exhibit. “Share Issuance Limit” means 2,135,625 shares of Common Stock,   subject to appropriate adjustment for any Stock Events occurring after   November 5, 2018, and a “ Lende r’s S hare Issuance Limit” means such   Lender’s Pro Rata Share of the Share Issuance Limit. “Stock Event” shall have   the meaning given to such term in the Notes. “Trading Day” means any day on   which the Common Stock is traded for at least six hours on the Principal   Market. “Unsatisfied Principal Amount” has the meaning set forth in Section 9   of this Exhibit. “Volume Weighted Average Price” means, for the Common Stock as   of any Trading Day, the volume weighted average sale price of the Common   Stock on the Principal Market as reported by Bloomberg. Volume Weighted   Average Price will be determined without regard to after-hours trading or any   other trading outside of the regular trading hours. “Withholding Date” means   the first date on which the Borrower withholds or determines that it is   required to withhold any Taxes as a result of the provisions of this Exhibit   or the issuance of any shares of Common Stock, or consummation of any   transactions, as contemplated hereby. 2. General. Subject to the terms and   conditions of this Exhibit, the Borrower’s valid exercise of its share   issuance rights under this Exhibit and subsequent fulfillment of its   obligations hereunder (including the issuance of the applicable number of   Freely Tradeable Shares and payment of any applicable Prepayment Fees and   Make Whole Interest) shall be deemed to satisfy its obligation (i) to pay   interest on the Interest Payment Date for which such share issuance right is   being exercised or (ii) to repay the amount of principal for which such share   issuance right is being exercised, as applicable. 3. Exercise of Share   Issuance Rights. Subject to the terms and conditions of this Exhibit, the   Borrower may deliver to each of the Lenders notice by electronic mail (a   “Share Issuance Notice”) of its intention to issue Freely Tradeable Shares   pursuant to the provisions of this Exhibit in order to satisfy principal due   under Section 2.3(a) of the Agreement or interest due on any Interest Payment   Date under Section 2.7 of the Agreement, in each case, by delivering such   Freely Tradeable Shares to the Lenders; provided, however, that, in addition   to the limitations set forth in Section 5 of this Exhibit, (i) the Borrower   may not deliver a Share Issuance Notice in respect of the satisfaction of   principal or interest on or prior to the six month anniversary of the Second   Amendment Date, (ii) a Share Issuance Notice may only be delivered between   the close of regular trading on a Trading Day and three (3) hours prior to   the opening of regular hours on the following Trading Day; (iii) a Share   Issuance Notice in respect of the Ex.2.3-3 141540134 

    

 

satisfaction of   interest may only be delivered on a date that is not more than fifteen (15)   and not less than ten (10) Trading Days prior to the Interest Payment Date   for the interest payment being satisfied through the issuance of Freely   Tradable Shares; and (iv) the Borrower may not deliver a Share Issuance   Notice or issue shares of Common Stock to satisfy interest or principal under   this Exhibit (a) during the occurrence of a Delisting Event, (b) at any time   on or after the date on which the Borrower has entered into, or publicly   disclosed its intention to enter into, an agreement with respect to, or is   otherwise subject to a transaction that would result in, a Change of Control,   (c) at any time following the occurrence, and during the continuance, of an   Event of Default or a Default, (d) from and after a Withholding Date, (e) if,   as of the close of trading on the immediately preceding Trading Day, the   Market Capitalization is less than $100,000,000, (f) to the extent that the   aggregate number of shares of Common Stock issued pursuant to prior Share   Issuance Notices has equaled the Share Issuance Limit, (g) unless all   material information regarding the Borrower (including any material   information that may be included in, or reflected by, the Share Issuance   Notice) has been publicly disclosed in a report filed pursuant to the   Exchange Act or has been otherwise publicly disclosed in a manner compliant   with Regulation FD, (h) unless all shares of Common Stock issuable pursuant   to such Share Issuance Notice will, at the time of issuance, be Freely   Tradeable Shares, (i) if the transfer agent for the Common Stock is not   participating in DTC’s Fast Automated Securities Transfer Program, (j) if any   Lender, after consultation with outside counsel of its choosing, promptly   advises the Borrower that the receipt or resale of Common Stock issued or   issuable hereunder would result in such Lender being deemed an “underwriter”   within the meaning of Section 2(11) under the Securities Act, (k) if the   arithmetic average of the Volume Weighted Average Price on each of the ten   (10) Trading Days immediately preceding such date is less than $3.00, subject   to appropriate adjustment for any Stock Event following the Second Amendment   Effective Date, or (l) if the Common Stock is subject to any DTC “chill,”   “freeze” or similar restriction with respect to any DTC services, including   the clearing of transactions in shares of the Common Stock through DTC   (collectively, the “Share Issuance Conditions”). Subject to such provisions,   a Share Issuance Notice shall be irrevocable, shall specify (x) the aggregate   amount of interest or principal, as applicable, subject to such Share   Issuance Notice, in each case, broken out by the amount due each Lender and   (y) in the case of a Share Issuance Notice that provides for the satisfaction   of principal through the issuance of Freely Tradeable Shares, a floor price   (the “Floor Price”) that is no less than $3.00 per share, subject to   appropriate adjustment for any Stock Event (such amount, a “Share Issuance   Amount”). If the Lenders do not confirm receipt of the Share Issuance Notice   within three (3) Trading Days of the delivery thereof, the Borrower shall   thereafter use its reasonable best efforts to confirm (by email,   telephonically or otherwise) such receipt, and in no event shall the Issuance   Period commence unless and until the Lenders have confirmed such receipt. For   the avoidance of doubt, the Borrower may exercise its right under this   Exhibit 2.3, and may deliver a Share Issuance Notice, only one time with   respect to the interest due and payable on any Interest Payment Date. 4.   Share Issuance. (a) On each Interest Payment Date in respect of which a Share   Issuance Notice has been delivered hereunder to provide for the satisfaction   of interest through the issuance of Freely Tradeable Shares, by no later than   9:00 a.m., New York City time, the Borrower shall deliver to each Lender its   Pro Rata Share of the applicable by causing the transfer Ex.2.3-4 141540134 

    

 

agent for the   Common Stock to electronically transmit such Interest Payment Shares to such   Lender by crediting to the account of such Lender’s prime broker (as   specified by such Lender no later than one Trading Day prior to the Interest   Payment Date) with DTC through its Deposit/Withdrawal at Custodian (DWAC)   system its Pro Rata Share of such Interest Payment Shares determined pursuant   to Section 6 of this Exhibit. Concurrently with the valid delivery of the   related Interest Payment Shares on the applicable Interest Payment Date, an   amount (the “Interest Credit Amount”) of interest payable on such Interest   Payment Date equal to the product of (x) the number of Interest Payment   Shares issued and delivered to a Lender on such date multiplied by (y) the   applicable Interest Payment Share Price, shall be deemed to have been   satisfied. (b) To the extent that the Borrower elects to satisfy principal in   Freely Tradeable Shares pursuant to a Share Issuance Notice, for each Trading   Day during the applicable Issuance Period (each, a “Reference Date”), the   Borrower shall issue to each Lender such Lender’s Pro Rata Share of an   aggregate number of shares of Common Stock (rounded to the nearest whole   share, with 0.5 being rounded up) equal to the product of (x) the number of   shares of Common Stock traded at or above the Floor Price (on all exchanges   and quotation systems on which shares of Common Stock are cited as having   been traded, per the Bloomberg AQR function) on such Reference Date between   9:35 a.m., New York City time, and 3:55 p.m., New York City time (the   “Applicable Trading Period”), multiplied by (y) 0.19 (the “Daily Issuance   Shares”); provided, that, at such time on any Reference Date as the value (as   determined in accordance with this Section 4(b)) of all shares issuable in   respect of such Reference Date (up to such time of such Reference Date) (the   “Partial Reference Date Shares”) together with the value of all shares issued   or issuable hereunder in respect of prior Reference Dates during such   Issuance Period are sufficient to satisfy the entire principal portion of the   Share Issuance Amount then the Daily Issuance Shares shall be equal to the   Partial Reference Date Shares and such Issuance Period and the Applicable   Trading Period shall thereafter be deemed terminated for all purposes   hereunder. Within two hours following the close of regular trading hours on   each Reference Date for which Daily Issuance Shares are issuable hereunder,   the Lenders shall deliver a notice (a “Daily Share Notice”) to the Borrower   setting forth the number of Daily Issuance Shares and the portion of the   Share Issuance Amount to be satisfied on the Principal Share Issuance Closing   Date (as defined below) related to such Reference Date, together with   appropriate calculations of such amount. By no later than 5:30 p.m., New York   City time, on the second Trading Day following each Reference Date (each, a   “Principal Share Issuance Closing Date”), the Company shall deliver to each   Lender its Pro Rata Share of the applicable Daily Issuance Shares by causing   the Company’s transfer agent to electronically transmit such Daily Issuance   Shares to each Lender by crediting to the account of each Lender’s prime   broker (as specified by such Lender no later than one Trading Day prior to   the applicable Principal Share Issuance Closing Date) with DTC through its   Deposit/Withdrawal at Custodian (DWAC) system its Pro Rata Share of such   Daily Issuance Shares. Concurrently with the valid delivery of the related   Daily Issuance Shares on each Principal Share Issuance Closing Date, an   amount (the “Principal Credit Amount”) equal to the product of (x) the number   of shares of Common Stock issued and delivered to a Lender on such date   multiplied by (y) 93% of the Volume Weighted Average Price for shares of   Common Stock that trade at or above the Floor Price during the Applicable   Trading Period (on all exchanges and quotation systems on which shares of   Common Stock are cited as having been traded, per the Bloomberg AQR function)   on Ex.2.3-5 141540134 

    

 

the applicable   Reference Date shall be applied to, and reduce, the principal amount being   satisfied through the issuance of Common Stock, in each case, in accordance   with Sections 2.3(e) of the Agreement. (c) All shares of Common Stock issued   and delivered pursuant to this Section 4 shall be Freely Tradeable Shares   (and for the avoidance of doubt, only Freely Tradeable Shares shall be deemed   to constitute Interest Payment Shares or Daily Issuance Shares and be applied   to any Credit Amount). In connection with the issuance and delivery of any   shares of Common Stock to the Lenders pursuant to this Section 4, the   Borrower shall deliver to the transfer agent for its Common Stock, by no   later than (i) the last Business Day prior to the Interest Payment Date for which   a Share Issuance Notice has been delivered to provide for the satisfaction of   interest or (ii) the first Principal Share Issuance Closing Date for each   Issuance Period in respect of a Share Issuance Notice delivered to provide   for the satisfaction of principal, as applicable, an opinion of counsel   reasonably satisfactory to the Lenders, substantially in the form attached as   Annex 1 to this Exhibit, relating to all shares of Common Stock to be issued   and delivered to the Lenders as Freely Tradeable Shares, and such other   instructions, documents and instruments as may be reasonably required by such   transfer agent in connection with the issuance to the Lenders of Freely   Tradeable Shares on the Interest Payment Date or during such Issuance Period,   as applicable. Copies of such instructions, documents and instruments shall   be provided to the Lenders promptly upon a request therefor. 5. Limitations   on Share Issuances. Notwithstanding anything herein to the contrary: (a)The   Borrower shall not issue to any Lender, and no Lender may acquire, a number   of shares of Common Stock hereunder to the extent that, upon such issuance,   the number of shares of Common Stock then beneficially owned by such Lender   and its Affiliates and any other persons or entities whose beneficial   ownership of Common Stock would be aggregated with such Lender’s for purposes   of Section 13(d) of the Exchange Act (including shares held by any “group” of   which the Lender is a member, but excluding shares beneficially owned by   virtue of the ownership of securities or rights to acquire securities   (including the Notes) that have limitations on the right to convert, exercise   or acquire similar to the limitation set forth herein), would exceed 4.985%   of the total number of shares of Common Stock then issued and outstanding   (the “4.985% Cap”). For purposes hereof, “group” has the meaning set forth in   Section 13(d) of the Exchange Act and applicable regulations of the SEC, and   the percentage held by each Lender shall be determined in a manner consistent   with the provisions of Section 13(d) of the Exchange Act. All Share Issuance   Notices shall set forth the number of shares of Common Stock then   outstanding. Upon written request of any Lender at any time, the Borrower   shall, within one (1) Business Day, confirm orally and in writing to such   Lender the number of shares of Common Stock then outstanding. At any time   following delivery of a Share Issuance Notice and ending on the last Trading   Day prior to the applicable Interest Payment Date or any applicable Principal   Share Issuance Closing Date, each Lender shall have the right to deliver   notice to the Borrower (a “Cap Notice”) (and, if applicable, shall be   entitled to include such Cap Notice in a Daily Share Notice) stating the   maximum number of shares of Common Stock that may be issued to such Lender   without exceeding the maximum number of shares that such Lender may receive   under the 4.985% Cap (the “Maximum Share Amount”), which shall be Ex.2.3-6   141540134 

    

 

conclusive and   binding upon the Borrower and such Lender. Notwithstanding anything herein to   the contrary, in no event shall (i) the number of shares issued to a Lender   pursuant to any Share Issuance Notice relating to interest or to a Lender on   any Principal Share Issuance Closing Date exceed such Lender’s applicable   Maximum Share Amount specified in such Lender’s Cap Notice; (ii) the   aggregate number of shares issued to a Lender pursuant to any Share Issuance   Notice, together with the shares previously issued to such Lender pursuant to   Share Issuance Notices, exceed such Lender’s Share Issuance Limit; or (iii)   any shares be issued to any Lender pursuant to a Share Issuance Notice   relating to interest to the extent that all of the interest payment due on   the applicable Interest Payment Dates have been otherwise satisfied or all   Interest Payment Dates have occurred. For the avoidance of doubt, the   Borrower shall not be entitled, or permitted, to issue an aggregate number of   shares of Common Stock pursuant to this Exhibit 2.3 in excess of the Share   Issuance Limit. (b) The Borrower shall not deliver more than one Share   Issuance Notice on any day. Following the delivery of any Share Issuance   Notice, from and after the delivery thereof, the Borrower shall not deliver a   subsequent Share Issuance Notice until three (3) Trading Days following: (i)   if the first such Share Issuance Notice provides for the satisfaction of   interest through the issuance of Freely Tradeable Shares, the date all of the   interest payable on the applicable Interest Payment Date shall have been   satisfied in full and (ii) if the first such Share Issuance Notice provides   for the satisfaction of principal through the issuance of Freely Tradeable   Shares, the date that the Borrower shall have delivered a number of Freely   Tradeable Shares equal to the Daily Issuance Shares for each Trading Day   during the applicable Issuance Period and satisfied its obligation to pay (in   cash) the Prepayment Fees and Make Whole Interest applicable to the principal   repaid pursuant to such Share Issuance Notice. (c) Following the delivery of   any Conversion Notice (as defined in the Notes) the Borrower shall not   deliver a Share Issuance Notice that provides for the satisfaction of   principal through the issuance of Freely Tradeable Shares until ten (10) Trading   Days following the issuance of Conversion Shares pursuant to such Conversion   Notice. (d) The Borrower shall not deliver a Share Issuance Notice that would   result in any Issuance Period ending fewer than three (3) Trading Days prior   to a date on which principal is due under Section 2.3(a) of the Purchase   Agreement, except in connection with the 2019 Principal Payment so long as   the Share Issuance Notice is delivered prior to the date the 2019 Principal   Payment is due (the “2019 Principal Payment Date”). If the Borrower delivers   a Share Issuance Notice prior to the 2019 Principal Payment Date and the   Issuance Period with respect thereto shall not have ended prior to the 2019   Principal Payment Date, then for the 2019 Principal Payment Date and each   calendar day thereafter, the difference between the Share Issuance Amount and   the sum of the Principal Credit Amounts as of the end of each such day shall   bear interest at the annual rate of 20%, compounded daily, and the Share   Issuance Amount shall increase daily by the amount of such interest until the   earlier of (i) such time as the sum of the Principal Credit Amounts equals   the Share Issuance Amount as so increased and (ii) such time as the excess of   the Share Issuance Amount, as so increased, over the sum of the Principal   Credit Amounts has been paid by the Borrower to the Purchasers in cash.   Notwithstanding anything to the contrary contained herein, if the Borrower   delivers a Share Ex.2.3-7 141540134 

    

 

Issuance Notice   prior to the 2019 Principal Payment Date, then the Borrower shall not be   obligated to pay an amount equal to the Share Issuance Amount on the 2019   Principal Payment Date, but (for the avoidance of doubt) the Borrower shall   remain obligated to pay the portion of the 2019 Principal Payment in excess   of the applicable Share Issuance Amount on the 2019 Principal Payment Date in   accordance with the terms of the Facility Agreement. If, as of the end of the   Issuance Period in respect of any such Share Issuance Notice, the Share Issuance   Amount, as increased in accordance with this paragraph, exceeds the sum of   the applicable Principal Credit Amounts for such Issuance Period, the Company   shall pay such excess amount to the Lenders (ratably, based on their Pro Rata   Shares), in cash by wire transfer of immediately available funds, on the   first Business Day following the end of such Issuance Period. 6. Allocation   Among Lenders. All shares of Common Stock issuable to the Lenders pursuant to   this Exhibit, all Credit Amounts and all Failure Amounts shall be allocated   pro rata among the Lenders based on each Lender’s Pro Rata Share. 7.   Termination of Right to Issue Shares. If any of the Share Issuance Conditions   is not satisfied at any time following the delivery of a Share Issuance   Notice and prior to the Interest Payment Date to which the Share Issuance   Notice relates or prior to any Principal Share Issuance Closing Date in   respect of such Share Issuance Notice, the Borrower shall immediately notify   each of the Lenders of such failure and the Borrower shall not be permitted   to issue shares of Common Stock in lieu of the cash interest owed on such   Interest Payment Date and none of the Daily Issuance Shares otherwise   issuable on such Principal Share Issuance Closing Date shall be considered to   have been delivered to the Lenders for any purposes hereunder. 8. Failure to   Deliver Share Issuance Shares. If the Borrower fails on any Interest Payment   Date or Principal Share Issuance Closing Date to cause the delivery of the   Interest Payment Shares or Daily Issuance Shares, as applicable, required to   be delivered on that date, and such failure is not cured within one (1)   Trading Day following such Interest Payment Date or Principal Share Issuance   Closing Date (a “Share Delivery Failure”), the Share Issuance Amount in   respect of such Interest Payment Date or Principal Share Issuance Closing   Date, as applicable, shall not be reduced in respect of such Interest Payment   Shares or Daily Issuance Shares until such shares are actually issued and   delivered, and in addition to all other rights and remedies of the Lenders   and the Lenders under this Exhibit, the Agreement and the other Loan   Documents, the Borrower shall promptly pay to each of the Lenders, for each   day that such Share Delivery Failure occurs or continues, an amount equal to   five percent (5%) of the amount that would have constituted such Lender’s   Credit Amount on such day had such failure not occurred (the “Failure   Amount). 9. Borrower Reporting.The Borrower shall file with the SEC a Current   Report on Form 8-K disclosing its delivery of a Share Issuance Notice include   the amount of principal or interest to which such Share Issuance Notice   relates, no later than 8:35 a.m., New York City time, on the Trading Day   immediately following the date the applicable Share Issuance Notice is sent   by the Borrower. In addition, if as of the end of the Issuance Period in   respect of any Share Issuance Notice, the Credit Amounts for such Issuance   Period are less than the Share Issuance Amount specified in the Share Issuance   Notice (such shortfall, the Ex.2.3-8 141540134 

    

 

“Unsatisfied   Principal Amount”), then no later than 8:35 a.m., New York City time, on the   Trading Day immediately following the expiration of such Issuance Period, the   Borrower shall file with the SEC a Current Report on Form 8-K disclosing the   portion of the Share Issuance Amount that was satisfied through the issuance   of Freely Tradeable Shares, and the Unsatisfied Principal Amount as of the   end of the Issuance Period. Ex.2.3-9 141540134 

    

 

Annex 1 to   Exhibit 2.3 - Payment Share Provisions [Date] [Transfer Agent Name and   Address] Attention: [ ] Re: Neos Therapeutics, Inc. (the “Borrower”) Ladies   and Gentlemen: Pursuant to Section 3 of Exhibit 2.3 (the “Exhibit”) of that   certain Second Amendment, dated November 5, 2018, to Facility Agreement (as   amended to date, the “Facility Agreement”), dated as of May 11, 2016, between   the Borrower and the Lenders party thereto from time to time (each an   “Lender” and collectively, the “Lenders”), the Borrower has delivered to the   Lenders a Share Issuance Notice (as defined in the Exhibit), dated as of [ ,   _], pursuant to which the Borrower has elected to satisfy certain payment   obligations under the Facility Agreement by issuing shares of Common Stock to   the Lenders. Capitalized terms used but not defined herein shall have the   meanings set forth in the Facility Agreement or the Exhibit, as applicable.   We are counsel for the Borrower and have been requested to furnish to you an   opinion with respect to all of the shares of Common Stock of the Borrower   that will be issued to the Lenders in connection the abovementioned Share   Issuance Notice (the “Shares”). As a basis for this opinion, we have received   and reviewed (1) the Facility Agreement, including the Exhibit, (2) the Share   Issuance Notice, (3) an officer’s certificate from the Borrower and (4) such   other documents as we have deemed relevant or necessary. On the basis of the   foregoing and assuming the accuracy of the aforementioned representations of   each Lender, it is our opinion that the Shares may be resold by each Lender   without restriction under the Securities Act of 1933, as amended, and,   accordingly, the Shares may be issued without any restrictive legend to each   Lender or its designee in accordance with each such Lender’s instructions   with respect to the Shares delivered to such Lender. Any questions concerning   theforegoing opinion should be communicated to [ ] of this firm. Very truly   yours, [ ] [ ],[ ] cc: [Lenders] Ex.2.3-10 141540134 

    

 

EXHIBIT C   COMPLIANCE CERTIFICATE [letterhead of the Borrower] To: Deerfield Management   Company, L.P. 780 Third Avenue, 37th Floor New York, NY 10017 Fax:   212-599-3075 Email: dclark@deerfield.com Attn: David J. Clark Re: Compliance   Certificate dated Ladies and Gentlemen: Reference is made to that certain   Facility Agreement dated as of May 11, 2016 (as amended, restated or   otherwise modified from time to time, the "Facility Agreement")   between Neos Therapeutics, Inc., a Delaware corporation (the “Borrower”), and   the lenders set forth on the signature page thereto. Capitalized terms used   in this Compliance Certificate have the meanings set forth in the Facility   Agreement unless specifically defined herein. Pursuant to Section 5.1(v) of   the Facility Agreement, the undersigned Chief Financial Officer of the   Borrower hereby certifies on behalf of each Loan Party (solely in his   capacity as an officer of the Borrower and not in his individual capacity)   that: 1. The financial statements of the Loan Parties for the -month period   ending attached hereto have been prepared in accordance with GAAP and fairly   present the financial condition of the Loan Parties for the periods and as of   the dates specified therein. 2. As of the date hereof, there does not exist   any Default or Event of Default. 3. The Loan Parties are in compliance with   the applicable financial covenants contained in Section 5.3 of the Facility   Agreement for the periods covered by this Compliance Certificate. Attached   hereto are statements of all relevant facts and computations in reasonable   detail sufficient to evidence the Loan Parties’ compliance with such   financial covenants, which computations were made in accordance with GAAP. IN   WITNESS WHEREOF, this Compliance Certificate is executed by the undersigned this   day of , . NEOS THERAPEUTICS, INC., as the Borrower Ex.C-1 141540134 

    

 

By: _ Name:   Title: Chief Financial Officer Ex.C-2 141540134 

    

 

EXHIBIT A-II   Amended and Restated Schedules to Amended Facility Agreement 141565389 

    

 

Schedule 3.1(h)   Pending Actions None. ACTIVE/101033086.1 

    

 

Schedule 3.1(m)   Intellectual Property Neos Therapeutics, Inc. has a non-exclusive license   agreement with Shire LLC (“Shire”) for certain of Shire's patents with   respect to the company’s Adzenys XR-ODT new drug application.   ACTIVE/101033086.1 

    

 

Schedule 3.1(p)   Marketing/Sale Rights None. ACTIVE/101033086.1 

    

 

Schedule 3.1(q)   Authorizations In April 2007, the FDA announced entry of a Consent Decree of   Permanent Injunction (the “Consent Decree”), against PharmaFab, Inc., the   predecessor corporation of Neos Therapeutics, Inc. (“PharmaFab”), one of   PhamaFab’s subsidiaries and two of Pharmafab’s officials (collectively, the   “Defendants”). The Consent Decree arose out of several perceived current Good   Manufacturing Practice (“cGNP”) deficiencies related to the manufacture of   unapproved drugs or Drug Efficacy Study Implementation drugs that the company   no longer manufactures. Pursuant to the Consent Decree, the Defendants were   permanently restrained and enjoined from directly or indirectly   manufacturing, processing, packing, labeling, holding or distributing any   prescription drugs that are not the subject of a new drug application or an   abbreviated new drug application. To date, the consent decree has had no   material impact on the company’s current business operations or its ability   to pursue approval of product candidates. ACTIVE/101033086.1 

    

 

Schedule 3.1(t)   Subsidiaries ACTIVE/101033086.1 Owner Subsidiary Jurisdiction of Subsidiary   Percentage of Equity Interests Owned Neos Therapeutics, Inc. Neos   Therapeutics Commercial, LLC Delaware 100% Neos Therapeutics, Inc. Neos   Therapeutics Brands, LLC Delaware 100% Neos Therapeutics, Inc. Neos   Therapeutics, LP Texas 99% PharmaFab Texas, LLC Neos Therapeutics, LP Texas   1% Neos Therapeutics, Inc. PharmaFab Texas, LLC Texas 100% 

    

 

Schedule 3.1(u)   Compliance with Health Care Laws None. ACTIVE/101033086.1 

    

 

Schedule 3.1(x)   Proceedings; Audits None. ACTIVE/101033086.1 

    

 

EXHIBIT A-III   Amended and Restated Schedules to Security Agreement 141565389 

    

 

SCHEDULE 1   INVESTMENT PROPERTY A. PLEDGED EQUITY B. PLEDGED NOTES None.   ACTIVE/101032594.2 Grantor Issuer Jurisdiction of Issuer Percentage of Equity   Interests Owned Percentage of Equity Interests Pledged Certificate No. Neos   Therapeutics, Inc. Neos Therapeutics Commercial, LLC Delaware 100% 100% N/A   Neos Therapeutics, Inc. Neos Therapeutics Brands, LLC Delaware 100% 100% N/A   Neos Therapeutics, Inc. Neos Therapeutics, LP Texas 99% 99% N/A PharmaFab   Texas, LLC Neos Therapeutics, LP Texas 1% 1% N/A Neos Therapeutics, Inc.   PharmaFab Texas, LLC Texas 100% 100% N/A 

    

 

SCHEDULE 2   FILINGS AND PERFECTION ACTIVE/101032594.2 Grantor Filing Neos Therapeutics,   Inc. UCC-1 filed with the Secretary of State of the State of Delaware   Intellectual Property Security Agreement filed with the United States Patent   and Trademark Office Neos Therapeutics Commercial, LLC UCC-1 filed with the Secretary   of State of the State of Delaware Neos Therapeutics Brands, LLC UCC-1 filed   with the Secretary of State of the State of Delaware Neos Therapeutics, LP   UCC-1 filed with the Secretary of State of the State of Texas Intellectual   Property Security Agreement filed with the United States Patent and Trademark   Office First Supplement to Intellectual Property Security Agreement filed   with the United States Patent and Trademark Office PharmaFab Texas, LLC UCC-1   filed with the Secretary of State of the State of Texas 

    

 

SCHEDULE 3   GRANTOR INFORMATION ACTIVE/101032594.2 Grantor (Exact Legal Name) State/   Country of Organization Federal Employer Identification Number Chief   Executive Office Address Organizational Identification Number Neos   Therapeutics, Inc. Delaware 27-0395455 2940 N. Hwy 360 Grand Prairie, TX   75050 4698824 Neos Therapeutics Commercial, LLC Delaware 37-1793424 2940 N.   Hwy 360 Grand Prairie, TX 75050 5826332 Neos Therapeutics Brands, LLC   Delaware 35-2542235 2940 N. Hwy 360 Grand Prairie, TX 75050 5826333 Neos Therapeutics,   LP Texas 75-2822938 2940 N. Hwy 360 Grand Prairie, TX 75050 0012158510   PharmaFab Texas, LLC Texas 75-2822937 2940 N. Hwy 360 Grand Prairie, TX 75050   0705103722 

    

 

SCHEDULE 4 A.   PLACE OF BUSINESS/LOCATIONS OF COLLATERAL B. OTHER LOCATIONS OF COLLATERAL   WHERE INVENTORY EXCEEDS $100,000 C. COLLATERAL IN POSSESSION OF LESSOR,   BAILEE, CONSIGNEE OR WAREHOUSEMAN None. ACTIVE/101032594.2 Grantor Address   Owned or Leased? (and if leased, the Lessor’s name and notice address) Neos Therapeutics,   Inc. Cardinal Health Dba Specialty Pharmaceutical Services 15 Ingram Blvd. La   Vergne, TN 37086 3PL distribution center Cardinal Health 105, Inc. Specialty   Pharmaceutical Services 15 Ingram Blvd LaVergne, TN 37086 Attn: Vice   President of Sales Grantor Address Owned or Leased? (and if leased, the   Lessor’s name and notice address) Neos Therapeutics, LP 2940 N. Hwy 360 Grand   Prairie, TX 75050 Lessor: Riverside Business Green, LP c/o Greenfield   Partners, LLC. 2 Post Road West Westport, Connecticut 06880 Attn: Barry P.   Marcus Neos Therapeutics, Inc. 1787 Sentry Parkway West Veva 16, Suite 130   Blue Bell, PA 19422 Lessor: 16-18 KPG III Sentry, LLC c/o Keystone Property   Group, L.P. 125 E. Elm Street, Suite 400 Conshohocken, PA 19428 

    

 

SCHEDULE 5   INTELLECTUAL PROPERTY Patents (All owned by Neos Therapeutics, LP)   ACTIVE/101032594.2 Application No. Application Date Patent No. Registration   Date 11/068,124 02/28/2005 8,318,210 11/27/2012 14/045,671 10/03/2013   9,522,120 12/20/2016 PCT/US06/06670 (PCT) 02/24/2006 N/A N/A 2599585 (Canada)   02/24/2006 2599585 05/20/2014 2007010541 (Mexico) 02/24/2006 295500   02/02/2012 12/717,251 03/04/2010 8,840,924 09/22/2014 PCT/US08/65408 (PCT)   05/30/2008 N/A N/A 2,689,101 (Canada) 05/30/2008 2,689,101 01/22/2013   12/985,340 01/05/2011 8,470,375 06/25/2013 13/490,697 06/07/2012 8,512,759   08/20/2013 13/904,739 05/29/2013 9,057,675 06/16/2015 13/210,829 08/16/2011   N/A N/A PCT/US12/44698 06/28/2012 N/A N/A 13/947,881 07/22/2013 8,709,491   04/29/2014 13/844,537 03/15/2013 9,017,731 04/28/2015 14/661,639 03/18/2015   9,265,737 02/23/2016 13/844,555 03/15/2013 9,839,619 12/12/2017 13/844,628   03/15/2013 N/A N/A 13/844,584 03/15/2013 9,072,680 07/07/2015 13/947,907   07/22/2013 9,089,496 07/28/2015 13/947,861 07/22/2013 N/A N/A 13/844,510   03/15/2013 N/A N/A 12805240.4 (EP) 06/28/2012 N/A N/A PCT/US17/59256 (PCT)   10/31/2017 N/A N/A 2017353921 (AU) 04/29/2019 N/A N/A 17868418.9 (EP)   04/29/2019 N/A N/A 10-2019-7015402 (KR) 05/29/2019 N/A N/A 16/346,850   05/01/2019 N/A N/A PCT/US12/45255 (PCT) 07/02/2012 N/A N/A 12/130,762   05/30/2008 8,313,770 11/20/2012 

    

 

Trademarks   Trademark Applications1 None. Registered Copyrights 1 Intent-to-use   trademarks for which a statement of use has not been filed have not been   listed on this schedule, as they are excluded from the collateral package.   ACTIVE/101032594.2 Owner Description of the Mark App. No. Filing Date Reg.   No. Reg. Date Neos Therapeutics, LP 85949275 6/3/13 5045871 9/20/16 Neos   Therapeutics, LP NEOS THERAPEUTICS 85947902 5/31/13 5281476 9/5/17 Neos   Therapeutics, LP Neos Therapeutics 77202145 6/09/07 3951112 4/25/11 Neos   Therapeutics, LP DTRS 78671913 7/16/05 3514099 10/07/08 Neos Therapeutics, LP   Dynamic Time Release Suspension 78671915 7/16/05 3514100 10/07/08 Neos Therapeutics,   Inc. 87599332 9/7/17 5628952 12/11/18 Neos Therapeutics, Inc. 86847760   12/14/15 5147879 2/21/17 Neos Therapeutics, Inc. 86847780 12/14/15 5387222   1/23/18 Neos Therapeutics, Inc. 86847757 12/14/15 5111115 12/27/16 

    

 

None. Copyright   Applications None. Licenses/Franchising Agreements Neos Therapeutics, Inc.   has a non-exclusive license agreement with Shire LLC (“Shire”) for certain of   Shire's patents with respect to the company’s Adzenys XR-ODT new drug   application. ACTIVE/101032594.2 

    

 

SCHEDULE 6   DEPOSITARY AND OTHER DEPOSIT ACCOUNTS ACTIVE/101032594.2 Owner Name and   Address of Bank Account Number Type of Account Neos Therapeutics, Inc. First   Republic Bank 12626 Hugh Bluff Dr., Suite 400 San Diego, CA 92130 Checking   Neos Therapeutics, Inc. First Republic Bank 12626 Hugh Bluff Dr., Suite 400   San Diego, CA 92130 Funding Neos Therapeutics, LP First Republic Bank 12626   Hugh Bluff Dr., Suite 400 San Diego, CA 92130 Checking Neos Therapeutics, LP   First Republic Bank 12626 Hugh Bluff Dr., Suite 400 San Diego, CA 92130   Lockbox Neos Therapeutics Brands, LLC First Republic Bank 12626 Hugh Bluff   Dr., Suite 400 San Diego, CA 92130 Lockbox Neos Therapeutics, Inc. US Bank   Investment 

    

 

SCHEDULE 7   COMMERCIAL TORT CLAIMS None. ACTIVE/101032594.2 

    

 

EXHIBIT A-IV   Fourth Amendment Perfection Certificate 141565389 

    

 

 

Perfection   Certificate October 2, 2019 Reference is hereby made to that certain Facility   Agreement dated as of May 11, 2016 (as amended by that certain (i) First   Amendment to Facility Agreement dated as of June 1, 2017, by and among Neos   Therapeutics, Inc., a Delaware corporation (the “Borrower”) , the Guarantors   party thereto and the Lenders party thereto, (ii) Second Amendment to   Facility Agreement dated as of November 5, 2018 among the Borrower,   Guarantors and Lenders, (iii) Third Amendment to Facility Agreement dated as   of March 29, 2019 among the Borrower, Guarantors and Lenders and (iv) Fourth   Amendment to Facility Agreement dated as of the date hereof among the   Borrower, Guarantors and Lenders, and as it may be further amended, restated,   amended and restated, supplemented or otherwise modified from time to time,   the "Agreement"), by and among the Lenders party thereto and the   Borrower. Capitalized terms used herein and not otherwise defined shall have   the meanings ascribed to them in the Agreement. Any terms (whether   capitalized or lower case) used in this Perfection Certificate that are   defined in the UCC shall be construed and defined as set forth in the UCC   unless otherwise defined herein or in the Agreement; provided that to the   extent that the UCC is used to define any term used herein and if such term   is defined differently in different Articles of the UCC, the definition of   such term contained in Article 9 of the UCC shall govern. Each of the   undersigned hereby certifies to Collateral Agent (for the benefit of the   Secured Parties) and each of the Lenders as follows as of the date hereof: 1.   Loan Party Information: (a) Jurisdictions of Formation; Foreign Business   Qualifications: Each Loan Party is (i) the type of entity disclosed next to   its name below, (ii) duly formed and validly existing under the laws of the   jurisdiction disclosed next to its name below and (iii) qualified to do   business in the jurisdictions disclosed next to its name below. Except as   indicated below, no Loan Party has changed its jurisdiction of organization   at any time during the past four months. Perfection Certificate   US_141510786v3_333285-00127 9/29/2019 2:53 PM LOAN PARTY ENTITY TYPE AND   JURISDICTION OF FORMATION FOREIGN BUSINESS QUALIFICATIONS Neos Therapeutics,   Inc. Corporation, Delaware None Neos Therapeutics Commercial, LLC LLC,   Delaware None Neos Therapeutics Brands, LLC LLC, Delaware None PharmaFab   Texas, LLC LLC, Texas None Neos Therapeutics, LP LP, Texas None 

    

 

(b) Names: The   exact legal name of each Loan Party, as such name appears in its certified   certificate of incorporation, articles of incorporation, certificate of   formation, or any other organizational document, is set forth below. Also set   forth below next to the name of each Loan Party is (i) a list of any other   prior legal names such Loan Party has had in the past five years, together   with the date of the relevant name change, (ii) a list of all other names   used by such Loan Party in connection with any business or organization to   which such Loan Party became the successor by merger, consolidation,   acquisition, change in form, nature or jurisdiction of organization or   otherwise or on any filings with the Internal Revenue Service, in each case,   at any time in the past five years, and (iii) a list of all of the present   and prior trade names used by such Loan Party at any time in the past five   years. (c) Collateral Locations: Set forth below is a list of all real   property locations owned or leased by each Loan Party Obligor, including (i)   the Collateral located on, and uses of, such real property, (ii) the   addresses of each parcel of real property and (iii) whether owned or leased   (and if leased, the complete name and notice address of the lessor). Except   as described below, no Loan Party Obligor has entered into any leases,   subleases, tenancies, franchise agreements, licenses or other occupancy   arrangements as owner, lessor, sublessor, licensor, franchisor or grantor   with respect to any real property and no Loan Party Obligor has any leases   which require the consent of the landlord, tenant or other party thereto to   the transactions contemplated by the Loan Documents. Perfection Certificate   US_141510786v3_333285-00127 9/29/2019 2:53 PM LOAN PARTY OBLIGOR COLLATERAL   DESCRIPTION/USE (indicate if any fixtures) COLLATERAL LOCATION OR PLACE OF   BUSINESS (INCLUDING CHIEF EXECUTIVE OFFICE) OWNER/LE SSOR (IF LEASED) Neos   Therapeutics, LP Inventory Manufacturing equipment Lab equipment Leasehold   improvements 2940 N. Hwy, 360 Suites 100, 200 and 400* Grand Prairie, TX   75050 Neos (Owner) LOAN PARTY LEGAL NAME PRIOR LEGAL NAMES OTHER NAMES   EXISTING/PRIOR TRADE NAMES Neos Therapeutics, Inc. None None None Neos   Therapeutics Commercial, LLC None None None Neos Therapeutics Brands, LLC   None None None PharmaFab Texas, LLC None None None Neos Therapeutics, LP None   None None 

    

 

(Lessor)   Leasing Financial LLC (Lessor) (Lessor) Perfection Certificate   US_141510786v3_333285-00127 9/29/2019 2:53 PM Computer equipment and s/w IP   Cash * Corporate offices Neos Therapeutics, LP Manufacturing equipment Lab   equipment Computer equipment (certain pieces only) 2940 N. Hwy, 360 Suites   100, 200 and 400 Grand Prairie, TX 75050 Essex Capital Corporation Neos   Therapeutics, LP Forklift 2940 N. Hwy, 360 Suites 100 and 200 Grand Prairie,   TX 75050 N J Malin - Raymond Corporation (Lessor) Neos Therapeutics, LP Lab   equipment 2940 N. Hwy, 360 Suites 100 and 200 Grand Prairie, TX 75050 DeLage   Landen Services (Lessor) Neos Therapeutics, Inc. Neos Therapeutics   Commercial, LLC Neos Therapeutics Brands, LLC PharmaFab Texas, LLC Neos   Therapeutics, LP Office, manufacturing facility, laboratory 2940 N. Hwy, 360   Suite 100, 200 and 400 Grand Prairie, TX 75050 GDI Portfolio I Acquisition,   Neos Therapeutics, Inc. Neos Therapeutics Commercial, LLC Neos Therapeutics   Brands, LLC PharmaFab Texas, LLC Neos Therapeutics, LP Office space 787   Sentry Park West, Viva 16, Suite 130 Blue Bell, PA 19422 16-18 KPG III   Sentry, LLC Neos Therapeutics, Inc. Neos Therapeutics Commercial, LLC Neos   Therapeutics Brands, LLC PharmaFab Texas, LLC Neos Therapeutics, LP Computer   equipment and s/w 787 Sentry Park West, Viva 16, Suite 130 Blue Bell, PA   19422 Neos (Owner) 

    

 

(d) Collateral   in Possession of Lessor, Bailee, Consignee or Warehouseman: Set forth below   is a list of all third parties with possession of any Collateral (including   Inventory and Equipment) of any Loan Party Obligor, including (i) the name   and address of such third party, (ii) a description of the Collateral in such   third party's possession, and (iii) the location of such Collateral. (e)   Litigation: Set forth below is a description of all claims, proceedings,   litigation or investigations pending or (to the best of each Loan Party   Obligor's knowledge) threatened against any Loan Party. None.   (f)Capitalization of Loan Parties: Attached hereto as Exhibit A is a   corporate organizational chart that lists each Loan Party and each of their   respective Subsidiaries, and indicates whether any of the Loan Parties is   inactive and has de minimis assets. Set forth below is a true and correct   list of all of the issued and outstanding Stock of each Loan Party and its   Subsidiaries and the record and beneficial owners of such Stock, along with   the certificate number representing such Stock. Perfection Certificate   US_141510786v3_333285-00127 9/29/2019 2:53 PM Loan Party Equityholder Equity   Description Percentage of Outstanding Equity Issued by Loan Party Certificate   (Indicate No.) Neos Therapeutics, Inc. Publicly traded company Common shares   100% Not available Neos Therapeutics Commercial, LLC Neos Therapeutics, Inc.   LLC Interest 100% Not applicable Neos Therapeutics Brands, LLC Neos   Therapeutics, Inc. LLC Interest 100% Not applicable PharmaFab Texas, LLC Neos   Therapeutics, Inc. LLC Interest 100% Not applicable LOAN PARTY OBLIGOR   ADDRESS OF COLLATERAL BAILEE/ CONSIGNEE/ WAREHOUSEMAN DESCRIPTION OF   COLLATERAL Neos Therapeutics, LP Cardinal Health dba Specialty Pharmaceutical   Services 15 Ingram Blvd. La Vergne, TN 37086 3PL (warehouseman) Inventory AR   records 

    

 

(g) Other Stock   and Investment Property: Set forth below is a list of all Investment Property   owned by any Loan Party Obligor, including any Stock not described above in   Section 1(f). (h) Material Contracts: Set forth below is a list of all   Material Contracts of any Loan Party. See attached Schedule 1(h). (i)   Extraordinary Transactions: Except for those purchases, mergers,   acquisitions, consolidations, and other transactions described below, all of   the Collateral has been originated by each Loan Party in the ordinary course   of business or consists of goods which have been acquired by such Loan Party   in the ordinary course of business from a person in the business of selling   goods of that kind. None. 2. Commercial Tort Claims: Set forth below is a   true and correct list of all commercial tort claims held by any Loan Party,   including a brief description thereof containing the case name and parties.   None. 3. Deposit Accounts / Other accounts: Set forth below is a list of all   Deposit Accounts, Securities Accounts, Commodiy accounts, Securities   Entitlements and Commodity Contracts and all other depositary, securities,   commodity and other accounts maintained by each Loan Party Obligor as of the   date hereof, including for each such account (i) the name of the Loan Party   Obligor maintaining the account, (ii) the name of the financial institution,   securities intermediary, commodity intermediary or other Person at which the   account is maintained, (iii) the account number and the purpose of the   account and (iv) whether the account is a "Restricted Account".   Perfection Certificate US_141510786v3_333285-00127 9/29/2019 2:53 PM Loan   Party Obligor Name of Financial Institution Account Number (* indicates   Purpose of Account Is the Account a "Restricted Account" as Loan   Party Obligor Description Neos Therapeutics, Inc. Short term investment of   excess cash or cash equivalents Neos Therapeutics, LP Neos Therapeutics, Inc.   Partnership Interest 99% Not applicable Neos Therapeutics, LP PharmaFab   Texas, LLC Partnership Interest 1% Not applicable 

    

 

4. Intellectual   Property: (a) Patents and Patent Applications: Set forth below is a complete   and correct list of all patents and applications for patents owned by any   Loan Party Obligor. See attached schedule 4(a). (b) Trademarks and Trademark   Applications: Set forth below is a complete and correct list of all   trademarks and applications for trademarks owned by any Loan Party Obligor.   See attached schedule 4(b). (c) Copyrights and Copyright Applications: Set   forth below is a complete and correct list of all copyrights and applications   for copyrights owned by any Loan Party Obligor. Perfection Certificate   US_141510786v3_333285-00127 9/29/2019 2:53 PM Loan Party Obligor Copyright   Title Copyright Registration Date Copyright Registration Number Copyright   Application Number None. account is approved for funding of loan proceeds)   defined in Annex II (Yes or No?) Neos Therapeutics, Inc. US Bank Investment   No Neos Therapeutics, Inc. First Republic Bank Checking No Neos Therapeutics,   LP First Republic Bank Checking No Neos Therapeutics, LP First Republic Bank   Funding No Neos Therapeutics, LP First Republic Bank Lock Box No Neos   Therapeutics Brands, LLC First Republic Bank Lock Box No 

    

 

(d)   Intellectual Property Licenses: Set forth below is a complete and correct   list of all Intellectual Property licenses entered into by any Loan Party   Obligor pursuant to which (i) any Loan Party Obligor has provided any license   or other rights in Intellectual Property owned or controlled by such Loan   Party Obligor to any other Person (other than non-exclusive software licenses   granted in the ordinary course of business) or (ii) any Person has granted to   any Loan Party Obligor any license or other rights in Intellectual Property   owned or controlled by such Person that is material to the business of such   Loan Party, including any Intellectual Property that is incorporated in any   Inventory or other product marketed, sold, licensed, or distributed by such   Loan Party Obligor. (i) License Agreement by and between Neos Therapeutics,   Inc. and Actavis Laboratories FL, Inc. dated October 17, 2017 (Adzenys   XR-ODT) License Agreement by and between Neos Therapeutics, Inc. and Teva   Pharmaceuticals USA, Inc. dated December 21, 2018 (Cotempla XR-ODT) (ii)   License Agreement by and between Shire LLC and Neos Therapeutics, Inc. dated   July 23, 2014 (Adzenys XR-ODT) License Agreement by and between Shire LLC and   Neos Therapeutics, Inc. dated March 6, 2017 (Adzenys ER) Exclusive License   Agreement by and between NeuRx Pharmaceuticals LLC and Neos Therapeutics,   Inc. dated October 233, 2018 (NRX-101) 5. Insurance: A true and complete   listing of all insurance carried by any Loan Party as of the date hereof,   including issuers, coverages and deductibles, is set forth below. See   attached Schedule 5. 6. Other Assets: A Loan Party Obligor owns the following   kinds of assets: Perfection Certificate US_141510786v3_333285-00127 9/29/2019   2:53 PM 

    

 

Aircraft: Yes   No x Letter-of-Credit Rights: Yes No x Indebtedness (including as evidenced   by promissory notes, instruments (other than checks to be deposited in the   ordinary course of business), tangible chattel paper, and/or electronic   chattel paper): Yes No x Vessels, boats or ships: Yes No x Railroad rolling   stock: Yes No x Motor Vehicles or similar titled collateral. Yes No x If the   answer is yes to any of these other types of assets, please describe on   Exhibit B. 7. Existing Indebtedness: Set forth below is a complete and   correct list of all existing Indebtedness of any Loan Party: [signature page   follows] Perfection Certificate US_141510786v3_333285-00127 9/29/2019 2:53 PM   Debt Exit Fee Gross Debt Deerfield Deerfield Private Design Fund III   30,000,000 500,159 30,500,159 Deerfield Special Situations Fund LP 15,000,000   250,080 15,250,080 Total Deerfield 45,000,000 750,239 45,750,239 Financing   Leases Essex Lease Sch 1 145,939 145,939 Essex Lease Sch 2 1,135,623   1,135,623 N J Malin - Raymond Leasing Corporation 67,693 67,693 DeLage Landen   Financial Services 388,750 388,750 Total financing leases 1,738,005 -   1,738,005 Earnouts Cornerstone Biopharma, Inc. 1,000,000 1,000,000 Total Debt   47,738,005 750,239 48,488,244 

    

 

IN WITNESS   WHEREOF, the undersigned have signed this Perfection Ce1tificate as of the   date first set forth above. NEOS THERAPEUTICS, INC. By Name: Gerald McLaugh   li n Title: Ch iefExecuti ve Officer NEOS THERAPEUTICS COMMERCIAL, LLC By:   Name: Gerald McLaughlin Title: Chief Executive Officer - NEOS THERAPEUTICS   BRANDS, LLC By: crk Name: Gera ld McLaughlin Title: Chief Executive Officer   PHARMAFAB TEXAS, LLC By : C (k"-:-:-:---L --Name: Gerald McLaughlin   Title: Sole Manager NEOS THERAPEUTICS, LP By: PharmaFab Texas, LLC, I ts General   Partner 9/1-By: Name: Gerald McLaughli n Title: Sole Manager Perfection   Certificate US_ I41 51 0786v3_333285-001 27 9/2912019 2:53 PM 

    

 

Exhibit A   CORPORATE ORGANIZATIONAL CHART Perfection Certificate   US_141510786v3_333285-00127 9/29/2019 2:53 PM 

    

 

Neos hold all   cash received from funding less working capital intercompany transfers. 100%   100% 100% Inactive Holds investment in LP Inactive 99% Sales of NT Brand   products Deminimus assets 1% LP includes the following: Payroll for all   employees All contract Manufacturing All current operations 75-2822938 Neos   Therapeutics, LP 75-2822937 PharmaFab, Texas, LLC (General Partner)   35-2542235 Neos Therapeutics Brands LLC 37-1793424 Neos Therapeutics   Commercial LLC 27-0395455 Neos Therapeutics, Inc 

    

 

Exhibit B   DESCRIPTION OF OTHER ASSETS 11 ACTIVE/99933240.7 141510786   US_141510786v3_333285-00127 9/29/2019 2:53 PM 

    

 

Schedule 1(h) –   Material Agreements Out licenses: License Agreement between Neos   Therapeutics, Inc. and Actavis Laboratories FL, Inc. dated October 17, 2017   (Adzenys XR-ODT) License Agreement between Neos Therapeutics, Inc. and Teva   Pharmaceuticals USA, Inc. dated December 21, 2018 (Cotempla XR-ODT) In   licenses: License Agreement between Shire LLC and Neos Therapeutics, Inc.   dated July 23, 2014 (Adzenys XR-ODT) License Agreement between Shire LLC and   Neos Therapeutics, Inc. dated March 6, 2017 (Adzenys ER) Exclusive License   Agreement between NeuRx Pharmaceuticals LLC and Neos Therapeutics, Inc. dated   October 23, 2018 (NRX-101) Asset Purchase Agreements: Asset Purchase   Agreement by and between Neos Therapeutics, Inc. and Cornerstone BioPharma,   Inc. dated August 28, 2014 Settlement Agreements: Settlement Agreement by and   between Shire LLC and Neos Therapeutics, Inc. dated July 23, 2014 Settlement   Agreement by and between Neos Therapeutics, Inc. and Actavis Laboratories FL,   Inc. dated October 17, 2017 Settlement Agreement by and between Neos   Therapeutics, Inc and Teva Pharmaceuticals USA, Inc. dated December 21, 2018   Leases: Commercial Lease Agreement by and between Riverside Business Green   and Neos Therapeutics, LP dated June 29, 1999, as amended Employment Agreements:   Amended and Restated Employment Agreement by and between Neos Therapeutics,   Inc. and Richard I. Eisenstadt dated July 10, 2015 Employment Agreement dated   June 27, 2018 by and between Neos Therapeutics, Inc. and Gerald McLaughlin   Debt: Facility Agreement between Neos Therapeutics, Inc. and Deerfield (as   lenders), including Amendments One, Two and Three ACTIVE/100087486.1 

    

 

Guaranty and   Security Agreement between Neos Therapeutics, Inc. and Deerfield (as lenders)   dated May 11, 2016 Intellectual Property Security Agreement between Neos   Therapeutics, Inc. and Deerfield (as lenders) dated May 11, 2016 Supply   Agreements: Supply Agreement by and between Neos Therapeutics, Inc. and   Coating Place, Inc. dated August 28, 2014 Supply Agreement by and between   Johnson Matthey Inc. and Neos Therapeutics, LP dated January 1, 2019 Supply   Agreement by and between Noramco, Inc. and Neos Therapeutics, LP dated   December 1, 2017 Neos/Amaray Manufacturing Agreement dated March 21, 2017   Distribution Agreement: Exclusive Distribution Agreement by and between   Cardinal Health and Neos Therapeutics, Inc. dated October 13, 2014, as   amended. Wholesale Purchase and Distribution Service Agreements: Distribution   Services Agreement by and between Cardinal Health and Neos Therapeutics, LP   dated April 28, 2016, as amended Cardinal Health Wholesale Purchase Agreement   by and between Neos Therapeutics, LP and Cardinal Health dated April 27, 2016   Core Distribution Agreement by and between McKesson Corporation and Neos   Therapeutics, LP effective April 1, 2016, as amended Distribution Services   Agreement by and between AmerisourceBergen Drug Corporation and Neos   Therapeutics, LP dated April 21, 2016, as amended (Branded) Master   Distribution Services Agreement by and between AmerisourceBergen Drug   Corporation and Neos Therapeutics, LP dated January 1, 2015 (Generic) PRxO   Generics Program Addendum to Master Distribution Services Agreement Master   Services Agreement by and between AmerisourceBergen Global Manufacturing   Services GmbH and Neos Therapeutics, Inc. dated January 1, 2015 (Generic)   PRxO Generics Program Addendum to Master Services Agreement Rebate   Agreements: Rebate Agreement by and between CaremarkPCS Health, L.L.C. and   Neos Therapeutics, LP dated April 15, 2016, as amended ACTIVE/100087486.1 

    

 

Preferred   Savings Grid Rebate Program Agreement by and between Express Scripts, Inc.   and Neos Therapeutics dated November 6, 2017, as amended Commercial Inflation   Agreement by and between Express Scripts, Inc. and Neos Therapeutics dated   November 6, 2017, as amended National Rebate Agreement by and between the   Secretary of Health and Human Services and Neos Therapeutics, LP dated May 9,   2018 National Rebate Agreement by and between the Secretary of Health and   Human Services and Neos Therapeutics Brands, LLC dated May 9, 2018   Pharmaceutical Pricing Agreement by and between the Secretary of Health and   Human Services and Neos Therapeutics dated January 27, 2015 Master Agreement   by and between the Secretary of Veterans Affairs and Neos Therapeutics, LP   Pharmaceutical Pricing Agreement by and between the Secretary of Veterans   Affairs and Neos Therapeutics, LP Master Agreement by and between the   Secretary of Veterans Affairs and Neos Therapeutics Brands, LLC dated June 7,   2016, as amended and modified Pharmaceutical Pricing Agreement by and between   the Secretary of Veterans Affairs and Neos Therapeutics Brands, LLC dated   June 7, 2016, as amended and modified ACTIVE/100087486.1 

    

 

10783479v2   7/19/2019 9:16 AM ACTIVE/100087489.3 7528.013 Loan Party Obligor Patent   Registration Number Registration Date Patent Application Number Application   Date Neos Therapeutics, LP 8,318,210 11/27/2012 11/068,124 02/28/2005 Neos   Therapeutics, LP 9,522,120 12/20/2016 14/045,671 10/03/2013 Neos   Therapeutics, LP PCT/US06/06670 (PCT) 02/24/2006 Neos Therapeutics, LP   2599585 05/20/2014 2599585 (Canada) 02/24/2006 Neos Therapeutics, LP 295500   02/02/2012 2007010541 (Mexico) 02/24/2006 Neos Therapeutics, LP 8,840,924   09/22/2014 12/717,251 03/04/2010 Neos Therapeutics, LP 8,313,770 11/20/2012   12/130,762 05/30/2008 Neos Therapeutics, LP PCT/US08/65408 (PCT) 05/30/2008   Neos Therapeutics, LP 2,689,101 01/22/2013 2,689,101 (Canada) 05/30/2008 Neos   Therapeutics, LP 8,470,375 06/25/2013 12/985,340 01/05/2011 Neos   Therapeutics, LP 8,512,759 08/20/2013 13/490,697 06/07/2012 Neos   Therapeutics, LP 9,057,675 06/16/2015 13/904,739 05/29/2013 Neos   Therapeutics, LP 13/210,829 08/16/2011 Neos Therapeutics, LP PCT/US12/44698 06/28/2012   Neos Therapeutics, LP 8,709,491 04/29/2014 13/947,881 07/22/2013 Neos   Therapeutics, LP 9,017,731 04/28/2015 13/844,537 03/15/2013 Neos   Therapeutics, LP 9,265,737 02/23/2016 14/661,639 03/18/2015 Neos   Therapeutics, LP 9,839,619 12/12/2017 13/844,555 03/15/2013 Neos   Therapeutics, LP 13/844,628 03/15/2013 Neos Therapeutics, LP 9,072,680   07/07/2015 13/844,584 03/15/2013 Neos Therapeutics, LP 9,089,496 07/28/2015   13/947,907 07/22/2013 Neos Therapeutics, LP 13/947,861 07/22/2013 Neos   Therapeutics, LP 13/844,510 03/15/2013 Neos Therapeutics, LP 12805240.4 (EP)   06/28/2012 Neos Therapeutics, LP PCT/US17/59256 (PCT) 10/31/2017 Neos   Therapeutics, LP 2017353921 (AU) 04/29/2019 

    

 

ACTIVE/100087489.3   Neos Therapeutics, LP 17868418.9 (EP) 04/29/2019 Neos Therapeutics, LP   10-2019-7015402 (KR) 05/29/2019 Neos Therapeutics, LP 16/346,850 05/01/2019   Neos Therapeutics, LP PCT/US12/45255 (PCT) 07/02/2012 

    

 

Schedule 4(b)   Trademarks Loan Party Obligor Trademark Title Trademark Application Number   Trademark Registration Number Date of Application Date of Registration Neos   Therapeutics, LP Adzenys 85/949275 5045871 06/03/2013 09/20/2016 Neos   Therapeutics, Inc. Adzenys ER 87/599332 5628952 09/07/2017 12/11/2018 Neos   Therapeutics, Inc. Adzenys XR-ODT 86/847760 5147879 12/14/2015 02/21/2017   Neos Therapeutics, Inc. Alumbria 87/482500 06/09/2017 Neos Therapeutics, Inc.   Alumbria XR-ODT 88/471408 06/13/2019 Neos Therapeutics, Inc. Cotempla   87/160228 09/06/2016 Neos Therapeutics, Inc. Cotempla XR-ODT 86/847780   5387222 12/14/2015 01/23/2018 Neos Therapeutics, LP DTRS 78/671913 3514099   07/16/2005 10/07/2008 Neos Therapeutics, LP Dynamic Time Release Suspension   78/671915 3514100 07/16/2005 10/07/2008 Neos Therapeutics, Inc. Logo   86/847757 5111115 12/14/2015 12/27/2016 Neos Therapeutics, LP Neos   Therapeutics 85/947902 5281476 05/31/2013 09/05/2017 Neos Therapeutics, LP   Neos Therapeutics 77/202145 3951112 06/09/2007 04/26/2011 Neos Therapeutics,   Inc. Vozentez 87/160248 09/02/2016 

    

 

Schedule 5 -   Insurance ACTIVE/100087490.1 Issuer Coverage Aggregate Deductable Federal   Insurance Co. General Liability $2,000,000 $5,000 Federal Insurance Co.   Property – In Transit $500,000 $10,000 Federal Insurance Co. BPP and EDP   $43,300,000 $10,000 Federal Insurance Co. Business Income $30,000,000 24 hrs   Federal Insurance Co. Schedule Equipment $55,375 $10,000 Federal Insurance   Co. Business Auto $1,000,000 $500 Federal Insurance Co. Workers Comp   $1,000,000 $0 Federal Insurance Co. Umbrella $5,000,000 Lloyds of London   Products $10,000,000 $100,000 XL Specialty Primary D&O $10,000,000   $1,500,000 AIG 1st Excess D&O $5,000,000 xs $10MM Old Republic 2nd Excess   D&O $5,000,000 xs $15MM AIG 3rd Excess D&O $5,000,000 xs $20MM AWAC   4th Excess D&O $5,000,000 xs $25MM Nationwide 5th Excess D&O   $5,000,000 xs $30MM Chubb 6th Excess D&O Side A $15,000,000 xs $35MM   Chubb EPL $3,000,000 $50,000 Chubb Fiduciary $3,000,000 $0 Chubb Crime   $5,000,000 $25,000 

    

 

EXHIBIT A-V   Post-Fourth Amendment Perfection Certificate 141565389 

    

 

EXHIBIT A-V TO   FOURTH AMENDMENT TO FACILITY AGREEMENT Form of Post-Fourth Amendment   Perfection Certificate , 20 Reference is hereby made to that certain Facility   Agreement dated as of May 11, 2016 (as amended by that certain (i) First   Amendment to Facility Agreement dated as of June 1, 2017, by and among Neos   Therapeutics, Inc., a Delaware corporation (the “Borrower”) , the Guarantors   party thereto and the Lenders party thereto, (ii) Second Amendment to   Facility Agreement dated as of November 5, 2018 among the Borrower,   Guarantors and Lenders, (iii) Third Amendment to Facility Agreement dated as   of March 29, 2019 among the Borrower, Guarantors and Lenders and (iv) Fourth Amendment   to Facility Agreement dated as of October 2, 2019 among the Borrower,   Guarantors and Lenders, and as it may be further amended, restated, amended   and restated, supplemented or otherwise modified from time to time, the   "Agreement"), by and among the Lenders party thereto and the   Borrower. Capitalized terms used herein and not otherwise defined shall have   the meanings ascribed to them in the Agreement. Any terms (whether   capitalized or lower case) used in this Post-Fourth Amendment Perfection   Certificate that are defined in the UCC shall be construed and defined as set   forth in the UCC unless otherwise defined herein or in the Agreement;   provided that to the extent that the UCC is used to define any term used   herein and if such term is defined differently in different Articles of the   UCC, the definition of such term contained in Article 9 of the UCC shall   govern. Each of the undersigned hereby certifies to Collateral Agent (for the   benefit of the Secured Parties) and each of the Lenders as follows as of the   date hereof: 1. Loan Party Information: (a) Jurisdictions of Formation;   Foreign Business Qualifications: Each Loan Party is (i) the type of entity   disclosed next to its name below, (ii) duly formed and validly existing under   the laws of the jurisdiction disclosed next to its name below and (iii)   qualified to do business in the jurisdictions disclosed next to its name   below. Except as indicated below, no Loan Party has changed its jurisdiction   of organization at any time during the past four months. 1 LOAN PARTY ENTITY   TYPE AND JURISDICTION OF FORMATION FOREIGN BUSINESS QUALIFICATIONS 

    

 

(b) Names: The   exact legal name of each Loan Party, as such name appears in its certified   certificate of incorporation, articles of incorporation, certificate of   formation, or any other organizational document, is set forth below. Also set   forth below next to the name of each Loan Party is (i) a list of any other   prior legal names such Loan Party has had in the past five years, together   with the date of the relevant name change, (ii) a list of all other names   used by such Loan Party in connection with any business or organization to   which such Loan Party became the successor by merger, consolidation,   acquisition, change in form, nature or jurisdiction of organization or   otherwise or on any filings with the Internal Revenue Service, in each case,   at any time in the past five years, and (iii) a list of all of the present   and prior trade names used by such Loan Party at any time in the past five   years. (c) Collateral Locations: Set forth below is a list of all real   property locations owned or leased by each Loan Party Obligor, including (i)   the Collateral located on, and uses of, such real property, (ii) the   addresses of each parcel of real property and (iii) whether owned or leased   (and if leased, the complete name and notice address of the lessor). Except   as described below, no Loan Party Obligor has entered into any leases,   subleases, tenancies, franchise agreements, licenses or other occupancy   arrangements as owner, lessor, sublessor, licensor, franchisor or grantor   with respect to any real property and no Loan Party Obligor has any leases   which require the consent of the landlord, tenant or other party thereto to   the transactions contemplated by the Loan Documents. 2 LOAN PARTY OBLIGOR   COLLATERAL DESCRIPTION/USE (indicate if any fixtures) COLLATERAL LOCATION OR   PLACE OF BUSINESS (INCLUDING CHIEF EXECUTIVE OFFICE) OWNER/LE SSOR (IF   LEASED) LOAN PARTY LEGAL NAME PRIOR LEGAL NAMES OTHER NAMES EXISTING/PRIOR   TRADE NAMES 

    

 

(d) Collateral   in Possession of Lessor, Bailee, Consignee or Warehouseman: Set forth below   is a list of all third parties with possession of any Collateral (including   Inventory and Equipment) of any Loan Party Obligor, including (i) the name   and address of such third party, (ii) a description of the Collateral in such   third party's possession, and (iii) the location of such Collateral. (e)   [Reserved] (f)Capitalization of Loan Parties: Attached hereto as Exhibit A is   a corporate organizational chart that lists each Loan Party and each of their   respective Subsidiaries, and indicates whether any of the Loan Parties is   inactive and has de minimis assets. Set forth below is a true and correct   list of all of the issued and outstanding Stock of each Loan Party and its   Subsidiaries and the record and beneficial owners of such Stock, along with   the certificate number representing such Stock. 3 Loan Party Equityholder   Equity Description Percentage of Outstanding Equity Issued by Loan Party   Certificate (Indicate No.) LOAN PARTY OBLIGOR ADDRESS OF COLLATERAL BAILEE/   CONSIGNEE/ WAREHOUSEMAN DESCRIPTION OF COLLATERAL 

    

 

(g) Other Stock   and Investment Property: Set forth below is a list of all Investment Property   owned by any Loan Party Obligor, including any Stock not described above in   Section 1(f). (h)[Reserved] (i)Extraordinary Transactions: Except for those   purchases, mergers, acquisitions, consolidations, and other transactions   described below, all of the Collateral has been originated by each Loan Party   in the ordinary course of business or consists of goods which have been   acquired by such Loan Party in the ordinary course of business from a person   in the business of selling goods of that kind. 2. Commercial Tort Claims: Set   forth below is a true and correct list of all commercial tort claims held by   any Loan Party, including a brief description thereof containing the case   name and parties. 3. Deposit Accounts / Other accounts: Set forth below is a   list of all Deposit Accounts, Securities Accounts, Commodity Accounts,   Securities Entitlements and Commodity Contracts and all other depositary,   securities, commodity and other accounts maintained by each Loan Party   Obligor as of the date hereof, including for each such account (i) the name   of the Loan Party Obligor maintaining the account, (ii) the name of the   financial institution, securities intermediary, commodity intermediary or   other Person at which the account is maintained, (iii) the account number and   the purpose of the account and (iv) whether the account is a "Restricted   Account". 4. Intellectual Property: (a) Patents and Patent Applications:   4 Loan Party Obligor Name of Financial Institution Account Number (*   indicates account is approved for funding of loan proceeds) Purpose of   Account Is the Account a "Restricted Account" as defined in Annex   II (Yes or No?) Loan Party Obligor Description 

    

 

Set forth below   is a complete and correct list of all patents and applications for patents   owned by any Loan Party Obligor. (b) Trademarks and Trademark Applications:   Set forth below is a complete and correct list of all trademarks and   applications for trademarks owned by any Loan Party Obligor. (c) Copyrights   and Copyright Applications: Set forth below is a complete and correct list of   all copyrights and applications for copyrights owned by any Loan Party   Obligor. (d) Intellectual Property Licenses: Set forth below is a complete   and correct list of all Intellectual Property licenses entered into by any   Loan Party Obligor pursuant to which (i) any Loan Party Obligor has provided   any license or other rights in Intellectual Property owned or controlled by   such Loan Party Obligor to any other Person (other than non-exclusive   software licenses granted in the ordinary course of business) or (ii) any   Person has granted to any Loan Party Obligor any license or other rights in   Intellectual Property owned or controlled by such Person that is material to   the business of such Loan Party, including any Intellectual Property that is   incorporated in any Inventory or other product marketed, sold, licensed, or   distributed by such Loan Party Obligor. 5. Insurance: A true and complete   listing of all insurance carried by any Loan Party as of the date hereof,   including issuers, coverages and deductibles, is set forth below. 6. Other   Assets: 5 Loan Party Obligor Copyright Title Copyright Registration Date   Copyright Registration Number Copyright Application Number Loan Party Obligor   Trademark Title Trademark Application Number Trademark Registration Number   Date of Application Date of Registration Loan Party Obligor Patent   Registration Number Registration Date Patent Application Number Application   Date 

    

 

A Loan Party   Obligor owns the following kinds of assets: Aircraft: Yes No Letter-of-Credit   Rights: Yes No Indebtedness (including as evidenced by promissory notes,   instruments (other than checks to be deposited in the ordinary course of   business), tangible chattel paper, and/or electronic chattel paper): Yes No   Vessels, boats or ships: Yes No Railroad rolling stock: Yes No Motor Vehicles   or similar titled collateral. Yes No If the answer is yes to any of these   other types of assets, please describe on Exhibit B. [signature page follows]   6 

    

 

IN WITNESS   WHEREOF, the undersigned have signed this Post-Fourth Amendment Perfection   Certificate as of the date first set forth above. NEOS THERAPEUTICS, INC. By   Name: Title: NEOS THERAPEUTICS COMMERCIAL, LLC By: Name: Title: NEOS   THERAPEUTICS BRANDS, LLC By: Name: Title: PHARMAFAB TEXAS, LLC By: Name:   Title: NEOS THERAPEUTICS, LP By: Pharmafab Texas, LLC, Its General Partner   By: Name: Title: Post­Fourth Amendment Perfection Certificate 

    

 

Exhibit A   CORPORATE ORGANIZATIONAL CHART 141541774 

    

 

Exhibit B   DESCRIPTION OF OTHER ASSETS 141541774 

    

 

EXHIBIT B   Closing Checklist 141565389 

    

 

DEERFIELD /   NEOS THERAPEUTICS FOURTH AMENDMENT TO FACILITY AGREEMENT CLOSING CHECKLIST1   company (“NTC”) NTLP Facility Agreement 1 Capitalized terms not otherwise   defined herein shall have the meaning ascribed to them under the Fourth   Amendment to Facility Agreement or Amended Facility Agreement, as applicable.   141384025 Document Responsible Party Signatures 1. Fourth Amendment to   Facility Agreement Katten Borrower NTC NTB PFT Deerfield 2. Exhibits to   Fourth Amendment to Exhibit A-I—Amended Facility Agreement Katten N/A Exhibit   A-II—Amended and Restated Schedules to Amended Facility Agreement Goodwin N/A   Exhibit A-III—Amended and Restated Schedules to Security Agreement Goodwin   N/A Exhibit A-IV – Perfection Certificate Katten Borrower Guarantors Exhibit   A-V – Form of Post-Fourth Katten Borrower Borrower Neo Therapeutics, Inc., a   Delaware corporation Deerfield Deerfield Private Design Fund III, L.P. and   Deerfield Special Situations Fund, L.P. Collateral Agent Deerfield Mgmt, L.P.   ABL Agent Encina Business Credit, LLC Goodwin Goodwin Procter LLP, Borrower’s   counsel Katten Katten Muchin Rosenman LLP, Deerfield’s and Collateral Agent’s   counsel Baker Baker Botts LLP, Borrower’s local counsel (TX) Goldberg   Goldberg Kohn Ltd., ABL Agent’s counsel Guarantors Neos Therapeutics   Commercial, LLC, a Delaware limited liability Neos Therapeutics Brands, LLC,   a Delaware limited liability company (“NTB”) Neos Therapeutics, LP, a Texas   limited partnership (“NTLP”) PharmaFab Texas, LLC, a Texas limited liability   company (“PFT”) 

    

 

natories   Applicable sig Agent Agent 2 Document Responsible Party Signatures Amendment   Perfection Certificate Guarantors Exhibit B – Closing Checklist Katten N/A   Exhibit C—ABL Documents Goldberg/Goodwin sig Applicable 3. ABL Agreement   Goldberg/Goodwin ABL Agent Encina Business Credit SPV, LLC Borrower NTC NTB   NTLP PFT 4. Other ABL Documents Goldberg/Goodwin natories 5. Intercreditor   Agreement Katten/Goldberg ABL Agent Collateral Agent Deerfield Borrower NTC   NTB NTLP PFT 6. Legal Opinion Goodwin Goodwin 7. Intellectual Property   Security Agreement Katten Borrower Collateral 8. Supplement to Intellectual   Property Security Agreement Katten NTLP Collateral 9. Perfection Certificate   Goodwin Borrower NTC NTB NTLP PFT 10. First Republic Bank DACAs Goodwin First   Republic Bank ABL Agent Collateral Agent 

    

 

signatory   Applicable sig signatories Applicable sig Applicable sig 3 Document   Responsible Party Signatures Borrower NTLP NTB A. CERTIFICATES AND   MISCELLANEOUS 11. Omnibus Secretary’s Certificate of Borrower, NTC, NTB and   NTLP, attaching the following: Goodwin Applicable A.Certificate of   Incorporation, Certificate of Formation and Certificate of Limited   Partnership Goodwin N/A B.Bylaws and Operating Agreements Goodwin N/A   C.Resolutions Goodwin N/A D.Incumbency Goodwin natories E.Good Standings (DE   and/or TX, as applicable) Goodwin N/A 12. Sole Manager’s Certificate of PFT,   attaching the following: Goodwin Applicable A. Certificate of Formation   Goodwin N/A B. Operating Agreement Goodwin N/A C. Resolutions Goodwin   natories D. Incumbency Goodwin natories E. Good Standing (TX) Goodwin N/A 

    

 

4 Document   Responsible Party Signatures 13. Payment of all fees, costs and expenses   pursuant to Section 4(d) of the Fourth Amendment to Facility Agreement   Borrower N/A 14. Receipt by the Collateral Agent and the Lenders of all other   documents, agreements, instruments and other information requested by any   Lender Borrower N/A B. POST-CLOSING OBLIGATIONS 15. SACA (US Bank) Goodwin US   Bank ABL Agent Collateral Agent Borrower 16. Collateral Assignment of   Business Interruption Insurance listing Collateral Agent as first lien   creditor and ABL Agent as second lien creditor Katten Collateral Agent ABL   Agent Borrower Guarantors 17. Insurance Endorsements listing Collateral Agent   as first lien creditor and ABL Agent as second lien creditor Goodwin   Applicable insurance companies 18. Legal Opinion (TX) Baker Botts Baker 

    

 

 

EXHIBIT C ABL   Documents 

    

 

Encina Loan and   Security Agreement (See attached.) 

    

 

PATENT SECURITY   AGREEMENT THIS PATENT SECURITY AGREEMENT (this "Agreement"), is   dated as of October 2, 2019 and is by NEOS THERAPEUTICS, LP, a Texas limited   partnership ("Grantor"), in favor of ENCINA BUSINESS CREDIT, LLC,   as Agent for the Lenders (in such capacity, "Agent") under the Loan   and Security Agreement (as defined herein). RECITALS A. Grantor, the other   Loan Party Obligors party thereto from time to time, Agent and the Lenders   party thereto from time to time have entered into a Loan and Security Agreement   dated as of the date hereof (as amended, restated, supplemented or otherwise   modified from time to time, the "Loan Agreement"; capitalized terms   used but not defined herein shall have the meaning given to such terms in the   Loan Agreement), pursuant to which Lenders have agreed to make loans and   certain other extensions of credit to NEOS THERAPEUTICS, INC., a Delaware   corporation, as a Borrower, NEOS THERAPEUTICS BRANDS, LLC, a Delaware limited   liability company, as a Borrower, and NEOS THERAPEUTICS, LP, a Texas limited   partnership, as a Borrower, as provided therein. B. Pursuant to the Loan   Agreement, Grantor is required to execute and deliver to Agent, for its   benefit and the benefit of the Lenders, this Agreement for purposes of filing   with the United States Patent and Trademark Office ("USPTO"). C.   Pursuant to the Loan Agreement, Grantor has granted to Agent, for itself and   on behalf of the Lenders, a security interest in substantially all of the   assets of Grantor, including all right, title and interest of Grantor in, to,   and under all now owned and hereafter acquired patents, patent applications   and patent licenses, and all products and proceeds thereof to secure the   payment and performance of the Obligations. AGREEMENT In consideration of the   mutual covenants and agreements set forth herein and in the Loan Agreement,   it is hereby agreed that: 1. This Agreement is made to secure the   satisfactory performance and payment of all the Obligations. Upon the   Termination Date, Agent shall promptly, following written request by Grantor,   execute, acknowledge, and deliver to Grantor all instruments reasonably   requested by Grantor necessary to release Agent's security interest in the   Patent Collateral (as defined below) acquired under this Agreement. 2. Grantor   hereby grants to Agent, for itself and on behalf of the Lenders, a continuing   security interest and lien in all of Grantor's right, title and interest in,   to, and under the following, whether presently existing or hereafter created   or acquired to secure the payment and performance of the Obligations: (a)   each issued patent and patent application, including, without limitation,   each issued patent and patent application referred to in Schedule 1 attached   hereto and incorporated herein, together with any reissues, reexamination   certificates, continuations, continuations-in-part, divisionals, or   extensions thereof; each exclusive patent license if Grantor has the right to   grant a security interest in such license, including, without limitation,   each exclusive patent license listed 10699743v6 10/1/2019 9:16 AM 7528.013 

    

 

on Schedule 1;   and (b) all products and proceeds of the foregoing, including, without   limitation, all claims and causes of action arising prior to or after the   date hereof for past, present or future infringement of any issued patent or   patent application referred to in Schedule 1 (items (a) and (b) being herein   collectively referred to as the "Patent Collateral"). This security   interest and lien is granted in conjunction with the security interests and   liens granted to Agent, for itself and on behalf of the Lenders, pursuant to   the Loan Agreement and subject to limitations set forth therein. Grantor   hereby acknowledges and affirms that the rights and remedies of Agent and the   Lenders with respect to the security interests and liens in the Patent   Collateral made and granted hereby are more fully set forth in the Loan   Agreement, the terms and provisions of which are incorporated by reference   herein as if fully set forth herein. THIS AGREEMENT IS MADE UNDER AND SHALL   BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW   YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED THEREIN WITHOUT REGARD   TO CONFLICT OF LAW PRINCIPLES. [signature page follows] -2- 

    

 

Grantor has   caused this Patent Security Agreement to be duly executed by its duly   authorized officer thereunto as of the date first set forth above. NEOS   THERAPEUTICS, LP By: PHARMAFAB TEXAS, LLC, its general partner >t!b-.;[L!t   By: Name: Gerald McLaughlin Title: Sole Manager "'-Signature Page to   Patent Security Agreement 

    

 

Acknowledged   by: ENCINA BUSINESS CREDIT, LLC, as Agent Signature Page to Patent Security   Agreement 

    

 

SCHEDULE 1 to   PATENT SECURITY AGREEMENT Patents PATENT PATENT NUMBER ISSUE DATE Modifying   drug release in suspensions of ionic resin systems 8313770 11/20/12   Compositions and methods of making sustained release liquid formulations   8318210 11/27/12 Method of formulating and designing liquid drug suspensions   containing ion exchange resin particles 8470375 6/25/13 Methods of   formulating and designing liquid drug suspensions containing ion exchange   resin particles 8512759 8/20/13 Composition comprising a mixture of dextro-and   levo-amphetamines complexed with ion-exchange resin particles to form drug   resin particles 8709491 4/29/14 Compositions and methods of making rapidly   dissolving ionically masked formulations 8840924 9/23/14 Composition   comprising a mixture of dextro-and levo-amphetamines complexed with   ion-exchange resin particles to form drug resin particles 9017731 4/28/15   Methods of formulating and designing liquid drug suspensions containing ion   exchange resin particles 9057675 6/16/15 Compositions comprising methylphenidate   complexed with ion-exchange resin particles 9072680 7/7/15 Compositions   comprising methylphenidate complexed with ion-exchange resin particles   9089496 7/28/15 Pharmaceutical composition comprising amphetamines complexed   with ion-exchange resin particles 9265737 2/23/16 Method for treating ADD or   ADHD comprising administering amphetamine complexed with ion-exchange resin   particles 9839619 12/12/17 Method for reducing the effects of an elevated   exposure to methylphenidate in presence of ethanol by using a composition   comprising methylphenidate complexed with ion-exchange resin particles   13/844510 (Application Number) 3/15/13 (Filing Date) Compositions and methods   of making sustained release liquid formulations 9522120 12/20/16 Dosage forms   for oral administration and methods of treatment using the same 13/844628   (Application Number) 3/15/13 (Filing Date) Treating ADD or ADHD with a   composition comprising methylphenidate complexed with ion-exchange resin   particles 13/947861 (Application Number) 7/22/13 (Filing Date) Effective   dosing of a child for the treatment of ADHD with methylphenidate 16/346,850   (Application Number) 5/1/19 (Filing Date) 

    

 

-6-PATENT   PATENT NUMBER ISSUE DATE Compositions and methods of making sustained release   liquid formulations PCT/US06/06670 2/24/06 Modifying drug release in   suspensions of ionic resin systems PCT/US08/65408 5/30/08 Dosage forms for   oral administration and methods of treatment using the same PCT/US12/44698   6/28/12 Effective dosing of a child for the treatment of ADHD with   methylphenidate PCT/US17/59256 10/31/17 Abuse resistant drug forms   PCT/US12/45255 7/2/12 Method for providing more reproducible release curves   by controlling particle size distribution. Dependent claims to techniques   including countercurrent process for drug loading, preactivating the resin,   modifying the medium, and enclosing the resin particles in a basket during   loading. 13/210,829 (Application Number) 8/16/11 (Filing Date) 

    

 

TRADEMARK   SECURITY AGREEMENT THIS TRADEMARK SECURITY AGREEMENT (this   "Agreement"), is dated as of October 2, 2019 and is by NEOS   THERAPEUTICS, INC., a Delaware corporation, and NEOS THERAPEUTICS, LP, a   Texas limited partnership (each, a "Grantor" and collectively, the   "Grantors"), in favor of ENCINA BUSINESS CREDIT, LLC, as Agent for   the Lenders (in such capacity, "Agent") under the Loan and Security   Agreement (as defined herein). RECITALS A. Each Grantor, the other Loan Party   Obligors party thereto from time to time, Agent and the Lenders party thereto   from time to time have entered into a Loan and Security Agreement dated as of   the date hereof (as amended, restated, supplemented or otherwise modified   from time to time, the "Loan Agreement"; capitalized terms used but   not defined herein shall have the meaning given to such terms in the Loan   Agreement), pursuant to which Lenders have agreed to make loans and certain   other extensions of credit to NEOS THERAPEUTICS, INC., a Delaware   corporation, as a Borrower and Borrower Representative, NEOS THERAPEUTICS   BRANDS, LLC, a Delaware limited liability company, as a Borrower, and NEOS   THERAPEUTICS, LP, a Texas limited partnership, as a Borrower, as provided   therein. B. Pursuant to the Loan Agreement, each Grantor is required to   execute and deliver to Agent, for its benefit and the benefit of the Lenders,   this Agreement for purposes of filing with the United States Patent and   Trademark Office ("USPTO"). C.Pursuant to the Loan Agreement, each   Grantor has granted to Agent, for itself and on behalf of the Lenders, a   security interest in substantially all the assets of such Grantor, including   all right, title and interest of such Grantor in, to, and under all now owned   and hereafter acquired trademarks, trademark applications and trademark   licenses, and all products and proceeds thereof to secure the payment and   performance of the Obligations. AGREEMENT In consideration of the mutual   covenants and agreements set forth herein and in the Loan Agreement, it is   hereby agreed that: 1. This Agreement is made to secure the satisfactory   performance and payment of all the Obligations. Upon the Termination Date,   Agent shall promptly, following written request by a Grantor, execute,   acknowledge, and deliver to such Grantor all instruments reasonably requested   by such Grantor necessary to release Agent's security interest in the   Trademark Collateral (as defined below) acquired under this Agreement. 2.   Each Grantor hereby grants to Agent, for itself and on behalf of the Lenders,   a continuing security interest and lien in all of such Grantor's right, title   and interest in, to, and under the following, whether presently existing or   hereafter created or acquired to secure the payment and performance of the   Obligations: (a) each trademark and trademark application, including, without   limitation, each trademark registration and trademark application referred to   in Schedule 1 attached hereto and incorporated herein, together with any   reissues, continuations 10699740v4 9/30/2019 3:45 PM 7528.013 

    

 

or extensions   thereof and all goodwill associated therewith; each exclusive trademark   license if such Grantor has the right to grant a security interest in such   license, including, without limitation, each exclusive trademark license listed   on Schedule 1, together with all goodwill associated therewith and (b) all   products and proceeds of the foregoing, including, without limitation, all   claims and causes of action arising prior to or after the date hereof for   past, present or future infringement of any trademark, including, without   limitation, any trademark registration or application referred to in Schedule   1 (items (a) and (b) being herein collectively referred to as the   "Trademark Collateral"). Notwithstanding the foregoing, any trademark   applications filed in the USPTO on the basis of any Grantor's intent to use   such trademark shall be excluded from Trademark Collateral, unless and until   a statement of use or amendment to allege use is filed in the USPTO,   whereupon such trademark shall automatically be deemed included in the   Trademark Collateral. This security interest and lien is granted in   conjunction with the security interests and liens granted to Agent, for   itself and on behalf of the Lenders, pursuant to the Loan Agreement and subject   to limitations set forth therein. Each Grantor hereby acknowledges and   affirms that the rights and remedies of Agent and the Lenders with respect to   the security interests and liens in the Trademark Collateral made and granted   hereby are more fully set forth in the Loan Agreement, the terms and   provisions of which are incorporated by reference herein as if fully set   forth herein. THIS AGREEMENT IS MADE UNDER AND SHALL BE GOVERNED BY AND   CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK APPLICABLE TO   CONTRACTS MADE AND TO BE PERFORMED THEREIN WITHOUT REGARD TO CONFLICT OF LAW   PRINCIPLES. [signature page follows] -2- 

    

 

Grantors have   caused this Trademark Security Agreement to be duly executed by its duly   authorized officer thereunto as of the date first set forth above. NEOS   THERAPEUTICS, INC., a Delaware corporation ti: 9/t. . By: Name: Gerald   McLaughlin Title: Chief Executive Officer and President NEOS THERAPEUTICS,   LP, a Texas limited partnership Signature Page to Trademark Security   Agreement 

    

 

Acknowledged   by: ENCINA BUSINESS CREDIT, LLC, as Agent Signature Page to Trademark   Security Agreement 

    

 

SCHEDULE 1 to   TRADEMARK SECURITY AGREEMENT Trademarks MARK SERIAL NUMBER STATUS REGISTRATION   NUMBER REGIS. DATE ADZENYS ER 87599332 Registered 5628952 12/11/18 COTEMPLA   XR-ODT 86847780 Registered 5387222 1/23/18 ADZENYS XR-ODT 86847760 Registered   5147879 2/21/17 [Design Only] 86847757 Registered 5111115 12/27/16 ADZENYS   85949275 Registered 5045871 9/20/16 NEOS THERAPEUTICS 85947902 Registered   5281476 9/5/17 DYNAMIC TIME RELEASE SUSPENSION 78671915 Registered 3514100   10/7/08 DTRS 78671913 Registered 3514099 10/7/08 NEOS THERAPEUTICS 77202145   Registered 3951112 4/26/11 

    

 

REVOLVING NOTE   $25,000,000.00 October 2, 2019 The undersigned (each, a "Borrower"   and collectively, the "Borrowers"), for value received, promises to   pay to the order of ENCINA BUSINESS CREDIT SPV, LLC ("Lender"), at   its principal office, the aggregate unpaid amount of all Revolving Loans made   to Borrowers by Lender pursuant to the Loan Agreement (defined below), such   principal amount to be payable on the dates and in the manner set forth in   the Loan Agreement. Borrowers further promise to pay interest on the unpaid   principal amount of each Revolving Loan from the date of such Revolving Loan   until such Revolving Loan is paid in full, payable at the rate(s) and at the   time(s) set forth in the Loan Agreement. Payments of both principal and   interest are to be made in lawful money of the United States of America. This   Revolving Note evidences indebtedness incurred under, and is subject to the   terms and provisions of, the Loan and Security Agreement, dated as of the   date hereof (as amended, restated or otherwise modified from time to time,   the "Loan Agreement"), among Borrowers, the other Loan Party   Obligors from time to time party thereto, Lender, the other Lenders from time   to time party thereto and ENCINA BUSINESS CREDIT, LLC, as agent for the   Lenders (in such capacity, "Agent"), to which Loan Agreement   reference is hereby made for a statement of the terms and provisions under   which this Revolving Note may or must be paid prior to its due date or its   due date accelerated. Terms not otherwise defined herein are used herein as   defined in the Loan Agreement THIS REVOLVING NOTE IS MADE UNDER AND SHALL BE   GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK   APPLICABLE TO CONTRACTS MADE AND TO BE WITHOUT REGARD TO CONFLICT OF LAW   PRINCIPLES. PERFORMED THEREIN [signature page follows] 10699757v3 9/26/2019   2:32 PM 7528.013 

    

 

NEOS   THERAPEUTICS, INC., a Delaware corporation, as a Borrower By: Name: Gera d   McLaughlin Its: Chief Executive Officer and President NEOS THERAPEUTICS BRANDS,   LLC, a Delaware limited liability company, as a Borrower ibAlld /<---, By:   Name: Gerald McLaughlin Its: Chief Executive Officer and President NEOS   THERAPEUTICS, LP, a Texas limited partnership, as a Borrower By: PHARMAFAB   TEXAS, LLC, its general partner a::€'--By: Name: Gerald McLaughlin Its: Sole   Manager Signature Page to Revolving Note

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