Document:

EX-10.2

  Exhibit 10.2

  SELLER NOTE

  THIS NOTE (AS DEFINED BELOW) HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE OFFERED, SOLD, PLEDGED, HYPOTHECATED, ASSIGNED OR TRANSFERRED EXCEPT (I) PURSUANT TO A REGISTRATION STATEMENT UNDER THE SECURITIES ACT WHICH HAS BECOME EFFECTIVE AND IS CURRENT WITH RESPECT TO THESE SECURITIES, OR (II) PURSUANT TO A SPECIFIC EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT, BUT ONLY UPON HOLDER HEREOF FIRST HAVING OBTAINED THE WRITTEN OPINION OF COUNSEL TO THE MAKER, OR OTHER COUNSEL, REASONABLY ACCEPTABLE TO THE MAKER, THAT THE PROPOSED DISPOSITION IS CONSISTENT WITH ALL APPLICABLE PROVISIONS OF THE SECURITIES ACT AS WELL AS ANY APPLICABLE “BLUE SKY” OR OTHER SIMILAR SECURITIES LAW.

  THIS NOTE AND THE INDEBTEDNESS EVIDENCED BY THIS NOTE, AND ALL RIGHTS OF THE HOLDER HEREOF WITH RESPECT THERETO, ARE SUBORDINATE IN THE MANNER AND TO THE EXTENT SET FORTH IN THAT CERTAIN SUBORDINATION AGREEMENT, DATED AS OF EVEN DATE HEREWITH (THE “SUBORDINATION AGREEMENT”), BY AND AMONG (I) RECRO PHARMA, INC. (“BORROWER”), (II) IRISYS, INC. (“SELLER”) AND (III) ATHYRIUM OPPORTUNITIES III ACQUISITION LP, AS ADMINISTRATIVE AGENT UNDER THE SENIOR CREDIT AGREEMENT (AS DEFINED BELOW) (THE “ADMINISTRATIVE AGENT”), TO THE INDEBTEDNESS (INCLUDING INTEREST) OWED BY THE BORROWER AND THE OTHER LOAN PARTIES (AS DEFINED IN THE SENIOR CREDIT AGREEMENT) TO THE ADMINISTRATIVE AGENT AND THE LENDERS (AS DEFINED IN THE SENIOR CREDIT AGREEMENT) PURSUANT TO THAT CERTAIN CREDIT AGREEMENT DATED AS OF NOVEMBER 17, 2017 (AS AMENDED, RESTATED, AMENDED AND RESTATED, SUPPLEMENTED, REFINANCED, RENEWED, REPLACED, IN WHOLE OR PART, OR OTHERWISE MODIFIED FROM TIME TO TIME, THE “SENIOR CREDIT AGREEMENT”) AMONG THE BORROWER, THE OTHER LOAN PARTIES PARTY THERETO, THE ADMINISTRATIVE AGENT AND THE LENDERS FROM TIME TO TIME PARTY THERETO; AND THE HOLDER OF THIS INSTRUMENT, BY ITS ACCEPTANCE HEREOF, IRREVOCABLY AGREES TO BE BOUND BY THE PROVISIONS OF THE SUBORDINATION AGREEMENT.

  THIS PROMISSORY NOTE MAY NOT BE ASSIGNED OR TRANSFERRED EXCEPT IN ACCORDANCE WITH THE EXPRESS TERMS HEREOF.

  RECRO PHARMA, INC.

  SUBORDINATED PROMISSORY NOTE
 

  August 13, 2021 (the “Issue Date”)	$6,116,672.72

   

   

  FOR VALUE RECEIVED, Recro Pharma, Inc., a Pennsylvania corporation (the “Borrower”), hereby promises to pay to the order of IriSys, Inc., a California corporation or its successors or permitted assigns (“Seller”), in lawful money of the United States of America, the principal amount of SIX MILLION ONE HUNDRED SIXTEEN THOUSAND SIX HUNDRED SEVENTY-TWO DOLLARS AND SEVENTY-TWO CENTS ($6,116,672.72), subject to adjustment pursuant to Section 4 below, together with interest from the Issue Date on the unpaid principal balance as set forth below, in accordance with and 

   

  

  Exhibit 10.2

  subject to the provisions of this subordinated promissory note (as it may be amended from time to time, this “Note”).

  This Note is being issued pursuant to that certain Unit Purchase Agreement, dated as of August 13 2021, by and among the Borrower, Seller and the other parties thereto (as it may be amended from time to time, the “Purchase Agreement”). Certain capitalized terms used in this Note are defined in Section 6 below.

  1.Interest. The outstanding principal amount of this Note shall accrue interest at a rate of 6.0% per annum (calculated on the basis of actual days elapsed in a year of 365 days as may be adjusted below, the “Interest Rate”), due and payable in cash (for the avoidance of doubt, subject to the Subordination Agreement), on each Payment Date.  For the avoidance of doubt, subject to the Subordination Agreement, the Borrower shall pay all accrued but unpaid interest on this Note in cash on the Maturity Date.  If any amount of principal of this Note is not paid when due (without regard to any applicable grace periods), whether at stated maturity, by acceleration or otherwise, such amount shall thereafter bear interest at 10.0% per annum (the “Default Rate”) at all times to the fullest extent permitted by applicable laws.  While any Event of Default exists, the Borrower shall pay interest on the principal amount of all outstanding Note Obligations hereunder at a rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable laws.  Accrued and unpaid interest on past due amounts (including interest on past due interest) shall be due and payable by the Borrower upon Lender’s demand.  Interest on this Note shall be due and payable by the Borrower in arrears on each Payment Date and at such other times as may be specified herein.  Interest hereunder shall be due and payable in accordance with the terms hereof before and after judgment, and before and after the commencement of any proceeding under any bankruptcy, insolvency or other debtor relief laws.  In the event any interest is paid on this Note which is deemed to be in excess of the then legal maximum rate, then that portion of the interest payment representing an amount in excess of the then legal maximum rate shall be deemed a payment of principal and applied against the principal of this Note.

  2.Payment of Principal and Interest; Maturity Date. 

  (a)Subject to the Subordination Agreement and the other provisions of this Note, the Borrower unconditionally promises to pay Seller all outstanding principal of this Note in three equal installments, one such installment due and payable on each Payment Date, together with interest accrued on this Note; provided, that (i) the final principal repayment installment of this Note shall be repaid on the Maturity Date and in any event shall be in an amount equal to the total principal amount of this Note outstanding on such date and (ii) the principal installment amounts shall be reduced ratably as a result of the application of any prepayments hereof made by the Borrower to Seller.  

  (b)Subject to the Subordination Agreement, the Borrower may, at any time and from time to time, upon at least three Business Days’ notice to Lender, voluntarily prepay all or any portion of the outstanding principal of this Note without penalty or premium; provided, any prepayment of this Note shall be in a principal amount of $100,000 or a whole multiple of $50,000 in excess thereof or, in each case, if less, the entire principal amount of this Note then outstanding.

  (c)Any prepayment of this Note shall be accompanied by all accrued interest on the amount prepaid.  Each prepayment of this Note pursuant to Section 2(b) shall be applied in the inverse order of maturity to the principal repayment installments hereof.

  (d)Upon the occurrence of a Change of Control, the Borrower shall prepay all outstanding principal of, and all accrued and unpaid interest on, this Note.

  3.Restrictions on Payment.

   

  

  Exhibit 10.2

  (e)Unsecured Nature of Note. This Note and the obligations hereunder shall at all times be unsecured. Any lien on or security interest in any property of the Borrower at any time granted to Seller shall be deemed null and void.

  (f)Successors and Assigns; Third Party Beneficiary. The provisions of this Note shall be binding on, and enforceable against, Seller and the Borrower and their respective successors and assigns; provided that (i) the Borrower shall not be entitled to assign its obligations hereunder to any person or entity without the prior written consent of Seller and (ii) the Borrower shall not be entitled to assign its obligations under this Note to any person or entity without the prior written consent of the Administrative Agent.

  (g)Acknowledgment; Amendments. Seller acknowledges and agrees that this Note is subject in all respects to the terms of the Subordination Agreement. Until all Senior Debt has been Paid in Full, and notwithstanding anything to the contrary contained in this Note, Seller and Borrower shall not, without the prior written consent of Administrative Agent, agree to any amendment or modification of this Note.

  4.Purchase Agreement Obligations. At the option of Seller, the amount of any Purchase Agreement Obligation which is finally determined to be payable by Seller pursuant to the Purchase Agreement and unpaid from time to time shall, upon written notice of such election by Seller to the Purchaser, be automatically set off against the amount of the Note Obligations then due and payable hereunder.

  5.Acceleration and Event of Default. Subject to the Subordination Agreement, the entire unpaid principal amount of this Note, all accrued and unpaid interest thereon and any other amounts due hereunder shall automatically accelerate and shall be due and payable by the Borrower, without presentment, demand, protest or notice of any kind, each of which is hereby expressly waived, on the date of occurrence of an Event of Default. Upon the occurrence of an Event of Default, Seller shall have available, in addition to all remedies available hereunder, those remedies available to a creditor of the Borrower or otherwise permitted to it by law, either by suit in equity or by action at law, or both.

  6.Definitions. For purposes of this Note, the following capitalized terms have the following meanings.

  2“Change of Control” has the meaning set forth in the Senior Credit Agreement, mutatis mutandis.

  1.“Event of Default” shall mean if (i) Borrower becomes insolvent or becomes unable or admits in writing its inability or fails generally to pay its debts as they become due; (ii) Borrower applies for, consents to, or acquiesces in the appointment of a trustee, receiver or other custodian for Borrower or any property thereof, or makes a general assignment for the benefit of creditors or, in the absence of such application, consent or acquiescence, a trustee, receiver or other custodian is appointed for such Borrower or for a substantial part of the property thereof and such appointment continues undischarged or unstayed for 60 calendar days; (iii) any bankruptcy, reorganization, debt arrangement, or other case or proceeding under any bankruptcy or insolvency law, or any dissolution or liquidation proceeding, is commenced in respect of Borrower, and if such case or proceeding is not commenced by Borrower, it is consented to or acquiesced in by Borrower, or remains for 60 days undismissed or unstayed; (iv) Borrower takes any action to authorize, or in furtherance of, any of the foregoing; (v) Borrower fails to pay when and as required to be paid herein, (A) any Note Obligations due on the Maturity Date or (B) any amount of principal of this Note; or (vi) Borrower fails to pay within fifteen (15) days after the same becomes due, any interest on this Note, or any other amount (except for amounts described in clause (v) of this definition) due under this Note.

  2.“Maturity Date” means the earliest to occur of (a) the third anniversary of the Issue Date and (b) the date on which payment of this Note is accelerated pursuant to Section 5 hereof; provided, if such anniversary is not a Business Day, the Maturity Date shall be the immediately preceding Business Day.

   

  

  Exhibit 10.2

  “Note Obligations” means all advances to, and debts, liabilities, obligations, covenants and duties of, the Borrower arising under this Note, whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising and including interest and fees that accrue after the commencement by or against the Borrower or any affiliate thereof of any proceeding under any debtor relief laws naming such person or entity as the debtor in such proceeding, regardless of whether such interest and fees are allowed or allowable claims in such proceeding.  Without limiting the foregoing, the Note Obligations include the obligation to pay principal, interest, expenses, fees, indemnities and other amounts payable by the Borrower under this Note and the Subordination Agreement.

  “Paid in Full” or “Payment in Full” shall mean the payment in full in cash of all Senior Debt, and the termination of all letters of credit and all commitments to lend under the Senior Debt Documents.

  “Payment Date” means each of the first and second anniversaries of the Issue Date, and the Maturity Date.

  “Purchase Agreement Obligation” means (i) an indemnification obligation of Seller to any Purchaser Indemnified Party (as defined in the Purchase Agreement) arising under Section 7.2 of the Purchase Agreement and which may be recovered directly from Seller pursuant to the provisions of Article VII of the Purchase Agreement or (ii) any payment obligation of Seller pursuant to Section 2.7(g) of the Purchase Agreement.  

  “Senior Debt” shall mean, collectively, all Loan Documents Obligations (as defined in the Senior Credit Agreement) and any indebtedness incurred to refinance, increase, renew, supplement or replace the same.

  “Senior Debt Documents” shall mean the Senior Credit Agreement and all other Loan Documents (as defined in the Senior Credit Agreement).

  7.Amendment and Waiver. The provisions of this Note may be amended or waived only in a writing signed by the Borrower and Seller, and consented to in writing by the Administrative Agent.

  8.Notices. All notices, requests, claims, demands and other communications under this Note will be in writing and will be deemed given if delivered personally, sent by overnight courier (providing proof of delivery) or when received via email (with confirmation of delivery) to the parties at the following addresses (or at such other address for a party as specified by like notice):

  if to Borrower: 

  Recro Pharma, Inc.
1 E. Uwchlan Ave, Suite 112
Exton,  PA 19341
Attention: Ryan Lake
Email: ryan.lake@recrocdmo.com

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

  Troutman Pepper Hamilton Sanders LLP
3000 Two Logan Square
Philadelphia, PA 19103
 

   

  

  Exhibit 10.2

  Attention: Rachael Bushey, Esq. and Jennifer Porter, Esq.
Email: rachael.bushey@troutman.com; jennifer.porter@troutman.com

  If to Seller:

  IriSys, Inc.
Attention: Gerald Yakatan
Email: gyakatan@sbcglobal.net

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

  Wilson Sonsini Goodrich & Rosati
Professional Corporation
12235 El Camino Real
San Diego, California 92130
Attention: Martin J. Waters and Jason Skolnik
Fax: (858) 350-2399
Email: mwaters@wsgr.com; jskolnik@wsgr.com

  9.Governing Law. This Agreement shall be governed by and construed in accordance with the law of the State of Delaware, without regard to the conflicts of laws rules of such state.

  10.Execution and Delivery. Facsimile, email or other electronic transmission of signatures to this Note shall be acceptable and binding.

  11.	Expenses; Waivers. If action is instituted to collect this Note, the Borrower promises to pay all costs and expenses, including, without limitation, reasonable attorneys’ fees and costs, incurred in connection with such action.  The Borrower hereby waives notice of default, presentment or demand for payment, protest or notice of nonpayment or dishonor and all other notices or demands relative to this instrument.

  12. WAIVER OF JURY TRIAL. BY ACCEPTANCE OF THIS NOTE, LENDER HEREBY AGREES AND THE BORROWER HEREBY AGREES TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS NOTE OR THE SUBORDINATION AGREEMENT.

  [Signature page follows.]

   

   

  

  Exhibit 10.2

   

  IN WITNESS WHEREOF, Borrower has executed and delivered this Note on the date first above written.

  BORROWER:

   

  RECRO PHARMA, INC.

   

   

  By:	______________________________

  Name:	

  Its:EX-10.3

  Exhibit 10.3

  SIXTH AMENDMENT TO CREDIT AGREEMENT 

  THIS SIXTH AMENDMENT TO CREDIT AGREEMENT (this “Agreement”), dated as of August 13, 2021 (the “Sixth Amendment Effective Date”), is entered into among RECRO PHARMA, INC., a Pennsylvania corporation (the “Borrower”), the Guarantors party hereto, the Lenders party hereto and ATHYRIUM OPPORTUNITIES III ACQUISITION LP, as Administrative Agent (the “Administrative Agent”).  All capitalized terms used herein and not otherwise defined herein shall have the meanings given to such terms in the Credit Agreement (as defined below).

   

  RECITALS

   

  WHEREAS, the Borrower, the Guarantors party thereto, the Lenders from time to time party thereto and the Administrative Agent have entered into that certain Credit Agreement, dated as of November 17, 2017 (as amended, restated, supplemented or modified from time to time prior to the date hereof, the “Credit Agreement”);

   

  WHEREAS, the Borrower has requested that the Lenders amend the Credit Agreement to provide for certain modifications of the terms as set forth below; and

   

  WHEREAS, the Lenders and the Administrative Agent are willing to amend the Credit Agreement referred to herein, in each case, subject to the terms and conditions hereof.

   

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

   

  1.Amendments to Credit Agreement.

   

  a.The following definitions are added to Section 1.01 of the Credit Agreement in the appropriate alphabetical order to read as follows:

   

  “IRISYS Acquisition” means the Acquisition by the Borrower of all of the Equity Interests of IRISYS, LLC, a California limited liability company, on the Sixth Amendment Effective Date, pursuant to that certain Unit Purchase Agreement, dated as of the Sixth Amendment Effective Date, by and among the Borrower, as the purchaser, IRISYS, LLC, as the target, and IRISYS, INC., Continent Pharmaceuticals U.S., Inc., and EPS Americas Corp., collectively, as the sellers.

   

  “IRISYS Seller Note” means that certain Subordinated Promissory Note, dated as of the Sixth Amendment Effective Date, by and among the Borrower and IRISYS, INC., in an original principal amount of $6,116,672.72. 

   

  “Sixth Amendment” means that certain Sixth Amendment to Credit Agreement, dated as of the Sixth Amendment Effective Date, by and among the Loan Parties, the Lenders and the Administrative Agent.

   

  “Sixth Amendment Effective Date” means August 13, 2021.

   

  “Sixth Amendment Fee Letter” means that certain letter agreement dated as of the Sixth Amendment Effective Date by and between the Borrower and the Administrative Agent.

   

  

   

  b.The definition of “Agreement” in Section 1.01 of the Credit Agreement is amended and restated in its entirety to read as follows:

   

  “Agreement” means this Credit Agreement, as amended or otherwise modified from time to time (including as amended by the First Amendment, the Second Amendment, the Third Amendment, the Fourth Amendment, the Fifth Amendment and the Sixth Amendment).

   

  c.The definition of “Loan Documents” in Section 1.01 of the Credit Agreement is amended and restated in its entirety to read as follows:

   

  “Loan Documents” means this Agreement, the First Amendment, the Second Amendment, the Third Amendment, the Fourth Amendment, the Fifth Amendment, the Sixth Amendment, each Note, the Fee Letter, the First Amendment Fee Letter, the Fourth Amendment Fee Letter, the Sixth Amendment Fee Letter, the Disclosure Letter, the Second Amendment Disclosure Letter, the Third Amendment Disclosure Letter, each Joinder Agreement, each Collateral Document and any other agreement, instrument or document designated by its terms as a “Loan Document”, excluding, for the avoidance of doubt, the Warrants.

   

  d.The definition of “Maturity Date” in Section 1.01 of the Credit Agreement is amended and restated in its entirety to read as follows:

   

  “Maturity Date” means December 31, 2023; provided, that, if such date is not a Business Day, the Maturity Date shall be the first Business Day immediately preceding such date.

   

  e.The definition of “Permitted Acquisition” in Section 1.01 of the Credit Agreement is amended and restated in its entirety to read as follows:

  	

  	“Permitted Acquisition” means (a) the IRISYS Acquisition, and (b) an Investment consisting of an Acquisition by a Loan Party; provided, that, (i) the property acquired (or the property of the Person acquired) in such Acquisition is used or useful in the same or a related line of business as the Borrower and its Subsidiaries were engaged in on the Closing Date (or any reasonable extensions or expansions thereof), (ii) no Default or Event of Default shall have occurred and be continuing or would result from such Acquisition, (iii) the Administrative Agent shall have received all items in respect of the Equity Interests or property acquired in such Acquisition as and when required to be delivered by the terms of Section 7.12 and/or Section 7.14, (iv) such Acquisition shall not be a “hostile” acquisition and shall have been approved by the Board of Directors and/or the shareholders (or equivalent) of the applicable Loan Party and the target of such Acquisition, (v) the Borrower shall have delivered to the Administrative Agent pro forma financial statements for the Borrower and its Subsidiaries after giving effect to such Acquisition for the twelve month period ending as of the most recent fiscal quarter end in a form reasonably satisfactory to the Administrative Agent, (vi) the Borrower shall have demonstrated to the reasonable satisfaction of the Administrative Agent that, after giving effect to such Acquisition on a Pro Forma Basis, the Loan Parties are in compliance with the covenants set forth in Section 8.16, (vii) the representations and warranties made by the Loan Parties in each Loan Document shall be true and correct in all material respects (and in all respects if any such representation or warranty is already qualified by materiality or reference to 

   

  

  Material Adverse Effect) at and as if made as of the date of such Acquisition (assuming for such purposes that such Acquisition has been consummated), except to the extent any such representation and warranty expressly relates to an earlier date, in which case it shall be true and correct in all material respects (and in all respects if any such representation or warranty is already qualified by materiality or reference to Material Adverse Effect) as of such earlier date and (viii) the aggregate consideration (including any Earn Out Obligations) paid (or payable, as the case may be) in cash by the Borrower and its Subsidiaries shall not exceed an aggregate amount equal to $40,000,000 for all such Acquisitions made in reliance on this clause (b) during the term of this Agreement.

  f.Section 8.03(l) of the Credit Agreement is amended and restated in its entirety to read as follows:

   

  (l)	(i) Indebtedness constituting Earn Out Obligations or obligations in respect of working capital adjustment requirements under the agreements used to consummate a Permitted Acquisition or other Investment permitted under Section 8.02 (other than by reference to this Section 8.03 (or any sub-clause hereof)), and (ii) Indebtedness incurred pursuant to the IRISYS Seller Note, so long as (A) the aggregate principal amount of such Indebtedness does not exceed $6,116,672.72, (B) such Indebtedness is unsecured and does not mature prior to the ninety-first (91st) day after the Maturity Date, (C) such Indebtedness is subordinated to the Obligations at all times on terms and conditions that are reasonably satisfactory to the Administrative Agent on the Sixth Amendment Effective Date;

   

  2.	Conditions Precedent to Effectiveness.  This Agreement shall be effective upon satisfaction of the following conditions precedent: 

   

  (a)receipt by the Administrative Agent of counterparts of (i) this Agreement duly executed by the Borrower, the Guarantors, the Lenders and the Administrative Agent and (ii) the Sixth Amendment Fee Letter duly executed by the Borrower and the Administrative Agent; 

   

  (b)receipt by the Administrative Agent of a certificate of a Responsible Officer of the Borrower (i) certifying that the IRISYS Acquisition has been consummated (or shall be consummated contemporaneously with the closing of this Agreement) in accordance with the terms of that certain Unit Purchase Agreement, dated as of the Sixth Amendment Effective Date, by and among the Borrower, as the purchaser, IRISYS, LLC, as the target, and IRISYS, INC., Continent Pharmaceuticals U.S., Inc., and EPS Americas Corp., collectively, as the sellers, a true correct copy of which is attached to such certificate together with all other material agreements entered into in connection therewith (including any schedules and exhibits thereto), and (ii) attaching a true, correct and complete copy of the IRISYS Seller Note; 

   

  (c)receipt by the Administrative Agent of favorable opinions of legal counsel to the Loan Parties, addressed to the Administrative Agent and each Lender, dated as of the Sixth Amendment Effective Date, and in form and substance reasonably satisfactory to the Administrative Agent and the Lenders; and

   

  (d)receipt by the Administrative Agent of all reasonable and documented out-of-pocket fees, charges and disbursements of counsel to the Administrative Agent and all reasonable and documented out-of-pocket due diligence expenses of the Administrative Agent and the Lenders, in each case, incurred in connection with this Agreement and the transactions contemplated hereby and for which invoices have been issued (provided, that, the issuance of such invoices shall not 

   

  

  thereafter preclude a final settling of accounts between the Borrower and the Administrative Agent).

   

  3.	Reaffirmation.  Each Loan Party hereby acknowledges and agrees that, as of the Sixth Amendment Effective Date, after giving effect to this Agreement and the transactions contemplated hereby, the aggregate principal amount of Loans outstanding under the Credit Agreement is $100,000,000.  Each of the Loan Parties acknowledges and reaffirms (a) that it is bound by all of the terms of the Investment Documents to which it is a party and (b) that it is responsible for the observance and full performance of all Obligations, including without limitation, the repayment of the Loans.  Furthermore, the Loan Parties acknowledge and confirm (i) that the Lenders have performed fully all of their obligations under the Credit Agreement and the other Investment Documents arising on or before the date hereof other than their respective obligations specifically set forth in this Agreement and (ii) that by entering into this Agreement, the Lenders do not, except as expressly set forth herein, waive or release any term or condition of the Credit Agreement or any of the other Investment Documents or any of their rights or remedies under such Investment Documents or any applicable law or any of the Obligations of the Loan Parties thereunder.

   

  4.	Release.  As a material part of the consideration for the Administrative Agent and the Lenders entering into this Agreement, the Loan Parties agree as follows (the “Release Provision”):

   

  a)	The Administrative Agent, the Lenders, each of their respective Affiliates and each of the foregoing Persons’ respective officers, managers, members, directors, advisors, sub-advisors, partners, agents and employees, and their respective successors and assigns (hereinafter all of the above collectively referred to as the “Lender Group”), are irrevocably and unconditionally released, discharged and acquitted from any and all actions, causes of action, claims, demands, damages and liabilities of whatever kind or nature, in law or in equity, now known or unknown, suspected or unsuspected to the extent that any of the foregoing arises from any action or failure to act under or otherwise arising in connection with the Investment Documents, in each case arising on or prior to the Sixth Amendment Effective Date, except to the extent such actions, causes of action, claims, demands, damages and liabilities result from the gross negligence or willful misconduct of any of the Lender Group as determined by a court of competent jurisdiction in a final and nonappealable judgment; provided, however, that, the Loan Parties do not release, discharge or acquit the Lender Group from their respective obligations specifically set forth in this Agreement.

   

  b)	Each Loan Party hereby acknowledges, represents and warrants to the Lender Group that:

   

   i)	it has read and understands the effect of the Release Provision. Each Loan Party has had the assistance of independent counsel of its own choice, or has had the opportunity to retain such independent counsel, in reviewing, discussing, and considering all the terms of the Release Provision; and if counsel was retained, counsel for such Loan Party has read and considered the Release Provision and advised such Loan Party with respect to the same.  Before execution of this Agreement, such Loan Party has had adequate opportunity to make whatever investigation or inquiry it may deem necessary or desirable in connection with the subject matter of the Release Provision.

   

  ii)	no Loan Party is acting in reliance on any representation, understanding, or agreement not expressly set forth herein or in the Credit Agreement or other Investment Documents.  Each Loan Party acknowledges that the Lender Group has not made any representation with respect to the Release Provision except as expressly set forth herein.

   

   

  

  iii)	each Loan Party has executed this Agreement and the Release Provision thereof as its free and voluntary act, without any duress, coercion, or undue influence exerted by or on behalf of any person.

   

  iv)	the Loan Parties are the sole owners of the claims released by the Release Provision, and no Loan Party has heretofore conveyed or assigned any interest in any such claims to any other Person.

   

   c)	Each Loan Party understands that the Release Provision was a material consideration in the agreement of the Administrative Agent and the Lenders to enter into this Agreement.  The Release Provision shall be in addition to any rights, privileges and immunities granted to the Administrative Agent and the Lenders under the Investment Documents.

   

  5.	Miscellaneous.

   

   a)	The Credit Agreement and the Obligations of the Loan Parties thereunder and under the other Investment Documents, are hereby ratified and confirmed and shall remain in full force and effect according to their terms, as amended by this Agreement.  This Agreement is a Loan Document.

   

   b)	Each Guarantor (i) acknowledges and consents to all of the terms and conditions of this Agreement, (ii) affirms all of its Obligations under the Investment Documents, and (iii) agrees that this Agreement and all documents executed in connection herewith do not operate to reduce or discharge its Obligations under the Credit Agreement or the other Investment Documents.

   

   c)	The Loan Parties represent and warrant to the Administrative Agent and the Lenders that:

   

   i)	each Loan Party has taken all necessary corporate, limited liability company or other organizational action to authorize the execution, delivery and performance of this Agreement.

   

   ii)	this Agreement has been duly executed and delivered by each Loan Party and constitutes a legal, valid and binding obligation of each Loan Party, enforceable against each such Loan Party in accordance with its terms, subject to bankruptcy, insolvency and similar laws affecting enforceability of creditors’ rights generally and to general principles of equity.

   

   iii)	no approval, consent, exemption, authorization or other action by, or notice to, or filing with, any Governmental Authority or any other Person is necessary or required in connection with the execution, delivery or performance by, or enforcement against, any Loan Party of this Agreement other than (A) those that have already been obtained and are in full force and effect and (B) those that may be required under any applicable notices under securities laws.

   

  (iv)	(A) the representations and warranties of the Borrower and each other Loan Party contained in Article VI of the Credit Agreement or any other Investment Document, or which are contained in any document furnished at any time under or in connection therewith, are true and correct in all material respects (and in all respects if any such representation and warranty is already qualified by materiality or reference to Material Adverse Effect) on and as of the date hereof, except to the extent that such representations 

   

  

  and warranties specifically refer to an earlier date, in which case they are true and correct in all material respects (and in all respects if any such representation and warranty is already qualified by materiality or reference to Material Adverse Effect) as of such earlier date and (B) no event has occurred and is continuing which constitutes a Default or an Event of Default.

   

  		(d)	Each of the Loan Parties hereby affirms the Liens created and granted in the Loan Documents in favor of the Administrative Agent, for the benefit of the Secured Parties, and agrees that this Agreement does not adversely affect or impair such Liens and security interests in any manner.

   

  (e)	This Agreement may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract.  Delivery of an executed counterpart of a signature page of this Agreement by facsimile or other electronic imaging means (e.g. “pdf” or “tif”) shall be effective as delivery of a manually executed counterpart of this Agreement.

   

  (f)	If any provision of this Agreement is held to be illegal, invalid or unenforceable, (i) the legality, validity and enforceability of the remaining provisions of this Agreement shall not be affected or impaired thereby and (ii) the parties shall endeavor in good faith negotiations to replace the illegal, invalid or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the illegal, invalid or unenforceable provisions.  The invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

   

  (g)	THIS AGREEMENT AND ANY CLAIM, CONTROVERSY, DISPUTE OR CAUSE OF ACTION (WHETHER IN CONTRACT OR TORT OR OTHERWISE) BASED UPON, ARISING OUT OF OR RELATING TO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY, SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

   

   

  [SIGNATURE PAGES FOLLOW]

   

   

  

  IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first above written.

  BORROWER:	RECRO PHARMA, INC.,

  a Pennsylvania corporation

  By:/s/ Ryan Lake			

  Name: Ryan Lake

  Title:   Chief Financial Officer

  GUARANTORS: 	RECRO GAINESVILLE LLC,

  a Massachusetts limited liability company

  By:/s/ Ryan Lake			

  Name: Ryan Lake

  					Title:   Treasurer

   

  					RECRO GAINESVILLE DEVELOPMENT LLC, 

  a Delaware limited liability company

   

  					By:/s/ Ryan Lake			

  					Name: Ryan Lake

  					Title:   Secretary and Treasurer

   

   

   

   

   

  		 

   

   

   

   

   

  

  ADMINISTRATIVE AGENT: 	ATHYRIUM OPPORTUNITIES III ACQUISITION LP,

  a Delaware limited partnership

  By:	Athyrium Opportunities Associates III LP, 

  its General Partner

   

  By:	Athyrium Opportunities Associates III GP LLC, the General Partner of Athyrium Opportunities Associates III LP 

   

   

  By:/s/ Rashida Adams			

  Name: Rashida Adams

  Title:   Authorized Signatory

   

   

   

  

  LENDERS:	ATHYRIUM OPPORTUNITIES III ACQUISITION LP,

  a Delaware limited partnership

  By:	Athyrium Opportunities Associates III LP, its General Partner

   

  By:	Athyrium Opportunities Associates III GP LLC, the General Partner of Athyrium Opportunities Associates III LP 

   

   

  By:/s/ Rashida Adams			

  Name: Rashida Adams

  Title:   Authorized Signatory

  			ATHYRIUM OPPORTUNITIES II ACQUISITION LP,

  a Delaware limited partnership

  By:	Athyrium Opportunities Associates II LP, its General Partner

   

  By:	Athyrium GP Holdings LLC, the General Partner of Athyrium Opportunities Associates II LP 

   

   

  By:/s/ Rashida Adams			

  Name: Rashida Adams

  Title:   Authorized Signatory

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