Document:

apvo-ex101_309.htm

EXHIBIT 10.1

amendment No. 1 to CREDIT AND SECURITY AGREEMENT

This AMENDMENT NO. 1 TO CREDIT AND SECURITY AGREEMENT (this “Agreement”) is made as of this 11th day of May, 2017, by and among Aptevo Therapeutics inc., a Delaware corporation (“Aptevo Therapeutics”), APTEVO BIOTHERAPEUTICS LLC, a Delaware limited liability company (“Aptevo BioTherapeutics”), APTEVO RESEARCH AND DEVELOPMENT LLC, a Delaware limited liability company (“Aptevo R&D”, and Aptevo R&D together with Aptevo Therapeutics and Aptevo BioTherapeutics, each individually, a “Borrower” and collectively, the “Borrowers”), MIDCAP FINANCIAL TRUST, a Delaware statutory trust, as Agent (in such capacity, together with its successors and assigns, “Agent”) and the other financial institutions or other entities from time to time parties to the Credit Agreement referenced below, each as a Lender.

RECITALS

A.Agent, Lenders and Borrowers have entered into that certain Credit and Security Agreement, dated as of August 4, 2016 (the “Original Credit Agreement” and as the same is amended hereby and as it may be further amended, modified, supplemented and restated from time to time, the “Credit Agreement”), pursuant to which the Lenders have agreed to make certain advances of money and to extend certain financial accommodations to Borrowers in the amounts and manner set forth in the Credit Agreement.

 

B.Pursuant to Section 6.2 of the Original Credit Agreement, Borrowers are required to maintain a minimum Net Commercial Product Revenue for each applicable Defined Period and Borrowers failed to comply with such requirement for the Defined Period ending March 31, 2017 which failure constitutes an Event of Default under Section 10.1(a)(ii) of the Credit Agreement (the “Specified Event of Default”).

 

C.Borrowers have requested, and Agent and Lenders have agreed, to waive, ab initio, the Specified Event of Default and to amend certain provisions of the Original Credit Agreement to, among other things, modify the conditions to the availability of Term Loan Tranche 2, grant a springing lien in the Borrower’s Intellectual Property, and amend the Net Commercial Product Revenue covenant, all in accordance with the terms and subject to the conditions set forth herein.

 

AGREEMENT

NOW, THEREFORE, in consideration of the foregoing, the terms and conditions set forth in this Agreement, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Agent, Lenders and Borrowers hereby agree as follows:

1.Recitals.  This Agreement shall constitute a Financing Document and the Recitals and each reference to the Credit Agreement, unless otherwise expressly noted, will be deemed to reference the Credit Agreement as amended hereby.  Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in the Credit Agreement (including those capitalized terms used in the Recitals hereto).

2.Limited Waiver.  

(a)At the request of and as an accommodation to the Borrowers and subject to the satisfaction of the conditions to effectiveness set forth in Section 5 hereof, Agent and Required Lenders hereby waive, ab initio, the Specified Event of Default in accordance with the terms hereof. 

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(b)The limited waiver set forth in this Section 2 is effective solely for the purposes set forth herein and shall be limited precisely as written and shall not, except as expressly provided herein, be deemed to (a) be a consent to any other amendment, waiver or modification of any term or condition of the Credit Agreement or of any other Financing Document; (b) prejudice any right that Agent or Lenders have or may have in the future under or in connection with the Credit Agreement or any other Financing Document (other than in respect of the Specified Event of Default); (c) constitute a consent to or waiver of any past, present or future Default or Event of Default (other than the Specified Event of Default) or other violation of any provisions of the Credit Agreement or any other Financing Documents; (d) create any obligation to forbear from taking any enforcement action, or to make any further extensions of credit (other than in respect of the Specified Event of Default); or (e) establish a custom or course of dealing among any of the Credit Parties, on the one hand, or Agent or any Lender, on the other hand.

3.Amendments to Original Credit Agreement.  Subject to the satisfaction of the conditions to effectiveness set forth in Section 5 below, the Original Credit Agreement is hereby amended as follows:

(a)The definition of “Collateral” in Section 1.1 of the Original Credit Agreement is hereby amended by adding the following words at the end thereof:

“but excluding any Excluded Property”

(b)Clause (b) of the definition of “Excluded Property” in Section 1.1 of the Original Credit Agreement is hereby amended by adding the following parenthetical after the words “property right” in the first line thereof:

“(including without limitation any jointly owned or jointly developed Intellectual Property rights)” 

(c)Clause (c) of the definition of “Excluded Property” in Section 1.1 of the Original Credit Agreement is hereby amended and restated in its entirety as follows:

“(c)prior to the occurrence of a Springing IP Event, Intellectual Property except to the extent that it is necessary under applicable law to have a Lien and security interest in any such Intellectual Property in order to have a perfected Lien and security interest in and to IP Proceeds (provided that, for avoidance of doubt, neither Agent nor any Lender shall have any right to transfer or dispose of any Intellectual Property as a result of this clause (c)), and for the avoidance of any doubt, the Collateral shall include, and Agent shall have a Lien and security interest in, (i) all IP Proceeds, (ii) all payments with respect to IP Proceeds that are received after the commencement of a bankruptcy or insolvency proceeding and (iii) except to the extent excluded by clause (b) above, all license and sublicense agreements to which any Borrower is a party and all rights granted to such Borrower thereunder, including without limitation, the license and sublicense agreements entered into between any Borrower and Emergent in connection with the Emergent Spinoff Transaction; provided, however, that, upon the occurrence of a Springing IP Event and continuing at all times thereafter (whether or not the Springing IP Event continues), Intellectual Property shall no longer constitute “Excluded Property” pursuant to this clause (c) (but may, for the avoidance of doubt, be excluded by other clauses of this definition to the extent applicable) and the Collateral shall immediately include all Intellectual Property of each Borrower (including, for the avoidance of doubt, all IP Proceeds but excluding Intellectual Property excluded by other clauses of this definition) automatically and without notice or any further action by Agent, any Lender or any Credit Party; and”

 

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(d)The definition of “Excluded Property” in Section 1.1 of the Original Credit Agreement is hereby amended by adding a new clause (d) immediately following clause (c) thereof and prior to the words “provided, however” as follows: 

“(d)intent to use trademark applications.”

(e)The following definitions in Section 1.1 of the Original Credit Agreement are hereby amended and restated in their entirety as follows: 

““Fee Letter” means each agreement between Agent and Borrower relating to fees payable to Agent, for its own account, in connection with the execution of this Agreement, including, without limitation, any amendments and restatements thereof.”

““Security Document” means this Agreement, the Intellectual Property Security Agreement and any other agreement, document or instrument executed concurrently herewith or at any time hereafter pursuant to which one or more Credit Parties or any other Person either (a) Guarantees payment or performance of all or any portion of the Obligations, and/or (b) provides, as security for all or any portion of the Obligations, a Lien on any of its assets in favor of Agent for its own benefit and the benefit of the Lenders, as any or all of the same may be amended, supplemented, restated or otherwise modified from time to time in accordance with the terms hereof.”

““Term Loan Tranche 2 Activation Date” means the date, if any, on which the Agent receives a Compliance Certificate delivered in accordance with Section 4.1, and such other documentation and information relating to the following conditions as Agent may reasonably request, evidencing to Agent’s reasonable satisfaction that (a) Borrower’s consolidated Net Commercial Product Revenue for the twelve (12) month period immediately preceding such date is greater than or equal to $40,000,000, and (b) Agent has received all documents, instruments and other agreements from Borrower and Borrower has taken such other actions as reasonably requested by Agent to perfect and maintain Agent’s first priority perfected security interest (subject to Permitted Liens), for the ratable benefit of Lenders, in Borrower’s Intellectual Property (other than Excluded Property).”

“Term Loan Tranche 2 Commitment Termination Date” means March 31, 2018.

(f)Section 1.1 of the Original Credit Agreement is hereby amended by adding the following definitions in the appropriate alphabetical order therein:

““First Amendment” means that certain Amendment No. 1 to Credit and Security Agreement, dated as of May 11, 2017, by and among Borrowers, Agent and the Lenders.”

““First Amendment Effective Date” means the first date that all of the conditions in Section 5 of the First Amendment are satisfied.”

““Intellectual Property Security Agreement” means an Intellectual Property Security Agreement in the form attached hereto as Exhibit G, which agreement shall become effective in accordance with the terms of Section 4.16(f).

““Springing IP Event” means that, on any date, (a) the Borrowers have allowed, as of the close of business on any day, the aggregate amount of unrestricted cash and cash equivalents held by the Borrowers in Deposit Accounts or Securities Accounts that are 

 

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subject to a first priority perfected Lien (subject to Permitted Liens) in favor of the Agent to be less than $25,000,000 or (b) a borrowing of the Term Loan Tranche 2 has occurred.”

(g)Clause (b) of Section 4.16 of the Original Credit Agreement is hereby amended and restated in its entirety as follows:

“(b)If Borrower obtains any Registered Intellectual Property (other than copyrights, mask works and related applications, which are addressed below), Borrower shall notify Agent on a quarterly basis and execute such documents and provide such other information (including, without limitation, copies of applications) and take such other actions as Agent shall request in its good faith business judgment to perfect and maintain a first priority perfected security interest (subject to Permitted Liens) in favor of Agent, for the ratable benefit of Lenders, in (x) prior to the occurrence of a Springing IP Event, the IP Proceeds or (y) upon the occurrence of a Springing IP Event, the Registered Intellectual Property (other than Excluded Property and any security interest that is not required to be perfected under the terms of this Agreement).  Upon the occurrence of a Springing IP Event, Borrower shall take such actions as Agent shall request in its good faith business judgment to perfect and maintain a first priority perfected security interest (subject to Permitted Liens) in favor of Agent, for the ratable benefit of Lenders, in the Registered Intellectual Property (other than Excluded Property and any security interest that is not required to be perfected under the terms of this Agreement).”  

(h)Section 4.16 of the Original Credit Agreement is hereby amended by adding the following new clauses (f) through (h) thereto:

“(f)On the First Amendment Effective Date, each Borrower will execute and deliver to Agent the Intellectual Property Security Agreement.  The Intellectual Property Security Agreement shall be held in escrow by Agent, and shall not be in force and effect, unless and until the occurrence of the Springing IP Event, at which time (i) the Intellectual Property Security Agreement shall immediately and automatically become effective without any further action or consent by any Borrower and (ii) Agent shall be automatically authorized to file the Intellectual Property Security Agreement (including any updated schedules thereto delivered pursuant to Section 4.16(h)) with the United States Patent and Trademark Office and/or United States Copyright Office, as applicable.

(g)Upon the occurrence of a Springing IP Event and continuing at all times thereafter (whether or not the Springing IP Event continues), then automatically and without notice or any further action by Agent, any Lender or any Borrower (i) Agent shall be authorized to file UCC financing statements, financing statement amendments and security agreements (including any Intellectual Property Security Agreement) necessary or desirable to perfect such security interest in the Intellectual Property (other than Excluded Property and any security interest that is not required to be perfected under the terms of this Agreement), and (ii) each Borrower shall execute such other agreements and take such other actions as Agent may reasonably request to establish, perfect or protect Agent’s security interest in the Intellectual Property (other than Excluded Property and any security interest that is not required to be perfected under the terms of this Agreement).

(h)Borrowers shall promptly (and in any event within three (3) Business Days of the occurrence thereof) provide Agent and each Lender with written notice of the occurrence of a Springing IP Event, which notice shall be accompanied by a certificate from an authorized executive officer from each Borrower (A) acknowledging that the Springing IP Event has occurred, (B) specifying the date on which the Springing IP Event 

 

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occurred, and (C) acknowledging that Agent may exercise any rights it may have under this Agreement or any other Financing Document with respect to the Springing IP Event.  Without limiting the foregoing, Borrowers shall promptly (and in any event within ten (10) days of the occurrence of a Springing IP Event) provide Agent a supplement to the Intellectual Property Security Agreement certifying to and attaching true, correct and complete copies of updated schedules to the Intellectual Property Security Agreement and certifying that all Intellectual Property owned by each Borrower and registered in the United States as of the date of such certification is reflected on such schedules (other than Excluded Property).”

(i)Section 9.2(c) of the Original Credit Agreement is hereby is hereby amended and restated in its entirety as follows:

“(c)Without limiting the generality of Section 3.2, except with respect to any rights of any Borrower as a licensee under any license of Intellectual Property owned by another Person, and except for (x) the filing of financing statements under the UCC, (y) any change of ownership filings applications, authorizations, consents or other actions that may be required with respect to Permits and (z) after the Springing IP Event, the filing of the Intellectual Property Security Agreement, duly completed with scheduled attached, with the United States Patent and Trademark Office and/or the United States Copyright Office (as the case may be), no authorization, approval or other action by, and no notice to or filing with, any Governmental Authority or consent of any other Person is required for (i) the grant by each Borrower to Agent of the security interests and Liens in the Collateral provided for under this Agreement and the other Security Documents (if any), or (ii) the exercise by Agent of its rights and remedies with respect to the Collateral provided for under this Agreement and the other Security Documents or under any applicable Law, including the UCC and neither any such grant of Liens in favor of Agent or exercise of rights by Agent shall violate or cause a default under any agreement between any Borrower and any other Person relating to any such collateral, including any license constituting Collateral to which a Borrower is a party, whether as licensor or licensee, with respect to any Intellectual Property, whether owned by such Borrower or any other Person.”

(j)Section 9.2(g)(ix) of the Original Credit Agreement is hereby amended by replacing the words “the foregoing” in the first line thereof with the words “this Agreement or any other Financing Document”.

(k)Section 9.2(g) of the Original Credit Agreement is hereby amended by adding a new clause (x) at the end thereof as follows:

“(x)  If, after the First Amendment Effective Date, any Borrower desires to enter into a Permitted License and the proposed licensee under such Permitted License requests that Agent enter into a non-disturbance agreement (or similar agreement) in connection with such Permitted License, Agent hereby agrees to negotiate in good faith and on a commercially reasonable basis with such Borrower and such licensee to enter into such a non-disturbance and attornment agreement with respect to the proposed Permitted License and the Intellectual Property that is the subject thereof, which shall provide (among other things) (A) that, notwithstanding any exercise of rights and/or remedies by the Agent under this Agreement after a Springing IP Event in respect of the Intellectual Property that is the subject of such Permitted License, such licensee shall continue to have the rights and licenses set forth in its license agreement to the extent that such licensee is in compliance with the terms thereof; provided that in the case of any bankruptcy or insolvency proceeding with respect to such Borrower the rights of such licensee and the Agent shall 

 

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be determined in accordance with the Bankruptcy Code (or other Laws applicable to such proceeding), (B) an acknowledgement and consent by such licensee of Agent’s security interest in the Collateral (including, to the extent applicable, such Permitted License and the Intellectual Property that is the subject thereof), and (C) that such Permitted License shall attorn to the owner of such Intellectual Property after such exercise of rights and remedies.” 

(l)Schedule 6.2 of the Original Credit Agreement is hereby replaced in its entirety by a new Schedule 6.2 attached hereto as Exhibit A.

(m)The Original Credit Agreement is hereby amended by adding the attached Exhibit G as Exhibit G thereto, in appropriate alphabetical order therein.

4.Representations and Warranties; Reaffirmation of Security Interest.  Each Borrower hereby confirms that each of the representations and warranties set forth in the Credit Agreement is true and correct in all material respects (without duplication of any materiality qualifier in the text of such representation or warranty) with respect to such Borrower as of the date hereof except to the extent that any such representation or warranty relates to a specific date in which case such representation or warranty shall be true and correct in all material respects as of such earlier date (without duplication of any materiality qualifier in the text of such representation or warranty).  Each Borrower confirms and agrees that all security interests and Liens granted to Agent continue in full force and effect, and that all Collateral remains free and clear of any Liens, other than those granted to Agent and Permitted Liens.  Nothing herein is intended to impair or limit the validity, priority or extent of Agent’s security interests in and Liens on the Collateral.  Each Borrower acknowledges and agrees that the Credit Agreement, the other Financing Documents and this Agreement constitute the legal, valid and binding obligation of such Borrower, and are enforceable against such Borrower in accordance with their terms, except as the enforceability thereof may be limited by bankruptcy, insolvency or other similar laws relating to the enforcement of creditors’ rights generally and by general equitable principles.  

5.Conditions to Effectiveness.  This Agreement shall become effective as of the date on which each of the following conditions has been satisfied (or waived in writing by the Agent and the Required Lenders), as determined by Agent in its sole discretion: 

(a)Borrowers, Agent and Required Lenders shall have delivered to Agent this Agreement, executed by an authorized officer of each such Person; 

(b)Borrowers shall have delivered to Agent a duly executed copy of the Amended and Restated Fee Letter, in form and substance reasonably satisfactory to Agent;

(c)Borrowers shall have delivered to Agent a duly executed Intellectual Property Security Agreement to be held in escrow, in form and substance reasonably satisfactory to Agent;

(d)Agent shall have filed UCC-3 amendment statements necessary to reflect the amendments set forth in this Agreement;

(e)Agent shall have received (i) reasonably satisfactory diligence of the Borrowers’ Intellectual Property, including without limitation customary intellectual property searches and (ii) lien searches and other searches as Agent determines necessary and as otherwise permitted by Section 7.3 of the Credit Agreement;

(f)all representations and warranties of Borrowers contained herein shall be true and correct in all material respects (without duplication of any materiality qualifier in the text of such 

 

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representation or warranty) as of the date hereof except to the extent that any such representation or warranty relates to a specific date in which case such representation or warranty shall be true and correct in all material respects as of such earlier date (without duplication of any materiality qualifier in the text of such representation or warranty) (and such parties’ delivery of their respective signatures hereto shall be deemed to be its certification thereof); and

(g)prior to and after giving effect to the agreements set forth herein, no Default or Event of Default (other than the Specified Event of Default) shall exist under any of the Financing Documents.

6.Release.  In consideration of the agreements of Agent and Lenders contained herein and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Borrower, voluntarily, knowingly, unconditionally and irrevocably, with specific and express intent, for and on behalf of itself and all of its respective parents, subsidiaries, affiliates, members, managers, predecessors, successors, and assigns, and each of their respective current and former directors, officers, shareholders, agents, and employees, and each of their respective predecessors, successors, heirs, and assigns (individually and collectively, the “Releasing Parties”) does hereby fully and completely release, acquit and forever discharge each of Agent, Lenders, and each their respective parents, subsidiaries, affiliates, members, managers, shareholders, directors, officers and employees, and each of their respective predecessors, successors, heirs, and assigns (individually and collectively, the “Released Parties”), of and from any and all actions, causes of action, suits, debts, disputes, damages, claims, obligations, liabilities, costs, expenses and demands of any kind whatsoever, at law or in equity, whether matured or unmatured, liquidated or unliquidated, vested or contingent, choate or inchoate, known or unknown that the Releasing Parties (or any of them) has against the Released Parties or any of them (whether directly or indirectly), based in whole or in part on facts, whether or not now known, existing on or before the date hereof (and not, for the avoidance of doubt, arising at any time hereafter).  Each Borrower acknowledges that the foregoing release is a material inducement to Agent’s and each Lender’s decision to enter into this Agreement and agree to the modifications contemplated hereunder, and has been relied upon by Agent and Lenders in connection therewith.

7.No Waiver or Novation.  The execution, delivery and effectiveness of this Agreement shall not, except as expressly provided in this Agreement, operate as a waiver of any right, power or remedy of Agent, nor constitute a waiver of any provision of the Credit Agreement, the Financing Documents or any other documents, instruments and agreements executed or delivered in connection with any of the foregoing.  Nothing herein is intended or shall be construed as a waiver of any existing Defaults or Events of Default under the Credit Agreement or the other Financing Documents (other than as expressly set forth in Section 2 hereof with respect to the Specified Event of Default) or any of Agent’s rights and remedies in respect of such Defaults or Events of Default (other than as expressly set forth in Section 2 hereof with respect to the Specified Event of Default).  This Agreement (together with any other document executed in connection herewith) is not intended to be, nor shall it be construed as, a novation of the Credit Agreement.

8.Affirmation.  Except as specifically amended pursuant to the terms hereof, each Borrower hereby acknowledges and agrees that the Credit Agreement and all other Financing Documents (and all covenants, terms, conditions and agreements therein) shall remain in full force and effect, and are hereby ratified and confirmed in all respects by such Borrower.  Each Borrower covenants and agrees to comply with all of the terms, covenants and conditions of the Credit Agreement and the Financing Documents, notwithstanding any prior course of conduct, waivers, releases or other actions or inactions on Agent’s or any Lender’s part which might otherwise constitute or be construed as a waiver of or amendment to such terms, covenants and conditions.  

 

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9.Miscellaneous.

(a)Reference to the Effect on the Credit Agreement.  Upon the effectiveness of this Agreement, each reference in the Credit Agreement to “this Agreement,” “hereunder,” “hereof,” “herein,” or words of similar import shall mean and be a reference to the Credit Agreement, as amended by this Agreement.     

(b)Incorporation of Credit Agreement Provisions.  The provisions contained in Section 11.6 (Indemnification) of the Credit Agreement are incorporated herein by reference to the same extent as if reproduced herein in their entirety.

(c)THIS AGREEMENT AND ALL DISPUTES AND OTHER MATTERS RELATING HERETO OR ARISING THEREFROM (WHETHER SOUNDING IN CONTRACT LAW, TORT LAW OR OTHERWISE), SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES. 

(d)EACH BORROWER HEREBY CONSENTS TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED IN THE STATE OF NEW YORK IN THE CITY OF NEW YORK, BOROUGH OF MANHATTAN, AND IRREVOCABLY AGREES THAT, SUBJECT TO AGENT’S ELECTION, ALL ACTIONS OR PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT SHALL BE LITIGATED IN SUCH COURTS.  EACH BORROWER EXPRESSLY SUBMITS AND CONSENTS TO THE JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS. EACH BORROWER HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS AND AGREES THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE UPON SUCH BORROWER BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, ADDRESSED TO SUCH BORROWER AT THE ADDRESS SET FORTH IN THIS AGREEMENT AND SERVICE SO MADE SHALL BE COMPLETE TEN (10) DAYS AFTER THE SAME HAS BEEN POSTED.

(e)EACH BORROWER, AGENT AND THE LENDERS HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.  EACH BORROWER, AGENT AND EACH LENDER ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH HAS RELIED ON THE WAIVER IN ENTERING INTO THIS AGREEMENT, AND THAT EACH WILL CONTINUE TO RELY ON THIS WAIVER IN THEIR RELATED FUTURE DEALINGS.  EACH BORROWER, AGENT AND EACH LENDER WARRANTS AND REPRESENTS THAT IT HAS HAD THE OPPORTUNITY OF REVIEWING THIS JURY WAIVER WITH LEGAL COUNSEL, AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS.

(f)Headings.  Section headings in this Agreement are included for convenience of reference only and shall not constitute a part of this Agreement for any other purpose.

(g)Counterparts.  This Agreement may be signed in any number of counterparts, each of which shall be deemed an original and all of which when taken together shall constitute one and the same instrument.  Delivery of an executed counterpart of this Agreement by facsimile or by electronic mail delivery of an electronic version (e.g., .pdf or .tif file) of an executed signature page shall be effective as delivery of an original executed counterpart hereof and shall bind the parties hereto. 

 

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(h)Entire Agreement.This Agreement constitutes the entire agreement and understanding among the parties hereto and supersedes any and all prior agreements and understandings, oral or written, relating to the subject matter hereof.

(i)Severability.  In case any provision of or obligation under this Agreement shall be invalid, illegal or unenforceable in any applicable jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby.

(j)Successors/Assigns.  This Agreement shall bind, and the rights hereunder shall inure to, the respective successors and assigns of the parties hereto, subject to the provisions of the Credit Agreement and the other Financing Documents.

[SIGNATURES APPEAR ON FOLLOWING PAGES]  

 

 

 

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IN WITNESS WHEREOF, intending to be legally bound, the undersigned have executed this Agreement as of the day and year first hereinabove set forth.  

 

 

	
AGENT:
	
MIDCAP FINANCIAL TRUST, 

	
 
	
as Agent

	
 
	
 

	
 
	
By:  Apollo Capital Management, L.P.,

	
 
	
its investment manager

	
 
	
 

	
 
	
By:  Apollo Capital Management GP, LLC,

	
 
	
its general partner

	
 
	
 

	
 
	
By:        /s/ Maurice Amsellem

	
 
	
Name: Maurice Amsellem

	
 
	
Title: Authorized Signatory 

 

 

 

 

	
LENDER:
	
MIDCAP FINANCIAL TRUST, 

	
 
	
as a Lender

	
 
	
 

	
 
	
By:  Apollo Capital Management, L.P.,

	
 
	
its investment manager

	
 
	
 

	
 
	
By:  Apollo Capital Management GP, LLC,

	
 
	
its general partner

	
 
	
 

	
 
	
By:        /s/ Maurice Amsellem

	
 
	
Name: Maurice Amsellem

	
 
	
Title: Authorized Signatory 

 

 

 

 

 

 

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LENDER:
	
APOLLO INVESTMENT CORPORATION

	
 
	
 

	
 
	
 

	
 
	
By:  Apollo Investment Management, L.P., as Advisor

	
 
	
By:  ACC Management, LLC, as its General Partner

	
 
	
 

	
 
	
 

	
 
	
By:        /s/ Tanner Powell

	
 
	
Name: Tanner Powell

	
 
	
Title: Authorized Signatory 

 

 

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LENDER:
	
FLEXPOINT MCLS HOLDINGS LLC

	
 
	
 
	
 

	
 
	
 
	
 

	
 
	
By:
	
    /s/ Daniel Edelman

	
 
	
Name:
	
Daniel Edelman

	
 
	
Title:
	
Authorized Signatory 

 

 

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LENDER:
	
ELM 2016-1 TRUST

	
 
	
 
	
 

	
 
	
By: MidCap Financial Services Capital Management, LLC, as Servicer

	
 
	
 
	
 

	
 
	
By:
	
    /s/ Adam Day

	
 
	
Name:
	
Adam Day

	
 
	
Title:
	
Authorized Signatory 

 

 

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BORROWERS:
	
APTEVO THERAPEUTICS INC.

	
 
	
 
	
 

	
 
	
 
	
 

	
 
	
By:
	
    /s/ Jeffrey G. Lamothe

	
 
	
Name:
	
Jeffrey G. Lamothe

	
 
	
Title:
	
Chief Financial Officer

 

	
 
	
APTEVO BIOTHERAPEUTICS LLC

	
 
	
 
	
 

	
 
	
 
	
 

	
 
	
By:
	
    /s/ Jeffrey G. Lamothe

	
 
	
Name:
	
Jeffrey G. Lamothe

	
 
	
Title:
	
Chief Financial Officer

 

	
 
	
APTEVO RESEARCH AND DEVELOPMENT LLC

	
 
	
 
	
 

	
 
	
 
	
 

	
 
	
By:
	
    /s/ Jeffrey G. Lamothe

	
 
	
Name:
	
Jeffrey G. Lamothe

	
 
	
Title:
	
Chief Financial Officer

 

 

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Exhibit A

Schedule 6.2 – Minimum Net Commercial Product Revenue Schedule

 

		
	
Defined Period Ending
	
Minimum Net Commercial Product Revenue Amount

	
30-Sep-16
	
$34,847,470

	
31-Dec-16
	
$35,000,000

	
31-Mar-17
	
$34,000,000

	
30-Jun-17
	
$33,250,000

	
30-Sep-17
	
$34,000,000

	
31-Dec-17
	
$36,500,000

	
31-Mar-18
	
$38,000,000

	
30-Jun-18
	
$39,000,000

	
30-Sep-18
	
$40,000,000

	
31-Dec-18
	
$41,000,000

	
31-Mar-19
	
$42,000,000

	
30-Jun-19
	
$43,000,000

	
30-Sep-19
	
$44,000,000

	
31-Dec-19
	
$45,000,000

	
31-Mar-20
	
$45,500,000

	
30-Jun-20
	
$46,000,000

	
30-Sep-20
	
$46,500,000

	
31-Dec-20 and the last day of each calendar quarter occurring thereafter
	
$47,000,000

 

 

MidCap / Aptevo / Amendment No. 1 to Credit Agreement 

 \\DC - 036639/000031 - 10303807 

 

Exhibit G to Credit Agreement (Form of Intellectual Property Security Agreement)

 

 

 

 

 

MidCap / Aptevo / Amendment No. 1 to Credit Agreement 

 \\DC - 036639/000031 - 10303807EX-4.1

 Exhibit 4.1 

SECOND SUPPLEMENTAL INDENTURE 

SECOND SUPPLEMENTAL INDENTURE (this “Supplemental Indenture”), dated as of May 12, 2017, by and among Hexion Inc., a New
Jersey corporation (the “Issuer”), the Subsidiary Guarantors party hereto (the “Guarantors”) and Wilmington Trust, National Association, as trustee under the indenture referred to below (the
“Trustee”). 
 WHEREAS, the Issuer and Guarantors have heretofore executed and delivered to the Trustee an Indenture (the
“Indenture”), dated as of February 8, 2017, providing for the issuance of the Issuer’s 10.375% First-Priority Senior Secured Notes due 2022 (the “Notes”) (as supplemented by the First Supplemental
Indenture, dated as of February 8, 2017), initially in the aggregate principal amount of $485,000,000 (the “Existing Notes”); 

WHEREAS, on the date hereof the Issuer intends to issue an aggregate principal amount of $75,000,000 of the Notes (the “New
Notes”), which shall be Additional Notes under the Indenture; 
 WHEREAS, the issuance and sale of the New Notes has been
authorized by resolutions adopted by the Board of Directors of the Issuer and the Guarantors; 
 WHEREAS, the Existing Notes and the New
Notes will be treated as a single series of Notes for all purposes of the Indenture (as supplemented by this Supplemental Indenture, including, without limitation, waivers, amendments, redemptions and offers to purchase); 

WHEREAS, the Incurrence of the Indebtedness represented by the New Notes is permitted as of the date hereof by Sections 4.03 and 4.12 of
the Indenture and the New Notes will be issued in compliance with the other applicable provisions of the Indenture; 
 WHEREAS, pursuant to
Sections 2.01 and 9.01 of the Indenture, the Issuer, the Guarantors and the Trustee are authorized to execute and deliver this Supplemental Indenture to provide for the issuance of the New Notes; 

WHEREAS the Issuer has complied with all conditions precedent provided for in the Indenture relating to this Supplemental Indenture; and 

WHEREAS the Issuer has requested that the Trustee execute and deliver this Supplemental Indenture. 

NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged,
the Issuer, the Guarantors and the Trustee mutually covenant and agree for the equal and ratable benefit of the Holders of the Notes as follows: 

SECTION 1. Defined Terms. As used in this Supplemental Indenture, terms defined in the Indenture or in the preamble or recital hereto
are used herein as therein defined. The words “herein,” “hereof” and “hereby” and other words of similar import used in this Supplemental Indenture refer to this Supplemental Indenture as a whole
and not to any particular section hereof. 

 SECTION 2. Terms of New Notes. The terms of the New Notes shall be identical to the
Existing Notes issued on the Issue Date other than with respect to the following: 
  

	 	(a)	The aggregate principal amount of New Notes which may be authenticated and delivered under the Indenture shall be $75,000,000. 

  

	 	(b)	The issue price of the New Notes shall be 100.50% of the aggregate principal amount of the New Notes. 

  

	 	(c)	The issuance date of the New Notes shall be the date of this Supplemental Indenture. 

  

	 	(d)	Interest on the New Notes shall accrue from the most recent date to which interest has been paid or, if no interest has been paid, from February 8, 2017. 

 

	 	(e)	The New Notes shall be issuable in whole or in part in the form of one or more Global Notes. The depositary for such Global Notes shall be The Depository Trust Company. 

 

	 	(f)	The New Notes shall have the other terms set forth in the form of global note attached hereto as Exhibit A. 

  

	 	(g)	The New Notes shall be considered Additional Notes issued pursuant to Section 2.01 of the Indenture. 

SECTION 3. Execution of the Notes. The Notes shall be executed on behalf of the Issuer by an Officer and authenticated by the Trustee
pursuant to Section 2.03 of the Indenture. 
 SECTION 4. Ratification of Indenture; Supplemental Indentures Part of Indenture.
Except as expressly amended hereby, the Indenture is in all respects ratified and confirmed and all the terms, conditions and provisions thereof shall remain in full force and effect. This Supplemental Indenture shall form a part of the Indenture
for all purposes, and every Holder of the Notes heretofore or hereafter authenticated and delivered shall be bound hereby. 
 SECTION 5.
Governing Law. THIS SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE
OF NEW YORK. 
 SECTION 6. Trustee Makes No Representation. The Trustee makes no representation as to the
validity or sufficiency of this Supplemental Indenture. 
 SECTION 7. Counterparts. The parties may sign any number of copies of this
Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. 
 SECTION 8.
Effect of Headings. The Section headings herein are for convenience only and shall not affect the construction thereof. 

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

					
	HEXION INC.
		
	By:	 	 /s/ George F. Knight

		 	Name:	 	George F. Knight
		 	Title:	 	Executive Vice President and Chief Financial Officer
	
	Guarantors:
	
	HSC CAPITAL CORPORATION
	LAWTER INTERNATIONAL INC.
	OILFIELD TECHNOLOGY GROUP, INC.
	 HEXION INTERNATIONAL INC.

HEXION INVESTMENTS INC.

	NL COOP HOLDINGS LLC
		
	By:	 	 /s/ George F. Knight

		 	Name:	 	George F. Knight
		 	Title:	 	Executive Vice President and Chief Financial Officer
	
	HEXION CI HOLDING COMPANY (CHINA) LLC
		
	By:	 	Lawter International Inc., as sole managing member
		
	By:	 	 /s/ George F. Knight

		 	Name:	 	George F. Knight
		 	Title:	 	Executive Vice President and Chief Financial Officer

 [Signature Page to Second Supplemental Indenture] 

 
			
	WILMINGTON TRUST, NATIONAL ASSOCIATION, as Trustee
		
	By:	 	 /s/ Jane Schweiger

	Name:	 	Jane Schweiger
	Title:	 	Vice President

 [Signature Page to Second Supplemental Indenture] 

 EXHIBIT A 

[FORM OF FACE OF INITIAL NOTE] 

[Global Notes Legend] 
 Unless
this certificate is presented by an authorized representative of The Depository Trust Company, a New York corporation (“DTC”), New York, New York, to the issuer or its agent for registration of transfer, exchange or payment, and any
certificate issued is registered in the name of Cede & Co. or such other name as is requested by an authorized representative of DTC (and any payment is made to Cede & Co., or to such other entity as is requested by an authorized
representative of DTC) any transfer, pledge or other use hereof for value or otherwise by or to any person is wrongful inasmuch as the registered owner hereof, Cede & Co., has an interest herein. 

Transfers of this Global Note shall be limited to transfers in whole, but not in part, to nominees of DTC or to a successor thereof or such
successor’s nominee and transfers of portions of this Global Note shall be limited to transfers made in accordance with the restrictions set forth in the indenture referred to on the reverse hereof. 

[[For Regulation S Global Note only] Until 40 days after the later of commencement or completion of the offering, an offer or sale of notes
within the United States by a dealer (as defined in the Securities Act) may violate the registration requirements of the Securities Act if such offer or sale is made otherwise than in accordance with Rule 144A thereunder.] 

[Restricted Notes Legend for Notes Offered Otherwise than in Reliance 

on Regulation S] 
 This note
(or its predecessor) was originally issued in a transaction exempt from registration under the United States Securities Act of 1933, as amended (the “Securities Act”), and this note may not be offered, sold or otherwise transferred in the
absence of such registration or an applicable exemption therefrom. Each purchaser of this note is hereby notified that the seller of this note may be relying on the exemption from the provisions of Section 5 of the Securities Act provided by
Rule 144A thereunder. 
 The holder of this note agrees for the benefit of the issuer that (a) this note may be offered,
resold, pledged or otherwise transferred, only (i) to the issuer, (ii) within the United States to a person whom the seller reasonably believes is a qualified institutional buyer (as defined in Rule 144A under the Securities Act) in a
transaction meeting the requirements of Rule 144A, (iii) to an institutional “accredited investor” within the meaning of Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act that, prior to such
transfer, furnishes the trustee a signed letter containing certain representations and agreements relating to the transfer of this note (the form of which can be obtained from the trustee) and, if such transfer is in respect of an aggregate
principal 

 
amount of notes less than $250,000, an opinion of counsel acceptable to the issuer that such transfer is in compliance with the Securities Act, (iv) outside the United States in an offshore
transaction in accordance with Rule 904 under the Securities Act, (v) pursuant to an exemption from registration under the Securities Act provided by Rule 144 thereunder (if available) or (vi) pursuant to an effective registration
statement under the Securities Act, in each of cases (i) through (vi) in accordance with any applicable securities laws of any state of the United States, and (b) the holder will, and each subsequent holder is required to, notify any
purchaser of this note from it of the resale restrictions referred to in (a) above. 
 [Restricted Notes Legend for Notes Offered in
Reliance on Regulation S.] 
 This note (or its predecessor) was originally issued in a transaction originally exempt from registration
under the U.S. Securities Act of 1933, as amended (the “Securities Act”), and may not be transferred in the United States or to, or for the account or benefit of, any U.S. person except pursuant to an available exemption from the
registration requirements of the Securities Act and all applicable state securities laws. Terms used above have the meanings given to them in Regulation S under the Securities Act. 

[Temporary Regulation S Global Note Legend] 

Except as set forth below, beneficial ownership interests in this Temporary Regulation S Global Note will not be exchangeable for
interests in the Permanent Regulation S Global Note or any other note representing an interest in the notes represented hereby which do not contain a legend containing restrictions on transfer, until the expiration of the “40-day distribution compliance period” (within the meaning of Rule 903(b)(2) of Regulation S under the Securities Act) and then only upon certification to the trustee that such beneficial interests
are owned either by non-U.S. persons or U.S. persons who purchased such interests in a transaction that did not require registration under the Securities Act. During such
40-day distribution compliance period, beneficial ownership interests in this Temporary Regulation S Global Note may only be sold, pledged or transferred (i) to the Issuer, (ii) outside the
United States in a transaction in accordance with Rule 904 of Regulation S under the Securities Act, or (iii) pursuant to an effective registration statement under the Securities Act, in each of cases (i) through (iii) in accordance
with any applicable securities laws of any state of the United States. Holders of interests in this Temporary Regulation S Global Note will notify any purchaser of this note of the resale restrictions referred to above, if then applicable.

 After the expiration of the distribution compliance period, beneficial interests in this Temporary Regulation S Global Note may be
exchanged for interests in a Rule 144A Global Note only if (1) such exchange occurs in connection with a transfer of the notes in compliance with Rule 144A and (2) the transferor of the Regulation S Global Note first delivers to the
trustee a written certificate (in the form attached to this certificate) to the effect that the Regulation S Global Note is being transferred (a) to a person who the transferor reasonably believes to be a qualified institutional buyer within
the meaning of Rule 144A, (b) to a person who is purchasing for its own account or the account of a qualified institutional buyer in a transaction meeting the requirements of Rule 144A, and (c) in accordance with all applicable securities
laws of the states of the United States and other jurisdictions. 

  
 2 

 After the expiration of the distribution compliance period, beneficial interests in this
Temporary Regulation S Global Note may be exchanged for interests in an IAI Global Note only if (1) such exchange occurs in connection with a transfer of the notes in compliance with an exemption under the Securities Act and (2) the
transferor of the Regulation S Global Note first delivers to the trustee a written certificate (in the form attached to this certificate) to the effect that the Regulation S Global Note is being transferred (a) to an institutional
“accredited investor” within the meaning of Rule 501(a)(1),(2),(3) or (7) under the Securities Act that, prior to such transfer, furnishes the trustee a signed letter containing certain representations and agreements relating to the
transfer of this note (the form of which can be obtained from the trustee) and, if such transfer is in respect of an aggregate principal amount of notes less than $250,000, an opinion of counsel acceptable to the Issuer that such transfer is in
compliance with the Securities Act and (b) in accordance with all applicable securities laws of the states of the United States and other jurisdictions. 

Beneficial interests in a Rule 144A Global Note or an IAI Global Note may be transferred to a person who takes delivery in the form of an
interest in the Regulation S Global Note, whether before or after the expiration of the 40-day distribution compliance period, only if the transferor first delivers to the trustee a written certificate (in the
form attached to this certificate) to the effect that such transfer is being made in accordance with Rule 903 or 904 of Regulation S or Rule 144 (if available). 

[Definitive Notes Legend] 

In connection with any transfer, the holder will deliver to the
registrar and transfer agent such certificates and other information as such transfer agent may reasonably require to
confirm that the transfer complies with the foregoing restrictions. 

  
 3 

 HEXION INC. 

10.375% First-Priority Senior Secured Notes due 2022 
  

			
		 	 144A CUSIP No. 42829LAD6

144A ISIN No. US42829LAD64
 REG S
CUSIP No. U4321LAD6
 REG S ISIN No. USU4321LAD65

  

			
	No. [    ]	  	$ [        ]

 HEXION INC., a New Jersey corporation, promises to pay to
[            ], or its registered assigns, the principal sum of [            ] Dollars
($[        ]) ), or such other amount as is listed on the Schedule of Increases or Decreases in Global Notes attached hereto, on February 1, 2022. 

Interest Payment Dates: February 1 and August 1, commencing August 1, 2017 

Record Dates: January 15 and July 15 

Additional provisions of this Note are set forth on the other side of this Note. 

Dated: 
 [SIGNATURE PAGE FOLLOWS] 

  
 4 

 IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly executed. 

 

					
	HEXION INC.
			
		 	by	 	  

		 		 	Name:
		 		 	Title:

 Dated: 
  

					
	TRUSTEE’S CERTIFICATE OF AUTHENTICATION
	
	WILMINGTON TRUST, NATIONAL ASSOCIATION,
		
		 	as Trustee, certifies that this is one of the Notes referred to in the Indenture.
			
		 	by	 	  

		 		 	Authorized Signatory

  
 5 

 [FORM OF REVERSE SIDE OF INITIAL NOTE] 

10.375% First-Priority Senior Secured Notes Due 2022 
  

	1.	Interest 

 Hexion Inc., a New Jersey corporation (such Person, and its successors and
assigns under the Indenture hereinafter referred to, being herein called the “Issuer” or “Hexion”), promises to pay interest on the principal amount of this Note at a rate per annum of 10.375%. The Issuer will pay interest
semiannually in arrears to the holders of record of the Notes on February 1 and August 1 of each year, commencing August 1, 2017. Interest on the Notes will accrue from the most recent date to which interest has been paid or, if no
interest has been paid, from the Issue Date. Interest will be computed on the basis of a 360-day year of twelve 30-day months. The Issuer will pay interest on overdue
principal at the rate borne by this Note plus 1.00% per annum, and it will pay interest on overdue installments of interest at the same rate to the extent lawful. 
  

	2.	Method of Payment 

 The Issuer will pay interest on the Notes (except defaulted interest)
to the Persons who are registered holders of Notes at the close of business on the January 15 or July 15 next preceding the interest payment date even if Notes are canceled after the record date and on or before the interest payment date.
Holders must surrender Notes to a Paying Agent to collect principal payments. The Issuer will pay principal and interest in money of the United States that at the time of payment is legal tender for payment of public and private debts. Payments in
respect of the Notes represented by a Global Note (including principal, premium and interest) will be made by wire transfer of immediately available funds to the accounts specified by the Depository. The Issuer will make all payments in respect of a
certificated Note (including principal, premium and interest) by mailing a check to the registered address of each Holder thereof; provided, however, that payments on a certificated Note will be made by wire transfer to a U.S. dollar
account maintained by the payee with a bank in the United States if such Holder elects payment by wire transfer by giving written notice to the Trustee or the Paying Agent to such effect designating such account no later than 30 days
immediately preceding the relevant due date for payment (or such other date as the Trustee may accept in its discretion). 
  

	3.	Paying Agent and Registrar 

 Initially, Wilmington Trust, National Association (the
“Trustee”) will act as Paying Agent and Registrar. The Issuer may appoint and change any Paying Agent, Registrar or co-registrar without notice. Hexion or any of its domestically incorporated Wholly
Owned Subsidiaries may act as Paying Agent, Registrar or co-registrar. 
  

	4.	Indenture 

 The Issuer issued the Notes under an Indenture dated as of February 8,
2017 (as supplemented to the date hereof, the “Indenture”), between the Issuer and the Trustee. The terms of the Notes include those stated in the Indenture. Terms defined in the Indenture and not defined herein have the meanings ascribed
thereto in the Indenture. The Notes are subject to all such terms, and holders of the Notes are referred to the Indenture for a statement of those terms. 

 The Notes are secured obligations of the Issuer and consist of (i) $485,000,000 aggregate
principal amount of 10.375% First-Priority Senior Secured Notes due 2022 issued on February 8, 2017, (ii) $75,000,000 aggregate principal amount of 10.375% First-Priority Senior Secured Notes due 2022 issued on May 12, 2017 as Additional
Notes under the Indenture, and (iii) any Additional Notes that may be issued after May 12, 2017. The Indenture contains covenants that, among other things, limit the ability of the Issuer and its Restricted Subsidiaries to incur additional
indebtedness; pay dividends or distributions on, or redeem or repurchase capital stock; make investments; engage in transactions with affiliates; create liens on assets to secure indebtedness; transfer or sell assets; guarantee indebtedness;
restrict dividends or other payments of subsidiaries; consolidate, merge or transfer all or substantially all of its assets; and engage in sale/leaseback transactions. These covenants are subject to important exceptions and qualifications contained
in the Indenture. 
  

	5.	Optional Redemption 

 Except as set forth below, the Issuer shall not be entitled to
redeem the Notes. 
 On and after February 1, 2019, the Issuer shall be entitled at its option on one or more occasions to redeem all
or a portion of the Notes upon not less than 30 nor more than 60 days’ prior notice mailed by first-class mail to each holder’s registered address, or delivered electronically if held by the Depository, to each Holder’s
registered address, at the following redemption prices (expressed as a percentage of principal amount on the redemption date), plus accrued and unpaid interest, if any, to, but excluding, the redemption date (subject to the right of Holders of
record on the relevant record date to receive interest due on the relevant interest payment date), if redeemed during the 12-month period commencing on February 1 of the years set forth below: 

 

					
	 Period
	  	Redemption
Price	 
		
	 2019
	  	 	105.188	% 
	 2020
	  	 	102.594	% 
	 2021 and thereafter
	  	 	100.000	% 

 In addition, prior to February 1, 2019, the Issuer may redeem Notes at its option, in whole at any time
or in part from time to time, upon not less than 30 nor more than 60 days’ prior notice mailed by first-class mail, or delivered electronically if held by the Depository, to each Holder’s registered address, at a redemption price equal to
100% of the principal amount of the Notes redeemed plus the Applicable Premium as of, and accrued and unpaid interest, if any, to, but excluding, the applicable redemption date (subject to the right of holders of record on the relevant record date
to receive interest due on the relevant interest payment date). 

 Upon the occurrence of Change of Control, the Issuer shall (i)(A) make an offer within 30 days
following such Change of Control to all holders of the Notes to purchase all the Notes properly tendered (a “Change of Control Offer”) at a purchase price (the “Change of Control Purchase Price”) equal to 101% of the principal
amount thereof, plus accrued and unpaid interest, if any, to the date of repurchase (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date); and (B) purchase all the
Notes properly tendered in accordance with the Change of Control Offer or (ii) exercise its right, within 30 days following such Change of Control, to redeem all the Notes as described under this paragraph 5. 

Notwithstanding the foregoing, on or prior to February 1, 2019, the Issuer shall upon not less than 30 nor more than 60 days’
prior notice mailed by first-class mail, or delivered electronically if held by the Depository, to each Holder’s registered address, be entitled at their option on one or more occasions to redeem Notes (which includes Additional Notes, if any)
in an aggregate principal amount not to exceed 35% of the original aggregate principal amount of the Notes (which includes Additional Notes, if any) in an aggregate amount equal to the net cash proceeds of one or more Equity Offerings (1) by
Hexion or (2) by any direct or indirect parent of Hexion, in each case, to the extent the net cash proceeds thereof are contributed to the common equity capital of Hexion or used to purchase Capital Stock (other than Disqualified Stock) of
Hexion from it, at a redemption price of 110.375% of the principal amount thereof, plus accrued and unpaid interest, if any, to the redemption date (subject to the right of Holders of record on the relevant record date to receive interest due on the
relevant interest payment date), with the net cash proceeds from one or more Equity Offerings (1) by Hexion or (2) by any direct or indirect parent of Hexion, in each case, to the extent the net cash proceeds thereof are contributed to the
common equity capital of Hexion or used to purchase Capital Stock (other than Disqualified Stock) of Hexion from it; provided, however, that (1) at least 50% of such aggregate principal amount of Notes (which includes Additional
Notes, if any) remains outstanding immediately after the occurrence of each such redemption; and (2) each such redemption occurs within 180 days after the consummation of the related Equity Offering. Notwithstanding the foregoing, the
Issuer may at any time and from time to time purchase Notes in the open market or otherwise. 
 If holders of not less than 90% in aggregate
principal amount of the outstanding Notes validly tender and do not withdraw such Notes in a Change of Control Offer and the Issuer, or any third party making a Change of Control Offer in lieu of the Issuer as described above, purchase all of the
Notes validly tendered and not withdrawn by such holders, the Issuer or such third party will have the right upon not less than 30 nor more than 60 days’ prior written notice to the holders (with a copy to the Trustee), given not more than 30
days following such purchase pursuant to the Change of Control Offer, to redeem all Notes that remain outstanding following such purchase at a price in cash equal to the Change of Control Payment. Any such redemption shall be effected pursuant to
paragraph 5 of this Note. 
 Notice of any redemption upon any corporate transaction or other event (including any Equity Offering,
incurrence of Indebtedness, Change of Control or other transaction) may be given prior to the completion thereof. In addition, any redemption described above or notice thereof may, at the Issuer’s discretion, be subject to one or more
conditions precedent, including, but not limited to, completion of a corporate transaction or other event. 

	6.	Notice of Redemption 

 Notice of redemption will be mailed by first-class mail, or sent
electronically if held by the Depository, at least 30 days but not more than 60 days before the redemption date to each Holder of Notes to be redeemed at his registered address. Notes in denominations larger than $2,000 principal amount may be
redeemed in part but only in whole multiples of $1,000. If money sufficient to pay the redemption price of and accrued interest on all Notes (or portions thereof) to be redeemed on the redemption date is deposited with the Paying Agent on or before
the redemption date and certain other conditions are satisfied, on and after such date interest ceases to accrue on such Notes (or such portions thereof) called for redemption. 

 

	7.	Put Provisions 

 Upon a Change of Control the Issuer must (i)(A) make an offer within 30
days following such Change of Control to all holders of the Notes to purchase all the Notes properly tendered (a “Change of Control Offer”) at a purchase price (the “Change of Control Purchase Price”) equal to 101% of the
principal amount thereof, plus accrued and unpaid interest, if any, to the date of repurchase (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date); and
(B) purchase all the Notes properly tendered in accordance with the Change of Control Offer or (ii) exercise its right, within 30 days following such Change of Control, to redeem all the Notes as described under paragraph 5 of this Note.

  

	8.	Guarantee 

 The payment by the Issuer of the principal of, and premium and interest on,
the Notes is fully and unconditionally guaranteed on a joint and several basis by each of the Guarantors to the extent set forth in the Indenture. 
  

	9.	Security 

 The Notes will be secured by the Collateral on the terms and subject to the
conditions set forth in the Indenture, the Senior Intercreditor Agreements, the Junior Intercreditor Agreements and the Security Documents, such security interest to be pari passu in priority to security interests granted for the
benefit of holders of other First Priority Lien Obligations. The First Lien Collateral Agent holds the Collateral in trust for the benefit of the Trustee and the Holders pursuant to, and subject to, the Security Documents and the Senior
Intercreditor Agreements. Each Holder, by accepting this Note, consents and agrees to the terms of the Security Documents (including the provisions providing for the foreclosure and release of Collateral) and the First Lien Intercreditor Agreement,
ABL Intercreditor Agreement and the Junior Priority Intercreditor Agreements in effect or as they may be amended from time to time in accordance with their terms and the Indenture and authorizes and directs the First Lien Collateral Agent to enter
into a Collateral Agreement Supplement, the Additional Secured Party Consent, any other Security Documents and the Fifth Joinder and Supplement to the Second Lien Intercreditor Agreement, and to perform its obligations and exercise its rights
thereunder in accordance therewith. 

	10.	Denominations; Transfer; Exchange 

 The Notes are in registered form without coupons in
denominations of $2,000 principal amount and whole multiples of $1,000. A Holder may transfer or exchange Notes in accordance with the Indenture. The Registrar may require a Holder, among other things, to furnish appropriate endorsements or transfer
documents and to pay any taxes and fees required by law or permitted by the Indenture. The Registrar need not register the transfer of or exchange any Notes selected for redemption (except, in the case of a Note to be redeemed in part, the portion
of the Note not to be redeemed) or any Notes for a period of 15 days before a selection of Notes to be redeemed or 15 days before an interest payment date. 
  

	11.	Persons Deemed Owners 

 The registered Holder of this Note may be treated as the owner of
it for all purposes. 
  

	12.	Unclaimed Money 

 If money for the payment of principal or interest remains unclaimed for
two years, the Trustee or Paying Agent shall pay the money back to the Issuer at its request unless an abandoned property law designates another Person. After any such payment, Holders entitled to the money must look only to the Issuer and not to
the Trustee for payment. 
  

	13.	Discharge and Defeasance 

 Subject to certain conditions set forth in the Indenture, the
Issuer at any time shall be entitled to terminate some or all of their and the Guarantors’ obligations under the Notes and the Indenture if the Issuer deposits with the Trustee money or, in certain cases, U.S. Government Obligations for the
payment of principal and interest on the Notes to redemption or maturity, as the case may be. 
  

	14.	Amendment, Waiver 

 Subject to certain exceptions set forth in the Indenture and the
First Lien Intercreditor Agreement, (a) the Indenture, the First Lien Intercreditor Agreement, the ABL Intercreditor Agreement, the Junior Priority Intercreditor Agreements and the related Security Documents may be amended with the written
consent of the Holders of at least a majority in principal amount of the Notes then outstanding (which consents may be obtained in connection with a tender offer or exchange offer for the Notes) and (b) any past default or compliance with any
provisions may be waived with the consent of the holders of a majority in principal amount of the Notes then outstanding (which consents may be obtained in connection with a tender offer or exchange offer for the Notes). 

Subject to certain exceptions set forth in the Indenture, without the consent of any Holder, the Issuer, the Guarantors, the Trustee and the
First Lien Collateral Agent may amend the Indenture, the Notes, any Security Document, the First Lien Intercreditor Agreement, the ABL Intercreditor Agreement or the Junior Priority Intercreditor Agreements to: (i) cure any ambiguity, omission,
defect, mistake or inconsistency; (ii) to comply with Article 5 of the Indenture; (iii) to provide for uncertificated Notes in addition to or in place of certificated Notes (provided, however, that the uncertificated Notes
are issued in registered form for purposes of 

 
Section 163(f) of the Code); (iv) to add Guarantees with respect to the Notes; (v) to add additional secured creditors holding Junior Priority Obligations or other First Priority Lien
Obligations or ABL Obligations, in each case so long as such obligations are not prohibited by the Indenture; (vi) to add to the covenants of Hexion or any Restricted Subsidiaries for the benefit of the holders or to surrender any right or
power conferred upon the Issuer or any Guarantor; (vii) to comply with any requirement of the SEC in connection with the qualification of the Indenture under the TIA (if the Issuer elects to qualify the Indenture under the TIA); (viii) to make
any change that does not adversely affect the rights of any holder; (ix) to conform the text of the Indenture, the Notes, the Security Documents, the First Lien Intercreditor Agreement, the ABL Intercreditor Agreement or the Junior Priority
Intercreditor Agreements, to any provision of the “Description of the Notes” in the Offering Circular to the extent that such provision in such “Description of the Notes” was intended by the Issuer to be a verbatim recitation of
a provision of the Indenture, the Notes, the Security Documents, the First Lien Intercreditor Agreement, the ABL Intercreditor Agreement or the Junior Priority Intercreditor Agreements, as stated in an Officers’ Certificate; (x) to make
certain changes to the Indenture to provide for the issuance of additional notes; (xi) to make any amendment to the provisions of the Indenture relating to the transfer and legending of notes; provided, however, that
(a) compliance with the Indenture as so amended would not result in notes being transferred in violation of the Securities Act or any other applicable securities law and (b) such amendment does not materially and adversely affect the
rights of holders to transfer notes; (xii) to secure the Notes or to add additional assets as Collateral; or (xiii) to release Collateral from the Lien pursuant to the Indenture, the Security Documents, the First Lien Intercreditor
Agreement, the ABL Intercreditor Agreement and the Junior Priority Intercreditor Agreements when permitted or required by the Indenture or the Security Documents or the First Lien Intercreditor Agreement, the ABL Intercreditor Agreement or the
Junior Priority Intercreditor Agreements. 
  

	15.	Defaults and Remedies 

 Under the Indenture, Events of Default include (a) default
for 30 days in payment of interest on the Notes; (b) default in payment of principal on the Notes at maturity, upon redemption pursuant to paragraph 5 of the Notes, upon acceleration or otherwise, or the failure by the Issuer to
redeem or purchase Notes when required; (c) failure by the Issuer or certain Subsidiaries to comply with other agreements in the Indenture or the Notes, in certain cases subject to notice and lapse of time; (d) certain accelerations
(including failure to pay within any grace period after final maturity) of other Indebtedness of the Issuer if the amount accelerated (or so unpaid) exceeds $50.0 million or its foreign currency equivalent; (e) certain events of bankruptcy
or insolvency with respect to the Issuer, the Guarantors and the Significant Subsidiaries; (f) certain judgments or decrees for the payment of money in excess of $50.0 million or its foreign currency equivalent (net of any amounts which
are covered by enforceable insurance policies issued by solvent carriers), which judgments are not discharged, waived or stayed for a period of 60 days; (g) certain defaults with respect to Guarantees; and (h) certain defaults relating to
the Collateral under the Security Documents. If an Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the Notes may declare all such Notes to be due and payable immediately, subject to
certain conditions set forth in the Indenture. Certain events of bankruptcy or insolvency are Events of Default which will result in the Notes being due and payable immediately upon the occurrence of such Events of Default. 

 Noteholders may not enforce the Indenture or the Notes except as provided in the Indenture. The
Trustee may refuse to enforce the Indenture or the Notes unless it receives indemnity or security reasonably satisfactory to it. Subject to certain limitations, Holders of a majority in principal amount of the Notes may direct the Trustee in its
exercise of any trust or power. The Trustee may withhold from Noteholders notice of any continuing Default (except a Default in payment of principal or interest) if it determines that withholding notice is in the interest of the Holders. 

 

	16.	Trustee Dealings with the Issuer 

 Subject to certain limitations imposed by the Act, the
Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Notes and may otherwise deal with and collect obligations owed to it by the Issuer or its Affiliates and may otherwise deal with the Issuer or
its Affiliates with the same rights it would have if it were not Trustee. 
  

	17.	No Recourse Against Others 

 A director, officer, employee or stockholder, as such, of
the Issuer or the Trustee shall not have any liability for any obligations of the Issuer under the Notes or the Indenture or for any claim based on, in respect of or by reason of such obligations or their creation; provided, however,
the foregoing will not affect or limit any liability of any Guarantor under the Indenture or its Guarantee. By accepting a Note, each Noteholder waives and releases all such liability. The waiver and release are part of the consideration for the
issue of the Notes. 
  

	18.	Authentication 

 This Note shall not be valid until an authorized signatory of the
Trustee (or an authenticating agent) manually signs the certificate of authentication on the other side of this Note. 
  

	19.	Abbreviations 

 Customary abbreviations may be used in the name of a Noteholder or an
assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the entireties), JT TEN (=joint tenants with rights of survivorship and not as tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors Act). 

 

	20.	CUSIP Numbers 

 Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures the Issuer has caused CUSIP numbers to be printed on the Notes and has directed the Trustee to use CUSIP numbers in notices of redemption as a convenience to Noteholders. No representation is made as to the
accuracy of such numbers either as printed on the Notes or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon. 

	21.	Governing Law 

 This Note shall be governed by, and construed in accordance with, the
laws of the state of New York. 
 The Issuer will furnish to any Noteholder upon written request and without charge to the
Noteholder a copy of the Indenture which has in it the text of this Note in larger type. Requests may be made to: 
 Hexion Inc. 

180 East Broad St. 
 Columbus, OH
43215 
 Attention: General Counsel 

 ASSIGNMENT FORM 

To assign this Note, fill in the form below: 
 I or we assign
and transfer this Note to 
 (Print or type assignee’s name, address and zip code) 

(Insert assignee’s soc. sec. or tax I.D. No.) 

and irrevocably appoint            agent to transfer this Note on the books of the Issuer. The
agent may substitute another to act for him. 
  
  

 

									
	Date:	 	  
	  	Your Signature:	  	  
	  	

  
  

Sign exactly as your name appears on the other side of this Note. 

In connection with any transfer of any of the Notes evidenced by this certificate occurring prior to the expiration of the applicable holding period referred
to in Rule 144(d) under the Securities Act after the later of the date of original issuance of such Notes and the last date, if any, on which such Notes were owned by the Issuer or any Affiliate of the Issuer, the undersigned confirms that such
Notes are being transferred in accordance with its terms: 
 CHECK ONE BOX BELOW 
  

	☐	to the Issuer; or 

  

							
		 	(1)	  	☐	  	pursuant to an effective registration statement under the Securities Act of 1933; or
				
		 	(2)	  	☐	  	inside the United States to a “qualified institutional buyer” (as defined in Rule 144A under the Securities Act of 1933) that purchases for its own account or for the account of a qualified institutional buyer to whom
notice is given that such transfer is being made in reliance on Rule 144A, in each case pursuant to and in compliance with Rule 144A under the Securities Act of 1933; or
				
		 	(3)	  	☐	  	outside the United States in an offshore transaction within the meaning of Regulation S under the Securities Act in compliance with Rule 904 under the Securities Act of 1933; or
				
		 	(4)	  	☐	  	pursuant to the exemption from registration provided by Rule 144 under the Securities Act of 1933; or
				
		 	(5)	  	☐	  	to an institutional “accredited investor” (as defined in Rule 501(a)(1),(2),(3) or (7) under the Securities Act of 1933) that has furnished to the Trustee a signed letter containing certain representations and
agreements.

 Unless one of the boxes is checked, the Trustee will refuse to register any of the Notes
evidenced by this certificate in the name of any person other than the registered holder thereof; provided, however, that if box (3), (4) or (5) is checked, the Trustee shall be entitled to require, prior to registering any such
transfer of the Notes, such legal opinions, certifications and other information as the Issuer has reasonably requested to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act of 1933, such as the exemption provided by Rule 144 under such Act. 
  

	
	  

	Signature

 Signature Guarantee: 
  

					
	  
	  		 	  

	Signature must be guaranteed	  		 	Signature

 Signatures must be guaranteed by an “eligible guarantor institution” meeting the requirements of the
Registrar, which requirements include membership or participation in the Security Transfer Agent Medallion Program (“STAMP”) or such other “signature guarantee program” as may be determined by the Registrar in addition to, or in
substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended. 

 TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED. 

The undersigned represents and warrants that it is purchasing this Note for its own account or an account with respect to which it exercises
sole investment discretion and that it and any such account is a “qualified institutional buyer” within the meaning of Rule 144A under the Securities Act of 1933, and is aware that the sale to it is being made in reliance on
Rule 144A and acknowledges that it has received such information regarding the Issuer as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is
relying upon the undersigned’s foregoing representations in order to claim the exemption from registration provided by Rule 144A. 
  

									
	Dated:	 	  
	 		 	  

		 		 		 	Notice:	 	To be executed by an executive officer

 [TO BE ATTACHED TO GLOBAL NOTES] 

SCHEDULE OF INCREASES OR DECREASES IN GLOBAL NOTE 

The following increases or decreases in this Global Note have been made: 

 

									
	 Date of Exchange
	  	Amount of decrease in
Principal amount of this
Global Note	  	Amount of increase in
Principal amount of this
Global Note	  	Principal amount of this
Global Note following
such decrease or increase	  	Signature of authorized
officer of Trustee or
Notes Custodian
		  		  		  		  	
		  		  		  		  	
		  		  		  		  	
		  		  		  		  	

 OPTION OF HOLDER TO ELECT PURCHASE 

If you want to elect to have this Note purchased by the Issuer pursuant to Section 4.06 or 4.08 of the Indenture, check the box: 

☐ 
 If you want to elect to
have only part of this Note purchased by the Issuer pursuant to Section 4.06 or 4.08 of the Indenture, state the amount in principal amount: $         

 

									
	Dated:	 	  
	 		 	Your Signature:	 	  

		 		 		 		 	(Sign exactly as your name appears on the other side of this Note.)

  

			
	Signature Guarantee:	 	  

		 	(Signature must be guaranteed)

 Signatures must be guaranteed by an “eligible guarantor institution” meeting the requirements of the
Registrar, which requirements include membership or participation in the Security Transfer Agent Medallion Program (“STAMP”) or such other “signature guarantee program” as may be determined by the Registrar in addition to, or in
substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.

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