Document:

Execution Version LOAN AND SECURITY AGREEMENT By and among  WELLS FARGO BANK, N.A. as Agent ________________________ THE LENDERS THAT ARE PARTIES HERETO as Lenders __________________  NICHOLAS FINANCIAL, INC. NICHOLAS DATA SERVICES, INC. as Borrowers _________ 	_ 116549.01103/127129470v.6 Exhibit 10.1

  

  

  1 116549.01103/127129470v.6 TABLE OF CONTENTS Page ARTICLE 1	DEFINITIONS ................................................................................................................................. 1 Section  1.1 Section  1.2 Certain  Definitions............................................................................................................... 1 Rules  of  Construction .......................................................................................................25 ARTICLE 2	THE REVOLVING CREDIT FACILITY............................................................................26 Section  2.1 Section  2.2 Section  2.3 Section  2.4 Section  2.5 Section  2.6 Section  2.7 Section  2.8 Section  2.9 Section 2.10 The Loan...............................................................................................................................26 Request for Advances; Advance Mechanics; Defaulting Lender ........................27  Letters  of Credit..................................................................................................................31 Method of Payment...........................................................................................................36 Optional and Mandatory Prepayment..........................................................................37  Interest  ...................................................................................................................................38 Fees  .........................................................................................................................................39 Regulatory Changes in Capital Requirements; Replacement of a Lender.........39  Sharing of Payments..........................................................................................................40 Pro  Rata Treatment............................................................................................................41 ARTICLE 3	SECURITY........................................................................................................................................43 Section  3.1 Section  3.2 Section  3.3 Section  3.4 Section  3.5 Section  3.6 Security  Interest ..................................................................................................................43 Financing  Statements  ........................................................................................................43 Stamping of Receivables...................................................................................................43 Collections  ............................................................................................................................44 Additional Rights of Agent; Power of Attorney.......................................................44  Additional Collateral  Provisions ....................................................................................44 ARTICLE 4	REPRESENTATIONS AND WARRANTIES....................................................................45 Section 4.1 Section  4.2 Section  4.3 Section  4.4 Section  4.5 Section  4.6 Section  4.7 Section  4.8 Section  4.9 Section  4.10 Section  4.11 Section  4.12 Section  4.13 Section  4.14 Section  4.15 Section  4.16 Section  4.17 Representations and Warranties as to Receivables ..................................................45  Organization  and Good Standing .................................................................................46 Perfection of Security Interest........................................................................................46 No Violations.......................................................................................................................46 Power  and  Authority .........................................................................................................47 Validity  of  Agreements .....................................................................................................47 Litigation  ...............................................................................................................................47 Compliance...........................................................................................................................47  Accuracy of Information; Full Disclosure..................................................................47  Taxes.......................................................................................................................................48 Indebtedness ........................................................................................................................48 Investments  ..........................................................................................................................48 ERISA  ....................................................................................................................................48 Environmental  Condition................................................................................................48 Solvency.................................................................................................................................48 Business Location...............................................................................................................49 Equity  Interests ...................................................................................................................49

  

  

  2 116549.01103/127129470v.6 Section 4.18 Deposit Accounts...............................................................................................................49  Section   4.19    No Extension of Credit for Securities  .........................................................................49 ARTICLE 5	CONDITIONS................................................................................................................................50 Section  5.1 Section  5.2 Documents to be Delivered to Agent Prior to Effectiveness ..............................50  Conditions to all Advances..............................................................................................51 ARTICLE 6	AFFIRMATIVE COVENANTS...............................................................................................52 Section  6.1 Section  6.2 Section  6.3 Section  6.4 Section  6.5 Section  6.6 Section  6.7 Section  6.8 Section  6.9 Section  6.10 Section  6.11 Section  6.12 Section  6.13 Section  6.14 Section  6.15 Reporting  Requirements...................................................................................................52 Books  and  Records ............................................................................................................53 Financial  Covenants...........................................................................................................53 Compliance With  Applicable Law.................................................................................53 Notice of  Certain  Events .................................................................................................54 Existence,  Properties .........................................................................................................54 Payment of Indebtedness; Taxes...................................................................................54 Notice Regarding  Any  Plan .............................................................................................54 Litigation, Enforcement Actions and Requests  for Information........................55 Business Location, Legal Name and State of Organization ..................................55  Operations ............................................................................................................................55 Chattel  Paper/Jurisdictions .............................................................................................55 PPP  Loan ..............................................................................................................................56 Post-Closing Deliverable..................................................................................................56 Further  Assurances ............................................................................................................56 ARTICLE 7	NEGATIVE COVENANTS......................................................................................................56 Section  7.1 Section  7.2 Section  7.3 Section  7.4 Section  7.5 Section  7.6 Section  7.7 Section  7.8 Section  7.9 Section  7.10 Section  7.11 Section  7.12 Section  7.13 Section  7.14 Section  7.15 Payments to and Transactions with Affiliates ...........................................................56  Restricted Payments...........................................................................................................56 Indebtedness ........................................................................................................................57 Liens........................................................................................................................................57 Disposal of Assets..............................................................................................................57 Investments ..........................................................................................................................57  Restrictions on Fundamental Changes ........................................................................57  Use  of Proceeds ..................................................................................................................57 Ownership  and Management..........................................................................................58 Amendment  to Subordinated Debt..............................................................................58 Accounting  Methods.........................................................................................................58 Nature of Business.............................................................................................................58 Bulk   Purchases ....................................................................................................................58 Deposit Accounts...............................................................................................................58  Source  of Repayment and Collateral ............................................................................58 ARTICLE 8	EVENTS OF DEFAULT............................................................................................................59 Section 8.1 Section  8.2 Section  8.3 Section  8.4 Section  8.5 Section  8.6 Failure to  Make Payments................................................................................................59 Information, Representations and Warranties ..........................................................59  Covenants  .............................................................................................................................59 Collateral................................................................................................................................59 Defaults Under Other Agreements...............................................................................59  Certain   Events .....................................................................................................................59

  

  

  3 116549.01103/127129470v.6 Section  8.7	Judgments  .............................................................................................................................60 Section  8.8	Guarantors............................................................................................................................60 Section  8.9	Hedging  Agreements.........................................................................................................60 Section   8.10     Credit Documents..............................................................................................................60 Section   8.11    Material Adverse Change.......................................Error!  Bookmark not defined. Section   8.12     Level Two  Regulatory Event ..........................................................................................60 ARTICLE 9	REMEDIES OF AGENT AND WAIVER...........................................................................60 Section  9.1 Section  9.2 Section  9.3 Section  9.4 Agent’s   Remedies ...............................................................................................................60 Waiver and Release by Borrowers.................................................................................61  No  Waiver.............................................................................................................................61 Application  of  Proceeds ...................................................................................................62 ARTICLE  10   MISCELLANEOUS.......................................................................................................................63 Section 10.1 Indemnification and Release Provisions .....................................................................63  Section   10.2    Amendments........................................................................................................................64 Section   10.3     Notices ...................................................................................................................................65 Section   10.4    Termination and Release..................................................................................................67 Section   10.5     Counterparts.........................................................................................................................67 Section   10.6    Costs, Expenses and  Taxes .............................................................................................67 Section   10.7     Participations and  Assignments .....................................................................................68 Section   10.8    Effectiveness  of Agreement............................................................................................70 Section 10.9 APPLICABLE LAW.........................................................................................................70  Section 10.10 JURISDICTION AND VENUE/WAIVER OF JURY TRIAL .......................70  Section 10.11 REVIEW BY COUNSEL...............................................................................................71 Section    10.12  Interpretation .......................................................................................................................71 Section   10.13  Severability  of Provisions.................................................................................................71 Section  10.14  Exchanging Information..................................................................................................71 Section   10.15  Patriot Act Notice ..............................................................................................................71 Section    10.16 Advertisement......................................................................................................................72 Section   10.17  Bank  Product Providers ...................................................................................................72 Section   10.18  Debtor-Creditor Relationship.........................................................................................73 Section 10.19 Revival and Reinstatement of Obligations .................................................................73  Section   10.20  Withholding  Taxes .............................................................................................................73 ARTICLE  11   AGENT..............................................................................................................................................76 Section   11.1     Appointment of Agent .....................................................................................................76 Section   11.2    Nature of Duties of Agent...............................................................................................77 Section   11.3    Lack of Reliance on Agent ..............................................................................................77 Section   11.4    Certain Rights  of Agent....................................................................................................78 Section   11.5    Reliance by Agent...............................................................................................................79 Section   11.6    Indemnification of Agent.................................................................................................79 Section   11.7    Agent in  its  Individual Capacity .....................................................................................79 Section   11.8    Holders  of Notes................................................................................................................79 Section   11.9    Successor Agent..................................................................................................................80 Section   11.10  Collateral Matters................................................................................................................80 Section   11.11  Delivery  of Information ...................................................................................................81 Section   11.12 Defaults..................................................................................................................................81

  

  

  4 116549.01103/127129470v.6 ARTICLE  12    INTER-BORROWER PROVISIONS ....................................................................................81 Section   12.1    Certain  Borrower Acknowledgments and Agreements..........................................82 Section   12.2    Maximum Amount of Joint and Several Liability.....................................................82 Section 12.3 Authorization of Borrower Agent by Borrowers:....................................................83  Section   12.4    Qualified  ECP Obligor.....................................................................................................83

  

  

  116549.01103/127129470v.6 LOAN AND SECURITY AGREEMENT This LOAN AND SECURITY AGREEMENT is made as of the 5th day of November,  2021 by and among NICHOLAS FINANCIAL, INC., a Florida corporation (“Borrower Agent”),  NICHOLAS DATA SERVICES, INC, a Florida corporation, and such other Persons joined hereto  from time to time as borrowers (collectively with Borrower Agent, the “Borrowers” and each  individually is referred to as a “Borrower”), WELLS FARGO BANK, N.A., as agent for Lenders  (“Agent”), with an office located at 800 Walnut Street, Des Moines, Iowa 50309, and the financial  institutions from time to time party hereto (collectively, the “Lenders” and each individually is  referred to as a “Lender”). BACKGROUND Borrowers have requested and Agent and Lenders have agreed to make available to  Borrowers a secured revolving credit facility in the initial amount of the Maximum Principal  Amount, all on terms and subject to the conditions set forth herein. NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of  which are hereby acknowledged, and intending to be legally bound hereby, the parties covenant and  agree as follows: ARTICLE 1  DEFINITIONS Section 1.1 Certain Definitions. The terms defined in this Section 1.1, whenever used  and capitalized in this Agreement shall, unless the context otherwise requires, have the respective  meanings herein specified. “Acceptance Date” has  the meaning assigned to that term in Section 10.7(c) of this  Agreement. “Acknowledgment and Waiver Agreements” means the acknowledgment and waiver  agreements, in form and substance acceptable to Agent, executed and delivered to Agent by  mortgagees, landlords, warehousemen or other Persons in possession of any Collateral or at whose  premises any Collateral is located. “Adjusted Tangible Net Worth” means, as of any date of determination for Parent, on a  consolidated basis (including Borrowers), (a) Tangible Net Worth, minus (b) the aggregate amount  of Borrowers’ Receivables that are more than one hundred twenty (120) days contractually past due  on a contractual aging basis, minus (c) the amount by which the then Minimum Loss Reserve  Requirement exceeds Borrowers’ Loan Reserves. “Advance” means each advance of the Loan made to Borrowers pursuant to Section 2.1 of  this Agreement. “Advance Rate” means the following percentage based upon the Collateral Performance  Indicator as of the end of each month then most recently ended for which monthly reports have  been delivered to Agent, pursuant to Section 6.1 of this Agreement:

  

  

  116549.01103/127129470v.6 Collateral Performance Indicator Advance Rate Less than or equal to 19% 85% Greater than 19 but less than or equal to 20% 84% Greater than 20% but less than or equal to 21% 83% Greater than 21% but less than or equal to 22% 82% Greater than 22% but less than or equal to 23% 81% Greater than 23% 80% “Affected Lender” has the meaning assigned to that term in Section 2.8(b) of this  Agreement. “Affiliate” means, as applied to any Person, any other Person who controls, is controlled by,  or is under common control with, such Person. For purposes of this definition, “control” means  the possession, directly or indirectly through one or more intermediaries, of the power to direct the  management and policies of a Person, whether through the ownership of Stock, by contract, or  otherwise; provided, however, that, for purposes of the definition of Eligible Receivables and  Section 7.1 of this Agreement: (a) any Person which owns directly or indirectly ten percent (10%) or  more of the Stock having ordinary voting power for the election of directors or other members of  the governing body of a Person or ten percent (10%) or more of the partnership or other ownership  interests of a Person (other than as a limited partner of such Person) shall be deemed an Affiliate of  such Person, (b) each employee, officer and director (or comparable manager) of a Person shall be  deemed to be an Affiliate of such Person, and (c) each partnership in which a Person is a general  partner shall be deemed an Affiliate of such Person. “Agent” has the meaning assigned to that term in the recitals. “Agreement” means this Loan and Security Agreement and all exhibits and schedules hereto,  as the same may be amended, modified or supplemented from time to time. “Annual Compliance Certificate” means a certificate in the form of Exhibit A attached  hereto and made a part hereof, as the same may be amended or modified by Agent from time to  time in its sole discretion. “Anti-Corruption Laws” means: (a) the U.S. Foreign Corrupt Practices Act of 1977, as  amended; (b) the U.K. Bribery Act 2010, as amended; and (c) any other anti-bribery or anti-  corruption laws, regulations or ordinances in any jurisdiction in which any Borrower or any member  of the Borrowing Group is located or doing business. “Anti-Money Laundering Laws” means applicable laws or regulations in any jurisdiction in  which any Borrower or any member of the Borrowing Group is located or doing business that  relates to money laundering, any predicate crime to money laundering, or any financial record  keeping and reporting requirements related thereto. “Anti-Terrorism Laws” means any laws relating to terrorism or money laundering (including  Anti-Money Laundering Laws), including the Patriot Act. “Applicable Margin” means two and one-quarter of one percent (2.25%).

  

  

  116549.01103/127129470v.6 “Application Event” means the occurrence of a failure by Borrowers to repay all of the  Obligations in full on the Termination Date. “Assignment and Acceptance” means an assignment and acceptance entered into by an  assigning Lender and an assignee Lender, accepted by Agent, in accordance with Section 10.7 of this  Agreement in form and substance satisfactory to Agent (in its sole and absolute discretion). “Available Tenor” means, as of any date of determination and with respect to the then-  current Benchmark, as applicable, (a) if such Benchmark is a term rate, any tenor for such  Benchmark (or component thereof) that is or may be used for determining the length of an interest  period pursuant to this Agreement or (b) otherwise, any payment period for interest calculated with  reference to such Benchmark (or component thereof) that is or may be used for determining any  frequency of making payments of interest calculated with reference to such Benchmark, in each case,  as of such date and not including, for the avoidance of doubt, any tenor for such Benchmark that is  then-removed from the definition of “Interest Period” pursuant to Section 2.11(c)(iv). “Availability Statement” means the certificate in substantially the form of Exhibit B attached  hereto and made part hereof. “Bank Products” means any one or more of the following financial products or  accommodations extended to Borrowers or their Subsidiaries, or any of them, by a Bank Product  Provider: (a) credit cards (including commercial credit cards (including so-called “procurement  cards” or “P-cards”)), (b) credit card processing services, (c) debit cards, (d) stored value cards, (e)  Cash Management Services, or (f) transactions under Hedge Agreements. “Bank Product Agreements” means those agreements entered into from time to time by  Borrowers or their Subsidiaries, or any of them, with a Bank Product Provider in connection with  the obtaining of any of the Bank Products. “Bank Product Collateralization” means providing cash collateral (pursuant to  documentation reasonably satisfactory to Agent) to be held by Agent for the benefit of the Bank  Product Providers (other than the Hedge Providers) in an amount determined by Agent as sufficient  to satisfy the reasonably estimated credit exposure with respect to the then existing Bank Product  Obligations (other than Hedge Obligations). “Bank Product Obligations” means (a) all obligations, liabilities, reimbursement obligations,  fees, or expenses owing by Borrowers or their Subsidiaries, or any of them, to any Bank Product  Provider pursuant to or evidenced by a Bank Product Agreement and irrespective of whether for the  payment of money, whether direct or indirect, absolute or contingent, due or to become due, now  existing or hereafter arising, (b) all Hedge Obligations, and (c) all amounts that Agent or any Lender  is obligated to pay to a Bank Product Provider as a result of Agent or such Lender purchasing  participations from, or executing guarantees or indemnities or reimbursement obligations to, a Bank  Product Provider with respect to the Bank Products provided by such Bank Product Provider to  Borrowers or their Subsidiaries, or any of them. “Bank Product Provider” means Wells Fargo or any of its Affiliates. “Bank Product Reserve Amount” means, as of any date of determination, the dollar amount  of reserves that Agent has determined is necessary or appropriate to establish (based upon the Bank

  

  

  116549.01103/127129470v.6 Product Providers’ reasonable determination of the liabilities and obligations of Borrowers or their  Subsidiaries, or any of them, in respect of Bank Products) in respect of Bank Products then  provided or outstanding. “Bankruptcy Code” means title 11 of the United States Code, as in effect from time to time. “Benchmark” means, initially, the Term SOFR Reference Rate; provided that if a  Benchmark Transition Event has occurred with respect to the Term SOFR Reference Rate or the  then-current Benchmark, then “Benchmark” means the applicable Benchmark Replacement to the  extent that such Benchmark Replacement has replaced such prior benchmark rate pursuant to  Section 2.11(c)(i). “Benchmark Replacement” means, with respect to any Benchmark Transition Event, the  sum of: (a) the alternate benchmark rate that has been selected by Agent and Borrowers giving due  consideration to (i) any selection or recommendation of a replacement benchmark rate or the  mechanism for determining such a rate by the Relevant Governmental Body or (ii) any evolving or  then-prevailing market convention for determining a benchmark rate as a replacement to the then-  current Benchmark for Dollar-denominated syndicated credit facilities and (b) the related  Benchmark Replacement Adjustment; provided that, if such Benchmark Replacement as so  determined would be less than the Floor, such Benchmark Replacement will be deemed to be the  Floor for the purposes of this Agreement and the other Credit Documents. “Benchmark Replacement Adjustment” means, with respect to any replacement of the then-  current Benchmark with an Unadjusted Benchmark Replacement for the Interest Period, the spread  adjustment, or method for calculating or determining such spread adjustment, (which may be a  positive or negative value or zero) that has been selected by Agent and Borrowers giving due  consideration to (a) any selection or recommendation of a spread adjustment, or method for  calculating or determining such spread adjustment, for the replacement of such Benchmark with the  applicable Unadjusted Benchmark Replacement by the Relevant Governmental Body or (b) any  evolving or then-prevailing market convention for determining a spread adjustment, or method for  calculating or determining such spread adjustment, for the replacement of such Benchmark with the  applicable Unadjusted Benchmark Replacement for Dollar-denominated syndicated credit facilities. “Benchmark Replacement Date” means the earliest to occur of the following events with  respect to the then-current Benchmark: in the case of clause (a) or (b) of the definition of “Benchmark Trans ition  Event,” the later of (i) the date of the public statement or publication of information referenced  therein and (ii) the date on which the administrator of such Benchmark (or the published  component used in the calculation thereof) permanently or indefinitely ceases to provide all  Available Tenors of such Benchmark (or such component thereof); or in the case of clause (c) of the definition of “Benchmark Transition Event,”  the first date on which such Benchmark (or the published component used in the calculation  thereof) has been determined and announced by or on behalf of the administrator of such  Benchmark (or such component thereof) or the regulatory supervisor for the administrator of such  Benchmark (or such component thereof) to be non-representative or non-compliant with or non-  aligned with the International Organization of Securities Commissions (IOSCO) Principles for

  

  

  116549.01103/127129470v.6 Financial Benchmarks; provided that such non-representativeness, non-compliance or non-  alignment will be determined by reference to the most recent statement or publication referenced in  such clause (c) and even if any Available Tenor of such Benchmark (or such component thereof)  continues to be provided on such date. For the avoidance of doubt, the “Benchmark Replacement Date” will be deemed to have occurred  in the case of clause (a) or (b) with respect to any Benchmark upon the occurrence of the applicable  event or events set forth therein with respect to all then-current Available Tenors of such  Benchmark (or the published component used in the calculation thereof). “Benchmark Transition Event” means the occurrence of one or more of the following  events with respect to the then-current Benchmark: a public statement or publication of information by or on behalf of the  administrator of such Benchmark (or the published component used in the calculation thereof)  announcing that such administrator has ceased or will cease to provide all Available Tenors of such  Benchmark (or such component thereof), permanently or indefinitely; provided that, at the time of  such statement or publication, there is no successor administrator that will continue to provide any  Available Tenor of such Benchmark (or such component thereof); a public statement or publication of information by the regulatory supervisor  for the administrator of such Benchmark (or the published component used in the calculation  thereof), the FRB, the Federal Reserve Bank of New York, an insolvency official with jurisdiction  over the administrator for such Benchmark (or such component), a resolution authority with  jurisdiction over the administrator for such Benchmark (or such component) or a court or an entity  with similar insolvency or resolution authority over the administrator for such Benchmark (or such  component), which states that the administrator of such Benchmark (or such component) has  ceased or will cease to provide all Available Tenors of such Benchmark (or such component thereof)  permanently or indefinitely; provided that, at the time of such statement or publication, there is no  successor administrator that will continue to provide any Available Tenor of such Benchmark (or  such component thereof); or a public statement or publication of information by or on behalf of the  administrator of such Benchmark (or the published component used in the calculation thereof) or  the regulatory supervisor for the administrator of such Benchmark (or such component thereof)  announcing that all Available Tenors of such Benchmark (or such component thereof) are not, or as  of a specified future date will not be, representative or in compliance with or aligned with the  International Organization of Securities Commissions (IOSCO) Principles for Financial  Benchmarks. For the avoidance of doubt, a “Benchmark Transition Event” will be deemed to have occurred with  respect to any Benchmark if a public statement or publication of information set forth above has  occurred with respect to each then-current Available Tenor of such Benchmark (or the published  component used in the calculation thereof). “Benchmark Transition Start Date” means, in the case of a Benchmark Transition Event,  the earlier of (a) the applicable Benchmark Replacement Date and (b) if such Benchmark Transition  Event is a public statement or publication of information of a prospective event, the ninetieth (90th)

  

  

  116549.01103/127129470v.6 day prior to the expected date of such event as of such public statement or publication of  information (or if the expected date of such prospective event is fewer than ninety (90) days after  such statement or publication, the date of such statement or publication). “Benchmark Unavailability Period” means the period (if any) (x) beginning at the time that a  Benchmark Replacement Date has occurred if, at such time, no Benchmark Replacement has  replaced the then-current Benchmark for all purposes hereunder and under any Credit Document in  accordance with Section 2.11(c)(i) and (y) ending at the time that a Benchmark Replacement has  replaced the then-current Benchmark for all purposes hereunder and under any Credit Document in  accordance with Section 2.11(c)(i). “Beneficial Ownership Certification” means a certification regarding beneficial ownership as  required by the Beneficial Ownership Regulation. “Beneficial Ownership Regulation” means 31 C.F.R. § 1010.230. “BHC Act Affiliate” has the meaning assigned to the term “affiliate” in, and shall be interpreted in accordance with, 12 U.S.C. §1841(k). “Board of Directors” means the board of directors (or comparable managers) of a Person or  any committee thereof duly authorized to act on behalf of the board of directors (or comparable  managers). “Books and Records” means all of Borrowers’ original ledger cards, payment schedules,  credit applications, contracts, lien and security instruments, guarantees relating in any way to the  Collateral and other books and records or transcribed information of any type, whether expressed in  electronic form in tapes, discs, tabulating runs, programs and similar materials now or hereafter in  existence relating to the Collateral. “Borrower Agent” has the meaning assigned to that term in the recitals. “ Borrowers’ Loan Account” has the meaning assigned to that term in Section 2.1 of this  Agreement. “Borrowing Base” means, as of the date of determination, an amount equal to (a) the  Advance Rate multiplied by the aggregate balance of Eligible Receivables, minus (b) the aggregate  amount of reserves, if any, established by Agent under Section 2.1(e) of this Agreement. “Borrowing Base Excess” has the meaning assigned to that term in Section 2.5(b) of this  Agreement. “Borrowing Group” means: (a) Borrowers, (b) the parent of Borrowers, (c) any Affiliate or  Subsidiary of Borrowers, (c) any Guarantor, (d) the owner of any collateral securing any part of the  credit (including the Collateral), any guaranty (including the Guaranties), or this Agreement, and (e)  any officer, director or agent acting on behalf of any of the parties referred to in items (a) through (d) with respect to the credit, this Agreement or any of the other Credit Documents. “Business Day” means any day except a Saturday, Sunday or other day on which national  banks are authorized by law to close including, without limitation, United States federal government

  

  

  116549.01103/127129470v.6 holidays. “Capital Lease” means a lease that is required to be capitalized for financial reporting  purposes in accordance with GAAP. “Cares Act” means The Coronavirus Aid, Relief and Economic Security Act. “Cash Management Services” means any cash management or related services including  treasury, depository, return items, overdraft, controlled disbursement, merchant store value cards, e-  payables services, electronic funds transfer, interstate depository network, automatic clearing house  transfer (including the Automated Clearing House processing of electronic funds transfers through  the direct Federal Reserve Fedline system) and other cash management arrangements. “Change of Control” means that (a) any “person” or “group” (within the meaning of  Sections 13(d) and 14(d) of the Securities Exchange Act of 1934), other than Magnolia Capital,  becomes the beneficial owner (as defined in Rule 13d-3 under the Securities Exchange Act of 1934),  directly or indirectly, of twenty percent (20%) or more, of the Stock of Parent having the right to  vote for the election of members of the Board of Directors, (b) a majority of the members of the  Board of Directors of Parent or any Borrower do not constitute Continuing Directors, (c) Parent  fails to own and control, directly or indirectly, one hundred percent (100%) of the Stock of each  Borrower, or (d) Nicholas Data fails to own and control, directly, one hundred percent (100%) of  the Stock of each Nicholas Financial. “Closing Fee” has the meaning assigned to that term in Section 2.7(a) of this Agreement.  “Code” means the Internal Revenue Code of 1986, as in effect from time to time.  “Collateral” means any and all rights and interests in or to Property of Borrowers, whether now owned or hereafter created or acquired, pledged from time to time as security for the  Obligations, which shall specifically include, without limitation, all of the following with respect to  Borrowers: All now owned and hereafter acquired, created, or arising Accounts and Receivables; All collateral, security and guaranties now or hereafter in existence for any Receivables; All now owned and hereafter acquired, created or arising General Intangibles  of every nature, kind and description, including, without limitation, customer lists, choses in  action, claims, books, records, goodwill, patents and patent applications, copyrights, trademarks,  tradenames, service marks, tradestyles, trademark applications, trade secrets and all goodwill of the  business relating thereto, contracts, contract rights, royalties, licenses, franchises, deposits, license,  franchise and royalty agreements, formulae, tax and any other types of refunds, returned and  unearned insurance premiums, rights and claims under insurance policies including without  limitation, credit insurance and key man life insurance policies, and computer information,  software, records and data; All now owned and hereafter acquired Equipment wherever located, and all

  

  

  replacements, parts, accessions, substitutions and additions thereto; All now owned or hereafter acquired Fixtures, wherever located; All now owned and hereafter acquired Inventory wherever located, and all  replacements, parts, accessions, substitutions and additions thereto; All now owned and hereafter acquired, created or arising Chattel Paper,  Instruments and Documents (including bills of lading, warehouse receipts and other documents of  title) of every nature, kind and description; All now owned and hereafter acquired, created or arising Supporting  Obligations of every nature, kind and description; (i) All now owned and hereafter acquired, created or arising Commercial Tort  Claims of every nature, kind and description; All now owned and hereafter acquired, created or arising Letter-of-Credit  Rights of every nature, kind and description; All now existing and hereafter acquired or arising deposit accounts, reserves  and credit balances of every nature, wherever located, and all documents and records associated  therewith; All Property, now or hereafter in the possession of Agent; All now owned or hereafter acquired Investment Property of every kind; and The accessions to, and substitutions for an all replacements, products and  Proceeds (including, without limitation, insurance proceeds and insurance premiums), whether cash  or non-cash, of all of the foregoing Property and interests in Property. Notwithstanding the foregoing, in no event shall the Collateral include the Excluded Collateral, and  no Borrower shall be deemed to have granted a security interest in the Excluded Collateral. “Collateral Performance Indicator” means as of the end of each calendar month, the sum of: the rolling three (3) month average 30+ day delinquency percentage (the  percentage defined as (x) Receivables for which payment is thirty (30) or more days contractually  past due, divided by (y) total Receivables at such date); plus (i) net charge-offs for the twelve (12) month period ending on such date  divided by (ii) average Principal Receivables during the twelve (12) month period ending on such  date; plus (i) Receivables for which the related collateral has been repossessed or  assigned for repossession, divided by (ii) total Receivables. “Collateral Pledge Agreement” means, individually, and “Collateral Pledge Agreements” 116549.01103/127129470v.6

  

  

  116549.01103/127129470v.6 means, collectively, those certain Collateral Pledge Agreements, of even date  herewith, from  Nicholas Data in favor of Agent, in form and substance acceptable to Agent, as the same may be  amended, modified , restated or extended from time to time. “Collections” means all cash, checks, notes, instruments, and other items of payment  (including principal, interest, fees, insurance proceeds, cash proceeds of asset sales and tax refunds)  with respect to Collateral. “Commitment” means, with respect to each Lender, a commitment of such Lender to make  its portion of the Advance in a principal amount up to each such Lender’s Commitment Percentage  of the Maximum Principal Amount. “Commitment Amount” means, for any Lender, the amount identified as the Commitment  Amount on Schedule I, as such amount may be modified in connection with any assignment made  in accordance with Section 10.7 of this Agreement. “Commitment Percentage” means, for any Lender, the percentage identified as the  Commitment Percentage on Schedule I, as such percentage may be modified in connection with any  assignment made in accordance with Section 10.7 of this Agreement. “Commodity Exchange Act” means the Commodity Exchange Act (7 U.S.C. Section 1 et  seq.), as amended from time to time, and any successor statute. “Conforming Changes” means, with respect to either the use or administration of Term  SOFR or the use, administration, adoption or implementation of any Benchmark Replacement, any  technical, administrative or operational changes (including changes to the definition of the definition  of “Business Day,” the definition of “U.S. Government Securities Business Day,” the definition of  “Interest Period” or any similar or analogous definition (or the addition of a concept of “interest  period”), timing and frequency of determining rates and making payments of interest, timing of  borrowing requests or prepayment, conversion or continuation notices, the applicability and length  of lookback periods, the applicability of Section 2.11 and other technical, administrative or  operational matters) that Agent decides may be appropriate to reflect the adoption and  implementation of any such rate or to permit the use and administration thereof by Agent in a  manner substantially consistent with market practice (or, if Agent decides that adoption of any  portion of such market practice is not administratively feasible or if Agent determines that no  market practice for the administration of any such rate exists, in such other manner of  administration as Agent decides is reasonably necessary in connection with the administration of this  Agreement and the other Credit Documents). “Consumer Finance Laws” means all applicable laws and regulations, federal, state and local,  relating to the extension of consumer credit, and the creation of a security interest in personal  property or a mortgage in real property in connection therewith, as the case may be, and laws with  respect to protection of consumers’ interests in connection with such transactions, including without  limitation, any usury laws, any privacy laws, the Federal Consumer Credit Protection Act, the  Federal Fair Credit Reporting Act, RESPA, the Magnuson-Moss Warranty Act, the Gramm-Leach-  Bliley Act, the Federal Trade Commission’s Rules and Regulations and Regulations B and Z of the  Federal Reserve Board, as any of the foregoing may be amended from time to time.

  

  

  116549.01103/127129470v.6 “Consumer Purpose Loans” means loans to one or more individuals the proceeds of which  are used to purchase goods, services or merchandise for personal, household or family use. “Continuing Director” means (a) any member of the Board of Directors who was a director  (or comparable manager) of a Person on the date of this Agreement, and (b) any individual who  becomes a member of the Board of Directors after the date of this Agreement if such individual was  approved, appointed or nominated for election to the Board of Directors by a majority of the  Continuing Directors, but excluding any such  individual originally proposed for election in  opposition to the Board of Directors in office on the date of this Agreement in an actual or  threatened election contest relating to the election of the directors (or comparable managers) of a  Person and whose initial assumption of office resulted from such contest or the settlement thereof. “Control Agreement” means any control agreement entered into among any Borrower,  Agent and a financial institution, as each may be amended, modified, restated or extended from time  to time. “Covered Entity” means any of the following: (i) a “covered entity” as that term is defined  in, and interpreted in accordance with, 12 C.F.R. §252.82(b); (ii) a “covered bank” as that term is  defined in, and interpreted in accordance with, 12 C.F.R. §47.3(b); or (iii) a “covered FSI” as that  term is defined in, and interpreted in accordance with, 12 C.F.R. §382.2(b). “Credit Documents” means this Agreement, the Notes, the Subordination Agreements, the  Control Agreements, the Custodian Agreement, the Guaranties, Collateral Pledge Agreements,  System Provider Letter Agreement, Issuer Documents and any and all additional documents,  instruments, agreements and other writings executed and delivered pursuant to or in connection  with this Agreement, as each may be amended, modified, restated or extended from time to time. “Custodian” means a Person reasonably acceptable to Agent. “Custodian Agreement” means a Custodian Agreement by and among Agent, Borrowers,  and Custodian, as the same may be amended, modified, restated or extended from time to time. “Debt” means as of the date of determination, all outstanding indebtedness including  without limitation: (a) all loans made hereunder to Borrowers; (b) accounts payable as of the date of  determination; (c) income tax liabilities; (d) mortgages; (e) deposits, debenture instruments, and  other instruments, including all accruals of interest and fees related thereto; (f) all other obligations  of a Person, which in accordance with GAAP would be classified upon a balance sheet as liabilities  (except capital stock and surplus earned or otherwise); and (g) Subordinated Debt. “Debt to Adjusted Tangible Net Worth Ratio” means the ratio of Debt of Parent, on a  consolidated basis (including Borrowers), to Adjusted Tangible Net Worth. “Default” means an event, condition or circumstance which, with the giving of notice or the  passage of time, or both, would constitute an Event of Default. “Default Right” has the meaning assigned to that term in, and shall be interpreted in  accordance with, 12 C.F.R. §§252.81, 47.2 or 382.1, as applicable. “Defaulting Lender” means any Lender that (a) has failed to fund any amounts required to

  

  

  116549.01103/127129470v.6 be funded by it under this Agreement on the date that it is required to do so under this Agreement, (b) notified Borrower Agent, Agent, or any Lender in writing that it does not intend to comply with  all or any portion of its funding obligations under this Agreement, (c) has made a public statement  to the effect that it does not intend to comply with its funding obligations under this Agreement or  under other agreements generally (as reasonably determined  by Agent) under which it has  committed to extend credit, (d) failed, within one (1) Business Day after written request by Agent, to  confirm that it will comply with the terms of this Agreement relating to its obligations to fund any  amounts required to be funded by it under this Agreement, (e) otherwise failed to pay over to Agent  or any other Lender any other amount required to be paid by it under this Agreement on the date  that it is required to do so under this Agreement, or (f) (i) becomes or is insolvent or has a parent  company that has become or is insolvent or (ii) becomes the subject of a bankruptcy or insolvency  proceeding, or has had a receiver, conservator, trustee, or custodian or appointed for it, or has taken  any action in furtherance of, or indicating its consent to, approval of or acquiescence in any such  proceeding or appointment or has a parent company that has become the subject of a bankruptcy or  insolvency proceeding, or has had a receiver, conservator, trustee, or custodian appointed for it, or  has taken any action in furtherance of, or indicating its consent to, approval of or acquiescence in  any such proceeding or appointment. “Direct Receivables” means Receivables originated by a Borrower. “Dissenting Lender” has the meaning assigned to that term in Section 10.2(a) of this  Agreement. “Distributions” means payments by Borrowers, or any of them, which constitute  redemptions, repurchases, dividends or distributions of any kind with respect to a Borrower’s equity  interests or any warrants, rights or options to purchase or otherwise acquire any shares of a  Borrower’s equity interests. “Dollars” or “$” means United States dollars. “EBITDA Ratio” means for Parent, on a consolidated basis (including Borrowers), the ratio  of (a) earnings before payments of interest, taxes, depreciation and amortization expenses for such  period, minus (i) any increase during such period in the amount by which the then Minimum Loss  Reserve Requirement exceeds Borrowers’ Loan Reserves and (ii) any increase over the past twelve months in Receivables more than one hundred twenty (120) days contractually past due (to the  extent deemed necessary by Agent in its sole discretion) to (b) the interest expense for such period,  as calculated on a rolling twelve (12) month basis and in accordance with GAAP. “Electronic Chattel Paper” shall have the meaning given to such term in the UCC. “Eligible Receivables” means, as of the date of determination, Receivables (net of unearned  interest, fees, insurance commissions, unearned discounts, reserves and holdbacks) which are Chattel  Paper, which conform to the warranties set forth in Section 4.1 of this Agreement, in which Agent  has a validly perfected first priority Lien, and which are not any of the following: Receivables for which a payment is more than sixty (60) days past due on a  contractual basis;

  

  

  116549.01103/127129470v.6 Indirect Receivables originated prior to the date of this Agreement with  original terms in excess of sixty (60) months but less than or equal to seventy two (72) months for  which a payment is more than thirty (30) days past due on a contractual basis; Receivables which are subject to bankruptcy proceedings or the account  debtor with respect to which is a debtor under the Bankruptcy Code; Receivables for which the related collateral has been  assigned for  repossession or has been repossessed; Receivables from officers, equity holders or employees of any Borrower or any Affiliate; (vi) Receivables subject to litigation or legal proceedings; Receivables which have been rescheduled as a result of delinquency status; Direct Receivables for which the amount, when aggregated with all Direct  Receivables, exceeds twenty percent (20%) of all total Net Receivables of Borrowers then  outstanding, to the extent of such excess; (a) Indirect Receivables with an original term in excess of seventy two (72)  months and (b) Direct Receivables with an original term in excess of sixty (60) months; (a) Indirect Receivables originated after the date of this Agreement with an  original term in excess of sixty (60) months but less than or equal to seventy two (72) months for  which the amount, when aggregated with all other such Indirect Receivables, exceeds two and  one-half of one percent (2.5%) of all total Net Receivables of Borrowers then outstanding, to the  extent of such excess, and (b) Direct Receivables with an original term in excess of forty eight (48)  months but less than or equal to sixty (60) months for which the amount, when aggregated with all  other such Direct Receivables, exceeds two and one-half of one percent (2.5%) of all total Net  Receivables of Borrowers then outstanding, to the extent of such excess; (a) Indirect Receivables with an original principal balance in excess of Twenty  Five Thousand Dollars ($25,000) and (b) Direct Receivables with an original principal balance in  excess of Fifteen Thousand Dollars ($15,000); (a) Indirect Receivables with an original principal balance in excess of Twenty  Thousand Dollars ($20,000) but less than or equal to Twenty Five Thousand Dollars ($25,000) for  which the amount, when aggregated with all other such Indirect Receivables, exceeds five percent  (5.0%) of all total Net Receivables of Borrowers then outstanding, to the extent of such excess,  and (b) Direct Receivables with an original principal balance in excess of Ten Thousand Dollars  ($10,000) but less than or equal to Fifteen Thousand Dollars ($15,000) for which the amount,  when aggregated with all other such Direct Receivables, exceeds five percent (5.0%) of all total  Net Receivables of Borrowers then outstanding, to the extent of such excess; Receivables for which payments have been deferred more than (A) two (2)  billing cycles during any rolling twelve (12) month period, or (B) three (3) billing cycles during the  contractual term;

  

  

  116549.01103/127129470v.6 Receivables which provide for interest only payments or a balloon payment; Receivables for which the amount, when aggregated with all other  Receivables originated with respect to a specific dealer or group of related dealers, exceeds five  percent (5.0%) of all total Net Receivables of Borrowers then outstanding, to the extent of such  excess; Receivables for which the purchase price has  not been funded to the  applicable dealer; Receivables for which a Borrower (or a Custodian under the Custodian  Agreement) has not received a valid certificate of title or proof of Lien noting a Borrower’s  security interest thereon, if applicable, within one hundred twenty (120) days after the origination  of the Receivable; Receivables that are not in compliance with Borrowers’ underwriting guidelines; Receivables serviced, collected or enforced by a Person other than a Borrower; Receivables constituting Electronic Chattel Paper; Receivables for which Agent has not received an opinion or other review  product from outside legal counsel, acceptable to Agent, that the documentation evidencing such  Receivable complies with applicable Consumer Finance Laws; or Receivables which, in Agent’s Permitted Discretion, do not constitute  acceptable collateral. “Environmental Law” means any applicable federal, state, provincial, foreign or local statute,  law, rule, regulation, ordinance, code, binding and enforceable guideline, binding and enforceable  written policy, or rule of common law now or hereafter in effect and in each case as amended, or  any judicial or administrative interpretation thereof, including any judicial or administrative order,  consent decree or judgment, in each case, to the extent binding on Borrowers or their Subsidiaries,  relating to the environment, the effect of the environment on employee health, or Hazardous  Materials, in each case as amended from time to time. “EPA” means the United States Environmental Protection Agency, or any successor thereto. “ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and  any successor statute thereto. “Event of Default” has the meaning assigned to that term in Article 8 of this Agreement. “Excess Availability” means, as of any date of determination, a percentage equal to (a) the  difference between (i) the sum of (A) the lesser of the Borrowing Base and the Maximum Principal  Amount, plus (B) unrestricted cash of Borrowers in a deposit account maintained with Wells Fargo  Bank, N.A. or a deposit account subject to a Control Agreement, minus (ii) the amount of

  

  

  116549.01103/127129470v.6 outstanding Advances, divided by (b) the lesser of the Borrowing Base and the Maximum Principal  Amount. “Exchange Act” means the Securities Exchange Act of 1934, as in effect from time to time. “Excluded Collateral” means (i) any permit, lease, license, or contract to which a Borrower is  a party (so long as the counterparty thereof is not an Affiliate of any Borrower) or any of such  Borrower’s rights or interests thereunder, if, and for so long as and to the extent that, the grant of  the security interest hereunder would constitute or result in breach or termination pursuant to the  terms of, or a default under, any such permit, lease, license or contract (other than to the extent that  any such breach, termination or default would be rendered ineffective pursuant to Section 9-406, 9-  407, 9-408 or 9-409 of the UCC (or any successor provision or provisions) of any relevant  jurisdiction, any other applicable law or principles of equity, (ii) any equipment or other similar fixed  or capital assets owned by any Borrower that is Purchase Money Indebtedness or a Capital Lease (in  each case that not in favor of an Affiliate of any Borrower) in each case that is permitted by  hereunder if, and for so long as and to the extent that, the grant of the security interest hereunder on  such equipment or other similar fixed or capital assets would constitute a violation (other than to the  extent that any such violation would be rendered ineffective pursuant to Section 9-406, 9-407, 9-408  or 9-409 of the UCC (or any successor provision or provisions) of any relevant jurisdiction, any  other applicable law or principles of equity), (iii) equity interests issued by a foreign subsidiary in  excess of 65% of the issued and outstanding equity interests of such foreign subsidiary, (iv) any  application to register any intent-to-use trademark  or service mark prior to the filing under  applicable law of a verified statement of use (or the equivalent) for such trademark or service mark  to the extent the creation of a security interest therein or the grant of a mortgage thereon would  void or invalidate such trademark or service mark; and (v) deposit accounts which are established  and used (and at all times will be used) solely for the purpose of paying current payroll obligations,  employee benefit obligations, current withholding taxes, or other taxes of the Borrowers (and which  do not (and will not at any time) contain any deposits other than those necessary to fund such items,  in each case in the ordinary course of business. “Excluded Swap Obligation” means, with respect to any Person, any Swap Obligation if, and  to the extent that, all or a portion of the agreement of such Person to be obligated with respect of,  or the grant by such Person of a Lien to secure, such Swap Obligation (or any Guaranty thereof) is  or becomes illegal or unlawful under the Commodity Exchange Act or any rule, regulation or order  of the Commodity Futures Trading Commission (or the application or official interpretation of any  thereof) by virtue of such Person’s failure for any reason not to constitute an “eligible contract  participant” as defined in the Commodity Exchange Act at the time the agreement of such Person  to be obligated with respect of such Swap Obligation would otherwise have become effective with  respect to such related Swap Obligation but for such Person’s failure to constitute an “eligible  contract participant” at such time. If a Swap Obligation arises under a master agreement governing  more than one swap, such exclusion shall apply only to the portion of such Swap Obligation that is  attributable to swaps for which such agreement of such Person to be obligated or Lien is or  becomes illegal or unlawful. “FATCA” means Sections 1471 through 1474 of the Code, as of the date of this Agreem ent  (or any amended or successor version that is substantively comparable and not materially more  onerous to comply with) and any current or future regulations or official interpretations thereof.

  

  

  116549.01103/127129470v.6 “Federal Funds Rate” means, for any period, a fluctuating interest rate per annum equal to,  for each day during such period, the weighted average of the rates on overnight Federal funds  transactions with members of the Federal Reserve System arranged by Federal funds brokers, as  published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if  such rate is not so published for any day which is a Business Day, the average of the quotations for  such day on such transactions received by Agent from three Federal funds brokers of recognized  standing selected by it. “Floor” means a rate of interest equal to 0.0%. “Foreign Lender” means any Lender or Participant that is not a United States person within  the meaning of the Code section 7701(a)(30). “GAAP” means generally accepted accounting principles as in effect from time to time in  the United States, consistently applied; provided, however, that all calculations relative to liabilities  shall be made without giving effect to Statement of Financial Accounting Standards No. 159. “Governmental Authority” means  any federal, state, local, or other governmental or  administrative body, instrumentality, board, department, or agency or any court, tribunal,  administrative hearing body, arbitration panel, commission, or other similar dispute-resolving panel  or body (including, without limitation, Local Authorities). “Guarantors” means, collectively, any Persons from time to time executing a Guaranty, and  each is referred to individually as a “Guarantor”. “Guaranty” means, individually, and “Guaranties” means  collectively, the Guaranty  Agreements executed by Guarantors from time to time, as the same may be amended, modified,  restated or extended from time to time. “Hazardous Materials” means  (a) substances that are defined or listed in, or otherwise  classified pursuant to, any applicable laws or regulations as “hazardous substances,” “hazardous  materials,” “hazardous wastes,” “toxic substances,” or any other formulation intended to define, lis t,  or classify substances by reason of deleterious properties such as ignitability, corrosivity, reactivity,  carcinogenicity, reproductive toxicity, or “EP toxicity”, (b) oil, petroleum, or petroleum derived  substances, natural gas, natural gas liquids, synthetic gas, drilling fluids, produced waters, and other  wastes associated with the exploration, development, or production of crude oil, natural gas, or  geothermal resources, (c) any flammable substances or explosives or any radioactive materials, and (d) asbestos in any form or electrical equipment that contains any oil or dielectric fluid containing  levels of polychlorinated biphenyls in excess of 50 parts per million. “Hedge Agreement” means a “swap agreement” as that term is defined in Section  101(53B)(A) of the Bankruptcy Code. “Hedge Obligations” means  any and all obligations or liabilities, whether absolute or  contingent, due or to become due, now existing or hereafter arising, of Borrowers or their  Subsidiaries, or any of them, arising under, owing pursuant to, or existing in respect of Hedge  Agreements entered into with one or more of the Hedge Providers.

  

  

  116549.01103/127129470v.6 “Hedge Provider” means Wells Fargo or any of its Affiliates. “Indirect Receivables” means Receivables originated by a Person other than a Borrower. “Insolvency Proceeding” means any proceeding commenced by or against any Person under  any provision of the Bankruptcy Code or under any other state or federal bankruptcy or insolvency  law, assignments for the benefit of creditors, formal or informal moratoria, compositions, extensions  generally with creditors, or proceedings seeking reorganization, arrangement, or other similar relief. “Intangible Assets” means all assets of any Person which would be classified in accordance  with GAAP as intangible assets, including without limitation (a) all franchises, licenses, permits,  patents, applications, copyrights, trademarks, trade names, goodwill, experimental or organization  expenses and other like intangibles, and (b) unamortized debt  discount and expense and  unamortized stock discount and expense. “Interest Period” means one (1) month. “Investment” means, with respect to any Person, any investment by such Person in any  other Person (including Affiliates) in the form of loans, guarantees, advances, capital contributions,  or acquisitions of Debt, Stock, or all or substantially all of the assets of such other Person (or of any  division or business line of such other Person), and any other items that are or would be classified as  investments on a balance sheet prepared in accordance with GAAP. “Investment Policy” means the investment policy of Borrowers as in effect as of the date of  this Agreement attached hereto as Exhibit D. “ISP” means, with respect to any Letter of Credit, the “International Standby Practices  1998” published by the Institute of International Banking Law & Practice (or such later version  thereof as may be in effect at the time of issuance). “Issuer Document” means, with respect to any Letter of Credit, a letter of credit application,  a letter of credit agreement, or any other document, agreement or instrument entered into (or to be  entered into) by a Borrower in favor of Issuing Bank and relating to such Letter of Credit. “Issuing Bank” means Wells Fargo or any other Lender that, at the request of Borrower and  with the consent of Agent, agrees, in such Lender’s sole discretion, to become an Issuing Bank for  the purpose of issuing Letters of Credit pursuant to Section 2.3 of this Agreement and the Issuing  Bank, in such capacity, shall be deemed to be a Lender. “Letter of Credit” means a letter of credit (as that term is defined in the UCC) that is issued  or is to be issued by Issuing Bank under this Agreement. “Letter of Credit Collateralization” means either (a) providing cash collateral (pursuant to  documentation reasonably satisfactory to Agent, including provisions that specify that the Letter of  Credit fees provided for in Section 2.7(c) of this Agreement and all fees and charges provided for in  Section 2.3 of this Agreement (including any usage charges) will continue to accrue while the Letters  of Credit are outstanding) to be held by Agent for the benefit of those Lenders in an amount equal  to one hundred five percent (105%) of the then existing Letter of Credit Usage, (b) delivering to  Agent documentation executed by all beneficiaries under the Letters of Credit, in form and

  

  

  116549.01103/127129470v.6 substance reasonably satisfactory to Agent and Issuing Bank, terminating all of such beneficiaries’  rights under the Letters of Credit, or (c) providing Agent with a standby letter of credit, in form and  substance reasonably satisfactory to Agent, from a commercial bank acceptable to Agent (in its sole  discretion) in an amount equal to one hundred five percent (105%) of the then existing Letter of  Credit Usage (it being understood that the Letter of Credit fee and all usage charges set forth in the  Agreement will continue to accrue while the Letters of Credit are outstanding and that any such fees  that accrue must be an amount that can be drawn under any such standby letter of credit). “Letter of Credit Disbursement” means a payment made by Issuing Bank pursuant to a  Letter of Credit. “Letter of Credit Sublimit” means an amount equal to One Million Dollars ($1,000,000). “Letter of Credit Usage” means, as of any date of determination, the aggregate undrawn  amount of all outstanding Letters of Credit. “Level One Regulatory Event” means the formal commencement by written notice by any  federal or state Governmental Authority of any inquiry, investigation, legal action or similar  proceeding against any Borrower or any of their Subsidiaries challenging its authority to originate,  hold, own, service, collect or enforce Receivables generally or any category or group of Receivables  that is material to the business of such Borrower or such Subsidiary, or otherwise alleging any  material non-compliance by any Borrower or any of their Subsidiaries with any applicable laws  related to originating, holding, collecting, servicing or enforcing Receivables generally or any  category or group of Receivables that is material to the business of such Borrower or such  Subsidiary (which shall include, without limitation, the issuance of a civil investigative demand by the  Consumer Financial Protection Bureau that meets the criteria set forth above), which inquiry,  investigation, legal action or proceeding is not released or terminated in a manner reasonably  acceptable to Agent within thirty (30) calendar days of commencement thereof. “Level Two Regulatory Event” means the issuance or entering of any stay, order, judgment,  cease and desist order, injunction, temporary restraining order, or other judicial or non-judicial  sanction, order or ruling against any Borrower or any of their Subsidiaries related in any way to the  originating, holding, pledging, collecting, servicing or enforcing of Receivables generally or any  category or group of Receivables that is material to the business  of such  Borrower or such  Subsidiary. “Lien” any mortgage, deed of trust, pledge, hypothecation, assignment, charge, deposit  arrangement, encumbrance, easement, lien (statutory or other), security interest, or other security  arrangement and any other preference, priority, or preferential arrangement of any kind or nature  whatsoever, including any conditional sale contract or other title retention agreement, the interest of  a lessor under a Capital Lease and any synthetic or other financing lease having substantially the  same economic effect as any of the foregoing. “Loan” means the aggregate principal amount advanced by Lenders to Borrowers pursuant  to Section 2.1 of this Agreement, together with interest accrued thereon and fees and costs incurred  in connection therewith. “Local Authorities” means individually and collectively the state and local governmental

  

  

  116549.01103/127129470v.6 authorities which govern the business and operations owned or conducted by Borrowers or any of  them. “Loan Reserves” means Borrowers’ allowance for loan losses, unearned discounts and  refundable dealer reserves as reported on the most recent financial statements provided to Agent  pursuant to Section 6.1 of this Agreement. “Magnolia Capital” means Magnolia Capital Fund, LP. “Material Adverse Change” means (a) a material adverse change in the business, operations,  results of operations, assets, liabilities or condition (financial or otherwise) of the Borrowers and any  Guarantors, taken as a whole, (b) a material impairment of the Borrowers’ and Guarantors’ ability to  perform their obligations under this Agreement or other Credit Documents or of Agent’s ability to  enforce the Obligations or realize upon the Collateral, or (c) a material impairment of the  enforceability or priority of Agent’s Liens with respect to the Collateral as a result of an action or  failure to act on the part of any Borrowers or any Guarantor. “Maturity Date” means November 5, 2024. “Maximum Principal Amount” means an amount equal to One Hundred Seventy Five  Million Dollars ($175,000,000). “Minimum Loss Reserve Requirement” means an amount, inclusive of a traditional  allowance for loan losses, discounts, dealer loss reserves and dealer holdback reserves, equal to the  greater of (a) Principal Receivables for the most recent month end multiplied by the rolling twelve (12) month ratio of net charge-offs to average Principal Receivables during such twelve (12) month  period or (b) an amount pursuant to the recommendation of the independent certified public  accountant auditing Borrowers’ financial statements. “Net Receivables” means gross Receivables less unearned discounts, dealer reserves,  unearned interest, unearned insurance commissions, unearned insurance premiums, and any other  unearned income represented on Borrowers’ balance sheet. “Net Worth” means, as to any Person, (a) in the case of a corporation, the sum of (i) its  capital stock, capital in excess of par or stated value of shares of its capital stock, retained earnings  and any other account which, in accordance with GAAP, constitutes stockholder equity less (ii) any  treasury stock, the cost of treasury stock and any unpaid stock subscriptions, in each case to the  extent included in clause (i), or (b) in the case of a Person other than a corporation, (i) the owners’  equity in such Person determined in accordance with GAAP, less (ii) any unpaid equity  subscriptions, in each case to the extent included in clause (i). “Nicholas Data” means Nicholas Data Services, Inc.,  a Florida corporation. “Nicholas Financial”  means Nicholas Financial,  Inc., a Florida corporation. “Notes” mean collectively, the promissory notes to this Agreement of Borrowers in favor of  each Lender, evidencing the joint and several obligation of Borrowers to repay the Loan, and any  and all amendments, renewals, replacements or substitutions  therefor, and each is referred to  individually as a “Note.”

  

  

  116549.01103/127129470v.6 “Obligations” means  (a) all loans (including the Advances), debts, principal, interest  (including any interest that accrues after the commencement of an Insolvency Proceeding, regardless  of whether allowed or allowable in whole or in part as a claim in any such Insolvency Proceeding),  reimbursement or indemnification obligations with respect to Letters of Credit (irrespective of  whether contingent), premiums, liabilities (including all amounts charged to Borrowers’ Loan  Account pursuant to this Agreement), obligations (including indemnification obligations), fees  (including the fees provided for in the fee letter, if any), fees and expenses owing Agent and/or  Lenders pursuant to Section 10.6 of this Agreement (including any fees or expenses that accrue after  the commencement of an Insolvency Proceeding, regardless of whether allowed or allowable in  whole or in part as a claim in any such Insolvency Proceeding), guaranties, and all covenants and  duties of any other kind and description owing by any Borrower or any Guarantor arising out of,  under, pursuant to, in connection with, or evidenced by this Agreement or any of the other Credit  Documents and irrespective of whether for the payment of money, whether direct or indirect,  absolute or contingent, due or to become due, now existing or hereafter arising, and including all  interest not paid when due and all other expenses or other amounts that Borrowers are required to  pay or reimburse by the Credit Documents or by law or otherwise in connection with the Credit  Documents, and (b) all Bank Product Obligations. Without limiting the generality of the foregoing,  the Obligations of Borrowers under this Agreement and the other Credit Documents include the  obligation to pay (i) the principal of the Advances, (ii) interest accrued on the Advances, (iii) the  amount necessary to reimburse Issuing Bank for amounts paid or payable in connection with Letters  of Credit, (iv) Letter of Credit commissions, charges, expenses, and fees, (v) fees payable under this  Agreement or any other Credit Documents, and (vi) indemnities and other amounts payable by any  Borrower under this Agreement or any other Credit Document. Any reference in this Agreement or  in the Credit Documents to the Obligations shall include all or any portion thereof and any  extensions, modifications, renewals, or alterations thereof, both prior and subsequent to any  Insolvency Proceeding. Notwithstanding anything to the contrary contained herein, the Obligations  shall specifically exclude Excluded Swap Obligations. “OFAC” means The Office of Foreign Assets Control of the U.S. Department of the  Treasury. “Out of Formula Loans” has the meaning assigned to that term in Section 10.2(b) of this  Agreement. “Parent” means Nicholas Financial, Inc., corporation organized under the laws of the  Province of British Columbia. “Participant” has the meaning assigned to that term in Section 10.7 of this Agreement. “Patriot Act” means the Uniting and Strengthening America by Providing Appropriate  Tools Required to Intercept and Obstruct Terrorism (USA Patriot Act of 2001). “PBGC” means the Pension Benefit Guaranty Corporation or any successor thereto. “Permitted Affiliate Transactions” means (a) transactions with or services rendered to any  Affiliate of a Borrower in the ordinary course of business and pursuant to the reasonable  requirements of the business of such Affiliate and upon terms found by the Board of Directors of a  Borrower to be fair and reasonable and no less favorable to a Borrower than such Borrower would

  

  

  116549.01103/127129470v.6 obtain in a comparable arms’ length transaction with a Person not affiliated with or employed by a  Borrower and (b) the payment of reasonable compensation to any such employee or officer of  Borrowers in the ordinary course of Borrowers’ business consistent and commensurate with  industry custom and practice for the services provided by such Person. “Permitted Discretion” means a determination made in good faith and in the exercise of  reasonable (from the perspective of a secured asset-based lender) business judgment. “Permitted Indebtedness” means (a) Debt evidenced by this Agreement or the other Credit  Documents; (b) trade indebtedness in the normal and ordinary course of business for value received ; (c) Purchase Money Indebtedness and any Refinancing Indebtedness in respect of such Debt, (d) the  other  indebtedness  and  obligations described on Schedule II attached  hereto and made part hereof, and any Refinancing Indebtedness in respect of such Debt, (e) indebtedness in connection with  Bank  Products, (f)  endorsement of instruments  or other payment  items  for deposit, (g) unsecured Debt in an aggregate amount not to exceed Two Million Dollars at any time and (h) the PPP Debt. “Permitted Liens” means (a) Liens granted to, or for the benefit of, Agent to secure the  Obligations, (b) Liens existing as of the date hereof described on Schedule III attached hereto, (c)  judgment Liens arising solely as a result of the existence of judgments, orders, or awards that do not  constitute an Event of Default under Section 8.7 of this Agreement, (d) Liens for unpaid taxes,  assessments, or other governmental charges or levies that either (i) are not yet delinquent, or (ii) do  not have priority over Agent’s Liens and the underlying taxes, assessments, or charges or levies are  the subject of Permitted Protests, (e) the interests of lessors under operating leases, (f) purchase  money Liens or the interests of lessors under Capital Leases to the extent that such Liens or  interests secure Purchase Money Indebtedness and so long as (i) such Lien attaches only to the asset  purchased or acquired and the proceeds thereof, and (ii) such Lien only secures the Debt that was  incurred to acquire the asset purchased or acquired or any Refinancing Indebtedness in respect  thereof, (g) non-exclusive licenses of patents, trademarks, copyrights, and other intellectual property  rights in the ordinary course of business, and (h) rights of setoff or bankers’ liens upon deposits of  cash in favor of banks or other depository institutions, solely to the extent incurred in connection  with the maintenance of such deposit accounts in the ordinary course of business. “Permitted Protest” means the right of Borrowers or any of their Subsidiaries to protest any  Lien (other than any Lien that secures the Obligations), taxes (other than payroll taxes or taxes that  are the subject of a United States federal tax lien), or rental payment, provided that (a) a reserve with  respect to such obligation is established on Borrowers’ books and records in such amount as is  required under GAAP, (b) any such protest is instituted promptly and prosecuted diligently by  Borrowers or their Subsidiaries, as applicable, in good faith, and (c) Agent is satisfied that, while any  such protest is pending, there will be no impairment of the enforceability, validity, or priority of any  of Agent’s Liens. “Person” means all natural persons, corporations, limited partnerships, general partnerships ,  joint stock companies, limited liability companies, joint ventures, associations, companies, trusts,  banks, trust companies, land trusts, business trusts or other organizations, whether or not legal  entities, and federal and state governments and agencies or regulatory authorities and political  subdivisions thereof, or any other entity. “Plan” means any employee benefit plan subject to the provisions of Title IV of ERISA

  

  

  refinanced, renewed, or extended is not recourse to any Person that is liable on account of the 116549.01103/127129470v.6 which is maintained in whole or in part for employees of Borrowers or any Affiliate of Borrowers. “PPP Debt” means Debt owing to Fifth Third Bank, National Association in the original  principal amount of $3,243,900 obtained under the Payroll Protection Program, as administered by  the Small Business Administration, under the Cares Act. “Press Release” has the meaning assigned to that term in Section 10.16 of this Agreement. “Principal Receivables” means gross Receivables (inclusive of all unearned discounts and  dealer reserves) less unearned  interest, unearned  insurance commissions, unearned  insurance  premiums, and any other unearned income represented on Borrowers’ balance sheet. “Property” means any interest in any kind of property or asset, whether real, personal or  mixed, or tangible or intangible. “Protective Advances” has the meaning assigned to that term in Section 10.2(c) of this  Agreement. “Purchase Money Indebtedness” means Debt, incurred at the time of, or within twenty (20)  days after, the acquisition of any fixed assets for the purpose of financing all or any part of the  acquisition cost thereof. “Qualified ECP Obligor” means, in respect of any Swap Obligation, each Borrower that has  total assets exceeding Ten Million Dollars ($10,000,000) at the time the relevant guaranty or grant of  the relevant Lien becomes effective with respect to such Swap Obligation or such other person as  constitutes an “eligible contract participant” under the Commodity Exchange Act or any regulations  promulgated thereunder and can cause another person to qualify as an “eligible contract participant”  at such time by entering into a keepwell under Section 1a(18)(A)(v)(II) of the Commodity Exchange  Act. “Receivables” means all lien, title retention and security agreements, chattel mortgages,  chattel paper, bailment leases, installment sale agreements, instruments, consumer finance paper  and/or promissory notes securing and evidencing loans made, and/or time sale transactions  acquired, by a Borrower (including Electronic Chattel Paper). “Refinancing Indebtedness” means refinancings, renewals, or extensions of Debt so long as: (a) such refinancings, renewals, or extensions do not result in an increase in the principal amount of  the Debt so refinanced, renewed, or extended, other than by the amount of premiums paid thereon  and the fees and expenses incurred in connection therewith and by the amount of unfunded  commitments with respect thereto, (b) such refinancings, renewals, or extensions do not result in a  shortening of the average weighted maturity (measured as of the refinancing, renewal, or extension)  of the Debt so refinanced, renewed, or extended, nor are they on terms or conditions that, taken as a  whole, are or could reasonably be expected to be materially adverse to the interests of Agent and  Lenders, (c) if the Debt that is refinanced, renewed, or extended was subordinated in right of  payment to the Obligations, then the terms and conditions of the refinancing, renewal, or extension  must include subordination terms and conditions that are at least as favorable to Agent and Lenders  as  those that were  applicable  to the refinanced, renewed, or extended Debt, and  (d) the Debt that is

  

  

  22 116549.01103/127129470v.6 Obligations other than those Persons which were obligated with respect to the Debt that was  refinanced, renewed, or extended. “Regulatory Event” means either a Level One Regulatory Event or a Level Two Regulatory Event. “Relevant Governmental Body” means the FRB or the Federal Reserve Bank of New York,  or a committee officially endorsed or convened by the FRB or the Federal Reserve Bank of New  York, or any successor thereto. “Replacement Lender” has the meaning assigned to that term in Section 2.8(b) of this  Agreement. “Report” has the meaning assigned to that term in Section 11.3(c) of this Agreement. “Reportable Event” has the meaning assigned to that term in Section 4.13 of this  Agreement. “Request for Advance” means the certificate in the form of Exhibit D attached hereto and  made part hereof or an online advance request. “Required Lenders” means, at any time, Lenders which are then in compliance with their  obligations hereunder and holding in the aggregate at least sixty-six and two-thirds of one percent  (66.67%) of (a) the Commitment Percentage (and participation interest) or (b) if this Agreement has  been terminated, the outstanding Loans and participation interest; provided, however, if there are  fewer than three (3) Lenders hereunder, Required Lenders means all Lenders which are then in  compliance with their obligations hereunder. “Restricted Payments” means payments by Borrowers, or any of them, which constitute (a) a  Distribution or (b) payments of principal or interest on Subordinated Debt. “Sanction” or “Sanctions” means any and all economic or financial sanctions, sectoral  sanctions, secondary sanctions, trade embargoes and restrictions and anti-terrorism laws imposed,  administered or enforced from time to time by any Sanctioned Entity: including, without limitation: (a) the United States of America, including those administered by the U.S. Department of the  Treasury’s Office of Foreign Assets Control (OFAC), the U.S. Department of State, the U.S.  Department of Commerce, or through any existing or future statute or Executive Order, (b) the  United Nations Security Council, (c) the European Union, (d) the United Kingdom, (e) any other  governmental authority with jurisdiction over Borrower or any member of the Borrowing Group. “Sanctioned Entity” means (a) a country or a government of a country, (b) an agency of the  government of a country, (c) an organization directly or indirectly controlled by a country or its  government, (d) a Person resident in or determined to be resident in a country, in each case, that is  subject to a country sanctions program administered and enforced by OFAC. “Sanctioned Target” means any target of Sanctions, including: (a) Persons on any list of  targets identified or designated pursuant to any Sanctions, (b) Persons, countries, or territories that  are the target of any territorial or country-based Sanctions program, (c) Persons that are a target of  Sanctions due to their ownership or control by any Sanctioned Target(s), or (d) otherwise a target of

  

  

  116549.01103/127129470v.6 Sanctions, including vessels and aircraft, that are designated under any Sanctions program. “SEC” means the United States Securities and Exchange Commission and any successor thereto. “SOFR” means a rate equal to the secured overnight financing rate as administered by the  SOFR Administrator. “SOFR Administrator” means the Federal Reserve Bank of New York (or a successor administrator of the secured overnight financing rate). “Stock” means all shares, options, warrants, interests, participations, or other equivalents  (regardless of how designated) of or in a Person, whether voting or nonvoting, including common  stock, preferred stock, or any other “equity security” (as such term is defined in Rule 3a11-1 of the  General Rules and Regulations promulgated by the SEC under the Exchange Act). “Subordinated Debt” means any indebtedness of Borrowers for borrowed money which  shall contain provisions subordinating the payment of such indebtedness and the liens and security  interests securing such indebtedness to Obligations, in form, substance and extent acceptable to  Agent in its sole discretion. “Subordination Agreement” means, individually, and “Subordination Agreements” means,  collectively, the Subordination Agreements executed in connection with the Subordinated Debt,  from time to time, each in form and substance satisfactory to Agent in its sole discretion. “Subsidiary” of any entity means any corporation, limited liability company, partnership or  other legal entity of which such entity directly or indirectly owns or controls at least a majority of the  outstanding stock or other equity interest having general voting power. For purposes of this  definition, “control” means the possession, directly or indirectly, of the power to direct or cause the  direction of the management and policies of an entity, whether through the ownership of voting  securities, by contract, or otherwise. “Swap Obligation” means, with respect to any Person, any obligation to pay or perform  under any agreement, contract or transaction that constitutes a “Swap” within the meaning of  Section 1a(47) of the Commodity Exchange Act. “System Provider” means GOLDPoint Systems Customer Information Management. “System Provider  Letter Agreement” means any letter agreement entered into among  Borrowers, Agent and System Provider, as each may be amended, modified, restated or extended  from time to time. “Tangible Net Worth” means, at any date, the Net Worth of Parent, on a consolidated basis  (including Borrowers), (but excluding the effect of intercompany transactions) minus, to the extent  not otherwise excluded (a) the aggregate amount of Intangible Assets including the excess for assets  acquired over their respective book values on the books of the corporation from which acquired,  and (b) investments in and loans to any Subsidiary or Affiliate or to any equity holder, director or  employee of Parent or any Borrower or an Affiliate of Parent or any Borrower.

  

  

  116549.01103/127129470v.6 “Taxes” means any taxes, levies, imposts, duties, fees, assessments or other charges of  whatever nature now or hereafter imposed by any jurisdiction or by any political subdivision or  taxing authority thereof or therein with respect to such payments and all interest, penalties or similar  liabilities with respect thereto; provided, however, that Taxes shall exclude (i) any tax imposed on  the net income or net profits of any Lender or any Participant (including any branch profits taxes),  in each case imposed by the jurisdiction (or by any political subdivision or taxing authority thereof)  in which such Lender or such Participant is organized or the jurisdiction (or by any political  subdivision or taxing authority thereof) in which such Lender’s or such Participant’s principal office  is located in each case as a result of a present or former connection between such Lender or such  Participant and the jurisdiction or taxing authority imposing the tax (other than any such connection  arising solely from such Lender or such Participant having executed, delivered or performed its  obligations or received payment under, or enforced its rights or remedies under the Agreement or  any other Credit Document); (ii) taxes resulting from a Lender’s or a Participant’s failure to comply  with the requirements of Section 10.20(c) or (d) of this Agreement; (iii) any United States federal  withholding taxes that would be imposed on amounts payable to a Foreign Lender based upon the  applicable withholding rate in effect at the time such Foreign Lender becomes a party to the  Agreement (or designates a new lending office), except that Taxes shall include (A) any amount that  such Foreign Lender (or its assignor, if any) was previously entitled to receive pursuant to Section  10.20(a) of the Agreement, if any, with respect to such withholding tax at the time such Foreign  Lender becomes a party to the Agreement (or designates a new lending office), and (B) additional  United States federal withholding taxes that may be imposed after the time such Foreign Lender  becomes a party to the Agreement (or designates a new lending office), as a result of a change in law,  rule, regulation, order or other decision with respect to any of the foregoing by any Governmental  Authority; and (iv) any United States federal withholding taxes imposed under FATCA. “Term  SOFR”  means  the Term   SOFR  Reference  Rate   for  a  tenor  comparable  to the Interest Period  on  the day (such day, the “Periodic Term SOFR Determination Day”) that is  two (2) U.S. Government Securities Business Days prior to the first day of such Interest Period (unless a  different time period is provided via written notice to Borrowers and Lenders from Agent), as such  rate is published by the Term SOFR Administrator; provided, however, that if as of 5:00 p.m. (New  York City time) on any Periodic Term SOFR Determination Day the Term SOFR Reference Rate  for the applicable tenor has not been published by the Term SOFR Administrator and a Benchmark  Replacement Date with respect to the Term SOFR Reference Rate has not occurred, then Term  SOFR will be the Term SOFR Reference Rate for such tenor as published by the Term SOFR  Administrator on the first preceding U.S. Government Securities Business Day for which such Term  SOFR Reference Rate for such tenor was published by the Term SOFR Administrator so long as  such first preceding U.S. Government Securities Business Day is not more than three (3) U.S.  Government Securities Business Days prior to such Periodic Term SOFR Determination Day;  provided, further, that if Term SOFR determined as provided above shall ever be less than the  Floor, then Term SOFR shall be deemed to be the Floor. “Term SOFR Administrator” means  CME Group Benchmark Administration Limited  (CBA) (or a successor administrator of the Term SOFR Reference Rate selected by Agent in its  reasonable discretion). “Term SOFR Reference Rate” means the forward-looking term rate based on SOFR. “Termination Date” means the earlier of: (a) the Maturity Date, or (b) the date on which the

  

  

  116549.01103/127129470v.6 Commitments are terminated and the Loan becomes due and payable pursuant to Section 9.1 of this  Agreement. “U.S. Government Securities Business Day” means any day except for (a) a Saturday, (b) a  Sunday or (c) a day on which the Securities Industry and Financial Markets Association recom mends  that the fixed income departments of its members be closed for the entire day for purposes of  trading in United States government securities. “U.S. Special Resolution Regime” means each of (i) the Federal Deposit Insurance Act and  the regulations promulgated thereunder and (ii) Title II of the Dodd-Frank Wall Street Reform and  Consumer Protection Act and the regulations promulgated thereunder. “UCC” means the Uniform Commercial Code as in effect in the State of Iowa from time to time. “UCP 600” means the rules of the Uniform Customs and Practice for Documentary Credits ,  as most recently published by the International Chamber of Commerce and in effect as of July 1,  2007 (or such later version thereof as may be in effect at the time of issuance). “Unadjusted Benchmark Replacement” means  the applicable Benchmark Replacement  excluding the related Benchmark Replacement Adjustment. “Unused Line Fee Percentage” means one-quarter of one percent (0.25%) per annum, in  each case computed on the basis of a Three Hundred Sixty (360) day year and the actual number of  days elapsed. “Usage” means, as of any date of determination, the sum of (a) the amount of outstanding  Advances, plus (b) the amount of the Letter of Credit Usage. “Wells Fargo” means Wells Fargo Bank, N.A., a national banking association. Section  1.2	Rules of Construction. (a)  Accounting Terms. All accounting terms not specifically defined herein shall  be construed in accordance with GAAP; provided, however, that if at any time any change in  GAAP would affect the computation of any covenant (including the computation of any financial  covenant) and/or pricing grid set forth in this Agreement or any other Credit Document,  Borrowers and Agent shall negotiate in good faith to amend such covenant and/or pricing grid to  preserve  the  original  intent  in  light  of  such  change;  provided  further,  that  until  so amended, (i) such covenant and/or pricing grid shall continue to be computed in accordance with the  application of GAAP prior to such change and (ii) Borrowers shall provide to Agent a written  reconciliation in form and substance reasonably satisfactory to Agent, between calculations of  such covenant and/or pricing grid made before and after giving effect to such change in GAAP.  Whenever the term “Borrowers” is used in respect of a financial covenant or a related definition, it  shall be understood to mean Borrowers and their Subsidiaries on a consolidated basis, unless the  context clearly requires otherwise. Notwithstanding anything to the contrary contained in the  definitions of “Capital Lease” or “Debt,” any change in accounting for leases pursuant to GAAP  resulting   from  the  adoption  of  Financial  Accounting  Standards  Board  Accounting   Standards

  

  

  116549.01103/127129470v.6 Update No. 2016-02, Leases (Topic 842), to the extent such adoption requires treating any lease  (or similar arrangement conveying the right to use) as a capital lease where such lease (or similar  arrangement) would not have been required to be so treated under GAAP as in effect on  December 31, 2015, such lease shall not be considered a capital lease, and all calculations and  deliverables under this Agreement or any other Loan Document shall be made or delivered, as  applicable, in accordance therewith. (b) Construction. Unless the context of this Agreement or any other Credit  Document clearly requires otherwise, references to the plural include the singular, references to  the singular include the plural, the terms “includes” and “including” are not limiting, and the term  “or” has, except where otherwise indicated, the inclusive meaning represented by the phrase  “and/or.” The words “hereof,” “herein,” “hereby,” “hereunder,” and similar terms in this  Agreement or any other Credit Document refer to this Agreement or such  other Credit  Document, as the case may be, as a whole and not to any particular provision of this Agreement  or such other Credit Document, as the case may be. Section, subsection, clause, schedule, and  exhibit references herein are to this Agreement unless otherwise specified. Any reference in this  Agreement or in any other Credit Document to any agreement, instrument, or document shall  include all alterations, amendments, changes, extensions, modifications, renewals, replacements,  substitutions, joinders, and supplements, thereto and thereof, as applicable (subject to any  restrictions on such  alterations, amendments, changes, extensions, modifications,  renewals,  replacements, substitutions, joinders, and supplements set forth herein). The words “asset” and  “property” shall be construed to have the same meaning and effect and to refer to any and all  tangible and intangible assets and properties. Any reference herein or in any other Credit  Document to the satisfaction, repayment, or payment in full of the Obligations shall mean the  repayment in full in cash or immediately available funds (or, (a) in the case of contingent  reimbursement obligations with respect  to Letters of Credit, providing  Letter of Credit  Collateralization, and (b) in the case of obligations with respect to Bank Products (other than  Hedge Obligations), providing Bank Product Collateralization) of all of the Obligations other than (i) unasserted contingent indemnification Obligations, (ii) any Bank Product Obligations (other  than Hedge Obligations) that, at such time, are allowed by the applicable Bank Product Provider  to remain outstanding without being required to be repaid or cash collateralized, and (iii) any  Hedge Obligations that, at such time, are allowed by the applicable Hedge Provider to remain  outstanding without being required to be repaid. Any reference herein to any Person shall be  construed to include such Person’s successors and assigns. (c)  UCC. Any terms used in this Agreement that are defined in the UCC shall  be construed and defined as set forth in the UCC unless otherwise defined herein; provided,  however, that to the extent that the UCC is used to define any term herein and such term is  defined differently in different articles of the UCC, the definition of such term contained in Article  9 of the UCC shall govern. ARTICLE 2 THE REVOLVING CREDIT FACILITY Section 2.1 (a) The Loan. Subject to the terms and conditions of this Agreement, and during the term of this Agreement, each Lender with a Commitment agrees (severally, not jointly or jointly and

  

  

  116549.01103/127129470v.6 severally) to make Advances to Borrowers in an amount at any one time outstanding not to exceed  the lesser of: (i) (ii) such Lender’s Commitment Amount, or such Lender’s Commitment Percentage of an amount equal to the lesser of: the Maximum Principal Amount, minus the Letter of Credit Usage at such time, and the Borrowing Base at such time, minus the Letter of Credit Usage at such time. Agent, as a non-fiduciary agent for Borrowers, shall maintain a register  “Borrowers’ Loan Account”) showing the principal amount of the Advances, owing to each  Lender, including Protective Advances and Out of Formula Loans owing to Agent, and the  interests therein of each Lender, from time to time and Borrowers’ Loan Account shall, absent  manifest error, conclusively be presumed to be correct and accurate. At least once each month,  Agent shall provide to Borrowers a statement of Borrowers’ Loan Account which statement shall  be considered correct and accepted by Borrowers and conclusively binding upon Borrowers unless  Borrowers notify Agent to the contrary within thirty (30) days of Agent’s providing such statement  to Borrowers. Amounts borrowed pursuant to this Section 2.1 may be repaid and, subject  to the terms and conditions of this Agreement, reborrowed at any time during the term of this  Agreement. The outstanding principal amount of the Advances, together with interest and fees  accrued and unpaid thereon, shall constitute Obligations hereunder and shall be due and payable  on the Termination Date. The indebtedness of Borrowers to each Lender hereunder shall be eviden ced  by a separate Note executed by Borrowers in favor of such Lender in the principal amount equal  to each such Lender’s Commitment Amount. Notwithstanding the face amount of the Notes,  Borrowers’ liability under the Notes shall be limited at all times to the actual indebtedness  (principal, interest and fees) then outstanding and owing by Borrowers to Agent and Lenders  hereunder. Agent has the right at any time, and from time to time, in its Permitted  Discretion (but without any obligation), to set aside reasonable reserves against the Borrowing  Base or the Maximum Principal Amount in such amounts as it may deem appropriate, including,  without limitation, a reserve equal to the Bank Product Reserve Amount and with respect to  Regulatory Events. Agent has the right, at any time and from time to time upon three (3) days  notice to Borrowers, to adjust the advance rates in the Borrowing Base downward in Agent’s sole  discretion, including, without limitation, to reflect, in Agent’s judgment, the experience with  Borrowers (including without limitation any increased credit, operational, legal, regulatory, political  or reputational risk of Borrowers). Section  2.2	Request for Advances; Advance Mechanics; Defaulting Lender.

  

  

  116549.01103/127129470v.6 Borrower Agent shall notify Agent in writing not later than 12:00 Noon  (Central time) on the date of each requested Advance, specifying the date and amount of the  Advance. Such notice shall be submitted via Agent’s online automatic request system in the form  of the Request for Advance and shall be certified by the President or Treasurer (or such other  authorized Person as Borrower Agent directs from time to time) of Borrower Agent. Each  request for an Advance pursuant to this Section 2.2 shall be irrevocable and binding on Borrowers.  Notwithstanding the obligation of Borrowers to send written confirmation of a Request for  Advance, in the event that Agent agrees to accept a Request for Advance made by telephone, such  telephonic request shall be binding on Borrowers whether or not written confirmation is sent by  Borrower or requested by Agent. Agent may act prior to the receipt of any requested written  confirmation, without any liability whatsoever, based upon telephonic notice believed by Agent in  good faith to be from Borrowers or their agents. Agent’s records of the terms of any telephonic  requests for Advances shall be conclusive on Borrowers in the absence of gross negligence or  willful misconduct on the part of Agent in connection therewith. Agent shall give to each Lender prompt notice (but in no event later than  1:00 P.M. (Central time) on the date of Agent’s receipt of notice from Borrowers) of each Request  for Advance by facsimile, telephone, e-mail or other form of transmission. No later than 2:00 P.M. (Central time) on the date on which an Advance is requested to be made pursuant to the applicable Request for Advance, each Lender will make available to Agent at the address of Agent  set forth in Section 10.4 of this Agreement, in immediately available funds, its Commitment  Percentage of such Advance requested to be made. Unless Agent shall have been notified by any  Lender prior to the date of Advance that such Lender does not intend to make available to Agent  its portion of the Advance to be made on such date, Agent may assume that such Lender will  make such amount available to Agent as required above and Agent may, in reliance upon such  assumption, make available the amount of the Advance to be provided by such Lender. Upon  fulfillment of the conditions set forth in Sections 2.2(a) and 5.2 of this Agreement for such  Advance, and as soon as practicable after receipt of funds from Lenders (but in any event not later  than 2:00 P.M. (Central time)) Agent will make such funds as have been received from Lenders  available to Borrowers in such account agreed to by Agent and Borrowers. (c)  To administer the Loan in an efficient manner and to minimize the transfer  of funds between Agent and Lenders, Lenders hereby instruct Agent, and Agent may (in its sole  discretion, without any obligation) (i) make available, on behalf of Lenders, the full amount of all  Advances requested by Borrowers, without giving each Lender prior notice of the proposed  Advance, of such Lender’s Commitment Percentage thereof and the other matters covered by the  Request for Advance and (ii) if Agent has made any such amounts available as provided in clause  (i), upon repayment of Loans by Borrowers, first apply such amounts repaid directly to the  amounts made available by Agent in accordance with clause (i) and not yet settled as described  below. If Agent makes an Advance on behalf of Lenders, as provided in the immediately  preceding sentence, the amount of outstanding Loans and each Lender’s Commitment Percentage  thereof shall be computed weekly rather than daily and shall be adjusted upward or downward on  the basis of the amount of outstanding Loans as of 5:00 P.M. (Central time) on the Business Day  immediately preceding the date of each computation; provided, however, that Agent retains the  absolute right at any time or from time to time to make the afore-described adjustments at  intervals more frequent than weekly. Agent shall deliver to each of Lenders at the end of each  week, or such lesser period or periods as Agent shall determine, a summary statement of the  amount of outstanding Loans for such period (such week or lesser period or periods being

  

  

  as a result of any default by such Lender hereunder, including, without limitation, the right of 116549.01103/127129470v.6 hereafter referred to as a “Settlement Period”). If the summary statement is sent by Agent and  received by Lenders prior to 12:00 Noon (Central time) on any Business Day each Lender shall  make the transfers described in the next succeeding sentence no later than 3:00 P.M. (Central time)  on the day such summary statement was sent; and if such summary statement is sent by Agent and  received by Lenders after 12:00 Noon (Central time) on any Business Day, each Lender shall make  such transfers no later than 3:00 P.M. (Central time) no later than the next succeeding Business  Day after such summary statement was sent. If in any Settlement Period, the amount of a  Lender’s Commitment Percentage of the Loans is in excess of the amount of Loans actually  funded by such Lender, such Lender shall forthwith (but in no event later than the time set forth  in the next preceding sentence) transfer to Agent by wire transfer in immediately available funds  the amount of such excess; and, on the other hand, if the amount of a Lender’s Commitment  Percentage of the Loans in any Settlement Period is less than the amount of Loans actually funded  by such Lender, Agent shall forthwith transfer to such Lender by wire transfer in immediately  available funds the amount of such difference. The obligation of each Lender to transfer such  funds shall be irrevocable and unconditional, without recourse to or warranty by Agent and made  without setoff or deduction of any kind. Each of Agent and Lenders agree to mark their  respective books and records at the end of each Settlement Period to show at all times the dollar  amount of their respective Commitment Percentages of the outstanding Loans. Because Agent on  behalf of Lenders may be advancing and/or may be repaid Loans prior to the time when Lenders  will actually advance and/or be repaid Loans, interest with respect to Loans shall be allocated by  Agent to each Lender (including Agent) in accordance with the amount of Loans actually  advanced by and repaid to each Lender (including Agent) during each Settlement Period and shall  accrue from and including the date such Advance is made by Agent to but excluding the date such  Loans are repaid by Borrowers in accordance with Section 2.4 of this Agreement or actually settled  by the applicable Lender as described in this Section 2.2(c). All such Advances made by Agent on  behalf of Lenders hereunder shall bear interest at the interest rate applicable hereunder for  Advances. Each Lender shall be entitled to earn interest at the then applicable rate of interest,  calculated in accordance with Section 2.6 of this Agreement, on outstanding Loans which it has  funded to Agent from the date such Lender funded such Advance to, but excluding, the date on  which such Lender is repaid with respect to the Loan. (d) If the amounts described in subsection (b) or (c) of this Section 2.2 are not in  fact made available to Agent by a Defaulting Lender and Agent has made such amount available to  Borrowers, Agent shall be entitled to recover such corresponding amount on demand from such  Defaulting Lender. If such Defaulting Lender does not pay such corresponding amount forthwith  upon Agent’s demand therefor, Agent shall promptly notify Borrowers and Borrowers shall  immediately (but in no event later than two (2) Business Days after such demand) pay such  corresponding amount to Agent. Agent shall also be entitled to recover from such Defaulting  Lender and Borrowers, (i) interest on such corresponding amount in respect of each day from the  date such corresponding amount was made available by Agent to Borrowers to the date such  corresponding amount is recovered by Agent, at a rate per annum equal to either (A) if paid by  such Defaulting Lender, the Federal Funds Rate or (B) if paid by Borrowers, the then applicable  rate of interest, calculated in accordance with Section 2.6 of this Agreement, plus (ii) in each case,  an amount equal to any costs (including reasonable legal expenses) and losses incurred as a result  of the failure of such Defaulting Lender to provide such amount as provided in this Agreement.  Nothing herein shall be deemed  to relieve any Lender from  its obligation to fulfill its  commitments hereunder or to prejudice any rights which Borrowers may have against any Lender

  

  

  shall have no right to refuse to be replaced hereunder, and agrees to execute and deliver a 116549.01103/127129470v.6 Borrowers to seek reimbursement from any Defaulting Lender for any amounts paid by  Borrowers under clause (ii) above on account of such Defaulting Lender’s default. The failure of any Lender to make its portion of the Advance to be made by  it as part of any Advance shall not relieve any other Lender of its obligation, if any, hereunder to  make its Advance on the date of such borrowing, but no Lender shall be responsible for the  failure of any other Lender to make the Advance to be made by such other Lender on the date of  any Advance. The amounts payable by each Lender shall be a separate and independent  obligation. Agent shall not be obligated to transfer to a Defaulting Lender any payments  made by Borrowers to Agent for the Defaulting Lender’s benefit or any Collections or proceeds of  Collateral that would otherwise be remitted hereunder to the Defaulting Lender, and, in the  absence of such transfer to the Defaulting Lender, Agent shall transfer any such payments (A)  first, to Agent to the extent of any Advances that were made by Agent and that were required to  be, but were not, paid by the Defaulting Lender, (B) second, to Issuing Bank, to the extent of the  portion of a Letter of Credit Disbursement that was required to be, but was not, paid by the  Defaulting Lender, (C) third, to each non-Defaulting Lender ratably in accordance with their  Commitments (but, in each case, only to the extent that such Defaulting Lender’s portion of an  Advance (or other funding obligation) was funded by such other non-Defaulting Lender), (D) to a  suspense account maintained by Agent, the proceeds of which shall be retained by Agent and may  be made available to be re-advanced to or for the benefit of Borrowers as if such Defaulting  Lender had made its portion of Advances (or other funding obligations) hereunder, and (E) from  and after the date on which all other Obligations have been paid in full, to such Defaulting Lender  in accordance with tier (G) of Section 9.4 of this Agreement. Subject to the foregoing, Agent may  hold and, in its discretion, re-lend to Borrowers for the account of such Defaulting Lender the  amount of all such payments received and retained by Agent for the account of such Defaulting  Lender. Solely for the purposes of voting or consenting to matters with respect to this Agreement  and the Credit Documents and for the purpose of calculating the fee payable under Section 2.7(b)  of this Agreement, such Defaulting Lender shall be deemed not to be a “Lender” and such  Lender’s Commitment Amount shall be deemed to be zero. The provisions of this Section 2.2(f)  shall remain effective with respect to such Defaulting Lender until the earlier of (y) the date on  which all of the non-Defaulting Lenders, Agent, Issuing Bank, and Borrowers shall have waived,  in writing, the application of this Section 2.2(f) to such Defaulting Lender, or (z) the date on which  such Defaulting Lender makes payment of all amounts that it was obligated to fund hereunder,  pays to Agent all amounts owing by Defaulting Lender in respect of the amounts that it was  obligated to fund hereunder, and, if requested by Agent, provides adequate assurance of its ability  to perform its future obligations hereunder. The operation of this Section 2.2(f) shall not be  construed to increase or otherwise affect the Commitment of any Lender, to relieve or excuse the  performance by such Defaulting Lender or any other Lender of its duties and obligations  hereunder, or to relieve or excuse the performance by Borrowers of their duties and obligations  hereunder to Agent, Issuing Bank or to Lenders other than such Defaulting Lender. Any failure  by a Defaulting Lender to fund amounts that it was obligated to fund hereunder shall constitute a  material breach by such Defaulting Lender of this Agreement and shall entitle Borrowers, at their  option, upon written notice to Agent, to arrange for a substitute Lender to assume the  Commitment of such Defaulting Lender, such substitute Lender to be reasonably acceptable to  Agent. In connection with the arrangement of such a substitute Lender, the Defaulting Lender

  

  

  Sublimit. 116549.01103/127129470v.6 completed form of Assignment and Acceptance in favor of the substitute Lender (and agrees that  it shall be deemed to have executed and delivered such document if it fails to do so) subject only  to being paid its share of the outstanding Obligations (other than Bank Product Obligations, but  including (1) all interest, fees, and other amounts that may be due and payable in respect thereof,  and (2) an assumption of its Commitment Percentage of its participation in the Letters of Credit);  provided, however, that any such assumption of the Commitment of such Defaulting Lender shall  not be deemed to constitute a waiver of any of the Agent’s, Lenders’ or Borrowers’ rights or  remedies against any such Defaulting Lender arising out of or in relation to such failure to fund.  In the event of a direct conflict between the priority provisions of this Section 2.2(f) and any other  provision contained in this Agreement or any other Credit Document, it is the intention of the  parties hereto that such provisions be read together and construed, to the fullest extent possible,  to be in concert with each other. In the event of any actual, irreconcilable conflict that cannot be  resolved as aforesaid, the terms and provisions of this Section 2.2(f) shall control and govern. Section 2.3 (a) Letters of Credit. Subject to the terms and conditions of this Agreement, upon the request of Borrower Agent made in accordance herewith, Issuing Bank agrees to issue a requested Letter of  Credit for the account of Borrowers. By Borrower Agent submitting a request to Issuing Bank for  the issuance of a Letter of Credit, Borrowers shall be deemed to have requested that Issuing Bank  issue the requested Letter of Credit. Each request for the issuance of a Letter of Credit, or the  amendment, renewal, or extension of any outstanding Letter of Credit, shall be made in writing by  the President or Treasurer (or such other authorized Person as Borrower Agent directs from time  to time) of Borrower Agent and delivered to Issuing Bank via hand delivery, facsimile, or other  electronic method of transmission reasonably in advance of the requested date of issuance,  amendment, renewal, or extension. Each such request shall be in form and substance reasonably  satisfactory to Issuing Bank and (i) shall specify (A) the amount of such Letter of Credit, (B) the  date of issuance, amendment, renewal, or extension of such Letter of Credit, (C) the proposed  expiration date of such Letter of Credit, (D) the name and address of the beneficiary of the Letter  of Credit, and (E) such other information (including, the conditions to drawing, and, in the case of  an amendment, renewal, or extension, identification of the Letter of Credit to be so amended,  renewed, or extended) as shall be necessary to prepare, amend, renew, or extend such Letter of  Credit, and (ii) shall be accompanied by such Issuer Documents as Agent or Issuing Bank may  request or require. Anything contained herein to the contrary notwithstanding, Issuing Bank may,  but shall not be obligated to, issue a Letter of Credit that supports the obligations of any Borrower  or their Subsidiaries (1) in respect of (x) a lease of real property, or (y) an employment contract, or at any time that one or more of the Lenders is a Defaulting Lender. The Issuing Bank shall  have no obligation to issue a Letter of Credit if any of the following would result after giving effect  to the requested issuance: the Letter of Credit Usage would exceed the Borrowing Base less the  outstanding amount of Advances, or the Letter of Credit Usage would exceed the Maximum Principal  Amount less the outstanding amount of Advances, or the Letter of Credit Usage would exceed the Letter of Credit

  

  

  32 116549.01103/127129470v.6 Additionally, Issuing Bank shall have no obligation to issue a Letter of Credit if (I) any order,  judgment, or decree of any Governmental Authority or arbitrator shall, by its terms, purport to  enjoin or restrain Issuing Bank from issuing such Letter of Credit, or any law applicable to Issuing  Bank or any request or directive (whether or not having the force of law) from any Governmental  Authority with jurisdiction over Issuing Bank shall prohibit or request that Issuing Bank refrain  from the issuance of letters of credit generally or such Letter of Credit in particular, or (II) the  issuance of such Letter of Credit would violate one or more policies of Issuing Bank applicable to  letters of credit generally. Any Issuing Bank (other than Wells Fargo or any of its Affiliates) shall notify Agent in  writing on each Business Day of all Letters of Credit issued on the prior Business Day by such  Issuing Bank; provided that (y) until Agent advises any such Issuing Bank that the provisions of  Section 5.2 of this Agreement are not satisfied, or (z) the aggregate amount of the Letters of Credit  issued in any such week exceeds such amount as shall be agreed by Agent and such Issuing Bank,  such Issuing Bank shall be required to so notify Agent in writing only once each week of the Letters  of Credit issued by such Issuing Bank during the immediately preceding week as well as the daily  amounts outstanding for the prior week, such notice to be furnished on such day of the week as  Agent and such Issuing Bank may agree. Each Letter of Credit shall be in form and substance  reasonably acceptable to Issuing Bank, including the requirement that the amounts payable  thereunder must be payable in Dollars. If Issuing Bank makes a payment under a Letter of Credit,  Borrowers shall pay to Agent an amount equal to the applicable Letter of Credit Disbursement on  the date such Letter of Credit Disbursement is made and, in the absence of such payment, the  amount of the Letter of Credit Disbursement immediately and automatically shall be deemed to be  an Advance hereunder (notwithstanding any failure to satisfy any condition precedent set forth in  Section 5.2 of this Agreement) and, initially, shall bear interest at the rate then applicable to  Advances. If a Letter of Credit Disbursement is deemed to be an Advance hereunder, Borrowers’  obligation to pay the amount of such Letter of Credit Disbursement to Issuing Bank shall be  automatically converted into an obligation to pay the resulting Advance. Promptly following receipt  by Agent of any payment from Borrowers pursuant to this paragraph, Agent shall distribute such  payment to Issuing Bank or, to the extent that Lenders have made payments pursuant to Section  2.3(b) of this Agreement to reimburse Issuing Bank, then to such Lenders and Issuing Bank as their  interests may appear. (b) Promptly following receipt of a notice of a Letter of Credit Disbursement  pursuant to Section 2.3(a) of this Agreement, each Lender with a Commitment agrees to fund an  amount equal to its Commitment Percentage of such  Advance deemed  made pursuant to  Section 2.3(a) of this Agreement on the same terms and conditions as if Borrowers had requested  the amount thereof as an Advance and Agent shall promptly pay to Issuing Bank the amounts so  received by it from the Lenders. By the issuance of a Letter of Credit (or an amendment, renewal,  or extension of a Letter of Credit) and without any further action on the part of Issuing Bank or  Lenders, Issuing Bank shall be deemed to have granted to each Lender, and each Lender shall be  deemed to have purchased, a participation in each Letter of Credit issued by Issuing Bank, in an  amount equal to its Commitment Percentage of such Letter of Credit, and each Lender agrees to  pay to Agent, for the account of Issuing Bank, an amount equal to its Commitment Percentage of  any Letter of Credit Disbursement made by Issuing Bank under the applicable Letter of Credit. In  consideration and in furtherance of the foregoing, each Lender hereby absolutely and  unconditionally agrees to pay to Agent, for the account of Issuing Bank, an amount equal to its  Commitment Percentage of each Letter of Credit Disbursement made by Issuing Bank and not

  

  

  116549.01103/127129470v.6 reimbursed by Borrowers on the date due as provided in Section 2.3(a) of this Agreement, or of  any reimbursement payment that is required to be refunded (or that Agent or Issuing Bank elects,  based upon the advice of counsel, to refund) to Borrowers for any reason. Each Lender  acknowledges and agrees that its obligation to deliver to Agent, for the account of Issuing Bank,  an amount equal to its Commitment Percentage of each Letter of Credit Disbursement pursuant  to this Section 2.3(b) shall be absolute and unconditional and such remittance shall be made  notwithstanding the occurrence or continuation of a Default or an Event of Default or the failure  to satisfy any condition set forth in Section 5.2 of this Agreement. If any Lender fails to make  available to Agent the amounts required pursuant to this Section 2.3(b), such Lender shall be  deemed to be a Defaulting Lender and Agent (for the account of Issuing Bank) shall be entitled to  recover such amount on demand from such Lender together with interest thereon at the  Defaulting Lender Rate until paid in full. Borrowers hereby agree to indemnify, save, defend, and hold Agent, Lenders  and Issuing Bank harmless from any damage, loss, cost, expense, or liability (other than Taxes,  which shall be governed by Section 10.20 of this Agreement), and reasonable attorneys fees  incurred by Issuing Bank, Agent or any Lender arising out of or in connection with any Letter of  Credit; provided, however, that Borrowers shall not be obligated hereunder to indemnify for any  loss, cost, expense, or liability that a court of competent jurisdiction finally determines to have  resulted from the gross negligence or willful misconduct of Issuing Bank, Agent or any Lender. Each Lender and each Borrower agree that, in paying any drawing under a  Letter of Credit, Issuing Bank shall not have any responsibility to obtain any document (other than  any sight draft, certificates and documents expressly required by the Letter of Credit) or to  ascertain or inquire as to the validity or accuracy of any such document or the authority of the  Person executing or delivering any such document. None of Issuing Bank, Agent or any Lender,  nor any correspondent, participant or assignee of Issuing Bank shall be liable to any Lender for (i)  any action taken or omitted in connection herewith at the request or with the approval of Lenders  or Required Lenders, as applicable; (ii) any action taken or omitted in the absence of gross  negligence or willful misconduct;  (iii) any error, omission, interruption, loss or delay in  transmission or delivery of any draft, notice or other communication under or relating to any  Letter of Credit or any error in interpretation of technical terms; or (iv) the due execution,  effectiveness, validity or enforceability of any document or instrument related to any Letter of  Credit or Issuer Document. Borrowers hereby assume all risks of the acts or omissions of any  beneficiary or transferee with respect to its use of any Letter of Credit; provided, however, that  this assumption is not intended to, and shall not, preclude Borrowers from pursuing such rights  and remedies as it may have against the beneficiary or transferee at law or under any other  agreement. None of Issuing Bank, Agent or any Lender, nor any correspondent, participant or  assignee  of Issuing  Bank  shall be liable  or responsible for any of the matters described in  clauses (i) through (vi) of Section 2.3(e) of this Agreement or for any action, neglect or omission under or  in connection with any Letter of Credit or Issuer Document, including in connection with the  issuance  or  any  amendment  of  any  Letter of Credit, the failure  to issue or amend  any Letter of Credit, the honoring or dishonoring of any demand under any Letter of Credit, or the following of  Borrowers’ instructions or those contained in the Letter of Credit or any modifications,  amendments, or supplements thereto, and such action or neglect or omission will bind Borrowers ;  provided, however, that anything in such clauses to the contrary notwithstanding, Borrowers may  have a claim against Issuing Bank, and Issuing Bank may be liable to Borrowers, to the extent, but  only  to  the extent,  of any  direct,  as  opposed  to  consequential,  exemplary  or punitive, damages

  

  

  116549.01103/127129470v.6 suffered by Borrowers which Borrowers prove were caused by Issuing Bank’s willful misconduct  or gross negligence or Issuing Bank’s willful failure to pay under any Letter of Credit after the  presentation to it by the beneficiary of a sight draft and certificate(s) strictly complying with the  terms and conditions of a Letter of Credit; provided further, however, that any claim against  Issuing Bank by Borrowers for any loss suffered or incurred by Borrowers shall be reduced by an  amount equal to the sum of (i) the amount (if any) saved by Borrowers as a result of the breach or  other wrongful conduct that allegedly caused such loss, and (ii) the amount (if any) of the loss that  would have been avoided had Borrowers taken all reasonable steps to mitigate such loss, including,  without limitation, by enforcing their rights against any beneficiary and, in case of a claim of  wrongful dishonor, by specifically and timely authorizing Issuing Bank to cure such dishonor. In  furtherance and not in limitation of the foregoing, Issuing Bank may accept documents that  appear on their face to be in order, without responsibility for further investigation, regardless of  any notice or information to the contrary (or Issuing Bank may refuse to accept and make  payment upon such documents if such documents are not in strict compliance with the terms of  such Letter of Credit and may disregard any requirement in a Letter of Credit that notice of  dishonor be given in a particular manner and any requirement that presentation be made at a  particular place or by a particular time of day), and Issuing Bank shall not be responsible for the  validity or sufficiency of any instrument transferring or assigning or purporting to transfer or  assign a Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in  part, which may prove to be invalid or ineffective for any reason. Issuing Bank shall not be  responsible for the wording of any Letter of Credit (including any drawing conditions or any terms  or conditions that are ineffective, ambiguous, inconsistent, unduly complicated or reasonably  impossible to satisfy), notwithstanding any assistance Issuing Bank may provide to Borrowers with  drafting or recommending text for any letter of credit application or with the structuring of any  transaction related to any Letter of Credit, and Borrowers hereby acknowledge and agree that any  such assistance will not constitute legal or other advice by Issuing Bank or any representation or  warranty by Issuing Bank that any such wording or such Letter of Credit will be effective.  Without limiting the foregoing, Issuing Bank may, as it deems appropriate, modify or alter and use  in any Letter of Credit the terminology contained on the letter of credit application for such Letter  of Credit. Borrowers hereby acknowledge and agree that neither Issuing Bank, Agent nor any  Lender shall be responsible for delays, errors, or omissions resulting from the malfunction of  equipment in connection with any Letter of Credit. The obligation of Borrowers to reimburse Issuing Bank for each drawing  under each Letter of Credit shall be absolute, unconditional and irrevocable, and shall be paid  strictly in accordance with the terms of this Agreement under all circumstances, including the  following: any lack of validity or enforceability of such Letter of Credit, this  Agreement, or any other Credit Document, the existence of any claim, counterclaim, setoff, defense or other  right that Borrowers or any of their Subsidiaries may have at any time against any beneficiary or any  transferee of such Letter of Credit (or any Person for whom any such beneficiary or any such  transferee may be acting), Issuing Bank or any other Person, whether in connection with this  Agreement, the transactions contemplated hereby or by such Letter of Credit or any agreement or  instrument relating thereto, or any unrelated transaction,

  

  

  116549.01103/127129470v.6 any draft, demand, certificate or other document presented under  such Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any  statement therein being untrue or inaccurate in any respect, or any loss or delay in the transmission  or otherwise of any document required in order to make a drawing under such Letter of Credit, any payment by Issuing Bank under such Letter of Credit against  presentation of a draft or certificate that does not strictly comply with the terms of such Letter of  Credit (including, without limitation, any requirement that presentation be made at a particular place  or by a particular time of day), or any payment made by Issuing Bank under such Letter of Credit to  any Person purporting to be a trustee in bankruptcy, debtor-in-possession, assignee for the benefit  of creditors, liquidator, receiver or other representative of or successor to any beneficiary or any  transferee of such Letter of Credit, any other circumstance or happening whatsoever, whether or not  similar to any of the foregoing, including any other circumstance that might otherwise constitute a  defense available to, or a discharge of, Borrowers or any of their Subsidiaries, or the fact that any Default or Event of Default shall have occurred and be continuing. Borrowers acknowledge and agree that any and all standard fees, charges, and  commissions in effect from time to time, of Issuing Bank relating to Letters of Credit or incurred  by Issuing Bank relating to Letters of Credit, upon the issuance of any Letter of Credit, upon the  payment or negotiation of any drawing under any Letter of Credit, or upon the occurrence of any  other activity with respect to any Letter of Credit (including the transfer, amendment or  cancellation of any Letter of Credit), together with any and all fronting fees in effect from time to  time related to Letters of Credit, shall be expenses for purposes of this Agreement, and shall be  reimbursable immediately by Borrowers to Agent for the account of Issuing Bank. If by reason of (x) any change after the date of this Agreement in any  applicable law, treaty, rule, or regulation or any change in the interpretation or application thereof  by any Governmental Authority, or (y) compliance by Issuing Bank, Agent or any Lender with any  direction, request, or requirement (irrespective of whether having the force of law) of any  Governmental Authority or monetary authority including, Regulation D of the Federal Reserve  Board as from time to time in effect (and any successor thereto): any reserve, deposit, or similar requirement is or shall be imposed or  modified in respect of any Letter of Credit issued or caused to be issued hereunder or hereby, or there shall be imposed on Issuing Bank, Agent or any Lender any  other condition regarding any Letter of Credit, and the result of the foregoing is to increase, directly or indirectly, the cost to Issuing Bank, Agent or  any Lender of issuing, making, participating in, or maintaining any Letter of Credit or to reduce the  amount receivable in respect thereof, then, and in any such case, Agent may, at any time within a  reasonable period after the additional cost is incurred or the amount received is reduced, notify  Borrowers, and Borrowers shall pay within thirty (30) days after demand therefor, such amounts as  Agent may specify to be necessary to compensate Issuing Bank, Agent or such Lender for such  additional cost or reduced receipt, together with interest on such amount from the date of such

  

  

  Bank Product Agreement (including any amounts due and payable to the Bank Product Providers 116549.01103/127129470v.6 demand until payment in full thereof at the rate then applicable to Advances; provided, however,  that Borrowers shall not be required to provide any compensation pursuant to this Section 2.3(g) for  any such amounts incurred more than one hundred eighty (180) days prior to the date on which the  demand for payment of such amounts is first made to Borrowers; provided further, however, that if  an event or circumstance giving rise to such amounts is retroactive, then the one hundred eighty (180) day period referred to above shall be extended to include the period of retroactive effect  thereof. The determination by Agent of any amount due pursuant to this Section 2.3(g), as set forth  in a certificate setting forth the calculation thereof in reasonable detail, shall, in the absence of  manifest or demonstrable error, be final and conclusive and binding on all of the parties hereto. Unless otherwise expressly agreed by Issuing Bank and Borrowers when a  Letter of Credit is issued, (i) the rules of the ISP and the UCP 600 shall apply to each standby  Letter of Credit, and (ii) the rules of the UCP 600 shall apply to each commercial Letter of Credit. In the event of a direct conflict between the provisions of this Section 2.3  and any provision contained in any Issuer Document, it is the intention of the parties hereto that  such provisions be read together and construed, to the fullest extent possible, to be in concert with  each other. In the event of any actual, irreconcilable conflict that cannot be resolved as aforesaid,  the terms and provisions of this Section 2.3 shall control and govern. Section 2.4 (a) Method of Payment. Borrowers shall make all payments of principal and interest on the Notes in lawful money of the United States of America and in funds immediately available by wire transfer  or automated clearing house transfer, to Agent at its address referred to in Section 10.3 of this  Agreement or at such other address as Agent otherwise directs. Any payment received by Agent  later than 1:30 p.m. (Central time) shall be deemed to have been received (unless Agent, in its sole  discretion, elects to credit it on the date received) on the following Business Day and any  applicable interest or fee shall continue to accrue until such following Business Day. Whenever  any payment is due on a day which is not a Business Day, the date for payment shall be extended  to the next succeeding Business Day and interest shall be paid for such extended time. Unless Agent receives notice from Borrowers prior to the date on which any  payment is due to Lenders that Borrowers will not make such payment in full as and when  required, Agent may assume that Borrowers have made (or will make) such payment in full to  Agent on such date in immediately available funds and Agent may (but shall not be so required), in  reliance upon such assumption, distribute to each Lender on such due date an amount equal to the  amount then due such Lender. If and to the extent Borrowers do not make such payment in full  to Agent on the date when due, each Lender severally shall repay to Agent on demand such  amount distributed to such Lender, together with interest thereon for each day from the date such  amount is distributed to such Lender until the date repaid. Borrowers hereby authorize Agent, from time to time without prior notice to  Borrowers, to charge (i) on the first day of each month, all interest accrued during the prior month  on the Advances hereunder, (ii) on the first day of each month, all fees accrued or chargeable  pursuant to Section 2.7 of this Agreement, (iii) as and when due and payable, all other fees, costs  and expenses payable hereunder or under any of the other Credit Documents, and (iv) as and  when due and payable all other payment obligations payable under any Credit Document or any

  

  

  termination date stated in any notice of termination. 116549.01103/127129470v.6 in respect of Bank Products) to Borrowers’ Loan Account, which amounts thereafter shall  constitute Advances hereunder. (d) So long as no Application Event has occurred and is continuing and except  as otherwise provided herein with respect to Defaulting Lenders, all principal and interest  payments received by Agent shall be apportioned ratably among Lenders (according to the unpaid  principal balance of the Obligations to which such payments relate held by each Lender) and all  payments of fees and expenses received by Agent (other than fees or expenses that are for Agent’s  separate account or for the separate account of Issuing Bank) shall be apportioned ratably among  the Lenders. All payments to be made hereunder by Borrowers shall be remitted to Agent and all  (subject to Section 2.5(b) of this Agreement) such payments, and all proceeds of Collateral  received by Agent, shall be applied, so long as no Application Event has occurred and is  continuing, to reduce the balance of the Advances outstanding and, thereafter, to Borrowers or  such other Person entitled thereto under applicable law. Section 2.5 (a) Optional and Mandatory Prepayment. Optional Prepayments. Borrowers may prepay the Loan from time to time, in full or in part without premium or penalty, provided that (i) prepayments shall be in a minimum  amount of Ten Thousand Dollars ($10,000) and Ten Thousand Dollars ($10,000) increments in  excess thereof, (ii) partial prepayments prior to the Termination Date shall not reduce Lenders’  Commitments under this Agreement, (iii) in the event Borrowers repay the Loan in full and  terminate this Agreement any time prior to the Maturity Date, Borrowers shall provide Agent at  least ten Business Days prior written notice, (iv) in the event Borrowers repay the Loan in full and  terminate this Agreement or the Obligations are accelerated following the occurrence of an Event  of Default at any time prior to the first anniversary of the date of this Agreement, Borrowers shall  pay a sum equal to two percent (2.0%) of the Maximum Principal Amount as a prepayment fee, (v)  in the event Borrowers repay the Loan in full and terminate this Agreement or the Obligations are  accelerated following the occurrence of an Event of Default at any time thereafter but prior to the  second anniversary of the date of this Agreement, Borrowers shall pay a sum equal to one percent  (1.0%) of the Maximum Principal Amount as a prepayment fee, and (vi) ) in the event Borrowers  repay the Loan in full and terminate this Agreement or the Obligations are accelerated following  the occurrence of an Event of Default at any time thereafter but prior to the third anniversary of  the date of this Agreement, Borrowers shall pay a sum equal to one-half of one percent (0.50%) of  the Maximum Principal Amount as a prepayment fee, it being acknowledged by Borrowers that  such prepayment fee is an estimate of Lenders’ damages in the event of early termination and is  not a penalty. Notwithstanding the foregoing, the parties agree that no prepayment fee shall be  due upon any termination of this Agreement occurring in connection with the refinancing of the  Loan with a credit facility in which Wells Fargo is the sole lender or an agent of the lenders. (b) Mandatory Prepayments. In the event that the Usage at any time exceeds the  Borrowing Base (whether established by an Availability Statement or otherwise) (such excess being  referred to as the “Borrowing Base Excess”), Borrowers shall pay to Agent immediately and  without demand or notice of any kind required, the Borrowing Base Excess. In the event of  termination of the credit facility established pursuant to this Agreement in accordance with the  terms hereof, all of the Obligations (other than Hedge Obligations which shall be terminated in  accordance with the applicable Hedge Agreement) shall be immediately due and payable upon the

  

  

  party to this Agreement or any other Credit Document. Agent will promptly notify Borrowers 116549.01103/127129470v.6 Section 2.6 (a) Interest. In the absence of an Event of Default or Default hereunder, and prior to maturity, the outstanding balance of the Loan will bear interest at an annual rate at all times equal  to the Term SOFR plus the Applicable Margin. Interest shall be payable monthly in arrears on the first (1st) day of each  month commencing on the first such date after the first Advance under the Loan and continuing  until the Commitments are terminated and the Obligations are paid in full. Unless otherwise  required by Agent at any time and from time to time or Borrowers have otherwise paid or  informed Agent that Borrowers will pay such amount in immediately available funds, Borrowers  shall be deemed to have requested an Advance on the first (1st) day of each calendar month in an  amount equal to accrued and unpaid interest and any other accrued but unpaid fees due and owing  hereunder and such amount shall be added to the outstanding principal balance of the Obligations.  Interest as provided hereunder will be calculated on the basis of a three hundred sixty (360) day  year and the actual number of days elapsed. The rate of interest provided for hereunder is subject  to increase or decrease as the Term SOFR increases or decreases in an amount corresponding to  the change in the Term SOFR, with such benchmark rate being determined on the Periodic Term  SOFR Determination Day, and any such change will become effective on the first (1st) day of the  immediately following month. From and after the Maturity Date, or such earlier date as the outstanding  principal balance of the Loan and other Obligations become due and payable by acceleration or  otherwise, or at Agent’s option upon the occurrence of an Event of Default, (i) Borrowers hereby  agree to pay interest on the outstanding principal balance of the Loan and other Obligations  (except for undrawn Letters of Credit) and, to the extent permitted by law, overdue interest with  respect thereto, at the rate of two and one-half percent (2.5%) per annum above the rate of  interest otherwise applicable to the Loan and (ii) the Letter of Credit fee provided for in Section  2.7(c) of this Agreement shall be increased to two (2) percentage points above the per annum rate  otherwise applicable hereunder. In no event shall the interest rate or rates payable under this Agreement, plus  any other amounts paid in connection herewith, exceed the highest rate permissible under any law  that a court of competent jurisdiction shall, in a final determination, deem applicable. Borrowers,  Agent and Lenders, in executing and delivering this Agreement, intend legally to agree upon the  rate or rates of interest and manner of payment stated within it; provided, however, that, anything  contained herein to the contrary notwithstanding, if such rate or rates of interest or manner of  payment exceeds the maximum allowable under applicable law, then, ipso facto, as of the date of  this Agreement, Borrowers are and shall be liable only for the payment of such maximum amount  as is allowed by law, and payment received from Borrowers in excess of such legal maximum,  whenever received, shall be applied to reduce the principal balance of the Obligations to the extent  of such excess. In connection with the use or administration of Term SOFR, Agent will have  the right to make Conforming Changes from time to time and, notwithstanding anything to the  contrary herein or in any other Credit  Document, any amendments implementing such  Conforming Changes will become effective without any further action or consent of any other

  

  

  reasonable  averaging  and  attribution  methods.	Failure or delay on the part of any Lender to 116549.01103/127129470v.6 and Lenders of the effectiveness of any Conforming Changes in connection with the use or  administration of Term SOFR. Section 2.7 (a) Fees. Borrowers shall pay to Agent (for the ratable benefit of Lenders) a closing fee in the amount of One Hundred Seventy Five Thousand Dollars ($175,000), which fee shall be  due and payable upon the effectiveness of this Agreement (the “Closing Fee”). Unused Line Fee. Borrowers shall pay to Agent (for the ratable benefit of  Lenders) an unused line fee at the rate of the Unused Line Fee Percentage on the average daily  unused Commitments, which fee shall be due and payable monthly in arrears on the first (1st) day  of each month commencing on the first such date after the funding of this Agreement and  continuing until the Commitment is terminated and the Obligations are paid in full, in which event  a monthly installment of the unused line fee shall be paid on the date of such termination. Letter of Credit Fee. Borrowers shall pay Agent (for the ratable benefit of  Lenders), a Letter of Credit fee (which fee shall be in addition to the fees, charges, commissions,  and costs set forth in Section 2.3 of this Agreement) at a per annum rate equal to the Applicable  Margin times the undrawn amount of all outstanding Letters of Credit, which fee shall be due and  payable monthly in arrears on the first (1st) day of each month commencing on the first such date  after the funding of this Agreement and continuing until the Commitment is terminated and the  Obligations are paid in full, in which event a monthly installment of the letter of credit fee shall be  paid on the date of such termination. Section  2.8	Regulatory Changes in Capital Requirements; Replacement of a Lender. (a)  Regulatory Changes in Capital Requirements. If, after the date hereof, any  Lender determines that (i) the adoption of or change in any law, rule, regulation or guideline  regarding capital or reserve requirements for banks or bank holding companies, or any change in  the interpretation, implementation, or application thereof by any Governmental Authority charged  with the administration thereof, including those changes resulting from the enactment of the  Dodd-Frank Wall Street Reform and Consumer Protection Act and Basel III, regardless of the  date enacted, adopted or issued, or (ii) compliance by such Lender or its parent bank holding  company with any guideline, request or directive of any such entity regarding capital adequacy  (whether or not having the force of law), has the effect of reducing the return on such Lender’s or  such holding company’s capital as a consequence of such Lender’s Commitments hereunder to a  level below that which such Lender or such holding company could have achieved but for such  adoption, change, or compliance (taking into consideration such Lender’s or such holding  company’s then existing policies with respect to capital adequacy and assuming the full utilization  of such entity’s capital) by any amount deemed by such Lender to be material, then such Lender  may notify Borrower Agent and Agent thereof. Following receipt of such notice, Borrowers agree  to pay such Lender on demand the amount of such reduction of return of capital as and when  such reduction is determined, payable within thirty (30) days after presentation by such Lender of  a statement in the amount and setting forth in reasonable detail such Lender’s calculation thereof  and the assumptions upon which such calculation was based (which statement shall be deemed  true and correct absent manifest error). In determining such amount, such Lender may use any

  

  

  40 116549.01103/127129470v.6 demand compensation pursuant to this Section 2.8(a) shall not constitute a waiver of such  Lender’s right to demand such compensation; provided that Borrowers shall not be required to  compensate a Lender pursuant to this Section 2.8(a) for any reductions in return incurred more  than one hundred eighty (180) days prior to the date that such Lender notifies Borrower Agent of  such law, rule, regulation or guideline giving rise to such reductions and of such Lender’s intention  to claim compensation therefor; provided further that if such claim arises by reason of the  adoption of or change in any law, rule, regulation or guideline that is retroactive, then the one  hundred eighty (180) day period referred to above shall be extended to include the period of  retroactive effect thereof. (b) Affected Lender; Replacement of a Lender. If any Lender requests amounts  under Section 2.8(a) of this Agreement (any such Lender, an “Affected Lender”), then such  Affected Lender shall use reasonable efforts to promptly designate a different one of its lending  offices or to assign its rights and obligations hereunder to another of its offices or branches, if (i)  in the reasonable judgment of such Affected Lender, such designation or assignment would  eliminate or reduce amounts payable pursuant to Section 2.8(a) of this Agreement and (ii) in the  reasonable judgment of such Affected Lender, such designation or assignment would not subject  it to any material unreimbursed  cost or expense and would not otherwise be materially  disadvantageous to it. Borrowers agree to pay all reasonable out-of-pocket costs and expenses  incurred by such Affected Lender in connection with any such designation or assignment. If, after  such reasonable efforts, such Affected Lender does not so designate a different one of its lending  offices or assign its rights to another of its offices or branches so as to eliminate Borrowers’  obligation to pay any future amounts to such Affected Lender pursuant to Section 2.8(a) of this  Agreement, then Borrowers (without prejudice to any amounts then due to such Affected Lender  under Section 2.8(a) of this Agreement) may, unless prior to the effective date of any such  assignment the Affected Lender withdraws its request for such additional amounts under Section  2.8(a) of this Agreement, may seek a substitute Lender reasonably acceptable to Agent to purchase  the Obligations owed to such Affected Lender and such Affected Lender’s Commitments  hereunder (a “Replacement Lender”), and if such Replacement Lender agrees to such purchase,  such Affected Lender shall assign to the Replacement Lender its Obligations and Commitments,  pursuant to an Assignment and Acceptance Agreement, and upon such purchase by the  Replacement Lender, such Replacement Lender shall be deemed to be a “Lender” for purposes of  this Agreement and such Affected Lender shall cease to be a “Lender” for purposes of this  Agreement. Section 2.9 Sharing of Payments. If any Lender shall obtain any payment (whether  voluntary, involuntary, through the exercise of any right of setoff or otherwise) on account of the  Loans made by it in excess of its pro rata share of such payment as provided for in this Agreement,  such Lender shall forthwith purchase from the other Lenders such participations in the Loans made  by them as shall be necessary to cause such purchasing Lender to share the excess payment accruing  to all Lenders in accordance with their respective ratable shares as provided for in this Agreement;  provided, however, that if all or any portion of such excess is thereafter recovered from such  purchasing Lender, such purchase from each Lender shall be rescinded and each such Lender shall  repay to the purchasing Lender the purchase price to the extent of such recovery together with an  amount equal to such Lender’s ratable share (according to the proportion of (a) the amount of such  Lender’s required repayment to (b) the total amount so recovered from the purchasing Lender) or  any interest or other amount paid or payable by the purchasing Lender in respect to the total  amount so recovered. Borrowers agree that any Lender so purchasing a participation from another

  

  

  116549.01103/127129470v.6 Lender pursuant to this Section 2.9 may, to the fullest extent permitted by law, exercise all of its  rights of payment (including the right of setoff) with respect to such participation as fully as if such  Lender were the direct creditor of Borrowers in the amount of such participation. Section 2.10 Pro Rata Treatment. Subject to Sections 2.2 and 9.4 of this Agreement, each  payment or prepayment of principal of the Loan and each payment of interest on the Loans, actually  received by Agent shall be allocated pro rata among Lenders in accordance with the respective  principal amounts of their outstanding Loans; provided, however, that the foregoing fees payable  hereunder to Lenders shall be allocated to each Lender based on such Lender’s Commitment  Percentage. Section 2.11 (a) Changed Circumstances. Circumstances   Affecting   Benchmark  Availability.	Subject to clause (c) below, if for any reason (i) Agent shall determine (which determination shall be conclusive and  binding absent manifest error) that reasonable and adequate means do not exist for ascertaining  Term SOFR for the applicable Interest Period on or prior to the first day of a calendar month, (ii)  the Required Lenders shall determine (which determination shall be conclusive and binding absent  manifest error) that Term SOFR does not adequately and fairly reflect the cost to such Lenders of  making or maintaining Loans, or (iii) upon the commencement of a Benchmark Unavailability  Period, then, in each case, Agent shall promptly give notice thereof to Borrowers. Upon notice  thereof by Agent to Borrowers, until such time as a Benchmark Replacement has been determined  pursuant to clause (c) below, Agent may select a replacement index rate and spread adjustment in  good faith and in its commercially reasonable discretion giving due consideration to (i) any selection  or recommendation of a replacement benchmark rate or the mechanism for determining such a rate  by the Relevant Governmental Body or (ii) any evolving or then-prevailing market convention for  determining a benchmark rate as a replacement to the then-current Benchmark for Dollar-  denominated syndicated credit facilities; provided that any comparable or successor rate shall be  applied by Agent, if administratively feasible, in a manner consistent with market practice. (b) Laws Affecting SOFR Availability. If, after the date hereof, the introduction  of, or any change in, any applicable law or regulation or any change in the interpretation or  administration thereof by any Governmental Authority, central bank or comparable agency charged  with the interpretation or administration thereof, or compliance by any Lender (or any of their  respective lending offices) with any request or directive (whether or not having the force of law) of  any such Governmental Authority, central bank or comparable agency, shall make it unlawful or  impossible for any Lender (or any of their respective lending offices) to determine or charge interest  based upon SOFR or Term SOFR, such Lender shall promptly give notice thereof to Agent and  Agent shall promptly give notice to Borrowers and the other Lenders. Thereafter, until Agent  notifies the Borrower that such circumstances no longer exist or until such time as a Benchmark  Replacement has been determined pursuant to clause (c) below, Agent may select a replacement  index rate and spread adjustment in good faith and in its commercially reasonable discretion giving  due consideration to (i) any selection or recommendation of a replacement benchmark rate or the  mechanism for determining such a rate by the Relevant Governmental Body or (ii) any evolving or  then-prevailing market convention for determining a benchmark rate as a replacement to the then-  current Benchmark for Dollar-denominated syndicated credit facilities; provided that any  comparable or successor rate shall be applied by Agent, if administratively feasible, in a manner  consistent with market practice.

  

  

  116549.01103/127129470v.6 (c) Benchmark Replacement Setting. (i)	Benchmark Replacement. Notwithstanding anything to the contrary herein or in any  other Credit  Document, upon the occurrence of a Benchmark Transition Event, Agent and  Borrowers may amend this Agreement to replace the then-current Benchmark with a Benchmark  Replacement. Any such amendment with respect to a Benchmark Transition Event will become  effective at 5:00 p.m. on the fifth (5th) Business Day after Agent has posted such proposed  amendment to all affected Lenders and Borrowers so long as Agent has not received, by such time,  written notice of objection to such amendment from Lenders comprising the Required Lenders. No  replacement of a Benchmark with a Benchmark Replacement pursuant to this Section 2.11(c)(i)(A)  will occur prior to the applicable Benchmark Transition Start Date. No Hedge Agreement shall be deemed to be a “Credit  Document” for purposes of this Section 2.11(c). Benchmark Replacement Conforming Changes. In connection with  the use, administration, adoption or implementation of a Benchmark Replacement, Agent will have  the right to make Conforming Changes from time to time and, notwithstanding anything to the  contrary herein or in any other Credit Document, any amendments implementing such Conform ing  Changes will become effective without any further action or consent of any other party to this  Agreement or any other Credit Document. Notices; Standards for Decisions and Determinations. Agent will  promptly notify Borrowers and Lenders of (A) the implementation of any Benchmark Replacement  and (B) the effectiveness of any Conforming Changes in connection with the use, administration,  adoption or implementation of a Benchmark Replacement. Agent will promptly notify Borrowers  of the removal or reinstatement of any tenor of a Benchmark pursuant to Section 2.11(c)(iv). Any  determination, decision or election that may be made by Agent or, if applicable, any Lender (or  group of Lenders) pursuant to this Section 2.11(c), including any determination with respect to a  tenor, rate or adjustment or of the occurrence or non-occurrence of an event, circumstance or date  and any decision to take or refrain from taking any action or any selection, will be conclusive and  binding absent manifest error and may be made in its or their sole discretion and without consent  from any other party to this Agreement or any other Credit Document, except, in each case, as  expressly required pursuant to this Section 2.11(c). Unavailability of Tenor of Benchmark. Notwithstanding anything to  the contrary herein or in any other Credit Document, at any time (including in connection with the  implementation of a Benchmark Replacement), (A) if the then-current Benchmark is a term rate  (including the Term SOFR Reference Rate) and either (1) any tenor for such Benchmark is not  displayed on a screen or other information service that publishes such rate from time to time as  selected by Agent in its reasonable discretion or (2) the administrator of such Benchmark or the  regulatory supervisor for the administrator of such Benchmark has provided a public statement or  publication of information announcing that any tenor for such Benchmark is not or will not be  representative or in compliance with or aligned with the International Organization of Securities  Commissions (IOSCO) Principles for Financial Benchmarks, then Agent may modify the definition  of “Interest Period” (or any similar or analogous definition) for any Benchmark settings at or after

  

  

  116549.01103/127129470v.6 such time to remove such unavailable, non-representative, non-compliant or non-aligned tenor and (B) if a tenor that was removed pursuant to clause (A) above either (1) is subsequently displayed on a  screen or information service for a Benchmark (including a Benchmark Replacement) or (2) is not,  or is no longer, subject to an announcement that it is not or will not be representative or in  compliance with or aligned with the International Organization of Securities Commissions (IOSCO)  Principles for Financial Benchmarks for a Benchmark (including a Benchmark Replacement), then  Agent may modify the definition of “Interest Period” (or any similar or analogous definition) for all  Benchmark settings at or after such time to reinstate such previously removed tenor. ARTICLE 3  SECURITY Section 3.1 Security Interest. To secure the payment and performance of the  Obligations, each Borrower hereby grants to Agent, for the benefit of Lenders, Issuing Bank and  Bank Product Providers, a continuing general Lien on and a continuing security interest in all of the  Collateral, wherever located, whether now owned or hereafter acquired, existing or created, together  with all replacements and substitutions therefor, and the cash and non-cash proceeds thereof,  subject to Permitted Liens. The Liens and security interests of Agent in the Collateral shall be first  and prior perfected Liens and security interests, subject only to Permitted Liens, and may be retained  by Agent until all of the Obligations have been paid in full and the Commitments have expired or  otherwise has been terminated. Section 3.2 Financing Statements. Agent is hereby authorized by each Borrower to file  any financing statements  covering the Collateral or any amendment adding collateral to any  financing statement or an amendment that adds a debtor to a financing statement, in each case  whether or not a Borrower’s signature appears thereon. Borrowers agree to comply with the  requirements of all state and federal laws and requests of Agent in order for Agent to have and  maintain a valid and perfected first security interest in the Collateral. Section 3.3 Stamping of Receivables. All Receivables of Borrowers shall be stamped and  assigned to Agent as follows to evidence the assignment to Agent: The within instrument or agreement is pledged as collateral to Wells  Fargo Bank, N.A. (together with its successors and assigns), as agent  for various financial institutions. Borrowers shall (a) upon request of Agent during the continuance of an Event of Default, deliver to  a Custodian under a Custodian Agreement (in form and content reasonably acceptable to Agent), as  the bailee and designee of Agent, the Collateral and all Documents and Instruments relating to  Collateral, (b) upon request of Agent during the continuance of an Event of Default, deliver to  Agent or its designee the Collateral; and (c) execute and deliver to Agent, for the benefit of Lenders,  such assignments, endorsements and allonges to promissory notes in form satisfactory to Agent,  and such additional agreements, documents or instruments as Agent may, from time to time, require  to evidence, perfect and continue to perfect Agent’s liens and security interests granted hereunder.  Agent may in its sole discretion record or file any such document, instrument or agreement,  including, without  limitation, this Agreement, as it may from time to time deem desirable.  Commencing sixty (60) after the date of this Agreement (or such later date agreed to by Agent),  Borrowers shall store all documentation evidencing the Receivables and certificates of titles in  fireproof filing cabinets on the premises of Borrowers and all such documentation and related forms

  

  

  44 116549.01103/127129470v.6 and disclosures shall be scanned and images accessible in the GOLDPoint servicing system. Section 3.4 Collections. Notwithstanding the assignment (but not in any way to be  deemed or construed to impair or affect the security interest granted hereunder) of the Collateral by  Borrowers to Agent, until notice to the contrary is provided to Borrowers by Agent during the  continuance of an Event of Default, Borrowers may service, manage, enforce and receive  Collections on Receivables for the account of Agent. Borrowers shall have no power to make any  material allowance or credit to any obligor outside the ordinary course of Borrowers’ business  without Agent’s prior written consent. Upon notice by Agent at any time during the continuance of  an Event of Default, Agent may require Borrowers to endorse and deposit all Collections within one (1) Business Day of receipt thereof and in the original form received (except for the endorsement of  Borrowers, if necessary, to enable the collection of instruments for the payment of money, which  endorsements Borrowers hereby agree to make) in the deposit account maintained with Agent or  such other deposit account maintained with such depository as Agent may from time to time  specify, which is subject to a Control Agreement. During the continuance of an Event of Default  Agent may also require Borrowers to enter into an appropriate lockbox agreement with Agent or  another financial institution acceptable to Agent, in form and content acceptable to Agent, with  respect to opening and maintaining a lock box arrangement for the Collections. Section 3.5 (a) Additional Rights of Agent; Power of Attorney. In addition to all the rights granted to Agent hereunder, Agent shall have the right, at any time following the occurrence of a Default or an Event of Default, to notify the  obligors and account debtors of all Collateral to make payment thereon directly to Agent, and to  take control of the cash and non-cash proceeds of such Collateral; provided, however, that once  such notification is given to such obligors, it shall not be vitiated by a subsequent cure of such  Event of Default without the prior written consent of Agent. (b) Each Borrower irrevocably appoints Agent its true and lawful attorney  during the continuance of an Event of Default, with power of substitution, to act in the name of  such Borrower or in the name of Agent or otherwise, for the use and benefit of Agent, but at the  cost and expense of Borrowers, without notice to Borrowers: to demand, collect, receipt for and  give renewals, extensions, discharges and releases of any Collateral; to institute and to prosecute  legal and equitable proceedings to realize upon any Collateral; to settle, compromise, or adjust  claims; to take possession and control in any manner and in any place of any cash or non-cash  items of payment or proceeds thereof; to endorse the name of such Borrower upon any notes,  checks, drafts, money orders, or other evidences of payment of Collateral; to sign such Borrower’s  name on any instruments or documents relating to any of the Collateral or on drafts against  account debtors; to do all other acts and things necessary, in Agent’s sole judgment, to effect  collection of the Collateral or protect its security interest in the Collateral; and generally to sell in  whole or in part for cash, credit or property to others or to itself at any public or private sale,  assign, make any agreement with respect to or otherwise deal with the Collateral as fully and  completely as though Agent were the absolute owner thereof for all purposes, except to the extent  limited by any applicable laws and subject to any requirement of notice to Borrowers or other  Persons under applicable laws. Section  3.6	Additional Collateral Provisions. Borrowers will defend the Collateral against  all Liens (other than Permitted Liens), and claims and demands of all Persons at any time claiming

  

  

  116549.01103/127129470v.6 the same or any interest therein. Borrowers agree to comply with the requirements of all state and  federal laws and requests of Agent in order for Agent to have and maintain a valid and perfected  first security interest and/or mortgage Lien in the Collateral including, without limitation, executing  such documents as Agent may require to obtain control over all Deposit Accounts, Letter-of-Credit  Rights and Investment Property, as applicable. Furthermore, Borrowers shall promptly notify Agent  in writing upon incurring or otherwise obtaining a Commercial Tort Claim against any third party,  and, upon the request of Agent, shall promptly enter into such security agreements and do such  other things or acts deemed appropriate by Agent to give Agent a fully valid, perfected and  enforceable security interest in any such Commercial Tort Claim. Collateral shall include any such  Commercial Tort Claim, and the authorization given by Borrowers to Agent in Section 3.2 of this  Agreement to file financing statements covering the Collateral shall include the authorization to file  financing statements with respect to any such Commercial Tort Claim. Borrowers warrant and  represent that they do not own any Commercial Tort Claims as of the date hereof. ARTICLE 4  REPRESENTATIONS AND WARRANTIES Each Borrower represents and warrants and shall continue to represent and warrant to  Agent and Lenders until the Obligations hereunder have been paid in full and the Commitments  have expired or otherwise have been terminated as follows: Section 4.1  generally: (a) Representations  and  Warranties   as  to  Receivables.	As to the Receivables Each Borrower or, where a Borrower was not the original lender, to the best of such Borrower’s knowledge, the original lender or seller had full power and authority to make  the loans (or other extensions of credit) evidenced by the Receivables and all such Receivables and  all Books and Records related thereto are genuine, based on enforceable contracts and are in all  respects what they purport to be; All Receivables have been duly authorized, executed, delivered by the parties  whose names appear thereon and are valid and enforceable in accordance with their terms (except  as enforcement may be limited by equitable principles or by bankruptcy, insolvency,  reorganization, moratorium, or similar laws relating to or limiting creditors’ rights generally);  constitute chattel paper; any chattels described in any Receivable are and will be accurately  described and are and will be in the possession of the parties granting the security interes t therein;  and any applicable filing, recording or lien notation law with respect to any collateral securing a  Receivable will have been complied with to the extent such filing or recording is necessary under  applicable law to create or perfect such Borrower’s security interest in such collateral consistent  with its present policy. The form and content of all Receivables and the security related thereto and  the transactions from which they arose comply in all material respects (and in any event in all  respects necessary to maintain and ensure the validity and enforceability of the Receivables) with  any and all applicable laws, rules and regulations, including without limitation, the Consumer  Finance Laws; The original amount and unpaid balance of each Receivable on Borrowers’

  

  

  116549.01103/127129470v.6 Books and Records and on any statement or schedule delivered to Agent and/or any Lender is  and will be the true and correct amount actually owing to a Borrower as of the date each  Receivable is pledged to Agent, is not subject to any claim of reduction, counterclaim, set-off,  recoupment or any other claim, allowance or adjustment; and no Borrower has any knowledge of  any fact which would impair the validity or collectability of any Receivables; All security agreements, title retention instruments, mortgages and other  documents and instruments which are security for Receivables contain a correct and sufficient  description of the real or personal property covered thereby, and, subject to the rights of Agent  hereunder and the interests of Borrowers as holder of such security agreements, title retention  instruments or mortgages or other documents or instruments, are or create security interests and  Liens; Borrowers have made an adequate credit investigation of the obligor of each  Receivable and has determined that his or her credit is satisfactory and meets the standards  generally observed by prudent finance companies operating in the subprime market and is in  conformity in all material respects with Borrowers’ policies and standards; and A Borrower has good and valid indefeasible title to the Receivables, free and  clear of all prior assignments, claims, liens, encumbrances and security interests, and has the right  to pledge and grant Agent, for the benefit of Lenders, a first priority security interest in the same,  in the manner provided in this Agreement. Section 4.2 Organization and Good Standing. Each Borrower is duly organized and  validly existing in good standing under the laws of the state identified on Schedule 4.2 attached  hereto and made part hereof and has the power and authority to engage in the business it conducts  and is qualified and in good standing in those states wherein the nature of business or property  owned by it requires such qualification, is not required to be qualified in any other state; or if not so  qualified, no material adverse effect would result therefrom. The organizational number assigned to  each Borrower by the state of its organization is set forth on Schedule 4.2 attached hereto and made  part hereof. Section 4.3 Perfection of Security Interest. Upon filing of financing statements with the  Secretary of State of the state of each Borrower’s jurisdiction of organization describing the  Collateral and listing each Borrower as debtor and Agent as secured party, Agent will have a first  priority perfected security interest in the Collateral which can be perfected by the filing of a UCC  financing statement superior in right of interest to any other Person (including, without limitation,  purchasers from, or creditors or receivers or a trustee in bankruptcy of, Borrowers). Section 4.4 No Violations. The making and performance of the Credit Documents do  not and will not violate any provisions of any law, rule, regulation, judgment, order, writ, decree,  determination or award or breach any provisions of the certificate of formation, operating  agreement or other organizational documents of any Borrower, or constitute a default or result in  the creation or imposition of any security interest in, or lien or encumbrance upon, any assets of any  Borrower (immediately or with the passage of time or with the giving of notice and passage of time,  or both) under any other contract, agreement, indenture or instrument to which a Borrower is a  party or by which a Borrower or its property is bound with failure to comply resulting in a Material  Adverse Change.

  

  

  116549.01103/127129470v.6 Section 4.5 (a) Power and Authority. Each Borrower has full power and authority under the law of the state of its organization and under its organizational documents to enter into, execute and deliver and  perform the Credit Documents; to borrow monies hereunder, to incur the obligations herein  provided for and to pledge and grant to Agent, pursuant to Section 3.1 of this Agreement, a  security interest in the Collateral; and (b)	All actions (corporate  or otherwise) necessary or appropriate for each Borrower’s execution, delivery and performance of the Credit Documents have been taken. Section 4.6 Validity of Agreements. Each of the Credit Documents is, or when delivered  to Agent will be, duly executed and constitute valid and legally binding obligations of each Borrower  enforceable against such Borrower in accordance with their respective terms, except as enforcement  may be limited by equitable principles or by bankruptcy, insolvency, reorganization, moratorium, or  similar laws relating to or limiting creditors’ rights generally. Section 4.7 Litigation. There is no order, notice, claim, action, suit, litigation, proceeding  or investigation pending or, threatened against or affecting any Borrower where the amount in  controversy is in excess of Fifty Thousand Dollars ($50,000), whether or not fully covered by  insurance, except as identified and described on Schedule 4.7 attached hereto and made part hereof. Section 4.8 Compliance. Each Borrower is in compliance in all material respects with all  applicable laws and regulations, federal, state and local (including all Consumer Finance Laws  (including being in compliance with privacy notice requirements under the Gramm-Leach-Bliley  Act)), material to the conduct of its business and operations; each Borrower possesses all the  franchises, permits, licenses, certificates of compliance and approval and grants of authority  necessary or required in the conduct of its business and the same are valid, binding, enforceable and  subsisting without any defaults thereunder or enforceable adverse limitations thereon, and are not  subject to any proceedings  or claims opposing the issuance, development or use thereof or  contesting the validity thereof; and no approvals, waivers or consents, governmental (federal, state  or local) or non-governmental, under the terms of contracts or otherwise, are required by reason of  or in connection with such Borrower’s execution and performance of the Credit Documents. Section 4.9 (a) Accuracy of Information; Full Disclosure. All financial statements, including any related schedules and notes appended thereto, delivered and to be delivered to Agent and/or any Lender pursuant to this Agreement  have been or will be prepared in accordance with GAAP and do and will fairly present the  financial condition of each Borrower and its Subsidiaries, if any, on the dates thereof and results of  operations for the periods covered thereby and discloses all liabilities (including contingent  liabilities) of any kind of such Borrower. Since the date of the most recent financial statements furnished to Agent  and/or any Lender, there has not been any Material Adverse Change. All financial statements and other statements, documents and information  furnished by Borrowers, or any of them, to Agent and/or any Lender in connection with this  Agreement and the Notes and the transactions contemplated hereunder do not and will not

  

  

  116549.01103/127129470v.6 contain any untrue statement of material fact or omit to state a material fact necessary in order to  make the statements contained therein not misleading. Each Borrower has disclosed to Agent in  writing any and all facts which materially and adversely affect the business, properties, operations  or condition, financial or otherwise, of such Borrower, or such Borrower’s ability to perform its  obligations under this Agreement and the Notes. Section 4.10 Taxes. Each Borrower has filed and will file all tax returns which are  required to be filed and has paid or will pay when due all taxes, license and other fees with respect to  the Collateral and the business of such Borrower except taxes contested pursuant to a Permitted  Protest. Section 4.11 Indebtedness. No Borrower has  presently outstanding indebtedness or  obligations including contingent obligations and obligations under leases of property from others,  except Permitted Indebtedness. Section 4.12 Investments. As of the date of this Agreement, no Borrower has direct or  indirect Subsidiaries or Affiliates or Investments (other than Consumer Purpose Loans), except as  described in Schedule 4.12 attached hereto and made part hereof. Section 4.13 ERISA. Each Borrower and any Subsidiary, and each member of the  controlled group of corporations (as such term “controlled group of corporations” is defined in  Section 1563 of the Code) of which such Borrower is a member, is in compliance in all material  respects with all applicable provisions of ERISA and the regulations promulgated thereunder. No  reportable event, as such term (hereinafter called a “Reportable Event”) is defined in Title IV of  ERISA, has occurred with respect to, nor has there been terminated, any Plan maintained for  employees of any Borrower,  or any Subsidiary, or any member of the controlled group of  corporations of which a Borrower is a member. Section 4.14 Environmental Condition. No Borrower’s nor any of their Subsidiaries’  Properties has ever been used by a Borrower, a Subsidiary or by previous owners or operators in the  disposal of, or to produce, store, handle, treat, release, or transport, any Hazardous Materials, where  such disposal, production, storage, handling, treatment, release or transport was in violation, in any  material respect, of any applicable Environmental Law, (b) no Borrower’s nor any of their  Subsidiaries’ Properties has ever been designated or identified in any manner pursuant to any  environmental protection statute as a Hazardous Materials disposal site, (c) no Borrower nor any of  their Subsidiaries has received notice that a Lien arising under any Environmental Law has attached  to any revenues or to any real property owned or operated by a Borrower or their Subsidiaries, and (d) no Borrower nor any of their Subsidiaries nor any of their respective facilities or operations is  subject to any outstanding written order, consent decree, or settlement agreement with any Person  relating to any Environmental Law or environmental liability. Section 4.15 Solvency. Each Borrower is, and after receipt and application of the first  Advance will be, solvent such that (a) the fair value of its assets (including without limitation the fair  salable value of such Borrower’s Intangible Assets) is greater than the total amount of its liabilities,  including without limitation, contingent liabilities, (b) the present fair salable value of its assets  (including without limitation the fair salable value of its Intangible Assets) is not less than the  amount that will be required to pay the probable liability on its debts as they become absolute and  matured, and (c) it is able to realize upon its assets and pay its debts and other liabilities, contingent

  

  

  116549.01103/127129470v.6 obligations and other commitments as they mature in the normal course of business. No Borrower  intends to, or believes that it will, incur debts or liabilities beyond its ability to pay as such debts and  liabilities mature, and is not engaged in a business or transaction, or about to engage in a business or  transaction, for which its property would constitute unreasonably small capital after giving due  consideration to the prevailing practice and industry in which it is engaged. For purposes of this  Section 4.15, in computing the amount of contingent liabilities at any time, it is intended that such  liabilities will be computed at the amount which, in light of all the facts and circumstances existing at  such time, represents the amount that reasonably can be expected to become an actual matured  liability. Section 4.16 Business Location. Each Borrower’s address set forth on Schedule 4.16  attached hereto and made part hereof is the location of such Borrower’s principal place of business  and such address, together with the addresses set forth on Schedule 4.16 attached hereto and made  part hereof, is the only location where such Borrower keeps its records concerning the Collateral.  The location of all other places of business of each Borrower and the names in which each  Borrower conducts business at each such location are set forth in Schedule 4.16 attached hereto and  made part hereof. Section 4.17 Equity Interests. All of the issued and outstanding equity interests or other  ownership interest of each Borrower is owned as described on Schedule 4.17 attached hereto and  made part hereof, and all such ownership interests are fully paid and non-assessable. Section 4.18 Deposit Accounts. All of each Borrower’s Deposit Accounts are set forth on  Schedule 4.18 attached hereto and made part hereof, including, with respect to each bank (a) the  name and address of such Person, and (b) the account numbers of the Deposit Accounts maintained  with such Person. Section 4.19 No Extension of Credit for Securities. No Borrower is, nor will it be,  engaged principally or as one of its important activities in the business of extending credit for the  purpose of purchasing or carrying or trading in any margin stocks or margin securities (within the  meaning of Regulations T, U and X of the Board of Governors of the Federal Reserve System) or  other securities, and no part of the proceeds of the Loan hereunder has been or will be applied for  the purpose of purchasing or carrying or trading in any such stock or securities or of refinancing any  credit previously extended, or of extending credit to others, for the purpose of purchasing or  carrying any such margin stock, margin securities or other securities in contravention of such  Regulations. Section 4.20 Sanctions. (a) No member of the Borrowing Group is a Sanctioned Target; (b) no member of the Borrowing Group is owned or controlled by, or is acting or purporting to act  for or on behalf of, directly or indirectly, a Sanctioned Target; (c) each member of the Borrowing  Group has instituted, maintains and complies with policies, procedures and controls reasonably  designed to assure compliance with Sanctions; and (d) to the best of Borrowers’ knowledge, after  due care and inquiry, no member of the Borrowing Group is under investigation for an alleged  violation of Sanction(s) by a Governmental Authority that enforces Sanctions. Borrowers shall  notify Agent in writing not more than one (1) Business Day after first becoming aware of any breach  of this Section. Section 4.21 Anti-Money Laundering and Anti-Corruption Laws. (a) Each member of the  Borrowing Group has instituted, maintains and complies with policies, procedures and controls

  

  

  (e)	Incumbency Certificates. A certificate of each Borrower’s secretary (or other 116549.01103/127129470v.6 reasonably designed to assure compliance with Anti-Money Laundering Laws and Anti-Corruption  Laws; and (b) to the best of Borrowers’ knowledge, after due care and inquiry, no member of the  Borrowing Group is under investigation for an alleged violation of Anti-Money Laundering Laws or  Anti-Corruption Laws by a Governmental Authority that enforces such laws. Section 4.22 PPP Debt. Borrowers have timely applied for and requested forgiveness of  the PPP Debt in compliance with the Cares Act, the implementing regulations of the Cares Act and  the PPP Debt loan documents. Section 4.23 Beneficial Ownership Certification. As of the date of this Agreement, the  information included in the Beneficial Ownership Certification is true and correct in all respects. ARTICLE 5  CONDITIONS Section 5.1 Documents to be Delivered to Agent Prior to Effectiveness. Prior to the  effectiveness of this Agreement, Borrowers shall deliver or cause to be delivered to Agent (all  documents, instruments, agreements and other deliverables to be in form and substance satisfactory  to Agent in its sole and absolute discretion): Credit Documents. This Agreement and all other Credit Documents duly  and properly executed by the parties thereto; Searches. Uniform Commercial Code, tax and judgment searches against  each Borrower in those offices and jurisdictions as Agent shall reasonably request which shall  show that no financing statement, Liens, assignments or other filings have been filed or remain in  effect against each Borrower or any Collateral except for Permitted Liens and those other Liens,  financing statements, assignments or other filings with respect to which the secured party or  existing lender (i) has delivered to Agent Uniform Commercial Code termination statements or  other documentation evidencing the termination of its Liens and security interests in Collateral, has agreed in writing to release or terminate its Lien and security interest in Collateral upon  receipt of proceeds of the Advances or (iii) has delivered a Subordination Agreement to Agent  with respect to its Lien and security interest in the Collateral; Organizational Documents. A copy of each Borrower’s (i) organization  documents, certified as of a recent date by such Borrower’s secretary (or other appropriate  officer), and (ii) bylaws, partnership agreement or operating agreement, as applicable, certified as  of a recent date by such Borrower’s secretary (or other appropriate officer); together with  certificates of good standing existence or fact in such Borrower’s state of organization and in each  jurisdiction in which such Borrower is qualified to do business, each dated within thirty (30) days  from the date of this Agreement; Authorization Documents. A certified copy  of resolutions or written  consents of each Borrower’s Board of Directors authorizing the execution, delivery and  performance of this Agreement and all other Credit Documents, the pledge of the Collateral to  Agent as security for the Obligations and designating the appropriate officers to execute and  deliver this Agreement and all other Credit Documents;

  

  

  (b)	Representations and Warranties. The representations and warranties of 116549.01103/127129470v.6 appropriate officer) as to the incumbency and signatures of officers of such Borrower signing this  Agreement and all other Credit Documents; Opinion of Counsel. Agent shall have received a corporate, enforceability,  no conflicts, attachment and perfection opinion, from counsel acceptable to Agent in its sole  discretion; Officer’s Certificate. A certificate, dated the date of this Agreement, signed  by the Chief Executive Officer, President or Chief Financial Officer of each Borrower certifying  that (i) all representations and warranties set forth in this Agreement are true and correct as of the  date hereof and (ii) no Default or Event of Default hereunder has occurred; Availability Statement. A completed Availability Statement; Acknowledgment  and  Waiver  Agreement.	Acknowledgment and Waiver  Agreements duly executed by the parties thereto; Due Diligence. Completion of Agent’s due diligence of Borrowers including  due diligence with respect to Borrowers’ owners, key operators, and key management personnel  with results satisfactory to Agent; Financial Information. A copy of each of the reports required pursuant to  Section 6.1 of this Agreement for the period most recently ended prior to the date hereof; Subordination  Documents.	Copies of the documents, instruments and  writings evidencing the Subordinated Debt; Insurance. Evidence of insurance issued by a reputable carrier with respect  to each Borrower’s fire, casualty, liability, and other insurance covering its Property, and any key  owner/operator insurance; Data Tape. A data tape submitted in a format and consisting of data  elements acceptable to Agent as of the most recent month end; Closing Fee. Payment to Agent of the Closing Fee in immediately available funds; Closing Agenda. Such other documents, information and reports listed on  the Closing Agenda; and Other Documents.	Such additional documents as Agent reasonably may request. Section  5.2	Conditions   to all  Advances.	The obligation of Lenders to make each  Advance hereunder and Issuing Bank to issue each Letter of Credit is conditioned upon: (a)  Advance Requirements. Borrowers’ satisfaction of each of the conditions  specified in Sections 2.1, 2.2 and 2.3 of this Agreement, as applicable;

  

  

  report, and also such other documentation and information promptly after request therefor by 116549.01103/127129470v.6 Borrowers contained in this Agreement and in all other Credit Documents shall be true and  correct in all material respects (except that such materiality qualifier shall not be applicable to any  representations and warranties that already are qualified or modified by materiality in the text  thereof) on and as of the date of such extension of credit, as though made on and as of such date  (except to the extent that such representations and warranties relate solely to an earlier date); and (c)  Event of Default or Default. No Default or Event of Default shall have  occurred and be continuing on the date of such extension of credit, nor shall either result from the  making thereof. ARTICLE 6  AFFIRMATIVE COVENANTS In addition to the covenants contained in Article 3 and 4 of this Agreement relating to the  Collateral, until all Obligations have been paid in full and the Commitments have expired or  otherwise have been terminated, each Borrower covenants and agrees as follows: Section 6.1 Reporting Requirements. Borrowers will deliver to Agent (which Agent will  thereafter deliver to Lenders): within twenty (20) days after the end of each month, company prepared  consolidated financial statements of Parent’s and its consolidated Subsidiaries’ businesses for such  previous month, consisting of a balance sheet, income statement, and schedules as of the end of  such month, all in reasonable detail, prepared in accordance with GAAP consistently applied,  subject to year-end adjustments, together with a covenant compliance certificate; within forty five (45) days after the end of each fiscal quarter, company  prepared consolidated financial statements of Parent’s and its consolidated Subsidiaries’ businesses  for such previous fiscal quarter, consisting of a balance sheet, income statement, and schedules as  of the end of such fiscal quarter, all in reasonable detail, prepared in accordance with GAAP  consistently applied, subject to year-end adjustments; within one hundred twenty (120) days after the close of each fiscal year,  consolidated financial statements of Parent and its consolidated Subsidiaries for the fiscal year  then ended consisting of a balance sheet, income statement, and statement of cash flow of Parent  and its consolidated Subsidiaries as of the end of such fiscal year, all in reasonable detail, including  all supporting schedules and footnotes, prepared in accordance with GAAP consistently applied,  and shall be audited and certified without qualification by an independent certified public  accountant selected by Parent and acceptable to Agent and accompanied by the unqualified  opinion of such accountant and an Annual Compliance Certificate; and cause Agent to be  furnished at the time of completion thereof, a copy of any management letter for Parent and its  consolidated prepared by such certified public accounting firm; within twenty (20) days after the end of each month, for the month then  ending, reports in form and substance satisfactory to Agent, setting forth an aging of Receivables,  an Availability Statement, detailed delinquency report books and records consisting of data tape  information (in a format and consisting of data elements acceptable to Agent), repossession

  

  

  Governmental Authorities, and the provisions and requirements of all franchises, permits, 116549.01103/127129470v.6 Agent; within forty five (45) days after the end of each fiscal quarter, for the fiscal  quarter then ending, a static pool report in form and substance satisfactory to Agent; upon request by Agent from time to time, copies of Borrowers’ and  Guarantors’ income tax returns (including any schedules attached thereto) filed with the Internal  Revenue Service promptly after the filing thereof with the Internal Revenue Service; and upon request by Agent from time to time, such other financial information  and reports concerning Borrowers, the Collateral and the operations, businesses, affairs, prospects  and financial condition of Borrowers and their Subsidiaries (including Availability Statements) as  Agent may reasonably request. Section 6.2 Books and Records. Borrowers will keep accurate and complete Books and  Records concerning the Collateral and all transactions with respect thereto consistent with sound  business practices and will comply with Agent’s reasonable requirements, from time to time in  effect, including those concerning the submission of reports on all items of Collateral. Agent and  each of its duly authorized representatives or agents shall have the right at any time and from time to  time during regular business hours, at Borrowers’ sole cost and expense, to inspect, audit, and copy  the Books and Records and Collateral of Borrowers, inspect, audit and conduct appraisals of any  Collateral and conduct clients reviews and field examinations. Section 6.3  covenants: (a) Financial   Covenants.	Borrowers  shall maintain the following financial EBITDA Ratio. An EBITDA Ratio of not less than 1.50 to 1.0 as of the end of each calendar month. Debt to Adjusted Tangible Net Worth Ratio. A Debt to Adjusted Tangible  Net Worth Ratio of not more than 3.00 to 1.0 as of the end of each calendar month. Collateral Performance Indicator. A Collateral Performance Indicator of less  than or equal to twenty four percent (24%) as of the end of each calendar month. The determination of the financial covenants contained herein shall exclude any asset, liability,  expense or income associated with Statement of Financial Accounting Standard No. 133. Section 6.4 (a) Compliance With Applicable Law. All Receivables shall comply in all material respects with all applicable federal, state and local laws, rules, regulations, proclamations, statutes, orders and interpretations  at the time when Agent obtains any interest therein pursuant to this Agreement. (b) Each Borrower shall comply in all material respects with all local, state and  federal laws and regulations applicable to its business including without limitation the Consumer  Finance Laws, (including complying with privacy notice requirements under the Gramm-Leach-  Bliley Act), Anti-Terrorism Laws, Environmental Law, and all laws and regulations of the

  

  

  Section  6.8	Notice Regarding Any Plan. Borrowers shall furnish to Agent: 116549.01103/127129470v.6 certificates of compliance and approval issued by regulatory authorities and other like grants of  authority held by Borrowers; and notify Agent immediately (and in detail) of any actual or alleged  failure to comply with or perform, breach, violation or default under any such laws or regulations  or under the terms of any of such franchises or licenses, grants of authority, or of the occurrence  or existence of any facts or circumstances which with the passage of time, the giving of notice or  otherwise could create such a breach, violation or default or could occasion the termination of any  of such franchises or grants of authority. With respect to Environmental Law, Borrowers shall notify Agent when, in  connection with the conduct of Borrowers’ business or operations, any Person (including, without  limitation, any federal, state or local agency) provides oral or written notification to any Borrower  or any Subsidiary with regard to an actual or imminently threatened removal, spill, release or  discharge of Hazardous Materials; and notify Agent immediately (and in detail) upon the receipt by  any Borrower of an assertion of liability under Environmental Law, of any actual or alleged failure  to comply with or perform, breach, violation or default under any such statutes or regulations or  of the occurrence or existence of any facts, events or circumstances which with the passage of  time, the giving of notice, or both, could create such a breach, violation or default. In addition to the foregoing, each Borrower shall, and each Borrower shall  ensure that each member of the Borrowing Group will, comply with Sanctions, Anti-Money  Laundering Laws, and Anti-Corruption Laws. Section 6.5 Notice of Certain Events. Borrowers will promptly notify Agent of (a) the  occurrence of any Default or Event of Default or (b) any change in the information provided in the  Beneficial Ownership Certification that would result in a change to the list of beneficial owners  identified in such certification. Section 6.6 Existence, Properties. Borrowers will (a) do or cause to be done all things  necessary to preserve and keep in full force and effect its existence, rights and franchises and comply  with all laws applicable to it; (b) maintain, preserve and protect all franchises, licenses and trade  names and preserve all the remainder of its property used or useful in the conduct of its business;  and (c) maintain in effect insurance with responsible and reputable insurance companies  or  associations in such amounts and covering such risks as shall be consistent with prudent business  practices in the industry and reasonably acceptable to Agent and furnish to Agent from time to time,  upon their request therefor, evidence of same. Section 6.7 Payment of Indebtedness; Taxes. Borrowers  will (a) pay all of their  indebtedness and obligations promptly and in accordance with normal terms; and (b) pay and  discharge or cause to be paid and discharged promptly all taxes, assessments, and governmental  charges or levies imposed upon it or upon its income and profits, or upon any of its property, real,  personal or mixed, or upon any part thereof, before the same shall become in default, as well as all  lawful claims for labor, materials and supplies or otherwise which, if unpaid, might become a lien or  charge upon such properties or any part thereof; provided, however, that Borrowers shall not be  required to pay and discharge or to cause to be paid and discharged any such indebtedness, tax,  assessment, charge, levy or claim so long as the validity thereof shall be contested pursuant to a  Permitted Protest.

  

  

  Subsidiaries, such review shall be limited to no more than once per year. Borrowers shall provide 116549.01103/127129470v.6 as soon as possible, and in any event within ten (10) days after any senior  officer of Borrowers know or have reason to know that any Reportable Event has occurred with  respect to any Plan maintained in whole or in part for the employees of a Borrower or any of their  Subsidiaries, a statement of the President or Treasurer of Borrowers setting forth details as to such  Reportable Event and the action which is proposed to be taken with respect thereto, together with  a copy of the notice of such Reportable Event given to the PBGC; and promptly after receipt thereof, a copy of any notice which a Borrower may  receive from the PBGC relating to the intention of a Borrower to terminate any Plan maintained  in whole or in part for the benefit of employees of any Borrower or any of their Subsidiaries or to  appoint a trustee to administer any such Plan. Section 6.9 Litigation, Enforcement Actions and Requests for Information. Borrowers  will promptly notify Agent of (a) any litigation or action instituted or, to Borrowers’ knowledge,  threatened in writing against any Borrower or any of their Subsidiaries, in an amount of Fifty  Thousand Dollars ($50,000) or more as to any separate action or litigation instituted or threatened or  in an aggregate amount of One Hundred Fifty Thousand Dollars ($150,000) or more as to all actions  or litigation instituted or threatened; (b) the entry of any judgment or lien against any property of  Borrower, in an amount of Fifty Thousand Dollars ($50,000) or more as to any separate judgment or  lien entered or in an aggregate amount of One Hundred Fifty Thousand Dollars ($150,000) or more  as to all judgments or liens entered; (c) any enforcement action or investigation instituted or, to  Borrowers’ knowledge, threatened,  against any Borrower or any of their Subsidiaries by any  Governmental Authority, including without limitation any proceeding or action to be commenced  by the filing of a stipulation and consent; (d) receipt by any Borrower or any of their Subsidiaries of  an “Early Warning Notice,” “Notice and Opportunity to Respond and Advise” or “Civil  Investigative Demand” from the Consumer Financial Protection Bureau or similar notice or request  from any other Governmental Authority; or (e) the occurrence of any Regulatory Event. Section 6.10 Business Location, Legal Name and State of Organization. Borrowers shall  notify Agent at least thirty (30) days prior to (a) any proposed change in a Borrower’s principal place  of business, a Borrower’s legal name or a Borrower’s state of organization; (b) any additional places  of business of any Borrower or any Subsidiaries; (c) the change in the names in which a Borrower or  any Subsidiary conducts business at each such location; or (d) the change of a Borrower’s  jurisdiction of organization. Section 6.11 Operations. Borrowers shall maintain satisfactory credit underwriting and  operating standards, including, with respect to each obligor of each Receivable, the completion of an  adequate investigation of such obligor and a determination that the credit history and anticipated  performance of such obligor is and will be satisfactory and meets the standards generally observed  by prudent finance companies operating in the subprime market. Section 6.12 (a) Chattel Paper/Jurisdictions. Upon Agent’s request from time to time, Borrowers shall engage outside legal counsel reasonably acceptable to Agent (at Borrowers’ sole cost and expense) to undertake a  review of Receivable documentation of Borrowers and their Subsidiaries; provided that, in the  absence of any material changes to the Receivable documentation of Borrowers and their

  

  

  56 116549.01103/127129470v.6 Agent with copies of such review within sixty (60) days after each such request with the results of  such documentation review to be acceptable to Agent in all material respects. (b) Borrowers shall promptly (i) notify Agent of either (A) Borrowers or any of  their Subsidiaries conducting business in any new jurisdiction, and (B) Borrowers or any of their  Subsidiaries making any material modifications to its respective Receivable documentation and (ii)  upon the request of Agent, provide Agent a list of jurisdictions in which Borrowers and their  Subsidiaries conduct business and licenses held in each such jurisdiction. Section 6.13 PPP Loan. Borrowers agrees promptly provide to Agent upon Agent’s  request documentation and other information related to the PPP Debt and the forgiveness of such  PPP Debt. Section 6.14 (a) Post-Closing Deliverable. Borrowers shall deliver to Agent: On or before December 5, 2021 (or such later date agreed to by Agent), fully executed Control Agreements for deposit accounts maintained with Wells Fargo and Fifth Third  Bank, National Association. On or before December 5, 2021 (or such later date agreed to by Agent), use  commercially reasonable efforts to deliver Acknowledgment and Waiver Agreements for each of  Borrowers’ leased locations. On or before the first anniversary of the date of this Agreement (or such  later date agreed to by Agent), an updated compliance and regulatory testing and reporting policies  and procedures acceptable to Agent in its reasonable discretion. Section 6.15 Further Assurances. Borrowers shall from time to time execute and deliver  to Agent such other documents and shall take such other action as may be reasonably requested by  Agent in order to implement or effectuate the provisions of, or more fully perfect the rights granted  or intended to be granted by Borrowers to Agent pursuant to the terms of this Agreement and the  other Credit Documents. ARTICLE 7  NEGATIVE COVENANTS Each Borrower covenants and agrees with Agent and Lenders that until all Obligations have  been paid in full and the Commitments have expired or otherwise have been terminated, no  Borrower will do any of the following without the prior written consent of Agent: Section 7.1 Payments to and Transactions with Affiliates. (a) Make any loan, advance,  extension of credit or payment to any Affiliate, officer, employee, member, manager, equity holder  or director of any Borrower or any Affiliate or (b) enter into any other transaction, including,  without limitation, the purchase, sale, lease or exchange of property, or the rendering or any service,  to or with any Affiliate or any equity holder, officer, or employee of any Borrower or any Affiliate  except for Permitted Affiliate Transactions. Section 7.2 Restricted Payments. Make any Restricted Payment, except that (a) Borrower  Agent may make quarterly Distributions so long as (i) no Default or Event of Default exists

  

  

  116549.01103/127129470v.6 immediately prior to and after giving effect to the making of such Distribution, (ii) Excess  Availability is at least twenty percent (20%) immediately after giving effect to the making of such  Distribution and (iii) the aggregate amount of such Distributions in any fiscal year does not exceed  50% of Borrowers’ net income for such fiscal year; and (b) Borrowers may make payments on the  Subordinated Debt to the extent expressly permitted pursuant to the terms of applicable  Subordination Agreement. Section 7.3 Indebtedness. Create, incur, assume, suffer to exist, guarantee, or otherwise  become or remain, directly or indirectly, liable with respect to any Debt, except for Permitted  Indebtedness. Section 7.4 Liens. Create, incur, assume, or suffer to exist, directly or indirectly, any Lien  on or with respect to any of its Property, of any kind, whether now owned or hereafter acquired, or  any income or profits therefrom, except for Permitted Liens. Section 7.5 Disposal of Assets. Convey, sell, lease, license, assign, transfer, or otherwise  dispose of (or enter into an agreement to convey, sell, lease, license, assign, transfer, or otherwise  dispose of) any of Borrowers’ Property, except for the sales in the ordinary course of Borrowers’  business of Receivables that have been charged-off, which are subject to bankruptcy proceedings or  the account debtor with respect to which is a debtor under the Bankruptcy Code or charged-off  deficiency balance Receivables so long as (a) no Default or Event of Default exists immediately prior  to and after giving effect to sale and (b) if required by Agent, such proceeds are paid directly to  Agent for application to the Obligations. Section 7.6 Investments. (a) Directly or indirectly, make or acquire any Investment or  incur any liabilities (including contingent obligations) for or in connection with any Investment other  than Permitted Investments, except that Borrowers may make Investments so long as (i) no Default  or Event of Default exists immediately prior to and after giving effect to the making of such  Investment, (ii) Excess Availability is at least ten percent (10%) immediately after giving effect to the  making of such Investment, (iii) such Investment is in accordance with the Investment Policy, (iv)  the amount of any individual Investment does not exceed Two Million Five Hundred Thousand  Dollars ($2,500,000) and (v) the aggregate amount of all Investments at any one time does not  exceed the lesser of (A) five percent (5.0%) of the total assets of Borrowers and (B) Ten Million  Dollars ($10,000,000), (b) enter into any new business activities or ventures not related to such  Borrower’s business existing as of the date of this Agreement or (c) create or form any Subsidiary. Section 7.7 Restrictions on Fundamental Changes. (a) Enter  into  any merger,  consolidation, reorganization, or recapitalization, or reclassify its Stock, (b) liquidate, wind up, or  dissolve itself or (c) suspend or go out of a substantial portion of its business. Section  7.8	Use of Proceeds. (a)  Use the proceeds of any Advance or other extension of credit made  hereunder for any purpose other than (i) on the date of this Agreement, (A) to repay, in full, the  outstanding principal, accrued interest, and accrued fees and expenses owing under or in  connection with Borrowers’ existing credit facility, and (B) to pay transactional fees, costs, and  expenses incurred in connection with this Agreement, the other Credit Documents, and the  transactions contemplated hereby and thereby, and (ii) thereafter, consistent with the terms and

  

  

  conditions hereof, for their lawful and permitted purposes (including that no part of the proceeds  of the loans made to Borrowers will be used to purchase or carry any margin stock or to extend  credit to others for the purpose of purchasing or carrying any margin stock or for any purpose that  violates the provisions of Regulation T, U or X of the Board of Governors of the United States  Federal Reserve). Use, and shall ensure that each member of the Borrowing Group will not,  directly or indirectly use any of the credit to fund, finance or facilitate any activities, business or  transactions: (i) that are prohibited by Sanctions, (ii) that would be prohibited by U.S. Sanctions if  conducted by a U.S. Person, or (iii) that would be prohibited by Sanctions if conducted by Agent  or any Lender, or any other party hereto. Borrowers shall notify Agent in writing not more than  one (1) Business Day after first becoming aware of any breach of this section. Use, and shall ensure that each member of the Borrowing Group will not,  directly or indirectly use any of the credit to fund, finance or facilitate any activities, business or  transactions that would be prohibited by Anti-Money Laundering Laws or Anti-Corruption Laws. Section 7.9 Ownership and Management. Allow (a) the occurrence of a Change of  Control or (b) any Borrower to be managed by any Person other than Doug Marohn as chief  executive officer or Irina Nashtatik as chief financial officer unless a replacement reasonably  acceptable to Required Lenders has been hired within one hundred twenty (120) days of such  change. Section 7.10 Amendment to Subordinated Debt. Amend or permit the amendment of the  documents and instruments evidencing Subordinated Debt or make any prepayment on account of  such Subordinated Debt which is not otherwise allowed to be made under the subordination  provisions applicable to such Subordinated Debt (including the applicable Subordination  Agreements). Section 7.11 Accounting Methods. Modify or change its fiscal year or its method of  accounting (other than as may be required under GAAP). Section 7.12 Nature of Business. Engage in any business other than the business in which  such Borrower currently is engaged or make any material change in the nature of the financings  which such Borrower extends (including without limiting the generality of the foregoing, matters  relating to size, type, term, nature and dollar amount). Section 7.13 Bulk Purchases. Purchase Receivables for a purchase price (a) exceeding Ten  Dollars ($10,000,000) in any one or related transactions, (b) up to Ten Million Dollars ($10,000,000)  in any one or related transactions if Excess Availability would be less than ten percent (10%)  immediately after giving effect to such  purchase or (c) exceeding Twenty Million Dollars  ($20,000,000) in the aggregate during any twelve (12) month period, in each case without prior  written consent of Agent (which consent may permit or otherwise limit such Receivables inclusion  in the Borrowing Base as determined in Agent’s sole and absolute discretion). Section 7.14 Deposit Accounts. Open or maintain any deposit accounts other than those  listed on Schedule 4.18 attached hereto. Section  7.15	Source of Repayment and Collateral. Fund any repayment of the credit with 116549.01103/127129470v.6

  

  

  events occur: (i) such Person consents to the institution of such Insolvency Proceeding against it, 116549.01103/127129470v.6 proceeds, or provide as collateral any property, that is directly or indirectly derived from any  transaction or activity that is prohibited by Sanctions, Anti-Money Laundering Laws or Anti-  Corruption Laws, or that could otherwise cause Agent or any Lender to be in violation of Sanctions,  Anti-Money Laundering Laws or Anti-Corruption Laws. Section 7.16 PNC Bank Deposit Accounts. Maintain more than One Hundred Fifty  Thousand Dollars ($150,000) in the aggregate in deposit accounts with PNC Bank, National  Association. ARTICLE 8  EVENTS OF DEFAULT Each of the following events shall constitute an Event of Default under this Agreement: Section 8.1 Failure to Make Payments. The failure of Borrowers to make any payment  of principal or interest under this Agreement or any other payment hereunder or in respect of any  other Obligation when due. Section 8.2 Information, Representations and Warranties. If any warranty,  representation, financial statement, certificate or statement made by any Borrower or any Guarantor  in this Agreement or in any other Credit Document or delivered in writing to Agent or any Lender  in connection with this Agreement or any other Credit Document proves to be untrue in any  material respect (except that such materiality qualifier shall not be applicable to any representations  and warranties that already are qualified or modified by materiality in the text thereof) as of the date  of issuance or making or deemed making thereof. Section 8.3 Covenants. The failure of any Borrower to (a) observe, perform, or comply  with Sections 6.4, 6.6, 6.7 or 6.10(b) of this Agreement and such failure continues for thirty (30) days  following the earlier of knowledge or written notice of from Agent or (b) observe, perform or  comply with any other covenant set forth in this Agreement or any other Credit Document. Section 8.4 Collateral. At any time after the grant to Agent of a security interest in or  Lien upon any Collateral, Agent’s interest therein shall for any reason cease to be a valid and  subsisting first priority Lien in favor of Agent and/or a valid and perfected first priority security  interest in and to the Collateral purported to be covered thereby having the priority set forth therein. Section 8.5 Defaults Under Other Agreements. Any default by any Borrower or any  Guarantor under any agreement to which such Borrower or such Guarantor is a party and with  respect to which the amount claimed exceeds One Hundred Thousand Dollars ($100,000), singly or  in the aggregate. Section 8.6 (a) Certain Events. Voluntary   Insolvency   Proceedings.	If an Insolvency Proceeding is commenced by a Borrower, any of their Subsidiaries or a Guarantor. (b)	Involuntary   Insolvency   Proceeding.	If an Insolvency Proceeding is  commenced against a Borrower, any of their Subsidiaries or a Guarantor and any of the following

  

  

  60 116549.01103/127129470v.6 (ii) the petition commencing the Insolvency Proceeding is not timely controverted, (iii) the petition  commencing the Insolvency Proceeding is not dismissed within sixty (60) calendar days of the date  of the filing thereof, (iv) an interim trustee is appointed to take possession of all or any substantial  portion of the properties or assets of, or to operate all or any substantial portion of the business  of, such Person, or (v) an order for relief shall have been issued or entered therein. (c)  Reportable and Other Events. (i) The occurrence of any Reportable Event  which Agent determines in good faith constitutes grounds for the termination of any Plan by the  PBGC or for the appointment by the United States District Court of a trustee to administer any  Plan; (ii) the institution by the PBGC of proceedings to terminate any Plan; or (iii) the failure of  Borrower, or any Subsidiary to meet the minimum funding standards established in Section 412 of  the Code. Section 8.7 Judgments. If one or more judgments, orders, or awards for the payment o f  money involving an aggregate amount of One Hundred Thousand Dollars ($100,000) or more  (except to the extent fully covered (other than to the extent of customary deductibles) by insurance  pursuant to which the insurer has not denied coverage) is entered or filed against a Borrower, any of  their Subsidiaries or a Guarantor, or with respect to any of their respective assets, and either (a)  there is a period of thirty (30) consecutive days at any time after the entry of any such judgment,  order, or award during which (1) the same is not discharged, satisfied, vacated, or bonded pending  appeal, or (2) a stay of enforcement thereof is not in effect, or (b) enforcement proceedings are  commenced upon such judgment, order, or award. Section 8.8 Guarantors. If the obligation of any Guarantor under the Guaranty is limited  or terminated by operation of law or by such Guarantor or any individual Guarantor shall die. Section 8.9 Hedging Agreements. Any default by Borrowers under any Hedging  Agreement. Section 8.10 Credit Documents. The validity or enforceability of any Credit Document  shall at any time for any reason (other than solely as the result of an action or failure to act on the  part of Agent) be declared to be null and void, or a proceeding shall be commenced by a Borrower,  their Subsidiaries or a Guarantor, or by any Governmental Authority having jurisdiction over a  Borrower or its Subsidiaries, seeking to establish the invalidity or unenforceability thereof, or a  Borrower or its Subsidiaries shall deny that such Person has any liability or obligation purported to  be created under any Credit Document. Section 8.11 Level Two Regulatory Event. The occurrence of a Level Two Regulatory  Event which remains unvacated, undischarged, unbonded or unstayed by appeal or otherwise for a  period of sixty (60) days from the date of its entry. ARTICLE 9 REMEDIES OF AGENT AND WAIVER Section 9.1 (a) A gent’s Remedies. Commitments. Upon the occurrence of any Event of Default or Default, Agent may, or at the direction of Required Lenders shall, cease making Advances hereunder and  may cause the Issuing Bank to cease issuing Letters of Credit hereunder. Upon the occurrence of

  

  

  116549.01103/127129470v.6 an Event of Default, Agent may, or at the direction of Required Lenders shall, (i) declare the  Commitments terminated, whereupon the Commitments shall immediately be terminated together  with (i) any obligation of any Lender hereunder to make Advances, and (ii) the obligation of  Issuing Bank to issue Letters of Credit and (ii) declare the Obligations (other than the Hedge  Obligations, which may be accelerated in accordance with the terms of the applicable Hedge  Agreement) immediately due and payable without presentment, notice of dishonor, protest or  further notice of any kind, all of which Borrowers hereby expressly waive. Notwithstanding the  foregoing, upon the occurrence of an Event of Default described in Section 8.6(a) or (b) of this  Agreement, the Commitments shall immediately terminate and the Loan made pursuant to this  Agreement and all other Obligations, together with all accrued interest, shall be immediately due  and payable in full without presentment, demand, or protest or notice of any kind, all of which  Borrowers hereby expressly waive. (b) Remedies. Upon such occurrence and/or declaration, Agent shall have, in  addition to the rights and remedies given to it by the Notes, this Agreement and the other Credit  Documents, all the rights and remedies of a secured party as provided in the Uniform Commercial  Code (regardless of whether such Uniform Commercial Code has been adopted in the jurisdiction  where such rights and remedies are asserted) and without limiting the generality of the foregoing,  and without demand of performance and without other notice (except as specifically required by  the Notes, this Agreement or the documents executed in connection herewith) or demand  whatsoever to Borrowers, all of which are hereby expressly waived, Agent may, in addition to all  the rights conferred upon it by law, exercise one or more of the following rights successively or  concurrently: (i) to take possession of the Collateral, or any evidence thereof, proceeding without  judicial process or by judicial process (without a prior hearing or notice thereof, which Borrowers  hereby expressly waive), (ii) to lawfully dispose of the whole or any part of the Receivables or any  other Collateral, or any other Property, instrument or document pledged as security for any  Obligation at public or private sale, without advertisement or demand upon Borrowers, or upon  any obligor of Receivables, the Collateral, or any other security, the same being hereby waived,  except to the extent otherwise required by law, with the right on the part of Agent or their  respective nominees to become the purchaser thereof as provided by law absolutely freed and  discharged from any equity of redemption, and all trusts and other claims whatsoever; and (iii) to  exercise any other rights and remedies available to it by law or agreement. Notice of any sale or  disposition of Collateral shall be given to Borrowers at least ten (10) days before any intended  public sale or the time after which any intended private sale or other disposition of the Collateral is  to be made, which Borrowers agree shall be reasonable notice of such sale or other disposition. Section 9.2 Waiver and Release by Borrowers. To the extent permitted by applicable  law, each Borrower: (a) waives (i) presentment and protest of the Notes and this Agreement or any  Receivables held by Agent on which any Borrower is any way liable and (ii) notice and opportunity  to be heard, after acceleration in the manner provided in Article 9 of this Agreement, before exercis e  by Agent of the remedies of self-help or set-off permitted by law or by any agreement with any  Borrower, and except where required hereby or by law, notice of any other action taken by Agent;  and (b) releases Agent, Lenders and their respective officers, attorneys, agents and employees from  all claims for loss or damage caused by any act or omission on the part of Agent, Lenders or their  respective officers, attorneys, agents and employees, except willful misconduct or gross negligence. Section 9.3 No Waiver. Neither the failure nor any delay on the part of Agent or any  Lender to exercise any right, power or privilege under this Agreement or any other Credit

  

  

  116549.01103/127129470v.6 Document shall operate as a waiver thereof, nor shall any single or partial exercise of any right,  power or privilege preclude any other further exercise of any right, power or privilege. Section 9.4 Application of Proceeds. Notwithstanding any other provisions of this  Agreement or any other Credit Document to the contrary, at any time that an Application Event has  occurred and is continuing and except as otherwise provided herein with respect to Defaulting  Lenders, all payments remitted to Agent and all proceeds of Collateral received by Agent shall be  applied as follows: FIRST, to pay all costs, expenses and other amounts owing to Agent  pursuant to Section 10.6 of this Agreement and the other Credit Documents until  paid in full; SECOND, to pay all costs or expenses owed to Agent or to any Lender  hereunder or under any other Credit Document until paid in full; THIRD, to pay all costs or expenses of Lenders owing hereunder in  connection with enforcing its rights under the Credit Documents until paid in  full; FOURTH, ratably to pay all interest and fees accrued in respect of the  Advances until paid in full; FIFTH, ratably (i) to pay the principal of all Advances until paid in full, and (ii) to Agent, to be held by Agent, for the benefit of Issuing Bank (and for the  ratable benefit of Lenders that have an obligation to pay to Agent, for the  account of Issuing Bank, a share of each Letter of Credit Disbursement), as cash  collateral in an amount up to one hundred five percent (105%) of the Letter of  Credit Usage (to the extent permitted by applicable law, such cash collateral shall  be applied to the reimbursement of any Letter of Credit Disbursement as and  when such disbursement occurs and, if a Letter of Credit expires undrawn, the  cash collateral held by Agent in respect of such Letter of Credit shall, to the  extent permitted by applicable law, be reapplied pursuant to this Section 9.1,  beginning with tier (A) hereof); (F) SIXTH, to pay any other Obligations other than Obligations owed to  Defaulting Lenders (including being paid, ratably, to the Bank Product Providers  on account of all amounts then due and payable in respect of Bank Product  Obligations, with any balance to be paid to Agent, to be held by Agent, for the  ratable benefit of the Bank Product Providers, as cash collateral (which cash  collateral may be released by Agent to the applicable Bank Product Provider and  applied by such Bank Product Provider to the payment or reimbursement of any  amounts due and payable with respect to Bank Product Obligations owed to the  applicable Bank Product Provider as and when such amounts first become due  and payable and, if and at such time as all such Bank Product Obligations are  paid or otherwise satisfied in full, the cash collateral held by Agent in respect of  such Bank Product Obligations shall be reapplied pursuant to this Section 9.1,

  

  

  116549.01103/127129470v.6 beginning with tier (A) hereof); SEVENTH, ratably to pay any Obligations owed to Defaulting Lenders; EIGHTH, to Borrowers  or such other Person entitled thereto under  applicable law. In carrying out the foregoing, (a) amounts received shall be applied in the numerical order provided  until exhausted prior to application to the next succeeding category; and (b) each of Lenders shall  receive an amount equal to its pro rata share (based on the proportion that its then outstanding  Loans and Obligations outstanding of amounts available to be applied pursuant to tiers (B), (C), (D),  (E), (F) or (G) above. ARTICLE 10  MISCELLANEOUS Section 10.1 Indemnification and Release Provisions. Each Borrower shall jointly and  severally pay, indemnify, defend, and hold Agent, Lenders and Issuing Bank together with each of  their Affiliates, officers, directors, employees, attorneys, and agents (each, an “Indemnified Person”)  harmless (to the fullest extent permitted by law) from and against any and all claims, demands, suits,  actions, investigations, proceedings, liabilities, fines, costs, penalties, and damages, and all reasonable  fees and disbursements of attorneys, experts, or consultants and all other costs and expenses actually  incurred in connection therewith or in connection with the enforcement of this indemnification (as  and when they are incurred and irrespective of whether suit is brought), at any time asserted against,  imposed upon, or incurred by any of them (a) in connection with or as a result of or related to the  execution and delivery, enforcement, performance, or administration (including any restructuring or  workout with respect hereto) of this Agreement, any of the other Credit Documents, or the  transactions contemplated hereby or thereby or the monitoring of Borrowers’ and their Subsidiaries ’  compliance with the terms of the Credit Documents (provided, however, that the indemnification in  this clause (a) shall not extend to (i) disputes solely between or among Lenders, (ii) disputes solely  between or among Lenders and their respective Affiliates; it being understood and agreed that the  indemnification in this clause (a) shall extend to Agent (but not the Lenders) relative to disputes  between or among Agent on the one hand, and one or more Lenders, or one or more of their  Affiliates, on the other hand, or (iii) any Taxes or any costs attributable to Taxes, which shall be  governed by Section 10.20), and (b) with respect to any investigation, litigation, or proceeding  related to this Agreement, any other Credit Document, or the use of the proceeds of the credit  provided hereunder (irrespective of whether any Indemnified Person is a party thereto), or any act,  omission, event, or circumstance in any manner related thereto (each and all of the foregoing, the  “Indemnified Liabilities”). The foregoing to the contrary notwithstanding, Borrowers shall have no  obligation to any Indemnified Person under this Section 10.1 with respect to any Indemnified  Liability that a court of competent jurisdiction finally determines to have resulted from the gross  negligence or willful misconduct of such Indemnified Person or its officers, directors, employees,  attorneys, or agents. This provision shall survive the termination of this Agreement and the  repayment of the Obligations. If any Indemnified Person makes any payment to any other  Indemnified Person with respect to an Indemnified Liability as to which Borrowers were required to  indemnify the Indemnified Person receiving such payment, the Indemnified Person making such  payment is entitled to be indemnified and reimbursed by Borrowers with respect thereto.  WITHOUT LIMITATION, THE FOREGOING INDEMNITY SHALL APPLY TO

  

  

  116549.01103/127129470v.6 EACH INDEMNIFIED PERSON WITH RESPECT TO INDEMNIFIED LIABILITIES  WHICH IN WHOLE OR IN PART ARE CAUSED BY OR ARISE OUT OF ANY  NEGLIGENT ACT OR OMISSION (BUT EXCLUDING GROSS NEGLIGENCE OR  WILLFUL MISCONDUCT) OF SUCH INDEMNIFIED PERSON OR OF ANY OTHER  PERSON. Section 10.2 (a) Amendments. Neither the amendment or waiver of any provision of this Agreement or any other Credit Document, nor the consent to any departure by Borrowers therefrom, shall in any  event be effective unless the same shall be in writing and signed by the Required Lenders, or if  Lenders shall not be parties thereto, by the parties thereto and consented to by the Required  Lenders, and each such amendment, waiver or consent shall be effective only in the specific  instance and for the specific purpose for which given; provided that no amendment, waiver or  consent shall unless in writing and signed by all Lenders, do any of the following: (a) modify the  definition of Maximum Principal Amount, (b) modify the Commitments of Lenders or subject  Lenders to any additional obligations, (c) except as otherwise expressly provided in this  Agreement, reduce the interest on any Note, (d) postpone any date fixed for any payment in  respect of principal of, or interest on, any Note or any fees hereunder, (e) change the percentage  of the Commitments, or any minimum requirement necessary for Lenders or the Required  Lenders to take any action hereunder, (f) amend or waive Section 6.3, Section 7.6, this Section  10.2, or change the definition of Required Lenders, (g) except as otherwise expressly provided in  this Agreement, and other than in connection with the financing, refinancing, sale or other  disposition of any Property of Borrowers permitted under this Agreement, release any Liens in  favor of Lenders on any portion of the Collateral, (h) permit Borrowers to delegate, transfer or  assign any of its, his or her obligations to any Lender, (i) release or compromise the obligations of  Borrowers to any Lender, or (j) amend the definition of “Advance Rate” or “Borrowing Base” (or  any defined term used in either such definition), or increase any advance rate, and, provided,  further, (x) that no amendment, waiver or consent affecting the rights or duties of Agent under  any Credit Document shall in any event be effective, unless in writing and signed by Agent, as  applicable, in addition to Lenders required hereinabove to take such action and (y) no amendment,  waiver or consent of any provision of this Agreement or the other Credit Documents pertaining to  Issuing Bank, or any other rights or duties of Issuing Bank under this Agreement or the other  Credit Documents, shall in any event be effective, unless in writing and signed by Issuing Bank,  Agent, Borrowers and Required Lenders. Notwithstanding any of the foregoing to the contrary,  the consent of Borrowers shall not be required for any amendment, modification or waiver of the  provisions of Article 11. In addition, Borrowers and Lenders hereby authorize Agent to modify  this Agreement by unilaterally amending or supplementing Schedule I from time to time in the  manner requested by Borrowers, Agent or any Lender in order to reflect any assignments or  transfers of the Loans as provided for hereunder; provided, however, that Agent shall promptly  deliver a copy of any such modification to Borrowers and each Lender. Without regard to any  other provision hereof, if any Lender (for such purpose, a “Dissenting Lender”) dissents to any  action Agent desires to take requiring either the unanimous consent of Lenders or the consent of  Required Lenders or fails to respond to Agent within five (5) Business Days of Agent’s request for  a consent, either Borrowers (if no Event of Default or Default is outstanding and with the prior  written consent of Agent, in its sole and absolute discretion) or Agent may compel such  Dissenting Lender to assign its entire Commitment (either to one or more existing Lenders or  other financial institution(s) who is to become a Lender pursuant to the terms hereof) so long as

  

  

  116549.01103/127129470v.6 such Dissenting Lender receives written notice of such intended assignment (and the proposed  effective date thereof) within one hundred twenty (120) days of its providing its dissent to Agent  or such Dissenting Lender failing to respond to Agent within the required five (5) Business Day  period and the effective date of such intended assignment is not later than ten (10) days thereafter  and (ii) the Dissenting Lender receives full payment on the effective date of such assignment of its  entire portion of the outstanding Obligations, with accrued interest and unpaid fees to such date  (but excluding any otherwise applicable early termination fee under Section 2.5(a) of this  Agreement). Notwithstanding anything contained in clause (a) above, any other provision  of this Agreement or other Credit Document or whether there exists a Default or Event of  Default, Agent may at its discretion and without the consent of Required Lenders, voluntarily  permit the outstanding Advances at any time to exceed the Borrowing Base by up to five percent  (5.0%) of the Borrowing Base (the “Out of Formula Loans”). Notwithstanding anything contained in clause (a) above, any other provision  of this Agreement or other Credit Document, Agent hereby is authorized by Borrowers and  Lenders, from time to time in Agent’s sole discretion, (A) after the occurrence and during the  continuance of a Default or an Event of Default, or (B) at any time that any of the other  applicable conditions precedent set forth in Section 5.2 of this Agreement are not satisfied, to  make Advances to, or for the benefit of, Borrowers on behalf of Lenders that Agent, in its sole  discretion deems necessary or desirable (i) to preserve or protect the Collateral, or any portion  thereof, or (ii) to enhance the likelihood of repayment of the Obligations (“Protective Advances”).  Notwithstanding anything contained in this Agreement or any other Credit Document to the  contrary no Protective Advance may be made by Agent if such Advance would cause the  aggregate principal amount of Protective Advances outstanding to exceed an amount equal to five  percent (5.0%) of the Borrowing Base. Each Out of Formula Loan and each Protective Advance shall be deemed to  be an Advance hereunder. The Out of Formula Loans and Protective Advances shall be repayable  on demand, secured by Agent’s Liens, constitute Obligations hereunder, and shall bear interest at  two and one half percent (2.50%) per annum above the rate otherwise applicable to the Advances.  The ability of Agent to make Protective Advances is separate and distinct from its ability to make  Out of Formula Loans and its ability to make Out of Formula Loans is separate and distinct from  its ability to make Protective Advances. For the avoidance of doubt, the limitations on Agent’s  ability to make Protective Advances do not apply to Out of Formula Loans and the limitations on  Agent’s ability to make Out of Formula Loans do not apply to Protective Advances. The  provisions of Sections 10.2(b), (c) and (d) of this Agreement are for the exclusive benefit of Agent  and Lenders and are not intended to benefit Borrowers in any way. Section 10.3 Notices. Unless otherwise provided in this Agreement, all notices or  demands relating to this Agreement or any other Credit Document shall be in writing and shall be  personally delivered or sent by nationally recognized overnight courier, electronic mail (at such email  addresses as a party may designate in accordance herewith), or facsimile. In the case of notices or  demands to Borrowers, Lenders or Agent, as the case may be, they shall be sent to the respective  address set forth below: If to Agent:

  

  

  116549.01103/127129470v.6 Wells Fargo Bank, N.A.  800 Walnut Street Mail Code F-00001-069  Des Moines, Iowa 50309 Attn:  Facsimile:  Email: Mr. William M. Laird, Senior Vice President  (215) 670-6120 billlaird@wellsfargo.com With a copy to: Blank Rome LLP  One Logan Square Philadelphia, Pennsylvania 19103 Attn:  Facsimile:  Email: Kevin J. Baum, Esquire  (215) 832-5612 kevin.baum@blankrome.com If to Borrowers: Nicholas Financial, Inc.  2454 McMullen Booth Rd.  Building C, Suite 501  Clearwater, Florida 33759 Attn:  Email: Doug Marohn, President and Chief Executive Officer  doug.marohn@nicfn.com With a copy to: Hill Ward Henderson 101 East Kennedy Boulevard, Suite 3700 Tampa, Florida 33602 Attn:  Email: Zachary W. Watt, Esquire  zachary.watt@hwhlaw.com If to any Lender: To the address set forth on Schedule I Any party hereto may change the address at which they are to receive notices hereunder, by notice in  writing in the foregoing manner given to the other party. All notices or demands sent in accordance  with this Section 10.3, shall be deemed received on the date of actual receipt; provided, that (a)  notices sent by overnight courier service shall be deemed to have been given when received, (b)  notices by facsimile shall be deemed to have been given when sent (except that, if not given during  normal business hours for the recipient, shall be deemed to have been given at the opening of  business on the next Business Day for the recipient) and (c) notices by electronic mail shall be  deemed received upon the sender’s receipt of an acknowledgment from the intended recipient (such  as by the “return receipt requested” function, as available, return email or other written  acknowledgment).

  

  

  67 116549.01103/127129470v.6 Section 10.4 Termination and Release. On the Termination Date, all commitments of  Agent, Lenders and Issuing Bank to provide additional credit hereunder shall automatically be  terminated and all of the Obligations (other than Hedge Obligations which shall be terminated in  accordance with the applicable Hedge Agreement) immediately shall become due and payable  without notice or demand and Borrowers shall be required to repay all of the Obligations in full.  No termination of the obligations of Agent, Lenders and Issuing Bank (other than payment in full of  the Obligations and termination of the Commitments) shall relieve or discharge any Borrower of its  duties, obligations, or covenants under this Agreement or under any other Credit Document and  Agent’s Liens in the Collateral shall continue to secure the Obligations and shall remain in effect  until all Obligations have been paid in full and the Commitments have been terminated. When all of  the Obligations have been paid in full (including the Bank Product Obligations) and Agent’s,  Lenders’ and Issuing Bank’s obligations to provide additional credit under this Agreement and the  other Credit Documents have been terminated irrevocably, Agent will, at Borrowers’ sole expense,  execute and deliver any termination statements, lien releases, discharges of security interests, and  other similar discharge or release documents (and, if applicable, in recordable form) as are  reasonably necessary to release, as of record, Agent’s Liens and all notices of security interests and  liens previously filed by Agent. Section 10.5 Counterparts. This Agreement shall be valid, binding, and enforceable  against a party when executed and delivered by an authorized individual on behalf of the party by  means  of (i)  an  original  manual signature; (ii) a faxed, scanned, or photocopied manual signature, or (iii)   any  other  electronic  signature  permitted  by  the  federal  Electronic  Signatures   in  Global and National Commerce Act, state enactments of the Uniform Electronic Transactions Act, and/or any  other relevant electronic signatures law, including any relevant provisions of the UCC (collectively,  “Signature Law”), in each case to the extent applicable. Each faxed, scanned, or photocopied manual  signature, or other electronic signature, shall for all purposes have the same validity, legal effect, and  admissibility in evidence as an original manual signature. Each party hereto shall be entitled to  conclusively rely upon, and shall have no liability with respect to, any faxed, scanned, or  photocopied manual signature, or other electronic signature, of any other party and shall have no  duty to investigate, confirm or otherwise verify the validity or authenticity thereof. This Agreement  may be executed in any number of counterparts, each of which shall be deemed to be an original,  but such counterparts shall, together, constitute one and the same instrument. For the avoidance of  doubt, original manual signatures shall be used for execution or indorsement of writings when  required under the UCC or other Signature Law due to the character or intended character of the  writings. The foregoing shall apply to each other Credit Document mutatis mutandis. Section 10.6 Costs, Expenses and Taxes. Borrowers agree to pay immediately upon  demand (a) reasonable legal fees and expenses of Agent related to the preparation, negotiation,  documentation, execution, filing or delivery of this Agreement or any other Credit Document and  any and all waivers, amendments or modifications of any of the Credit Documents or any of the  terms and provisions thereof and any and all client reviews, field examinations, appraisals, audits and  inspections conducted under this Agreement or any other Credit Documents, (b) all fees (including  without limitation, reasonable legal fees and expenses), costs and other expenses of Agent and each  Lender incurred in connection with collection of the Loan, the maintenance or preservation of the  security interest in the Collateral, the sale, disposition or other realization on the Collateral, or the  enforcement of Agent’s and Lenders’ rights hereunder or under any Credit Document, including,  without limitation, such fees, costs and expenses incurred by Agent which Agent, in its reasonable  business judgment, deems reasonably necessary to preserve or protect the business conducted by

  

  

  116549.01103/127129470v.6 Borrowers, the Collateral, or any portion thereof, (c) all fees (including without limitation,  reasonable legal fees and expenses), costs and other expenses of Agent and each Lender incurred in  connection with the prosecution or defense of any action in any way related to this Agreement or  any other Credit Document, including without limitation, any action for declaratory relief, whether  incurred at the trial or appellate level, in an arbitration proceeding or otherwise, and including any of  the foregoing incurred in connection with any Insolvency Proceeding (including without limitation,  any adversary proceeding, contested matter or motion brought by Agent, any Lender or any other  Person) relating to Borrowers or any other Person, (d) all fees, charges, commissions and costs  provided for in Section 2.3(f) of this Agreement (including any fronting fees) and all other fees,  charges, commissions, costs and expenses for amendments, renewals, extensions, transfers, or  drawings from time to time incurred or charged by Issuing Bank in respect of Letters of Credit and  fees, costs, and expenses incurred or charged by Issuing Bank in connection with the issuance,  amendment, renewal, extension, or transfer of, or drawing under, any Letter of Credit or any  demand for payment thereunder and (e) any and all stamp and other taxes or filing fees payable or  determined to be payable in connection with the execution and delivery of the Notes and this  Agreement, the Collateral and other documents to be delivered hereunder, and agrees to save Agent  and Lenders harmless from and against any and all liabilities with respect to or resulting from any  delay in payment or omission to pay such taxes. Notwithstanding the foregoing, (x) in the case of  legal fees and expenses of outside counsel in connection with any of the events described above  (other than clauses (b) and (c)), amounts payable by Borrowers shall be limited to a single primary  firm and a single firm of local counsel in each applicable jurisdiction to represent Agent and Lenders  as a whole and (y) in the case of legal fees and expenses of outside counsel in connection with any of  the events described above in clauses (b) and (c), amounts payable by Borrowers shall be limited to a  single primary firm and a single firm of local counsel in each applicable jurisdiction to represent  Agent and Lenders as a whole and a single primary firm to represent Lenders as a whole. Section 10.7 (a) Participations and Assignments. This Agreement shall bind and inure to the benefit of each signatory, its successors and assigns; provided, however that, Borrowers shall not have the right to assign or  delegate their obligations and duties under this Agreement or any other Credit Documents or any  interest therein except with the prior written consent of Agent and Lenders. Notwithstanding Section 10.7(c) of this Agreement, nothing herein shall  restrict, prevent or prohibit any Lender from (i) pledging its Loans hereunder to a Federal Reserve  Bank in support of borrowings made by such Lender from such Federal Reserve Bank or (ii)  granting assignments or participations in such Lender’s Loans hereunder to its parent and/or to  any affiliate of such Lender or to any existing Lender or affiliate thereof. Any Lender may make,  carry or transfer Loans at, to or for the account of, any of its branch offices or the office of an  affiliate of such Lender except to the extent such transfer would result in increased costs to  Borrower. Each Lender may, with the prior written consent of Agent and (if no Default  or Event of Default is outstanding) with the consent of Borrowers, assign to one or more banks or  other financial institutions all or a portion of its rights and obligations under this Agreement and  the Notes. In connection with each assignment: (i) the parties thereto shall execute and deliver to  Agent, for its acceptance (if properly completed and executed in accordance with the terms  hereof) and recording in its books and records, an Assignment and Acceptance, together with any

  

  

  116549.01103/127129470v.6 Note or Notes subject to such assignment and a processing and recordation fee of Three  Thousand Five Hundred Dollars ($3,500) to be paid by the assignee, (ii) no such assignment shall  be for less than Twenty Million Dollars ($20,000,000) or, if less, the entire remaining Commitment  of such Lender, each such assignment shall be of a uniform, and not a varying, percentage of all  rights and obligations under and in respect of both the Commitment of such Lender and all Loans  of such Lender. Upon such execution and delivery of the Assignment and Acceptance to Agent,  from and after the date specified as the effective date in the Assignment and Acceptance  (“Acceptance Date”), (x) the assignee thereunder shall be a party hereto, and, to the extent that  rights and obligations hereunder have been assigned to it pursuant to such Assignment and  Acceptance, such assignee shall have the rights and obligations of a Lender hereunder and (y) the  assignor thereunder shall, to the extent that rights and obligations hereunder have been assigned  by it pursuant to such Assignment and Acceptance, relinquish its rights (other than any rights it  may have pursuant to Section 10.1 of this Agreement which will survive) and be released from its  obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all  or the remaining portion of an assigning Lender’s rights and obligations under this Agreement,  such Lender shall cease to be a party hereto). Within two (2) Business Days after demand by Agent, Borrowers shall  execute and deliver to Agent in exchange for any surrendered Note or Notes (which the assigning  Lender agrees to promptly deliver to Borrowers) a new Note or Notes to the order of the assignee  in an amount equal to the Commitment assumed by it pursuant to such Assignment and  Acceptance and, if the assigning Lender has retained a Commitment hereunder, a new Note or  Notes to the order of the assigning Lender in an amount equal to the Commitment retained by it  hereunder. Such new Note or Notes shall re-evidence the indebtedness outstanding under the old  Notes or Notes and shall be in an aggregate principal amount equal to the aggregate principal  amount of such surrendered Note or Notes and shall otherwise be in substantially the form of the  Note or Notes subject to such assignments. Each Lender may, with the prior written consent of Agent, but without the  consent of any other Lender or Borrowers, sell participations to one or more parties (a  “Participant”) in or to all or a portion of its rights and obligations under this Agreement  (including, without limitation, all or a portion of its Commitments, the Loans owing to it and the  Note or Notes held by it); provided that if such Lender obtains the consents required under this  clause (e) then (i) such Lender’s obligations under this Agreement (including, without limitation,  its Commitment to Borrowers hereunder) shall remain unchanged, (ii) such Lender shall remain  solely responsible to the other parties hereto for the performance of such obligations, (iii) such  Lender shall remain the holder of any such Note for all purposes of this Agreement, (iv)  Borrowers, Agent, and the other Lenders shall continue to deal solely and directly with such  Lender in connection with such Lender’s rights and obligations under this Agreement and (v) such  Lender shall not transfer, grant, assign or sell any participation under which the Participant shall  have rights to approve any amendment or waiver of this Agreement. Each Lender agrees that, without the prior written consent of Borrowers and  Agent, it will not make any assignment or sell a participation hereunder in any manner or under  any circumstances that would require registration or qualification of, or filings in respect of, any  Advance, Note or other Obligation under the securities laws of the United States of America or of  any jurisdiction.

  

  

  116549.01103/127129470v.6 (g) In connection with the efforts of any Lender to assign its rights or  obligations or to participate interests, Agent or such Lender may disclose any information in its  possession regarding Borrowers, their finances and/or Property. By executing and delivering an  Assignment and Acceptance, the assigning Lender thereunder and the assignee thereunder confirm  to and agree with each other and the other parties hereto as follows: (i) other than as provided in  such Assignment and Acceptance, such assigning Lender makes no representation or warranty and  assumes no responsibility with respect to any statements, warranties or representations made in or  in connection with this Agreement or the execution, legality, validity, enforceability, genuineness,  sufficiency or value of this Agreement or any other Credit Document furnished pursuant hereto; such assigning Lender makes no representation or warranty and assumes no responsibility with  respect to the financial condition of the Borrowers or the performance or observance by the  Borrowers of any of their obligations under this Agreement or any other Credit Document  furnished pursuant hereto;  (iii) such assignee confirms that it has received a copy of this  Agreement, together with such other documents and information as it has deemed appropriate to  make its own credit analysis and decision to enter into such Assignment and Acceptance; (iv) such  assignee will, independently and without reliance upon Agent, such assigning Lender or any other  Lender, and based on such documents and information as it shall deem appropriate at the time,  continue to make its own credit decisions in taking or not taking action under this Agreement; (v)  such assignee appoints and authorizes Agent to take such action as agent on its behalf and to  exercise such powers under this Agreement as are delegated to Agent by the terms hereof,  together with such powers as are reasonably incidental thereto; and (vi) such assignee agrees that it  will perform in accordance with their terms all of the obligations which by the terms of this  Agreement are required to be performed by it as a Lender. Section 10.8 Effectiveness of Agreement. Anything to the contrary in this Agreement  notwithstanding, the provisions hereof shall not be effective until this Agreement is: (a) duly  executed, and delivered by authorized officers of Borrowers to Agent; and (b) duly signed by an  authorized officer of Agent and each Lender. Section 10.9 APPLICABLE LAW. THIS AGREEMENT AND ALL  DOCUMENTS EXECUTED IN CONNECTION HEREWITH SHALL BE DEEMED  TO HAVE BEEN MADE AND TO BE PERFORMABLE IN THE STATE OF IOWA  AND, TOGETHER WITH ALL MATTERS ARISING HEREUNDER OR RELATED  HERETO, SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH  THE LAWS OF THE STATE OF IOWA. Section 10.10 JURISDICTION AND VENUE/WAIVER OF JURY TRIAL. JURISDICTION/VENUE. IN ANY  JUDICIAL PROCEEDING  INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER ARISING OUT OF OR  RELATED TO THIS AGREEMENT OR ANY CREDIT DOCUMENT OR THE  RELATIONSHIP ESTABLISHED HEREUNDER, BORROWERS HEREBY  IRREVOCABLY SUBMIT TO THE EXCLUSIVE JURISDICTION OF ANY STATE  OR FEDERAL COURT LOCATED IN POLK COUNTY, IOWA AND AGREE NOT  TO RAISE ANY OBJECTION TO SUCH JURISDICTION OR TO THE LAYING OR  MAINTAINING OF THE VENUE OF ANY SUCH PROCEEDING IN SUCH  COUNTY. BORROWERS AGREE THAT SERVICE OF PROCESS IN ANY SUCH  PROCEEDING MAY BE DULY EFFECTED UPON IT BY MAILING A COPY

  

  

  116549.01103/127129470v.6 THEREOF, BY REGISTERED MAIL, POSTAGE PREPAID, TO BORROWERS. (b) WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY  WAIVES TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING,  DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT,  CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF OR RELATED TO  THIS AGREEMENT OR ANY CREDIT DOCUMENT OR THE RELATIONSHIP  ESTABLISHED HEREUNDER. THIS PROVISION IS A MATERIAL  INDUCEMENT FOR AGENT AND LENDERS TO ENTER INTO THIS  AGREEMENT. Section 10.11 REVIEW BY COUNSEL. BORROWERS ACKNOWLEDGE THAT  THEY HAVE HAD THE ASSISTANCE OF COUNSEL IN THE REVIEW AND  EXECUTION  OF  THIS AGREEMENT AND, SPECIFICALLY,  SECTIONS 10.9 AND 10.10   OF   THIS   AGREEMENT,  AND  FURTHER   ACKNOWLEDGE   THAT THE MEANING AND EFFECT OF THE FOREGOING HAVE BEEN FULLY EXPLAINED  TO BORROWERS BY THEIR COUNSEL. Section 10.12 Interpretation. Neither this Agreement nor any uncertainty or ambiguity  herein shall be construed against Agent, Lenders, Issuing Bank or Borrowers, whether under any  rule of construction or otherwise. On the contrary, this Agreement has been reviewed by all parties  and shall be construed and interpreted according to the ordinary meaning of the words used so as to  accomplish fairly the purposes and intentions of all parties hereto. Section 10.13 Severability of Provisions. Each provision of this Agreement shall be  severable from every other provision of this Agreement for the purpose of determining the legal  enforceability of any specific provision. Section 10.14 Exchanging Information. Agent, Lenders, Wells Fargo & Company and all  direct and indirect subsidiaries of Agent, Lenders or Wells Fargo & Company may exchange and  share any and all information they may have in their possession regarding Borrowers and their  Affiliates with Agent’s and Lenders’ prospective participants, affiliates, accountants, lawyers and  other advisors, Agent, Lenders, Wells Fargo & Company and all direct and indirect subsidiaries of  Agent, Lenders or Wells Fargo & Company, and Borrowers waive any right of confidentiality it may  have with respect to such exchange of such information. Section 10.15 Patriot Act Notice. Each Lender that is subject to the requirements of the  Patriot Act hereby notifies Borrowers that pursuant to the requirements of the Patriot Act, it is  required to obtain, verify and record information that identifies Borrowers, which information  includes the name and address of Borrowers and other information that will allow such Lender to  identify Borrowers in accordance with the Patriot Act. In addition, if Agent is required by law or  regulation or internal policies to do so, it shall have the right to periodically conduct (a) Patriot Act  searches, OFAC/PEP searches, and customary individual background checks for Borrowers and  Guarantors and (b) OFAC/PEP searches and customary individual background checks for the  Borrowers’ senior management and key principals, and Borrowers agree to cooperate in respect of  the conduct of such searches and further agrees that the reasonable costs and charges for such  searches shall constitute expenses hereunder and be for the account of Borrowers.

  

  

  116549.01103/127129470v.6 Section 10.16 Advertisement. Each Lender and each Borrower hereby authorizes Agent to  publish the name of such Lender and Borrower, the existence of the financing arrangements  referenced under this Agreement, the primary purpose and/or structure of those arrangements, the  title and role of each party to this Agreement and the total amount of the financing evidenced  hereby in any “tombstone”, comparable advertisement or press release which Agent elects to submit  for publication (“Press Release”). With respect to any of the foregoing, Agent shall provide Lenders  and Borrowers with an opportunity to review and confer with Agent regarding the contents of any  Press Release prior to its submission for publication. Section 10.17 Bank Product Providers. Each Bank Product Provider shall be deemed a  third party beneficiary hereof and of the provisions of the other Credit Documents for purposes of  any reference in a Credit Document to the parties for whom Agent is acting. Agent hereby agrees to  act as agent for such Bank Product Providers and (a) by virtue of entering into a Bank Product  Agreement, the applicable Bank Product Provider shall be automatically deemed to have appointed  Agent as its agent and to have accepted the benefits of the Credit Documents, and (b) Wells Fargo,  in its capacity as a Bank Product Provider appoints Agent as its agent with respect to any Bank  Products extended by Wells Fargo or its Affiliates to Borrowers  or their Subsidiaries. It is  understood and agreed that the rights and benefits of each Bank Product Provider under the Credit  Documents consist exclusively of such Bank Product Provider’s being a beneficiary of the Liens and  security interests (and, if applicable, guarantees) granted to Agent and the right to share in payments  and collections out of the Collateral as more fully set forth herein. In addition, each Bank Product  Provider, by virtue of entering into a Bank Product Agreement, shall be automatically deemed to  have agreed that Agent shall have the right, but shall have no obligation, to establish, maintain, relax,  or release reserves in respect of the Bank Product Obligations and that if reserves are established  there is no obligation on the part of Agent to determine or insure whether the amount of any such  reserve is appropriate or not. In connection with any such distribution of payments or proceeds of  Collateral, Agent shall be entitled to assume no amounts are due or owing to any Bank Product  Provider unless such Bank Product Provider has provided a written certification (setting forth a  reasonably detailed calculation) to Agent as to the amounts that are due and owing to it and such  written certification is received by Agent a reasonable period of time prior to the making of such  distribution. Agent shall have no obligation to calculate the amount due and payable with respect to  any Bank Products, but may rely upon the written certification of the amount due and payable from  the relevant Bank Product Provider. In the absence of an updated certification, Agent shall be  entitled to assume that the amount due and payable to the relevant Bank Product Provider is the  amount last certified to Agent by such Bank Product Provider as being due and payable (less any  distributions made to such Bank Product Provider on account thereof). Borrowers may obtain Bank  Products from any Bank Product Provider, although Borrowers are not required to do so.  Borrowers acknowledge and agree that no Bank Product Provider has committed to provide any  Bank Products and that the providing of Bank Products by any Bank Product Provider is in the sole  and absolute discretion of such Bank Product Provider. Notwithstanding anything to the contrary  in this Agreement or any other Credit Document, no provider or holder of any Bank Product shall  have any voting or approval rights hereunder (or be deemed a Lender) solely by virtue of its status as  the provider or holder of such agreements or products or the Obligations owing thereunder, nor  shall the consent of any such provider or holder be required (other than in their capacities as  Lenders, to the extent applicable) for any matter hereunder or under any of the other Credit  Documents, including as to any matter relating to the Collateral or the release of Collateral or  Guarantors.

  

  

  116549.01103/127129470v.6 Section 10.18 Debtor-Creditor Relationship. The relationship between Lenders and Agent,  on the one hand, and Borrowers and Guarantors, on the other hand, is solely that of creditor and  debtor. Neither Agent, any Lender or Issuing Bank has (or shall be deemed to have) any fiduciary  relationship or duty to any Borrower or any Guarantor arising out of or in connection with the  Credit Documents or the transactions contemplated thereby, and there is no agency or joint venture  relationship between Agent, any Lender and Issuing Bank, on the one hand, and Borrowers and  Guarantors, on the other hand, by virtue of any Credit Document or any transaction contemplated  therein. Section 10.19 Revival and Reinstatement of Obligations. If the incurrence or payment of  the Obligations by Borrowers or Guarantors or the transfer to Agent, any Lender and Issuing Bank  of any property should for any reason subsequently be asserted, or declared, to be void or voidable  under any state or federal law relating to creditors’ rights, including provisions of the Bankruptcy  Code relating to fraudulent conveyances, preferences, or other voidable or recoverable payments of  money or transfers of property (each, a “Voidable Transfer”), and if Agent, any Lender and Issuing  Bank, or any of them, are required to repay or restore, in whole or in part, any such Voidable  Transfer, or elects to do so upon the advice of counsel, then, as to any such Voidable Transfer, or  the amount thereof that Agent, any Lender and Issuing Bank, or any of them, are required or elect  to repay or restore, and as to all reasonable costs, expenses, and attorneys fees of Agent, any Lender  and Issuing Bank, as applicable related thereto, the liability of Borrowers or Guarantors  automatically shall be revived, reinstated, and restored and shall exist as though such Voidable  Transfer had never been made. Section 10.20 Withholding Taxes. All payments made by Borrowers hereunder or under any Note or other  Credit Document will be made without setoff, counterclaim, or other defense. In addition, all such  payments will be made free and clear of, and without deduction or withholding for, any present or  future Taxes, and in the event any deduction or withholding of Taxes is required, Borrowers shall  comply with the next sentence of this Section 10.20(a). If any Taxes are so levied or imposed,  Borrowers agree to pay the full amount of such Taxes and such additional amounts as may be  necessary so that every payment of all amounts due under this Agreement, any Note, or Credit  Document, including any amount paid pursuant to this Section 10.20(a) after withholding or  deduction for or on account of any Taxes, will not be less than the amount provided for herein;  provided, however, that Borrowers shall not be required to increase any such amounts if the increase  in such amount payable results from Agent’s or such Lender’s own willful misconduct or gross  negligence (as finally determined by a court of competent jurisdiction). Borrowers will furnish to  Agent as promptly as possible after the date the payment of any Tax is due pursuant to applicable  law, certified copies of tax receipts evidencing such payment by Borrowers. Borrowers agree to pay any present or future stamp, value added or  documentary taxes or any other excise or property taxes, charges, or similar levies that arise from  any payment made hereunder or from the execution, delivery, performance, recordation, or filing of,  or otherwise with respect to this Agreement or any other Credit Document. If a Lender or a Participant is entitled to claim an exemption or reduction  from United States withholding tax, such Lender or such Participant agrees with and in favor of

  

  

  116549.01103/127129470v.6 Agent, to deliver to Agent (or, in the case of a Participant, to the Lender granting the participation  only) one of the following before receiving its first payment under this Agreement: if such Lender or such Participant is entitled to claim an exemption  from United States withholding tax pursuant to the portfolio interest exception, (A) a statement of  such Lender or such Participant, signed under penalty of perjury, that it is not a (I) a “bank” as  described in Section 881(c)(3)(A) of the Code, (II) a ten percent (10%) shareholder of any Borrower  (within the meaning of Section 871(h)(3)(B) of the Code), or (III) a controlled foreign corporation  related to any Borrower within the meaning of Section 864(d)(4) of the Code, and (B) a properly  completed and executed IRS Form W-8BEN or Form W-8IMY (with proper attachments); if such Lender or such Participant is entitled to claim an exemption  from, or a reduction of, withholding tax under a United States tax treaty, a properly completed and  executed copy of IRS Form W-8BEN; if such Lender or such Participant is entitled to claim that interest  paid under this Agreement is exempt from United States withholding tax because it is effectively  connected with a United States trade or business of such Lender or such Participant, a properly  completed and executed copy of IRS Form W-8ECI; if such Lender or such Participant is entitled to claim that interest  paid under this Agreement is exempt from United States withholding tax because such Lender or  such Participant serves as an intermediary, a properly completed and executed copy of IRS Form W-  8IMY (with proper attachments); or a properly completed and executed copy of any other form or forms,  including IRS Form W-9, as may be required under the Code or other laws of the United States as a  condition to exemption from, or reduction of, United States withholding or backup withholding tax. Each Lender or Participant shall provide new forms (or successor forms) upon the expiration or  obsolescence of any previously delivered forms and to promptly notify Agent (or, in the case of a  Participant, to the Lender granting the participation only) of any change in circumstances which  would modify or render invalid any claimed exemption or reduction. If a Lender or a Participant claims an exemption from withholding tax in a  jurisdiction other than the United States, such Lender or such Participant agrees with and in favor of  Agent, to deliver to Agent (or, in the case of a Participant, to the Lender granting the participation  only) any such form or forms, as may be required under the laws of such jurisdiction as a condition  to exemption from, or reduction of, foreign withholding or backup withholding tax before receiving  its first payment under this Agreement, but only if such Lender or such Participant is legally able to  deliver such forms; provided, however, that nothing in this Section 10.20(d) shall require a Lender or  Participant to disclose any information that it deems to be confidential (including without limitation,  its tax returns). Each Lender and each Participant shall provide new forms (or successor forms)  upon the expiration or obsolescence of any previously delivered forms and to promptly notify Agent  (or, in the case of a Participant, to the Lender granting the participation only) of any change in  circumstances which would modify or render invalid any claimed exemption or reduction. If a Lender or a Participant claims exemption from, or reduction of,  withholding tax and such Lender or such Participant sells, assigns, grants a participation in, or

  

  

  such Lender, agree to repay the amount paid over to Borrowers (plus any penalties, interest or other 116549.01103/127129470v.6 otherwise transfers all or part of the Obligations to such Lender or such Participant, such Lender or  such Participant agrees to notify Agent (or, in the case of a sale of a participation interest, to the  Lender granting the participation only) of the percentage amount in which it is no longer the  beneficial owner of Obligations to such Lender or such Participant. To the extent of such  percentage amount, Agent will treat such Lender’s or such Participant’s documentation provided  pursuant to Section 10.20(c) or 10.20(d) as no longer valid. With respect to such percentage  amount, such Participant or assignee may provide new documentation, pursuant to Section 10.20(c)  or 10.20(d), if applicable. Borrowers agree that each Participant shall be entitled to the benefits of  this Section 10.20 with respect to its participation in any portion of the Commitments and the  Obligations so long as such Participant complies with the obligations set forth in this Section 10.20  with respect thereto. If a Lender or a Participant is entitled to a reduction in the applicable  withholding tax, Agent (or, in the case of a Participant, to the Lender granting the participation) may  withhold from any interest payment to such Lender or such Participant an amount equivalent to the  applicable withholding tax after taking into  account such  reduction. If the forms or other  documentation required by Section 10.20(c) or 10.20(d) are not delivered to Agent (or, in the case of  a Participant, to the Lender granting the participation), then Agent (or, in the case of a Participant,  to the Lender granting the participation) may withhold from any interest payment to such Lender or  such Participant not providing such forms or other documentation an amount equivalent to the  applicable withholding tax. If the Internal Revenue Service or any other Governmental Authority of the  United States or other jurisdiction asserts a claim that Agent (or, in the case of a Participant, to the  Lender granting the participation) did not properly withhold tax from amounts paid to or for the  account of any Lender or any Participant due to a failure on the part of such Lender or such  Participant (because the appropriate form was not delivered, was not properly executed, or because  such Lender failed to notify Agent (or such Participant failed to notify the Lender granting the  participation) of a change in circumstances which rendered the exemption from, or reduction of,  withholding tax ineffective, or for any other reason) such Lender shall indemnify and hold Agent  harmless (or, in the case of a Participant, such Participant shall indemnify and hold the Lender  granting the participation harmless) for all amounts paid, directly or indirectly, by Agent (or, in the  case of a Participant, to the Lender granting the participation), as tax or otherwise, including  penalties and interest, and including any taxes imposed by any jurisdiction on the amounts payable  to Agent (or, in the case of a Participant, to the Lender granting the participation only) under this  Section 10.20, together with all costs and expenses (including attorneys’ fees and expenses). The  obligation of Lenders and Participants under this subsection shall survive the payment of all  Obligations and the resignation or replacement of Agent. If Agent or a Lender determines, in its sole discretion, that it has received a  refund of any Taxes as to which it has been indemnified by Borrowers or with respect to which  Borrowers have paid additional amounts pursuant to this Section 10.20, so long as no Default or  Event of Default has occurred and is continuing, it shall pay over such refund to Borrowers (but  only to the extent of payments made, or additional amounts paid, by Borrowers under this Section 10.20 with respect to Taxes giving rise to such a refund), net of all out-of-pocket expenses of Agent  or such Lender and without interest (other than any interest paid by the relevant Governmental  Authority with respect to such a refund); provided, that Borrowers, upon the request of Agent or

  

  

  relationship of agency or trust with or for Borrowers. 116549.01103/127129470v.6 charges, imposed by the relevant Governmental Authority, other than such penalties, interest or  other charges imposed as a result of the willful misconduct or gross negligence of Agent hereunder)  to Agent or such Lender in the event Agent or such Lender is required to repay such refund to such  Governmental Authority.   Notwithstanding  anything  in this Agreement to the contrary, this Section 10.20  shall  not be construed to require Agent or any Lender to  make available its  tax returns (or any other information which it deems confidential) to Borrowers or any other Person. Section 10.21 Recognition of the U.S. Special Resolution Regimes. In the event that any Lender that is a Covered Entity becomes subject to a  proceeding under a U.S. Special Resolution Regime, the transfer from such Lender of this  Agreement, and any interest and obligation in or under this Agreement, will be effective to the same  extent as the transfer would be effective under the U.S. Special Resolution Regime if this  Agreement, and any such interest and obligation, were governed by the laws of the United States of  America or a state of the United States of America. In the event that any Lender that is a Covered Entity or a BHC Act Affiliate  of such Lender becomes subject to a proceeding under a U.S. Special Resolution Regime, Default  Rights under this Agreement that may be exercised against such Lender are permitted to be  exercised to no greater extent than such Default Rights could be exercised under the U.S. Special  Resolution Regime if this Agreement were governed by the laws of the United States of America or  a state of the United States of America. ARTICLE 11  AGENT Section 11.1 (a) Appointment of Agent. Each Lender hereby designates Agent as agent to act as herein specified. Each Lender hereby irrevocably authorizes, and each holder of any Note by the acceptance of a  Note or participation, shall be deemed irrevocably to authorize Agent to take such action on its  behalf under the provisions of this Agreement and the Notes and any other Credit Documents  and to exercise such powers and to perform such duties hereunder and thereunder as are  specifically delegated to or required of Agent by the terms hereof and thereof and such other  powers as are reasonably incidental thereto. Agent shall hold all Collateral and all payments of  principal, interest, fees (other than any fees payable solely for the account of Agent), charges and  expenses received pursuant to this Agreement or any other Credit Document for the ratable  benefit of Lenders except as otherwise provided herein. Agent may execute any of its duties under  this Agreement or any other Credit Document by or through agents, employees or attorneys in  fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties.  Agent shall not be responsible for the negligence or misconduct of any agent or attorney in fact  that it selects as long as such selection was made without gross negligence or willful misconduct. (b) The provisions of this Article 11 are solely for the benefit of Agent and  Lenders, and Borrowers shall not have any rights as a third party beneficiary of any of the  provisions hereof (except for the applicable provision of Section 11.9(a) of this Agreement). In  performing its functions and duties under this Agreement, Agent shall act solely as agent of  Lenders and does not assume and shall not be deemed to have assumed any obligation toward or

  

  

  represents (and by entering into a Bank Product Agreement, each Bank Product Provider shall be 116549.01103/127129470v.6 Section 11.2 Nature of Duties of Agent. Any provision to the contrary contained  elsewhere in this Agreement or in any other Credit Document notwithstanding, Agent shall not have  any duties or responsibilities, except those expressly set forth herein or in the other Credit  Documents, nor shall Agent have or be deemed to have any fiduciary relationship with any Lender  (or Bank Product Provider), and no implied covenants, functions, responsibilities, duties, obligations  or liabilities shall be read into this Agreement or any other Credit Document or otherwise exist  against Agent. Without limiting the generality of the foregoing, the use of the term “agent” in this  Agreement or the other Credit Documents with reference to Agent is not intended to connote any  fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable  law. Instead, such term is used merely as a matter of market custom, and is intended to create or  reflect only a representative relationship between independent contracting parties. Except as  expressly otherwise provided in this Agreement, Agent shall have and may use its sole discretion  with respect to exercising or refraining from exercising any discretionary rights or taking or  refraining from taking any actions that Agent expressly is entitled to take or assert under or pursuant  to this Agreement and the other Credit Documents. Without limiting the generality of the  foregoing, or of any other provision of the Credit Documents that provides rights or powers to  Agent, Lenders agree that Agent shall have the right to exercise the following powers as long as this  Agreement remains in effect: (a) maintain, in accordance with its customary business practices,  ledgers and records reflecting the status of the Obligations, the Collateral, the Collections and  related matters, (b) execute or file any and all financing or similar statements or notices,  amendments, renewals, supplements, documents, instruments, proofs of claim, notices and other  written agreements with respect to the Credit Documents, (c) make Advances, for itself or on behalf  of Lenders, as provided in the Credit Documents, (d) exclusively receive, apply, and distribute the  Collections as provided in the Credit Documents, (e) open and maintain such bank accounts and  cash management arrangements as Agent deems necessary and appropriate in accordance with the  Credit Documents for the foregoing purposes with respect to the Collateral and the Collections, perform, exercise, and enforce any and all other rights and remedies with respect to Borrowers or  their Subsidiaries, the Obligations, the Collateral, the Collections or otherwise related to any of same  as provided in the Credit Documents, and (g) incur and pay such expenses as Agent may deem  necessary or appropriate for the performance and fulfillment of its functions and powers pursuant  to the Credit Documents. Section  11.3	Lack of Reliance on Agent. Each Lender (and Bank Product Provider) acknowledges that none of Agent  nor any of its Affiliates, officers, directors, employees, attorneys, and agents has made any  representation or warranty to it, and that no act by Agent hereinafter taken, including any review  of the affairs of Borrowers and their Subsidiaries or Affiliates, shall be deemed to constitute any  representation or warranty by Agent or any of its Affiliates, officers, directors, employees,  attorneys, or agents to any Lender (or Bank Product Provider). Each Lender represents (and by  entering into a Bank Product Agreement, each Bank Product Provider shall be deemed  to  represent) to Agent that it has, independently and without reliance upon Agent and based on such  due diligence, documents and information as it has deemed appropriate, made its own appraisal of  and investigation into the business, prospects, operations, property, financial and other condition  and creditworthiness of Borrowers or any other Person party to a Credit Document, and all  applicable bank regulatory laws relating to the transactions contemplated hereby, and made its own  decision to enter into this Agreement and to extend credit to Borrowers. Each Lender also

  

  

  under any provision hereof, Agent shall have the right to request instructions from the Required 116549.01103/127129470v.6 deemed to represent) that it will, independently and without reliance upon Agent and based on  such documents and information as it shall deem appropriate at the time, continue to make its  own credit analysis, appraisals and decisions in taking or not taking action under this Agreement  and the other Credit Documents, and to make such investigations as it deems necessary to inform  itself as to the business, prospects, operations, property, financial and other condition and  creditworthiness of Borrowers or any other Person party to a Credit Document. Except for  notices, reports, and other documents expressly herein required to be furnished to the Lenders by  Agent, Agent shall not have any duty or responsibility to provide any Lender (or Bank Product  Provider) with any credit or other information concerning the business, prospects, operations,  property, financial and other condition or creditworthiness of Borrowers or any other Person  party to a Credit Document that may come into  the possession of Agent. Each Lender  acknowledges (and by entering into a Bank Product Agreement, each Bank Product Provider shall  be deemed to acknowledge) that Agent does not have any duty or responsibility, either initially or  on a continuing basis (except to the extent, if any, that is expressly specified herein) to provide  such Lender (or Bank Product Provider) with any credit or other information with respect to  Borrowers, their Affiliates or any of their respective business, legal, financial or other affairs, and  irrespective of whether such information came into Agent’s or its Affiliates’ or representatives’  possession before or after the date on which such Lender became a party to this Agreement (or  such Bank Product Provider entered into a Bank Product Agreement). Agent shall not be responsible to any Lender for any recitals, statements,  information, representations or warranties herein or in any document, certificate or other writing  delivered in connection herewith or for the execution, effectiveness, genuineness, validity,  enforceability, collectibility, priority or sufficiency of this Agreement, the Credit Documents or the  financial or other condition of Borrowers. Agent shall not be required to make any inquiry  concerning either the performance or observance of any of the terms, provisions or conditions of  this Agreement or the Notes, or the financial condition of Borrowers, or the existence or possible  existence of any Default or Event of Default, unless specifically requested to do so in writing by  any Lender. Agent shall promptly forward to each Lender, when complete, copies of any  field audit, examination or appraisal report prepared by or for Agent with respect to any Borrower  or Collateral (“Report”). Each Lender agrees (a) that Agent makes no representation or warranty  as to the accuracy or completeness of any Report, and shall not be liable for any information  contained in or omitted from any Report; (b) that the Reports are not intended to be  comprehensive audits or examinations, and that Agent or any other Person performing any audit  or examination will inspect only specific information regarding Obligations or the Collateral and  will rely significantly upon Borrowers’ books and records as well as upon representations of  Borrowers’ officers and employees; and (c) to keep all Reports confidential and strictly for such  Lender’s internal use, and not to distribute any Report (or the contents thereof) to any Person  (except to such Lender’s participants, attorneys and accountants) or use any Report in any manner  other than administration of the Loans and other Obligations. Each Lender shall indemnify and  hold harmless Agent and any other Person preparing a Report from any action such Lender may  take as a result of or any conclusion it may draw from any Report, as well as from any claims or  liabilities arising as a direct or indirect result of Agent furnishing a Report to such Lender. Section  11.4	Certain   Rights  of  Agent.	Without limiting Agent’s rights and discretion

  

  

  thereof shall have been filed with Agent. Any request, authority or consent of any Person who, at 116549.01103/127129470v.6 Lenders or, as required, each of Lenders. If Agent shall request instructions from the Required  Lenders or all Lenders, as the case may be, with respect to any act or action (including the failure to  act) in connection with this Agreement, Agent shall be entitled to refrain from such act or taking  such action unless and until Agent shall have received instructions from the Required Lenders or  each of Lenders, as the case may be, and Agent shall not incur liability to any Person by reason of so  refraining. Without limiting the foregoing, no Lender shall have any right of action whatsoever  against Agent as a result of Agent acting or refraining from acting hereunder in accordance with the  instructions of the Required Lenders or each of Lenders, as the case may be. Section 11.5 Reliance by Agent. Agent shall be entitled to rely, and shall be fully  protected in relying, upon any note, writing, resolution, notice, statement, certificate, facsimile, e-  mail or other electronic transmission or other documentary or telephone message believed by it to  be genuine and correct and to have been signed, sent or made by the proper person. Agent may  consult with legal counsel (including counsel for Borrowers with respect to matters concerning  Borrowers), independent public accountants and other experts selected by it and shall not be liable  for any action taken or omitted to be taken by it in good faith in accordance with the advice of such  counsel, accountants or experts. Section 11.6 Indemnification of Agent. To the extent Agent is not reimbursed and  indemnified by Borrowers, each Lender will reimburse and indemnify Agent, in proportion to its  respective Commitment, for and against any and all liabilities, obligations, losses, damages, penalties,  actions, judgments, suits, costs, expenses (including counsel fees and disbursements) or  disbursements of any kind or nature whatsoever which may be imposed on, incurred by or asserted  against Agent in any way relating to or arising out of this Agreement, provided that no Lender shall  be liable for any portion of such  liabilities, obligations, losses, damages, penalties, actions,  judgments, suits, costs, expenses or disbursements resulting solely from Agent’s gross negligence or  willful misconduct. Section 11.7 Agent in its Individual Capacity. Wells Fargo and its Affiliates may make  loans to, issue letters of credit for the account of, accept deposits from, provide Bank Products to,  acquire equity interests in, and generally engage in any kind of banking, trust, financial advisory,  underwriting, or other business with Borrowers and their Subsidiaries and Affiliates and any other  Person party to any Credit Document as though Wells Fargo were not Agent hereunder, and, in  each case, without notice to or consent of Lenders. Lenders acknowledge (and by entering into a  Bank Product Agreement, each Bank Product Provider shall be deemed to acknowledge) that,  pursuant to such activities, Wells Fargo or its Affiliates may receive information regarding  Borrowers or their Affiliates or any other Person party to any Credit Documents that is subject to  confidentiality obligations in favor of Borrowers  or such other Person and that prohibit the  disclosure of such information to Lenders (or Bank Product Providers), and Lenders acknowledge  (and by entering into a Bank Product Agreement, each Bank Product Provider shall be deemed to  acknowledge) that, in such circumstances (and in the absence of a waiver of such confidentiality  obligations, which waiver Agent will use its reasonable best efforts to obtain), Agent shall not be  under any obligation to provide such information to them. The terms “Lender” and “Lenders”  include Wells Fargo in its individual capacity. Section 11.8 Holders of Notes. Agent may deem and treat the payee of any Note as the  owner thereof for all purposes hereof unless and until a written notice of the assignment or transfer

  

  

  of upon receipt of the proceeds of such sale by Agent if the sale or disposition is permitted under 116549.01103/127129470v.6 the time of making such request or giving such authority or consent, is the holder of any Note, shall  be conclusive and binding on any subsequent holder, transferee or assignee of such Note or of any  Note or Notes issued in exchange therefor. Section 11.9 (a) Successor Agent. Agent may, upon five (5) Business Days notice to Lenders and Borrowers, resign at  any time (effective upon the appointment of a successor Agent pursuant to the  provisions of this Section 11.9(a) of this Agreement) by giving written notice thereof to Lenders  and Borrowers. If, at the time that Agent’s resignation is effective, it is acting as Issuing Bank,  such resignation shall also operate to effectuate its resignation as Issuing Bank and it shall  automatically be relieved of any further obligation to issue Letters of Credit. Upon any such  resignation, the Required Lenders shall have the right, upon five (5) days notice, to appoint a  successor Agent. If no successor Agent shall have been so appointed by the Required Lenders,  and shall have accepted such appointment, within thirty (30) days after the retiring Agent’s giving  of notice of resignation, then, upon five (5) days notice, the retiring Agent may, on behalf of  Lenders, appoint a successor Agent, which shall be a bank or other financial institution which  maintains an office in the United States, or a commercial bank organized under the laws of the  United States of America or of any State thereof, or any affiliate of such bank or trust or other  financial institution which is engaged in the banking business, having a combined capital and  surplus of at least Five Hundred Million Dollars ($500,000,000); provided, however, that Required  Lenders may, upon five (5) days notice, replace any such successor Agent appointed by a retiring  Agent. (b) Upon the acceptance of any appointment as Agent hereunder by a successor  Agent, such successor Agent shall thereupon succeed to and become vested with all the rights,  powers, privileges and duties of the retiring Agent, and the retiring Agent shall be discharged from  its duties and obligations under this Agreement. After any retiring Agent’s resignation hereunder  as Agent, the provisions of this Article 11 shall inure to its benefit as to any actions taken or  omitted to be taken by it while it was Agent under this Agreement. In the event Agent or its assets  are taken over by any state or federal agency having jurisdiction over Agent or its assets, a majority  of the Lenders other than Agent may appoint a successor to Agent. Section 11.10 Collateral Matters. Each Lender authorizes and directs Agent to accept the other Credit  Documents for the benefit of Lenders. Agent is hereby authorized, on behalf of all Lenders,  without the necessity of any notice to or further consent from any Lender, from time to time prior  to an Event of Default, to take any action, in its sole discretion, with respect to any Collateral or  Credit Document which may be necessary or appropriate to perfect and maintain perfected or  enforce the Liens upon the Collateral granted pursuant to this Agreement. Lenders hereby authorize Agent, at its option and in its discretion, to release  any Lien granted  to or held by Agent  upon any Collateral (i) upon termination of the  Commitments and payment in immediately available funds and satisfaction of all of the  Obligations at any time arising under or in respect of this Agreement or the Credit Documents or  the transactions contemplated hereby or thereby, (ii) constituting Property being sold or disposed

  

  

  81 116549.01103/127129470v.6 this Agreement or any other Credit Document or is made by Agent in the enforcement of its  rights hereunder following the occurrence of an Event of Default or (iii) if approved, authorized  or ratified in writing by the Required Lenders, unless such release is required to be approved by all  Lenders hereunder;  provided, however, that Agent may, in its discretion, upon request by  Borrowers, release Agent’s Liens on Collateral value in the aggregate not in excess of Five Million  Dollars ($5,000,000) during any one year period without the prior written approval or  authorization of any of the other Lenders. Upon request by Agent at any time, Lenders will  confirm in writing Agent’s authority to release particular types or items of Collateral pursuant to  this Section 11.10(b). (c)  Agent shall have no obligation whatsoever to Lenders or to any other Person  to assure that the Collateral exists or is in the possession of a custodian pursuant to the Custodian  Agreement or is owned by Borrowers or is cared for, protected or insured or that the Liens  granted to Agent herein or pursuant hereto have been properly or sufficiently or lawfully created,  perfected, protected or enforced or are entitled to any particular priority, or to exercise or to  continue exercising at all or in any manner or under any duty of care, disclosure or fidelity any of  the rights, authorities and powers granted or available to Agent in this Section 11.10 or in any of  the Credit Documents, it being understood and agreed that in respect of the Collateral, or any act,  omission or event related thereto, Agent may act in any manner it may deem appropriate, in its  sole discretion, given Agent’s own interest in the Collateral as one of the Lenders and that Agent  shall have no duty or liability whatsoever to Lenders, except for its gross negligence or willful  misconduct. Section 11.11 Delivery of Information. Agent shall not be required to deliver to any  Lender originals or copies of any documents, instruments , agreements, notices, communications or  other information received by Agent from Borrowers, the Required Lenders, any Lender or any  other Person under or in connection with this Agreement or any other Credit Document except (a)  as specifically provided in this Agreement or any other Credit Document and (b) as requested from  time to time in writing by any Lender with respect to documents, instruments, notices or other  written communications from Borrowers received by and in the possession of Agent. Section 11.12 Defaults. Agent shall not be deemed to have knowledge of the occurrence  of a Default or Event of Default (other than the non-payment of principal of or interest on the  Loan to the extent the same is required to be paid to Agent for the account of Lenders) unless  Agent has actual knowledge thereof or has received notice from a Lender or Borrowers specifying  such Default or Event of Default and stating that such notice is a “Notice of Default.” In the event  that Agent has such knowledge of or receives such a notice of the occurrence of a Default or Event  of Default, Agent shall give prompt notice thereof to Lenders. Agent shall (subject to Article 9) take  such action with respect to such Default or Event of Default or refrain from taking such action,  with respect to such Default or Event of Default as Agent shall deem advisable in the best interest  of Lenders and shall, without limiting Agent’s rights or discretion under this Agreement, use  reasonable efforts under the circumstances to consult with Lenders before taking any material  enforcement action; and provided further that Agent shall not be required to take any such action  which it determines to be contrary to law. ARTICLE 12 INTER-BORROWER PROVISIONS

  

  

  116549.01103/127129470v.6 Section 12.1 (a) Certain Borrower Acknowledgments and Agreements. Each Borrower acknowledges that it will enjoy significant benefits from the business conducted by the other Borrowers because of, inter alia, their combined ability to bargain  with other Persons including without limitation their ability to receive this credit facility on  favorable terms granted by this Agreement and other Credit Documents which would not have  been available to an individual Borrower acting alone. Each Borrower has determined that it is in  its best interest to procure this credit facility which each Borrower may utilize directly and which  receive the credit support of the other Borrowers as contemplated by this Agreement and the  other Credit Documents. (b) Agent has advised Borrowers that it is unwilling to enter into this Agreement  and the other Credit Documents and make available this credit facility extended hereby to any  Borrower unless each Borrower agrees, among other things, to be jointly and severally liable for  the due and proper payment of the Obligations of each other Borrower under this Agreement and  other Credit Documents. Each Borrower has determined that it is in its best interest and in  pursuit of its purposes that it so induce Lender to extend credit pursuant to this Agreement and  the other Credit Documents executed in connection herewith (i) because of the desirability to each  Borrower of this credit facility, the interest rates and the modes of borrowing available hereunder, because each Borrower may engage in transactions jointly with other Borrowers and (iii)  because each Borrower may require, from time to time, access to funds under this Agreement for  the purposes herein set forth. Each Borrower has determined that it has and, after giving effect to the  transactions contemplated by this Agreement and the other Credit Documents (including, without  limitation, the inter-Borrower arrangement set forth in this Section 12.1) will have, assets having a  fair saleable value in excess of the amount required to pay its probable liability on its existing debts  as they fall due for payment and that the sum of its debts is not and will not then be greater than  all of its Property at a fair valuation, that such Borrower has, and will have, access to adequate  capital for the conduct of its business and the ability to pay its debts from time to time incurred in  connection therewith as such debts mature and that the value of the benefits to be derived by such  Borrower from the access to funds under this Agreement (including, without limitation, the inter-  Borrower arrangement set forth in this Section 12.1) is reasonably equivalent to the obligations  undertaken pursuant hereto. Borrower Agent (on behalf of each Borrower) shall maintain records  specifying (a) all Obligations incurred by each Borrower, (b) the date of such incurrence, (c) the  date and amount of any payments made in respect of such Obligations and (d) all inter-Borrower  obligations pursuant to this Section 12. Borrower Agent shall make copies of such records  available to Agent, upon request. Section 12.2 Maximum Amount of Joint and Several Liability. To the extent that  applicable law otherwise would render the full amount of the joint and several obligations of any  Borrower hereunder and under the other Credit Documents invalid or unenforceable, such  Borrower’s obligations hereunder and under the other Credit Documents shall be limited to the  maximum amount which does not result in such invalidity or unenforceability, provided, however,  that each Borrower’s obligations hereunder and under the other Credit Documents shall be  presumptively valid and enforceable to their fullest extent in accordance with the terms hereof or

  

  

  116549.01103/127129470v.6 thereof, as if this Section 12.2 were not a part of this Agreement. Section  12.3	Authorization of Borrower Agent by Borrowers: Each Borrower hereby irrevocably authorizes Borrower Agent to give  notices, make requests, make payments, receive payments and notices, give receipts and execute  agreements, make agreements or take any other action whatever on behalf of such Borrower under  and with respect to any Credit Document and each Borrower shall be bound thereby. This  authorization is coupled with an interest and shall be irrevocable, and Agent may rely on any  notice, request, information supplied by Borrower Agent, every document executed by Borrower  Agent in respect of Borrowers or any thereof as if the same were supplied, made or taken by any  or all Borrowers. Without limiting the generality of the foregoing, the failure of one or more  Borrowers to join in the execution of any writing in connection herewith shall not, unless the  context clearly requires, relieve any such Borrower from obligations in respect of such writing. Borrowers acknowledge that the credit facility provided hereunder is on  terms more favorable than any Borrower acting alone would receive and that each Borrower  benefits directly and indirectly from all Advances hereunder. Each Guarantor and, subject only to  the terms of Section 12.2 of this Agreement, each of the other Borrowers, shall be jointly and  severally liable for all Obligations, regardless of, inter alia, which Borrower requested (or received  the proceeds of) a particular Advance. Section 12.4 Qualified ECP Obligor. Each Qualified ECP Obligor hereby jointly and  severally absolutely, unconditionally and irrevocably undertakes to provide such funds or other  support as may be needed from time to time by each other Borrower to honor all of its obligations  under this Agreement in respect of Swap Obligations (provided, however, that each Qualified ECP  Obligor shall only be liable under this Section 12.4 for the maximum amount of such liability that  can be hereby incurred without rendering its obligations under this Section 12.4, or otherwise under  this Agreement, voidable under applicable law relating to fraudulent conveyance or fraudulent  transfer, and not for any greater amount). The obligations of each Qualified ECP Obligor under this  Section 12.4 shall remain in full force and effect until payment in full of all Obligations and  termination of the Commitments. Each Qualified ECP Obligor intends that this Section 12.4  constitute, and this Section 12.4 shall be deemed to constitute, a “keepwell, support, or other  agreement” for the benefit of each other Loan Party for all purposes of Section 1a(18)(A)(v)(II) of  the Commodity Exchange Act. [SIGNATURES ON FOLLOWING PAGE(S)]

  

  

  [SIGNATURE PAGE TO LOAN AND SECURITY AGREEMENT] S-1 IMPORTANT: READ BEFORE SIGNING. THE TERMS OF THIS  AGREEMENT SHOULD BE READ CAREFULLY BECAUSE ONLY  THOSE TERMS IN WRITING ARE ENFORCEABLE. NO OTHER  TERMS OR ORAL PROMISES NOT CONTAINED IN THIS WRITTEN  CONTRACT MAY BE LEGALLY ENFORCED. YOU MAY CHANGE  THE TERMS OF THIS AGREEMENT ONLY BY ANOTHER WRITTEN  AGREEMENT. Dated the date and year first set forth above. BORROWERS: NICHOLAS FINANCIAL, INC. By:         _/s/ Douglas Marohn 	                          Name: _Douglas Marohn 	                                       Title:     _President & CEO NICHOLAS DATA SERVICES, INC. By:         _/s/ Douglas Marohn 	                          Name: _Douglas Marohn 	                                       Title:     _President & CEO

  

  

  [SIGNATURE PAGE TO LOAN AND SECURITY AGREEMENT] S-2 AGENT: WELLS FARGO BANK, N.A. By:         _/s/ William M Laird 	                            Name:  _William M Laird 	                                          Title:     _SVP – Portfolio Manager LENDERS: WELLS FARGO BANK, N.A. By:         _/s/ William M Laird 	                            Name:  _William M Laird 	                                          Title:     _SVP – Portfolio Manager FIRST HORIZON BANK By:         /s/ Rachel Hayes_ 	                                  Name: _Rachel Hayes 		                                                 Title:     _Senior Vice President HANCOCK WHITNEY BANK By:         _/s/ Jeffrey E Gould 	                            Name:  _Jeffrey E Gould 	                                         Title:    _SVP

  

  

  116549.01103/127129470v.6 EXHIBITS Exhibit A:	Form of Annual Compliance Certificate  Exhibit B:	Form of Availability Statement Exhibit C:	Form of Request for Advance Exhibit D:	Investment Policy SCHEDULES Schedule I:	Lenders Schedule II:	Permitted Indebtedness  Schedule III:	Permitted Liens Schedule 4.2:	Organization and Good Standing Schedule 4.7:	Litigation Schedule 4.12: Investments  Schedule 4.16: Business Locations  Schedule 4.17: Equity Interests  Schedule 4.18: Deposit Accounts

  

  

  116549.01103/127129470v.6 SCHEDULE I Commitments Lenders Commitment Percentage Commitment Amount Wells Fargo Bank, N.A.  800 Walnut Street Mail Code F-00001-069  Des Moines, Iowa 50309 Attn: Mr. William M. Laird, Senior Vice President  Facsimile: (215) 670-6120 57.14% $100,000,000 First Horizon Bank 165 Madison Ave., 10th FL  Memphis, TN 38133 Attn: Rachel Hayes, Senior Vice President  Facsimile: 901-523-4633 22.86% $40,000,000 Hancock Whitney Bank  445 North Boulevard  Baton Rouge, LA 70802  Attn: Greg Scott  Facsimile: 225-381-0402 20.00% $35,000,000 TOTAL 100% $175,000,000

  

  

  116549.01103/127129470v.6 SCHEDULE II Permitted Indebtedness None.

  

  

  116549.01103/127129470v.6 SCHEDULE III Permitted Liens None.

  

  

  116549.01103/127129470v.6 SCHEDULE 4.2 Organization and Good Standing Borrower State of Organization Organizational ID Nicholas Financial, Inc. Florida L90100 Nicholas Data Services, Inc. Florida H48674

  

  

  116549.01103/127129470v.6 SCHEDULE 4.7 Litigation Borrower Claimant Amount Claimed Description Covered by Insurance (with deductible) Nicholas Financial, Inc. Lucaria McClimans Unknown Car accident involving  company owned  car Yes

  

  

  116549.01103/127129470v.6 SCHEDULE 4.12 Investments None.

  

  

  116549.01103/127129470v.6 SCHEDULE 4.16 Business Locations Borrower Principal Place of Business Other Locations Nicholas Financial, Inc. Building C, Suite 501B 2454 McMullen Booth Road  Clearwater, FL 33759 Cahaba Plaza 220 Cahaba Valley Road  Pelham, AL 35124 3030 Memorial Pkwy SW Suite A-105  Huntsville, AL 35801 2401 W. Eau Gallie Blvd. Suite 4 Melbourne, FL 32935 931 S. Semoran Blvd, Suite 212  Winter Park, FL 32792 500 S.W. 10th Street, Suite 307 Ocala, FL 34478-4307 1562 Wells Road Suite 10-11 Orange Park, FL 32073 2190 Airport Boulevard Suite # 2650 Pensacola, FL 32504 2620 -2 W. Tennessee Street Tallahassee, FL 32304 1705 N. Congress Ave. Boynton Beach, FL 33426 2267 SW 2nd Street Pompano Beach, FL 33069 6501 102nd Ave N., Ste 6473 Pinellas  Park, FL 33782-3029 8534 Ridge Road New Port Richey, FL 34654-4934 Fountain Oaks Shopping Center 3673 W. Waters Avenue  Tampa, FL 33614 3360 Satellite Blvd. Suite # 6 Duluth, GA. 30096 2359 Windy Hill Road, Suite 215 Marietta, GA 30067 1500 Mt. Zion Road, Suite 203 Morrow, GA 30260

  

  

  116549.01103/127129470v.6 2 Park of Commerce Blvd.  Suite F Savannah, GA 31405 3035 Centerville Hwy, Suite 7 Snellville, GA 30039 950 E Fairview Ave. Suite # 170 Meridian, ID 83646 113-1 E. Lake Street  Bloomingdale, IL 60108 75 Executive Drive, Suite C Carmel, IN 46032 5510 S. East Street, Suite J Indianapolis, IN 46227 8127 Connector Drive Florence, KY 41042 3421 Stony Spring Circle Louisville, KY 40220 4384 Clearwater Way, Suite 190 Lexington, KY 40515 37156 Six Mile Rd., Suite A-6 Livonia, MI 48152 1633 28th Street S.W., Suite M Wyoming, MI 49519 1229 NE Douglas Street  Lee's Summit, MO 64086 4895 Mexico Road St. Peters, MO 63376 7895 W. Sunset Rd., Suite 106 Las Vegas, NV 89113 3600 Arco Corporate Drive Suite 210 Charlotte, NC 28273 2331 Crown Point Executive Drive Suite N Charlotte, NC 28227 800 N. Main Street, Unit D Kernersville, NC 27284 5215 Capital Boulevard Raleigh, NC 27616 911 Graham Rd Suite 45 Stow, OH 44221 11255 Reed Hartman Hwy Suite H Cincinnati, OH 45241 1257 B Rockside Road  Parma, OH 44134

  

  

  116549.01103/127129470v.6 34131 Center Ridge Road  North Ridgeville, OH 44039 10501	Blacklick	Eastern	Road #500 Pickerington, OH 43147 Kroger Marketplace Center 3852 Hard Road Dublin, OH 43016-8025 11279 Perry Highway, Suite 305 Wexford, PA 15090 2048 Sam Rittenburg Blvd., Suite 4 Charleston, SC 29407 800 Columbiana Drive, Suite 106 Irmo, SC 29063 355 Woodruff Road, Suite 401 Greenville, SC 29607-3481 139 Maple Row Blvd., Suite 100 Hendersonville, TN 37075 9630 N Sam Houston Pkwy E Suite F Humble, TX 77396 808 W. Layton Ave.  Milwaukee, WI 53221 2273 W 7800 S Suite 4 West Jordan, UT 84088

  

  

  116549.01103/127129470v.6 SCHEDULE 4.17 Equity Interest Borrower Holder Class Ownership Percentage Nicholas Data Services, Inc. Nicholas Financial, Inc. (British Columbia) Common stock 100% Nicholas Financial, Inc. Nicholas Data Services, Inc. Common stock 100%

  

  

  116549.01103/127129470v.6 SCHEDULE 4.18 Deposit Accounts Depository Bank Account Owner Account # Account Type PNC Bank PO Box 609 Pittsburgh PA 15230- 9738 41-5601-1062 Deposit Account Fifth Third Bank PO Box 630900 Cincinnati OH 45263- 0900 7281862008 Deposit Account Wells Fargo Bank PO Box 63020 San Francisco CA  94163-2798 0004862503661 Master Operating Account Wells Fargo Bank PO Box 63020 San Francisco CA  94163-2798 0004784303844 Deposit Account Texas Capital Bank 2350 Lakeside Blvd Richardson TX 75082 1411031022 Master Operating Account Texas Capital Bank 2350 Lakeside Blvd Richardson TX 75082 1418000426 Controlled Disbursement  Account Wells Fargo Bank PO Box 63020 San Francisco CA  94163-2798 0004897148144 Money Market Account Wells Fargo Bank PO Box 63020 San Francisco CA  94163-2798 0004977925858 Money Market Account Wells Fargo Bank PO Box 63020 San Francisco CA  94163-2798 0004862503679 Controlled Disbursement  Account Schwab PO Box 2912 Phoenix, AZ 85062- 2912 7845-5763 Deposit Account

  

  

  116549.99999/22148269v.2 EXHIBITS Exhibit A:  Exhibit B:  Exhibit C:  Exhibit D: Form of Annual Compliance Certificate  Form of Availability Statement Form of Request for Advance Investment Policy

  

  

  116549.99999/22148269v.2 Exhibit A Form of Annual Compliance Certificate In connection with that certain LOAN AND SECURITY AGREEMENT dated as of  November [__], 2021, by and among NICHOLAS FINANCIAL, INC., a Florida corporation  (“Borrower Agent”), NICHOLAS DATA SERVICES, INC, a Florida corporation, and such other  Persons joined hereto from time to time as borrowers (collectively with Borrower Agent, the  “Borrowers” and each individually is referred to as a “Borrower”), WELLS FARGO BANK, N.A.,  as agent for Lenders (“Wells Fargo”) and the financial institutions from time to time party thereto  (collectively, the “Lenders”), and the other agreements and documents executed and delivered by  the Borrowers to Wells Fargo in connection therewith, as the same may have been amended from  time to time (collectively, the “Loan Agreement”), the undersigned does hereby certify, represent  and warrant to Wells Fargo, the truth, accuracy and completeness of the following statements as of  the date set opposite his/her signature below: Borrowers remain in compliance with all financial covenants and other covenants contained  in the Loan Agreement as of the date hereof; all representations and warranties contained in the  Loan Agreement are and remain true, accurate and complete in all material respects as of the date  hereof (except if such representation and warranty is already qualified by materiality, in which case  true and correct in all respects); and no event has occurred as of the date hereof that constitutes, or,  with the passage of time or the giving of notice, or both, would constitute, a Default or an Event of  Default under the Loan Agreement. Other than Non-Material Violations (as defined below), Borrowers are in compliance in all  material respects with, and have appropriate internal control processes, policies and procedures in  place to remain in compliance with, all federal, state and local laws, rules and regulations (“Laws and  Regulations”) applicable to (i) the transactions contemplated in the Loan Agreement and (ii) the  extension of credit, and the creation of a security interest in personal property or a mortgage in real  property in connection therewith, as the case may be, and laws with respect to protection of  interests in connection with such transactions, including without limitation, all Finance Laws. The  term “Non-Material Violations” as used above means violations of Laws and Regulations by  Borrowers that would not, either presently or with the passage of time, and either individually or in  the aggregate, (i) have a material adverse effect on Borrowers’ financial condition or business taken  as a whole or (ii) adversely affect the condition or value of the Collateral (as defined in the Loan  Agreement) or the enforceability of material contracts and Receivables (as defined in the Loan  Agreement). The undersigned is the President or Chief Executive Officer of the Borrower Agent, and, as  such, the undersigned has the full power and authority to execute and deliver this Certificate to  Wells Fargo. The undersigned does hereby personally verify that the statements made herein are  true, correct and complete in every respect, and the undersigned understands that the failure of any  statement made herein to be true, correct or complete will constitute an event of default (however  the same may be designated) under the Loan Agreement.

  

  

  116549.99999/22148269v.2 IN WITNESS WHEREOF, the undersigned has executed this Certificate as of the date  written below. Date: __________________ NICHOLAS FINANCIAL, INC. By: ________________________________  Name:  _________________ 	_______  Title: ________________________________

  

  

  116549.99999/22148269v.2 Exhibit B Form of Availability Statement On file with Agent.

  

  

  EXHIBIT B 2) Add Volume During Period: (A) Cash Advanced (B) Discounts Charged / Reserves Withheld (C) Insurance (D) Miscellaneous Total Volume $0.00 3) Less Liquidation During Period: (A) Cash Collections (B) Charge-offs (C) Interest & Insurance Rebates (D) Transfers to Repo Inventory (E) Miscellaneous Total Liquidation $0.00 4) Principal Receivables End of Period (Total of Lines 1 plus 2 minus Line 3) $0.00 5)   Less:	(A) Unearned Dealer Discounts and Purchase Discounts (B) Dealer Reserves (C) Unearned Insurance and Fee Commissions (D) Other 6) Net Receivables (Line 4 less Line 5) $0.00 7) Ineligible Receivables (from Part IV) $0.00 8) Total Eligible Receivables (Line 7 less Line 8) $0.00 9) Advance Rate, subject to the CPI 85% 10) Calculated Availability (line 9 x line 10) $0.00 Total Availability, lesser of Calculated Availabilty and Commitment Amount Amount Owing to Wells Fargo at End of Period $0.00 13) Additional Cash Available End of Period (Excess Availability) $0.00 AVAILABILITY STATEMENT (parts I, II, III, IV, V) Nicholas Financial, Inc. Commitment Amount:  Reporting Period Ending: $175,000,000 Part I: Availability Calculation 1) Principal Receivables Beginning of Period (Line 4 of previous Availability Statement) (Subtract Line 12 from Line 11.) Part II: Custodian's Certificate TO: Wells Fargo Preferred Capital I hereby certify that the amount shown as Outstanding Principal End of Period in Line 4 is correct and all the collateral  documents evidencing these Receivables are in the possession and under the exclusive control of the applicable  custodian as required pursuant to the Loan and Security Agreement, as amended, by and among Nicholas Financial, Inc.  and Wells Fargo Bank, N.A., dated November 5, 2021. Nicholas Financial, Inc. Date: By: Authorized Officer

  

  

  Part II: Adjusted Tangible Net Worth and Adjusted Capital Base Calculations Total Equity: Less Intangibles (goodwill, patents, trademarks, trade names, organizational expense,  unamortized debt issuance costs, and other like intangibles): Less Investments in and loans to shareholders, directors, employees & subsidiaries: Less Receivables 121 or more days contractually delinquent: Less shortfall of Allowance for Loan Loss ("ALL") to meet required ALL (part III B): Adjusted Tangible Net Worth (Line 1 less Lines 1a through 1d): $	- 3. Subordinated Debt as defined in the Loan Agreement: 4 . Capital Base (Line 2 + 3): - $ Total Debt: Part III: Covenant Compliance and Reserve Adequacy Covenant Compliance 1. EBITDA Ratio for the most recent 12 months ended to be maintained at no less than 1.50x 2. Total Debt to Adjusted Tangible Net Worth Ratio, as defined in the Loan Agreement, to be maintained at no greater than 3.00x: #DIV/0! 3. Collateral Performance Indicator ("CPI") to be maintained at no greater than 24.00%: Rolling 3-Month 31+ Delinquency %  Rolling Charge-off % Repo Inventory %, if any CPI 0.00% B. Reserve Adequacy Loss Reserves, inclusive of unearned discounts and dealer reserves, to be maintained at no less than the greater of: the Principal Balance of outstanding Receivables multiplied by the rolling 12 month ratio of the sum of net charge-offs to  average Principal Receivables, or: an amount pursuant to the recommendation of the external accounting firm preparing the GAAP financial statements: - $ - $ - $ - $ TOTAL NET INELIGIBLE RECEIVABLES - $ Part V: CERTIFICATE OF BORROWER The undersigned Borrower certifies that: The information set forth on this Availability Statement is true and correct; The representations and warranties made in the Loan and Security Agreement between the  Borrower and Wells Fargo Bank, N.A., are true and correct as of today's date; No Default or Event of Default under the Loan and Security Agreement has occurred. Nicholas Financial, Inc. By: Authorized Officer LOSS RESERVES REQUIRED $ - ACTUAL LOSS RESERVES Unearned Discounts & Dealer Reserves: Allowance for Loan Loss: Total Loss Reserves: $ - Part IV: SCHEDULE OF CERTAIN INELIGIBLES Accounts more than 60 days contractually past due: Accounts with original term of 61 to 72 months originated prior to closing that are more than 30 days contractually past due Accounts subject to banktruptcy proceedings Accounts assigned for repossession or that have been repossessed Accounts to officers, equity holders, or employees Accounts subject to litigation or legal proceedings Accounts that have been rescheduled as a result of delinquency status Accounts that are direct receivables to the extent they exceed 20% of net receivables Accounts that are: indirect receivables with an original term > 60 months and ≤ 72 months to the extent they exceed 2.5% of net receivables direct receivables with an original term > 48 months and ≤ 60 months to the extent they exceed 2.5% of net receivables Accounts that are: indirect receivables with an original term > 72 months (a) direct receivables with an original term > 60 months Accounts that are: indirect receivables with an original principal balance > $20,000 and ≤ $25,000 to the extent they  exceed 5% of net receivables direct receivables with an original principal balance > $10,000 and ≤ $15,000 to the extent they  exceed 5% of net receivables Accounts that are: indirect receivables with an original principal balance > $25,000 (a) direct receivables with an original principal balance > $15,000 Accounts for which payments have been deferred more than (a) two biling cycles during any rolling 12 month period, or (b) three biling cycles during the contractual term Accounts which provide for interest only payments or a balloon payment Accounts from any one dealer or group of related dealers to the extend that such receivables represent more than 5% of net receivables Accounts for which the purchase price has not been funded to the applicable dealer Accounts in which valid certificate of title has not been received within 120 days of origination Accounts which are not in compliance with Borrower's underwriting guidelines Accounts serviced by a company other than a Borrower Accounts on a form for which WFPC has not received an acceptable opinion for compliance with laws and regulations Accounts, which in Wells Fargo's permitted discretion, do not constitute acceptable collateral.

  

  

  116549.99999/22148269v.2 Exhibit C Form of Request for Advance To:	Wells Fargo Bank, N.A. 800 Walnut Street Des Moines, Iowa 50309 Re: Loan and Security Agreement (as amended, modified, supplemented or otherwise restated  from time to time, “Loan Agreement”), dated as of November [__], 2021 by and among  NICHOLAS FINANCIAL, INC., a Florida corporation (“Borrower Agent”), NICHOLAS  DATA SERVICES, INC, a Florida corporation and such other Persons joined thereto from  time to time as borrowers (each a “Borrower” and collectively, the “Borrowers”), Wells  Fargo Bank, N.A., as agent for Lenders (“Agent”), and the financial institutions from time to  time a party thereto (collectively, with Agent, the “Lenders”). Date of Request: ________ __, 202__ This Request for Advance is delivered pursuant to the Loan Agreement. All terms defined in the  Loan Agreement shall have the same meaning herein, except as expressly defined in this Request for  Advance or as set forth in the Availability Statement. I. Loan Availability from line ___ of the most recent Availability Statement provided to Agent II. All    Loan   principal   repayments	since most recent  Availability Statement III. All Advances since most recent Availability Statement IV. Request for Advance V. Availability after Request for Advance (I. plus II. minus III. minus IV.) VI. Receiving account number for wire transaction Borrowers each hereby certify that: a) Upon making the Advance, the principal balance of the outstanding Advances made  by Agent shall be equal to or less than the lesser of (i) the Maximum Principal  Amount or (ii) the Borrowing Base; The representations and warranties made in the Loan Agreement are true and correct in all material respects as of the date of this Request for Advance; No Event of Default or Default has occurred and is continuing or would be caused  by the Advance requested; Borrowers confirm Borrowers’ compliance with Sections 2.1 and 2.7 of the Loan  Agreement both immediately prior to and after the Advance requested; b) c) d)

  

  

  116549.99999/22148269v.2 e) There has been no material adverse change in the financial condition, operations or  business of Borrowers since the date of the financial statements most recently  delivered to Agent pursuant to Section 6.1 of the Loan Agreement. Signature of officer authorized by Borrower  Agent to request Advance: _____________________________________ Name:  Title:

  

  

  116549.99999/22148269v.2 Exhibit D Investment Policy See attached.

  

  

  00078218v2 COMPANY NAME Investment Policy  September 10, 2020 Policy It is the policy of COMPANY NAME (the “Company”) that all Company investments  shall be in accordance with the policy and procedures set forth below (collectively, this “Policy”). Permitted Investments The Company is permitted to invest in the following types of equity and debt securities,  cash and cash equivalents, and other investments meeting the qualifications set forth below: Security Type Definition U.S. Treasury bills, notes, and bonds U.S. government-guaranteed securities. U.S. government agency debt Debt obligations issued by agencies of the U.S.  government, such as the Federal National  Mortgage Association (FNMA), the Federal  Home Loan Bank (FHLB), the Federal Home  Loan Mortgage Corporation (FHLMC), and  the Federal Farm Credit Bank (FFCB). Commercial paper An unsecured promissory note (maturities of 1-  270 days) issued by banks, corporations, and  finance companies. Domestic certificates of deposit A marketable receipt for funds deposited in a  United States bank or thrift institution for a  specific time period at a stated rate of interest. Time deposits Certificates of deposit held in a United States  financial institution for a negotiated fixed term  or with the understanding that the depositor can  withdraw only by giving notice. Money market funds Money market funds in United States financial  institutions. Corporate debt securities (notes and bonds) Corporate debt instruments.

  

  

  2 00078218v2 Security Type Definition Qualifying corporate equity securities The Company may purchase corporate equity  securities of publicly traded companies which  meet the following qualifications: The issuer has a market capitalization  of at least $500 million; The Company shall maintain a cash  buffer amount established by the  Management in connection with the  latest available Monthly Servicer  Report, and which amount is initially set at $15 million (the “Cash Buffer  Amount”). The Company shall not use  any of the funds reserved for the Cash  Buffer Amount to purchase any  qualifying corporate equity securities; The total amount of equity securities  of any single issuer purchased by the  Company shall not exceed fifteen  (15%) percent of the Company’s net  worth at the equity securities cost  basis (as reported on its most recent  financial statements as filed with the Securities and Exchange Commission  at the time of purchase); None of the Company’s officers or  directors serve as a member of the  Board of Directors or an officer of any  such issuer or hold a 5% or greater  equity stake in any such issuer; and Any and all investments in corporate  equity securities which meet the  requirements set forth in this Section  shall require 2 of the 3 Investment  Committee members approval. III.	Administrative Measures Management shall institute appropriate administrative measures to provide that all  investments are not in violation of, and are reviewed in accordance with, this Policy. This Policy  is intended to govern liquid investments and does not cover or prohibit the Company from making  investments in and acquiring assets in privately-held companies as long as any requisite Board  approval is obtained.

  

  

  3 00078218v2 In order to maintain adequate internal financial controls, the Company’s Chief Financial  Officer shall be notified of all trades before they occur with the broker-dealer utilized by the  Company to effect any trades. The Company shall also institute such additional measures as  deemed necessary or desirable by the Company’s Chief Financial Officer and the Company’s  independent public accountant to ensure that all investment activities maintain adequate internal  controls as required by Section 404 of the Sarbanes-Oxley Act. The Investment Committee shall be responsible for day-to-day investment operations and  investment decisions. The initial members of the Investment Committee shall be Adam Peterson,  Jeremy Zhu, and Doug Marohn. Members of the Investment Committee may be appointed or  removed by the Company’s Board of Directors at any time for any reason or no reason. No  member of the Investment Committee shall be compensated for his role as a member of the  Investment Committee. The Committee shall provide to the Board of Directors a quarterly report on equity  securities held by the Company including the price paid for such securities, the current market  value of such securities at the end of such month, the total return on such investments for the  calendar year to date and the total return on such investments since the date of acquisition of such  equity securities. The amount of securities which may be held by the Company shall not exceed 90% of the  maximum value of securities which the Company may hold without having to register as an  Investment Company within the meaning of the Investment Company Act of 1940, all as  determined by the Company’s Chief Financial Officer from time to time. The Company’s Audit Committee may, from time to time, and in its sole discretion,  prohibit investments in certain industries and regions. To assure continued relevance of the guidelines and objectives established in this  Investment Policy Statement, the Audit Committee plans to review the investment policy at least  annually. After review, if changes are needed, the Audit Committee will recommend such changes  to the Board of Directors for approval. IV.	Interpretation In any circumstance where the terms of this Policy differ from any existing or newly  enacted law, rule, regulation or standard governing the Company, the law, rule, regulation or  standard will take precedence over this Policy until such time as this Policy is changed to conform  to the law, rule, regulation or standard.EX-10.1

   

  Exhibit 10.1

   

  Conformed Version – 

  [Exhibit B intentionally omitted. It is not material and would be competitively harmful if publicly disclosed.]

  FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT

  THIS FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT (this “Amendment”), dated as of October 14, 2021 (“First Amendment Effective Date”), is entered into by and among AXSOME THERAPEUTICS, INC., a Delaware corporation (“Borrower”), and the several banks and other financial institutions or entities party hereto as Lender, constituting the Required Lenders and HERCULES CAPITAL, INC., a Maryland corporation, in its capacity as administrative agent and collateral agent for Lender (in such capacity, “Agent”).

  A. Borrower, Lenders and Agent are parties to that certain Loan and Security Agreement, dated as of September 25, 2020, (the “Existing Loan Agreement”; and the Existing Loan Agreement, as amended by this Amendment and as further amended, restated, supplemented or otherwise modified from time to time, the “Loan Agreement”). 

  B. Borrower, Lenders and Agent desire to modify the terms of the Existing Loan Agreement as set forth in this Amendment. 

  SECTION 1 Definitions; Interpretation.

  (a)Terms Defined in Loan Agreement.  All capitalized terms used in this Amendment (including in the recitals hereof) and not otherwise defined herein shall have the meanings assigned to them in the Loan Agreement.

  (b)Rules of Construction.  The rules of construction that appear in Section 1.3 of the Loan Agreement shall be applicable to this Amendment and are incorporated herein by this reference.

  SECTION 2 Amendments to the Loan Agreement.

  (a)Upon satisfaction of the conditions set forth in Section 3 hereof, the Existing Loan Agreement is hereby amended as follows:

  (i)Exhibit A attached hereto sets forth a clean copy of the Loan Agreement as amended hereby;

  (ii)In Exhibit B hereto, deletions of the text in the Existing Loan Agreement (including, to the extent included in such Exhibit B, each Schedule or Exhibit to the Existing Loan Agreement) are indicated by struck-through text, and insertions of text are indicated by bold, double-underlined text.

  (b)References Within Existing Loan Agreement.  Each reference in the Existing Loan Agreement to “this Agreement” and the words “hereof,” “herein,” “hereunder,” or words of like import, shall mean and be a reference to the Existing Loan Agreement as amended by this Amendment.  This Amendment shall be a Loan Document.

  SECTION 3 Conditions of Effectiveness.  The effectiveness of Section 2 of this Amendment shall be subject to Agent’s receipt of the following documents, in form and substance satisfactory to Agent, or, as applicable, the following conditions being met: 

  (a)Agent’s receipt of this Amendment, executed by Agent, each Lender and Borrower;

  (b)a duly executed certificate of an officer of Borrower certifying and attaching copies of (A) the Charter, certified as of a recent date by the jurisdiction of organization of Borrower and as in effect as of the First Amendment Effective Date; (B) the bylaws of Borrower, as in effect as of the First Amendment Effective Date; (C) resolutions of Borrower’s board of directors evidencing approval of this Amendment and the Advance to be made on the First Amendment Effective Date, as such resolutions remain in full force and effect as of the First Amendment Effective 

   

   

   

  

   

  Date; and (D) a schedule setting forth the name, title and specimen signature of officers or other authorized signers on behalf of Borrower; 

  (c)a certificate of good standing for Borrower from its jurisdiction of organization; 

  (d)On the First Amendment Effective Date, after giving effect to the amendment of the Existing Loan Agreement contemplated hereby: (i) the representations and warranties contained in Section 4 shall be true and correct on and as of the First Amendment Effective Date as though made on and as of such date; and (ii) there exist no Events of Default or events that with the passage of time would result in an Event of Default; and

  (e)Borrower shall have paid (i) all invoiced costs and expenses then due in accordance with Section 5(e), (ii) an amendment fee equal to $250,000 to the Agent and (iii) all other fees, costs and expenses, if any, due and payable as of the First Amendment Effective Date under the Loan Agreement.

  SECTION 4 Representations and Warranties.  To induce Agent and Lender to enter into this Amendment, Borrower hereby confirms, as of the date hereof, (a) that the representations and warranties made by it in Section 5 of the Loan Agreement and in the other Loan Documents are true and correct in all material respects; provided, however, that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof and that any representations and warranties made as of a specific date are only true and correct in all material respects as of such date, and that no Event of Default has occurred and is continuing, (b) that no event that has had or could reasonably be expected to have a Material Adverse Effect has occurred and is continuing and Borrower is not aware of any event likely to occur that is reasonably expected to result in a Material Adverse Effect; (c) that the information included in the Perfection Certificate delivered to Agent on the First Amendment Effective Date is true and correct; (d) Lenders have and shall continue to have valid, enforceable and perfected first-priority liens, subject only to Permitted Liens, on and security interests in the Collateral and all other collateral heretofore granted by Borrower to Lenders, pursuant to the Loan Documents or otherwise granted to or held by Lenders; (e) the agreements and obligations of Borrower contained in the Loan Documents and in this Amendment constitute the legal, valid and binding obligations of Borrower, enforceable against Borrower in accordance with their respective terms, except as the enforceability thereof may be limited by bankruptcy, insolvency or other similar laws of general application affecting the enforcement of creditors’ rights or by the application of general principles of equity; and (f) the execution, delivery and performance of this Amendment by Borrower will not violate any law, rule, regulation, order, contractual obligation or organizational document of Borrower and will not result in, or require, the creation or imposition of any lien, claim or encumbrance of any kind on any of its properties or revenues.  For the purposes of this Section 4, each reference in Section 5 of the Loan Agreement to “this Agreement,” and the words “hereof,” “herein,” “hereunder,” or words of like import in such Section, shall mean and be a reference to the Loan Agreement as amended by this Amendment.

  SECTION 5 Miscellaneous.

  (a)Loan Documents Otherwise Not Affected; Reaffirmation.

   

  (i)Except as expressly amended pursuant hereto or referenced herein, the Loan Agreement and the other Loan Documents shall remain unchanged and in full force and effect and are hereby ratified and confirmed in all respects.  Lender’s and Agent’s execution and delivery of, or acceptance of, this Amendment shall not be deemed to create a course of dealing or otherwise create any express or implied duty by any of them to provide any other or further amendments, consents or waivers in the future.  

  (ii)Borrower hereby expressly (1) reaffirms, ratifies and confirms all Secured Obligations under the Loan Agreement and the other Loan Documents, (2) reaffirms, ratifies and confirms the grant of security under Section 3.1 of the Loan Agreement, (3) reaffirms that such grant of security in the Collateral secures all Secured Obligations under the Loan Agreement, and with effect from (and including) the First Amendment Effective Date, such grant of security in the Collateral: (x) remains in full force and effect notwithstanding the amendments expressly referenced herein; and (y) secures all Secured Obligations under the Loan Agreement, as amended by this Amendment, and the other Loan Documents, (4) agrees that this Amendment shall be a “Loan Document” under the Loan Agreement and (5) agrees that the Loan Agreement and each other Loan Document shall remain in full force and effect following any action contemplated in connection herewith.

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  (iii)This Amendment is not a novation and the terms and conditions of this Amendment shall be in addition to and supplemental to all terms and conditions set forth in the Loan Documents.  Nothing in this Amendment is intended, or shall be construed, to constitute an accord and satisfaction of Borrower’s Secured Obligations under or in connection with the Loan Agreement and any other Loan Document or to modify, affect or impair the perfection or continuity of Agent’s security interest in, (on behalf of itself and the Lenders) security titles to or other liens on any Collateral for the Secured Obligations.

  (b)Conditions.  For purposes of determining compliance with the conditions specified in Section 3, each Lender that has signed this Amendment shall be deemed to have consented to, approved or accepted or to be satisfied with, each document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to a Lender unless Agent shall have received notice from such Lender prior to the date hereof specifying its objection thereto.

  (c)[Reserved]. 

  (d)No Reliance.  Borrower hereby acknowledges and confirms to Agent and Lenders that Borrower is executing this Amendment on the basis of its own investigation and for its own reasons without reliance upon any agreement, representation, understanding or communication by or on behalf of any other Person.

  (e)Costs and Expenses.  Borrower agrees to pay to Agent on the date hereof the reasonable out-of-pocket costs and expenses of Agent and Lender party hereto, and the fees and disbursements of counsel to Agent and Lender party hereto in connection with the negotiation, preparation, execution and delivery of this Amendment and any other documents to be delivered in connection herewith on the date hereof.

  (f)Binding Effect.  This Amendment binds and is for the benefit of the successors and permitted assigns of each party.

  (g)Governing Law.  THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL IN ALL RESPECTS BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF CALIFORNIA (WITHOUT REGARD TO THE CONFLICT OF LAWS PRINCIPLES THAT WOULD RESULT IN the application of ANY laws OTHER THAN THE LAWS OF THE STATE OF CALIFORNIA), INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, REGARDLESS OF THE LOCATION OF THE COLLATERAL.

  (h)Complete Agreement; Amendments.  This Amendment and the Loan Documents represent the entire agreement about this subject matter and supersede prior negotiations or agreements with respect to such subject matter.  All prior agreements, understandings, representations, warranties, and negotiations between the parties about the subject matter of this Amendment and the Loan Documents merge into this Amendment and the Loan Documents.  

  (i)Severability of Provisions.  Each provision of this Amendment is severable from every other provision in determining the enforceability of any provision.

  (j)Counterparts.  This Amendment may be executed in any number of counterparts and by different parties on separate counterparts, each of which, when executed and delivered, is an original, and all taken together, constitute one Amendment.  Delivery of an executed counterpart of a signature page of this Amendment by facsimile, portable document format (.pdf) or other electronic transmission will be as effective as delivery of a manually executed counterpart hereof.

  (k)Loan Documents. This Amendment and the documents related thereto shall constitute a Loan Document.

  (l)Electronic Execution of Certain Other Documents.  The words “execution,” “execute”, “signed,” “signature,” and words of like import in or related to any document to be signed in connection with this Amendment and the transactions contemplated hereby (including without limitation assignments, assumptions, amendments, waivers and consents) shall be deemed to include electronic signatures, the electronic matching of assignment terms and contract formations on electronic platforms approved by the Collateral Agent, or the keeping of records in 

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  electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the California Uniform Electronic Transactions Act, or any other similar state laws based on the Uniform Electronic Transactions Act.

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  IN WITNESS WHEREOF, the parties hereto have duly executed this Amendment, as of the date first above written.

  BORROWER:

  AXSOME THERAPEUTICS, INC.

  Signature:	/s/Herriot Tabuteau, M.D.

  Print Name:	Herriot Tabuteau, M.D.

  Title: 		Chief Executive Officer

  [SIGNATURES CONTINUE ON THE NEXT PAGE]

   

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  AGENT:

  HERCULES CAPITAL, INC.

  Signature:	/s/ Seth Meyer

  Print Name:	Seth Meyer

  Title:		Chief Financial Officer

  LENDER:

  HERCULES CAPITAL, INC.

  Signature:	/s/ Seth Meyer

  Print Name:	Seth Meyer

  Title:		Chief Financial Officer

   

  Hercules Funding IV LLC

  Signature:	/s/ Seth Meyer

  Print Name:	Seth Meyer

  Title:		Chief Financial Officer

   

  Hercules Private CREDIT Fund I L.P.

  By: Hercules Private Global Venture Growth Fund GP I LLC, its general partner

  By: Hercules Adviser LLC, its sole member

   

  Signature:	/s/ Seth Meyer

  Print Name:	Seth Meyer

  Title:		Authorized Signatory

   

   

   

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  Hercules Private Global Venture Growth Fund I L.P.

  By: Hercules Private Global Venture Growth Fund GP I LLC, its general partner

  By: Hercules Adviser LLC, its sole member

   

  Signature:	/s/ Seth Meyer

  Print Name:	Seth Meyer

  Title:		Authorized Signatory

   

   

   

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  EXHIBIT A

  LOAN AND SECURITY AGREEMENT

  THIS LOAN AND SECURITY AGREEMENT is made and dated as of September 25, 2020 and is entered into by and among Axsome Therapeutics, Inc., a Delaware corporation, and each of its Subsidiaries other than Excluded Subsidiaries (individually and collectively referred to as the “Borrower”), the several banks and other financial institutions or entities from time to time parties to this Agreement (collectively, referred to as the “Lenders”) and HERCULES CAPITAL, INC., a Maryland corporation, in its capacity as administrative agent and collateral agent for itself and the Lenders (in such capacity, the “Agent”).  

  RECITALS

  A.	Borrower has requested the Lenders make available to Borrower a loan in an aggregate principal amount of up to Three Hundred Million Dollars ($300,000,000) (the “Term Loan”); and 

  B.	The Lenders are willing to make the Term Loan on the terms and conditions set forth in this Agreement.

  AGREEMENT

  NOW, THEREFORE, Borrower, Agent and the Lenders agree as follows:

  1.DEFINITIONS AND RULES OF CONSTRUCTION

  a.Unless otherwise defined herein, the following capitalized terms shall have the following meanings:

  “Account Control Agreement(s)” means any agreement entered into by and among the Agent, Borrower and a third party bank or other institution (including a Securities Intermediary) in which Borrower maintains a Deposit Account or an account holding Investment Property and which perfects Agent’s first priority security interest in the subject account or accounts.

  “ACH Authorization” means the ACH Debit Authorization Agreement in substantially the form of Exhibit H, which account numbers shall be redacted for security purposes if and when filed publicly by the Borrower.

  “ACH Failure” means the failure of the Automated Clearing House (ACH) system to effect a transfer of funds requested by Lender to be used to satisfy all or part of Borrower’s obligations to pay principal and interest due hereunder, unless any such failure results from insufficient funds in Borrower’s account(s).

  “Acquisition” means any transaction or series of related transactions for the purpose of or resulting, directly or indirectly, in (a) the acquisition of all or substantially all of the assets of a Person, or any division, line of business or other business unit of another Person, (b) the acquisition of fifty percent (50%) or more of the Equity Interests of any Person, whether or not involving a merger,  consolidation or similar transaction with such other Person, or otherwise 

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  causing any Person to become a Subsidiary of Borrower, or (c) the acquisition of, or the right to use, develop or sell (in each case, including through licensing), any product that would constitute a Borrower Product upon acquisition.  

  “Acquisition Deferred Payments” means, with respect to an Acquisition, any “earnouts,” holdbacks, performance based-milestones, royalties, purchase price adjustments, profit sharing arrangements, deferred purchase money amounts, indemnifications, non-competition agreements, incentive payments, and other similar payment obligations, and other contingent obligations and agreements consisting of the adjustment of purchase price or similar adjustments.

  “Advance(s)” means a Term Loan Advance.

  “Advance Date” means the funding date of any Advance.

  “Advance Request” means a request for an Advance submitted by Borrower to Agent in substantially the form of Exhibit A, which account numbers shall be redacted for security purposes if and when filed publicly by the Borrower.

  “Affiliate” means with respect to any Person (a) any Person that directly or indirectly controls, is controlled by, or is under common control with such Person, (b) any Person directly or indirectly owning, controlling or holding with power to vote ten percent (10%) or more of the outstanding voting securities of such Person, and (c) any Person ten percent (10%) or more of whose outstanding voting securities are directly or indirectly owned, controlled or held by such Person with power to vote such securities.  As used in the definition of “Affiliate,” the term “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities, by contract or otherwise.

  “Agreement” means this Loan and Security Agreement, as amended from time to time.

  “Amortization Date” means November 1, 2025; provided however, (x) if the First Interest Only Extension Conditions are satisfied, then May 1, 2026, and (y) if the Second Interest Only Extension Conditions are satisfied, then November 1, 2026.

  “Antecip License Agreement” means that certain License Agreement, dated as of April 17, 2012 by and between Borrower and Antecip Bioventures II LLC, as amended by the First Amendment to License Agreement dated as of August 21, 2015, as amended by the Antecip Direct Agreement and as may be further amended from time to time pursuant to terms of the Antecip Direct Agreement.

  “Antecip Direct Agreement” means that certain Direct Agreement dated as of the date hereof, by and among the Company, Antecip Bioventures II LLC and the Agent (as amended, supplemented or otherwise modified from time to time).

  “Anti-Corruption Laws” means all laws, rules, and regulations of any jurisdiction applicable to Borrower or any of its Affiliates from time to time concerning or relating to bribery 

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  or corruption, including without limitation the United States Foreign Corrupt Practices Act of 1977, as amended, the UK Bribery Act 2010 and other similar legislation in any other jurisdictions.

  “Anti‐Terrorism Laws” means any laws, rules, regulations or orders relating to terrorism or money laundering, including without limitation Executive Order No. 13224 (effective September 24, 2001), the USA PATRIOT Act, the laws comprising or implementing the Bank Secrecy Act, and the laws administered by OFAC.

  “Australian Subsidiary” means Axsome Therapeutics Australia Pty Ltd, a company organized under the laws of Australia.

   

  “AXS-05” means Borrower’s AXS-05 product candidate (bupropion and dextromethorphan) for the treatment of Major Depressive Disorder (MDD) and other indications.

  “AXS-05 Milestone” means Borrower shall have provided evidence reasonably satisfactory to Agent that the FDA has approved Borrower’s New Drug Application for AXS-05 for the treatment of MDD with a label claim that is generally consistent with that sought in Borrower’s New Drug Application filing.

   “AXS-05 Milestone Date” means the date on which the Borrower achieves the AXS-05 Milestone.

  “AXS-07” means Borrower’s AXS-07 product candidate (MoSEIC meloxicam and rizatriptan) for the acute treatment of migraine.

  “AXS-07 Milestone” means Borrower shall have provided evidence reasonably  satisfactory to Agent that the FDA has approved Borrower’s New Drug Application for AXS-07 for the acute treatment of migraine with a label claim that is generally consistent with that sought in Borrower’s New Drug Application filing.

  “AXS-07 Milestone Date” means the date on which the Borrower achieves the AXS-07 Milestone.

  “AXS-12” means Borrower’s AXS-12 product candidate (reboxetine) for the treatment of narcolepsy.

  “AXS-14” means Borrower’s AXS-14 product candidate (esreboxetine) for the treatment of fibromyalgia.

  “Blocked Person” means any Person:  (a) listed in the annex to, or is otherwise subject to the provisions of, Executive Order No. 13224, (b) a Person owned or controlled by, or acting for or on behalf of, any Person that is listed in the annex to, or is otherwise subject to the provisions of, Executive Order No. 13224, (c) a Person with which any Lender is prohibited from dealing or otherwise engaging in any transaction by any Anti-Terrorism Law, (d) a Person that commits, threatens or conspires to commit or supports “terrorism” as defined in Executive Order 

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  No. 13224, or (e) a Person that is named a “specially designated national” or “blocked person” on the most current list published by OFAC or other similar list.

  “Borrower Products” means all products currently being designed, manufactured or that are under preclinical or clinical investigation or development by Borrower or which Borrower intends to sell, license, or distribute in the future subject to applicable regulatory approvals including any products under development, collectively, together with all products that have been sold, licensed or distributed by Borrower since its incorporation.

  “Borrower’s Books” means Borrower’s or any of its Subsidiaries’ books and records including ledgers, federal, state, local and foreign tax returns, records regarding Borrower’s or its Subsidiaries’ assets or liabilities, the Collateral, business operations or financial condition, and all computer programs or storage or any equipment containing such information.

  “Business Day” means any day other than Saturday, Sunday and any other day on which banking institutions in the State of California are closed for business.

  “Cash” means all cash, cash equivalents and liquid funds.

  “Change in Control” means any (x) reorganization, recapitalization, consolidation or merger (or similar transaction or series of related transactions) of Borrower, sale or exchange of outstanding shares (or similar transaction or series of related transactions) of Borrower in which the holders of Borrower’s outstanding shares immediately before consummation of such transaction or series of related transactions do not, immediately after consummation of such transaction or series of related transactions, retain shares representing more than fifty percent (50%) of the voting power of the surviving entity of such transaction or series of related transactions (or the parent of such surviving entity if such surviving entity is wholly owned by such parent), in each case without regard to whether Borrower is the surviving entity or (y) “change of control”, “fundamental change”, “make-whole fundamental change” or any comparable term under and as defined in any indenture governing any Permitted Convertible Debt has occurred. 

  “Closing Date” means the date of this Agreement.

  “Code” means the Internal Revenue Code of 1986, as amended.

  “Common Stock” means the Common Stock, $0.0001 par value per share, of the Borrower.

  “Company IP” means any and all of the following, as they exist in and throughout the United States: (a) Current Company IP; (b) improvements, continuations, continuations-in-part, divisions, provisionals or any substitute applications, any patent issued with respect to any of the Current Company IP, any patent right claiming the composition of matter of, or the method of making or using, the Borrower Products in the United States, any reissue, reexamination, renewal or patent term extension or adjustment (including any supplementary protection certificate) of any such patent, and any confirmation patent or registration patent or patent of addition based on any such patent; (c) trade secrets or trade secret rights, including any rights to unpatented inventions, know-how, show-how, operating manuals, confidential or proprietary information, research in progress, algorithms, data, databases, data collections, designs, processes, procedures, methods, 

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  protocols, materials, formulae, drawings, schematics, blueprints, flow charts, models, strategies, prototypes, techniques, and the results of experimentation and testing, including samples, in each case, as specifically related to any research, development, manufacture, production, use, commercialization, marketing, importing, storage, transport, offer for sale, distribution or sale of the Borrower Products; (d) any and all IP Ancillary Rights specifically relating to any of the foregoing; and (e) regulatory filings, submissions and approvals related to any research, development, manufacture, production, use, commercialization, marketing, importing, storage, transport, offer for sale, distribution or sale of the Borrower Products and all data provided in any of the foregoing.  

  “Contingent Obligation” means, as applied to any Person, any direct or indirect liability, contingent or otherwise, of that Person with respect to (i) any Indebtedness, lease, dividend, letter of credit or other obligation of another, including any such obligation directly or indirectly guaranteed, endorsed, co-made or discounted or sold with recourse by that Person, or in respect of which that Person is otherwise directly or indirectly liable; (ii) any obligations with respect to undrawn letters of credit, corporate credit cards or merchant services issued for the account of that Person; and (iii) all obligations arising under any interest rate, currency or commodity swap agreement, interest rate cap agreement, interest rate collar agreement, or other agreement or arrangement designated to protect a Person against fluctuation in interest rates, currency exchange rates or commodity prices; provided, however, that the term “Contingent Obligation” shall not include endorsements for collection or deposit in the ordinary course of business  or guaranties of operating leases that do not constitute Indebtedness.  The amount of any Contingent Obligation shall be deemed to be an amount equal to the stated or determined amount of the primary obligation in respect of which such Contingent Obligation is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by such Person in good faith; provided, however, that such amount shall not in any event exceed the maximum amount of the obligations under the guarantee or other support arrangement. For the avoidance of doubt, no Permitted Bond Hedge Transaction or Permitted Warrant Transaction will be considered a Contingent Obligation of Borrower.

  “Copyright License” means any written agreement granting any right to use any Copyright or Copyright registration, now owned or hereafter acquired by Borrower or in which Borrower now holds or hereafter acquires any interest.

  “Copyrights” means all copyrights, whether registered or unregistered, held pursuant to the laws of the United States of America, any State thereof, or of any other country.

  “Cross-Default Reference Obligation” has the meaning assigned to such term in the definition of “Permitted Convertible Debt.”

  “Deposit Accounts” means any “deposit accounts,” as such term is defined in the UCC, and includes any checking account, savings account, or certificate of deposit.

  “Domestic Subsidiary” means any Subsidiary organized under the laws of the United States of America, any State thereof, the District of Columbia, or any other jurisdiction within the United States of America.

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  “Due Diligence Fee” means $75,000, which fee has been paid to the Lenders prior to the Closing Date, and shall be deemed fully earned on such date regardless of the early termination of this Agreement.

  “Equity Interests” means, with respect to any Person, the capital stock, partnership or limited liability company interest, or other equity securities or equity ownership interests of such Person.

  “ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the regulations promulgated thereunder.

  “Excluded Account” means (i) accounts used solely to fund payroll or employee benefits in an aggregate amount not to exceed the then-next two payroll cycles, (ii) any Account (including, for the avoidance of doubt, any cash, cash equivalents, or other property contained therein) to the extent, and for so long as, such Account is pledged and used exclusively to secure performance of obligations arising and permitted under clauses (vi), (xiv) and (xv) of the definition of “Permitted Liens” and (iii) other Accounts that have a balance not to exceed One Hundred Thousand Dollars ($100,000.00) in the aggregate at any time.

  “Excluded Subsidiary” means (a) the Irish Subsidiary, (b) the Australian Subsidiary and (c) each Foreign Subsidiary of Borrower designated by Borrower as an “Excluded Subsidiary”; provided that, in each of the foregoing cases, the Excluded Subsidiary Condition is satisfied with respect to such Subsidiary at all times, and in each case as long as no Excluded Subsidiary owns any Intellectual Property.  

  “Excluded Subsidiary Condition” means (a) the aggregate revenues (under GAAP) of all Excluded Subsidiaries does not exceed five percent (5%) of the consolidated revenues (under GAAP) of Borrower and its Subsidiaries; and (b) value of the total assets of all Excluded Subsidiaries does not exceed five percent (5%) of the consolidated total assets of Borrower and its Subsidiaries.

  1.“FDA” means the U.S. Food and Drug Administration or any successor thereto.

  2.“FDA Good Manufacturing Practices” means the applicable requirements and standards set forth in the Food, Drug, and Cosmetic Act (“FDCA”) and its implementing regulations (for example, for pharmaceuticals being used in Phase 2 or 3 studies, and commercial pharmaceuticals, 21 C.F.R. Parts 210 and 211) and relevant FDA  guidance documents (for example, for pharmaceuticals in Phase 1, FDA guidance entitled “CGMP for Phase 1 Investigational Drugs”. 

  3.“FDA Laws” means all applicable statutes, rules, regulations, standards, guidelines, policies and orders and Requirements of Law administered, implemented, enforced or issued by FDA or any comparable governmental authority.

  4.“Federal Health Care Program Laws” means collectively, federal Medicare or federal or state Medicaid statutes, Sections 1128, 1128A, 1128B, 1128C or 1877 of the Social Security Act (42 U.S.C. §§ 1320a-7, 1320a-7a, 1320a-7b, 1320a-7c, 1320a-7h and 1395nn), the 

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  federal TRICARE statute (10 U.S.C. § 1071 et seq.), the civil False Claims Act of 1863 (31 U.S.C. § 3729 et seq.), criminal false claims statutes (e.g., 18 U.S.C. §§ 287 and 1001), the Program Fraud Civil Remedies Act of 1986 (31 U.S.C. § 3801 et seq.), HIPAA, or related regulations or other Requirements of Law that directly or indirectly govern the health care industry, programs of governmental authorities related to healthcare, health care professionals or other health care participants, or relationships among health care providers, suppliers, distributors, manufacturers and patients, and the pricing, sale and reimbursement of health care items or services including the collection and reporting requirements, and the processing of any applicable rebate, chargeback or adjustment, under applicable rules and regulations relating to the Medicaid Drug Rebate Program (42 U.S.C. § 1396r-8) and any state supplemental rebate program, Medicare average sales price reporting (42 U.S.C. § 1395w-3a), the Public Health Service Act (42 U.S.C. § 256b), the VA Federal Supply Schedule (38 U.S.C. § 8126) or under any state pharmaceutical assistance program or U.S. Department of Veterans Affairs agreement, and any successor government programs.

  “First Amendment Closing Date” means October 14, 2021.

  5.“First Interest Only Extension Conditions” shall mean satisfaction of each of the following events: (a) no default or Event of Default shall have occurred and be continuing; and (b) either the AXS-05 Milestone or the AXS-07 Milestone have been achieved on or prior to October 31, 2025.

  6.“Forecast” means the projections for Borrower as delivered and accepted by Agent on October 4, 2021; provided however, that Borrower may from time to time update the Forecast with a forecast approved by the board of directors of the Borrower, subject to the consent of Agent in its reasonable discretion; provided, further that, it is acknowledged that the Forecast is premised on, among other things, certain assumptions about possible timing of a launch date for AXS-05 and AXS-07 and to the extent the assumed launch dates are deferred or delayed, then, for purposes of this Agreement and the other Loan Documents, the Forecast shall be deemed to be automatically updated and revised to defer the expected dates for receipt or recognition of revenues from AXS-05 and AXS-07, as applicable, by the same amount of time as the deferral or delay of the actual launch dates; provided, further that the Forecast must be updated prior to December 31, 2023 to include projections for 2024 and beyond based on a forecast approved by the board of directors demonstrating reasonable growth rates. 

  7.“Foreign Subsidiary” means any Subsidiary other than a Domestic Subsidiary.

  “GAAP” means generally accepted accounting principles in the United States of America, as in effect from time to time.  

  “Hedge Agreement” means any interest rate, currency or commodity swap agreement, interest rate cap agreement, interest rate collar agreement, fuel or mineral or other commodity hedge or exchange agreement or any other agreement or arrangement entered into for non-speculative purposes designated to protect a Person against fluctuation in interest rates, currency exchange rates, commodity or mineral prices.

  “Indebtedness” means (a) all indebtedness for borrowed money or the deferred purchase price of property or services (excluding trade credit entered into in the ordinary course 

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  of business not past due for more than one hundred eighty (180) days), including reimbursement and other obligations with respect to surety bonds and letters of credit, (b) all obligations evidenced by notes, bonds, debentures or similar instruments, (c) all capital lease obligations, (d) equity securities of any Person subject to repurchase or redemption other than at the sole option of such Person, (e) non-contingent “earnouts”, purchase price adjustments, profit sharing arrangements, deferred purchase money amounts and similar payment obligations arising out of purchase and sale contracts but only as and to the extent of the amount required to be reflected as a liability on the balance sheet of such Person in accordance with GAAP, (f) non-contingent obligations to reimburse any bank or Person in respect of amounts paid under a letter of credit, banker’s acceptance or similar instrument, and (h) all Contingent Obligations. For the avoidance of doubt no Permitted Bond Hedge Transaction or Permitted Warrant Transaction shall be considered Indebtedness of the Borrower.

  8.“Initial Facility Charge” means $737,500, which is payable to the Lenders in accordance with Section 4.1(f).

  9.“Initial Minimum Cash Test Date” means the date on which the outstanding principal amount of the Term Loan Advances is first equal to or greater than Fifty-Five Million Dollars ($55,000,000). 

  10.“Initial Performance Covenant Test Date” means the later of (i) the last calendar month of the calendar quarter that is nine months following the earlier of (x) the AXS-05 Milestone Date and (y) the AXS-07 Milestone Date, or (ii) the date on which the outstanding principal amount of the Term Loan Advances is equal to or greater than Sixty Five Million Dollars ($65,000,000).

  “Insolvency Proceeding” means any proceeding by or against any Person under the United States Bankruptcy Code, or any other bankruptcy or insolvency law, including assignments for the benefit of creditors, compositions, extensions generally with its creditors, or proceedings seeking reorganization, arrangement, or other similar relief.

  “Intellectual Property” means all of Borrower’s Copyrights; Trademarks; Patents; Licenses; trade secrets and inventions; mask works; Borrower’s applications therefor and reissues, extensions, or renewals thereof; and Borrower’s goodwill associated with any of the foregoing, together with Borrower’s rights to sue for past, present and future infringement of Intellectual Property and the goodwill associated therewith.

  “Intellectual Property Security Agreement” means the Intellectual Property Security Agreement dated as of the Closing Date between the Borrower and Agent, as the same may from time to time be amended, restated, modified or otherwise supplemented.

  “Investment” means (a) any beneficial ownership (including stock, partnership, limited liability company interests, or other securities) of or in any Person, (b) any loan, advance or capital contribution to any Person or (c) any Acquisition.

  “IP Ancillary Rights” means, with respect to any Copyright, Trademark, Patent, software, trade secrets or trade secret rights, including any rights to unpatented inventions, know-how, show-how and operating manuals, all income, royalties, proceeds and liabilities at any time 

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  due or payable or asserted under or with respect to any of the foregoing or otherwise with respect thereto, including all rights to sue or recover at law or in equity for any past, present or future infringement, misappropriation, dilution, violation or other impairment thereof, and, in each case, all rights to obtain any other intellectual property right ancillary to any Copyright, Trademark, Patent, software, trade secrets or trade secret rights.

  “Irish Subsidiary” is Axsome Therapeutics Limited, a company organized under the laws of Ireland.

  “IRS” means the United States Internal Revenue Service. 

  “Joinder Agreements” means for each Subsidiary (other than an Excluded Subsidiary), a completed and executed Joinder Agreement in substantially the form attached hereto as Exhibit F.

  “License” means any Copyright License, Patent License, Trademark License or other license of rights or interests.

  “Lien” means any mortgage, deed of trust, pledge, hypothecation, assignment for security, security interest, encumbrance, levy, lien or charge of any kind, whether voluntarily incurred or arising by operation of law or otherwise, against any property, any conditional sale or other title retention agreement, and any lease in the nature of a security interest.

  “Loan” means the Advances made under this Agreement.

  “Loan Documents” means this Agreement, the promissory notes (if any), the ACH Authorization, the Account Control Agreements, the Joinder Agreements, all UCC Financing Statements, the Warrant, the Pledge Agreement, the Intellectual Property Security Agreement, the Antecip Direct Agreement, and any other documents executed in connection with the Secured Obligations or the transactions contemplated hereby, as the same may from time to time be amended, modified, supplemented or restated. 

  “Market Capitalization” means, as of any date of determination, the product of (a) the number of outstanding shares of Common Stock publicly disclosed in the most recent filing of Borrower with the United States Securities Exchange Commission as outstanding as of such date of determination and (b) the closing price of Borrower’s Common Stock (as quoted on Bloomberg L.P.’s page or any successor page thereto of Bloomberg L.P. or if such page is not available, any other commercially available source).

  “Material Adverse Effect” means a material adverse effect upon: (i) the business, operations, properties, assets or financial condition of Borrower and its Subsidiaries taken as a whole; or (ii) the ability of Borrower to perform or pay the Secured Obligations in accordance with the terms of the Loan Documents, or the ability of Agent or the Lenders to enforce any of its rights or remedies with respect to the Secured Obligations; or (iii) the Collateral or Agent’s Liens on the Collateral or the priority of such Liens.

  “Material Agreement” means (a) the Antecip License Agreement, (b) that certain license agreement dated as of January 10, 2020 by and between Borrower and Pfizer, Inc. and (c) 

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  any other license, agreement or other contractual arrangement whereby Borrower or any of its Subsidiaries is required to transfer, either in-kind or in cash, prior to the Term Loan Maturity Date, assets or property valued (book or market) at more than Ten Million Dollars ($10,000,000.00) in the aggregate. 

  “Material Regulatory Liabilities” means (a)(i) any liabilities arising from the violation of Public Health Laws, Federal Health Care Program Laws, and other applicable comparable Requirements of Law, or from any non-routing terms, conditions of or requirements imposed relative to any Registrations (including costs of actions required under applicable Requirements of Law, including FDA Laws and Federal Health Care Program Laws, or necessary to remedy any violation of any terms or conditions applicable to any Registrations), including, but not limited to, withdrawal of approval, recall, revocation, suspension, import detention and seizure of any Borrower Product, and (ii) any loss of recurring annual revenues as a result of any loss, suspension or limitation of any Registrations, which, in the case of the foregoing clauses (i) and (ii), exceed $2,000,000 individually or in the aggregate, or (b) any Material Adverse Effect.  

  “Maturity Extension Conditions” means (i) the Borrower achieves T6M Net Product Revenue of at least 60% of the T6M Net Product Revenue included in the Forecast and (ii) the Borrower notifies the Agent in writing of its desire to extend the Term Loan Maturity Date on or within five (5) Business Days of the third anniversary of the First Amendment Closing Date.

  “Maximum Term Loan Amount” means Three Hundred Million Dollars ($300,000,000). 

  “Net Product Revenue Ratio” means, as of any date of determination, the ratio of (a) the outstanding amount of the Term Loan Advances to (b) T3M Net Product Revenue.

  11.“New Drug Application” means a new drug application in the United States for authorization to market a product, as defined in the applicable laws and regulations and submitted to the FDA.

  “Non-Disclosure Agreement” means that certain Non-Disclosure Agreement by and between Borrower and Agent, dated as of August 11, 2020. 

  “OFAC” is the U.S. Department of Treasury Office of Foreign Assets Control.

  “OFAC Lists” are, collectively, the Specially Designated Nationals and Blocked Persons List maintained by OFAC pursuant to Executive Order No. 13224, 66 Fed. Reg. 49079 (Sept. 25, 2001) and/or any other list of terrorists or other restricted Persons maintained pursuant to any of the rules and regulations of OFAC or pursuant to any other applicable Executive Orders.

  “Patent License” means any written agreement granting any right with respect to any invention on which a Patent is in existence or a Patent application is pending, in which agreement Borrower now holds or hereafter acquires any interest.

  “Patents” means all letters patent of, or rights corresponding thereto, in the United States of America or in any other country, all registrations and recordings thereof, and all 

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  applications for letters patent of, or rights corresponding thereto, in the United States of America or any other country.

  “Performance Covenant A” means satisfaction of each of the following at all times:  (i) Borrower’s Market Capitalization exceeds One Billion Dollars ($1,000,000,000) and (ii) Borrower maintains Qualified Cash in an amount not less than fifty percent (50%) of the sum of the outstanding principal amount of the Term Loan Advances plus the Qualified Cash A/P Amount. 

  “Performance Covenant B” means Borrower at all times maintains Qualified Cash in an amount not less than eighty five percent (85%) of the sum of the outstanding principal amount of the Term Loan Advances plus the Qualified Cash A/P Amount.

  “Performance Covenant C” means Borrower achieves T6M Net Product Revenue of at least 60% of the T6M Net Product Revenue included in the Forecast, determined on a quarterly basis.

  “Permitted Acquisition” means any Acquisition (including by way of merger), in each case located entirely within the United States of America, which is conducted in accordance with the following requirements:

  (i)of assets, Equity Interests, businesses, Persons or products engaged in a line of business incidental or related to that of the Borrower or its Subsidiaries or reasonable extensions thereof;

  (ii)unless otherwise agreed by Agent in its sole discretion, if such Acquisition is structured as a stock acquisition, then the Person so acquired shall either (i) become a wholly-owned (other than issuance of shares necessary under local law for the qualification of directors) Subsidiary of Borrower or of a Subsidiary and the Borrower shall comply, or cause such Subsidiary to comply, with 7.13 hereof, as applicable, or (ii) such Person shall be merged with and into Borrower (with the Borrower being the surviving entity);

  (iii)if such Acquisition is structured as the acquisition or in-licensing of assets, such assets shall be acquired by a Borrower, and shall be free and clear of Liens other than Permitted Liens;

  (iv)the Borrower shall have delivered to the Lenders not less than ten (10) days (or such shorter period as Agent may agree in its sole discretion) nor more than forty five (45) days prior to the date of such Acquisition, notice of such Acquisition together with pro forma projected financial information, copies of all material documents relating to such acquisition reasonably requested by Agent, and historical financial statements for such acquired entity (to the extent available), division or line of business, in each case in form reasonably satisfactory to the Lenders and demonstrating compliance with the covenants set forth in Section 7.20 hereof on a pro forma basis as if the Acquisition occurred on the first day of the most recent measurement period;

  (v)both immediately before and after such Acquisition no Default or Event of Default shall have occurred and be continuing; and

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  (vi)the sum of the purchase price of such proposed new Permitted Acquisition (together with all prior Permitted Acquisitions consummated during the term of this Agreement), computed on the basis of total acquisition consideration paid or incurred, or to be paid or incurred, by Borrower with respect thereto (but excluding for such purpose: any unpaid Acquisition Deferred Payments, in each case except to the extent required to be reflected as liabilities on the balance sheet of Borrower), including the amount of Permitted Indebtedness assumed or to which such assets, businesses or business or ownership interest or shares, or any Person so acquired, is subject, shall not be greater than Twenty Five Million Dollars $25,000,000 plus the aggregate amount of Tranche 5 Advances approved by Lenders’ investment committee for Acquisitions minus the aggregate amount of all Acquisition Deferred Payments that have been paid. 

  “Permitted Bond Hedge Transaction” means any call or capped call option (or substantively equivalent derivative transaction) relating to the Common Stock (or other securities or property following a merger event or other change of the Common Stock) purchased by Borrower in connection with the issuance of any Permitted Convertible Debt and as may be amended in accordance with its terms; provided that, the net purchase price of any such call option transaction, less the amount received by Borrower in respect of any Permitted Warrant Transaction in connection with such issuance of Permitted Convertible Debt, shall not exceed 25% of the gross proceeds to Borrower from such issuance of Permitted Convertible Debt; provided further that the terms, conditions and covenants of each such call option transaction are customary for agreements of such type, as determined in good faith by the board of directors of the Borrower or a committee thereof. 

  12.“Permitted Convertible Debt” means Indebtedness of the Borrower that is convertible into a fixed number (subject to customary anti-dilution adjustments, “make-whole” increases and other customary changes thereto) of shares of Common Stock (or other securities or property following a merger event or other change of the Common Stock), cash or any combination thereof (with the amount of such cash or such combination determined by reference to the market price of such Common Stock or such other securities); provided that such Indebtedness shall (a) not require any scheduled amortization or otherwise require payment of principal prior to, or have a scheduled maturity date, earlier than, one hundred eighty (180) days after the Term Loan Maturity Date, (b) be unsecured, (c) not be guaranteed by any Subsidiary of Borrower, (d) contain usual and customary subordination terms for underwritten offerings of senior subordinated convertible notes as determined in good faith by the board of directors of the Borrower or a committee thereof, (e) shall specifically designate this Agreement and all Secured Obligations as “designated senior indebtedness” or similar term so that the subordination terms referred to in clause (d) of this definition specifically refer to such notes as being subordinated to the Secured Obligations pursuant to such subordination terms and (f) be on terms and conditions customary for Indebtedness of such type, as determined in good faith by the board of directors of the Borrower or a committee thereof; provided further, that any cross-default or cross-acceleration event of default (each howsoever defined) provision contained therein that relates to indebtedness or other payment obligations of Borrower (or any of its Subsidiaries) (such indebtedness or other payment obligations, a “Cross-Default Reference Obligation”) contains a cure period of at least thirty (30) calendar days (after written notice to the issuer of such Indebtedness by the trustee or to such issuer and such trustee by holders of at least 25% in aggregate principal amount of such Indebtedness then outstanding) before a default, event of default, acceleration or other event or condition under 

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  such Cross-Default Reference Obligation results in an event of default under such cross-default or cross-acceleration provision. 

  “Permitted Indebtedness” means: 

  (i)Indebtedness of Borrower in favor of the Lenders or Agent arising under this Agreement or any other Loan Document; 

  (ii)Indebtedness existing on the Closing Date which is disclosed in Schedule 1A; 

  (iii)Indebtedness of up to $500,000 outstanding at any time secured by a Lien described in clause (vii) of the defined term “Permitted Liens,” provided such Indebtedness does not exceed the cost of the Equipment and related software financed with such Indebtedness; 

  (iv)Indebtedness to trade creditors incurred in the ordinary course of business (other than any trade credit that is past due for more than one hundred eighty (180) days); 

  (v)Indebtedness that also constitutes a Permitted Investment; 

  (vi)Subordinated Indebtedness; 

  (vii)Indebtedness, including reimbursement obligations, in connection with (A) letters of credit, (B) foreign exchange services, ACH Services, and, cash management services (including credit cards, debit cards and similar instruments) and (C)  Hedge Agreements (entered into in order to manage existing or anticipated interest rate, exchange rate or commodity price risks and not for speculative purposes), in each case that may or be unsecured or secured by Cash and issued on behalf of the Borrower or a Subsidiary thereof in an aggregate amount not to exceed $3,000,000 at any time outstanding, 

  (viii)other unsecured Indebtedness in an amount not to exceed $250,000 at any time outstanding, 

  (ix)intercompany Indebtedness as long as either (A) each of the Subsidiary obligor and the Subsidiary obligee under such Indebtedness is a Subsidiary that has executed a Joinder Agreement, or (B) it is Indebtedness of an Excluded Subsidiary permitted under clause (x) of the definition of Permitted Investments; 

  (x)Permitted Convertible Debt not to exceed Five Hundred Million Dollars ($500,000,000) in principal amount at any one time outstanding; 

  (xi)Indebtedness with respect to a Permitted Royalty Transaction that (a) is subordinated to the Secured Obligations pursuant to a subordination or intercreditor agreement on terms and conditions reasonably satisfactory to Agent, (b) does not have a scheduled maturity date earlier than one hundred eighty (180) days after the Term Loan Maturity Date, (c) is in an aggregate amount not to exceed $250,000,000, and (d) shall specifically designate this Agreement and all Secured Obligations as “designated senior indebtedness” or similar term so that the subordination terms referred to in clause (a) of 

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  this clause specifically refer to such notes as being subordinated to the Secured Obligations pursuant to such subordination terms; 

  (xii)Indebtedness incurred as a result of endorsing negotiable instruments received in the ordinary course of business;

  (xiii)Indebtedness in respect of surety bonds and other indemnities and similar obligations up to an aggregate amount of Five Hundred Thousand Dollars ($500,000) at any one time outstanding; 

  (xiv)Indebtedness arising with respect to Borrower’s real property lease and operating lease obligations in the ordinary course of Borrower’s business; and

  (xv)Indebtedness in respect of Acquisition Deferred Payments incurred in connection with Permitted Acquisitions;  

  (xvi)extensions, refinancings, renewals, modifications, amendments or restatements of any items of Permitted Indebtedness; provided that the principal amount is not increased or the terms modified to impose materially more burdensome terms upon Borrower or its Subsidiary, as the case may be.

  “Permitted Investment” means: 

  (i)Investments existing on the Closing Date which are disclosed in Schedule 1B;

  (ii)(a) marketable direct obligations issued or unconditionally guaranteed by the United States of America or any agency or any State thereof maturing within one year from the date of acquisition thereof currently having a rating of at least A-2 or P-2 from either Standard & Poor’s Corporation or Moody’s Investors Services, (b) commercial paper maturing no more than one year from the date of creation thereof and currently having a rating of at least A-2 or P-2 from either Standard & Poor’s Corporation or Moody’s Investors Service, (c) certificates of deposit issued by any bank with assets of at least $500,000,000 maturing no more than one year from the date of investment therein, (d) money market accounts, and (e) Investments permitted by Borrower’s Investment Policy and Guidelines dated as of August 2016 and provided to the Agent and Lenders, as amended from time to time; provided that any material amendments thereto have been approved by Agent and the Lenders in their reasonable discretion; 

  (iii)repurchases of Equity Interests from current or former employees, officers, directors, or consultants of Borrower under the terms of applicable repurchase agreements at the original issuance price of such securities (1) in an aggregate amount not to exceed $250,000 in any fiscal year; provided that no Event of Default has occurred, is continuing or would exist after giving effect to the repurchases or (2) in any amount where the consideration for the repurchase is the cancellation of indebtedness owed by such former employees, officers, directors or consultants to Borrower; 

  (iv)Investments accepted in connection with Permitted Transfers; 

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  (v)Investments (including debt obligations) received in connection with the bankruptcy or reorganization of customers or suppliers and in settlement of delinquent obligations of, and other disputes with, customers or suppliers arising in the ordinary course of Borrower’s business; 

  (vi)Investments consisting of notes receivable of, or prepaid royalties and other credit extensions, to customers and suppliers who are not Affiliates, in the ordinary course of business; provided that this subparagraph (vi) shall not apply to Investments of Borrower in any Subsidiary; 

  (vii)Investments consisting of loans not involving the net transfer on a substantially contemporaneous basis of cash proceeds to employees, officers or directors relating to the purchase of capital stock of Borrower pursuant to employee stock purchase plans or other similar agreements approved by Borrower’s board of directors; 

  (viii)Investments consisting of travel advances and employee relocation loans in the ordinary course of business; 

  (ix)Investments in Subsidiaries (including creation of a Subsidiary in anticipation of a proposed Permitted Acquisition); provided that, unless such Subsidiary is an Excluded Subsidiary (after giving pro forma effect to such Investment), each such Subsidiary enters into a Joinder Agreement promptly after its formation by Borrower and execute such other related documents as shall be reasonably requested by Agent; 

  (x)Investments in Excluded Subsidiaries to cover ordinary course of business operating and entity maintenance and regulatory (and, if applicable, wind-down and liquidation) costs and expenses in an aggregate amount not to exceed $500,000 in any fiscal year, and other amounts approved in advance in writing by Agent; 

  (xi)joint ventures or strategic alliances in the ordinary course of Borrower’s business consisting of the nonexclusive licensing of technology, the development of technology or the providing of technical support; provided that any cash Investments by Borrower do not exceed $250,000 in the aggregate in any fiscal year; 

  (xii)Permitted Acquisitions;

  (xiii)Borrower’s entry into (including payments of premiums in connection therewith), and the performance of obligations under, any Permitted Bond Hedge Transactions and Permitted Warrant Transactions in accordance with their terms; 

  (xiv)Hedge Agreements constituting Permitted Indebtedness pursuant to clause (vii) thereof; and 

  (xv)additional Investments that do not exceed $250,000 in the aggregate in any fiscal year.

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  “Permitted Liens” means: 

  (i)Liens in favor of Agent or the Lenders; 

  (ii)Liens existing on the Closing Date which are disclosed in Schedule 1C; 

  (iii)Liens for taxes, fees, assessments or other governmental charges or levies, either not yet delinquent or being contested in good faith by appropriate proceedings diligently conducted; provided, that Borrower maintains adequate reserves therefor on Borrower’s Books in accordance with GAAP; 

  (iv)Liens securing claims or demands of materialmen, artisans, mechanics, carriers, warehousemen, landlords and other like Persons arising in the ordinary course of Borrower’s business and imposed without action of such parties; provided, that the payment thereof is not yet delinquent or remain payable without penalty, or that are being contested in good faith and by appropriate proceedings which proceedings have the effect of preventing the forfeiture or sale of the property subject thereto;

  (v)Liens arising from judgments, decrees or attachments in circumstances which do not constitute an Event of Default hereunder; 

  (vi)the following Liens, to the extent made in the ordinary course of business:  deposits and pledges under worker’s compensation, unemployment insurance, social security and other similar laws, or to secure the performance of bids, tenders or contracts (other than for the repayment of borrowed money) or to secure indemnity, performance or other similar bonds for the performance of bids, tenders or contracts (other than for the repayment of borrowed money) or to secure statutory obligations (other than Liens arising under ERISA or environmental Liens) or surety or appeal bonds, or to secure indemnity, performance or other similar bonds; 

  (vii)Liens on Equipment or software or other intellectual property constituting purchase money Liens and Liens in connection with capital leases securing Indebtedness permitted in clause (iii) of “Permitted Indebtedness”;  

  (viii)Liens incurred in connection with Subordinated Indebtedness;

  (ix)leasehold interests in leases or subleases and licenses and sublicenses granted in the ordinary course of business and not interfering in any material respect with the business of the licensor; 

  (x)Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of custom duties that are promptly paid on or before the date they become due; 

  (xi)Liens on insurance proceeds securing the payment of financed insurance premiums that are promptly paid on or before the date they become due (provided that such Liens extend only to such insurance proceeds and not to any other property or assets); 

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  (xii)statutory and common law rights of set-off and other similar rights as to deposits of cash and securities in favor of banks, other depository institutions and brokerage firms; 

  (xiii)easements, zoning restrictions, rights-of-way and similar encumbrances on real property imposed by law or arising in the ordinary course of business so long as they do not materially impair the value or marketability of the related property; 

  (xiv)(A) Without duplication of any Indebtedness incurred pursuant to clause (vii) of the definition of Permitted Indebtedness, Liens on Cash securing obligations permitted under clause (vii) of the definition of Permitted Indebtedness, and (B) security deposits in connection with real property leases, the combination of (A) and (B) in an aggregate amount not to exceed $3,000,000 at any time; 

  (xv)Liens solely on any Cash earnest money deposits made by Borrower or any of its Subsidiaries in connection with any letter of intent or purchase agreement that constitutes a Permitted Acquisition in an aggregate amount not to exceed five percent (5%) of the aggregate purchase consideration paid in connection thereto;

  (xvi)Liens solely on the royalty interests purchased pursuant to a Permitted Royalty Transaction and proceeds thereof and Intellectual Property being financed by such facility; 

  (xvii)Licenses that qualify as Permitted Transfers; and 

  (xviii)Liens incurred in connection with the extension, renewal or refinancing of the Indebtedness secured by Liens of the type described in clauses (i) through (xvii) above; provided, that any extension, renewal or replacement Lien shall be limited to the property encumbered by the existing Lien and the principal amount of the Indebtedness being extended, renewed or refinanced (as may have been reduced by any payment thereon) does not increase.

  “Permitted Royalty Transaction” means any synthetic royalty participations (and not royalty purchases or buyouts) with respect to any of AXS-05, AXS-07, AXS-12, AXS-14 and/or any other proprietary assets of the Borrower whereby Borrower receives upfront unrestricted (including, not subject to any redemption, clawback, escrow or similar encumbrance or restriction) net cash proceeds of at least $100,000,000 in exchange for rights to participation payments based on net sales of AXS-05, AXS-07, AXS-12, AXS-14 and/or any other proprietary assets of the Borrower in an amount not to exceed 7.5% of net sales, and on terms (including without limitation, that any security granted in connection with such Permitted Royalty Transaction is limited solely to the respective Intellectual Property being financed by such facility) and with a purchaser satisfactory to Agent.  

  “Permitted Transfers” means:  

  (i)sales of Inventory in the ordinary course of business, 

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  (ii)(A) licenses and similar arrangements for the use of Intellectual Property in the ordinary course of business that could not result in a legal transfer of title of the licensed property that are non-exclusive or may be exclusive in respects other than territory or may be exclusive as to territory but only as to discreet geographical areas outside of the United States of America in the ordinary course; and (B) the abandonment, permitted lapse, cancellation, termination and/or cessation of any immaterial Company IP that is, in the reasonable judgment of the Borrower, no longer economically practicable, commercially desirable to maintain or useful, in each case, in the conduct of business of the Borrower and its Subsidiaries taken as a whole,

  (iii)dispositions of worn-out, obsolete or surplus Equipment at fair market value in the ordinary course of business, 

  (iv)to the extent constituting Transfers, Permitted Liens and Permitted Investments,

  (v)Permitted Royalty Transactions, 

  (vi)the disposition of any Permitted Convertible Debt, any Hedge Agreement or in connection with any Permitted Bond Hedge Transaction or Permitted Warrant Transaction, in each case as permitted hereunder,

  (vii)the use or transfer of Cash in a manner that is not prohibited by the terms of this Agreement or the other Loan Documents and in the ordinary course of business,

  (viii)transfers by and among the Borrower and any of its Subsidiaries (other than Permitted Investments); provided that (a)(x) such transfers are in the ordinary course of business and (y) with respect to any transfers to an Excluded Subsidiary, such transfers do not involve any transfer of any Intellectual Property and are in an aggregate amount not to exceed $500,000 in any fiscal year or (b) such Subsidiary has entered into a Joinder Agreement and such other documents as shall reasonably be required by Agent, and

  (ix)other transfers of assets having a fair market value of not more than $500,000 in the aggregate in any fiscal year. 

  “Permitted Warrant Transaction” means any call option, warrant or right to purchase (or substantively equivalent derivative transaction) relating to Common Stock (or other securities or property following a merger event or other change of the Common Stock) and/or cash (in an amount determined by reference to the price of such Common Stock) sold by Borrower substantially concurrently with any purchase by Borrower of a related Permitted Bond Hedge Transaction and as may be amended in accordance with its terms; provided that (x) that the terms, conditions and covenants of each such call option transaction are customary for agreements of such type, as determined in good faith by the board of directors of the Borrower or a committee thereof and (y) such call option transaction would be classified as an equity instrument in accordance with GAAP.

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  “Person” means any individual, sole proprietorship, partnership, joint venture, trust, unincorporated organization, association, corporation, limited liability company, institution, other entity or government.

  “Pledge Agreement” means the Pledge Agreement dated as of the Closing Date between Borrower and Agent, as the same may from time to time be amended, restated, modified or otherwise supplemented.

  “Public Health Laws” means all Requirements of Law relating to the procurement, development, clinical and non-clinical evaluation, product approval or licensure, manufacture, production, analysis, distribution, dispensing, importation, exportation, use, handling, quality, sale, labeling, promotion, clinical trial registration or post market requirements of any drug, biologic or other product (including, without limitation, any ingredient or component of the foregoing products) subject to regulation under the Federal Food, Drug, and Cosmetic Act (21 U.S.C. § 301 et seq.) and the Public Health Service Act (42 U.S.C. § 201 et seq.), including without limitation the regulations promulgated by the FDA at Title 21 of the Code of Federal Regulations and all applicable regulations promulgated by the National Institutes of Health (“NIH”) and codified at Title 42 of the Code of Federal Regulations, and guidance, compliance, guides, and other policies issued by the FDA, the NIH and other comparable governmental authorities.

  “Qualified Cash” means the amount of Borrower’s Cash held in accounts subject to an Account Control Agreement in favor of Agent.

  “Qualified Cash A/P Amount” means the amount of Borrower’s accounts payable under GAAP not paid after the 180th day following the invoice for such account payable.

  “Receivables” means (i) all of Borrower’s Accounts, Instruments, Documents, Chattel Paper, Supporting Obligations, letters of credit, proceeds of any letter of credit, and Letter of Credit Rights, and (ii) all customer lists, software, and business records related thereto.

  “Redemption Conditions” means, with respect to any payment of cash in respect of the principal amount of any Permitted Convertible Debt, satisfaction of each of the following events: (a) no Default or Event of Default shall exist or result therefrom, and (b) both immediately before and at all times after such redemption, Borrower’s Qualified Cash shall be no less than 150% of the outstanding principal amount of the Secured Obligations plus the Qualified Cash A/P Amount.

  “Register” has the meaning specified in Section 11.7.

  “Registrations” shall mean authorizations, approvals, licenses, permits, certificates, registrations, listings, certificates, or exemptions of or issued by any governmental authority (including marketing approvals, investigational new drug applications, product recertifications, drug manufacturing establishment registration and product listing, pricing and reimbursement approvals, labeling approvals or their foreign equivalent) that are required for the research, development, manufacture, commercialization, distribution, marketing, storage, transportation, pricing, governmental authority reimbursement, use and sale of Borrower Products.  

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  “Regulatory Action” means an administrative or regulatory enforcement action, proceeding or investigation, warning letter, untitled letter, Form 483 or similar inspectional observations, other notice of violation letter, recall, seizure, Section 305 notice or other similar written communication, or consent decree, issued or required by the FDA or under the Public Health Laws, the NIH or a comparable governmental authority in any other regulatory jurisdiction.  

  “Required Lenders” means at any time, the holders of more than 50% of the sum of the aggregate unpaid principal amount of the Term Loans then outstanding.

  “Requirements of Law” means, with respect to any Person, collectively, the common law and all federal, state, provincial, local, foreign, multinational or international laws, statutes, codes, treaties, standards, rules and regulations, guidelines, ordinances, orders, judgments, writs, injunctions, decrees (including administrative or judicial precedents or authorities) and the interpretation or administration thereof by, and other determinations, directives, requirements or requests of, any governmental authority, in each case that are applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject.

  “Restricted License” means any Material Agreement with respect to which Borrower is the licensee (other than over-the-counter software and software that is commercially available to the public) (a) that prohibits or otherwise restricts Borrower from granting a security interest in Borrower’s interest in such Material Agreement or any other property, or (b) for which a default under or termination of could reasonably be expected to interfere in any material respect with the Agent’s right to sell any Collateral.

  “Sanctioned Country” means, at any time, a country or territory which is the subject or target of any Sanctions.

  “Sanctioned Person” means, at any time, (a) any Person listed in any Sanctions-related list of designated Persons maintained by the Office of Foreign Assets Control of the U.S. Department of the Treasury or the U.S. Department of State, or by the United Nations Security Council, the European Union or any EU member state, (b) any Person operating, organized or resident in a Sanctioned Country or (c) any Person controlled by any such Person.

  “Sanctions” means economic or financial sanctions or trade embargoes imposed, administered or enforced from time to time by (a) the U.S. government, including those administered by the Office of Foreign Assets Control of the U.S. Department of the Treasury or the U.S. Department of State, or (b) the United Nations Security Council, the European Union or Her Majesty’s Treasury of the United Kingdom.

  “Second Interest Only Extension Conditions” shall mean satisfaction of each of the following events: (a) no default or Event of Default shall have occurred and be continuing; (b) the AXS-05 Milestone has been achieved; and (c) the AXS-07 Milestone has been achieved on or prior to April 30, 2026.

  “Secured Obligations” means Borrower’s obligations under this Agreement and any Loan Document (other than the Warrant), including any obligation to pay any amount now owing or later arising.

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  “Subordinated Indebtedness” means Indebtedness subordinated to the Secured Obligations in amounts and on terms and conditions satisfactory to Agent in its sole discretion and subject to a subordination agreement in form and substance satisfactory to Agent in its sole discretion.

  “Subsequent Financing” means the closing of any equity financing which becomes effective after the Closing Date in which Borrower receives net cash proceeds in excess of $25,000,000 from the sale and issuance of its Equity Interests for Cash primarily for capital raising purposes and that is broadly marketed to multiple investors, which shall not include any Permitted Convertible Debt offering (or any Permitted Bond Hedge Transaction or Permitted Warrant Transaction) or any issuance or sale by Borrower of its Equity Interests (i) pursuant to benefit plans or arrangements, including under Borrower’s equity incentive plans (whether currently in effect or adopted by Borrower after the Closing Date) or otherwise as equity compensation, (ii) as dividends or distributions or upon stock splits, recapitalizations or similar transactions, (iii) pursuant to a merger, consolidation, acquisition, strategic alliance or similar business combination or acquisition, (iv) to banks, funds, equipment or real property lessors or other financial institutions pursuant to a non-convertible debt financing, equipment lease, loan or credit arrangement or commercial leasing transaction entered into for primarily non-equity financing purposes, (v) in connection with strategic transactions, including (A) joint ventures, manufacturing, marketing, OEM, sponsored research, collaboration or distribution arrangements or (B) technology transfer or development arrangements, (vi) securities issued or issuable to suppliers or third party service providers in connection with the provision of goods or services, (vii) in an at-the-market (ATM) offering, and (viii) securities issued in connection with options, warrants, convertible securities or other arrangement in existence on the Closing Date or issued in transactions excluded from the definition of Subsequent Financing pursuant to clause (i) through (vii) above; provided, however, that, if Borrower or its agents attempts to “wall-cross” the Lender or its assignee or nominee in conjunction with any Subsequent Financing and the Lender or its assignee or nominee declines to be “wall-crossed,” then the issuance and sale of such equity securities shall not be considered a Subsequent Financing hereunder.

  “Subsidiary” means an entity, whether a corporation, partnership, limited liability company, joint venture or otherwise, in which Borrower owns or controls 50% or more of the outstanding voting securities, including each entity listed on Schedule 1 hereto.

  “T3M Net Product Revenue” means Borrower’s net product revenue (as determined in accordance with GAAP) solely from the sale of AXS-05, AXS-07, AXS-12, AXS-14 and any other proprietary assets of the Borrower (which may include royalty, profit sharing, or sales-based milestone revenue recognized in accordance with GAAP, but which shall not include any upfront or non-sales-based milestone payments under business development or licensing transactions), measured on a trailing three-month basis as of the date of the most recently delivered monthly financial statement in accordance with Section 7.1(a). For the avoidance of doubt, net product revenue shall not include any of the following to the extent not recognizable as revenue in accordance with GAAP (i) trade, quantity and cash discounts allowed by Borrower, (ii) discounts, refunds, rebates, charge backs, retroactive price adjustment and any other allowances which effectively reduce net selling price, (iii) product returns and allowances, (iv) allowances for shipping or other distribution expenses, (iv) set-offs and counterclaims, and (v) any other similar and customary deductions that are typically deducted from gross revenue and not included in net 

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  revenue in accordance with GAAP. Notwithstanding anything to the contrary herein, T3M Net Product Revenue shall not include any royalty payments associated with a Permitted Royalty Transaction or otherwise.

  “T6M Net Product Revenue” means Borrower’s net product revenue (as determined in accordance with GAAP) solely from the sale of AXS-05 and AXS-07 (which may include royalty, profit sharing, or sales-based milestone revenue recognized in accordance with GAAP, but which shall not include any upfront or non-sales-based milestone payments under business development or licensing transactions), measured on a trailing six-month basis as of the date of the most recently quarterly financial statement filed with its most recent 10-Q filing. For the avoidance of doubt, net product revenue shall not include any of the following to the extent not recognizable as revenue in accordance with GAAP (i) trade, quantity and cash discounts allowed by Borrower, (ii) discounts, refunds, rebates, charge backs, retroactive price adjustment and any other allowances which effectively reduce net selling price, (iii) product returns and allowances, (iv) allowances for shipping or other distribution expenses, (iv) set-offs and counterclaims, and (v) any other similar and customary deductions that are typically deducted from gross revenue and not included in net revenue in accordance with GAAP.  

  “Taxes” means all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges imposed by any governmental authority, including any interest, additions to tax or penalties applicable thereto.

  “Term Commitment” means as to any Lender, the obligation of such Lender, if any, to make a Term Loan Advance to the Borrower in a principal amount not to exceed the amount set forth under the heading “Term Commitment” opposite such Lender’s name on Schedule 1.1.  

  “Term Loan Advance” means each Tranche 1 Advance, Tranche 2 Advance, Tranche 3 Advance, Tranche 4 Advance, Tranche 5 Advance and any other Term Loan funds advanced under this Agreement.

  “Term Loan Cash Interest Rate” means for any day a per annum rate of interest equal to the greater of either (i) the prime rate as reported in The Wall Street Journal plus 5.70%, and (ii) 8.95%.

  “Term Loan Maturity Date” means October 1, 2026; provided however, if on or within five (5) Business Days of the third anniversary of the First Amendment Closing Date the Maturity Extension Conditions are satisfied, then, October 1, 2027; provided further that if such day is not a Business Day, the Term Loan Maturity Date shall be the immediately preceding Business Day.

  “Trademark License” means any written agreement granting any right to use any Trademark or Trademark registration, now owned or hereafter acquired by Borrower or in which Borrower now holds or hereafter acquires any interest. 

  “Trademarks” means all trademarks (registered, common law or otherwise) and any applications in connection therewith, including registrations, recordings and applications in the United States Patent and Trademark Office or in any similar office or agency of the United States of America, any State thereof or any other country or any political subdivision thereof.

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  “Tranche 1A Commitment” means as to any Lender, the obligation of such Lender, if any, to make a Term Loan Advance to Borrowers in a principal amount not to exceed the amount set forth under the heading “Tranche 1A Term Commitment” opposite such Lender’s name on Schedule 1.1.  

  “Tranche 1B Commitment” means as to any Lender, the obligation of such Lender, if any, to make a Term Loan Advance to Borrowers in a principal amount not to exceed the amount set forth under the heading “Tranche 1B Term Commitment” opposite such Lender’s name on Schedule 1.1.  

  “Tranche 2B Draw Period” means the period beginning on the AXS-05 Milestone Date and ending on, as of the applicable date of determination, (A) if the full amount of the Tranche 2A Advances have not been drawn, the earlier of (x) 181 days following the AXS-05 Milestone Date and (y) December 31, 2022 and (B) if the full amount of the Tranche 2A Advances have been drawn, the earlier of (x) 365 days following the AXS-05 Milestone Date and (y) December 31, 2022.

  13.“Tranche 2 Facility Charge” means three-quarter percent (0.75%) of the Tranche 2 Advances funded, which is payable to the Lenders in accordance with Section 4.2(d).

  14.“Tranche 3 Facility Charge” means three-quarter percent (0.75%) of the Tranche 3 Advances funded, which is payable to the Lenders in accordance with Section 4.2(e).

  15.“Tranche 4 Draw Conditions” means (i) Borrower’s achievement of the AXS-05 Milestone or the AXS-07 Milestone and (ii) both before and after giving effect to any such Tranche 4 Advance, (a) the Net Product Revenue Ratio shall be no greater than 4.00:1.00 and (b) no Default or Event of Default shall have occurred and be continuing.

  16.“Tranche 4 Facility Charge” means one percent (1.00%) of the Tranche 4 Advances funded, which is payable to the Lenders in accordance with Section 4.2(f).

  17.“Tranche 5 Facility Charge” means one percent (1.00%) of the Tranche 5 Advances funded, which is payable to the Lenders in accordance with Section 4.2(g).

  “UCC” means the Uniform Commercial Code as the same is, from time to time, in effect in the State of California; provided, that in the event that, by reason of mandatory provisions of law, any or all of the attachment, perfection or priority of, or remedies with respect to, Agent’s Lien on any Collateral is governed by the Uniform Commercial Code as the same is, from time to time, in effect in a jurisdiction other than the State of California, then the term “UCC” shall mean the Uniform Commercial Code as in effect, from time to time, in such other jurisdiction solely for purposes of the provisions thereof relating to such attachment, perfection, priority or remedies and for purposes of definitions related to such provisions.  

  “U.S. Person” means any Person that is a “United States person” as defined in Section 7701(a)(30) of the Code.

  “Warrant” means any warrant entered into in connection with the Loan, as may be amended, restated or modified from time to time. 

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  b.The following terms are defined in the Sections or subsections referenced opposite such terms:

  		
	Defined Term
	Section

	Agent
	Preamble

	Assignee
	11.14

	Borrower
	Preamble

	Claims
	11.11

	Collateral
	3.1

	Confidential Information
	11.13

	Current Company IP
	5.10(a)

	End of Term Charge
	2.6

	Event of Default
	9

	Extension End of Term Charge
	2.6

	Financial Statements
	7.1

	Indemnified Person
	6.3

	Lenders
	Preamble

	Liabilities
	6.3

	Maximum Rate
	2.3

	Open Source License
	5.10(p)

	Original End of Term Charge
	2.6

	Participant Register
	11.8

	Prepayment Charge
	2.5

	Publicity Materials
	11.19

	Register
	11.7

	Rights to Payment
	3.1

	Specified Disputes
	5.10(g)

	Third Party IP
	5.10(i)

	Tranche 1A Advance
	2.2(a)(i)

	Tranche 1B Advance
	2.2(a)(ii)

	Tranche 1 Advance
	2.2(a)(ii)

	Tranche 2A Advance
	2.2(a)(iii)

	Tranche 2B Advance
	2.2(a)(iii)

	Tranche 2 Advance
	2.2(a)(iii)

	Tranche 3 Advance
	2.2(a)(iv)

	Tranche 4 Advance
	2.2(a)(v)

	Tranche 5 Advance
	2.2(a)(vi)

   

  c.Unless otherwise specified, all references in this Agreement or any Annex or Schedule hereto to a “Section,” “subsection,” “Exhibit,” “Annex,” or “Schedule” shall refer to the corresponding Section, subsection, Exhibit, Annex, or Schedule in or to this Agreement.  

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  Unless otherwise specifically provided herein, any accounting term used in this Agreement or the other Loan Documents shall have the meaning customarily given such term in accordance with GAAP, and all financial computations hereunder shall be computed in accordance with GAAP, consistently applied; provided that if at any time any change in GAAP would affect the computation of any financial covenant or ratio or requirement set forth in any Loan Document, and either Borrower or Agent shall so request, Borrower, Agent and the Lenders shall negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in GAAP; provided, further, that, until so amended, (a) such ratio or requirement shall continue to be computed in accordance with GAAP prior to such change therein and (b) Borrower shall provide Agent financial statements and other documents required under this Agreement or as reasonably requested hereunder setting forth a reconciliation between calculations of such ratio covenant or requirement made before and after giving effect to such change in GAAP.  Notwithstanding the foregoing, any obligations of a Person that are or would have been treated as operating leases for purposes of GAAP prior to the issuance by the Financial Accounting Standards Board on February 25, 2016 of an Accounting Standards Update (the “ASU”) shall continue to be accounted for as operating leases for purposes of all financial definitions, calculations and covenants for purpose of this Agreement (whether or not such operating lease obligations were in effect on such date) notwithstanding the fact that such obligations are required in accordance with the ASU (on a prospective or retroactive basis or otherwise) to be treated as capitalized lease obligations in accordance with GAAP (other than for purposes of the delivery of financial statements prepared in accordance with GAAP). Unless otherwise defined herein or in the other Loan Documents, terms that are used herein or in the other Loan Documents and defined in the UCC shall have the meanings given to them in the UCC.  For all purposes under the Loan Documents, in connection with any division or plan of division under Delaware law (or any comparable event under a different jurisdiction’s laws): (a) if any asset, right, obligation or liability of any Person becomes the asset, right, obligation or liability of a different Person, then it shall be deemed to have been transferred from the original Person to the subsequent Person and (b) if any new Person comes into existence, such new Person shall be deemed to have been organized on the first date of its existence by the holders of its Equity Interests at such time.

  d.Notwithstanding anything to the contrary in this Agreement or any other Loan Document, all terms of an accounting or financial nature used herein shall be construed, and all computations of amounts and ratios referred to herein shall be made without giving effect to any treatment of Indebtedness in respect of convertible debt instruments under Accounting Standards Codification 470-20 (or any other Accounting Standards Codification or Financial Accounting Standard having a similar result or effect) to value any such Indebtedness in a reduced or bifurcated manner as described therein, and such Indebtedness shall at all times be valued at the full stated principal amount thereof. For the avoidance of doubt, and without limitation of the foregoing, Permitted Convertible Debt shall at all times be valued at the full stated principal amount thereof and shall not include any reduction or appreciation in value of the shares deliverable upon conversion thereof.

  2.THE LOAN

  a.[Reserved]

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  b.Term Loan.

  i.Advances.  

  1.Subject to the terms and conditions of this Agreement, the Lenders will severally (and not jointly) make in an amount not to exceed their respective Tranche 1A Commitments, and Borrower agrees to draw, a Term Loan Advance of Fifty Million Dollars ($50,000,000) on the Closing Date (the “Tranche 1A Advance”). 

  2.Subject to the terms and conditions of this Agreement, beginning on the Closing Date and continuing through September 15, 2021, Borrower may request and the Lenders will severally (and not jointly) make, in an amount not to exceed their respective Tranche 1B Commitments, additional Term Loan Advances in an aggregate principal amount of up to Ten Million Dollars ($10,000,000), in minimum increments of Five Million Dollars ($5,000,000) (each, a “Tranche 1B Advance” and together with the Tranche 1A Advance, each a “Tranche 1 Advance”), other than the last Term Loan Advance under the Tranche 1B Commitment which may be less than Five Million Dollars ($5,000,000). For the avoidance of doubt, no Tranche 1B Advances were made as of September 15, 2021, and the Tranche 1B Commitments have expired as of the First Amendment Closing Date. 

  3.Subject to the terms and conditions of this Agreement, (A) beginning on the AXS-05 Milestone Date and continuing through the earlier of (x) 90 days following the AXS-05 Milestone Date and (y) December 31, 2022, Borrower may request and the Lenders shall severally (and not jointly) make additional Term Loan Advances in an aggregate principal amount of up to Fifty Million Dollars ($50,000,000), in minimum increments of Five Million Dollars ($5,000,000) (each, a “Tranche 2A Advance”) and (B) during the Tranche 2B Draw Period, Borrower may request and the Lenders shall severally (and not jointly) make additional Term Loan Advances in an aggregate principal amount of up to Fifty Million Dollars ($50,000,000), in minimum increments of Five Million Dollars ($5,000,000) (each, a “Tranche 2B Advance” and 

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  together with the Tranche 2A Advance, each a “Tranche 2 Advance”).  

  4.Subject to the terms and conditions of this Agreement, beginning on the AXS-07 Milestone Date and continuing through the earlier of (x) 181 days following the AXS-07 Milestone Date and (y) June 30, 2023, Borrower may request and the Lenders shall severally (and not jointly) make additional Term Loan Advances in an aggregate principal amount of up to Twenty Million Dollars ($20,000,000), in minimum increments of Five Million Dollars ($5,000,000) (each, a “Tranche 3 Advance”).  

  5.Subject to the terms and conditions of this Agreement, and subject to the satisfaction of Tranche 4 Draw Conditions, beginning on January 1, 2022 and continuing through December 31, 2024, Borrower may request additional Term Loan Advances in an aggregate principal amount of up to Fifty Five Million Dollars ($55,000,000), in minimum increments of Five Million Dollars ($5,000,000) (each, a “Tranche 4 Advance”). 

  6.Subject to the terms and conditions of this Agreement, and conditioned on approval by the Lenders’ investment committee in its sole and unfettered discretion, on or before December 31, 2025, Borrower may request additional Term Loan Advances in an aggregate principal amount of up to Seventy Five Million Dollars ($75,000,000), in minimum increments of Ten Million Dollars ($10,000,000) (each, a “Tranche 5 Advance”).  

  7.The aggregate outstanding Term Loan Advances may be up to the Maximum Term Loan Amount.

  ii. Advance Request.  To obtain a Term Loan Advance, Borrower shall complete, sign and deliver an Advance Request (at least one (1) Business Day before the Closing Date and at least five (5) Business Days before each Advance Date other than the Closing Date) to Agent.  The Lenders shall fund the Term Loan Advance in the manner requested by the Advance Request provided that each of the conditions precedent to such Term Loan Advance is satisfied as of the requested Advance Date.

  iii.Interest.  

  1.Term Loan Cash Interest Rate.  The principal balance of each Term Loan Advance shall bear interest thereon from 

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  such Advance Date at the Term Loan Cash Interest Rate based on a year consisting of 360 days, with interest computed daily based on the actual number of days elapsed.  The Term Loan Cash Interest Rate will float and change on the day the prime rate changes from time to time.

  2.[Reserved]. 

  3.[Reserved].

  iv.Payment.  Borrower will pay interest on each Term Loan Advance on the first Business Day of each month, beginning the month after the Advance Date (each an “Interest Payment Date”).  Borrower shall repay the aggregate Term Loan principal balance that is outstanding on the day immediately preceding the Amortization Date, in equal monthly installments of principal and interest (mortgage style) beginning on the Amortization Date and continuing on the first Business Day of each month thereafter until the Secured Obligations (other than any inchoate indemnity obligations and any other obligations which, by their terms, are to survive the termination of this Agreement) are repaid; provided, that if the Term Loan Cash Interest Rate is adjusted in accordance with its terms, the amount of each subsequent monthly installment shall be recalculated so that the remaining payments shall be equal monthly installments of principal and interest beginning on the first Business Day of the month following such recalculation and continuing on the first Business Day of each month thereafter until the Secured Obligations (other than any inchoate indemnity obligations and any other obligations which, by their terms, are to survive the termination of this Agreement) are repaid in full. The entire Term Loan principal balance and all accrued but unpaid interest hereunder, shall be due and payable on the Term Loan Maturity Date.  Borrower shall make all payments under this Agreement without setoff, recoupment or deduction and regardless of any counterclaim or defense.  If a payment hereunder becomes due and payable on a day that is not a Business Day, the due date thereof shall be the immediately preceding Business Day.  The Lenders will initiate debit entries to the Borrower’s account as authorized on the ACH Authorization (i) on each payment date of all periodic obligations payable to the Lenders under each Term Loan Advance and (ii) reasonable, documented, out-of-pocket legal fees and costs incurred by Agent or the Lenders in connection with Section 11.12 of this Agreement; provided that, with respect to clause (i) above, in the event that the Lenders or Agent informs Borrower that the Lenders will not initiate a debit entry to Borrower’s account for a certain amount of the periodic obligations due on a specific payment date, Borrower shall pay to the Lenders such amount of periodic 

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  obligations in full in immediately available funds on such payment date; provided, further, that, with respect to clause (i) above, if the Lenders or Agent informs Borrower that the Lenders will not initiate a debit entry as described above later than the date that is three (3) Business Days prior to such payment date, Borrower shall pay to the Lenders such amount of periodic obligations in full in immediately available funds on the date that is three (3) Business Days after the date on which the Lenders or Agent notifies Borrower of such; provided, further, that, with respect to clause (ii) above, in the event that the Lenders or Agent informs Borrower that the Lenders will not initiate a debit entry to Borrower’s account for certain amount of such reasonable, documented out-of-pocket legal fees and costs incurred by Agent or the Lenders, Borrower shall pay to the Lenders such amount in full in immediately available funds within three (3) Business Days.

  c.Maximum Interest.  Notwithstanding any provision in this Agreement or any other Loan Document, it is the parties’ intent not to contract for, charge or receive interest at a rate that is greater than the maximum rate permissible by law that a court of competent jurisdiction shall deem applicable hereto (which under the laws of the State of California shall be deemed to be the laws relating to permissible rates of interest on commercial loans) (the “Maximum Rate”).  If a court of competent jurisdiction shall finally determine that Borrower has actually paid to the Lenders an amount of interest in excess of the amount that would have been payable if all of the Secured Obligations had at all times borne interest at the Maximum Rate, then such excess interest actually paid by Borrower shall be applied as follows:  first, to the payment of the Secured Obligations consisting of the outstanding principal; second, after all principal is repaid, to the payment of the Lenders’ accrued interest, costs, expenses, professional fees and any other Secured Obligations; and third, after all Secured Obligations are repaid, the excess (if any) shall be refunded to Borrower.  

  d.Default Interest.  In the event any payment is not paid on the scheduled payment date  (or promptly following resolution of an ACH Failure (and in no event later than three (3) Business Days of the scheduled payment date); provided that such late payment is due to an ACH Failure), an amount equal to five percent (5%) of the past due amount shall be payable on demand. In addition, upon the occurrence and during the continuation of an Event of Default hereunder, all Secured Obligations, including principal, interest, compounded interest, and professional fees, shall bear interest at a rate per annum equal to the rate set forth in Section 2.2(c) plus five percent (5%) per annum.  In the event any interest is not paid when due hereunder, delinquent interest shall be added to principal and shall bear interest on interest, compounded at the rate set forth in Section 2.2(c) or Section 2.4, as applicable.

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  e.Prepayment.  At its option, upon at least seven (7) Business Days prior written notice to Agent (or such shorter notice period as agreed by Agent in its sole discretion), Borrower may at any time and from time to time, prepay all or a portion of the outstanding Advances by paying the entire principal balance, or such portion thereof in minimum increments of Five Million Dollars ($5,000,000), all accrued and unpaid interest thereon, together with a prepayment charge equal to the following percentage of the Advance amount being prepaid: with respect to each Advance, if such Advance amounts are prepaid in any of the first twelve (12) months following the First Amendment Closing Date, 2.0%; on or after the date that is twelve (12) months following the First Amendment Closing Date but prior to twenty four (24) months following the First Amendment Closing Date, 1.5%; and on or after the date that is twenty four (24) months following the First Amendment Closing Date but prior to thirty six (36) months following the First Amendment Closing Date, 1.0% (each, a “Prepayment Charge”). If at any time Borrower elects to make a prepayment, and at such time, there are outstanding Advances under multiple Tranches, the Prepayment Charge shall be determined by applying the amount of such prepayment in the following order: first, to the outstanding principal amount (and accrued but unpaid interest thereon) of Advances outstanding under the Tranche with the latest initial funding date; second, to the outstanding principal amount (and accrued but unpaid interest thereon) of Advances outstanding under the Tranche with the next latest initial funding date and so on until the entire principal balance of all Advances made hereunder (and all accrued but unpaid interest thereon) is paid in full. Borrower agrees that the Prepayment Charge is a reasonable calculation of the Lenders’ lost profits in view of the difficulties and impracticality of determining actual damages resulting from an early repayment of the Advances.  Borrower shall prepay the outstanding amount of all principal and accrued interest through the prepayment date and the Prepayment Charge, if any, upon the occurrence of a Change in Control or any other prepayment hereunder. Notwithstanding the foregoing, Agent and the Lenders agree to waive the Prepayment Charge if Agent and the Lenders (in their sole and absolute discretion) agree in writing to refinance the Advances prior to the Term Loan Maturity Date. Any amounts paid under this Section shall be applied by Agent to the then unpaid amount of any Secured Obligations (including principal and interest) in such order and priority as Agent may choose in its sole discretion.  For the avoidance of doubt, if a payment hereunder becomes due and payable on a day that is not a Business Day, the due date thereof shall be the immediately preceding Business Day.  Notwithstanding anything to the contrary contained in this Agreement, so long as Borrower provided notice to the Agent no less than seven (7) Business Days prior to the proposed prepayment date, Borrower may rescind any notice of prepayment if such prepayment would have resulted from a refinancing of all or a portion of the Term Loan Advances, which refinancing shall not be consummated or shall otherwise be delayed.

  f.End of Term Charge.  

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  i.On any date that Borrower partially prepays the outstanding Secured Obligations pursuant to Section 2.5, Borrower shall pay the Lenders (x) with respect to any repayment of any Tranche 1 Advances, a charge of 4.85% of the principal amount of such Term Loan Advances being repaid and (y) for all other Advances repaid, a charge of 4.50% of the principal amount of such Term Loan Advances being repaid.

  ii.On the earliest to occur of (i) October 1, 2026, (ii) the date that Borrower prepays the outstanding Secured Obligations (other than any inchoate indemnity obligations and any other obligations which, by their terms, are to survive the termination of this Agreement) in full, or (iii) the date that the Secured Obligations become due and payable in full (other than regularly scheduled interest and amortization payments), Borrower shall pay the Lenders a charge equal to (x) Two Million Nine Hundred and Ten Thousand Dollars ($2,910,000), plus (y) 4.50% of the aggregate amount of all Term Loan Advances (other than Tranche 1 Advances) funded, minus (z) the aggregate amount of payments made pursuant to Section 2.6(a) (the “Original End of Term Charge”). 

  iii.If the Maturity Extension Conditions are satisfied, on the earliest to occur of (i) October 1, 2027, (ii) the date that Borrower prepays the outstanding Secured Obligations (other than any inchoate indemnity obligations and any other obligations which, by their terms, are to survive the termination of this Agreement) in full, or (iii) the date that the Secured Obligations become due and payable in full (other than regularly scheduled interest and amortization payments), Borrower shall pay the Lenders an additional charge equal to 1.50% of the aggregate amount of all Term Loan Advances outstanding as of the date on which the Maturity Extension Conditions are satisfied (the “Extension End of Term Charge”, collectively with any charge made pursuant to Section 2.6(a) and the Original End of Term Charge, the “End of Term Charge”). 

  iv.Notwithstanding the required payment date of such End of Term Charge, the applicable pro rata portion of the End of Term Charge shall be deemed earned by the Lenders as of each date a Term Loan Advance is made.  For the avoidance of doubt, if a payment hereunder becomes due and payable on a day that is not a Business Day, the due date thereof shall be the immediately preceding Business Day.

  g.Pro Rata Treatment.  Each payment (including prepayment) on account of any fee and any reduction of the Term Loans shall be made pro rata according to the Term Commitments of the relevant Lender.

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  h.Taxes; Increased Costs.  The Borrower, the Agent and the Lenders each hereby agree to the terms and conditions set forth on Addendum 1 attached hereto.

  i.Treatment of Prepayment Charge and End of Term Charge.  Borrower agrees that any Prepayment Charge and any End of Term Charge payable shall be presumed to be the liquidated damages sustained by each Lender as the result of the early termination, and Borrower agrees that it is reasonable under the circumstances currently existing and existing as of the Closing Date and the First Amendment Closing Date.  The Prepayment Charge and the End of Term Charge shall also be payable in the event the Secured Obligations (and/or this Agreement) are satisfied or released by foreclosure (whether by power of judicial proceeding), deed in lieu of foreclosure, or by any other means.  Borrower expressly waives (to the fullest extent it may lawfully do so) the provisions of any present or future statute or law that prohibits or may prohibit the collection of the foregoing Prepayment Charge and End of Term Charge in connection with any such acceleration.  Borrower agrees (to the fullest extent that each may lawfully do so): (a) each of the Prepayment Charge and the End of Term Charge is reasonable and is the product of an arm’s length transaction between sophisticated business people, ably represented by counsel; (b) each of the Prepayment Charge and the End of Term Charge shall be payable notwithstanding the then prevailing market rates at the time payment is made; (c) there has been a course of conduct between the Lenders and Borrower giving specific consideration in this transaction for such agreement to pay the Prepayment Charge and the End of Term Charge as a charge (and not interest) in the event of prepayment or acceleration; (d) Borrower shall be estopped from claiming differently than as agreed to in this paragraph.  Borrower expressly acknowledges that their agreement to pay each of the Prepayment Charge and the End of Term Charge to the Lenders as herein described was on the Closing Date and the First Amendment Closing Date and continues to be a material inducement to the Lenders to provide the Term Loans.

   

  3.SECURITY INTEREST

  a.As security for the prompt and complete payment when due (whether on the payment dates or otherwise) of all the Secured Obligations, Borrower grants to Agent a security interest in all of Borrower’s right, title, and interest in, to and under all of Borrower’s personal property and other assets including without limitation the following (except as set forth herein) whether now owned or hereafter acquired (collectively, the “Collateral”):  (a) Receivables; (b) Equipment; (c) Fixtures; (d) General Intangibles; (e) Inventory; (f) Investment Property; (g) Deposit Accounts; (h) Cash; (i) Goods; (j) the Antecip License Agreement and all proceeds thereof; and all other tangible and intangible personal property of Borrower whether now 

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  or hereafter owned or existing, leased, consigned by or to, or acquired by, Borrower and wherever located, and any of Borrower’s property in the possession or under the control of Agent; and, to the extent not otherwise included, all Proceeds of each of the foregoing and all accessions to, substitutions and replacements for, and rents, profits and products of each of the foregoing.

  b.Notwithstanding the broad grant of the security interest set forth in Section 3.1, above, the Collateral shall not include (collectively, the “Excluded Property”) (a) any “intent to use” trademarks at all times prior to the first use thereof, whether by the actual use thereof in commerce, the recording of a statement of use with the United States Patent and Trademark Office or otherwise, provided, that upon submission and acceptance by the United States Patent and Trademark Office of an amendment to allege use of an intent-to-use trademark application pursuant to 15 U.S.C. Section 1060(a) (or any successor provision) such intent-to-use application shall constitute Collateral, (b) non-assignable property, licenses or contracts, which by their terms require the consent of the licensor thereof or another party (but only to the extent such prohibition on transfer is enforceable under applicable law, including, without limitation, Sections 9406, 9407 and 9408 of the UCC), (c) any particular asset if the pledge thereof or the security interest therein is prohibited or restricted by applicable law, rule or regulation (including any requirement to obtain the consent of any governmental authority, regulatory authority or third party), provided that the foregoing exclusion of this clause (c) shall in no way be construed (1) to apply to the extent that any described prohibition or restriction is unenforceable under Section 9406, 9407 or 9408 of the UCC or other applicable law or (2) to apply to the extent that any consent or waiver has been obtained, or is hereafter obtained, that would permit the Agent’s security interest or Lien notwithstanding the prohibition or restriction on the pledge of such asset, (d) any Excluded Accounts, including cash pledged pursuant to Permitted Liens and any Deposit Account, securities account, commodities account or other account to the extent solely and exclusively used to hold any cash pledged as a Permitted Lien, and (e) Equipment and software (and the products and proceeds thereof) subject to Permitted Liens of the type described in clause (vii) of the definition of Permitted Liens, but only to the extent and for so long as the agreements under which the equipment is financed prohibit granting a security interest therein to Lender. 

  c.Upon termination of this Agreement and repayment if full of all Secured Obligations (other than any inchoate indemnity obligations and any other obligations which, by their terms, are to survive the termination of this Agreement), all security interest in the Collateral granted under this Agreement shall terminate and all rights on the Collateral shall revert to Borrower. Agent shall execute such documents and take such other steps as are reasonably necessary for Borrower to accomplish the foregoing, all at Borrower’s sole cost and expense.

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  4.CONDITIONS PRECEDENT TO LOAN

  The obligations of the Lenders to make the Loan hereunder are subject to the satisfaction by Borrower of the following conditions:

  a.Initial Advance.  On or prior to the Closing Date, Borrower shall have delivered to Agent the following:

  i.executed copies of the Loan Documents (other than the Warrant, which shall be an original), Account Control Agreements, and all other documents and instruments reasonably required by Agent to effectuate the transactions contemplated hereby or to create and perfect the Liens of Agent with respect to all Collateral, in all cases in form and substance reasonably acceptable to Agent;

  ii.a legal opinion of Borrower’s counsel in form and substance reasonably acceptable to Agent,

  iii.certified copy of resolutions of Borrower’s board of directors evidencing approval of (i) the Loan and other transactions evidenced by the Loan Documents; and (ii) the Warrant and transactions evidenced thereby;

  iv.certified copies of the Certificate of Incorporation and the Bylaws, as amended through the Closing Date, of Borrower;

  v.a certificate of good standing for Borrower from its state of incorporation and similar certificates from all other jurisdictions in which it does business and where the failure to be qualified could have a Material Adverse Effect;

  vi.payment of the Due Diligence Fee, Initial Facility Charge and reimbursement of Agent’s and the Lenders’ current expenses reimbursable pursuant to this Agreement, which amounts may be deducted from the initial Advance; 

  vii.all certificates of insurance and copies of each insurance policy required hereunder; 

  viii.executed copy of the Antecip Direct Agreement; and

  ix.such other documents as Agent may reasonably request.

  b.All Advances.  On each Advance Date:

  i.Agent shall have received (i) an Advance Request for the relevant Advance as required by Section 2.2(b), each duly executed by 

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  Borrower’s Chief Executive Officer or Chief Financial Officer, and (ii) any other documents Agent may reasonably request.

  ii.The representations and warranties set forth in this Agreement shall be true and correct in all material respects on and as of the Advance Date with the same effect as though made on and as of such date, except to the extent such representations and warranties expressly relate to an earlier date.

  iii.Borrower shall be in compliance with all the terms and provisions set forth herein and in each other Loan Document on its part to be observed or performed, and at the time of and immediately after such Advance no Event of Default shall have occurred and be continuing.

  iv.with respect to any Tranche 2 Advance, the Borrower shall have paid the Tranche 2 Facility Charge. 

  v.with respect to any Tranche 3 Advance, the Borrower shall have paid the Tranche 3 Facility Charge. 

  vi.with respect to any Tranche 4 Advance, the Borrower shall have paid the Tranche 4 Facility Charge. 

  vii.with respect to any Tranche 5 Advance, the Borrower shall have paid the Tranche 5 Facility Charge. 

  viii.Prior to the funding of any Tranche 4 Advance, Borrower shall deliver to Agent a calculation detailing the Net Product Revenue Ratio and demonstrating compliance with the Tranche 4 Draw Conditions in form and substance reasonably acceptable to Agent. 

  ix.Each Advance Request shall be deemed to constitute a representation and warranty by Borrower on the relevant Advance Date as to the matters specified in paragraphs (b) and (c) of this Section 4.2 and as to the matters set forth in the Advance Request.

  c.No Default.  As of the Closing Date and each Advance Date, (i) no fact or condition exists that could (or could, with the passage of time, the giving of notice, or both) constitute an Event of Default and (ii) no event that has had or could reasonably be expected to have a Material Adverse Effect has occurred and is continuing. 

  5.Post-Close Obligations. Notwithstanding any provision herein or in any other Loan Document to the contrary, to the extent not actually delivered on or prior to the Closing Date, Borrower shall deliver to Agent (or its designated attorney or representative), within two (2) Business Days after the Closing Date, an Account Control Agreement for Borrower’s accounts (other than Excluded Accounts) maintained with Silicon Valley Bank.

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  6.REPRESENTATIONS AND WARRANTIES OF BORROWER

  Borrower represents and warrants that: 

  a.Corporate Status.  Borrower is a corporation duly organized, legally existing and in good standing under the laws of its state of incorporation, and is duly qualified as a foreign corporation in all jurisdictions in which the nature of its business or location of its properties require such qualifications and where the failure to be qualified could reasonably be expected to have a Material Adverse Effect.  Borrower’s present name, former names (if any), locations, place of formation, tax identification number, organizational identification number and other information are correctly set forth in Exhibit B, as may be updated by Borrower in a written notice (including any Compliance Certificate) provided to Agent after the Closing Date. 

  b.Collateral.  Borrower owns the Collateral, free of all Liens, except for Permitted Liens.  Borrower has the power and authority to grant to Agent a Lien in the Collateral as security for the Secured Obligations.  

  c.Consents.  Borrower’s execution, delivery and performance of this Agreement and all other Loan Documents, and Borrower’s execution of the Warrant, (i) have been duly authorized by all necessary corporate action of Borrower, (ii) will not result in the creation or imposition of any Lien upon the Collateral, other than Permitted Liens and the Liens created by this Agreement and the other Loan Documents, (iii) do not violate any provisions of Borrower’s Certificate or Articles of Incorporation (as applicable), bylaws, or any, law, regulation, order, injunction, judgment, decree or writ to which Borrower is subject and (iv) except as described on Schedule 5.3, do not violate any material contract or agreement or require the consent or approval of any other Person which has not already been obtained.  The individual or individuals executing the Loan Documents and the Warrant are duly authorized to do so.

  d.Material Adverse Effect.  No event that has had or could reasonably be expected to have a Material Adverse Effect has occurred and is continuing. Borrower is not aware of any event likely to occur that is reasonably expected to result in a Material Adverse Effect.

  e.Actions Before Governmental Authorities.  There are no actions, suits or proceedings at law or in equity or by or before any governmental authority now pending or, to the knowledge of Borrower, threatened in writing against Borrower or its property, that is reasonably expected to result in a Material Adverse Effect. 

  f.Laws.  Neither Borrower nor any of its Subsidiaries is in violation of any law, rule or regulation, or in default with respect to any judgment, writ, injunction or decree of any governmental authority, where such violation or 

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  default is reasonably expected to result in a Material Adverse Effect.  Borrower is not in default in any manner under any provision of any agreement or instrument evidencing (i) material Indebtedness, or any other Material Agreement to which it is a party or by which it is bound or (ii) any other agreement which default is reasonably expected to result in a Material Adverse Effect.  

  Neither Borrower nor any of its Subsidiaries is an “investment company” or a company “controlled” by an “investment company” under the Investment Company Act of 1940, as amended.  Neither Borrower nor any of its Subsidiaries is engaged as one of its important activities in extending credit for margin stock (under Regulations X, T and U of the Federal Reserve Board of Governors).  Borrower and each of its Subsidiaries has complied in all material respects with the Federal Fair Labor Standards Act.  Neither Borrower nor any of its Subsidiaries is a “holding company” or an “affiliate” of a “holding company” or a “subsidiary company” of a “holding company” as each term is defined and used in the Public Utility Holding Company Act of 2005.  Neither Borrower’s nor any of its Subsidiaries’ properties or assets has been used by Borrower or such Subsidiary or, to Borrower’s knowledge, by previous Persons, in disposing, producing, storing, treating, or transporting any hazardous substance other than in material compliance with applicable laws.  Borrower and each of its Subsidiaries has obtained all consents, approvals and authorizations of, made all declarations or filings with, and given all notices to, all Governmental Authorities that are necessary to continue their respective businesses as currently conducted.

  None of Borrower, any of its Subsidiaries, or any of Borrower’s or its Subsidiaries’ Affiliates or any of their respective agents acting or benefiting in any capacity in connection with the transactions contemplated by this Agreement is (i) in violation of any Anti-Terrorism Law, (ii) engaging in or conspiring to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding or attempts to violate, any of the prohibitions set forth in any Anti-Terrorism Law, or (iii) is a Blocked Person.  None of Borrower, any of its Subsidiaries, or to the knowledge of Borrower and any of their Affiliates or agents, acting or benefiting in any capacity in connection with the transactions contemplated by this Agreement, (x) conducts any business or engages in making or receiving any contribution of funds, goods or services to or for the benefit of any Blocked Person, or (y) deals in, or otherwise engages in any transaction relating to, any property or interest in property blocked pursuant to Executive Order No. 13224, any similar executive order or other Anti-Terrorism Law.  None of the funds to be provided under this Agreement will be used, directly or indirectly, (a) for any activities in violation of any applicable anti-money laundering, economic sanctions and anti-bribery laws and regulations laws and regulations or (b) for any payment to any governmental official or employee, political party, official of a political party, candidate for political office, or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage, in violation of the United States Foreign Corrupt Practices Act of 1977, as amended.

  g.Information Correct and Current.  No information, report, Advance Request, financial statement, exhibit or schedule furnished, by or on behalf of Borrower to Agent in connection with any Loan Document or included therein or delivered pursuant thereto contained, or, when taken as a whole, 

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  contains any material misstatement of fact or, when taken together with all other such information or documents, omitted or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were, are or will be made, not materially misleading at the time such statement was made or deemed made. Additionally, any and all financial or business projections provided by Borrower to Agent, whether prior to or after the Closing Date, shall be (i) provided in good faith and based on the most current data and information available to Borrower and subject to normal year-end adjustments, and (ii) the most current of such projections provided to Borrower’s board of directors (it being understood that such projections are subject to significant uncertainties and contingencies, many of which are  beyond the control of Borrower, that no assurance is given that any particular projections will be realized, that actual results may differ). 

  h.Tax Matters.  Except as described on Schedule 5.8, (a) Borrower and its Subsidiaries have filed all federal and state income Tax returns and other material Tax returns that they are required to file, (b) Borrower and its Subsidiaries have duly paid all federal and state income Taxes and other material Taxes or installments thereof that they are required to pay, except Taxes being contested in good faith by appropriate proceedings and for which Borrower and its Subsidiaries maintain adequate reserves in accordance with GAAP, and (c) to the best of Borrower’s knowledge, no proposed or pending Tax assessments, deficiencies, audits or other proceedings with respect to Borrower or any Subsidiary have had, or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

  i.Intellectual Property Claims.  Borrower is the sole owner of, or otherwise has the right to use, the Intellectual Property material to Borrower’s business.  Except as described on Schedule 5.9 and as may be updated by Borrower in a written notice provided from time to time after the Closing Date, (i) each of the material Copyrights, Trademarks and Patents (other than patent applications) is valid and enforceable, (ii) no material part of the Intellectual Property has been judged invalid or unenforceable, in whole or in part, and (iii) except as set forth in the most recently delivered Compliance Certificate in accordance with Section 7.1(d), no claim has been made to Borrower in writing that any material part of the Intellectual Property violates the rights of any third party. Exhibit C (and as may be updated by Borrower in a written notice provided from time to time after the Closing Date) is a true, correct and complete list of each of Borrower’s registered Patents and filed Patent applications, registered Trademarks, registered Copyrights, and Material Agreements under which Borrower licenses Intellectual Property from third parties (other than shrink-wrap software licenses, licenses that are commercially available to the public, open source licenses, licenses disclosed in writing to Agent as required under this Agreement and immaterial Intellectual Property licensed to 

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  Borrower in the ordinary course of business), together with application or registration numbers, as applicable, owned by Borrower or any Subsidiary, in each case as of the Closing Date. Borrower is not in material breach of, nor has Borrower failed to perform any material obligations under, any of the foregoing contracts, licenses or agreements and, to Borrower’s knowledge, no third party to any such contract, license or agreement is in material breach thereof or has failed to perform any material obligations thereunder.  

  j.Intellectual Property.  

  (a)A true, correct and complete list of each pending, registered, issued or in-licensed Intellectual Property that, individually or taken together with any other such Intellectual Property, is material to the business of Borrower and its Subsidiaries, taken as a whole, relating to the research, development, manufacture, production, use, commercialization, marketing, importing, storage, transport, offer for sale, distribution or sale of the Borrower Products, and is owned or co-owned by or exclusively or non-exclusively licensed to the Borrower or any of its Subsidiaries (collectively, the “Current Company IP”), including its name/title, current owner or co-owners (including ownership interest), registration, patent or application number, and registration or application date, issued or filed in the United States, is set forth on Schedule 5.10(a).  Except as set forth on Schedule 5.10(a), (i) (A) each item of owned Current Company IP is valid, subsisting and (other than with respect to Patent applications) enforceable and no such item of Current Company IP has lapsed, expired, been cancelled or invalidated or become abandoned or unenforceable, and (B) no written notice has been received challenging the inventorship or ownership, or relating to any lapse, expiration, invalidation, abandonment or unenforceability, of any such item of Current Company IP, and (ii) (A) each such item of Current Company IP which is licensed from another Person is valid, subsisting and enforceable and no such item of Current Company IP has lapsed, expired, been cancelled or invalidated, or become abandoned or unenforceable, and (B) no written notice has been received challenging the inventorship or ownership, or relating to any lapse, expiration, invalidation, abandonment or unenforceability, of any such item of Current Company IP. To the knowledge of Borrower, there are no published patents, patent applications, articles or prior art references that would reasonably be expected to materially adversely affect the exploitation of the Borrower Products.  Except as set forth on Schedule 5.10(a), (x) each Person who has or has had any rights in or to owned Current Company IP or any trade secrets owned by the Borrower or any of its Subsidiaries, including each inventor named on the Patents within such owned Current Company IP filed by the Borrower or any of its Subsidiaries, and has executed an agreement assigning his, her or its entire right, title and interest in and to such owned Current Company IP and such trade secrets, and the inventions, improvements, ideas, discoveries, writings, works of authorship, information and other intellectual property embodied, described or claimed therein, to the stated owner thereof, and (y) no such Person has any contractual or other obligation that would preclude or conflict with such assignment or the exploitation of the Borrower Products or entitle such Person to ongoing payments.  

  (b) (i) The Borrower or any of its Subsidiaries possesses valid title to the Current Company IP for which it is listed as the owner or co-owner, as applicable, on Schedule 5.10(a); and (ii) there are no Liens on any Current Company IP.

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  (c)There are no maintenance, annuity or renewal fees that are currently overdue beyond their allotted grace period for any of the Current Company IP which is owned by or exclusively licensed to the Borrower or any of its Subsidiaries, nor have any applications or registrations therefor lapsed or become abandoned, been cancelled or expired.  There are no maintenance, annuity or renewal fees that are currently overdue beyond their allotted grace period for any of the Current Company IP which is non-exclusively licensed to the Borrower or any of its Subsidiaries, nor have any applications or registrations therefor lapsed or become abandoned, been cancelled or expired.

  (d)There are no unpaid fees or royalties under any Material Agreements that have become due, or are expected to become overdue.  Each Material Agreement is in full force and effect and is legal, valid, binding, and enforceable in accordance with its respective terms, except as may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or limiting creditors’ rights generally or by equitable principles relating to enforceability.  Except as set forth on Schedule 5.10(d), neither Borrower nor any of its Subsidiaries, as applicable, is in breach of or default in any manner that could reasonably be expected to materially affect the Borrower Products under any Material Agreement to which it is a party or may otherwise be bound, and no circumstances or grounds exist that would give rise to a claim of breach or right of rescission, termination, non-renewal, revision or amendment of any of the Material Agreements, including the execution, delivery and performance of this Agreement and the other Loan Documents.

  (e)No payments by the Borrower or any of its Subsidiaries are due to any other Person in respect of the Current Company IP, other than pursuant to the Material Agreements and those fees payable to patent offices in connection with the prosecution and maintenance of the Current Company IP, any applicable taxes and associated attorney fees. 

  (f)Neither the Borrower nor any of its Subsidiaries has undertaken or omitted to undertake any acts, and no circumstance or grounds exist that would invalidate or reduce, in whole or in part, the enforceability or scope of (i) the Current Company IP in any manner that could reasonably be expected to materially adversely affect the Borrower Products, or (ii) in the case of Current Company IP owned or co-owned or exclusively or non-exclusively licensed by the Borrower or any of its Subsidiaries, except as set forth on Schedule 5.10(f), the Borrower’s or Subsidiary’s entitlement to own or license and exploit such Current Company IP.

  (g)Except as described on Schedule 5.9 or in the most recently delivered Compliance Certificate in accordance with Section 7.1(d), there is no requested, filed pending, decided or settled opposition, interference proceeding, reissue proceeding, reexamination proceeding, inter-partes review proceeding, post-grant review proceeding, cancellation proceeding, injunction, litigation, paragraph IV patent certification or lawsuit under the Hatch-Waxman Act, hearing, investigation, complaint, arbitration, mediation, demand, International Trade Commission investigation, decree, or any other dispute, disagreement, or claim, in each case alleged in writing to Borrower or any of its Subsidiaries (collectively referred to hereinafter as “Specified Disputes”), nor to the knowledge of Borrower, has any such Specified Dispute been threatened in writing, in each case challenging the legality, validity, enforceability or ownership of any Current Company IP, in each case that would have a material adverse effect on the Borrower Products.  

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  (h)In each case where an issued Patent within the Current Company IP is owned or co-owned by the Borrower or any of its Subsidiaries by assignment, the assignment has been duly recorded with the U.S. Patent and Trademark Office.  

  (i)Except as set forth on Schedule 5.10(i) there are no pending or, to the knowledge of Borrower, threatened claims against Borrower or any of its Subsidiaries alleging (i) that any research, development, manufacture, production, use, commercialization, marketing, importing, storage, transport, offer for sale, distribution or sale of the Borrower Products in the United States infringes or violates (or in the past infringed or violated) the rights of any third parties in or to any Intellectual Property (“Third Party IP”) or constitutes a misappropriation of (or in the past constituted a misappropriation of) any Third Party IP, or (ii) that any Current Company IP is invalid or unenforceable.  

  (j)Except as set forth on Schedule 5.10(j), the manufacture, production, use, commercialization, marketing, importing, storage, transport, offer for sale, distribution or sale of the Borrower Products does not, to the knowledge of Borrower, infringe or violate (or in the past infringed or violated) any issued or registered Third Party IP (including any issued Patent within the Third Party IP) or constitute a misappropriation of (or in the past constituted a misappropriation of) any Third Party IP.

  (k)Except as set forth on Schedule 5.10(k), there are no settlements, covenants not to sue, consents, judgments, orders or similar obligations which: (i) restrict the rights of the Borrower or any of its Subsidiaries to use any Intellectual Property relating to the research, development, manufacture, production, use, commercialization, marketing, importing, storage, transport, offer for sale, distribution or sale of the Borrower Products (in order to accommodate any Third Party IP or otherwise), or (ii) permit any third parties to use any Company IP.

  (l)Except as set forth on Schedule 5.10(l), to the knowledge of Borrower (i) there is no, nor has there been any, infringement or violation by any Person of any of the Company IP or the rights therein, and (ii) there is no, nor has there been any, misappropriation by any Person of any of the Company IP or the subject matter thereof.

  (m)The Borrower and each of its Subsidiaries has taken all commercially reasonable measures customary in the biopharmaceutical industry to protect the confidentiality and value of all trade secrets owned by the Borrower or any of its Subsidiaries or used or held for use by the Borrower or any of its Subsidiaries, in each case relating to the research, development, manufacture, production, use, commercialization, marketing, importing, storage, transport, offer for sale, distribution or sale of the Borrower Products.

  (n)Except as set forth on Schedule 5.10(n), at the time of any shipment of Borrower Product in the United States occurring prior to the Closing Date, the units thereof so shipped complied with their relevant specifications and were manufactured in all material respects in accordance with current FDA Good Manufacturing Practices. 

  (o)Except as described on Schedule 5.10(o), Borrower has all material rights with respect to Intellectual Property necessary or material in the operation or conduct of Borrower’s business as currently conducted and proposed to be conducted by Borrower.  Without limiting the 

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  generality of the foregoing, and in the case of Licenses, except for restrictions that are unenforceable under Division 9 of the UCC, Borrower has the right, to the extent required to operate Borrower’s business, to freely transfer, license or assign Intellectual Property necessary or material in the operation or conduct of Borrower’s business as currently conducted and proposed to be conducted by Borrower, without condition, restriction or payment of any kind (other than license payments in the ordinary course of business) to any third party, and Borrower owns or has the right to use, pursuant to valid licenses, all software development tools, library functions, compilers and all other third-party software and other items that are material to Borrower’s business and used in the design, development, promotion, sale, license, manufacture, import, export, use or distribution of Borrower Products that are material to Borrower’s business except customary covenants in inbound license agreements and equipment leases where Borrower is the licensee or lessee. Except as has been disclosed in the Perfection Certificate or pursuant to Section 7.1(d), Borrower is not a party to, nor is it bound by, any Restricted License.

  No material software or other materials used by Borrower or any of its Subsidiaries (or used in any Borrower Products or any Subsidiaries’ products) are subject to an open-source or similar license (including but not limited to the General Public License, Lesser General Public License, Mozilla Public License, or Affero License) (collectively, “Open Source Licenses”) in a manner that would cause such software or other materials to have to be (i) distributed to third parties at no charge or a minimal charge (royalty-free basis); (ii) licensed to third parties to modify, make derivative works based on, decompile, disassemble, or reverse engineer; or (iii) used in a manner that does could require disclosure or distribution in source code form.

  k.Borrower Products.  Except as described on Schedule 5.11 or in the most recently delivered Compliance Certificate in accordance with Section 7.1(d), no material Intellectual Property owned by Borrower or Borrower Product has been or is subject to any actual or, to the knowledge of Borrower, threatened in writing litigation, proceeding (including any proceeding in the United States Patent and Trademark Office or any corresponding foreign office or agency) or outstanding decree, order, judgment, settlement agreement or stipulation that restricts in any manner Borrower’s use, transfer or licensing thereof or that could reasonably be expected to affect the validity, use or enforceability thereof.  Except as described in the most recently delivered Compliance Certificate in accordance with Section 7.1(d),there is no decree, order, judgment, agreement, stipulation, arbitral award or other provision entered into in connection with any litigation or proceeding that obligates Borrower to grant licenses or ownership interest in any future Intellectual Property related to the operation or conduct of the business of Borrower or Borrower Products. Except as described in the most recently delivered Compliance Certificate in accordance with Section 7.1(d), Borrower has not received any written notice or claim, or, to the knowledge of Borrower, oral notice or claim, challenging or questioning Borrower’s ownership in any Intellectual Property material to Borrower’s business (or written notice of any claim challenging or questioning the ownership in any licensed Intellectual Property material to Borrower’s business of the owner thereof) or suggesting that any third party has any claim of legal or beneficial ownership with respect thereto nor, to Borrower’s knowledge, is there a 

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  reasonable basis for any such claim.  Neither Borrower’s use of its Intellectual Property material to Borrower’s business nor the production and sale of Borrower Products material to Borrower’s business infringes the Intellectual Property or other rights of others. 

  l.Financial Accounts.  Exhibit D, as may be updated by the Borrower in a written notice provided to Agent after the Closing Date, is a true, correct and complete list of (a) all banks and other financial institutions at which Borrower or any Subsidiary maintains Deposit Accounts and (b) all institutions at which Borrower or any Subsidiary maintains an account holding Investment Property, and such exhibit correctly identifies the name, address and telephone number of each bank or other institution, the name in which the account is held, a description of the purpose of the account, and the complete account number therefor.

  m.Employee Loans.  Except for Permitted Investments, Borrower has no outstanding loans to any employee, officer or director of the Borrower nor has Borrower guaranteed the payment of any loan made to an employee, officer or director of the Borrower by a third party.

  n.Capitalization and Subsidiaries.  Borrower’s capitalization as of the Closing Date is set forth on Schedule 5.14 annexed hereto.  Borrower does not own any stock, partnership interest or other securities of any Person, except for Permitted Investments.  Attached as Schedule 5.14, as may be updated by Borrower in a written notice provided after the Closing Date, is a true, correct and complete list of each Subsidiary.

  7.INSURANCE; INDEMNIFICATION

  a.Coverage.  Borrower shall cause to be carried and maintained commercial general liability insurance, on an occurrence form, against risks customarily insured against in Borrower’s line of business.  Such risks shall include the risks of bodily injury, including death, property damage, personal injury, advertising injury, and contractual liability per the terms of the indemnification agreement found in Section 6.3.  Borrower must maintain a minimum of $2,000,000 of commercial general liability insurance for each occurrence.  Borrower has and agrees to maintain a minimum of $2,000,000 of directors’ and officers’ insurance for each occurrence and $5,000,000 in the aggregate. So long as there are any Secured Obligations  (other than inchoate indemnity obligations and other obligations which are expressly stated to survive termination of this Agreement) outstanding, Borrower shall also cause to be carried and maintained insurance upon the Collateral, insuring against all risks of physical loss or damage howsoever caused, in an amount not less than the full replacement cost of the Collateral; provided that such insurance may be subject to standard exceptions and deductibles.  If Borrower fails to obtain the insurance called for by this Section 6.1 or fails to pay any premium thereon or fails to pay any other amount which 

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  Borrower is obligated to pay under this Agreement or any other Loan Document or which may be required to preserve the Collateral, Agent may obtain such insurance or make such payment, and all amounts so paid by Agent are immediately due and payable, bearing interest at the then highest rate applicable to the Secured Obligations, and secured by the Collateral.  Agent will make reasonable efforts to provide Borrower with notice of Agent obtaining such insurance at the time it is obtained or within a reasonable time thereafter.  No payments by Agent are deemed an agreement to make similar payments in the future or Agent’s waiver of any Event of Default. 

  b.Certificates.  Borrower shall deliver to Agent certificates of insurance that evidence Borrower’s compliance with its insurance obligations in Section 6.1 and the obligations contained in this Section 6.2.  Borrower’s insurance certificate shall state Agent (shown as “Hercules Capital, Inc., as Agent”) is an additional insured for commercial general liability, a lenders loss payable for all risk property damage insurance, subject to the insurer’s approval, and a lenders loss payable for property insurance and additional insured for liability insurance for any future insurance that Borrower may acquire from such insurer.  Attached to the certificates of insurance will be additional insured endorsements for liability and lender’s loss payable endorsements for all risk property damage insurance.  All certificates of insurance will provide for a minimum of thirty (30) days advance written notice to Agent of cancellation (other than cancellation for non-payment of premiums, for which ten (10) days’ advance written notice shall be sufficient) or any other change adverse to Agent’s interests.  Any failure of Agent to scrutinize such insurance certificates for compliance is not a waiver of any of Agent’s rights, all of which are reserved.  Borrower shall provide Agent with copies of each insurance policy, and upon entering or amending any insurance policy required hereunder, Borrower shall provide Agent with copies of such policies and shall promptly deliver to Agent updated insurance certificates with respect to such policies.

  c.Indemnity.  Borrower agrees to indemnify and hold Agent, the Lenders and their officers, directors, employees, agents, in-house attorneys, representatives and shareholders (each, an “Indemnified Person”) harmless from and against any and all claims, costs, expenses, damages and liabilities (including such claims, costs, expenses, damages and liabilities based on liability in tort, including strict liability in tort), including reasonable, documented, out-of-pocket attorneys’ fees and disbursements and other costs of investigation or defense (including those incurred upon any appeal) (collectively, “Liabilities”), that may be instituted or asserted against or incurred by such Indemnified Person as the result of credit having been extended, suspended or terminated under this Agreement and the other Loan Documents or the administration of such credit, or in connection with or arising out of the transactions contemplated hereunder and thereunder, or any actions or failures to act in connection therewith, or arising out of the 

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  disposition or utilization of the Collateral, excluding in all cases Liabilities to the extent resulting solely from any Indemnified Person’s gross negligence or willful misconduct.  This Section 6.3 shall not apply with respect to Taxes other than any Taxes that represent losses, claims, damages, etc. arising from any non-Tax claim.  In no event shall any Indemnified Person be liable on any theory of liability for any special, indirect, consequential or punitive damages (including any loss of profits, business or anticipated savings). This Section 6.3 shall survive the repayment of indebtedness under, and otherwise shall survive the expiration or other termination of, this Agreement.  

  8.COVENANTS OF BORROWER

  Borrower agrees as follows:

  a.Financial Reports.  Borrower shall furnish to Agent the financial statements and reports listed hereinafter (the “Financial Statements”):

  i.as soon as practicable (and in any event within thirty (30) days) unless extended by Agent in connection with quarter-end closes) after the end of each month, unaudited interim and year-to-date financial statements as of the end of such month (prepared on a consolidated and consolidating basis, if applicable), including balance sheet and related statements of income and cash flows accompanied by a report detailing any material contingencies (including the commencement of any material litigation by or against Borrower) or any other occurrence that could reasonably be expected to have a Material Adverse Effect, all certified by Borrower’s Chief Executive Officer or Chief Financial Officer to the effect that they have been prepared in accordance with GAAP, except (i) for the absence of footnotes, (ii) that they are subject to normal year-end adjustments, and (iii) they do not contain certain non-cash items that are customarily included in quarterly and annual financial statements; 

  ii.as soon as practicable (and in any event within forty-five (45) days) after the end of each calendar quarter, unaudited interim and year-to-date financial statements as of the end of such calendar quarter (prepared on a consolidated and consolidating basis, if applicable), including balance sheet and related statements of income and cash flows accompanied by a report detailing any material contingencies (including the commencement of any material litigation by or against Borrower) or any other occurrence that could reasonably be expected to have a Material Adverse Effect, certified by Borrower’s Chief Executive Officer or Chief Financial Officer to the effect that they have been prepared in accordance with GAAP, except (i) for 

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  the absence of footnotes, and (ii) that they are subject to normal year-end adjustments;

  iii.as soon as practicable (and in any event within ninety (90) days) after the end of each fiscal year, unqualified audited financial statements as of the end of such year (prepared on a consolidated and consolidating basis, if applicable), including balance sheet and related statements of income and cash flows, and setting forth in comparative form the corresponding figures for the preceding fiscal year, certified by a firm of independent certified public accountants selected by Borrower and reasonably acceptable to Agent, accompanied by any management report from such accountants; 

  iv. as soon as practicable (and in any event within thirty (30) days unless extended by Agent in connection with quarter-end closes) after the end of each month, a Compliance Certificate in the form of Exhibit E;

  v.as soon as practicable (and in any event within thirty (30) days unless extended by Agent in connection with quarter-end closes) after the end of each month, a report showing agings of accounts receivable and accounts payable;

  vi.promptly and in any event within 5 days after the sending or filing thereof, as the case may be, copies of any proxy statements, financial statements or reports that Borrower has made generally available to holders of its Common Stock and copies of any regular, periodic and special reports or registration statements that Borrower files with the Securities and Exchange Commission or any governmental authority that may be substituted therefor, or any national securities exchange;

  vii.[Reserved];

  viii.financial and business projections promptly following their approval by Borrower’s board of directors, and in any event, within sixty (60) days after the end of Borrower’s fiscal year, as well as budgets, operating plans and other financial information reasonably requested by Agent; and

  ix.prompt notice if Borrower or any Subsidiary has knowledge that Borrower, or any Subsidiary or Affiliate of Borrower, is listed on the OFAC Lists or (a) is convicted on, (b) pleads nolo contendere to, (c) is indicted on, or (d) is arraigned and held over on charges involving money laundering or predicate crimes to money laundering. 

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  Borrower shall not (without the consent of Agent, such consent not to be unreasonably withheld or delayed), make any change in its (a) accounting policies or reporting practices, except as required by GAAP or (b) fiscal years or fiscal quarters, unless Borrower shall have notified Agent in writing within thirty (30) days in advance of such change. The fiscal year of Borrower shall end on December 31.

  The executed Compliance Certificate, and all Financial Statements required to be delivered pursuant to clauses (a), (b), (c) and (d) shall be sent via e-mail to financialstatements@htgc.com with a copy to legal@htgc.com and mdutra@htgc.com provided, that if e-mail is not available or sending such Financial Statements via e-mail is not possible, they shall be faxed to Agent at: (650) 473-9194, attention Account Manager: Axsome Therapeutics, Inc.

  Notwithstanding the foregoing, documents required to be delivered under Sections 7.1(a), (b), (c) or (f) pursuant to the terms hereof (to the extent any such documents are included in materials otherwise filed with the SEC) may be delivered electronically and if so delivered, shall be deemed to have been delivered on the date on which Borrower emails a link thereto to Agent.

  b.Management Rights.  Borrower shall permit any representative that Agent or the Lenders authorizes, including its attorneys and accountants, to inspect the Collateral and examine and make copies and abstracts of the books of account and records of Borrower at reasonable times and upon reasonable notice during normal business hours; provided, however, that so long as no Event of Default has occurred and is continuing, such examinations shall be limited to no more often than twice per fiscal year.  In addition, any such representative shall have the right to meet with management and officers of Borrower to discuss such books of account and records in connection with such examinations. In addition, Agent or the Lenders shall be entitled at reasonable times and intervals to consult with and advise the management and officers of Borrower concerning significant business issues affecting Borrower. Such consultations shall not unreasonably interfere with Borrower’s business operations. The parties intend that the rights granted Agent and the Lenders shall constitute “management rights” within the meaning of 29 C.F.R. Section 2510.3- 101(d)(3)(ii), but that any advice, recommendations or participation by Agent or the Lenders with respect to any business issues shall not be deemed to give Agent or the Lenders, nor be deemed an exercise by Agent or the Lenders of, control over Borrower’s management or policies. 

  c.Further Assurances.  Borrower shall from time to time following Agent’s written request execute, deliver and file, alone or with Agent, any financing statements, security agreements, collateral assignments, notices, control agreements, or other documents to perfect, give the highest priority to Agent’s Lien on the Collateral (subject to Permitted Liens) or otherwise evidence Agent’s rights herein.  Borrower shall from time to time procure any instruments or documents as may be reasonably requested by Agent, and take all further action that may be necessary, or that Agent may reasonably request, to perfect and protect the Liens granted hereby and 

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  thereby.  In addition, and for such purposes only, Borrower hereby authorizes Agent to execute and deliver on behalf of Borrower and to file such financing statements (including an indication that the financing statement covers “all assets or all personal property” of Borrower in accordance with Section 9-504 of the UCC), collateral assignments, notices, control agreements, security agreements and other documents without the signature of Borrower either in Agent’s name or in the name of Agent as agent and attorney-in-fact for Borrower.  Borrower shall protect and defend Borrower’s title to the Collateral and Agent’s Lien thereon against all Persons claiming any interest adverse to Borrower or Agent other than Permitted Liens.  

  d.Indebtedness.  Borrower shall not create, incur, assume, guarantee or be or remain liable with respect to any Indebtedness, or permit any Subsidiary so to do, other than Permitted Indebtedness, or prepay any Indebtedness or take any actions which impose on Borrower an obligation to prepay any Indebtedness, except for (a) the conversion of Indebtedness into equity securities and the payment of cash in lieu of fractional shares in connection with such conversion, (b) payment and prepayment of purchase money Indebtedness and capital leases pursuant to its then applicable payment schedule, (c) prepayment by any Subsidiary of (i) inter-company Indebtedness owed by such Subsidiary to any Borrower, or (ii) if such Subsidiary is not a Borrower, intercompany Indebtedness owed by such Subsidiary to another Subsidiary that is not a Borrower or (d) as otherwise permitted hereunder or approved in writing by Agent.

  Notwithstanding anything to the contrary in the foregoing, the issuance of, performance of obligations under (including any payments of interest), and conversion, exchange, exercise, repurchase, redemption (including, for the avoidance of doubt, a required repurchase in connection with the redemption of Permitted Convertible Debt upon satisfaction of a condition related to the stock price of the Common Stock), settlement or early termination or cancellation of (whether in whole or in part and including by netting or set-off) (in each case, whether in cash, Common Stock, following a merger event or other change of the Common Stock, other securities or property), or the satisfaction of any condition that would permit or require any of the foregoing, any Permitted Convertible Debt shall not constitute a prepayment of Indebtedness by Borrower for the purposes of this Section 7.4; provided that principal payments in cash (other than cash in lieu of fractional shares) shall only be allowed if the Redemption Conditions are satisfied in respect of such payment and at all times after such payment; provided further that, to the extent both (a) the aggregate amount of cash payable upon conversion or payment of any Permitted Convertible Debt (excluding any required payment of interest with respect to such Permitted Convertible Debt and excluding any payment of cash in lieu of a fractional share due upon conversion thereof) exceeds the aggregate principal amount thereof and (b) such conversion or payment does not trigger or correspond to an exercise or early unwind or settlement of a corresponding portion of the Permitted Bond Hedge Transactions relating to such Permitted Convertible Debt (including, for the avoidance of doubt, the case where there is no Bond Hedge 

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  Transaction relating to such Permitted Convertible Debt), the payment of such excess cash shall not be permitted by the preceding sentence.

  Notwithstanding the foregoing, Borrower may repurchase, exchange or induce the conversion of Permitted Convertible Debt by delivery of shares of Common Stock and/or a different series of Permitted Convertible Debt and/or by payment of cash (in an amount that does not exceed the proceeds received by Borrower from the substantially concurrent issuance of Common Stock and/or Permitted Convertible Debt plus the net cash proceeds, if any, received by Borrower pursuant to the related exercise or early unwind or termination of the related Permitted Bond Hedge Transactions and Permitted Warrant Transactions, if any, pursuant to the immediately following proviso); provided that, substantially concurrently with, or a commercially reasonable period of time before or after, the related settlement date for the Permitted Convertible Debt that is so repurchased, exchanged or converted, Borrower shall exercise or unwind or terminate early (whether in cash, shares or any combination thereof) the portion of the Permitted Bond Hedge Transactions and Permitted Warrant Transactions, if any, corresponding to such Permitted Convertible Debt that are so repurchased, exchanged or converted.

  e.Collateral.  Borrower shall at all times keep the Collateral and all other property and assets used in Borrower’s business or in which Borrower now or hereafter holds any interest free and clear from any legal process or Liens whatsoever (except for Permitted Liens), and shall give Agent prompt written notice of any legal process affecting the Collateral, such other property and assets, or any Liens thereon, provided however, that the Collateral and such other property and assets may be subject to Permitted Liens .  Borrower shall not enter into or suffer to exist or become effective any agreement that prohibits or limits the ability of any Borrower to create, incur, assume or suffer to exist any Lien upon any of its property (including Intellectual Property), whether now owned or hereafter acquired, to secure its obligations under the Loan Documents to which it is a party other than (a) this Agreement and the other Loan Documents, (b) any agreements governing any purchase money Liens or capital lease obligations otherwise permitted hereby (in which case, any prohibition or limitation shall only be effective against the assets financed thereby) and (c) customary restrictions on the assignment of leases, licenses and other agreements. Borrower shall cause its Subsidiaries to protect and defend such Subsidiary’s title to its assets from and against all Persons claiming any interest adverse to such Subsidiary, and Borrower shall cause its Subsidiaries at all times to keep such Subsidiary’s property and assets free and clear from any legal process or Liens whatsoever (except for Permitted Liens), and shall give Agent prompt written notice of any legal process affecting such Subsidiary’s assets. 

  f.Investments.  Borrower shall not directly or indirectly acquire or own, or make any Investment in or to any Person, or permit any of its Subsidiaries to do so, other than Permitted Investments.

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  Notwithstanding the foregoing, and for the avoidance of doubt, this Section 7.6 shall not prohibit the conversion by holders of (including any payment upon conversion, whether in cash, Common Stock or a combination thereof), or required payment of any principal or premium on (including, for the avoidance of doubt, in respect of a required repurchase in connection with the redemption of Permitted Convertible Debt upon satisfaction of a condition related to the stock price of the Common Stock) or required payment of any interest with respect to, any Permitted Convertible Debt in each case, in accordance with the terms of the indenture governing such Permitted Convertible Debt; provided that principal payments in cash (other than cash in lieu of fractional shares) shall only be allowed if the Redemption Conditions are satisfied in respect of such payment and at all times after such payment; provided further that, to the extent both (a) the aggregate amount of cash payable upon conversion or payment of any Permitted Convertible Debt (excluding any required payment of interest with respect to such Permitted Convertible Debt and excluding any payment of cash in lieu of a fractional share due upon conversion thereof) exceeds the aggregate principal amount thereof and (b) such conversion or payment does not trigger or correspond to an exercise or early unwind or settlement of a corresponding portion of the Bond Hedge Transactions relating to such Permitted Convertible Debt (including, for the avoidance of doubt, the case where there is no Bond Hedge Transaction relating to such Permitted Convertible Debt), the payment of such excess cash shall not be permitted by the preceding sentence.

  Notwithstanding the foregoing, Borrower may repurchase, exchange or induce the conversion of Permitted Convertible Debt by delivery of Common Stock and/or a different series of Permitted Convertible Debt and/or by payment of cash (in an amount that does not exceed the proceeds received by Borrower from the substantially concurrent issuance of Common Stock and/or Permitted Convertible Debt plus the net cash proceeds, if any, received by Borrower pursuant to the related exercise or early unwind or termination of the related Permitted Bond Hedge Transactions and Permitted Warrant Transactions, if any, pursuant to the immediately following proviso); provided that, substantially concurrently with, or a commercially reasonable period of time before or after, the related settlement date for the Permitted Convertible Debt that is so repurchased, exchanged or converted, Borrower shall exercise or unwind or terminate early (whether in cash, shares or any combination thereof) the portion of the Permitted Bond Hedge Transactions and Permitted Warrant Transactions, if any, corresponding to such Permitted Convertible Debt that are so repurchased, exchanged or converted.

  g.Distributions.  Borrower shall not, and shall not allow any Subsidiary to, (a) repurchase or redeem any class of stock or other Equity Interest other than pursuant to employee, director or consultant repurchase plans or other similar agreements that are Permitted Investments or the conversion of any of its convertible securities pursuant to the terms of such convertible securities; provided, however, in each case the repurchase or redemption price does not exceed the original consideration paid for such stock or Equity Interest unless required by the terms of such agreement or plan, or pursuant to a public repurchase of securities in compliance with the requirements of SEC Rule 10b-18, or (b) declare or pay any cash dividend or make any other cash distribution on any class of stock or other Equity 

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  Interest, except that a Subsidiary may pay dividends or make other distributions to Borrower or any Subsidiary of Borrower, or (c) except for Permitted Investments, lend money to any employees, officers or directors or guarantee the payment of any such loans granted by a third party in excess of $100,000 in the aggregate or (d) waive, release or forgive any Indebtedness owed by any employees, officers or directors in excess of $100,000 in the aggregate other than cancellation of Indebtedness in connection with the repurchase of Equity Interests permitted under clause (a) above.  Notwithstanding the foregoing, Borrower may redeem or repurchase stock and other Equity Interests and may declare and pay dividends and make distributions in any amount, so long as the Redemption Conditions (as applied to such redemption, repurchase, dividend or distribution) are satisfied.

  Notwithstanding the foregoing, and for the avoidance of doubt, this Section 7.7 shall not prohibit the conversion by holders of (including any payment upon conversion, whether in cash, Common Stock or a combination thereof), or required payment of any principal or premium on (including, for the avoidance of doubt, in respect of a required repurchase in connection with the redemption of Permitted Convertible Debt upon satisfaction of a condition related to the stock price of the Common Stock) or required payment of any interest with respect to, any Permitted Convertible Debt in each case, in accordance with the terms of the indenture governing such Permitted Convertible Debt; provided that principal payments in cash (other than cash in lieu of fractional shares) shall only be allowed if the Redemption Conditions are satisfied in respect of such payment and at all times after such payment; provided further that, to the extent both (a) the aggregate amount of cash payable upon conversion or payment of any Permitted Convertible Debt (excluding any required payment of interest with respect to such Permitted Convertible Debt and excluding any payment of cash in lieu of a fractional share due upon conversion thereof) exceeds the aggregate principal amount thereof and (b) such conversion or payment does not trigger or correspond to an exercise or early unwind or settlement of a corresponding portion of the Bond Hedge Transactions relating to such Permitted Convertible Debt (including, for the avoidance of doubt, the case where there is no Bond Hedge Transaction relating to such Permitted Convertible Debt), the payment of such excess cash shall not be permitted by the preceding sentence.

  Notwithstanding the foregoing, Borrower may repurchase, exchange or induce the conversion of Permitted Convertible Debt by delivery of Common Stock and/or a different series of Permitted Convertible Debt and/or by payment of cash (in an amount that does not exceed the proceeds received by Borrower from the substantially concurrent issuance of Common Stock and/or Permitted Convertible Debt plus the net cash proceeds, if any, received by Borrower pursuant to the related exercise or early unwind or termination of the related Permitted Bond Hedge Transactions and Permitted Warrant Transactions, if any, pursuant to the immediately following proviso); provided that, substantially concurrently with, or a commercially reasonable period of time before or after, the related settlement date for the Permitted Convertible Debt that is so repurchased, exchanged or converted, Borrower shall exercise or unwind or terminate early (whether in cash, shares or any combination thereof) the portion of the Permitted Bond Hedge Transactions and Permitted 

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  Warrant Transactions, if any, corresponding to such Permitted Convertible Debt that are so repurchased, exchanged or converted.

  Notwithstanding anything to the contrary set forth in this Section 7, and for the avoidance of doubt: 

  1.Borrower may make any required payment of premium to a counterparty thereunder due in connection with entering into any Permitted Bond Hedge Transaction;

  2.Borrower may make any payment in connection with any Permitted Warrant Transaction by (i) delivery of shares of the Borrower’s Common Stock (together with cash in lieu of fractional shares) upon net share settlement thereof, (ii) set-off, netting and/or payment of an early termination payment or other payment thereunder, in each case, in the Borrower’s Common Stock and (iii) solely to the extent the Borrower does not have the option of satisfying such payment obligations through the delivery of shares of the Borrower’s Common Stock or is otherwise required to satisfy such payment obligations in cash, set-off, netting and/or payment of an early termination payment or other payment thereunder, in each case, in cash (it being understood and agreed that any payment made in cash in connection with Permitted Warrant Transactions by set-off, netting and/or payment of an early termination payment or similar payment thereunder, in each case, after using commercially reasonable efforts to satisfy such obligation (or the portion thereof remaining after giving effect to any netting or set-off against termination or similar payments under an applicable Permitted Bond Hedge Transaction) by delivery of shares of the Borrower’s Common Stock shall be deemed to be a payment obligation required to be satisfied in cash); and

  3.Borrower may acquire shares or other Equity Interests or cash or a combination thereof under the terms of any Permitted Bond Hedge Transaction or Permitted Warrant Transaction.

  h.Transfers.  Except for Permitted Transfers, Borrower shall not, and shall not allow any Subsidiary to, voluntarily or involuntarily transfer, sell, lease, license, lend or in any other manner convey any equitable, beneficial or legal interest in any material portion of its assets.

  i.Mergers and Consolidations.  Except for Permitted Acquisitions, Borrower shall not merge or consolidate, or permit any of its Subsidiaries to merge or consolidate, with or into any other business organization (other than 

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  mergers or consolidations of (a) a Subsidiary which is not a Borrower into another Subsidiary or into Borrower or (b) a Borrower into another Borrower).

  j.Taxes.  Borrower shall, and shall cause each of its Subsidiaries to, pay when due all material Taxes of any nature whatsoever now or hereafter imposed or assessed against Borrower or the Collateral or upon Borrower’s ownership, possession, use, operation or disposition thereof or upon Borrower’s rents, receipts or earnings arising therefrom.  Borrower shall, and shall cause each of its Subsidiaries to, accurately file on or before the due date therefor (taking into account proper extensions) all federal and state income Tax returns and other material Tax returns required to be filed.  Notwithstanding the foregoing, Borrower and its Subsidiaries may contest, in good faith and by appropriate proceedings diligently conducted, Taxes for which Borrower and its Subsidiaries maintain adequate reserves in accordance with GAAP.

  k.Corporate Changes.  Neither Borrower nor any Subsidiary shall change its corporate name, legal form or jurisdiction of formation without twenty (20) days’ prior written notice to Agent.  Neither Borrower nor any Subsidiary shall suffer a Change in Control. Neither Borrower nor any Subsidiary shall relocate its chief executive office or its principal place of business unless: (i) it has provided prior written notice to Agent; and (ii) such relocation shall be within the continental United States of America.  Neither Borrower nor any Subsidiary shall relocate any item of Collateral (other than (u) sales of Inventory in the ordinary course of business and Permitted Transfers, (v) relocations of Equipment and other property having an aggregate value of up to $250,000 in any fiscal year, (w) relocations of Collateral from a location described on Exhibit B to another location described on Exhibit B, (x) locations of mobile equipment, including phones, tablets and computers with employees and consultants in the ordinary course of business, (y) locations where Collateral may be temporarily located for sales, testing or demonstration purposes in the ordinary course of business, (z) locations where biopharmaceutical compounds and therapeutic materials are located in the ordinary course of business in connection with clinical trials and development arrangements) unless (i) it has provided prompt written notice to Agent, (ii) such relocation is within the continental United States of America and, (iii) if such relocation is to a third party bailee, it has delivered a bailee agreement in form and substance reasonably acceptable to Agent.

  l.Deposit Accounts.  Neither Borrower nor any Subsidiary (other than Excluded Subsidiaries) shall maintain any Deposit Accounts, or accounts holding Investment Property, except with respect to which Agent has an Account Control Agreement; provided that no Account Control Agreement shall be required for Excluded Accounts. No Excluded Subsidiary shall maintain any Deposit Accounts, or accounts holding Investment Property 

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  holding more than Five Hundred Thousand Dollars ($500,000) in the aggregate for all such Accounts of all Excluded Subsidiaries at any time.

  m.Borrower shall notify Agent of each Subsidiary formed or acquired subsequent to the Closing Date and, at within 20 days such formation or acquisition (including, without limitation, pursuant to a division), as applicable, unless otherwise approved in writing by Agent in its sole discretion, shall cause any such Subsidiary (other than Excluded Subsidiaries) to execute and deliver to Agent a Joinder Agreement.  If at any time, the Excluded Subsidiary Condition is not satisfied, Borrower shall promptly cause one or more Subsidiaries to execute and deliver to Agent a Joinder Agreement such that, after giving effect to such Joinder Agreement, the Excluded Subsidiary Conditions is satisfied.

  n.Excluded Subsidiaries.  Borrower shall not permit the Excluded Subsidiaries to: (a) have outstanding liabilities in excess of $750,000 in the aggregate at any time, or (b) own any Intellectual Property material to the business of Borrower or Borrower and its Subsidiaries, taken as a whole.  

  o.Notification of Event of Default.  Borrower shall notify Agent immediately of the occurrence of any Event of Default.

  p.Regulatory and Product Notices.  The Borrower shall promptly (but in any event within three (3) days) after the receipt or occurrence thereof notify Agent of:  

  (i) any written notice received by Borrower or its Subsidiaries alleging potential or actual violations of any Public Health Law by Borrower or its Subsidiaries,

  (ii)any written notice that the FDA (or international equivalent) is limiting, suspending or revoking any Registration (including, but not limited to, by the issuance of a clinical hold),

  (iii)any written notice that Borrower or its Subsidiaries has become subject to any Regulatory Action,

  (iv)the exclusion or debarment from any governmental healthcare program or debarment or disqualification by FDA (or international equivalent) of Borrower or its Subsidiaries or its or their authorized officers,

  (v)any notice that a Borrower or any Subsidiary, or any of their licensees or sublicensees (including licensees or sublicensees under any Material Agreement), is being investigated or is the subject of any allegation of potential or actual violations of any Federal Health Care Program Laws,

  (vi)any written notice that any product of Borrower or its Subsidiaries has been seized, withdrawn, recalled, detained, or subject to a suspension of manufacturing, or the commencement of any proceedings in the United States or any other jurisdiction seeking the 

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  withdrawal, recall, suspension, import detention, or seizure of any Borrower Product are pending or threatened in writing against Borrower or its Subsidiaries,

  (vii)changing the scope of marketing authorization or the labeling of the products of Borrower and its Subsidiaries under any such Registration, or

  (viii)considering or implementing any other such regulatory action,

  except, in each case of (i) through (viii) above, where such action would not reasonably be expected to have, either individually or in the aggregate, Material Regulatory Liabilities. 

  q.Use of Proceeds.  Borrower agrees that the proceeds of the Loans shall be used solely to refinance existing indebtedness, to pay related fees and expenses in connection with this Agreement and for working capital and general corporate purposes.  The proceeds of the Loans will not be used in violation of Anti-Corruption Laws or applicable Sanctions.

  r.Material Agreement. The Borrower shall not, without the consent of the Agent, materially amend or terminate the Antecip License Agreement. The Borrower shall give prompt written notice to the Agent of entering into a Material Agreement or materially amending or terminating a Material Agreement. 

  s.Compliance with Laws.

  Borrower shall maintain, and shall cause its Subsidiaries to maintain, compliance in all material respects with all applicable laws, rules or regulations (including any law, rule or regulation with respect to the making or brokering of loans or financial accommodations), and shall, or cause its Subsidiaries to, obtain and maintain all required governmental authorizations, approvals, licenses, franchises, permits or registrations reasonably necessary in connection with the conduct of Borrower’s business except where a failure to do so could not reasonably be expected to have a Material Adverse Effect.

  Neither Borrower nor any of its Subsidiaries shall, nor shall Borrower or any of its Subsidiaries permit any Affiliate controlled by Borrower to, directly or indirectly, knowingly enter into any documents, instruments, agreements or contracts with any Person listed on the OFAC Lists.  Neither Borrower nor any of its Subsidiaries shall, nor shall Borrower or any of its Subsidiaries, permit any Affiliate controlled by Borrower to, directly or indirectly, (i) conduct any business or engage in any transaction or dealing with any Blocked Person, including, without limitation, the making or receiving of any contribution of funds, goods or services to or for the benefit of any Blocked Person, (ii) deal in, or otherwise engage in any transaction relating to, any property or interests in property blocked pursuant to Executive Order No. 13224 or any similar executive order or other Anti‐Terrorism Law, or (iii) engage in or conspire to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in Executive Order No. 13224 or other Anti‐Terrorism Law.

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  Borrower has implemented and maintains in effect policies and procedures designed to ensure compliance by the Borrower, its Subsidiaries and their respective directors, officers, employees and agents with Anti-Corruption Laws and applicable Sanctions, and Borrower, its Subsidiaries and their respective officers and employees and to the knowledge of Borrower its directors and agents, are in compliance with Anti-Corruption Laws and applicable Sanctions in all material respects.

  None of Borrower, any of its Subsidiaries or any of their respective directors, officers or employees, or to the knowledge of Borrower, any agent for Borrower or its Subsidiaries that will act in any capacity in connection with or benefit from the credit facility established hereby, is a Sanctioned Person.  No Loan, use of proceeds or other transaction contemplated by this Agreement will violate Anti-Corruption Laws or applicable Sanctions.

  t.Financial Covenants.

  i.Minimum Cash.  

  1.If the Initial Minimum Cash Test Date has occurred, Borrower shall thereafter maintain Qualified Cash in an amount greater than or equal to the sum of Fifteen Million Dollars ($15,000,000) plus the Qualified Cash A/P Amount at all times.

  2.If Borrower makes any payment in respect to the last sentence of the first paragraph of Section 7.7 or makes any other cash payment in respect of Permitted Convertible Debt, subject to satisfaction of the Redemption Conditions, Borrower shall, at all times thereafter, maintain Qualified Cash in the amount required by the defined term “Redemption Conditions”.

  ii.Performance Covenant. If the Initial Performance Covenant Test Date has occurred, Borrower shall thereafter satisfy either of (i) Performance Covenant A or Performance Covenant B, tested at all times, or (ii) Performance Covenant C, tested quarterly.

  u.Intellectual Property.  Each Borrower shall (i) protect, defend and maintain the validity and enforceability of its Intellectual Property that is material to the conduct of Borrower’s business; (ii) promptly advise Agent in writing of material infringements of its Intellectual Property; and (iii) not allow any Intellectual Property material to Borrowers’ business to be abandoned, forfeited or dedicated to the public without Agent’s written consent.  If a Borrower (a) obtains any Patent, registered Trademark, registered Copyright, registered mask work, or any pending application for any of the foregoing, whether as owner, licensee or otherwise, or (b) applies for any Patent or the registration of any Trademark, then such Borrower shall concurrently with the delivery of the next Compliance Certificate required 

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  under Section 7.1(d), provide written notice thereof to Agent and shall execute such intellectual property security agreements and other documents and take such other actions as Agent may request in its good faith business judgment to perfect and maintain a first priority perfected security interest in favor of Agent in such property.  If a Borrower decides to register any Copyrights or mask works in the United States Copyright Office, such Borrower shall: (x) provide Agent with at least fifteen (15) days prior written notice of such Borrower’s intent to register such Copyrights or mask works together with a copy of the application it intends to file with the United States Copyright Office (excluding exhibits thereto); (y) execute an intellectual property security agreement and such other documents and take such other actions as Agent may request in its good faith business judgment to perfect and maintain a first priority perfected security interest in favor of Agent in the Copyrights or mask works intended to be registered with the United States Copyright Office; and (z) record such intellectual property security agreement with the United States Copyright Office contemporaneously with filing the Copyright or mask work application(s) with the United States Copyright Office. Except as set forth in the most recently delivered Compliance Certificate in accordance with Section 7.1(d), provide to Agent (x) copies of all applications that it files for Patents or for the registration of Trademarks, Copyrights or mask works, or (y) evidence that it has acquired any registered Trademarks, in each case, together with evidence of the recording of the intellectual property security agreement required for Agent to perfect and maintain a first priority perfected security interest in such property.  Borrower shall, together with the delivery of the next Compliance Certificate referred to in Section 7.01(d), provide written notice to Agent of entering into or becoming bound by any Restricted License (other than over-the-counter software that is commercially available to the public).  Borrower shall use its commercially reasonable efforts take such steps as Agent reasonably requests to obtain the consent of, or waiver by, any person whose consent or waiver is necessary for (1) any Restricted License to be deemed “Collateral” and for Agent to have a security interest in it that might otherwise be restricted or prohibited by law or by the terms of any such Restricted License, whether now existing or entered into in the future, and (2) Agent to have the ability in the event of a liquidation of any Collateral to dispose of such Collateral in accordance with Agent’s rights and remedies under this Agreement and the other Loan Documents.

  v.Transactions with Affiliates.  Borrower shall not and shall not permit any Subsidiary to, directly or indirectly, enter into or permit to exist any transaction of any kind with any Affiliate of Borrower or such Subsidiary except for (a) transactions on terms that are not less favorable to Borrower or such Subsidiary, as the case may be, than those that might be obtained in an arm’s length transaction from a Person who is not an Affiliate of Borrower or such Subsidiary, (b) transactions between or among the Borrowers not involving any other Affiliate, (c) any Permitted Investment, 

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  (d) any Permitted Indebtedness, (e) any Distributions permitted by Section 7.7, (f) any Permitted Transfers, (g) to the extend approved by the Borrower’s board of directors, the payment of reasonable fees to directors of Borrower who are not employees of Borrower or any Subsidiary, and compensation and employee benefit arrangements paid to, and indemnities provided for the benefit of, directors, officers or employees of Borrower or its Subsidiaries in the ordinary course of business, and (h) any contribution to the capital of Borrower or any purchase of Equity Interests of Borrower, in each case solely to the extent such transaction does not cause a Change in Control to occur.

  9.RIGHT TO invest

  a.Borrower shall provide (or in the case of a Subsequent Financing that is a registered offering, the Borrower shall use its commercially reasonable efforts to provide) the Lenders or their permitted assignees or nominees, designated as such in writing to Borrower, the opportunity, in their discretion, to participate in each Subsequent Financing in an amount of up to Five Million Dollars ($5,000,000), in the aggregate for all Lenders and their permitted assignees or nominees, in such Subsequent Financing on substantially the same terms, conditions and pricing afforded to other investors participating in such Subsequent Financing. If the Lenders (or their permitted assignees or nominees) elect to participate in any Subsequent Financing, the Lenders (or their permitted assignees or nominees, as applicable) participating in such Subsequent Financing agree to become a party to the agreements executed by the other investors participating in such Subsequent Financing, including with respect to obligations of confidentiality or as may otherwise be required by the Securities Act of 1933, as amended, and the rules and regulations promulgated by the Securities and Exchange Commission thereunder.  Borrower, or an investment bank or underwriter engaged on Borrower’s behalf, shall provide the Lenders or their permitted assignees or nominees at least three (3) Business Days’ written notice of any planned Subsequent Financing and the opportunity to exercise the right to invest under this Section 8.1 with respect to any such Subsequent Financing.  This Section 8.1, and all rights and obligations hereunder, shall terminate upon the earliest to occur of (a) termination of this Agreement or (b) such time that the Lenders or their permitted assignees or nominees have purchased $5,000,000 of Borrower’s Equity Interests in the aggregate in Subsequent Financings. 

  10.EVENTS OF DEFAULT

  The occurrence of any one or more of the following events shall be an Event of Default:

  a.Payments.  Borrower fails to pay any amount due under this Agreement or any of the other Loan Documents (other than the Warrant) on the due date; 

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  provided, however, that an Event of Default shall not occur on account of a failure to pay due solely to an administrative or operational error of Agent or the Lenders or Borrower’s bank if Borrower had the funds to make the payment when due and makes the payment within three (3) Business Days following Borrower’s knowledge of such failure to pay; or

  b.Covenants.  Borrower breaches or defaults in the performance of any covenant or Secured Obligation under this Agreement, or any of the other Loan Documents or any other agreement among Borrower, Agent and the Lenders, and (a) with respect to a default under any covenant under this Agreement (other than under Sections 4.4, 6, 7.4, 7.5, 7.6, 7.7, 7.8, 7.9, 7.15, 7.17, 7.18, 7.19, 7.20. 7.21 and 7.22), any other Loan Document, or any other agreement among Borrower, Agent and the Lenders, such default continues for more than ten (10) days after the earlier of the date on which (i) Agent or the Lenders has given notice of such default to Borrower and (ii) Borrower has actual knowledge of such default or (b) with respect to a default under any of Sections 4.4, 6, 7.4, 7.5, 7.6, 7.7, 7.8, 7.9, 7.15, 7.17, 7.18, 7.19, 7.20. 7.21 and 7.22, the occurrence of such default; or 

  c.Material Adverse Effect.  A circumstance has occurred that could reasonably be expected to have a Material Adverse Effect; provided that, solely for purposes of this Section 9.3, the occurrence of any of the following, in and of itself, shall not constitute a Material Adverse Effect: (a) failure to achieve the AXS-05 Milestone, (b) failure to achieve the AXS-07 Milestone, or (c) adverse results or delays in any nonclinical or clinical trial, (d) the denial, delay or limitation of approval of the FDA with respect to any drug. 

  d.Representations.  Any representation or warranty made by Borrower in any Loan Document or in the Warrant shall have been false or misleading in any material respect when made or when deemed made; or 

  e.Insolvency.  Borrower (A) (i) shall make an assignment for the benefit of creditors; or (ii) shall be unable to pay its debts as they become due, or be unable to pay or perform under the Loan Documents, or shall become insolvent; or (iii) shall file a voluntary petition in bankruptcy; or (iv) shall file any petition, answer, or document seeking for itself any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any present or future statute, law or regulation pertinent to such circumstances; or (v) shall seek or consent to or acquiesce in the appointment of any trustee, receiver, or liquidator of Borrower or of all or any substantial part (i.e., 33-1/3% or more) of the assets or property of Borrower; or (vi) shall cease its operations of its business as its business has normally been conducted, or terminate substantially all of its employees; or (vii) Borrower or its directors or majority stockholders shall take any action initiating any of the foregoing actions described in clauses (i) through (vi); or (B) either (i) forty-five (45) days shall have expired after the 

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  commencement of an involuntary action against Borrower seeking reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any present or future statute, law or regulation, without such action being dismissed or all orders or proceedings thereunder affecting the operations or the business of Borrower being stayed; or (ii) a stay of any such order or proceedings shall thereafter be set aside and the action setting it aside shall not be timely appealed; or (iii) Borrower shall file any answer admitting or not contesting the material allegations of a petition filed against Borrower in any such proceedings; or (iv) the court in which such proceedings are pending shall enter a decree or order granting the relief sought in any such proceedings; or (v) forty-five (45) days shall have expired after the appointment, without the consent or acquiescence of Borrower, of any trustee, receiver or liquidator of Borrower or of all or any substantial part of the properties of Borrower without such appointment being vacated; or

  f.Attachments; Judgments.  Any portion of Borrower’s assets is attached or seized, or a levy is filed against any such assets, or a judgment or judgments is/are entered for the payment of money (not covered by independent third party insurance as to which liability has not been rejected by such insurance carrier), individually or in the aggregate, of at least $500,000, or Borrower is enjoined or in any way prevented by court order from conducting any part of its business as its business has normally been conducted and such attachment, seizure, levy, judgment or injunction is not, within fifteen (15) days after the occurrence thereof, satisfied, discharged, paid or stayed (whether through the posting of a bond or otherwise); or  

  g.Other Obligations.  

  i.The occurrence of any default in the payment of any Indebtedness under any agreement or obligation of Borrower involving Indebtedness in excess of $1,000,000, beyond the period of grace if any, provided in the instrument or agreement under which such Indebtedness was created; or

  ii.There is, under any agreement to which Borrower is a party with a third party or parties, any default resulting in a right by such third party or parties, whether or not exercised, to accelerate the maturity of any Indebtedness in an amount individually or in the aggregate in excess of One Million Dollars ($1,000,000); or

  iii.The occurrence of any early payment is required or unwinding or termination occurs with respect to any Permitted Bond Hedge Transaction or Permitted Warrant Transaction, or any condition giving rise to the foregoing is met, in each case, with respect to which Borrower or its Affiliate is the “affected party” or “defaulting party” under the terms of such Permitted Bond Hedge Transaction 

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  or Permitted Warrant Transaction, if a Material Adverse Effect could reasonably be expected to result from such default, early payment, unwinding or termination; or

  iv.The occurrence of any default under, (i) subject to the Antecip Direct Agreement, the Antecip License Agreement that permits the counterparty thereto to terminate such agreement or (ii) any other Material Agreement that permits the counterparty thereto to terminate such Material Agreement or accelerate payments in excess of $5,000,000 owed thereunder.

  h.Stop Trade.  At any time, an SEC stop trade order or NASDAQ market trading suspension of the Common Stock shall be in effect for five (5) consecutive days or five (5) days during a period of ten (10) consecutive days, excluding in all cases a suspension of all trading on a public market; provided that Borrower shall not have been able to cure such trading suspension within thirty (30) days of the notice thereof or list the Common Stock on another public market within sixty (60) days of such notice.

  11.REMEDIES

  a.General.  Upon the occurrence and during the continuation of any one or more Events of Default, Agent may, and at the direction of the Required Lenders shall, accelerate and demand payment of all or any part of the Secured Obligations together with a Prepayment Charge and declare them to be immediately due and payable (provided, that upon the occurrence of an Event of Default of the type described in Section 9.5, all of the Secured Obligations (including, without limitation, the Prepayment Charge and the End of Term Charge) shall automatically be accelerated and made due and payable, in each case without any further notice or act).  Borrower hereby irrevocably appoints Agent as its lawful attorney-in-fact to:  (a) exercisable following the occurrence and during the continuation of an Event of Default, (i) sign Borrower’s name on any invoice or bill of lading for any account or drafts against account debtors; (ii) demand, collect, sue, and give releases to any account debtor for monies due, settle and adjust disputes and claims about the accounts directly with account debtors, and compromise, prosecute, or defend any action, claim, case, or proceeding about any Collateral (including filing a claim or voting a claim in any bankruptcy case in Agent’s or Borrower’s name, as Agent may elect); (iii) make, settle, and adjust all claims under Borrower’s insurance policies; (iv) pay, contest or settle any Lien, charge, encumbrance, security interest, or other claim in or to the Collateral, or any judgment based thereon, or otherwise take any action to terminate or discharge the same; (v) transfer the Collateral into the name of Agent or a third party as the UCC permits; and (vi) receive, open and dispose of mail addressed to Borrower; and (b) regardless of whether an Event of Default has occurred, (i) endorse Borrower’s name on any checks, payment instruments, or other forms of payment or security; and (ii) 

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  notify all account debtors to pay Agent directly.  Borrower hereby appoints Agent as its lawful attorney-in-fact to sign Borrower’s name on any documents necessary to perfect or continue the perfection of Agent’s security interest in the Collateral regardless of whether an Event of Default has occurred until all Secured Obligations (other than any inchoate indemnity obligations and any other obligations which, by their terms, are to survive the termination of this Agreement) have been satisfied in full and the Loan Documents (other than the Warrant) have been terminated.  Agent’s foregoing appointment as Borrower’s attorney in fact, and all of Agent’s rights and powers, coupled with an interest, are irrevocable until all Secured Obligations (other than any inchoate indemnity obligations and any other obligations which, by their terms, are to survive the termination of this Agreement) have been fully repaid and performed and the Loan Documents (other than the Warrant) have been terminated.  Agent may, and at the direction of the Required Lenders shall, exercise all rights and remedies with respect to the Collateral under the Loan Documents or otherwise available to it under the UCC and other applicable law, including the right to release, hold, sell, lease, liquidate, collect, realize upon, or otherwise dispose of all or any part of the Collateral and the right to occupy, utilize, process and commingle the Collateral.  All Agent’s rights and remedies shall be cumulative and not exclusive.

  b.Collection; Foreclosure.  Upon the occurrence and during the continuance of any Event of Default, Agent may, and at the direction of the Required Lenders shall, at any time or from time to time, apply, collect, liquidate, sell in one or more sales, lease or otherwise dispose of, any or all of the Collateral, in its then condition or following any commercially reasonable preparation or processing, in such order as Agent may elect.  Any such sale may be made either at public or private sale at its place of business or elsewhere.  Borrower agrees that any such public or private sale may occur upon ten (10) calendar days’ prior written notice to Borrower.  Agent may require Borrower to assemble the Collateral and make it available to Agent at a place designated by Agent that is reasonably convenient to Agent and Borrower.  The proceeds of any sale, disposition or other realization upon all or any part of the Collateral shall be applied by Agent in the following order of priorities:

  First, to Agent and the Lenders in an amount sufficient to pay in full Agent’s and the Lenders’ reasonable costs and professionals’ and advisors’ fees and expenses as described in Section 11.12;

  Second, to the Lenders in an amount equal to the then unpaid amount of the Secured Obligations (including principal, interest, and the Default Rate interest), in such order and priority as Agent may choose in its sole discretion; and

  Finally, after the full and final payment in Cash of all of the Secured Obligations (other than inchoate obligations), to any creditor holding a junior Lien on the 

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  Collateral, or to Borrower or its representatives or as a court of competent jurisdiction may direct.

  Agent shall be deemed to have acted reasonably in the custody, preservation and disposition of any of the Collateral if it complies with the obligations of a secured party under the UCC.

  c.No Waiver.  Agent shall be under no obligation to marshal any of the Collateral for the benefit of Borrower or any other Person, and Borrower expressly waives all rights, if any, to require Agent to marshal any Collateral.  

  d.Cumulative Remedies.  The rights, powers and remedies of Agent hereunder shall be in addition to all rights, powers and remedies given by statute or rule of law and are cumulative.  The exercise of any one or more of the rights, powers and remedies provided herein shall not be construed as a waiver of or election of remedies with respect to any other rights, powers and remedies of Agent.

  12.MISCELLANEOUS

  a.Severability.  Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be prohibited by or invalid under such law, such provision shall be ineffective only to the extent and duration of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement.

  b.Notice.  Except as otherwise provided herein, any notice, demand, request, consent, approval, declaration, service of process or other communication (including the delivery of Financial Statements) that is required, contemplated, or permitted under the Loan Documents or with respect to the subject matter hereof shall be in writing, and shall be deemed to have been validly served, given, delivered, and received upon the earlier of: (i) the day of transmission by electronic mail or hand delivery or delivery by an overnight express service or overnight mail delivery service; or (ii) the third calendar day after deposit in the United States of America mails, with proper first class postage prepaid, in each case addressed to the party to be notified as follows:

  i.If to Agent:

  HERCULES CAPITAL, INC.
Legal Department
Attention:  Chief Legal Officer and Michael Dutra
400 Hamilton Avenue, Suite 310
Palo Alto, CA  94301
email: legal@htgc.com and mdutra@htgc.com
Telephone:  650-289-3060

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  ii.If to the Lenders:

  HERCULES CAPITAL, INC.
Legal Department
Attention:  Chief Legal Officer and Michael Dutra
400 Hamilton Avenue, Suite 310
Palo Alto, CA  94301
email: legal@htgc.com and mdutra@htgc.com
Telephone:  650-289-3060

  iii.If to Borrower:

  22 Cortlandt Street, 16th Floor

  New York, NY, 10007

  Attention:  Nick Pizzie, Chief Financial Officer
email: npizzie@axsome.com

  Telephone:  +1-646-844-6270

   

  or to such other address as each party may designate for itself by like notice.

  c.Entire Agreement; Amendments.  

  i.This Agreement and the other Loan Documents constitute the entire agreement and understanding of the parties hereto in respect of the subject matter hereof and thereof, and supersede and replace in their entirety any prior proposals, term sheets, non-disclosure or confidentiality agreements, letters, negotiations or other documents or agreements, whether written or oral, with respect to the subject matter hereof or thereof (including Agent’s revised proposal letter dated September 2, 2020 and the Non-Disclosure Agreement).  

  ii.Neither this Agreement, any other Loan Document (other than the Warrant which is subject to the amendment provisions therein), nor any terms hereof or thereof may be amended, supplemented or modified except in accordance with the provisions of this Section 11.3(b).  The Required Lenders and Borrower party to the relevant Loan Document may, or, with the written consent of the Required Lenders, the Agent and the Borrower party to the relevant Loan Document may, from time to time, (i) enter into written amendments, supplements or modifications hereto and to the other Loan Documents for the purpose of adding any provisions to this Agreement or the other Loan Documents or changing in any manner the rights of the Lenders or of the Borrower hereunder or thereunder or (ii) waive, on such terms and conditions as the Required Lenders or the Agent, as the case may be, may specify in such instrument, any of the requirements of this Agreement or the other Loan Documents or any default or Event of Default and its consequences; provided, however, that no such waiver and no such amendment, 

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  supplement or modification shall (A) forgive the principal amount or extend the final scheduled date of maturity of any Loan, extend the scheduled date of any amortization payment in respect of any Term Loan, reduce the stated rate of any interest (or fee payable hereunder) or extend the scheduled date of any payment thereof, in each case without the written consent of each Lender directly affected thereby; (B) eliminate or reduce the voting rights of any Lender under this Section 11.3(b) without the written consent of such Lender; (C) reduce any percentage specified in the definition of Required Lenders, consent to the assignment or transfer by the Borrower of any of its rights and obligations under this Agreement and the other Loan Documents, release all or substantially all of the Collateral or release a Borrower from its obligations under the Loan Documents, in each case without the written consent of all Lenders; or (D) amend, modify or waive any provision of Section 11.18 or Addendum 3 without the written consent of the Agent.  Any such waiver and any such amendment, supplement or modification shall apply equally to each Lender and shall be binding upon Borrower, the Lender, the Agent and all future holders of the Loans.  Notwithstanding the foregoing, the Warrant may be amended in accordance with its terms, and this Section 11.3(b) shall not apply to such amendments. 

  d.No Strict Construction.  The parties hereto have participated jointly in the negotiation and drafting of this Agreement.  In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties hereto and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provisions of this Agreement.

  e.No Waiver.  The powers conferred upon Agent and the Lenders by this Agreement are solely to protect its rights hereunder and under the other Loan Documents and its interest in the Collateral and shall not impose any duty upon Agent or the Lenders to exercise any such powers.  No omission or delay by Agent or the Lenders at any time to enforce any right or remedy reserved to it, or to require performance of any of the terms, covenants or provisions hereof by Borrower at any time designated, shall be a waiver of any such right or remedy to which Agent or the Lenders is entitled, nor shall it in any way affect the right of Agent or the Lenders to enforce such provisions thereafter.

  f.Survival.  All agreements, representations and warranties contained in this Agreement and the other Loan Documents or in any document delivered pursuant hereto or thereto shall be for the benefit of Agent and the Lenders and shall survive the execution and delivery of this Agreement. Sections 6.3, 11.15 and 11.18 shall survive the termination of this Agreement.

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  g.Successors and Assigns.  The provisions of this Agreement and the other Loan Documents shall inure to the benefit of and be binding on Borrower and its permitted assigns (if any).  Borrower shall not assign its obligations under this Agreement or any of the other Loan Documents (other than the Warrant which may be assigned in accordance with its terms) without Agent’s express prior written consent, and any such attempted assignment shall be void and of no effect.  Agent and the Lenders may assign, transfer, or endorse its rights hereunder and under the other Loan Documents without prior notice to Borrower (provided that any assignment, transfer or endorsement of the Warrant shall be subject to the terms thereof), and all of such rights shall inure to the benefit of Agent’s and the Lenders’ successors and assigns; provided that as long as no Event of Default has occurred and is continuing, neither Agent nor any Lender may assign, transfer or endorse its rights hereunder or under the Loan Documents to any party that is a direct competitor of Borrower or any “vulture fund” “distressed debt fund” or similar entity (in each case, as reasonably determined by Agent in good faith), it being acknowledged that in all cases, any transfer to an Affiliate of any Lender or Agent shall be allowed.  Notwithstanding the foregoing, (x) in connection with any assignment by a Lender as a result of a forced divestiture at the request of any regulatory agency, the restrictions set forth herein shall not apply and Agent and the Lenders may assign, transfer or indorse its rights hereunder and under the other Loan Documents to any Person or party (provided that any assignment, transfer or endorsement of the Warrant shall be subject to the terms thereof) and (y) in connection with a Lender’s own financing or securitization transactions, the restrictions set forth herein shall not apply and Agent and the Lenders may assign, transfer or indorse its rights hereunder and under the other Loan Documents to any Person or party providing such financing or formed to undertake such securitization transaction and any transferee of such Person or party upon the occurrence of a default, event of default or similar occurrence with respect to such financing or securitization transaction (provided that any assignment, transfer or endorsement of the Warrant shall be subject to the terms thereof); provided that no such sale, transfer, pledge or assignment under this clause (y) shall release such Lender from any of its obligations hereunder or substitute any such Person or party for such Lender as a party hereto until Agent shall have received and accepted an effective assignment agreement from such Person or party in form satisfactory to Agent executed, delivered and fully completed by the applicable parties thereto, and shall have received such other information regarding such assignee as Agent reasonably shall require.  The Agent, acting solely for this purpose as an agent of the Borrower, shall maintain at one of its offices in the United States a register for the recordation of the names and addresses of the Lender(s), and the Term Commitments of, and principal amounts (and stated interest) of the Loans owing to, each Lender pursuant to the terms hereof from time to time (the “Register”).  The entries in the Register shall be conclusive absent manifest error, and the Borrower, the Agent and the 

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  Lender(s) shall treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement.  The Register shall be available for inspection by the Borrower and any Lender, at any reasonable time and from time to time upon reasonable prior notice. 

  h.Participations.  Each Lender that sells a participation shall, acting solely for this purpose as a non-fiduciary agent of the Borrower, maintain a register on which it enters the name and address of each participant and the principal amounts (and stated interest) of each participant’s interest in the Loans or other obligations under the Loan Documents (the “Participant Register”); provided that no Lender shall have any obligation to disclose all or any portion of the Participant Register (including the identity of any participant or any information relating to a participant's interest in any commitments, loans, its other obligations under any Loan Document) to any Person except to the extent that such disclosure is necessary to establish that such commitment, loan, letter of credit or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations.  The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each Person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary.  For the avoidance of doubt, the Agent (in its capacity as Agent) shall have no responsibility for maintaining a Participant Register.  Borrower agrees that each participant shall be entitled to the benefits of the provisions in Addendum 1 attached hereto (subject to the requirements and limitations therein, including the requirements under Section 7 of Addendum 1 attached hereto (it being understood that the documentation required under Section 7 of Addendum 1 attached hereto shall be delivered to the participating Lender)) to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to Section 11.7; provided that such participant shall not be entitled to receive any greater payment under Addendum 1 attached hereto, with respect to any participation, than its participating Lender would have been entitled to receive, except to the extent such entitlement to receive a greater payment results from a change in law that occurs after the participant acquired the applicable participation.

  i.Governing Law.  This Agreement and the other Loan Documents have been negotiated and delivered to Agent and the Lenders in the State of California, and shall have been accepted by Agent and the Lenders in the State of California.  Payment to Agent and the Lenders by Borrower of the Secured Obligations is due in the State of California.  This Agreement and the other Loan Documents shall be governed by, and construed and enforced in accordance with, the laws of the State of California, excluding conflict of laws principles that would cause the application of laws of any other jurisdiction.

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  j.Consent to Jurisdiction and Venue.  All judicial proceedings (to the extent that the reference requirement of Section 11.11 is not applicable) arising in or under or related to this Agreement or any of the other Loan Documents may be brought in any state or federal court located in the State of California.  By execution and delivery of this Agreement, each party hereto generally and unconditionally: (a) consents to nonexclusive personal jurisdiction in Santa Clara County, State of California; (b) waives any objection as to jurisdiction or venue in Santa Clara County, State of California; (c) agrees not to assert any defense based on lack of jurisdiction or venue in the aforesaid courts; and (d) irrevocably agrees to be bound by any judgment rendered thereby in connection with this Agreement or the other Loan Documents.  Service of process on any party hereto in any action arising out of or relating to this Agreement shall be effective if given in accordance with the requirements for notice set forth in Section 11.2, and shall be deemed effective and received as set forth in Section 11.2.  Nothing herein shall affect the right to serve process in any other manner permitted by law or shall limit the right of either party to bring proceedings in the courts of any other jurisdiction.

  k.Mutual Waiver of Jury Trial / Judicial Reference.  

  i.Because disputes arising in connection with complex financial transactions are most quickly and economically resolved by an experienced and expert Person and the parties wish applicable state and federal laws to apply (rather than arbitration rules), the parties desire that their disputes be resolved by a judge applying such applicable laws.  EACH OF BORROWER, AGENT AND THE LENDERS SPECIFICALLY WAIVES ANY RIGHT IT MAY HAVE TO TRIAL BY JURY OF ANY CAUSE OF ACTION, CLAIM, CROSS-CLAIM, COUNTERCLAIM, THIRD PARTY CLAIM OR ANY OTHER CLAIM (COLLECTIVELY, “CLAIMS”) ASSERTED BY BORROWER AGAINST AGENT, THE LENDERS OR THEIR RESPECTIVE ASSIGNEE OR BY AGENT, THE LENDERS OR THEIR RESPECTIVE ASSIGNEE AGAINST BORROWER.  This waiver extends to all such Claims, including Claims that involve Persons other than Agent, Borrower and the Lenders; Claims that arise out of or are in any way connected to the relationship among Borrower, Agent and the Lenders; and any Claims for damages, breach of contract, tort, specific performance, or any equitable or legal relief of any kind, arising out of this Agreement, any other Loan Document.  

  ii.If the waiver of jury trial set forth in Section 11.11(a) is ineffective or unenforceable, the parties agree that all Claims shall be resolved by reference to a private judge sitting without a jury, pursuant to Code of Civil Procedure Section 638, before a mutually acceptable referee or, if the parties cannot agree, a referee selected by the 

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  Presiding Judge of the Santa Clara County, California.  Such proceeding shall be conducted in Santa Clara County, California, with California rules of evidence and discovery applicable to such proceeding.    

  iii.In the event Claims are to be resolved by judicial reference, either party may seek from a court identified in Section 11.10, any prejudgment order, writ or other relief and have such prejudgment order, writ or other relief enforced to the fullest extent permitted by law notwithstanding that all Claims are otherwise subject to resolution by judicial reference.

  l.Professional Fees.  Borrower promises to pay Agent’s and the Lenders’ reasonable, documented out-of-pocket fees and expenses necessary to finalize the loan documentation, including but not limited to reasonable, documented attorneys’ fees, UCC searches, filing costs, and other miscellaneous expenses. In addition, Borrower promises to pay any and all reasonable, documented out-of-pocket attorneys’ and other professionals’ fees and expenses incurred by Agent after the Closing Date in connection with or related to:  (a) the Loan; (b) the administration, collection, or enforcement of the Loan; (c) the amendment or modification of the Loan Documents; (d) any waiver, consent, release, or termination under the Loan Documents; (e) the protection, preservation, audit, field exam, sale, lease, liquidation, or disposition of Collateral or the exercise of remedies with respect to the Collateral; (f) any legal, litigation, administrative, arbitration, or out of court proceeding in connection with or related to Borrower or the Collateral, and any appeal or review thereof; and (g) any bankruptcy, restructuring, reorganization, assignment for the benefit of creditors, workout, foreclosure, or other action related to Borrower, the Collateral, the Loan Documents, including representing Agent or the Lenders in any adversary proceeding or contested matter commenced or continued by or on behalf of Borrower’s estate, and any appeal or review thereof.

  m.Confidentiality.  Agent and the Lenders acknowledge that certain items of Collateral and information provided to Agent and the Lenders by Borrower, including items provided in connection with the Non-Disclosure Agreement, are confidential and proprietary information of Borrower, if and to the extent such information either (x) is marked as confidential by Borrower at the time of disclosure, or (y) should reasonably be understood to be confidential (the “Confidential Information”).  Accordingly, Agent and the Lenders agree that any Confidential Information it may obtain in the course of acquiring, administering, or perfecting  Agent’s security interest in the Collateral shall not be disclosed to any other Person or entity in any manner whatsoever, in whole or in part, without the prior written consent of Borrower, except that Agent and the Lenders may disclose any such information:  (a) to its Affiliates and its partners, investors, lenders, directors, officers, employees, agents, advisors, counsel, accountants, 

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  counsel, representative and other professional advisors if Agent or the Lenders in their sole discretion determines that any such party should have access to such information in connection with such party’s responsibilities in connection with the Loan or this Agreement and; provided that such recipient of such Confidential Information either (i) agrees to be bound by the confidentiality provisions of this paragraph or (ii) is otherwise subject to confidentiality restrictions that reasonably protect against the disclosure of Confidential Information; (b) if such information is generally available to the public through no fault of Agent or any Lender ; (c) if required or appropriate in any report, statement or testimony submitted to any governmental authority having or claiming to have jurisdiction over Agent or the Lenders and any rating agency; (d) if required or appropriate in response to any summons or subpoena or in connection with any litigation, to the extent permitted or deemed advisable by Agent’s or the Lenders’ counsel; (e) to comply with any legal requirement or law applicable to Agent or the Lenders or demanded by any governmental authority; (f) to the extent reasonably necessary in connection with the exercise of, or preparing to exercise, or the enforcement of, or preparing to enforce, any right or remedy under any Loan Document (including Agent’s sale, lease, or other disposition of Collateral after default), or any action or proceeding relating to any Loan Document; (g) to any participant or assignee of Agent or the Lenders or any prospective participant or assignee, provided, that such participant or assignee or prospective participant or assignee is subject to confidentiality restrictions no less stringent than this Section 11.13 and in any event that reasonably protect against the disclosure of Confidential Information; (h) otherwise to the extent consisting of general portfolio information that does not identify Borrower; or (i) otherwise with the prior consent of Borrower; provided, that any disclosure made in violation of this Agreement shall not affect the obligations of Borrower or any of its Affiliates or any guarantor under this Agreement or the other Loan Documents.  Agent’s and the Lenders’ obligations under this Section 11.13 shall supersede all of their respective obligations under the Non-Disclosure Agreement.

  n.Assignment of Rights.  Borrower acknowledges and understands that Agent or the Lenders may, subject to Section 11.7, sell and assign all or part of its interest hereunder and under the Loan Documents (other than the Warrant which is subject to any assignment, transfer or endorsement provisions therein) to any Person or entity (an “Assignee”).  After such assignment the term “Agent” or “Lender” as used in the Loan Documents (other than the Warrant which is subject to any assignment, transfer or endorsement provisions therein) shall mean and include such Assignee, and such Assignee shall be vested with all rights, powers and remedies of Agent and the Lenders hereunder with respect to the interest so assigned; but with respect to any such interest not so transferred, Agent and the Lenders shall retain all rights, powers and remedies hereby given.  No such assignment by Agent or the Lenders shall relieve Borrower of any of its obligations 

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  hereunder.  the Lenders agrees that in the event of any transfer by it of the promissory note(s) (if any), it will endorse thereon a notation as to the portion of the principal of the promissory note(s), which shall have been paid at the time of such transfer and as to the date to which interest shall have been last paid thereon.

  o.Revival of Secured Obligations.  This Agreement and the Loan Documents shall remain in full force and effect and continue to be effective if any petition is filed by or against Borrower for liquidation or reorganization, if Borrower becomes insolvent or makes an assignment for the benefit of creditors, if a receiver or trustee is appointed for all or any significant part of Borrower’s assets, or if any payment or transfer of Collateral is recovered from Agent or the Lenders.  The Loan Documents and the Secured Obligations and Collateral security shall continue to be effective, or shall be revived or reinstated, as the case may be, if at any time payment and performance of the Secured Obligations or any transfer of Collateral to Agent, or any part thereof is rescinded, avoided or avoidable, reduced in amount, or must otherwise be restored or returned by, or is recovered from, Agent, the Lenders or by any obligee of the Secured Obligations, whether as a “voidable preference,” “fraudulent conveyance,” or otherwise, all as though such payment, performance, or transfer of Collateral had not been made.  In the event that any payment, or any part thereof, is rescinded, reduced, avoided, avoidable, restored, returned, or recovered, the Loan Documents and the Secured Obligations shall be deemed, without any further action or documentation, to have been revived and reinstated except to the extent of the full, final, and indefeasible payment to Agent or the Lenders in Cash.

  p.Counterparts.  This Agreement and any amendments, waivers, consents or supplements hereto may be executed in any number of counterparts, and by different parties hereto in separate counterparts, each of which when so delivered shall be deemed an original, but all of which counterparts shall constitute but one and the same instrument.

  q.No Third-Party Beneficiaries.  No provisions of the Loan Documents are intended, nor will be interpreted, to provide or create any third-party beneficiary rights or any other rights of any kind in any Person other than Agent, the Lenders and Borrower unless specifically provided otherwise herein, and, except as otherwise so provided, all provisions of the Loan Documents will be personal and solely among Agent, the Lenders and the Borrower. 

  r.Agency.  Agent and each Lender hereby agree to the terms and conditions set forth on Addendum 3 attached hereto.  Borrower acknowledges and agrees to the terms and conditions set forth on Addendum 3 attached hereto.

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  s.Publicity.  None of the parties hereto nor any of its respective member businesses and Affiliates shall, without the other parties’ prior written consent (which shall not be unreasonably withheld or delayed), publicize or use (a) the other party's name (including a brief description of the relationship among the parties hereto), logo or hyperlink to such other parties’ web site, separately or together, in written and oral presentations, advertising, promotional and marketing materials, client lists, public relations materials or on its web site (together, the "Publicity Materials"); (b) the names of officers of such other parties in the Publicity Materials; and (c) such other parties’ name, trademarks, servicemarks in any news or press release concerning such party; provided however, notwithstanding anything to the contrary herein, no such consent shall be required (i) to the extent necessary to comply with the requests of any regulators, legal requirements or laws applicable to such party, pursuant to any listing agreement with any national securities exchange (so long as such party provides prior notice to the other party hereto to the extent reasonably practicable) and (ii) to comply with Section 11.13.

  t.Electronic Execution of Certain Other Documents.  The words “execution,” “execute”, “signed,” “signature,” and words of like import in or related to any document to be signed in connection with this Agreement and the transactions contemplated hereby (including without limitation assignments, assumptions, amendments, waivers and consents) shall be deemed to include electronic signatures, the electronic matching of assignment terms and contract formations on electronic platforms approved by the Agent, or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the California Uniform Electronic Transaction Act, or any other similar state laws based on the Uniform Electronic Transactions Act.

  (SIGNATURES TO FOLLOW)

   

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  IN WITNESS WHEREOF, Borrower, Agent and the Lenders have duly executed and delivered this Loan and Security Agreement as of the day and year first above written.

  BORROWER:

  Axsome Therapeutics, Inc.

  Signature:	_______________________

  Print Name:	_______________________

  Title:		_______________________

  Accepted in Palo Alto, California:

  AGENT:

  HERCULES CAPITAL, INC.

  Signature:	_______________________

  Print Name:	_______________________

  Title:		_______________________

  LENDERS:

  HERCULES CAPITAL, INC.

  Signature:	_______________________

  Print Name:	_______________________

  Title:		_______________________

   

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  Table of Addenda, Exhibits and Schedules

   

  Addendum 1:	Taxes; Increased Costs

  Addendum 2:	[Reserved]

  Addendum 3:	Agent and Lender Terms

  Exhibit A:	Advance Request

  Attachment to Advance Request

  Exhibit B:	Name, Locations, and Other Information for Borrower

  Exhibit C:	Borrower’s Patents, Trademarks, Copyrights and Licenses

  Exhibit D:	Borrower’s Deposit Accounts and Investment Accounts

  Exhibit E:	Compliance Certificate

  Exhibit F:	Joinder Agreement

  Exhibit G:	[Reserved]

  Exhibit H:	ACH Debit Authorization Agreement

  Exhibit I:		[Reserved]

  Exhibit J-1:	Form of U.S. Tax Compliance Certificate (For Foreign Lenders That Are Not Partnerships For U.S. Federal Income Tax Purposes)

  Exhibit J-2:	Form of U.S. Tax Compliance Certificate (For Foreign Participants That Are Not Partnerships For U.S. Federal Income Tax Purposes)

  Exhibit J-3:	Form of U.S. Tax Compliance Certificate (For Foreign Participants That Are Partnerships For U.S. Federal Income Tax Purposes)

  Exhibit J-4:	Form of U.S. Tax Compliance Certificate (For Foreign Lenders That Are Partnerships For U.S. Federal Income Tax Purposes)

  Schedule 1.1		Commitments

  Schedule 1		Subsidiaries
Schedule 1A		Existing Permitted Indebtedness
Schedule 1B		Existing Permitted Investments
Schedule 1C		Existing Permitted Liens
Schedule 5.3		Consents, Etc.
Schedule 5.8		Tax Matters
Schedule 5.9		Intellectual Property Claims
Schedule 5.10(a)	Current Company IP

  Schedule 5.10(d)	Matters Relating to current Material Agreements

  Schedule 5.10(f)	Enforceability, Entitlement and Exploitation of Current Company IP

  Schedule 5.10(i)	Claims of Infringement on Third Party IP By Current Company IP

  Schedule 5.10(j)	Infringement on Third Party IP By Current Company IP

  Schedule 5.10(k)	Obligations Relating to Company IP

  Schedule 5.10(l)	Third Party Infringements of Company IP

  Schedule 5.10(n)	FDA Good Manufacturing Practices Compliance Matters

  Schedule 5.10(o)		Intellectual Property

  Schedule 5.11		Borrower Products
Schedule 5.14		Capitalization

   

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  ADDENDUM 1 to LOAN AND SECURITY AGREEMENT

  TAXES; INCREASED COSTS

  1.Defined Terms.  For purposes of this Addendum 1:

  a.“Connection Income Taxes” means Other Connection Taxes that are imposed on or measured by net income (however denominated) or that are franchise Taxes or branch profits Taxes.

  b.“Excluded Taxes” means any of the following Taxes imposed on or with respect to a Recipient or required to be withheld or deducted from a payment to a Recipient, (i) Taxes imposed on or measured by net income (however denominated), franchise Taxes, and branch profits Taxes, in each case, (A) imposed as a result of such Recipient being organized under the laws of, or having its principal office or, in the case of any Lender, its applicable lending office located in, the jurisdiction imposing such Tax (or any political subdivision thereof) or (B) that are Other Connection Taxes, (ii) in the case of a Lender, U.S. federal withholding Taxes imposed on amounts payable to or for the account of such Lender with respect to an applicable interest in a Loan or Term Commitment pursuant to a law in effect on the date on which (A) such Lender acquires such interest in the Loan or Term Commitment or (B) such Lender changes its lending office, except in each case to the extent that, pursuant to Section 2 or Section 4 of this Addendum 1, amounts with respect to such Taxes were payable either to such Lender’s assignor immediately before such Lender became a party hereto or to such Lender immediately before it changed its lending office, (iii) Taxes attributable to such Recipient’s failure to comply with Section 7 of this Addendum 1 and (iv) any withholding Taxes imposed under FATCA.

  c.“FATCA” means Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof, any agreements entered into pursuant to Section 1471(b)(1) of the Code, and any fiscal or regulatory legislation, rules or practices adopted pursuant to any intergovernmental agreement, treaty or convention among governmental authorities and implementing such Sections of the Code.

  d.“Foreign Lender” means a Lender that is not a U.S. Person.

  e.“Indemnified Taxes” means (i) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of the Borrower under any Loan Document and (ii) to the extent not otherwise described in clause (i), Other Taxes.

  f.“Other Connection Taxes” means, with respect to any Recipient, Taxes imposed as a result of a present or former connection between such Recipient and the jurisdiction imposing such Tax (other than connections arising from such Recipient having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Loan Document, or sold or assigned an interest in any Loan or Loan Document).

  g.“Other Taxes” means all present or future stamp, court or documentary, intangible, recording, filing or similar Taxes that arise from any payment made under, from the execution, 

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  delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Loan Document, except any such Taxes that are Other Connection Taxes imposed with respect to an assignment.

  h.“Recipient” means the Agent or any Lender, as applicable.

  i.“Withholding Agent” means the Borrower and the Agent.

  2.Payments Free of Taxes.  Any and all payments by or on account of any obligation of the Borrower under any Loan Document (other than the Warrant) shall be made without deduction or withholding for any Taxes, except as required by applicable law.  If any applicable law (as determined in the good faith discretion of an applicable Withholding Agent) requires the deduction or withholding of any Tax from any such payment by a Withholding Agent, then the applicable Withholding Agent shall be entitled to make such deduction or withholding and shall timely pay the full amount deducted or withheld to the relevant governmental authority in accordance with applicable law and, if such Tax is an Indemnified Tax, then the sum payable by the Borrower shall be increased as necessary so that after such deduction or withholding has been made (including such deductions and withholdings applicable to additional sums payable under this Section 2 or Section 4 of this Addendum 1) the applicable Recipient receives an amount equal to the sum it would have received had no such deduction or withholding been made.

  3.Payment of Other Taxes by Borrower.  The Borrower shall timely pay to the relevant governmental authority in accordance with applicable law, or at the option of the Agent timely reimburse it for the payment of, any Other Taxes.

  4.Indemnification by Borrower.  The Borrower shall indemnify each Recipient, within 10 days after demand therefor, for the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under Section 2 of this Addendum 1 or this Section 4) payable or paid by such Recipient or required to be withheld or deducted from a payment to such Recipient and any reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant governmental authority.  A certificate as to the amount of such payment or liability delivered to the Borrower by a Lender (with a copy to the Agent), or by the Agent on its own behalf or on behalf of a Lender, shall be conclusive absent manifest error. 

  5.Indemnification by the Lenders.  Each Lender shall severally indemnify the Agent, within 10 days after demand therefor, for (a) any Indemnified Taxes attributable to such Lender (but only to the extent that the Borrower has not already indemnified the Agent for such Indemnified Taxes and without limiting the obligation of the Borrower to do so), (b) any Taxes attributable to such Lender’s failure to comply with the provisions of Section 11.8 of the Agreement relating to the maintenance of a Participant Register and (c) any Excluded Taxes attributable to such Lender, in each case, that are payable or paid by the Agent in connection with any Loan Document, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant governmental authority.  A certificate as to the amount of such payment or liability delivered to any Lender by the Agent shall be conclusive absent manifest error.  Each Lender hereby authorizes the Agent to set off and apply any and all amounts at any time owing to such Lender under any Loan Document or otherwise payable by the 

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  Agent to the Lender from any other source against any amount due to the Agent under this Section 5.

  6.Evidence of Payments.  As soon as practicable after any payment of Taxes by the Borrower to a governmental authority pursuant to the provisions of this Addendum 1, the Borrower shall deliver to the Agent the original or a certified copy of a receipt issued by such governmental authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Agent.

  7.Status of Lenders.

  a.Any Lender that is entitled to an exemption from or reduction of withholding Tax with respect to payments made under any Loan Document shall deliver to the Borrower and the Agent, at the time or times reasonably requested by the Borrower or the Agent, such properly completed and executed documentation reasonably requested by the Borrower or the Agent as will permit such payments to be made without withholding or at a reduced rate of withholding.  In addition, any Lender, if reasonably requested by the Borrower or the Agent, shall deliver such other documentation prescribed by applicable law or reasonably requested by the Borrower or the Agent as will enable the Borrower or the Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements.  Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation (other than such documentation set forth in Sections 7(b)(i), 7(b)(ii) and 7(b)(iv) of this Addendum 1) shall not be required if in the Lender’s reasonable judgment such completion, execution or submission would subject such Lender to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Lender.

  b.Without limiting the generality of the foregoing, in the event that the Borrower is a U.S. Person,

  i.any Lender that is a U.S. Person shall deliver to the Borrower and the Agent on or prior to the date on which such Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Agent), executed copies of IRS Form W-9 certifying that such Lender is exempt from U.S. federal backup withholding tax;

  ii.any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Borrower and the Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Agent), whichever of the following is applicable:

  A.in the case of a Foreign Lender claiming the benefits of an income tax treaty to which the United States is a party (x) with respect to payments of interest under any Loan Document, executed copies of IRS Form W-8BEN or IRS Form W-8BEN-E establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “interest” article of such tax treaty and (y) with respect to any other applicable payments under any Loan Document, IRS Form W-8BEN or IRS Form W-8BEN-E establishing an exemption from, or reduction of, 

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  U.S. federal withholding Tax pursuant to the “business profits” or “other income” article of such tax treaty;

  B.executed copies of IRS Form W-8ECI;

  C.in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Code, (x) a certificate substantially in the form of Exhibit J-1 to the effect that such Foreign Lender is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, a “10 percent shareholder” of the Borrower within the meaning of Section 871(h)(3)(B) of the Code, or a “controlled foreign corporation” related to the Borrower as described in Section 881(c)(3)(C) of the Code (a “U.S. Tax Compliance Certificate”) and (y) executed copies of IRS Form W-8BEN or IRS Form W-8BEN-E; or

  D.to the extent a Foreign Lender is not the beneficial owner, executed copies of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN, IRS Form W-8BEN-E, a U.S. Tax Compliance Certificate substantially in the form of Exhibit J-2 or Exhibit J-3, IRS Form W-9, and/or other certification documents from each beneficial owner, as applicable; provided that if the Foreign Lender is a partnership and one or more direct or indirect partners of such Foreign Lender are claiming the portfolio interest exemption, such Foreign Lender may provide a U.S. Tax Compliance Certificate substantially in the form of Exhibit J-4 on behalf of each such direct and indirect partner;

  iii.any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Borrower and the Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Agent), executed copies of any other form prescribed by applicable law as a basis for claiming exemption from or a reduction in U.S. federal withholding Tax, duly completed, together with such supplementary documentation as may be prescribed by applicable law to permit the Borrower or the Agent to determine the withholding or deduction required to be made; and

  iv.if a payment made to a Lender under any Loan Document would be subject to U.S. federal withholding Tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall deliver to the Borrower and the Agent at the time or times prescribed by law and at such time or times reasonably requested by the Borrower or the Agent such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by the Borrower or the Agent as may be necessary for the Borrower and the Agent to comply with their obligations under FATCA and to determine that such Lender has complied with such Lender’s obligations under FATCA or to determine the amount, if any, to deduct and withhold from such payment.  Solely for purposes of this clause (iv), “FATCA” shall include any amendments made to FATCA after the date of this Agreement.

  c.Each Lender agrees that if any form or certification it previously delivered expires or becomes obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify the Borrower and the Agent in writing of its legal inability to do so.

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  8.Treatment of Certain Refunds.  If any party determines, in its sole discretion exercised in good faith, that it has received a refund of any Taxes as to which it has been indemnified pursuant to the provisions of this Addendum 1 (including by the payment of additional amounts pursuant to the provisions of this Addendum 1), it shall pay to the indemnifying party an amount equal to such refund (but only to the extent of indemnity payments made under the provisions of this Addendum 1 with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses (including Taxes) of such indemnified party and without interest (other than any interest paid by the relevant governmental authority with respect to such refund).  Such indemnifying party, upon the request of such indemnified party, shall repay to such indemnified party the amount paid over pursuant to this Section 8 (plus any penalties, interest or other charges imposed by the relevant governmental authority) in the event that such indemnified party is required to repay such refund to such governmental authority.  Notwithstanding anything to the contrary in this Section 8, in no event will the indemnified party be required to pay any amount to an indemnifying party pursuant to this Section 8 the payment of which would place the indemnified party in a less favorable net after-Tax position than the indemnified party would have been in if the Tax subject to indemnification and giving rise to such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with respect to such Tax had never been paid.  This Section 8 shall not be construed to require any indemnified party to make available its Tax returns (or any other information relating to its Taxes that it deems confidential) to the indemnifying party or any other Person.

  9.Increased Costs.  If any change in applicable law shall subject any Recipient to any Taxes (other than (A) Indemnified Taxes, (B) Taxes described in clauses (ii) through (iv) of the definition of Excluded Taxes and (C) Connection Income Taxes) on its loans, loan principal, commitments, or other obligations, or its deposits, reserves, other liabilities or capital attributable thereto, and the result shall be to increase the cost to such Recipient of making, converting to, continuing or maintaining any Term Loan or of maintaining its obligation to make any such Loan, or to reduce the amount of any sum received or receivable by such Recipient (whether of principal, interest or any other amount), then, upon the request of such Recipient, the Borrower will pay to such Recipient such additional amount or amounts as will compensate such Recipient for such additional costs incurred or reduction suffered.

  10.Mitigation. If any Lender requires the Borrower to pay any Indemnified Taxes or additional amounts pursuant to this Addendum, then such Lender shall (at the request of the Borrower) use reasonable efforts to designate a different lending office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its branches, offices, or affiliates, if, in the judgment of such Lender, such designation or assignment: (i) would eliminate or reduce amounts payable pursuant to this Addendum in the future, and (ii) would not subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender. The Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender in connection with such designation or assignment.

  11.Survival.  Each party’s obligations under the provisions of this Addendum 1 (including any inchoate indemnity obligations and any other obligations which, by their terms, are to survive the termination of the Loan Documents) shall survive the resignation or replacement of the Agent or any assignment of rights by, or the replacement of, a Lender, the termination of the Term 

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  Commitments and the repayment, satisfaction or discharge of all obligations under any Loan Document (other than the Warrant).

   

   

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  ADDENDUM 2 to LOAN AND SECURITY AGREEMENT

  [Reserved.]

   

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  ADDENDUM 3 to LOAN AND SECURITY AGREEMENT

  Agent and Lender Terms

  (a)Each Lender hereby irrevocably appoints Hercules Capital, Inc. to act on its behalf as the Agent hereunder and under the other Loan Documents (other than the Warrant) and authorizes the Agent to take such actions on its behalf and to exercise such powers as are delegated to the Agent by the terms hereof or thereof, together with such actions and powers as are reasonably incidental thereto.

  (b)Each Lender agrees to indemnify the Agent in its capacity as such (to the extent not reimbursed by Borrower and without limiting the obligation of Borrower to do so), according to its respective Term Commitment percentages (based upon the total outstanding Term Commitments) in effect on the date on which indemnification is sought under this Addendum 3, from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind whatsoever that may at any time be imposed on, incurred by or asserted against the Agent in any way relating to or arising out of, this Agreement, any of the other Loan Documents (other than the Warrant) or any documents contemplated by or referred to herein or therein (other than the Warrant) or the transactions contemplated hereby or thereby or any action taken or omitted by the Agent under or in connection with any of the foregoing; The agreements in this Section shall survive the payment of the Loans and all other amounts payable hereunder.

  (c)Agent in Its Individual Capacity.  The Person serving as the Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not the Agent and the term “Lender” shall, unless otherwise expressly indicated or unless the context otherwise requires, include each such Person serving as Agent hereunder in its individual capacity. 

  (d)Exculpatory Provisions.  The Agent shall have no duties or obligations except those expressly set forth herein and in the other Loan Documents.  Without limiting the generality of the foregoing, the Agent shall not:

  (i)be subject to any fiduciary or other implied duties, regardless of whether any default or any Event of Default has occurred and is continuing;

  (ii)have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby or by the other Loan Documents that the Agent is required to exercise as directed in writing by the Lenders; provided that the Agent shall not be required to take any action that, in its opinion or the opinion of its counsel, may expose the Agent to liability or that is contrary to any Loan Document or applicable law; and

  (iii)except as expressly set forth herein and in the other Loan Documents, have any duty to disclose, and the Agent shall not be liable for the failure to disclose, any information relating to the Borrower or any of its Affiliates that is communicated to or obtained by any Person serving as the Agent or any of its Affiliates in any capacity.

  (e)The Agent shall not be liable for any action taken or not taken by it (i) with the consent or at the request of the Lenders or as the Agent shall believe in good faith shall be 

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  necessary, under the circumstances or (ii) in the absence of its own gross negligence or willful misconduct.

  (f)The Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with this Agreement or any other Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or therein or the occurrence of any default or Event of Default, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, any other Loan Document or any other agreement, instrument or document or (v) the satisfaction of any condition set forth in Section 4 or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to the Agent. Reliance by Agent.  Agent may rely, and shall be fully protected in acting, or refraining to act, upon, any resolution, statement, certificate, instrument, opinion, report, notice, request, consent, order, bond or other paper or document that it has no reason to believe to be other than genuine and to have been signed or presented by the proper party or parties or, in the case of cables, telecopies and telexes, to have been sent by the proper party or parties.  In the absence of its gross negligence or willful misconduct, Agent may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon any certificates or opinions furnished to Agent and conforming to the requirements of this Agreement or any of the other Loan Documents.  Agent may consult with counsel, and any opinion or legal advice of such counsel shall be full and complete authorization and protection in respect of any action taken, not taken or suffered by Agent hereunder or under any Loan Documents in accordance therewith.  Agent shall have the right at any time to seek instructions concerning the administration of the Collateral from any court of competent jurisdiction.  Agent shall not be under any obligation to exercise any of the rights or powers granted to Agent by this Agreement and the other Loan Documents at the request or direction of the Lenders unless Agent shall have been provided by the Lenders with adequate security and indemnity against the costs, expenses and liabilities that may be incurred by it in compliance with such request or direction.

   

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  EXHIBIT A

  ADVANCE REQUEST

  To: 	Agent:	Date:		__________, 2006

  Hercules Capital, Inc. (the “Agent”)
	400 Hamilton Avenue, Suite 310
	Palo Alto, CA 94301
	email: legal@htgc.com
	Attn:

  Axsome Therapeutics, Inc. (“Borrower”) hereby requests from Hercules Capital, Inc. (“Lender”) an Advance in the amount of _____________________ Dollars ($________________) (the “Advance Amount”) on ______________, _____ (the “Advance Date”) pursuant to the Loan and Security Agreement, dated September 25, 2020 among Borrower, Agent and the Lender (the “Agreement”). Capitalized words and other terms used but not otherwise defined herein are used with the same meanings as defined in the Agreement.

  Please:

  (a)	Issue a check payable to Borrower	________

  or

  (b)	Wire Funds to Borrower’s account	________ [IF FILED PUBLICLY, ACCOUNT INFO REDACTED FOR SECURITY PURPOSES]

  	Bank:                        _____________________________
	Address:                    _____________________________
	                                  _____________________________
	ABA Number:          _____________________________
	Account Number:     _____________________________
	Account Name:        _____________________________

  	Contact Person:        _____________________________
	Phone Number        

  	To Verify Wire Info: _____________________________

  	Email address:           _____________________________

   

  Borrower represents that the conditions precedent to the Advance set forth in the Agreement are satisfied or waived and shall be satisfied upon the making of such Advance, including but not limited to:  (i) that no event that has had or could reasonably be expected to have a Material Adverse Effect has occurred and is continuing; (ii) that the representations and warranties set forth in the Agreement and in the Warrant are and shall be true and correct in all material respects on and as of the Advance Date with the same effect as though made on and as of such date, except to the extent such representations and warranties expressly relate to an earlier date; (iii) that Borrower is in compliance with all the terms and provisions set forth in each Loan Document on its part to be observed or performed; and (iv) that as of the Advance Date, no fact or condition exists that could (or could, with the passage of time, the giving of notice, or both) constitute an Event of Default under the Loan Documents.  Borrower understands and acknowledges that Agent has the right to review the financial information supporting this representation and, based upon such review in its sole but reasonable discretion, the Lender may decline to fund the requested Advance.

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  Borrower hereby represents that Borrower’s corporate status and locations have not changed since the date of the Agreement or, if the Attachment 1 to this Advance Request is completed, are as set forth in the Attachment to this Advance Request.

  With respect to any Advances requested under Tranche 4, Borrower represents and warrants that the information provided on Attachment 2 to this Advance Request is true and correct in all respects.

  Borrower agrees to notify Agent promptly before the funding of the Loan if any of the matters which  have been represented above shall not be true and correct on the Advance Date and if Agent has received no such notice before the Advance Date then the statements set forth above shall be deemed to have been made and shall be deemed to be true and correct as of the Advance Date.

  Executed as of [              ], 20[   ].

  BORROWER: Axsome Therapeutics, Inc.

  SIGNATURE:________________________
TITLE:_____________________________
PRINT NAME:______________________

   

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  ATTACHMENT 1 TO ADVANCE REQUEST

  Dated: _______________________

  Borrower hereby represents and warrants to Agent that Borrower’s current name and organizational status is as follows:

  Name:                                                 [                                      ]

  Type of organization:                         [                                      ]

  State of organization:                         [                                      ]

  Organization file number:                  [                                      ]	

  Borrower hereby represents and warrants to Agent that the street addresses, cities, states and postal codes of its current locations are as follows:

  [  ]

  Borrower hereby represents and warrants to Agent that the Advance Amount does not exceed the Maximum Term Loan Amount as follows:

  a.	Advance Amount: $________________

  b.	Maximum Term Loan Amount: $300,000,000

  c.	Is clause a. less than or equal to clause b.? 

  Yes/Compliant _______ No/Non-Compliant _______

   

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  ATTACHMENT 2 TO ADVANCE REQUEST

  Dated: _______________________

  Borrower hereby represents and warrants to Agent the following:

  Net Product Revenue Ratio and Tranche 4 Draw Conditions

  		
	Current Net Product Revenue Ratio Calculation
	Amounts

	(a)  The outstanding amount of the Term Loan Advances as of the date hereof
	[  ]

	(b)  T3M Net Product Revenue as of the reporting period noted above
	[  ]

	Current Net Product Revenue Ratio as defined as the ratio of (a) to (b)
	[  ]

   

  		
	Tranche 4 Draw Conditions Requirements
	Satisfied?

	Borrower’s achievement of the AXS-05 Milestone or the AXS-07 Milestone
	Yes__   No__

	Net Product Revenue Ratio shall be no greater than 4.00:1.00 (per above and below)
	Yes__   No__

	No Default or Event of Default shall have occurred and be continuing
	Yes__   No__

   

  		
	Tranche 4 Availability Calculation if all the conditions above are “Yes”
	Amounts

	(c)  T3M Net Product Revenue as of the reporting period noted above
	[  ]

	(d)  Maximum allowable Net Product Revenue Ratio
	4.00

	(e) Maximum allowable amount of outstanding Term Loan Advances as calculated as the product of (c) and (d)
	[  ]

	(f) The outstanding amount of the Term Loan Advances as of the date hereof
	[  ]

	(g) Tranche 4 amount available as calculated as (e) minus (f) 
	[  ]

	(h) Tranche 4 minimum drawable amount as calculated as the amount in (g) rounded down to the nearest multiple of $[5,000,000]
	[  ]

   

   

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  EXHIBIT B

  NAME, LOCATIONS, AND OTHER INFORMATION FOR BORROWER

  1.  Borrower represents and warrants to Agent that Borrower’s current name and organizational status as of the Closing Date is as follows:

  Name:                                       [                                               ]

  Type of organization:               [                                               ]

  State of organization:                [                                               ]

  Organization file number:         [                                               ]	

  2.  Borrower represents and warrants to Agent that for five (5) years prior to the Closing Date, Borrower did not do business under any other name or organization or form except the following:

  Name:	
Used during dates of:	
Type of Organization:	
State of organization:	
Organization file Number:	
Borrower’s fiscal year ends on _____
Borrower’s federal employer tax identification number is: _______________

  3.  Borrower represents and warrants to Agent that its chief executive office is located at _______________.

   

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  EXHIBIT C

  BORROWER’S PATENTS, TRADEMARKS, COPYRIGHTS AND LICENSES

   

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  EXHIBIT D

  BORROWER’S DEPOSIT ACCOUNTS AND INVESTMENT ACCOUNTS

   

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  EXHIBIT E

  COMPLIANCE CERTIFICATE

  Hercules Capital, Inc. (as “Agent”)
400 Hamilton Avenue, Suite 310
Palo Alto, CA 94301

  Reference is made to that certain Loan and Security Agreement dated September 25, 2020 and the Loan Documents (as defined therein) entered into in connection with such Loan and Security Agreement all as may be amended from time to time (hereinafter referred to collectively as the “Loan Agreement”) by and among Hercules Capital, Inc. (the “Agent”), the several banks and other financial institutions or entities from time to time party thereto (collectively, the “Lender”) and Axsome Therapeutics, Inc. (the “Company”) and each of its Subsidiaries (as defined therein) other than Excluded Subsidiaries (as defined therein), as Borrower. All capitalized terms not defined herein shall have the same meaning as defined in the Loan Agreement.

  The undersigned is an Officer of the Company, knowledgeable of all Company financial matters, and is authorized to provide certification of information regarding the Company; hereby certifies, in such capacity, that in accordance with the terms and conditions of the Loan Agreement, the Company is in compliance for the period ending _____ of all covenants, conditions and terms and hereby reaffirms that all representations and warranties contained therein are true and correct on and as of the date of this Compliance Certificate with the same effect as though made on and as of such date, except to the extent such representations and warranties expressly relate to an earlier date, after giving effect in all cases to any standard(s) of materiality contained in the Loan Agreement as to such representations and warranties.  Attached are the required documents supporting the above certification.  The undersigned further certifies that these are prepared in accordance with GAAP (except for the absence of footnotes with respect to unaudited financial statement and subject to normal year-end adjustments) and are consistent from one period to the next except as explained below.

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	REPORTING REQUIREMENT
	REQUIRED
	CHECK IF ATTACHED

	Interim Financial Statements 
	Monthly within 30 days
	 

	Interim Financial Statements 
	Quarterly within 45 days
	 

	Audited Financial Statements 
	FYE within 90 days 
	 

	Accounts Receivable and Payable Agings
	Monthly within 30 days
	 

	Intellectual Property
	Following registering new Intellectual Property or the acquisition thereof (Section 7.21 of Loan Agreement)
	 

	Restricted License
	Following entering into or becoming bound by new Restricted Licenses (Section 7.21 of Loan Agreement)
	 

  Section 5.9 – Intellectual Property

  Has any claim been made to Borrower that any material part of the Intellectual Property violates the rights of any third party?  Yes____       No_____

  Section 5.11 – Borrower Products

  (a)  To Borrower’s knowledge, is any material Intellectual Property owned by Borrower or any Borrower Product subject to any actual or, to the knowledge of Borrower, threatened in writing litigation, proceeding (including any proceeding in the United States Patent and Trademark Office or any corresponding foreign office or agency) or outstanding decree, order, judgment, settlement agreement or stipulation that restricts in any manner Borrower’s use, transfer or licensing thereof or that could reasonably be expected to affect the validity, use or enforceability thereof)?  Yes____       No_____

  (b) Has Borrower received any written notice or claim, or, to the knowledge of Borrower, oral notice or claim, challenging or questioning Borrower’s ownership in any Intellectual Property material to Borrower’s business (or written notice of any claim challenging or questioning the ownership in any licensed Intellectual Property material to Borrower’s business of the owner thereof) or suggesting that any third party has any claim of legal or beneficial ownership with respect thereto or, to Borrower’s knowledge, is there a reasonable basis for any such claim?  Yes____       No_____

   

  ACCOUNTS OF BORROWER AND ITS SUBSIDIARIES AND AFFILIATES

  The undersigned hereby also confirms the below disclosed accounts represent all depository accounts and securities accounts presently open in the name of each Borrower or Borrower’s Subsidiary/Affiliate, as applicable.

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  Each new account that has been opened since delivery of the previous Compliance Certificate is designated below with a “*”.

  							
	 
	 
	Depository AC #
	Financial Institution
	Account Type (Depository / Securities)
	Last Month Ending Account Balance
	Purpose of Account

	BORROWER Name/Address:
	 

	 
	1
	 
	 
	 
	 
	 

	2
	 
	 
	 
	 
	 

	3
	 
	 
	 
	 
	 

	4
	 
	 
	 
	 
	 

	5
	 
	 
	 
	 
	 

	6
	 
	 
	 
	 
	 

	7
	 
	 
	 
	 
	 

	 

	SUBSIDIARY / AFFILIATE Name/Address
	 

	 
	1
	 
	 
	 
	 
	 

	2
	 
	 
	 
	 
	 

	3
	 
	 
	 
	 
	 

	4
	 
	 
	 
	 
	 

	5
	 
	 
	 
	 
	 

	6
	 
	 
	 
	 
	 

	7
	 
	 
	 
	 
	 

	 

   

   

  Section 7.20 - Financial Covenants

   

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	Financial Covenant
	Required
	Actual 
	In Compliance?

	Minimum Cash
Section 7.20(a)(i) of the Loan Agreement
	Greater than or equal to the sum of $15,000,000 plus the Qualified Cash A/P Amount
	[  ]
	Yes
 
No
 
N/A

	Performance Covenant A 
Section 7.20(b) of the Loan Agreement
	(i) Borrower’s Market Capitalization exceeds One Billion Dollars ($1,000,000,000) and (ii) Borrower maintains Qualified Cash in an amount not less than fifty percent (50%) of the sum of the outstanding principal amount of the Term Loan Advances plus the Qualified Cash A/P Amount
	[  ]
	Yes
 
No
 
N/A

	Performance Covenant B
Section 7.20(b) of the Loan Agreement
	Borrower maintains Qualified Cash in an amount not less than eighty five percent (85%) of the sum of the outstanding principal amount of the Term Loan Advances plus the Qualified Cash A/P Amount
	[  ]
	Yes
 
No
 
N/A

	Performance Covenant C
Section 7.20(b) of the Loan Agreement
	Borrower achieves T6M Net Product Revenue of at least 60% of the T6M Net Product Revenue included in the Forecast, determined on a quarterly basis
	[  ]
	Yes
 
No
 
N/A

   

  Is Borrower complying with at least one Performance Covenant?  Yes____       No_____     N/A_____

  Section 7.21 – Intellectual Property

  Has Borrower filed any application for any Patent or the registration of any Copyright, mask work or Trademark, or acquired any new registered Trademark since the last reported period?  Yes____       No_____

  If yes: Borrower shall supplement such intellectual property security agreements and or other documents as needed to maintain a first priority perfected security interest in favor of Agent within 90 days of the date hereof.

   

  Very Truly Yours,

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  AXSOME THERAPEUTICS, INC.

  By:        ____________________________

  Name:   _____________________________

  Its:        ____________________________

   

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  EXHIBIT F

  FORM OF JOINDER AGREEMENT

  This Joinder Agreement (the “Joinder Agreement”) is made and dated as of [          ], 20[  ], and is entered into by and between__________________., a ___________ corporation (“Subsidiary”), and HERCULES CAPITAL, INC., a Maryland corporation (as “Agent”).  

  RECITALS

  A.  Subsidiary’s Affiliate, Axsome Therapeutics, Inc. (“Company”) has entered into that certain Loan and Security Agreement dated September 25, 2020, with the several banks and other financial institutions or entities from time to time party thereto as lender (collectively, the “Lenders”) and the Agent, as such agreement may be amended (the “Loan Agreement”), together with the other agreements executed and delivered in connection therewith; 

  B.  Subsidiary acknowledges and agrees that it will benefit both directly and indirectly from Company’s execution of the Loan Agreement and the other agreements executed and delivered in connection therewith;

  AGREEMENT

  NOW THEREFORE, Subsidiary and Agent agree as follows:

  1.The recitals set forth above are incorporated into and made part of this Joinder Agreement.  Capitalized terms not defined herein shall have the meaning provided in the Loan Agreement.

  2. By signing this Joinder Agreement, Subsidiary shall be bound by the terms and conditions of the Loan Agreement the same as if it were the Borrower (as defined in the Loan Agreement) under the Loan Agreement, mutatis mutandis, provided however, that (a) with respect to (i) Section 5.1 of the Loan Agreement, Subsidiary represents that it is an entity duly organized, legally existing and in good standing under the laws of [        ], (b) neither Agent nor the Lenders shall have any duties, responsibilities or obligations to Subsidiary arising under or related to the Loan Agreement or the other Loan Documents, (c) that if Subsidiary is covered by Company’s insurance, Subsidiary shall not be required to maintain separate insurance or comply with the provisions of Sections 6.1 and 6.2 of the Loan Agreement, and (d) that as long as Company satisfies the requirements of Section 7.1 of the Loan Agreement, Subsidiary shall not have to provide Agent separate Financial Statements.  To the extent that Agent or the Lenders has any duties, responsibilities or obligations arising under or related to the Loan Agreement or the other Loan Documents, those duties, responsibilities or obligations shall flow only to Company and not to Subsidiary or any other Person or entity.  By way of example (and not an exclusive list): (i) Agent’s providing notice to Company in accordance with the Loan Agreement or as otherwise agreed among Company, Agent and the Lenders shall be deemed provided to Subsidiary; (ii) a Lender’s providing an Advance to Company shall be deemed an Advance to Subsidiary; and (iii) Subsidiary shall have no right to request an Advance or make any other demand on the Lenders.

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  3.Subsidiary agrees not to certificate its equity securities without Agent’s prior written consent, which consent may be conditioned on the delivery of such equity securities to Agent in order to perfect Agent’s security interest in such equity securities.

  4.Subsidiary acknowledges that it benefits, both directly and indirectly, from the Loan Agreement, and hereby waives, for itself and on behalf on any and all successors in interest (including without limitation any assignee for the benefit of creditors, receiver, bankruptcy trustee or itself as debtor-in-possession under any bankruptcy proceeding) to the fullest extent provided by law, any and all claims, rights or defenses to the enforcement of this Joinder Agreement on the basis that (a) it failed to receive adequate consideration for the execution and delivery of this Joinder Agreement or (b) its obligations under this Joinder Agreement are avoidable as a fraudulent conveyance.

  5.As security for the prompt, complete and indefeasible payment when due (whether on the payment dates or otherwise) of all the Secured Obligations, Subsidiary grants to Agent a security interest in all of Subsidiary’s right, title, and interest in and to the Collateral.

   [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

   

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  [SIGNATURE PAGE TO JOINDER AGREEMENT]

  SUBSIDIARY:

  _________________________________.

  	 

  	By:			

  	Name:			

  	Title: 			

  	Address:

  			 

  			 

  	Telephone: ___________

  	email: ____________

  AGENT:

  HERCULES CAPITAL, INC.

By:____________________________________
Name:__________________________________
Title: ___________________________________

Address:
400 Hamilton Ave., Suite 310
Palo Alto, CA 94301
email: legal@htgc.com
Telephone:  650-289-3060

   

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  EXHIBIT G

  [Reserved.]

   

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  EXHIBIT H

  ACH DEBIT AUTHORIZATION AGREEMENT

  Hercules Capital, Inc. 
400 Hamilton Avenue, Suite 310
Palo Alto, CA  94301

  Re:  Loan and Security Agreement dated September 25, 2020 (the “Agreement”) by and among Axsome Therapeutics, Inc., a Delaware corporation and each of its Subsidiaries (as defined therein) other than Excluded Subsidiaries (as defined therein) (individually and collectively, “Borrower”), and Hercules Capital, Inc., as agent (“Company”) and the lenders party thereto (collectively, the “Lenders”)

  In connection with the above referenced Agreement, the Borrower hereby authorizes the Company to initiate debit entries for (i) the periodic payments due under the Agreement and (ii) reasonable, documented out-of-pocket legal fees and costs incurred by Agent or the Lenders pursuant to Section 11.12 of the Agreement to the Borrower’s account indicated below.  The Borrower authorizes the depository institution named below to debit to such account.

    

  [IF FILED PUBLICLY, ACCOUNT INFO REDACTED FOR SECURITY PURPOSES]

  		
	Depository Name
	Branch

	City
	State and Zip Code

	Transit/ABA Number
	Account Number

  This authority will remain in full force and effect so long as any amounts are due under the Agreement. 

  ____________________________________________
(Borrower)

  By: _________________________________________

  Name: _________________________________________

  Date: ________________________________________

   

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  EXHIBIT I

  [Reserved.]

   

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  EXHIBIT J-1

  FORM OF U.S. TAX COMPLIANCE CERTIFICATE

  (For Foreign Lenders That Are Not Partnerships For U.S. Federal Income Tax Purposes)

  Reference is hereby made to the Loan and Security Agreement dated as of ________ ___, 20___ (as amended, supplemented or otherwise modified from time to time, the “Loan Agreement”) by and among Axsome Therapeutics, Inc., a Delaware corporation and each of its Subsidiaries (as defined in the Loan Agreement) other than Excluded Subsidiaries (as defined in the Loan Agreement) (hereinafter collectively referred to as the “Borrower”), the several banks and other financial institutions or entities from time to time parties to the Loan Agreement (collectively, referred to as the “Lenders”), and HERCULES CAPITAL, INC., a Maryland corporation, in its capacity as administrative agent and collateral agent for itself and the Lenders (in such capacity, the “Agent”).

  Pursuant to the provisions of Addendum 1 of the Loan Agreement, the undersigned hereby certifies that (i) it is the sole record and beneficial owner of the Loan(s) (as well as any promissory note(s) evidencing such Loan(s)) in respect of which it is providing this certificate, (ii) it is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, (iii) it is not a “ten percent shareholder” of the Borrower within the meaning of Section 871(h)(3)(B) of the Code and (iv) it is not a “controlled foreign corporation” related to the Borrower as described in Section 881(c)(3)(C) of the Code.

  The undersigned has furnished the Agent and the Borrower with a certificate of its non-U.S. Person status on IRS Form W-8BEN or IRS Form W-8BEN-E. By executing this certificate, the undersigned agrees that (1) if the information provided in this certificate changes, the undersigned shall promptly so inform the Borrower and the Agent, and (2) the undersigned shall have at all times furnished the Borrower and the Agent with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.

  Unless otherwise defined herein, terms defined in the Loan Agreement and used herein shall have the meanings given to them in the Loan Agreement.

   

  Date: _____________ ___, 20___		[NAME OF LENDER]

   

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  By:                  ____________________________

  Name:             ____________________________

  Title:               ____________________________

   

   

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  EXHIBIT J-2

  FORM OF U.S. TAX COMPLIANCE CERTIFICATE

  (For Foreign Participants That Are Not Partnerships For U.S. Federal Income Tax Purposes)

  Reference is hereby made to the Loan and Security Agreement dated as of ________ ___, 20___ (as amended, supplemented or otherwise modified from time to time, the “Loan Agreement”) by and among Axsome Therapeutics, Inc., a Delaware corporation and each of its Subsidiaries (as defined in the Loan Agreement) other than Excluded Subsidiaries (as defined in the Loan Agreement) (hereinafter collectively referred to as the “Borrower”), the several banks and other financial institutions or entities from time to time parties to the Loan Agreement (collectively, referred to as the “Lenders”), and HERCULES CAPITAL, INC., a Maryland corporation, in its capacity as administrative agent and collateral agent for itself and the Lenders (in such capacity, the “Agent”).

  Pursuant to the provisions of Addendum 1 of the Loan Agreement, the undersigned hereby certifies that (i) it is the sole record and beneficial owner of the participation in respect of which it is providing this certificate, (ii) it is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, (iii) it is not a “ten percent shareholder” of the Borrower within the meaning of Section 871(h)(3)(B) of the Code and (iv) it is not a “controlled foreign corporation” related to the Borrower as described in Section 881(c)(3)(C) of the Code.

  The undersigned has furnished its participating Lender with a certificate of its non-U.S. Person status on IRS Form W-8BEN or IRS Form W-8BEN-E. By executing this certificate, the undersigned agrees that (1) if the information provided in this certificate changes, the undersigned shall promptly so inform such Lender in writing, and (2) the undersigned shall have at all times furnished such Lender with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.

  Unless otherwise defined herein, terms defined in the Loan Agreement and used herein shall have the meanings given to them in the Loan Agreement.

   

  Date: _____________ ___, 20___		[NAME OF PARTICIPANT]

   

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  By:                  ____________________________

  Name:             ____________________________

  Title:               ____________________________

   

   

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  EXHIBIT J-3

  FORM OF U.S. TAX COMPLIANCE CERTIFICATE

  (For Foreign Participants That Are Partnerships For U.S. Federal Income Tax Purposes)

  Reference is hereby made to the Loan and Security Agreement dated as of ________ ___, 20___ (as amended, supplemented or otherwise modified from time to time, the “Loan Agreement”) by and among Axsome Therapeutics, Inc., a Delaware corporation and each of its Subsidiaries (as defined in the Loan Agreement) other than Excluded Subsidiaries (as defined in the Loan Agreement) (hereinafter collectively referred to as the “Borrower”), the several banks and other financial institutions or entities from time to time parties to the Loan Agreement (collectively, referred to as the “Lenders”), and HERCULES CAPITAL, INC., a Maryland corporation, in its capacity as administrative agent and collateral agent for itself and the Lenders (in such capacity, the “Agent”).

  Pursuant to the provisions of Addendum 1 of the Loan Agreement, the undersigned hereby certifies that (i) it is the sole record owner of the participation in respect of which it is providing this certificate, (ii) its direct or indirect partners/members are the sole beneficial owners of such participation, (iii) with respect to such participation, neither the undersigned nor any of its direct or indirect partners/members is a “bank” extending credit pursuant to a loan agreement entered into in the ordinary course of its trade or business within the meaning of Section 881(c)(3)(A) of the Code, (iv) none of its direct or indirect partners/members is a “ten percent shareholder” of the Borrower within the meaning of Section 871(h)(3)(B) of the Code and (v) none of its direct or indirect partners/members is a “controlled foreign corporation” related to the Borrower as described in Section 881(c)(3)(C) of the Code.

  The undersigned has furnished its participating Lender with IRS Form W-8IMY accompanied by one of the following forms from each of its partners/members that is claiming the portfolio interest exemption: (i) an IRS Form W-8BEN or IRS Form W-8BEN-E or (ii) an IRS Form W-8IMY accompanied by an IRS Form W-8BEN or IRS Form W-8BEN-E from each of such partner’s/member’s beneficial owners that is claiming the portfolio interest exemption. By executing this certificate, the undersigned agrees that (1) if the information provided in this certificate changes, the undersigned shall promptly so inform such Lender and (2) the undersigned shall have at all times furnished such Lender with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.

  Unless otherwise defined herein, terms defined in the Loan Agreement and used herein shall have the meanings given to them in the Loan Agreement.

   

  Date: _____________ ___, 20___		[NAME OF PARTICIPANT]

   

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  By:                  ____________________________

  Name:             ____________________________

  Title:               ____________________________

   

   

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  EXHIBIT J-4

  FORM OF U.S. TAX COMPLIANCE CERTIFICATE

  (For Foreign Lenders That Are Partnerships For U.S. Federal Income Tax Purposes)

  Reference is hereby made to the Loan and Security Agreement dated as of ________ ___, 20___ (as amended, supplemented or otherwise modified from time to time, the “Loan Agreement”) by and among Axsome Therapeutics, Inc., a Delaware corporation and each of its Subsidiaries (as defined in the Loan Agreement) other than Excluded Subsidiaries (as defined in the Loan Agreement) (hereinafter collectively referred to as the “Borrower”), the several banks and other financial institutions or entities from time to time parties to the Loan Agreement (collectively, referred to as the “Lenders”), and HERCULES CAPITAL, INC., a Maryland corporation, in its capacity as administrative agent and collateral agent for itself and the Lenders (in such capacity, the “Agent”).

  Pursuant to the provisions of Addendum 1 of the Loan Agreement, the undersigned hereby certifies that (i) it is the sole record owner of the Loan(s) (as well as any promissory note(s) evidencing such Loan(s)) in respect of which it is providing this certificate, (ii) its direct or indirect partners/members are the sole beneficial owners of such Loan(s) (as well as any promissory note(s) evidencing such Loan(s)), (iii) with respect to the extension of credit pursuant to this Loan Agreement or any other Loan Document, neither the undersigned nor any of its direct or indirect partners/members is a “bank” extending credit pursuant to a loan agreement entered into in the ordinary course of its trade or business within the meaning of Section 881(c)(3)(A) of the Code, (iv) none of its direct or indirect partners/members is a “ten percent shareholder” of the Borrower within the meaning of Section 871(h)(3)(B) of the Code and (v) none of its direct or indirect partners/members is a “controlled foreign corporation” related to the Borrower as described in Section 881(c)(3)(C) of the Code.

  The undersigned has furnished the Agent and the Borrower with IRS Form W-8IMY accompanied by one of the following forms from each of its partners/members that is claiming the portfolio interest exemption: (i) an IRS Form W-8BEN or IRS Form W-8BEN-E or (ii) an IRS Form W-8IMY accompanied by an IRS Form W-8BEN or IRS Form W-8BEN-E from each of such partner’s/member’s beneficial owners that is claiming the portfolio interest exemption. By executing this certificate, the undersigned agrees that (1) if the information provided in this certificate changes, the undersigned shall promptly so inform the Borrower and the Agent, and (2) the undersigned shall have at all times furnished the Borrower and the Agent with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.

  Unless otherwise defined herein, terms defined in the Loan Agreement and used herein shall have the meanings given to them in the Loan Agreement.

   

  Date: _____________ ___, 20___		[NAME OF LENDER]

   

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  By:                  ____________________________

  Name:             ____________________________

  Title:               ____________________________

   

   

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  SCHEDULE 1.1

  COMMITMENTS

  									
	LENDERS
	TRANCHE 1A 
TERM 
COMMITMENT
	TRANCHE 1B 
TERM 
COMMITMENT**
	TRANCHE 2A 
TERM 
COMMITMENT
	TRANCHE 2B 
TERM 
COMMITMENT
	TRANCHE 3 
TERM 
COMMITMEN T
	TRANCHE 4 
TERM 
COMMITMENT
	TRANCHE 5 
TERM 
COMMITMENT*
	TERM
COMMITMENT*

	Hercules 
Capital, Inc.
	$0
	$0**
	$40,000,000
	$40,000,000
	$16,000,000
	$55,000,000
	$75,000,000*
	$226,000,000*

	Hercules 
Funding IV 
LLC
	$50,000,000
	$0**
	$0
	$0
	$0
	$0
	$0
	$50,000,000

	Hercules 
Private 
Credit Fund 
I L.P.
	$0
	$0**
	$6,250,000
	$6,250,000
	$2,500,000
	$0
	$0
	$15,000,000

	Hercules Private Global Venture Growth
Fund I L.P.
	$0
	$0**
	$3,750,000
	$3,750,000
	$1,500,000
	$0
	$0
	$9,000,000

	TOTAL 
COMMITM 
ENTS
	$50,000,000
	$0**
	$50,000,000
	$50,000,000
	$20,000,000
	$55,000,000
	$75,000,000*
	$300,000,000*

  * Funding of Tranche 5 is subject to approval by Lender’s investment committee in its sole discretion. 

  	** Tranche 1B Term Commitment expired; no Tranche 1B Advances made.

   

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  EXHIBIT B

  [Exhibit B intentionally omitted. It is not material and would be competitively harmful if publicly disclosed.]

   

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