Document:

Exhibit 10.1

 

December 10, 2020

 

Neos Therapeutics, Inc.

2940 N. Highway 360

Grand Prairie, TX 75050

Attention: John Limongelli

 

Re: Acquisition of Neos Therapeutics, Inc.

 

Ladies and Gentlemen:

 

Reference is made to the Agreement and
Plan of Merger, dated as of the date hereof (the “Merger Agreement”), by and among Aytu Biosciences, Inc., a
Delaware corporation (“Aytu”), Argon Merger Sub, Inc., a Delaware corporation, and Neos Therapeutics, Inc.,
a Delaware corporation (the “Company”), pursuant to which Acquisition Sub, or its permitted assignees, will
be merged with and into the Company (the “Merger”). This letter agreement is being entered between Aytu and
the Company to describe their agreement relating to a potential financing prior to the completion of the Merger. Capitalized terms
used but not defined herein have the meanings ascribed to them in the Merger Agreement and, if not therein defined, as defined
in the unsecured convertible note issued pursuant to the terms of the Merger Agreement by the Company to Aytu (the “Convertible
Note”), the form of which is attached to this letter agreement (this “Agreement”) as Exhibit A.

 

1. Commitment.
Aytu and the Company hereby commit, subject to (a) the terms and conditions set forth herein and (b) receipt of approval from The
Nasdaq Stock Market (“Nasdaq”) with respect to the Convertible Note and the transactions contemplated thereby,
that, promptly following the date hereof, they will in good faith prepare, negotiate and enter into (i) the Convertible Note and
(ii) a registration rights agreement (the “Registration Rights Agreement”) on substantially the terms set forth
in Sections 2 and 3 below (the “Commitment”).

 

2. Registration
Rights Agreement. The Conversion Shares will be issued as a private placement of the securities. The Company shall agree to
prepare and file a resale registration statement (“Registration Statement”) registering the resale of all the
Conversion Shares, which Registration Statement shall be filed within 30 days from the termination of the Merger Agreement for
any reason. The Company shall use best efforts cause the Registration Statement to be declared effective by the Securities and
Exchange Commission within 75 days following the filing of the Registration Statement (the “Effectiveness Deadline”).
If the Registration Statement is not declared effective by the Effectiveness Deadline, the Company will pay to Aytu an additional
amount of common stock of the Company (“Common Stock”), or cash if the issuance of Common Stock is not permitted
under the rules of Nasdaq, equal to 3% of the Common Stock covered on the Registration Statement for each 30-day period that the
Registration Statement is not declared effective after the Effectiveness Deadline. In addition, if the Registration Statement is
not effective or available to use prior to such time as Aytu can sell all of the Common Stock covered by the Registration Statement
pursuant to Rule 144 without regard to volume limitations, the Company will pay to Aytu an additional amount of Common Stock, or
cash if the issuance of Common Stock is not permitted under the rules of Nasdaq, equal to 3% of the remaining unsold amount of
the Common Stock covered on the Registration Statement for each 30-day period that the Registration Statement is not available
to use.

 

     

     

    

 

3. Other
Covenants. The Registration Rights Agreement shall include a covenant that the Company shall not issue any equity or securities
convertible into equity from the date the Convertible Note is issued (the “Note Issuance Date”) until 30 days
after the date the Registration Statement is declared effective except for (i) the issuance by the Company of shares upon the exercise
of a stock option or warrant or the conversion of a security outstanding on the Note Issuance Date (including, for the avoidance
of doubt, convertible notes issued by the Company to its senior lenders), or (ii) the issuance by the Company of stock options,
restricted stock units or shares of capital stock of the Company under any equity compensation plan of the Company.

 

4. Enforceability.
This Agreement may only be enforced by Aytu and the Company. Notwithstanding anything to the contrary in this letter agreement,
the Company’s creditors shall have no right to enforce this letter agreement or to cause the Company to enforce this letter
agreement and none of the Company's equity holders or creditors shall have any right to enforce or cause the Company to enforce
this letter agreement.

 

5. Termination.
This Agreement will terminate automatically at the earlier to occur of (i) the Effective Time and (ii) the first date on which
Aytu’s commitment to make advances under the Convertible Note has been terminated and all amounts outstanding under the Convertible
Note have been paid in full in cash.

 

6. No
Modification; Entire Agreement. This Agreement may not be amended, modified or supplemented except by an agreement in writing
signed by the Company and Aytu. This Agreement, the Convertible Note and the Merger Agreement constitute the sole and entire agreement
of Aytu or any of its affiliates, on the one hand, and the Company or any of its affiliates, on the other, with respect to the
subject matter contained herein and in the Convertible Note, and supersedes all prior and contemporaneous understandings, agreements,
representations and warranties, both written and oral, with respect to such subject matter.

 

7. Parties
in Interest; Third Party Beneficiaries. This Agreement is for the sole benefit of and shall be binding upon the Company and
Aytu and their respective successors and permitted assigns. Nothing in this Agreement, express or implied, is intended to or shall
confer upon any person other than the Company and Aytu any legal or equitable right, benefit or remedy of any nature whatsoever,
under or by reason of this Agreement.

 

8. Governing
Law; Submission to Jurisdiction; Venue. This Agreement and all disputes or controversies arising out of or relating to this
Agreement or the transactions contemplated hereby shall be governed by, and construed in accordance with, the internal Laws of
the State of Delaware, without regard to the Laws of any other jurisdiction that might be applied because of the conflicts of Laws
principles of the State of Delaware.

 

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Each of the parties
irrevocably agrees that any Action arising out of or relating to this Agreement brought by any party or its Affiliates against
any other party or its Affiliates shall be brought and determined in the Court of Chancery of the State of Delaware; provided,
that if jurisdiction is not then available in the Court of Chancery of the State of Delaware, then any such Action may be brought
in any federal court located in the State of Delaware or any other Delaware state court. Each of the parties hereby irrevocably
submits to the jurisdiction of the aforesaid courts for itself and with respect to its property, generally and unconditionally,
with regard to any such Action arising out of or relating to this Agreement and the transactions contemplated hereby. Service of
process, summons, notice or other document in accordance with 9.2 of the Merger Agreement, with respect to Aytu and the Company
shall be effective service of process for any suit, action or other proceeding brought in any such court.

 

The parties irrevocably
and unconditionally waive any objection to the laying of venue of any suit, action or proceeding in such courts and irrevocably
waive and agree not to plead or claim in any such court that any such suit, action or proceeding brought in any such court has
been brought in an inconvenient forum.

 

9. Waiver
of Jury Trial. Each party acknowledges and agrees that any controversy which may arise under this letter is likely to involve
complicated and difficult issues and, therefore, each such party irrevocably and unconditionally waives any right it may have to
a trial by jury in respect of any legal action arising out of or relating to this letter or the transactions contemplated hereby.

 

10. No
Assignment. The Commitment evidenced by this Agreement shall not be assignable by the Company or Aytu without the other party’s
prior written consent. No transfer of any rights or obligations hereunder by Aytu or the Company shall be permitted without the
consent of the other party. Any purported transfer or assignment of any portion of a party's rights or obligations hereunder in
contravention of this Section 11 shall be null and void ab initio.

 

11. Counterparts.
This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall be deemed
to be one and the same agreement. A signed copy of this letter delivered by facsimile, e-mail or other means of electronic transmission
shall be deemed to have the same legal effect as delivery of an original signed copy of this Agreement.

 

[signature page
follows]

 

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	 	Very truly yours,
	 	 
	 	AYTU BIOSCIENCE, INC.
	 	 
	 	By	/s/ Josh Disbrow
	 	Name:  	Josh Disbrow

	 	Title:	Chief Executive Officer

 

	Agreed to and accepted:	 
	 	 
	NEOS THERAPEUTICS, INC.	 
	 	 
	By	/s/ Richard Eisenstadt
	 
	Name:  	Richard Eisenstadt	 
	Title:	Chief Financial Officer	 

 

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EXHIBIT A

 

CONVERTIBLE NOTE

 

THIS INSTRUMENT AND THE INDEBTEDNESS
EVIDENCED HEREBY, AND THE RIGHTS AND REMEDIES OF THE HOLDER OF THIS INSTRUMENT, ARE SUBORDINATED TO THE REPAYMENT AND FULL PERFORMANCE
OF THE COMPANY’S INDEBTEDNESS AND OTHER OBLIGATIONS UNDER (I) THAT CERTAIN FACILITY AGREEMENT, DATED AS OF MAY 11, 2016 (AS
AMENDED, RESTATED, SUPPLEMENTED AND OTHERWISE MODIFIED FROM TIME TO TIME, THE “SENIOR FACILITY AGREEMENT”), BY AND
AMONG THE COMPANY AND THE LENDERS FROM TIME TO TIME PARTY THERETO (THE “SENIOR FACILITY LENDERS”) AND (II) THAT CERTAIN
LOAN AND SECURITY AGREEMENT, DATED AS OF OCTOBER 2, 2019 (AS AMENDED, RESTATED, SUPPLEMENTED AND OTHERWISE MODIFIED FROM TIME TO
TIME, THE “ABL AGREEMENT”), BY AND AMONG THE COMPANY, CERTAIN AFFILIATES OF THE COMPANY PARTY THERETO AND THE LENDERS
FROM TIME TO TIME PARTY THERETO (THE “ABL LENDERS”) AND ENCINA BUSINESS CREDIT, LLC, AS AGENT FOR SUCH ABL LENDERS;
AND THE HOLDER OF THIS INSTRUMENT, BY ITS ACCEPTANCE HEREOF, SHALL BE BOUND BY THE PROVISIONS HEREOF AND THE PROVISIONS OF (A)
THAT CERTAIN SUBORDINATION AGREEMENT DATED AS OF THE DATE HEREOF AMONG THE COMPANY, THE HOLDER HEREOF AND THE SENIOR FACILITY LENDERS
(AS AMENDED, RESTATED, SUPPLEMENTED AND OTHERWISE MODIFIED FROM TIME TO TIME, THE “SENIOR FACILITY SUBORDINATION AGREEMENT”)
AND (B) THAT CERTAIN SUBORDINATION AGREEMENT DATED AS OF THE DATE HEREOF, AMONG THE COMPANY, THE HOLDER HEREOF AND THE ABL LENDERS
(AS AMENDED, RESTATED, SUPPLEMENTED AND OTHERWISE MODIFIED FROM TIME TO TIME, THE “ABL SUBORDINATION AGREEMENT” AND,
TOGETHER WITH THE SENIOR FACILITY SUBORDINATION AGREEMENT, THE “SUBORDINATION AGREEMENTS”).

 

UNSECURED CONVERTIBLE PROMISSORY
NOTE

  

	Issue Date:                            	Principal: Up to U.S.

 $5,000,000.00

 

FOR VALUE RECEIVED, NEOS THERAPEUTICS,
INC., a Delaware corporation (the “Company”), hereby promises to pay to AYTU BIOSCIENCE, INC., a
Delaware corporation, or its permitted registered assigns (collectively, the “Holder”), the Principal (as defined
below) in the amount of up to Five Million U. S. dollars ($5,000,000.00) on the terms and conditions set forth in this Note (as
defined below), which has been issued by the Company pursuant to, and in accordance with, the terms of that certain Agreement and
Plan of Merger dated December [●], 2020 by and among the Company, Holder and Argon Merger Sub, Inc., a Delaware corporation,
(as amended, supplemented or otherwise modified from time to time, in accordance with its terms, the “Merger Agreement”).
The Company hereby promises to pay accrued and unpaid Interest and premium, if any, on the Principal on the dates, at the rates
and in the manner provided herein.

 

1. Definitions.

 

(a) Certain Defined
Terms. For purposes of this Note, the following terms shall have the following meanings:

 

(i) “Act
of Bankruptcy” means, with respect to any Person, if (i) the Person shall (1) be or become insolvent, or (2) apply for
or consent to the appointment of, or the taking of possession by, a receiver, custodian, trustee, liquidator or the like of the
Person or entity or of all or a substantial part of the Person’s or entity’s property, or (3) commence a voluntary
case under any bankruptcy, insolvency, reorganization, arrangement, readjustment of debt, dissolution, liquidation or similar proceeding
under the laws of any jurisdiction, or (4) file a petition seeking to take advantage of any other law relating to bankruptcy, insolvency,
reorganization, winding up or composition or adjustment of debts, or (5) the Person’s inability to pay the Person’s
debts as they mature, or (6) make an assignment for the benefit of the Person’s creditors; or (ii) a proceeding or case shall
be commenced, without the application or consent of the Person, and which is not dismissed within 90 days after such commencement,
in any court of competent jurisdiction, seeking (1) the liquidation, reorganization, dissolution, winding up or the composition
or adjustment of debts of the Person or entity, (2) the appointment of a trustee, receiver, custodian or liquidator or the like
of the Person or entity, or of all or any substantial part of the Person’s property, or (3) similar relief in respect of
the Person under any law relating to bankruptcy, insolvency, reorganization, winding up or composition or adjustment of debts.

 

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(ii) “Business
Day” means any day other than Saturday, Sunday or any other day on which commercial banks in New York, New York are authorized
or required by law to close.

 

(iii) “Change
of Control” means (a) any “Person” or “group” (as such terms are used in Sections 13(d) and 14(d)
of the Exchange Act) other than the holders of the Company’s voting stock on the date the Merger Agreement is executed and
delivered by the parties thereto or their Controlled Investment Affiliates, is or shall at any time become the “beneficial
owner” (as defined in Rule 13(d)-3 and 13(d)-5 under the Exchange Act), directly or indirectly, of greater than 50% of the
voting interest in the Company’s stock, (b) a sale of substantially all of the assets of the Company and its subsidiaries,
or (c) the occurrence of a “Change of Control”, “Change in Control”, “Fundamental Change” or
concepts of similar import under the Senior Facility Agreement or the ABL Agreement; provided, however, in no event shall a “Change
of Control” include or be a reference to, or be deemed to have occurred upon, the consummation of the transactions contemplated
under the Merger Agreement on the Closing Date (as defined therein).

 

(iv) “Controlled
Investment Affiliates” means as to any Person, any other Person that (a) directly or indirectly, is in control of, is
controlled by, or is under common control with, such Person and (b) is organized by such Person primarily for the purpose
of making equity or debt investments in one or more companies.

 

(v) “Common
Stock” means the common stock of the Company, $0.001 par value per share.

 

(vi) “Conversion
Amount” means the aggregate amount of Principal and Interest to be converted, which as of the Conversion Date, will be
100% of Principal as of such date, together with all accrued and unpaid Interest thereon as of such date.

 

(vii) “Conversion
Date” means the date of delivery via facsimile or electronic mail of a Conversion Notice.

 

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(viii) “Conversion
Price” means, as of any Conversion Date, the greater of (i) $0.50, subject to adjustment for any Stock Event that occurs
after the date hereof, and (ii) 90% of the arithmetic average of the Volume Weighted Average Prices per Share on each of the thirty
(30) Trading Days immediately preceding the Conversion Date (the “Measurement Period”); provided, that in the
event that a stock split, stock combination, reclassification, payment of stock dividend, recapitalization or other similar transaction
of such character that the Shares shall be changed into or become exchangeable for a larger or small number of Shares (a “Stock
Event”) is consummated during the Measurement Period, the Volume Weighted Average Price for all Trading Days during the
Measurement Period prior to the effectiveness of the Stock Event shall be appropriately adjusted to reflect such Stock Event.

 

(ix) “Conversion
Shares” means fully paid and nonassessable Shares issuable upon conversion of the Note in accordance with Section 3.

 

(x) “Delisting
Event” means an event which shall be deemed to have occurred if the Shares cease to be listed, traded or publicly quoted
on the Principal Market on which Shares are listed as of such date, and shall continue until such Shares are relisted or requoted
on either the New York Stock Exchange, the NYSE American, the NASDAQ Global Select Market, the NASDAQ Global Market, the NASDAQ
Capital Market or, in each case, any successor thereto (each, a “Principal Market”).

 

(xi) “Exchange
Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated by the SEC thereunder.

 

(xii) “Interest”
means any interest (including any default interest) accrued on the Principal pursuant to the terms of this Note.

 

(xiii) “Maturity
Date” shall mean the earlier of (i) acceleration of the obligations evidenced hereby and (ii) November 7, 2022.

 

(xiv) “Market
Disruption Event” means, with respect to any Trading Day and any security, (a) a failure by the Principal Market to open
for trading during its entire regular trading session, (b) the occurrence or existence prior to 1:00 p.m., New York City time,
on such day for such securities for more than one half-hour period in the aggregate during regular trading hours of any suspension
or limitation imposed on trading (by reason of movements in price exceeding limits permitted by the relevant securities exchange
or otherwise) in such securities or in any options, contracts or future contracts relating to such securities, or (c) to the extent
“Volume Weighted Average Price” is determined in accordance with clause (b) of the definition thereof, the suspension
of trading for the one-half hour period ending on the scheduled close of trading on such day (by reason of movements in price exceeding
limits permitted by the stock exchange or otherwise) in such securities.

 

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(xv) “Note”
means this Unsecured Convertible Promissory Note (including all unsecured convertible promissory notes issued in exchange herefor
or, upon transfer or replacement hereof, and as any of the foregoing may be further amended, restated, supplemented or otherwise
modified from time).

 

(xvi) “Person”
means and includes any natural person, individual, partnership, limited partnership, joint venture, corporation, trust, limited
liability company, limited company, joint stock company, unincorporated organization, government entity or any political subdivision
or agency thereof, or any other entity.

 

(xvii) “Principal”
means the outstanding principal amount of this Note as of any date of determination.

 

(xviii) “Principal
Market” shall have the meaning set forth in the definition of Delisting Event above.

 

(xix) “Reg Rights
Side Letter” means the letter agreement, dated as of December 10, 2020 between Holder and the Company and substantially
in the form attached hereto as Exhibit B.

 

(xx) “Register”
means the register for the recordation of the name and address of the Holder of this Note and the Principal (and stated Interest)
owing to such Holder from time to time.

 

(xxi) “SEC”
means the United States Securities and Exchange Commission.

 

(xxii) “Securities
Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated by the SEC thereunder.

 

(xxiii) “Shares”
means shares of Common Stock.

 

(xxiv) 
“Trading Day” means any day on which the Common Stock is traded for any period on the Principal Market; provided,
that Trading Day shall not include any Trading Day on which there is a Market Disruption Event.

 

(xxv) “Volume
Weighted Average Price” for any security as of any Trading Day means (a) the volume weighted average sale price of such
security on the principal U.S. national or regional securities exchange on which such security is traded as reported by Bloomberg
Financial Markets or an equivalent, reliable reporting service mutually acceptable to and hereinafter designated by Holder and
the Company (“Bloomberg”), or (b) if no volume weighted average sale price is reported for such security, then
the closing price per share of such security as reported by Bloomberg, or, if no closing price per share is reported for such security
by Bloomberg, the average of the last bid and last ask price (or if more than one in either case, the average of the average last
bid and average last ask prices) on such Trading Day as reported in the composite transactions for the principal U.S. national
or regional securities exchange on which such security is traded. If the security is not listed for trading on a U.S. national
or regional securities exchange on the relevant Trading Day, then the Volume Weighted Average Price will be the average of the
mid-point of the last bid and last ask prices of the security in the over-the-counter market on the relevant Trading Day as reported
by the OTC Markets Group, Inc. or similar organization. If the Volume Weighted Average Price cannot be calculated for such security
on such date in the manner provided above, the Volume Weighted Average Price shall be the fair market value as mutually determined
by the Company and the holders of a majority in interest of the Notes being converted (based on the Principal amount being converted
by each such holder) for which the calculation of the Volume Weighted Average Price is required in order to determine the Conversion
Price of such Notes. Volume Weighted Average Price will be determined without regard to after-hours trading or any other trading
outside of the regular trading hours.

 

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2. Multi-Advances;
Principal & Interest; Payments.

 

(a) Advances.
From time to time upon not less than 10 days’ prior written notice (which may be by electronic mail) by the Company to Holder
and provided that the aggregate amount of all advances made hereunder does not exceed $5,000,000, the Company may request, and
Holder shall advance, such sums as requested by the Company; provided that (i) no Event of Default has occurred and is continuing,
(ii) no “Event of Default”, as defined under each of the Senior Facility Agreement and the ABL Agreement, has occurred
and is continuing (iii) the Merger Agreement has not been terminated in accordance with its terms and (iv) any advance is in an
amount of not less than $100,000 and in $100,000 increments thereof.

 

(b) Interest
& Principal. Interest shall accrue on the Principal at the rate of 6.0% per annum, calculated on the basis of the actual
number of days elapsed in a 365 day year, and shall compound monthly and be added to the Principal on the first day of each month
beginning January 1, 2021, and the first day of each month thereafter, and shall be due and payable with the Principal. The Company
acknowledges that this addition to Principal will result in the total outstanding principal amount of indebtedness evidenced by
this Note exceeding the face amount of this Note. If an Event of Default has occurred and is continuing, the interest rate then
in effect will be increased by 2.0% per annum (the “Default Margin”) and all overdue obligations under
this Note will bear interest at the interest rate in effect at such time plus the Default Margin. Subject to the provisions of
the Subordination Agreements, on the earlier to occur of acceleration of this Note and the Maturity Date, all Principal plus all
accrued and unpaid Interest shall be due and payable.

 

(c) Optional
Prepayments. Subject to the provisions of the Subordination Agreements, the Company may prepay at any time and from time to
time, all or any portion of the balance remaining on this Note, without premium or penalty.

 

(d) Mandatory
Prepayments. Subject to the provisions of the Subordination Agreements, upon payment in full in cash of all obligations
under each of the Senior Facility Agreement and the ABL Agreement and termination of all commitments to lend thereunder, the Company
shall repay the entire balance remaining under this Note on the first Business Day following the date each of the Senior Facility
Agreement and the ABL Agreement has been “Paid in Full” (as such term or any similar term is defined in the applicable
Subordination Agreement).

 

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3. Conversion
Rights. The Principal and accrued and unpaid Interest may be converted, in whole but not in part, into Shares on the terms
and conditions set forth in this Section 3.

 

(a) Conversion
at Option of the Holder. At any time beginning 30 days after termination of the Merger Agreement, subject to (i) the 9.985%
Cap (as defined below), and (ii), the Exchange Cap (as defined below), the Holder shall be entitled to convert all or any part
of the outstanding Principal and accrued Interest, as of the date of the Conversion Notice therefor delivered in accordance with
this Section 3, into Conversion Shares in accordance with this Section 3 at the Conversion Rate (as defined in Section
3(b)). The Company shall not issue any fraction of a Share upon any conversion. If the issuance would result in the issuance
of a fraction of a Share, then the Company shall round such fraction of a Share up or down to the nearest whole share (with 0.5
rounded up).

 

(b) Conversion
Rate. The number of Conversion Shares issuable upon a conversion of any portion of this Note pursuant to Section 3 shall
be determined according to the following formula (the “Conversion Rate”):

 

            Conversion
Amount            

Conversion Price

 

(c) Mechanics
of Conversion. The conversion of Principal and Interest (“Conversion”) shall be conducted in the following
manner:

 

(i) Holder’s
Delivery Requirements. To convert a Conversion Amount into Conversion Shares pursuant to Section 3(a) above on any date,
the Holder shall transmit by facsimile or electronic mail (or otherwise deliver), for receipt on or prior to 5:00 p.m. New York
City time on such date, a copy of a conversion notice in the form attached hereto as Exhibit A (the “Conversion
Notice”) to the Company (Attention: Richard Eisenstadt, Fax: (972) 408-1143, Email: reisenstadt@neostx.com).

 

(ii) Company’s
Response. Subject to Section 3(g)(ii), upon receipt or deemed receipt by the Company of a copy of a Conversion Notice,
the Company (I) shall promptly send, via electronic mail a confirmation of receipt of such Conversion Notice to the Holder and
the Company’s designated transfer agent (the “Transfer Agent”), which confirmation shall constitute an
instruction to the Transfer Agent to process such Conversion Notice in accordance with the terms herein, and (II) on or before
the second (2nd) Business Day following the date of receipt or deemed receipt by the Company of such Conversion Notice (or, if
earlier, the end of the then standard settlement period for U.S. broker-dealer securities transactions) (the “Share Delivery
Date”), (A) provided the Holder (or its designee) is eligible to receive such Conversion Shares through The Depository
Trust Company (“DTC”) (which shall include any time at which the Unrestricted Conditions (as defined below)
are satisfied), credit such aggregate number of Conversion Shares to which the Holder shall be entitled to the Holder’s or
its designee’s balance account with DTC through its Deposit/Withdrawal at Custodian (“DWAC”) system, or
(B) if the foregoing shall not apply, issue and deliver to the address as specified in the Conversion Notice, a stock certificate,
registered in the name of the Holder or its designee, in each case, for the number of Conversion Shares to which the Holder shall
be entitled. The Conversion Shares will be free-trading, and freely transferable, and will not contain a legend (or stop transfer
instructions) restricting the resale or transferability of the Conversion Shares if any of the Unrestricted Conditions (as defined
below) is met.

 

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(iii) Dispute
Resolution. In the case of a dispute as to the determination of the Conversion Price or the arithmetic calculation of the Conversion
Rate, the Company shall instruct the Transfer Agent to issue to the Holder the number of Conversion Shares that is not disputed
and shall transmit an explanation of the disputed determinations or arithmetic calculations to the Holder via electronic mail within
two (2) Business Days of receipt or deemed receipt of the Holder’s Conversion Notice or other date of determination. If the
Holder and the Company are unable to agree upon the determination of the Conversion Price or arithmetic calculation of the Conversion
Rate within one (1) Business Day of such disputed determination or arithmetic calculation being transmitted to the Holder, then
the Company shall promptly (and in any event within two (2) Business Days) submit via electronic mail (A) the disputed determination
of the Conversion Price to an independent, reputable investment banking firm agreed to by the Company and the Holder, or (B) the
disputed arithmetic calculation of the Conversion Rate to the Company’s independent registered public accounting firm, as
the case may be. The Company shall direct the investment bank or the accounting firm, as the case may be, to perform the determination
or calculation and notify the Company and the Holder of the results no later than two (2) Business Days from the time it receives
the disputed determination or calculation. Such investment bank’s or accounting firm’s determination or calculation,
as the case may be, shall be binding upon all parties absent manifest error. The fees and expenses of such investment bank or accountant
shall be paid by the Company. Notwithstanding the existence of a dispute contemplated by this paragraph, if requested by the Holder,
the Company shall issue to the Holder the Conversion Shares not in dispute in accordance with the terms hereof.

 

(iv) Record
Holder. The Person or Persons entitled to receive the Conversion Shares issuable upon a Conversion shall be treated for all
purposes as the legal and record holder or holders of such Shares upon delivery by the Holder of the Conversion Notice, or in the
case of Conversion Shares the issuance of which is subject to a bona fide dispute that is subject to and being resolved
pursuant to, and in compliance with the time periods and other provisions of, the dispute resolution provisions of Section 3(c)(iii),
the first Business Day after the resolution of such bona fide dispute.

 

(v) Company’s
Failure to Timely Convert.

 

(A) Cash
Damages. If by the Share Delivery Date, the Company shall fail to issue the Conversion Shares and deliver a certificate to
the Holder for, or credit the Holder’s or its designee’s balance account with DTC with, the number of Conversion Shares,
as applicable, (free of any restrictive legend, provided any of the Unrestricted Conditions is satisfied) (a “Delivery
Failure”), then, in addition to all other available remedies that the Holder may pursue hereunder and under the Merger
Agreement, the Company shall pay additional damages to the Holder for each day after the Share Delivery Date such conversion is
not timely effected in an amount equal to two percent (2%) of the product of (I) the number of Conversion Shares not issued to
the Holder or its designee on or prior to the Share Delivery Date and to which the Holder is entitled and (II) the Volume Weighted
Average Price of the Common Stock on the Share Delivery Date (such product is referred to herein as the “Share Product
Amount”). Alternatively in lieu of the foregoing damages, subject to Section 3(c)(iii), at the written election
of the Holder made in the Holder’s sole discretion, if, on or after the applicable Conversion Date, the Holder purchases
(in an open market transaction or otherwise) Shares to deliver in satisfaction of a sale by such Holder of Conversion Shares that
such Holder anticipated receiving from the Company (such purchased Shares, “Buy-In Shares”), the Company shall
be obligated to promptly pay to such Holder (in addition to all other available remedies that the Holder may otherwise have), 110%
of the amount by which (A) such Holder’s total purchase price (including brokerage commissions, if any) for such Buy-In Shares
exceeds (B) the net proceeds received by such Holder from the sale of the number of Conversion Shares such Holder was entitled
to receive but had not received on the Share Delivery Date. If the Company fails to pay the additional damages set forth in this
Section 3(c)(v)(A) within five (5) Business Days of the date incurred, then the Holder entitled to such payments shall have
the right at any time, so long as the Company continues to fail to make such payments, to require the Company, upon written notice,
to immediately issue, in lieu of such cash damages, the number of Shares equal to the quotient of (X) the aggregate amount of the
damages payments described herein divided by (Y) the Conversion Price specified by the Holder in the Conversion Notice. Amounts
payable pursuant to this Section 3(c)(v) shall be paid on or before the fifth (5th) Business Day of each month following
a month in which such payment accrued.

 

    11

     

    

 

(B) Void
Conversion Notice. If for any reason the Holder has not received all of the Conversion Shares prior to the tenth (10th) Business
Day after the Share Delivery Date with respect to a Conversion (a “Conversion Failure”), then the Holder, upon
written notice to the Company (a “Void Conversion Notice”), may void its Conversion with respect to, and retain
or have returned, as the case may be, any portion of Principal that has not been converted pursuant to the Holder’s Conversion
Notice; provided, that the voiding of the Holder’s Conversion Notice shall not affect the Company’s obligations
to make any payments that have accrued prior to the date of such notice pursuant to Section 3(c)(v)(A) or otherwise.

 

(vi) Book-Entry.
Notwithstanding anything to the contrary set forth herein, upon Conversion or repayment of this Note in accordance with the terms
hereof, the Holder shall not be required to physically surrender this Note to the Company.

 

(d) Taxes.
The Company shall pay any and all taxes (excluding income taxes, franchise taxes or other taxes levied on gross earnings, profits
or the like of the Holder) that may be payable with respect to the issuance and delivery of Conversion Shares upon the conversion
of this Note, unless the tax is due because the Holder requests any Conversion Shares to be issued in a name other than the Holder’s
name, in which case the Holder will pay that tax.

 

(e) Legends.

 

(i) Restrictive
Legend. The Holder understands that until such time as the Conversion Shares have been registered under the Securities Act
as contemplated by the Reg Rights Side Letter or otherwise may be sold pursuant to Rule 144 under the Securities Act or an exemption
from registration under the Securities Act without any restriction as to the number of securities as of a particular date that
can then be immediately sold, the Conversion Shares, as applicable, may bear a restrictive legend in substantially the following
form (and a stop-transfer order consistent therewith may be placed against transfer of the certificates for such securities):

 

THESE SECURITIES HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAW. THE SECURITIES
MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, OR PURSUANT
TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT, INCLUDING PURSUANT TO RULE 144 UNDER THE SECURITIES ACT OR PURSUANT
TO A PRIVATE SALE EFFECTED UNDER SECTION 4(a)(7) OF THE SECURITIES ACT OR APPLICABLE FORMAL OR INFORMAL SEC INTERPRETATION OR GUIDANCE,
SUCH AS A SO-CALLED “4[(a)](1) AND A HALF SALE.” NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION
WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.

 

    12

     

    

 

(ii) Removal
of Restrictive Legends. The certificates evidencing the Conversion Shares shall not contain or be subject to (and the Holder
shall be entitled to the removal of) any legend or stop transfer instructions restricting the transfer thereof (including the legend
set forth above in subsection 3(e)(i)): (A) while a registration statement covering the resale of such security by the Holder is
effective under the Securities Act, (B) following any sale of such Conversion Shares pursuant to Rule 144, (C) if such Conversion
Shares are eligible for sale under Rule 144(b)(1) without limitations, including with respect to those described in Rule 144(c)(1),
(D) if the Holder certifies at any time that the Holder is not an “affiliate” of the Company (as such term is used
under Rule 144 pursuant to the Securities Act), and the Holder’s holding period for purposes of Rule 144 and subsection (d)(3)(iii)
thereof with respect to the Conversion Shares is at least six (6) months (it being acknowledged and agreed by the Company that
the Holder’s holding period for the Conversion Shares shall be deemed to have commenced on the date hereof), or (E) if such
legend is not required under applicable requirements of the Securities Act (including judicial interpretations and pronouncements
issued by the staff of the SEC) (the “Unrestricted Conditions”). Promptly following such time as any of the
Unrestricted Conditions has been satisfied, the Company shall cause its counsel to issue a legal opinion or other instruction to
the Transfer Agent (if required by the Transfer Agent) to effect the issuance of the Conversion Shares without a restrictive legend
or, in the case of Conversion Shares that have previously been issued, the removal of the legend thereunder. If any of the Unrestricted
Conditions is met at the time of issuance of the Conversion Shares, then the Conversion Shares shall be issued free of all legends.
The Company agrees that following such time as any of the Unrestricted Conditions is met or such legend is otherwise no longer
required under this Section 3(e), it will, no later than two (2) Trading Days (or if earlier, the number of Trading Days
comprising the then standard settlement period for U.S. broker-dealer securities transactions) following the delivery (the “Unlegended
Shares Delivery Deadline”) by the Holder to the Company or the Transfer Agent of any certificate representing Conversion
Shares, as applicable, issued with a restrictive legend (such fourth Trading Day, the “Legend Removal Date”),
deliver or cause to be delivered to such Holder a certificate (or electronic transfer) representing such Shares that is free from
all restrictive and other legends. The Company shall assume (and the Holder shall be deemed to represent) that the Holder is not
an affiliate of the Company, unless the Holder has otherwise advised the Company in writing.

 

(iii) Sale
of Unlegended Shares. Holder agrees that the removal of the restrictive legend from any certificates representing securities
as set forth in Section 3(e)(i) above is predicated upon the Company’s reliance that the Holder will sell any Conversion
Shares pursuant to either the registration requirements of the Securities Act, including any applicable prospectus delivery requirements,
or an exemption therefrom, and that if such securities are sold pursuant to a Registration Statement, they will be sold in compliance
with the plan of distribution set forth therein.

 

    13

     

    

 

(f) Reservation
of Shares. The Company shall at all times reserve and keep available out of its authorized but unissued Shares solely for the
purpose of effecting Conversions of this Note, such number of Shares as shall from time to time be sufficient to effect the conversion
of the Note (without giving effect to the 9.985% Cap); and if at any time the number of authorized but unissued Shares shall not
be sufficient to effect the conversion of the entire Principal amount convertible under this Note, the Company will use its best
efforts to take such corporate action as may, in the opinion of counsel, be necessary to increase its authorized but unissued Shares
to such number of Shares as shall be sufficient for such purpose. The Company covenants and agrees that, upon any Conversion of
this Note, all Shares issuable upon such Conversion shall be duly and validly issued, fully paid and nonassessable and not subject
to preemptive rights, rights of first refusal or similar rights of any Person.

 

(g) Limitations
on Conversion.

 

(i) Beneficial
Ownership Limitation. Notwithstanding anything herein to the contrary, the Company shall not be required to issue to the Holder,
and the Holder may not acquire, a number of Shares upon Conversion or otherwise issue any Shares pursuant hereto to the extent
that, upon such Conversion, the number of Shares then beneficially owned by the Holder and any other Persons or entities whose
beneficial ownership of Common Stock would be aggregated with the Holder’s for purposes of Section 13(d) of the Exchange
Act (including Shares held by any “group” of which the Holder is a member, but excluding Shares beneficially owned
by virtue of the ownership of securities or rights to acquire securities that have limitations on the right to convert, exercise
or purchase similar to the limitation set forth herein) would exceed 9.985% of the total number of Shares then issued and outstanding
(the “9.985% Cap”); provided, however, that the 9.985% Cap shall only apply to the extent that the Common Stock
is deemed to constitute an “equity security” pursuant to Rule 13d-1(i) promulgated under the Exchange Act. For purposes
hereof (including the representation contemplated by the second paragraph of this Section 3(g)(i)), “group”
has the meaning set forth in Section 13(d) of the Exchange Act and applicable regulations of the SEC, and the percentage held by
the Holder shall be determined in a manner consistent with the provisions of Section 13(d) of the Exchange Act. For purposes hereof
(including the representation contemplated by the second paragraph of this Section 3(g)(i)), in determining the number of
outstanding Shares, the Holder may rely on the number of outstanding Shares as stated in the Company’s most recent quarterly
or annual report filed with the SEC, or any current report filed by the Corporation with the SEC subsequent thereto. Upon the written
request of the Holder, the Company shall, within two (2) Trading Days, confirm orally and in writing to the Holder the number of
Shares then outstanding, and the Holder shall be entitled to rely upon such confirmation for purposes hereof (including the representation
contemplated by the second paragraph of this Section 3(g)(i)).

 

    14

     

    

 

Delivery of a Conversion
Notice by the Holder shall constitute a representation by the Holder that the issuance of Common Stock in accordance with such
Conversion Notice will not cause the Holder (together with any other Person whose beneficial ownership of Common Stock would be
aggregated with such Holder’s for purposes of Section 13(d) of the Exchange Act and the applicable regulations of the SEC)
to beneficially own a number of Shares in excess of the 9.985% Cap, as determined in accordance with, and subject to the terms,
conditions, qualifications and assumptions set forth in, the immediately preceding paragraph.

 

(ii) Principal
Market Regulation. The Company shall not be required to issue any Shares upon a Conversion if the issuance of such Shares together
with any previous issuances of Shares pursuant to this Note by the Holder hereof would exceed [__________]1
Shares, subject to appropriate adjustment for any Stock Event that occurs after the date hereof (the “Exchange Cap”).
Upon any conversion of this Note, the Company shall issue the maximum amount of the number of Shares set forth in the applicable
Conversion Notice that may be issued without exceeding the Exchange Cap. For the avoidance of doubt, to the extent the conversion
of any Principal and Interest of this Note pursuant to any Conversion Notice in respect of a Conversion would have resulted in
an issuance of Shares in excess of the Exchange Cap, such Principal and Interest shall not be converted (the Company having no
obligation to net cash settle such conversion), and such Principal shall remain outstanding and shall be repaid in cash in accordance
with the terms of this Note. Alternatively, at the option of the Holder, the Conversion Price will be increased to [__________]
for the portion of the Conversion that would result in an issuance of Shares in excess of the Exchange Cap 2.

 

4. Voting Rights.
Except as required by law, the Holder shall have no voting rights with respect to any of the Conversion Shares until the Conversion
Date relating to the conversion of this Note upon which such Conversion Shares are issuable (or in the case of Conversion Shares
the issuance of which is subject to a bona fide dispute that is subject to and being resolved pursuant to, and in compliance
with the time periods and other provisions of, the dispute resolution provisions of Section 3(c)(iii), the first Business
Day after the resolution of such bona fide dispute).

 

5. Events of
Default. Subject to the provisions set forth in the Subordination Agreements, the Principal of this Note, together with all
Interest accrued and unpaid thereon, shall at the option of the Holder become immediately due and payable if any one or more of
the following events (an “Event of Default”) shall have occurred and be continuing: (i) the Company’s
failure to pay any amount due on this Note when due; or (ii) any Act of Bankruptcy shall occur with respect to the Company.

 

6. Acceleration;
Due on Sale. Subject to the provisions of the Subordination Agreements in the event of: (i) a Change of Control or (ii) an
Event of Default, Holder may, by written notice to the Company, declare all amounts owing under this Note to be due and payable
forthwith, whereupon the same shall immediately become due and payable.

 

 

 

		1	This will be 19.9% of the Company’s outstanding common
stock.

		2	This will be the closing price required by Nasdaq for this
portion to not be considered sold at a discount. To discuss if this will work for Nasdaq.

 

    15

     

    

 

7. Amendment;
Waiver. The terms and provisions of this Note shall not be amended or waived except in a writing signed by the Company and
the Holder.

 

8. Remedies,
Characterizations, Other Obligations, Breaches and Injunctive Relief. The remedies provided in this Note shall be cumulative
and in addition to all other remedies available under this Note, the Merger Agreement, at law or in equity (including a decree
of specific performance and/or other injunctive relief). No remedy contained herein shall be deemed a waiver of compliance with
the provisions giving rise to such remedy, and nothing herein shall limit the Holder’s right to pursue actual damages for
any failure by the Company to comply with the terms of this Note. The Company covenants to the Holder that there shall be no characterization
concerning this instrument other than as expressly provided herein. Amounts set forth or provided for herein with respect to payments,
conversion and the like (and the computation thereof) shall be the amounts to be received by the Holder thereof and shall not,
except as expressly provided herein, be subject to any other obligation of the Company (or the performance thereof). The Company
acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Holder and that the remedy at
law for any such breach may be inadequate. The Company therefore agrees that, in the event of any such breach or threatened breach,
the Holder shall be entitled, in addition to all other available remedies (at law or in equity), to an injunction restraining any
breach, without the necessity of showing economic loss and without any bond or other security being required.

 

9. Specific
Shall Not Limit General; Construction. No specific provision contained in this Note shall limit or modify any more general
provision contained herein. This Note shall be deemed to be jointly drafted by the Company and Holder and shall not be construed
against any Person as the drafter hereof.

 

10. Failure
or Indulgence Not Waiver. No failure or delay on the part of the Holder in the exercise of any power, right or privilege hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other
or further exercise thereof or of any other right, power or privilege.

 

11. Notices.
All notices, requests, consents, claims, demands, waivers and other communications hereunder shall be provided in accordance with
the notice provisions in the Merger Agreement.

 

12. Restrictions
on Transfer.

 

(a) Registration
or Exemption Required. This Note has been issued in a transaction exempt from the registration requirements of the Securities
Act. None of the Note or the Conversion Shares may be transferred, sold, assigned, hypothecated or otherwise disposed of except
pursuant to an effective registration statement or an exemption to the registration requirements of the Securities Act and applicable
state securities laws including, without limitation, pursuant to Section 4(a)(7) of the Securities Act, Rule 144 under the Securities
Act or a so-called “4[(a)](1) and a half” transaction.

 

(b) Assignment.
The Holder may not sell, transfer, assign, pledge, hypothecate or otherwise dispose of this Note, in whole or in part without the
express prior written consent of the Company and any such purported sale, transfer, assignment, pledge, hypothecation or other
disposition shall be void ab initio; provided, however, following the termination of the Merger Agreement, the Company shall
not unreasonably withhold, condition or delay such consent. No assignment of this Note shall be effective unless effected by the
Company (including by making appropriate notation of such transfer on the Register). This Note and the rights evidenced hereby
shall inure to the benefit of and be binding upon the successors and expressly permitted assigns of the Holder.

 

    16

     

    

 

(c) Registered
Note. This Note may be transferred only upon notation of such transfer on the Register, which the Company shall promptly endeavor
to do upon any transfer otherwise permitted hereunder, and no assignment thereof shall be effective until recorded therein.

 

13. Payment
of Collection, Enforcement and Other Costs. If (a) this Note is placed in the hands of an attorney for collection or enforcement
or is collected or enforced through any legal proceeding; or (b) an attorney is retained to represent the Holder in any bankruptcy,
reorganization, receivership of the Company or other proceedings affecting Company creditors’ rights and involving a claim
under this Note, then the Company shall pay the costs incurred by the Holder for such collection, enforcement or action, including
reasonable attorneys’ fees and disbursements.

 

14. Cancellation.
After all Principal, Interest and other amounts at any time owed under, or on account of, this Note have been paid in full or converted
into Shares in accordance with the terms hereof, this Note shall automatically be deemed cancelled, shall be surrendered to the
Company for cancellation and shall not be reissued. Notwithstanding anything in this Note to the contrary, this Note shall automatically,
and without any action on the part of either the Company or the Holder, be deemed to be paid in full and cancelled effective as
of the Effective Time (as defined in the Merger Agreement).

 

15. Waiver
of Notice. To the extent permitted by law, the Company hereby waives demand, notice, presentment, protest and all other demands
and notices in connection with the delivery, acceptance, performance, default or enforcement of this Note and the Merger Agreement.

 

16. Governing
Law. This Note shall be governed by and construed and enforced in accordance with the laws of the State of Delaware applicable
to contracts made and to be performed in such State. All legal proceedings concerning the interpretation and enforcement of this
Note shall be brought and determined in the Court of Chancery of the State of Delaware; provided, that if jurisdiction is
not then available in the Court of Chancery of the State of Delaware, then any such proceeding may be brought in any federal court
located in the State of Delaware or any other Delaware state court. The Company hereby and each Holder (by its acceptance of this
Note) irrevocably submits to the exclusive jurisdiction of such courts for the adjudication of any dispute hereunder or in connection
herewith or with any transaction contemplated hereby, and hereby irrevocably waives, and agrees not to assert in any suit, action
or other proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action
or other proceeding is improper or is an inconvenient venue for such proceeding. The Company hereby and each Holder (by its acceptance
of this Note) irrevocably waives personal service of process and consents to process being served in any such suit, action or other
proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such
Person at the address in effect for notices to it under the Merger Agreement and agrees that such service shall constitute good
and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to
serve process in any other manner permitted by law. EACH OF THE COMPANY AND THE HOLDER (BY ACCEPTANCE HEREOF) IRREVOCABLY WAIVES
THE RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING BROUGHT TO ENFORCE ANY PROVISION OF THIS NOTE OR ANY OTHER TRANSACTION
DOCUMENT. THIS WAIVER APPLIES TO ANY ACTION, SUIT OR PROCEEDING WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE. EACH OF THE COMPANY
AND THE HOLDER (BY ITS ACCEPTANCE HEREOF (A) CERTIFIES THAT NO OTHER PARTY AND NO AGENT, REPRESENTATIVE OR OTHER PERSON AFFILIATED
WITH OR RELATED TO ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION,
SEEK TO ENFORCE THE FOREGOING WAIVER, AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO
THIS AGREEMENT BY THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 16.

 

    17

     

    

 

17. Interpretative
Matters. Unless the context otherwise requires, (a) all references to Sections or Exhibits are to Sections or Exhibits contained
in or attached to this Note, (b) each accounting term not otherwise defined in this Note has the meaning assigned to it in accordance
with generally accepted accounting principles, (c) words in the singular or plural include the singular and plural and pronouns
stated in either the masculine, the feminine or neuter gender shall include the masculine, feminine and neuter and (d) the use
of the word “including” in this Note shall be by way of example rather than limitation. If a stock split, stock dividend,
stock combination or other similar event occurs during any period over which an average price is being determined, then an appropriate
adjustment will be made to such average to reflect such event.

 

18. Execution.
A facsimile, telecopy, PDF or other reproduction of this Note may be delivered by the Company, and an executed copy of this Note
may be delivered by the Company by facsimile, e-mail or other similar electronic transmission device pursuant to which the signature
of or on behalf of the Company can be seen, and such execution and delivery shall be considered valid, binding and effective for
all purposes. The Company hereby agrees that it shall not raise the execution of facsimile, PDF or other reproduction of this Note,
or the fact that any signature was transmitted by facsimile, e-mail or other similar electronic transmission device, as a defense
to the Company’s execution of this Note. Notwithstanding the foregoing, the Company shall be required to deliver an originally
executed Note to the Holder.

 

[Signature page follows]

 

    18

     

    

 

IN WITNESS WHEREOF,
the Company has caused this Note to be duly executed as of the date first set forth above.

 

	
        

         
	COMPANY:
	 	 
	 	NEOS THERAPEUTICS, INC.
	 	 	 
	 	By:	                   
	 	Name:	 
	 	Title:	 

 

     

     

    

 

	Accepted and agreed:	 
	 	 	 
	Holder:	 
	 	 	 
	Aytu Bioscience, Inc.	 
	 	 
	By:	           	 
	Name:	 	 
	Title:	 	 

 

    19

     

    

 

Exhibit A

 

CONVERSION NOTICE

 

Notice Date: ________

 

Reference is made to
the Unsecured Subordinated Convertible Promissory Note, dated December [__], 2020 (the “Note”) of NEOS THERAPEUTICS,
INC., a Delaware corporation (the “Company”), in the original principal amount of up to $5,000,000.00; capitalized
terms used herein and not defined herein have the meanings ascribed thereto in the Note. In accordance with and pursuant to the
Note, the undersigned hereby elects to convert the Conversion Amount indicated below, which is 100% of the Principal as of the
Notice Date set forth above, into shares of common stock, par value $0.001 per share (the “Common Stock”), of
the Company, as of the date specified below.

 

Date of Conversion:                 

 

Amount of Principal
to be converted:                                                        

 

Please confirm the following information:

 

Conversion Price:                                                     

 

Number of shares of
Common Stock to be issued:                                              

 

Please issue the Common Stock into which
the Note is being converted in the following name and, if physical certificates are applicable, to the following address:

 

Issue to:                                                                                                                                                                           

 

DTC Participant Number and
Name:                                                                                                                            

 

Account Number:                                                                                                                                                             

 

     

     

    

 

Exhibit B

 

Reg Rights Side Letter

 

[see attached]Exhibit
10.2

 

Execution
Version

 

CONFIDENTIAL

 

Deerfield
Management Company, L.P.

780
Third Avenue, 37th Floor

New
York, New York 10017

 

December
10, 2020

 

Neos
Therapeutics, Inc.

2940
N. Hwy 360, Suite 400

Grand
Prairie, TX 75050

Attention:
Richard Eisenstadt

 

Aytu
Bioscience, Inc.

373
Inverness Parkway, Suite 206

Englewood,
CO 80112

Attention:
Josh Disbrow

 

		Re:	Letter
                                         Agreement re: Consent and Modifications to Loan Documents

 

Ladies
and Gentlemen:

 

Reference
is made to that certain Facility Agreement, dated as of May 11, 2016 (amended by the First Amendment to Facility Agreement, dated
as of June 1, 2017, the Second Amendment to Facility Agreement, dated as of November 5, 2018, the Third Amendment to Facility
Agreement, dated as of March 29, 2019, the Fourth Amendment to Facility Agreement, dated as of October 2, 2019, and the Fifth
Amendment to Facility Agreement, dated as of May 6, 2020, as the same may be further amended, restated, supplemented or otherwise
modified from time to time hereafter, the “Facility Agreement”; capitalized terms used herein without definition
have the respective meanings ascribed to them in the Facility Agreement) between Neos Therapeutics, Inc., a Delaware corporation
(the “Borrower”), and the lenders from time to time party thereto (the “Lenders”, “we”
or “us”). The Borrower has advised us that, pursuant to that certain Agreement and Plan of Merger, among the
Borrower, Aytu Bioscience, Inc., a Delaware corporation (“Aytu”; and together with its Subsidiaries (prior
to giving effect to the Merger), the “Aytu Group”), and Neutron Acquisition Sub., Inc.. a Delaware corporation,
dated as of the date hereof (together with all exhibits, schedules and disclose letters thereto, the “Merger Agreement”),
Aytu intends to acquire the Borrower (the “Merger” and, together with the other transactions contemplated by
the Merger Agreement, the “Transactions”) and, in connection therewith, (a) the Borrower has requested that
the Lenders consent to the issuance of the Convertible Note (as defined below) on the date hereof, (b) the Borrower and Aytu have
requested that, on the Closing Date (as defined below), the Lenders (i) consent to the consummation of the Merger, (ii) waive
the Event of Default due to the Change of Control that would arise without such consent, and (iii) agree to certain other amendments
to, and waivers of, provisions of the Facility Agreement and the other Loan Documents, in each case as set forth in the term sheet
attached hereto as Annex A (the “Term Sheet”), (c) the Borrower has requested that, on the Closing Date,
the Lenders irrevocably waive (i) (A) the Going Concern Condition (as defined in that certain letter agreement by and among the
Borrower and the Lenders dated as of November 6, 2020) for each of the fiscal quarters ended June 30, 2020 and September 30, 2020
and each other fiscal quarter ending thereafter and prior to the Closing Date and (B) any Event of Default that would arise without
such waiver due to the failure to satisfy the Going Concern Condition (as defined in that certain letter agreement by and among
the Borrower and the Lenders dated as of November 6, 2020) for each of the fiscal quarters ended June 30, 2020 and September 30,
2020 and each other fiscal quarter ending thereafter and prior to the Closing Date as required pursuant to Section 5.1(v) of the
Facility Agreement and (ii) the right to impose the default rate of interest under Section 2.8 of the Facility Agreement, or to
collect interest accruing at such default rate of interest, that Lenders had a lawful right to collect or apply with respect to
any such Event of Default for failure to satisfy such Going Concern Condition, and (d) the Borrower has requested that, on the
Closing Date, the Lenders consent to certain amendments to, and waivers of, provisions of the ABL Agreement or other ABL Documents
(such amendments, collectively, the “ABL Modification”) on the terms of the commitment letter attached hereto
as Annex B (the “ABL Commitment Letter”). The consent, waiver and other amendments and modifications
described in the foregoing clauses (b) through (d) are sometimes hereinafter referred to collectively as the “Closing
Date Modifications”. This letter agreement, including the Term Sheet and the Conditions Annex attached hereto and thereto
are herein referred to collectively as the “Letter Agreement.” The date on which the Merger is consummated
is referred to as the “Closing Date,” which shall be the date on which all conditions under this Letter Agreement
are satisfied (or waived in writing by the Lenders).

 

     

     

    

 

1.
Consent. The Borrower has advised us that, on the date hereof, the Borrower intends to issue to Aytu that certain Unsecured
Convertible Promissory Note in the form attached hereto as Annex B (the “Convertible Note”), the proceeds
of which, if any, will be used by the Borrower to pay certain of its general corporate expenses during the period from the date
hereof until the Closing Date. In connection therewith, the Borrower has requested that the Lenders consent to the issuance of
the Convertible Note and the incurrence of the Indebtedness contemplated thereby. Provided that the Borrower and Aytu shall
have executed and delivered to the Lenders a subordination agreement, in the form attached hereto as Annex C (the “Convertible
Note Subordination Agreement”), and notwithstanding anything to the contrary set forth in the Facility Agreement or
any other Loan Document, the Lenders hereby consent to the Borrower’s issuance of the Convertible Note and incurrence of
the Indebtedness thereunder.

 

2.
Closing Date Modifications. Upon the terms of this Letter Agreement, and subject only to the conditions set forth in Section
3 below and in the Conditions Annex, the Lenders agree that they shall be obligated to consummate the Closing Date Modifications
on the Closing Date.

 

3.
Conditions to Closing Date Modifications. The effectiveness of the Lenders’ obligation to consummate the Closing
Date Modifications shall be subject solely to the satisfaction of the conditions precedent set forth in (a) this Section 3
and (B) the Conditions Annex. Subject to the satisfaction of the conditions set forth in this Section 3 and the Conditions
Annex, the only representations relating to the Merger, Aytu and its Subsidiaries and the Borrower and its subsidiaries and their
respective businesses the accuracy of which shall be a condition to the Lenders consummation of the Closing Date Modifications
shall be (i) such of the representations made by Aytu and its Affiliates with respect to Aytu and its Affiliates or the related
business, financials or entities in the Merger Agreement as are material to the interests of the Lenders, but only to the extent
that the Borrower or its Affiliates have the right (taking into account any applicable cure provisions) to terminate its or their
obligations under the Merger Agreement or otherwise decline or refuse to close or consummate the Merger as a result of a breach
(or failure to be accurate, true or correct) of any such representations in the Merger Agreement (the representations in this
clause (i), the “Specified Merger Agreement Representations”) and (ii) the Specified Representations
(as defined below). For purposes hereof, “Specified Representations” means the representations and warranties
set forth in Sections 3.1(c), 3.1(g), 3.1(i), 3.1(q) (solely as it relates to the execution, delivery and performance of the Amendment
Documentation (as defined in the Conditions Annex)), 3.1(aa), 3.1(hh), 3.1(pp), and 3.1(qq) of the Facility Agreement, in each
case after giving effect to the Merger and in each case with respect to both the Borrower and its Subsidiaries and Aytu and its
other Subsidiaries. The provisions of this Section 3 are collectively referred to as the “Closing Certainty Provision”.

 

    - 2 -

     

    

 

4.
No MNPI. At or prior to 9:30 a.m. (New York City time) on the first (1st) business day following the date of
this Letter Agreement, each of the Borrower and Aytu shall file a current report on Form 8-K (the “Announcing Form 8-Ks”)
with the Securities and Exchange Commission (the “SEC”) describing the terms of the transactions contemplated
by this Letter Agreement and by the Merger Agreement (including, without limitation, the Transactions) and disclosing any other
material non-public information (in the context of United States of America federal securities laws) provided or made available
to the Lenders, the Agent, the Lender, any of their affiliates or any of their officers, directors, employees, attorneys, advisors,
representatives or agents (all such persons and entities, collectively, the “Applicable Persons”) by either
the Borrower or Aytu or any of the Borrower’s or Aytu’s Subsidiaries or Affiliates or any of their or their respective
Subsidiaries’ or Affiliates’ officers, directors, employees, attorneys, representatives or agents prior to the filing
of the Announcing Form 8-Ks. Each of the Announcing Form 8-Ks shall include as exhibits thereto this Letter Agreement (including
the annexes hereto) and the Merger Agreement (in each case, without redaction). Each of the Borrower and Aytu represents and warrants
to the Lenders, the Agent, the Lenders and each other Applicable Person that, from and after the filing of its applicable Announcing
Form 8-K, no Applicable Person shall be (or shall be deemed to be) in possession of any material non-public information regarding
either the Borrower or Aytu, any of the Borrower’s or Aytu’s Subsidiaries or Affiliates received from, or made available
by, the Borrower or Aytu or any of the Borrower’s or Aytu’s respective Subsidiaries or Affiliates or any of their
or their respective Subsidiaries’ or Affiliates’ officers, directors, employees, attorneys, advisors, representatives
or agents. Notwithstanding any affirmative disclosure obligations of the Borrower pursuant to the terms of this Letter Agreement,
each of the Borrower and Aytu shall not, and shall cause each of their respective Subsidiaries and Affiliates and each of their
and their respective Subsidiaries’ and Affiliates’ officers, directors, employees, attorneys, advisors, representatives
and agents to not, provide any of the Applicable Person with any material non-public information regarding either the Borrower
or Aytu, any of the Borrower’s or Aytu’s respective Subsidiaries or Affiliates or the Transactions from and after
the filing of the Announcing Form 8-Ks with the SEC without the express prior written consent of the Lenders, it being acknowledged
and agreed that any such consent given prior to the date hereof shall be ineffective from and after the date of the Announcing
Form 8-Ks. Each of the Borrower and Aytu hereby acknowledges and agrees that no Applicable Person shall have any duty of trust
or confidence with respect to any material non-public information provided to any Applicable Person in breach of, or otherwise
possessed by any Applicable Person as a result of a breach of, any of the foregoing covenants. Notwithstanding anything to the
contrary contained herein, in the event of a breach of any of the foregoing covenants, in addition to any other remedies available
at law or in equity, the Lenders and their Affiliates shall have the right to make a public disclosure, in the form of a press
release, public advertisement or otherwise, of the applicable material non-public information without the prior approval by the
Borrower, Aytu or any other Person. For the avoidance of doubt, the parties hereto acknowledge and agree that nothing contained
in this Section 4 shall limit the obligations of the Borrower under, or the rights of the Lenders under, Section 5.1(xiii)
of the Facility Agreement.

 

5.
Acceptance/Expiration of Letter Agreement.

 

(a)
This Letter Agreement and the agreements of the Lenders set forth herein shall automatically terminate at 11:59 p.m. (New York
Time) on December 10, 2020 (the “Acceptance Deadline”), without further action or notice unless signed counterparts
of this Letter Agreement (and all components thereof) shall have been fully delivered by email to each Lenders by such time.

 

    - 3 -

     

    

 

(b)
If this Letter Agreement is accepted by the Borrower and Aytu as provided above, the agreements of the Lenders set forth herein,
other than the consent set forth in Section 1 hereof, will automatically terminate without further action or notice upon
the earliest to occur of (i) the consummation of the Merger after giving effect to the Amendment Documentation (as defined in
the Conditions Annex), (ii) the date of the definitive termination of the Merger Agreement in accordance with Section 8.1 thereof,
and (iii) September 10, 2021.

 

(c)
Each of the parties hereto agrees that this Letter Agreement, if accepted by the Borrower and Aytu prior to the Acceptance Deadline
as provided above, is a binding and enforceable agreement (subject to the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization and other similar laws relating to or affecting creditors’ rights generally and general principles of equity
(whether considered in a proceeding in equity or law)) with respect to the subject matter contained herein (including an agreement
to negotiate in good faith the Amendment Documentation by the parties in a manner consistent with this Letter Agreement). Nothing
in this Letter Agreement shall be deemed to require Aytu to consummate the Merger.

 

6.
Miscellaneous. Each of Section 6.3, 6.4, 6.6, 6.7, 6.8 and 6.11 of the Facility Agreement is hereby incorporated herein
by reference, mutatis mutandis (to be interpreted, except with respect to Section 6.11 of the Facility Agreement (which
shall only cover the Borrower and its Subsidiaries), to include coverage of Aytu and its Subsidiaries as if they were Loan Parties),
as if fully set forth herein.

 

[Signature
Pages Follow]

 

    - 4 -

     

    

 

Please
indicate acceptance of the terms hereof by signing a counterpart of this Letter Agreement and returning it to the Lenders, together
with the Term Sheet and the Conditions Annex attached to it, by no later than the Acceptance Deadline.

 

	 	Sincerely,
	 	 
	 	LENDERS:
	 	 
	 	DEERFIELD
    PRIVATE DESIGN FUND III, L.P.

 

	 	By:	Deerfield
    Mgmt III, L.P., its General Partner
	 	By:	J.E.
    Flynn Capital III, LLC, its General Partner

 

	 	By:	/s/
    David J. Clark
	 	Name:  	David
    J. Clark
	 	Title:	Authorized
    Signatory

 

	 	DEERFIELD
    PARTNERS, L.P.
	 	 	 
	 	By:	Deerfield
    Mgmt, L.P., its General Partner
	 	By:	J.E.
    Flynn Capital, LLC, its General Partner
	 	 	 
	 	By:	/s/
    David J. Clark
	 	Name:  	David
    J. Clark
	 	Title:	Authorized
    Signatory

 

    - 5 -

     

    

 

	Agreed
    to and accepted as of the date first 
	above
    written:	 
	 	 
	BORROWER:	 
	 	 
	NEOS
    THERAPEUTICS, INC.	 
	 	 	 
	By:	/s/
                                         Richard Eisenstadt
	 
	Name: 	Richard
                                         Eisenstadt
	 
	Title:	Chief
                                         Financial Officer
	 

 

	ACKNOWLEDGED
    and accepted as of the date first 
	 
	above
    written:	 
	 	 
	guarantors:	 
	 	 
	neos
    therapeutics commercial, llc	 
	 	 
	By:	/s/
                                         Richard Eisenstadt
	 
	Name: 	Richard
    Eisenstadt	 
	Title:	Chief
    Financial Officer	 

 

	neos
    therapeutics BRANDS, llc	 
	 	 
	By:	/s/
                                         Richard Eisenstadt
	 
	Name: 	Richard
    Eisenstadt	 
	Title:	Chief
    Financial Officer	 

 

	neos
    therapeutics, l.p.	 
	 	 
	By:	/s/ Richard Eisenstadt
	 
	Name: 	Richard Eisenstadt	 
	Title:	Chief Financial Officer
	 

 

	PHARMAFAB
    TEXAS, llc	 
	 	 
	By:	/s/ Richard Eisenstadt
	 
	Name: 	Richard Eisenstadt
	 
	Title:	Chief Financial Officer
	 

 

	AYTU
    BIOSCIENCE, INC.	 
	 	 
	By:	/s/ Josh Disbrow
	 
	Name: 	Josh Disbrow
	 
	Title:	Chief Executive Officer
	 

 

    - 6 -

     

    

 

Annex
A

 

Summary
of CLOSING DATE MODIFICATIONS TO 

FACILITY
AGREEMENT AND OTHER DOCUMENTS

 

Capitalized
Terms used herein without definition shall have the meanings assigned to them in the letter agreement (such letter agreement,
together with the below-defined Term Sheet and the Conditions Annex attached hereto and thereto, the “Letter Agreement”)
to which this Summary of Terms and Conditions (this “Term Sheet”) is attached, or if not defined therein, in
Facility Agreement.

 

Closing
Date Modification Terms

 

Except
as otherwise described in this Term Sheet or otherwise in the Letter Agreement, the terms and conditions of the Facility Agreement
and the other Loan Documents will be substantially the same as those in effect on the date hereof.

 

	Closing
Date Prepayment and Related Waivers:
	●     Borrower
                                         will prepay $15,000,000 of the principal of the Loan on the Closing Date in lieu of payment
                                         contemplated by Section 2.3(a)(v) of the Facility Agreement (the “Prepayment”).

                                                                                                                                                                                                             

        ●     Payment
        of the 6.25% prepayment fee contemplated by clause (ii) of the definition of “Prepayment Fees and Make Whole Interest”
        in Section 2.3(b) of the Facility Agreement will be waived with respect to the Prepayment (but not with respect to any
        other or subsequent payment, prepayment or repayment of any principal of the Loans; provided that the “make
        whole” interest payment contemplated by clause (iii) of such definition will be required to be paid assuming the
        Prepayment is made as of May 11, 2021 (i.e., make whole interest shall be payable in respect of the period from Closing
        Date through May 11, 2021 as if the make whole period did not end until such date).

         

        ●     For
        purposes of clarity, except as expressly set forth above, each and every one of the payment obligations of the Loan Parties
        under the Loan Documents (including, without limitation, the payments contemplated by Section 2.3(a)(iv) of the Facility
        Agreement and the Exit Payments) shall remain in full force and effect after the consummation of the Closing Date Modifications.

         

	Consents,
    Waivers and Certain Amendments:	Subject
                                         to the terms and conditions of this Letter Agreement, on the Closing Date, (a)Lenders
                                         will consent to the consummation of the Merger and will waive any Event of Default resulting
                                         from the Change of Control that would otherwise result without such consent (including
                                         the right to impose any default rate of interest in connection therewith), (b) Lenders
                                         will irrevocably waive any Event of Default pursuant to Section 5.1(v) of the Facility
                                         Agreement for the failure to satisfy the Going Concern Condition (as defined in that
                                         certain letter agreement by and among the Borrower and the Lenders dated as of November
                                         6, 2020) for each of the fiscal quarters ended June 30, 2020 and September 30, 2020 and
                                         each other fiscal quarter ending thereafter and prior to the Closing Date (including
                                         the right to impose any default rate of interest in connection therewith) and (c) Lenders
                                         will agree to such waivers and modifications to the Loan Documents as are reasonably
                                         necessary (as determined by the Lenders and the Borrower) to reflect the consummation
                                         of the Merger and the status of the Borrower as a wholly-owned subsidiary of Aytu, including
                                         without limitation:

         

        ●     Section
        5.1(xiv) (reporting; waiving the prohibition of any action that would cause termination of registration of Borrower’s
        Common Stock under the Exchange Act)

         

        ●     Section
        5.2(i) (fundamental changes to permit the Merger)

         

        ●     Section
        5.2(xiii) (modifications to governing documents in connection with the Merger)

         

 

    A - 1 

     

    

 

	New
    Guarantors:	Each
                                         member of the Aytu Group, other than Excluded Foreign Subsidiaries (as defined below)
                                         (the “New Guarantors”), shall, on the Closing Date, execute and deliver
                                         a Joinder to Guaranty and Security Agreement in the form attached as Annex I to the Guaranty
                                         and Security Agreement (collectively, the “Joinders”) and thereby
                                         become a Grantor thereunder and a Guarantor under the Loan Documents.

                                                                                                                                                                                                             

        “Excluded
        Foreign Subsidiary” means, for any taxable year of such foreign subsidiary to which Section 956(a) of the Code
        (as defined below) applies with respect to the domestic Loan Party of which such foreign subsidiary is a subsidiary, any
        foreign subsidiary which is a controlled foreign corporation (as defined in the Internal Revenue Code of 1986, as amended
        (the “Code”), and any Treasury Regulations promulgated thereunder) that has not guaranteed or pledged
        any of its assets to secure, or with respect to which there shall not have been pledged two-thirds or more of the voting
        equity interests to secure, any indebtedness (other than the Obligations) of a Loan Party.

         

	Collateral
    of New Guarantors:	

                                                                                                                                                                   ●     The
                                         Liens granted to the Collateral Agent by the New Guarantors shall be first-priority perfected
                                         Liens subject only to (i) Permitted Liens, (ii) Liens securing purchase money obligations
                                         owed by Aytu and its Subsidiaries not to exceed $250,000 in the aggregate at any time
                                         outstanding and (iii) any Liens in support of any royalty obligations owed by Aytu to
                                         any Lender or any Affiliate of a Lender.

                                                                                                                                                                    

        ●     The New Guarantors will not grant any Liens on their assets to secure any obligations under the ABL Documents,
        and the ABL Agent shall execute and deliver a consent, which consent shall be in form and substance reasonably acceptable
        to the Lenders (the “ABL Agent Consent”), pursuant to which the ABL Agent shall consent to the arrangements
        contemplated by this Letter Agreement.

         

	Elimination
    of Conversion Feature:	The
    right of the Lenders to convert Loans into Conversion Shares, and the right of the Borrower to make payments in Freely
    Tradeable Shares, shall be eliminated in its entirety. In addition, the Notes shall be replaced with promissory notes that do
    not contain conversion features, and all provisions in the Facility Documents relating to Conversion Shares, Freely Tradeable
    Shares, and related terms and all provisions including references to (or references to defined terms contained in) the Notes
    shall be eliminated (including the payment deferral described in the proviso to Section 2.3(a)(iv) of the Facility Agreement)
    and/or amended, as applicable, to reflect the termination of the conversion features.

 

    A - 2 

     

    

 

	Amendments
    to Affirmative Covenants:	The
                                         Facility Agreement will be amended to provide that the following (but only the following)
                                         affirmative covenants will apply to Aytu and its Subsidiaries (other than the Borrower
                                         and its Subsidiaries, as to whom all affirmative covenants contained in Section 5.1 of
                                         the Facility Agreement, as modified by the Closing Date Modifications, will continue
                                         to apply):

                                                                                                                                                                                                             

        ●      Section 5.1(i) (Maintain Existence and Qualification)

         

        ●      Section 5.1(ii) (Compliance with Laws)

         

        ●      Section 5.1(iii) (Authorizations)

         

        ●     Section 5.1(iv) (Notices of Default, Proceedings, Material Adverse Effect Occurrences, Etc.; Additional Information Requests)

         

        ●     Section
        5.1(v) (Financial Statements, SEC Reports, Etc.) (excluding any requirement to deliver a Compliance Certificate reflecting
        Aytu and its Subsidiaries (other the Borrower and its Subsidiaries) are in compliance with Section 5.3 of the Facility
        Agreement but provided that the SEC reports shall disclose compliance by the Borrower and its Subsidiaries with the financial
        covenants and any material non-public information contained in the related Compliance Certificate)

         

        ●      Section 5.1(vi) (Expense Reimbursement)

         

        ●      Section 5.1(xiii) (Disclosure; No MNPI)

         

        ●      Section 5.1(xv) (Further Assurances)

         

        ●      Section 5.1(xvi) (Insurance)

         

        ●      Section 5.1(xviii) (Name Changes)

         

        ●      Section 5.1(xix) (Intellectual Property)

         

        ●      Section 5.1(xx) (Deposit Accounts and Other Accounts)

         

	Amendments
    to Negative Covenants:	The
                                         Facility Agreement will be amended to provide that the following (but only the following)
                                         negative covenants will apply to Aytu and its Subsidiaries (other than the Borrower and
                                         its Subsidiaries, as to whom all affirmative covenants contained in Section 5.1 of the
                                         Facility Agreement, as modified by the Closing Date Modifications, will continue to apply);
                                         provided that the additional exceptions, qualifications and baskets described
                                         below shall be included and shall be applicable to Aytu and its Subsidiaries (other than
                                         the Borrower and its Subsidiaries):

 

    A - 3 

     

    

 

		

                                                                                                                                                                                

        ●     Section 5.2(i)(a) and (c) (Fundamental Changes)

         

        ●     Section 5.2(iii) (Liens; Disposition of Loan Documents Rights and Obligations); provided that the following will
        be added to the definition of “Permitted Liens” for Aytu and its Subsidiaries (other than the Borrower and
        its Subsidiaries):

         

        o     Liens securing purchase money obligations owed by Aytu and its Subsidiaries (other than the Borrower and its Subsidiaries)
        not to exceed $250,000 in the aggregate at any time outstanding; and 

         

        o     Liens securing any royalty obligations owed by Aytu to any Lender or any Affiliate of a Lender

         

        ●     Section 5.2(iv) (Indebtedness); provided that the definition of “Permitted Indebtedness” will be amended
        to provide that Aytu and its Subsidiaries (other than the Borrower and its Subsidiaries) shall be permitted, (i) from
        and after the 91st day after the Closing Date, to incur unsecured Indebtedness in an aggregate amount outstanding
        not to exceed an amount to be agreed that is subordinated in right of payment to the Obligations pursuant to a subordination
        agreement substantially similar in form and substance to the Convertible Note Subordination Agreement or otherwise in
        form and substance reasonably acceptable to the Lenders, (ii) to incur purchase money obligations in an aggregate amount
        not to exceed $250,000 outstanding at any time and (iii) to incur unsecured indebtedness in an aggregate amount outstanding
        at any time not to exceed $1,000,000.

         

        ●     Section 5.2(vi) (Asset Sales and Other Dispositions); provided that Aytu and its Subsidiaries (other than the Borrower
        and its Subsidiaries) shall be permitted to effect a divestiture of the Mioxsys product line and related IP. For purposes
        of clarity, the foregoing shall not limit assets sales and dispositions between the Loan Parties (including the New Guarantors).

         

        ●      Section 5.2(x) (Nature of Business)

         

        ●      Section 5.2(xi)(b) (Payments on Certain Indebtedness)

         

        ●     Section 5.2(xii) (Transactions with Affiliates) (except to the extent otherwise expressly permitted by the Facility Agreement)

         

        ●     Section
5.2(xiii) (Modification to Governing Documents); provided that Aytu and its Subsidiaries (other than the Borrower and its
Subsidiaries) shall not be subject to the obligation to notify the Lenders of any changes to such Person’s Organizational
Documents that are not materially adverse to the interests of the Secured Parties

         

 

    A - 4 

     

    

 

	 	●     Section
                                         5.2(xiv) (Burdensome Restrictions)

                                                                                                                                                                    

                                                                                ●     Section
                                         5.2(xv) (Deposit Accounts; Cash and Other Asset Deposits)

                                                                                 

	Amendments
    to Events of Default:	The
                                         Events of Default will be amended to apply generally to events affecting Aytu and its
                                         Subsidiaries (and will continue to apply the Borrower and its Subsidiaries); provided
                                         that:

                                                                                                                                                                                

        ●     the definition of “Change of Control” will be amended to reflect the ownership structure of Aytu and its Subsidiaries
        after giving effect to the Merger.

         

	Other
    Modifications:	The Facility Agreement and the other Loan Documents will also be amended to the extent necessary to give effect to the other provisions of this Term Sheet, including, without limitation, to reflect that (a) Aytu nor any of its Subsidiaries will be Subsidiaries of the Borrower (b) the Collateral of Aytu will not also be pledged to secure the obligations under the ABL Documents and (c) to give effect to any further reasonably necessary modifications related to the Merger.

                                                                                 

	Intercreditor:	The Lenders will work in good faith with the ABL Agent to amend or otherwise modify the Intercreditor Agreement to the extent necessary to give effect to (a) the provisions of this Term Sheet, (b) the Closing Date Modifications (including to ABL Commitment Letter on the terms described in Annex B) and/or (c) the Merger.

                                                                                 

	Miscellaneous:	The
    Amendment Documentation (as defined in the Conditions Annex) will contain customary provisions for amendments of the type
    contemplated by this Letter Agreement, including, without limitation, customary non-novation language and reaffirmation of
    the Obligations and the Liens granted by the Loan Parties.

 

    A - 5 

     

    

 

CONDITIONS
ANNEX

 

The
effectiveness of the Lenders’ obligation to enter into the Amendment Documentation (defined below) shall be subject solely
to the satisfaction (or waiver in writing by the Lenders in their sole discretion) of the following conditions and the conditions
in Section 3 of the Letter Agreement. Capitalized terms used but not otherwise defined herein have the meanings assigned
to such terms in the Letter Agreement (or, if not defined therein, in the Term Sheet) to which this Conditions Annex is
attached.

 

1.
The definitive agreement evidencing the Closing Date Modifications, the Joinders, the ABL Agent Consent and the other documents
and certificates executed or delivered in connection therewith (collectively, the “Amendment Documentation”),
which (a) shall be consistent, in all material respects, in each case, with the Letter Agreement and the Term Sheet, (c) shall
otherwise be satisfactory to the Agent, the Lenders, Aytu and the Borrower and (c) shall have been executed and delivered by the
Borrower and each other Loan Party party thereto to the Collateral Agent and the Lenders. The Collateral Agent and the Lenders
shall have received (i) executed legal opinions and resolutions in form and substance reasonably satisfactory to the Collateral
Agent and the Lenders, (ii) lien searches in the jurisdiction of organization (and at the location of the chief executive office,
where applicable and appropriate) of each New Guarantor, (iii) a certificate of the chief financial officer (or other officer
with reasonably equivalent responsibilities) of Aytu certifying that Aytu and its Subsidiaries, taken as a whole, after giving
effect to the consummation of the Merger, are Solvent, (iv) customary officer’s and secretary’s certificates attaching
the organizational documents of the Borrower and each Guarantor (including the New Guarantors), and (vi) documents (including,
without limitation insurance certificates and UCC-1 financing statements) effecting the requirements of clause 7 of this
Annex I.

 

2.
The Specified Merger Agreement Representations shall be true and correct in all material respects to the extent required by the
Closing Certainty Provision.

 

3.
The Specified Representations shall be true and correct in all material respects (unless such Specified Representations are already
subject to materiality, and in such event, in all respects) as of the Closing Date or, to the extent any such Specified Representation
specifically relates to an earlier date, as of such earlier date.

 

4.
Substantially concurrently with the execution and delivery of the Amendment Documentation, the Merger shall be consummated in
accordance with the terms of Merger Agreement without giving effect to (a) any amendments, modifications or supplements thereof
or (b) waivers or consents thereunder by the Borrower or its Affiliates, in the case of each of clauses (a) and (b)
above in this Section 4, that are materially adverse to the interests of the Collateral Agent and the Lenders
and that have not been consented to in writing (such consent not to be unreasonably withheld, conditioned or delayed) by the Lenders;
it being understood that (x) any increase in the merger consideration under the Merger Agreement or (y) any change to the definition
of “Company Material Adverse Effect” in the Merger Agreement shall, in each case, be deemed materially adverse to
the interests of the Agent and the Lenders.

 

5.
On the Closing Date, after giving effect to the consummation of the Merger, neither Aytu nor any of its Subsidiaries shall have
any outstanding Indebtedness other than Permitted Indebtedness (which shall include all Indebtedness contemplated by the Term
Sheet).

 

6.
All actions necessary to establish that the Collateral Agent (for the benefit of itself, the Lenders and the other secured parties
under the Loan Documents) will have perfected first priority security interests (subject to Permitted Liens (which shall include
all Liens contemplated by the Term Sheet)) in the Collateral owned by each New Guarantor shall have been taken.

 

7.
All expenses, fees and other amounts required to be paid on the Closing Date pursuant to the Letter Agreement (including, without
limitation, the Term Sheet) shall have been paid in cash.

 

8.
With respect to the New Guarantors, the Lenders shall have received at least five (5) Business Days prior to the Closing Date
all documentation and other information required by regulatory authorities under applicable “know your customer” and
anti-money laundering rules and regulations, including, without limitation, the PATRIOT Act, that has been reasonably requested
by the Agent or any Lender at least ten (10) days in advance of the Closing Date.

 

9.
The Prepayment shall have been made in cash in immediately available funds.

 

    A - 6 

     

    

 

ANNEX
B

 

ABL
Commitment Letter

 

[Attached.]

 

    B - 1 

     

    

 

ANNEX
C

 

Form
of Convertible Note

 

[Attached.]

 

    C - 1 

     

    

 

ANNEX
D

 

Form
of Convertible Note Subordination Agreement

 

This
SUBORDINATION AGREEMENT (this “Agreement”), dated as of [●], 202[●], is entered into by and among
(i) AYTU BIOSCIENCE, INC., a Delaware corporation (“Subordinated Lender”), (ii) NEOS THERAPEUTICS, INC., a
Delaware corporation (“Borrower”), and (iii) DEERFIELD PRIVATE DESIGN FUND III, L.P. and DEERFIELD PARTNERS,
L.P. (each, a “Lender” and, collectively, the “Lenders”, and, together with any other institutions
or other entities from time to time parties to the Facility Agreement (as hereinafter defined) as Lenders, the “Senior
Lenders”).

 

RECITALS

 

A.
Borrower and Lenders have entered into a Facility Agreement, dated as of May 11, 2016 (as the same has been amended prior to the
date hereof and as the same may be further amended, restated, supplemented or otherwise modified from time to time hereafter,
the “Facility Agreement”) pursuant to which, among other things, Lenders agreed, subject to the terms and conditions
set forth in the Facility Agreement, to make certain loans and financial accommodations to Borrower. 

 

B.
All of Borrower’s obligations to Senior Lenders under the Facility Agreement and the other Senior Loan Documents (as hereinafter
defined) are secured by liens on and security interests in the Collateral (as defined in the Facility Agreement).

 

C.
On the date hereof, Borrower has issued to Subordinated Lender that certain Unsecured Convertible Promissory Note in the aggregate
principal amount of up to $5,000,000 (the “Subordinated Note”).

 

D.
As an inducement to and as one of the conditions precedent to the agreement of Senior Lenders to consent to the transactions contemplated
by the Subordinated Loan Documents (as hereinafter defined), Lenders have required the execution and delivery of this Agreement
by Subordinated Lender and Borrower in order to set forth the relative rights and priorities of Senior Lenders and Subordinated
Lender under the Senior Loan Documents and the Subordinated Loan Documents (as hereinafter defined).

 

AGREEMENT

 

NOW,
THEREFORE, in order to induce the Lenders to consent to the transactions contemplated by the Subordinated Loan Documents, and
for other good and valuable consideration, the receipt and sufficiency of which hereby are acknowledged, the parties hereto hereby
covenant and agree as follows:

 

1.
Definitions. All capitalized terms used but not defined herein shall have the respective meanings ascribed thereto in the
Facility Agreement. In addition, the following terms shall have the following meanings in this Agreement:

 

“Agreement”
shall have the meaning ascribed thereto in the preamble hereof.

 

“Bankruptcy
Code” shall mean Title 11 of the United States Code, as amended from time to time, and any successor statute and all
rules and regulations promulgated thereunder.

 

“Borrower”
shall have the meaning ascribed thereto in the preamble hereof.

 

    D - 1 

     

    

 

“Distribution”
shall mean, with respect to any indebtedness or other obligation, (a) any payment or distribution by any Person of cash or other
property, by set-off or otherwise, on account of such indebtedness or obligation, including, without limitation, at maturity of
such indebtedness, (b) any redemption, purchase or other acquisition of such indebtedness or obligation by any Person, or (c)
the granting of any lien or security interest to or for the benefit of the holders of such indebtedness or obligation in or upon
any property of any Person.

 

“Enforcement
Action” shall mean (a) to take from or for the account of Borrower or any guarantor of the Subordinated Loan(s), by
set-off or in any other manner, the whole or any part of any moneys which may now or hereafter be owing by Borrower or any such
guarantor with respect to the Subordinated Loan (other than as expressly provided in Section 2.1 below); (b) to sue for
payment of, or to initiate or participate with others in any suit, action or proceeding against Borrower or any such guarantor,
including, without limitation, commencement of an involuntary proceeding against Borrower under the Bankruptcy Code, to (i) enforce
payment of or to collect the whole or any part of the Subordinated Loan (which shall include, for the avoidance of doubt, any
demand or collection of payment at maturity), or (ii) commence judicial enforcement of any of the rights and remedies under the
Subordinated Loan Documents or applicable law with respect to the Subordinated Loan; (c) to accelerate the Subordinated Loan(s);
(d) to exercise any put option or to cause Borrower or any such guarantor to honor any redemption or mandatory prepayment obligation
under any Subordinated Loan Document; or (e) to take any action under the provisions of any state or federal law, including, without
limitation, the Uniform Commercial Code, or under any contract or agreement, to enforce, foreclose upon, take possession of or
sell any property or assets of Borrower or any such guarantor, including the Collateral.

 

“Facility
Agreement” shall have the meaning ascribed thereto Recital A.

 

“Lender”
and “Lenders” shall have the meanings ascribed thereto in the preamble hereof.

 

“Paid
in Full” or “Payment in Full” shall mean, with respect to the Senior Loans, the date of the full
payment in cash and satisfaction in full of all of the obligations under the Senior Loan Documents (other than inchoate indemnity
obligations for which a claim has not yet been made and any other obligations which, by their terms survive the termination of
the Senior Loan Documents), and the termination of all obligations of Senior Lenders under the Senior Loan Documents (including,
without limitation, any commitment to lend), and the termination of the Senior Loan Documents.

 

“Person”
shall mean any natural person, corporation, general or limited partnership, limited liability company, firm, trust, association,
government, governmental agency or other entity, whether acting in an individual, fiduciary or other capacity.

 

“Proceeding”
shall mean any voluntary or involuntary insolvency, bankruptcy, receivership, custodianship, liquidation, dissolution, reorganization,
assignment for the benefit of creditors, appointment of a custodian, receiver, trustee or other officer with similar powers or
any other proceeding for the liquidation, dissolution or other winding up of a Person.

 

“Senior
Lenders” shall have the meaning ascribed thereto in the preamble hereof.

 

“Senior
Loan(s)” shall mean all obligations, liabilities and indebtedness of every nature of Borrower from time to time owed
to Senior Lenders under the Facility Agreement and the other Senior Loan Documents, whether now existing or hereafter created,
whether primary, secondary, direct, contingent, fixed or otherwise, heretofore, now and from time to time hereafter owing, due
or payable, whether before or after the filing of a Proceeding under the Bankruptcy Code, together with (a) any amendments, modifications,
renewals, refinancings, replacements or extensions thereof, and (b) any interest accruing thereon after the commencement of a
Proceeding, without regard to whether or not such interest, fees, costs or expenses are an allowed claims in any such Proceeding.

 

    D - 2 

     

    

 

“Senior
Loan Documents” shall mean the Facility Agreement, and all promissory notes or other instruments evidencing the Senior
Loan or the obligation to pay the Senior Loan, any guaranties with respect to the Senior Loan, any security agreement or other
collateral document securing the Senior Loan and all other documents, agreements and instruments now existing or hereafter entered
into evidencing or pertaining to all or any portion of the Senior Loan.

 

“Subordinated
Lender” shall have the meaning ascribed thereto in the preamble to this Agreement.

 

“Subordinated
Loan(s)” shall mean all obligations, liabilities and indebtedness of every nature of Borrower from time to time owed
to Subordinated Lender pursuant to the Subordinated Loan Documents, whether now existing or hereafter created, whether primary,
secondary, direct, contingent, fixed or otherwise, heretofore, now and from time to time hereafter owing, due or payable, whether
before or after the filing of a Proceeding under the Bankruptcy Code together with any amendments, modifications, renewals or
extensions thereof.

 

“Subordinated
Loan Documents” shall mean the Subordinated Note, any other agreement, promissory note or other instrument evidencing
the Subordinated Loan, any guaranty with respect to the Subordinated Loan, any security agreement or other collateral document
securing the Subordinated Loan and all other documents, agreements and instruments now existing or hereafter entered into evidencing
or pertaining to all or any portion of the Subordinated Loan.

 

“Subordinated
Note” shall have the meaning ascribed thereto in Recital C.

 

2.
Subordination.

 

2.1.
Subordination of Subordinated Loans to Senior Loans. Borrower covenants and agrees, and Subordinated Lender likewise covenants
and agrees that, notwithstanding anything to the contrary contained in any of the Subordinated Loan Documents, the payment of
any and all of the Subordinated Loans shall be subordinate and subject in right and time of payment, to the extent and in the
manner hereinafter set forth, to the Payment in Full of all Senior Loans. Each holder of the Senior Loans, whether now outstanding
or hereafter created, incurred, assumed or guaranteed, shall be deemed to have consented to the Subordinated Loans in reliance
upon the provisions contained in this Agreement. Until the Senior Loans have been Paid in Full, Borrower shall not make, and Subordinated
Lenders shall not accept, any Distribution on account of any Subordinated Loan, other than (i) regularly scheduled payments of
capitalized payments-in-kind of accrued interest (but not, for the sake of clarity, any payments in cash) on the Subordinated
Loan due and payable on a non-accelerated basis, (ii) payments effected through conversion of indebtedness under the Subordinated
Loan to common stock of Borrower (or other qualified capital stock (on terms and conditions reasonably satisfactory to Senior
Lenders) of Borrower) and (iii) payments effected through conversion of the indebtedness under the Subordinated Loan to other
indebtedness so long as, to the extent Borrower is an obligor thereunder, such convertible indebtedness is subject to a subordination
agreement on the same terms and conditions of this Agreement and otherwise satisfactory to Senior Lenders. Subordinated Lender
expressly acknowledges and agrees that if Borrower’s failure to make any payments due and payable to the Subordinated Lender
under the Subordinated Loan Documents is due solely to this Agreement prohibiting any such payments, such failure shall not constitute
a default or event of default under the Subordinated Loan Documents.

 

    D - 3 

     

    

 

2.2.
Subordinated Loan Standstill. Until the Senior Loans are Paid in Full, Subordinated Lender shall not, without the
prior written consent of Senior Lenders, take any Enforcement Action with respect to the Subordinated Loans.

 

2.3.
Incorrect Payments. If any Distribution on account of the Subordinated Loan not permitted to be made by Borrower or accepted
by Subordinated Lender under this Agreement is made to and received by Subordinated Lender, such Distribution shall not be commingled
with any of the assets of Subordinated Lender, shall be held in trust by Subordinated Lender for the benefit of Senior Lenders
and shall be promptly paid over to the Senior Lenders for application in accordance with the Senior Loan Documents to the payment
of the Senior Loans then remaining unpaid, until all of the Senior Loans are Paid in Full.

 

2.4.
Subordination of Liens and Security Interests; Agreement Not to Contest; Agreement to Release any Liens. Subordinated Lender
hereby acknowledges, agrees, represents and warrants that none of the Subordinated Loans nor any portion thereof is as of the
date hereof, or at any time in the future shall be, secured by any lien or security interest in any of the Collateral, the equity
interests in Borrower or any other asset of Borrower, or guaranteed by any Person. Without limiting the foregoing, until the Senior
Loans have been Paid in Full, all liens and security interests of Subordinated Lender in the Collateral, if any, shall be and
hereby are subordinated for all purposes and in all respects to the liens and security interests of Senior Lenders in the Collateral,
regardless of the time, manner or order of perfection of any such liens and security interests and regardless of any failure,
whether intervening or continuing, of Senior Lenders’ liens and security interests to be perfected; provided, however,
that each of the parties hereto acknowledges and agrees that the existence of any lien or security interest of Subordinated Lender
would constitute an automatic and immediate Event of Default under the Facility Agreement and a breach of this Agreement. Subordinated
Lender agrees that it will not at any time contest the validity, perfection, priority or enforceability of the Senior Loans, the
Senior Loan Documents, or the liens and security interests of Senior Lenders in the Collateral securing the Senior Loans. In the
event that any lien or security interest arises in favor of Subordinated Lender, immediately upon Senior Lenders’ request,
Subordinated Lender shall or shall cause its agent to promptly execute and deliver to Senior Lenders such termination statements
and releases as Senior Lenders shall reasonably request to effect the release of the liens and security interests of Subordinated
Lender in any such Collateral.

 

2.5.
Sale, Transfer or other Disposition of Subordinated Loan. The Subordinated Lender shall not sell, assign, pledge, dispose
of or otherwise transfer all or any portion of the Subordinated Loans or any Subordinated Loan Document without the prior written
consent of the Senior Lenders. Without limiting the foregoing, if any such sale, assignment, pledge, disposition or other transfer
is made in contravention of this Agreement, the subordination effected hereby shall survive such sale, assignment, pledge, disposition
or other transfer of all or any portion of the Subordinated Loans, and the terms of this Agreement shall be binding upon the successors
and assigns of the Subordinated Lender.

 

2.6.
Legends. Until the termination of this Agreement in accordance with Section 8 hereof, Subordinated Lender will cause to
be clearly, conspicuously and prominently inserted on the face of each Subordinated Loan Document, the following legend:

 

    D - 4 

     

    

 

“This
instrument or other agreement and the indebtedness, rights and obligations evidenced hereby are subordinate in the manner and
to the extent set forth in that certain Subordination Agreement, dated as of [●], 202[●] (as amended, restated, supplemented
or modified from time to time, the “Subordination Agreement”), by and among (I) neos therapeutics, inc. (the
“Company”), (II) the Subordinated Lender identified therein, and (III) Deerfield Private Design Fund III, L.P.
and DEERFIELD PARTNERS, L.P., AND THEIR RESPECTIVE successors and assigns (the “Senior LenderS”), to certain
indebtedness, rights and obligations of Obligors to the Senior LenderS, and all liens and security interests of Senior Lender
securing the same, all as described in the Subordination Agreement, and each holder and transferee of this instrument or agreement,
by its acceptance hereof, irrevocably agrees to be bound by the provisions of the Subordination Agreement.”

 

2.7.
Liquidation, Dissolution, Bankruptcy. In the event of any Proceeding involving Borrower:

 

(a)
Any Distribution, whether in cash, securities or other property, that would otherwise, but for the terms hereof, be payable or
deliverable in respect of the Subordinated Loan, shall be paid or delivered directly to the Senior Lenders (to be held and/or
applied by Senior Lenders in accordance with the terms of the Senior Loan Documents) until all of the Senior Loans are Paid in
Full. Subordinated Lender irrevocably authorizes, empowers and directs any debtor, debtor in possession, receiver, trustee, liquidator,
custodian, conservator or other Person having authority, to pay or otherwise deliver all such Distributions to Senior Lenders.
Subordinated Lender also irrevocably authorizes and empowers Senior Lenders, in the name of Subordinated Lender, to demand, sue
for, collect and receive any and all such Distributions.

 

(b)
Subordinated Lender agrees that Senior Lenders may consent to the use of cash collateral or provide financing to the Borrower
on such terms and conditions and in such amounts as Senior Lenders, in their sole discretion, may decide and, in connection therewith,
the Borrower may grant to Senior Lenders liens and security interests upon all of the property of Borrower, which liens and security
interests (i) shall secure payment of the Senior Loans (whether such Senior Loans arose prior to the commencement of any Proceeding
or at any time thereafter) and all other financing provided by Senior Lenders during the Proceeding, and (ii) shall be superior
in priority to the liens and security interests, if any, in favor of Subordinated Lender on the property of Borrower. Subordinated
Lender agrees that it will not object to or oppose a sale or other disposition of any property securing all of any part of the
Senior Loans free and clear of security interests, liens or other claims of Subordinated Lender under Section 363 of the Bankruptcy
Code or any other provision of the Bankruptcy Code if Senior Lenders have consented to such sale or disposition. Subordinated
Lender agrees not to assert any right it may have to “adequate protection” of Subordinated Lender’s interest
in any Collateral in any Proceeding. Subordinated Lender waives any claim it may now or hereafter have arising out of Senior Lenders’
election, in any Proceeding instituted under the Bankruptcy Code, of the application of Section 1111(b)(2) of the Bankruptcy Code,
and/or any borrowing or grant of a security interest under Section 364 of the Bankruptcy Code by the Borrower, as debtor in possession.
Subordinated Lender further agrees that it will not seek to participate or participate on any creditors’ committee of the
Borrower without Senior Lenders’ prior written consent.

 

    D - 5 

     

    

 

(c)
Subordinated Lender agrees to execute, verify, deliver and file any proofs of claim in respect of the Subordinated Loans requested
by Senior Lenders in connection with any such Proceeding and hereby irrevocably authorizes, empowers and appoints Senior Lenders
as its agent and attorney-in fact to (i) execute, verify, deliver and file such proofs of claim upon the failure of Subordinated
Lender promptly to do so prior to thirty (30) days before the expiration of the time to file any such proof of claim, and (ii)
vote such claim in any such Proceeding upon the failure of Subordinated Lender to do so prior to fifteen (15) days before the
expiration of the time to vote any such claim; provided, however, that Senior Lenders shall have no obligation to execute, verify,
deliver, file and/or vote any such proof of claim. In the event that Senior Lenders vote any claim in accordance with the authority
granted hereby, Subordinated Lender shall not be entitled to change or withdraw such vote. Subordinated Lender hereby assigns
to Senior Lenders or their nominee (and will, upon request of Senior Lenders, reconfirm in writing the assignment to Senior Lenders
or its nominee of) all of its rights under such claims.

 

(d)
The Senior Loans shall continue to be treated as the Senior Loans and the provisions of this Agreement shall continue to govern
the relative rights and priorities of Senior Lenders and Subordinated Lender even if all or part of the Senior Loans or the security
interests securing the Senior Loans are subordinated, set aside, avoided, invalidated or disallowed in connection with any such
Proceeding, and this Agreement shall be reinstated if at any time any payment of any of the Senior Loans is rescinded or must
otherwise be returned by any holder of the Senior Loans or any representative of such holder.

 

3.
Modifications.

 

3.1.
Modifications to Senior Loan Documents. Senior Lenders may at any time and from time to time without the consent of Subordinated
Lenders, without providing any notice to the Senior Lenders, without incurring liability to Subordinated Lenders and without impairing
or releasing the obligations of Subordinated Lender under this Agreement, change the manner or place of payment or alter any of
the terms of the Senior Loans, or amend in any manner any agreement, note, guaranty or other instrument evidencing or securing
or otherwise relating to the Senior Loans.

 

3.2.
Modifications to Subordinated Loan Documents; Maximum Principal Amount of Subordinated Loan. Until the Senior Loans have
been Paid in Full, and notwithstanding anything to the contrary contained in the Subordinated Loan Documents, Subordinated Lender
shall not, without the prior written consent of the Senior Lenders, agree to any amendment, modification or supplement to the
Subordinated Loan Documents other than, so long as a copy is provided to Senior Lenders, an amendment for the sole purpose of
extending the maturity date of the Subordinated Loans. Nothing herein, including the provisions of this Agreement pertaining to
subordination of liens on the Collateral, shall be construed to imply Senior Lenders’ consent to any Subordinated Loan Document
which grants a lien upon any of the Collateral or the making of any other loans or other advances by Subordinated Lender.

 

4.
Waiver of Certain Rights by Subordinated Lender.

 

4.1.
Marshaling. Subordinated Lender hereby waives any rights it may have under applicable law to assert the doctrine of marshaling
or to otherwise require Senior Lenders to marshal any property of Borrower or any other guarantor of the Senior Loans for the
benefit of Subordinated Lender.

 

    D - 6 

     

    

 

4.2.
Rights Relating to Senior Lenders’ Actions with respect to the Collateral. Subordinated Lender hereby waives, to
the extent permitted by applicable law, any rights which it may have to enjoin or otherwise obtain a judicial or administrative
order preventing any Senior Lender from taking, or refraining from taking, any action with respect to all or any part of the Collateral.
Without limitation of the foregoing, Subordinated Lender hereby agrees (a) that it has no right to direct or object to the manner
in which Senior Lender enforces its rights and remedies with respect to, or applies the proceeds of the Collateral resulting from
the exercise by any Senior Lender of rights and remedies under the Senior Loan Documents to the Senior Loans, and (b) that no
Senior Lender has assumed any obligation to act as the agent for Subordinated Lender with respect to the Collateral.

 

4.3.
Rights Relating to Disclosures. Subordinated Lender hereby agrees that Senior Lenders have not assumed any obligation or
duty to disclose information regarding Borrower or the Senior Loans to Subordinated Lender, and Senior Lenders shall not have
a special or fiduciary relationship to Subordinated Lender. Subordinated Lender hereby fully waives and releases Senior Lenders
from any affirmative disclosures which may be required of Senior Lenders under applicable law.

 

5.
Construction. The terms of this Agreement were negotiated among business persons sophisticated in the area of business
finance, and accordingly, in construing the terms of this Agreement, no rule or law which would require that this instrument be
construed against the party who drafted this instrument shall be given any force or effect.

 

6.
Modification of this Agreement. No modification or waiver of any provision of this Agreement, or consent to any departure
by any party from the terms hereof, shall be effective in any event unless the same is in writing and signed by Senior Lenders
or such other holder of the Senior Loans and Subordinated Lender or such other holder of the Subordinated Loans, and then such
modification, waiver or consent shall be effective only in the specific instance and for the specific purpose given. Any notice
to or demand on any party hereto in any event not specifically required hereunder shall not entitle the party receiving such notice
or demand to any other or further notice or demand in the same, similar or other circumstances unless specifically required hereunder.

 

7.
Further Assurances. Each party to this Agreement promptly will execute and deliver such further instruments and agreements
and do such further acts and things as may be reasonably requested in writing by any other party hereto that may be necessary
or desirable in order to effect fully the purposes of this Agreement.

 

8.
Continuing Agreement. This is a continuing agreement and will remain in full force and effect until all of the obligations
under the Senior Loan Documents have been Paid in Full after which this Agreement shall terminate without further action on the
part of the parties hereto; provided, that if any payment is, subsequent to such termination, recovered from any holder
of Senior Loans, this Agreement shall be reinstated. This Agreement will continue to be effective or will be reinstated, as the
case may be, if at any time payment of all or any part of the Senior Loan Documents or the obligations thereunder is rescinded
or must otherwise be returned by Senior Lenders upon insolvency, bankruptcy, or reorganization of any Obligor or otherwise, all
as though such payment had not been made.

 

9.
Notices. Any notice, request or other communication to be given or made under this Agreement shall be in writing. Such
notice, request or other communication shall be deemed to have been duly given or made when it shall be delivered by hand, overnight
mail, international courier (confirmed by facsimile), electronic mail or facsimile to the party to which it is required or permitted
to be given or made at such party’s address specified below or at such other address as such party shall have designated
by notice to the other parties:

 

    D - 7 

     

    

 

If
to Senior Lenders at:

 

Deerfield
Management Company, L.P.

780
Third Avenue, 37th Floor

New
York, NY 10017

Attn:
David J. Clark

Email:
dclark@deerfield.com

 

If
to Borrower, at:

 

Neos
Therapeutics, Inc.

2940
N. Hwy 360, Suite 400

Grand
Prairie, TX 75050

E-mail:
reisenstadt@neostx.com

Attention:
Richard Eisenstadt

 

If
to Subordinated Lender, at:

 

Aytu
Bioscience, Inc.

373
Inverness Parkway, Suite 206

Englewood,
CO 80112

Email:

Attention:

 

If
mailed, notice shall be deemed to be given five (5) days after being sent, and if sent by personal delivery, email or prepaid
courier, notice shall be deemed to be given when delivered.

 

10.
Successors and Assigns. This Agreement shall inure to the benefit of, and shall be binding upon, the respective successors
and assigns of Senior Lenders, Subordinated Lender and Borrower; provided, however, that neither Subordinated Lender
nor Borrower may assign this Agreement in whole or in part without the prior written consent of Senior Lenders or as permitted
by Section 2.5. Senior Lenders may, from time to time, without notice to Subordinated Lender, assign or transfer any or
all of the Senior Loans or any interest therein to any Person and, notwithstanding any such assignment or transfer, or any subsequent
assignment or transfer, the Senior Loans shall, subject to the terms hereof, be and remain the Senior Loans for purposes of this
Agreement, and every permitted assignee or transferee of any of the Senior Loans or of any interest therein shall, to the extent
of the interest of such permitted assignee or transferee in the Senior Loans, be entitled to rely upon the subordination provided
under this Agreement and shall be entitled to enforce the terms and provisions hereof to the same extent as if such assignee or
transferee were initially a party hereto.

 

11.
No Waiver or Novation. No waiver shall be deemed to have been made by any party to this Agreement of any of its rights
under this Agreement unless the same shall be in writing and duly signed by its duly authorized officers, and each waiver, if
any, shall be a waiver only with respect to the specific instance involved and shall in no way impair the rights of any party
to this Agreement in any other respect at any time. No executory agreement shall be effective to change, modify or to discharge,
in whole or in part, this Agreement, unless such executory agreement is in writing and duly signed by the duly authorized officers
of each party to this Agreement.

 

    D - 8 

     

    

 

12.
APPLICABLE LAW; CONSENT TO JURISDICTION.

 

12.1.
As part of the consideration and mutual promises being exchanged and given in connection with this Agreement, the parties hereto
agree that all claims, controversies and disputes of any kind or nature arising under or relating in any way to the enforcement
or interpretation of this Agreement or to the parties’ dealings, rights or obligations in connection herewith, including
disputes relating to the negotiations for, inducements to enter into, or execution of, this Agreement, and disputes concerning
the interpretation, enforceability, performance, breach, termination or validity of all or any portion of this Agreement shall
be governed by the laws of the State of New York without giving effect to any laws, rules or provisions that would cause the application
of the laws of any jurisdiction other than the State of New York.

 

12.2.
The parties hereto agree that all claims, controversies and disputes of any kind or nature relating in any way to the enforcement
or interpretation of this Agreement or to the parties’ dealings, rights or obligations in connection herewith, shall be
brought exclusively in the state and federal courts sitting in The City of New York, borough of Manhattan. With respect to any
such claims, controversies or disputes, each of the Parties hereby irrevocably:

 

12.2.1.
submits itself and its property, generally and unconditionally, to the personal jurisdiction of the aforesaid courts and agrees
that it will not bring any action in any court or tribunal other than the aforesaid courts;

 

12.2.2.
waives, and agrees not to assert, by way of motion, as a defense, counterclaim or otherwise, in any action or proceeding (A) any
claim that it is not personally subject to the jurisdiction of the above named courts for any reason other than the failure to
serve process in accordance with this Section 12, (B) any claim that it or its property is exempt or immune from jurisdiction
of any such court or from any legal process commenced in such courts (whether through service of notice, attachment prior to judgment,
attachment in aid of execution of judgment, execution of judgment or otherwise) and (C) to the fullest extent permitted by the
applicable law, any claim that (1) the suit, action or proceeding in such court is brought in an inconvenient forum, (2) the
venue of such suit, action or proceeding is improper or (3) this Agreement, or the subject matter hereof, may not be enforced
in or by such courts; and

 

12.2.3.
WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY DISPUTE ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY TO THIS AGREEMENT CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE
OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT SEEK TO ENFORCE THE FOREGOING WAIVER
IN THE EVENT OF A LEGAL ACTION, (B) SUCH PARTY HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (C) SUCH PARTY MAKES THIS WAIVER
VOLUNTARILY AND (D) SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS
IN THIS SECTION 12.

 

    D - 9 

     

    

 

13.
Miscellaneous.

 

13.1.
Conflict. In the event of any conflict between any term, covenant or condition of this Agreement and any term, covenant
or condition of any of the Subordinated Loan Documents, the provisions of this Agreement shall control and govern.

 

13.2.
Headings. The paragraph headings used in this Agreement are for convenience only and shall not affect the interpretation
of any of the provisions hereof.

 

13.3.
Counterparts. This Agreement and any amendment hereto may be executed and delivered in any number of counterparts, and
by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original, but all
of which taken together shall constitute one and the same agreement. In the event that any signature to this Agreement or any
amendment hereto is delivered by facsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature
shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same
force and effect as if such facsimile or “.pdf” signature page were an original thereof. No party hereto shall raise
the use of a facsimile machine or e-mail delivery of a “.pdf” format data file to deliver a signature to this Agreement
or any amendment hereto or the fact that such signature was transmitted or communicated through the use of a facsimile machine
or e-mail delivery of a “.pdf” format data file as a defense to the formation or enforceability of a contract, and
each party hereto forever waives any such defense.

 

13.4.
Severability. In the event that any provision of this Agreement is deemed to be invalid, illegal or unenforceable by reason
of the operation of any law or by reason of the interpretation placed thereon by any court or governmental authority, the validity,
legality and enforceability of the remaining provisions of this Agreement shall not in any way be affected or impaired thereby,
and the affected provision shall be modified to the minimum extent permitted by law so as most fully to achieve the intention
of this Agreement.

 

13.5.
Relative Rights. This Agreement shall define the relative rights of Senior Lenders and Subordinated Lender. Nothing in
this Agreement shall (a) impair, as between Borrower and Senior Lenders, the obligation of Borrower with respect to the payment
of the Senior Loans and the Subordinated Loans in accordance with their respective terms, or (b) affect the relative rights of
Senior Lenders or Subordinated Lender with respect to any other creditors of Borrower.

 

13.6.
Entire Agreement. This Agreement (including the documents and instruments referred to herein) constitutes the entire agreement
and supersedes all other prior agreements and understandings, both written and oral, among the parties with respect to the subject
matter hereof.

 

13.7.
Interpretative Matters. Unless otherwise indicated or the context otherwise requires, (a) all references to Sections, Schedules,
Appendices or Exhibits are to Sections, Schedules, Appendices or Exhibits contained in or attached to this Agreement, (b) words
in the singular or plural include the singular and plural and pronouns stated in either the masculine, the feminine or neuter
gender shall include the masculine, feminine and neuter, (c) the words “hereof,” “herein” and words of
similar effect shall reference this Agreement in its entirety, and (d) the use of the word “including” in this Agreement
shall be by way of example rather than limitation.

 

[SIGNATURES
APPEAR ON FOLLOWING PAGES]

 

    D - 10 

     

    

 

IN
WITNESS WHEREOF, intending to be legally bound, and intending that this Agreement constitute an instrument executed and delivered
under seal, the parties have caused this Agreement to be executed under seal as of the date first written above.

 

	 	SENIOR LENDERS;
	 	 
	 	DEERFIELD PRIVATE DESIGN FUND III, L.P.

 

	 	By:	Deerfield Mgmt III, L.P., its General Partner
	 	By:	J.E. Flynn Capital III, LLC, its General Partner

 

	 	By:	/s/ David J. Clark
	 	Name:  	David J. Clark
	 	Title:	Authorized Signatory

 

	 	DEERFIELD PARTNERS, L.P.

 

	 	By:	Deerfield Mgmt, L.P., its General Partner
	 	By:	J.E. Flynn Capital, LLC, its General Partner

 

	 	By:	/s/ David J. Clark
	 	Name:  	David J. Clark
	 	Title:	Authorized Signatory

 

    D - 11 

     

    

 

	 	SUBORDINATED LENDER:
	 	 
	 	AYTU BIOSCIENCE, INC.

 

	 	By:	 /s/ Josh Disbrow
	 	Name:  	 Josh Disbrow
	 	Title:	Chief Executive Officer

 

    D - 12 

     

    

 

	 	BORROWER:
	 	 
	 	NEOS THERAPEUTICS, INC.

 

	 	By:	 /s/ Richard Eisenstadt
	 	Name:  	Richard Eisenstadt
	 	Title:	Chief Financial Officer

 

 

D - 13

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