Document:

Form of Securities Purchase Agreement

 Exhibit 10.1 
 SECURITIES PURCHASE AGREEMENT 
 THIS SECURITIES PURCHASE AGREEMENT (this
“Agreement”), dated as of July 9, 2008, by and among Threshold Pharmaceuticals, Inc., a Delaware corporation with headquarters located at 1300 Seaport Boulevard, Redwood City, CA 94063 (the “Company”), and each
investor identified on the signature pages hereto (individually, an “Investor” and collectively, the “Investors”). 
 BACKGROUND 
 A. The Company and each Investor are executing and delivering this Agreement in reliance upon the exemption
from registration afforded by Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”), and Rule 506 of Regulation D (“Regulation D”) as promulgated by the United States Securities and
Exchange Commission (the “SEC”) under the Securities Act. 
 B. Each Investor, severally and not jointly, wishes to
purchase, and the Company wishes to sell, subject to the Stockholder Approval (as defined herein) and upon the terms and conditions stated in this Agreement, (i) that aggregate number of shares of the common stock, par value $0.001 per share,
of the Company (the “Common Stock”), set forth on such Investor’s signature page to this Agreement for a price per share equal to $0.34 (the “Per Share Price”) (which aggregate amount for all Investors together
shall be 53,823,530 shares of Common Stock and shall collectively be referred to herein as the “Shares,” for an aggregate purchase price of $18,300,000 (the “Purchase Price”)) and (ii) warrants, in
substantially the form attached hereto as Exhibit A (the “Warrants”), to acquire up to that number of additional shares of Common Stock set forth on such Investor’s signature page to this Agreement (the shares of Common
Stock issuable upon exercise of or otherwise pursuant to the Warrants issued to the Investors, which aggregate amount for all Investors together shall be 21,529,413, collectively, the “Warrant Shares”). 
 C. The Shares, the Warrants and the Warrant Shares issued or issuable pursuant to this Agreement are collectively referred to herein as the
“Securities.” 
 NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for other good
and valuable consideration the receipt and adequacy of which are hereby acknowledged, the Company and the Investors agree as follows: 
 ARTICLE I 
 DEFINITIONS 
 1.1 Definitions. In addition to the terms defined elsewhere in this Agreement, the following terms have the meanings indicated: 
 “Affiliate” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person, as such terms are used in and construed under
Rule 144 under the Securities Act. 

 “Agent” has the meaning set forth in Section 3.1(l). 
 “Agreement” has the meaning set forth in the Preamble. 
 “Alternate Warrants” has the meaning set forth in Section 4.9. 
 “Best
Efforts” means the efforts that a prudent person desirous of achieving a result would use in similar circumstances to ensure that such result is achieved as expeditiously as practical; provided, however, that an obligation to
use Best Efforts under this Agreement does not require the Company to dispose of or make any change to its business, expend any material funds or incur any other material burden. 
 “Bloomberg” shall mean Bloomberg Financial Markets. 
 “Business Day” means any day other than Saturday, Sunday, any day which shall be a federal legal holiday in the United States or any day on which banking institutions in The State of New York are
authorized or required by law or other governmental action to close. 
 “Closing” means the closing of the purchase and sale
of the Securities pursuant to Section 2.1. 
 “Closing Bid Price” shall mean, for any security as of any date,
the last closing bid price for such security on the Trading Market, as reported by Bloomberg, or, if the Trading Market begins to operate on an extended hours basis and does not designate the closing bid price, then the last bid price of such
security prior to 4:00:00 p.m., New York Time, as reported by Bloomberg, or, if the Trading Market is not the principal securities exchange or trading market for such security, the last closing bid price or last trade price, respectively, of such
security on the Eligible Market where such security is listed or traded as reported by Bloomberg, or if the foregoing do not apply, the average of the bid prices, or the ask prices, respectively, of any market makers for such security as reported in
the “pink sheets” by Pink Sheets LLC (formerly the National Quotation Bureau, Inc.); provided, that if the Closing Bid Price cannot be calculated for a security on a particular date on any of the foregoing bases, the Closing Bid
Price of such security on such date shall be the fair market value as mutually determined by the Company and the applicable Investors. 
 “Closing Date” shall mean the seventh Business Day following the date that the Company has satisfied the conditions to closing set forth in Section 5.1, including the receipt of Stockholder Approval, or such other time
as shall be mutually agreed to by the Company and each Investor. 
 “Company” has the meaning set forth in the Preamble.

 “Company Counsel” means Morrison & Foerster LLP, counsel to the Company. 
 “Common Stock” has the meaning set forth in the Preamble. 
 “Contingent Obligation” has the meaning set forth in Section 3.1(aa). 
  

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 “Convertible Securities” means any stock or securities (other than Options) convertible
into or exercisable or exchangeable for Common Stock. 
 “Disclosure Materials” has the meaning set forth in
Section 3.1(g). 
 “Effective Date” means the date that the Registration Statement is first declared effective
by the SEC. 
 “Effectiveness Period” has the meaning set forth in Section 6.1(b). 
 “8-K Filing” has the meaning set forth in Section 4.5. 
 “Eligible Market” means any of the New York Stock Exchange, the American Stock Exchange, the NASDAQ Global Select Market, the NASDAQ
Global Market, the NASDAQ Capital Market or OTC Bulletin Board. 
 “Environmental Laws” has the meaning set forth in
Section 3.1(dd). 
 “Evaluation Date” has the meaning set forth in Section 3.1(x). 
 “Event” has the meaning set forth in Section 6.1(d). 
 “Event Payments” has the meaning set forth in Section 6.1(d). 
 “Exchange Act” means the Securities Exchange Act of 1934, as amended. 
 “Excluded Events” has the meaning set forth in Section 6.1(d)(iii). 
 “Excluded Investors” means (i) Lazard Freres & Co. LLC and its Affiliates, and (ii) MTS Investment Advisors, Inc. and
its Affiliates. 
 “Exempt Issuance” shall mean the issuance of: (a) shares of Common Stock or Convertible Securities,
or options to employees, officers or directors of the Company pursuant to any stock or option plan duly adopted for such purpose by the Board of Directors or a majority of the members of a committee established for such purpose; (b) securities
upon the exercise of the Warrants and/or the exercise or conversion of Convertible Securities issued and outstanding on the date of this Agreement; provided, that such securities have not been amended since the date hereof to increase the
number of such securities or to decrease the exercise, exchange or conversion price of such securities; (c) securities issuable in accordance with existing obligations of the Company to Company employees, officers, directors, consultants or
agents; (d) securities issuable to any employees or former agents of the Company in satisfaction of or in settlement of any disputes or controversies concerning the terms of such person’s employment or separation from the Company;
(e) securities issued for consideration other than cash pursuant to a merger, consolidation, acquisition, licensing or similar business combination the primary purpose of which is not to raise equity capital; (f) securities issued in
connection with any stock split, stock dividend, recapitalization or similar transaction by the Company; (g) securities issued as consideration, whether in whole or in part, to any person or entity for providing services or supplying goods to
the Company; (h) securities issued to any entity which is or will be, itself or 

  

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through its subsidiaries or affiliates, an operating company in a business related to or complementary with the business of the Company and in which the
Company receives material benefits in addition to the investment of funds; (i) securities issued pursuant to any equipment leasing arrangement; (j) securities issued to pay all or a portion of any investment banking, finders or similar fee
or commission, which entitles the holders thereof to acquire shares of Common Stock at a price not less than the market price of the Common Stock on the date of such issuance and which is not subject to any adjustments other than on account of stock
splits and reverse stock splits; and (k) any other securities as may be mutually agreed in writing prior to their issuance by the Company and the Investors holding 60% of the shares of Common Stock purchased under this Agreement. 
 “Filing Date” means the date that is thirty (30) days after the date of the Stockholder Approval or, if such date is not a Business
Day, the next date that is a Business Day. 
 “GAAP” has the meaning set forth in Section 3.1(g). 
 “Hazardous Materials” has the meaning set forth in Section 3.1(dd). 
 “Indebtedness” has the meaning set forth in Section 3.1(aa). 
 “Indemnified Party” has the meaning set forth in Section 6.4(c). 
 “Indemnifying Party” has the meaning set forth in Section 6.4(c). 
 “Insolvent” has the meaning set forth in Section 3.1(h). 
 “Intellectual Property Rights” has the meaning set forth in Section 3.1(t). 
 “Investor” has the meaning set forth in the Preamble. 
 “Lien” means any lien, charge, claim, security interest, encumbrance, right of first refusal or other restriction. 
 “Losses” means any and all losses, claims, damages, liabilities, settlement costs and expenses, including, without limitation, reasonable attorneys’ fees. 
 “Material Adverse Effect” means (i) a material adverse effect on the results of operations, assets, business or financial condition
of the Company and the Subsidiaries taken as a whole on a consolidated basis or (ii) material and adverse impairment of the Company’s ability to perform its obligations under any of the Transaction Documents; provided, that none of
the following alone shall be deemed, in and of itself, to constitute a Material Adverse Effect: (i) a change in the market price or trading volume of the Common Stock or (ii) changes in general economic conditions or changes affecting the
industry in which the Company operates generally (as opposed to Company-specific changes). 
 “Material Permits” has the
meaning set forth in Section 3.1(v). 
  

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 “Options” means any outstanding rights, warrants or options to subscribe for or purchase
Common Stock or Convertible Securities. 
 “Per Share Price” shall have the meaning set forth in the preamble. 

“Person” has the meaning set forth in Section 3.1(aa). 
 “Proceeding” means an action, claim, suit, investigation or proceeding (including, without limitation, a partial proceeding, such as a
deposition), whether commenced or threatened in writing. 
 “Prospectus” means the prospectus included in the Registration
Statement (including, without limitation, a prospectus that includes any information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A promulgated under the Securities Act), as
amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Securities covered by the Registration Statement, and all other amendments and supplements to the Prospectus including
post-effective amendments, and all material incorporated by reference or deemed to be incorporated by reference in such Prospectus. 
 “Purchase Price” shall have the meaning set forth in the preamble. 
 “Registrable Securities”
means the Shares and the Warrant Shares issued or issuable pursuant to the Transaction Documents, together with any securities issued or issuable upon any stock split, dividend or other distribution, recapitalization or similar event with respect to
the foregoing. 
 “Registration Statement” means each registration statement required to be filed under Article VI,
including (in each case) the Prospectus, amendments and supplements to such registration statement or Prospectus, including pre- and post-effective amendments, all exhibits thereto, and all material incorporated by reference or deemed to be
incorporated by reference in such registration statement. 
 “Regulation D” has the meaning set forth in the Preamble.

 “Required Effectiveness Date” means (i) if the Registration Statement does not become subject to review by the SEC,
the date which is the earliest of (a) ninety (90) days after the Closing Date or (b) five (5) Trading Days after the Company receives notification from the SEC that the Registration Statement will not become subject to review, or
(ii) if the Registration Statement becomes subject to review by the SEC, the date which is the earliest of (a) one hundred twenty (120) days after the Closing Date or (b) five (5) Trading Days after the Company receives
notification from the SEC that the SEC has no further comment to the Registration Statement. 
 “Rule 144,”
“Rule 415,” and “Rule 424” means Rule 144, Rule 415 and Rule 424, respectively, promulgated by the SEC pursuant to the Securities Act, as such Rules may be amended from time to time, or any
similar rule or regulation hereafter adopted by the SEC having substantially the same effect as such Rule. 
  

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 “SEC” has the meaning set forth in the Preamble. 
 “SEC Reports” has the meaning set forth in Section 3.1(g). 
 “Securities” has the meaning set forth in the Preamble. 
 “Securities Act” has the meaning set forth in the Preamble. 
 “Shares” has
the meaning set forth in the Preamble. 
 “Short Sales” has the meaning set forth in Section 3.2(i). 

“Stockholder Approval” means the approval by the Company’s stockholders of the issuance of all the Securities. In order to
solicit such Stockholder Approval, the Company shall as soon as practical provide each stockholder entitled to vote at a special meeting of stockholders of the Company (the “Stockholder Meeting”) a proxy statement meeting the
requirements of Section 14 of the Exchange Act and the related rules and regulations promulgated thereunder by the SEC (the “Proxy Statement”) soliciting each such stockholder’s affirmative vote at the Stockholder Meeting,
which meeting shall be called promptly but in no event later than forty-five (45) days from the date hereof (unless the Proxy Statement relating to the Stockholder Meeting is reviewed by the SEC, in which case such date shall be extended to
ninety (90) days from the date hereof), for approval of resolutions approving the Company’s issuance of all of the Securities in accordance with the law and the rules and regulations of Nasdaq and the Delaware General Corporation Law, and
the Company shall use its Best Efforts to solicit its stockholders’ approval of such resolutions. The Proxy Statement shall contain a recommendation by the Board of Directors of the Company that the resolutions approving the Company’s
issuance of all Securities be approved. Notwithstanding any other provision of this Agreement, no Securities shall be issued under this Agreement to any Investor prior to the Stockholder Approval except in accordance with the rules and
interpretations of Nasdaq. The Company and the Investors shall cooperate with one another (i) in connection with the preparation of the Proxy Statement, and (ii) in taking such actions or making any such filings, furnishing information
required in connection with the Proxy Statement and seeking timely to obtain any such actions, consents, approvals or waivers. The Investors and their counsel shall be given no less than five (5) Trading Days to review and comment on the Proxy
Statement before that document (or any amendment thereto) is filed with the SEC, and reasonable and good faith consideration shall be given to any comments made by such party and its counsel. Each of the Investors and the Company shall provide the
other party and its counsel with (x) any comments or other communications, whether written or oral, that such party or its counsel may receive from time to time from the SEC or its staff with respect to the Proxy Statement promptly after
receipt of those comments or other communications and (y) a reasonable opportunity to participate in the response to those comments and to provide comments on that response (to which reasonable and good faith consideration shall be given),
including by participating in any discussions or meetings with the SEC. 
 “Subsidiaries” or “Subsidiary”
means the direct or indirect subsidiaries of the Company. 
  

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 “Trading Day” means (i) a day on which the Common Stock is traded on a Trading
Market (other than the OTC Bulletin Board), or (ii) if the Common Stock is not listed or quoted on a Trading Market (other than the OTC Bulletin Board), a day on which the Common Stock is traded in the over-the-counter market, as reported by
the OTC Bulletin Board, or (iii) if the Common Stock is not listed or quoted on any Trading Market, a day on which the Common Stock is quoted in the over-the-counter market as reported by the Pink Sheets LLC (or any similar organization or
agency succeeding to its functions of reporting prices); provided, that in the event that the Common Stock is not listed or quoted as set forth in (i), (ii) and (iii) hereof, then Trading Day shall mean a Business Day. 

“Trading Market” means whichever of the New York Stock Exchange, the American Stock Exchange, the NASDAQ Global Select Market, the
NASDAQ Global Market, the NASDAQ Capital Market or OTC Bulletin Board on which the Common Stock is listed or quoted for trading on the date in question. 
 “Transaction” has the meaning set forth in Section 3.2(i). 
 “Transaction Documents” means this Agreement, the schedules and exhibits attached hereto, the Warrants, the Transfer Agent Instructions and any confidentiality agreements entered into between the Company and any Investors.

 “Transfer Agent” means Mellon Investor Services LLC, located at 525 Market Street, Suite 3500, San Francisco, California
94105, or any successor transfer agent for the Company. 
 “Transfer Agent Instructions” means, with respect to the Company,
the Irrevocable Transfer Agent Instructions, in the form of Exhibit E, executed by the Company and delivered to and acknowledged in writing by the Transfer Agent. 
 “Warrants” has the meaning set forth in the Preamble. 
 “Warrant Shares” has the meaning set forth in the Preamble. 
 ARTICLE II 
 PURCHASE AND SALE 
 2.1 Closing.
Subject to the Stockholder Approval and the terms and conditions of this Agreement, on the Closing Date, each Investor shall severally, and not jointly, purchase, and the Company shall sell and issue to each Investor, the Shares and the Warrants in
the respective amounts set forth on such Investor’s signature page to this Agreement attached hereto in exchange for a payment by such Investor of the Per Share Price multiplied by the number of Shares set forth on such Investor’s
signature page to this Agreement. The date and time of the Closing shall be 11:00 a.m., New York City time, on the Closing Date, or such later date agreed to between the Company and the holders of a majority in interest of the Shares. The Closing
shall take place at the offices of the Company’s Counsel. 
  

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 2.2 Closing Deliveries. 
 (a) At or prior to the Closing, as the case may be, the Company shall effect, deliver or cause to be delivered to each Investor the
following: 
 (i) a copy of the Company’s irrevocable instructions to the Transfer Agent instructing the Transfer Agent
to deliver, on an expedited basis, one or more stock certificates, free and clear of all restrictive and other legends (except as expressly provided in Section 4.1(b) hereof), evidencing such number of Shares set forth on such
Investor’s signature page to this Agreement, registered in the name of such Investor; 
 (ii) a Warrant, issued in the
name of such Investor, pursuant to which such Investor shall have the right to acquire such number of Warrant Shares set forth on such Investor’s signature page to this Agreement; 
 (iii) duly executed Transfer Agent Instructions acknowledged by the Transfer Agent; 
 (iv) a legal opinion of Company Counsel, in the form of Exhibit C, executed by such counsel and delivered to the Investors;

 (v) a certificate of the Secretary of the Company, dated as of the Closing Date, (a) certifying the resolutions
adopted by the Board of Directors of the Company approving the transactions contemplated by this Agreement and the other Transaction Documents and the issuance of the Securities, (b) certifying the current versions of the certificate of
incorporation, as amended and by-laws of the Company and (c) certifying as to the signatures and authority of persons signing the Transaction Documents and related documents on behalf of the Company; and 
 (vi) a certificate of the Chief Executive Officer or Chief Financial Officer of the Company, dated as of the Closing Date, certifying to
the fulfillment of the conditions specified in Section 5.1(a) and (b). 
 (b) At the Closing, each Investor
shall deliver or cause to be delivered to the Company an amount representing such Investor’s share of the Purchase Price for the Shares and Warrants as set forth on the signature pages to this Agreement in United States dollars (the number of
Shares to be purchased by such Investor multiplied by the Per Share Price) and in immediately available funds, by wire transfer to an account designated in writing to such Investor by the Company for such purpose. 
  

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 ARTICLE III 
 REPRESENTATIONS AND WARRANTIES 
 3.1 Representations and Warranties of the Company. The Company
hereby represents and warrants to the Investors as follows (which representations and warranties shall be deemed to apply, where appropriate, to any Subsidiary of the Company): 
 (a) Subsidiaries. The Company owns or controls, directly or indirectly, all of the capital stock or comparable equity interests of
each Subsidiary free and clear of any Lien, and all issued and outstanding shares of capital stock or comparable equity interest of each Subsidiary are validly issued and are fully paid, non-assessable and free of preemptive and similar rights; and
the Company owns or controls, directly or indirectly, only the following corporations, partnerships, limited liability partnerships, limited liability companies, associations or other entities: THLD Enterprises (UK), Limited, a United Kingdom
limited liability company. 
 (b) Organization and Qualification. The Company and each Subsidiary is an entity duly
organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation, with the requisite legal authority to own and use its properties and assets and to carry on its business as currently conducted. Neither the
Company nor any Subsidiary is in violation of any of the provisions of its respective certificate or articles of incorporation, bylaws or other organizational or charter documents. The Company and each Subsidiary is duly qualified to do business and
is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good
standing, as the case may be, would not, individually or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect. 
 (c) Authorization; Enforcement. The Company has the requisite corporate authority to enter into and, subject to obtaining the Stockholder Approval, to consummate the transactions contemplated by each of the
Transaction Documents to which it is a party and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of each of the Transaction Documents to which it is a party by the Company and the consummation by it of the
transactions contemplated hereby and thereby have been duly authorized by all necessary corporate action on the part of the Company and no further consent or action is required by the Company, its Board of Directors or its stockholders (other than
the Stockholder Approval). Each of the Transaction Documents to which it is a party has been (or upon delivery will be) duly executed by the Company and is, or when delivered in accordance with the terms hereof, will constitute, the valid and
binding obligation of the Company enforceable against the Company in accordance with its terms, except (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and
contribution provisions may be limited by applicable law. 
 (d) No Conflicts. The execution, delivery and performance
of the Transaction Documents to which it is a party by the Company and, assuming the Stockholder Approval is obtained, the consummation by the Company of the transactions contemplated hereby and thereby do not, and will not, (i) conflict with
or violate any provision of the Company’s or any Subsidiary’s certificate or articles of incorporation, bylaws or other organizational or charter documents, (ii) conflict with, or constitute a default (or an event that with notice or
lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or 

  

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both) of, any agreement, credit facility, debt or other instrument (evidencing a Company or Subsidiary debt or otherwise) or other understanding to which the
Company or any Subsidiary is a party or by which any property or asset of the Company or any Subsidiary is bound, or affected, except to the extent that such conflict, default, termination, amendment, acceleration or cancellation right would not
reasonably be expected to have a Material Adverse Effect, or (iii) result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Company or any
Subsidiary is subject (including, assuming the accuracy of the representations and warranties of the Investors set forth in Section 3.2 hereof, federal and state securities laws and regulations and the rules and regulations of any
self-regulatory organization to which the Company or its securities are subject, including all applicable Trading Markets), or by which any property or asset of the Company or any Subsidiary are bound or affected, except to the extent that such
violation would not reasonably be expected to have a Material Adverse Effect. 
 (e) Securities. Upon receipt of the
Stockholder Approval, the Securities (including the Warrant Shares) shall be duly authorized and, when issued and paid for in accordance with the applicable Transaction Documents, will be duly and validly issued, fully paid and nonassessable, free
and clear of all Liens and will not be subject to preemptive or similar rights of stockholders (other than those imposed by the Investors). The Company has reserved from its duly authorized capital stock the maximum number of shares of Common Stock
issuable upon exercise of the Warrants. 
 (f) Capitalization. The SEC Reports accurately report the number of shares
and type of all authorized, issued and outstanding shares of capital stock of the Company as of the respective dates of such reports. All outstanding shares of capital stock are duly authorized, validly issued, fully paid and nonassessable and have
been issued in compliance in all material respects with all applicable securities laws. Except as a result of the purchase and sale of the Shares and Warrants that may be issued pursuant to this Agreement and, except as described in the SEC Reports,
there are no outstanding options, warrants, script rights to subscribe to, calls or commitments of any character whatsoever relating to shares of capital stock of the Company, or, rights or obligations convertible into or exchangeable for, or giving
any Person any right to subscribe for or acquire, any shares of capital stock of the Company, or contracts, commitments, understandings or arrangements by which the Company is or may become bound to issue additional shares of its capital stock or
rights convertible or exchangeable into shares of its capital stock. The issuance and sale of the Securities will not result in a right of any holder of outstanding securities of the Company to adjust the exercise, conversion, exchange or reset
price under any outstanding securities. To the knowledge of the Company, except as disclosed in the SEC Reports and any Schedules 13D or 13G filed with the SEC pursuant to Rule 13d-1 of the Exchange Act by reporting persons or in Schedule
3.1(f) hereto, no Person or group of related Persons beneficially owns (as determined pursuant to Rule 13d-3 under the Exchange Act), or has the right to acquire, by agreement with or by obligation binding upon the Company, beneficial ownership
of in excess of 5% of the outstanding shares of any class of the capital stock of the Company. 
  

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 (g) SEC Reports; Financial Statements. Except as set forth on Schedule
3.1(g), the Company has filed all reports required to be filed by it under the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the twelve (12) months preceding the date hereof on a timely basis or
has received a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration of any such extension and has filed all reports required to be filed by it under the Exchange Act, including pursuant to
Section 13(a) or 15(d) thereof, for the two (2) years preceding the date hereof. Such reports required to be filed by the Company under the Exchange Act during the two (2) years preceding the date of this Agreement, including pursuant
to Section 13(a) or 15(d) thereof, together with any materials filed or furnished by the Company under the Exchange Act during the two (2) years preceding the date of this Agreement, whether or not any such reports were required being
collectively referred to herein as the “SEC Reports” and, together with this Agreement and the Schedules to this Agreement, the “Disclosure Materials”. As of their respective dates (or, if amended or superseded by a
filing prior to the Closing Date, then on the date of such filing), the SEC Reports filed by the Company complied in all material respects with the requirements of the Securities Act and the Exchange Act and the rules and regulations of the SEC
promulgated thereunder, and none of the SEC Reports, when filed (or, if amended or superseded by a filing prior to the Closing Date, then on the date of such filing) by the Company, contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The financial statements of the Company included in the SEC
Reports comply in all material respects with applicable accounting requirements and the rules and regulations of the SEC with respect thereto as in effect at the time of filing (or, if amended or superseded by a filing prior to the Closing Date,
then on the date of such filing). Such financial statements have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis during the periods involved (“GAAP”), except as
may be otherwise specified in such financial statements, the notes thereto and except that unaudited financial statements may not contain all footnotes required by GAAP or may be condensed or summary statements, and fairly present the consolidated
financial position of the Company and its Subsidiaries as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, year-end audit adjustments. All
material agreements to which the Company or any Subsidiary is a party or to which the property or assets of the Company or any Subsidiary are subject are included as part of or identified in the SEC Reports, to the extent such agreements are
required to be included or identified pursuant to the rules and regulations of the SEC. 
 (h) Material Changes;
Undisclosed Events, Liabilities or Developments; Solvency. Since the date of the latest audited financial statements included within the SEC Reports, except as disclosed in the SEC Reports, (i) there has been no event, occurrence or
development that, individually or in the aggregate, has had or that would reasonably be expected to result in a Material Adverse Effect, (ii) the Company has not incurred any material liabilities other than (A) trade payables and accrued
expenses incurred in the ordinary course of business consistent with past practice and (B) liabilities not required to be reflected in the Company’s financial statements pursuant to GAAP or required to be disclosed in filings made with the
SEC, (iii) the Company has not altered its method of accounting or changed its auditors, except as disclosed in its SEC Reports, (iv) the Company has not declared or made any dividend or distribution of cash or other property to its
stockholders, in their capacities as such, or purchased, redeemed or made any agreements to 

  

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purchase or redeem any shares of its capital stock, except for the repurchase of shares of Common Stock from employees, consultants or service providers in
connection with the termination of services pursuant to agreements with the Company providing for such repurchase right, and (v) the Company has not issued any equity securities to any officer, director or Affiliate, except pursuant to Company
stock-based plans in existence as of the date of this Agreement. The Company has not taken any steps to seek protection pursuant to any bankruptcy law nor does the Company have any knowledge or reason to believe that its creditors intend to initiate
involuntary bankruptcy proceedings or any actual knowledge of any fact which would reasonably lead a creditor to do so. The Company is not, as of the date hereof, and after giving effect to the transactions contemplated hereby to occur at the
Closing, will not be, Insolvent (as defined below). For purposes of this Section 3.1(h), “Insolvent” means (i) the present fair saleable value of the Company’s assets is less than the amount required to pay the
Company’s total Indebtedness (as defined in Section 3.1(aa)), (ii) the Company is unable to pay its debts and liabilities, subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured,
(iii) the Company intends to incur or believes that it will incur debts that would be beyond its ability to pay as such debts mature or (iv) the Company has unreasonably small capital with which to conduct the business in which it is
engaged as such business is now conducted and is proposed to be conducted. 
 (i) Absence of Litigation. Except as
disclosed in the SEC Reports, as of the date hereof, there is no action, suit, claim, or Proceeding, or, to the Company’s knowledge, inquiry or investigation, before or by any court, public board, government agency, self-regulatory organization
or body pending or, to the knowledge of the Company, threatened against or affecting the Company or any Subsidiary or any of their respective properties or assets that could, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect. 
 (j) Compliance. (i) Neither the Company nor any Subsidiary is in default under or in
violation of (and no event has occurred that has not been waived that, with notice or lapse of time or both, would result in a default by the Company or any Subsidiary under), nor has the Company or any Subsidiary received written notice of a claim
that it is in default under or that it is in violation of, any indenture, loan or credit agreement or any other agreement or instrument to which it is a party or by which it or any of its properties is bound (whether or not such default or violation
has been waived), the default under of violation of which would reasonably be expected to have a Material Adverse Effect, (ii) neither the Company nor any Subsidiary is in violation of any order of any court, arbitrator, or governmental body
which would reasonably be expected to have a Material Adverse Effect, and (iii) neither the Company nor any Subsidiary is or has been in violation of any statute, rule or regulation of any governmental authority, the violation of which would
reasonably be expected to have a Material Adverse Effect. 
 (k) Title to Assets. Neither the Company nor any
Subsidiary owns real property. The Company and each Subsidiary has good and marketable title in all personal property owned by them that is material to the business of the Company and each Subsidiary, in each case free and clear of all Liens, except
for Liens that would not, individually or in the aggregate, reasonably be expected to have or result in a Material Adverse Effect. Any real 

  

 -12- 

 
property and facilities held under lease by the Company or any Subsidiary is held by it under valid, subsisting and enforceable leases of which the Company
and each Subsidiary is in material compliance. 
 (l) No General Solicitation; Placement Agents’ Fees. Neither the
Company, nor any of its Affiliates, nor any Person acting on its or their behalf, has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D) in connection with the offer or sale of the
Securities. The Company acknowledges that is has engaged Lazard Freres & Co. LLC and MTS Investment Advisors, Inc. as the placement agents (each an “Agent”, and collectively, the “Agents”) in connection
with the sale of the Securities. Other than the Agents, the Company has not engaged any other placement agent or other agent in connection with the sale of the Securities and the Company shall be responsible for the payment of any placement
agents’ fees, financial advisory fees, or brokers’ commission (other than for persons engaged by any Investor or its investment advisor) relating to or arising out of the issuance of the Securities pursuant to this Agreement. 

(m) Private Placement; Investment Company; U.S. Real Property Holding Corporation. Neither the Company nor any of its Affiliates
nor, any Person acting on the Company’s behalf has, directly or indirectly, at any time within the past six (6) months, made any offer or sale of any security or solicitation of any offer to buy any security under circumstances that would
(i) eliminate the availability of the exemption from registration under Regulation D under the Securities Act in connection with the offer and sale by the Company of the Securities as contemplated hereby or (ii) cause the offering of
the Securities pursuant to the Transaction Documents to be integrated with prior offerings by the Company for purposes of any applicable law, regulation or stockholder approval provisions, including, without limitation, under the rules and
regulations of any Trading Market. Assuming the accuracy of the representations and warranties of the Investors set forth in Section 3.2, no registration under the Securities Act is required for the offer and sale of the Securities by
the Company to the Investors as contemplated hereby. The sale and issuance of the Securities hereunder does not contravene the rules and regulations of any Trading Market on which the Common Stock is listed or quoted. The Company is not required to
be registered as, and is not an Affiliate of, an “investment company” within the meaning of the Investment Company Act of 1940, as amended. The Company is not required to be registered as a United States real property holding corporation
within the meaning of the Foreign Investment in Real Property Tax Act of 1980. 
 (n) Form S-1 Eligibility. The Company
is eligible to register the Registrable Securities for resale by the Investors using Form S-1 promulgated under the Securities Act. 
 (o) Listing and Maintenance Requirements. Except as disclosed in the SEC Reports, the Company has not, in the twelve (12) months preceding the date hereof, received notice (written or oral) from any Trading Market on which the
Common Stock is or has been listed or quoted to the effect that the Company is not in compliance with the listing or maintenance requirements of such Trading Market. 
  

 -13- 

 (p) Registration Rights. Except as described the SEC Reports as of the date
hereof, the Company has not granted or agreed to grant to any Person any rights (including “piggy-back” registration rights) to have any securities of the Company registered with the SEC or any other governmental authority that have not
expired or been satisfied or waived. 
 (q) Application of Takeover Protections. The Company and its Board of Directors
have taken all necessary action, if any, to render inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or other similar anti-takeover provision under the Company’s
charter documents or the laws of its state of incorporation that is or could become applicable to any of the Investors as a result of the Investors and the Company fulfilling their obligations or exercising their rights under the Transaction
Documents, including, without limitation, as a result of the Company’s issuance of the Securities and the Investors’ ownership of the Securities. 
 (r) Disclosure. The Company confirms that neither it nor any of its officers, directors or Affiliates, has provided any of the Investors (other than Excluded Investors or those certain investors who signed a
confidentiality agreement with the Company) or their agents or counsel with any information that constitutes or might constitute material, nonpublic information (other than the existence and terms of the issuance of Securities, as contemplated by
this Agreement). The Company understands and confirms that each of the Investors (other than Excluded Investors or those certain investors who signed a confidentiality agreement with the Company) will rely on the foregoing representations in
effecting transactions in securities of the Company. All disclosure provided by the Company to the Investors regarding the Company, its business and the transactions contemplated hereby, including the Schedules to this Agreement furnished by or on
behalf of the Company, are true and correct in all material respects and do not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading. To the Company’s knowledge, except for the transactions contemplated by this Agreement, no event or circumstance has occurred or information exists with respect to the Company or any
Subsidiary or their businesses, properties, operations or financial condition, which, under applicable law, rule or regulation, requires public disclosure or announcement by the Company but which has not been so publicly announced or disclosed. The
Company acknowledges and agrees that no Investor (other than Excluded Investors) makes or has made any representations or warranties with respect to the transactions contemplated hereby other than those set forth in the Transaction Documents.

 (s) Acknowledgment Regarding Investors’ Purchase of Securities. Based upon the assumption that the transactions
contemplated by this Agreement are consummated in all material respects in conformity with the Transaction Documents, the Company acknowledges and agrees that each of the Investors (other than Excluded Investors) is acting solely in the capacity of
an arm’s length purchaser with respect to the Transaction Documents and the transactions contemplated hereby and thereby. The Company further acknowledges that no Investor (other than Excluded Investors) is acting as a financial advisor or
fiduciary of the Company (or in any similar capacity) with respect to this Agreement and the transactions contemplated hereby and any advice given by any Investor (other than Excluded Investors) or any of their respective representatives or agents
in connection with the Transaction Documents and the transactions contemplated hereby and thereby is merely 

  

 -14- 

 
incidental to the Investors’ purchase of the Securities. The Company further represents to each Investor that the Company’s decision to enter into
this Agreement has been based solely on the independent evaluation of the transactions contemplated hereby by the Company and its advisors and representatives. 
 (t) Patents and Trademarks. As of the date hereof, the Company and each Subsidiary owns, or possesses adequate rights or licenses
to use, all trademarks, trade names, service marks, service mark registrations, service names, patents, patent rights, copyrights, inventions, licenses, approvals, governmental authorizations, trade secrets and other intellectual property rights
necessary to conduct their respective businesses as now conducted (“Intellectual Property Rights”), except as would not reasonably be expected to have a Material Adverse Effect. None of the Company’s or any Subsidiary’s
Intellectual Property Rights have expired or terminated. As of the date hereof, the Company does not have any knowledge of any infringement by the Company or any Subsidiary of Intellectual Property Rights of others. Except as disclosed in the SEC
Reports, as of the date hereof, there is no claim, action or proceeding being made or brought, or to the knowledge of the Company, being threatened, against the Company or any Subsidiary regarding its Intellectual Property Rights. 
 (u) Insurance. The Company and each Subsidiary is insured by insurers of recognized financial responsibility against such losses
and risks and in such amounts as are prudent and customary in the businesses and locations in which the Company and each Subsidiary is engaged. 
 (v) Regulatory Permits. The Company and each Subsidiary possesses all certificates, authorizations and permits issued by the appropriate federal, state, local or foreign regulatory authorities necessary to
conduct their respective businesses as presently conducted and described in the SEC Reports as of the date hereof (“Material Permits”), except where the failure to possess such permits would not, individually or in the aggregate,
have or reasonably be expected to result in a Material Adverse Effect, and neither the Company nor any Subsidiary has received any written notice of proceedings relating to the revocation or modification of any Material Permit. 
 (w) Transactions With Affiliates and Employees. Except as set forth or incorporated by reference in the Company’s SEC Reports,
as of the date hereof, none of the officers, directors or employees of the Company is presently a party to any transaction with the Company or to any presently contemplated transaction with the Company that would be required to be reported on Form
10-K by Item 13 thereof pursuant to Regulation S-K Item 404(a) (other than for ordinary course services as employees, officers or directors), including any contract, agreement or other arrangement providing for the furnishing of services
to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any such officer, director or employee or, to the Company’s knowledge, any corporation, partnership, trust or other entity in
which any such officer, director, or employee has a substantial interest or is an officer, director, trustee or partner. 
  

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 (x) Internal Accounting Controls. The Company and its Subsidiaries maintain a
system of internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management’s general or specific
authorization, and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. The Company has established disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and designed such disclosure controls and procedures to ensure that information required to be disclosed by the Company in the reports it files or submits under
the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. The Company’s certifying officers have evaluated the effectiveness of the Company’s disclosure controls
and procedures as of the end of the period covered by the Company’s most recently filed periodic report under the Exchange Act (such date, the “Evaluation Date”). The Company presented in its most recently filed periodic report
under the Exchange Act the conclusions of the certifying officers about the effectiveness of the disclosure controls and procedures based on their evaluations as of the Evaluation Date. Since the Evaluation Date, there have been no changes in the
Company’s internal control over financial reporting (as such term is defined in the Exchange Act) that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

 (y) Sarbanes-Oxley Act. The Company is in compliance with the applicable requirements of the Sarbanes-Oxley Act of
2002 and applicable rules and regulations promulgated by the SEC thereunder, except where such noncompliance would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. 
 (z) Foreign Corrupt Practices. Neither the Company nor any Subsidiary nor, to the knowledge of the Company, any director, officer,
agent, employee or other Person acting on behalf of the Company or any Subsidiary has, in the course of its actions for, or on behalf of, the Company (i) used any corporate funds for any unlawful contribution, gift, entertainment or other
unlawful expenses relating to political activity; (ii) made any direct or indirect unlawful payment to any foreign or domestic government official or employee or to any foreign or domestic political parties or campaigns from corporate funds;
(iii) violated or is in violation in any material respect of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended; or (iv) made any unlawful bribe, rebate, payoff, influence payment, kickback or other unlawful
payment to any foreign or domestic government official or employee. 
 (aa) Indebtedness. Except as disclosed in the
SEC Reports, as of the date hereof, neither the Company nor any Subsidiary (i) has any outstanding Indebtedness (as defined below), (ii) is in violation of any term of or is in default under any contract, agreement or instrument relating
to any Indebtedness, except where such violations and defaults would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect, and (iii) is a party to any contract, agreement or instrument relating to
any Indebtedness, the performance of which, in the reasonable judgment of the Company’s officers, has or is reasonably expected to have a Material Adverse Effect. For purposes of 

  

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this Agreement: (x) “Indebtedness” of any Person means, without duplication (A) all indebtedness for borrowed money, (B) all
obligations issued, undertaken or assumed as the deferred purchase price of property or services (other than trade payables entered into in the ordinary course of business), (C) all reimbursement or payment obligations with respect to letters
of credit, surety bonds and other similar instruments, (D) all obligations evidenced by notes, bonds, debentures or similar instruments, including obligations so evidenced incurred in connection with the acquisition of property, assets or
businesses, (E) all indebtedness created or arising under any conditional sale or other title retention agreement, or incurred as financing, in either case with respect to any property or assets acquired with the proceeds of such indebtedness
(even though the rights and remedies of the seller or bank under such agreement in the event of default are limited to repossession or sale of such property), (F) all monetary obligations under any leasing or similar arrangement which, in
connection with GAAP, consistently applied for the periods covered thereby, is classified as a capital lease, (G) all indebtedness referred to in clauses (A) through (F) above secured by (or for which the holder of such Indebtedness
has an existing right, contingent or otherwise, to be secured by) any mortgage, lien, pledge, charge, security interest or other encumbrance upon or in any property or assets (including accounts and contract rights) owned by any Person, even though
the Person which owns such assets or property has not assumed or become liable for the payment of such indebtedness, and (H) all Contingent Obligations in respect of indebtedness or obligations of others of the kinds referred to in clauses
(A) through (G) above; (y) “Contingent Obligation” means, as to any Person, any direct or indirect liability, contingent or otherwise, of that Person with respect to any indebtedness, lease, dividend or other
obligation of another Person if the primary purpose or intent of the Person incurring such liability, or the primary effect thereof, is to provide assurance to the obligee of such liability that such liability will be paid or discharged, or that any
agreements relating thereto will be complied with, or that the holders of such liability will be protected (in whole or in part) against loss with respect thereto; and (z) “Person” means an individual, a limited liability
company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, a government or any department or agency thereof and any other legal entity. 
 (bb) Employee Relations. Neither the Company nor any Subsidiary is a party to any collective bargaining agreement or employs any
member of a union. The Company believes that its relations with its employees are as disclosed in the SEC Reports. Except as disclosed in the SEC Reports, as of the date hereof, no executive officer of the Company or any Subsidiary has notified the
Company or any Subsidiary that such officer intends to leave the Company or a Subsidiary, as applicable, or otherwise terminate such officer’s employment with the Company or a Subsidiary, as applicable. To the knowledge of the Company or any
Subsidiary, as of the date hereof, no executive officer of the Company or any Subsidiary is in violation of any material term of any employment contract, confidentiality, disclosure or proprietary information agreement, non-competition agreement, or
any other contract or agreement or any restrictive covenant, and the continued employment of each such executive officer does not subject the Company or any Subsidiary to any liability with respect to any of the foregoing matters. 
 (cc) Labor Matters. The Company and each Subsidiary is in compliance with all federal, state, local and foreign laws and
regulations respecting labor, employment and employment practices and benefits, terms and conditions of employment and wages and hours, except where failure to be in compliance would not, either individually or in the aggregate, reasonably be
expected to result in a Material Adverse Effect. 
  

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 (dd) Environmental Laws. The Company and each Subsidiary (i) is in compliance
with any and all Environmental Laws (as hereinafter defined), (ii) has received all permits, licenses or other approvals required of them under applicable Environmental Laws to conduct their respective businesses and (iii) is in compliance
with all terms and conditions of any such permit, license or approval where, in each of the foregoing clauses (i), (ii) and (iii), the failure to so comply would not be reasonably expected to have, individually or in the aggregate, a Material
Adverse Effect. The term “Environmental Laws” means all federal, state, local or foreign laws relating to pollution or protection of human health or the environment (including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata), including, without limitation, laws relating to emissions, discharges, releases or threatened releases of chemicals, pollutants, contaminants, or toxic or hazardous substances or wastes (collectively,
“Hazardous Materials”) into the environment, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials, as well as all authorizations, codes,
decrees, demands or demand letters, injunctions, judgments, licenses, notices or notice letters, orders, permits, plans or regulations issued, entered, promulgated or approved thereunder. 
 (ee) Subsidiary Rights. The Company or its Subsidiaries have the unrestricted right to vote, and (subject to limitations imposed by
applicable law) to receive dividends and distributions on, all capital securities of its Subsidiaries as owned by the Company. 
 (ff) Tax Status. Except for matters that would not, individually or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect, the Company and each Subsidiary (i) has made or filed all foreign,
federal and state income and all other tax returns, reports and declarations required by any jurisdiction to which it is subject, (ii) has paid all taxes and other governmental assessments and charges shown or determined to be due on such
returns, reports and declarations, except those being contested in good faith and (iii) has set aside on its books provision reasonably adequate for the payment of all taxes for periods subsequent to the periods to which such returns, reports
or declarations apply. There are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company know of no basis for any such claim. 
 (gg) The Company is not, and was not in the past, a “Shell Company” (as defined in Rule 405 promulgated under the Securities
Act). 
 3.2 Representations and Warranties of the Investors. Each Investor hereby, as to itself only and for no other Investor,
represents and warrants to the Company as follows: 
 (a) Organization; Authority. Such Investor is an entity duly
organized, validly existing and in good standing under the laws of the jurisdiction of its organization with the requisite corporate, partnership or other power and authority to enter into and to 

  

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consummate the transactions contemplated by the Transaction Documents and otherwise to carry out its obligations hereunder and thereunder. The purchase by
such Investor of the Securities hereunder has been duly authorized by all necessary corporate, partnership or other action on the part of such Investor. This Agreement has been duly executed and delivered by such Investor and constitutes the valid
and binding obligation of such Investor, enforceable against it in accordance with its terms, except (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and
contribution provisions may be limited by applicable law. 
 (b) No Public Sale or Distribution. Such Investor is
(i) acquiring the Shares and the Warrants and (ii) upon exercise of the Warrants will acquire the Warrant Shares issuable upon exercise thereof, in the ordinary course of business for its own account and not with a view towards, or for
resale in connection with, the public sale or distribution thereof, except pursuant to sales registered under the Securities Act or under an exemption from such registration and in compliance with applicable federal and state securities laws, and
such Investor does not have a present arrangement to effect any distribution of the Securities to or through any person or entity; provided, however, that by making the representations herein, such Investor does not agree to hold any
of the Securities for any minimum or other specific term and reserves the right to dispose of the Securities at any time in accordance with or pursuant to a registration statement or an exemption under the Securities Act. 
 (c) Investor Status. At the time such Investor was offered the Securities, it was, at the date hereof it is, and on the date which
it exercises any Warrants it will be an “accredited investor” as defined in Rule 501(a) under the Securities Act or a “qualified institutional buyer” as defined in Rule 144A(a) under the Securities Act. Such Investor is not a
registered broker dealer registered under Section 15(a) of the Exchange Act, or a member of the Financial Industry Regulatory Association (“FINRA”) or an entity engaged in the business of being a broker dealer. Except as
otherwise disclosed in writing to the Company on Exhibit B-2 (attached hereto) on or prior to the date of this Agreement, such Investor is not affiliated with any broker dealer registered under Section 15(a) of the Exchange Act, or a
member of FINRA or an entity engaged in the business of being a broker dealer. 
 (d) General Solicitation. Such
Investor is not purchasing the Securities as a result of any advertisement, article, notice or other communication regarding the Securities published in any newspaper, magazine or similar media, broadcast over television or radio, disseminated over
the Internet or presented at any seminar or any other general solicitation or general advertisement. 
 (e) Experience of
Such Investor. Such Investor, either alone or together with its representatives has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective
investment in the Securities, and has so evaluated the merits and risks of such investment. Such Investor understands that it must bear the economic risk of this investment in the Securities indefinitely, and is able to bear such risk and is able to
afford a complete loss of such investment. 
  

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 (f) Access to Information. Such Investor acknowledges that it has reviewed the
Disclosure Materials and has been afforded: (i) the opportunity to ask such questions as it has deemed necessary of, and to receive answers from, representatives of the Company concerning the terms and conditions of the offering of the
Securities and the merits and risks of investing in the Securities; (ii) access to information (other than material non-public information for those certain investors who did not enter into a confidentiality agreement with the Company) about
the Company and each Subsidiary and their respective financial condition, results of operations, business, properties, management and prospects sufficient to enable it to evaluate its investment; and (iii) the opportunity to obtain such
additional information that the Company possesses or can acquire without unreasonable effort or expense that is necessary to make an informed investment decision with respect to the investment. Neither such inquiries nor any other investigation
conducted by or on behalf of such Investor or its representatives or counsel shall modify, amend or affect such Investor’s right to rely on the truth, accuracy and completeness of the Disclosure Materials and the Company’s representations
and warranties contained in the Transaction Documents. Such Investor acknowledges receipt of copies of the SEC Reports. 
 (g)
No Governmental Review. Such Investor understands that no United States federal or state agency or any other government or governmental agency has passed on or made any recommendation or endorsement of the Securities or the fairness or
suitability of the investment in the Securities nor have such authorities passed upon or endorsed the merits of the offering of the Securities. 
 (h) No Conflicts. The execution, delivery and performance by such Investor of this Agreement and the consummation by such Investor of the transactions contemplated hereby will not (i) result in a violation
of the organizational documents of such Investor or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, any agreement, indenture or instrument to which such Investor is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including federal and state securities laws)
applicable to such Investor, except in the case of clauses (ii) and (iii) above, for such that are not material and do not otherwise materially adversely affect the ability of such Investor to consummate the transactions contemplated
hereby. 
 (i) Prohibited Transactions; Confidentiality. No Investor, directly or indirectly, and no Person acting on
behalf of or pursuant to any understanding with any Investor, has engaged in any purchases or sales in the securities, including derivatives, of the Company (including, without limitation, any Short Sales (a “Transaction”) involving
any of the Company’s securities) since the time that such Investor was first contacted by the Company, an Agent or any other Person regarding an investment in the Company. Such Investor covenants that neither it nor any Person acting on its
behalf or pursuant to any understanding with such Investor will engage, directly or indirectly, in any Transactions in the securities of the Company (including Short Sales) prior to the time the transactions 

  

 -20- 

 
contemplated by this Agreement are publicly disclosed. “Short Sales” include, without limitation, all “short sales” as defined in
Rule 200 promulgated under Regulation SHO under the Exchange Act and all types of direct and indirect stock pledges, forward sale contracts, options, puts, calls, short sales, swaps, derivatives and similar arrangements (including on a total return
basis), and sales and other transactions through non-U.S. broker-dealers or foreign regulated brokers. 
 (j) Restricted
Securities. The Investors understand that the Securities are characterized as “restricted securities” under the U.S. federal securities laws inasmuch as they are being acquired from the Company in a transaction not involving a public
offering and that under such laws and applicable regulations such securities may be resold without registration under the Securities Act only in certain limited circumstances. 
 (k) Legends. It is understood that, except as provided in Section 4.1(b) of this Agreement, certificates evidencing
such Securities may bear the legend set forth in Section 4.1(b). 
 (l) No Legal, Tax or Investment Advice. Such
Investor understands that nothing in this Agreement or any other materials presented by or on behalf of the Company to the Investor in connection with the purchase of the Securities constitutes legal, tax or investment advice. Such Investor has
consulted such legal, tax and investment advisors as it, in its sole discretion, has deemed necessary or appropriate in connection with its purchase of the Securities. Such Investor understands that each Agent has acted solely as an agent of the
Company in this placement of the Securities, and that neither Agent makes any representation or warranty with regard to the merits of this transaction or as to the accuracy of any information such Investor may have received in connection therewith.
Such Investor acknowledges that he has not relied on any information or advice furnished by or on behalf of such Agent. 
 (m)
Such Investor shall have completed or caused to be completed and delivered to the Company upon the execution of this Agreement, the Questionnaires attached hereto as Exhibits B1-B3, and the answers to such Questionnaires are true and correct in all
material respects as of the date of this Agreement and will be true and correct in all material respects as of the Closing Date and the effective date of the Registration Statement; provided, that such Investor shall be entitled to update
such information by providing notice thereof to the Company before the effective date of such Registration Statement. 
 ARTICLE IV

 OTHER AGREEMENTS OF THE PARTIES 
 4.1 Transfer Restrictions. 
 (a) The Investors covenant that the Securities will only be disposed of pursuant
to an effective registration statement under, and in compliance with the requirements of, the Securities Act or pursuant to an available exemption from the registration requirements of the Securities Act, and in compliance with any applicable state
securities laws. In connection with any transfer of Securities other than pursuant to an 

  

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effective registration statement or to the Company, or pursuant to Rule 144, the Company may require the transferor to provide to the Company an opinion of
counsel selected by the transferor, the form and substance of which opinion shall be reasonably satisfactory to the Company, to the effect that such transfer does not require registration under the Securities Act. Notwithstanding the foregoing, the
Company hereby consents to and agrees to register on the books of the Company and with its Transfer Agent, without any such legal opinion, except to the extent that the transfer agent requests such legal opinion, any transfer of Securities by an
Investor to an Affiliate of such Investor, provided that the transferee certifies to the Company that it is an “accredited investor” as defined in Rule 501(a) under the Securities Act and provided that such Affiliate does not request any
removal of any existing legends on any certificate evidencing the Securities. 
 (b) The Investors agree to the imprinting,
until no longer required by this Section 4.1(b), of the following legend on any certificate evidencing any of the Securities: 
 THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), OR ANY APPLICABLE STATE SECURITIES LAWS AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR
IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN COMPLIANCE WITH APPLICABLE STATE SECURITIES LAWS OR BLUE SKY LAWS. THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A
REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT OR OTHER LOAN SECURED BY SUCH SECURITIES. 
 Certificates evidencing the Shares and the Warrant Shares shall not be required to contain such legend or any other legend (i) while a registration statement
(including the Registration Statement) covering the resale of the Shares and the Warrant Shares is effective under the Securities Act, (ii) following any sale of such Securities pursuant to Rule 144 if the holder provides the Company with a
representation letter executed by such holder that is reasonably acceptable to the Company and its counsel to the effect that the Securities can be sold under Rule 144, (iii) if the Securities are eligible for sale under Rule 144, or
(iv) if the holder provides the Company with a representation letter executed by such holder that is reasonably acceptable to the Company and its counsel to the effect that the legend is not required under applicable requirements of the
Securities Act (including controlling judicial interpretations and pronouncements issued by the Staff of the SEC). Following the Effective Date and provided the registration statement referred to in clause (i) above is then in effect, or at
such earlier time as a legend is no longer required for certain Securities, the Company will no later than three (3) Trading Days following the delivery by an Investor to the Company or the Transfer Agent (if 

  

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delivery is made to the Transfer Agent a copy shall be contemporaneously delivered to the Company) of (i) a legended certificate representing such
Securities (and, in the case of a requested transfer, endorsed or with stock powers attached, signatures guaranteed, and otherwise in form necessary to affect transfer), and (ii) an opinion of counsel to the extent required by
Section 4.1(a), deliver or cause to be delivered to such Investor a certificate representing such Securities that is free from all restrictive and other legends. Upon the written request of the Holder and provided that the Transfer Agent
is participating in The Depository Trust Company (“DTC”) Fast Automated Securities Transfer Program, the Company shall use commercially reasonable efforts to reissue such Securities to which a Holder is entitled to such
Holder’s or its designee’s balance account with DTC through its Deposit Withdrawal Agent Commission system (“DWAC”) provided that the Holder provides the Company the reasonably necessary details to effect the foregoing
DWAC delivery. When the Company is required to cause an unlegended certificate to replace a previously issued legended certificate, if: (1) the unlegended certificate is not delivered to a Investor within three Trading Days of submission by
that Investor of a legended certificate and supporting documentation to the Company and its counsel as provided above and (2) prior to the time such unlegended certificate is received by the Investor, the Investor, or any third party on behalf
of such Investor or for the Investor’s account, purchases (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Investor of shares represented by such certificate (a “Buy-In”),
then the Company shall either (i) pay cash to the Holder in an amount equal to the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased (the “Buy-In Price”),
at which point the Company’s obligation to deliver such certificate (and to issue such shares of Common Stock) or credit such Holder’s balance account with DTC shall terminate, or (ii) promptly honor its obligation to deliver to the
Holder a certificate or certificates representing such shares of Common Stock or credit such Holder’s balance account with DTC and pay cash to the Holder in an amount equal to the excess (if any) of the Buy-In Price over the product of
(A) such number of shares of Common Stock, times (B) the Closing Bid Price on the date of exercise. The Company may not make any notation on its records or give instructions to the Transfer Agent that enlarge the restrictions on transfer
set forth in this Section. 
 (c) The Company will not object to and shall permit (except as prohibited by law) an Investor to
pledge or grant a security interest in some or all of the Securities in connection with a bona fide margin agreement with a registered broker-dealer or grant a security interest in some or all of the Securities to a financial institution that is an
“accredited investor” as defined in Rule 501(a) under the Securities Act and who agrees to be bound by the provisions of this Agreement, and if required under the terms of such arrangement, the Company will not object to and shall permit
(except as prohibited by law) such Investor to transfer pledged or secured Securities to the pledgees or secured parties. Except as required by law, such a pledge or transfer would not be subject to approval of the Company, no legal opinion of the
pledgee, secured party or pledgor shall be required in connection therewith (but such legal opinion shall be required in connection with a subsequent transfer or foreclosure following default by the Investor transferee of the pledge), and no notice
shall be required of such pledge. Each Investor acknowledges that the Company shall not be responsible for any pledges relating to, or the grant of any security interest in, any of the Securities or for any agreement, understanding or arrangement
between any Investor and its pledgee or secured party. At the appropriate Investor’s expense, the Company will execute and deliver such reasonable documentation as a pledgee or secured party of Securities may reasonably request in connection
with a pledge or 

  

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transfer of the Securities, including the preparation and filing of any required prospectus supplement under Rule 424(b)(3) of the Securities Act or other
applicable provision of the Securities Act to appropriately amend the list of Selling Stockholders thereunder. Provided that the Company is in compliance with the terms of this Section 4.1(c), the Company’s indemnification
obligations pursuant to Section 6.4 shall not extend to any Proceeding or Losses arising out of or related to this Section 4.1(c). 
 4.2 Furnishing of Information. Until the date that all Investors owning Shares, Warrants or Warrant Shares may sell all of them under Rule 144(b) of the Securities Act (or any successor provision) without
compliance with Rule 144(c) of the Securities Act (or any successor provision), the Company covenants to use its commercially reasonable efforts to timely file (or obtain extensions in respect thereof and file within the applicable grace period) all
reports required to be filed by the Company after the date hereof pursuant to the Exchange Act. During such period, if the Company is not required to file reports pursuant to such laws, it will prepare and furnish to the Investors and make publicly
available in accordance with Rule 144 such information as is required for the Investors to sell the Shares and Warrant Shares under Rule 144. The Company further covenants that it will take such further action as any holder of Securities may
reasonably request to satisfy the provisions of this Section 4.2. 
 4.3 Integration. The Company shall not, and shall use
its commercially reasonable efforts to ensure that no Affiliate thereof shall, sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined in Section 2 of the Securities Act) that would be
integrated with the offer or sale of the Securities in a manner that would require the registration under the Securities Act of the sale of the Securities to the Investors or that would be integrated with the offer or sale of the Securities for
purposes of the rules and regulations of any Trading Market. 
 4.4 Reservation of Securities. The Company shall maintain a reserve
from its duly authorized shares of Common Stock for issuance pursuant to the Transaction Documents in such amount as may be required to fulfill its obligations to issue such Securities under the Transaction Documents. In the event that at any time
the then authorized shares of Common Stock are insufficient for the Company to satisfy its obligations to issue such Securities under the Transaction Documents, the Company shall promptly take such actions as may be required to increase the number
of authorized shares. 
 4.5 Securities Laws Disclosure; Publicity. The Company shall, at or before 9:00 a.m., New York time, on the
first Trading Day following execution of this Agreement, issue a press release disclosing all material terms of the transactions contemplated hereby and shall file such press release as an exhibit to a Form 8-K. The Company shall reflect in such
Form 8-K when so filed with the SEC such comments relating to such Investor as such Investor may reasonably propose. In the event such Form 8-K is not filed by the Company, the Investors shall each have the right to make a public disclosure, in the
form of a press release, of the transactions contemplated hereby only upon the review and approval of such public disclosure by the Company, which such approval shall not be unreasonably withheld. Within four (4) Trading Days of the execution
of this Agreement, the Company shall file a Current Report on Form 8-K with the SEC (the “8-K Filing”) describing the terms of the transactions contemplated by the Transaction Documents and including as exhibits to such Current
Report on Form 8-K the 

  

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Transaction Documents (including the schedules and the names, and addresses of the Investors and the amount(s) of Securities respectively purchased)
and the form of Warrants, in the form required by the Exchange Act. Thereafter, the Company shall timely file any filings and notices required by the SEC or applicable law with respect to the transactions contemplated hereby and provide copies
thereof to the Investors promptly after filing. Except as herein provided, neither the Company nor any Subsidiary shall publicly disclose the name of any Investor, or include the name of any Investor in any press release without the prior written
consent of such Investor (which consent shall not be unreasonably withheld or delayed), unless otherwise required by law, regulatory authority or Trading Market. Neither the Company nor any Subsidiary shall, nor shall any of their respective
officers, directors, employees and agents, provide any Investor with any material nonpublic information regarding the Company or any Subsidiary from and after the issuance of the above referenced press release without the express written consent of
such Investor. 
 4.6 Use of Proceeds. The Company intends to use the net proceeds from the sale of the Securities for working
capital and general corporate purposes. The Company also may use a portion of the net proceeds, currently intended for general corporate purposes, to acquire or invest in technologies, products or services that complement its business, although the
Company has no present plans or commitments and is not currently engaged in any material negotiations with respect to these types of transactions. 
 4.7 Participation Rights. 
 (a) Each Investor, for so long as it holds at least 50% of the sum of
(i) the original number of Shares issued to such Investor under this Agreement and (ii) the number of Warrant Shares underlying the Warrants issued to such Investor under this Agreement, will have the right to purchase its pro rata share
of any future offering by the Company of shares of capital stock of the Company or rights, options, or warrants to purchase shares of capital stock of the Company or securities of any type whatsoever that are, or may become, convertible into shares
of capital stock of the Company on the terms and conditions of such financing; provided, that underwritten public offerings and Exempt Issuances will be excluded from this right. For purposes of the foregoing, the pro rata share of any Investor
shall be equal to a fraction, the numerator of which is the number of Shares purchased by the Investor under this Agreement and the denominator of which is all of the outstanding shares of the Common Stock of the Company upon the consummation of the
sale of Shares pursuant to this Agreement. This Section 4.7 shall terminate and cease to have any force or effect on such date as the Company shall have issued equity securities resulting in net proceeds to the Company equal to or in
excess of $25 million in a single transaction after the date hereof, excluding Exempt Issuances. 
 (b) The Company shall
provide each Investor notice at least five (5) Business Days in advance of the closing of any equity financing to which this Section 4.7 applies, which notice shall specify the terms and conditions of such financing. Each Investor
shall notify the Company within such five (5) Business Day period if such Investor is electing to exercise its rights under this Section 4.7 with respect to such financing on such terms and conditions. Any Investor that fails to so
notify the Company of such election within such five (5) Business Day period shall be deemed to have waived its rights under this Section 4.7 with respect to the financing described in the Company’s notice. Such waiver shall
not affect such Investor’s rights to any additional equity financings to which this Section 4.7 applies. 
  

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 (c) The Company shall have thirty (30) days from the expiration of the ten
(10) Business Day offer period described above to offer, issue or sell all or any part of such offered securities as to which the Investors have not exercised their participation rights under this Section 4.7, but only upon terms and
conditions that are not more favorable to the acquiring person or persons or less favorable to the Company than those set forth in the notice provided to the Investors by the Company pursuant to Section 4.7(b) hereof. 
 4.8 Equal Treatment of Investors. No consideration shall be offered or paid to any person to amend or consent to a waiver or modification of any
provision of any of the Transaction Documents or in consideration of the exchange, redemption or repurchase of any Security unless the same consideration is also offered to all of the parties to the Transaction Documents. For clarification purposes,
this provision constitutes a separate right granted to each Investor by the Company and negotiated separately by each Investor, and is intended for the Company to treat the Investors as a class and shall not in any way be construed as the Investors
acting in concert or as a group with respect to the purchase, disposition or voting of Securities or otherwise. 
 4.9 Alternate
Warrants. If the Board of Directors of the Company elects not to proceed with the transactions contemplated by the Transaction Documents for any reason other than a failure by the Investors to perform the conditions precedent set forth in
Section 5.2, the Company shall promptly issue to the Investors, in the aggregate, a number of warrants (the “Alternate Warrants”) equal to 19.9% of the outstanding shares of Common Stock of the Company as of the date
hereof. The Alternate Warrants shall be substantially in the form of the warrant attached hereto as Exhibit A except that the exercise price of the Alternate Warrants shall be equal to $0.34 per share. If issued, the Alternate Warrants shall be
distributed to each Investor on a pro rata basis based upon a fraction, the numerator of which is equal to the amount of the aggregate Per Share Price committed to by the Investor and the denominator of which is equal to the Purchase Price.

 ARTICLE V 
 CONDITIONS

 5.1 Conditions Precedent to the Obligations of the Investors. The obligation of each Investor to acquire Securities at the Closing
is subject to the satisfaction or waiver by such Investor, at or before the Closing, of each of the following conditions: 
 (a) Stockholder Approval. Prior to the Closing, the Company shall have received the Stockholder Approval. 
 (b) Representations and Warranties. The representations and warranties of the Company contained herein shall be true and correct in all material respects as of the date when made and as of the Closing as though made on and as of such
date, other than with respect to representations and warranties of the Company which are qualified by materiality or by Material Adverse Effect, which shall be true and correct in all respects (provided, that any representation made “as
of the date hereof” shall be deemed, for purposes of this section, to be made as of the Closing Date). 
  

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 (c) Performance. The Company and each other Investor shall have performed,
satisfied and complied in all material respects with all covenants, agreements and conditions required by the Transaction Documents to be performed, satisfied or complied with by it at or prior to the Closing, other than with respect to covenants,
agreements and conditions of the Company which are qualified by materiality or by Material Adverse Effect, which shall be complied with in all respects. 
 (d) Consents. The Company shall have obtained in a timely fashion any and all consents, permits, approvals, registrations and waivers necessary for consummation of the purchase and sale of the Shares at the
Closing, all of which shall be and remain so long as necessary in full force and effect. 
 (e) No Suspensions of Trading
in Common Stock; Listing. Trading in the Common Stock shall not have been suspended by the SEC or any Trading Market (except for any suspensions of trading of not more than one Trading Day solely to permit dissemination of material information
regarding the Company) at any time since the date of execution of this Agreement, and the Common Stock shall have been at all times since such date listed for trading on a Trading Market. 
 (f) Absence of Litigation. No action, suit or proceeding by or before any court or any governmental body or authority, against the
Company or any Subsidiary or pertaining to the transactions contemplated by this Agreement or their consummation, shall have been instituted on or before the Closing Date, which action, suit or proceeding would, if determined adversely, reasonably
be expected to have a Material Adverse Effect on the ability of the Company to consummate the transactions contemplated hereby. 
 (g) Company Deliverables. The Company shall have delivered the Company Deliverables in accordance with Section 2.2(a). 
 (h) No Change to Investors. There shall have been no change to the identity of the Investors, the number of Shares that each such Investor is purchasing under this Agreement or the aggregate amount of the
Purchase Price. 
 5.2 Conditions Precedent to the Obligations of the Company. The obligation of the Company to sell the Securities at
the Closing is subject to the satisfaction or waiver by the Company, at or before the Closing, of each of the following conditions: 
 (a) Representations and Warranties. The representations and warranties of the Investors contained herein shall be true and correct in all material respects as of the date when made and as of the Closing Date as though made on and as
of such date, other than with respect to representations and warranties of the Investors which are qualified by materiality or by Material Adverse Effect, which shall be true and correct in all respects (provided, that any representation made
“as of the date hereof” shall be deemed, for purposes of this section, to be made as of the Closing Date). 
  

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 (b) Performance. The Investors shall have performed, satisfied and complied in all
material respects with all covenants, agreements and conditions required by the Transaction Documents to be performed, satisfied or complied with by the Investors at or prior to the Closing, other than with respect to covenants, agreements and
conditions of the Investors which are qualified by materiality or by Material Adverse Effect, which shall be complied with in all respects. 
 (c) Investors Deliverables. Such Investor shall have delivered its share of the Purchase Price in accordance with Section 2.2(b). 
 ARTICLE VI 
 REGISTRATION RIGHTS 
 6.1 Registration Statement. 
 (a) As promptly as possible, and in any event on or prior to the Filing Date, the Company shall prepare and file with the SEC a Registration Statement covering the resale of all Registrable Securities for an offering to be made on a
continuous basis pursuant to Rule 415; provided, however, that if at any time the SEC takes the position that the offering of some or all of the Registrable Securities in a Registration Statement is not eligible to be made on a delayed
or continuous basis under the provisions of Rule 415 as a result of a characterization by the SEC of the transaction described by the Registration Statement as a primary offering by the Company, the Company shall use its Best Efforts to persuade the
SEC that the offering contemplated by the Registration Statement is a valid secondary offering and not an offering “by or on behalf of the issuer” as defined in Rule 415. In the event that, despite the Company’s Best Efforts
and compliance with the terms of this Section 6.1(a) the SEC refuses to alter its position, the Company shall, upon obtaining consent of the Investors, (i) remove from the Registration Statement such portion of the Registrable
Securities (the “Cut Back Shares”) and/or (ii) agree to such restrictions and limitations on the registration and resale of the Registrable Securities as the SEC may require to assure the Company’s compliance with the
requirements of Rule 415. Any Registrable Securities not able to be included in the Registration Statement shall reduce the number of Registrable Securities of each Investor covered by such Registration Statement on a pro-rata basis based on the
number of Registrable Securities issued or issuable to each Investor, and the Company shall have no liability to any Investor pursuant to Section 6.1(d) or otherwise as a result of the filing of a Registration Statement covering less than all
of the Registrable Securities under the circumstances described in this proviso. As soon as practicable following such intervening period of time as shall be required by the SEC prior to the filing thereof, the Company shall file one or more
additional registration statements covering the resale of the Cut Back Shares. With regard to any such new Registration Statement, all of the provisions of this Section 6.1 shall again be applicable to the Cut Back Shares. For purposes
of any such new Registration Statement, the Filing Date shall be deemed to be ten (10) Business Days after such intervening period of time as shall be required by the SEC prior to the filing thereof and the Required Effectiveness Date shall be
deemed to be the date which is the earliest of (a) ninety (90) days after the filing thereof or (b) five (5) Trading Days after the Company receives notification from the SEC that such Registration Statement will not become
subject to review. The Registration Statement shall be on Form S-3 (except if the 

  

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Company is not then eligible to register for resale the Registrable Securities on Form S-3, in which case such registration shall be on another appropriate
form in accordance with the Securities Act and the Exchange Act) and shall contain (except if otherwise directed by the Investors or requested by the SEC) the “Plan of Distribution” in substantially the form attached hereto as Exhibit D
(except if otherwise required pursuant to written comments received from the SEC upon a review of such Registration Statement). 
 (b) The Company shall use its reasonable Best Efforts to cause the Registration Statement to be declared effective by the SEC as promptly as possible after the filing thereof, but in any event prior to the Required Effectiveness Date, and
shall use its reasonable Best Efforts to keep the Registration Statement continuously effective under the Securities Act until the earlier of the date that all Registrable Securities covered by such Registration Statement have been sold or can be
sold publicly under Rule 144 without volume restrictions (the “Effectiveness Period”); provided that, upon notification by the SEC that a Registration Statement will not be reviewed or is no longer subject to further review and
comments, the Company shall request acceleration of such Registration Statement within five (5) Trading Days after receipt of such notice and request that it become effective on 4:00 p.m. New York City time on the Effective Date and file a
prospectus supplement for any Registration Statement, whether or not required under Rule 424 (or otherwise), by 9:00 a.m. New York City time the day after the Effective Date. 
 (c) The Company shall notify the Investors in writing promptly (and in any event within two (2) Trading Days) after receiving
notification from the SEC that the Registration Statement has been declared effective. 
 (d) Should an Event (as defined
below) occur, then upon the occurrence of such Event, and on every monthly anniversary thereof until the applicable Event is cured, the Company shall pay to each Investor an amount in cash, as liquidated damages and not as a penalty, as follows:
after each Event, equal to one percent (1.0%) for the first month (or a pro rata portion thereof if less than a full month), and two percent (2.0%) for each month thereafter (or a pro rata portion thereof, if less than a full month), of
(i) the number of Shares held by such Investor as of the date of such Event, multiplied by (ii) the Per Share Price; provided, however, that the total amount of payments pursuant to this Section 6.1(d) shall not
exceed, when aggregated with all such payments paid to all Investors, ten percent (10%) of the aggregate purchase price of the Securities purchased pursuant to this Agreement. The payments to which an Investor shall be entitled pursuant to this
Section 6.1(d) are referred to herein as “Event Payments.” Any Event Payments payable pursuant to the terms hereof shall apply on a pro rated basis for any portion of a month prior to the cure of an Event. In the event
the Company fails to make Event Payments in a timely manner, such Event Payments shall bear interest at the rate of one percent (1.0%) per month (pro rated for partial months) until paid in full. All pro rated calculations made pursuant to this
paragraph shall be based upon the actual number of days in such pro rated month. Notwithstanding the foregoing, the maximum payment to an Investor associated with all Events in the aggregate shall not exceed (i) in any thirty (30)-day period,
an aggregate of two percent (2.0%) of the purchase price paid by such Investor for its Shares then held (plus interest accrued thereon, if applicable) and (ii) ten percent (10.0%) of the purchase paid by such Investor for its Shares
then held. 
  

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 For such purposes, each of the following shall constitute an “Event”: 
 (i) the Registration Statement is not filed on or prior to the Filing Date; 
 (ii) the Registration Statement is not declared effective on or prior to the Required Effectiveness Date; 
 (iii) except as provided for in Section 6.1(e) (the “Excluded Events”), after the Effective Date and during
the Effectiveness Period, an Investor is not permitted to sell Registrable Securities under the Registration Statement (or a subsequent Registration Statement filed in replacement thereof) for any reason (other than the fault of such Investor) for
three (3) or more Trading Days (whether or not consecutive); 
 (iv) except as a result of the Excluded Events, the
Common Stock is not listed or quoted, or is suspended from trading, on an Eligible Market for a period of three (3) Trading Days (which need not be consecutive Trading Days) during the Effectiveness Period; 
 (v) with respect to an Investor, the Company fails for any reason to deliver a certificate evidencing any Securities to such Investor
within five (5) Trading Days after delivery of such certificate is required pursuant to any Transaction Document or the exercise rights of the Investors pursuant to the Warrants are otherwise suspended for any reason; or 
 (vi) during the Effectiveness Period, except as a result of the Excluded Events, the Company fails to have any Shares listed or quoted on
an Eligible Market. 
 (e) Notwithstanding anything in this Agreement to the contrary, the Company may, by written notice to
the Investors, suspend sales under a Registration Statement after the Effective Date thereof and/or require that the Investors immediately cease the sale of shares of Common Stock pursuant thereto and/or defer the filing of any subsequent
Registration Statement if the Board of Directors determines in good faith that (A) it would be materially detrimental to the Company (other than as relating solely to the price of the Common Stock) to maintain a Registration Statement at such
time or (B) it is in the best interests of the Company to suspend sales under such registration at such time. Upon receipt of such notice, each Investor shall immediately discontinue any sales of Registrable Securities pursuant to such
registration until such Investor is advised in writing by the Company that the current Prospectus or amended Prospectus, as applicable, may be used. In no event, however, shall this right be exercised to suspend sales beyond the period during which
(in the good faith determination of the Company’s Board of Directors) the failure to require such suspension would be materially detrimental to the Company. The Company’s rights under this Section 6(e) may be exercised for a
period of no more than thirty (30) Trading Days at a time (which may be consecutive) and not more than three (3) times in any twelve (12)-month period, without such suspension being considered as part of an Event Payment determination.
Immediately after the end of any suspension period under this Section 6(e), the Company shall take all necessary actions (including filing any required supplemental prospectus) to restore the effectiveness of the applicable Registration
Statement and the ability of the Investors to publicly resell their Registrable Securities pursuant to such effective Registration Statement. 
  

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 (f) The Company shall not, from the date hereof until the Effective Date of the
Registration Statement, prepare and file with the SEC a registration statement relating to an offering for its own account or the account of others under the Securities Act of any of its equity securities, other than any registration statement or
post-effective amendment to a registration statement (or supplement thereto) relating to the Company’s employee benefit plans registered on Form S-8. 
 6.2 Registration Procedures. In connection with the Company’s registration obligations hereunder, the Company shall: 
 (a) Not less than five (5) Trading Days prior to the filing of a Registration Statement or any related Prospectus or any amendment or
supplement thereto, furnish via email to those Investors who have supplied the Company with email addresses copies of all such documents proposed to be filed, which documents (other than any document that is incorporated or deemed to be incorporated
by reference therein) will be subject to the review of such Investors. The Company shall reflect in each such document when so filed with the SEC such comments regarding the Investors and the plan of distribution as the Investors may reasonably and
promptly propose no later than four (4) Trading Days after the Investors have been so furnished with copies of such documents as aforesaid. 
 (b) (i) Subject to Section 6.1(e), prepare and file with the SEC such amendments, including post-effective amendments, to each Registration Statement and the Prospectus used in connection therewith as
may be necessary to keep the Registration Statement continuously effective, as to the applicable Registrable Securities for the Effectiveness Period and prepare and file with the SEC such additional Registration Statements in order to register for
resale under the Securities Act all of the Registrable Securities; (ii) cause the related Prospectus to be amended or supplemented by any required Prospectus supplement, and as so supplemented or amended to be filed pursuant to Rule 424;
(iii) respond as promptly as reasonably possible, and in any event within twelve (12) Trading Days (except to the extent that the Company reasonably requires additional time to respond to accounting comments), to any comments received from
the SEC with respect to any Registration Statement or any amendment thereto; and (iv) comply in all material respects with the provisions of the Securities Act and the Exchange Act with respect to the disposition of all Registrable Securities
covered by a Registration Statement during the applicable period in accordance with the intended methods of disposition by the Investors thereof set forth in the Registration Statement as so amended or in such Prospectus as so supplemented.

 (c) Notify the Investors as promptly as reasonably possible, and (if requested by the Investors confirm such notice in
writing no later than two (2) Trading Days thereafter) of any of the following events: (i) the SEC notifies the Company whether there will be a “review” of any Registration Statement; (ii) the SEC comments in writing on any
Registration Statement; (iii) any Registration Statement or any post-effective amendment is declared effective; (iv) the SEC or any other Federal or state governmental authority requests any amendment or supplement to any Registration
Statement or Prospectus or requests 

  

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additional information related thereto; (v) the SEC issues any stop order suspending the effectiveness of any Registration Statement or initiates any
Proceedings for that purpose; (vi) the Company receives notice of any suspension of the qualification or exemption from qualification of any Registrable Securities for sale in any jurisdiction, or the initiation or threat of any Proceeding for
such purpose; or (vii) the financial statements included in any Registration Statement become ineligible for inclusion therein or any Registration Statement or Prospectus or other document contains any untrue statement of a material fact or
omits to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. 
 (d) Use its commercially reasonable efforts to avoid the issuance of or, if issued, obtain the withdrawal of (i) any order suspending
the effectiveness of any Registration Statement, or (ii) any suspension of the qualification (or exemption from qualification) of any of the Registrable Securities for sale in any jurisdiction, as soon as possible. 
 (e) If requested by an Investor, provide such Investor without charge, at least one conformed copy of each Registration Statement and each
amendment thereto, including financial statements and schedules, and all exhibits to the extent requested by such Person (including those previously furnished or incorporated by reference) promptly after the filing of such documents with the SEC.

 (f) Promptly deliver to each Investor, without charge, as many copies of the Prospectus or Prospectuses (including each
form of prospectus) and each amendment or supplement thereto as such Persons may reasonably request. The Company hereby consents to the use of such Prospectus and each amendment or supplement thereto by each of the selling Investors in connection
with the offering and sale of the Registrable Securities covered by such Prospectus and any amendment or supplement thereto to the extent permitted by federal and state securities laws and regulations. 
 (g) (i) In the time and manner required by each Trading Market, prepare and file with such Trading Market an additional shares
listing application covering all of the Registrable Securities; (ii) take all steps necessary to cause such Shares and Warrant Shares to be approved for listing on each Trading Market as soon as possible thereafter; (iii) provide to each
Investor evidence of such listing; and (iv) except as a result of the Excluded Events, during the Effectiveness Period, maintain the listing of such Shares and Warrant Shares on each such Trading Market or another Eligible Market. 

(h) Prior to any public offering of Registrable Securities, use its Best Efforts to register or qualify or cooperate with the selling
Investors in connection with the registration or qualification (or exemption from such registration or qualification) of such Registrable Securities for offer and sale under the securities or Blue Sky laws of such jurisdictions within the United
States as any Investor requests in writing, to keep each such registration or qualification (or exemption therefrom) effective for so long as required, but not to exceed the duration of the Effectiveness Period, and to do any and all other acts or
things reasonably necessary or advisable to enable the disposition in such jurisdictions of the Registrable Securities covered by a Registration Statement; provided, however, that the 

  

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Company shall not be obligated to file any general consent to service of process or to qualify as a foreign corporation or as a dealer in securities in any
jurisdiction in which it is not so qualified or to subject itself to taxation in respect of doing business in any jurisdiction in which it is not otherwise so subject. 
 (i) Cooperate with the Investors to facilitate the timely preparation and delivery of certificates representing Registrable Securities to
be delivered to a transferee pursuant to a Registration Statement, which certificates shall be free, to the extent permitted by this Agreement and under law, of all restrictive legends, and to enable such certificates to be in such denominations and
registered in such names as any such Investors may reasonably request. 
 (j) Upon the occurrence of any event described in
Section 6.2(c)(vii), as promptly as reasonably possible, prepare a supplement or amendment, including a post-effective amendment, to the Registration Statement or a supplement to the related Prospectus or any document incorporated or
deemed to be incorporated therein by reference, and file any other required document so that, as thereafter delivered, neither the Registration Statement nor such Prospectus will contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. 
 (k) Cooperate with any reasonable due diligence investigation undertaken by the Investors in connection with the sale of Registrable
Securities, including, without limitation, by making available documents and information; provided that the Company will not deliver or make available to any Investor material, nonpublic information unless such Investor requests in advance in
writing to receive material, nonpublic information and agrees to keep such information confidential. 
 (l) Comply with all
rules and regulations of the SEC applicable to the registration of the Securities. 
 (m) It shall be a condition precedent to
the obligations of the Company to complete the registration pursuant to this Agreement with respect to the Registrable Securities of any particular Investor or to make any Event Payments set forth in Section 6.1(d) to such Investor that
such Investor furnish to the Company the information specified in Exhibits B-1, B-2 and B-3 hereto and such other information regarding itself, the Registrable Securities and other shares of Common Stock held by it and the intended method of
disposition of the Registrable Securities held by it (if different from the Plan of Distribution set forth on Exhibit D hereto) as shall be reasonably required to effect the registration of such Registrable Securities and shall complete and
execute such documents in connection with such registration as the Company may reasonably request. 
 (n) The Company shall
comply with all applicable rules and regulations of the SEC under the Securities Act and the Exchange Act, including, without limitation, Rule 172 under the Securities Act, file any final Prospectus, including any supplement or amendment thereof,
with the SEC pursuant to Rule 424 under the Securities Act, promptly inform the Investors in writing if, at any time during the Effectiveness Period, the Company does not 

  

 -33- 

 
satisfy the conditions specified in Rule 172 and, as a result thereof, the Investors are required to make available a Prospectus in connection with any
disposition of Registrable Securities and take such other actions as may be reasonably necessary to facilitate the registration of the Registrable Securities hereunder. 
 6.3 Registration Expenses. The Company shall pay all fees and expenses incident to the performance of or compliance with Article VI of this Agreement by the Company, including without limitation
(a) all registration and filing fees and expenses, including without limitation those related to filings with the SEC, any Trading Market and in connection with applicable state securities or Blue Sky laws, (b) printing expenses (including
without limitation expenses of printing certificates for Registrable Securities), (c) messenger, telephone and delivery expenses, (d) fees and disbursements of counsel for the Company, (e) fees and expenses of all other Persons
retained by the Company in connection with the consummation of the transactions contemplated by this Agreement, and (f) all listing fees to be paid by the Company to the Trading Market. 
 6.4 Indemnification. 
 (a) Indemnification by the Company. The Company shall, notwithstanding any termination of this Agreement, indemnify and hold harmless each Investor, the officers, directors, partners, members, agents and employees of each of them,
each Person who controls any such Investor (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) and the officers, directors, partners, managers, members, agents and employees of each such controlling
Person, to the fullest extent permitted by applicable law, from and against any and all Losses, as incurred, arising out of or relating to (i) any breach of any covenant, agreement or obligation of the Company contained in the Transaction
Documents or any other certificate, instrument or document contemplated hereby or thereby or (ii) any untrue or alleged untrue statement of a material fact contained in the Registration Statement, any Prospectus or any form of Company
prospectus or in any amendment or supplement thereto or in any Company preliminary prospectus, or arising out of or relating to any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements
therein (in the case of any Prospectus or form of prospectus or supplement thereto, in the light of the circumstances under which they were made) not misleading, except to the extent, but only to the extent, that (A) such untrue statements,
alleged untrue statements, omissions or alleged omissions are based solely upon information regarding such Investor furnished in writing to the Company by such Investor for use therein, or to the extent that such information relates to such Investor
or such Investor’s proposed method of distribution of Registrable Securities and was reviewed and expressly approved by such Investor in writing expressly for use in the Registration Statement, or (B) with respect to any prospectus, if the
untrue statement or omission of material fact contained in such prospectus was corrected on a timely basis in the prospectus, as then amended or supplemented, if such corrected prospectus was timely made available by the Company to the Investor, and
the Investor seeking indemnity hereunder was advised in writing not to use the incorrect prospectus prior to the use giving rise to Losses. 
 (b) Indemnification by Investors. Each Investor shall, severally and not jointly, indemnify and hold harmless the Company and its directors, officers, agents and employees to the fullest extent permitted by
applicable law, from and against all Losses (as 

  

 -34- 

 
determined by a court of competent jurisdiction in a final judgment not subject to appeal or review) arising solely out of any untrue statement of a material
fact contained in the Registration Statement, any Prospectus, or any form of prospectus, or in any amendment or supplement thereto, or arising out of or relating to any omission of a material fact required to be stated therein or necessary to make
the statements therein (in the case of any Prospectus or form of prospectus or supplement thereto, in the light of the circumstances under which they were made) not misleading, but only to the extent that (i) such untrue statements or omissions
are based solely upon information regarding such Investor furnished to the Company by such Investor in writing expressly for use therein, or to the extent that such information relates to such Investor or such Investor’s proposed method of
distribution of Registrable Securities and was reviewed and expressly approved in writing by such Investor expressly for use in the Registration Statement (it being understood that the information provided by the Investor to the Company in
Exhibits B-1, B-2 and B-3 and the Plan of Distribution set forth on Exhibit D, as the same may be modified by such Investor constitutes information reviewed and expressly approved by such Investor in writing
expressly for use in the Registration Statement), such Prospectus or such form of prospectus or in any amendment or supplement thereto. In no event shall the liability of any selling Investor hereunder be greater in amount than the dollar amount of
the net proceeds received by such Investor upon the sale of the Registrable Securities giving rise to such indemnification obligation. 
 (c) Conduct of Indemnification Proceedings. If any Proceeding shall be brought or asserted against any Person entitled to indemnity hereunder (an “Indemnified Party”), such Indemnified Party
shall promptly notify the Person from whom indemnity is sought (the “Indemnifying Party”) in writing, and the Indemnifying Party shall have the right to assume the defense thereof, including the employment of counsel reasonably
satisfactory to the Indemnified Party and the payment of all fees and expenses incurred in connection with defense thereof; provided, that the failure of any Indemnified Party to give such notice shall not relieve the Indemnifying Party of its
obligations or liabilities pursuant to this Agreement, except (and only) to the extent that such failure shall have proximately and materially adversely prejudiced the Indemnifying Party. 
 An Indemnified Party shall have the right to employ separate counsel in any such Proceeding and to participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of such Indemnified Party or Parties unless: (i) the Indemnifying Party has agreed in writing to pay such fees and expenses; or (ii) the Indemnifying Party shall have failed
promptly to assume the defense of such Proceeding and to employ counsel reasonably satisfactory to such Indemnified Party in any such Proceeding; or (iii) the named parties to any such Proceeding (including any impleaded parties) include both
such Indemnified Party and the Indemnifying Party, and such Indemnified Party shall have been advised by counsel reasonably satisfactory to the indemnifying party that a conflict of interest is likely to exist if the same counsel were to represent
such Indemnified Party and the Indemnifying Party (in which case, if such Indemnified Party notifies the Indemnifying Party in writing that it elects to employ separate counsel at the expense of the Indemnifying Party, the Indemnifying Party shall
not have the right to assume the defense thereof and the reasonable fees and expenses of separate counsel shall be at the expense of the Indemnifying Party). It shall be understood, however, that the Indemnifying Party shall not, in connection with
any one such Proceeding (including separate Proceedings that have 

  

 -35- 

 
been or will be consolidated before a single judge) be liable for the fees and expenses of more than one separate firm of attorneys at any time for all
Indemnified Parties, which firm shall be appointed by a majority of the Indemnified Parties. The Indemnifying Party shall not be liable for any settlement of any such Proceeding effected without its written consent, which consent shall not be
unreasonably withheld, delayed or conditioned. No Indemnifying Party shall, without the prior written consent of the Indemnified Party, effect any settlement of any pending Proceeding in respect of which any Indemnified Party is a party, unless such
settlement includes an unconditional release of such Indemnified Party from all liability on claims that are the subject matter of such Proceeding. 
 All reasonable fees and expenses of the Indemnified Party (including reasonable fees and expenses to the extent incurred in connection with investigating or preparing to defend such Proceeding in a manner not
inconsistent with this Section) shall be paid to the Indemnified Party, as incurred, within twenty (20) Trading Days of written notice thereof to the Indemnifying Party (regardless of whether it is ultimately determined that an Indemnified
Party is not entitled to indemnification hereunder; provided, that the Indemnifying Party may require such Indemnified Party to undertake to reimburse all such fees and expenses to the extent it is finally judicially determined that such
Indemnified Party is not entitled to indemnification hereunder). 
 (d) Contribution. If the indemnification under
Section 6.4(a) or (b) is unavailable to an Indemnified Party (by reason of public policy or otherwise), then each Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall contribute to the amount paid or
payable by such Indemnified Party as a result of such Losses, in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party and Indemnified Party in connection with the actions, statements or omissions that resulted in
such Losses as well as any other relevant equitable considerations. The relative fault of such Indemnifying Party and Indemnified Party shall be determined by reference to, among other things, whether any action in question, including any untrue or
alleged untrue statement of a material fact or omission or alleged omission of a material fact, has been taken or made by, or relates to information supplied by, such Indemnifying Party or Indemnified Party, and the parties’ relative intent,
knowledge, access to information and opportunity to correct or prevent such action, statement or omission. The amount paid or payable by a party as a result of any Losses shall be deemed to include, subject to the limitations set forth in
Section 6.4(c), any reasonable attorneys’ or other reasonable fees or expenses incurred by such party in connection with any Proceeding to the extent such party would have been indemnified for such fees or expenses if the
indemnification provided for in this Section was available to such party in accordance with its terms. 
 (e) The parties
hereto agree that it would not be just and equitable if contribution pursuant to this Section 6.4(d) were determined by pro rata allocation or by any other method of allocation that does not take into account the equitable considerations
referred to in the immediately preceding paragraph. Notwithstanding the provisions of this Section 6.4(d), no Investor shall be required to contribute, in the aggregate, any amount in excess of the amount by which the net proceeds
actually received by such Investor from the sale of the Registrable Securities subject to the Proceeding exceed the amount of any damages that such Investor has otherwise been required to pay by reason of such untrue or 

  

 -36- 

 
alleged untrue statement or omission or alleged omission. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. 
 (f) The indemnity and contribution agreements contained in this Section are in addition to any liability that the Indemnifying Parties may have to the Indemnified Parties. 
 6.5 Dispositions. Each Investor agrees that it will comply with the prospectus delivery requirements of the Securities Act as applicable to it in
connection with sales of Registrable Securities pursuant to the Registration Statement and shall sell its Registrable Securities in accordance with the Plan of Distribution set forth in the Prospectus. Each Investor further agrees that, upon receipt
of a notice from the Company of the occurrence of any event of the kind described in Sections 6.2(c)(v), (vi) or (vii), such Investor will discontinue disposition of such Registrable Securities under the Registration
Statement until such Investor is advised in writing by the Company that the use of the Prospectus, or amended Prospectus, as applicable, may be resumed. The Company may provide appropriate stop orders to enforce the provisions of this paragraph.
Each Investor, severally and not jointly with the other Investors, agrees that the removal of the restrictive legend from certificates representing Securities as set forth in this Section 4.1 is predicated upon the Company’s
reliance that the Investor will comply with the provisions of this subsection. Both the Company and the Transfer Agent, and their respective directors, officers, employees and agents, may rely on this subsection. 
 6.6 No Piggyback on Registrations. Neither the Company nor any of its security holders (other than the Investors in such capacity pursuant hereto
and the Excluded Investors) may include securities of the Company in the Registration Statement other than the Registrable Securities. 
 ARTICLE VII 
 MISCELLANEOUS 
 7.1 Termination. This Agreement may be terminated by the Company or any Investor, by written notice to the other parties, if between the date hereof and the Closing: (A) the Company shall have breached any of its
representations, warranties, covenants or obligations contained herein, which breach would result in the failure to satisfy any condition set forth in Section 5.1 at the time of the Closing and which the Company would be incapable of
curing prior to the Closing Date, (B) the Stockholder Approval shall not have been obtained by the date that is ninety-one (91) days after the date hereof or (C) the Closing shall not have been consummated on or before the date that
is ten (10) Trading Days after the date that the Company obtains the Stockholder Approval; provided, however, that no such termination will affect the right of any party to sue for any breach by the other party (or parties). The
Company and the Investor(s) may extend the termination of this Agreement by mutual written agreement. 
 7.2 Fees and Expenses. Except
as expressly set forth in the Transaction Documents to the contrary, each party shall pay the fees and expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party incident to the
negotiation, preparation, execution, delivery and performance of this Agreement; provided, however, that if (i) the Company fails to hold the Stockholder Meeting within ninety (90) days from the date hereof 

  

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or (ii) the Stockholder Approval is not obtained at the Stockholder Meeting, the Company shall reimburse the Investors for their reasonable fees and
expenses, including fees of their advisers, counsel, accountants and other experts, if any, actually incurred incident to the negotiation, execution, delivery and performance of the Transaction Documents; provided, further,
however, that the Company shall not be obligated to reimburse any individual Investor more than $10,000 under this Section 7.2. The Company shall pay all Transfer Agent fees, stamp taxes and other taxes and duties levied in
connection with the sale and issuance of the applicable Securities. 
 7.3 Entire Agreement. The Transaction Documents, together with
the Exhibits and Schedules thereto, contain the entire understanding of the parties with respect to the subject matter hereof and supersede all prior agreements and understandings, oral or written, with respect to such matters, which the parties
acknowledge have been merged into such documents, exhibits and schedules. At or after the Closing, and without further consideration, the Company will execute and deliver to the Investors such further documents as may be reasonably requested in
order to give practical effect to the intention of the parties under the Transaction Documents. 
 7.4 Notices. Any and all notices or
other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of (a) the date of transmission, if such notice or communication is delivered via
facsimile or email at the facsimile number or email address specified in this Section prior to 6:30 p.m. (New York City time) on a Trading Day, (b) the next Trading Day after the date of transmission, if such notice or communication is
delivered via facsimile or email at the facsimile number or email address specified in this Section on a day that is not a Trading Day or later than 6:30 p.m. (New York City time) on any Trading Day, (c) the Trading Day following the date of
deposit with a nationally recognized overnight courier service, or (d) upon actual receipt by the party to whom such notice is required to be given. The addresses, facsimile numbers and email addresses for such notices and communications are
those set forth on the signature pages hereof, or such other address or facsimile number as may be designated in writing hereafter, in the same manner, by any such Person. 
 7.5 Amendments; Waivers. No provision of this Agreement may be waived or amended except in a written instrument signed, in the case of an
amendment, by the Company and each of the Investors or, in the case of a waiver, by the party against whom enforcement of any such waiver is sought. No waiver of any default with respect to any provision, condition or requirement of this Agreement
shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of any party to exercise any right hereunder in any
manner impair the exercise of any such right. Notwithstanding the foregoing, a waiver or consent to depart from the provisions hereof with respect to a matter that relates exclusively to the rights of Investors under Article VI may be
given by Investors holding at least a majority of the Registrable Securities to which such waiver or consent relates. 
 7.6
Construction. The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof. The language used in this Agreement will be deemed to be the
language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party. 
  

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 7.7 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the
parties and their successors and permitted assigns. The Company may not assign this Agreement or any rights or obligations hereunder without the prior written consent of the Investors. Any Investor may assign its rights under this Agreement to any
Person to whom such Investor assigns or transfers any Securities; provided, (i) such transferor agrees in writing with the transferee or assignee to assign such rights, and a copy of such agreement is furnished to the Company after such
assignment, (ii) the Company is furnished with written notice of (x) the name and address of such transferee or assignee and (y) the Registrable Securities with respect to which such registration rights are being transferred or
assigned, (iii) following such transfer or assignment, the further disposition of such securities by the transferee or assignee is restricted under the Securities Act and applicable state securities laws, (iv) such transferee agrees in
writing to be bound, with respect to the transferred Securities, by the provisions hereof that apply to the “Investors” and (v) such transfer shall have been made in accordance with the applicable requirements of this Agreement and
with all laws applicable thereto. 
 7.8 No Third-Party Beneficiaries. This Agreement is intended for the benefit of the parties
hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, except that each Indemnified Party is an intended third party beneficiary of
Section 6.4 and (in each case) may enforce the provisions of such Section directly against the parties with obligations thereunder. 
 7.9 Governing Law; Venue; Waiver of Jury Trial. THE CORPORATE LAWS OF THE STATE OF DELAWARE SHALL GOVERN ALL ISSUES CONCERNING THE RELATIVE RIGHTS OF THE COMPANY AND ITS STOCKHOLDERS. ALL QUESTIONS CONCERNING THE CONSTRUCTION,
VALIDITY, ENFORCEMENT AND INTERPRETATION OF THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. THE COMPANY AND INVESTORS HEREBY IRREVOCABLY SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF THE STATE
AND FEDERAL COURTS SITTING IN THE CITY OF NEW YORK, BOROUGH OF MANHATTAN FOR THE ADJUDICATION OF ANY DISPUTE BROUGHT BY THE COMPANY OR ANY INVESTOR HEREUNDER, IN CONNECTION HEREWITH OR WITH ANY TRANSACTION CONTEMPLATED HEREBY OR DISCUSSED HEREIN
(INCLUDING WITH RESPECT TO THE ENFORCEMENT OF ANY OF THE TRANSACTION DOCUMENTS), AND HEREBY IRREVOCABLY WAIVE, AND AGREE NOT TO ASSERT IN ANY SUIT, ACTION OR PROCEEDING BROUGHT BY THE COMPANY OR ANY INVESTOR, ANY CLAIM THAT IT IS NOT PERSONALLY
SUBJECT TO THE JURISDICTION OF ANY SUCH COURT, OR THAT SUCH SUIT, ACTION OR PROCEEDING IS IMPROPER. EACH PARTY HEREBY IRREVOCABLY WAIVES PERSONAL SERVICE OF PROCESS AND CONSENTS TO PROCESS BEING SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING BY
MAILING A COPY THEREOF VIA REGISTERED OR CERTIFIED MAIL OR OVERNIGHT DELIVERY (WITH EVIDENCE OF DELIVERY) TO SUCH PARTY AT THE ADDRESS IN EFFECT FOR NOTICES TO IT UNDER THIS AGREEMENT AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE GOOD AND SUFFICIENT
SERVICE OF PROCESS AND NOTICE THEREOF. NOTHING CONTAINED HEREIN SHALL BE DEEMED TO LIMIT IN ANY WAY ANY RIGHT TO SERVE PROCESS IN ANY MANNER PERMITTED BY LAW. THE COMPANY AND INVESTORS HEREBY WAIVE ALL RIGHTS TO A TRIAL BY JURY. 
  

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 7.10 Survival. The representations and warranties, agreements and covenants contained herein shall
survive the Closing. 
 7.11 Execution. This Agreement may be executed in two (2) or more counterparts, all of which when taken
together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart. In the
event that any signature is delivered by facsimile transmission or email attachment, 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 email-attached signature page were an original thereof. 
 7.12 Severability. If any provision of this Agreement
is held to be invalid or unenforceable in any respect, the validity and enforceability of the remaining terms and provisions of this Agreement shall not in any way be affected or impaired thereby and the parties will attempt to agree upon a valid
and enforceable provision that is a reasonable substitute therefor, and upon so agreeing, shall incorporate such substitute provision in this Agreement. 
 7.13 Rescission and Withdrawal Right. Notwithstanding anything to the contrary contained in (and without limiting any similar provisions of) the Transaction Documents, whenever any Investor exercises a right,
election, demand or option owed to such Investor by the Company under a Transaction Document and the Company does not timely perform its related obligations within the periods therein provided, then, prior to the performance by the Company of the
Company’s related obligation, such Investor may rescind or withdraw, in its sole discretion from time to time upon written notice to the Company, any relevant notice, demand or election in whole or in part without prejudice to its future
actions and rights. 
 7.14 Replacement of Securities. If any certificate or instrument evidencing any Securities is mutilated, lost,
stolen or destroyed, the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof, or in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably
satisfactory to the Company of such loss, theft or destruction and the execution by the holder thereof of a customary lost certificate affidavit of that fact and an agreement to indemnify and hold harmless the Company for any losses in connection
therewith. The applicants for a new certificate or instrument under such circumstances shall also pay any reasonable third-party costs associated with the issuance of such replacement Securities. 
 7.15 Remedies. In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, each of the
Investors and the Company will be entitled to seek specific performance under the Transaction Documents. The parties agree that monetary damages may not be adequate compensation for any loss incurred by reason of any breach of obligations described
in the foregoing sentence and hereby agree to waive in any action for specific performance of any such obligation (other than in connection with any action for a temporary restraining order) the defense that a remedy at law would be adequate.

  

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 7.16 Payment Set Aside. To the extent that the Company makes a payment or payments to any Investor
hereunder or any Investor enforces or exercises its rights hereunder, and such payment or payments or the proceeds of such enforcement or exercise or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set
aside, recovered from, disgorged by or are required to be refunded, repaid or otherwise restored to the Company by a trustee, receiver or any other person under any law (including, without limitation, any bankruptcy law, state or federal law, common
law or equitable cause of action), then to the extent of any such restoration the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such
enforcement or setoff had not occurred. 
 7.17 Adjustments in Share Numbers and Prices. In the event of any stock split, subdivision,
dividend or distribution payable in shares of Common Stock (or other securities or rights convertible into, or entitling the holder thereof to receive directly or indirectly shares of Common Stock), combination or other similar recapitalization or
event occurring after the date hereof, each reference in any Transaction Document to a number of shares or a price per share shall be amended to appropriately account for such event. 
 7.18 Independent Nature of Investors’ Obligations and Rights. The obligations of each Investor under any Transaction Document are several and
not joint with the obligations of any other Investor, and no Investor shall be responsible in any way for the performance of the obligations of any other Investor under any Transaction Documents. The decision of each Investor to purchase Securities
pursuant to this Agreement has been made by such Investor independently of any other Investor and independently of any information, materials, statements or opinions as to the business, affairs, operations, assets, properties, liabilities, results
of operations, condition (financial or otherwise) or prospects of the Company which may have been made or given by any other Investor or by any agent or employee of any other Investor, and no Investor or any of its agents or employees shall have any
liability to any other Investor (or any other person) relating to or arising from any such information, materials, statements or opinions. Nothing contained herein or in any Transaction Document, and no action taken by any Investor pursuant thereto,
shall be deemed to constitute the Investors as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Investors are in any way acting in concert or as a group with respect to such obligations or
the transactions contemplated by the Transaction Document. Each Investor acknowledges that no other Investor has acted as agent for such Investor in connection with making its investment hereunder and that no other Investor will be acting as agent
of such Investor in connection with monitoring its investment hereunder. Each Investor shall be entitled to independently protect and enforce its rights, including without limitation the rights arising out of this Agreement or out of the other
Transaction Documents, and it shall not be necessary for any other Investor to be joined as an additional party in any Proceeding for such purpose. 
 SIGNATURE PAGES TO FOLLOW 
  

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 IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed
by their respective authorized signatories as of the date first indicated above. 
  

			
	THRESHOLD PHARMACEUTICALS, INC.
		
	By:	 	 
	Name:	 	
	Title:	 	
	
	Address for Notice:
	
	 1300 Seaport Boulevard
 Redwood City, CA
94063
 Tel: (650) 474-8200
 Fax:
(650) 474-2529
 Attn: Joel A. Fernandes, Senior Director, Finance and Controller

	
	With a copy to:
	
	 Morrison & Foerster LLP
 755 Page
Mill Road
 Palo Alto, California 94304
 Tel: (650) 813-5640

 Fax: (650) 494-0792
 Attn: Stephen B. Thau, Esq.

 COMPANY SIGNATURE PAGE 

 Investor Signature Page 
 By its execution and delivery of this signature page, the undersigned Investor hereby joins in and agrees to be bound by the terms and conditions of the
Securities Purchase Agreement dated as of July 9, 2008 (the “Purchase Agreement”) by and among Threshold Pharmaceuticals, Inc. and the Investors (as defined therein), as to the number of shares of Common Stock and Warrants set forth
below, and authorizes this signature page to be attached to the Purchase Agreement or counterparts thereof. 
  

			
	Name of Investor:
	
	 
		
	By:	 	 
		 	Name:
		 	Title:

  

			
	Address:	 	 
	
	 
	
	 

  

	
	Telephone No.:  ___________________________
	
	Facsimile No.:  ____________________________
	
	Email Address:  ___________________________
	
	Number of Shares:  ________________________
	
	Number of Warrants:  ______________________
	
	Purchase Price:  $__________________________

 Delivery Instructions (if different than above): 
 c/o:  ______________________________________________ 
 Address:  __________________________________________ 
                  __________________________________________ 
 Telephone No.:  _____________________________________ 
 Facsimile No.:  ______________________________________ 
 Other Special Instructions:  _____________________________ 

 Exhibits: 
  

	A	Form of Warrant 

  

	B	Instruction Sheet for Investors 

  

	C	Opinion of Company Corporate Counsel 

  

	D	Plan of Distribution 

  

	E	Company Transfer Agent Instructions 

 Exhibit A 
 FORM OF WARRANT 

 Exhibit B 
 INSTRUCTION SHEET FOR INVESTOR 
 (to be read in conjunction with the entire Securities Purchase
Agreement) 
  

	A.	Complete the following items in the Securities Purchase Agreement: 

  

	 	1.	Complete and execute the Investor Signature Page. The Agreement must be executed by an individual authorized to bind the Investor. 

  

	 	2.	Exhibit B-1 - Stock Certificate Questionnaire: 

 Provide the information requested by the Stock Certificate Questionnaire; 
  

	 	3.	Exhibit B-2 - Registration Statement Questionnaire: 

 Provide the information requested by the Registration Statement Questionnaire. 
  

	 	4.	Exhibit B-3 - Investor Certificate: 

 Provide the
information requested by the Investor Certificate. 
  

	 	5.	Return, via facsimile, the signed Securities Purchase Agreement including the properly completed Exhibits B-1 through B-3, to: 

 Facsimile: 
 Telephone: 
 Attn: 
  

	 	6.	After completing instruction number five (5) above, deliver the original signed Securities Purchase Agreement including the properly completed Exhibits B-1 through B-3 to:

 Address: 
  

	B.	Instructions regarding the wire transfer of funds for the purchase of the Securities will be telecopied to the Investor by the Company at a later date. 

 Exhibit B-1 
 THRESHOLD PHARMACEUTICALS, INC. 
 STOCK CERTIFICATE QUESTIONNAIRE 
  

					
		  	Please provide us with the following information:	  	
			
	 1.
	  	The exact name that the Securities are to be registered in (this is the name that will appear on the stock and warrant certificate(s)). You may use a nominee name if appropriate:	  	 
			
	 2.
	  	The relationship between the Investor of the Securities and the Registered Holder listed in response to item 1 above:	  	 
			
	 3.
	  	The mailing address, telephone and telecopy number and email address of the Registered Holder listed in response to item 1 above:	  	 
			
		  		  	 
			
		  		  	 
			
		  		  	 
			
		  		  	 
			
	 4.
	  	The Tax Identification Number of the Registered Holder listed in response to item 1 above:	  	 

 Exhibit B-2 
 THRESHOLD PHARMACEUTICALS, INC. 
 REGISTRATION STATEMENT QUESTIONNAIRE

 In connection with the Registration Statement, please provide us with the following information regarding the Investor.

 1. Please state your organization’s name exactly as it should appear in the Registration Statement: 
 ________________________________________________________________________________________________ 
 Except as set forth below, your organization does not hold any equity securities of the Company on behalf of another person or entity. 
 State any exceptions here: 
 ________________________________________________________________________________________________ 
 If the Investor is not a natural
person, please identify the natural person or persons who will have voting and investment control over the Securities owned by the Investor: 
 ________________________________________________________________________________________________ 
 2. Address of your organization: 
 _________________________________________________________ 
 _________________________________________________________ 
 Telephone:  ________________________________________________ 
 Fax:  _____________________________________________________ 
 Contact
Person:  ____________________________________________ 
 3. Have you or your organization had any position, office or other material relationship
within the past three years with the Company or its affiliates? (Include any relationships involving you or any 

 
of your affiliates, officers, directors, or principal equity holders (5% or more) that has held any position or office or has had any other material
relationship with the Company (or its predecessors or affiliates) during the past three years.) 
  ̈    Yes             ̈    No 
 If yes, please indicate the nature of any such relationship below: 
 4. Are you the beneficial owner of any other securities of the Company? (Include any equity securities that you beneficially own or have a right to acquire within sixty (60) days after the date hereof, and as to which you have sole
voting power, shared voting power, sole investment power or shared investment power.) 
  ̈    Yes             ̈    No 
 If yes, please describe the nature and amount of such ownership as of a recent date. 
 5. Except as set forth below, you wish that all the shares of the Company’s common stock beneficially owned by you or that you have the right to acquire from the Company be offered for your account in the
Registration Statement. 
 State any exceptions here: 
 6. Have you made or are you aware of any arrangements relating to the distribution of the shares of the Company pursuant to the Registration Statement? 
  ̈    Yes             ̈    No 
 If yes, please describe the nature and amount of such arrangements. 
  

 -B-2-2- 

 7. FINRA Matters 
 (a) State below whether (i) you or any associate or affiliate of yours are a member of the FINRA, a controlling shareholder of an FINRA member, a person associated with a member, a
direct or indirect affiliate of a member, or an underwriter or related person with respect to the proposed offering; (ii) you or any associate or affiliate of yours owns any stock or other securities of any
FINRA member not purchased in the open market; or (iii) you or any associate or affiliate of yours has made any outstanding subordinated loans to any FINRA member. If you are a general or limited partnership, a no
answer asserts that no such relationship exists for you as well as for each of your general or limited partners. 
  

			
	Yes:   ̈    	  	    No:   ̈

 If “yes,” please identify the FINRA member and describe your relationship,
including, in the case of a general or limited partner, the name of the partner: 
 If you answer “no” to Question 7(a), you need
not respond to Question 7(b). 
 (b) State below whether you or any associate or affiliate of yours has been an underwriter, or
a controlling person or member of any investment banking or brokerage firm which has been or might be an underwriter for securities of the Corporation or any affiliate thereof including, but not limited to, the common stock now being
registered. 
  

			
	Yes:   ̈    	  	    No:   ̈

 If “yes,” please identify the FINRA member and describe your relationship,
including, in the case of a general or limited partner, the name of the partner. 
  

 -B-2-3- 

 ACKNOWLEDGEMENT 
 The undersigned hereby agrees to notify the Company promptly of any changes in the foregoing information which should be made as a result of any developments, including the passage of time. The undersigned also agrees
to provide the Company and the Company’s counsel any and all such further information regarding the undersigned promptly upon request in connection with the preparation, filing, amending, and supplementing of the Registration Statement (or any
prospectus contained therein). The undersigned hereby consents to the use of all such information in the Registration Statement. 
 The
undersigned understands and acknowledges that the Company will rely on the information set forth herein for purposes of the preparation and filing of the Registration Statement. 
 The undersigned understands that the undersigned may be subject to serious civil and criminal liabilities if the Registration Statement, when it becomes
effective, either contains an untrue statement of a material fact or omits to state a material fact required to be stated in the Registration Statement or necessary to make the statements in the Registration Statement not misleading. The undersigned
represents and warrants that all information it provides to the Company and its counsel is currently accurate and complete and will be accurate and complete at the time the Registration Statement becomes effective and at all times subsequent
thereto, and agrees during the Effectiveness Period and any additional period in which the undersigned is making sales of Shares under and pursuant to the Registration Statement, and agrees during such periods to notify the Company immediately of
any misstatement of a material fact in the Registration Statement, and of the omission of any material fact necessary to make the statements contained therein not misleading. 
 Dated:                      
  

	
	
	  
	Name
	
	  
	Signature
	
	  
	Name and Title of Signatory

  

 -B-2-4- 

 Exhibit B-3 
 THRESHOLD PHARMACEUTICALS, INC. 
 CERTIFICATE FOR CORPORATE, PARTNERSHIP, LIMITED LIABILITY
COMPANY, 
 TRUST, FOUNDATION AND JOINT INVESTORS 
 If the Investor is a corporation, partnership, limited liability company, trust, pension plan, foundation, joint Investor (other than a married couple)
or other entity, an authorized officer, partner, or trustee must complete, date and sign this Certificate. 
 CERTIFICATE

 The undersigned certifies that the representations and responses below are true and accurate: 
 (a) The Investor has been duly formed and is validly existing and has full power and authority to invest in the Company. The person signing on behalf of
the undersigned has the authority to execute and deliver the Securities Purchase Agreement on behalf of the Investor and to take other actions with respect thereto. 
 (b) Indicate the form of entity of the undersigned: 
  ̈    Limited Partnership 
  ̈    General Partnership 
  ̈    Limited Liability Company 
  ̈    Corporation 
  ̈    Revocable Trust (identify each grantor and indicate under what circumstances the trust is revocable by the
grantor):  __________________________________________________________________________________________ __________________________________________________________________________________________________ 
 (Continue on a separate piece of paper, if necessary.) 
  ̈    Other type of Trust (indicate type of trust and, for trusts other than pension trusts, name the grantors and
beneficiaries):  _____________________________________________________________________________________ __________________________________________________________________________________________________ 
 (Continue on a separate piece of paper, if necessary.) 
  ̈    Other form of organization (indicate form of organization  (__________________________________________ 
 _________________________________________________________________________________________________). 

 (c) Indicate the approximate date the undersigned entity was formed: _______________ . 
 (d) In order for the Company to offer and sell the Securities in conformance with state and federal securities laws, the following information must be
obtained regarding your investor status. Please initial each category applicable to you as an investor in the Company. 
  

	 	 ̈	1. A bank as defined in Section 3(a)(2) of the Securities Act, or any savings and loan association or other institution as defined in Section 3(a)(5)(A) of the Securities
Act whether acting in its individual or fiduciary capacity; 

  

	 	 ̈	2. A broker or dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934; 

  

	 	 ̈	3. An insurance company as defined in Section 2(13) of the Securities Act; 

  

	 	 ̈	4. An investment company registered under the Investment Company Act of 1940 or a business development company as defined in Section 2(a)(48) of that Act;

  

	 	 ̈	5. A Small Business Investment Company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958;

  

	 	 ̈	6. A plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions, for the benefit of its
employees, if such plan has total assets in excess of $5,000,000; 

  

	 	 ̈	7. An employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974, if the investment decision is made by a plan fiduciary, as defined in
Section 3(21) of such Act, which is either a bank, savings and loan association, insurance company, or registered investment advisor, or if the employee benefit plan has total assets in excess of $5,000,000 or, if a self-directed plan, with
investment decisions made solely by persons that are accredited investors; 

  

	 	 ̈	8. A private business development company as defined in Section 202(a)(22) of the Investment Advisers Act of 1940; 

  

	 	 ̈	9. Any partnership or corporation or any organization described in Section 501(c)(3) of the Internal Revenue Code or similar business trust, not formed for the specific purpose
of acquiring the Shares, with total assets in excess of $5,000,000; 

  

	 	 ̈	10. A trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the Shares, whose purchase is directed by a sophisticated person as
described in Rule 506(b)(2)(ii) of the Exchange Act; 

  

 -B-3-2- 

	 	 ̈	11. An entity in which all of the equity owners qualify under any of the above subparagraphs. If the undersigned belongs to this investor category only, list the equity owners of
the undersigned, and the investor category which each such equity owner satisfies:  ________________________________________________________________________________
_____________________________________________________________________________________________ 

 (Continue on a separate piece
of paper, if necessary.) 
 Please set forth in the space provided below the (i) states, if any, in the U.S. in which you maintained
your principal office during the past two years and the dates during which you maintained your office in each state, (ii) state(s), if any, in which you are incorporated or otherwise organized and (iii) state(s), if any, in which you pay
income taxes. 
 ________________________________________________________________ 
 ________________________________________________________________ 
 ________________________________________________________________ 
 Dated:                                      
                      , 2008 
  

	
	
	  
	Print Name of Investor

  

	
	
	  
	Name:
	Title:
	

 (Signature and title of authorized officer, partner or trustee) 
  

 -B-3-3- 

 Exhibit C 
 OPINION OF COMPANY COUNSEL 

 Exhibit D 
 PLAN OF DISTRIBUTION 
 The selling stockholders may, from time to time, sell any or all of their shares of
common stock on any stock exchange, market or trading facility on which the shares are traded or in private transactions. These sales may be at fixed or negotiated prices. The selling stockholders may use any one or more of the following methods
when selling shares: 
  

	 	•	 	 ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers; 

  

	 	•	 	 block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the
transaction; 

  

	 	•	 	 purchases by a broker-dealer as principal and resale by the broker-dealer for its account; 

  

	 	•	 	 an exchange distribution in accordance with the rules of the applicable exchange; 

  

	 	•	 	 privately negotiated transactions; 

  

	 	•	 	 short sales; 

  

	 	•	 	 broker-dealers may agree with the selling stockholders to sell a specified number of such shares at a stipulated price per share; 

  

	 	•	 	 a combination of any such methods of sale; and 

  

	 	•	 	 any other method permitted pursuant to applicable law. 

 The selling stockholders may also sell shares under Rule 144 under the Securities Act, if available, rather than under this prospectus. 
 Broker-dealers engaged by the selling stockholders may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the selling stockholders (or, if any
broker-dealer acts as agent for the purchaser of shares, from the purchaser) in amounts to be negotiated. The selling stockholders do not expect these commissions and discounts to exceed what is customary in the types of transactions involved. Any
profits on the resale of shares of common stock by a broker-dealer acting as principal might be deemed to be underwriting discounts or commissions under the Securities Act. Discounts, concessions, commissions and similar selling expenses, if any,
attributable to the sale of shares will be borne by a selling stockholder. The selling stockholders may agree to indemnify any agent, dealer or broker-dealer that participates in transactions involving sales of the shares if liabilities are imposed
on that person under the Securities Act. 

 The selling stockholders may from time to time pledge or grant a security interest in some or all of the
shares of common stock owned by them and, if they default in the performance of their secured obligations, the pledgees or secured parties may offer and sell the shares of common stock from time to time under this prospectus after we have filed a
supplement to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act of 1933 supplementing or amending the list of selling stockholders to include the pledgee, transferee or other successors in interest as selling
stockholders under this prospectus. 
 The selling stockholders also may transfer the shares of common stock in other circumstances, in which
case the transferees, pledgees or other successors in interest will be the selling beneficial owners for purposes of this prospectus and may sell the shares of common stock from time to time under this prospectus after we have filed a supplement to
this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act of 1933 supplementing or amending the list of selling stockholders to include the pledgee, transferee or other successors in interest as selling stockholders
under this prospectus. 
 The selling stockholders and any broker-dealers or agents that are involved in selling the shares of common stock
may be deemed to be “underwriters” within the meaning of the Securities Act in connection with such sales. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the shares of common stock
purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act. 
 We are required to pay all fees and
expenses incident to the registration of the shares of common stock. We have agreed to indemnify the selling stockholders against certain losses, claims, damages and liabilities, including liabilities under the Securities Act. 
 The selling stockholders have advised us that they have not entered into any agreements, understandings or arrangements with any underwriters or
broker-dealers regarding the sale of their shares of common stock, nor is there an underwriter or coordinating broker acting in connection with a proposed sale of shares of common stock by any selling stockholder. If we are notified by any selling
stockholder that any material arrangement has been entered into with a broker-dealer for the sale of shares of common stock, if required, we will file a supplement to this prospectus. If the selling stockholders use this prospectus for any sale of
the shares of common stock, they will be subject to the prospectus delivery requirements of the Securities Act. 
 The anti-manipulation
rules of Regulation M under the Securities Exchange Act of 1934 may apply to sales of our common stock and activities of the selling stockholders. 
  

 -D-2- 

 Exhibit E 
 COMPANY TRANSFER AGENT INSTRUCTIONS 

 Schedule 3.1(f) 
 CAPITALIZATION 
 None. 

 Schedule 3.1(g) 
 SEC REPORTS 
 None.Commitment Letter with Bank of America

 Exhibit 10.1 
  

			
	 BANC OF AMERICA SECURITIES LLC
 BANC OF AMERICA BRIDGE LLC
 BANK OF AMERICA, N.A.
 One Bryant Park
 New York, New York
10036
 214 North Tryon Street
 Charlotte, North Carolina 28255
	  	 THE BANK OF NOVA SCOTIA
 One Liberty Plaza
 New York, New York 10006

 July 10, 2008 
 Ashland Inc. 
 50 E. RiverCenter Boulevard 
 P.O. Box 391 
 Covington, Kentucky 41012-0391 
 Attention:        Kevin Willis 
 Project Viking 
 Commitment Letter 
 $1.950 Billion
Senior Credit Facilities 
 $750.0 Million Senior Bridge Facility 
 Ladies and Gentlemen: 
 You have advised Bank of America, N.A. (“Bank of America”),
The Bank of Nova Scotia (“Scotiabank” and, together with Bank of America, the “Committing Banks”), Banc of America Bridge LLC (“Banc of America Bridge”), and Banc of America
Securities LLC (“BAS” and, together with Banc of America Bridge and the Committing Banks, the “Committing Parties”) that Ashland Inc., a Kentucky corporation (the “Borrower” or
“you”), intends to acquire (the “Acquisition”) all of the stock of Hercules Incorporated, a Delaware corporation (the “Acquired Business”) (the Borrower, the Acquired Business
and their subsidiaries are sometimes collectively referred to herein as the “Companies”), from the shareholders of the Acquired Business, for consideration consisting of not more than $2.162 billion in cash and 0.093 shares
of the Borrower’s common stock for each share of the Acquired Business’ common stock (as more fully provided in the Acquisition Agreement (as defined below)) issued to shareholders of the Acquired Business. The Acquisition will be effected
through the merger of a newly created wholly-owned subsidiary of the Borrower with and into the Acquired Business, with the Acquired Business being the surviving corporation as a wholly owned subsidiary of the Borrower. 
 You have also advised us that you intend to finance the Acquisition, the costs and expenses related to the Transaction (as hereinafter defined), the
repayment of certain existing indebtedness of the Companies (the “Refinancing”) and the ongoing working capital and other general corporate purposes of the Companies after consummation of the Acquisition from the following
sources (and that no financing other than the financing described herein will be required in connection with the Transaction): (a) at least $871.0 million of cash on hand at the Borrower and at least a number of shares of common stock of the
Borrower as set forth in the 

 
previous paragraph issued to shareholders of the Acquired Business (the “Equity Consideration”); (b) up to $1.950 billion in
senior secured credit facilities of the Borrower (collectively, the “Senior Credit Facilities”), comprised of (i) term loan A facilities (the “Term A Facility”) aggregating up to $600.0 million,
(ii) term loan B facilities (the “Term B Facility”) aggregating up to $850.0 million and (iii) a revolving credit facility of up to $500.0 million; and (c) at least $750.0 million in gross proceeds from the
issuance and sale by the Borrower of senior unsecured notes having the same guarantees as the Senior Credit Facilities (the “Senior Notes”) or, alternatively, up to $750.0 million of senior unsecured loans under a bridge
facility (the “Bridge Facility” and, together with the Senior Credit Facilities, the “Facilities”) made available to the Borrower as interim financing to the Permanent Securities referred to below
(such senior loans being the “Bridge Loans” and, together with any Rollover Loans and Exchange Notes (as defined in Annex II hereto), the “Bridge Financing”). It is understood that up to $100.0 million
of the Term A Facility and $100.0 million of the Term B Facility may be replaced prior to the Closing Date or repaid after the Closing Date with an accounts receivable securitization facility of the Borrower as described in Annex IV hereto and
otherwise on customary terms and conditions (the “A/R Facility”), with the proceeds of such A/R Facility reducing or repaying, as the case may be, the Term A Facility and Term B Facility on a dollar for dollar basis allocated
between such facilities in consultation with the Borrower as the Lead Arrangers may reasonably determine. The $100.0 million of the Term A Facility and $100.0 million of the Term B Facility which may be funded on the Closing Date in lieu of the A/R
Facility is referred to herein as the “A/R Facility Backstop.” The Acquisition, the issuance of the Equity Consideration, the entering into and funding of the Senior Credit Facilities, the issuance and sale of the Senior
Notes or the entering into and funding of the Bridge Facility, the Refinancing and all related transactions are hereinafter collectively referred to as the “Transaction.” The sources and uses for the financing for the
Transaction are as set forth on Schedule I hereto. 
 BAS, Scotiabank and Scotia Capital (USA) Inc. (“Scotia
Capital”) have also delivered to you a separate engagement letter dated the date hereof (the “Engagement Letter”) setting forth the terms on which BAS and Scotia Capital are willing to act as joint lead
underwriters, joint lead initial purchasers, joint lead arrangers and joint lead placement agents for (i) the Senior Notes or (ii) if the Bridge Facility is funded on the Closing Date, the senior unsecured notes or any other securities of
the Companies that may be issued after the Closing Date for the purpose of refinancing all or a portion of the outstanding amounts under the Bridge Facility (the “Permanent Securities”). 
 1. Commitments. In connection with the foregoing, (a) each of Bank of America and Scotiabank, severally and not jointly, are pleased to
advise you of its commitment to provide 50% and 50%, respectively, of the principal amount of the Senior Credit Facilities and Bank of America’s willingness to act as the sole and exclusive administrative agent (in such capacity, the
“Administrative Agent”) for the Senior Credit Facilities, all upon and subject to the terms and conditions set forth in this letter and in the summary of terms attached as Annex I and Annex III hereto (collectively,
the “Senior Financing Summary of Terms”), (b) each of BAS and Scotiabank, jointly and not severally, are pleased to advise you of their willingness, as the joint lead arrangers and joint book running managers (in such
capacities, the “Senior Lead Arrangers”) for the Senior Credit Facilities, to form a syndicate of financial institutions and institutional lenders (collectively, the “Senior Lenders”) in consultation
with you for the Senior Credit Facilities, including Bank of America and Scotiabank; provided that BAS will have “left” 

  

 -2- 

 
placement in all marketing materials and other documentation used in connection with the Senior Credit Facilities and will have the roles associated with
such “left” placement, (c) each of Banc of America Bridge and Scotiabank, severally and not jointly, are pleased to advise you of its commitment to provide 50% and 50%, respectively, of the principal amount of the Bridge Facility, all
upon and subject to the terms and conditions set forth in this letter and in the summary of terms attached as Annex II and Annex III hereto (collectively, the “Bridge Summary of Terms” and, together with the Senior Financing
Summary of Terms, the “Summaries of Terms” and, together with this letter agreement, the “Commitment Letter”), and (d) each of BAS and Scotiabank, are also pleased to advise you of their
willingness, as the joint lead arrangers and joint book running managers (in such capacities, the “Bridge Lead Arrangers”; BAS and Scotiabank acting in their capacities as Senior Lead Arrangers and/or Bridge Lead Arrangers
are sometimes referred to herein as the “Lead Arrangers”) for the Bridge Facility, to form a syndicate of financial institutions and institutional lenders (collectively, the “Bridge Lenders” and,
together with the Senior Lenders, the “Lenders”) for the Bridge Facility, including Banc of America Bridge and Scotiabank (the “Initial Bridge Lenders”); provided that BAS will have
“left” placement in all marketing materials and other documentation used in connection with the Bridge Facility and will have the roles associated with such “left” placement. All capitalized terms used and not otherwise defined
herein shall have the same meanings as specified therefor in the Summaries of Terms. If you accept this Commitment Letter as provided below in respect of the Senior Credit Facilities, the date of the initial funding under the Senior Credit
Facilities, and/or if you accept this Commitment Letter as provided below in respect of the Bridge Facility, the date of the initial funding of the Bridge Facility or of the issuance and sale of the Senior Notes in lieu of funding the Bridge
Facility, in each case, is referred to herein as the “Closing Date.” 
 2. Syndication. The Lead Arrangers
intend to commence syndication of each of the Facilities promptly upon your acceptance of the terms of this Commitment Letter and the Fee Letter related to such Facility, and the commitment of the Commitment Banks hereunder, as the case may be,
related to such Facility shall be reduced dollar-for-dollar as and when corresponding commitments received from the Senior Lenders or Bridge Lenders, as the case may be, are funded on the Closing Date. You agree to actively assist, and to use
commercially reasonable efforts to cause the Acquired Business to actively assist, the Lead Arrangers in achieving a syndication of each such Facility that is satisfactory to the Lead Arrangers and you. Such assistance shall include (a) your
providing and causing your advisors to provide the Lead Arrangers and the Lenders upon request with all information reasonably deemed necessary by the Lead Arrangers to complete such syndication, including, but not limited to, information and
evaluations prepared by the Companies and their advisors, or on their behalf, relating to the Transaction (including the Projections (as hereinafter defined), the “Information”), (b) your assistance in the preparation of
Information Memoranda and other materials to be used in connection with the syndication of each such Facility (collectively with the Summaries of Terms and any additional summaries of terms prepared for distribution to Public Lenders (as hereinafter
defined), the “Information Materials”), (c) your using your commercially reasonable efforts to ensure that the syndication efforts of the Lead Arrangers benefit materially from the existing banking relationships of the
Companies, (d) your procuring a rating for each of the Facilities and the Senior Notes from each of Standard & Poor’s Ratings Services (“S&P”) and Moody’s Investors Service, Inc.
(“Moody’s”) prior to the launch of the syndication and (e) your otherwise assisting the Lead Arrangers in their syndication efforts, including by making the officers and 

  

 -3- 

 
advisors of the Borrower, and using your commercially reasonable efforts to cause officers and advisors of the Acquired Business, available from time to time
to attend and make presentations regarding the business and prospects of the Companies, as appropriate, at one or more meetings of prospective Lenders. The parties hereby agree that the Information Memoranda to be used in connection with the
syndication of the Facilities shall be completed at least 30 days prior to the Closing Date. 
 It is understood and agreed that, in
consultation with the Borrower, the Lead Arrangers will manage and control all aspects of the syndication of each Facility, including decisions as to the selection of prospective Lenders and any titles offered to proposed Lenders, when commitments
will be accepted and the final allocations of the commitments among the Lenders. It is understood that no Lender participating in either Facility will receive compensation from you in order to obtain its commitment, except on the terms contained
herein and in the Summaries of Terms. It is also understood and agreed that the amount and distribution of the fees among the Lenders will be at the sole and absolute discretion of the Lead Arrangers. 
 3. Information Requirements. You represent, warrant and covenant that (a) all financial projections concerning the Companies that have been
or are hereafter made available to the Committing Parties or the Lenders by any of the Borrower, its subsidiaries or their representatives (or on their behalf) (the “Projections”) have been or will be prepared in good faith
based upon reasonable assumptions, (b) to your knowledge, all Projections that have been or are hereafter made available to the Committing Parties or the Lenders by the Acquired Business or its representatives (or on its behalf) (or to the
Borrower and delivered by the Borrower to the Committing Parties or Lenders) have been or will be prepared in good faith based upon reasonable assumptions, (c) all Information, other than Projections, which has been or is hereafter made
available to the Lead Arrangers or any of the Lenders by any of the Borrower, its subsidiaries or any of their representatives (or on their behalf) in connection with any aspect of the Transaction, as and when furnished, is and will be complete and
correct in all material respects and does not and will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements contained therein, in light of the circumstances in which made, not
misleading, and (d) to your knowledge, all Information, other than Projections, which has been or is hereafter made available to the Lead Arrangers or any of the Lenders by the Acquired Business or its representatives (or on its behalf) (or to
the Borrower and delivered by the Borrower to the Committing Parties or Lenders) in connection with any aspect of the Transaction, as and when furnished, is and will be complete and correct in all material respects and does not and will not contain
any untrue statement of a material fact or omit to state a material fact necessary to make the statements contained therein, in light of the circumstances in which made, not misleading. You agree to furnish us with further and supplemental
information from time to time until the Closing Date and, if requested by us, for such period thereafter as is necessary to complete the syndication of the Facilities so that the representation, warranty and covenant in the immediately preceding
sentence are correct on the Closing Date and on such later date on which the syndication of the Facilities is completed as if the Information were being furnished, and such representation, warranty and covenant were being made, on such date. In
issuing these commitments and in arranging and syndicating each of the Facilities, the Committing Parties are and will be using and relying on the Information without independent verification thereof. Information and Projections provided to the Lead
Arrangers prior to the date hereof are hereinafter referred to as the “Pre-Commitment Information.” 
  

 -4- 

 You acknowledge that (a) the Committing Parties on your behalf will make available Information
Materials to the proposed syndicate of Lenders by posting the Information Materials on IntraLinks or another similar electronic system and (b) certain prospective Lenders (such Lenders, “Public Lenders”; all other
Lenders, “Private Lenders”) may have personnel that do not wish to receive material non-public information (within the meaning of the United States federal securities laws, “MNPI”) with respect to the
Companies, their respective affiliates or any other entity, or the respective securities of any of the foregoing, and who may be engaged in investment and other market-related activities with respect to such entities’ securities. If requested,
you will assist us in preparing an additional version of the Information Materials not containing MNPI (the “Public Information Materials”) to be distributed to prospective Public Lenders. 
 Before distribution of any Information Materials (a) to prospective Private Lenders, you shall provide us with a customary letter authorizing the
dissemination of the Information Materials and (b) to prospective Public Lenders, you shall provide us with a customary letter authorizing the dissemination of the Public Information Materials and confirming the absence of MNPI therefrom. In
addition, at our request, you shall identify Public Information Materials by clearly and conspicuously marking the same as “PUBLIC”. 
 You agree that the Committing Parties on your behalf may distribute the following documents to all prospective Lenders, unless you advise the Committing Parties in writing (including by email) within a reasonable time
prior to their intended distributions that such material should only be distributed to prospective Private Lenders: (a) administrative materials for prospective Lenders such as lender meeting invitations and funding and closing memoranda,
(b) notifications of changes to the terms of the Facilities and (c) other materials intended for prospective Lenders after the initial distribution of the Information Materials, including drafts and final versions of definitive documents
with respect to the Facilities. If you advise us that any of the foregoing items should be distributed only to Private Lenders, then the Committing Parties will not distribute such materials to Public Lenders without further discussions with you.
You agree (whether or not any Information Materials are marked “PUBLIC”) that Information Materials made available to prospective Public Lenders in accordance with this Commitment Letter shall not contain MNPI. 
 4. Fees and Indemnities. You agree to pay the fees set forth in the Fee Letter dated as of the date hereof (the “Fee
Letter”) among the parties hereto. You also agree to reimburse the Committing Parties from time to time on demand for all reasonable and invoiced out-of-pocket fees and expenses (including, but not limited to, the reasonable and
invoiced fees, disbursements and other charges of Cahill Gordon & Reindel LLP, as counsel to the Lead Arrangers and the Administrative Agent, and of any special and local counsel to the Committing Parties retained by the Lead
Arrangers, and reasonable and invoiced and due diligence expenses) incurred in connection with the Facilities, the syndication thereof, the preparation of the definitive documentation therefor and the other transactions contemplated hereby; provided
that the Lead Arrangers shall consult with the Borrower on a regular basis regarding the engagement of special counsel and the incurrence of due diligence expenses. In addition, if this Commitment 

  

 -5- 

 
Letter is accepted with respect to the Bridge Facility, the reasonable and invoiced out-of-pocket fees and expenses incurred by BAS and Scotiabank in
connection with the Senior Notes or the Permanent Securities will be reimbursed as provided in the Engagement Letter. 
 You also agree to
indemnify and hold harmless the Committing Parties, each other Lender and each of their affiliates and their officers, directors, employees, agents, advisors and other representatives (each an “Indemnified Party”) from and
against (and will reimburse each Indemnified Party as the same are incurred for) any and all claims, damages, losses, liabilities and expenses (including, without limitation, the reasonable fees, disbursements and other charges of counsel) that may
be incurred by or asserted or awarded against any Indemnified Party, in each case arising out of or in connection with or by reason of (including, without limitation, in connection with any investigation, litigation or proceeding or preparation of a
defense in connection therewith) (a) any aspect of the Transaction or any similar transaction and any of the other transactions contemplated thereby or (b) the Facilities and any other financings contemplated by the Commitment Letter or
the Engagement Letter, or any use made or proposed to be made with the proceeds thereof, except to the extent such claim, damage, loss, liability or expense is found by a court of competent jurisdiction to have resulted from the gross negligence or
willful misconduct of such Indemnified Party or such Indemnified Party’s subsidiaries or the officers, directors, employees, agents, advisors and other representatives of such Indemnified Party or its subsidiaries. In the case of an
investigation, litigation or proceeding to which the indemnity in this paragraph applies, such indemnity shall be effective whether or not such investigation, litigation or proceeding is brought by you, your equity holders or creditors or an
Indemnified Party, whether or not an Indemnified Party is otherwise a party thereto and whether or not any aspect of the Transaction is consummated. Each Indemnified Party will promptly notify you upon receipt of written notice of any claim or
threat to institute a claim, provided that any failure by any Indemnified Party to give such notice shall not relieve you from the obligation to indemnify the Indemnified Parties unless you are materially prejudiced by such failure. You also agree
that none of the Committing Parties, and none of their affiliates and their officers, directors, employees, agents, advisors and other representatives shall have any liability (whether direct or indirect, in contract or tort or otherwise) to you or
your subsidiaries or affiliates or to your or their respective equity holders or creditors arising out of, related to or in connection with any aspect of the Transaction, except to the extent of direct (as opposed to special, indirect, consequential
or punitive) damages determined by a court of competent jurisdiction to have resulted from the gross negligence or willful misconduct of such Indemnified Party or such Indemnified Party’s subsidiaries or the officers, directors, employees,
agents, advisors and other representatives of such Indemnified Party or its subsidiaries. It is further agreed that Bank of America and Scotiabank shall only have liability to you (as opposed to any other person), and that Bank of America and
Scotiabank shall be liable solely in respect of their own commitment to the Facilities on a several, and not joint, basis with any other Lender. Notwithstanding any other provision of this Commitment Letter, no Indemnified Party shall be liable for
any damages arising from the use by others of information or other materials obtained through electronic telecommunications or other information transmission systems, other than for direct or actual damages resulting from the gross negligence or
willful misconduct of such Indemnified Party or of such Indemnified Party’s subsidiaries or the officers, directors, employees, agents, advisors and other representatives of such Indemnified Party or its subsidiaries as determined by a court of
competent jurisdiction. 
  

 -6- 

 5. Conditions to Financing. The commitments of Bank of America and Scotiabank in respect of the
Senior Credit Facilities, the commitment of Banc of America Bridge and Scotiabank in respect of the Bridge Facility and the undertaking of BAS and Scotiabank to provide the services described herein are subject to the satisfaction of each of the
conditions set forth in Annex III hereto. 
 6. Confidentiality and Other Obligations. This Commitment Letter, the Fee Letter and the
Engagement Letter and the contents hereof and thereof are confidential and, except for the disclosure hereof or thereof on a confidential basis to your accountants, attorneys and other professional advisors retained in connection with the
Transaction, may not be disclosed in whole or in part to any person or entity without our prior written consent; provided, however, it is understood and agreed that you may disclose this Commitment Letter (including the Summaries of Terms) but not
the Fee Letter or the Engagement Letter (a) on a confidential basis to the board of directors, senior officers and advisors of the Acquired Business in connection with their consideration of the Transaction, (b) after your acceptance of
this Commitment Letter and the Fee Letter, in filings with the Securities and Exchange Commission and other applicable regulatory authorities and stock exchanges and (c) after written notice (to the extent permitted by law) to the Lead
Arrangers of any legally required disclosure, as otherwise required by law. 
 You acknowledge that the Committing Parties or their
affiliates may be providing financing or other services to parties whose interests may conflict with yours. The Committing Parties agree that they will not furnish confidential information obtained from you to any of their other customers and that
they will treat confidential information relating to the Companies with the same degree of care as they treat their own confidential information. The Committing Parties further advise you that they will not make available to you confidential
information that they have obtained or may obtain from any other customer. In connection with the services and transactions contemplated hereby, you agree that the Committing Parties are permitted to access, use and share with any of their bank or
non-bank affiliates, agents, advisors (legal or otherwise) or representatives, any information concerning the Companies or any of their respective affiliates that is or may come into the possession of the Committing Parties or any of such
affiliates. 
 In connection with all aspects of each transaction contemplated by this letter, you acknowledge and agree that:
(a) (i) the arranging and other services described herein regarding the Facilities are arm’s-length commercial transactions between you and your affiliates, on the one hand, and the Committing Parties, on the other hand, (ii) you
have consulted your own legal, accounting, regulatory and tax advisors to the extent you have deemed appropriate, and (iii) you are capable of evaluating, and understand and accept, the terms, risks and conditions of the transactions
contemplated hereby; (b) (i) each of the Committing Parties has been, is, and will be acting solely as a principal and, except as otherwise expressly agreed in writing by the relevant parties, has not been, is not, and will not be acting
as an advisor, agent or fiduciary for you, any of your affiliates or any other person or entity and (ii) none of the Committing Parties has any obligation to you or your affiliates with respect to the transactions contemplated hereby except
those obligations expressly set forth herein; and (c) the Committing Parties and their respective affiliates may be engaged in a broad range of transactions that involve interests that differ from yours and those of your affiliates, and the
Committing Parties have no obligation to disclose any of such interests to you or your affiliates. To the fullest extent permitted by law, you hereby waive and release any claims that you may have against the Committing Parties with respect to

  

 -7- 

 
any breach or alleged breach of agency or fiduciary duty (as distinct from contractual duties hereunder) in connection with any aspect of any transaction
contemplated by this Commitment Letter. 
 The Committing Parties hereby notify you that pursuant to the requirements of the USA PATRIOT Act,
Title III of Pub. L. 107-56 (signed into law October 26, 2001) (the “Act”), each of them is required to obtain, verify and record information that identifies you, which information includes your name and address and
other information that will allow the Committing Parties, as applicable, to identify you in accordance with the Act. 
 The Committing
Parties acknowledge and agree that all MNPI furnished by the Companies to the Committing Parties shall be for the confidential use of the Committing Parties and of the prospective Senior Lenders who are subject to the standard confidentiality
agreement of, as the case may be, the Committing Parties or IntraLinks or Syndtrak and each of their respective officers, directors, employees, attorneys and other advisors who accept such information subject to an obligation to keep it confidential
or are otherwise bound by an obligation of confidentiality, in accordance with their customary procedures for handling confidential information and for disseminating such information to prospective lenders. 
 7. Survival of Obligations. The provisions of numbered paragraphs 3, 4 and 6 shall remain in full force and effect regardless of whether any
definitive documentation for the Facilities shall be executed and delivered and notwithstanding the termination of this Commitment Letter or any commitment or undertaking of the Committing Parties hereunder. 
 8. Miscellaneous. This Commitment Letter and the Fee Letter may be executed in multiple counterparts and by different parties hereto in separate
counterparts, all of which, taken together, shall constitute an original. Delivery of an executed counterpart of a signature page to this Commitment Letter or the Fee Letter by telecopier or electronic transmission shall be effective as delivery of
a manually executed counterpart thereof. 
 This Commitment Letter and the Fee Letter shall be governed by, and construed in accordance with,
the laws of the State of New York. Each of the parties hereto hereby irrevocably waives any and all right to trial by jury in any action, proceeding or counterclaim (whether based on contract, tort or otherwise) arising out of or relating to this
Commitment Letter (including, without limitation, the Summaries of Terms), the Fee Letter, the Transaction and the other transactions contemplated hereby and thereby or the actions of the Committing Parties in the negotiation, performance or
enforcement hereof. Each of the parties hereto hereby irrevocably submits to the exclusive jurisdiction of any New York State court or Federal court sitting in the Borough of Manhattan in New York City in respect of any suit, action or proceeding
arising out of or relating to the provisions of this Commitment Letter (including, without limitation, the Summaries of Terms), the Fee Letter, the Transaction and the other transactions contemplated hereby and thereby and irrevocably agrees that
all claims in respect of any such suit, action or proceeding may be heard and determined in any such court. Each of the parties hereto waives, to the fullest extent permitted by applicable law, any objection that it may now or hereafter have to the
laying of the venue of any such suit, action or proceedings brought in any such court, and any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. You shall not sell, transfer or
otherwise dispose of any material portion of assets (other than inventory) of the Borrower and its subsidiaries on a consolidated basis prior to the Closing Date. 
  

 -8- 

 This Commitment Letter, together with the Summaries of Terms and the Fee Letter (and, if this Commitment
Letter is accepted with respect to the Bridge Facility, the Engagement Letter), embodies the entire agreement and understanding among the Committing Parties, you and your affiliates with respect to the Facilities and supersedes all prior agreements
and understandings relating to the subject matter hereof. However, please note that the terms and conditions of the commitments of the Committing Banks and undertaking of BAS and Scotiabank hereunder are not limited to those set forth herein or in
the Summaries of Terms. Those matters that are not covered or made clear herein or in the Summaries of Terms or the Fee Letter are subject to mutual agreement of the parties. No party has been authorized by the Committing Parties to make any oral or
written statements that are inconsistent with this Commitment Letter. 
 This Commitment Letter is not assignable by you without our prior
written consent and is intended to be solely for the benefit of the parties hereto and the Indemnified Parties. 
 All commitments and
undertakings of the Committing Banks under this Commitment Letter with respect to the Senior Credit Facilities will expire at 12:00 midnight (New York City time) on July 10, 2008 unless you execute this Commitment Letter as provided below and
the Fee Letter as provided therein to accept such commitments and return them to us prior to that time. All commitments and undertakings of Banc of America Bridge, Scotiabank and BAS under this Commitment Letter with respect to the Bridge Facility
will also expire at that time unless you sign this Commitment Letter as provided below and the Fee Letter as provided therein to accept such commitments, and also sign the Engagement Letter, and return them to us prior to that time. Thereafter, all
accepted commitments and undertakings of the Committing Parties hereunder will expire on the earliest of (a) December 31, 2008, unless the Closing Date occurs on or prior thereto, (b) the closing of the Acquisition, (i) in the
case of the Senior Credit Facilities, without the use of the Senior Credit Facilities, or (ii) in the case of the Bridge Facility, without the use of the Bridge Facility, (c) the acceptance by any of the Companies or any of their
affiliates of an offer for all or any substantial part of the capital stock or property and assets of the Companies other than as part of the Transaction, and (d) if any event occurs or information becomes available that, in the reasonable and
good faith judgment of the Committing Parties, results or is reasonably likely to result in the failure to satisfy any condition set forth in paragraph 5 of this Commitment Letter. In addition, all accepted commitments and undertakings of the
Committing Parties hereunder may be terminated by us if you fail to perform your obligations under this Commitment Letter or the Fee Letter (or, if this Commitment Letter is accepted with respect to the Bridge Facility, the Engagement Letter) on a
timely basis. 
 BY SIGNING THIS COMMITMENT LETTER, EACH OF THE PARTIES HERETO HEREBY ACKNOWLEDGES AND AGREES THAT (A) BANK OF AMERICA
AND SCOTIABANK ARE OFFERING TO PROVIDE THE SENIOR CREDIT FACILITIES SEPARATE AND APART FROM BANC OF AMERICA BRIDGE’S AND SCOTIABANK’S OFFER TO PROVIDE THE BRIDGE FACILITY AND (B) BANC OF AMERICA BRIDGE AND SCOTIABANK ARE OFFERING TO
PROVIDE THE BRIDGE FACILITY SEPARATE AND APART FROM THE OFFER BY BANK OF AMERICA AND SCOTIABANK TO 

  

 -9- 

 
PROVIDE THE SENIOR CREDIT FACILITIES. YOU MAY, AT YOUR OPTION, ELECT TO ACCEPT THIS COMMITMENT LETTER (AND THE APPLICABLE PROVISIONS OF THE FEE LETTER) WITH
RESPECT TO EITHER THE SENIOR CREDIT FACILITIES OR THE BRIDGE FACILITY OR BOTH. 
 [The remainder of this page intentionally left blank.]

  

 -10- 

 We are pleased to have the opportunity to work with you in connection with this important financing.

  

			
	Very truly yours,
	
	BANK OF AMERICA, N.A.
		
	By:	 	 /s/ K. James Pirouz

	Name:	 	K. James Pirouz
	Title:	 	Principal
	
	BANC OF AMERICA BRIDGE LLC
		
	By:	 	 /s/ K. James Pirouz

	Name:	 	K. James Pirouz
	Title:	 	Principal
	
	BANC OF AMERICA SECURITIES LLC
		
	By:	 	 /s/ K. James Pirouz

	Name:	 	K. James Pirouz
	Title:	 	Principal
	
	THE BANK OF NOVA SCOTIA
		
	By:	 	 /s/ Todd Meller

	Name:	 	Todd Meller
	Title:	 	Managing Director

  

 -11- 

 The provisions of this Commitment Letter 
 with respect to the Senior Credit Facilities 
 are accepted and agreed to as of the date 
 first written above: 
  

			
	ASHLAND INC.
		
	By:	 	 /s/ J. Kevin Willis

	Name:	 	J. Kevin Willis
	Title:	 	Treasurer and Vice President, Finance

 The provisions of this Commitment Letter 
 with respect to the Bridge Facility are 
 accepted and agreed to as of the date first 
 written above: 
  

			
	ASHLAND INC.
		
	By:	 	 /s/ J. Kevin Willis

	Name:	 	J. Kevin Willis
	Title:	 	Treasurer and Vice President, Finance

  

 -12- 

 SCHEDULE I 
 SOURCES AND USES OF FUNDS 
 ($ millions) 
  

									
	 Sources
	  	 	  	 Uses
	  	 
	Senior Credit Facilities	  	$	1,439.0	  	Cash Purchase Price of Acquired Business Equity	  	$	2,133.0
	Senior Notes or Bridge Facility	  	 	750.0	  	Refinancing of Existing Borrower Debt	  	 	593.0
	Cash	  	 	871.0	  	Common Stock of Borrower	  	 	492.0
	Common Stock of Borrower	  	 	492.0	  	Estimated Fees and Expenses	  	 	334.0
		  	 	 	  		  	 	 
	 Total Sources
	  	$	3,552.0	  	Total Uses	  	$	3,552.0
		  	 	 	  		  	 	 

 Common Stock of the Borrower is based on an exchange rate of 0.093 shares of Common Stock of the Borrower for each
share of Common Stock of the Acquired Business and consideration will fluctuate. 
 Cash includes the Borrower’s cash on hand at closing, the Acquired
Business’s cash on hand at closing and option proceeds. 
  

 Schedule I-1 

 ANNEX I 
 SUMMARY OF TERMS AND CONDITIONS 
 $1.950 BILLION SENIOR CREDIT FACILITIES 
 Capitalized terms not otherwise defined herein have the same meanings as specified therefor in the Commitment Letter to which this Annex I is attached.

  

	 Borrower: 
	Ashland Inc., a Kentucky corporation (the “Borrower”). A newly created, wholly-owned subsidiary of the Borrower will merge with and into the Acquired Business, with the Acquired
Business surviving as a wholly owned subsidiary of the Borrower. The Borrower, the Acquired Business and their subsidiaries are collectively referred to herein as the “Companies”). 

  

	 Guarantors: 
	The obligations of the Borrower and its subsidiaries under the Senior Credit Facilities and under any treasury management, interest protection or other hedging arrangements entered into with a Senior Lender
(or an affiliate thereof) will be guaranteed by each of the existing and future direct and indirect Material Subsidiaries of the Borrower, including the Acquired Business and its subsidiaries, other than (i) any joint venture and (ii) any subsidiary
that is a “controlled foreign corporation” (a “CFC”) under Section 957 of the Internal Revenue Code to the extent such guarantee could reasonably be expected to result in a material tax liability (the
“Guarantors”); provided that recourse under the guaranty of Ashland International Holdings, Inc., Valvoline International, Inc., Hercules Paper Holdings, Inc. and any other Guarantor substantially all business and
purpose of which is the holding of stock of CFCs (each a “Foreign Holdco”) shall be limited to Collateral pledged by such Foreign Holdco pursuant to the “Security” section below (and Foreign Holdcos may be subject
to covenants prohibiting them from engaging in other businesses or operations and acquiring assets and liabilities, except that the three identified by name above may continue activities being conducted by them on the Closing Date so long as there
is no material change in the nature or material increase in the relative quantity of such activities thereafter). All guarantees will be guarantees of payment and not of collection. “Material Subsidiaries” shall be defined in
a manner to be agreed in the loan documentation. 

  

 Annex I-1 

	 Administrative and Collateral Agent: 
	Bank of America, N.A. (“Bank of America”) will act as sole and exclusive administrative and collateral agent for the Senior Lenders (the “Administrative
Agent”). 

 Joint Lead Arrangers and Joint Book 

	     Managers: 
	Banc of America Securities LLC (“BAS”) and The Bank of Nova Scotia (“Scotiabank”) will act as joint lead arrangers and joint book running managers for the
Senior Credit Facilities (the “Senior Lead Arrangers”). 

  

	 Senior Lenders: 
	Bank of America and Scotiabank and other banks, financial institutions and institutional lenders acceptable to the Senior Lead Arrangers and selected in consultation with the Borrower.

  

	 Senior Credit Facilities: 
	An aggregate principal amount of up to $1.950 billion will be available through the following facilities: 

 Term A Facility: a $600.0 million term loan facility, all of which will be drawn on the Closing Date. 
 Term B Facility: a $850.0 million term loan facility, all of which will be drawn on the Closing Date (together with Term A Facility, the “Term Loan Facilities”). 
 It is understood that up to $100.0 million of the Term A Facility and $100.0 million of the Term B Facility may be replaced prior to the Closing Date or
repaid after the Closing Date with an accounts receivable securitization facility of the Borrower on customary terms and conditions (the “A/R Facility”), with the proceeds of such A/R Facility reducing or repaying, as the
case may be, the Term A Facility and Term B Facility on a dollar for dollar basis allocated between such facilities as the Lead Arrangers may determine. The $100.0 million of the Term A Facility and $100.0 million of the Term B Facility which may be
funded on the Closing Date in lieu of the A/R Facility is referred to herein as the “A/R Facility Backstop.” 
 Prior to the Closing Date, the Senior Lead Arrangers shall have the right to reallocate the principal amount of the Term Loan Facilities between the Term A Facility and the Term B Facility (with corresponding changes to the Scheduled
Amortization (as hereinafter defined)) in consultation with the Borrower. 
 At the request of the Senior Lead Arrangers, the Borrower will
use its commercially reasonable efforts to cause a portion of the Term Loan Facilities as requested by the Senior Lead Arrangers to be issued by one or more of the Borrower’s European 

  

 Annex I-2 

 
subsidiaries (in US Dollars, Euro, or other freely available currencies that may be agreed), and provided in any event that the Borrower and the
Guarantors will remain guarantors with respect thereto and provided, further, that the Borrower shall not be required to use such efforts if, in the Borrower’s good faith determination, such borrowings by European subsidiaries (or
the use or repatriation of the proceeds thereof) would reasonably be expected to cause any (other than immaterial) (i) detriment to the Companies’ current or prospective operations, earnings or financial condition or (ii) tax liability to the
Companies. 
 Revolving Credit Facility: a $500.0 million revolving credit facility, available from time to time until the fifth
anniversary of the Closing Date, and to include a sublimit to be determined for the issuance of standby and commercial letters of credit (each a “Letter of Credit”) and a sublimit for swingline loans (each a
“Swingline Loan”). At the Borrower’s request the Revolving Credit Facility will contain a sub-facility denominated in Euros and not greater than the Euro equivalent of $100.0 million. Letters of Credit will be initially
issued by a Lender specified by the Borrower prior to the Closing Date and reasonably acceptable to the Senior Lead Arrangers (in such capacity, the “Issuing Bank”) and a sublimit for swingline loans (each a
“Swingline Loan”), and each of the Lenders under the Revolving Credit Facility will purchase an irrevocable and unconditional participation in each Letter of Credit and each Swingline Loan. Only $12.0 million of the Revolving
Credit Facility may be drawn on the Closing Date and up to $130.0 million of rollover L/Cs may be rolled over or backstopped; provided that the Borrower may also borrow additional amounts under the Revolving Credit Facility on the Closing
Date in order to fund upfront fees or original issue discount. 
  

	 Swingline Option: 
	Swingline Loans will be made available on a same day basis in an aggregate amount not exceeding an amount to be determined and in a minimum amount to be determined. The Borrower must repay each Swingline
Loan in full no later than ten (10) business days after such loan is made. 

  

	 Purpose: 
	The proceeds of the Senior Credit Facilities shall be used (i) to finance in part the Acquisition; (ii) to pay fees and expenses incurred in connection with the Transaction; (iii) to provide ongoing working
capital and for other general corporate purposes of the Borrower and its subsidiaries; and (iv) to finance in part the Refinancing. 

  

	 Closing Date: 
	On or before December 31, 2008. 

  

 Annex I-3 

	 Interest Rates: 
	The interest rates per annum applicable to the Senior Credit Facilities will be, at the option of the Borrower (i) LIBOR plus the Applicable Margin (as hereinafter defined) or (ii) the Alternate Base Rate
(to be defined as the higher of (x) the Bank of America prime rate and (y) the Federal Funds rate plus 0.50%) plus the Applicable Margin. The Applicable Margin means (a) with respect to the Term A Facility and the Revolving Credit Facility (i) for
the first six months after the Closing Date, 2.75% per annum, in the case of LIBOR advances, and 1.75% per annum, in the case of Alternate Base Rate advances, and (ii) thereafter, a percentage per annum to be determined in accordance with a pricing
grid attached hereto as Addendum II and (b) with respect to the Term B Facility, 3.25% per annum, in the case of LIBOR advances, and 2.25% per annum, in the case of Alternate Base Rate advances. In no event shall LIBOR be deemed to be less than
3.00% (the “LIBOR Floor”) nor shall the Alternate Base Rate be deemed to be less than 4.00% (the “Base Rate Floor”). 

 The Borrower may select interest periods of one, two, three or six months for LIBOR advances. Interest shall be payable at the end of the selected
interest period, but no less frequently than quarterly. 
 During the continuance of any event of default under the loan documentation, the
Applicable Margin on all obligations owing under the loan documentation shall increase by 2% per annum. 
  

	 Commitment Fee: 
	Commencing on the Closing Date, a commitment fee of (a) until six months following the Closing Date, 0.50% and (b) thereafter, a percentage per annum determined in accordance with a pricing grid attached
hereto as Addendum II (calculated on a 360-day basis) shall be payable on the unused portions of the Senior Credit Facilities, such fee to be payable quarterly in arrears and on the date of termination or expiration of the commitments.

  

	 Calculation of Interest and Fees: 
	Other than calculations in respect of interest at the Alternate Base Rate (which shall be made on the basis of actual number of days elapsed in a 365/366 day year), all calculations of interest and fees
shall be made on the basis of actual number of days elapsed in a 360-day year. 

  

	 Cost and Yield Protection: 
	Customary for transactions and facilities of this type, including, without limitation, in respect of breakage or redeployment costs incurred in connection with prepayments, changes in capital adequacy and
capital requirements or their interpretation, illegality, unavailability, reserves without proration or offset and payments free and clear of withholding or other taxes. 

  

 Annex I-4 

	 Letter of Credit Fees: 
	Letter of Credit fees equal to the Applicable Margin from time to time on Revolving Credit LIBOR advances on a per annum basis will be payable quarterly in arrears and shared proportionately by the Senior
Lenders under the Revolving Credit Facility. In addition, a fronting fee at a rate per annum and payable as established by separate agreement between the Borrower and the Issuing Bank will be payable to the Issuing Bank for its own account. Both the
Letter of Credit fees and the fronting fees will be calculated on the amount available to be drawn under each outstanding Letter of Credit. 

  

	 Maturity: 
	Term Loan A Facility: five years after the Closing Date. 

 Term Loan B
Facility: seven years after the Closing Date. 
 Revolving Credit Facility: five years after the Closing Date. 
  

	 Scheduled Amortization: 
	Term Loan Facilities: The Term A Facility will be subject to quarterly amortization of principal (in equal installments), with 5% of the aggregate Term A advances to be payable in each of the first
two years, 10% of the aggregate Term A advances to be payable in the third year, 20% of the aggregate Term A advances to be payable in the fourth year and 60% of the aggregate Term A advances to be payable in the fifth year (in quarterly
installments of 5%, 5%, 5%, and 45%. The Term B Facility will be subject to quarterly amortization of principal (in equal installments), with 1% of the initial aggregate Term B advances to be payable in each of the first six years and 94% of the
initial aggregate Term B advances to be payable in the final year (in quarterly installments of 0.25%, 0.25%, 0.25%, and 93.25%) (collectively, the “Scheduled Amortization”). 

 Revolving Credit Facility: Advances under the Revolving Credit Facility may be made, and Letters of Credit may be issued, on a revolving basis up
to the full amount of the Revolving Credit Facility. 
 Mandatory Prepayments and Commitment

	     Reductions: 
	 In addition to the amortization set forth above, (a) all cash proceeds (net of fees, commissions, and other related expenses and taxes attributable to the event) from (i) sales of property and assets of
Borrower and its subsidiaries (including sales or issuances of equity interests by subsidiaries of Borrower but 

  

 Annex I-5 

	 	 
excluding sales of inventory in the ordinary course of business, and other exceptions to be agreed in the loan documentation), and (ii) Extraordinary
Receipts (to be defined to include extraordinary receipts such as tax refunds, casualty and indemnity payments, and certain casualty insurance proceeds and to exclude cash receipts in the ordinary course of business and any reimbursements matched to
an expense, including asbestos and environmental claim insurance and indemnity payments), in each case, subject to reinvestments completed during the 12 month period following receipt, (b) all cash proceeds (net of fees, commissions, and other
related expenses and taxes attributable to the event) from the issuance or incurrence after the Closing Date of additional debt of Borrower or any of its subsidiaries (other than debt permitted under the loan documentation and other than, if the
Bridge Facility is funded, the Rollover Loans or Exchange Notes referred to in Annex II or equity or Permanent Securities in an initial principal amount sufficient to refinance any outstanding Bridge Financing), and (c) 25% of Excess Cash Flow (to
be defined in the loan documentation) of Borrower and its subsidiaries (stepping down to 0% when the Borrower’s total Leverage Ratio is less than 2.5 to 1.0), shall be applied to the prepayment of (and permanent reduction of the commitments
under) the Senior Credit Facilities in the following manner: first, ratably to the principal repayment installments of each of the Term Loan Facilities on a pro rata basis and, second, to the Revolving Credit Facility; provided that
prepayments of Excess Cash Flow applied to the Revolving Credit Facility shall not reduce the commitments thereunder. 

 Optional Prepayments and Commitment 

	     Reductions: 
	The Senior Credit Facilities may be prepaid at any time in whole or in part without premium or penalty, except that any prepayment of LIBOR advances other than at the end of the applicable interest periods
therefor shall be made with reimbursement for any funding losses and redeployment costs of the Senior Lenders resulting therefrom. Each such prepayment of the Term Loan Facilities shall be applied ratably to the principal repayment installments of
each of the Term Loan Facilities on a pro rata basis. The unutilized portion of any commitment under the Senior Credit Facilities may be reduced or terminated by the Borrower at any time without penalty. 

  

	 Security: 
	The Borrower and each of the Guarantors shall grant the Administrative Agent (for its benefit and for the benefit of the Senior Lenders) valid and perfected first priority (subject to certain exceptions to
be set forth in the loan documentation) liens and security interests in all of the following (collectively, the “Collateral”): 

 (a) all present and future shares of capital stock of (or other ownership or profit interests in) each of its present and future subsidiaries, except that (i) in the case of each subsidiary that is a CFC, such pledge
shall be limited to 65% of the voting stock of each such entity and (ii) none of the stock of a Foreign Holdco shall be pledged; 
  

 Annex I-6 

 (b) all present and future intercompany debt owed to the Borrower and each Guarantor; 
 (c) (i) all of the present and future personal property of the Borrower and each Guarantor, including, but not limited to, equipment (other than motor
vehicles and other certificate of title vehicles), inventory, accounts receivable (other than those subject to the A/R Facility), fixtures, certain material deposit and bank accounts, investment property, license rights, intellectual property and
other general intangibles, insurance proceeds and instruments and (ii) owned real estate having a value in excess of a value to be agreed in the loan documentation (to the extent permitted under applicable existing agreements); provided that
interests in joint ventures will be pledged only to the extent permitted by formation documents; and 
 (d) all proceeds and products of the
property and assets described in clauses (a), (b) and (c) above. 
 Notwithstanding the foregoing, the collateral shall not include assets
where the Administrative Agent determines that the cost of obtaining such pledge or security interest is excessive in relation to the benefit thereof. 
 The Collateral shall ratably secure the relevant party’s obligations in respect of the Senior Credit Facilities, any interest rate swap or similar agreements with a Senior Lender or an affiliate of a Senior
Lender and treasury management agreements with a Senior Lender or an affiliate of a Senior Lender. 
 Conditions Precedent to Closing and 

	     Initial Borrowings: 
	Those specified in Annex III to the Commitment Letter. 

 Conditions Precedent to Each 
     Borrowing Under the Senior Credit 

	     Facilities: 
	 Each borrowing or issuance or renewal of a Letter of Credit under the Senior Credit Facilities (other than the initial 

  

 Annex I-7 

	 	 
borrowings on the Closing Date) will be subject to satisfaction of the following conditions precedent: (i) all of the representations and warranties in the
loan documentation shall be materially correct; and (ii) no defaults or Events of Default shall have occurred and be continuing. 

  

	 Representations and Warranties: 
	The following and others reasonably agreed by the Senior Lead Arrangers and the Borrower: (i) corporate status; (ii) corporate power and authority, enforceability; (iii) no violation of law,
contracts or organizational documents; (iv) no material litigation; (v) accuracy and completeness of specified financial statements and other information and no material adverse change; (vi) no required governmental (including without
limitation exchange control) or third party approvals or consents; (vii) use of proceeds/compliance with margin regulations; (viii) valid title to property and assets (including, intellectual property and licenses), free and clear of
liens, charges and other encumbrances; (ix) status under Investment Company Act; (x) ERISA matters; (xi) environmental matters; (xii) perfected liens, security interests and charges; (xiii) solvency; (xiv) tax status
and payment of taxes; (xv) status as senior debt; (xvi) defaults; (xvii) insurance; and (xviii) reportable transactions. 

 The foregoing will be subject to qualifications for material adverse effect, exclusions and/or materiality thresholds, in each case to be agreed upon in the loan documentation. 
  

	 Covenants: 
	The following affirmative, negative and financial covenants and other affirmative and negative covenants reasonably agreed by the Senior Lead Arrangers and the Borrower: 

  

	 	(a)	 Affirmative Covenants: (i) Compliance with laws and regulations (including, without limitation, ERISA and environmental laws); (ii) payment of taxes and
other obligations; (iii) maintenance of appropriate and adequate insurance; (iv) preservation of corporate existence, rights (charter and statutory), franchises, permits, licenses and approvals; (v) visitation and inspection rights; (vi) keeping of
proper books in accordance with generally accepted accounting principles; (vii) maintenance of properties; (viii) performance of leases, related documents and other material agreements; (ix) conducting transactions with affiliates on terms
equivalent to those obtainable on an arm’s-length basis; (x) further assurances as to perfection and priority of security interests; (xi) grant of security on additional property and 

  

 Annex I-8 

	 	 
assets of the Companies not already Collateral upon the occurrence of an Event of Default and (xii) customary financial and other reporting requirements
(including, without limitation, audited annual financial statements and quarterly unaudited financial statements, notices of defaults, compliance certificates, annual business plans and forecasts, notices of material litigation and proceedings,
material environmental actions and liabilities and material ERISA and tax events and liabilities, reports to shareholders and other creditors, and other business and financial information as any Senior Lender shall reasonably request).

 The foregoing will be subject to qualifications for material adverse effect, exclusions and/or materiality thresholds
or baskets, in each case to be agreed upon in the loan documentation. 
  

	 	(b)	 Negative Covenants: Restrictions (with qualifications and exceptions to be agreed) on (i) liens; (ii) debt (other than the Senior Notes or the
Bridge Financing and Permanent Securities in an initial principal amount sufficient to refinance the outstanding Bridge Financing, the A/R Facility (if any) and the Indebtedness to Remain Outstanding (as defined in Annex III)), guarantees or other
contingent obligations (including, without limitation, the subordination of all intercompany indebtedness on terms satisfactory to the Lenders); (iii) mergers and consolidations; (iv) sales, transfers and other dispositions of property and
assets (other than sales of inventory in the ordinary course of business); (v) loans, acquisitions, joint ventures and other investments (with an exception for investments consisting of asset transfers to a joint venture between the Borrower
and Sud-Chemie AG, (A) in which each would have a 50% interest and (B) under which the Borrower would contribute its Casting Solutions business group and its interest in Ashland-Südchemie-Kernfest GmbH, which contributed assets shall
be as separately described to the Lead Arrangers as part of the Pre-Commitment Information); (vi) in the case of the Borrower, dividends and other distributions to, and redemptions and repurchases from, equity holders; (vii) creating new
subsidiaries; (viii) becoming a general partner in any partnership; (ix) prepaying, redeeming or repurchasing debt; (x) capital expenditures; (xi) granting negative pledges (other than any such negative pledge under the
definitive 

  

 Annex I-9 

	 	 
documentation for the Bridge Facility and the Senior Notes which shall expressly permit liens in favor of the Administrative Agent and the Senior Lenders);
(xii) changes in the nature of business; (xiii) amending organizational documents, or amending or otherwise modifying certain material agreements; (xiv) changes in accounting policies or reporting practices; (xv) sale and leaseback transactions; and
(xvi) transactions with affiliates. 

 The foregoing will be subject to qualifications for material adverse effect,
exclusions and/or materiality thresholds or baskets, in each case to be agreed upon in the loan documentation. 
  

	 	(c)	Financial Covenants: 

  

	 	•	 	 Maintenance of a maximum Leverage Ratio, with step downs to be determined; and 

  

	 	•	 	 Maintenance of a minimum Fixed Charge Coverage Ratio, with step ups to be determined. 

 All of the financial covenants will be calculated on a consolidated basis and for each consecutive four fiscal quarter period, except that during the
first year following the Closing Date such measurements for historical fiscal quarters ended prior to the Closing Date for which quarterly financial statements have been provided to the Senior Lead Arrangers pursuant to Annex III shall be made by
reference to stipulated amounts of EBITDA and Fixed Charges to be agreed in the loan documentation. 
  

	 Interest Rate Protection: 
	The Borrower shall obtain interest rate protection in form and with parties acceptable to the Senior Lead Arrangers for a notional amount and otherwise on terms to be agreed in the loan documentation.

 Within 90 days after the Closing Date, the Borrower shall enter into interest rate swap contracts with terms and conditions
and with counterparties reasonably satisfactory to the Administrative Agent covering such amount of consolidated funded debt for borrowed money such that at least 50% of the aggregate principal amount of consolidated funded debt for borrowed money
of the Borrower and its subsidiaries is subject to interest rate swap contracts providing for effective payment of interest on a fixed rate basis or bears interest at fixed rates for a period of at least three years. 
  

 Annex I-10 

	 Events of Default: 
	The following and others reasonably agreed by the Senior Lead Arrangers and the Borrower: (i) nonpayment of principal, interest, fees or other amounts, (ii) any representation or warranty proving
to have been materially incorrect when made or confirmed; (iii) failure to perform or observe covenants set forth in the loan documentation within a specified period of time, where customary and appropriate, after notice or knowledge of such
failure; (iv) cross-defaults to other indebtedness in an amount to be agreed; (v) bankruptcy and insolvency defaults (with grace period for involuntary proceedings); (vi) monetary judgment defaults in an amount to be agreed and
material non-monetary judgment defaults; (vii) actual or asserted impairment of loan documentation or security; (viii) Change of Control (to be defined); and (ix) customary ERISA defaults. 

 The foregoing will be subject to customary and reasonable notice, grace and cure periods and qualifications for material adverse effect or other
materiality thresholds. 
  

	 Assignments and Participations: 
	Each Senior Lender will be permitted to make assignments in minimum amounts to be agreed to other financial institutions approved by the Administrative Agent and, so long as no event of default has occurred
and is continuing, the Borrower, which approval shall not be unreasonably withheld or delayed; provided, however, that neither the approval of the Borrower nor the Administrative Agent shall be required in connection with assignments
to other Senior Lenders or any of their affiliates. Each Senior Lender will also have the right, without consent of the Borrower or the Administrative Agent, to assign (i) as security all or part of its rights under the loan documentation to any
Federal Reserve Bank and (ii) all or part of its rights or obligations under the loan documentation to any of its affiliates. Senior Lenders will be permitted to sell participations with voting rights limited to significant matters such as changes
in amount, rate and maturity date. An assignment fee will be charged to the applicable Lender with respect to each assignment as set forth in Addendum I. 

  

	 Waivers and Amendments: 
	 Amendments and waivers of the provisions of the loan documentation will require the approval of Senior Lenders holding advances and commitments representing more than 50% of the aggregate advances and
commitments under the Senior Credit Facilities, except that (a) the consent of each affected Senior Lender will be required with respect to the following: (i) increases in commitment amounts, (ii) reductions of principal, interest, or
fees, (iii) extensions of scheduled maturities or times 

  

 Annex I-11 

	 	 
for payment (which, by way of clarification and not limitation, shall not be deemed to include mandatory prepayments), (iv) releases of all or
substantially all of the collateral or value of the guarantees and (v) changes that impose any restriction on the ability of any Senior Lender to assign any of its rights or obligations and (b) the consent of Senior Lenders holding more
than 50% of the advances and commitments under each of the Term A Facility and the Term B Facility shall be required with respect to any amendment or waiver that changes the allocation of any payments between the Term Loan Facilities.

  

	 Indemnification: 
	The Borrower will indemnify and hold harmless the Administrative Agent, the Senior Lead Arrangers, each Senior Lender and each of their affiliates and their officers, directors, employees, agents and
advisors from and against all losses, liabilities, claims, damages or expenses arising out of or relating to the Transaction, the Senior Credit Facilities, the Borrower’s use of loan proceeds or the commitments, including, but not limited to,
reasonable attorneys’ fees and settlement costs other than losses, liabilities, claims, damages or expenses, except to the extent of direct (as opposed to special, indirect, consequential or punitive) damages determined by a court of competent
jurisdiction to have resulted from the gross negligence or willful misconduct of such Indemnified Party or such Indemnified Party’s subsidiaries or the officers, directors, employees, agents, advisors and other representatives of such
indemnified party or its subsidiaries. This indemnification shall survive and continue for the benefit of all such persons or entities, notwithstanding any failure of the Senior Credit Facilities to close. 

  

	 Governing Law: 
	New York. 

  

	 Expenses: 
	The Borrower will pay all reasonable and invoiced costs and expenses associated with the preparation, due diligence, administration, syndication and enforcement of all loan documentation, including, without
limitation, the reasonable and invoiced legal fees and expenses of the Administrative Agent’s counsel, regardless of whether or not the Senior Credit Facilities are closed. The Borrower will also pay the expenses of each Senior Lender in
connection with the enforcement, during an Event of Default, of any of the loan documentation related to the Senior Credit Facilities. 

  

	 Counsel to the Administrative Agent: 
	Cahill Gordon & Reindel LLP. 

  

 Annex I-12 

	 Miscellaneous: 
	Each of the parties shall (i) waive its right to a trial by jury and (ii) submit to exclusive New York jurisdiction. The loan documentation will contain customary increased cost, withholding tax, capital
adequacy and yield protection provisions. 

  

 Annex I-13 

 ADDENDUM I 
 PROCESSING AND RECORDATION FEES 
 The Administrative Agent will charge a processing and recordation fee (an
“Assignment Fee”) in the amount of $2,500 for each assignment; provided, however, that in the event of two or more concurrent assignments to members of the same Assignee Group (which may be effected by a suballocation
of an assigned amount among members of such Assignee Group) or two or more concurrent assignments by members of the same Assignee Group to a single Eligible Assignee (or to an Eligible Assignee and members of its Assignee Group), the Assignment Fee
will be $2,500 plus the amount set forth below: 
  

			
	 Transaction:
	  	Assignment Fee:
	 First four concurrent assignments or suballocations to members of an Assignee Group (or from members of an Assignee Group, as
applicable)
	  	-0-
		
	 Each additional concurrent assignment or suballocation to a member of such Assignee Group (or from a member of such Assignee Group, as
applicable)
	  	$500

 For purposes hereof, “Assignee Group” means two or more Eligible Assignees that are
Affiliates of one another or two or more Approved Funds managed by the same investment advisor. The terms “Affiliate,” “Approved Fund” and “Eligible Assignee” shall be defined
in the definitive loan documentation. 
  

 Annex I-14 

 ADDENDUM II 
 PRICING GRID 
  

										
	Leverage Ratio	  	Commitment Fee	 	 	Applicable Margin	 
	  	 	LIBOR	 	 	Alternate Base
Rate	 
	> 3.75:1.00	  	.50	%	 	3.25	%	 	2.25	%
	> 3.50:1.00 and < 3.75:1.00	  	.50	%	 	3.00	%	 	2.00	%
	> 2.75:1.00 and < 3.50:1.00	  	.50	%	 	2.75	%	 	1.75	%
	> 2.00:1.00 and < 2.75:1.00	  	.40	%	 	2.50	%	 	1.50	%
	< 2.00:1.00	  	.30	%	 	2.00	%	 	1.00	%

  

 Annex I-15 

 ANNEX II-A 
 SUMMARY OF TERMS AND CONDITIONS 
 $750.0 MILLION SENIOR BRIDGE FACILITY 
 Capitalized terms not otherwise defined herein have the same meanings as specified therefor in the Commitment Letter to which this Annex II-A is
attached. 
  

	 Borrower: 
	Same Borrower as in the Senior Financing Summary of Terms. 

  

	 Guarantors: 
	Same Guarantors as in the Senior Financing Summary of Terms. 

  

	 Joint Lead Arrangers and Joint Book Managers: 
	Banc of America Securities LLC (“BAS”) and The Bank of Nova Scotia (“Scotiabank”) will act as joint lead arrangers and joint book running managers for the
Bridge Facility (in such capacity, the “Bridge Lead Arrangers”). 

  

	 Bridge Lenders: 
	Banc of America Bridge LLC or an affiliate thereof (“Banc of America Bridge”) and The Bank of Nova Scotia or an affiliate (“Scotiabank” and, together with Banc
of America Bridge, the “Initial Bridge Lenders”) and other financial institutions and institutional lenders acceptable to the Bridge Lead Arrangers in consultation with the Borrower (the “Bridge
Lenders”). 

  

	 Bridge Facility: 
	Up to $750.0 million of unsecured senior bridge loans (the “Bridge Loans”). The Bridge Loans will be available to the Borrower in one drawing upon consummation of the Acquisition.

  

	 Ranking: 
	The Bridge Loans will be unsecured, senior obligations of the Borrower, ranking pari passu with or senior to all other unsecured obligations of the Borrower. The Guarantees will be unsecured, senior
obligations of each Guarantor, ranking pari passu with or senior to all other unsecured obligations of such Guarantor. 

  

	 Purpose: 
	Together with borrowings under the Senior Credit Facilities, the proceeds of the Bridge Facility shall be used (i) to finance in part the Acquisition; (ii) to pay fees and expenses incurred in connection
with the Transaction; and (iii) to finance in part the Refinancing. 

  

	 Closing Date: 
	On or before December 31, 2008. 

  

	 Interest Rate: 
	 Interest shall be payable quarterly in arrears at a rate per annum equal to the greatest of (i) three-month LIBOR plus the Applicable Margin, (ii) the yield on the U.S. Treasury security with a maturity
closest to the Rollover Maturity Date plus the Applicable Margin and (iii) 3.00% per annum plus the Applicable 

  

 Annex II-A-1 

	 	 
Margin. The Applicable Margin for Bridge Loans shall initially be 450 basis points and will in each case increase by an additional 50 basis at the end
of each subsequent three-month period for as long as the Bridge Loans are outstanding; provided that the interest rate shall not exceed 12.00% per annum; provided that such maximum interest rate permitted by this clause shall increase
by an additional 25 basis points in the event that (i) the sum of the consolidated operating income from continuing operations, plus depreciation and amortization (excluding the impact of non-recurring one time gains and losses and including
interest income of the Acquired Business and its subsidiaries but excluding interest income of the Borrower and its subsidiaries) (for purposes of this proviso, “EBITDA”) of the Borrower and the EBITDA of the Acquired
Business, in each case for the quarter ended June 30, 2008, is less than $190.0 million or (ii) the sum of the EBITDA of the Borrower and the EBITDA of the Acquired Business, in each case for the six months ended September 30, 2008
(calculated based on the monthly financial statements of the Borrower and the Acquired Business provided to the Lead Arrangers in accordance with clause (v) of Annex III to the Commitment Letter on or prior to October 24, 2008 or, if released
prior to such date by the Borrower or the Acquired Business or both, the earnings release issued by the Borrower or the Acquired Business or both for the quarter ending September 30, 2008), is less than $350.0 million. Notwithstanding the
foregoing, in the case of an Event of Default, the Applicable Margin shall be increased by 2.0% per annum. 

  

	 Maturity: 
	12 months from the Closing Date (the “Bridge Loan Maturity Date” or “Rollover Date”). 

  

	 Optional Prepayment: 
	The Bridge Loans may be prepaid prior to the Bridge Loan Maturity Date, without premium or penalty, in whole or in part, upon written notice, at the option of the Borrower, at any time, together with accrued
interest to the prepayment date. 

  

	 Mandatory Prepayments: 
	The Borrower will prepay the Bridge Loans, without premium or penalty, together with accrued interest to the prepayment date, with any of the following: (i) the net proceeds from the issuance of any debt or
equity securities of the Borrower; (ii) subject to customary exceptions to be agreed and prepayment requirements under the Senior Credit Facilities, the net proceeds from any other indebtedness incurred by the Borrower or any of the Borrower’s
subsidiaries; and (iii) subject to customary exceptions to be agreed and to prepayment requirements under the Senior Credit Facilities, the net proceeds from asset sales by the Borrower or any of the Borrower’s subsidiaries.

  

 Annex II-A-2 

	 Change of Control: 
	In the event of a Change of Control, each Bridge Lender will have the right to require the Borrower, and the Borrower must offer, to prepay the outstanding principal amount of the Bridge Loans plus accrued
and unpaid interest thereon to the date of prepayment plus a prepayment fee equal to 1% of such outstanding principal amount. Prior to making any such offer, the Borrower will, within 30 days of the Change of Control, repay all obligations under the
Senior Credit Facilities or obtain any required consent of the Senior Lenders under the Senior Credit Facilities to make such prepayment of the Bridge Loans. 

  

	 Conversion into Rollover Loans: 
	If the Bridge Loans have not been previously prepaid in full for cash on or prior to the Rollover Date, the principal amount of the Bridge Loans outstanding on the Rollover Date may, subject to the
conditions precedent set forth in Annex II-B, be converted into unsecured, senior rollover loans with a maturity of seven years from the Rollover Date (the “Rollover Loans”) and otherwise having the terms set forth in Annex
II-B. On or after the Rollover Date, each Bridge Lender will have the right to exchange the outstanding Rollover Loans held by it for unsecured, senior exchange notes of the Borrower having the terms set forth in Annex II-C.

  

	 Conditions Precedent: 
	Those specified in Annex III to the Commitment Letter. 

  

	 Covenants: 
	To include financial covenants, and other covenants reasonably agreed by the Bridge Lead Arrangers and the Borrower and in any event to include covenants similar to those contained in the Senior Credit
Facilities and a covenant for the Borrower to use its commercially reasonable efforts to refinance the Bridge Facility with the proceeds of the Permanent Financing as promptly as practicable following the Closing Date. 

  

	 Representations and Warranties, Events of Default, Waivers and Consents: 
	Provisions similar to those contained in the Senior Credit Facilities and others reasonably agreed by the Bridge Lead Arrangers and the Borrower. 

  

	 Assignments and Participations: 
	 The Bridge Lenders shall have the right to assign their interest in the Bridge Loans in whole or in part in compliance with 

  

 Annex II-A-3 

	 	 
applicable law to any third parties. In addition, the Initial Bridge Lenders may share their respective commitments with any third party.

  

	 Indemnification: 
	Substantially similar to the Senior Credit Facilities. 

  

	 Governing Law: 
	New York. 

  

	 Expenses: 
	The Borrower will pay all reasonable and invoiced costs and expenses associated with the preparation, due diligence, administration, syndication and enforcement of all loan documentation, including, without
limitation, the reasonable and invoiced legal fees and expenses of the Bridge Lead Arrangers’ counsel, regardless of whether or not the Bridge Facility is closed. The Borrower will also pay the expenses of each Bridge Lender in connection with
the enforcement following default of any of the loan documentation related to the Bridge Facility. 

  

	 Counsel to Bridge Lead Arrangers: 
	Cahill Gordon & Reindel LLP. 

  

	 Fees: 
	As provided in the Fee Letter. 

  

 Annex II-A-4 

 ANNEX II-B 
 SUMMARY OF TERMS AND CONDITIONS 
 $750.0 MILLION SENIOR ROLLOVER FACILITY 
 Capitalized terms not otherwise defined herein have the same meanings as specified therefor in the Commitment Letter to which this Annex II-B is
attached. 
  

	 Borrower: 
	Same Borrower as in Senior Financing Summary of Terms and Bridge Summary of Terms. 

  

	 Guarantors: 
	Same Guarantors as in Senior Financing Summary of Terms and Bridge Summary of Terms. 

  

	 Rollover Facility: 
	Unsecured, senior rollover loans (the “Rollover Loans”) in an initial principal amount equal to 100% of the outstanding principal amount of the Bridge Loans on the Rollover Date.
Subject to the conditions precedent set forth below, the Rollover Loans will be available to the Borrower to refinance the Bridge Loans on the Rollover Date. The Rollover Loans will be governed by the definitive documents for the Bridge Loans and,
except as set forth below, shall have the same terms as the Bridge Loans. 

  

	 Ranking: 
	Same as Bridge Loans. 

  

	 Interest Rate: 
	At the Rollover Date, the interest rate on the Rollover Loans will be a rate per annum equal to the greatest of (i) three-month LIBOR in effect from time to time (ii) the yield in effect from time to time on
the U.S. Treasury security with a maturity closest to the Rollover Maturity Date and (iii) 3.00% per annum plus the Applicable Margin on the Bridge Loans in effect on the Rollover Date. For each three-month period after the Rollover Date the
interest rate shall increase by 0.50%. The interest rate on the Rollover Loans shall not exceed the Cap. Notwithstanding the foregoing, following the occurrence of an Event of Default, the applicable interest rate shall be increased by 2.0% per
annum. Interest on the Rollover Loans will be payable quarterly in arrears. 

  

	 Maturity: 
	Seven years from the Rollover Date (the “Rollover Maturity Date”). 

  

	 Optional Prepayment: 
	For so long as the Rollover Loans have not been exchanged for unsecured, senior exchange notes of the Borrower as provided in Annex II-C, they may be prepaid at the option of the Borrower, in whole or in
part, at any time, together with accrued and unpaid interest to the prepayment date (but without premium or penalty). 

  

 Annex II-B-1 

	 Conditions Precedent to Rollover: 
	The ability of the Borrower to refinance any Bridge Loans with Rollover Loans is subject to the following conditions being satisfied: 

  

	 	(i)	at the time of any such refinancing, there shall exist no Event of Default or event that, with notice and/or lapse of time, could become an Event of Default;

  

	 	(ii)	all fees due to the Bridge Lead Arrangers and the Initial Bridge Lenders shall have been paid in full; 

  

	 	(iii)	the Bridge Lenders shall have received promissory notes evidencing the Rollover Loans (if requested) and such other documentation as shall be set forth in the loan documents; and

  

	 	(iv)	no order, decree, injunction or judgment enjoining any such refinancing shall be in effect. 

  

	 Assignments and Participations: 
	The Bridge Lenders shall have the right to assign their interest in any Rollover Loans in whole or in part in compliance with applicable law to any third parties. The Bridge Lenders will be permitted to sell
participations with voting rights limited to significant matters such as changes in amount, rate and maturity date. 

  

	 Rollover Covenants: 
	From and after the Rollover Date, the covenants applicable to the Rollover Loans will conform to those applicable to the Exchange Notes, except for covenants relating to the obligation of the Borrower to
refinance the Rollover Loans and others to be agreed. 

  

	 Governing Law: 
	New York. 

  

	 Expenses: 
	Same as the Bridge Loans. 

  

	 Fees: 
	As provided in the Fee Letter. 

  

 Annex II-B-2 

 ANNEX II-C 
 SUMMARY OF TERMS AND CONDITIONS 
 $750.0 MILLION SENIOR EXCHANGE NOTES 
 Capitalized terms not otherwise defined herein have the same meanings as specified therefor in the Commitment Letter to which this Annex II-C is
attached. 
  

	 Borrower: 
	Same Borrower as in Senior Financing Summary of Terms and Bridge Summary of Terms. 

  

	 Guarantors: 
	Same Guarantors as in Senior Financing Summary of Terms and Bridge Summary of Terms. 

  

	 Ranking: 
	Same as Bridge Loans. 

  

	 Exchange Notes: 
	At any time on or after the Rollover Date, Rollover Loans due to any Bridge Lender may, at the option of such Bridge Lender, be exchanged for an equal principal amount of unsecured, senior exchange notes of
the Borrower (the “Exchange Notes”). The Borrower will issue the Exchange Notes under an indenture that complies with the Trust Indenture Act of 1939, as amended (the “Indenture”). The Borrower will
appoint a trustee reasonably acceptable to the holders of the Exchange Notes. The Indenture will be in substantially the form attached as an exhibit to the definitive agreement for the Bridge Facility. The Indenture will include provisions customary
for an indenture governing publicly traded high yield debt securities, but with covenants that are more restrictive in certain respects. Except as expressly set forth above, the Exchange Notes shall have the same terms as the Rollover Loans.

  

	 Interest Rate Redemption Provision: 
	 Each Exchange Note will initially bear interest at the rate in effect on the Rollover Loans for which it is exchanged and, thereafter, the interest rate on the Exchange Notes shall be determined in the
same manner as set forth in Annex II-B with respect to the Rollover Loans. For so long as they bear interest at an increasing rate of interest, the Exchange Notes will be redeemable at the option of the Borrower, in whole or in part at any time, at
par plus accrued and unpaid interest to the redemption date. Each holder of Exchange Notes shall have the option to fix the interest rate on the Exchange Notes to a rate that is equal to the then applicable rate of interest borne by the Exchange
Notes (but in no event in excess of the Cap). In such event, such Exchange Notes will be non-callable until the fourth anniversary of the Closing Date and will be callable thereafter at 

  

 Annex II-C-1 

	 	 
par plus accrued interest plus a premium equal to one-half of the coupon in effect on the date on which the interest rate was fixed, declining ratably to par
on the date that is one year prior to maturity of the Exchange Notes. The Exchange Notes will provide for mandatory repurchase offers customary for publicly traded high yield debt securities. 

  

	 Registration Rights: 
	Within 270 days after the Closing Date the Borrower shall file a shelf registration statement with the Securities and Exchange Commission and the Borrower shall use its commercially reasonable efforts to
cause such shelf registration statement to be declared effective by the Bridge Loan Maturity Date and keep such shelf registration statement effective, with respect to resales of the Exchange Notes, for as long as it is required by the holders to
resell the Exchange Notes. Upon failure to comply with the requirements of the registration rights agreement (a “Registration Default”), the Borrower shall pay liquidated damages to each holder of Exchange Notes with respect
to the first 90-day period immediately following the occurrence of the first Registration Default in an amount equal to one-half of one percent (0.50%) per annum on the principal amount of Exchange Notes held by such holder. The amount of the
liquidated damages will increase by an additional one-half of one percent (0.50%) per annum on the principal amount of Exchange Notes with respect to each subsequent 90-day period until all Registration Defaults have been cured, up to a maximum
amount of liquidated damages for all Registration Defaults of 1.5% per annum. 

  

	 Governing Law: 
	New York. 

  

 Annex II-C-2 

 ANNEX III 
 CONDITIONS PRECEDENT TO CLOSING 
 $1.950 BILLION SENIOR CREDIT FACILITIES 
 $750.0 MILLION SENIOR BRIDGE FACILITY 
 Capitalized terms not otherwise defined herein have the same meanings as specified therefor in the Commitment Letter to which this Annex III is attached. 
 The commitments of Bank of America and Scotiabank in respect of the Senior Credit Facilities, the commitment of Banc of America Bridge and Scotiabank in respect of the Bridge Facility and the undertaking of BAS and
Scotia Capital to provide the services described herein are subject to the satisfaction of each of the following conditions precedent and each of the other conditions precedent set forth in this Annex III: (a) in the case of the Senior Credit
Facilities and the Bridge Facility, respectively, you shall have accepted the separate fee letter addressed to you dated the date hereof from the Committing Parties (the “Fee Letter”) as provided therein for the Senior Credit
Facilities, the Bridge Facility, or both Facilities, as the case may be; and you shall have paid, or caused the Companies to pay, all applicable reasonable and invoiced fees and expenses (including the reasonable and invoiced fees and disbursements
of counsel) that are due thereunder; (b) in the case of the Bridge Facility, you shall have accepted the Engagement Letter; and thereafter the Engagement Letter shall remain in full force and effect; (c) the negotiation, execution and
delivery of definitive documentation with respect to each such Facility consistent with the terms and conditions of the applicable Summary of Terms and otherwise reasonably satisfactory to the Lead Arrangers and the Lenders under such Facility;
(d) prior to and during the syndication of the Facilities, there shall be no offering, placement or arrangement of any debt securities or bank financing by or on behalf of any of the Companies or any of their affiliates (other than the Senior
Notes, the A/R Facility (if any) and operating facilities, lines of credit pooling activity, guarantees, capital leases, derivatives, letters of credit, discounting of accounts receivable by foreign subsidiaries, defeased indebtedness, and other
indebtedness that did not exceed $40 million in the aggregate as of June 30, 2008, in each case as disclosed as part of the Pre-Commitment Information, and replacements and other modifications thereof in the ordinary course of business and
consistent with past practice and other unsecured indebtedness not to exceed $20,000,000 in the aggregate, in each case so long as the same are not syndicated and do not breach Section 5.01(b) of the Acquisition Agreement (the
“Borrower Existing Indebtedness”)) and (e) none of Bank of America, Banc of America Bridge, BAS or Scotiabank becoming aware after the date hereof of any information, or any event, development or change relating to the
Companies that, in our reasonable judgment, is inconsistent in a material and adverse manner with any information or other matter (other than Projections in respect of the Companies and any matter relating to financial models and forward-looking
underlying assumptions relating to such Projections) disclosed to us by the Borrower prior to the date hereof. 
  

 Annex III-1 

 In addition, the closing and the initial extension of credit under the Senior Credit Facilities and the
extension of the Bridge Loans under the Bridge Facility will be subject to the following: 
 (i) Reference is made to the certain Agreement
and Plan of Merger among the Borrower, Ashland Sub One Inc. and Hercules Incorporated of even date herewith (collectively with all schedules and exhibits thereto, and as modified pursuant to the immediately following sentence, the
“Acquisition Agreement”). The Acquisition Agreement shall not have been altered, amended or otherwise changed or supplemented or any condition therein consented to or waived without the prior written consent of the Lenders
(other than a waiver by the Acquired Business of the condition set forth in Section 7.03(c) of the Acquisition Agreement and other than any other such alterations, amendments, changes, supplements, consents or waivers that are not materially
adverse individually or in the aggregate to the interests of the Lead Arrangers or Lenders). The Acquisition shall have been consummated in accordance with the terms of the Acquisition Agreement, as its provisions may from time to time have been
altered, amended, changed, supplemented, consented to or waived in accordance with the immediately preceding sentence. All principal, interest and other amounts outstanding in connection with existing debt of the Companies that is material,
individually or in the aggregate, shall have been paid in full and any liens securing such debt shall be released, except for (i) in the case of the Acquired Business and its subsidiaries, (a) the 6.50% junior subordinated deferrable
interest debentures due 2029 in an aggregate par value of approximately $282,000,000; (b) interest rate and currency hedge exposure aggregating (if it were to be terminated on the date hereof) approximately $175,000,000, some of which may, at
the option of certain of the respective counterparties thereto, be due and payable following the Acquisition; (c) reimbursement obligations in respect of letters of credit in the aggregate amount of approximately $50,000,000 as of the date
hereof (which will be backstopped or rolled over as part of the rolledover or backstopped L/Cs as set forth in Annex I); (d) indebtedness for borrowed money of foreign subsidiaries of the Acquired Business in the aggregate principal amount of
approximately $74,000,000 as of June 30, 2008; and (e) other debt incurred by the Acquired Business after the date hereof pursuant and subject to Section 5.01(a) of the Acquisition Agreement (it being understood for the avoidance of
doubt that the Acquired Business’ accounts receivables facility will be terminated as of the Closing Date) and (ii) in the case of the Borrower and its subsidiaries, the Borrower Existing Indebtedness (other than its existing revolving
credit facility, which shall be repaid and terminated in full prior to or concurrently with the closing) ((i) and (ii) collectively, the “Indebtedness to Remain Outstanding”). Since the date of this Commitment Letter,
there shall not have been any Event (as defined below) that, individually or in the aggregate, is having or would reasonably be expected to have a Material Adverse Effect on the Acquired Business. “Material Adverse Effect”
means any change, effect, event, occurrence, state of facts or development (an “Event”) that materially adversely affects the business, financial condition, or annual results of operations of the Acquired Business and its
Subsidiaries (as defined in the Acquisition Agreement), taken as a whole; provided, however, that a “Material Adverse Effect” shall not include any Events directly or indirectly resulting from: (i) changes or conditions
generally affecting the businesses or industries in which the Acquired Business and its Subsidiaries operate, to the extent such changes or conditions do not materially and disproportionately impact the Acquired Business and its Subsidiaries, taken
as a whole, (ii) changes or conditions in U.S., European, Asian or Latin American or global, international, or general economic, regulatory, or political conditions (including calamities, the outbreak or escalation of hostilities or acts of war
or terrorism), to the extent such conditions do not materially and disproportionately impact the Acquired Business and its Subsidiaries, taken as a whole, (iii) changes or conditions generally affecting the financial, securities or credit
markets, 

  

 Annex III-2 

 
(iv) any failure, in and of itself, by the Acquired Business to meet any projections, forecasts, revenue or earnings estimates for any period ending on or
after the date of this Commitment Letter (it being understood that the facts or occurrences giving rise to or contributing to such failure that are not otherwise excludable may be deemed to constitute, or be taken into account in determining whether
there has been or will be, a Material Adverse Effect), (v) the public announcement, pendency, execution, delivery or existence of the Acquisition Agreement, the Acquisition and the other Transactions, including the Acquired Business’
compliance with the Acquisition Agreement and the impact of the Acquisition Agreement, the Acquisition and the other Transactions on the relationships of the Acquired Business with its employees, independent contractors, customers, suppliers,
licensors, licensees, distributors, Governmental Entities (as defined in the Acquisition Agreement) and other third parties with whom the Acquired Business has business dealings, (vi) changes in GAAP (as defined in the Acquisition Agreement),
Applicable Law (as defined in the Acquisition Agreement) or accounting standards (or interpretations thereof) or accounting estimates of existing contingent liabilities under GAAP, (vii) any changes in the market price or trading volume of the
Company Common Stock (as defined in the Acquisition Agreement) (it being understood that the facts or occurrences giving rise to or contributing to such changes in market price or trading volume that are not otherwise excludable may be deemed to
constitute, or be taken into account in determining whether there has been or will be, a Material Adverse Effect), (viii) any litigation arising from allegations of a breach of fiduciary duty relating to the Acquisition Agreement or the
Acquisition and the other Transactions or (ix) changes in any analyst’s recommendations, any corporate default or equivalent credit ratings (whether by Moody’s, Standard & Poor’s or other recognized credit rating
agencies) or any other recommendations or ratings as to the Acquired Business or its Subsidiaries (including, in and of itself, any failure to meet analyst projections). 
 (ii) The Administrative Agent under each Facility shall have received (a) satisfactory opinions of counsel to the Borrower and the Guarantors (which shall cover, among other things, authority, legality, validity,
binding effect and enforceability of the documents for such Facility and, in the case of the Senior Credit Facilities, creation and perfection of the liens granted thereunder on the Collateral, and in each case subject to customary and reasonable
assumptions, qualifications and limitations) and of appropriate local counsel and such corporate resolutions, certificates and other documents as such Administrative Agent shall reasonably require and (b) satisfactory evidence that in the case
of the Senior Credit Facilities, the Administrative Agent (on behalf of the Senior Lenders) shall have a valid and perfected first priority lien and security interest in such capital stock and in the other Collateral as provided in Annex I to the
Commitment Letter. In the case of the Senior Credit Facilities, all filings, recordations and searches necessary or reasonably desirable in connection with the liens and security interests in the Collateral shall have been duly made; all filing and
recording fees and taxes shall have been duly paid and any surveys, title insurance, landlord waivers or access letters (if obtainable through the Companies’ commercially reasonable efforts and only with respect to locations containing material
amounts of tangible Collateral) requested by the Administrative Agent with respect to real property interests of the Borrower and its subsidiaries shall have been obtained. The Administrative Agent shall have received evidence of the Borrower’s
and the Guarantors’ compliance with the insurance requirements of the loan documentation, and the Administrative Agent shall have received endorsements naming the Administrative Agent, on behalf of the Senior Lenders, as an additional insured
or loss payee, as the case may be, under all insurance policies to be maintained with respect to the properties of the Borrower and the Guarantors forming part of the Collateral. All loans made by the Lenders to the Borrower or any of its affiliates
shall be in full compliance with the Federal Reserve’s regulations. 
  

 Annex III-3 

 (iii) The Lead Arrangers and the Lenders shall have received: (A) audited consolidated financial
statements of the Borrower and its Subsidiaries for the three fiscal years most recently ending at least 60 days prior to the Acquisition, unaudited consolidated financial statements of the Companies for any interim monthly periods ending at least
20 days prior to the Acquisition and quarterly periods ending at least 35 days prior to the Acquisition, and pro forma financial statements as to the Companies giving effect to the Transaction for the most recently completed fiscal year, the period
commencing with the end of the most recently completed fiscal year and ending with the most recently completed month and the most recently completed twelve month period, which in each case, (1) shall be satisfactory in form and substance to the
Lead Arrangers, (2) shall not be materially inconsistent with the Pre-Commitment Information, and (3) shall meet the requirements of Regulation S-X under the Securities Act of 1933, as amended, and all other accounting rules and
regulations of the SEC promulgated thereunder applicable to a registration statement under such Act on Form S-1; (B) audited consolidated financial statements of the Acquired Business and its Subsidiaries for the three fiscal years ended most
recently ending at least 60 days prior to the Acquisition, unaudited consolidated financial statements of the Companies for any interim monthly periods ending at least 20 days prior to the Acquisition and quarterly periods ending at least 35 days
prior to the Acquisition, which in each case, (1) shall be satisfactory in form and substance to the Lead Arrangers and the Lenders, (2) shall not be materially inconsistent with the Pre-Commitment Information, and (3) shall meet the
requirements of Regulation S-X under the Securities Act of 1933, as amended, and all other accounting rules and regulations of the SEC promulgated thereunder applicable to a registration statement under such Act on Form S-1; (C) forecasts
prepared by management of the Companies, each in form satisfactory to the Lead Arrangers and the Lenders, of balance sheets, income statements and cash flow statements for each quarter for the first four quarters following the Closing Date and for
each of the first five years following the Closing Date commencing with the first fiscal year following the Closing Date; (D) the pro forma financial statements delivered pursuant to clauses (A) and (B) above and the forecasts
delivered pursuant to clause (C) above shall be prepared in good faith and on the basis of the assumptions that are stated therein, which assumptions are fair in light of the then existing conditions or, to the extent including projections or
forward-looking information, in accordance with the representations and warranties of the Borrower in clauses (a) and (b) of Section 3 of the Commitment Letter, and, in the case of each of (1), (2) and (3) above, the chief
financial officer of the Borrower shall have provided the Lead Arrangers a written certification to that effect and (E) copies of written certifications from the chief executive officer and chief financial officer of the Borrower that are
required to be issued by Section 906 and Section 302 of the Sarbanes-Oxley Act of 2002. 
 (iv) Each of the Senior Credit
Facilities, the Bridge Facility and the Senior Notes shall have received ratings from Moody’s and S&P at least 30 days prior to the Closing Date. 
 (v) The Companies shall have complied in all material respects with all of the terms of the Fee Letter, including, without limitation, Section 2 thereof, and, if the Commitment Letter shall have been accepted as
to the Bridge Facility, the Engagement Letter to be complied with on or before such date. All accrued reasonable and invoiced fees and expenses of the Administrative Agent, the Senior Lead Arrangers, the Bridge Lead Arrangers and the Lenders 

  

 Annex III-4 

 
(including the reasonable and invoiced fees and expenses of Cahill Gordon & Reindel LLP, counsel for the Administrative Agent and the
Lead Arrangers and local counsel for the Administrative Agent) then invoiced shall have been paid. 
 (vi) In the case of the Senior Credit
Facilities, the Administrative Agent shall have received satisfactory evidence of receipt by the Borrower of not less than $750.0 million cash proceeds from the advance of the Bridge Loans or the issuance by the Borrower of the Senior Notes; and, in
the case of the Bridge Facility, the Lead Arrangers shall have received evidence satisfactory to the Lead Arrangers that all other conditions to commitments of the Senior Lenders under the Senior Credit Facilities have been satisfied, in each of the
foregoing cases, subject to any re-allocation of amounts permitted under Section 3 of the Fee Letter. 
 (vii) In the case of the Bridge
Facility, (A) not later than 30 days prior to the Closing Date, the Companies shall have completed and made available to the Lead Arrangers and potential investors copies of an offering memorandum for the offer and sale of the Senior Notes
pursuant to Rule 144A of the rules and regulations under the Securities Act containing such disclosures as may be required by applicable laws, as are customary and appropriate for such a document or as may be reasonably required by the Lead
Arrangers (including all audited, pro forma and other financial statements and schedules of the Companies of the type that would be required in a registered public offering of the Senior Notes on Form S-1 and including commercially reasonable
efforts to deliver a customary “comfort letter” from the independent public accountants for the Companies in form and substance satisfactory to the Lead Arrangers), (B) senior management and officers of the Borrower shall have made
themselves available (subject to the reasonable notice and scheduling) for due diligence and a road show and other meetings with potential investors for the Senior Notes as required by the Lead Arrangers in their reasonable judgment to market the
Senior Notes and (C) the Borrower shall have used commercially reasonable efforts to cause the senior management and officers of the Acquired Business to make themselves available (subject to the reasonable notice and scheduling) for due
diligence and a road show and other meetings with potential investors for the Senior Notes as required by the Lead Arrangers in their reasonable judgment to market the Senior Notes. 
 (viii) (A) With respect to the Acquired Business and its subsidiaries (immediately prior to giving effect to the Acquisition), the representations and
warranties with respect to the Acquired Business and its subsidiaries shall be true and correct to the extent required by the condition set forth in Section 7.02(a) of the Acquisition Agreement; 
 (B) with respect to the Acquired Business and its Subsidiaries (immediately after giving effect to the Acquisition), the following representations and
warranties shall in each case be true and correct in all material respects: (1) corporate power and authority, due execution, delivery and enforceability of the loan documentation, (2) no material violation of law, material contracts (with
material contracts of the Acquired Business being those set forth in the schedules to the Acquisition Agreement) or organizational documents, (3) Federal Reserve margin regulations and the Investment Company Act and (4) perfected liens,
security interests and charges in favor of the Administrative Agent; 
 (C) with respect to the Borrower and its subsidiaries (excluding
subsidiaries acquired as part of the Acquisition), the representations and warranties in the loan documentation in respect 

  

 Annex III-5 

 
of (1) perfected liens, security interests and charges in favor of the Administrative Agent and (2) corporate status (7.01), corporate power and
authority, enforceability (7.05), no violation of law, contracts or organizational documents (7.04), disclosure (but without representation of no material adverse change) (7.10), no material litigation (7.03), accuracy and completeness of specified
financial statements and other information (but without representation of no material adverse change) (7.02), no required governmental (including without limitation exchange control) or third party approvals or consents (7.06), use of
proceeds/compliance with margin regulations (7.07), status under Investment Company Act (7.11), ERISA matters (7.08), environmental matters (7.14), tax status and payment of taxes (7.09), defaults (7.13), insurance (7.15) and reportable
transactions (7.16) shall be true and correct in all material respects; provided, however, that in the event of any inaccuracy in any material respect of any representations and warranties listed in this subclause (2) the Borrower shall be
permitted to satisfy the requirement in respect of such representations and warranties (each a “Subject Rep”) if in each case the corresponding representation and warranty contained in the section of the Revolving Agreement referenced in
the parenthetical adjacent to the Subject Rep above can be made by the Borrower true and correct in all material respects (for the purposes of this clause (viii) only, without giving effect to any termination of the Revolving Agreement
occurring on or before the Closing Date); and 
 (D) no default or event of default shall have occurred and be continuing under any of
clauses (i), (v) and (vii) (limited to assertions by a Company) of Events of Default; and no event of default shall have occurred and be continuing under any of the other clauses thereof. 
 As used herein, the term “Revolving Agreement” shall mean the Credit Agreement dated as of April 9, 2007 among the Borrower, The Bank of
Nova Scotia, as administrative agent, a joint lead arranger and book manager, Bank of America, N.A., as syndication agent, SunTrust Bank, Inc., JP Morgan Chase Bank, N.A. and Citibank, N.A., collectively as co-documentation agents, Banc of America
Securities LLC as a joint lead arranger and the lenders party thereto, as in effect on the date hereof and as hereafter modified, but only so long as no such modification is materially adverse to the interests of the Lead Arrangers or Lenders. For
the purpose of determining compliance with the foregoing, (I) the audited consolidated balance sheet and statements of income, common stockholders equity and cash flows and the unaudited consolidated balance and statements of income, common
stockholders equity and cash flows referred to in Section 7.02 of the Revolving Agreement shall be deemed to refer to the most recent audited consolidated balance sheet and statements of income, common stockholders equity and cash flows and
unaudited consolidated balance sheet and statements of income, common stockholders equity and cash flows, respectively, delivered to the Lead Arrangers, (II) the following defined terms used in the Revolving Agreement shall be deemed to refer to the
equivalent defined term under the loan documentation: Consolidated, Lenders, Agreement, Notes, Effective Date, Loans, Letters of Credit, Majority Lenders, Default, Property and (III) other appropriate conforming changes to the loan documentation may
be indicated as the parties may reasonably agree. 
  

 Annex III-6 

 ANNEX IV 
 SUMMARY OF TERMS AND CONDITIONS 
 $200.0 MILLION ACCOUNTS 
 RECEIVABLE FACILITY 
  

	 Borrower/Servicer/ Seller: 
	Certain Subsidiaries of Ashland Incorporated. 

  

	 Issuer: 
	A bankruptcy remote SPE of the Seller. 

  

	 Term of Facility: 
	364-days, expected (but not required) to be renewed annually. 

  

	 Concentration Limits: 
	To be applied to obligors using standard rating agency methodology. 

  

	 Eligible Receivables: 
	Standard eligibility criteria for such transactions. 

  

	 Required Reserves: 
	Comprised of reserves for portfolio losses, dilution, yield and servicing. 

  

	 Servicer Defaults: 
	Usual and customary for transactions of this nature. 

  

	 Termination Events: 
	Customary for transactions of this nature. 

  

 Annex IV-1

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