Document:

Exhibit 10.2

 

[EXECUTION COPY]

 

SECURITY AND PLEDGE AGREEMENT 

 

This SECURITY AND
PLEDGE AGREEMENT (as amended, modified, extended, restated, renewed, replaced, or supplemented from time to time, this “Agreement”)
is entered into as of October 24, 2017 among ANIKA THERAPEUTICS, INC., a Massachusetts corporation (the “Borrower”),
the Subsidiaries of the Borrower identified as “Grantors” on the signature pages hereto and such other parties that
may become Grantors hereunder after the date hereof (together with the Borrower, each individually a “Grantor”,
and collectively, the “Grantors”) and BANK OF AMERICA, N.A., in its capacity as administrative agent
(in such capacity, the “Administrative Agent”) for the Secured Parties.

 

RECITALS

 

WHEREAS, pursuant to
that certain Credit Agreement, dated as of the date hereof (as amended, modified, extended, restated, renewed, replaced, or supplemented
from time to time, the “Credit Agreement”), among the Borrower, the Subsidiary Guarantors party thereto from
time to time, the Lenders party thereto from time to time and the Administrative Agent, the Lenders have agreed to make Loans and
issue Letters of Credit upon the terms and subject to the conditions set forth therein; and

 

WHEREAS, this Agreement
is required by the terms of the Credit Agreement.

 

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

 

1. Definitions.

 

 (a) Capitalized terms used and not otherwise defined herein shall have the meanings ascribed to such terms in the Credit Agreement. With reference to this Agreement, unless otherwise specified herein: (i) the definitions of terms herein shall apply equally to the singular and plural forms of the terms defined, (ii) whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms, (iii) the words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”, (iv) the word “will” shall be construed to have the same meaning and effect as the word “shall”, (v) any definition of, or reference to, any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document, as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (vi) any reference herein to any Person shall be construed to include such Person’s permitted successors and assigns, (vii) the words “herein”, “hereof” and “hereunder”, and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (viii) all references herein to Sections, Exhibits and Schedules shall be construed to refer to Sections of, and Exhibits and Schedules to, this Agreement, (ix) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights, (x) the term “documents” includes any and all instruments, documents, agreements, certificates, notices, reports, financial statements and other writings, however evidenced, whether in physical or electronic form, (xi) in the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including;” the words “to” and “until” each mean “to but excluding;” and the word “through” means “to and including”, (xii) Section headings herein are included for convenience of reference only and shall not affect the interpretation of this Agreement and (xiii) where the context requires, terms relating to the Collateral or any part thereof, when used in relation to a Grantor, shall refer to such Grantor’s Collateral or the relevant part thereof.

 

     

     

    

 (b) The following terms shall have the meanings set forth in the UCC (defined below): Accession, Account, Account Debtor, Adverse Claim, As-Extracted Collateral, Certificated Security, Chattel Paper, Commercial Tort Claim, Consumer Goods, Deposit Account, Document, Electronic Chattel Paper, Equipment, Farm Products, Financial Asset, Fixtures, General Intangible, Goods, Instrument, Inventory, Investment Company Security, Investment Property, Letter-of-Credit Right, Manufactured Home, Payment Intangible, Proceeds, Securities Account, Securities Intermediary, Security, Software, Supporting Obligation and Tangible Chattel Paper.

 

(c) In
addition, the following terms shall have the meanings set forth below:

 

“Assignment
of Claims Act” means the Assignment of Claims Act of 1940 (41 U.S.C. Section 15, 31 U.S.C. Section 3737, and 31 U.S.C.
Section 3727), including all amendments thereto and regulations promulgated thereunder.

 

“Collateral”
has the meaning provided in Section 2 hereof.

 

“Control”
means the manner in which “control” is achieved under the UCC with respect to any Collateral for which the UCC specifies
a method of achieving “control”.

 

“Copyright
License” means any agreement now or hereafter in existence, providing for the grant to any Person of any rights (including,
without limitation, the grant of rights for a party to be designated as an author or owner and/or to enforce, defend, use, display,
copy, manufacture, distribute, exploit and sell, make derivative works, and require joinder in suit and/or receive assistance from
another party) in a Copyright.

 

“Copyrights”
means, collectively, all of the following of any Grantor: (i) all copyrights, works protectable by copyright, copyright registrations
and copyright applications anywhere in the world, (ii) all derivative works, counterparts, extensions and renewals of any of the
foregoing, (iii) all income, royalties, damages and payments now or hereafter due and/or payable under any of the foregoing or
with respect to any of the foregoing, including, without limitation, damages or payments for past, present and future infringements,
violations or misappropriations of any of the foregoing, (iv) the right to sue for past, present and future infringements, violations
or misappropriations of any of the foregoing and (v) all rights corresponding to any of the foregoing throughout the world.

 

 

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“Excluded
Property” means, collectively, (a) more than sixty-five percent (65%) of the issued and outstanding Equity Interests
entitled to vote (within the meaning of Treas. Reg. Section 1.956-2(c)(2)) in each Foreign Subsidiary of the Borrower that
is a CFC, (b) any permit, license or any Contractual Obligation of a Grantor to the extent the grant of a security interest in
such permit, license, or Contractual Obligation in the manner contemplated by this Agreement, under applicable Law, is prohibited
and would result in the termination thereof or give the other parties thereto the right to terminate, accelerate or otherwise alter
such Grantor’s rights, titles and interests thereunder (including upon the giving of notice or the lapse of time or both),
provided, that (i) any such limitation described in the foregoing clause (b) on the security interests granted hereunder
shall only apply to the extent that any such prohibition or right to terminate or accelerate or alter the Grantor’s rights
could not be rendered ineffective pursuant to the UCC or any other applicable Law (including Debtor Relief Laws) or principles
of equity and (ii) in the event of the termination or elimination of any such prohibition or right or the requirement for any consent
contained in any applicable Law, permit, license or other Contractual Obligation, to the extent sufficient to permit any such item
to become Collateral hereunder, or upon the granting of any such consent, or waiving or terminating any requirement for such consent,
a security interest in such permit, license or other Contractual Obligation shall be automatically and simultaneously granted hereunder
and shall be included as Collateral hereunder, (c) any property which, subject to the terms of Section 7.02(c) of the Credit
Agreement, is subject to a Lien of the type described in Section 7.01(i) of the Credit Agreement, to the extent that a grant
of a security interest in such property would require a consent that has not been obtained or would violate or invalidate such
financing arrangements, but only to the extent, and for as long as, such consent is not obtained or such prohibition or right of
termination is not terminated or rendered unenforceable or otherwise deemed ineffective by the UCC or any other applicable Law,
and (d) any Intellectual Property (including any Software); provided, however, notwithstanding anything to the contrary
contained above, “Excluded Property” shall not include (i) (x) any income, royalties, damages and payments (including,
without limitation, damages or payments for past, present and future infringements, violations or misappropriations) now or hereafter
due and/or payable in respect of patents, patent rights, trademarks, service marks, trade names, and copyrights of any Grantor,
the intellectual property know-how related thereto and the right to grant further licenses in respect thereof or (y) any contract
or other agreement pursuant to which any Grantor receives income, royalties, damages, payments, or has rights to payment, now or
hereafter due or payable under, on account of or with respect to any Intellectual Property of any Grantor, or the rights (including
any such rights to payment) of any Grantor in or under such contract or agreement, and all similar rights corresponding thereto
or (ii) any proceeds, products, substitutions or replacements of Excluded Property (unless such proceeds, products, substitutions
or replacements would themselves otherwise constitute Excluded Property).

 

“Government
Contract” means a contract between any Grantor and an agency, department or instrumentality of the United States or any
state, municipal or local Governmental Authority located in the United States or all obligations of any such Governmental Authority
arising under any Account now or hereafter owing by any such Governmental Authority, as Account Debtor, to any Grantor.

 

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“Intellectual
Property” means, collectively, all of the following of any Grantor: (i) all systems software and applications software
(including source code and object code), all documentation for such software, including, without limitation, user manuals, flowcharts,
functional specifications, operations manuals, and all formulas, processes, ideas and know-how embodied in any of the foregoing
that are developed by such Grantor, (ii) concepts, discoveries, improvements and ideas, know-how, technology, reports, design information,
trade secrets, practices, specifications, test procedures, maintenance manuals, research and development, inventions (whether or
not patentable), blueprints, drawings, data, customer lists, catalogs, and all physical embodiments of any of the foregoing that
are developed by such Grantor, (iii) Patents and Patent Licenses, Copyrights and Copyright Licenses, Trademarks and Trademark Licenses.

 

“Issuer”
means the issuer of any Pledged Equity.

 

“Patent
License” means any agreement, now or hereafter in existence, providing for the grant by, or to, any Grantor of any rights
(including, without limitation, the right for a party to be designated as an owner and/or to enforce, defend, make, have made,
make improvements, manufacture, use, sell, import, export, and require joinder in suit and/or receive assistance from another party)
covered in whole or in part by a Patent.

 

“Patents”
means collectively, all of the following of any Grantor: (i) all patents, all inventions and patent applications anywhere in the
world, (ii) all improvements, counterparts, reissues, divisional, re-examinations, extensions, continuations (in whole or in part)
and renewals of any of the foregoing and improvements thereon, (iii) all income, royalties, damages or payments now or hereafter
due and/or payable under any of the foregoing or with respect to any of the foregoing, including, without limitation, damages or
payments for past, present or future infringements, violations or misappropriations of any of the foregoing, (iv) the right to
sue for past, present and future infringements, violations or misappropriations of any of the foregoing and (v) all rights corresponding
to any of the foregoing throughout the world.

 

“Pledged
Equity” means, with respect to each Grantor, (i) 100% of the issued and outstanding Equity Interests of each Domestic
Subsidiary of the Borrower that is directly owned by such Grantor and (ii) 65% of the issued and outstanding Equity Interests
entitled to vote (within the meaning of Treas. Reg. Section 1.956-2(c)(2)) and 100% of the issued and outstanding Equity Interests
not entitled to vote (within the meaning of Treas. Reg. Section 1.956-2(c)(2)) in each Foreign Subsidiary of the Borrower
that is a CFC that is directly owned by such Grantor, including the Equity Interests of the Subsidiaries owned by such Grantor
as set forth on Schedule 5.21(f) to the Credit Agreement (as updated from time to time in accordance with the Credit
Agreement), in each case together with the certificates (or other agreements or instruments), if any, representing such shares,
and all options and other rights, contractual or otherwise, with respect thereto, including, but not limited to, the following:

 

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(1) all
Equity Interests representing a dividend thereon, or representing a distribution or return of capital upon or in respect thereof,
or resulting from a stock split, revision, reclassification or other exchange therefor, and any subscriptions, warrants, rights
or options issued to the holder thereof, or otherwise in respect thereof; and

 

(2) in
the event of any consolidation or merger involving any Issuer and in which such Issuer is not the surviving Person, all shares
of each class of the Equity Interests of the successor Person formed by or resulting from such consolidation or merger, to the
extent that such successor Person is a direct Subsidiary of a Grantor.

 

“Restricted
Securities Collateral” has the meaning set forth in Section 7(j) of this Agreement.

 

“Trademark
License” means any agreement, now or hereafter in existence, providing for the grant by, or to, any Grantor of any rights
in (including, without limitation, the right for a party to be designated as an owner and/or to enforce, defend, use, mark, police,
and require joinder in suit and/or receive assistance from another party) in a Trademark.

 

“Trademarks”
means, collectively, all of the following of any Grantor: (i) all trademarks, trade names, corporate names, company names, business
names, fictitious business names, internet domain names, trade styles, service marks, logos, other business identifiers, whether
registered or unregistered, all registrations and recordings thereof, and all applications in connection therewith anywhere in
the world, (ii) all counterparts, extensions and renewals of any of the foregoing, (iii) all income, royalties, damages and payments
now or hereafter due and/or payable under any of the foregoing or with respect to any of the foregoing, including, without limitation,
damages or payments for past, present or future infringements, violations, dilutions or misappropriations of any of the foregoing,
(iv) the right to sue for past, present or future infringements, violations, dilutions or misappropriations of any of the foregoing
and (v) all rights corresponding to any of the foregoing (including the goodwill) throughout the world.

 

“Vehicles”
means all cars, trucks, trailers, construction and earth moving equipment and other vehicles covered by a certificate of title
under the laws of any state, all tires and all other appurtenances to any of the foregoing.

 

“Vessel”
means any watercraft or other artificial contrivance used, or capable of being used, as a means of transportation on water (including,
without limitation, those whose primary purpose is the maritime transportation of cargo or which are otherwise engaged, used or
useful in any business activities of the Grantors) which are owned by and registered (or to be owned and registered) in the name
of any of the Grantors, including, without limitation, any Vessel leased or otherwise registered in the foregoing parties’
names, pursuant to a lease or other operating agreement constituting a capital lease obligation, in each case together with all
related spares, equipment and any additional improvements, vessel owned, bareboat chartered or operated by a Grantor other than
Vessels owned by an entity other than a Grantor and which are managed under Vessel management agreements.

 

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“UCC”
means the Uniform Commercial Code as in effect from time to time in the state of New York, except as such term may be used in connection
with the perfection of the Collateral and then the applicable jurisdiction with respect to such affected Collateral shall apply.

 

“Work”
means any work that is subject to copyright protection pursuant to Title 17 of the United States Code.

 

2. Grant
of Security Interest in the Collateral. To secure the prompt payment and performance in full when due, whether by lapse of
time, acceleration, mandatory prepayment or otherwise, of the Secured Obligations, each Grantor hereby grants to the Administrative
Agent, for the benefit of the Secured Parties, a continuing security interest in, and a right to set off against, any and all right,
title and interest of such Grantor in and to all of the following, whether now owned or existing or owned, acquired, or arising
hereafter (collectively, the “Collateral”): (a) all Accounts; (b) all cash, currency, money and Cash Equivalents;
(c) all Chattel Paper (including Electronic Chattel Paper and Tangible Chattel Paper); (d) all Commercial Tort Claims (including,
without limitation, those set forth on Schedule 5.21(e) to the Credit Agreement (as updated from time to time in accordance
with the Credit Agreement)); (e) all Deposit Accounts; (f) all Documents; (g) all Equipment and machinery; (h) all Fixtures; (i)
all General Intangibles; (j) all Goods; (k) all Instruments; (l) all Inventory; (m) all Investment Property, Securities and Financial
Assets; (n) all Letter-of-Credit Rights; (o) all Payment Intangibles, any and all contract rights or rights to the payment of money,
all insurance claims and proceeds, all tort claims, all hedge agreements, all indemnification rights and all tax refunds; (p) all
Pledged Equity; (q) all Securities Accounts; (r) all Software; (s) all Supporting Obligations; (t) all Vehicles; (u) all books
and records pertaining to the Collateral; (v) all Accessions and all Proceeds and products of any and all of the foregoing; and
(w) all other personal, real or fixture property of any kind or type whatsoever now or hereafter owned by such Grantor or as to
which such Grantor now or hereafter has the power to transfer an interest therein.

 

Notwithstanding anything
to the contrary contained herein, the security interests granted in Section 2 of this Agreement shall not extend to, and
the term “Collateral” shall not include, any Excluded Property; provided, however, that if and to the extent
that any property shall not constitute, or cease to be, Excluded Property, the Lien and security interest granted pursuant to Section
2 of this Agreement shall immediately, and without the need for further action of any Grantor or any other Person, attach to
such property, which shall thereupon form part of the Collateral.

 

The Grantors and the
Administrative Agent, on behalf of the Secured Parties, hereby acknowledge and agree that the security interest created hereby
in the Collateral (a) constitutes continuing collateral security for all of the Secured Obligations, whether now existing
or hereafter arising and (b) is not to be construed as an assignment, license or encumbrance of any Intellectual Property.

 

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3. Representations
and Warranties. Each Grantor hereby represents and warrants to the Administrative Agent, for the benefit of the Secured Parties,
that until the Facility Termination Date, that:

 

 (a) Ownership. Each Grantor is the legal and beneficial owner of its Collateral and has the right to pledge, sell, assign or transfer the same. There exists no Lien (other than the Lien of the Administrative Agent under this Agreement) on or with respect to the Pledged Equity of such Grantor.

 

 (b) Security Interest/Priority. This Agreement creates a valid security interest in favor of the Administrative Agent, for the benefit of the Secured Parties, in the Collateral of such Grantor and, when properly perfected by filing, shall constitute a valid and perfected, first priority security interest in such Collateral (including all uncertificated Pledged Equity consisting of partnership or limited liability company interests that do not constitute Securities), to the extent such security interest can be perfected by filing under the UCC, free and clear of all Liens except for Permitted Liens. No Grantor has authenticated any agreement authorizing any secured party thereunder to file a financing statement, except to perfect consensual Permitted Liens. The taking possession by the Administrative Agent of the certificated securities (if any) evidencing the Pledged Equity and all other Instruments constituting Collateral will perfect and establish the first priority of the Administrative Agent’s security interest in all the Pledged Equity evidenced by such certificated securities and such Instruments. With respect to any Collateral consisting of a Deposit Account, Securities Entitlement or held in a Securities Account, upon execution and delivery by the applicable Grantor, the applicable Securities Intermediary or depository bank and the Administrative Agent of a Qualifying Control Agreement, the Administrative Agent shall have a valid and perfected, first priority security interest in such Collateral (subject to Permitted Liens arising as a matter of Law).

 

 (c) Types of Collateral. None of the Collateral consists of, or is the Proceeds of, (i) As-Extracted Collateral, (ii) Consumer Goods, (iii) Farm Products, (iv) Manufactured Homes, (v) standing timber, (vi) an aircraft, airframe, aircraft engine or related property, (vii) an aircraft leasehold interest, (viii) a Vessel or (ix) any other interest in or to any of the foregoing.

 

 (d) Accounts. (i) Each Account of the Grantors and the papers and documents relating thereto are genuine and in all material respects what they purport to be, (ii) each Account arises out of (A) a bona fide sale of goods sold and delivered by such Grantor (or is in the process of being delivered) or (B) services theretofore actually rendered by such Grantor to, the account debtor named therein, (iii) no Account of a Grantor is evidenced by any Instrument or Chattel Paper unless such Instrument or Chattel Paper, to the extent requested by the Administrative Agent in writing, has been endorsed over and delivered to, or submitted to the control of, the Administrative Agent, (iv) no surety bond was required or given in connection with any Account of a Grantor or the contracts or purchase orders out of which they arose, (v) the right to receive payment under each Account is assignable and (vi) no Account Debtor has any defense, set-off, claim or counterclaim against any Grantor that can be asserted against the Administrative Agent, whether in any proceeding to enforce the Administrative Agent’s rights in the Collateral or otherwise, except defenses, setoffs, claims or counterclaims that are not, in the aggregate, material to the value of the Accounts taken as a whole.

 

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 (e) Equipment and Inventory. With respect to any Equipment and/or Inventory of a Grantor, each such Grantor has exclusive possession and control of such Equipment and Inventory of such Grantor except for (i) Equipment leased by such Grantor as a lessee, (ii) Equipment or Inventory in transit with common carriers or (iii) Equipment and/or Inventory in the possession or control of a warehouseman, bailee or any agent or processor of such Grantor to the extent such Grantor has complied with Section 4(e). No Inventory of a Grantor is held by a Person other than a Grantor pursuant to consignment, sale or return, sale on approval or similar arrangement. Collateral consisting of Inventory is of good and merchantable quality, free from material defects. None of such Inventory is subject to any licensing, Patent, Trademark, trade name or Copyright with any Person that restricts any Grantor’s ability to use, manufacture, lease, sell or otherwise dispose of such Inventory. The completion of the manufacturing process of such Inventory by a Person other than the applicable Grantor would be permitted under any contract to which such Grantor is a party or to which the Inventory is subject.

 

 (f) Authorization of Pledged Equity. All Pledged Equity (i) is duly authorized and validly issued, (ii) is fully paid and, to the extent applicable, nonassessable and is not subject to the preemptive rights of any Person, (iii) is beneficially owned as of record by a Grantor and (iv) constitutes all the issued and outstanding shares of all classes of the equity of such Issuer issued to such Grantor.

 

 (g) No Other Equity Interests, Instruments, Etc. As of the Closing Date, (i) no Grantor owns any certificated Equity Interests in any Subsidiary that are required to be pledged and delivered to the Administrative Agent hereunder except as set forth on Schedule 5.21(f) to the Credit Agreement (as updated from time to time in accordance with the Credit Agreement), and (ii) no Grantor holds any Instruments, Documents or Tangible Chattel Paper required to be pledged and delivered to the Administrative Agent pursuant to Section 4(c)(i) of this Agreement other than as set forth on Schedule 5.21(c) to the Credit Agreement (as updated from time to time in accordance with the Credit Agreement). All such certificated securities, Instruments, Documents and Tangible Chattel Paper have been delivered to the Administrative Agent to the extent required by the terms of this Agreement and the other Loan Documents.

 

 (h) Partnership and Limited Liability Company Interests. Except as previously disclosed in writing to the Administrative Agent, none of the Collateral consisting of an interest in a partnership or a limited liability company (i) is dealt in or traded on a securities exchange or in a securities market, (ii) by its terms expressly provides that it is a Security governed by Article 8 of the UCC, (iii) is an Investment Company Security, (iv) is held in a Securities Account or (v) constitutes a Security or a Financial Asset.

 

 (i) Reserved.

 

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 (j) Consents; Etc. No approval, consent, exemption, authorization or other action by, notice to, or filing with, any Governmental Authority or any other Person (including, without limitation, any stockholder, member or creditor of such Grantor), is necessary or required for (i) the grant by such Grantor of the security interest in the Collateral granted hereby or for the execution, delivery or performance of this Agreement by such Grantor, (ii) the perfection of such security interest (to the extent such security interest can be perfected by filing under the UCC or the granting of control (to the extent required under Section 4(c) hereof) or (iii) the exercise by the Administrative Agent or the Secured Parties of the rights and remedies provided for in this Agreement (including, without limitation, as against any Issuer), except for (A) the filing or recording of UCC financing statements or other filings under the Assignment of Claims Act, (B)  obtaining control to perfect the Liens created by this Agreement (to the extent required under Section 4(c) hereof), (C) such actions as may be required by Laws affecting the offering and sale of securities, (D) such actions as may be required by applicable foreign Laws affecting the pledge of the Pledged Equity of Foreign Subsidiaries, (E) consents, authorizations, filings or other actions which have been obtained or made, and (F) as may be required with respect to Vehicles registered under a certificate of title.

 

 (k) Commercial Tort Claims. As of the Closing Date, no Grantor has (either individually or in the aggregate for all such Commercial Tort Claims) any Commercial Tort Claims seeking damages in excess of $250,000 other than as set forth on Schedule 5.21(e) to the Credit Agreement (as updated from time to time in accordance with the Credit Agreement).

 

4. Covenants.
Each Grantor covenants that until the Facility Termination Date, that such Grantor shall:

 

(a) Maintenance
of Perfected Security Interest; Further Information.

 

(i) Maintain
the security interest created by this Agreement as a first priority perfected security interest (subject only to Permitted Liens)
and shall defend such security interest against the claims and demands of all Persons whomsoever (other than the holders of Permitted
Liens).

 

(ii) From time
to time furnish to the Administrative Agent upon the Administrative Agent’s reasonable written request, statements and schedules
further identifying and describing the assets and property of such Grantor and such other reports in connection therewith as the
Administrative Agent may reasonably request, all in reasonable detail.

 

(b) Required
Notifications. Each Grantor shall promptly notify the Administrative Agent, in writing, of: (i) any Lien (other than Permitted
Liens) on any of the Collateral which would adversely affect the ability of the Administrative Agent to exercise any of its remedies
hereunder and (ii) the occurrence of any other event which could reasonably be expected to have a material impairment on the aggregate
value of the Collateral or on the security interests created hereby.

 

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 (c) Perfection through Possession and Control.

 

(i) If (A)
any amount in excess of $250,000 payable under or in connection with any of the Collateral shall be or become evidenced by any
Instrument or Tangible Chattel Paper or Supporting Obligation, or (B) if any property constituting Collateral shall be stored or
shipped subject to a Document, in each case, ensure that such Instrument, Tangible Chattel Paper, Supporting Obligation or Document,
is either in the possession of such Grantor at all times or, if requested by the Administrative Agent in writing to perfect its
security interest in such Collateral, is delivered to the Administrative Agent duly endorsed in a manner reasonably satisfactory
to the Administrative Agent. Such Grantor shall ensure that any Collateral consisting of Tangible Chattel Paper is marked with
a legend reasonably acceptable to the Administrative Agent indicating the Administrative Agent’s security interest in such
Tangible Chattel Paper. To the extent the value of all Instruments, Documents, Supporting Obligation and Tangible Chattel Paper
not in the possession of the Administrative Agent exceeds $250,000, the Grantors shall deliver such Instruments, Documents, Supporting
Obligations and Tangible Chattel Paper to the Administrative Agent so that the value of all Instruments, Documents, Supporting
Obligations and Tangible Chattel Paper not in the possession of the Administrative Agent does not exceed $250,000.

 

(ii) Deliver
to the Administrative Agent promptly upon the receipt thereof by or on behalf of a Grantor, including, without limitation, in connection
with any Permitted Acquisition, all certificates and instruments constituting Certificated Securities or Pledged Equity. Prior
to delivery to the Administrative Agent, all such certificates constituting Pledged Equity shall be held in trust by such Grantor
for the benefit of the Administrative Agent pursuant hereto. All such certificates representing Pledged Equity shall be delivered
in suitable form for transfer by delivery or shall be accompanied by duly executed instruments of transfer or assignment in blank,
substantially in the form provided in Exhibit A hereto or other form reasonably acceptable to the Administrative Agent.

 

(iii) If any
Collateral shall consist of (A) Deposit Accounts, Securities Accounts or uncertificated Investment Property or (B) Electronic Chattel
Paper and Letter-of-Credit Rights (in the case of this clause (B), with a value in excess of $250,000), execute and deliver (and,
with respect to any Collateral consisting of a Securities Account or uncertificated Investment Property, cause the Securities Intermediary
or the Issuer, as applicable, with respect to such Investment Property to execute and deliver) to the Administrative Agent all
control agreements, assignments, instruments or other documents as reasonably requested by the Administrative Agent for the purposes
of obtaining and maintaining Control of such Collateral, subject to any express limitations set forth in Section 6.14 of the Credit
Agreement. If any Collateral shall consist of Deposit Accounts or Securities Accounts, comply with Section 6.14 of the Credit
Agreement.

 

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 (d) Filing of Financing Statements, Notices, etc. Each Grantor shall execute and deliver to the Administrative Agent and/or file such agreements, assignments or instruments (including affidavits, notices, reaffirmations and amendments and restatements of existing documents, as the Administrative Agent may reasonably request) and do all such other things as the Administrative Agent may reasonably deem necessary or appropriate (i) to assure to the Administrative Agent its security interests hereunder, including such instruments as the Administrative Agent may from time to time reasonably request in order to perfect and maintain the security interests granted hereunder in accordance with the UCC, including, without limitation, financing statements (including continuation statements), (ii) to consummate the transactions contemplated hereby and (iii) to otherwise protect and assure the Administrative Agent of its rights and interests hereunder. Furthermore, each Grantor also hereby irrevocably makes, constitutes and appoints the Administrative Agent, its nominee or any other person whom the Administrative Agent may designate, as such Grantor’s attorney in fact with full power and for the limited purpose to prepare and file (and, to the extent applicable, sign) in the name of such Grantor any financing statements, or amendments and supplements to financing statements, renewal financing statements, notices or any similar documents which in the Administrative Agent’s reasonable discretion would be necessary or appropriate in order to perfect and maintain perfection of the security interests granted hereunder, such power, being coupled with an interest, being and remaining irrevocable until the Facility Termination Date. Each Grantor hereby agrees that a carbon, photographic or other reproduction of this Agreement or any such financing statement is sufficient for filing as a financing statement by the Administrative Agent without notice thereof to such Grantor wherever the Administrative Agent may in its reasonable discretion desire to file the same.

 

 (e) Collateral Held by Warehouseman, Bailee, etc.

 

(i) During
the existence of any Event of Default and the continuation thereof, and at the written request of the Administrative Agent, if
any Collateral is at any time in the possession or control of a warehouseman, bailee or any agent or processor of such Grantor
(A) notify the Administrative Agent of such possession, (B) notify such Person in writing of the Administrative Agent’s security
interest for the benefit of the Secured Parties in such Collateral, (C) instruct such Person to hold all such Collateral for the
Administrative Agent’s account and subject to the Administrative Agent’s instructions and (D) unless otherwise consented
to in writing by the Administrative Agent, use commercially reasonable efforts to obtain (1) a written acknowledgment from such
Person that it is holding such Collateral for the benefit of the Administrative Agent and (2) such other documentation required
by the Administrative Agent (including, without limitation, subordination and access agreements); and

 

(ii) At
the request of the Administrative Agent, perfect and protect such Grantor’s ownership interests in all Inventory stored with
a consignee against creditors of the consignee by filing and maintaining financing statements against the consignee reflecting
the consignment arrangement filed in all appropriate filing offices, providing any written notices required by the UCC to notify
any prior creditors of the consignee of the consignment arrangement, and taking such other actions as may be appropriate to perfect
and protect such Grantor’s interests in such inventory under Section 2-326, Section 9-103, Section 9-324 and Section 9-505
of the UCC or otherwise, which such financing statements filed pursuant to this Section shall be assigned to the Administrative
Agent, for the benefit of the Secured Parties.

 

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 (f) Treatment of Accounts. Not grant or extend the time for payment of any Account, or compromise or settle any Account for less than the full amount thereof, or release any person or property, in whole or in part, from payment thereof, or amend, supplement or modify any Account in any manner that could reasonably be likely to adversely affect the value thereof, or allow any credit or discount thereon, other than as normal and customary in the ordinary course of a Grantor’s business or as otherwise permitted under the Credit Agreement. Each Grantor will deliver to the Administrative Agent a copy of each demand, notice or document received by it that reasonably questions or calls into doubt the validity or enforceability of any material Account.

 

 (g) Commercial Tort Claims. Execute and deliver such statements, documents and notices and do and cause to be done all such things as may be required by the Administrative Agent, or required by Law to create, preserve, perfect and maintain the Administrative Agent’s security interest in any Commercial Tort Claims initiated by or in favor of any Grantor, which might, individually or in the aggregate for all such Commercial Tort Claims, reasonably result in awarded damages in excess of $250,000.

 

(h) Inventory.
With respect to the Inventory of each Grantor:

 

(i) At
all times maintain inventory records in accordance with GAAP and otherwise customary for similarly situated companies in the same
line of business.

 

(ii) Produce,
use, store and maintain the Inventory with all reasonable care and caution and in accordance with applicable standards of any insurance
and in conformity with applicable Laws (including the requirements of the Federal Fair Labor Standards Act of 1938, as amended
and all rules, regulations and orders related thereto).

 

 (i) Books and Records. Mark its books and records (and shall cause the Issuer of the Pledged Equity of such Grantor to mark its books and records) to reflect the security interest granted pursuant to this Agreement.

 

(j) Nature
of Collateral. At all times maintain the Collateral as personal property and not affix any of the Collateral with an aggregate
value for all such Collateral in excess of $250,000 to any real property in a manner which would change its nature from personal
property to real property or a Fixture to real property, unless the Administrative Agent shall have a perfected Lien on such Fixture
or real property.

 

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(k) Issuance
or Acquisition of Equity Interests in Partnerships or Limited Liability Companies.

 

(i)  Not
without executing and delivering, or causing to be executed and delivered, to the Administrative Agent such agreements, documents
and instruments as the Administrative Agent may reasonably require, issue or acquire any Pledged Equity consisting of an interest
in a partnership or a limited liability company that (A) is dealt in or traded on a securities exchange or in a securities market,
(B) by its terms expressly provides that it is a Security governed by Article 8 of the UCC, (C) is an Investment Company Security,
(D) is held in a Securities Account or (E) constitutes a Security or a Financial Asset.

 

(ii) Without
the prior written consent of the Administrative Agent, no Grantor will (A) vote to enable, or take any other action to permit,
any applicable Issuer to issue any Investment Property or Equity Interests constituting partnership or limited liability company
interests, except for those additional Investment Property or Equity Interests constituting partnership or limited liability company
interests that will be subject to the security interest granted herein in favor of the Secured Parties, or (B) enter into any agreement
or undertaking, except in connection with a Disposition permitted under Section 7.05 of the Credit Agreement, restricting the right
or ability of such Grantor or the Administrative Agent to sell, assign or transfer any Investment Property or Pledged Equity or
Proceeds thereof. The Grantors will defend the right, title and interest of the Administrative Agent in and to any Investment Property
and Pledged Equity against the claims and demands of all Persons whomsoever.

 

(iii) If
any Grantor shall become entitled to receive or shall receive, including, without limitation, in connection with any Permitted
Acquisition, (A) any Certificated Securities (including, without limitation, any certificate representing a stock dividend or a
distribution in connection with any reclassification, increase or reduction of capital or any certificate issued in connection
with any reorganization), option or rights in respect of the ownership interests of any Issuer, whether in addition to, in substitution
of, as a conversion of, or in exchange for, any Investment Property, or otherwise in respect thereof, or (B) any sums paid upon
or in respect of any Investment Property upon the liquidation or dissolution of any Issuer, such Grantor shall accept the same
as the agent of the Secured Parties, hold the same in trust for the Secured Parties, and promptly deliver the same to the Administrative
Agent, on behalf of the Secured Parties, in accordance with the terms hereof.

 

 (l) Reserved.

 

(m) Equipment.
Maintain each item of Equipment in good working order and condition (reasonable wear and tear and obsolescence excepted).

 

(n) Government
Contracts. Promptly notify the Administrative Agent, in writing, if it enters into any contract involving aggregate payments
in excess of $250,000 with a Governmental Authority under which such Governmental Authority, as account debtor, owes a monetary
obligation to any Grantor under any Account.

 

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(o) Vehicles.
Upon the written request of the Administrative Agent upon the occurrence and during the continuance of an Event of Default, file
or cause to be filed in each office in each jurisdiction which the Administrative Agent shall deem reasonably advisable to perfect
its Liens on the Vehicles, all applications for certificates of title or ownership (and any other necessary documentation) indicating
the Administrative Agent’s first priority Lien on the Vehicle (subject to any Permitted Liens) covered by such certificate.

 

(p) Reserved.

 

(q) Change
of Name; State of Organization. No Grantor shall, without providing 30 days prior written notice to the Administrative Agent
(or such other period of time as agreed to by the Administrative Agent), change its name, state of formation or organization, form
of organization or principal place of business.

 

(r) Further
Assurances.

 

(i) Promptly
upon the written request of the Administrative Agent and at the sole expense of the Grantors, duly execute and deliver, and have
recorded, such further instruments and documents and take such further actions as the Administrative Agent may reasonably request
for the purpose of obtaining or preserving the full benefits of this Agreement and of the rights and powers herein granted, including,
without limitation, (A) with respect to Government Contracts involving aggregate payments in excess of $250,000, assignment agreements
and notices of assignment, in form and substance reasonably satisfactory to the Administrative Agent, duly executed by any Grantors
party to such Government Contract in compliance with the Assignment of Claims Act (or analogous state applicable Law), and (B)
all applications, certificates, instruments, registration statements, and all other documents and papers the Administrative Agent
may reasonably request and as may be required by law in connection with the obtaining of any consent, approval, registration, qualification,
or authorization of any Person deemed necessary or appropriate for the effective exercise of any rights under this Agreement.

 

(ii) From time
to time upon the Administrative Agent’s reasonable written request, promptly furnish such updates to the information disclosed
pursuant to this Agreement and the Credit Agreement, including any Schedules hereto or thereto, such that such updated information
is true and correct in all material respects as of the date so furnished.

 

(s) Credit
Agreement. The obligation of any Grantor to take any act specified in Section 4 of this Agreement is subject to the
last paragraph of Section 6.14 of the Credit Agreement.

 

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5. Authorization
to File Financing Statements. Each Grantor hereby authorizes the Administrative Agent to prepare and file such financing statements
(including continuation statements) or amendments thereof or supplements thereto or other instruments as the Administrative Agent
may from time to time deem reasonably necessary or appropriate in order to perfect and maintain the security interests granted
hereunder in accordance with the UCC, which such financing statements may describe the Collateral in the same manner as described
herein or may contain an indication or description of Collateral that describes such property in any other manner as the Administrative
Agent may determine, in its sole discretion, is necessary, advisable or prudent to ensure the perfection of the security interest
in the Collateral granted herein, including, without limitation, describing such property as “all assets, whether now owned
or hereafter acquired” or “all personal property, whether now owned or hereafter acquired.”

 

6. Advances.
On failure of any Grantor to perform any of the covenants and agreements contained herein or in any other Loan Document, the Administrative
Agent may, at its sole option and in its sole discretion, perform the same and in so doing may expend such sums as the Administrative
Agent may reasonably deem advisable in the performance thereof, including, without limitation, the payment of any insurance premiums,
the payment of any taxes, a payment to obtain a release of a Lien or potential Lien, expenditures made in defending against any
adverse claim and all other expenditures which the Administrative Agent may make for the protection of the security hereof or which
may be compelled to make by operation of Law. All such sums and amounts so expended shall be repayable by the Grantors on a joint
and several basis promptly upon timely notice thereof and written demand therefor, shall constitute additional Secured Obligations
and shall, to the extent set forth in the Credit Agreement, bear interest from the date said amounts are expended at the Default
Rate. No such performance of any covenant or agreement by the Administrative Agent on behalf of any Grantor, and no such advance
or expenditure therefor, shall relieve the Grantors of any Default or Event of Default. The Administrative Agent may make any payment
hereby authorized in accordance with any bill, statement or estimate procured from the appropriate public office or holder of the
claim to be discharged without inquiry into the accuracy of such bill, statement or estimate or into the validity of any tax assessment,
sale, forfeiture, tax lien, title or claim except to the extent such payment is being contested in good faith by a Grantor in appropriate
proceedings and against which adequate reserves are being maintained in accordance with GAAP.

 

7. Remedies.

 

 (a) General Remedies. Upon the occurrence of an Event of Default and during continuation thereof, the Administrative Agent on behalf of the Secured Parties shall have, in addition to the rights and remedies provided herein, in the Loan Documents, in any other documents relating to the Secured Obligations, or by any applicable Law (including, but not limited to, levy of attachment, garnishment and the rights and remedies set forth in the UCC of the jurisdiction applicable to the affected Collateral), the rights and remedies of a secured party under the UCC (regardless of whether the UCC is the law of the jurisdiction where the rights and remedies are asserted and regardless of whether the UCC applies to the affected Collateral), and further, the Administrative Agent may, with or without judicial process or the aid and assistance of others, (i) enter on any premises on which any of the Collateral may be located and, without resistance or interference by the Grantors, take possession of the

 

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Collateral, (ii) dispose of any Collateral on any such premises, (iii) require the Grantors to assemble and make available to the Administrative Agent at the expense of the Grantors any Collateral at any place and time designated by the Administrative Agent which is reasonably convenient to both parties, (iv) remove any Collateral from any such premises for the purpose of effecting sale or other disposition thereof, or (v) without demand and without advertisement, notice, hearing or process of law, all of which each of the Grantors hereby waives to the fullest extent permitted by Law, at any place and time or times, sell, lease, assign, give option or options to purchase, or otherwise dispose of and deliver the Collateral or any part thereof (or contract to do any of the foregoing), in one or more parcels any or all Collateral held by or for it at public or private sale (which in the case of a private sale of Pledged Equity, shall be to a restricted group of purchasers who will be obligated to agree, among other things, to acquire such securities for their own account, for investment and not with a view to the distribution or resale thereof), at any exchange or broker’s board or elsewhere, by one or more contracts, in one or more parcels, for money, upon credit or otherwise, at such prices and upon such terms as the Administrative Agent deems advisable, in its sole discretion (subject to any and all mandatory legal requirements). Each Grantor acknowledges that any such private sale may be at prices and on terms less favorable to the seller than the prices and other terms which might have been obtained at a public sale and, notwithstanding the foregoing, agrees that such private sale shall be deemed to have been made in a commercially reasonable manner and, in the case of a sale of Pledged Equity, that the Administrative Agent shall have no obligation to delay sale of any such securities for the period of time necessary to permit the Issuer of such securities to register such securities for public sale under the Securities Act of 1933. The Administrative Agent or any other Secured Party shall have the right upon any such public sale or sales, and, to the extent permitted by applicable Law, upon any such private sale or sales, to purchase the whole or any part of the Collateral so sold. Neither the Administrative Agent’s compliance with applicable Law nor its disclaimer of warranties relating to the Collateral shall be considered to adversely affect the commercial reasonableness of any sale. To the extent the rights of notice cannot be legally waived hereunder, each Grantor agrees that any requirement of reasonable notice shall be met if such notice, specifying the place of any public sale or the time after which any private sale is to be made, is personally served on or mailed, postage prepaid, to the Borrower in accordance with the notice provisions of Section 11.02 of the Credit Agreement at least 10 days before the time of sale or other event giving rise to the requirement of such notice. Each Grantor further acknowledges and agrees that any offer to sell any Pledged Equity which has been (A) publicly advertised on a bona fide basis in a newspaper or other publication of general circulation in the financial community of New York, New York (to the extent that such offer may be advertised without prior registration under the Securities Act of 1933), or (B) made privately in the manner described above shall be deemed to involve a “public sale” under the UCC, notwithstanding that such sale may not constitute a “public offering” under the Securities Act of 1933, and the Administrative Agent may, in such event, bid for the purchase of such securities. The Administrative Agent shall not be obligated to make any sale or other disposition of the Collateral regardless of notice having been given. To the extent permitted by applicable Law, any Secured Party may be a purchaser at any such sale. To the extent permitted by applicable Law, each of the Grantors hereby waives all of its rights of redemption with respect to any such sale. Subject to the provisions of applicable Law, the Administrative Agent may

 

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postpone or cause the postponement of the sale of all or any portion of the Collateral by announcement at the time and place of such sale, and such sale may, without further notice, to the extent permitted by Law, be made at the time and place to which the sale was postponed, or the Administrative Agent may further postpone such sale by announcement made at such time and place. To the extent permitted by applicable Law, each Grantor waives all claims, damages and demands it may acquire against the Administrative Agent or any Secured Party arising out of the exercise by them of any rights hereunder except to the extent any such claims, damages or demands result solely from the gross negligence or willful misconduct of the Administrative Agent or any other Secured Party as determined by a final non-appealable judgment of a court of competent jurisdiction, in each case against whom such claim is asserted. Each Grantor agrees that the internet shall constitute a “place” for purposes of Section 9-610(b) of the UCC and that any sale of Collateral to a licensor pursuant to the terms of a license agreement between such licensor and a Grantor is sufficient to constitute a commercially reasonable sale (including as to method, terms, manner, and time) within the meaning of Section 9-610 of the UCC.

 

 (b) Remedies Relating to Accounts.

 

 (i) During the continuation of an Event of Default, whether or not the Administrative Agent has exercised any or all of its rights and remedies hereunder, (A) each Grantor shall, promptly upon written request by the Administrative Agent, notify (such notice to be in form and substance reasonably satisfactory to the Administrative Agent) its Account Debtors and parties to the Contractual Obligations subject to a security interest hereunder that such Accounts and the Contractual Obligations have been assigned to the Administrative Agent, for the benefit of the Secured Parties and promptly upon written request of the Administrative Agent, instruct all account debtors to remit all payments in respect of Accounts to a mailing location selected by the Administrative Agent and (B) the Administrative Agent shall have the right to enforce any Grantor’s rights against its customers and account debtors, and the Administrative Agent or its designee may notify any Grantor’s customers and account debtors that the Accounts of such Grantor have been assigned to the Administrative Agent or of the Administrative Agent’s security interest therein, and may (either in its own name or in the name of a Grantor or both) demand, collect (including without limitation by way of a lockbox arrangement), receive, take receipt for, sell, sue for, compound, settle, compromise and give acquittance for any and all amounts due or to become due on any Account, and, in the Administrative Agent’s discretion, file any claim or take any other action or proceeding to protect and realize upon the security interest of the Secured Parties in the Accounts.

 

 (ii) Each Grantor acknowledges and agrees that the Proceeds of its Accounts remitted to or on behalf of the Administrative Agent in accordance with the provisions hereof shall be solely for the Administrative Agent’s own convenience and that such Grantor shall not have any right, title or interest in such Accounts or in any such other amounts except as expressly provided herein. Neither the Administrative Agent nor the Secured Parties shall have any liability or responsibility to any Grantor for acceptance of a check, draft or other order for payment of money bearing the legend “payment in full” or words of similar import or any other restrictive legend or endorsement or be responsible for determining the correctness of any remittance.

 

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 (iii) During the continuation of an Event of Default, (A) the Administrative Agent shall have the right, but not the obligation, to make test verifications of the Accounts in any manner and through any medium that it reasonably considers advisable, and the Grantors shall furnish all such assistance and information as the Administrative Agent may require in connection with such test verifications, (B) upon the Administrative Agent’s reasonable written request and at the expense of the Grantors, the Grantors shall cause independent public accountants or others reasonably satisfactory to the Administrative Agent to furnish to the Administrative Agent reports showing reconciliations, aging and test verifications of, and trial balances for, the Accounts and (C) the Administrative Agent in its own name or in the name of others may communicate with account debtors on the Accounts to verify with them to the Administrative Agent’s satisfaction the existence, amount and terms of any Accounts.

 

 (iv) During the continuation of an Event of Default, upon the written request of the Administrative Agent, each Grantor shall forward to the Administrative Agent, on the last Business Day of each week, deposit slips related to all cash, money, checks or any other similar items of payment received by the Grantor during such week, and, if requested by the Administrative Agent in writing, copies of such checks or any other similar items of payment, together with a statement showing the application of all payments on the Collateral during such week and a collection report with regard thereto, in form and substance reasonably satisfactory to the Administrative Agent.

 

 (c) Deposit Accounts/Securities Accounts. Upon the occurrence of an Event of Default and during continuation thereof, the Administrative Agent may prevent withdrawals or other dispositions of funds in Deposit Accounts and Securities Accounts that are subject to Qualifying Control Agreements or held with any Secured Party.

 

 (d) Investment Property/Pledged Equity. Upon the occurrence of an Event of Default and during the continuation thereof: the Administrative Agent shall have the right to receive any and all cash dividends or other payments or distributions made in respect of any Investment Property or Pledged Equity or other Proceeds paid in respect of any Investment Property or Pledged Equity, and any or all of any Investment Property or Pledged Equity may, at the option of the Administrative Agent, be registered in the name of the Administrative Agent or its nominee, and the Administrative Agent or its nominee may thereafter exercise (i) all voting, corporate and other rights pertaining to such Investment Property, or any such Pledged Equity at any meeting of shareholders, partners or members of the relevant Issuers or otherwise and (ii) any and all rights of conversion, exchange and subscription and any other rights, privileges or options pertaining to such Investment Property or Pledged Equity as if it were the absolute owner thereof (including, without limitation, the right to exchange at its discretion any and all of the Investment Property or Pledged Equity upon the merger, consolidation, reorganization, recapitalization or other fundamental change in the corporate, partnership or limited liability company structure of any Issuer or upon the exercise by any Grantor or the Administrative Agent of any right, privilege or option pertaining to such Investment Property or Pledged Equity, and in connection therewith, the right to deposit and deliver any and all of the Investment Property or Pledged Equity with any committee, depositary, transfer agent, registrar or other designated agency upon such terms and conditions as the Administrative Agent may determine), all without liability except to account for property actually received by it; but the Administrative Agent shall have no duty to any Grantor to exercise any such right, privilege or option and the Administrative Agent and the other Secured Parties shall not be responsible for any failure to do so or delay in so doing. In furtherance thereof, each Grantor hereby authorizes and instructs each Issuer with respect to any Collateral consisting of Investment Property and/or Pledged Equity to (A) comply with any instruction received by it from the Administrative Agent in writing that (1) states that an Event of Default has occurred and is continuing and (2) is otherwise in accordance with the terms of this Agreement, without any other or further instructions from such Grantor, and each Grantor agrees that each Issuer shall be fully protected in so complying following receipt of such notice and prior to notice that such Event of Default is no longer continuing, and (B) except as otherwise expressly permitted hereby, pay any dividends, distributions or other payments with respect to any Investment Property or Pledged Equity directly to the Administrative Agent. Unless an Event of Default shall have occurred and be continuing and the Administrative Agent shall have given notice to the relevant Grantor of the Administrative Agent’s intent to exercise its corresponding rights pursuant to this Section 7, each Grantor shall be permitted to receive all cash dividends or other payments or other distributions made in respect of any Investment Property and any Pledged Equity, in each case paid in the normal course of business of the relevant Issuer and consistent with past practice, to the extent permitted in the Credit Agreement, and to exercise all voting and other corporate, company and partnership rights with respect to any Investment Property and Pledged Equity to the extent not inconsistent with the terms of this Agreement and the other Loan Documents.

 

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(e) Material
Contracts. Upon the occurrence of an Event of Default and during the continuation thereof, the Administrative Agent shall be
entitled to (but shall not be required to): (i) proceed to perform any and all obligations of the applicable Grantor under any
Material Contract and exercise all rights of such Grantor thereunder as fully as such Grantor itself could and (ii) do all other
acts which the Administrative Agent may deem necessary or proper to protect its security interest granted hereunder, provided such
acts are not inconsistent with or in violation of the terms of any of the Credit Agreement, of the other Loan Documents or applicable
Law.

 

 (f) Access. In addition to the rights and remedies hereunder, upon the occurrence of an Event of Default and during the continuance thereof and subject to the terms of the underlying leases applicable thereto (except to the extent any restrictions set forth therein are invalidated or otherwise superseded by applicable Law) and any consent or waiver delivered in accordance with Section 6.14(c) of the Credit Agreement or otherwise in accordance with applicable Law, the Administrative Agent shall have the right to enter and remain upon the various premises of the Grantors without cost or charge to the Administrative Agent, and use the same, together with materials, supplies, books and records of the Grantors for the purpose of collecting and liquidating the Collateral, or for preparing for sale and conducting the sale of the Collateral, whether by foreclosure, auction or otherwise. In addition, the Administrative Agent may remove Collateral, or any part thereof, from such premises and/or any records with respect thereto, in order to effectively collect or liquidate such Collateral. If the Administrative Agent exercises its right to take possession of the Collateral, each Grantor shall also at its expense perform any and all other steps reasonably requested in writing by the Administrative Agent to preserve and protect the security interest hereby granted in the Collateral, such as placing and maintaining signs indicating the security interest of the Administrative Agent, appointing overseers for the Collateral and maintaining inventory records.

 

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 (g) Nonexclusive Nature of Remedies. Failure by the Administrative Agent or the Secured Parties to exercise any right, remedy or option under this Agreement, any other Loan Document, any other document relating to the Secured Obligations, or as provided by Law, or any delay by the Administrative Agent or the Secured Parties in exercising the same, shall not operate as a waiver of any such right, remedy or option. No waiver hereunder shall be effective unless it is in writing, signed by the party against whom such waiver is sought to be enforced and then only to the extent specifically stated, which in the case of the Administrative Agent or the Secured Parties shall only be granted as provided herein. To the extent permitted by Law, neither the Administrative Agent, the Secured Parties, nor any party acting as attorney for the Administrative Agent or the Secured Parties, shall be liable hereunder for any acts or omissions or for any error of judgment or mistake of fact or law other than their gross negligence or willful misconduct hereunder as determined by a final non-appealable judgment of a court of competent jurisdiction. The rights and remedies of the Administrative Agent and the Secured Parties under this Agreement shall be cumulative and not exclusive of any other right or remedy which the Administrative Agent or the Secured Parties may have.

 

 (h) Retention of Collateral. In addition to the rights and remedies hereunder, the Administrative Agent may, in compliance with Sections 9-620 and 9-621 of the UCC or otherwise complying with the requirements of applicable Law of the relevant jurisdiction, accept or retain the Collateral in satisfaction of the Secured Obligations. Unless and until the Administrative Agent shall have provided such notices, however, the Administrative Agent shall not be deemed to have retained any Collateral in satisfaction of any Secured Obligations for any reason.

 

 (i) Waiver; Deficiency. Each Grantor hereby waives, to the extent permitted by applicable Laws, all rights of redemption, appraisement, valuation, stay, extension or moratorium now or hereafter in force under any applicable Laws in order to prevent or delay the enforcement of this Agreement or the absolute sale of the Collateral or any portion thereof. In the event that the proceeds of any sale, collection or realization are insufficient to pay all amounts to which the Administrative Agent or the Secured Parties are legally entitled, the Grantors shall be jointly and severally liable for the deficiency, together with interest thereon at the Default Rate, together with the costs of collection and, subject to the terms of the Loan Documents, the fees, charges and disbursements of counsel. Any surplus remaining after the full payment and satisfaction of the Secured Obligations shall be returned to the Grantors or to whomsoever a court of competent jurisdiction shall determine to be entitled thereto.

 

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(j) Registration
Rights. After the acceleration of the Obligations upon the occurrence and continuation of an Event of Default:

 

(i) If the
Administrative Agent shall determine that in order to exercise its right to sell any or all of the Collateral it is necessary or
advisable to have such Collateral registered under the provisions of the Securities Act (any such Collateral, the “Restricted
Securities Collateral”), the relevant Grantor will cause each applicable Issuer (and the officers and directors thereof)
that is a Grantor or a Subsidiary of a Grantor (other than Anika Therapeutics S.r.l.) to (A) execute and deliver all such instruments
and documents, and do or cause to be done all such other acts as may be, in the opinion of the Administrative Agent, necessary
or advisable to register such Restricted Securities Collateral, or that portion thereof to be sold, under the provisions of the
Securities Act, (B) use its commercially reasonable efforts to cause the registration statement relating thereto to become effective
and to remain effective for a period of one year from the date of the first public offering of such Restricted Securities Collateral,
or that portion thereof to be sold, and (C) make all amendments thereto and/or to the related prospectus which, in the opinion
of the Administrative Agent, are necessary or advisable, all in conformity with the requirements of the Securities Act and the
rules and regulations of the Securities and Exchange Commission applicable thereto. Each Grantor agrees to cause each applicable
Issuer (and the officers and directors thereof) to comply with the provisions of the securities or “Blue Sky” laws
of any and all jurisdictions which the Administrative Agent shall designate and to make available to its security holders, as soon
as practicable, an earnings statement (which need not be audited) which will satisfy the provisions of the Securities Act.

 

(ii) Each Grantor
agrees to use its commercially reasonable efforts to do or cause to be done all such other acts as may be necessary to make such
sale or sales of all or any portion of the Restricted Securities Collateral valid and binding and in compliance with any and all
other applicable Laws. Each Grantor further agrees that a breach of any of the covenants contained in this Section 7 will
cause irreparable injury to the Administrative Agent and the other Secured Parties, that the Administrative Agent and the other
Secured Parties have no adequate remedy at law in respect of such breach and, as a consequence, that each and every covenant contained
in this Section 7 shall be specifically enforceable against such Grantor, and such Grantor hereby waives and agrees not
to assert any defenses against an action for specific performance of such covenants except for a defense that no Event of Default
has occurred under the Credit Agreement.

 

8. Rights
of the Administrative Agent.

 

 (a) Power of Attorney. In addition to other powers of attorney contained herein, each Grantor hereby designates and appoints the Administrative Agent, on behalf of the Secured Parties, and each of its designees or agents, as attorney-in-fact of such Grantor, irrevocably and with power of substitution, with authority to take any or all of the following actions upon the occurrence and during the continuance of an Event of Default:

 

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 (i) to demand, collect, settle, compromise, adjust, give discharges and releases, all as the Administrative Agent may reasonably determine;

 

 (ii) to commence and prosecute any actions at any court for the purposes of collecting any Collateral and enforcing any other right in respect thereof;

 

 (iii) to defend, settle or compromise any action brought and, in connection therewith, give such discharge or release as the Administrative Agent may deem reasonably appropriate;

 

 (iv) to receive, open and dispose of mail addressed to a Grantor and endorse checks, notes, drafts, acceptances, money orders, bills of lading, warehouse receipts or other instruments or documents evidencing payment, shipment or storage of the goods giving rise to the Collateral of such Grantor on behalf of and in the name of such Grantor, or securing, or relating to such Collateral;

 

 (v) to sell, assign, transfer, make any agreement in respect of, or otherwise deal with or exercise rights in respect of, any Collateral or the goods or services which have given rise thereto, as fully and completely as though the Administrative Agent were the absolute owner thereof for all purposes;

 

 (vi) to adjust and settle claims under any insurance policy relating thereto;

 

 (vii) to execute and deliver all assignments, conveyances, statements, financing statements, continuation financing statements, security agreements, affidavits, notices and other agreements, instruments and documents that the Administrative Agent may determine necessary in order to perfect and maintain the security interests and liens granted in this Agreement and in order to fully consummate all of the transactions contemplated herein;

 

(viii) to
institute any foreclosure proceedings in respect of the Collateral that the Administrative Agent may deem appropriate;

 

(ix) to
sign and endorse any drafts, assignments, proxies, stock powers, verifications, notices and other documents relating to the Collateral;

 

(x) to
exchange any of the Pledged Equity or other property upon any merger, consolidation, reorganization, recapitalization or other
readjustment of the Issuer thereof and, in connection therewith, deposit any of the Pledged Equity with any committee, depository,
transfer agent, registrar or other designated agency upon such terms as the Administrative Agent may reasonably deem appropriate;

 

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(xi) to
vote for a shareholder resolution, or to sign an instrument in writing, sanctioning the transfer of any or all of the Pledged Equity
into the name of the Administrative Agent or one or more of the Secured Parties or into the name of any transferee to whom the
Pledged Equity or any part thereof may be sold pursuant to Section 7 hereof;

 

(xii) to
pay or discharge taxes, liens, security interests or other encumbrances levied or placed on or threatened against the Collateral;

 

(xiii) to
direct any parties liable for any payment in connection with any of the Collateral to make payment of any and all monies due and
to become due thereunder directly to the Administrative Agent or as the Administrative Agent shall direct;

 

(xiv) to
receive payment of and receipt for any and all monies, claims, and other amounts due and to become due at any time in respect of
or arising out of any Collateral; and

 

 (xv) do and perform all such other acts and things as the Administrative Agent may reasonably deem to be necessary, proper or convenient in connection with the Collateral.

 

This power
of attorney is a power coupled with an interest and shall be irrevocable until the Facility Termination Date. The Administrative
Agent shall be under no duty to exercise or withhold the exercise of any of the rights, powers, privileges and options expressly
or implicitly granted to the Administrative Agent in this Agreement, and shall not be liable for any failure to do so or any delay
in doing so. The Administrative Agent shall not be liable for any act or omission or for any error of judgment or any mistake of
fact or law in its individual capacity or its capacity as attorney-in-fact except acts or omissions resulting from its gross negligence
or willful misconduct as determined by a final non-appealable judgment of a court of competent jurisdiction. This power of attorney
is conferred on the Administrative Agent solely to protect, preserve and realize upon its security interest in the Collateral and
shall not impose any duty upon the Administrative Agent or any other Secured Party to exercise any such powers.

 

 (b) Assignment by the Administrative Agent. The Administrative Agent may from time to time assign the Secured Obligations to a successor Administrative Agent appointed in accordance with the Credit Agreement, and such successor shall be entitled to all of the rights and remedies of the Administrative Agent under this Agreement in relation thereto.

 

 (c) The Administrative Agent’s Duty of Care. Other than the exercise of reasonable care to assure the safe custody of the Collateral while being held by the Administrative Agent hereunder, the Administrative Agent shall have no duty or liability to preserve rights pertaining thereto, it being understood and agreed that the Grantors shall be responsible for preservation of all rights in the Collateral, and the Administrative Agent shall be relieved of all responsibility for the Collateral upon surrendering it or tendering the surrender of it to the Grantors. The Administrative Agent shall be deemed to have exercised reasonable care in the custody and preservation of the Collateral in its possession if the Collateral is accorded treatment substantially equal to that which the Administrative Agent accords its own property, which shall be no less than the treatment employed by a reasonable and prudent agent in the industry, it being understood that the Administrative Agent shall not have responsibility for taking any necessary steps to preserve rights against any parties with respect to any of the Collateral. In the event of a public or private sale of Collateral pursuant to Section 7 hereof, the Administrative Agent shall have no responsibility for (i) ascertaining or taking action with respect to calls, conversions, exchanges, maturities, tenders or other matters relating to any Collateral, whether or not the Administrative Agent has or is deemed to have knowledge of such matters, or (ii) taking any steps to clean, repair or otherwise prepare the Collateral for sale.

 

    23

     

    

 (d) Liability with Respect to Accounts. Anything herein to the contrary notwithstanding, each of the Grantors shall remain liable under each of the Accounts to observe and perform all the conditions and obligations to be observed and performed by it thereunder, all in accordance with the terms of any agreement giving rise to each such Account. Neither the Administrative Agent nor any Secured Party shall have any obligation or liability under any Account (or any agreement giving rise thereto) by reason of or arising out of this Agreement or the receipt by the Administrative Agent or any Secured Party of any payment relating to such Account pursuant hereto, nor shall the Administrative Agent or any Secured Party be obligated in any manner to perform any of the obligations of a Grantor under or pursuant to any Account (or any agreement giving rise thereto), to make any payment, to make any inquiry as to the nature or the sufficiency of any payment received by it or as to the sufficiency of any performance by any party under any Account (or any agreement giving rise thereto), to present or file any claim, to take any action to enforce any performance or to collect the payment of any amounts which may have been assigned to it or to which it may be entitled at any time or times.

 

(e) Releases
of Collateral.

 

(i)  If
any Collateral shall be sold, transferred or otherwise disposed of by any Grantor in a transaction permitted by the Credit Agreement,
then the Administrative Agent, at the request and sole expense of such Grantor, shall promptly execute and deliver to such Grantor
all releases and other documents, and take such other action, reasonably necessary for the release of the Liens created hereby
or by any other Collateral Document on such Collateral.

 

(ii)  The
Administrative Agent may release any of the Pledged Equity from this Agreement or may substitute any of the Pledged Equity for
other Pledged Equity without altering, varying or diminishing in any way the force, effect, lien, pledge or security interest of
this Agreement as to any Pledged Equity not expressly released or substituted, and this Agreement shall continue as a first priority
lien on all Pledged Equity not expressly released or substituted.

 

    24

     

    

9. Application
of Proceeds. After the exercise of remedies provided for in Section 8.02 of the Credit Agreement (or after the Loans have automatically
become immediately due and payable and the L/C Obligations have automatically been required to be Cash Collateralized as set forth
in Section 8.02 of the Credit Agreement) any payments in respect of the Secured Obligations and any proceeds of the Collateral,
when received by the Administrative Agent or any Secured Party in cash or Cash Equivalents will be applied in reduction of the
Secured Obligations in the order set forth in the Credit Agreement.

 

10. Continuing
Agreement. This Agreement shall continue to be effective or be automatically reinstated, as the case may be, if at any time
payment, in whole or in part, of any of the Secured Obligations is rescinded or must otherwise be restored or returned by the Administrative
Agent or any Secured Party as a preference, fraudulent conveyance or otherwise under any Debtor Relief Law, all as though such
payment had not been made; provided that in the event payment of all or any part of the Secured Obligations is rescinded or must
be restored or returned, subject to the terms of the Loan Documents, all reasonable out-of-pocket costs and expenses (including
without limitation any reasonable outside counsel legal fees and disbursements) incurred by the Administrative Agent or any Secured
Party in defending and enforcing such reinstatement shall be deemed to be included as a part of the Secured Obligations.

 

11. Amendments;
Waivers; Modifications, etc. This Agreement and the provisions hereof may not be amended, waived, modified, changed, discharged
or terminated except as set forth in Section 11.01 of the Credit Agreement.

 

12. Successors
in Interest. This Agreement shall be binding upon each Grantor, its successors and assigns and shall inure, together with the
rights and remedies of the Administrative Agent and the Secured Parties hereunder, to the benefit of the Administrative Agent and
the Secured Parties and their successors and permitted assigns.

 

13. Notices.
All notices required or permitted to be given under this Agreement shall be in conformance with Section 11.02 of the Credit Agreement;
provided that notices and communications to the Grantors shall be directed to the Grantors, at the address of the Borrower
set forth in Section 11.02 of the Credit Agreement.

 

14. Counterparts.
This Agreement may be executed in any number of counterparts, each of which where so executed and delivered shall be an original,
but all of which shall constitute one and the same instrument. It shall not be necessary in making proof of this Agreement to produce
or account for more than one such counterpart. Delivery of an executed counterpart of a signature page of this Agreement by fax
transmission or other electronic mail transmission (e.g. “pdf” or “tif”) shall be effective as delivery
of a manually executed counterpart of this Agreement. Without limiting the foregoing, to the extent a manually executed counterpart
is not specifically required to be delivered, upon the request of any party, such fax transmission or electronic mail transmission
shall be promptly followed by such manually executed counterpart.

 

15. Headings.
The headings of the sections hereof are provided for convenience only and shall not in any way affect the meaning or construction
of any provision of this Agreement.

 

    25

     

    

16. Governing
Law; Submission to Jurisdiction; Venue; WAIVER OF JURY TRIAL. The terms of Sections 11.14 and 11.15 of the Credit Agreement
with respect to governing law, submission to jurisdiction, venue and waiver of jury trial are incorporated herein by reference,
mutatis mutandis, and the parties hereto agree to such terms.

 

17. Severability.
If any provision of this Agreement is determined to be illegal, invalid or unenforceable, such provision shall be fully severable
and the remaining provisions shall remain in full force and effect and shall be construed without giving effect to the illegal,
invalid or unenforceable provisions.

 

18. Entirety.
This Agreement, the other Loan Documents and the other documents relating to the Secured Obligations represent the entire agreement
of the parties hereto and thereto, and supersede all prior agreements and understandings, oral or written, if any, including any
commitment letters or correspondence relating to the Loan Documents, any other documents relating to the Secured Obligations, or
the transactions contemplated herein and therein.

 

19. Other
Security. To the extent that any of the Secured Obligations are now or hereafter secured by property other than the Collateral
(including, without limitation, real property and securities owned by a Grantor), or by a guarantee, endorsement or property of
any other Person, then the Administrative Agent shall have the right to proceed against such other property, guarantee or endorsement
after the occurrence of any Event of Default and during the continuation thereof, and the Administrative Agent shall have the right,
in its sole discretion, to determine which rights, security, liens, security interests or remedies the Administrative Agent shall
at any time pursue, relinquish, subordinate, modify or take with respect thereto, without in any way modifying or affecting any
of them or the Secured Obligations or any of the rights of the Administrative Agent or the Secured Parties under this Agreement,
under any other of the Loan Documents or under any other document relating to the Secured Obligations.

 

20. Joinder.
At any time after the date of this Agreement, one or more additional Persons may become party hereto by executing and delivering
to the Administrative Agent a Joinder Agreement in the form of Exhibit D to the Credit Agreement or such other form reasonably
acceptable to the Administrative Agent. Immediately upon such execution and delivery of such Joinder Agreement (and without any
further action), each such additional Person will become a party to this Agreement as an “Grantor” and have all of
the rights and obligations of a Grantor hereunder and this Agreement and the schedules hereto shall be deemed amended by such Joinder
Agreement.

 

21. Consent
of Issuers of Pledged Equity. Any Loan Party that is an Issuer hereby acknowledges, consents and agrees to the grant of the
security interests in such Pledged Equity by the applicable Grantors pursuant to this Agreement, together with all rights accompanying
such security interest as provided by this Agreement and applicable Law, notwithstanding any anti-assignment provisions in any
operating agreement, limited partnership agreement or similar organizational or governance documents of such Issuer.

 

    26

     

    

22. Joint
and Several Obligations of Grantors.

 

(a) Each
of the Grantors is accepting joint and several liability hereunder in consideration of the financial accommodations to be provided
by the Lenders under the Credit Agreement, for the mutual benefit, directly and indirectly, of each of the Grantors and in consideration
of the undertakings of each of the Grantors to accept joint and several liability for the obligations of each of them.

 

(b) Each
of the Grantors jointly and severally hereby irrevocably and unconditionally accepts, not merely as a surety but also as a primary
obligor, joint and several liability with the other Grantors with respect to the payment and performance of all of the Secured
Obligations, it being the intention of the parties hereto that (i) all the Secured Obligations shall be the joint and several obligations
of each of the Grantors without preferences or distinction among them and (ii) a separate action may be brought against each Grantor
to enforce this Agreement whether or not the Borrower, any other Grantor or any other Person is joined as a party.

 

(c) Notwithstanding
any provision to the contrary contained herein, in any other of the Loan Documents, to the extent the obligations of a Grantor
shall be adjudicated to be invalid or unenforceable for any reason (including, without limitation, because of any applicable state
or federal law relating to fraudulent conveyances or transfers) then the obligations of such Grantor hereunder shall be limited
to the maximum amount that is permissible under applicable law (whether federal or state and including, without limitation, Debtor
Relief Laws).

 

23. Marshaling.
The Administrative Agent shall not be required to marshal any present or future collateral security (including but not limited
to the Collateral) for, or other assurances of payment of, the Secured Obligations or any of them or to resort to such collateral
security or other assurances of payment in any particular order, and all of its rights and remedies hereunder and in respect of
such collateral security and other assurances of payment shall be cumulative and in addition to all other rights and remedies,
however existing or arising. To the extent that it lawfully may, each Grantor hereby agrees that it will not invoke any law relating
to the marshaling of collateral which might cause delay in or impede the enforcement of the Administrative Agent’s rights
and remedies under this Agreement or under any other instrument creating or evidencing any of the Secured Obligations or under
which any of the Secured Obligations is outstanding or by which any of the Secured Obligations is secured or payment thereof is
otherwise assured, and, to the extent that it lawfully may, each Grantor hereby irrevocably waives the benefits of all such laws.

 

24. Injunctive
Relief.

 

(a)  Each
Grantor recognizes that, in the event such Grantor fails to perform, observe or discharge any of its obligations or liabilities
under this Agreement or any other Loan Document, any remedy of law may prove to be inadequate relief to the Administrative Agent
and the other Secured Parties. Therefore, each Grantor agrees that the Administrative Agent and the other Secured Parties, at the
option of the Administrative Agent and the other Secured Parties, shall be entitled to temporary and permanent injunctive relief
in any such case without the necessity of proving actual damages.

 

    27

     

    

(b)  The
Administrative Agent, the other Secured Parties and each Grantor hereby agree that no such Person shall have a remedy of punitive
or exemplary damages against any other party to a Loan Document and each such Person hereby waives any right or claim to punitive
or exemplary damages that they may now have or may arise in the future in connection with any dispute under this Agreement or any
other Loan Document, whether such dispute is resolved through arbitration or judicially.

 

25. Secured
Parties. Each Secured Party that is not a party to the Credit Agreement who obtains the benefit of this Agreement shall be
deemed to have acknowledged and accepted the appointment of the Administrative Agent pursuant to the terms of the Credit Agreement,
and with respect to the actions and omissions of the Administrative Agent hereunder or otherwise relating hereto that do or may
affect such Secured Party, the Administrative Agent and each of its Affiliates shall be entitled to all of the rights, benefits
and immunities conferred under Article IX of the Credit Agreement.

 

 

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

 

 

 

    28

     

    

Each of the parties
hereto has caused a counterpart of this Agreement to be duly executed and delivered as of the date first above written.

 

		GRANTORS:	ANIKA THERAPEUTICS, INC. a Massachusetts corporation
	 	 	 
	 	 	 
	 	 	 
	 	 	By:/s/ Charles H. Sherwood
	 	 	Name: Charles H. Sherwood, Ph.D.
	 	 	Title: Chief Executive Officer
	 	 	 

 

 

 

 

 

 

    Anika – Signature Page to Security Agreement

     

    

Accepted and agreed to as of the date first
above written.

 

BANK OF AMERICA, N.A., as Administrative
Agent

 

 

 

By: /s/ Molly Kropp

Name: Molly Kropp

Title: Vice President

 

    Anika Specialties – Signature Page to Security Agreement

     

    

EXHIBIT A

 

[FORM OF]

 

IRREVOCABLE STOCK POWER

 

 

FOR VALUE RECEIVED,
the undersigned hereby sells, assigns and transfers to __________________ the following Equity Interests of [___________], a [_________]
[corporation] [limited liability company]:

 

	No. of Shares	Certificate No.
	 	 
	 	 
	 	 
	 	 

 

 

 

 

 

and irrevocably appoints __________________________________
its agent and attorney-in-fact to transfer all or any part of such Equity Interests and to take all necessary and appropriate action
to effect any such transfer. The agent and attorney-in-fact may substitute and appoint one or more persons to act for him.

 

 

	 	 	 	 
	 	 	 	 
	 	By:	 	 
	 	Name:	 	 
	 	Title:The
Company has filed a registration statement (including a prospectus) with the SEC for the offering to which this communication
relates. Before you invest, you should read the prospectus in that registration statement and other documents the issuer has filed
with the SEC for more complete information about the issuer and this offering. You may get these documents for free by visiting
EDGAR on the SEC Web site at www.sec.gov. Alternatively, the issuer for this subscription will arrange to send you the prospectus
if you request it by calling (617) 830-3031 x128.

 

SUBSCRIPTION
AGREEMENT

 

This
Subscription Agreement (this “Subscription”) is dated as of October 26, 2017, by and between VBI
Vaccines Inc., a company incorporated under the laws of British Columbia, Canada (the “Company”),
and each investor identified on the signature page hereto (each, including its successors and assigns, a “Investor”
and collectively the “Investors”).

 

RECITALS

 

WHEREAS,
subject to the terms and conditions set forth in this Subscription and pursuant to the Company’s effective registration
statement under the Securities Act of 1933, as amended (the “Securities Act”), on Form S-3 (File No.
333-217995), dated June 8, 2017 (as amended and/or supplemented from time to time, the “Registration Statement”),
the Company desires to issue and sell to each Investor, and each Investor, severally and not jointly, desires to purchase from
the Company, common shares of the Company (the “Securities”) as more fully described in this Subscription.

 

NOW,
THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Subscription, and for other good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, the Company and each Investor hereby agree as follows:

 

1.
Subscription.

 

(a)
The Investors, severally and not jointly, agree to buy, and the Company agrees to sell and issue to the Investors, up to an aggregate
of $22,800,000 of Securities, with each Investor purchasing the Securities in the amount equal to such Investor’s subscription
amount as set forth on the signature page hereto executed by such Investor (the “Subscription Amount”).

 

(b)
The Securities have been registered on the Registration Statement. The Registration Statement has been declared effective by the
Securities and Exchange Commission (the “SEC”) and is effective on the date hereof. A final prospectus
supplement is attached hereto as Exhibit A and will be delivered to each Investor as required by law.

 

(c)
The completion of the purchase and sale of the Securities (the “Closing”) shall take place at the offices
of Haynes and Boone, LLP, located at 30 Rockefeller Plaza, New York, New York 10112, or at such other location(s) or remotely
by facsimile transmission or other electronic means as the parties may mutually agree, on October 30, 2017, or such other date
as agreed between the Company and the Investors. At the Closing, (i) each Investor shall pay the Subscription Amount by wire transfer
of immediately available funds to the Company to such bank account or accounts as shall be designated by the Company, and (ii)
the Company shall cause the Securities to be delivered to each Investor and shall provide the Investors with a certificate signed
by a duly authorized officer confirming: (a) that the representations and warranties of the Company set forth in Section 2 are
true and correct as of the Closing, (b) that the Company has completed, following the date hereof and inclusive of the Subscription
Amount, financings for an aggregate amount of $55,000,000, (c) the absence of any material adverse change in the Company, its
business, or prospects since the date of this Subscription and (d) the Company’s Board has appointed the Investors’
representative to the Board as set forth in Section 5 below.

 

2.
Representations and Warranties of the Company. The Company represents and warrants as of the date hereof to each Investor
as follows:

 

(a)
it has the full corporate power and authority to enter into this Subscription and to perform all of its obligations hereunder;

 

    	 

    	 

    

 

(b)
this Subscription has been duly authorized and executed by, and when delivered in accordance with the terms hereof will constitute
a valid and binding agreement of, the Company enforceable in accordance with its terms, except as such enforceability may be limited
by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights and remedies of creditors generally
or subject to general principles of equity;

 

(c)
the execution and delivery of this Subscription and the consummation of the transactions contemplated hereby do not conflict with
or result in a breach of the Company’s articles or notice of articles, as amended to date, or any other organizational documents;

 

(d)
the Securities, when issued and paid for in accordance with the terms of this Subscription, will be duly authorized, validly issued,
fully paid and non-assessable; and

 

(e)
the Registration Statement, at the time it became effective, did not contain, and as of the time hereof and as of the Closing,
does not contain, any 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 not misleading.

 

3.
Representations, Warranties and Acknowledgments of the Investor.

 

(a)
Each Investor, for itself and for no other Investor, hereby represents and warrants as of the date hereof to the Company as follows:
(i) it has the full right, power and authority to enter into this Subscription and to perform all of its obligations hereunder;
(ii) this Subscription has been duly authorized and executed by the Investor and, when delivered in accordance with the terms
hereof, will constitute a valid and binding agreement of the Investor enforceable against the Investor in accordance with its
terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
the rights and remedies of creditors generally or subject to general principles of equity; (iii) the execution and delivery of
this Subscription and the consummation of the transactions contemplated hereby do not conflict with or result in a breach of the
Investor’s governing or organizational documents; (iv) the Investor has had full access to the prospectus included in the
Registration Statement and the Company’s periodic reports and other information incorporated by reference therein, and was
able to read, review, download and print such materials, if desired; (v) at the time the Investor was offered the Securities,
it was, and at the date hereof it is, and on the date of the Closing it will be, an “accredited investor” as defined
in Rule 501(a) under the Securities Act of 1933, as amended; (vi) the Investor is knowledgeable, sophisticated and experienced
in making, and is qualified to make, decisions with respect to investments in securities representing an investment decision like
that involved in the purchase of the Securities; (vii) the Investor and the Investor’s attorneys, accountants, purchaser
representatives and/or tax advisors, if any (collectively, “Advisors”), have received and carefully
reviewed this Subscription, the Company’s SEC filings and each of the transaction documents and all other documents requested
by the Investor or its Advisors, if any, and understand the information contained therein, prior to the execution of this Subscription;
(viii) the Investor and its Advisors, if any, have had a reasonable opportunity to ask questions of and receive answers from the
Company’s officers and any other persons authorized by the Company to answer such questions, concerning, among other related
matters, the Securities, the transaction documents and the business, financial condition, results of operations and prospects
of the Company and all such questions have been answered by the Company to the full satisfaction of the Investor and its Advisors,
if any; (ix) the Investor has taken no action which would give rise to any claim by any person for brokerage commissions, finders’
fees or the like relating to this Subscription or the transactions contemplated hereby other than the Pontifax Warrants (as defined
below); (x) the Investor is not relying on the Company or any of its respective employees or agents with respect to the legal,
tax, economic and related considerations of an investment in the Securities, and the Investor has relied on the advice of, or
has consulted with, only its own Advisors; (xi) the Investor is satisfied that it has received adequate information with respect
to all matters which it or its Advisors, if any, consider material to its decision to make an investment in the Securities; (xii)
except as set forth below, the Investor is not a, and it has no direct or indirect affiliation or association with any, member
of the Financial Industry Regulatory Authority, Inc. or an Associated Person (as such term is defined under the NASD Membership
and Registration Rules Section 1011) as of the date hereof; and (xiii) neither the Investor nor any group of investors (as identified
in a public filing made with the SEC) of which the Investor is a part in connection with the offering of the Securities, acquired,
or obtained the right to acquire, twenty percent (20%) or more of the Company’s common shares (or securities convertible
into or exercisable for common shares) or the voting power of the Company on a post-transaction basis.

 

    	 	2	 

    	 

    

 

(b)
Each Investor, for itself and for no other Investor, hereby also represents and warrants as of the date hereof to the Company
that, other than the transactions contemplated hereunder, the Investor has not, directly or indirectly, nor has any person acting
on behalf of or pursuant to any understanding with the Investor, executed any transactions in securities of the Company, including
“short sales” as defined in Rule 200 of Regulation SHO under the Securities Exchange Act of 1934, as amended (“Short
Sales”), during the period commencing from the time that the Investor first became aware of the proposed transactions
contemplated hereunder until the date hereof (the “Discussion Time”). The Investor has maintained the
confidentiality of all disclosures made to it in connection with this transaction (including the existence and terms of this transaction).

 

(c)
Each Investor is not, as of the date of this Agreement, and will not be, as of the closing date, a resident of any jurisdiction
of Canada.

 

(d)
Each Investor acknowledges and agrees that the issuance by the Company of the Securities (including the common shares underlying
the Pontifax Warrants (as defined below)) will be conditional upon receipt of all necessary regulatory approvals, including those
of the NASDAQ Capital Market and the Toronto Stock Exchange.

 

4.
Covenant of the Investors

 

(a)
Regarding Short Sales and Confidentiality. Each Investor hereby covenants that neither it nor any affiliates acting on
its behalf or pursuant to any understanding with it will execute any transactions in securities of the Company, including Short
Sales, during the period after the Discussion Time and ending at the time that the transactions contemplated by this Subscription
are first publicly announced by the Company through a press release and/or Current Report on Form 8-K. The Investor hereby covenants
that until such time as the transactions contemplated by this Subscription are publicly disclosed by the Company through a press
release and/or Current Report on Form 8-K, the Investor will maintain the confidentiality of all disclosures made to it in connection
with this transaction (including the existence and terms of this transaction.

 

(b)
Canadian Securities Law Compliance. Each Investor covenants and agrees that it (i) will not, during the period ending on
the date that is four (4) months and one (1) day after the Closing, sell or otherwise effect a trade of any of the Securities
(including the Pontifax Warrants (as defined below) and the common shares underlying the Pontifax Warrants) to any person known
to be resident in any jurisdiction in Canada or any person known to be acquiring such securities for the benefit of another person
resident in any jurisdiction in Canada, and (ii) will not sell the Securities (including the common shares underlying the Pontifax
Warrants) through the facilities of the Toronto Stock Exchange, other than in a transaction made in compliance with the prospectus
requirements of applicable Canadian securities laws or pursuant to a transaction that is otherwise made in reliance on an available
exemption from the prospectus requirements of applicable Canadian securities laws.

 

5.
Covenant of the Company Regarding Right to Nominate Director. Immediately upon the Closing, the Company shall cause its
board of directors (the “Board”) to (i) increase the current Board by one member and elect to such newly
created vacancy Ran Nussbaum, to serve until his successor has been duly elected or appointed and qualified or until his earlier
death, resignation or removal in accordance with the articles of the Company.

 

6.
Pontifax Warrants. Upon Closing, the Company shall issue to Pontifax (China) IV Limited Partnership, Pontifax (Israel)
IV Limited Partnership and Pontifax (Cayman) IV Limited Partnership (collectively “Pontifax”) four year
warrants to purchase 550,000 common shares at an exercise price of $3.34 per share (the “Pontifax Warrants”)
in connection with the offering of Securities, in the form attached hereto as Exhibit B.

 

7.
Miscellaneous.

 

(a)
Each party shall pay the fees and expenses of its Advisors, if any, and all other expenses incurred by such party incident to
the negotiation, preparation, execution, delivery and performance of this Subscription. The Company shall pay all transfer agent
fees (including, without limitation, any fees required for same-day processing of any instruction letter delivered by the Company),
stamp taxes and other taxes and duties levied in connection with the delivery of any Securities to the Investors. Notwithstanding
the foregoing, upon consummation of this Subscription, the Company will reimburse Pontifax for its transaction related fees and
expenses up to $100,000, which amount may be deducted from Pontifax’s Subscription Amount.

 

    	 	3	 

    	 

    

 

(b)
This Subscription constitutes the entire understanding and agreement among the parties with respect to its subject matter, and
there are no agreements or understandings with respect to the subject matter hereof which are not contained in this Subscription.

 

(c)
This Subscription may be executed in any number of counterparts, all of which taken together shall constitute one and the same
instrument and shall become effective when counterparts have been signed by each party and delivered to the other party hereto,
it being understood that the parties need not sign the same counterpart. Execution may be made by delivery by facsimile or by
e-mail delivery of a “.pdf” format data file.

 

(d)
The provisions of this Subscription are severable and, in the event that any court or officials of any regulatory agency of competent
jurisdiction shall determine that any one or more of the provisions or part of the provisions contained in this Subscription shall,
for any reason, be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision or part of a provision of this Subscription and this Subscription shall be reformed and construed
as if such invalid or illegal or unenforceable provision, or part of such provision, had never been contained herein, so that
such provisions would be valid, legal and enforceable to the maximum extent possible, so long as such construction does not materially
adversely affect the economic rights of either party hereto.

 

(e)
All communications hereunder, except as may be otherwise specifically provided herein, shall be in writing and shall be mailed,
hand delivered, sent by a recognized overnight courier or sent via facsimile or by e-mail delivery and confirmed by letter, to
the party to whom it is addressed at the following addresses or such other address as such party may advise the other in writing:

 

To
the Company: as set forth on the signature page hereto.

 

To
an Investor: as set forth on each Investor’s signature page hereto.

 

All
notices hereunder shall be effective upon receipt by the party to which it is addressed.

 

(f)
No provision of this Subscription may be waived, modified, supplemented or amended except in a written instrument signed, in the
case of an amendment, by the Company and the Investors, 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 Subscription 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 either party to exercise any right hereunder in any manner impair the
exercise of any such right.

 

(g)
This Subscription shall be governed by and interpreted in accordance with the laws of the State of New York for contracts to be
wholly performed in such state and without giving effect to the principles thereof regarding the conflict of laws.

 

[Remainder
of Page Intentionally Left Blank]

 

    	 	4	 

    	 

    

 

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

 

	 	VBI
    Vaccines Inc.
	 	 	 
	 	By:	 
	 	Name:
	
	 	Title:
    	
	 	 	 
	 	Address
    for Notices:
	 	 	 
	 	 	VBI
    Vaccines Inc.
	 	 	222
    3rd Street, Suite 2241
	 	 	Cambridge,
    MA 02142

 

[Company
Signature Page to Subscription Agreement]

 

    	 

    	 

    

 

[Investor
Signature Page to Subscription Agreement]

 

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

 

Name
of Investor: _____________________________________________________________

 

Signature
of Authorized Signatory of Investor: _______________________________________

 

Name
of Authorized Signatory: _____________________________________________________

 

Title
of Authorized Signatory: _____________________________________________________

 

Email
Address of Authorized Signatory: _____________________________________________

 

Facsimile
Number of Authorized Signatory: __________________________________________

 

Address
for Notice to Investor:

 

Address
for Delivery of Securities to Investor (if not same as address for notice) / DWAC Account Number:

 

Subscription
Amount: _____________

 

Common
Shares: _____________

 

EIN
Number:

 

[Signature
pages continue]

 

    	 

    	 

    

 

Exhibit
A

 

Attached

 

    	 

    	 

    

 

Exhibit
B

 

Attached

 

    	 

    	 

    

 

THIS
WARRANT AND THE SHARES ISSUABLE UPON EXERCISE HEREOF MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, OR HYPOTHECATED IN THE ABSENCE
OF AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL (WHICH MAY BE COMPANY COUNSEL) REASONABLY SATISFACTORY
TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES
LAWS.

 

WARRANT
AGREEMENT

 

To
Purchase Common Shares of

 

VBI
VACCINES INC.

 

Dated
as of [●], 2017 (the “Effective Date”)

 

WHEREAS,
VBI Vaccines Inc., a corporation organized under the laws of British Columbia, Canada (the “Company”) has entered
into a subscription agreement of even date herewith (as amended and in effect from time to time, the “Subscription Agreement”)
with the undersigned warrantholder (the “Warrantholder”).

 

WHEREAS,
pursuant to the Subscription Agreement and as additional consideration to the Warrantholder for, among other things, its agreements
in the Subscription Agreement, the Company has agreed to issue to the Warrantholder this Warrant Agreement, evidencing the right
to purchase common shares of the Company (this “Warrant”, “Warrant Agreement”, or this “Agreement”).

 

NOW,
THEREFORE, in consideration of the mutual covenants and agreements contained herein, the Company and Warrantholder agree as follows:

 

SECTION
1. GRANT OF THE RIGHT TO PURCHASE COMMON SHARES

 

(a)
For value received, the Company hereby grants to the Warrantholder, and the Warrantholder is entitled, upon the terms and subject
to the conditions hereinafter set forth, to subscribe for and purchase, from the Company, up to the number of fully paid and non-assessable
Common Shares (as defined below) equal to the Number of Shares (as defined below), at a purchase price per share equal to the
Exercise Price (as defined below). The number and Exercise Price of such shares are subject to adjustment as provided in Section
8. As used herein, the following terms shall have the following meanings:

 

“Charter”
means the Company’s Articles, as may be amended and in effect from time to time.

 

“Common
Shares” means the Company’s common shares, no par value per share, as presently constituted under the Charter,
and any class and/or series of Company capital stock for or into which such common shares may be converted or exchanged in a reorganization,
recapitalization or similar transaction.

 

“Exchange
Act” means the Securities Exchange Act of 1934, as amended.

 

    	 

    	 

    

 

“Exercise
Price” means $[•], subject to adjustment from time to time in accordance with the provisions of this Agreement.

 

“Merger
Event” means any of the following: (i) a sale, lease or other transfer of all or substantially all assets of the Company,
(ii) any merger or consolidation involving the Company in which the Company is not the surviving entity or in which the outstanding
shares of the Company’s capital stock are otherwise converted into or exchanged for shares of capital stock or other securities
or property of another entity and in which the holders of a majority of the outstanding shares of capital stock of the Company
immediately prior to such merger or consolidation do not hold a majority of the surviving entity or other entity immediately following
such merger or consolidation, or (iii) any sale by holders of the outstanding voting equity securities of the Company in a single
transaction or series of related transactions of shares constituting a majority of the outstanding combined voting power of the
Company.

 

“Purchase
Price” means, with respect to any exercise of this Warrant, an amount equal to the Exercise Price (subject to adjustment
from time to time in accordance with the provisions of this Agreement) multiplied by the number of Common Shares as to which this
Warrant is then exercised.

 

“Rule
144” means Rule 144 of the Securities Act, as amended.

 

“Securities
Act” means the Securities Act of 1933, as amended.

 

(b)
Number of Shares. This Warrant shall be exercisable for [●] Common Shares, subject to adjustment from time to time
in accordance with the provisions of this Agreement, subject to further adjustment thereafter from time to time in accordance
with the provisions of this Agreement.

 

SECTION
2. TERM OF THE AGREEMENT

 

The
term of this Agreement and the right to purchase Common Shares as granted herein shall commence on the Effective Date and, subject
to Section 8(a), shall be exercisable for a period ending upon the fourth (4th) anniversary of the Effective Date.

 

SECTION
3. EXERCISE OF THE PURCHASE RIGHTS

 

(a)
Exercise. The purchase rights set forth in this Agreement are exercisable by the Warrantholder, in whole or in part, at
any time, or from time to time, prior to the expiration of the term set forth in Section 2, by tendering to the Company
at its principal office a notice of exercise in the form attached hereto as Exhibit I (the “Notice of Exercise”),
duly completed and executed. Promptly upon receipt of the Notice of Exercise and the payment of the Purchase Price in cash or
certified check, and in no event later than three business (3) days thereafter, the Company shall, subject to the prior receipt
of all necessary regulatory approvals, including those of the NASDAQ Capital Market and the Toronto Stock Exchange, cause its
transfer agent to issue to the Warrantholder in book entry form the number of Common Shares purchased, and the Company shall execute
the acknowledgment of exercise in the form attached hereto as Exhibit II (the “Acknowledgment of Exercise”)
indicating the number of shares which remain subject to future purchases under this Agreement, if any.

 

Upon
any partial exercise of this Warrant, the Company shall, upon the Warrantholder’s written request, promptly issue an amended
Agreement representing the remaining number of shares purchasable hereunder. All other terms and conditions of such amended Agreement
shall be identical to those contained herein, including, but not limited to the Effective Date hereof.

 

    	 

    	 

    

 

SECTION
4. RESERVATION OF SHARES

 

During
the term of this Agreement, the Company will at all times have authorized and reserved a sufficient number of Common Shares to
provide for the exercise of the rights to purchase Common Shares as provided for herein.

 

SECTION
5. NO FRACTIONAL SHARES OR SCRIP

 

No
fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Agreement, but in lieu of
such fractional shares the Company shall make a cash payment therefor upon the basis of the Exercise Price then in effect.

 

SECTION
6. NO RIGHTS AS SHAREHOLDER

 

Without
limitation of any provision hereof, Warrantholder agrees that this Agreement does not entitle the Warrantholder to any voting
rights or other rights as a stockholder of the Company prior to the exercise of any of the purchase rights set forth in this Agreement.

 

SECTION
7. WARRANTHOLDER REGISTRY

 

The
Company shall maintain a registry showing the name and address of the registered holder of this Agreement. Warrantholder’s
initial address, for purposes of such registry, is set forth in Section 12(g). Warrantholder may change such address by
giving written notice of such changed address to the Company.

 

SECTION
8. ADJUSTMENT RIGHTS

 

The
Exercise Price and the number of Common Shares purchasable hereunder are subject to adjustment from time to time, as follows:

 

(a)
Merger Event. In connection with a Merger Event, this Warrant shall, on and after the closing thereof, automatically and
without further action on the part of any party or other person, represent the right to receive the consideration payable on or
in respect of all Common Shares that are issuable hereunder as of immediately prior to the closing of such Merger Event less the
Purchase Price for all such Common Shares (such consideration to include both the consideration payable at the closing of such
Merger Event and all deferred consideration payable thereafter, if any, including, but not limited to, payments of amounts deposited
at such closing into escrow and payments in the nature of earn-outs, milestone payments or other performance-based payments),
and such Merger Event consideration shall be paid to Warrantholder as and when it is paid to the holders of the outstanding Common
Shares.

 

(b)
Reclassification of Shares. Except for Merger Events subject to Section 8(a), if the Company at any time shall,
by combination, reclassification, exchange or subdivision of securities or otherwise, change any of the securities as to which
purchase rights under this Agreement exist into the same or a different number of securities of any other class or classes of
securities, this Agreement shall thereafter represent the right to acquire such number and kind of securities as would have been
issuable as the result of such change with respect to the securities which were subject to the purchase rights under this Agreement
immediately prior to such combination, reclassification, exchange, subdivision or other change. The provisions of this Section
8(b) shall similarly apply to successive combination, reclassification, exchange, subdivision or other change.

 

    	 

    	 

    

 

(c)
Subdivision or Combination of Shares. If the Company at any time shall combine or subdivide its Common Shares, (i) in the
case of a subdivision, the Exercise Price shall be proportionately decreased and the number of shares for which this Warrant is
exercisable shall be proportionately increased, or (ii) in the case of a combination, the Exercise Price shall be proportionately
increased and the number of shares for which this Warrant is exercisable shall be proportionately decreased.

 

(d)
Stock Dividends. If the Company at any time while this Agreement is outstanding and unexpired shall:

 

	 	(i)	pay
    a dividend with respect to the outstanding Common Shares payable in additional Common Shares, then the Exercise Price shall
    be adjusted, as of the record date applicable to such dividend, to that price determined by multiplying the Exercise Price
    in effect immediately prior to such date of determination by a fraction (A) the numerator of which shall be the total number
    of Common Shares outstanding immediately prior to such dividend or distribution, and (B) the denominator of which shall be
    the total number of Common Shares outstanding immediately after such dividend or distribution, and the number of Common Shares
    for which this Warrant is exercisable shall be proportionately increased; or
	 	 	 
	 	(ii)	make
    any other dividend or distribution on or with respect to Common Shares, except any dividend or distribution (A) in cash, or
    (B) specifically provided for in any other clause of this Section 8, then, in each such case, provision shall be made
    by the Company such that the Warrantholder shall receive upon exercise of this Warrant a proportionate share of any such distribution
    as though it were the holder of the Common Shares as of the record date fixed for the determination of the shareholders of
    the Company entitled to receive such distribution.

 

(e)
Notice of Certain Events. If: (i) the Company shall declare any dividend or distribution upon its outstanding Common Shares,
payable in shares, cash, property or other securities; (ii) the Company shall offer for subscription pro rata to the holders of
its Common Shares any additional shares of any class or other rights; (iii) there shall be any Merger Event; or (iv) there shall
be any voluntary dissolution, liquidation or winding up of the Company; then, in connection with each such event, the Company
shall give the Warrantholder notice thereof at the same time and in the same manner as it gives notice thereof to the holders
of outstanding Common Shares.

 

SECTION
9. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY

 

(a)
Reservation of Common Shares. The Company covenants and agrees that all Commnon Shares, if any, that may be issued upon
the exercise of this Warrant will, upon issuance, be validly issued and outstanding, fully paid and non-assessable. The Company
further covenants and agrees that the Company will, at all times during the term hereof, have authorized and reserved, free from
preemptive rights, a sufficient number of Common Shares to provide for the exercise of the rights represented by this Warrant.
If at any time during the term hereof the number of authorized but unissued Common Shares shall not be sufficient to permit exercise
of this Warrant in full, the Company will take such corporate action as may, in the opinion of its counsel, be necessary to increase
its authorized but unissued Common Shares to such number of shares as shall be sufficient for such purposes.

 

    	 

    	 

    

 

(b)
Due Authority. The execution and delivery by the Company of this Agreement and the performance of all obligations of the
Company hereunder, including the issuance to Warrantholder of the right to acquire the Common Shares, have been duly authorized
by all necessary corporate action on the part of the Company. This Agreement constitutes a legal, valid and binding agreement
of the Company, enforceable in accordance with its terms, except as may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws relating to or affecting creditors’ rights generally (including, without limitation, fraudulent
conveyance laws) and by general principles of equity, regardless of whether considered in a proceeding in equity or at law.

 

(c)
Consents and Approvals. No consent or approval of, giving of notice to, registration with, or taking of any other action
in respect of any state, federal or other governmental authority or agency is required with respect to the execution, delivery
and performance by the Company of its obligations under this Agreement, except for the filing of notices pursuant to Regulation
D under the Securities Act, any filing required by applicable state securities law, which filings will be effective by the time
required thereby and such consents, approvals, authorizations, orders and registrations or qualifications as may be required under
applicable state and provincial securities laws or by the by-laws and rules of the NASDAQ or the Toronto Stock Exchange in connection
with the issuance of the Common Shares.

 

SECTION
10. REPRESENTATIONS AND COVENANTS OF THE WARRANTHOLDER

 

This
Agreement has been entered into by the Company in reliance upon the following representations and covenants of the Warrantholder:

 

(a)
Investment Purpose. This Warrant and the shares issued on exercise hereof will be acquired for investment and not with
a view to the sale or distribution of any part thereof in violation of applicable federal and state securities laws, and the Warrantholder
has no present intention of selling or engaging in any public distribution of the same except pursuant to a registration or exemption.

 

(b)
Financial Risk. The Warrantholder has such knowledge and experience in financial and business matters as to be capable
of evaluating the merits and risks of its investment, and has the ability to bear the economic risks of its investment in the
Company.

 

(c)
No Short Sales. Warrantholder has not at any time on or prior to the Effective Date engaged in any short sales or equivalent
transactions in the Common Shares. Warrantholder agrees that at all times from and after the Effective Date and on or before the
expiration or earlier termination of this Agreement, it shall not engage in any short sales or equivalent transactions in the
Common Shares.

 

(d)
Canadian Securities Laws. The Warrantholder covenants and agrees that it (i) will not, during the period ending on the
date that is four (4) months and one (1) day after the Effective Date, sell or otherwise effect a trade of this Warrant or the
underlying Common Shares to any person known to be resident in any jurisdiction in Canada or any person known to be acquiring
such securities for the benefit of another person resident in any jurisdiction in Canada, and (ii) will not sell the Common Shares
through the facilities of the Toronto Stock Exchange, other than in a transaction made in compliance with the prospectus requirements
of applicable Canadian securities laws or pursuant to a transaction that is otherwise made in reliance on an available exemption
from the prospectus requirements of applicable Canadian securities laws.

 

    	 

    	 

    

 

SECTION
11. TRANSFERS

 

Subject
to Section 10(f) and compliance with applicable federal and state securities laws, this Agreement and all rights hereunder are
transferable, in whole or in part, without charge to the holder hereof (except for transfer taxes) upon surrender of this Agreement
properly endorsed, with the prior written consent of the Company. Each taker and holder of this Agreement, by taking or holding
the same, consents and agrees that this Agreement, when endorsed in blank, shall be deemed negotiable, and that the holder hereof,
when this Agreement shall have been so endorsed and its transfer recorded on the Company’s books, shall be treated by the
Company and all other persons dealing with this Agreement as the absolute owner hereof for any purpose and as the person entitled
to exercise the rights represented by this Agreement. Subject to the Company’s prior written consent, the transfer of this
Agreement shall be recorded on the books of the Company upon receipt by the Company of a notice of transfer in the form attached
hereto as Exhibit III (the “Transfer Notice”) and an opinion of counsel (which may be Company counsel) reasonably
satisfactory to the Company that such transfer does not require registration under the Securities Act or any applicable state
securities laws, at its principal offices and the payment to the Company of all transfer taxes and other governmental charges
imposed on such transfer.

 

SECTION
12. MISCELLANEOUS.

 

(a)
Successors and Assigns. This Agreement shall be binding upon any successors or assigns of the Company.

 

(b)
Remedies. In the event of any default hereunder, the non-defaulting party may proceed to protect and enforce its rights
either by suit in equity and/or by action at law, including but not limited to an action for damages as a result of any such default,
and/or an action for specific performance for any default where the non-defaulting party will not have an adequate remedy at law
and where damages will not be readily ascertainable.

 

(c)
No Impairment of Rights. The Company will not, by amendment of its Charter or through any other means, avoid or seek to
avoid the observance or performance of any of the terms of this Agreement, but will at all times in good faith assist in the carrying
out of all such terms and in the taking of all such actions as may be necessary or appropriate in order to protect the rights
of the Warrantholder against impairment.

 

(d)
Additional Documents. The Company agrees to supply such other documents as the Warrantholder may from time to time reasonably
request.

 

(e)
Severability. In the event any one or more of the provisions of this Agreement shall for any reason be held invalid, illegal
or unenforceable, the remaining provisions of this Agreement shall be unimpaired, and the invalid, illegal or unenforceable provision
shall be replaced by a mutually acceptable valid, legal and enforceable provision, which comes closest to the intention of the
parties underlying the invalid, illegal or unenforceable provision.

 

(f)
Notices. Except as otherwise provided herein, any notice, demand, request, consent, approval, declaration, service of process
or other communication that is required, contemplated, or permitted under this Agreement or with respect to the subject matter
hereof shall be in writing, and shall be deemed to have been validly served, given, delivered, and received upon the earlier of:
(a) personal delivery to the party to be notified, (b) when sent by confirmed telex, electronic transmission or facsimile if sent
during normal business hours of the recipient, if not, then on the next business day, (c) five days after having been sent by
registered or certified mail, return receipt requested, postage prepaid, or (d) one day after deposit with a nationally recognized
overnight courier, specifying next day delivery, with written verification of receipt, and shall be addressed to the party to
be notified as follows:

 

    	 

    	 

    

 

If
to Warrantholder:

 

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

 

If
to the Company:

 

VBI
Vaccines Inc.

222
Third Street, Suite 2241

Cambridge,
Massachusetts 02142

Attention:
Jeff Baxter

Facsimile:
[_______]

Email:
jbaxter@vbivaccines.com

 

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

 

Haynes
and Boone, LLP

30
Rockefeller Plaza

New
York, New York 10112

Attn:
Rick A. Werner, Esq.

E-mail:
rick.werner@haynesboone.com

 

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

 

(g)
Entire Agreement; Amendments. This Agreement constitutes the entire agreement and understanding of the parties hereto in
respect of the subject matter hereof, and supersedes and replaces in their entirety any prior proposals, term sheets, letters,
negotiations or other documents or agreements, whether written or oral, with respect to the subject matter hereof. None of the
terms of this Agreement may be amended except by an instrument executed by each of the parties hereto.

 

(h)
Headings. The various headings in this Agreement are inserted for convenience only and shall not affect the meaning or
interpretation of this Agreement or any provisions hereof.

 

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

 

    	 

    	 

    

 

(j)
No Waiver. No omission or delay by Warrantholder at any time to enforce any right or remedy reserved to it, or to require
performance of any of the terms, covenants or provisions hereof by Warrantholder at any time designated, shall be a waiver of
any such right or remedy to which Warrantholder is entitled, nor shall it in any way affect the right of Warrantholder to enforce
such provisions thereafter during the term of this Agreement.

 

(k)
Survival. All agreements, representations and warranties contained in this Agreement or in any document delivered pursuant
hereto shall be for the benefit of Warrantholder and shall survive the execution and delivery of this Agreement and the expiration
or other termination of this Agreement.

 

(l)
Governing Law. This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State
of New York, excluding conflict of laws principles that would cause the application of laws of any other jurisdiction.

 

(m)
Consent to Jurisdiction and Venue. All judicial proceedings arising in or under or related to this Agreement may be brought
in any state or federal court of competent jurisdiction located in the State of New York, Borough of Manhattan. By execution and
delivery of this Agreement, each party hereto generally and unconditionally: (a) consents to personal jurisdiction in the State
of New York, Borough of Manhattan; (b) waives any objection as to jurisdiction or venue in the State of New York, Borough of Manhattan;
(c) agrees not to assert any defense based on lack of jurisdiction or venue in the aforesaid courts; and (d) irrevocably agrees
to be bound by any judgment rendered thereby in connection with this Agreement. Service of process on any party hereto in any
action arising out of or relating to this Agreement shall be effective if given in accordance with the requirements for notice
set forth in Section 12(f), and shall be deemed effective and received as set forth in Section 12(f). Nothing herein
shall affect the right to serve process in any other manner permitted by law or shall limit the right of either party to bring
proceedings in the courts of any other jurisdiction.

 

(n)
Mutual Waiver of Jury Trial. Because disputes arising in connection with complex financial transactions are most quickly
and economically resolved by an experienced and expert person and the parties wish applicable state and federal laws to apply
(rather than arbitration rules), the parties desire that their disputes arising under or in connection with this Agreement be
resolved by a judge applying such applicable laws. EACH OF THE COMPANY AND WARRANTHOLDER SPECIFICALLY WAIVES ANY RIGHT IT MAY
HAVE TO TRIAL BY JURY OF ANY CAUSE OF ACTION, CLAIM, CROSS-CLAIM, COUNTERCLAIM, THIRD PARTY CLAIM OR ANY OTHER CLAIM (COLLECTIVELY,
“CLAIMS”) ASSERTED BY THE COMPANY AGAINST WARRANTHOLDER OR ITS ASSIGNEE OR BY WARRANTHOLDER OR ITS ASSIGNEE
AGAINST THE COMPANY RELATING TO THIS AGREEMENT. This waiver extends to all such Claims, including Claims that involve persons
or entities other the Company and Warrantholder; Claims that arise out of or are in any way connected to the relationship between
the Company and Warrantholder; and any Claims for damages, breach of contract, specific performance, or any equitable or legal
relief of any kind, arising out of this Agreement.

 

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

 

    	 

    	 

    

 

(p)
Lost, Stolen, Mutilated or Destroyed Warrant. If this Warrant is lost, stolen, mutilated or destroyed, the Company may,
on such terms as to indemnity or otherwise as it may reasonably impose (which shall, in the case of a mutilated Warrant, include
the surrender thereof), issue a new Warrant of like denomination and tenor as this Warrant so lost, stolen, mutilated or destroyed.
Any such new Warrant shall constitute an original contractual obligation of the Company, whether or not the allegedly lost, stolen,
mutilated or destroyed Warrant shall be at any time enforceable by anyone.

 

(q)
Legends. To the extent required by applicable laws, this Warrant and the Common Shares issuable hereunder (and the securities
issuable, directly or indirectly, upon conversion of such Common Shares, if any) may be imprinted with a restricted securities
legend in substantially the following form:

 

THIS
SECURITY MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER THE SECURITIES ACT
OF 1933, AS AMENDED AND ANY APPLICABLE STATE SECURITIES LAWS, OR PURSUANT TO RULE 144 OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.

 

[Remainder
of Page Intentionally Left Blank]

 

    	 

    	 

    

 

IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by its officers thereunto duly authorized as of
the Effective Date.

 

	COMPANY:	VBI VACCINES INC.
	 	 	 
	 	By:
    	             
	 	Name:
    	 
	 	Title:
    	 

 

	WARRANTHOLDER:	[●] 
	 	 	 
	 	By:	 
	 	Name:	 
	 	Title:	 

 

[Signature
Page to Warrant]

 

    	 

    	 

    

 

EXHIBIT
I

 

NOTICE
OF EXERCISE

 

To:
[  ]

 

	(1)	The
    undersigned Warrantholder hereby elects to purchase _______ Common Shares of VBI Vaccines Inc., pursuant to the terms of the
    Agreement dated the _____ day of _____ , 2017 (the “Agreement”) between VBI Vaccines Inc. and the Warrantholder,
    and tenders herewith payment of the full Purchase Price in cash, together with all applicable transfer taxes, if any. 
	 	 
	(2)	Please
    issue a certificate or certificates representing said Common Shares in the name of the undersigned or in such other name as
    is specified below.

 

	 	 
	 	(Name)
	 	 
	 	 
	 	(Address)

 

	WARRANTHOLDER: 
	[●]
     
	 	 	 
	 	By:
    	 
	 	Name:
    	 
	 	Title:
    	 

 

    	 

    	 

    

 

EXHIBIT
II

 

1.
ACKNOWLEDGMENT OF EXERCISE

 

The
undersigned [  ], hereby acknowledge receipt of the “Notice of Exercise” from [●], to purchase [  ] Common Shares
of VBI Vaccines Inc., pursuant to the terms of the Warrant, and further acknowledges that [  ] shares remain subject to purchase
under the terms of the Warrant.

 

	COMPANY:	VBI
    VACCINES INC.
	 	 	 
	 	By:
    	             
	 	Name:
    	 
	 	Title:
    	 

 

    	 

    	 

    

 

EXHIBIT
III

 

TRANSFER
NOTICE

 

(To
transfer or assign the foregoing Warrant execute this form and supply required information. Do not use this form to purchase shares.)

 

FOR
VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby transferred and assigned to

 

	(Please
    Print)	 
	 	 
	whose
    address is	 
	 	 
	 	Dated:
	 	 
	 	Holder’s
    Signature:
	 	 
	 	Holder’s
    Address:
	 	 
	Signature
    Guaranteed:	 

 

NOTE:
The signature to this Transfer Notice must correspond with the name as it appears on the face of the Agreement, without alteration
or enlargement or any change whatever. Officers of corporations and those acting in a fiduciary or other representative capacity
should file proper evidence of authority to assign the foregoing Agreement.

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