# Harrow (HROW) 10-Q SEC filing - Q3 FY2024
- Filed: Nov 14, 2024
- Fiscal quarter: Q3 FY2024
- Calendar quarter: Q3 2024
- Accession: 0001493152-24-045295
- OpenCapital page: https://www.opencapital.sh/filings/0001493152-24-045295
- Markdown URL: https://www.opencapital.sh/filings/0001493152-24-045295.md
- Official SEC filing index: https://www.sec.gov/Archives/edgar/data/1360214/0001493152-24-045295-index.htm
## Filing documents
- [10-Q (form10-q.htm)](https://www.sec.gov/Archives/edgar/data/1360214/000149315224045295/form10-q.htm)
- [EX-10.1 (ex10-1.htm)](https://www.sec.gov/Archives/edgar/data/1360214/000149315224045295/ex10-1.htm)
- [EX-31.1 (ex31-1.htm)](https://www.sec.gov/Archives/edgar/data/1360214/000149315224045295/ex31-1.htm)
- [EX-31.2 (ex31-2.htm)](https://www.sec.gov/Archives/edgar/data/1360214/000149315224045295/ex31-2.htm)
- [EX-32.1 (ex32-1.htm)](https://www.sec.gov/Archives/edgar/data/1360214/000149315224045295/ex32-1.htm)
---
## 10-Q
SEC source: [form10-q.htm](https://www.sec.gov/Archives/edgar/data/1360214/000149315224045295/form10-q.htm)
**UNITED
STATES**
**SECURITIES
AND EXCHANGE COMMISSION**
**Washington,
D.C. 20549**
**FORM10-Q**
**☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**
**For
the quarterly period ended September 30, 2024**
**or**
**☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**
**For
the transition period from ___________ to _____________**
**Commission
File Number: 001-35814**
**Harrow,
Inc.**
(Exact
name of registrant as specified in its charter)
| Delaware | 45-0567010 |
| --- | --- |
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
| 1A Burton Hills Blvd., Suite 200 Nashville, Tennessee | 37215 |
| (Address of principal executive offices) | (Zip code) |
**(615) 733-4730**
(Registrant’s
telephone number, including area code)
Securities
registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol(s) Name on exchange on which registered
Common Stock, $0.001 par value per share HROW The Nasdaq Stock Market LLC
8.625% Senior Notes due 2026 HROWL The Nasdaq Stock Market LLC
11.875% Senior Notes due 2027 HROWM The Nasdaq Stock Market LLC
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files). Yes ☒ No ☐
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,”
“smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐ Accelerated filer ☐
Non-accelerated filer ☒ Smaller reporting company ☒
Emerging growth company ☐
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate
by a check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As
of November 12, 2024, there were 35,614,718 shares of the registrant’s common stock, $0.001 par value, outstanding.
**HARROW,
INC.**
Table
of Contents
| | | **Page** |
| --- | --- | --- |
| Part I | [FINANCIAL INFORMATION](#b_001) | 3 |
| Item 1. | [Financial Statements (unaudited)](#b_002) | 3 |
| Item 2. | [Management’s Discussion and Analysis of Financial Condition and Results of Operations](#a_001) | 27 |
| Item 3. | [Quantitative and Qualitative Disclosures About Market Risk](#a_002) | 33 |
| Item 4. | [Controls and Procedures](#a_003) | 33 |
| Part II | [OTHER INFORMATION](#a_004) | 34 |
| Item 1. | [Legal Proceedings](#a_005) | 34 |
| Item 1A. | [Risk Factors](#a_006) | 34 |
| Item 2. | [Unregistered Sales of Equity Securities and Use of Proceeds](#a_007) | 36 |
| Item 3. | [Defaults Upon Senior Securities](#a_008) | 36 |
| Item 4. | [Mine Safety Disclosures](#a_009) | 36 |
| Item 5. | [Other Information](#a_010) | 36 |
| Item 6. | [Exhibits](#a_011) | 36 |
| | [Signatures](#a_012) | 37 |
2
**PART
I**
**FINANCIAL
INFORMATION**
**Item
1. Financial Statements (unaudited)**
**HARROW, INC.**
### CONDENSED CONSOLIDATED BALANCE SHEETS
| Line item | September 30, 2024 | December 31, 2023 |
| --- | --- | --- |
| | (Unaudited) | |
| ASSETS | | |
| Current assets | | |
| Cash and cash equivalents | $72,601,000 | $74,085,000 |
| Investment in Eton Pharmaceuticals | - | 8,681,000 |
| Accounts receivable, net | 53,734,000 | 36,261,000 |
| Inventories | 10,156,000 | 10,867,000 |
| Prepaid expenses and other current assets | 10,571,000 | 9,588,000 |
| Total current assets | 147,062,000 | 139,482,000 |
| Property, plant and equipment, net | 3,625,000 | 3,521,000 |
| Capitalized software costs, net | 1,869,000 | 2,138,000 |
| Operating lease right-of-use assets, net | 9,379,000 | 6,785,000 |
| Intangible assets, net | 189,272,000 | 159,906,000 |
| Goodwill | 332,000 | 332,000 |
| TOTAL ASSETS | $351,539,000 | $312,164,000 |
| LIABILITIES AND STOCKHOLDERS’ EQUITY | | |
| Current liabilities | | |
| Accounts payable and accrued expenses | $25,277,000 | $24,581,000 |
| Contingent consideration payable | 37,000,000 | - |
| Accrued rebates and copay assistance | 24,899,000 | 18,432,000 |
| Accrued payroll and related liabilities | 7,185,000 | 5,450,000 |
| Deferred revenue and customer deposits | 137,000 | 75,000 |
| Current portion of operating lease obligations | 507,000 | 806,000 |
| Total current liabilities | 95,005,000 | 49,344,000 |
| Operating lease obligations, net of current portion | 9,500,000 | 6,524,000 |
| Accrued expenses, net of current portion | 2,713,000 | 2,713,000 |
| Deferred tax liability | 643,000 | - |
| Notes payable, net of unamortized debt discounts | 186,057,000 | 183,172,000 |
| TOTAL LIABILITIES | 293,918,000 | 241,753,000 |
| Commitments and contingencies | - | |
| STOCKHOLDERS’ EQUITY | | |
| Common stock, $0.001 par value, 50,000,000 shares authorized, 35,611,365 and 35,168,260 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively | 35,000 | 35,000 |
| Additional paid-in capital | 216,103,000 | 204,635,000 |
| Accumulated deficit | (158,162,000) | (133,904,000) |
| TOTAL HARROW, INC. STOCKHOLDERS’ EQUITY | 57,976,000 | 70,766,000 |
| Noncontrolling interests | (355,000) | (355,000) |
| TOTAL STOCKHOLDERS’ EQUITY | 57,621,000 | 70,411,000 |
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $351,539,000 | $312,164,000 |
The
accompanying notes are an integral part of these condensed consolidated financial statements
3
**HARROW,
INC.**
**UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS**
| Line item | For the Three Months Ended / September 30, 2024 | For the Three Months Ended / September 30, 2023 | For the Nine Months Ended / September 30, 2024 | For the Nine Months Ended / September 30, 2023 |
| --- | --- | --- | --- | --- |
| Revenues: | | | | |
| Product sales, net | $49,019,000 | $31,809,000 | $132,398,000 | $81,804,000 |
| Other revenues | 238,000 | 2,456,000 | 385,000 | 12,034,000 |
| Total revenues | 49,257,000 | 34,265,000 | 132,783,000 | 93,838,000 |
| Cost of sales | (12,018,000) | (10,067,000) | (35,110,000) | (28,338,000) |
| Gross profit | 37,239,000 | 24,198,000 | 97,673,000 | 65,500,000 |
| Operating expenses: | | | | |
| Selling, general and administrative | 33,645,000 | 21,033,000 | 94,275,000 | 56,878,000 |
| Research and development | 2,273,000 | 1,421,000 | 7,475,000 | 3,316,000 |
| Total operating expenses | 35,918,000 | 22,454,000 | 101,750,000 | 60,194,000 |
| Income (loss) from operations | 1,321,000 | 1,744,000 | (4,077,000) | 5,306,000 |
| Other (expense) income: | | | | |
| Interest expense, net | (5,525,000) | (5,749,000) | (16,411,000) | (16,200,000) |
| Investment (loss) gain from Eton Pharmaceuticals | - | 1,348,000 | (3,171,000) | 2,676,000 |
| Loss on extinguishment of debt | - | - | - | (5,465,000) |
| Other income (expenses), net | 4,000 | (195,000) | 76,000 | (344,000) |
| Total other expense, net | (5,521,000) | (4,596,000) | (19,506,000) | (19,333,000) |
| Loss before income taxes | (4,200,000) | (2,852,000) | (23,583,000) | (14,027,000) |
| Provision for income taxes | (20,000) | (1,539,000) | (675,000) | (1,236,000) |
| Net loss | $(4,220,000) | $(4,391,000) | $(24,258,000) | $(15,263,000) |
| Basic and diluted net loss per share of common stock | $(0.12) | $(0.13) | $(0.68) | $(0.48) |
| Weighted average number of shares of common stock outstanding, basic and diluted | 35,702,200 | 34,255,197 | 35,597,409 | 31,689,947 |
The
accompanying notes are an integral part of these unaudited condensed consolidated financial statements
4
**HARROW,
INC.**
**UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY**
**For
the periods ended September 30, 2024 and 2023**
| Line item | Common Stock / Shares | Common Stock / Par / Value | Additional / Paid-in / Capital | Accumulated / Deficit | Total / Harrow, Inc. / Stockholders’ / Equity | Total / Noncontrolling / Interest / Equity | Total / Stockholders’ / Equity |
| --- | --- | --- | --- | --- | --- | --- | --- |
| Balance at December 31, 2022 | 29,901,530 | $30,000 | $137,058,000 | $(109,493,000) | $27,595,000 | $(355,000) | $27,240,000 |
| Issuance of common stock in connection with: | | | | | | | |
| Public offering, net of offering costs | 3,887,324 | 4,000 | 64,516,000 | - | 64,520,000 | - | 64,520,000 |
| Exercise of consultant stock-based options | 10,000 | - | 85,000 | - | 85,000 | - | 85,000 |
| Exercise of employee stock-based options | 219,246 | - | 270,000 | - | 270,000 | - | 270,000 |
| Vesting of RSUs and PSUs | 1,810,673 | 2,000 | (2,000) | - | - | - | - |
| Shares withheld related to net share settlement of equity awards | (711,152) | (1,000) | (12,970,000) | - | (12,971,000) | - | (12,971,000) |
| Stock-based compensation expense | - | - | 11,521,000 | - | 11,521,000 | - | 11,521,000 |
| Net loss | - | - | - | (15,263,000) | (15,263,000) | - | (15,263,000) |
| Balance at September 30, 2023 | 35,117,621 | $35,000 | $200,478,000 | $(124,756,000) | $75,757,000 | $(355,000) | $75,402,000 |
| Balance at December 31, 2023 | 35,168,260 | $35,000 | $204,635,000 | $(133,904,000) | $70,766,000 | $(355,000) | $70,411,000 |
| Issuance of common stock in connection with: | | | | | | | |
| Exercise of employee stock-based options | 248,175 | - | 1,005,000 | - | 1,005,000 | - | 1,005,000 |
| Vesting of RSUs | 332,517 | - | - | - | - | - | - |
| Shares withheld related to net share settlement of equity awards | (137,587) | - | (2,362,000) | - | (2,362,000) | - | (2,362,000) |
| Stock-based compensation expense | - | - | 12,825,000 | - | 12,825,000 | - | 12,825,000 |
| Net loss | - | - | - | (24,258,000) | (24,258,000) | - | (24,258,000) |
| Balance at September 30, 2024 | 35,611,365 | $35,000 | $216,103,000 | $(158,162,000) | $57,976,000 | $(355,000) | $57,621,000 |
| Line item | Common Stock / Shares | Common Stock / Par / Value | Additional / Paid-in / Capital | Accumulated / Deficit | Total / Harrow, Inc. / Stockholders’ / Equity | Total / Noncontrolling / Interest / Equity | Total / Stockholders’ / Equity |
| --- | --- | --- | --- | --- | --- | --- | --- |
| Balance at June 30, 2023 | 30,276,938 | $30,000 | $142,742,000 | $(120,365,000) | $22,407,000 | $(355,000) | $22,052,000 |
| Issuance of common stock in connection with: | | | | | | | |
| Public offering, net of offering costs | 3,887,324 | 4,000 | 64,516,000 | - | 64,520,000 | - | 64,520,000 |
| Exercise of employee stock-based options | 2,430 | - | 18,000 | - | 18,000 | - | 18,000 |
| Vesting of PSUs | 1,567,913 | 2,000 | (2,000) | - | - | - | - |
| Shares withheld related to net share settlement of equity awards | (616,984) | (1,000) | (11,272,000) | - | (11,273,000) | - | (11,273,000) |
| Stock-based compensation expense | - | - | 4,476,000 | - | 4,476,000 | - | 4,476,000 |
| Net loss | - | - | - | (4,391,000) | (4,391,000) | - | (4,391,000) |
| Balance at September 30, 2023 | 35,117,621 | $35,000 | $200,478,000 | $(124,756,000) | $75,757,000 | $(355,000) | $75,402,000 |
| Balance at June 30, 2024 | 35,479,492 | $35,000 | $212,439,000 | $(153,942,000) | $58,532,000 | $(355,000) | $58,177,000 |
| Balance | 35,479,492 | $35,000 | $212,439,000 | $(153,942,000) | $58,532,000 | $(355,000) | $58,177,000 |
| Issuance of common stock in connection with: | | | | | | | |
| Exercise of employee stock-based options | 160,980 | - | 484,000 | - | 484,000 | - | 484,000 |
| Shares withheld related to net share settlement of equity awards | (29,107) | - | (1,205,000) | - | (1,205,000) | - | (1,205,000) |
| Stock-based compensation expense | - | - | 4,385,000 | - | 4,385,000 | - | 4,385,000 |
| Net loss | - | - | - | (4,220,000) | (4,220,000) | - | (4,220,000) |
| Balance at September 30, 2024 | 35,611,365 | $35,000 | $216,103,000 | $(158,162,000) | $57,976,000 | $(355,000) | $57,621,000 |
| Balance | 35,611,365 | $35,000 | $216,103,000 | $(158,162,000) | $57,976,000 | $(355,000) | $57,621,000 |
The
accompanying notes are an integral part of these unaudited condensed consolidated financial statements
5
**HARROW,
INC.**
**UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS**
| Line item | For the Nine Months Ended / September 30, 2024 | For the Nine Months Ended / September 30, 2023 |
| --- | --- | --- |
| CASH FLOWS FROM OPERATING ACTIVITIES | | |
| Net loss | $(24,258,000) | $(15,263,000) |
| Adjustments to reconcile net loss to net cash used in operating activities: | | |
| Depreciation and amortization of property, plant and equipment and software development costs | 1,382,000 | 1,095,000 |
| Amortization of intangible assets | 7,708,000 | 7,634,000 |
| Amortization of operating lease right-of-use assets | 636,000 | 541,000 |
| (Recovery of) provision for credit losses | (20,000) | 68,000 |
| Amortization of debt issuance costs and debt discount | 2,985,000 | 2,568,000 |
| Investment loss (gain) from investment in Eton | 3,171,000 | (2,676,000) |
| Loss on extinguishment of debt | - | 5,465,000 |
| Loss on disposal of intangible assets | - | 22,000 |
| Stock-based compensation | 12,825,000 | 11,521,000 |
| Deferred income tax | 643,000 | - |
| Changes in assets and liabilities: | | |
| Accounts receivable | (17,453,000) | (12,287,000) |
| Inventories | 711,000 | (2,383,000) |
| Prepaid expenses and other current assets | (983,000) | (4,079,000) |
| Accounts payable, accrued expenses, accrued rebates and copay assistance | 6,433,000 | 1,584,000 |
| Accrued payroll and related liabilities | 1,735,000 | 1,294,000 |
| Deferred revenue and customer deposits | 62,000 | 40,000 |
| NET CASH USED IN OPERATING ACTIVITIES | (4,423,000) | (4,856,000) |
| CASH FLOWS FROM INVESTING ACTIVITIES | | |
| Net proceeds from sale of investment in Eton Pharmaceuticals | 5,510,000 | - |
| Investment in patent and trademark assets | (74,000) | - |
| Purchase of product NDAs and related patents | - | (151,084,000) |
| Purchases of property, plant and equipment | (1,040,000) | (1,266,000) |
| NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES | 4,396,000 | (152,350,000) |
| CASH FLOWS FROM FINANCING ACTIVITIES | | |
| Proceeds from 11.875% notes payable, net of costs | - | 4,961,000 |
| Proceeds from Oaktree Loan, net of costs | - | 73,552,000 |
| Payment of debt issuance costs | (100,000) | - |
| Payment of payroll taxes upon vesting of PSUs, RSUs and exercise of stock options | (2,362,000) | (12,971,000) |
| Proceeds from exercise of stock options | 1,005,000 | 355,000 |
| Proceeds from B. Riley senior secured note, net of costs | - | 55,879,000 |
| Repayment of B. Riley senior secured note | - | (59,750,000) |
| Proceeds from public offering of common stock, net of costs | - | 64,520,000 |
| NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES | (1,457,000) | 126,546,000 |
| NET CHANGE IN CASH AND CASH EQUIVALENTS | (1,484,000) | (30,660,000) |
| CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 74,085,000 | 96,270,000 |
| CASH AND CASH EQUIVALENTS AT END OF PERIOD | $72,601,000 | $65,610,000 |
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | | |
| Cash paid for income taxes | - | - |
| Cash paid for interest | $15,553,000 | $12,279,000 |
| SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING ACTIVITIES: | | |
| Reclassification of deferred financing costs | - | $1,950,000 |
| Accrual of exit fee related to Oaktree Loan | - | $2,713,000 |
| Insurance premium financed | - | $1,321,000 |
| Purchase of product NDAs associated with contingent consideration payable | $37,000,000 | - |
| Purchase of property, plant and equipment included in accounts payable and accrued expenses | $177,000 | $11,000 |
| Right-of-use assets obtained in exchange for new operating lease obligations | $3,230,000 | - |
The
accompanying notes are an integral part of these unaudited condensed consolidated financial statements
6
**HARROW,
INC.**
**NOTES
TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
**For
the Three and Nine Months Ended September 30, 2024 and 2023**
### **NOTE 1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION**
**Company
and Background**
Harrow, Inc. (together with its consolidated subsidiaries, unless the context indicates or otherwise requires, the “Company”
or “Harrow”) is a leading eyecare pharmaceutical company engaged in the discovery, development, and commercialization of
innovative ophthalmic pharmaceutical products for the U.S. market. Harrow helps U.S. eyecare professionals preserve the gift of sight
by making its comprehensive portfolio of prescription and non-prescription pharmaceutical products accessible and affordable to millions
of Americans each year. The Company owns commercial rights to one of the largest portfolios of branded ophthalmic pharmaceutical products
in the U.S, all of which are marketed under its Harrow name. The Company also owns and operates ImprimisRx, one of the nation’s
leading ophthalmology-focused pharmaceutical-compounding businesses.
**Basis
of Presentation**
The
Company has prepared the accompanying unaudited condensed consolidated financial statements in accordance with accounting principles
generally accepted in the United States of America (“GAAP”) for interim financial information and in accordance with the
rules and regulations of the U.S. Securities and Exchange Commission. Accordingly, they do not include all of the information and footnotes
required by GAAP for audited financial statements. In the opinion of management, all adjustments (consisting of only normal recurring
adjustments) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended September
30, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024 or for any other period.
For further information, refer to the Company’s audited consolidated financial statements and notes thereto included in the Company’s
Annual Report on Form 10-K for the year ended December 31, 2023.
The
accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned and majority
owned subsidiaries.
Harrow
consolidates entities in which it has a controlling financial interest. The Company assesses control under the variable interest entity
(“VIE”) model to determine whether the Company is the primary beneficiary of that entity. The Company consolidates (i) entities
in which it holds and/or controls, directly or indirectly, more than 50% of the voting rights, and (ii) VIEs for which the Company is
deemed to be the primary beneficiary. All intercompany accounts and transactions have been eliminated in consolidation.
### **NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**
The
following represents an update for the three and nine months ended September 30, 2024 to the significant accounting policies described
in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.
**Segments**
The
Company’s chief operating decision-maker is its Chief Executive Officer who makes resource allocation decisions and assesses performance
based on financial information presented as operating segments. During the period ended September 30, 2024, the Company identified two
operating segments as reportable segments. See Note 15 for more information regarding the Company’s reportable segments.
**Risks,
Uncertainties and Liquidity**
The
Company is subject to certain regulatory standards, approvals, guidelines and inspections which could impact the Company’s ability
to make, dispense, and sell certain products. If the Company was required to cease compounding and selling certain products as a result
of regulatory guidelines or inspections, this may have a material impact on the Company’s financial condition, liquidity and results
of operations.
7
**Credit
Losses**
The
Company estimates and records a provision for its expected credit losses related to its financial instruments, including its trade receivables.
Management considers historical collection rates, the current financial status of the Company’s customers, macroeconomic factors,
and other industry-specific factors when evaluating for current expected credit losses. Forward-looking information is also considered
in the evaluation of current expected credit losses. However, because of the short time to the expected receipt of accounts receivable,
management believes that the carrying value, net of expected losses, approximates fair value and therefore, relies more on historical
and current analysis of such financial instruments, including its trade receivables.
To
determine the provision for credit losses for accounts receivable, the Company has disaggregated its accounts receivable by class of
customer at the business component level, as management determined that risk profile of the Company’s customers is consistent based
on the type and industry in which they operate, mainly in the pharmaceuticals industry. Each business component is analyzed for estimated
credit losses individually. In doing so, the Company establishes a historical loss matrix, based on the previous collections of accounts
receivable by the age of such receivables, and evaluates the current and forecasted financial position of its customers, as available.
Further, the Company considers macroeconomic factors and the status of the pharmaceuticals industry to estimate if there are current
expected credit losses within its trade receivables based on the trends of the Company’s expectation of the future status of such
economic and industry-specific factors. Also, specific allowance amounts are established based on review of outstanding invoices to record
the appropriate provision for customers that have a higher probability of default.
The
accounts receivable balance on the Company’s condensed consolidated balance sheet as of September 30, 2024 was $53,734,000, net
of $281,000 of allowances. The following table provides a roll-forward of the allowance for credit losses that is deducted from the amortized
cost basis of accounts receivable to present the net amount expected to be collected at September 30, 2024:
SCHEDULE
OF ACCOUNTS RECEIVABLE ALLOWANCE OF CREDIT LOSS
| Balance at January 1, 2024 | 371,000 |
| --- | --- |
| Change in expected credit losses | (20,000) |
| Write-offs, net of recoveries | (70,000) |
| Balance at September 30, 2024 | $281,000 |
**Fair
Value Measurements**
Fair
value measurements are determined based on the assumptions that market participants would use in pricing an asset or liability. GAAP
establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of
unobservable inputs by requiring that the most observable inputs be used when available. The established fair value hierarchy prioritizes
the use of inputs used in valuation methodologies into the following three levels:
- Level 1: Applies to assets or liabilities for which there are quoted prices (unadjusted) for identical assets or liabilities in active markets. A quoted price in an active market provides the most reliable evidence of fair value and must be used to measure fair value whenever available.
- Level 2: Applies to assets or liabilities for which there are significant other observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
- Level 3: Applies to assets or liabilities for which there are significant unobservable inputs that reflect a reporting entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability. For example, Level 3 inputs would relate to forecasts of future earnings and cash flows used in a discounted future cash flows method.
At
December 31, 2023, the Company measured its investment in Eton Pharmaceuticals, Inc. (“Eton”) on a recurring basis. The Company’s
investment in Eton was classified as a Level 1 as the fair value was determined using quoted market prices in active markets for the
same securities. As of December 31, 2023, the fair market value of the Company’s investment in Eton was $8,681,000. In April 2024,
the Company sold all of its shares of common stock it held of Eton in a block trade at a gross price of $3.00 per share. After deducting
trading expenses and commissions of approximately $436,000, the Company received net proceeds of $5,510,000 and recorded a loss of $3,171,000 related to the sale of its investment in Eton.
8
The
Company’s 2026 Notes (as defined in Note 11) are carried at face value, including the unamortized premium, less unamortized debt
issuance costs, the 2027 Notes (as described in Note 11) are carried at face value less unamortized debt issuance costs, and the Oaktree
Loan (as defined in Note 11) is carried at face value less the original issue discount and unamortized debt issuance costs on the condensed
consolidated balance sheets and the Company presents fair value for disclosure purposes only. The 2026 Notes and 2027 Notes are classified
as Level 1 instruments as the fair value is determined using quoted market prices in active markets for the same securities. The Oaktree
Loan is classified as a Level 2 instrument and its fair value is determined through an income approach that considers collateral coverage,
yield calibration, yield analysis and any adjustments to implied yield associated with the Company’s fundamental measures.
The
following table presents the estimated fair values and the carrying values:
SCHEDULE
OF ESTIMATED FAIR VALUE
| Line item | September 30, 2024 / Carrying Value | September 30, 2024 / Fair Value | December 31, 2023 / Carrying Value | December 31, 2023 / Fair Value |
| --- | --- | --- | --- | --- |
| 2026 Notes | $73,804,000 | $76,830,000 | $73,218,000 | $70,260,000 |
| 2027 Notes | $37,950,000 | $43,084,000 | $37,413,000 | $40,363,000 |
| Oaktree Loan | $74,303,000 | $78,663,000 | $72,541,000 | $76,627,000 |
The
Company’s other financial instruments include cash and cash equivalents, accounts receivable, accounts payable and accrued expenses,
accrued payroll and related liabilities, contingent consideration payable, deferred revenue and customer deposits and operating lease
liabilities. The carrying amount of these financial instruments, except for operating lease liabilities, approximates fair value due
to the short-term maturities of these instruments. Based on borrowing rates currently available to the Company, the carrying value of
the operating lease liabilities approximate their respective fair values.
**Basic
and Diluted Net Loss per Common Share**
Basic
net loss per common share is computed by dividing net loss attributable to common stockholders for the period by the weighted average
number of common shares outstanding during the period. Diluted net loss per share is computed by dividing the net loss attributable to
common stockholders for the period by the weighted average number of common and common equivalent shares, such as stock options, restricted
stock units (“RSUs”), and market-based vesting performance stock units (“PSUs”), outstanding during the period.
Common equivalent shares (using the treasury stock method) from stock options, unvested RSUs, and unvested PSUs were 4,411,488 and 4,588,982 at September 30, 2024 and 2023, respectively, and are excluded in the calculation of diluted net loss per common share for the periods
presented because the effect is anti-dilutive. Included in the basic and diluted net loss per share calculation were RSUs awarded to
directors that had vested, but the issuance and delivery of the shares are deferred until the director ceases providing services. The
number of shares underlying vested RSUs at September 30, 2024 and 2023 was 195,696 and 244,352, respectively.
The
following table shows the computation of basic and diluted net loss per share of common stock:
SCHEDULE
OF BASIC NET LOSS PER SHARE OF COMMON STOCK
| Line item | For the Three Months Ended September 30, 2024 | For the Three Months Ended September 30, 2023 | For the Nine Months Ended September 30, 2024 | For the Nine Months Ended September 30, 2023 |
| --- | --- | --- | --- | --- |
| Numerator – net loss | $(4,220,000) | $(4,391,000) | $(24,258,000) | $(15,263,000) |
| Denominator – weighted average number of shares outstanding, basic and diluted | 35,702,200 | 34,255,197 | 35,597,409 | 31,689,947 |
| Net loss per share, basic and diluted | $(0.12) | $(0.13) | $(0.68) | $(0.48) |
**Income
Taxes**
The
Company’s effective tax rate was (2.95)% and (8.81)% for the nine months ended September 30, 2024 and 2023, respectively. The Company’s
effective tax rate for the nine months ended September 30, 2024 and 2023 differs from the U.S. federal statutory tax rate of 21% due
to state taxes, permanent book-tax differences related to Internal Revenue Code of 1986, as amended, Section 162(m) excess officer compensation
limitation, share-based compensation and the change in valuation allowance. In the current period ended September 30, 2024, the Company met the exception to using the estimated annual effective
tax rate. The current period income tax expense reflects year-to-date income tax expense. The prior year third quarter income tax expense
was recorded using the estimated annual effective tax rate.
9
As
of September 30, 2024 and December 31, 2023, there were no unrecognized tax benefits included in the condensed consolidated balance sheets
that would, if recognized, affect the effective tax rate.
**Investment
in Melt Pharmaceuticals, Inc. – Related Party**
The
Company owns 3,500,000 shares of common stock and 2,334,256 shares of preferred stock of Melt (representing in aggregate approximately46% of Melt’s equity interests as of September 30, 2024). The Company analyzes its investment in Melt and related agreements on
a regular basis to evaluate its position of variable interests in Melt. The Company has determined that it does not have the ability
to control Melt, however it has the ability to exercise significant influence over the operating and financial decisions of Melt. Therefore,
the Company uses the equity method of accounting for the Melt investment. Under this method, the Company recognizes earnings and losses
in Melt in its consolidated financial statements and adjusts the carrying amount of its investment in Melt accordingly. Any intra-entity
profits and losses are eliminated.
On
a quarterly basis, management assesses whether there are any indicators that the carrying value of the Company’s equity method
investments may be other than temporarily impaired. Indicators include financial condition, operating performance, and near-term prospects
of the investee. To the extent indicators suggest that a loss in value may have occurred, the Company will evaluate both quantitative
and qualitative factors to determine if the loss in value is other than temporary. If a potential loss in value is determined to be other
than temporary, the Company will recognize an impairment loss based on the estimated fair value of the equity method investments. The
Company has no investments other than its common stock and preferred stock positions in Melt and no other requirements to advance funds
to Melt.
The
following table summarizes the Company’s investments in Melt as of September 30, 2024:
SCHEDULE OF INVESTMENT
| Line item | Cost / Basis | Share of Equity Method / Losses | Net Carrying / Value |
| --- | --- | --- | --- |
| Common stock | $5,810,000 | $(5,810,000) | - |
| Preferred stock | 18,397,000 | (18,397,000) | - |
| | $24,207,000 | $(24,207,000) | - |
See
Note 4 for more information and related party disclosure regarding Melt.
**Accounting
Guidance Issued but Not Adopted at September 30, 2024**
In
October 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-06, *Disclosure Improvements—Codification Amendments
in Response to the SEC’s Disclosure Update and Simplification Initiative*. This ASU modifies the disclosure or presentation
requirements of a variety of topics in the codification by aligning them with the SEC’s regulations. The amendments to the various
topics should be applied prospectively, and the effective date for the Company for each amendment will be determined based on the effective
date of the SEC’s removal of the related disclosure from Regulation S-X or Regulation S-K. If the SEC has not removed the applicable
requirement by June 30, 2027, then the related amendment in ASU 2023-06 will be removed from the codification and will not become effective.
Early adoption of this ASU is prohibited. The Company does not expect the amendments in this ASU to have a material impact on the disclosures
or presentation on its consolidated financial statements.
In
November 2023, FASB issued ASU 2023-07, *Segment Reporting (Topic 280) - Improvements to Reportable Segment Disclosures*, which
enhances the disclosures required for operating segments in the Company’s annual and interim consolidated financial statements.
ASU 2023-07 is effective for the Company in our annual reporting for fiscal 2024 and for interim period reporting beginning in fiscal
2025 on a retrospective basis, with all required disclosures to be made for all prior periods presented in the consolidated financial
statements. Early adoption is permitted. The Company is currently evaluating the impact of ASU 2023-07 on its consolidated financial
statements.
In
December 2023, FASB issued ASU 2023-09, *Income Taxes (Topic 740) - Improvements to Income Tax Disclosures*, which enhances
the disclosures required for income taxes in the Company’s annual consolidated financial statements. Notably, this ASU requires
entities to disclose specific categories in the effective tax rate reconciliation and provide additional information for reconciling
items that meet a quantitative threshold. ASU 2023-09 is effective for the Company in its annual reporting for fiscal year 2025 on a
prospective basis. Early adoption and retrospective reporting are permitted. The Company is currently evaluating the impact of ASU 2023-09
on its consolidated financial statements.
10
In
November 2024, the FASB issued ASU 2024-03, *Income Statement – Reporting Comprehensive Income – Expense Disaggregation
Disclosures,* to improve the disclosures by a public business entity about the types of expenses in commonly presented expense captions.
This ASU is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December
15, 2027, with early adoption permitted. The Company is currently evaluating the impact of ASU 2024-03 on its consolidated financial
statements.
### **NOTE 3. REVENUES**
The
Company accounts for contracts with customers in accordance with ASC 606, *Revenue from Contracts with Customers*. The Company has
three primary streams of revenue: (1) product revenues, including revenue recognized from sales of products through its pharmacy and
outsourcing facility and sales of branded products to wholesalers through a third-party logistics (“3PL”) partner, (2) revenue
recognized from transfer of acquired product sales and profits, and (3) revenue recognized from intellectual property licenses and related
arrangements.
*Product
Revenues*
The
Company sells prescription medications directly through its pharmacy, outsourcing facility and 3PL partner. Revenue from the Company’s
pharmacy services include: (i) the portion of the price the client pays directly to the Company, net of any volume-related or other discounts
paid back to the client, (ii) the price paid to the Company by individuals, and (iii) customer copayments made directly to the pharmacy
network. Sales taxes are not included in revenue. Following the core principles of ASC 606, the Company has identified the following:
| 1. | Identify the contract(s) with a customer: A contract is deemed to exist when the customer places an order through receipt of a prescription, via an online order or via receipt of a purchase order from a customer. For branded products, orders are received through the Company’s 3PL partner, and the customer takes title of the products via formal purchase orders placed and fulfilled. |
| --- | --- |
| 2. | Identify the performance obligations in the contract: Obligations for fulfillment of the Company’s contracts consist of delivering the product to customers at their specified destination. For shipping and handling activities under ASC 606, if the customer takes control of the goods after shipment, shipping and handling activities would always be considered a fulfillment activity and not treated as a separate performance obligation. If the customer takes control of the goods before shipment, entities must make an accounting policy election to treat shipping and handling activities as either a fulfillment cost or as a separate performance obligation. The Company has elected to treat its shipping and handling activities as a fulfillment cost. |
| 3. | Determine the transaction price: The transaction price is based on an amount that reflects the consideration to which the Company expects to be entitled, net of accruals for estimated rebates, wholesaler chargebacks, discounts, copay assistance and other deductions (collectively, sales deductions) and an estimate for returns and replacements established at the time of sale. The Company utilizes the services of a third-party professional services firm to estimate rebates and chargebacks associated with sales of its branded products. The transfer of promised goods is satisfied within a year, and therefore there are no significant financing components. There is no non-cash consideration related to product sales. |
| 4. | Allocate the transaction price to the performance obligations in the contract: Because there is only one performance obligation for product sales, no allocation is necessary. |
| 5. | Recognize revenue when (or as) the entity satisfies a performance obligation: Revenue from products is recognized upon transfer of control of a product to a customer. This generally occurs upon shipment unless contractual terms with a customer state that transfer of control occurs at delivery. |
*Revenues
From Transfer of Acquired Product Sales and Profits*
The
Company has entered into agreements whereby it purchased the exclusive commercial rights to assets associated with certain ophthalmic
products from other pharmaceutical companies (the “Sellers”). During a temporary, transition period, the Sellers continue
to manufacture and market these products and transfer the net profit from the sale of the products to the Company. The revenue recognized
by the Company from the transfer of net profit was recognized at the time profit from the product sales were calculated by the Sellers
and confirmed by the Company, typically on a monthly basis, at which point there is no future performance obligation required by the
Company and no consequential continuing involvement on the Company’s part to recognize the associated revenue. On a quarterly basis,
the Sellers invoice the Company for all credits and reimbursements (“Chargebacks”) made to customers related to the products.
The Company uses historical actual experience to estimate Chargebacks associated with the net sales and profit transferred. The estimated
Chargebacks are recorded as a reduction in revenues from transfer of acquired product sales and profits in the Company’s consolidated
statements of operations, and recorded as a reduction to accounts receivable in the consolidated balance sheets, at the time the revenue
is recognized.
11
*Intellectual
Property License and Related Arrangements Revenues*
As
of September 30, 2024, the Company held five intellectual property licenses and related arrangements pursuant to which the Company has
agreed to license or sell to a customer the right to access the Company’s intellectual property. License arrangements may consist
of non-refundable upfront license fees, data transfer fees, research reimbursement payments, exclusive license rights to patented or
patent pending compounds, technology access fees, and various performance or sales milestones. These arrangements can be multiple-element
arrangements, the revenue of which is recognized at the point in time that the performance obligation is met.
Non-refundable
fees that are not contingent on any future performance by the Company and require no consequential continuing involvement on the part
of the Company are recognized as revenue when the license term commences and the licensed data, technology, compounded drug preparation
and/or other deliverables are delivered. Such deliverables may include physical quantities of compounded drug preparations, design of
the compounded drug preparations and structure-activity relationships, the conceptual framework and mechanism of action, and rights to
the patents or patent applications for such compounded drug preparations. The Company defers recognition of non-refundable fees if it
has continuing performance obligations without which the technology, right, product or service conveyed in conjunction with the non-refundable
fee has no utility to the licensee and that are separate and independent of the Company’s performance under the other elements
of the arrangement. In addition, if the Company’s continued involvement is required, through research and development services
that are related to its proprietary know-how and expertise of the delivered technology or can only be performed by the Company, then
such non-refundable fees are deferred and recognized over the period of continuing involvement. Guaranteed minimum annual royalties are
recognized on a straight-line basis over the applicable term.
Revenue
disaggregated by revenue source consisted of the following:
SCHEDULE OF DISAGGREGATED REVENUE
| Line item | For the Three Months Ended / September 30, 2024 | For the Three Months Ended / September 30, 2023 | For the Nine Months Ended / September 30, 2024 | For the Nine Months Ended / September 30, 2023 |
| --- | --- | --- | --- | --- |
| Product sales, net | $49,019,000 | $31,809,000 | $132,398,000 | $81,804,000 |
| Other revenues | 238,000 | 2,456,000 | 385,000 | 12,034,000 |
| Total revenues | $49,257,000 | $34,265,000 | $132,783,000 | $93,838,000 |
Deferred
revenue and customer deposits at September 30, 2024 and December 31, 2023 were $137,000 and $75,000, respectively. All deferred revenue
and customer deposit amounts at December 31, 2023 were recognized as revenue during the nine months ended September 30, 2024.
### **NOTE 4. INVESTMENT IN, AND NOTE RECEIVABLE FROM MELT PHARMACEUTICALS, INC. - RELATED PARTY TRANSACTIONS**
In
December 2018, the Company entered into an Asset Purchase Agreement with Melt (the “Melt APA”). Pursuant to the terms of
the Melt APA, Melt was assigned certain intellectual property and related rights from the Company to develop, formulate, make, sell,
and sub-license certain Company conscious sedation and analgesia related formulations (collectively, the “Melt Products”).
Under the terms of the Melt APA, Melt is required to make mid-single digit royalty payments to the Company on net sales of the Melt Products
while any patent rights remain outstanding, as well as other conditions.
In
February 2019, the Company entered into a Management Services Agreement (the “Melt MSA”), whereby the Company provided
to Melt certain administrative services and support, including bookkeeping, web services and human resources related activities, and
Melt was required to pay the Company a monthly amount of $10,000.
The Melt MSA was terminated effective July 1, 2023. During the three and nine months ended September 30, 2024, the Company did not
record any reimbursable expenses and amounts payable by Melt pursuant to the Melt MSA. During the three and nine months ended
September 30, 2023, the Company recorded $0 and $89,000 due from Melt for reimbursable expenses and amounts payable by Melt pursuant to the Melt MSA, which amounts are included in prepaid
expenses and other current assets in the accompanying condensed consolidated balance sheets. As
of both September 30, 2024 and December 31, 2023, the Company was due $228,000 from Melt for reimbursable expenses and amounts payable under the Melt MSA.
12
In
March 2024, Melt completed its Series B Preferred Stock financing which raised gross proceeds of approximately $23,900,000.
The
Company’s Chief Executive Officer, Mark L. Baum, is a member of the Melt board of directors. The Melt board of directors consists
of five members, including Mr. Baum. Mr. Baum is the only representative of the Company on Melt’s board of directors.
The
unaudited condensed results of operations information of Melt is summarized below:
SCHEDULE
OF CONDENSED INCOME STATEMENT
| Revenues, net | For the Nine Months Ended September 30, 2024 / - | For the Nine Months Ended September 30, 2023 / - |
| --- | --- | --- |
| Loss from operations | $(11,334,000) | $(3,663,000) |
| Net loss | $(10,942,000) | $(5,407,000) |
The
unaudited condensed balance sheet information of Melt is summarized below:
SCHEDULE
OF CONDENSED BALANCE SHEET
| Line item | At September 30, 2024 | At December 31, 2023 |
| --- | --- | --- |
| Current assets | $7,366,000 | $13,404,000 |
| Total assets | $7,366,000 | $13,404,000 |
| Total liabilities | $5,242,000 | $3,922,000 |
| Total stockholders’ equity | 2,124,000 | 9,482,000 |
| Total liabilities and stockholders’ equity | $7,366,000 | $13,404,000 |
### **NOTE 5. INVENTORIES**
Inventories
are comprised of finished compounded formulations, over-the-counter and prescription retail pharmacy products, branded pharmaceutical
products, including those held at the Company’s 3PL partner, related laboratory supplies and active pharmaceutical ingredients. The composition of inventories was as follows:
SCHEDULE
OF INVENTORIES
| Line item | At September 30, 2024 | At December 31, 2023 |
| --- | --- | --- |
| Raw materials | $5,306,000 | $5,477,000 |
| Work in progress | 176,000 | 54,000 |
| Finished goods | 4,674,000 | 5,336,000 |
| Total inventories | $10,156,000 | $10,867,000 |
### **NOTE 6. PREPAID EXPENSES AND OTHER CURRENT ASSETS**
Prepaid
expenses and other current assets consisted of the following:
SCHEDULE
OF PREPAID EXPENSES AND OTHER CURRENT ASSETS
| Line item | At September 30, 2024 | At December 31, 2023 |
| --- | --- | --- |
| Prepaid insurance | $1,639,000 | $1,241,000 |
| Prepaid computer software licenses and related expenses | 619,000 | 1,613,000 |
| Prefunded co-pay assistance | 4,514,000 | - |
| Other prepaid expenses | 1,749,000 | 906,000 |
| Receivable due from Melt | 228,000 | 228,000 |
| Prepaid FY 2024 Prescription Drug User (“PDUFA”) fees | - | 3,438,000 |
| Deferred Oaktree Loan commitment fee | 372,000 | 409,000 |
| Deposits and other current assets | 1,450,000 | 1,753,000 |
| Total prepaid expenses and other current assets | $10,571,000 | $9,588,000 |
13
### **NOTE 7. PROPERTY, PLANT AND EQUIPMENT**
Property,
plant and equipment consisted of the following:
SCHEDULE
OF PROPERTY, PLANT AND EQUIPMENT
| Line item | At September 30, 2024 | At December 31, 2023 |
| --- | --- | --- |
| Property, plant and equipment: | | |
| Computer hardware | $1,477,000 | $1,322,000 |
| Furniture and equipment | 965,000 | 936,000 |
| Lab and pharmacy equipment | 5,304,000 | 4,564,000 |
| Leasehold improvements | 6,899,000 | 6,771,000 |
| Property, plant and equipment, gross | 14,645,000 | 13,593,000 |
| Accumulated depreciation | (11,020,000) | (10,072,000) |
| Property, plant and equipment, net | $3,625,000 | $3,521,000 |
For
the three and nine months ended September 30, 2024, depreciation related to property, plant and equipment was $351,000 and $948,000,
respectively, compared to $290,000 and $743,000 during the same periods in 2023, respectively.
### **NOTE 8. CAPITALIZED SOFTWARE COSTS**
Capitalized
software costs consisted of the following:
SCHEDULE OF CAPITALIZED SOFTWARE COSTS
| Line item | At September 30, 2024 | At December 31, 2023 |
| --- | --- | --- |
| Capitalized software costs: | | |
| Capitalized internal-use software development costs | $3,366,000 | $2,780,000 |
| Acquired third-party software license for internal-use | 205,000 | 159,000 |
| Total gross capitalized software for internal-use | 3,571,000 | 2,939,000 |
| Accumulated amortization | (1,702,000) | (1,268,000) |
| Capitalized internal-use software in process | - | 467,000 |
| Total capitalized software costs net | $1,869,000 | $2,138,000 |
The
Company recorded amortization expense of $146,000 and $434,000 related to capitalized software costs during the three and nine months
ended September 30, 2024, respectively, and $115,000 and $352,000 during the same periods in 2023, respectively.
### **NOTE 9. INTANGIBLE ASSETS AND GOODWILL**
The
Company’s intangible assets at September 30, 2024 consisted of the following:
SCHEDULE OF INTANGIBLE ASSETS
| Line item | Amortization Periods (in years) | Cost | Accumulated Amortization | Net Carrying Value |
| --- | --- | --- | --- | --- |
| Patents | 7-19 | $610,000 | $(207,000) | $403,000 |
| Licenses | 7-20 | 50,000 | (36,000) | 14,000 |
| Trademarks | Indefinite | 226,000 | - | 226,000 |
| Acquired NDAs | 4-15 | 207,398,000 | (18,899,000) | 188,499,000 |
| Customer relationships | 3-15 | 596,000 | (539,000) | 57,000 |
| Trade name | 5 | 75,000 | (7,000) | 68,000 |
| Non-competition clause | 3-4 | 50,000 | (50,000) | - |
| State pharmacy licenses | 25 | 8,000 | (3,000) | 5,000 |
| | | $209,013,000 | $(19,741,000) | $189,272,000 |
14
Amortization
expense for intangible assets was as follows:
SCHEDULE OF AMORTIZATION EXPENSES FOR INTANGIBLE ASSETS
| Line item | For the Three Months Ended / September 30, 2024 | For the Three Months Ended / September 30, 2023 | For the Nine Months Ended / September 30, 2024 | For the Nine Months Ended / September 30, 2023 |
| --- | --- | --- | --- | --- |
| Patents | $19,000 | $22,000 | $47,000 | $65,000 |
| Licenses | 34,000 | 2,000 | 34,000 | 7,000 |
| Acquired NDAs | 2,547,000 | 2,551,000 | 7,606,000 | 7,526,000 |
| Customer relationships | 3,000 | 9,000 | 19,000 | 36,000 |
| Trade name | 1,000 | - | 1,000 | - |
| State pharmacy licenses | 1,000 | - | 1,000 | - |
| Amortization expense of intangible assets | $2,605,000 | $2,584,000 | $7,708,000 | $7,634,000 |
Estimated
future amortization expenses for the Company’s intangible assets at September 30, 2024 was as follows:
SCHEDULE
OF ESTIMATED FUTURE AMORTIZATION EXPENSE
| | |
| --- | --- |
| Remainder of 2024 | $4,025,000 |
| 2025 | 16,630,000 |
| 2026 | 16,630,000 |
| 2027 | 16,281,000 |
| 2028 | 15,933,000 |
| Thereafter | 119,547,000 |
| Intangible assets | $189,046,000 |
In
connection with an asset purchase agreement between Novartis and the Company, the Company is required to make a milestone payment
following the release of the first commercially available batch of TRIESENCE . During the three months ended September 30, 2024, the
Company determined that it was probable the first commercial batch would be released and, as such, recognized the $37,000,000 milestone payment as an increase in the amount of intangible assets for Acquired NDAs.
There
were no changes to the carrying value of the Company’s goodwill during the three and nine months ended September 30, 2024 and 2023.
### **NOTE 10. ACCOUNTS PAYABLE AND ACCRUED EXPENSES**
Accounts
payable and accrued expenses consisted of the following:
SCHEDULE OF ACCOUNTS PAYABLE AND ACCRUED EXPENSES
| Line item | At September 30, 2024 | At December 31, 2023 |
| --- | --- | --- |
| Accounts payable | $23,202,000 | $21,424,000 |
| Accrued insurance premium | 21,000 | 873,000 |
| Other accrued payments | 106,000 | 306,000 |
| Accrued interest (see Note 11) | 1,948,000 | 1,978,000 |
| Accrued exit fee for Oaktree Loan (see Note 11) | 2,713,000 | 2,713,000 |
| Total accounts payable and accrued expenses | $27,990,000 | $27,294,000 |
| Less: current portion | (25,277,000) | (24,581,000) |
| Non-current total accrued expenses | $2,713,000 | $2,713,000 |
15
### **NOTE 11. DEBT**
*Oaktree
Loan Due 2026*
In
March 2023, the Company entered into a Credit Agreement and Guaranty, (the “Oaktree Loan”) with Oaktree Fund Administration,
LLC, as administrative agent for the lenders (“Oaktree”), providing for a senior secured term loan facility to
the Company with a principal amount of up to $100,000,000. Upon entering into the Oaktree Loan, the Company drew a principal amount of
$65,000,000. In July 2023, the Company drew an additional principal amount of $12,500,000 and entered into the First Amendment to the
Oaktree Loan (the “First Amendment”). Under the First Amendment, the overall credit facility size was increased from
$100,000,000 to $112,500,000. The additional principal loan amount of up to $35,000,000 available under the Oaktree Loan (“Tranche
B”) was to be made available to the Company upon the commercialization of TRIESENCE. Since Tranche B was not drawn by the Company on or
before March 27, 2024, the amount available under Tranche B decreased to $30,000,000. While undrawn, the Company is required to pay a
commitment fee related to the Tranche B amount equal to 2% per annum, payable quarterly. This fee is recorded within prepaid expenses
and other current assets and is being amortized on a straight-line basis over the access period.
Interest
expense related to the Oaktree Loan totaled $3,026,000 and $8,923,000 for the three and nine months ended September 30, 2024, respectively,
and included the amortization of debt issuance costs and discount of $656,000 and $1,861,000, respectively. Interest expense related
to the Oaktree Loan totaled $2,995,000 and $5,660,000 for the three and nine months ended
September 30, 2023, respectively, and included the amortization of debt issuance costs and discount of $567,000 and $1,093,000, respectively.
The
Oaktree Loan carries an exit fee equal to 3.5% of the aggregate principal amount owed, payable at maturity. As of September 30, 2024
and December 31, 2023, the Company had recorded in accrued expenses the total exit fee liability of $2,713,000 and $2,713,000, respectively.
*HROWM
– 11.875% Senior Notes Due 2027*
In
December 2022 and January 2023, the Company closed offerings of $40,250,000 aggregate principal amount of 11.875% senior notes due December
2027 (the “2027 Notes”). Interest expense related to the 2027 Notes totaled $1,376,000 and $4,121,000 for the three and nine months ended September 30, 2024, respectively, and included amortization of debt issuance costs
and debt discount of $181,000 and $537,000, respectively. Interest expense related to the 2027 Notes totaled $1,375,000 and $4,141,000 for the three and nine months ended September 30, 2023, respectively, and included amortization of debt issuance costs and debt discount
of $180,000 and $556,000, respectively.
*HROWL
– 8.625% Senior Notes Due 2026*
In
April and September 2021, the Company closed offerings (including an over-allotment exercise in May 2021) of $75,000,000 aggregate principal amount of 8.625%
senior notes due April
2026 (the “2026 Notes”). Interest
expense related to the 2026 Notes totaled $1,814,000 and $5,438,000 for the three and nine
months ended September 30, 2024, respectively, and included amortization of debt issuance costs and debt discount of $197,000 and $587,000,
respectively. Interest expense related to the 2026 Notes totaled $1,814,000 and $5,436,000 for the three and nine
months ended September 30, 2023, respectively, and included amortization of debt issuance costs and debt discount of $197,000 and $585,000,
respectively.
A
summary of the Company’s debt is described as follows:
SCHEDULE OF LONG TERM DEBT
| Line item | At September 30, 2024 | At December 31, 2023 |
| --- | --- | --- |
| 8.625% Senior Notes due April 2026 | $75,000,000 | $75,000,000 |
| 11.875% Senior Notes due December 2027 | 40,250,000 | 40,250,000 |
| Oaktree Loan due January 2026 | 77,500,000 | 77,500,000 |
| Notes payable gross | 192,750,000 | 192,750,000 |
| Less: Unamortized debt issuance costs, net of premium | (6,693,000) | (9,578,000) |
| Notes payable net | $186,057,000 | $183,172,000 |
For
the three and nine months ended September 30, 2024, the total effective interest rate of the Company’s debt was 11.03% and 11.17%,
respectively, and 10.78% and 10.91% for the same periods in 2023, respectively.
16
At
September 30, 2024, future minimum payments under the Company’s debt were as follows:
SCHEDULE OF FUTURE MINIMUM PAYMENT UNDER NOTES PAYABLES
| Line item | Amount |
| --- | --- |
| Remainder of 2024 | $5,166,000 |
| 2025 | 20,560,000 |
| 2026 | 159,895,000 |
| 2027 | 45,030,000 |
| Total minimum payments | 230,651,000 |
| Less: amount representing interest payments | (37,901,000) |
| Notes payable, gross principal amount due | 192,750,000 |
| Less: unamortized debt issuance costs, net of premium | (6,693,000) |
| Notes payable, net of unamortized debt issuance costs | $186,057,000 |
### **NOTE 12. LEASES**
The
Company leases office and laboratory space under non-cancellable operating leases listed below. These lease agreements have remaining
terms between one to seven years and contain various clauses for renewal at the Company’s option.
- An operating lease for 5,789 square feet of office space in Carlsbad, California, which commenced in January 2022 and will expire in March 2025.
- An operating lease for 38,153 square feet of lab, warehouse and office space in Ledgewood, New Jersey that expires in July 2027, with an option to extend the term for two additional five-year periods. This includes an amendment, which was made effective July 2020, that extended the term of the original lease and added 1,400 of additional square footage to the lease, another amendment entered into in May 2021 that extended the term of the lease to July 2027 and added 8,900 square feet of space, and another amendment entered into in January 2024 that added 2,861 square feet of space.
- An operating lease for 5,500 square feet of office space in Nashville, Tennessee, which commenced in January 2020 and will expire in December 2024, with an option to extend the term for two additional five-year periods. The Company does not intend to exercise its option to extend the term of this lease.
- An operating lease for 11,552 square feet of lab and office space in Nashville, Tennessee, which commenced in September 2022 and will expire in September 2027.
- In March 2024, the Company entered into an operating lease for 17,625 square feet of office space in Nashville, Tennessee that commenced in August 2024 and has a seven-year term with an option to extend the term for two additional five-year periods. This office space serves as the Company’s new corporate headquarters. Commensurate with the commencement date of the lease, the Company recognized an operating right of use asset and liability of $2,853,000.
At
September 30, 2024, the weighted average incremental borrowing rate and the weighted average remaining lease term for the operating leases
held by the Company were 7.85% and 10.4years, respectively.
During
the three and nine months ended September 30, 2024, cash paid for amounts included for the operating lease liabilities was $327,000 and
$972,000, respectively, and $310,000 and $921,000 for the same periods in 2023, respectively. During the three and nine months ended
September 30, 2024, the Company recorded operating lease expense of $414,000 and $1,053,000, respectively, and $309,000 and $926,000 for the same periods in 2023, respectively, which is included in selling, general and administrative expenses.
Future
lease payments under operating leases as of September 30, 2024 were as follows**:**
SCHEDULE
OF FUTURE LEASE PAYMENTS UNDER OPERATING LEASES
| Line item | Operating Leases |
| --- | --- |
| Remainder of 2024 | $329,000 |
| 2025 | 1,386,000 |
| 2026 | 1,767,000 |
| 2027 | 1,641,000 |
| 2028 | 1,342,000 |
| Thereafter | 7,971,000 |
| Total minimum lease payments | 14,436,000 |
| Less: amount representing interest payments | (4,429,000) |
| Total operating lease obligations | 10,007,000 |
| Less: current portion, operating lease obligations | (507,000) |
| Operating lease obligations, net of current portion | $9,500,000 |
17
### **NOTE 13. STOCKHOLDERS’ EQUITY AND STOCK-BASED COMPENSATION**
**Common
Stock**
During
the nine months ended September 30, 2024, the Company issued 141,628 shares of common stock and received proceeds of $1,005,000 upon the
exercise of options to purchase 141,628 shares of common stock with exercise prices ranging from $1.70 to $25.86 per share.
During
the nine months ended September 30, 2024, the Company issued 32,580 shares of common stock upon the cashless exercise of options to purchase 39,237 shares with exercise prices ranging from $1.70 to $8.00 per share.
During the nine months ended September 30, 2024, the Company issued 44,860 shares of common stock upon the cashless exercise of options to purchase 90,000 shares at an exercise price of $7.37. The Company withheld29,107 shares of common stock for payroll tax withholdings totaling $1,205,000.
During
the nine months ended September 30, 2024, 45,000 RSUs granted in February 2021 to Andrew R. Boll, the Company’s Chief Financial
Officer, vested, and 26,520 shares of the Company’s common stock were issued to Mr. Boll, net of 18,480 shares of common stock
withheld for payroll tax withholdings totaling $197,000.
During
the nine months ended September 30, 2024, 150,000 RSUs granted in February 2021 to Mark L. Baum, the Company’s Chief Executive
Officer, vested, and 90,164 shares of the Company’s common stock were issued to Mr. Baum, net of 59,836 shares of common stock
withheld for payroll tax withholdings totaling $638,000.
During
the nine months ended September 30, 2024, 30,000 RSUs granted in February 2021 to John Saharek, the Company’s Chief Commercial
Officer, vested, and 17,384 shares of the Company’s common stock were issued to Mr. Saharek, net of 12,616 shares of common stock
withheld for payroll tax withholdings totaling $135,000.
During
the nine months ended September 30, 2024, 50,000 RSUs granted in February 2021 to various other employees, vested, and 32,452 shares
of the Company’s common stock were issued, net of 17,548 shares of common stock withheld for payroll tax withholdings totaling
$187,000.
During
the nine months ended September 30, 2024, the Company issued 57,517 shares of its common stock underlying RSUs held by directors that
ceased providing services to the Company. The RSUs had previously vested, including 3,872 RSUs that vested during the nine months ended
September 30, 2024, but the issuance and delivery of the shares were deferred until the director ceased providing services to the Company.
During
the nine months ended September 30, 2024, 34,008 shares of the Company’s common stock underlying RSUs issued to directors vested,
but the issuance and delivery of these shares are deferred until the applicable directors cease providing services to the Company.
During the nine months ended September 30, 2024, 3,667 shares of the Company’s
common stock underlying RSUs issued to consultants vested, but the issuance and delivery of these shares has not occurred.
**Stock
Option Plan**
On
September 17, 2007, the Company’s Board of Directors and stockholders adopted the Company’s 2007 Incentive Stock and Awards
Plan, which was subsequently amended on November 5, 2008, February 26, 2012, July 18, 2012, May 2, 2013 and September 27, 2013 (as amended,
the “2007 Plan”). The 2007 Plan reached its term in September 2017, and we can no longer issue additional awards under this
plan, however, options previously issued under the 2007 Plan will remain outstanding until they are exercised, reach their maturity or
are otherwise cancelled/forfeited. On June 13, 2017, the Company’s Board of Directors and stockholders adopted the Company’s
2017 Incentive Stock and Awards Plan which was subsequently amended on June 3, 2021 (as amended, the “2017 Plan” together
with the 2007 Plan, the “Plans”). As of September 30, 2024, the 2017 Plan provides for the issuance of a maximum of 6,000,000 shares of the Company’s common stock. The purpose of the Plans are to attract and retain directors, officers, consultants, advisors
and employees whose services are considered valuable, to encourage a sense of proprietorship and to stimulate an active interest of such
persons in the Company’s development and financial success. Under the Plans, the Company is authorized to issue incentive stock
options intended to qualify under Section 422 of the Internal Revenue Code of 1986, as amended, non-qualified stock options, RSUs and
restricted stock. The Plans are administered by the Compensation Committee of the Company’s Board of Directors. The Company had53,344 shares available for future issuances under the 2017 Plan at September 30, 2024.
18
*Stock
Options*
A
summary of stock option activity under the Plans for the nine months ended September 30, 2024 is as follows:
SCHEDULE OF STOCK OPTION PLAN ACTIVITY
| Line item | Number of Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life | Aggregate Intrinsic Value |
| --- | --- | --- | --- | --- |
| Options outstanding – January 1, 2024 | 2,711,317 | $6.25 | | |
| Options granted | 140,000 | $14.72 | | |
| Options exercised | (270,865) | $7.12 | | |
| Options cancelled/forfeited | (100,063) | $13.56 | | |
| Options outstanding – September 30, 2024 | 2,480,389 | $6.33 | 3.44 | $95,807,000 |
| Options exercisable | 2,218,148 | $5.50 | 2.80 | $87,536,000 |
| Options vested and expected to vest | 2,444,924 | $6.21 | 3.36 | $94,733,000 |
The
aggregate intrinsic value in the table above represents the total pre-tax amount of the proceeds, net of exercise price, which would
have been received by option holders if all option holders had exercised and immediately sold all shares underlying options with an exercise
price lower than the market price on September 30, 2024, based on the closing price of the Company’s common stock of $44.96 on
that date.
During
the nine months ended September 30, 2024, the Company granted stock options to certain employees. The stock options were granted with
an exercise price equal to the current market price of the Company’s common stock, as reported by the securities exchange on which
the common stock was then listed, at the grant date and have contractual terms of ten years. Vesting terms for options granted to employees
during the nine months ended September 30, 2024 included the following vesting schedule: 25% of the shares subject to the option vest
and become exercisable on the first anniversary of the grant date and the remaining 75% of the shares subject to the option vest and
become exercisable quarterly in equal installments thereafter over three years. Certain option awards provide for accelerated vesting
if there is a change in control (as defined in the Plans) and in the event of certain modifications to the option award agreement.
The
fair value of each option award is estimated on the date of grant using the Black-Scholes-Merton option pricing model. The expected term
of options granted to employees and directors was determined in accordance with the “simplified approach,” as the Company
has limited, relevant, historical data on employee exercises and post-vesting employment termination behavior. The expected risk-free
interest rate is based on the U.S. Treasury yield for a period consistent with the expected term of the option in effect at the time
of the grant. The financial statement effect of forfeitures is estimated at the time of grant and revised, if necessary, if the actual
effect differs from those estimates. For option grants to employees and directors, the Company assigns a forfeiture factor of 10%. These
factors could change in the future, which would affect the determination of stock-based compensation expense in future periods.
The
table below illustrates the fair value per share determined using the Black-Scholes-Merton option pricing model with the following assumptions
used for valuing options granted to employees:
SCHEDULE OF FAIR VALUE ASSUMPTIONS
| Line item | 2024 |
| --- | --- |
| Weighted-average fair value of options granted | $9.64 |
| Expected terms (in years) | 6.11 |
| Expected volatility | 67.78 - 72.95% |
| Risk-free interest rate | 3.72 - 4.48% |
| Dividend yield | - |
The
following table summarizes information about stock options outstanding and exercisable at September 30, 2024:
SCHEDULE OF STOCK OPTION OUTSTANDING AND EXERCISABLE
| Range of Exercise Prices | Options Outstanding / Number Outstanding | Options Outstanding / Weighted Average Remaining Contractual Life in Years | Options Outstanding / Weighted Average Exercise Price | Options Exercisable / Number Exercisable | Options Exercisable / Weighted Average Exercise Price |
| --- | --- | --- | --- | --- | --- |
| $1.47 - $1.70 | 31,942 | $2.96 | 1.68 | $31,942 | 1.68 |
| $1.73 | 250,000 | $3.25 | 1.73 | $250,000 | 1.73 |
| $2.23 | 270,000 | $2.34 | 2.23 | $270,000 | 2.23 |
| $2.40 - $2.60 | 14,068 | $2.33 | 2.57 | $14,068 | 2.57 |
| $3.95 | 308,500 | $1.50 | 3.95 | $308,500 | 3.95 |
| $4.49 - $5.72 | 92,300 | $4.86 | 5.53 | $92,300 | 5.53 |
| $6.30 | 285,000 | $4.39 | 6.30 | $285,000 | 6.30 |
| $6.75 - $7.26 | 46,036 | $7.76 | 6.85 | $18,162 | 6.77 |
| $7.30 | 274,500 | $5.26 | 7.30 | $274,500 | 7.30 |
| $7.60 - $39.63 | 908,043 | $3.31 | 9.63 | $673,676 | 8.04 |
| $1.47 - $39.63 | 2,480,389 | $3.44 | 6.33 | $2,218,148 | 5.50 |
19
As
of September 30, 2024, there was approximately $2,071,000 of total unrecognized compensation expense related to unvested stock options
granted under the Plans which is expected to be recognized over the weighted-average remaining vesting period of 2.83 years. The stock-based
compensation for all stock options was $160,000 and $416,000 during the three and nine months ended September 30, 2024, respectively,
and $154,000 and $617,000 during the same periods in 2023, respectively.
The
intrinsic value of options exercised during the nine months ended September 30, 2024 was $6,651,000.
*Restricted
Stock Units*
RSU
awards are granted subject to certain vesting requirements and other restrictions, including time-based and performance-based vesting
criteria. The grant date fair value of the RSUs, which has been determined based upon the market value of the Company’s common
stock on the grant date, is expensed over the vesting period of the RSUs.
A
summary of the Company’s RSU activity and related information for the nine months ended September 30, 2024 is as follows:
SCHEDULE OF RESTRICTED STOCK UNITS ACTIVITY
| Line item | Number of Shares | Weighted Average Grant Date Fair Value |
| --- | --- | --- |
| RSUs unvested - January 1, 2024 | 363,029 | $9.23 |
| RSUs granted | 319,081 | 23.93 |
| RSUs vested | (312,674) | 9.84 |
| RSUs cancelled/forfeited | (6,250) | 8.10 |
| RSUs unvested - September 30, 2024 | 363,186 | $21.63 |
As
of September 30, 2024, the total unrecognized compensation expense related to unvested RSUs was approximately $7,324,000, which is expected
to be recognized over a weighted-average period of 2 years, based on estimated and actual vesting schedules of the applicable RSUs.
The stock-based compensation for RSUs during the three and nine months ended September 30, 2024 was $587,000 and $1,494,000, respectively,
and was $374,000 and $789,000 during the same periods in 2023, respectively.
*Performance
Stock Units (Market-Based Vesting)*
A
summary of the Company’s PSU activity and related information for the nine months ended September 30, 2024 is as follows:
SCHEDULE OF PERFORMANCE STOCK UNITS ACTIVITY
| Line item | Number of Shares | Weighted Average Grant Date Fair Value |
| --- | --- | --- |
| PSUs unvested – January 1, 2024 | 1,567,913 | $18.56 |
| PSUs granted | - | |
| PSUs vested | - | |
| PSUs cancelled/forfeited | - | |
| PSUs unvested – September 30, 2024 | 1,567,913 | $18.56 |
20
As
of September 30, 2024, the total unrecognized compensation expense related to unvested PSUs was approximately $7,277,000, which is expected
to be recognized over a weighted-average period of 0.51 years, based on estimated and actual vesting schedules of the applicable PSUs.
The stock-based compensation for PSUs during the three and nine months ended September 30, 2024 was $3,638,000 and $10,915,000, respectively,
and $3,948,000 and $10,115,000 during the same periods in 2023, respectively.
**Stock-Based
Compensation Summary**
The
Company recorded stock-based compensation related to equity instruments granted to employees, directors and consultants as follows:
SCHEDULE OF STOCK BASED COMPENSATION GRANTED TO EMPLOYEES, DIRECTORS AND CONSULTANTS
| Line item | For the Three Months Ended September 30, 2024 | For the Three Months Ended September 30, 2023 | For the Nine Months Ended September 30, 2024 | For the Nine Months Ended September 30, 2023 |
| --- | --- | --- | --- | --- |
| Employees - selling, general and administrative | $3,728,000 | $3,784,000 | $10,832,000 | $9,719,000 |
| Employees - research and development | 422,000 | 475,000 | 1,300,000 | 1,224,000 |
| Directors - selling, general and administrative | 199,000 | 200,000 | 601,000 | 528,000 |
| Consultants - selling, general and administrative | 36,000 | 17,000 | 92,000 | 50,000 |
| Total | $4,385,000 | $4,476,000 | $12,825,000 | $11,521,000 |
### **NOTE 14. COMMITMENTS AND CONTINGENCIES**
**Legal**
*General
and Other*
In
the ordinary course of business, the Company is involved in various legal proceedings, government investigations and other matters that
are complex in nature and have outcomes that are difficult to predict. The Company describes legal proceedings and other matters that
are/were significant or that it believes could become significant in this note.
The
Company records accruals for loss contingencies to the extent that it concludes it is probable that a liability has been incurred and
the amount of the related loss can be reasonably estimated. The Company evaluates, on a quarterly basis, developments in legal proceedings
and other matters that could cause an increase or decrease in the amount of a liability that has been accrued previously.
The
Company’s legal proceedings involve various aspects of its business and a variety of claims, some of which present novel factual
allegations and/or unique legal theories. Typically, a number of the matters pending against the Company are at early stages of the legal
process, which in complex proceedings of the sort the Company faces often extend for several years. While it is not possible to accurately
predict or determine the eventual outcomes of matters that have not concluded, an adverse determination in one or more of the matters
(whether discussed in this note or not) currently pending may have a material adverse effect on the Company’s condensed consolidated
results of operations, financial position or cash flows.
*Ocular
Science, Inc. et. al*
In
July 2021, ImprimisRx, LLC, a subsidiary of the Company, filed a lawsuit against Ocular Science, Inc. and OSRX, Inc. (together,
“OSRX”) in the U.S. District Court for the Southern District of California, asserting claims for copyright infringement,
trademark infringement, unfair competition and false advertising (Lanham Act). Since July 2021, the complaint has been amended and
OSRX added counterclaims alleging ImprimisRx, LLC is violating the Lanham Act with false advertising. The Court granted cross
motions for summary judgement on each party’s Lanham Act claims thus leaving only ImprimisRx, LLC’s copyright
infringement, trademark infringement and unfair competition claims for trial. ImprimisRx, LLC is seeking damages from OSRX. The
trial associated with this matter began during the month of November 2024 and is ongoing as of the date of this Quarterly
Report.
21
**Product
and Professional Liability**
Product
and professional liability litigation represents an inherent risk to all firms in the pharmaceutical and pharmacy industry. We utilize
traditional third-party insurance policies with regard to our product and professional liability claims. Such insurance coverage at any
given time reflects current market conditions, including cost and availability, when the policy is written.
**Indemnities**
In
addition to the indemnification provisions contained in the Company’s charter documents, the Company generally enters into separate
indemnification agreements with each of the Company’s directors and officers. These agreements require the Company, among other
things, to indemnify the director or officer against specified expenses and liabilities, such as attorneys’ fees, judgments, fines
and settlements, paid by the individual in connection with any action, suit or proceeding arising out of the individual’s status
or service as the Company’s director or officer, other than liabilities arising from willful misconduct or conduct that is knowingly
fraudulent or deliberately dishonest, and to advance expenses incurred by the individual in connection with any proceeding against the
individual with respect to which the individual may be entitled to indemnification by the Company. Several of the Company’s asset
purchase and license agreements contain customary representations, warranties, covenants and confidentiality provisions, and also contain
mutual indemnification obligations related primarily to performance under the respective agreements. The Company also indemnifies its
lessors in connection with its facility leases for certain claims arising from the use of the facilities. These indemnities do not provide
for any limitation of the maximum potential future payments the Company could be obligated to make. Historically, the Company has not
incurred any payments for these obligations and, therefore, no liabilities have been recorded for these indemnities in the accompanying
condensed consolidated balance sheets.
**Asset
Purchase, License and Related Agreements**
*FDA
Approved Product Acquisitions*
In
recent years, the Company has acquired commercial and product rights to various FDA approved ophthalmic medications and products through
asset purchase, licenses, supply and/or other related agreements. In general, in exchange for product and commercial rights these agreements
provide the counterparties with certain upfront and contingent milestone payments typically related to certain annual sales amounts and
manufacturing events, and in certain cases, per unit transfer prices and royalties on sales of some of the products. During the three
and nine months ended September 30, 2024, $730,000 and $2,040,000,
respectively, were incurred under these agreements as royalty expenses, and $220,000 and $705,000,
respectively, during the same periods in 2023. During the three and nine months ended September 30, 2024, $0was incurred under these agreements related to
upfront and milestone payments under these agreements. During the three and nine months ended September 30, 2023, the Company amended
the Sintetica Agreement to allow for early payment of previously accrued amounts for commercial related milestones associated with sales
of IHEEZO in exchange for a $550,000 reduction in the milestone amounts due, and as a result of this amendment, the Company reduced
the intangible asset value associated with IHEEZO by $550,000 and paid the remaining commercial milestone amount of $4,450,000.
As of September 30, 2024, the remaining contingent consideration payable pursuant to these agreements were not considered probable
and reasonably estimable and therefore, no amount was accrued related to these contingent obligations during the three and nine months
ended September 30, 2024. At the time contingent consideration payable becomes probable and reasonably estimable the additional consideration,
if any, paid will be allocated to the assets based on their initial estimated fair values as a percent of the total purchase price.
*Formulation
Acquisitions*
The
Company has acquired and sourced intellectual property rights related to certain proprietary innovations from certain inventors, innovator
companies and related parties (the “Inventors”) through multiple asset purchase agreements and license agreements. In general,
these agreements provide that the Inventors will cooperate with the Company in obtaining patent protection for the acquired intellectual
property and that the Company will use commercially reasonable efforts to research, develop and commercialize a product based on the
acquired intellectual property. In addition, the Company has acquired a right of first refusal on additional intellectual property and
drug development opportunities presented by these Inventors.
In
consideration for the acquisition of these intellectual property rights, the Company is obligated to make payments to the Inventors based
on the completion of a milestone, generally consisting of: (1) a payment payable within 30 to 45 days after the issuance of the
first patent in the United States arising from the acquired intellectual property (if any); (2) a payment payable within 30 days after
the Company files the first investigational new drug application (“IND”) with the U.S. Food and Drug Administration (“FDA”)
for the first product arising from the acquired intellectual property (if any); (3) for certain of the Inventors, a payment payable within
30 days after the Company files the first new drug application with the FDA for the first product arising from the acquired intellectual
property (if any); and (4) certain royalty payments based on the net receipts received by the Company in connection with the sale or
licensing of any product based on the acquired intellectual property (if any), after deducting (among other things) the Company’s
development costs associated with such product. If, following five years after the date of the applicable asset purchase agreement, the
Company either (a) for certain of the Inventors, has not filed an IND or, for the remaining Inventors, has not initiated a study where
data is derived, or (b) has failed to generate royalty payments to the Inventors for any product based on the acquired intellectual property,
the Inventors may terminate the applicable asset purchase agreement and request that the Company re-assign the acquired technology to
the Inventors. During the three and nine months ended September 30, 2024, $453,000 and $949,000, respectively, were incurred under these
agreements as royalty expenses and $300,000 and $951,000, respectively, during the same periods in 2023.
22
**Sales
and Marketing Agreements**
The
Company has entered various sales and marketing agreements with certain organizations to provide exclusive and non-exclusive sales and
marketing representation services to Harrow in select geographies in the U.S. in connection with the Company’s ophthalmic pharmaceutical
compounded formulations or related products.
Under
the terms of the sales and marketing agreements, the Company was generally required to make commission payments equal to 10% to 14% of
net sales for products above and beyond the initial existing sales amounts. In addition, the Company was required to make periodic milestone
payments to certain organizations in shares of the Company’s restricted common stock if net sales in the assigned territory reach
certain future levels by the end of their terms. Commission expenses of $0 and $130,000 were incurred under these agreements for commission
expenses during the three and nine months ended September 30, 2023, respectively.
**Contract
Manufacturing**
The
Company has entered into manufacturing agreements with respect to third-party contract manufacturers for its FDA approved pharmaceutical
products. Some of these contract manufacturing agreements require minimum annual order amounts. The Company has committed to pay approximately
$2,728,000 related to contract manufacturing agreements for the year ending December 31, 2024.
### **NOTE 15. SEGMENTS AND CONCENTRATIONS**
Prior
to the three months ended September 30, 2024, the Company operated its business on the basis of a single reportable segment due to the
lack of discrete, precise financial information available to the chief operating decision maker (“CODM”). The CODM does not
review segment assets when assessing segment performance and deciding how to allocate resources. During the three months ended September
30, 2024, refinements were made to the financial reporting information and the Company began reporting on two reportable segments which
were generally determined based on the decision-making structure of the Company and the grouping of similar products and services: Branded
and ImprimisRx.
- The ***Branded*** segment includes activities of our FDA approved ophthalmology pharmaceutical products, including the out-licensing of rights to certain of our branded products.
- The ***ImprimisRx*** segment represents activities in our ophthalmology-focused pharmaceutical compounding business.
Segment
contribution for the segments represents net revenues less cost of sales, certain general and administrative expenses, selling and marketing
expenses, and research and development expenses. The Company does not evaluate the following items at the segment level:
- Selling, general and administrative expenses that result from shared infrastructure, including certain expenses associated with legal matters, public company costs (e.g. investor relations), board of directors and principal executive officers and other like shared expenses.
- Operating expenses within selling, general and administrative expenses that result from the impact of corporate initiatives. Corporate initiatives primarily include integration, restructuring, acquisition and other shared costs.
- Other select revenues and operating expenses including research and development expenses, amortization, and asset sales and impairments, net as not all such information has been accounted for at the segment level, or such information has not been used by all segments.
23
Segment
net revenues, segment operating expenses and segment contribution information consisted of the following:
SCHEDULE
OF SEGMENT NET REVENUES
_Three Months Ended September 30, 2024_
| Line item | Branded | Imprimis Rx | Consolidated |
| --- | --- | --- | --- |
| Product sales, net | $28,314,000 | $20,705,000 | $49,019,000 |
| Other revenues | 238,000 | - | 238,000 |
| Total revenues | 28,552,000 | 20,705,000 | 49,257,000 |
| Cost of sales | (5,169,000) | (6,849,000) | (12,018,000) |
| Gross profit | 23,383,000 | 13,856,000 | 37,239,000 |
| Operating expenses: | | | |
| Selling, general and administrative | 14,038,000 | 5,427,000 | 19,465,000 |
| Research and development | 212,000 | 84,000 | 296,000 |
| Segment contribution | $9,133,000 | $8,345,000 | 17,478,000 |
| Corporate | | | 14,180,000 |
| Research and development | | | 1,977,000 |
| Income from operations | | | $1,321,000 |
_Three Months Ended September 30, 2023_
| Line item | Branded | Imprimis Rx | Consolidated |
| --- | --- | --- | --- |
| Product sales, net | $12,040,000 | $19,769,000 | $31,809,000 |
| Other revenues | 2,456,000 | - | 2,456,000 |
| Total revenues | 14,496,000 | 19,769,000 | 34,265,000 |
| Cost of sales | (3,335,000) | (6,732,000) | (10,067,000) |
| Gross profit | 11,161,000 | 13,037,000 | 24,198,000 |
| Operating expenses: | | | |
| Selling, general and administrative | 1,930,000 | 7,703,000 | 9,633,000 |
| Research and development | 37,000 | 159,000 | 196,000 |
| Segment contribution | $9,194,000 | $5,175,000 | 14,369,000 |
| Corporate | | | 11,400,000 |
| Research and development | | | 1,225,000 |
| Income from operations | | | $1,744,000 |
_Nine Months Ended September 30, 2024_
| Line item | Branded | Imprimis Rx | Consolidated |
| --- | --- | --- | --- |
| Product sales, net | $69,395,000 | $63,003,000 | $132,398,000 |
| Other revenues | 385,000 | - | 385,000 |
| Total revenues | 69,780,000 | 63,003,000 | 132,783,000 |
| Cost of sales | (14,406,000) | (20,704,000) | (35,110,000) |
| Gross profit | 55,374,000 | 42,299,000 | 97,673,000 |
| Operating expenses: | | | |
| Selling, general and administrative | 36,034,000 | 17,364,000 | 53,398,000 |
| Research and development | 321,000 | 261,000 | 582,000 |
| Segment contribution | $19,019,000 | $24,674,000 | 43,693,000 |
| Corporate | | | 40,877,000 |
| Research and development | | | 6,893,000 |
| Loss from operations | | | $(4,077,000) |
24
_Nine Months Ended September 30, 2023_
| Line item | Branded | Imprimis Rx | Consolidated |
| --- | --- | --- | --- |
| Product sales, net | $21,829,000 | $59,975,000 | $81,804,000 |
| Other revenues | 12,034,000 | - | 12,034,000 |
| Total revenues | 33,863,000 | 59,975,000 | 93,838,000 |
| Cost of sales | (8,396,000) | (19,942,000) | (28,338,000) |
| Gross profit | 25,467,000 | 40,033,000 | 65,500,000 |
| Operating expenses: | | | |
| Selling, general and administrative | 4,797,000 | 23,334,000 | 28,131,000 |
| Research and development | 37,000 | 560,000 | 597,000 |
| Segment contribution | $20,633,000 | $16,139,000 | 36,772,000 |
| Corporate | | | 28,747,000 |
| Research and development | | | 2,719,000 |
| Income from operations | | | $5,306,000 |
All
revenue is attributable to the United States. All long-lived assets at September 30, 2024 and December 31, 2023 were located in the United
States.
Revenues
by segment are further described as follows:
SCHEDULE
OF REVENUES BY SEGMENT
| Line item | For the Three Months Ended / September 30, | For the Three Months Ended / September 30, | For the Nine Months Ended / September 30, | For the Nine Months Ended / September 30, |
| --- | --- | --- | --- | --- |
| IHEEZO | $26% | $17% | $20% | $11% |
| VEVYE | 11% | - | 9% | - |
| Other products (Anterior Segment) | 21% | 19% | 23% | 14% |
| Other revenue, net | 0% | 6% | 0% | 11% |
| Branded revenue, net | 58% | 42% | 53% | 36% |
| ImprimisRx revenue, net | 42% | 58% | 47% | 64% |
| Total revenues, net | $100% | $100% | $100% | $100% |
Other
than IHEEZO, VEVYE, and one ImprimisRx product, no other products accounted for more than 10% of total revenues for the periods
presented.
*Customer
and Supplier Concentrations*
Substantially
all of the Company’s Branded sales are made to a third-party logistics wholesaler who sells the products to the end-user. There
were no customers who comprised more than 10% of ImprimisRx revenues for the three and nine months ended September 30, 2024 and 2023.
25
As
of September 30, 2024 and December 31, 2023, accounts receivable from a single customer accounted for 64% and 80%, respectively, of
total consolidated accounts receivable. For the three and nine months ended September 30, 2024, revenues from a single customer accounted
for 46% and 42%, respectively, of total consolidated revenues. For the three and nine months ended September 30, 2023, revenues from
a single customer accounted for 35% and 23%, respectively, of total consolidated revenues.
The
Company receives its active pharmaceutical ingredients from three main suppliers. These suppliers collectively accounted for 50% and51% of active pharmaceutical ingredient purchases during the three and nine months ended September 30, 2024, respectively, and 96% and79% during the same periods in 2023, respectively.
### **NOTE 16. SUBSEQUENT EVENTS**
The
Company has performed an evaluation of events occurring subsequent to September 30, 2024 through the filing date of this Quarterly Report
on Form 10-Q. Based on its evaluation, no events other than those described below need to be disclosed.
In
October 2024, the Company entered into the Second Amendment to Credit Agreement and Guaranty with Oaktree (“Second Amendment”).
Upon satisfaction of certain conditions to funding, the Company drew down the principal amount of $30,000,000 (the “$30,000,000 Draw”) under a pre-existing commitment under the Oaktree Loan to partially fund a one-time milestone payment to Novartis Technology,
LLC and Novartis Innovative Therapies AG (together, “Novartis”). Under its asset purchase agreement with Novartis, the Company
made a one-time milestone payment to Novartis equal to $37,000,000 upon the commercial availability of TRIESENCE, which the Company paid
in October 2024. In connection with the Second Amendment, the Company incurred approximately $150,000 of costs. In connection with the
Second Amendment and following the $30,000,000 Draw, the Company has drawn down a total principal loan amount of $107,500,000 under the
Oaktree Loan and no additional principal loan amount remains available to the Company under the Oaktree Loan.
In November 2024, the Company became aware of a cybersecurity incident that involved unauthorized access of an employee’s
email account. Through this unauthorized access the threat actor was able to fraudulently divert Company funds to its bank account. The
Company, along with its external cybersecurity experts, is continuing to work diligently to fully investigate and assess the impact of
the incident and has notified, and is cooperating with, federal law enforcement. As the investigation of the incident is ongoing, the
full scope, nature and impact of the incident are not yet fully known.
26
**Item
2. Management’s Discussion and Analysis of Financial Condition and Results of Operations**
*The
following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited
condensed consolidated financial statements and the related notes thereto contained in Part I, Item 1 of this Quarterly Report on Form
10-Q (this “Quarterly Report”). Our condensed consolidated financial statements have been prepared and, unless otherwise
stated, the information derived therefrom as presented in this discussion and analysis is presented, in accordance with accounting principles
generally accepted in the United States of America (“GAAP”).*
*The
information contained in this Quarterly Report is not a complete description of our business or the risks associated with an investment
in our common stock. We urge you to carefully review and consider the various disclosures made by us in this Quarterly Report and in
our other reports filed with the U.S. Securities and Exchange Commission (the “SEC”), including our Annual Report on Form
10-K for the fiscal year ended December 31, 2023 and subsequent reports, which discuss our business in greater detail. As used in this
discussion and analysis, unless the context indicates otherwise, the terms the “Company,” “Harrow,” “we,”
“us” and “our” refer to Harrow, Inc. and its consolidated subsidiaries, including ImprimisRx, LLC, ImprimisRx
NJ, LLC dba ImprimisRx, Imprimis NJOF, LLC, Harrow IP, LLC and Harrow Eye, LLC. In this discussion and analysis, we refer to our consolidated
subsidiaries ImprimisRx, LLC, ImprimisRx NJ, LLC and Imprimis NJOF, LLC collectively as “ImprimisRx.”*
*In
addition to historical information, the following discussion contains forward-looking statements regarding future events and our future
performance. In some cases, you can identify forward-looking statements by terminology such as “will,” “may,”
“should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,”
“predicts,” “forecasts,” “potential” or “continue” or the negative of these terms or
other comparable terminology. All statements made in this Quarterly Report other than statements of historical fact are forward-looking
statements. These forward-looking statements involve risks and uncertainties and reflect only our current views, expectations and assumptions
with respect to future events and our future performance. If risks or uncertainties materialize or assumptions prove incorrect, actual
results or events could differ materially from those expressed or implied by such forward-looking statements. Risks that could cause
actual results to differ from those expressed or implied by the forward-looking statements we make include, among others, risks related
to: liquidity or results of operations; our ability to successfully implement our business plan, develop and commercialize our products,
product candidates and proprietary formulations in a timely manner or at all, identify and acquire additional products, manage our pharmacy
operations, service our debt, obtain financing necessary to operate our business, recruit and retain qualified personnel, manage any
growth we may experience and successfully realize the benefits of our previous acquisitions and any other acquisitions and collaborative
arrangements we may pursue; competition from pharmaceutical companies, outsourcing facilities and pharmacies; general economic and business
conditions, including inflation and supply chain challenges; regulatory and legal risks and uncertainties related to our pharmacy operations
and the pharmacy and pharmaceutical business in general; physician interest in and market acceptance of our current and any future formulations
and compounding pharmacies generally; and the other risks and uncertainties described under the heading “Risk Factors” in
Part II, Item 1A of this Quarterly Report and in our other filings with the SEC. You should not place undue reliance on forward-looking
statements. Forward-looking statements speak only as of the date they are made and, except as required by law, we undertake no obligation
to revise or publicly update any forward-looking statement for any reason.*
**Overview**
We
are a leading eyecare pharmaceutical company engaged in the discovery, development, and commercialization of innovative ophthalmic pharmaceutical
products for the U.S. market. Harrow helps U.S. eyecare professionals preserve the gift of sight by making its comprehensive portfolio
of prescription and non-prescription pharmaceutical products accessible and affordable to millions of Americans each year. We own commercial
rights to one of the largest portfolios of branded ophthalmic pharmaceutical products in North America, all of which are marketed under
the Harrow name. We also own and operate ImprimisRx, one of the nation’s leading ophthalmology-focused pharmaceutical-compounding
businesses.
**Factors
Affecting Our Performance**
We
believe the primary factors affecting our performance are (1) our ability to increase revenues of our branded pharmaceutical products,
proprietary compounded formulations and certain non-proprietary products, and grow and gain operating efficiencies in our operations,
(2) potential and ongoing regulatory-related restrictions, (3) our ability to optimize pricing and obtain reimbursement options for our
drug products, and continue to pursue development and commercialization opportunities for certain of our ophthalmology and other assets
that we have not yet made commercially available. We believe we have built a tangible and intangible infrastructure that will allow us
to scale revenues efficiently in the near and long-term. All of these activities will require significant costs and other resources,
which we may not have or be able to obtain from operations or other sources. See “Liquidity and Capital Resources” below.
27
**Recent
Developments**
The
following is a summary of selected significant developments affecting our business that occurred since December 31, 2023. For additional
developments, see our Annual Report on Form 10-K for the year ended December 31, 2023.
*Cybersecurity Incident*
In November 2024, we became aware of a cybersecurity incident that involved unauthorized access of an employee’s
email account. Through this unauthorized access the threat actor was able to fraudulently divert Company funds to its bank account. We
detected the incident in a time that management believes minimized any financial, operational or reputational risk to the Company, we
believe this early detection will result in an immaterial impact to the Company’s financial results and at no point was our ability
to generate revenues disrupted. We, along with our external cybersecurity experts, are continuing to work diligently to fully investigate
and assess the impact of the incident and we have notified, and are cooperating with, federal law enforcement. As the investigation of
the incident is ongoing, the full scope, nature and impact of the incident are not yet fully known.
*TRIESENCE
Re-Launch, Oaktree Second Amendment and Draw*
In
October 2024, we announced the re-launch of TRIESENCE following the successful manufacturing of three process performance
qualification batches of the product. In connection with the re-launch, during October 2024 we made a one-time payment of
$37,000,000 to Novartis Technology, LLC and Novartis Innovative Therapies AG (together, “Novartis”) pursuant to terms of
an asset purchase agreement between Novartis and the Company. Also, during October 2024, we entered into the Second Amendment (the “Second Amendment”) to the Credit Agreement and Guaranty originally entered into
on March 27, 2023, as amended by that certain First Amendment to Credit Agreement and Guaranty and Consent, dated as of July 18,
2023 (as amended, the “Oaktree Loan”), with the lenders from time to time party thereto and Oaktree Fund Administration,
LLC, as administrative agent for the lenders (“Oaktree”). Upon satisfaction of certain conditions to funding,
the Company drew down the principal amount of $30,000,000 (the “$30,000,000 Draw”) under a pre-existing commitment under
the Oaktree Loan to partially fund the one-time payment to Novartis.
In
the Second Amendment, the Company and Oaktree agreed to certain changes to the Oaktree Loan in connection with the Company’s draw
under the Oaktree Loan. Pursuant to the amendment, Oaktree agreed to waive any make-whole costs associated with the $30,000,000 Draw
in the event of early repayment of the debt under the Oaktree Loan if paid before March 31, 2025. In addition, Oaktree agreed to exclude
the $30,000,000 Draw from the calculation of the Total Leverage Ratio as defined in the Oaktree Loan. No other material changes to the
Oaktree Loan were provided in the Second Amendment.
Following
entry into the Second Amendment and the funding of the Novartis milestone payment, the Company has drawn down a total principal loan
amount of $107,500,000 under the Oaktree Loan and no additional principal loan amount remains available to the Company under the Oaktree
Loan.
*Apotex - Canadian Out-License*
In
February 2024, we entered into a license and supply agreement with Apotex Inc. (“Apotex”). Under the terms of the agreement,
Apotex licensed exclusive rights and marketing authorizations of the following products in the Canadian market from Harrow: VERKAZIA
(cyclosporine ophthalmic emulsion) 0.1% and Cationorm PLUS. Apotex was also granted a license for products Apotex will pursue approval
for in Canada: VEVYE (cyclosporine ophthalmic solution) 0.1%, IHEEZO (chloroprocaine hydrochloride ophthalmic gel) 3%, and ZERVIATE (cetirizine
ophthalmic solution) 0.24% (with VERKAZIA and Cationorm Plus, collectively, the “Apotex Products”). In exchange for these
licenses, Harrow will earn amounts related to manufacturing, regulatory and commercial achievement milestones, in addition to royalties
on net sales of the Apotex Products.
*IHEEZO
Reimbursement*
In
January 2024, we met with the Centers for Medicare & Medicaid Services (“CMS”) to request clarification related to its
anesthesia billing policy which has historically not allowed for the separate billing of anesthesia services in the physician’s
office. During the meeting we requested that CMS clarify that J-Code 2403, IHEEZO’s permanent J-Code, is appropriate to be billed
for the anesthesia product itself (i.e., IHEEZO in our case) in the physician office setting. In March 2024, we received communication
from a representative at CMS that the inclusion of J-Code 2403 in CMS’s April 2024 quarterly drug pricing file of the average sales
prices (ASP) of some Medicare Part B-covered drugs and biologicals confirms that IHEEZO is separately payable in the physician office
setting.
In
February 2024, we made a request to CMS to consider increasing the Medically Unlikely Edits (“MUE”) for IHEEZO’s J-Code
from 1 to 2. This request was made because the limitation of one MUE only allowed a single IHEEZO administration (equal to one single-use
vial) to be used and billed, while many ophthalmologists perform bilateral ocular procedures, which would require two vials of IHEEZO
to be used. On March 20, 2024, we received communication from the National Correct Coding Initiative (NCCI) program of CMS stating that
CMS decided to increase the MUE for IHEEZO’s J-Code (J2403) from 1 to 2. The MUE edit was made effective on July 1, 2024.
28
*VEVYE
U.S. Launch*
In
January 2024, we launched VEVYE (cyclosporine ophthalmic solution) 0.1%, the first and only water-free cyclosporine dissolved in a semifluorinated
alkane approved to treat both the signs and symptoms of dry eye disease in the U.S. We partnered with various entities including PhilRx,
Apollo Care and PARx Solutions to enhance our market and patient access program for VEVYE.
**Results
of Operations**
The
following period-to-period comparisons of our financial results for the three and nine months ended September 30, 2024 and 2023 are not
necessarily indicative of results for any future period.
*Revenues*
Our
revenues include amounts recorded from sales of proprietary compounded formulations, sales of branded products to wholesalers through
a third-party logistics facility, commissions from third parties and revenues received from royalty payments owed to us pursuant to out-license
arrangements. The following presents our revenues:
| Line item | For the Three Months Ended / September 30, 2024 | For the Three Months Ended / September 30, 2023 | $ / Variance | For the Nine Months Ended / September 30, 2024 | For the Nine Months Ended / September 30, 2023 | $ / Variance |
| --- | --- | --- | --- | --- | --- | --- |
| IHEEZO | $12,882,000 | $5,927,000 | $6,955,000 | $26,498,000 | $10,073,000 | $16,425,000 |
| VEVYE | 5,186,000 | - | 5,186,000 | 12,099,000 | - | 12,099,000 |
| Other branded products (Anterior Segment) | 10,256,000 | 6,605,000 | 3,651,000 | 30,808,000 | 13,205,000 | 17,603,000 |
| Other revenues, net | 228,000 | 1,964,000 | (1,736,000) | 375,000 | 10,585,000 | (10,2109,000) |
| Branded revenue, net | 28,552,000 | 14,496,000 | 14,056,000 | 69,780,000 | 33,863,000 | 35,917,000 |
| ImprimisRx revenue, net | 20,705,000 | 19,769,000 | 936,000 | 63,003,000 | 59,975,000 | 3,028,000 |
| Total revenues, net | $49,257,000 | $34,265,000 | $14,992,000 | $132,783,000 | $93,838,000 | $38,945,000 |
*Cost
of Sales*
Our
cost of sales includes direct and indirect costs to manufacture formulations and products, including active pharmaceutical ingredients,
personnel costs, packaging, storage, royalties, shipping and handling costs, manufacturing equipment and tenant improvements depreciation,
the write-off of obsolete inventory, amortization of acquired product NDAs, and other related expenses.
Branded
The
following presents our Branded cost of sales:
| Line item | For the Three Months Ended / September 30, 2024 | For the Three Months Ended / September 30, 2023 | $ / Variance | For the Nine Months Ended / September 30, 2024 | For the Nine Months Ended / September 30, 2023 | $ / Variance |
| --- | --- | --- | --- | --- | --- | --- |
| Cost of sales | $5,169,000 | $3,335,000 | $1,834,000 | $14,406,000 | $8,396,000 | $6,010,000 |
The
increase in our Branded cost of sales was largely attributable to expenses associated with unit volumes sold.
29
ImprimisRx
The
following presents our ImprimisRx cost of sales:
| Line item | For the Three Months Ended / September 30, 2024 | For the Three Months Ended / September 30, 2023 | $ / Variance | For the Nine Months Ended / September 30, 2024 | For the Nine Months Ended / September 30, 2023 | $ / Variance |
| --- | --- | --- | --- | --- | --- | --- |
| Cost of sales | $6,849,000 | $6,732,000 | $117,000 | $20,704,000 | $19,942,000 | $762,000 |
The
increase in our ImprimisRx cost of sales was largely attributable to expenses associated with unit volumes sold and increased direct
and indirect costs associated with production of our products.
*Gross
Profit and Margin*
Branded
| Line item | For the Three Months Ended / September 30, 2024 | For the Three Months Ended / September 30, 2023 | $ / Variance | For the Nine Months Ended / September 30, 2024 | For the Nine Months Ended / September 30, 2023 | $ / Variance |
| --- | --- | --- | --- | --- | --- | --- |
| Gross Profit | $23,383,000 | $11,161,000 | $12,222,000 | $55,374,000 | $25,467,000 | $29,907,000 |
| Gross Margin | 81.9% | 77.0% | 4.9% | 79.4% | 75.2% | 4.2% |
The
increase in Branded gross margin between the three and nine months ended September 30, 2024 and 2023 was primarily attributable to an
increase in sales reducing the impact of our fixed expenses, such as license amortization.
ImprimisRx
| Line item | For the Three Months Ended / September 30, 2024 | For the Three Months Ended / September 30, 2023 | $ / Variance | For the Nine Months Ended / September 30, 2024 | For the Nine Months Ended / September 30, 2023 | $ / Variance |
| --- | --- | --- | --- | --- | --- | --- |
| Gross Profit | $13,856,000 | $13,037,000 | $819,000 | $42,299,000 | $40,033,000 | $2,266,000 |
| Gross Margin | 66.9% | 65.9% | 1.0% | 67.1% | 66.7% | 0.4% |
*Selling,
General and Administrative Expenses*
Our
selling, general and administrative expenses include personnel costs, including wages and stock-based compensation, corporate facility
expenses, and investor relations, consulting, insurance, filing, legal and accounting fees and expenses as well as costs associated with
our marketing activities and sales of our FDA approved, proprietary compounded formulations and other non-proprietary pharmacy products
and formulations.
| Line item | For the Three Months Ended / September 30, 2024 | For the Three Months Ended / September 30, 2023 | $ / Variance | For the Nine Months Ended / September 30, 2024 | For the Nine Months Ended / September 30, 2023 | $ / Variance |
| --- | --- | --- | --- | --- | --- | --- |
| Selling, general and administrative | $33,645,000 | $21,033,000 | $12,612,000 | $94,275,000 | $56,878,000 | $37,397,000 |
The
increase in selling, general and administrative expenses between periods was primarily attributable to an increase in expenses including
regulatory enhancements, costs to support the transition of recent product acquisitions, and an increase in expenses related to the addition
of new employees in sales, marketing and other departments to support current and expected growth, including the commercial launch of
VEVYE in December 2023. Stock-based compensation expense increased by $1,227,000 during the nine months ended September 30, 2024 compared
to the prior year period.
30
*Research
and Development Expenses*
Our
research and development (“R&D”) expenses primarily include personnel costs, including wages and stock-based compensation,
expenses related to the development of intellectual property, investigator-initiated research and evaluations, formulation development,
and other costs related to the clinical development of our assets.
| Line item | For the Three Months Ended / September 30, 2024 | For the Three Months Ended / September 30, 2023 | $ / Variance | For the Nine Months Ended / September 30, 2024 | For the Nine Months Ended / September 30, 2023 | $ / Variance |
| --- | --- | --- | --- | --- | --- | --- |
| Research and development | $$2,273,000 | $1,421,000 | $852,000 | $7,475,000 | $3,316,000 | 4,159,000 |
The
increase in R&D expenses between periods was primarily attributable to activity related to our expanded branded product portfolio,
technical transfer activities associated with the production of certain products related to our product acquisitions that occurred in
2023, product development efforts, product launches, and clinical and medical support.
*Interest
Expense, Net*
Interest
expense, net was $5,525,000 and $16,411,000 for the three and nine months ended September 30, 2024, respectively, compared to $5,749,000
and $16,200,000 for the same periods in 2023, respectively. The decrease during the three months ended September 30, 2024 compared to
the same period in 2023 was primarily the result of increased interest income earned. The increase during the nine months ended September
30, 2024 compared to the same period in 2023 was primarily the result from the increase in the outstanding principal amount of our debt
obligations.
*Investment
(Loss) Gain from Eton*
During
the nine months ended September 30, 2024, we recorded a loss of $3,171,000 related to the change in fair market value of Eton’s
common stock at the time of its sale, including trading expenses and commissions of approximately $436,000, compared to a gain of $1,348,000
and gain of $2,676,000 during the three and nine months ended September 30, 2023, respectively.
*Loss
on Extinguishment of Debt*
During
the nine months ended September 30, 2023, we recorded a loss on extinguishment of debt of $5,465,000, related to the early payoff of
a loan.
*Other
Income, Net*
During
the three and nine months ended September 30, 2024, we recorded other income of $4,000 and $76,000, respectively, related to a sublease
of lab and office space in Nashville. During the three and nine months ended September 30, 2023, we recorded other expense, net of $195,000
and $344,000, respectively, related primarily to transition services and write-off of inventories associated with the divestment of our
non-ophthalmology business.
**Liquidity
and Capital Resources**
***Liquidity***
Our
cash on hand at September 30, 2024 was $72,601,000, compared to $74,085,000 at December 31, 2023.
In
October 2024, we made a one-time payment of $37,000,000 upon the achievement of a milestone associated with one of our asset
purchase agreements which was funded, in part, from our availability under the delayed draw commitments of our Oaktree debt
facility.
As
of the date of this Quarterly Report, we believe that our cash and cash equivalents will be sufficient to sustain our planned level of
operations and capital expenditures for at least the next 12 months. In addition, we may consider the sale of certain assets including,
but not limited to, part of, or all of, our investments in Surface Ophthalmics, Inc. (“Surface”) and Melt Pharmaceuticals,
Inc. (“Melt”) and any of our consolidated subsidiaries. However, we may pursue acquisitions of revenue generating products
or drug candidates or other strategic transactions that involve large expenditures or we may experience growth more rapidly or on a larger
scale than we expect, any of which could result in the depletion of capital resources more rapidly than anticipated and could require
us to seek additional financing to support our operations.
31
We
expect to use our current cash position and funds generated from our operations and any financing to pursue our business plan, which
includes developing and commercializing drug candidates, compounded formulations and technologies, integrating and developing our operations,
pursuing potential future strategic transactions as opportunities arise, including potential acquisitions of additional drug products,
drug candidates, and/or assets or technologies, pharmacies, outsourcing facilities, drug company and manufacturers, and otherwise fund
our operations. We may also use our resources to conduct clinical trials or other studies in support of our formulations or any drug
candidate for which we pursue FDA approval, to pursue additional development programs or to explore other development opportunities.
*Net
Cash Flow*
The
following provides detailed information about our net cash flows:
| Line item | For the Nine Months Ended September 30, 2024 | For the Nine Months Ended September 30, 2023 |
| --- | --- | --- |
| Net cash (used in) provided by: | | |
| Operating activities | $(4,423,000) | $(4,856,000) |
| Investing activities | 4,396,000 | (152,350,000) |
| Financing activities | (1,457,000) | 126,546,000 |
| Net change in cash and cash equivalents | (1,484,000) | (30,660,000) |
| Cash and cash equivalents at beginning of the period | 74,085,000 | 96,270,000 |
| Cash and cash equivalents at end of the period | $72,601,000 | $65,610,000 |
*Operating
Activities*
Net
cash used in operating activities during the nine months ended September 30, 2024 was $(4,423,000) compared to $(4,856,000) during the
same period in the prior year. The decrease in net cash used in operating activities between the periods was mainly attributed
to changes in our working capital balances including accounts receivable, accounts payable, prepaid expenses and inventories.
*Investing
Activities*
Net
cash provided by (used in) investing activities during the nine months ended September 30, 2024 was $4,396,000 compared to $(152,350,000)
during the same period in the prior year. Cash used in investing activities in 2023 was primarily related to the acquisition of branded
products completed in 2023. Cash provided by investing activities in 2024 was primarily related to the sale of our investment in Eton.
*Financing
Activities*
Net
cash (used in) provided by financing activities during the nine months ended September 30, 2024 and 2023 was $(1,457,000) and $126,546,000,
respectively. Cash used in financing activities during the nine months ended September 30, 2024 was primarily related to payment of payroll
taxes upon vesting of RSUs in exchange for shares withheld from employees. Cash provided by financing activities during the nine months
ended September 30, 2023 was primarily related to proceeds received from the sale of notes and common stock in our 2023 capital markets
transactions and entering into loan arrangements, offset by repayment of the B. Riley senior secured note and payment of payroll taxes
upon vesting and exercise of equity instruments in exchange for shares withheld from employees.
***Sources
of Capital***
Our
principal sources of cash have consisted of sales of our common stock, debt issuances, sales of our investments, and on an annual basis
(e.g. for the year ended December 31, 2023) cash generated from operating activities. We may also sell some or all of our ownership interests
in Surface, Melt or our other subsidiaries.
32
We
may acquire new products, product candidates and/or businesses and, as a result, we may need significant additional capital to support
our business plan and fund our proposed business operations. We may receive additional proceeds from the exercise of stock options that
are currently outstanding. We may also seek additional financing from a variety of sources, including other equity or debt financings,
funding from corporate partnerships or licensing arrangements, sales of assets or any other financing transaction. If we issue equity
or convertible debt securities to raise additional funds, our existing stockholders may experience substantial dilution, and the newly
issued equity or debt securities may have more favorable terms or rights, preferences and privileges senior to those of our existing
stockholders. If we raise additional funds through collaboration or licensing arrangements or sales of assets, we may be required to
relinquish potentially valuable rights to our product candidates or proprietary technologies or formulations, or grant licenses on terms
that are not favorable to us. If we raise funds by incurring additional debt, we may be required to pay significant interest expenses
and our leverage relative to our earnings or to our equity capitalization may increase. Obtaining commercial loans, assuming they would
be available, would increase our liabilities and future cash commitments and may impose restrictions on our activities, such as the financial
and operating covenants. Further, we may incur substantial costs in pursuing future capital and/or financing transactions, including
investment banking fees, legal fees, accounting fees, printing and distribution expenses and other costs. We may also be required to
recognize non-cash expenses in connection with certain securities we may issue, such as convertible notes and warrants, which would adversely
impact our financial results.
We
may be unable to obtain financing when necessary as a result of, among other things, our performance, general economic conditions, conditions
in the pharmaceuticals and pharmacy industries, or our operating history, including our past bankruptcy proceedings. In addition, the
fact that we have a limited history of profitability could further impact the availability or cost to us of future financings. As a result,
sufficient funds may not be available when needed from any source or, if available, such funds may not be available on terms that are
acceptable to us. If we are unable to raise funds to satisfy our capital needs when needed, then we may need to forego pursuit of potentially
valuable development or acquisition opportunities, we may not be able to continue to operate our business pursuant to our business plan,
which would require us to modify our operations to reduce spending to a sustainable level by, among other things, delaying, scaling back
or eliminating some or all of our ongoing or planned investments in corporate infrastructure, business development, sales and marketing
and other activities, or we may be forced to discontinue our operations entirely.
**Recently
Issued and Adopted Accounting Pronouncements**
See
Note 2 to our unaudited condensed consolidated financial statements included in this Quarterly Report.
**Item
3. Quantitative and Qualitative Disclosures About Market Risk**
Not
applicable.
**Item
4. Controls and Procedures**
***Evaluation
of Disclosure Controls and Procedures***
We
maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed
or submitted pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized
and reported within the time periods specified in the rules and forms of the SEC, and that such information is accumulated and communicated
to our management, including our principal executive officer and principal financial officer, as appropriate, to allow for timely decisions
regarding required disclosure.
Under
the supervision and with the participation of our principal executive officer and principal financial officer, our management conducted
an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Exchange
Act, as they existed on September 30, 2024. Based on this evaluation, our principal executive officer and principal financial officer
have concluded that our disclosure controls and procedures were effective to achieve their stated purpose as of September 30, 2024, the
end of the period covered by this Quarterly Report.
***Changes
in Internal Control over Financial Reporting***
There
has been no change in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) during the
quarter ended September 30, 2024, that has materially affected, or is reasonably likely to materially affect, our internal control over
financial reporting.
33
**PART
II**
**OTHER
INFORMATION**
**Item
1. Legal Proceedings**
See
Note 14 to our unaudited condensed consolidated financial statements included in this Quarterly Report for information on various legal
proceedings, which is incorporated into this Item by reference.
**Item
1A. Risk Factors**
In addition to the other information
contained in this Quarterly Report you should consider the risk factors below which have been updated based on recent events as well as
the other risk factors and information in our Annual Report on Form 10-K for the year ended December 31, 2023, including our audited financial
statements and the related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
If any such risks actually occur, our business, financial condition, results of operations and future growth prospects would likely be
materially and adversely affected. In these circumstances, the market price of our common stock would likely decline and you may lose
all or part of your investment. Additional risks and uncertainties not presently known to us or that we currently deem immaterial also
may impair our business operations.
***Our
business and operations could suffer in the event of cybersecurity or other system failures.***
Despite
the implementation of security measures, our internal computer systems and those of any third parties with which we partner are vulnerable
to damage from computer viruses, unauthorized access, natural disasters, terrorism, war and telecommunication and electrical failures.
While we have not experienced any cybersecurity or system failure, accident or breach to date that has been determined to have had a material
impact, if a significant event were to occur, it could result in a material disruption of our operations, substantial costs to rectify
or correct the failure, if possible, and potentially violation of HIPAA and other privacy laws applicable to our operations. For example,
the California Consumer Privacy Act (the “CCPA”) became effective on January 1, 2020 and gave California residents expanded
rights to access and require deletion of their personal information, opt out of certain personal information sharing and receive detailed
information about how their personal information is used. The CCPA provides for civil penalties for violations, as well as a private right
of action for data breaches that may increase data breach litigation. Although the CCPA includes exemptions for certain clinical trials
data, and HIPAA-protected health information, the law may increase our compliance costs and potential liability with respect to other
personal information we collect about California residents. The CCPA has prompted a number of proposals for new federal and state privacy
legislation. Other countries also have, or are developing, laws governing the collection, use and transmission of personal information,
such as the General Data Protection Regulation (“GDPR”) in the European Union (the “EU”) that became effective
in May 2018 and the Personal Information Protection and Electronic Documents Act that became effective in Canada in April 2000. We anticipate
that over time we may expand our business outside of the United States. With such expansion, we would be subject to increased governmental
regulation in the EU countries in which we might operate, including the GDPR. These laws and similar laws adopted in the future could
increase our potential liability, increase our compliance costs and adversely affect our business. If any disruption or security breach
resulted in a loss of or damage to our data or applications or inappropriate disclosure of confidential or protected information, we could
incur liability, further development of our proprietary formulations could be delayed, and our pharmacy operations could be disrupted,
subject to restriction or forced to terminate their operations, any of which could severely harm our business and prospects.
***A breakdown
of our information technology systems, or a cyberattack or information security breach could significantly compromise the confidentiality,
integrity and availability of our information technology systems, network-connected control systems and/or our data, interrupt the operation
of our business and/or affect our reputation.***
To
achieve our business objectives, we rely on sophisticated information technology systems, including hardware, software, technology infrastructure,
online sites and networks for both internal and external operations, mobile applications, cloud services and network-connected control
systems, some of which are managed, hosted, provided or serviced by third parties. Internal or external events that compromise the confidentiality,
integrity and availability of our systems and data may significantly interrupt the operation of our business, result in significant costs
and/or adversely affect our reputation.
Our
information technology systems are highly integrated into our business, including our customer service infrastructure, R&D efforts,
clinical and commercial manufacturing processes and product sales and distribution processes. Further, as the large part of our employees
work remotely for some portion of their jobs, our reliance on our third-party information technology systems has increased substantially
and is expected to continue to increase. Remote and hybrid working arrangements can increase cybersecurity risks due to the challenges
associated with managing remote computing assets and security vulnerabilities that are present in many non-corporate and home networks.
The complexity and interconnected nature of software, hardware and our systems make them vulnerable to breakdown or other service interruptions,
and to software errors or defects, misconfiguration and other security vulnerabilities. Upgrades or changes to our systems or the software
that we use have resulted and we expect, in the future, will result in the introduction of new cybersecurity vulnerabilities and risks.
Our systems are also subject to frequent perimeter network reconnaissance and scanning, phishing and other cyberattacks. As the cyber-threat
landscape evolves, these attacks are growing in frequency, sophistication, and intensity, and are becoming increasingly difficult to detect
and increasingly sophisticated in using techniques and tools—including artificial intelligence—that circumvent security controls,
evade detection and remove forensic evidence. Such attacks could include the use of harmful and virulent malware, including ransomware
or other denials of service, which can be deployed through various means, including the software supply chain, e-mail, malicious websites
and/or the use of social engineering/phishing.
We
have experienced attacks against our network, although none that have had a material adverse impact to our business. Recently, in November
2024, we became aware of a cybersecurity incident that involved unauthorized access of an employee’s email account. Through
this unauthorized access the threat actor was able to fraudulently divert Company funds to its bank account. We detected the incident
in a time that management believes minimized the financial, operational or reputational risk to the Company, and at no point was our ability
to generate revenues disrupted. However, we, along with our external cybersecurity experts, are continuing to work diligently to fully
investigate and assess the impact of the incident and have notified, and are cooperating with, federal law enforcement. As the investigation
of the incident is ongoing, the full scope, nature and impact of the incident are not yet fully known.
34
There
can be no assurance that our efforts to guard against the wide and growing variety of potential attack techniques will be successful.
Attacks such as those experienced by government entities (including those that approve and/or regulate our products) and other multi-national
companies, including some of our peers, could leave us unable to utilize key business systems or access or protect important data, and
could have a material adverse effect on our ability to operate our business, including developing, gaining regulatory approval for, manufacturing,
selling and/or distributing our products. For example, in 2017, a pharmaceutical company experienced a cyberattack involving virulent
malware that significantly disrupted its operations, including its research and sales operations and the production of some of its medicines
and vaccines. As a result of the cyberattack, its orders and sales for certain products were negatively affected. In late 2020, SolarWinds
Corporation, a leading provider of software for monitoring and managing information technology infrastructure, disclosed that it had suffered
a cybersecurity incident whereby attackers had inserted malicious code into legitimate software updates for its products that were installed
by myriad private and government customers, enabling the attackers to access a backdoor to such systems. In 2022, Okta, Inc., a provider
of software that helps companies manage user authentication, disclosed that several hundred of its corporate customers were vulnerable
to a security breach that allowed attackers to access Okta’s internal network. Although this breach did not have a significant effect
on our business, there can be no assurance that a similar future breach would not result in a material adverse effect on our business
or results of operations.
Our
systems contain and use a high volume of sensitive data, including intellectual property, trade secrets and other proprietary business
information, financial information, regulatory information, strategic plans, sales trends and forecasts, litigation materials and/or personal
identifiable information belonging to us, our staff, our patients, customers and/or other parties. In some cases, we utilize third-party
service providers to collect, process, store, manage or transmit such data, which have increased our risk. Intentional or inadvertent
data privacy or security breaches (including cyberattacks) resulting from attacks or lapses by employees, service providers (including
providers of information technology-specific services), business partners, nation states (including groups associated with or supported
by foreign intelligence agencies), organized crime organizations, “hacktivists” or others, create risks that our sensitive
data may be exposed to unauthorized persons, our competitors or the public. System vulnerabilities and/or cybersecurity breaches experienced
by our third-party service providers constitute a substantial share of the information security risks to our business. There can be no
assurance that a cybersecurity incident would not result in a material adverse effect on our business or results of operations. Further,
the timeliness of our awareness of a cybersecurity incident affects our ability to respond to and work to mitigate the severity of such
events.
Cyberattackers
are also increasingly exploiting vulnerabilities in commercially available software from shared or open-source code. We rely on third
party commercial software that have had and may have such vulnerabilities, but as use of open-source code is frequently not disclosed,
our ability to fully assess this risk to our systems is limited. There can be no assurances that a vulnerability in the software and services
that we use would not result in a material adverse effect on our business or results of operations.
Domestic
and global government regulators, our business partners, suppliers with whom we do business, companies that provide us or our partners
with business services and companies we have acquired or may acquire face similar risks. Security breaches of their systems or service
outages have adversely affected systems and could, in the future, affect our systems and security, leave us without access to important
systems, products, raw materials, components, services or information, or expose our confidential data or sensitive personal information.
An extended service outage affecting these or other vendors, particularly where such vendor is the single source from which we obtain
the services, could have a material adverse effect on our business or results of operations. For example, in February 2024, UnitedHealth
Group announced that a suspected nation-state associated cyber security threat actor had gained access to some of the Change Healthcare
(“Change”) information technology systems. Change is the largest clearinghouse for medical claims in the U.S. While Harrow
was not directly impacted by this cybersecurity incident, it was reported that as a reaction to the cybersecurity incident, Change temporarily
disconnected over 100 related payment systems and Change was unable to process medical claims through its primary platforms. This resulted
in the delays to the revenue and cash collection cycle for several ASCs and physician offices, putting a strain on their cash resources.
While temporary, the cash constraints for these ASCs and physician offices, we believe, impacted sales of some of our products, such as
IHEEZO, during this disrupted period of time. In addition, we distribute our products in the United States primarily through three pharmaceutical
wholesalers, and a security breach that impairs the distribution operations of our wholesalers could significantly impair our ability
to deliver our products to healthcare providers and patients. There can be no assurance that our cybersecurity risk management program
and processes, including our policies, controls, or procedures, will be effective in protecting our information technology systems and
sensitive data.
We
will continue to experience varying degrees of cyberattacks and other incidents in the future. Even though we continue to invest in the
monitoring, protection and resilience of our critical and/or sensitive data and systems, there can be no assurances that our efforts will
detect, prevent or fully recover systems or data from all breakdowns, service interruptions, attacks and/or breaches of our systems that
could adversely affect our business and operations and/or result in the loss or exposure of critical, proprietary, private, confidential
or otherwise sensitive data, which could result in material financial, legal business or reputational harm to us or negatively affect
our stock price. While we maintain cyber-liability insurance, our insurance is not sufficient to cover us against all losses that could
potentially result from a service interruption, breach of our systems or loss of our critical or sensitive data.
We
are also subject to various laws and regulations globally regarding privacy and data protection, including laws and regulations relating
to the collection, storage, handling, use, disclosure, transfer and security of personal data. The legislative and regulatory environment
regarding privacy and data protection is continuously evolving and developing and the subject of significant attention globally. For example,
we are subject to the CCPA, which became effective in January 2020, which can result in substantial penalties for noncompliance. The CCPA
was amended in late 2020, to create the California Privacy Rights Act to create opt in requirements for the use of sensitive personal
data and the formation of a new dedicated agency for the enforcement of the law, the California Privacy Protection Agency. Similar consumer
privacy laws went into effect in Virginia, Colorado, Utah, Connecticut and Florida in 2023. Consumer privacy laws were also passed in
11 other states, with the earliest effective dates later this year, and proposed in three additional states. Failure to comply with these
current and future laws could result in significant penalties and reputational harm and could have a material adverse effect on our business
and results of operations.
35
**Item
2. Unregistered Sales of Equity Securities and Use of Proceeds**
None.
**Item
3. Defaults Upon Senior Securities**
Not
applicable.
**Item
4. Mine Safety Disclosures**
Not
applicable.
**Item
5. Other Information**
None.
**Item
6. Exhibits**
| Exhibit Number | Description |
| --- | --- |
| 10.1* | Second Amendment dated October 25, 2024 to the Credit Agreement and Guaranty dated March 27, 2023 between the Company and Oaktree Fund Administration, LLC. |
| 31.1* | Certification of Mark L. Baum, principal executive officer, pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities and Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
| 31.2* | Certification of Andrew R. Boll, principal financial and accounting officer, pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities and Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
| 32.1** | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, executed by Mark L. Baum, principal executive officer, and Andrew R. Boll, principal financial and accounting officer. |
| 101.INS* | Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |
| 101.SCH* | Inline XBRL Taxonomy Extension Schema Document |
| 101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase Document |
| 101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase Document |
| 101.LAB* | Inline XBRL Taxonomy Extension Label Linkbase Document |
| 101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase Document |
| 104 | The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2024, has been formatted in Inline XBRL. |
\* Filed herewith.
\*\* Furnished herewith.
36
**SIGNATURES**
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
**Harrow, Inc.**
Dated: November 14, 2024 By: */s/ Mark L. Baum*
Mark L. Baum
Chief Executive Officer and Director
(Principal Executive Officer)
By: */s/ Andrew R. Boll*
Andrew R. Boll
Chief Financial Officer (Principal Financial and Accounting Officer)
37
---
## EX-10.1
SEC source: [ex10-1.htm](https://www.sec.gov/Archives/edgar/data/1360214/000149315224045295/ex10-1.htm)
EXHIBIT
10.1
SECOND
AMENDMENT TO CREDIT AGREEMENT AND GUARANTY
This **SECOND AMENDMENT TO CREDIT AGREEMENT AND GUARANTY** (this “***Amendment***”), dated as of October 25, 2024 (the
“***Second Amendment Effective Date***”), is entered into by and among HARROW, INC. (formerly known as Harrow Health,
Inc.), a Delaware corporation (the “***Borrower***”), the Guarantors (as defined in the Credit Agreement referred
to below) identified on the signature pages hereof, the Lenders (as defined in the Credit Agreement referred to below) identified on
the signature pages hereof (each individually, a “***Lender***”, and collectively, the “***Lenders***”),
and OAKTREE FUND ADMINISTRATION, LLC, as administrative agent for the Lenders (in such capacity, the “***Administrative Agent***”).
WITNESSETH
**WHEREAS**,
the Borrower, the Guarantors from time to time party thereto, the Lenders from time to time party thereto and the Administrative Agent
are parties to that certain Credit Agreement and Guaranty, dated as of March 27, 2023 (as amended by that certain First Amendment to
Credit Agreement and Guaranty and Consent, dated as of July 18, 2023, and as further amended, restated, supplemented or otherwise modified
from time to time immediately prior to this Amendment) (the “***Existing Credit Agreement***,” and the Existing Credit
Agreement as amended hereby, the “***Credit Agreement***”);
**WHEREAS**,
the Borrower has requested that the Administrative Agent and the Lenders agree to certain amendments to the Existing Credit Agreement,
as more fully set forth in this Amendment;
**WHEREAS**,
upon the terms and conditions set forth herein, the Administrative Agent and the Lenders are willing to amend the Existing Credit Agreement
subject to the terms and conditions set forth in this Amendment.
**NOW,
THEREFORE**, in consideration of the foregoing and the mutual covenants herein contained, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:
1. Defined
Terms. All initially capitalized terms used herein (including the preamble and recitals hereof) without definition shall have the
meanings ascribed thereto in the Credit Agreement.
2. Amendments
to Existing Credit Agreement. Subject to the satisfaction (or waiver in writing by the Administrative Agent and the Lenders) of the
conditions precedent set forth in Section 3 hereof, the Existing Credit Agreement (including Schedule 1 thereto, but not the other
schedules and exhibits attached thereto) shall be amended to delete the stricken text (indicated textually in the same manner as the
following example: stricken text) and to add the bold and double-underlined text (indicated
textually in the same manner as the following example: **bold and double-underlined
text**) as set forth on the pages of the Credit Agreement attached as Annex A hereto.
3. Conditions
Precedent to Amendment. The effectiveness of this Amendment is conditioned on the satisfaction in full, or waiver, of each of the
following conditions precedent:
(a) the
Administrative Agent shall have received executed counterparts of this Amendment, duly executed by the appropriate Obligor on the Second
Amendment Effective Date, and delivered by each applicable Obligor in such number as reasonably requested by the Administrative Agent
(which may be delivered by electronic means for the purposes of satisfying this clause (a) on the Second Amendment Effective Date);
1
(b) the
Administrative Agent shall have received a certificate, dated as of the Second Amendment Effective Date, duly executed and delivered
by a Responsible Officer of each Obligor (i) attaching (A) resolutions of each Obligor’s Board then in full force and effect authorizing
the execution, delivery and performance of this Amendment and the transactions contemplated hereby (including, in the case of the Borrower,
the borrowing of the Tranche B Loans), (B) each Organic Document of such Obligor (or a certification that there have been no modifications
thereof since the delivery thereof to Administrative Agent on the Closing Date), and certifying as to the full force and validity thereof,
(C) the incumbency and signatures of Responsible Officers authorized to execute and deliver each Loan Document to be executed by such
Obligor (or a certification that there have been no changes thereto since the delivery to Administrative Agent of the incumbency on the
Closing Date) and (D) a copy of a good standing certificate, dated a date reasonably close to the Second Amendment Effective Date, for
each such Obligor and (ii) certifying as to clauses (c) and (d) of this Section 3;
(c) each
of the representations and warranties contained in Section 4 of this Amendment shall be true and correct as of the date hereof;
(d) both
before and after giving effect to this Amendment, no event shall have occurred and be continuing that would constitute a Default or Event
of Default; and
(e) each
of the Administrative Agent and each Lender shall have received for its own account all fees, costs and expenses due and payable to it
pursuant to Section 14.03 of the Credit Agreement, including all reasonable closing costs and fees and all unpaid reasonable and
documented expenses of the Administrative Agent incurred in connection with this Amendment (including the Administrative Agent’s
reasonable and documented legal fees and expenses), plus fees and expenses of any local counsel, plus all collateral filing fees and
security fees, in each case, to the extent invoiced (or as to which a good faith estimate has been provided to the Borrower) at least
two (2) Business Days prior to the Second Amendment Effective Date.
4. Representations
and Warranties. Each of the Borrower and each Guarantor hereby represents and warrants to the Administrative Agent and the Lenders
as follows:
(a) The
execution, delivery and performance of this Amendment and such Obligor’s obligations hereunder and thereunder are within such Obligor’s
corporate or other organizational powers and have been duly authorized by all necessary corporate or other organizational action including,
if required, approval by all necessary holders of its Equity Interests. This Amendment has been duly executed and delivered by each Obligor
that is a party thereto and constitutes, a legal, valid and binding obligation of such Obligor, enforceable against such Obligor in accordance
with its terms, except as such enforceability may be limited by (i) bankruptcy, insolvency, reorganization, moratorium or similar laws
of general applicability affecting the enforcement of creditors’ rights and (ii) the application of general principles of equity
(regardless of whether such enforceability is considered in a proceeding in equity or at law).
(b) The
representations and warranties contained in the Credit Agreement and in the other Loan Documents are true and correct in all material
respects (unless such representations are already qualified by reference to materiality, Material Adverse Effect or similar language,
in which case such representations and warranties are be true and correct in all respects) on and as of the Second Amendment Effective
Date, except to the extent such representations and warranties specifically relate to an earlier date, in which case such representations
and warranties were been true and correct in all material respects on and as of such earlier date.
2
**5. GOVERNING LAW; JURISDICTION;
ETC.; WAIVER OF RIGHT TO TRIAL BY JURY; AND JUDGMENT CURRENCY. THIS AMENDMENT SHALL BE SUBJECT TO THE PROVISIONS REGARDING GOVERNING
LAW; JURISDICTION; ETC.; WAIVER OF RIGHT TO TRIAL BY JURY; AND JUDGMENT CURRENCY SET FORTH IN SECTIONS 14.09, 14.10, 14.11 AND 14.18 OF THE CREDIT AGREEMENT, AND SUCH PROVISIONS ARE INCORPORATED HEREIN BY THIS REFERENCE, *MUTATIS MUTANDIS*.**
6. Counterpart
Execution. This Amendment may be executed in any number of counterparts (including electronic imaging means), all of which taken
together shall constitute one and the same instrument and any of the parties hereto may execute this Amendment by signing any such counterpart.
Delivery of an executed signature page of this Amendment by electronic transmission (e.g. “pdf” or “tif” format)
shall be effective as delivery of a manually executed counterpart hereof. The words “execution,” “execute”, “signed,”
“signature,” and words of like import in or related to any document to be signed in connection with this Amendment and the
transactions contemplated hereby shall be deemed to include electronic signatures, the electronic matching of assignment terms and contract
formations on electronic platforms approved by the Administrative Agent, which shall be of the same legal effect, validity or enforceability
as a manually executed signature to the extent and as provided for in any applicable law, including the Federal Electronic Signatures
in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based
on the Uniform Electronic Transactions Act.
7. Limited
Effect. Except as expressly provided herein, the Existing Credit Agreement and the other Loan Documents shall remain unmodified and
in full force and effect. This Amendment shall not be deemed (a) to be a waiver of, consent to, or a modification or amendment of any
other term or condition of the Existing Credit Agreement or any other Loan Document, (b) to prejudice any right or rights which the Administrative
Agent or the Lenders may now have or may have in the future under or in connection with the Credit Agreement or the other Loan Documents
or any of the instruments or agreements referred to therein, as the same may be amended, restated, supplemented or modified from time
to time, (c) to be a commitment or any other undertaking or expression of any willingness to engage in any further discussion with the
Borrower or any of its Subsidiaries or any other Person with respect to any other waiver, amendment, modification or any other change
to the Credit Agreement or the other Loan Documents or any rights or remedies arising in favor of the Lenders or the Administrative Agent,
or any of them, under or with respect to any such documents or (d) to be a waiver of, or consent to, or a modification or amendment of,
any other term or condition of any other agreement by and among the Loan Parties, on the one hand, and the Administrative Agent or any
Lender, on the other hand. Without limiting the generality of the foregoing, the execution and delivery of this Amendment shall not constitute
a novation of any indebtedness or other obligations owing to the Lenders or the Administrative Agent under the Credit Agreement based
on facts or events occurring or existing prior to the execution and delivery of this Amendment.
8. Release.
Each of the Loan Parties hereby releases and forever discharges the Administrative Agent, the Lenders, and their respective predecessors,
successors, assigns, officers, managers, directors, employees, agents, attorneys, representatives, and affiliates (hereinafter all of
the above collectively referred to as, the “Lender Group”), from any and all claims, counterclaims, demands, damages,
debts, suits, liabilities, actions and causes of action of any nature whatsoever, in each case to the extent arising in connection with
the Loan Documents or any of the negotiations, activities, events or circumstances arising out of or related to the Loan Documents on
or prior to the effectiveness of this Amendment, whether arising at law or in equity, whether known or unknown, whether liability be
direct or indirect, liquidated or unliquidated, whether absolute or contingent, foreseen or unforeseen, and whether or not heretofore
asserted, which any of the Loan Parties may have or claim to have against any entity within the Lender Group.
9. Acknowledgment
and Reaffirmation. By its execution hereof, each of the Loan Parties hereby expressly (a) acknowledges and agrees to the terms and
conditions of this Amendment, (b) except as otherwise amended hereby, reaffirms all of its respective covenants and other obligations
set forth in the Credit Agreement and the other Loan Documents to which it is a party, (c) ratifies and confirms all security interests
previously granted by it to the Administrative Agent for the benefit of the Secured Parties under the Loan Documents, as amended hereby,
and (d) acknowledges that its respective covenants and other obligations set forth in the Credit Agreement and the other Loan Documents
to which it is a party remain in full force and effect as amended hereby.
10. Entire
Agreement. This Amendment, and the terms and provisions hereof, the Credit Agreement and the other Loan Documents constitute the
entire agreement among the parties with respect to the subject matter hereof and thereof and supersede any and all previous agreements
and understandings, oral or written, relating to the subject matter hereof, including any confidentiality (or similar) agreements.
11. Severability.
If any provision hereof is found by a court to be invalid or unenforceable, to the fullest extent permitted by any Law the parties agree
that such invalidity or unenforceability shall not impair the validity or enforceability of any other provision hereof.
12. Loan
Document. This Amendment shall constitute a Loan Document for all purposes of the Credit Agreement and the other Loan Documents.
Each reference in the Credit Agreement to “this Agreement”, “hereunder”, “hereof”, “herein”,
or words of like import, and each reference to the Credit Agreement in any other Loan Document shall be deemed a reference to the Credit
Agreement as amended hereby.
[Signature
Pages Follow]
3
IN
WITNESS WHEREOF, the parties have entered into this Amendment as of the date first above written.
BORROWER:
**HARROW, INC.**,
a Delaware corporation
By: */s/ Andrew Boll*
Name: Andrew Boll
Title: Chief Financial Officer and Corporate Secretary
GUARANTORS
**HARROW IP, LLC**,
a Delaware limited liability company
**VISIONOLOGY EQUITY, LLC**,
a Delaware limited liability company
**VISIONOLOGY, INC.**,
a Delaware corporation
**VISIONOLOGY MSO, INC.**,
a Delaware corporation
By: */s/ Andrew R. Boll*
Title: Chief Financial Officer and Corporate Secretary
**HARRPOW IP, LLC**
a Delaware limited liability company
By: */s/ Andrew R. Boll*
Name: Andrew R. Boll
Title: Vice President
**IMPRIMISRX, LLC**
a Delaware limited liability company
**IMPRIMIS NJOF, LLC**
a New Jersey limited liability company
**IMPRIMISRX NJ, LLC**
a New Jersey limited liability company
**IMPIRMISRX NASHVILLE, LLC**
a Delaware limited liability company
By: */s/ John Saharek*
Name: John Saharek
Title: President
ADMINISTRATIVE AGENT:
**OAKTREE FUND ADMINISTRATION, LLC**
By: Oaktree Capital Management, L.P.
Its: Managing Member
By: */s/ Mary Gallegly*
Name: Mary Gallegly
Title: Managing Director
By: */s/ Jessic Dombroff*
Name: Jessica Dombroff
Title: Senior Vice President
4
LENDERS:
**INPRS STRATEGIC CREDIT HOLDINGS, LLC**
By: Oaktree Capital Management, L.P.
Its: Manager
By: */s/ Mary Gallegly*
Name: Mary Gallegly
Title: Managing Director
By: */s/ Jessic Dombroff*
Name: Jessica Dombroff
Title: Senior Vice President
**OAKTREE SPECIALTY LENDING CORPORATION**
By: Oaktree Fund Advisors, LLC
Its: Investment Advisor
By: */s/ Mary Gallegly*
Name: Mary Gallegly
Title: Managing Director
By: */s/ Jessic Dombroff*
Name: Jessica Dombroff
Title: Senior Vice President
**OAKTREE STRATEGIC CREDIT FUND**
By: Oaktree Fund Advisors, LLC
Its: Investment Advisor
By: */s/ Mary Gallegly*
Name: Mary Gallegly
Title: Managing Director
By: */s/ Jessic Dombroff*
Name: Jessica Dombroff
Title: Senior Vice President
5
**OAKTREE ROUTE 66 MULTI-STRATEGY FUND, L.P.**
By: Oaktree Route 66 Multi-Strategy Fund GP, L.P.
Its: General Partner
By: Oaktree Route 66 Multi-Strategy Fund GP, Ltd.
Its: General Partner
By: Oaktree Capital Management, L.P.
Its: Director
By: */s/ Mary Gallegly*
Name: Mary Gallegly
Title: Managing Director
By: */s/ Jessic Dombroff*
Name: Jessica Dombroff
Title: Senior Vice President
**OAKTREE AZ STRATEGIC LENDING FUND, L.P.**
By: Oaktree AZ Strategic Lending Fund GP, L.P.
Its: General Partner
By: Oaktree Fund GP IIA, LLC
Its: General Partner
By: Oaktree Fund GP II, L.P.
Its: Managing Member
By: */s/ Mary Gallegly*
Name: Mary Gallegly
Title: Authorized Signatory
By: */s/ Jessica Dombroff*
Name: Jessica Dombroff
Title: Authorized Signatory
6
**OAKTREE LSL FUND HOLDINGS**
**EURRC S.À R.L.**
By: */s/ Martin Eckel*
Name: Martin Eckel
Title: Manager
By: */s/ Hugo Froment*
Name: Hugo Froment
Title: Manager
**OAKTREE LSL FUND DELAWARE HOLDINGS EURRC, L.P.**
By: Oaktree Life Sciences Lending Fund GP, L.P.
Its: General Partner
By: Oaktree Life Sciences Lending Fund GP Ltd.
Its: General Partner
By: Oaktree Capital Management, L.P.
Its: Director
By: */s/ Mary Gallegly*
Name: Mary Gallegly
Title: Managing Director
By: */s/ Jessica Dombroff*
Name: Jessica Dombroff
Title: Senior Vice President
7
Conformed
through Second Amendment, dated as of October 25, 2024
**ANNEX
A**
**AMENDED
CREDIT AGREEMENT**
**CREDIT
AGREEMENT AND GUARANTY**
**dated
as of March 27, 2023,**
**as
amended by that certain First Amendment to Credit Agreement and Guaranty**
**dated
as of July 18, 2023 and as amended by that certain Second Amendment to Credit
Agreement and Guaranty dated as of October 25, 2024**
**by
and among**
**HARROW,
INC.,**
**as
the Borrower,**
**THE
SUBSIDIARY GUARANTORS FROM TIME TO TIME PARTY HERETO,**
**as
the Guarantors,**
**THE
LENDERS FROM TIME TO TIME PARTY HERETO,**
**as
the Lenders,**
**and**
**OAKTREE
FUND ADMINISTRATION, LLC,**
**as
the Administrative Agent**
**U.S.
$107,500,000**
-ii-
**TABLE
OF CONTENTS**
| Line item | | | Page |
| --- | --- | --- | --- |
| Section 1. DEFINITIONS | 1 | | |
| | 1.01 | Certain Defined Terms | 1 |
| | 1.02 | Accounting Terms and Principles | 43 |
| | 1.03 | Interpretation | 43 |
| | 1.04 | Division | 45 |
| | 1.05 | Currency Generally | 45 |
| Section 2. THE COMMITMENT AND THE LOANS | 45 | | |
| | 2.01 | Loans | 45 |
| | 2.02 | Borrowing Procedures | 46 |
| | 2.03 | Funding of Borrowings | 46 |
| | 2.04 | Notes | 46 |
| | 2.05 | Use of Proceeds | 46 |
| | 2.06 | Commitment Fees | 47 |
| | 2.07 | Defaulting Lenders. | 48 |
| Section 3. PAYMENTS OF PRINCIPAL AND INTEREST, ETC. | 48 | | |
| | 3.01 | Scheduled Repayments and Prepayments Generally; Application | 48 |
| | 3.02 | Interest | 49 |
| | 3.03 | Prepayments | 49 |
| | 3.04 | Commitment Termination | 53 |
| | 3.05 | Exit Fee | 53 |
| | 3.06 | Original Issue Discount | 53 |
| Section 4. PAYMENTS, ETC. | 53 | | |
| | 4.01 | Payments | 53 |
| | 4.02 | Computations | 55 |
| | 4.03 | Set-Off | 55 |
| Section 5. YIELD PROTECTION, TAXES, ETC. | 56 | | |
| | 5.01 | Additional Costs | 56 |
| | 5.02 | [Reserved] | 57 |
| | 5.03 | Taxes | 57 |
| | 5.04 | Mitigation Obligations; Replacement of Lenders | 61 |
| | 5.05 | Inability to Determine Rates | 62 |
| | 5.06 | Survival | 63 |
| Section 6. CONDITIONS | 64 | | |
| | 6.01 | Conditions to the Closing Date | 64 |
| | 6.02 | Conditions to the Borrowing of Tranche B Term Loans | 68 |
| | 6.03 | Conditions to the Borrowing of Incremental Tranche A Term Loans | 69 |
| Section 7. REPRESENTATIONS AND WARRANTIES | 70 | | |
| | 7.01 | Power and Authority | 70 |
| | 7.02 | Authorization; Enforceability | 71 |
| | 7.03 | Governmental and Other Approvals; No Conflicts | 71 |
| | 7.04 | Financial Statements; Material Adverse Change | 71 |
| | 7.05 | Properties | 71 |
| | 7.06 | No Actions or Proceedings | 73 |
| | 7.07 | Compliance with Laws and Agreements | 74 |
-i-
**TABLE
OF CONTENTS**
(continued)
| Line item | 7.08 | Taxes | 75 |
| --- | --- | --- | --- |
| | 7.09 | Full Disclosure | 75 |
| | 7.10 | Investment Company Act and Margin Stock Regulation | 76 |
| | 7.11 | Solvency | 76 |
| | 7.12 | Subsidiaries | 76 |
| | 7.13 | Excluded Subsidiaries | 76 |
| | 7.14 | Material Agreements | 76 |
| | 7.15 | Restrictive Agreements | 76 |
| | 7.16 | Real Property | 77 |
| | 7.17 | Pension Matters | 77 |
| | 7.18 | Regulatory Approvals | 77 |
| | 7.19 | [Reserved] | 79 |
| | 7.20 | OFAC; Anti-Terrorism Laws | 79 |
| | 7.21 | Anti-Corruption | 79 |
| | 7.22 | Priority of Obligations | 79 |
| | 7.23 | Royalty and Other Payments | 79 |
| | 7.24 | Non-Competes | 80 |
| | 7.25 | Reimbursement from Medical Reimbursement Programs | 80 |
| Section 8. AFFIRMATIVE COVENANTS | 80 | | |
| | 8.01 | Financial Statements and Other Information | 80 |
| | 8.02 | Notices of Material Events | 83 |
| | 8.03 | Existence | 84 |
| | 8.04 | Payment of Obligations | 85 |
| | 8.05 | Insurance | 85 |
| | 8.06 | Books and Records; Inspection Rights | 85 |
| | 8.07 | Compliance with Laws and Other Obligations | 86 |
| | 8.08 | Maintenance of Properties, Etc. | 86 |
| | 8.09 | Governmental Licenses | 86 |
| | 8.10 | Use of Proceeds | 86 |
| | 8.11 | Certain Obligations Respecting Subsidiaries; Further Assurances | 86 |
| | 8.12 | Termination of Non-Permitted Liens | 88 |
| | 8.13 | Board Materials; Lender Calls | 88 |
| | 8.14 | Maintenance of Regulatory Approvals, Contracts, Intellectual Property, Etc. | 89 |
| | 8.15 | ERISA Compliance and Pension Plans | 89 |
| | 8.16 | Cash Management | 89 |
| | 8.17 | Post-Closing Obligations | 90 |
| | 8.18 | Warrants | 91 |
| | 8.19 | Certain Additional Rights of Lender (VCOC) | 92 |
| Section 9. NEGATIVE COVENANTS | 92 | | |
| | 9.01 | Indebtedness | 90 |
| | 9.02 | Liens | 95 |
| | 9.03 | Fundamental Changes and Acquisitions | 98 |
| | 9.04 | Lines of Business | 99 |
| | 9.05 | Investments | 99 |
| | 9.06 | Restricted Payments | 102 |
-ii-
**TABLE OF CONTENTS**
(continued)
| Line item | 9.07 | Payments of Indebtedness | 103 |
| --- | --- | --- | --- |
| | 9.08 | Change in Fiscal Year | 103 |
| | 9.09 | Sales of Assets, Etc. | 103 |
| | 9.10 | Transactions with Affiliates | 105 |
| | 9.11 | Restrictive Agreements | 105 |
| | 9.12 | Modifications and Terminations of Material Agreements and Organic Documents | 106 |
| | 9.13 | Outbound Licenses | 106 |
| | 9.14 | Sales and Leasebacks | 106 |
| | 9.15 | Hazardous Material | 106 |
| | 9.16 | Accounting Changes | 107 |
| | 9.17 | Compliance with ERISA | 107 |
| | 9.18 | Sanctions; Anti-Corruption Use of Proceeds | 107 |
| Section 10. FINANCIAL COVENANTS | 107 | | |
| | 10.01 | Minimum Liquidity | 107 |
| | 10.02 | Minimum Net Revenues | 107 |
| Section 11. EVENTS OF DEFAULT | 108 | | |
| | 11.01 | Events of Default | 108 |
| | 11.02 | Remedies | 111 |
| | 11.03 | Additional Remedies | 112 |
| | 11.04 | Minimum Net Revenues Covenant Cure | 113 |
| | 11.05 | Payment of Yield Protection Premium and Exit Fee | 114 |
| Section 12. THE ADMINISTRATIVE AGENT | 115 | | |
| | 12.01 | Appointment and Duties | 115 |
| | 12.02 | Binding Effect | 116 |
| | 12.03 | Use of Discretion | 116 |
| | 12.04 | Delegation of Rights and Duties | 117 |
| | 12.05 | Reliance and Liability | 117 |
| | 12.06 | Administrative Agent Individually | 119 |
| | 12.07 | Lender Credit Decision | 119 |
| | 12.08 | Expenses; Indemnities | 119 |
| | 12.09 | Resignation of the Administrative Agent | 120 |
| | 12.10 | Release of Collateral or Guarantors | 121 |
| | 12.11 | Additional Secured Parties | 122 |
| | 12.12 | Agent May File Proofs of Claim | 122 |
| | 12.13 | Acknowledgements of Lenders | 123 |
| Section 13. GUARANTY | 127 | | |
| | 13.01 | The Guaranty | 127 |
| | 13.02 | Obligations Unconditional | 129 |
| | 13.03 | Discharge Only Upon Payment in Full. | 123 |
| | 13.04 | Additional Waivers; General Waivers. | 130 |
| | 13.05 | Reinstatement | 131 |
| | 13.06 | Subrogation | 131 |
| | 13.07 | Remedies | 132 |
| | 13.08 | Instrument for the Payment of Money | 132 |
| | 13.09 | Continuing Guarantee | 132 |
-iii-
**TABLE OF CONTENTS**
(continued)
| Line item | 13.11 | General Limitations on Guarantee Obligations | 133 |
| --- | --- | --- | --- |
| Section 14. MISCELLANEOUS | 133 | | |
| | 14.01 | No Waiver | 133 |
| | 14.02 | Notices | 133 |
| | 14.03 | Expenses, Indemnification, Etc. | 134 |
| | 14.04 | Amendments, Etc. | 135 |
| | 14.05 | Successors and Assigns | 136 |
| | 14.06 | Survival | 140 |
| | 14.07 | Captions | 140 |
| | 14.08 | Counterparts, Effectiveness | 140 |
| | 14.09 | Governing Law | 140 |
| | 14.10 | Jurisdiction, Service of Process and Venue | 141 |
| | 14.11 | Waiver of Jury Trial | 141 |
| | 14.12 | Waiver of Immunity | 141 |
| | 14.13 | Entire Agreement | 142 |
| | 14.14 | Severability | 142 |
| | 14.15 | No Fiduciary Relationship | 142 |
| | 14.16 | Confidentiality | 143 |
| | 14.17 | Interest Rate Limitation | 143 |
| | 14.18 | Judgment Currency | 143 |
| | 14.19 | USA PATRIOT Act | 144 |
| | 14.20 | Acknowledgement and Consent to Bail-In of Affected Financial Institutions | 144 |
| | 14.21 | Certain ERISA Matters | 145 |
-iv-
**SCHEDULES
AND EXHIBITS**
Schedule 1 - Loans Schedule
Schedule 2 - Minimum Net Revenues
Schedule 4 - Products
Schedule 5 - Refinanced Facility
Schedule 7.05(b) - Certain Intellectual Property
Schedule 7.06(a) - Litigation
Schedule 7.06(c) - Collective Bargaining Agreements
Schedule 7.08 - Taxes
Schedule 7.12 - Information Regarding Subsidiaries
Schedule 7.14 - Material Agreements
Schedule 7.15 - Restrictive Agreements
Schedule 7.16 - Real Property Owned or Leased by Obligors
Schedule 7.17 - Pension Matters
Schedule 7.18(c) - Adverse Findings
Schedule 7.23 - Royalties and Other Payments
Schedule 9.01(b) - Existing Indebtedness
Schedule 9.02(b) - Existing Liens
Schedule 9.05(a) - Existing Investments
Schedule 9.09 - Sale of Assets
Schedule 9.10 - Transactions with Affiliates
Schedule 9.14 - Existing Sales and Leasebacks
Exhibit A - Form of Assignment and Assumption
Exhibit B - Form of Borrowing Notice
Exhibit C - Form of Funding Date Certificate
Exhibit D - [Reserved]
Exhibit E - Form of Guarantee Assumption Agreement
Exhibit F - Form of Intercompany Subordination Agreement
Exhibit G - [Reserved]
Exhibit H - Form of Note
Exhibit I - Form of Warrant
Exhibit J-1 - Form of U.S. Tax Compliance Certificate (For Foreign Lenders That Are Not Partnerships For U.S. Federal Income Tax Purposes)
Exhibit J-2 - Form of U.S. Tax Compliance Certificate (For Foreign Participants That Are Not Partnerships For U.S. Federal Income Tax Purposes)
Exhibit J-3 - Form of U.S. Tax Compliance Certificate (For Foreign Participants That Are Partnerships For U.S. Federal Income Tax Purposes)
Exhibit J-4 - Form of U.S. Tax Compliance Certificate (For Foreign Lenders That Are Partnerships For U.S. Federal Income Tax Purposes)
Exhibit K - Form of Solvency Certificate
Exhibit L - Form of Compliance Certificate
-v-
**CREDIT
AGREEMENT AND GUARANTY**
CREDIT
AGREEMENT AND GUARANTY, dated as of March 27, 2023 (this “***Agreement***”), among **HARROW, INC.** (formerly
known as Harrow Health, Inc.), a Delaware corporation (the “***Borrower***”), certain Subsidiaries of the Borrower
required to provide Guarantees from time to time hereunder, the lenders from time to time party hereto (each a “***Lender***”
and collectively, the “***Lenders***”), and **OAKTREE FUND ADMINISTRATION, LLC**, as administrative agent for
the Lenders (in such capacity, the “***Administrative Agent***”).
**WITNESSETH:**
WHEREAS,
the Borrower has requested that the Lenders provide a senior secured term loan facility to the Borrower in an aggregate principal amount
of $100,000,000, consisting of (a) a $65,000,000 Closing Date Tranche A Term Loan to be extended on the Closing Date and (b) an up to
$35,000,000 Tranche B Term Loan to be extended on the Tranche B Funding Date, which was reduced to $30,000,000 under the Tranche B Commitment
as of March 28, 2024, to be extended as of the Second Amendment Effective Date;
WHEREAS,
on the First Amendment Effective Date, the Borrower has requested that the Lenders provide a $12,500,000 Incremental Tranche A Term Loan
to be extended on the Incremental Tranche A Funding Date, which Incremental Tranche A Term Loan will form a single tranche of Tranche
A Term Loans with the Closing Date Tranche A Term Loan extended on the Closing Date; and
WHEREAS,
the Lenders are willing, on the terms and subject to the conditions set forth herein, to provide such senior secured term loan facility.
NOW,
THEREFORE, the parties hereto agree as follows:
**Section
1.**
DEFINITIONS
***Section
2.*** ***Certain Defined
Terms***. As used herein, the following terms
have the following respective meanings:
“***Acquisition***”
means any transaction, or any series of related transactions, by which any Person, directly or indirectly, by means of amalgamation,
merger, purchase of assets, purchase of Equity Interests, exclusive licensing of Intellectual Property or otherwise, (i) acquires all
or substantially all of the assets of any other Person, (ii) acquires an entire business line or unit or division of any other Person,
(iii) with respect to any other Person that is managed or governed by a Board, acquires control of Equity Interests of such other Person
representing more than fifty percent (50%) of the ordinary voting power (determined on a fully-diluted basis) for the election of directors
of such Person’s Board, or (iv) acquires control of more than fifty percent (50%) of the Equity Interests in any other Person (determined
on a fully-diluted basis) that is not managed by a Board.
“***Administrative
Agent***” has the meaning set forth in the preamble hereto.
1
“***Affected
Financial Institution***” means (a) any EEA Financial Institution or (b) any U.K. Financial Institution.
“***Affiliate***”
means, with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, Controls or
is Controlled by or is under common Control with the Person specified.
“***Agreement***”
has the meaning set forth in the preamble hereto.
“***ANDA***”
means (i) (x) an abbreviated new drug application (as defined in the FD&C Act) and (y) any similar application or functional equivalent
relating to any new drug application applicable to or required by any non-U.S. Governmental Authority, and (ii) all supplements and amendments
that may be filed with respect to any of the foregoing.
“***Anti-Terrorism
Laws***” means any laws relating to terrorism or money laundering, including, without limitation, (i) the Money Laundering
Control Act of 1986 (e.g., 18 U.S.C. §§ 1956 and 1957), (ii) the Bank Secrecy Act of 1970 (e.g., 31 U.S.C. §§ 5311
– 5330), as amended by the Patriot Act, (iii) the laws, regulations and Executive Orders administered by the United States Department
of the Treasury’s Office of Foreign Assets Control (“**OFAC**”), (iv) the Comprehensive Iran Sanctions, Accountability,
and Divestment Act of 2010 and implementing regulations by the United States Department of the Treasury, (v) any law prohibiting or directed
against terrorist activities or the financing of terrorist activities (e.g., 18 U.S.C. §§ 2339A and 2339B), or (vi) any similar
laws enacted in the United States or any other jurisdictions in which the parties to this agreement operate, and all other present and
future legal requirements of any Governmental Authority governing, addressing, relating to, or attempting to eliminate, terrorist acts
and acts of war.
“***Applicable
Commitment***” means the Closing Date Tranche A Commitment, the Incremental Tranche A Commitment or the Tranche B Commitment,
as applicable.
“***Applicable
Funding Date***” means the Closing Date, the Incremental Tranche A Funding Date or the Tranche B Funding Date, as applicable.
“***Applicable
Margin***” means a percentage equal to 6.50%.
“***Arm’s
Length Transaction***” means, with respect to any transaction, the terms of such transaction shall not be less favorable to
the Borrower or any of its Subsidiaries than commercially reasonable terms that would be obtained in a transaction with a Person that
is an unrelated third party.
“***Asset
Sale***” has the meaning set forth in **Section 9.09**.
“***Assignment
and Assumption***” means an assignment and assumption entered into by a Lender and an assignee of such Lender substantially
in the form of **Exhibit A**, or such other form as agreed by the Administrative Agent.
2
“***Bail-In
Action***” means the exercise of any Write-Down and Conversion Powers by the applicable EEA Resolution Authority or U.K. Resolution
Authority in respect of any liability of an Affected Financial Institution.
“***Bail-In
Legislation***” means (a) with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European
Parliament and of the Council of the European Union, the implementing law, regulation, rule or requirement for such EEA Member Country
from time to time that is described in the EU Bail-In Legislation Schedule; and (b) with respect to the United Kingdom, Part I of the
United Kingdom Banking Act 2009 (as amended from time to time) and any other law, regulation or rule applicable in the United Kingdom
relating to the resolution of unsound or failing banks, investment firms or other financial institutions or their Affiliates (other than
through liquidation, administration or other Insolvency Proceedings).
“***Bailee
Letter***” means a bailee letter substantially in the form of Exhibit F to the Security Agreement.
“***Bankruptcy
Code***” means Title 11 of the United States Code entitled “Bankruptcy.”
“***Benefit
Plan***” means any employee benefit plan as defined in Section 3(3) of ERISA (whether governed by the laws of the United States
or otherwise) to which any Obligor or Subsidiary thereof incurs or otherwise has any obligation or liability, contingent or otherwise.
“***Beneficial
Ownership Certification***” means a certification regarding beneficial ownership as required by the Beneficial Ownership Regulation.
“***Beneficial
Ownership Regulation***” means 31 C.F.R. § 1010.230.
“***BLA***”
means (i) (x) a biologics license application (as defined in the Public Health Service Act) to introduce, or deliver for introduction,
a biologic product, including vaccines into commerce in the U.S., or any successor application or procedure and (y) any similar application
or functional equivalent relating to biologics licensing applicable to or required by any non-U.S. Governmental Authority, and (ii) all
supplements and amendments that may be filed with respect to the foregoing.
“***Board***”
means, with respect to any Person, the board of directors or equivalent management or oversight body of such Person or any committee
thereof authorized to act on behalf of such board (or equivalent body).
“***Borrower***”
has the meaning set forth in the preamble hereto.
“***Borrowing***”
means the borrowing of the Loans on each Applicable Funding Date.
“***Borrowing
Notice***” means a written notice substantially in the form of **Exhibit B**.
3
“***Bringdown
Date***” means each date on which a Loan is advanced pursuant to **Section 2.01** and any other date the representations
and warranties under the Loan Documents are required to be made (other than the Closing Date).
“***Business
Day***” means a day (other than a Saturday or Sunday) on which commercial banks are not authorized or required to close in
New York City.
“***Capital
Lease Obligations***” means, as to any Person, the obligations of such Person to pay rent or other amounts under a lease of
(or other agreement conveying the right to use) real and/or personal property, which obligations are required to be classified and accounted
for as a capital lease or finance lease on a balance sheet of such Person under GAAP, and for the purposes of this Agreement, the amount
of such obligations shall be the capitalized amount thereof, determined in accordance with GAAP. “Capital Lease Obligations”
shall not include any obligations under a straight-line or operating lease (including any lease that would not have been a capital lease
under GAAP prior to giving effect to Accounting Standards Codification 842, Leases).
“***CATIONORM
PLUS***” (0.4ml x 30 Vials) is a hydrating and lubricating emulsion which protects the ocular surface and relieves the discomfort
and irritation due to dry eye caused by prolonged use of contact lenses or environmental condition.
“***Casualty
Event***” means the damage, destruction or condemnation, as the case may be, of property of the Borrower or any of its Subsidiaries
in excess of $2,000,000.
“***Change
of Control***” means
(a) an event or series of events (i) as a result of which any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Securities Act, but excluding any of such person or its Subsidiaries, and any Person acting in its capacity as trustee, agent or other fiduciary or administrator of any Plan) becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a person or group shall be deemed to have “beneficial ownership” of all Equity Interests that such person or group has the right to acquire, whether such right is exercisable immediately or only after the passage of time (such right, an “***option right***”)), directly or indirectly, of thirty-five percent (35%) or more of the Equity Interests of the Borrower entitled to vote for members of the Board of the Borrower on a fully-diluted basis (and taking into account all such Equity Interests that such person or group has the right to acquire pursuant to any option right) or (ii) as a result of which, during any period of twelve (12) consecutive months, a majority of the members of the Board of the Borrower cease to be composed of individuals (A) who were members of such Board on the first day of such period, (B) who were elected, appointed or nominated to such Board, or whose election, appointment or nomination to such Board was approved, by individuals referred to in clause (A) above constituting at the time of such election, appointment, nomination or approval at least a majority of such Board or equivalent governing body or (C) who were elected, appointed or nominated to such Board, or whose election, appointment or nomination to such Board was approved, by individuals referred to in clauses (A) and (B) above constituting at the time of such election, appointment, nomination or approval at least a majority of such Board;
4
(b) except to the extent permitted by this Agreement, an event or series of events that results in the Borrower’s failure to own, directly or indirectly, beneficially and of record, one hundred percent (100%) of all issued and outstanding Equity Interests of each Subsidiary Guarantor (other than Visionology, Inc. and Visionology MSO, Inc.);
(c) except to the extent permitted by this Agreement, an event or series of events that results in the Borrower’s failure to own, directly or indirectly, beneficially and of record, at least fifty-one percent (51%) of all issued and outstanding Equity Interests of each of Visionology, Inc. and Visionology MSO, Inc.; or
(d) an event or series of events that results in the sale of all or substantially all of the assets of the Borrower and its Subsidiaries, taken as a whole.
“***Claims***”
means (and includes) any claim, demand, complaint, grievance, action, application, suit, cause of action, order, charge, indictment,
prosecution, judgement or other similar process, whether in respect of assessments or reassessments, debts, liabilities, expenses, costs,
damages or losses, contingent or otherwise, whether liquidated or unliquidated, matured or unmatured, disputed or undisputed, contractual,
legal or equitable, including loss of value, professional fees, including fees and disbursements of legal counsel, and all costs incurred
in investigating or pursuing any of the foregoing or any proceeding relating to any of the foregoing.
“***Closing
Date***” means the date on which the conditions precedent specified in **Section 6.01** are satisfied (or waived in accordance
with **Section 14.04**).
“***Closing
Date Fee Letter***” means the Fee Letter, dated the date of this Agreement, among the Borrower, Oaktree Capital Management,
L.P. and the Administrative Agent.
“***Closing
Date Tranche A Commitment***” means, with respect to each Lender, the obligation of such Lender to make Closing Date Tranche
A Term Loans to the Borrower on the Closing Date in accordance with the terms and conditions of this Agreement, which commitment is in
the amount set forth opposite such Lender’s name on **Schedule 1** under the caption “Closing Date Tranche A Commitment”,
as such Schedule may be amended from time to time pursuant to an Assignment and Assumption or otherwise. The aggregate amount of Closing
Date Tranche A Commitments on the date of this Agreement equals $65,000,000.
5
“***Closing
Date Tranche A Term Loans***” has the meaning assigned to such term in **Section 2.01(a)(i)**.
“***CME***”
means CME Group Benchmark Administration Limited.
“***Code***”
means the Internal Revenue Code of 1986, as amended from time to time, and the rules and regulations promulgated thereunder from time
to time.
“***Collateral***”
means any real, personal and mixed property (including Equity Interests), whether tangible or intangible, in which Liens are granted
or purported to be granted to the Administrative Agent as security for the Obligations under any Loan Document on or after the Closing
Date, including future acquired or created assets or property (or collectively, all such real, personal and mixed property, as the context
may require); provided, for the avoidance of doubt, “Collateral” shall not include any Excluded Assets (as defined
in the Security Agreement).
“***Commitment***”
means, with respect to each Lender, the obligation of such Lender to make Loans to the Borrower on the Closing Date, the Incremental
Tranche A Funding Date or the Tranche B Funding Date, as applicable, in accordance with the terms and conditions of this Agreement, which
commitment is in the amount set forth opposite such Lender’s name on **Schedule 1** under the caption “Applicable Commitment”,
as such Schedule may be amended from time to time pursuant to an Assignment and Assumption or otherwise pursuant to this Agreement.
“***Commitment
Fee***” has the meaning set forth in the Fee Letter.
“***Commitment
Termination Date***” means (i) with respect to the Closing Date Tranche A Commitment, the Closing Date, (ii) with respect
to the Incremental Tranche A Commitment, the earlier to occur of (x) the date the Incremental Tranche A Commitment is terminated pursuant
to **Section 3.04**, (y) the termination of the Eyevance APA without the consummation of the Eyevance Acquisition and (z) August 8,
2023 and (iii) with respect to the Tranche B Commitment, the earlier to occur of (x) the date the Tranche B Commitment is terminated
pursuant to **Section 3.04** and (y) January 31, 2025.
“***Company
Competitor***” means (i) any competitor of the Borrower or any of its Subsidiaries primarily operating in the same line of
business as the Borrower or any of its Subsidiaries and (ii) any of such competitor’s Affiliates (other than any Person that is
a bona fide debt fund primarily engaged in the making, purchasing, holding or other investing in commercial loans, notes, bonds or similar
extensions of credit or securities in the Ordinary Course) that are either (x) identified by name in writing by the Borrower to the Administrative
Agent from time to time or (y) clearly identifiable as an Affiliate of a competitor on the basis of such Affiliate’s name. Notwithstanding
anything to the contrary contained in this Agreement, Administrative Agent shall not have any duty or obligation to carry out due diligence
in order to identify or determine whether a Person would be a Company Competitor, and the Administrative Agent shall have no liability
with respect to any assignment or participation made to a Company Competitor.
“***Compliance
Certificate***” has the meaning set forth in **Section 8.01(c)**.
6
“***Conforming
Changes***” means, with respect to the use, administration of or any conventions associated with Term SOFR or any proposed
Successor Rate, as applicable, any conforming changes to the definitions of “Term SOFR” and “Interest Period”,
timing and frequency of determining rates and making payments of interest and other technical, administrative or operational matters
(including, for the avoidance of doubt, the definitions of “Business Day” and “U.S. Government Securities Business
Day”, timing of borrowing requests or prepayment, conversion or continuation notices and length of lookback periods and other technical,
administrative or operational matters) as may be appropriate, in the discretion of the Administrative Agent, to reflect the adoption
and implementation of such applicable rate(s) and to permit the administration thereof by the Administrative Agent in a manner substantially
consistent with market practice (or, if the Administrative Agent determines that adoption of any portion of such market practice is not
administratively feasible or that no market practice for the administration of such rate exists, in such other manner of administration
as the Administrative Agent determines is reasonably necessary in connection with the administration of this Agreement and any other
Loan Document).
“***Connection
Income Taxes***” means Other Connection Taxes that are imposed on or measured by net income (however denominated) or that
are franchise Taxes or branch profits Taxes.
“***Contracts***”
means any contract, license, lease, agreement, obligation, promise, undertaking, understanding, arrangement, document, commitment, entitlement
or engagement under which a Person has, or will have, any liability or contingent liability (in each case, whether written or oral, express
or implied, and whether in respect of monetary or payment obligations, performance obligations or otherwise).
“***Control***”
means, in respect of a particular Person, the possession by one or more other Persons, directly or indirectly, of the power to direct
or cause the direction of the management or policies of such particular Person, whether through the ability to exercise voting power,
by contract or otherwise. “Controlling” and “Controlled” have meanings correlative thereto.
“***Control
Agreement***” has the meaning set forth in **Section 8.16(a)**.
“***Controlled
Account***” has the meaning set forth in **Section 8.16(a)**.
“***Copyright***”
means all copyrights (including with respect to published and unpublished works of authorship, software, website and mobile content,
data, databases and other compilations of information), copyright registrations and applications for copyright registrations, including
all renewals, restorations, reversions and extensions thereof and all other rights whatsoever accruing thereunder or pertaining thereto
throughout the world.
“***Credit
Spread Adjustment***” means 0.15% per annum.
“***Cure
Expiration Date***” has the meaning set forth in **Section 11.04**.
7
“***Daily
Simple SOFR***” means with respect to any applicable determination date means the SOFR published on such date on the Federal
Reserve Bank of New York’s website (or any successor source).
“***Default***”
means any Event of Default and any event that, upon the giving of notice, the lapse of time or both, would constitute an Event of Default.
“***Default
Rate***” has the meaning set forth in **Section 3.02(b)**.
“***Defaulting
Lender***” means, subject to **Section 2.07(b)**, any Lender, as determined by the Administrative Agent, that (a) has failed
to perform any of its funding obligations hereunder, including with respect to any Closing Date Tranche A Commitments, Incremental Tranche
A Commitments or any Tranche B Commitments, within three (3) Business Days of the date required to be funded by it hereunder, (b) has
notified the Borrower or the Administrative Agent that it does not intend to comply with its funding obligations hereunder, or (c) has
(i) become the subject of an Insolvency Proceeding, (ii) had a receiver, conservator, trustee, administrator, assignee for the benefit
of creditors or similar Person charged with reorganization or liquidation of its business or a custodian appointed for it, (iii) taken
any action in furtherance of, or indicated its consent to, approval of or acquiescence in any such proceeding or appointment or (iv)
become the subject of a Bail-In Action; provided, that, a Lender shall not be a Defaulting Lender solely by virtue of the ownership or
acquisition of any Equity Interests in that Lender or any direct or indirect parent company thereof by a Governmental Authority. Any
determination by the Administrative Agent that a Lender is a Defaulting Lender under any one or more of clauses (a) through (c) above, and of the effective date of such status, shall be conclusive and binding absent manifest error, and such Lender shall be
deemed to be a Defaulting Lender (subject to **Section 2.07(b)**) as of the date established therefor by the Administrative Agent
in a written notice of such determination, which shall be delivered by the Administrative Agent to the Borrower and each Lender promptly
following such determination.
“***Deferred
Acquisition Consideration***” means any purchase price adjustments, royalty, earn-out, milestone payments, contingent or other
deferred payments of a similar nature (including any non-compete payments and consulting payments) made in connection with any Permitted
Acquisition, the Eyevance Acquisition or other acquisition or investment permitted under this Agreement.
“***Designated
Jurisdiction***” means any country or territory to the extent that such country or territory is the subject of country- or
territory-wide Sanctions.
8
“***Disqualified
Equity Interests***” means, with respect to any Person, any Equity Interest of such Person that, by its terms (or by the terms
of any security or other Equity Interest into which it is convertible or for which it is exchangeable), or upon the happening of any
event or condition (a) matures (excluding any maturity as the result of an optional redemption
by the issuer thereof) or is mandatorily redeemable (other than solely for (i) Qualified Equity Interests and
(ii) cash in lieu of fractional shares), including pursuant to a sinking fund obligation or otherwise, (b) is redeemable at the
option of the holder thereof (other than solely for (i) Qualified Equity Interests and (ii) cash
in lieu of fractional shares), in whole or in part, (c) provides for the scheduled payments of dividends or other distributions
in cash (other than the payment of cash in lieu of redemption of fractional shares) or other
securities that would constitute Disqualified Equity Interests, or (d) is or becomes convertible into or exchangeable for (unless
at the sole option of the issuer thereof) Indebtedness or any other Equity Interests that would constitute Disqualified Equity
Interests, in each case, prior to the date that is ninety-one (91) days after the Maturity Date; provided, that, any Disqualified
Equity Interests that would not constitute Disqualified Equity Interests but for provisions thereof giving holders thereof (or the holders
of any security into or for which such Equity Interests are convertible, exchangeable or exercisable) the right to require the issuer
thereof to redeem or repurchase such Equity Interests upon the occurrence of a change in control (including for this purpose an asset
sale that would require prepayment in full of the Obligations) occurring prior to the 91st day after the Maturity Date shall not constitute
Disqualified Equity Interests if such right to redemption or repurchase is subject, to the satisfaction of the Administrative Agent in
its reasonable discretion, to the prior payment in full of all Obligations (other than contingent indemnification obligations for which
no claim has been asserted) under the Loan Documents; provided, further, that, if such Equity Interests are issued
pursuant to a plan for the benefit of employees of the Borrower or any Subsidiary or by any such plan to such employees, such Equity
Interests shall not constitute Disqualified Equity Interests solely because (i) such employee may deliver such Equity Interests to the
Borrower and its Subsidiaries (or the Borrower or such Subsidiary withholds such Equity Interests) in satisfaction of any exercise price
or tax withholding obligations with respect to such Equity Interests, or (ii) they may be required to be repurchased by Borrower or its
Subsidiaries as a result of any such employee’s termination, death or disability.
“***Distressed
Debt Investor***” means any investor or investment fund specializing in distressed debt and a majority of whose investment
portfolio at all times consists of distressed debt. In no event shall any Oaktree Lender be deemed to be a Distressed Debt Investor.
Notwithstanding anything to the contrary contained in this Agreement, Administrative Agent shall not have any duty or obligation to carry
out due diligence in order to identify or determine whether a Person would be a Distressed Debt Investor, and the Administrative Agent
shall have no liability with respect to any assignment or participation made to a Distressed Debt Investor.
“***Division***”
has the meaning set forth in **Section 1.04**.
“***Dollars***”
and “***$***” means lawful money of the United States of America.
“***Domestic
Subsidiary***” means any Subsidiary that is a corporation, limited liability company, partnership or similar business entity
incorporated, formed or organized under the laws of the United States, any state of the United States or the District of Columbia.
9
“***EBITDA***”
means the consolidated net income (or loss) of the Borrower and its Subsidiaries for such period, as determined in accordance with GAAP
(a) increased, without duplication, by the following, in each case only to the extent deducted (and not added back or excluded) in determining
consolidated net income (or loss) for such period: (i) stock-based compensation and expenses for such period, (ii) interest expense,
net (for such period), (iii) taxes for such period, (iv) depreciation for such period, (v) amortization of intangible assets for such
period, (vi) non-cash impairments of intangible assets for such period, (vii) investment losses for such period, solely to the extent
such losses are limited to the Permitted Minority Investments, (viii) non-cash expenses for such period, (ix) cash expenses (other than
cash expenses recorded in respect of acquired in-process research and development) for such period, not to exceed $2,000,000 in the aggregate
during such period, and (x) cash expenses recorded in respect of acquired in-process research and development, not to exceed $3,000,000
in the aggregate during such period; and (b) decreased, without duplication, and to the extent included in arriving at consolidated net
income (or loss): (i) investment gains for such period, to the extent such gains are from the Permitted Minority Investments, and (ii)
non-cash gains for such period; provided that the calculation of EBITDA and all of the addbacks and components thereof shall be
substantially consistent with how Adjusted EBITDA and such addbacks and components thereof were reported in the letter to stockholders
dated November 14, 2022 from the Borrower to its stockholders.
“***EEA
Financial Institution***” means (a) any credit institution or investment firm established in any EEA Member Country which
is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of
an institution described in clause (a) of this definition, or (c) any financial institution established in an EEA Member Country which
is a subsidiary of an institution described in clauses (a) or (b) of this definition and is subject to consolidated supervision with
its parent.
“***EEA
Member Country***” means any of the member states of the European Union, Iceland, Liechtenstein, and Norway.
“***EEA
Resolution Authority***” means any public administrative authority or any person entrusted with public administrative authority
of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.
“***Eligible
Transferee***” means and includes (a) any commercial bank or other institutional lender, (b) any insurance company, (c) any
finance company, (d) any financial institution, (e) any Person that is a bona fide debt fund primarily engaged in the making, purchasing,
holding or other investing in commercial loans, notes, bonds or similar extensions of credit or securities in the Ordinary Course, (f)
with respect to any Lender, any of its Affiliates or such Lender’s or Affiliate’s managed funds or accounts, and (g) any
other “accredited investor” (as defined in Regulation D of the Securities Act) that is principally in the business of managing
investments or holding assets for investment purposes; provided that, an Eligible Transferee shall not include any Defaulting
Lender, Company Competitor or Distressed Debt Investor; provided, further, that (i) the preceding proviso shall not apply
retroactively to any Person that previously acquired an assignment or participation interest hereunder to the extent such Person was
not a Defaulting Lender, Company Lender or a Distressed Debt Investor at the time of the applicable assignment or participation and (ii)
the Administrative Agent shall not have any duty or obligation to carry out due diligence in order to identify or determine whether a
Person would be excluded as an Eligible Transferee as a result of the application of the preceding proviso.
“***Employee
Benefit Plan***” means any of (a) an “employee benefit plan” (as defined in ERISA) that is subject to Title I
of ERISA, (b) a “plan” as defined in and subject to Section 4975 of the Code or (c) any Person whose assets include (for
purposes of ERISA Section 3(42) or otherwise for purposes of Title I of ERISA or Section 4975 of the Code) the assets of any such “employee
benefit plan” or “plan”.
10
“***Environmental
Claims***” means any investigation, notice, notice of violation, claim, action, suit, proceeding, demand, information request,
abatement order or other order or directive (conditional or otherwise), by any Governmental Authority or any other Person, arising (a)
pursuant to or in connection with any actual or alleged violation of any Environmental Law; (b) in connection with any Hazardous Material
or any actual or alleged Hazardous Materials Activity; or (c) in connection with any actual or alleged damage, injury, threat or harm
to health, safety, natural resources or the environment, arising out of a violation of Environmental Law or any Hazardous Materials Activity.
“***Environmental
Law***” means all laws (including common law and any federal, state, provincial or local governmental law), rule, regulation,
order, writ, judgment, notice, requirement, binding agreement, injunction or decree, whether U.S., or non-U.S. relating in any way to
(a) environmental matters, including those relating to any Hazardous Materials Activity; (b) the generation, use, storage, transportation
or disposal of Hazardous Materials; or (c) to the extent related to Hazardous Materials Activity, occupational safety and health, industrial
hygiene, land use, natural resources or the protection of human, plant or animal health or welfare, in any manner applicable to the Borrower
or any of its Subsidiaries or any Facility.
“***Environmental
Liability***” means any liability, contingent or otherwise (including any liability for damages, costs of environmental remediation,
fines, penalties or indemnities), of any Obligor or any of its Subsidiaries directly or indirectly resulting from or based upon (a) violation
of any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials,
(c) exposure to any Hazardous Materials, (d) the release or threatened release of any Hazardous Materials into the environment or (e)
any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the
foregoing.
“***Equity
Interests***” means, with respect to any Person (for purposes of this defined term, an “***issuer***”),
all shares of, interests or participations in, or other equivalents in respect of such issuer’s capital stock, including all membership
interests, partnership interests or equivalent, whether now outstanding or issued after the Closing Date, and in each case, however designated
and whether voting or non-voting. Notwithstanding the foregoing, in no event shall any Indebtedness convertible or exchangeable into
Equity Interests constitute “Equity Interests” hereunder.
“***ERISA***”
means the United States Employee Retirement Income Security Act of 1974, as amended.
“***ERISA
Affiliate***” means, collectively, any Obligor, Subsidiary thereof, and any Person under common control, or treated as a single
employer, with any Obligor or Subsidiary thereof, within the meaning of Section 414(b) or (c) of the Code.
11
“***ERISA
Event***” means (a) a reportable event as defined in Section 4043 of ERISA with respect to a Title IV Plan, excluding, however,
such events as to which the PBGC by regulation has waived the requirement of Section 4043(a) of ERISA that it be notified within thirty
(30) days of the occurrence of such event; (b) the applicability of the requirements of Section 4043(b) of ERISA with respect to a contributing
sponsor, as defined in Section 4001(a)(13) of ERISA, to any Title IV Plan where an event described in paragraph (9), (10), (11), (12)
or (13) of Section 4043(c) of ERISA is reasonably expected to occur with respect to such plan within the following thirty (30) days;
(c) a withdrawal by any Obligor or any ERISA Affiliate thereof from a Title IV Plan or the termination of any Title IV Plan resulting
in liability under Sections 4063 or 4064 of ERISA; (d) the withdrawal of any Obligor or any ERISA Affiliate thereof in a complete or
partial withdrawal (within the meaning of Section 4203 and 4205 of ERISA) from any Multiemployer Plan if there is any potential liability
therefore, or the receipt by any Obligor or any ERISA Affiliate thereof of notice from any Multiemployer Plan that it is insolvent pursuant
to Section 4245 of ERISA; (e) the filing of a notice of intent to terminate, the treatment of a plan amendment as a termination under
Section 4041 or 4041A of ERISA, or the commencement of proceedings by the PBGC to terminate a Title IV Plan or Multiemployer Plan, but
in the case of a multiple-employer plan or a Multiemployer Plan, only once notice has been received from the plan administrator; (f)
the imposition of liability on any Obligor or any ERISA Affiliate thereof pursuant to Sections 4062(e) or 4069 of ERISA or by reason
of the application of Section 4212(c) of ERISA; (g) the failure by any Obligor or any ERISA Affiliate thereof to make any required contribution
to a Title IV Plan, or the failure to meet the minimum funding standard of Section 412 of the Code with respect to any Title IV Plan
(whether or not waived in accordance with Section 412(c) of the Code) or the failure to make by its due date a required installment under
Section 430 of the Code with respect to any Title IV Plan or the failure to make any required contribution to a Multiemployer Plan; (h)
the determination that any Title IV Plan is considered an at-risk plan or a plan in endangered to critical status within the meaning
of Sections 430, 431 and 432 of the Code or Sections 303, 304 and 305 of ERISA, but in the case of a multiple-employer plan or a Multiemployer
Plan, only once notice has been received from the plan administrator; (i) an event or condition which might reasonably be expected to
constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Title IV Plan
or Multiemployer Plan; (j) the imposition of any liability under Title I or Title IV of ERISA, other than PBGC premiums due but not delinquent
under Section 4007 of ERISA, upon any Obligor or any ERISA Affiliate thereof; (k) an application for a funding waiver under Section 303
of ERISA or an extension of any amortization period pursuant to Section 412 of the Code with respect to any Title IV Plan, but in the
case of a multiple-employer plan, only once notice has been received from the plan administrator; (l) the occurrence of a non-exempt
prohibited transaction under Sections 406 or 407 of ERISA for which any Obligor or any Subsidiary thereof would reasonably be expected
to be directly or indirectly liable; (m) a violation of the applicable requirements of Section 404 or 405 of ERISA or the exclusive benefit
rule under Section 401(a) of the Code by any fiduciary or disqualified person for which any Obligor or any ERISA Affiliate thereof may
be directly or indirectly liable; (n) the occurrence of an act or omission which would reasonably be expected to give rise to the imposition
on any Obligor or any ERISA Affiliate thereof of fines, penalties, taxes or related charges under Chapter 43 of the Code or under Sections
409, 502(c), (i) or (1) or 4071 of ERISA; (o) the assertion of a material claim (other than routine claims for benefits) against any
Plan or the assets thereof, but in the case of a multiple-employer plan, only once notice has been received from the plan administrator,
or against any Obligor or any Subsidiary thereof in connection with any such plan; (p) receipt from the IRS of notice of the failure
of any Qualified Plan to qualify under Section 401(a) of the Code, or the failure of any trust forming part of any Qualified Plan to
fail to qualify for exemption from taxation under Section 501(a) of the Code that is not corrected under the IRS’s Employee Plans
Compliance Resolution System (EPCRS), but in the case of a multiple-employer plan, only once notice has been received from the plan administrator;
(q) the imposition of any lien (or the fulfillment of the conditions for the imposition of any lien) on any of the rights, properties
or assets of any Obligor or any ERISA Affiliate thereof, in either case pursuant to Title I or IV, including Section 302(f) or 303(k)
of ERISA or to Section 401(a)(29) or 430(k) of the Code; or (r) the establishment or amendment by any Obligor or any Subsidiary thereof
of any “welfare plan”, as such term is defined in Section 3(1) of ERISA, that provides post-employment welfare benefits in
a manner that would increase the liability of any Obligor, other than payment of premiums otherwise required by section 4980B of the
Code.
12
“***ERISA
Funding Rules***” means the rules regarding minimum required contributions (including any installment payment thereof) to
Title IV Plans, as set forth in Sections 412, 430, 431, 432 and 436 of the Code and Sections 302, 303, 304 and 305 of ERISA.
“***Erroneous
Payment***” has the meaning assigned to it in **Section 12.14(a)**.
“***Erroneous
Payment Deficiency Assignment***” has the meaning assigned to it in **Section 12.14(d)**.
“***Erroneous
Payment Impacted Class***” has the meaning assigned to it in **Section 12.14(d)**.
“***Erroneous
Payment Return Deficiency***” has the meaning assigned to it in **Section 12.14(d)**.
“***Erroneous
Payment Subrogation Rights***” has the meaning assigned to it in **Section 12.14(d)**.
“***EU
Bail-In Legislation Schedule***” means the EU Bail-In Legislation Schedule published by the Loan Market Association (or any
successor Person), as in effect from time to time.
“***Event
of Default***” has the meaning set forth in **Section 11.01**.
“***Exchange
Act***” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“***Excluded
Accounts***” means (a) deposit accounts exclusively used for payroll, payroll Taxes and other employee wage and benefit payments
to or for the benefit of any Obligor’s employees; provided that the aggregate balance maintained in such deposit accounts
does not exceed the amount necessary to make the next two immediate succeeding payrolls, payroll tax or benefit payments (and such minimum
account as may be required by any applicable Law or the applicable financial institution with respect to such account), (b) zero balance
accounts swept no less frequently than weekly to a Controlled Account (including any such account where payments pursuant to Medicaid,
Medicare, TRICARE or other state or federal healthcare payor programs are deposited), (c) accounts (including trust accounts) used exclusively
for bona fide escrow purposes, insurance or fiduciary purposes, (d) cash collateral for Permitted Liens and (e) any other deposit accounts
only for so long as, in the case of this clause (e), the amounts of deposit therein do not exceed $500,000 in the aggregate.
13
“***Excluded
Prepayment Amount***” has the meaning set forth in **Section 3.03(f)**.
“***Excluded
Subsidiaries***” means any Immaterial Subsidiary.
“***Excluded
Taxes***” means any of the following Taxes imposed on or with respect to a Recipient or required to be withheld or deducted
from a payment to a Recipient: (i) Taxes imposed on or measured by net income (however denominated), franchise Taxes and branch profits
Taxes, in each case, (x) imposed as a result of such Recipient being organized under the laws of, or having its principal office or,
in the case of any Lender, its applicable lending office located in, the jurisdiction imposing such Tax (or any political subdivisions
thereof) or (y) that are Other Connection Taxes, (ii) in the case of a Lender, U.S. federal withholding Taxes imposed on amounts payable
to or for the account of such Lender with respect to an applicable interest in a Loan or Commitment pursuant to a law in effect on the
date on which (1) such Lender acquires such interest in the Loan or Commitment or (2) such Lender changes its lending office (in either
case, other than pursuant to an assignment request by the Borrower under **Section 5.04)**, except in each case to the extent that,
pursuant to **Section 5.03**, amounts with respect to such Taxes were payable either to such Lender’s assignor immediately before
such Lender became a party hereto or to such Lender immediately before it changed its lending office, (iii) Taxes attributable to such
Recipient’s failure to comply with **Section 5.03(f)**, and (iv) any withholding Taxes imposed under FATCA.
“***Exit
Fee***” has the meaning assigned to such term in **Section 3.05**.
“***Existing
Notes***” means, collectively (a) the Borrower’s 8.625% senior unsecured notes due 2026 and (b) the Borrower’s
11.875% senior unsecured notes due 2027.
“***Existing
Notes Indenture***” means, collectively, (a) the Indenture, dated as of April 20, 2021, by and between the Borrower and U.S.
Bank, National Association, as trustee, (b) the First Supplemental Indenture, dated as of April 20, 2021, by and between the Borrower
and U.S. Bank, National Association, as trustee and (c) the Second Supplemental Indenture, dated as of December 20, 2022, by and between
the Borrower and U.S. Bank, National Association, as trustee.
“***Eyevance***”
means, collectively, Eyevance Pharmaceuticals, LLC, a Delaware limited liability company, and Santen S.A.S**.**, a corporation organized
and existing under the laws of France.
“***Eyevance
Acquired Assets***” means, collectively, the Transferred Assets (as defined in the Eyevance APA), the License (as defined
in the Eyevance License Agreement) and the Products (as defined in the Eyevance License Agreement).
14
“***Eyevance
Acquisition***” means the Acquisition of the Eyevance Acquired Assets; provided that:
(a) immediately
prior to, and immediately after giving effect thereto, no Event of Default under any of **Section 11.01(a)**, **(b)** or **(h)** shall exist, or would reasonably be expected to result therefrom;
(b) such
Acquisition shall comply in all material respects with all applicable Laws and all applicable Governmental Approvals, on the terms and
conditions set forth in the Eyevance Acquisition Agreements;
(c) on
a Pro Forma Basis after giving effect to such Acquisition, the Borrower and its Subsidiaries shall be in compliance with the financial
covenants set forth in **Section 10**;
(d) the
Deferred Acquisition Consideration for such Acquisition shall consist solely of (i) the Eyevance Milestone Payments in an aggregate amount
not to exceed the sum of the amounts set forth in Sections 1.3(a)(ii) and (iii) of the Eyevance APA and Section 9.2 of the Eyevance License
Agreement, (ii) a royalty in respect of VERKAZIA in the amount set forth in Section 9.3 of the Eyevance License Agreement and (iii) a
royalty in respect of CATIONORM PLUS in the amount set forth in Section 9.3 of the Eyevance License Agreement;
(e) to
the extent that all or any portion of the purchase price for any such Acquisition (including any Deferred Acquisition Consideration)
is paid in Equity Interests, all such Equity Interests shall be Qualified Equity Interests;
(f) other
than assets with respect to which the book value of such assets does not exceed $100,000 in the aggregate for such Acquisition, all of
the assets acquired in such Acquisition (whether directly or through the Acquisition of any Person) shall be located in the U.S.;
(g) the
Borrower shall provide to the Administrative Agent (i) at least three (3) Business Day’s prior written notice of the closing of
such Acquisition, together with summaries, prepared in reasonable detail, of all due diligence conducted by or on behalf of the Borrower
prior to such Acquisition, in each case subject to customary confidentiality restrictions, (ii) true, correct and complete copies of
any amendments, supplements or other modifications to the Eyevance Acquisition Agreements, together with any related documents reasonably
requested by the Administrative Agent, (iii) pro forma financial statements of the Borrower and its Subsidiaries (as of the last day
of the most recently ended fiscal quarter prior to the date of consummation of such Acquisition for which financial statements are required
to be delivered pursuant to **Section 8.01(a)** or **(b)**) after giving effect to such Acquisition (iv) subject to customary confidentiality
restrictions, any other information reasonably requested (to the extent available), by the Administrative Agent and available to the
Obligors and (v) a certificate of a Responsible Officer of the Borrower certifying as to the satisfaction of the requirements in clauses
(a) through (g) of this definition of “Eyevance Acquisition” and attaching the items described in clause (g)(ii) and (g)(iii);
15
(h) no
Obligor or any of its Subsidiaries (including any acquired Person) shall, in connection with the Eyevance Acquisition, assume or remain
liable with respect to (x) any Indebtedness of the related seller or the business, Person or assets acquired, except (i) to the extent
permitted pursuant to **Section 9.01(i)** or **Section 9.01(k)**, (ii) the Freshkote Royalty and (iii) the Zerivate License Obligations,
(y) any Lien on any business, Person or assets acquired, except to the extent permitted pursuant to **Section 9.02**, (z) any other
liabilities that are not Indebtedness (including Tax, ERISA and environmental liabilities) and that are not otherwise prohibited under
this Agreement; provided that if such assumed liabilities exceed $5,000,000 in the aggregate (together with assumed liabilities
described in clause (i) of the definition of “Permitted Acquisitions”), the Administrative Agent shall have consented in
writing to the Eyevance Acquisition (such consent not to be unreasonably delayed, withheld, or conditioned). Any other such Indebtedness,
liabilities or Liens not permitted to be assumed, continued or otherwise supported by any Obligor or Subsidiary thereof hereunder shall
be paid in full or released within sixty (60) days of the acquisition date (or such longer period of time as agreed by the Administrative
Agent in its reasonable discretion) as to the business, Persons or properties being so acquired on or before the consummation of the
Eyevance Acquisition; and
(i) the
Obligors shall promptly take all actions (including, without limitation, the delivery of shares of stock together with undated transfer
powers executed in blank and the delivery of control agreements and other instruments, as applicable) as shall be required by the terms
of the Security Documents or reasonably requested by the Administrative Agent to create, in favor of the Administrative Agent for the
benefit of the Secured Parties, perfected security interests and Liens in such assets and other property (other than Excluded Assets
(as defined in the Security Agreement)) of such Obligor as collateral security for the Obligations.
“***Eyevance
Acquisition Agreements***” means, collectively, the Eyevance APA, the Eyevance License Agreement, and all other material related
documents, in each case, as in effect on the First Amendment Effective Date, or as amended, restated, amended and restated, supplemented
or otherwise modified in any manner not materially adverse to the interests of the Administrative Agent or the Lenders in their respective
capacities as such, unless consented to in writing by the Administrative Agent and the Lenders; provided, that any increase in the consideration
paid, whether in the form of Upfront Payment (as defined in the Eyevance APA), Lumpsum Payment (as defined in the Eyevance License Agreement),
Deferred Acquisition Consideration or otherwise shall be deemed materially adverse to the Administrative Agent and the Lenders, in their
respective capacities as such.
“***Eyevance
APA***” means the Asset Purchase Agreement, dated as of the First Amendment Effective Date, by and between the Borrower, Harrow
Eye, LLC, Harrow IP, LLC and Eyevance Pharmaceuticals LLC, a Delaware limited liability company, (including all schedules, annexes, exhibits
and other attachments thereto), as in effect on the First Amendment Effective Date, or as amended, restated, amended and restated, supplemented
or otherwise modified in any manner not materially adverse to the interests of the Administrative Agent or the Lenders in their respective
capacities as such, unless consented to in writing by the Administrative Agent and the Lenders; provided, that any increase in the consideration
paid, whether in the form of Upfront Payment (as defined in the Eyevance APA), Deferred Acquisition Consideration or otherwise shall
be deemed materially adverse to the Administrative Agent and the Lenders, in their respective capacities as such.
“***Eyevance
License Agreement***” means the License Agreement, dated as of the First Amendment Effective Date, by and between the Borrower,
Harrow Eye, LLC, Harrow IP, LLC and Santen S.A.S., a corporation organized and existing under the laws of France, (including all schedules,
annexes, exhibits and other attachments thereto), as in effect on the First Amendment Effective Date, or as amended, restated, amended
and restated, supplemented or otherwise modified in any manner not materially adverse to the interests of the Administrative Agent or
the Lenders in their respective capacities as such, unless consented to in writing by the Administrative Agent and the Lenders; provided,
that any increase in the consideration paid, whether in the form of Lumpsum Payment (as defined in the Eyevance License Agreement), Deferred
Acquisition Consideration or otherwise shall be deemed materially adverse to the Administrative Agent and the Lenders, in their respective
capacities as such.
16
“***Eyevance
Milestone Payments***” means, collectively (a) the milestone payments described in Section 1.3(a)(ii) and (iii) of the Eyevance
APA and (b) the Milestone Payments (as defined in the Eyevance License Agreement).
“***Eyevance
Specified Acquisition Agreement Representations***” means each of the representations and warranties made by or with respect
to Eyevance and the Eyevance Acquired Assets in the Eyevance Acquisition Agreements as are material to the interests of the Lenders,
but only to the extent that the Borrower or any of its Subsidiaries has the right to terminate its or their respective obligations under
the Eyevance Acquisition Agreements or otherwise decline to close the Eyevance Acquisition as a result of a breach of any such representation
and warranty or any such representation and warranty not being accurate.
“***Facility***”
means any real property (including all buildings, fixtures or other improvements located thereon) now, hereafter or heretofore owned,
leased or operated by any Obligor or any of its Subsidiaries.
“***FATCA***”
means Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively
comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof, any
agreements entered into pursuant to Section 1471(b)(1) of the Code and any fiscal or regulatory legislation, rules or practices adopted
pursuant to any intergovernmental agreement, treaty or convention among Governmental Authorities and implementing such Sections of the
Code.
“***FD&C
Act***” means the U.S. Food, Drug and Cosmetic Act, 21 U.S.C. §§ 301 et seq. (or any successor thereto), as amended
from time to time, and the rules, regulations and guidelines issued or promulgated thereunder.
“***FDA***”
means the U.S. Food and Drug Administration and any successor entity.
17
“***Federal
Funds Effective Rate***” means, for any day, the rate calculated by the Federal Reserve Bank of New York based on such day’s
federal funds transactions by depositary institutions (as determined in such manner as the Federal Reserve Bank of New York shall set
forth on its public website from time to time) and published on the next succeeding Business Day by the Federal Reserve Bank of New York
as the federal funds effective rate; provided, that (a) if such day is not a Business Day, the Federal Funds Effective Rate for
such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day,
and (b) if no such rate is so published on such next succeeding Business Day, the Federal Funds Effective Rate for such day shall be
the average rate charged to three (3) major banks on such day on such transactions as determined by the Administrative Agent; provided, further, that if the Federal Funds Effective Rate as so determined would be less than zero, such rate shall be deemed to be zero
for the purposes of this Agreement.
“***Fee
Letter***” means the collective reference to the Closing Date Fee Letter and the First Amendment Fee Letter.
“***First
Amendment***” means the First Amendment to Credit Agreement and Guaranty, dated as of the First Amendment Effective Date,
by and among the Borrower, the Guarantors party thereto, the Lenders Party thereto and the Administrative Agent.
“***First
Amendment Effective Date***” means July 18, 2023.
“***First
Amendment Fee Letter***” means the Fee Letter, dated the First Amendment Effective Date, between the Borrower and the Administrative
Agent.
“***FLAREX***”
(0.1% fluorometholone acetate ophthalmic suspension) is used to treat certain eye conditions due to inflammation or injury.
“***Foreign
Lender***” means a Lender that is not a U.S. Person.
“***Foreign
Subsidiary***” means any Subsidiary that is not a Domestic Subsidiary.
“***Freshkote
Royalty***” means the royalty described in Section 3.1.4(c) of that certain Asset Purchase Agreement, dated as of September
7, 2018, by and between the Borrower, Harrow Eye, LLC, and Harrow IP, LLC, as successors-by-assignment to Eyevance Pharmaceuticals LLC,
a Delaware limited liability company, and Focus Laboratories, Inc., an Arkansas corporation, (including all schedules, annexes, exhibits
and other attachments thereto), as in effect on the First Amendment Effective Date, or as amended, restated, amended and restated, supplemented
or otherwise modified in any manner not materially adverse to the interests of the Administrative Agent or the Lenders in their respective
capacities as such, unless consented to in writing by the Administrative Agent and the Lenders; provided that any increase in
the amount of such royalty shall be deemed materially adverse to the interests of the Administrative Agent and the Lenders in their respective
capacities as such.
“***Funding
Date Certificate***” means a certificate substantially in the form of **Exhibit C**.
18
“***GAAP***”
means generally accepted accounting principles in the United States of America, as in effect from time to time, set forth in the opinions
and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants, in the statements and
pronouncements of the Financial Accounting Standards Board and in such other statements by such other entity as may be in general use
by significant segments of the accounting profession that are applicable to the circumstances as of the date of determination. All references
to “GAAP” shall be to GAAP applied consistently with the principles used in the preparation of the financial statements delivered
pursuant to **Section 6.01(f)**.
“***Governmental
Approval***” means any consent, authorization, approval, order, license, franchise, permit, certification, accreditation,
registration, provider or supplier number, HCPCS code, payment status, clearance or exemption that is issued or granted by or from (or
pursuant to any act of) any Governmental Authority, including any application or submission related to any of the foregoing.
“***Governmental
Authority***” means any nation, government, branch of power (whether executive, legislative or judicial), state, province
or municipality or other political subdivision thereof and any entity exercising executive, legislative, judicial, monetary, regulatory
or administrative functions of or pertaining to government, including without limitation regulatory authorities, governmental departments,
agencies, commissions, bureaus, officials, ministers, courts, bodies, boards, tribunals and dispute settlement panels, and other law-,
rule- or regulation-making organizations or entities of any state, territory, county, city or other political subdivision of any country,
in each case whether U.S., or non-U.S.
“***Guarantee***”
of or by any Person (the “***guarantor***”) means any obligation, contingent or otherwise, of the guarantor guaranteeing
or having the economic effect of guaranteeing any Indebtedness or other obligation (the “***primary obligations***”)
of any other Person (the “***primary obligor***”) in any manner, whether directly or indirectly, and including any
obligation of the guarantor, direct or indirect, (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such
primary obligations or to purchase (or to advance or supply funds for the purchase of) any security for the payment thereof, (ii) to
purchase or lease property, securities or services for the purpose of assuring the owner of such primary obligations of the payment thereof,
(iii) to maintain working capital, equity capital or any other financial statement condition or liquidity of the primary obligor so as
to enable the primary obligor to pay such primary obligations or (iv) as an account party in respect of any letter of credit or letter
of guaranty (including any bank guarantee) issued to support such primary obligations; provided, that the term Guarantee shall
not include (x) endorsements for collection or deposit and (y) guarantees of operating leases, in each case, in the Ordinary Course.
“***Guarantee
Assumption Agreement***” means a Guarantee Assumption Agreement substantially in the form of **Exhibit E** by an entity
that, pursuant to **Section 8.11(a)**, is required to become a “Subsidiary Guarantor.”
“***Guaranteed
Obligations***” has the meaning set forth in **Section 13.01**.
**“*Guarantor*”** means each Subsidiary Guarantor.
19
“***Guaranty***”
means the Guaranty made by the Guarantors under **Section 13** in favor of the Secured Parties (including any Guaranty assumed by
an entity that is required to become a “Subsidiary Guarantor” pursuant to a Guarantee Assumption Agreement).
“***Hazardous
Material***” means any chemical, material or substance, exposure to which is prohibited, limited or regulated by any Governmental
Authority or which may or would reasonably be expected to pose a hazard to the health and safety of the owners, occupants or any Persons
in the vicinity of any Facility or to the indoor or outdoor environment.
“***Hazardous
Materials Activity***” means any past, current, proposed or threatened activity, event or occurrence involving any Hazardous
Materials, including the use, manufacture, possession, storage, holding, presence, existence, location, release, threatened release,
discharge, placement, generation, transportation, processing, construction, treatment, abatement, removal, remediation, disposal, recycling,
disposition or handling of any Hazardous Materials, and any investigation, monitoring, corrective action or response action with respect
to any of the foregoing.
“***Healthcare
Laws***” means, collectively, all Laws and Product Authorizations applicable to the business, any Product or the Product Commercialization
and Development Activities of any Obligor, whether U.S. or non-U.S., regulating the distribution, dispensing, compounding, importation,
exportation, quality, manufacturing, sales, marketing, labeling, promotion and provision of and payment for drugs, biological products,
or healthcare products, items and services, including, without limitation, the FD&C Act, the Social Security Act, the Federal Anti-Kickback
Statute, the federal False Claims Act, the Stark Law, the PDMA, the Physician Payments Sunshine Act, the Civil Monetary Penalties Law,
the exclusion laws, the Health Insurance Portability and Accountability Act of 1996 and all rules, regulations and guidance pertaining
to or governing the Medicare and Medicaid programs, the TRICARE Program, federal employee health benefit plans and any other government
healthcare programs; and all rules, regulations and guidance promulgated under or pursuant to any of the foregoing, including any state
and non-U.S. equivalents.
“***Hedging
Agreement***” means any interest rate exchange agreement, foreign currency exchange agreement, commodity price protection
agreement or other interest or currency exchange rate or commodity price hedging arrangement.
“***IHEEZO***”
has the meaning set forth in **Schedule 4**.
“***ILEVRO***”
has the meaning set forth in **Schedule 4**.
20
“***Immaterial
Subsidiary***” means any Subsidiary of the Borrower that (i) individually constitutes or holds less than two and one half
percent (2.5%) of the Borrower’s consolidated total assets and generates less than two and one half percent (2.5%) of the Borrower’s
consolidated total revenue, and (ii) when taken together with all then existing Immaterial Subsidiaries, such Subsidiary and such Immaterial
Subsidiaries, in the aggregate, would constitute or hold less than three percent (3%) of the Borrower’s consolidated total assets
and generate less than three percent (3%) of the Borrower’s consolidated total revenue, in each case of the foregoing clauses as
of the last day of, or for, the most recently ended fiscal period for which financial statements were required to have been delivered
pursuant to Section **8.01(a) or (b)**; *provided* that, notwithstanding the foregoing, no Subsidiary that owns any Material
Intellectual Property shall be an Immaterial Subsidiary.
“***IND***”
means (i) (x) an investigational new drug application (as defined in the FD&C Act) that is required to be filed with the FDA before
beginning clinical testing in human subjects, or any successor application or procedure and (y) any similar application or functional
equivalent relating to any investigational new drug application applicable to or required by any non-U.S. Governmental Authority, and
(ii) all supplements and amendments that may be filed with respect to the foregoing.
“***Incremental
Tranche A Availability Period***” has the meaning set forth in the Loans Schedule.
“***Incremental
Tranche A Commitment***” means with respect to each Lender, the obligation of such Lender to make Incremental Tranche A Term
Loans to the Borrower on the Incremental Tranche A Funding Date in accordance with the terms and conditions of this Agreement, which
commitment is in the amount set forth opposite such Lender’s name on **Schedule 1** under the caption “Incremental Tranche
A Commitment”, as such Schedule may be amended from time to time pursuant to an Assignment and Assumption or otherwise. The aggregate
amount of Incremental Tranche A Commitments on the First Amendment Effective Date equals $12,500,000.
“***Incremental
Tranche A Funding Condition***” has the meaning set forth in the Loans Schedule.
“***Incremental
Tranche A Funding Date***” means the date on or prior to the expiration of the Incremental Tranche A Availability Period on
which all conditions precedent set forth in **Section 6.03** for the borrowing of Incremental Tranche A Term Loans are satisfied or
waived in accordance with the terms of this Agreement.
“***Incremental
Tranche A Term Loans***” has the meaning assigned to such term in **Section 2.01(a)(i)**.
21
“***Indebtedness***”
of any Person means, without duplication, (i) all obligations of such Person for borrowed money, (ii) all obligations of such Person
evidenced by bonds, debentures, notes, loan agreements or similar instruments, (iii) all obligations of such Person upon which interest
charges are customarily paid (excluding interest penalties for late payments under commercial contracts entered into in the Ordinary
Course and, for the avoidance of doubt, which commercial contracts do not relate to obligations for borrowed money or purchase money
indebtedness), (iv) all obligations of such Person under conditional sale or other title retention agreements relating to property acquired
by such Person, (v) all obligations of such Person in respect of the deferred purchase price of property or services (excluding (A) any
royalty payments or similar payments based on a percentage of sales under any such license or other agreement, (B) deferred compensation
and accounts payable incurred in the Ordinary Course and not overdue by more than sixty (60) days or otherwise being disputed in good
faith, and (C) any earn-out obligation until such earn-out obligation appears on such Person’s balance sheet in accordance with
GAAP), (vi) all Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any Lien on property owned or acquired by such Person, whether or not the Indebtedness secured thereby has
been assumed, (vii) all Guarantees by such Person of Indebtedness of others, (viii) all Capital Lease Obligations of such Person, (ix)
all obligations, contingent or otherwise, of such Person as an account party in respect of letters of credit and letters of guaranty,
(x) obligations under any Hedging Agreement, currency swaps, forwards, futures or derivatives transactions, (xi) all obligations, contingent
or otherwise, of such Person in respect of bankers’ acceptances, (xii) all milestone and similar payments of such Person under
any license or other agreements appearing on such Person’s balance sheet in accordance with GAAP (but excluding any such payments
based on a percentage of sales under any such license or other agreement), (xiii) any Disqualified Equity Interests of such Person, and
(xiv) all other obligations required to be classified as indebtedness of such Person under GAAP; provided that, notwithstanding
the foregoing, Indebtedness shall not include (A) accrued expenses, deferred rent, deferred taxes, deferred compensation or customary
obligations under employment agreements, or (B) any accounts payable existing as of the Closing Date that are classified as indebtedness
in accordance with GAAP but have been overdue for more than two (2) years prior to the Closing Date and are not subject to collection
attempts by the applicable payee, in an amount not to exceed $500,000 in the aggregate. The Indebtedness of any Person shall include
the Indebtedness of any other entity (including any partnership in which such Person is a general partner) to the extent such Person
is liable therefor as a result of such Person’s ownership interest in or other relationship with such entity, except to the extent
the terms of such Indebtedness provide that such Person is not liable therefor.
“***Indemnified
Party***” has the meaning set forth in **Section 14.03(b)**.
“***Indemnified
Taxes***” means (i) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any
Obligation and (ii) to the extent not otherwise described in **clause (i)**, Other Taxes.
“***Insolvency
Proceeding***” means (i) any case, action or proceeding before any court or other Governmental Authority relating to bankruptcy,
reorganization, insolvency, administration, re-arrangement, moratorium, liquidation, receivership, examinership, dissolution, winding-up
or relief of debtors, or (ii) any general assignment for the benefit of creditors, composition, marshaling of assets for creditors, or
other, similar arrangement in respect of any Person’s creditors generally or any substantial portion of such Person’s creditors,
in each case undertaken under U.S. federal or state, or foreign law, including the Bankruptcy Code.
“***Intellectual
Property***” means all intellectual property or proprietary rights anywhere in the world, including all rights in or to Patents,
Trademarks, Copyrights, and Technical Information.
“***Intercompany
Subordination Agreement***” means a subordination agreement to be executed and delivered by each Obligor and each of its Subsidiaries,
pursuant to which all obligations in respect of any Indebtedness owing to any such Person by an Obligor shall be subordinated to the
prior payment in full in cash of all Obligations, such agreement to be in substantially the form attached hereto as **Exhibit F**.
22
“***Interest
Period***” means (a) the period commencing on and including the Closing Date and ending on and including the immediately subsequent
Payment Date and (b) subsequently, each period commencing on and excluding the last day of the previous Interest Period for such Loan
and ending on and including the immediately subsequent Payment Date.
“***Interest
Rate***” means, for any Interest Period, a rate per annum equal to the sum of (a) the Applicable Margin plus (b) Three-Month
Term SOFR, as may be increased pursuant to **Section 3.02(b)**.
“***Invention***”
means any novel, inventive or useful art, apparatus, method, process, machine (including any article or device), manufacture or composition
of matter, or any novel, inventive and useful improvement in any art, method, process, machine (including article or device), manufacture
or composition of matter.
“***Investment***”
means, for any Person: (i) the acquisition (whether for cash, property, services or securities or otherwise) of any debt or Equity Interests,
bonds, notes, debentures, partnership or other ownership interests or other securities of any other Person (including any “short
sale” or any sale of any securities at a time when such securities are not owned by the Person entering into such sale); (ii) the
making of any deposit with, or advance, loan, assumption of debt or other extension of credit to, or capital contribution in any other
Person (including the purchase of property from another Person subject to an understanding or agreement, contingent or otherwise, to
resell such property to such Person), but excluding any such advance, loan or extension of credit having a term not exceeding ninety
(90) days arising in connection with the sale of inventory or supplies by such Person in the Ordinary Course; or (iii) the entering into
of any Guarantee of, or other contingent obligation with respect to, Indebtedness or other liability of any other Person and (without
duplication) any amount committed to be advanced, lent or extended to such Person. The amount of an Investment shall be the amount actually
invested (which, in the case of any Investment constituting the contribution of an asset or property, shall be based on such Person’s
good faith estimate of the fair market value of such asset or property at the time such Investment is made), less the amount of cash
received or returned for such Investment, without adjustment for subsequent increases or decreases in the value of such Investment or
write-ups, write-downs or write-offs with respect thereto; provided that in no event shall such amount be less than zero or increase
any basket or amount pursuant to **Section 9.05** above the fixed amount set forth therein.
“***IOPIDINE***”
has the meaning set forth in **Schedule 4**.
“***IRS***”
means the U.S. Internal Revenue Service or any successor agency, and to the extent relevant, the U.S. Department of the Treasury.
“***Joint
Venture***” means a joint venture, partnership or other similar arrangement, in corporate, partnership or similar legal form
with a Person other than Borrower or its Subsidiaries.
“***Key
Person***” means each of the Chief Financial Officer of Borrower, the Chief Executive Officer of Borrower and the Chief Commercial
Officer of Borrower, which as of the Closing Date are Andrew Boll, Mark Baum, and John Saharek, respectively.
23
“***Key
Person Event***” means, at any time, two (2) or more Key Persons cease to be employed by the Borrower, and Borrower shall
fail, within one hundred eighty (180) days (or such longer period as the Administrative Agent may accept in its sole discretion) of the
date that each such Person ceases to serve in such capacity, to appoint a replacement for such Person reasonably acceptable to the Administrative
Agent. A Key Person shall be deemed not employed if they have resigned or provided notice of resignation or any period they are subject
to any “gardening” or similar leave.
“***Landlord
Consent***” means, with respect to locations in the United States, a Landlord Consent substantially in the form attached to
the Security Agreement, or with respect to locations in and outside of the United States, a landlord consent or similar document in form
and substance satisfactory to the Administrative Agent.
“***Law***”
means, collectively, all U.S. and non-U.S. federal, state, provincial, territorial, municipal or local statute, treaty, rule, guideline,
regulation, ordinance, code or administrative or judicial precedent or authority, including any interpretation or administration thereof
by any Governmental Authority charged with the enforcement, interpretation or administration thereof, and all applicable administrative
orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental Authority, in each
case whether or not having the force of law.
“***Lenders***”
has the meaning set forth in the preamble hereto.
“***Lien***”
means (a) any mortgage, lien, license, pledge, hypothecation, charge, security interest, or other encumbrance of any kind or character
whatsoever, whether or not filed, recorded or otherwise perfected under applicable Law, or any lease, title retention agreement, mortgage,
restriction, easement, right-of-way, option or adverse claim (of ownership or possession) (including any conditional sale or other title
retention agreement, any lease in the nature thereof, and any other encumbrance on title to real property, any option or other agreement
to sell, or give a security interest in, such asset and any filing of or agreement to give any financing statement under the Uniform
Commercial Code (or equivalent statutes of any jurisdiction)) or any preferential arrangement that has the practical effect of creating
a security interest and (b) in the case of Equity Interests, any purchase option, call or similar right of a third party with respect
to such Equity Interests.
“***Loan***”
means each loan advanced by a Lender pursuant to **Section 2.01**.
“***Loan
Documents***” means, collectively, this Agreement, the Notes, the First Amendment, the Second Amendment, the Security Documents,
the Perfection Certificate, the Closing Date Fee Letter, the First Amendment Fee Letter, any Guarantee Assumption Agreement, the Intercompany
Subordination Agreement, and any subordination agreement, intercreditor agreement or other present or future document, instrument, agreement
or certificate delivered to the Administrative Agent (for itself or for the benefit of any other Secured Party) in connection with this
Agreement or any of the other Loan Documents, in each case, as amended or otherwise modified.
“***Loans
Schedule***” means **Schedule 1** attached hereto.
24
“***Loss***”
means judgments, debts, liabilities, expenses, costs, damages or losses, contingent or otherwise, whether liquidated or unliquidated,
matured or unmatured, disputed or undisputed, contractual, legal or equitable, including loss of value, professional fees, including
fees and disbursements of legal counsel on a full indemnity basis, and all costs incurred in investigating or pursuing any Claim or any
proceeding relating to any Claim.
“***Majority
Lenders***” means, at any time, Lenders having at such time in excess of fifty percent (50%) of the aggregate unused Commitments
then in effect and the outstanding principal amount of the Loans at such time; provided, that, so long as the Oaktree Lenders
own at least twenty-five percent (25%) of the aggregate unused Commitments then in effect and the outstanding principal amount of the
Loans at such time, the consent of the Oaktree Lenders shall be required to constitute the Majority Lenders. The Commitments of any Defaulting
Lender shall be disregarded in determining Majority Lenders at any time.
“***Make-Whole
Discounted Value***” means the amount obtained by discounting all Make-Whole Remaining Scheduled Payments with respect to
the principal amount of such Loan being paid or prepaid to the Maturity Date, as determined by the Administrative Agent at a discount
factor equal to the Make-Whole Reinvestment Yield.
“***Make-Whole
Remaining Scheduled Payments***” means all interest payments on the principal amount of the Loan being paid or prepaid that
would be due on or prior to the Maturity Date with respect to such amount.
“***Make-Whole
Reinvestment Yield***” means, as determined by the Administrative Agent, 0.50% over the yield to maturity of the most recently
issued United States Treasury securities with a constant maturity (as compiled and published in the most recent Federal Reserve Statistical
Release H.15 (or is obtainable from the Federal Reserve System’s Data Download Program as of the date of such H.15) that has become
publicly available at least two Business Days prior to such date (or, if such Statistical Release is no longer published, any publicly
available source of similar market data)) most nearly equal to the period from such date of payment or prepayment to the Maturity Date; provided, that if the period from such date payment or prepayment to the Maturity Date is less than one year, the weekly average
yield on actually traded United States Treasury securities adjusted to a constant maturity of one year will be used.
“***Mandatory
Prepayment***” has the meaning set forth in **Section 3.03(b)(i)(A)**.
“***Margin
Stock***” means “margin stock” within the meaning of Regulations U and X.
“***Material
Adverse Change***” and “***Material Adverse Effect***” mean a material adverse change in or effect on
(i) the business, financial performance, operations, financial condition, assets or liabilities of the Borrower and its Subsidiaries
taken as a whole, (ii) the ability of the Obligors, taken as a whole, to perform their payment obligations under the Loan Documents,
as and when due, (iii) the legality, validity, binding effect or enforceability of any Loan Document or (iv) the rights, remedies and
benefits available to, or conferred upon, the Administrative Agent or the Secured Parties under any Loan Document.
25
“***Material
Agreement***” means any Contract required to be disclosed (including amendments thereto) under regulations promulgated under
the Securities Act of 1933 or Securities Exchange Act of 1934, as may be amended.
“***Material
Environmental Liability***” means any Environmental Liability that has had or would reasonably be expected to have a Material
Adverse Effect.
“***Material
Indebtedness***” means, at any time (a) the Existing Notes and (b) any other Indebtedness of any Obligor or Subsidiary thereof,
the outstanding principal amount of which, individually or in the aggregate, exceeds $5,000,000.
“***Material
Intellectual Property***” means all Intellectual Property, whether currently owned by (or purported to be owned by), or subject
to a license, covenant not to sue or similar right or immunity to (or purported to be subject to a license, covenant not to sue or similar
right or immunity to) the Borrower or any of its Subsidiaries, or acquired, developed, obtained by, or otherwise subject to a license,
covenant not to sue or similar right or immunity to the Borrower or any of its Subsidiaries after the date hereof that is, in each case,
material to the current, planned, or anticipated business of the Borrower or any of its Subsidiaries. As of the Closing Date, Material
Intellectual Property includes all Intellectual Property material to any Product (including Product Commercialization and Development
Activities with respect to such Products).
“***Material
Product Authorizations***” means any and all Product Authorizations, in each case, necessary to be held or maintained by,
or for the benefit of, any Obligor or any of its Subsidiaries for any Product Commercialization and Development Activities that is, in
each case, material to the current, planned, or anticipated business of the Borrower or any of its Subsidiaries.
“***Material
Subsidiary***” means any Subsidiary of the Borrower that is not an Immaterial Subsidiary.
“***Maturity
Date***” means January 19, 2026.
“***MAXIDEX***”
has the meaning set forth in **Schedule 4**.
“***MAXITROL***”
has the meaning set forth in **Schedule 4**.
“***Medicaid***”
means that government-sponsored entitlement program under Title XIX, P.L. 89-97 of the Social Security Act, which provides federal grants
to states for medical assistance based on specific eligibility criteria, as set forth on Section 1396, et seq. of Title 42 of the United
States Code.
“***Medicare***”
means that government-sponsored insurance program under Title XVIII, P.L. 89-97, of the Social Security Act, which provides for a health
insurance system for eligible elderly and disabled individuals, as set forth at Section 1395, et seq. of Title 42 of the United States
Code.
26
“***Melt
Note***” means that certain Secured Term Note dated September 1, 2021 in the original principal amount of $13,500,000 (as
has been and may be further increased by PIK interest) by Melt Pharmaceuticals, Inc. in favor of Borrower.
“***Minimum
Liquidity Amount***” means $15,000,000.
“***Minimum
Net Revenues***” means, with respect to each date that the Minimum Net Revenues Covenant is tested, (i) if the first TRIESENCE
Commercial Batch Release (as defined in the Novartis Purchase Agreement) has not occurred prior to such date for sales and marketing
in the United States, the amount set forth on **Schedule 2** under the caption “Minimum Net Revenues (Excluding TRIESENCE)”
and (ii) if the first TRIESENCE Commercial Batch Release (as defined in the Novartis Purchase Agreement) has occurred prior to such date
for sales and marketing in the United States, the amount set forth on **Schedule 2** under the caption “Minimum Net Revenues
(Including TRIESENCE)”.
“***Minimum
Net Revenues Covenant***” has the meaning set forth in **Section 10.02**.
“***Minimum
Net Revenues Cure Right***” has the meaning set forth in **Section 11.04**.
“***MOXEZA***”
has the meaning set forth in **Schedule 4**.
“***Multiemployer
Plan***” means any multiemployer plan, as defined in Section 400l(a)(3) of ERISA, to which any ERISA Affiliate incurs or otherwise
has any obligation or liability, contingent or otherwise.
“***NATACYN***”
(5% natamycin) is indicated for the treatment of fungal blepharitis, conjunctivitis, and keratitis caused by susceptible organisms including
Fusarium solani keratitis e.
“***NDA***”
means (i) (x) a new drug application (as defined in the FD&C Act) and (y) any similar application or functional equivalent relating
to any new drug application applicable to or required by any non-U.S. country, jurisdiction or Governmental Authority, and (ii) all supplements
and amendments that may be filed with respect to any of the foregoing.
“***NEVANAC***”
has the meaning set forth in **Schedule 4**.
27
“***Net
Cash Proceeds***” means, (i) with respect to any Casualty Event experienced or suffered by any Obligor or any of its Subsidiaries,
the amount of cash proceeds received from time to time by or on behalf of such Person in respect thereof after deducting therefrom only
(w) reasonable costs and expenses related thereto incurred by such Obligor or such Subsidiary in connection therewith, (x) Taxes (including
transfer Taxes or net income Taxes) paid or reasonably estimated to be payable in connection therewith, (y) reasonable reserves established
for liabilities estimated to be payable in respect of such Casualty Event and deposited into escrow with a third party escrow agent on
terms reasonably acceptable to the Administrative Agent or set aside in a separate deposit account that is subject to a Control Agreement
in favor of the Administrative Agent and (z) any amounts required to be used to prepay Permitted Indebtedness pursuant to **Sections
9.01(i) and 9.01(k)** secured by the assets subject to such Casualty Event (other than (A) Indebtedness owing to the Administrative
Agent or any Lender under this Agreement or the other Loan Documents and (B) Indebtedness assumed by the purchaser of such asset); and
(ii) with respect to any Asset Sale by any Obligor or any of its Subsidiaries, the amount of cash proceeds received from time to time
by or on behalf of such Person in respect thereof after deducting therefrom only (w) reasonable costs and expenses related thereto incurred
by such Obligor or such Subsidiary in connection therewith, (x) Taxes (including transfer Taxes or net income Taxes) paid or reasonably
expected to be payable in connection therewith, (y) reasonable reserves established for liabilities estimated to be payable in respect
of such Asset Sale and deposited into escrow with a third party escrow agent on terms reasonably acceptable to the Administrative Agent
or set aside in a separate deposit account that is subject to a Control Agreement in favor of the Administrative Agent and (z) any amounts
required to be used to prepay Permitted Indebtedness pursuant to **Sections 9.01(i) and 9.01(k)** secured by the assets subject to
such Asset Sale (other than (A) Indebtedness owing to the Administrative Agent or any Lender under this Agreement or the other Loan Documents
and (B) Indebtedness assumed by the purchaser of such asset); provided that, in each case of **clauses (i)** and **(ii)**,
costs and expenses shall only be deducted to the extent, that the amounts so deducted are (x) actually paid or payable to a Person that
is not an Affiliate of any Obligor or any of its Subsidiaries and (y) properly attributable to such Casualty Event or Asset Sale, as
the case may be.
“***Net
Revenues***” means, for any period, the consolidated net revenue of Borrower and its Subsidiaries derived from pharmaceutical
and device products, as determined in accordance with GAAP (as the same is in effect on the Closing Date and without giving effect to
any subsequent amendments thereto); provided that in no event shall Net Revenues include any upfront and milestone payments or
similar non-recurring payment made in connection with any commercial contract received by such Borrower or Subsidiary.
“***Net
Revenues Cure Payment***” means, with respect to any fiscal quarter of the Borrower to which the Minimum Net Revenues Covenant
applies, the greatest of (i) the Net Revenues Shortfall Amount, (ii) 10.0% of the outstanding principal amount of the Obligations and
(iii) $10,000,000.
“***Net
Revenues Shortfall Amount***” means, with respect to any fiscal quarter of the Borrower to which the Minimum Net Revenues
Covenant applies, the amount (if any) by which the Minimum Net Revenues for such fiscal quarter exceed the Net Revenues for such fiscal
quarter.
“***NJ
Reinvestment***” has the meaning set forth in **Section 3.03(b)(i)(C)**.
“***Note***”
means a promissory note, in substantially the form of **Exhibit H** hereto, executed and delivered by the Borrower to any Lender in
accordance with **Section 2.04**.
“***Notice
of Intent to Cure Net Revenues Covenant***” has the meaning set forth in **Section 11.04**.
28
“***Novartis
Milestone Payment***” means the “Additional Consideration” as defined in the Novartis Purchase Agreement.
“***Novartis
Purchase Agreement***” means the Asset Purchase Agreement, dated as of December 13, 2022, among the Borrower, Harrow Eye,
LLC, Harrow IP, LLC, Novartis Technology, LLC and Novartis Innovative Therapies AG, as in effect on the Closing Date, or as amended,
restated, amended and restated, supplemented or otherwise modified in any manner not adverse in any material respect to the Administrative
Agent and the Lenders.
“***NY
UCC***” means the UCC as in effect from time to time in the State of New York.
“***Oaktree
Lender***” means any Lender that is an Affiliate or managed fund or account of Oaktree Capital Management, L.P.
“***Obligations***”
means, with respect to any Obligor, all amounts, obligations, liabilities, covenants and duties of every type and description owing by
such Obligor to any Secured Party (including all Guaranteed Obligations) or any other indemnitee hereunder or any participant, in each
case, arising out of, under, or in connection with, any Loan Document, whether direct or indirect (regardless of whether acquired by
assignment), absolute or contingent, due or to become due, whether liquidated or not, now existing or hereafter arising and however acquired,
and whether or not evidenced by any instrument or for the payment of money, including, without duplication, (i) if such Obligor is the
Borrower, all Loans, (ii) all interest, whether or not accruing after the filing of any petition in bankruptcy or after the commencement
of any insolvency, reorganization or similar proceeding, and whether or not a claim for post-filing or post-petition interest is allowed
in any such proceeding, and (iii) all other fees, expenses (including fees, charges and disbursement of counsel), interest, Commitment
Fees, Yield Protection Premium, Exit Fee, commissions, charges, costs, disbursements, indemnities and reimbursement of amounts paid and
other sums chargeable to such Obligor under any Loan Document. Notwithstanding the foregoing, amounts, obligations and liabilities under
the Warrants or any other right to invest in the Equity Interests of the Borrower shall not be included in the defined term “Obligations.”
“***Obligors***”
means, collectively, the Borrower and the Subsidiary Guarantors and their respective successors and permitted assigns.
“***OFAC***”
has the meaning assigned to such term in the definition of “Anti-Terrorism Laws”.
“***Ordinary
Course***” means ordinary course of business or ordinary trade activities that are customary for similar businesses in the
normal course of their ordinary operations and not while in financial distress.
“***Organic
Document***” means, for any Person, such Person’s formation documents, including, as applicable, its certificate of
incorporation, by-laws, certificate of partnership, partnership agreement, certificate of formation, limited liability agreement, operating
agreement and all shareholder agreements, voting trusts and similar arrangements applicable to such Person’s Equity Interests,
or any equivalent document of any of the foregoing.
29
“***Other
Connection Taxes***” means, with respect to any Recipient, Taxes imposed as a result of a present or former connection between
such Recipient and the jurisdiction imposing such Tax (other than connections arising from such Recipient having executed, delivered,
become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged
in any other transaction pursuant to or enforced any Loan Document, or sold or assigned an interest in any Loan or Loan Document).
“***Other
Taxes***” means all present or future stamp, court or documentary, intangible, recording, filing or similar Taxes that arise
from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection
of a security interest under, or otherwise with respect to, any Loan Document, except any such Taxes that are Other Connection Taxes
imposed with respect to an assignment (other than an assignment made pursuant to **Section 5.04**).
“***Participant***”
has the meaning set forth in **Section 14.05(e)**.
“***Participant
Register***” has the meaning set forth in **Section 14.05(e)**.
“***Patents***”
means all patents and patent applications, including the Inventions and improvements described and claimed therein, the reissues, divisionals,
continuations, renewals, extensions, and continuations in part thereof, and all rights whatsoever accruing thereunder or pertaining to
the foregoing throughout the world.
“***Patriot
Act***” has the meaning set forth in **Section 14.19**.
“***Payment
Date***” means (i) the last Business Day of each March, June, September and December of each year, commencing on the first
such date to occur after the Closing Date; and (ii) the Maturity Date.
“***Payment
Recipient***” has the meaning assigned to it in **Section 12.13(a)**.
“***Payor***”
means any health care insurance and other similar programs under which the Obligor or any of its Subsidiaries are directly or indirectly
receiving payments, including any federal or state healthcare program, Medicare, Medicaid, the TRICARE program, the Veterans Health Administration,
private or commercial insurance programs, third-party administrators, preferred provider organizations, managed care organizations, health
maintenance organizations, health plans, self-insured health plans, or any fiscal intermediary or contractor of any of the foregoing.
“***PBGC***”
means the United States Pension Benefit Guaranty Corporation referred to and defined in ERISA and any successor entity performing similar
functions.
“***PDMA***”
means the Prescription Drug Marketing Act of 1987, 21 U.S.C. §§ 321 et seq. (or any successor thereto), as amended from time
to time, and the rules, regulations, guidelines, guidance documents and compliance policy guides issued or promulgated thereunder.
“***Perfection
Certificate***” means the Perfection Certificate, delivered pursuant to **Section 6.01(h)** to the Administrative Agent,
as amended, restated, supplemented or otherwise modified from time to time.
30
“***Permitted
Acquisition***” means any Acquisition by the Borrower or any of its Subsidiaries, whether by purchase, merger or otherwise; provided that:
(a) immediately
prior to, and immediately after giving effect thereto, no Default or Event of Default shall have occurred and be continuing or would
reasonably be expected to result therefrom;
(b) such
Acquisition shall comply in all material respects with all applicable Laws and all applicable Governmental Approvals;
(c) in
the case of any Acquisition of Equity Interests of another Person, after giving effect to such Acquisition, all Equity Interests of such
other Person acquired by any Subsidiary of the Borrower shall be owned, directly or indirectly, beneficially and of record, by the Borrower
or any of its Subsidiaries, and the Borrower shall cause such acquired Person to satisfy each of the actions set forth in **Section
8.11** as and when required by such Section;
(d) on
a Pro Forma Basis after giving effect to such Acquisition, the Borrower and its Subsidiaries shall be in compliance with the financial
covenants set forth in **Section 10**;
(e) to
the extent that all or any portion of the purchase price (including reasonable estimates of any Deferred Acquisition Consideration) for
any such Acquisition is paid in cash, the amount thereof shall not exceed (x) $5,000,000 *plus* (y) the amount of any substantially
concurrent contributions to the common equity of the Borrower; provided that (i) any such contribution must be used within thirty
(30) days of such contribution to pay the acquisition costs of such Permitted Acquisition, (ii) the Administrative Agent’s prior
written consent (which shall not be unreasonably delayed, withheld, or conditioned) shall be required if the amount of any such common
equity contribution exceeds $20,000,000 in the aggregate with any other such Acquisitions in any fiscal year;
(f) to
the extent that all or any portion of the purchase price for any such Acquisition is paid in Equity Interests, all such Equity Interests
shall be Qualified Equity Interests;
(g) (i)
any Person acquired in such Acquisition shall be formed or organized, as applicable, in the U.S. or any state thereof, and (ii) other
than assets with respect to which the book value of such assets does not exceed $100,000 in the aggregate for such Acquisition, all of
the assets acquired in such Acquisition (whether directly or through the Acquisition of any Person) shall be located in the U.S.;
31
(h) in
the case of any such Acquisition that has a purchase price (including reasonable estimates of any Deferred Acquisition Consideration)
in excess of $5,000,000, (A) the Borrower shall provide to the Administrative Agent (i) at least ten (10) Business Day’s prior
written notice of any such Acquisition, together with summaries, prepared in reasonable detail, of all due diligence conducted by or
on behalf of the Borrower or the applicable Subsidiary, as applicable, prior to such Acquisition, in each case subject to customary confidentiality
restrictions, (ii) subject to customary confidentiality restrictions, a copy of the draft purchase agreement related to the proposed
Acquisition (and any related documents reasonably requested by the Administrative Agent), (iii) pro forma financial statements of the
Borrower and its Subsidiaries (as of the last day of the most recently ended fiscal quarter prior to the date of consummation of such
Acquisition for which financial statements are required to be delivered pursuant to **Section 8.01(a)** or **(b)**) after giving
effect to such Acquisition, and (iv) subject to customary confidentiality restrictions, any other information reasonably requested (to
the extent available), by the Administrative Agent and available to the Obligors and (B) to the extent the cash purchase price exceeds
$5,000,000, the Administrative Agent shall have consented in writing to such Acquisition (such consent not to be unreasonably delayed,
withheld, or conditioned); and
(i) no
Obligor or any of its Subsidiaries (including any acquired Person) shall, in connection with any such Acquisition, assume or remain liable
with respect to (x) any Indebtedness of the related seller or the business, Person or assets acquired, except to the extent permitted
pursuant to **Section 9.01(i)** or **Section 9.01(k)**, (y) any Lien on any business, Person or assets acquired, except to the
extent permitted pursuant to **Section 9.02**, (z) any other liabilities that are not Indebtedness (including Tax, ERISA and environmental
liabilities) and that are not otherwise prohibited under this Agreement; provided that if such assumed liabilities exceed $5,000,000
in the aggregate (together with assumed liabilities described in clause (h) of the definition of “Eyevance Acquisition”),
the Administrative Agent shall have consented in writing to such Acquisition (such consent not to be unreasonably delayed, withheld,
or conditioned). Any other such Indebtedness, liabilities or Liens not permitted to be assumed, continued or otherwise supported by any
Obligor or Subsidiary thereof hereunder shall be paid in full or released within sixty (60) days of the acquisition date (or such longer
period of time as agreed by the Administrative Agent in its reasonable discretion) as to the business, Persons or properties being so
acquired on or before the consummation of such Acquisition.
“***Permitted
Cash Equivalent Investments***” means (i) marketable direct obligations issued or unconditionally guaranteed by the United
States or any member states of the European Union or any agency or any state thereof having maturities of not more than two (2) years
from the date of acquisition, (ii) commercial paper maturing no more than three-hundred sixty-five (365) days after the date of acquisition
thereof and having the highest rating from either Standard & Poor’s Ratings Group or Moody’s Investors Service, Inc.,
(iii) certificates of deposit maturing no more than one (1) year after issue that are issued by any bank organized under the Laws of
the United States, or any state thereof, or the District of Columbia, or any U.S. branch of a foreign bank having, at the date of acquisition
thereof, combined capital and surplus of not less than $500,000,000, (iv) any money market or similar funds that exclusively hold any
of the foregoing, and (v) any other short term liquid investments approved in writing by the Administrative Agent in its sole discretion.
32
“***Permitted
Hedging Agreement***” means a Hedging Agreement entered into by any Obligor in such Obligor’s Ordinary Course for the
purpose of hedging currency risks or interest rate risks (and not for speculative purposes) and (x) with respect to hedging currency
risks, in an aggregate notional amount for all such Hedging Agreements not in excess of $10,000,000 and (y) with respect to hedging interest
rate risks, in an aggregate notional amount for all such Hedging Agreements not in excess of 100% of the aggregate principal amount of
Loans outstanding at such time.
“***Permitted
Indebtedness***” means any Indebtedness permitted under **Section 9.01**.
“***Permitted
Licenses***” means: (i) licenses of off-the-shelf software that is commercially available to the public, (ii) non-exclusive
intercompany licenses or grants of rights for development, manufacture, production, commercialization (including commercial sales to
end users), marketing, promotion, co-promotion, sales or distribution among the Obligors, (iii) any outbound non-exclusive license for
the use of Intellectual Property of any Obligor for development, manufacture, production, commercialization (including commercial sales
to end users), marketing, promotion, co-promotion, sales or distribution of any Product, in each case, entered into in the Ordinary Course; provided, that, with respect to each such license or grant described in this clause (iii), (A) no Event of Default has occurred
or is continuing at the time such license or grant, or the agreement governing such license or grant is entered into and (B) such license
or grant constitutes an Arm’s Length Transaction, the terms of which do not provide for a sale or assignment of Intellectual Property,
(iv) any non-exclusive or exclusive license of Intellectual Property or technology or a grant of rights for development, manufacture,
production, commercialization (including commercial sales to end users), marketing, co-promotion, sales, or distribution; provided that, with respect to each such license described in this clause (iv), (A) no Event of Default has occurred or is continuing at the
time such license or grant, or the agreement governing such license or grant is entered into, (B) such license or grant constitutes an
Arm’s Length Transaction, the terms of which do not provide for a sale or assignment of Intellectual Property, and (C) in the case
of any exclusive license, any such license could not result in a legal transfer of the title of the licensed property but may be exclusive
in respects other than territory and may be exclusive as to territory only as to discrete geographic areas and/or regions outside of
the United States, and (v) other licenses to which the Administrative Agent shall have consented to in writing.
“***Permitted
Liens***” means any Liens permitted under **Section 9.02**.
“***Permitted
Minority Investments***” means the Borrower’s minority Investments in the Equity Interests of each of Eton Pharmaceuticals,
Inc., Surface Pharmaceuticals, Inc., and Melt Pharmaceuticals, Inc. in existence as of the Closing Date and, with respect to the Equity
Interests of Melt Pharmaceuticals, Inc., any additional Investments received in full or partial satisfaction of the Indebtedness evidenced
by the Melt Note (as in existence on the Closing Date).
33
“***Permitted
Refinancing***” means, with respect to any Indebtedness permitted to be refinanced, extended, renewed or replaced hereunder,
any refinancings, extensions, renewals and replacements of such Indebtedness; provided that such refinancing, extension, renewal
or replacement shall not (i) increase the outstanding principal amount of the Indebtedness being refinanced, extended, renewed or replaced,
except by an amount equal to accrued interest, any required prepayment premium, and customary fees and expenses reasonably incurred in
connection therewith, (ii) contain terms relating to outstanding principal amount, amortization, maturity, collateral security (if any)
or subordination (if any), or other material terms that, taken as a whole, are materially less favorable to the Obligors and their respective
Subsidiaries or the Secured Parties than the terms of any agreement or instrument governing such existing Indebtedness, (iii) have an
applicable interest rate which does not exceed the greater of (A) the rate of interest of the Indebtedness being replaced and (B) the
then applicable market interest rate, (iv) contain any new requirement to grant any Lien or to give any Guarantee that was not an existing
requirement of such Indebtedness and (v) after giving effect to such refinancing, extension, renewal or replacement, no Default or Event
of Default shall have occurred or would reasonably be expected to occur as a result thereof.
“***Person***”
means any individual, corporation, company, voluntary association, partnership, limited liability company, joint venture, trust, unincorporated
organization or Governmental Authority or other entity of whatever nature.
“***Plan***”
means any employee pension benefit plan (as defined in Section 3(2) of ERISA) (other than a Multiemployer Plan) subject to the provisions
of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA, and in respect of which the Borrower or any ERISA Affiliate
is (or, if such plan were terminated, would under Section 4069 of ERISA be deemed to be) an “employer” as defined in Section
3(5) of ERISA.
“***Prepayment
Price***” has the meaning set forth in **Section 3.03(a)(i)**.
“***Pro
Forma Basis***” shall mean, with respect to the calculation of any financial ratio, as of any date, that *pro forma* effect will be given to the Transactions, any Acquisition, any issuance, incurrence, assumption or permanent repayment of Indebtedness
(including Indebtedness issued, incurred or assumed as a result of, or to finance, any relevant transaction and for which any such financial
ratio is being calculated), all sales, transfers and other dispositions or discontinuance of any Subsidiary, line of business or division,
or any conversion of a Subsidiary Guarantor to a non-Guarantor Subsidiary or of a non-Guarantor Subsidiary to a Subsidiary Guarantor,
in each case that have occurred during the four consecutive fiscal quarter period of the Borrower being used to calculate such financial
ratio (the “***Reference Period***”), or subsequent to the end of the Reference Period but prior to such date or
prior to or simultaneously with the event for which a determination under this definition is made (including any such event occurring
at an entity that became a Subsidiary after the commencement of the Reference Period), as if each such event occurred on the first day
of the Reference Period.
“***Product***”
means (i) those pharmaceutical or biological products (and described in reasonable detail) on **Schedule 4** attached hereto as of
the Closing Date, and updated as of the Incremental Tranche A Funding Date, and (ii) any material current or future pharmaceutical or
biological product developed, compounded, distributed, dispensed, imported, exported, labeled, promoted, manufactured, licensed, marketed,
sold or otherwise commercialized by any Obligor or any of its Subsidiaries, including any such product in development or which may be
developed.
34
“***Product
Authorizations***” means any and all Governmental Approvals, whether U.S. or non-U.S. (including all applicable ANDAs, NDAs,
BLAs, INDs, Product Standards, supplements, amendments, pre- and post- approvals, governmental price and reimbursement approvals and
approvals of applications for regulatory exclusivity) of any Regulatory Authority, in each case, necessary to be held or maintained by,
or for the benefit of, any Obligor or any of its Subsidiaries for the ownership, use or commercialization of any Product or for any Product
Commercialization and Development Activities with respect thereto in any country or jurisdiction.
“***Product
Commercialization and Development Activities***” means, with respect to any Product, any combination of research, development,
testing, manufacture, formulation, import, use, sale, licensing, importation, exportation, shipping, storage, handling, design, labeling,
marketing, promotion, supply, distribution, packaging, purchasing or other commercialization activities, receipt of payment in respect
of any of the foregoing (including, without limitation, in respect of licensing, royalty or similar payments), or any similar or other
activities the purpose of which is to commercially exploit such Product.
“***Product
Related Information***” means, with respect to any Product, all books, records, lists, ledgers, files, manuals, correspondence,
reports, plans, drawings, data and other information of every kind (in any form or medium), and all techniques and other know-how, owned
or possessed by the Obligors or any of their respective Subsidiaries that are necessary or useful for any Product Commercialization and
Development Activities relating to such Product, including (i) brand materials and packaging, customer targeting and other marketing,
promotion and sales materials and information, referral, customer, supplier and other contact lists and information, product, business,
marketing and sales plans, research, studies and reports, sales, maintenance and production records, training materials and other marketing,
sales and promotional information and (ii) clinical data, information included or supporting any Product Authorization, any regulatory
filings, updates, notices and correspondence (including adverse event and other pharmacovigilance and other post-marketing reports and
information, etc.), technical information, product development and operational data and records, and all other documents, records, files,
data and other information, used in connection with the Product Commercialization and Development Activities for such Product.
“***Product
Standards***” means all safety, quality and other specifications and standards applicable to any Product, including all pharmaceutical,
biological and other standards promulgated by Standards Bodies.
“***Prohibited
Payment***” means any bribe, rebate, payoff, influence payment, kickback or other payment or gift of money or anything of
value (including meals or entertainment) to any officer, employee or ceremonial office holder of any government or instrumentality thereof,
political party or supra-national organization (such as the United Nations), any political candidate, any royal family member or any
other person who is connected or associated personally with any of the foregoing that is prohibited under any Law for the purpose of
influencing any act or decision of such payee in his official capacity, inducing such payee to do or omit to do any act in violation
of his lawful duty, securing any improper advantage or inducing such payee to use his influence with a government or instrumentality
thereof to affect or influence any act or decision of such government or instrumentality.
35
“***Proportionate
Share***” means, with respect to any Lender, the percentage obtained by dividing (i) the sum of the Commitments (or, if the
Commitments are terminated, the outstanding principal amount of the Loans) of such Lender then in effect by (ii) the sum of the Commitments
(or, if the Commitments are terminated, the outstanding principal amount of the Loans) of all Lenders then in effect.
“***Qualified
Equity Interest***” means, with respect to any Person, any Equity Interest of such Person that is not a Disqualified Equity
Interest.
“***Qualified
Plan***” means an employee pension benefit plan (as defined in Section 3(2) of ERISA) other than a Multiemployer Plan (i)
that is or was at any time within the preceding five years maintained or sponsored by any Obligor or any ERISA Affiliate thereof or to
which any Obligor or any ERISA Affiliate thereof has within the preceding five years ever made, or was within the preceding five years
ever obligated to make, contributions, and (ii) that is intended to be tax qualified under Section 401(a) of the Code.
“***Real
Property Security Documents***” means any Landlord Consents or Bailee Letters.
“***Recipient***”
means any Lender or any other recipient of any payment to be made by or on account of any Obligation.
“***Referral
Source***” has the meaning set forth in **Section 7.07(b)**.
“***Refinanced
Facility***” means, collectively, the Indebtedness of the Obligors as set forth on **Schedule 5**.
“***Register***”
has the meaning set forth in **Section 14.05(d)**.
“***Regulation
T***” means Regulation T of the Board of Governors of the Federal Reserve System, as amended.
“***Regulation
U***” means Regulation U of the Board of Governors of the Federal Reserve System, as amended.
“***Regulation
X***” means Regulation X of the Board of Governors of the Federal Reserve System, as amended.
“***Regulatory
Authority***” means any Governmental Authority, whether U.S. or non-U.S., that is concerned with or has regulatory or supervisory
oversight with respect to any Product or any Product Commercialization and Development Activities relating to any Product, including
the FDA and all equivalent Governmental Authorities, whether U.S. or non-U.S.
“***Reinvestment***”
has the meaning set forth in **Section 3.03(b)(i)(C)**.
“***Reinvestment
Period***” has the meaning set forth in **Section 3.03(b)(i)(B)**.
“***Related
Parties***” has the meaning set forth in **Section 14.16**.
36
“***Resignation
Effective Date***” has the meaning set forth in **Section 12.09**.
“***Resolution
Authority***” means an EEA Resolution Authority or, with respect to any U.K. Financial Institution, a U.K. Resolution Authority.
“***Responsible
Officer***” of any Person means each of the president, chief executive officer, chief financial officer, general counsel and
similar officer of such Person.
“***Restricted
Payment***” means (i) any dividend or other distribution (whether in cash, Equity Interests or other property) with respect
to any Equity Interests of any Obligor or any of its Subsidiaries, (ii) any payment (whether in cash, Equity Interests or other property),
including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, defeasance, acquisition, cancellation
or termination of any such Equity Interests of any Obligor or any of its Subsidiaries, or on account of any return of capital to any
Obligor’s stockholders, partners or members (or the equivalent of any thereof), or any option, warrant or other right to acquire
any such dividend or other distribution or payment, or (iii) any payment of interest, principal or fees in respect of any Indebtedness
owed by any Obligor or any of its Subsidiaries to an Affiliate of any Obligor or to a holder of more than ten percent (10%) of the Equity
Interests of any Obligor or any of its Subsidiaries.
“***Restrictive
Agreement***” means any Contract or other arrangement that prohibits, restricts or imposes any condition upon (i) the ability
of any Obligor or any of its Subsidiaries to create, incur or permit to exist any Lien upon any of its properties or assets (other than
(x) customary provisions in Contracts restricting the assignment thereof (including, without limitation, any leases and in-bound licenses
of Intellectual Property) and (y) restrictions or conditions imposed by any Contract governing secured Permitted Indebtedness permitted
under **Section 9.01(i)**, to the extent that such restrictions or conditions apply only to the property or assets securing such Indebtedness),
or (ii) the ability of any Subsidiary of an Obligor to make Restricted Payments to such Obligor or of any Obligor or any of its Subsidiaries
to make or repay loans or advances to any other Obligor or to Guarantee Indebtedness of any other Obligor.
“***Sanction***”
means any international economic or financial sanction or trade embargo imposed, administered or enforced from time to time by the United
States Government (including, without limitation, OFAC), the United Nations Security Council, the European Union or its Member States,
His Majesty’s Treasury or other relevant sanctions authority where the Borrower or any of its Subsidiaries is located or conducts
business.
“***Sanctioned
Person***” means, at any time, (i) any Person listed in any Sanctions-related list of designated Persons maintained by the
United States Government (including, without limitation, OFAC), the United Nations Security Council, the European Union or its Member
States, His Majesty’s Treasury or other relevant sanctions authority, (ii) any Person organized or resident in a Designated Jurisdiction
or (iii) any Person fifty percent (50%) or more owned or is controlled by any such Person or Persons described in the foregoing clauses
(i) or (ii).
“***Scheduled
Unavailability Date***” has the meaning set forth in **Section 5.05(a)(ii)**.
37
“***Second
Amendment***” means the Second Amendment to Credit Agreement and Guaranty, dated as of the Second Amendment Effective Date,
by and among the Borrower, the Guarantors party thereto, the Lenders party thereto and the Administrative Agent.
“***Second
Amendment Effective Date***” means October 25, 2024.
“***Secured
Parties***” means the Lenders, the Administrative Agent and any of their respective permitted transferees or assigns.
“***Securities
Act***” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“***Security
Agreement***” means the Security Agreement, delivered pursuant to **Section 6.01(h)**, among the Obligors and the Administrative
Agent, granting a security interest in the Obligors’ Collateral in favor of the Administrative Agent, for the benefit of the Secured
Parties.
“***Security
Documents***” means, collectively, the Security Agreement, each Short-Form IP Security Agreement, each Real Property Security
Document, and each other security document, control agreement or financing statement required or recommended to perfect Liens in favor
of the Secured Parties for purposes of securing the Obligations.
“***Short-Form
IP Security Agreements***” means short-form Copyright, Patent or Trademark (as the case may be) security agreements, substantially
in the form of Exhibit C, D and E to the Security Agreement, entered into by one or more Obligors in favor of the Secured Parties, each
in form and substance reasonably satisfactory to the Administrative Agent (and as amended, modified or replaced from time to time).
“***Solvent***”
means, as to any Person as of any date of determination, that on such date (i) the fair value of the property of such Person is greater
than the total amount of liabilities, including contingent liabilities, of such Person, (ii) the present fair saleable value of such
Person is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute
and matured in the Ordinary Course, (iii) such Person does not intend to, and does not believe that it will, incur debts or liabilities
beyond such Person’s ability to pay such debts and liabilities as they mature in the ordinary course and (iv) such Person is not
engaged in a business or transaction, and is not about to engage in a business or transaction, for which such Person’s property
would constitute an unreasonably small capital after giving due consideration to the prevailing practice in the industry in which such
Person is engaged or is to engage. The amount of any contingent liability at any time shall be computed as the amount that, in light
of all of the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual
or matured liability.
“***Specified
Representations***” means the representations and warranties set forth in Sections 7.01(i) and (iv), 7.02, 7.03, 7.10, 7.11,
7.20, 7.21 and 7.22.
“***Standards
Bodies***” means any of the organizations that create, sponsor or maintain safety, quality or other standards, including FDA,
USP, ISO, ANSI, CEN and SCC and the like.
38
“***Subsidiary***”
means, with respect to any Person (the “***parent***”) at any date, any corporation, limited liability company, partnership,
association or other entity the accounts of which would be consolidated with those of the parent in the parent’s consolidated financial
statements if such financial statements were prepared in accordance with GAAP as of such date, as well as any other corporation, limited
liability company, partnership, association or other entity (i) of which securities or other ownership interests representing more than
fifty percent (50%) of the equity or more than fifty percent (50%) of the ordinary voting power or, in the case of a partnership, more
than fifty percent (50%) of the general partnership interests are, as of such date, owned, controlled or held, directly or indirectly,
or (ii) that is, as of such date, otherwise Controlled, by the parent or one or more direct or indirect subsidiaries of the parent or
by the parent and one or more direct or indirect subsidiaries of the parent. Unless otherwise specified, all references herein to a “Subsidiary”
or to “Subsidiaries” shall refer to a Subsidiary or Subsidiaries of the Borrower.
“***Subsidiary
Guarantors***” means each Subsidiary of the Borrower identified under the caption “SUBSIDIARY GUARANTORS” on the
signature pages hereto and each Subsidiary of the Borrower that becomes, or is required to become, a “Subsidiary Guarantor”
after the date hereof pursuant to **Section 8.11**.
“***Successor
Rate***” has the meaning set forth in **Section 5.05(a)(ii)(B)**.
“***Taxes***”
means all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees
or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.
“***Technical
Information***” means all (i) Product Related Information and (ii) all other know-how, information of a scientific, technical,
or business nature in any form or medium, Invention disclosures, documented research, developmental, demonstration or engineering work,
in each case that is proprietary, confidential, or that constitutes trade secrets under applicable Laws.
“***Term
SOFR***” means for any Interest Period the rate per annum equal to the Term SOFR Screen Rate two U.S. Government Securities
Business Days prior to the commencement of such Interest Period with a term equivalent to such Interest Period; provided that
if the rate is not published prior to 11:00 a.m. on such determination date then Term SOFR means the Term SOFR Screen Rate on the first
U.S. Government Securities Business Day immediately prior thereto, in each case, *plus* the Credit Spread Adjustment for such Interest
Period.
“***Term
SOFR Replacement Date***” has the meaning assigned to such term in **Section 5.05(a)(ii)(A)**.
“***Term
SOFR Screen Rate***” means the forward-looking SOFR term rate administered by CME (or any successor administrator satisfactory
to the Administrative Agent) and published on the applicable Bloomberg screen page (or such other commercially available source providing
such quotations as may be designated by the Administrative Agent from time to time).
39
“***Termination
Conditions***” has the meaning set forth in **Section 13.03**.
“***Three-Month
Term SOFR***” means a rate per annum equal to the greater of (i) two and three quarters percent (2.75%) per annum and (ii)
the Term SOFR for a three-month interest period; provided, that if the Three-Month Term SOFR as so determined would be greater
than six percent (6.00%) per annum, Three-Month Term SOFR shall be deemed to equal six percent (6.00%) per annum for purposes of this
Agreement.
“***Title
IV Plan***” means an employee benefit plan (as defined in Section 3(3) of ERISA) other than a Multiemployer Plan (i) that
is or was at any time within the preceding five years maintained or sponsored by any Obligor or any ERISA Affiliate thereof or to which
any Obligor or any ERISA Affiliate thereof has within the preceding five years ever made, or was within the preceding five years obligated
to make, contributions, and (ii) that is or was subject to Section 412 of the Code, Section 302 of ERISA or Title IV of ERISA.
“***TOBRADEX
ST***” (0.3% tobramycin and 0.05% dexamethasone) is a topical antibiotic and corticosteroid combination for steroid-responsive
inflammatory ocular conditions for which a corticosteroid is indicated and where superficial bacterial ocular infection or a risk of
bacterial ocular infection exists.
“***Total
Debt***” means, as of any date of determination, the aggregate principal amount of Indebtedness of the Borrower and its Subsidiaries
outstanding on such date, determined on a consolidated basis in accordance with GAAP (but excluding the effects of any discounting of
Indebtedness resulting from the application of purchase accounting in connection with the Transactions, any Permitted Acquisition or
the Eyevance Acquisition), consisting of Indebtedness for borrowed money, Capital Lease Obligations and debt obligations evidenced by
bonds, debentures, notes, loan agreements or other similar instruments; provided that Total Debt shall not include (x) obligations
under Hedging Agreements entered into in the Ordinary Course and not for speculative purposes, (y) undrawn letters of credit or (z) any
outstanding Tranche B Term Loans.
“***Total
Leverage Ratio***” means, at any time of determination, the ratio of (a) Total Debt at such time to (b) EBITDA of the Borrower
and its Subsidiaries for the four consecutive fiscal quarter period ended as of such date.
“***Trademarks***”
means all trade names, trademarks and service marks, corporate names, logos, Internet domain names and other indicia of origin, in each
case, whether or not registered, trademark and service mark registrations, and applications for trademark and service mark registrations,
including (i) all renewals of trademark and service mark registrations and (ii) all rights whatsoever accruing thereunder or pertaining
thereto throughout the world (including common law rights), together, in each case, with the goodwill associated therewith or symbolized
thereby.
“***Tranche
A Term Loans***” has the meaning assigned to such term in **Section 2.01(a)(i)**.
“***Tranche
B Availability Period***” has the meaning set forth in the Loans Schedule.
40
“***Tranche
B Commitment***” means, with respect to each Lender, the obligation of such Lender to make Tranche B Term Loans to the Borrower
on the Tranche B Funding Date for Tranche B Term Loans in accordance with the terms and conditions of this Agreement, which commitment
is in the amount set forth opposite such Lender’s name on **Schedule 1** under the caption “Applicable Commitment”
for Tranche B Term Loans, as such Schedule may be amended from time to time pursuant to an Assignment and Assumption, pursuant to the
following sentence, or otherwise. The aggregate amount of Tranche B Commitments on the date of this Agreement equals $35,000,000; *provided* that, if the Tranche B Funding Date does not occur on or prior to March 27, 2024, the Tranche B Commitment shall automatically, and
without any further action of any Person, be reduced to $30,000,000, and **Schedule 1** shall be deemed amended to reflect such reduction,
and to reduce each Lender’s Tranche B Commitment set forth in **Schedule 1** on a pro rata basis.
“***Tranche
B Funding Condition***” has the meaning set forth in the Loans Schedule.
“***Tranche
B Funding Date***” means the date on or prior to the expiration of the Tranche B Availability Period on which all conditions
precedent set forth in **Section 6.02** for the borrowing of Tranche B Term Loans are satisfied or waived in accordance with the terms
of this Agreement.
“***Tranche
B Term Loans***” has the meaning assigned to such term in **Section 2.01(a)(ii)**.
“***Transactions***”
means (a) the negotiation, preparation, execution, delivery and performance by each Obligor of this Agreement and the other Loan Documents
to which such Obligor is (or is intended to be) a party, the making of the Loans hereunder, and all other transactions contemplated pursuant
to this Agreement and the other Loan Documents, including the creation of the Liens pursuant to the Security Documents and (b) the payment
of all fees and expenses incurred or paid by the Obligors in connection with the foregoing.
“***UCC***”
means, with respect to any applicable jurisdictions, the Uniform Commercial Code as in effect in such jurisdiction, as may be modified
from time to time.
“***TRIESENCE***”
has the meaning set forth in **Schedule 4**.
“***U.K.
Financial Institution***” means any BRRD Undertaking (as such term is defined under the PRA Rulebook (as amended from time
to time) promulgated by the United Kingdom Prudential Regulation Authority) or any person falling within IFPRU 11.6 of the FCA Handbook
(as amended from time to time) promulgated by the United Kingdom Financial Conduct Authority, which includes certain credit institutions
and investment firms, and certain affiliates of such credit institutions or investment firms.
“***U.K.
Resolution Authority***” means the Bank of England or any other public administrative authority having responsibility for
the resolution of any U.K. Financial Institution.
“***United
States***” or “***U.S.***” means the United States of America, its fifty states and the District of Columbia.
41
“***U.S.
Government Securities Business Day***” means any day, except for (i) a Saturday, (ii) a Sunday or (iii) a day on which the
Securities Industry and Financial Markets Association recommends that the fixed income departments of its members be closed for the entire
day for purposes of trading in United States government securities.
“***U.S.
Person***” means a “United States Person” within the meaning of Section 7701(a)(30) of the Code.
“***U.S.
Tax Compliance Certificate***” has the meaning set forth in **Section 5.03(f)(ii)(B)(3)**.
“***VCOC
Lender***” has the meaning assigned to such term in **Section 8.19**.
“***VERKAZIA***”
(0.1% cyclosporine ophthalmic emulsion) is an eye drop that helps control the ongoing inflammation of vernal keratoconjunctivitis.
“***VIGAMOX***”
has the meaning set forth in **Schedule 4**.
“***Warrant***”
means each Warrant (if any) delivered pursuant to **Section 8.18** in substantially the form attached hereto as **Exhibit I**,
as amended, replaced or otherwise modified pursuant to the terms thereof.
“***Withholding
Agent***” means the Borrower and the Administrative Agent.
“***Write-Down
and Conversion Powers***” means, (a) with respect to any EEA Resolution Authority, the write-down and conversion powers of
such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down
and conversion powers are described in the EU Bail-In Legislation Schedule, and (b) with respect to the United Kingdom, any powers of
the applicable Resolution Authority under the Bail-In Legislation to cancel, reduce, modify or change the form of a liability of any
U.K. Financial Institution or any contract or instrument under which that liability arises, to convert all or part of that liability
into shares, securities or obligations of that person or any other person, to provide that any such contract or instrument is to have
effect as if a right had been exercised under it or to suspend any obligation in respect of that liability or any of the powers under
that Bail-In Legislation that are related to or ancillary to any of those powers.
“***Yield
Protection Premium***” means with respect to any prepayment of all or any portion of the Loans, whether by optional or mandatory
prepayment, acceleration or otherwise, an amount equal to the Make-Whole Discounted Value of the Make-Whole Remaining Scheduled Payments
as calculated by the Administrative Agent; provided that such amount shall in no event be less than zero.
42
“***Zerivate
License Obligations***” means the royalty and commercial milestone payment obligations described in Sections 3.2 and 3.3 of
that certain Exclusive License Agreement, dated as of September 20, 2017, by and between the Borrower, Harrow Eye, LLC, and Harrow IP,
LLC, as successors-by-assignment to Eyevance Pharmaceuticals LLC, a Delaware limited liability company, and Nicox Ophthalmics, Inc.,
a Delaware corporation, (including all schedules, annexes, exhibits and other attachments thereto), as in effect on the First Amendment
Effective Date, as amended by that certain First Amendment to Exclusive License Agreement, dated as of August 2, 2019, that certain Second
Amendment to Exclusive License Agreement, dated as of June 16, 2020, and as it may be further amended, restated, amended and restated,
supplemented or otherwise modified in any manner not materially adverse to the interests of the Administrative Agent or the Lenders in
their respective capacities as such, unless consented to in writing by the Administrative Agent and the Lenders; provided that
any increase in the amount of any of such royalty or commercial milestone payment obligations shall be deemed materially adverse to the
Administrative Agent and the Lenders, in their respective capacities as such.
***Section
3.******Accounting Terms and Principles***.
Unless otherwise specified, all accounting terms used in each Loan Document shall be interpreted, and all accounting determinations and
computations thereunder (including under **Section 10** and any definitions used in such calculations) shall be made, in accordance
with GAAP. Unless otherwise expressly provided, all financial covenants and defined financial terms shall be computed on a consolidated
basis for the Borrower and its Subsidiaries, in each case without duplication. If the Borrower requests an amendment to any provision
hereof to eliminate the effect of (a) any change in GAAP or the application thereof or (b) the issuance of any new accounting rule or
guidance or in the application thereof, in each case, occurring after the date of this Agreement, then the Lenders and Borrower agree
that they will negotiate in good faith amendments to the provisions of this Agreement that are directly affected by such change or issuance
with the intent of having the respective positions of the Lenders and Borrower after such change or issuance conform as nearly as possible
to their respective positions as of the date of this Agreement and, until any such amendments have been agreed upon, (i) the provisions
in this Agreement shall be calculated as if no such change or issuance has occurred and (ii) the Borrower shall provide to the Lenders
a written reconciliation in form and substance reasonably satisfactory to the Lenders, between calculations of any baskets and other
requirements hereunder before and after giving effect to such change or issuance.
***Section
4.*** ***Interpretation***.
For all purposes of this Agreement, except as otherwise expressly provided herein or unless the context otherwise
requires,
**Section
5.** the terms defined in this Agreement include
the plural as well as the singular and vice versa;
**Section
6.** words importing gender include all
genders;
**Section
7.** any reference to a Section, Annex, Schedule
or Exhibit refers to a Section of, or Annex, Schedule or Exhibit to, this Agreement;
**Section
8.** any reference to “this
Agreement” refers to this Agreement, including all Annexes, Schedules and Exhibits hereto, and the words herein, hereof,
hereto and hereunder and words of similar import refer to this Agreement and its Annexes, Schedules and Exhibits as a whole and not
to any particular Section, Annex, Schedule, Exhibit or any other subdivision;
43
**Section
9.** references to days, months and years refer
to calendar days, months and years, respectively;
**Section
10.** all references herein to
“include” or “including” shall be deemed to be followed by the words “without
limitation”;
**Section
11.** the word “from” when used in
connection with a period of time means “from and including” and the word “until” means “to but not
including”;
**Section
12.** the words “asset” and
“property” shall be construed to have the same meaning and effect and to refer broadly to any and all assets and
properties, whether tangible or intangible, real or personal, including cash, securities, rights under contractual obligations and
permits and any right or interest in any such assets or property;
**Section
13.** accounting terms not specifically defined
herein (other than “property” and “asset”) shall be construed in accordance with GAAP, subject to **Section
1.02**;
**Section
14.** the word “will” shall have the
same meaning as the word “shall”;
**Section
15.** where any provision in this Agreement or
any other Loan Document refers to an action to be taken by any Person, or an action which such Person is prohibited from taking,
such provision shall be applicable whether such action is taken directly or, to the knowledge of such Person, indirectly;
and
**Section
16.** references to any Lien granted or created
hereunder or pursuant to any other Loan Document securing any Obligations shall deemed to be a Lien for the benefit of the Secured
Parties.
Unless
otherwise expressly provided herein, references to organizational documents, agreements (including the Loan Documents, including any
schedules and exhibits thereto) and other contractual instruments shall be deemed to include all subsequent amendments, restatements,
extensions, supplements and other modifications thereto permitted by the Loan Documents. Any definition or reference to any Law shall
include all statutory and regulatory provisions consolidating, amending, replacing, supplementing or interpreting such Law.
44
If
any payment required to be made pursuant to the terms and conditions of any Loan Document falls due on a day which is not a Business
Day, then such required payment date shall be extended to the immediately following Business Day. For purposes of determining compliance
with any covenant (including the computation of any financial covenant) contained herein, Indebtedness of the Obligors and their Subsidiaries
will be deemed to be equal to 100% of the outstanding principal amount thereof or payment obligations with respect thereto at the time
of determination thereof, or with respect to any Hedging Agreements, the amount that would be payable if the agreement governing such
Hedging Agreements were terminated on the date of termination.
***Section
17.*** ***Division***.
For all purposes under the Loan Documents, in connection with any division or plan of division under Delaware law (or any comparable
event under a different jurisdiction’s laws) (a “***Division***”), if (a) any asset, right, obligation or
liability of any Person becomes the asset, right, obligation or liability of a different Person, then it shall be deemed to have
been transferred from the original Person to the subsequent Person, and (b) any new Person comes into existence, such new Person
shall be deemed to have been organized on the first date of its existence by the holders of its Equity Interests at such
time.
***Section
18.*** ***Currency
Generally***. For purposes of determining
compliance with **Section 9** with respect to the amount of any Indebtedness or Investment in a currency other than Dollars, no
Default or Event of Default shall be deemed to have occurred solely as a result of changes in rates of currency exchange occurring
after the time such Indebtedness or Investment is incurred, made or acquired (so long as such Indebtedness or Investment, at the
time incurred, made or acquired, was permitted hereunder).
**Section
19.**
THE
COMMITMENT AND THE LOANS
***Section
20.*** ***Loans***.
**Section
21.** On the terms and subject to the conditions
of this Agreement, each Lender agrees:
(i) to make Loans to the Borrower (A) in a principal amount equal to the amount of such Lender’s Closing Date Tranche A Commitment on the Closing Date and (B) in a principal amount equal to the amount of such Lender’s Incremental Tranche A Commitment on the Incremental Tranche A Funding Date (the “***Incremental Tranche A Term Loans***” and, together with the Closing Date Tranche A Term Loans, the “***Tranche A Term Loans***”); and
45
(ii) to make Loans to the Borrower in a principal amount equal to the amount of such Lender’s Tranche B Commitment (“***Tranche B Term Loans***”), on the Second Amendment Effective Date in accordance with **Section 2.02**.
**Section
22.** No amounts paid or prepaid with respect to
any Loan may be reborrowed.
**Section
23.** Any term or provision hereof (or of any
other Loan Document) to the contrary notwithstanding, Loans made to the Borrower will be denominated solely in Dollars and will be
repayable solely in Dollars and no other currency.
***Section
24.*** ***Borrowing
Procedures***. At least five (5) Business Days
prior any Applicable Funding Date (or such shorter period agreed by the Administrative Agent), the Borrower shall deliver to the
Administrative Agent an irrevocable Borrowing Notice in the form of **Exhibit B** signed by a duly authorized representative of
the Borrower (which notice, if received by the Administrative Agent on a day that is not a Business Day or after 10:00 A.M. (Eastern
time) on a Business Day, shall be deemed to have been delivered on the next Business Day). Each Borrowing Notice shall be for the
full amount of each of the Applicable Commitments and no Borrowing Notice for less than such full amount shall be
permitted.
***Section
25.*** ***Funding of
Borrowings***. Promptly following receipt of
any written Borrowing Notice the Administrative Agent shall advise each Lender of the details thereof and of the amount of such
Lender’s Loan to be made as part of the requested Borrowing. Each Lender shall make each Loan to be made by it hereunder on
the proposed date thereof solely by wire transfer of immediately available funds, by 2:00 p.m. New York City time, to the account of
the Administrative Agent most recently designated by it for such purpose by notice to the Lenders. Upon receipt of all funds the
Administrative Agent will make such Loans available to the Borrower promptly by wire transfer of the amounts so received, in like
funds, to an account designated by the Borrower in the applicable Borrowing Notice.
***25.04
Notes***. If requested by any Lender, the Loan of such Lender shall be evidenced by one or more Notes. The Borrower shall prepare,
execute and deliver to the Lender such promissory note(s) substantially in the form attached hereto as **Exhibit H**.
***Section
26.*** ***Use of
Proceeds***. The Borrower shall use the
proceeds of the Closing Date Tranche A Term Loans to refinance the Refinanced Facility in the aggregate amount set forth on **Schedule
5**, and for other working capital and general corporate purposes, including the payment of fees and expenses associated with this
Agreement. The Borrower shall use all of the proceeds of the Incremental Tranche A Term Loans to fund (i) the Upfront Payment (as
defined in the Eyevance APA), the Lumpsum Payment (as defined in the Eyevance License Agreement) and for the payment of fees and
expenses in connection with the Eyevance Acquisition, in each case, substantially concurrently with the funding of the Incremental
Tranche A Term Loans on the Incremental Tranche A Funding Date, (ii) the Eyevance Milestone Payments, and (iii) for other working
capital and general corporate purposes.
46
***Section
27.*** ***Commitment
Fees***. The Borrower shall pay to the
Administrative Agent for the account of the Lenders the Commitment Fee as set forth in the Fee Letter.
***Section
28.*** ***Defaulting
Lenders.***
**Section
29.** **Adjustments**.
Notwithstanding anything to the contrary contained in this Agreement, if any Lender becomes a Defaulting Lender, then, until such
time as that Lender is no longer a Defaulting Lender, to the extent permitted by applicable Law,
**Section
30.** **Waivers and Amendment. The Defaulting
Lender’s right to approve or disapprove any amendment, waiver or consent with respect to this Agreement shall be restricted as
set forth in Section 14.04.**
**Section
31.** **Reallocation of Payments. Any payment of
principal, interest, fees or other amounts received by the Administrative Agent for the account of that Defaulting Lender (whether
voluntary or mandatory, at maturity, pursuant to Section 11 or otherwise, and including any amounts made available to the
Administrative Agent by that Defaulting Lender pursuant to Section 4.03), shall be applied at such time or times as may be
determined by the Administrative Agent as follows: first, to the payment of any amounts owing by that Defaulting Lender to the
Administrative Agent hereunder; second, as the Borrower may request (so long as no Default or Event of Default exists), to the
funding of any Loan in respect of which that Defaulting Lender has failed to fund its portion thereof as required by this Agreement,
as determined by the Administrative Agent; third, if so determined by the Administrative Agent and the Borrower, to be held in a
non-interest bearing deposit account and released in order to satisfy obligations of that Defaulting Lender to fund Loans under this
Agreement; fourth, to the payment of any amounts owing to the Lenders as a result of any judgment of a court of competent
jurisdiction obtained by any Lender against that Defaulting Lender as a result of that Defaulting Lender’s breach of its
obligations under this Agreement; fifth, so long as no Default or Event of Default exists, to the payment of any amounts owing to
the Borrower as a result of any judgment of a court of competent jurisdiction obtained by the Borrower against that Defaulting
Lender as a result of that Defaulting Lender’s breach of its obligations under this Agreement; and sixth, to that Defaulting
Lender or as otherwise directed by a court of competent jurisdiction; provided, that, if (x) such payment is a payment of the
principal amount of any Loans in respect of which that Defaulting Lender has not fully funded its appropriate share and (y) such
Loans were made at a time when the conditions set forth in Section 6.02 were satisfied or waived, such payment shall be applied
solely to pay the Loans of all non-Defaulting Lenders on a pro rata basis prior to being applied to the payment of any Loans of that
Defaulting Lender. Any payments, prepayments, repayments or other amounts paid or payable to a Defaulting Lender that are applied
(or held) to pay amounts owed by a Defaulting Lender pursuant to this Section 2.07(a)(ii) shall be deemed paid to and redirected by
that Defaulting Lender, and each Lender irrevocably consents hereto.**
47
(b) **Defaulting Lender Cure**. If the Borrower and the Administrative Agent agree in writing in their sole discretion that a Defaulting
Lender should no longer be deemed to be a Defaulting Lender, the Administrative Agent will so notify the parties hereto, whereupon as
of the effective date specified in such notice and subject to any conditions set forth therein, that Lender will cease to be a Defaulting
Lender; provided, that, no adjustments will be made retroactively with respect to fees accrued or payments made by or on
behalf of the Borrower while that Lender was a Defaulting Lender; provided, further, that, except to the extent
otherwise expressly agreed by the affected parties, no change hereunder from Defaulting Lender to Lender will constitute a waiver or
release of any claim of any party hereunder arising from that Lender having been a Defaulting Lender.
(c) **Certain Fees**. No Defaulting Lender shall be entitled to receive any Commitment Fee payable under **Section 2.06** or any upfront
fee set forth in the Fee Letter for any period during which that Lender is a Defaulting Lender (and the Borrower shall not be required
to pay any such Commitment Fee or upfront fee that otherwise would have been required to have been paid to that Defaulting Lender).
**Section
32.**
PAYMENTS
OF PRINCIPAL AND INTEREST, ETC.
***Section
33.*** ***Scheduled Repayments and
Prepayments Generally; Application***. The
Borrower hereby promises to pay to the Administrative Agent for the account of each Lender (as such amounts may in each case be
reduced from time to time in accordance with **Section 3.03**), on the Maturity Date, all outstanding Obligations in full
(including, without limitation, the Exit Fee, accrued and unpaid interest, any accrued and unpaid Commitment Fee and any other
accrued and unpaid charges thereon and all other obligations due and payable by the Borrower under this Agreement (other than
inchoate indemnification obligations for which no claim has been made)). Except as otherwise provided in this Agreement, each
payment (including each repayment and prepayment) by the Borrower (other than fees payable pursuant to the Fee Letter) will be
deemed to be made ratably in accordance with the Lenders’ Proportionate Shares and applied ratably among each tranche of the
Loans. On any date occurring prior to October 21, 2025, that payment or prepayment in full of the Loans hereunder occurs, the
Borrower shall pay in full all outstanding Obligations (other than any inchoate indemnification obligations for which no claim has
been made), which shall include the Yield Protection Premium, if applicable, any accrued and unpaid Commitment Fee and the Exit Fee.
On any date occurring on or after October 21, 2025 to the Maturity Date, that payment or prepayment in full of the Loans hereunder
occurs, the Borrower shall pay in full all outstanding Obligations (other than any inchoate indemnification obligations for which no
claim has been made), which shall include any accrued and unpaid Commitment Fee and the Exit Fee, but for purposes of clarity, not
the Yield Protection Premium.
48
***Section
34.*** ***Interest***.
**Section
35.** **Interest Generally**.
The outstanding principal amount of the Loans shall accrue interest from the date made until the date of repayment (whether by
acceleration or otherwise and whether voluntary or mandatory) at the Interest Rate.
**Section
36.** **Default Interest**.
Notwithstanding the foregoing, upon the occurrence and during the continuance of any Event of Default, the Interest Rate shall
increase (i) automatically, in the case of any Event of Default under **Section 11.01(a)**, **(b)** or **(h)** and (ii)
upon the request of the Majority Lenders, in the case of any other Event of Default, by two percent (2.0%) *per annum* (the
Interest Rate, as increased pursuant to this **Section 3.02(b)**, being the “***Default Rate***”). If any
Obligation (including, without limitation, fees, costs and expenses payable hereunder) is not paid when due (giving effect to any
applicable grace period) under any applicable Loan Document, the amount thereof shall accrue interest at the Default
Rate.
**Section
37.** **Interest Payment Dates**.
Accrued interest on the Loans shall be payable in arrears on each Payment Date in cash, and upon the payment or prepayment of the
Loans (on the principal amount being so paid or prepaid); provided that interest payable at the Default Rate shall also be
payable in cash from time to time on demand by the Administrative Agent.
***Section
38.*** ***Prepayments***.
**Section
39.** **Optional Prepayments**.
**Section
40.** **Subject to prior written notice pursuant
to clause (ii) below, the Borrower shall have the right to optionally prepay in whole or in part the outstanding principal amount of
the Loans and/or any tranche thereof (i.e., any of the Tranche A Term Loans and/or the Tranche B Term Loans) on any Business Day for
an amount equal to the sum of (A) the aggregate principal amount of the Loans being prepaid, (B) any accrued but unpaid interest on
the principal amount of the Loans being prepaid, (C) any applicable Yield Protection Premium, (D) the Exit Fee and (E) any other
unpaid amounts then due and owing pursuant to this Agreement and the other Loan Documents (such aggregate amount, the
“*Prepayment Price*”); provided that each partial prepayment of principal of Loans shall be in an aggregate
amount at least equal to $5,000,000 and integral multiples of $1,000,000 in excess thereof (or, if less, any remaining outstanding
principal amount of the Loans and/or any tranche thereof).**
**Section
41.** **A notice of optional prepayment shall be
effective only if received by the Administrative Agent not later than 2:00 p.m. (Eastern time) on a date not less than three (3)
(nor more than five (5)) Business Days prior to the proposed prepayment date; provided that a notice of optional prepayment
may state that such notice is conditional upon the effectiveness of other credit facilities or the receipt of the proceeds from the
issuance of other Indebtedness or the occurrence of some other identifiable event or condition, in which case such notice of
prepayment may be revoked by the Borrower (by notice to the Administrative Agent on or prior to the specified date of prepayment) if
such condition is not satisfied. Each notice of optional prepayment shall specify the proposed prepayment date, the Prepayment
Price, the principal amount to be prepaid, the applicable tranche or tranches to be prepaid (if a partial prepayment) and any
conditions to prepayment (if applicable).**
49
**Section
42.** **Mandatory Prepayments**.
**Section
43.** **Mandatory Prepayments for Casualty
Events or Asset Sales.**
**(A)
Within five (5) Business Days following the receipt of Net Cash Proceeds from the occurrence of any Casualty Event or Asset Sale (other
than pursuant to Section 9.09 (a), (b), (c), (d), (e), (f), (i), (m), or (n) or an Asset Sale of the Permitted Minority Investments)
for which the Net Cash Proceeds from such individual Casualty Event or Asset Sale exceeds $2,000,000, or which causes the aggregate total
of Net Cash Proceeds that have not been applied as a prepayment pursuant to this Section 3.03(b)(i) from all such Casualty Events or
Asset Sales to exceed $5,000,000 in any fiscal year, the Borrower shall make a mandatory prepayment of the Loans, together with any accrued
but unpaid interest on any principal amount of the Loans being prepaid and any applicable Yield Protection Premium and Exit Fee (collectively,
the “*Mandatory Prepayment*”), which Mandatory Prepayment shall be in an amount equal to one hundred percent (100%)
of the Net Cash Proceeds received by the Borrower or any of its Subsidiaries with respect to such Asset Sale or insurance proceeds or
condemnation awards in respect of such Casualty Event, as the case may be.**
**(B)
Notwithstanding the foregoing Section 3.03(b)(i)(A), so long as no Default has occurred and is continuing or shall immediately result
therefrom, if, within five (5) Business Days following the receipt of Net Cash Proceeds from a Casualty Event at or in connection with
the Borrower’s manufacturing facility in Ledgewood, New Jersey, a Responsible Officer of the Borrower delivers to the Administrative
Agent a written notice to the effect that the Borrower intends to apply the insurance proceeds or condemnation awards in respect of such
Casualty Event, to the costs of replacement of the properties or assets that are the subject of such Casualty Event (the “*NJ
Reinvestment*”), then such insurance proceeds or condemnation awards in respect of such Casualty Event may be applied for such
purpose in lieu of such mandatory prepayment to the extent such insurance proceeds or condemnation awards in respect of such Casualty
Event are actually applied for such purposes; provided, further, that in the event that such insurance proceeds or condemnation
awards have not been so applied within three hundred and sixty five (365) days following the receipt of such insurance proceeds or condemnation
awards (such applicable period, the “*Reinvestment Period*”) (or, if the Borrower has entered into a binding commitment
prior to the last day of such Reinvestment Period to reinvest such proceeds no later than ninety five (95) days after the expiry of the
Reinvestment Period), the Borrower shall no later than the end of such period make a Mandatory Prepayment (which, for the avoidance of
doubt, shall include any accrued but unpaid interest on any principal amount of the Loans being prepaid and any applicable Yield Protection
Premium and Exit Fee) in an aggregate amount equal to one hundred percent (100%) of the unused balance of such Net Cash Proceeds received
by any Obligor or any of its Subsidiaries with respect to such insurance proceeds or condemnation awards in respect of such Casualty
Event.**
50
**(C)
Notwithstanding the foregoing Section 3.03(b)(i)(A), so long as no Default has occurred and is continuing or shall immediately result
therefrom, if, within five (5) Business Days following the receipt of Net Cash Proceeds from a Casualty Event (other than at or in connection
with the Borrower’s manufacturing facility in Ledgewood, New Jersey), a Responsible Officer of the Borrower delivers to the Administrative
Agent a written notice to the effect that the Borrower or the applicable Subsidiary intends to apply the insurance proceeds or condemnation
awards in respect of such Casualty Event, to the costs of replacement of the properties or assets that are the subject of such Casualty
Event (a “*Reinvestment*”), then such insurance proceeds or condemnation awards in respect of such Casualty Event in
an aggregate amount not to exceed $1,500,000 in any fiscal year may be applied for such purpose in lieu of such mandatory prepayment
to the extent such insurance proceeds or condemnation awards in respect of such Casualty Event are actually applied for such purposes; provided, further, that if such Casualty Event occurs with respect to any Obligor, such Reinvestment shall be made in the
business of an Obligor; provided, further, that in the event that such insurance proceeds or condemnation awards have not been
so applied within the Reinvestment Period (or, if the Borrower or any of its Subsidiaries has entered into a binding commitment prior
to the last day of such Reinvestment Period to reinvest such proceeds no later than ninety five (95) days after the expiry of the Reinvestment
Period), the Borrower shall no later than the end of such period make a Mandatory Prepayment (which, for the avoidance of doubt, shall
include any accrued but unpaid interest on any principal amount of the Loans being prepaid and any applicable Yield Protection Premium
and Exit Fee) in an aggregate amount equal to one hundred percent (100%) of the unused balance of such Net Cash Proceeds received by
any Obligor or any of its Subsidiaries with respect to such insurance proceeds or condemnation awards in respect of such Casualty Event.**
**Section
44.** **Mandatory Prepayments for Debt
Issuances. Immediately upon receipt by any Obligor or any of its Subsidiaries of proceeds from any issuance, incurrence or
assumption of Indebtedness other than Indebtedness permitted by Section 9.01, on or after the Closing Date, the Borrower shall
prepay the Loans and other Obligations in an amount equal to 100% of the cash proceeds received, *plus* any accrued but unpaid
interest on the principal amount of the Loans being prepaid, the Yield Protection Premium, if applicable, any accrued and unpaid
Commitment Fee, and the Exit Fee.**
51
**Section
45.** **Mandatory Prepayment for Change of
Control. Upon the occurrence of any Change of Control, the Borrower shall prepay all of the Loans and the other Obligations,
including any accrued but unpaid interest on the principal amount of the Loans being prepaid, any applicable Yield Protection
Premium, any accrued and unpaid Commitment Fee and the Exit Fee.**
**Section
46.** **Mandatory Prepayment for Net Revenues
Cure Payment. Any Net Revenues Cure Payment shall be applied to the prepayment of all outstanding Obligations, including any accrued
but unpaid interest on any principal amount of the Loans being prepaid, any applicable Yield Protection Premium, any accrued and
unpaid Commitment Fee and the Exit Fee.**
**Section
47.** **Notice. A notice of mandatory prepayment
shall be effective only if received by the Administrative Agent not later than 2:00 p.m. (New York City time) on a date not less
than one (1) Business Day (or such shorter period agreed by the Administrative Agent) prior to the proposed prepayment date. Each
notice of mandatory prepayment shall specify the proposed prepayment date, the amount of the mandatory prepayment, the principal
amount to be prepaid and the subsection under which the prepayment is required.**
**Section
48.** **Application**.
So long as no Event of Default has occurred and is continuing, any mandatory prepayment made in accordance with **Section
3.03(b)** shall be applied as follows: first, to any accrued and unpaid interest, accrued and unpaid Commitment Fee, any
applicable Yield Protection Premium and the Exit Fee; and second to prepay the outstanding principal balance of the Loans on
a pro rata basis.
**Section
49.** **Yield Protection Premium**.
Without limiting the foregoing, whenever the Yield Protection Premium is in effect and payable pursuant to the terms hereof or any
other Loan Document, such Yield Protection Premium shall be payable on each prepayment of all or any portion of the Loans, whether
by optional or mandatory prepayment, acceleration or otherwise (other than any prepayment pursuant to any scheduled amortization
payment); provided that, from the Second Amendment Effective Date until March 31, 2025, no Yield Protection Premium shall be
payable on any optional or mandatory prepayment of Tranche B Term Loans. Notwithstanding the foregoing, no Yield Protection Premium
shall be due and payable in connection with a Mandatory Prepayment required hereunder as a result of a Casualty Event.
**Section
50.** **Partial Prepayments**.
Prepayments shall be accompanied by accrued and unpaid interest and the Exit Fee.
**Section
51.** **Declined Payment**.
Notwithstanding anything in this **Section 3.03** to the contrary, the Oaktree Lender may elect, by notice to the Administrative
Agent prior to 12:00 p.m. (Eastern Time) at least one (1) Business Day prior to the required prepayment date, to decline all or any
portion of any mandatory prepayment of its Loans pursuant to this **Section 3.03**, in which case the aggregate amount of the
prepayment that would have been applied to prepay Loans but was so declined may be retained by the Borrower and used for any purpose
not prohibited by this Agreement.
52
***Section
52.*** ***Commitment
Termination***. Each Applicable Commitment
shall terminate automatically without further action upon the earlier of (i) the making by the Lenders of the Loans to which such
Applicable Commitment relates on the Applicable Funding Date, (ii) with respect to the Incremental Tranche A Commitment, the last
day of the Incremental Tranche A Availability Period and (iii) with respect to the Tranche B Commitment, the last day of the Tranche
B Availability Period. The Borrower shall have the right at any time or from time to time to terminate in full (but not in part) all
of the then outstanding Applicable Commitments with respect to the Incremental Tranche A Term Loans or the Tranche B Term Loans; provided that the Borrower shall give the Lender and the Administrative Agent at least three (3) Business Days’ prior written notice of
each such termination. Any notice of termination delivered pursuant to this **Section 3.04** may state that such notice is
conditional upon the effectiveness of other credit facilities or the receipt of the proceeds from the issuance of other Indebtedness
or the occurrence of some other identifiable event or condition, in which case such notice of termination may be revoked by the
Borrower (by written notice to the Administrative Agent on or prior to the specified date of termination) if such condition is not
satisfied. The termination of the Incremental Tranche A Commitment or the Tranche B Commitment pursuant to this **Section 3.04** shall
be permanent.
***Section
53.*** ***Exit Fee***.
Upon any payment or prepayment in full or in part of the Loans hereunder, whether voluntary or involuntary, prior to, on or after
the Maturity Date or following the acceleration of the Obligations hereunder, including as a result of the commencement of any
Insolvency Proceeding, the Borrower shall pay to each of the Lenders for its own account a fee equal to 3.50% of the aggregate
principal amount of such Loans to be paid or prepaid (the “***Exit Fee***”). The Exit Fee shall be earned, due
and payable immediately upon any such payment or prepayment, and shall be in addition to any accrued and unpaid interest,
reimbursement obligations, Yield Protection Premium or other amounts payable in connection therewith.
***Section
54.*** ***Original Issue
Discount***. The Borrower and the Lenders
acknowledge that the Loans will be treated as issued with original issue discount for U.S. federal tax purposes, within the meaning
of section 1273 of the Code. The issue price, amount of original issue discount, issue date and yield to maturity for the Loans may
be obtained by submitting a written request for such information to the Borrower care of Andrew Boll at 1A Burton Hills Blvd., Suite
200, Nashville TN, 37215 (which request shall also be sent via email to). The Borrower and the Lenders agree that, for U.S. federal
income tax purposes, pursuant to Treasury Regulation section 1.1275-2(c), each tranche will be treated as a single debt instrument
with a single issue price, maturity date, yield to maturity and stated redemption price at maturity for purposes of Section 1271 of
the Code.
**Section
55.**
PAYMENTS,
ETC.
***Section
56.*** ***Payments***.
53
**Section
57.** **Payments Generally**.
Each payment of principal, interest and other amounts to be made by the Obligors under this Agreement or any other Loan Document
shall be made (i) in Dollars, in immediately available funds, without deduction, set off or counterclaim, to the Administrative
Agent, for the account of the respective Lenders to which such payment is owed, to the deposit account of the Administrative Agent
designated by the Administrative Agent by notice to the Borrower, and (ii) not later than 2:00 p.m. (Eastern time) on the date on
which such payment is due (each such payment made after such time on such due date may, in the Administrative Agent’s
discretion, be deemed to have been made on the next succeeding Business Day).
**Section
58.** **Application of Payments**.
Notwithstanding anything herein to the contrary, following the occurrence and continuance of an Event of Default, all payments shall
be applied as follows:
**Section
59.** first, to the payment of that
portion of the Obligations constituting unpaid fees, indemnities, expenses or other amounts (including fees and disbursements and
other charges of counsel payable under **Section 14.03**) payable to the Administrative Agent in its capacity as such;
**Section
60.** second, to the payment of that
portion of the Obligations constituting unpaid fees, indemnities, costs, expenses and other amounts (other than principal and
interest, but including fees and disbursements and other charges of counsel payable under **Section 14.03**, any Commitment Fees,
Yield Protection Premium and any Exit Fees) payable to the Lenders arising under the Loan Documents, ratably among them in
proportion to the respective amounts described in this clause (B) payable to them;
**Section
61.** third, to the payment of that
portion of the Obligations constituting accrued and unpaid interest on the Loans, ratably among the Lenders in proportion to the
respective amounts described in this clause (C) payable to them;
**Section
62.** fourth, to the payment of that
portion of the Obligations constituting unpaid principal of the Loans, ratably among the Lenders in proportion to the respective
amounts described in this clause (D) payable to them;
**Section
63.** fifth, in reduction of any other
Obligation then due and owing, ratably among the Administrative Agent and the Lenders based upon the respective aggregate amount of
all such Obligations owing to them in accordance with the respective amounts thereof then due and payable; and
**Section
64.** sixth, the balance, if any, after
all Obligations have been indefeasibly paid in full, to the Borrower or such other Person as may be lawfully entitled to or directed
by the Borrower to receive the remainder.
**Section
65.** **Non-Business Days**.
If the due date of any payment under this Agreement (whether in respect of principal, interest, fees, costs or otherwise) would
otherwise fall on a day that is not a Business Day, such date shall be extended to the next succeeding Business Day, and, in the
case of any payment accruing interest, interest thereon shall continue to accrue and be payable for the period of such extension; provided that if such next succeeding Business Day would fall after the Maturity Date, payment shall be made on the immediately preceding
Business Day.
54
***Section
66.*** ***Computations***.
All computations of interest and fees hereunder shall be computed on the basis of a year of three hundred and sixty (360) days and
actual days elapsed during the period for which payable.
***Section
67.*** ***Set-Off***.
**Section
68.** **Set-Off Generally**.
Upon the occurrence and during the continuance of any Event of Default, the Administrative Agent, each of the Lenders and each of
their Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and
apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any
time owing by the Administrative Agent, any Lender and any of their Affiliates to or for the credit or the account of any Obligor
against any and all of the Obligations, whether or not such Person shall have made any demand and although such obligations may be
unmatured; provided, that, in the event that any Defaulting Lender shall exercise any such right of setoff, (x) all amounts so set
off shall be paid over immediately to the Administrative Agent for further application in accordance with the provisions of **Section
2.07** and, pending such payment, shall be segregated by such Defaulting Lender from its other funds and deemed held in trust for
the benefit of the Administrative Agent and the Lenders and (y) the Defaulting Lender shall provide promptly to the Administrative
Agent a statement describing in reasonable detail the Obligations owing to such Defaulting Lender as to which it exercised such
right of setoff. Any Person exercising rights of set off hereunder agrees promptly to notify the Borrower after any such set-off and
application; provided that the failure to give such notice shall not affect the validity of such set-off and application. The
rights of the Administrative Agent, the Lenders and each of their Affiliates under this **Section 4.03** are in addition to other
rights and remedies (including other rights of set-off) that such Persons may have.
**Section
69.** **Exercise of Rights Not
Required**. Nothing contained in **Section
4.03(a)** shall require the Administrative Agent, any Lender or any of their Affiliates to exercise any such right or shall affect
the right of such Persons to exercise, and retain the benefits of exercising, any such right with respect to any other indebtedness
or obligation of any Obligor.
**Section
70.** **Payments Set Aside.** To
the extent that any payment by or on behalf of any Obligor is made to the Administrative Agent or any Lender, or the Administrative
Agent, any Lender or any Affiliate of the foregoing exercises its right of setoff pursuant to this **Section 4.03**, and such
payment or the proceeds of such setoff or any part thereof is subsequently invalidated, declared to be fraudulent or preferential,
set aside or required (including pursuant to any settlement entered into by the Administrative Agent, such Lender or such Affiliate
in its discretion) to be repaid to a trustee, receiver or any other party, in connection with any Insolvency Proceeding or
otherwise, then (i) to the extent of such recovery, the obligation or part thereof originally intended to be satisfied shall be
revived and continued in full force and effect as if such payment had not been made or such setoff had not occurred, and (ii) each
Lender severally agrees to pay to the Administrative Agent upon demand its applicable share (without duplication) of any amount so
recovered from or repaid by the Administrative Agent, plus interest thereon from the date of such demand to the date such payment is
made at a rate per annum equal to the Federal Funds Effective Rate from time to time in effect.
55
**Section
71.**
YIELD
PROTECTION, TAXES, ETC.
***Section
72.*** ***Additional
Costs***.
**Section
73.** **Change in Law Generally**.
If, on or after the date hereof (or, with respect to any Lender, such later date on which such Lender becomes a party to this
Agreement), the adoption of any Law, or any change in any Law, or any change in the interpretation or administration thereof by any
court or other Governmental Authority charged with the interpretation or administration thereof, or compliance by the Administrative
Agent or any of the Lenders (or its lending office) with any request or directive (whether or not having the force of law) of any
such Governmental Authority, shall impose, modify or deem applicable any reserve (including any such requirement imposed by the
Board of Governors of the Federal Reserve System), special deposit, contribution, insurance assessment or similar requirement, in
each case that becomes effective after the date hereof (or, with respect to any Lender, such later date on which such Lender becomes
a party to this Agreement), against assets of, deposits with or for the account of, or credit extended by, a Lender (or its lending
office) or shall impose on a Lender (or its lending office) any other condition affecting the Loans or the Commitment, and the
result of any of the foregoing is to increase the cost to such Lender of making or maintaining the Loans, or to reduce the amount of
any sum received or receivable by such Lender under this Agreement or any other Loan Document, or subject any Lender to any Taxes on
its Loan, Commitment or other obligations, or its deposits, reserves, other liabilities or capital (if any) attributable thereto by
an amount reasonably deemed by such Lender in good faith to be material (other than (i) Indemnified Taxes, (ii) Taxes described in **clauses
(ii)** through **(iv)** of the definition of Excluded Taxes and (iii) Connection Income Taxes), then the Borrower shall pay to
such Lender, within five (5) Business Days of receipt of the certificate contemplated by **Section 5.01(c)**, such additional
amount or amounts as will compensate such Lender for such increased cost or reduction.
**Section
74.** **Change in Capital
Requirements**. If a Lender shall have determined
that, on or after the date hereof (or, with respect to any Lender, such later date on which such Lender becomes a party to this
Agreement), the adoption of any Law regarding capital adequacy, or any change therein, or any change in the interpretation or
administration thereof by any Governmental Authority charged with the interpretation or administration thereof, or any request or
directive regarding capital adequacy (whether or not having the force of law) of any such Governmental Authority, in each case that
becomes effective after the date hereof (or, with respect to any Lender, such later date on which such Lender becomes a party to
this Agreement), has or would have the effect of reducing the rate of return on capital of a Lender (or its parent) as a consequence
of a Lender’s obligations hereunder or the Loans to a level below that which a Lender (or its parent) could have achieved but
for such adoption, change, request or directive by an amount reasonably deemed by it to be material, then the Borrower shall pay to
such Lender, within five (5) Business Days of receipt of the certificate contemplated by **Section 5.01(c)**, such additional
amount or amounts as will compensate such Lender (or its parent) for such reduction.
56
**Section
75.** **Notification by Lender**.
Each Lender promptly will notify the Borrower of any event of which it has knowledge, occurring after the date hereof (or, with
respect to any Lender, such later date on which such Lender becomes a party to this Agreement), which will entitle such Lender to
compensation pursuant to this **Section 5.01**. Before giving any such notice pursuant to this **Section 5.01(c)** such Lender
shall designate a different lending office if such designation (x) will, in the reasonable judgment of such Lender, avoid the need
for, or reduce the amount of, such compensation and (y) will not, in the reasonable judgment of such Lender, be materially
disadvantageous to such Lender. A certificate of such Lender claiming compensation under this **Section 5.01**, setting forth the
additional amount or amounts to be paid to it hereunder, shall be conclusive and binding on the Borrower in the absence of manifest
error. The Borrower shall not be required to compensate a Lender pursuant to the foregoing provisions of this **Section 5.01** for any increased costs incurred or reductions suffered more than six (6) months prior to the date that such Lender notifies the
Borrower of the change in law giving rise to such increased costs or reductions and of such Lender’s intention to claim
compensation therefor (except that, if the change in law giving rise to such increased costs or reductions is retroactive, then the
six-month period referred to above shall be extended to include the period of retroactive effect thereof).
**Section
76.** Notwithstanding anything herein to the
contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives
thereunder or issued in connection therewith and (y) all requests, rules, guidelines or directives promulgated by the Bank for
International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States
or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to constitute a change in Law
for all purposes of this **Section 5.01**, regardless of the date enacted, adopted or issued.
***Section
77.******[Reserved]***.
***Section
78.*** ***Taxes***.
**Section
79.** **Payments Free of Taxes**.
Any and all payments by or on account of any Obligation shall be made without deduction or withholding for any Taxes, except as
required by any Law. If any Law (as determined in the good faith discretion of an applicable Withholding Agent) requires the
deduction or withholding of any Tax from any such payment by a Withholding Agent, then the applicable Withholding Agent shall be
entitled to make such deduction or withholding and shall timely pay the full amount deducted or withheld to the relevant
Governmental Authority in accordance with applicable Laws and, if such Tax is an Indemnified Tax, then the sum payable by such
Obligor shall be increased as necessary so that after such deduction or withholding has been made (including such deductions and
withholdings applicable to additional sums payable under this **Section 5.03**) the applicable Recipient receives an amount equal
to the sum it would have received had no such deduction or withholding been made.
57
**Section
80.** **Payment of Other Taxes by the
Borrower**. The Borrower shall timely pay to the
relevant Governmental Authority in accordance with applicable Laws, or at the option of the Administrative Agent, timely reimburse
it for the payment of any Other Taxes.
**Section
81.** **Evidence of Payments**.
As soon as practicable after any payment of Taxes by the Borrower to a Governmental Authority pursuant to this **Section 5.03**,
the Borrower shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental
Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably
satisfactory to the Administrative Agent.
**Section
82.** **Indemnification by the
Borrower**. The Borrower shall reimburse and
indemnify each Recipient, within ten (10) days after demand therefor, for the full amount of any Indemnified Taxes (including
Indemnified Taxes imposed or asserted on or attributable to amounts payable under this **Section 5.03**) payable or paid by such
Recipient or required to be withheld or deducted from a payment to such Recipient and any reasonable expenses arising therefrom or
with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant
Governmental Authority. A certificate as to the amount of such payment or liability delivered to the Borrower by a Lender (with a
copy to the Administrative Agent), or by the Administrative Agent on its own behalf or on behalf of a Lender shall be conclusive
absent manifest error.
**Section
83.** **Indemnification by the
Lender**. Each Lender shall severally indemnify
the Administrative Agent, within ten (10) days after demand therefor, for (i) any Indemnified Taxes attributable to such Lender (but
only to the extent that the Borrower has not already indemnified the Administrative Agent for such Indemnified Taxes and without
limiting the obligation of the Borrower to do so), (ii) any Taxes attributable to such Lender’s failure to comply with the
provisions of **Section 14.05(e)** relating to the maintenance of a Participant Register, and (iii) any Excluded Taxes
attributable to such Lender, in each case, that are payable or paid by the Administrative Agent in connection with any Loan
Document, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally
imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to
any Lender by the Administrative Agent shall be conclusive absent manifest error. Each Lender hereby authorizes the Administrative
Agent to set off and apply any and all amounts at any time owing to such Lender under any Loan Document or otherwise payable by the
Administrative Agent to the Lender from any other source against any amount due to the Administrative Agent under this **Section
5.03(e)**.
**Section
84.** **Status of Lenders**.
58
**Section
85.** **Any Lender that is entitled to an
exemption from or reduction of withholding Tax with respect to payments made under any Loan Document shall deliver to the Borrower
and the Administrative Agent, at the time or times reasonably requested by the Borrower or the Administrative Agent, such properly
completed and executed documentation reasonably requested by the Borrower or the Administrative Agent as will permit such payments
to be made without withholding or at a reduced rate of withholding. In addition, any Lender, if reasonably requested by the Borrower
or the Administrative Agent, shall deliver such other documentation prescribed by Law as reasonably requested by the Borrower or the
Administrative Agent as will enable the Borrower or the Administrative Agent to determine whether or not such Lender is subject to
backup withholding or information reporting requirements. Notwithstanding anything to the contrary in the preceding two (2)
sentences, the completion, execution and submission of such documentation (other than such documentation set forth in Section
5.03(f)(ii)(A), (ii)(B), and (ii)(D)) shall not be required if in such Lender’s reasonable judgment such completion, execution
or submission would subject such Lender to any material unreimbursed cost or expense or would materially prejudice the legal or
commercial position of such Lender.**
(ii) **Without limiting the generality of the foregoing, in the event that the Borrower is a U.S. Person:**
(A)
any Lender that is a U.S. Person shall deliver to the Borrower and the Administrative Agent on or about the date on which such Lender
becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative
Agent), executed copies of IRS Form W-9 (or successor form) certifying that such Lender is exempt from U.S. federal backup withholding
tax;
(B)
any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Borrower and the Administrative Agent (in such
number of copies as shall be requested by the recipient) on or about the date on which such Foreign Lender becomes a Lender under this
Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), whichever of the
following is applicable:
(1)
in the case of a Foreign Lender claiming the benefits of an income tax treaty to which the United States is a party (x) with respect
to payments of interest under any Loan Document, executed copies of IRS Form W-8BEN or IRS Form W-8BEN-E as applicable (or successor
forms) establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “interest” article of
such tax treaty and (y) with respect to any other applicable payments under any Loan Document, IRS Form W-8BEN or IRS Form W-8BEN-E as
applicable (or successor forms) establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “business
profits” or “other income” article of such tax treaty;
(2)
executed copies of IRS Form W-8ECI (or successor form);
(3)
in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Code, (x) a
certificate substantially in the form of **Exhibit J-1** to the effect that such Foreign Lender is not a “bank” within
the meaning of Section 881(c)(3)(A) of the Code, a “10 percent shareholder” of the Borrower within the meaning of Section
871(h)(3)(B) of the Code, or a “controlled foreign corporation” related to the Borrower as described in Section 881(c)(3)(C)
of the Code (a “***U.S. Tax Compliance Certificate***”) and (y) executed copies of IRS Form W-8BEN or IRS Form W-8BEN-E
as applicable (or successor forms); or
59
(4)
to the extent a Foreign Lender is not the beneficial owner, executed copies of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form
W-8BEN or IRS Form W-8BEN-E (or successor form), a U.S. Tax Compliance Certificate, substantially in the form of **Exhibit J-2** or **J-3**, IRS Form W-9 (or successor forms), and/or other certification documents from each beneficial owner, as applicable; provided that if the Foreign Lender is a partnership and one or more direct or indirect partners of such Foreign Lender are claiming the portfolio
interest exemption, such Foreign Lender may provide a U.S. Tax Compliance Certificate substantially in the form of **Exhibit J-4** on
behalf of each such direct and indirect partner.
(C)
any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Borrower and the Administrative Agent (in such
number of copies as shall be requested by the recipient) on or about the date on which such Foreign Lender becomes a Lender under this
Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), executed copies
of any other form prescribed by applicable Laws as a basis for claiming exemption from or a reduction in U.S. federal withholding Tax,
duly completed, together with such supplementary documentation as may be prescribed by applicable Laws to permit the Borrower or the
Administrative Agent to determine the withholding or deduction required to be made; and
(D)
if a payment made to a Lender under any Loan Document would be subject to U.S. federal withholding Tax imposed by FATCA if such Lender
were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of
the Code, as applicable), such Lender shall deliver to the Borrower and the Administrative Agent at the time or times prescribed by law
and at such time or times reasonably requested by the Borrower or the Administrative Agent such documentation prescribed by applicable
Law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by the Borrower
or the Administrative Agent as may be necessary for the Borrower and the Administrative Agent to comply with their obligations under
FATCA and to determine that such Lender has complied with such Lender’s obligations under FATCA or to determine the amount, if
any, to deduct and withhold from such payment. Solely for purposes of this clause (D), “FATCA” shall include any amendments
made to FATCA after the date of this Agreement.
Each
Lender agrees that if any form or certification it previously delivered expires or becomes obsolete or inaccurate in any respect, it
shall update such form or certification or promptly notify the Borrower and the Administrative Agent in writing of its legal inability
to do so.
60
**Section
86.** **Treatment of Certain Tax
Benefits**. If any party to this Agreement
determines, in its sole discretion exercised in good faith, that it has received a refund of any Taxes as to which it has been
indemnified pursuant to this **Section 5** (including by the payment of additional amounts pursuant to this **Section 5**), it
shall pay to the indemnifying party an amount equal to such refund (but only to the extent of indemnity payments made under this **Section
5** with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses (including Taxes) of such indemnified
party and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund). Such
indemnifying party, upon the request of such indemnified party, shall repay to such indemnified party the amount paid over pursuant
to this **Section 5.03(g)** (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) in the
event that such indemnified party is required to repay such refund to such Governmental Authority. Notwithstanding anything to the
contrary in this **Section 5.03(g)**, in no event will the indemnified party be required to pay any amount to an indemnifying
party pursuant to this **Section 5.03(g)** the payment of which would place the indemnified party in a less favorable net
after-Tax position than the indemnified party would have been in if the Tax subject to indemnification and giving rise to such
refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with respect to
such Tax had never been paid. This **Section 5.03(g)** shall not be construed to require any indemnified party to make available
its Tax returns (or any other information relating to its Taxes that it deems confidential) to the indemnifying party or any other
Person.
***Section
87.*** ***Mitigation Obligations;
Replacement of Lenders***.
**Section
88.** If the Borrower is required to pay any
Indemnified Taxes or additional amounts to any Lender or to any Governmental Authority for the account of any Lender pursuant to **Section
5.01** or **Section 5.03**, then such Lender shall (at the request of the Borrower) use commercially reasonable efforts to
designate a different lending office for funding or booking its Loans hereunder or to assign and delegate its rights and obligations
hereunder to another of its offices, branches or Affiliates if, in the sole reasonable judgment of such Lender, such designation or
assignment and delegation would (i) eliminate or reduce amounts payable pursuant to **Section 5.01** or **Section 5.03**, as
the case may be, in the future, (ii) not subject such Lender to any unreimbursed cost or expense and (iii) not otherwise be
disadvantageous to such Lender. The Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender in
connection with any such designation or assignment and delegation.
**Section
89.** If any Lender requests compensation
pursuant to **Section 5.01**, or if the Borrower is required to pay any Indemnified Taxes or additional amounts to any Lender or
to any Governmental Authority for the account of any Lender pursuant to **Section 5.01** or **Section 5.03**, and such Lender
has declined or is unable to designate a different lending office in accordance with **Section 5.04(a)**, or if any Lender is a
Defaulting Lender, then the Borrower may, at such Lender’s sole expense and effort, upon notice to such Lender and the
Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the
restrictions contained in, and consents required by, **Section 14.05(b)** (other than such Lender’s consent)), all of its
interests, rights (other than its existing rights to payments pursuant to **Section 5.01** or **Section 5.03**) and
obligations under this Agreement and the related Loan Documents to an Eligible Transferee that shall assume such obligations (which
assignee may be another Lender, if a Lender accepts such assignment); provided that: (i) the Borrower shall have provided all
of the documentation and information in accordance with **Section 14.05(b)**; (ii) such Lender shall have received payment of an
amount equal to (A) the outstanding principal of its Loans, (B) accrued interest thereon, (C) accrued fees and (D) all other amounts
payable to it hereunder and under the other Loan Documents from the assignee (to the extent of such outstanding principal and
accrued interest and fees) or the Borrower (in the case of all other amounts); (iii) in the case of any such assignment resulting
from a claim for compensation under **Section 5.01** or payments required to be made pursuant to **Section 5.03**, such
assignment will result in a reduction in such compensation or payments thereafter; and (iv) such assignment does not conflict with
applicable Law. A Lender shall not be required to make any such assignment or delegation if, prior thereto, as a result of a waiver
by such Lender or otherwise, the circumstances entitling the Borrower to require such assignment and delegation cease to
apply.
61
***Section
90.*** ***Inability to Determine
Rates***.
**Section
91.** **Replacement of Term SOFR or Successor
Rate**. Notwithstanding anything to the contrary
in this Agreement or any other Loan Documents, if the Administrative Agent determines (which determination shall be conclusive
absent manifest error), or the Borrower or Majority Lenders notify the Administrative Agent (with, in the case of the Majority
Lenders, a copy to the Borrower) that the Borrower or Majority Lenders (as applicable) have determined, that:
**Section
92.** **adequate and reasonable means do not
exist for ascertaining Term SOFR pursuant to the definition thereof, including because the Term SOFR Screen Rate is not available or
published on a current basis and such circumstances are unlikely to be temporary; or**
**Section
93.** **CME or any successor administrator of
the Term SOFR Screen Rate or a Governmental Authority having jurisdiction over the Administrative Agent or such administrator with
respect to its publication of Term SOFR, in each case acting in such capacity has made a public statement identifying a specific
date after which three month interest periods of Term SOFR or the Term SOFR Screen Rate shall or will no longer be representative or
made available, or permitted to be used for determining the interest rate of U.S. dollar denominated syndicated loans or shall or
will otherwise cease, provided that, at the time of such statement, there is no successor administrator that is reasonably
satisfactory to the Administrative Agent that will continue to provide such interest periods of Term SOFR after such specific date,
(the latest date on which such interest periods of Term SOFR or the Term SOFR Screen Rate are no longer representative or available
permanently or indefinitely, the “*Scheduled Unavailability Date*”);**
**then**
**Section
94.** in the case of events or circumstances of
the type described in **Section 5.05(a)(i)**, or **(ii)** affecting Term SOFR, on a date and time determined by the
Administrative Agent (any such date, the “***Term SOFR Replacement Date***”), which date shall be at the end of
an Interest Period or on the relevant interest payment date, as applicable, for interest calculated and, solely with respect to **clause
(ii)** above, no later than the Scheduled Unavailability Date, Term SOFR will be replaced hereunder and under any other Loan
Document with Daily Simple SOFR *plus* the Credit Spread Adjustment, in each case, without any amendment to, or further action
or consent of any other party to, this Agreement or any other Loan Document, and all interest payments on Loans with a Successor
Rate of Daily Simple SOFR *plus* the Credit Spread Adjustment will be payable on the next Payment Date; or
62
**Section
95.**(x) if the Administrative Agent reasonably determines
that Daily Simple SOFR is not available on or prior to the Term SOFR Replacement Date, or (y) if the events or circumstances of the type
described in **Section 5.05(a)(i)**, or **(ii)** affecting any Successor Rate are then in effect, then, the Administrative Agent
and the Borrower may amend this Agreement solely for the purpose of replacing the Interest Rate or any then current Successor Rate in
accordance with this **Section 5.05** with an alternative benchmark rate giving due consideration to any evolving or then existing
convention for similar credit facilities syndicated and agented in the U.S. and denominated in Dollars for such alternative benchmarks,
and, in each case, including any mathematical or other adjustments to such benchmark giving due consideration to any evolving or then
existing convention for similar credit facilities syndicated and agented in the U.S. and denominated in Dollars for such benchmarks,
which adjustment or method for calculating such adjustment shall be published on an information service as selected by the Administrative
Agent from time to time in its reasonable discretion and may be periodically updated (and any such proposed rate, including for the avoidance
of doubt, any adjustment thereto, a “***Successor Rate***”), and any such amendment shall become effective at 5:00
p.m. on the fifth (5th) Business Day after the Administrative Agent shall have posted such proposed amendment to all Lenders
and the Borrower unless, prior to such time, Lenders comprising the Majority Lenders have delivered to the Administrative Agent written
notice that such Majority Lenders object to such amendment.
**Section
96.** The Administrative Agent will promptly (in
one or more notices) notify the Borrower and each Lender of the implementation of any Successor Rate.
**Section
97.** Any Successor Rate shall be applied in a
manner consistent with market practice; provided that to the extent such market practice is not administratively feasible for
the Administrative Agent, such Successor Rate shall be applied in a manner as otherwise reasonably determined by the Administrative
Agent (in consultation with the Borrower).
**Section
98.** Notwithstanding anything else herein, if at
any time any Successor Rate as so determined would otherwise be less than zero, the Successor Rate will be deemed to be zero for the
purposes of this Agreement and the other Loan Documents.
**Section
99.** In connection with the implementation of a
Successor Rate, the Administrative Agent will have the right to make Conforming Changes from time to time and, notwithstanding
anything to the contrary herein or in any other Loan Document, any amendments implementing such Conforming Changes will become
effective without any further action or consent of any other party to this Agreement; provided that, with respect to any such
amendment effected, the Administrative Agent shall post each such amendment implementing such Conforming Changes to the Borrower and
the Lenders reasonably promptly after such amendment becomes effective.
***Section
100.*** ***Survival***.
Each party’s obligations under this **Section 5** shall survive the resignation or replacement of the Administrative Agent
or any assignment of rights by, or the replacement of, a Lender, the termination of the Commitments and the repayment, satisfaction
or discharge of all Obligations under any Loan Document.
63
**Section
101.**
CONDITIONS
***Section
102.*** ***Conditions to the Closing
Date***. The obligation of each Lender to make
the Closing Date Tranche A Terms Loans shall be subject to the delivery of a Borrowing Notice as required pursuant to **Section
2.02** and the prior or concurrent satisfaction or waiver of each of the conditions precedent set forth below in this **Section
6.01**.
**Section
103.** **Loan Documents**.
The Administrative Agent shall have received each Loan Document required to be executed by the appropriate Obligor on the Closing
Date and delivered by each applicable Obligor in such number as reasonably requested by the Administrative Agent (which may be
delivered by electronic means for the purposes of satisfying this clause (a) on the Closing Date) and such Loan Documents shall be
in form and substance satisfactory to the Administrative Agent and the Lenders and their respective counsels.
**Section
104.** **Secretary’s Certificate, Etc.** The
Administrative Agent shall have received from each Obligor (x) a copy of a good standing certificate, dated a date reasonably close
to the Closing Date, for each such Person (other than Visionology, Inc.) and (y) a certificate, dated as of the Closing Date, duly
executed and delivered by such Person’s Responsible Officer, as to:
**Section
105.** **resolutions of each such Person’s
Board then in full force and effect authorizing the execution, delivery and performance of each Loan Document to be executed by such
Person and the Transactions;**
**Section
106.** **the incumbency and signatures of
Responsible Officers authorized to execute and deliver each Loan Document to be executed by such Person; and**
**Section
107.** **the full force and validity of each
Organic Document of such Person and copies thereof,**
**which
certificates shall be in form and substance reasonably satisfactory to the Administrative Agent and upon which the Administrative Agent
and the Lenders may conclusively rely until they shall have received a further certificate of the Responsible Officer of any such Person
updating the prior certificate of such Person.**
**Section
108.** **Perfection Certificate**.
The Administrative Agent shall have received a fully completed Perfection Certificate in form and substance reasonably satisfactory
to the Administrative Agent, dated as of the Closing Date, duly executed and delivered by a Responsible Officer of the Borrower. All
documents and agreements required to be appended to the Perfection Certificate, shall be in form and substance reasonably
satisfactory to the Administrative Agent, shall have been executed and delivered by the requisite parties and shall be in full force
and effect.
64
**Section
109.** **Funding Date
Certificate**. The Administrative Agent shall
have received a Funding Date Certificate, dated as of the Closing Date and substantially in the form of **Exhibit C**, duly
executed and delivered by a Responsible Officer of the Borrower.
**Section
110.** **Delivery of Notes**.
Each Lender shall have received a Note for the Closing Date Tranche A Term Loans to the extent requested by such Lender pursuant to **Section
2.04**, duly executed and delivered by a Responsible Officer of the Borrower.
**Section
111.** **Financial Information, Etc.** The
Administrative Agent shall have received, or such information shall be publicly available on “EDGAR”, (i) audited
consolidated financial statements of the Borrower and its Subsidiaries for the fiscal year ended December 31, 2021 and (ii)
unaudited consolidated balance sheets of the Borrower and its Subsidiaries for each fiscal quarter ended after December 31, 2021
through December 31, 2022, together with the related consolidated statement of operations and cash flows for such fiscal
quarter.
**Section
112.** **Solvency**.
The Administrative Agent shall have received a solvency certificate, substantially in the form of **Exhibit K** duly executed and
delivered by the chief financial officer of the Borrower, dated as of the Closing Date, in form and substance reasonably
satisfactory to the Administrative Agent.
**Section
113.** **Security Documents**.
The Administrative Agent shall have received executed counterparts of a Security Agreement, in form and substance reasonably
acceptable to the Administrative Agent, dated as of the Closing Date, duly executed and delivered by each Obligor, together with all
documents (including share certificates, transfers and stock transfer forms, notices or any other instruments) required to be
delivered or filed under the Security Documents and evidence satisfactory to it that arrangements have been made with respect to all
registrations, notices or actions required under the Security Documents to be effected, given or made in order to establish a valid
and perfected first priority (subject to Permitted Liens) security interest in the Collateral in accordance with the terms of the
Security Documents, including:
**Section
114.****[reserved];**
**Section
115.** **financing statements naming each
Obligor as a debtor and the Administrative Agent as the secured party, or other similar instruments or documents, in each case
suitable for filing, filed under the UCC (or equivalent law) of all jurisdictions as may be necessary or, in the opinion of the
Administrative Agent, desirable to perfect the Liens of the Secured Parties pursuant to the Security Agreement;**
65
**Section
116.** **UCC-3 termination statements, if any,
necessary to release all Liens and other rights of any Person in any collateral described in the Security Agreement previously
granted by any Person (other than with respect to Permitted Liens);**
**Section
117.** **all applicable Short-Form IP Security
Agreements required to be provided under the Security Agreement, each dated as of the Closing Date, duly executed and delivered by
each applicable Obligor; and**
**Section
118.** **the Intercompany Subordination
Agreement or such other subordination agreement in form and substance reasonably satisfactory to the Administrative
Agent.**
**Section
119.** **Lien Searches**.
The Administrative Agent shall be satisfied with Lien searches regarding the Borrower and the Subsidiary Guarantors made as of a
date reasonably close to the Closing Date.
**Section
120.** **Evidence of Insurance**.
Receipt by the Administrative Agent of copies of insurance policies and certificates of insurance of the Obligors evidencing
liability and casualty insurance meeting the requirements set forth in the Loan Documents, including, but not limited to, naming the
Administrative Agent as additional insured (in the case of liability insurance) or lender loss payee (in the case of hazard
insurance) on behalf of the Secured Parties.
**Section
121.** **Payoff of Existing Credit
Facility**. The Refinanced Facility shall have
been (or substantially concurrently with the Closing Date shall be) repaid or satisfied and discharged, and in connection therewith
all Guarantees and Liens shall have been released, on or prior to the Closing Date, on terms reasonably acceptable to the
Administrative Agent and the Administrative Agent shall have received an executed payoff letter and related Lien release
documentation in connection therewith, in each case in form and substance reasonably acceptable to the Administrative
Agent.
**Section
122.** **Due Diligence Review**.
The Administrative Agent and the Lenders shall have completed and be satisfied with all legal due diligence and business due
diligence (including, without limitation, due diligence related to third party reports, and completion of any studies and/or
consultant projects), and the Administrative Agent and the Lenders shall be satisfied with the Obligors’ capital, legal and organizational structure.
**Section
123.** **Opinions of Counsel**.
The Administrative Agent shall have received duly executed legal opinions of counsel to the Obligors (including, as appropriate,
local counsel to the Obligors) dated as of the Closing Date, in form and substance reasonably acceptable to the Administrative
Agent.
**Section
124.** **Fee Letter**.
The Administrative Agent shall have received an executed counterpart of the Closing Date Fee Letter, duly executed and delivered by
the Borrower.
66
**Section
125.** **Closing Fees, Expenses,
Etc**. Each of the Administrative Agent and each
Lender shall have received for its own account, (i) the upfront fee as set forth in the Closing Date Fee Letter, which shall be paid
by way of the Administrative Agent retaining such amount from the proceeds of the Loan and (ii) all fees, costs and expenses due and
payable to it pursuant to the Closing Date Fee Letter and **Section 14.03**, including all reasonable closing costs and fees and
all unpaid reasonable and documented expenses of the Administrative Agent incurred in connection with the Transactions (including
the Administrative Agent’s reasonable and documented legal fees and expenses), plus fees and expenses of any local counsel,
plus all collateral filing fees and security fees, in each case, (A) to the extent invoiced (or as to which a good faith estimate
has been provided to the Borrower) at least two (2) Business Days prior to the Closing Date and (B) in the case of the fees, costs
and expenses pursuant to clause (ii), net of any amounts previously paid by the Borrower to the Administrative Agent as a deposit
against such fees, costs and expenses.
**Section
126.** **Material Adverse Change**.
Since December 31, 2021, no event, circumstance or change shall have occurred that has caused or would reasonably be expected to
cause, either individually or in the aggregate, a Material Adverse Change, both before and after giving effect to the Loans to be
made on the Closing Date.
**Section
127.** **FDA Enforcement Actions**.
With respect to each warning letter, untitled letter, inspection or investigation by a Governmental Authority directed at the
Borrower or any of its Subsidiaries, the Borrower or the applicable Subsidiaries have disclosed all material documentation and
materials (including all written communications to and from FDA) with respect to such warning letter, untitled letter, inspection or
investigation as of the Closing Date.
**Section
128.** **No Default**.
No event shall have occurred or be continuing that would constitute a Default or Event of Default.
**Section
129.** **Representations and
Warranties**. The representations and warranties
contained in this Agreement and in the other Loan Documents delivered pursuant to **Section 6.01** shall be true and correct in
all material respects (unless such representations are already qualified by reference to materiality, Material Adverse Effect or
similar language, in which case such representations and warranties shall be true and correct in all respects) on and as of the
Closing Date, except to the extent such representations and warranties specifically relate to an earlier date, in which case such
representations and warranties shall have been true and correct in all material respects on and as of such earlier date.
**Section
130.** **Minimum Liquidity**.
Subject to **Section 8.17(d)** and **(f)**, the Administrative Agent shall have received written evidence reasonably
satisfactory to it that, as of the Closing Date, the Borrower is in pro forma compliance with **Section 10.01**.
**Section
131.** **Beneficial Ownership Certificate;
KYC***.* To the extent requested by any
Lender or the Administrative Agent at least three (3) Business Days prior to the Closing Date, the Borrower shall have provided to
such Lender and the Administrative Agent all documentation and other information so requested, including a duly executed IRS Form
W-9 of the Borrower (or such other applicable tax form), in connection with applicable “know your customer” and
anti-money laundering rules and regulations, including the Patriot Act, and if the Borrower qualifies as a “legal entity
customer” under the Beneficial Ownership Regulation, a Beneficial Ownership Certification, in each case prior to the Closing
Date.
67
***Section
132.*** ***Conditions to the Borrowing of
Tranche B Term Loans***. The obligation of
each Lender to make Tranche B Term Loans shall be subject to the delivery of a Borrowing Notice as required pursuant to **Section
2.02**, and the prior or concurrent satisfaction or waiver of each of the conditions precedent set forth below in this **Section
6.02**:
**Section
133.** **Funding Date
Certificate**. The Administrative Agent shall
have received a Funding Date Certificate substantially in the form of **Exhibit C** dated as of the Applicable Funding Date, duly
executed and delivered by a Responsible Officer of the Borrower.
**Section
134.** **Delivery of Notes**.
The Administrative Agent shall have received a Note to the extent requested by any Lender pursuant to **Section 2.04** for the
Tranche B Term Loans made on the Tranche B Funding Date duly executed and delivered by a Responsible Officer of the
Borrower.
**Section
135.** **Solvency**.
The Administrative Agent shall have received a solvency certificate, substantially in the form of **Exhibit K**, duly executed
and delivered by the chief financial officer of the Borrower, dated as of the Tranche B Funding Date, in form and substance
reasonably satisfactory to the Administrative Agent.
**Section
136.** **Fees, Expenses, Etc.** Each of the Administrative Agent and each Lender shall have received for its own account all Commitment Fees and other fees, costs
and expenses due and payable to it on or prior to the Tranche B Funding Date pursuant to the Fee Letter, **Section 2.06** and **Section
14.03**, including all reasonable and documented closing costs and fees and all unpaid reasonable and documented expenses of the
Administrative Agent incurred in connection with the Transactions (including the Administrative Agent’s reasonable and
documented legal fees and expenses) in each case, to the extent invoiced (or as to which a good faith estimate has been provided to
the Borrower) at least two (2) Business Days prior to the Tranche B Funding Date.
**Section
137.** **Material Adverse Change**.
Since December 31, 2021, no event, circumstance or change shall have occurred that has caused or would reasonably be expected to
cause, either individually or in the aggregate, a Material Adverse Change, both before and after giving effect to the Tranche B Term
Loans to be made on the Tranche B Funding Date.
**Section
138.** **No Default**.
No event shall have occurred or be continuing or would result from the making of the Tranche B Term Loans on the Tranche B Funding
Date that would constitute a Default or Event of Default.
**Section
139.** **Representations and Warranties; Updated
Schedules**. The representations and warranties
contained in this Agreement and in the other Loan Documents delivered pursuant to **Section 6.01(a)** shall be true and correct
in all material respects (unless such representations are already qualified by reference to materiality, Material Adverse Effect or
similar language, in which case such representations and warranties shall be true and correct in all respects) on and as of the
Tranche B Funding Date, except to the extent such representations and warranties specifically relate to an earlier date, in which
case such representations and warranties shall have been true and correct in all material respects on and as of such earlier date.
The Borrower shall have delivered to the Administrative Agent updated copies of **Schedules 7.06(c)**, **7.12**, **7.16**, **7.17** and **7.23**, to the extent required to satisfy the foregoing requirements set forth in this **Section 6.02(g)**.
68
**Section
140.** **Tranche B Funding
Condition**. The Tranche B Funding Condition
shall have been satisfied as set forth on the Loans Schedule; provided that, solely with respect to a Borrowing of Tranche B
Term Loans on the Second Amendment Effective Date, the Tranche B Funding Condition will be deemed to have been satisfied as of the
Second Amendment Effective Date.
**Section
141.** **Tranche B Availability
Period**. The Tranche B Term Loans shall be
borrowed on or prior to the last day of the Tranche B Availability Period.
***Section
142.*** ***Conditions to the Borrowing of
Incremental Tranche A Term Loans***. The
obligation of each Lender to make Incremental Tranche A Term Loans shall be subject to the delivery of a Borrowing Notice as
required pursuant to **Section 2.02**, and the prior or concurrent satisfaction or waiver of each of the conditions precedent set
forth below in this **Section 6.03**:
**Section
143.** **Funding Date
Certificate**. The Administrative Agent shall
have received a Funding Date Certificate substantially in the form of **Exhibit C** dated as of the Applicable Funding Date, duly
executed and delivered by a Responsible Officer of the Borrower.
**Section
144.** **Delivery of Notes**.
The Administrative Agent shall have received a Note (or an amendment and restatement of an existing Note) to the extent requested by
any Lender pursuant to **Section 2.04** for the Tranche A Term Loans of such Lender, duly executed and delivered by a Responsible
Officer of the Borrower.
**Section
145.** **Solvency**.
The Administrative Agent shall have received a solvency certificate, substantially in the form of **Exhibit K**, duly executed
and delivered by the chief financial officer of the Borrower, dated as of the Incremental Tranche A Funding Date, in form and
substance reasonably satisfactory to the Administrative Agent.
**Section
146.** **Fees, Expenses, Etc**.
Each of the Administrative Agent and each Lender shall have received for its own account all Commitment Fees and other fees, costs
and expenses due and payable to it on or prior to the Incremental Tranche A Funding Date pursuant to the Fee Letter, **Section
2.06** and **Section 14.03**, including all reasonable and documented closing costs and fees and all unpaid reasonable and
documented expenses of the Administrative Agent incurred in connection with the Transactions (including the Administrative
Agent’s reasonable and documented legal fees and expenses) in each case, to the extent invoiced (or as to which a good faith
estimate has been provided to the Borrower) at least two (2) Business Days prior to the Incremental Tranche A Funding
Date.
**Section
147.** **Material Adverse Change.** Since
the First Amendment Effective Date, no event, circumstance or change shall have occurred that has caused or would reasonably be
expected to cause, either individually or in the aggregate, a Material Adverse Change, both before and after giving effect to the
Incremental Tranche A Term Loans to be made on the Incremental Tranche A Funding Date.
69
**Section
148.** **No Payment or Bankruptcy
Default**. No event shall have occurred or be
continuing or would result from the making of the Incremental Tranche A Term Loans on the Incremental Tranche A Funding Date that
would constitute an Event of Default under any of Section 11.01(a), (b) or (h).
**Section
149.** **Representations and Warranties; Updated
Schedules**. The Specified Representations shall
be true and correct in all material respects (unless such representations are already qualified by reference to materiality,
Material Adverse Effect or similar language, in which case such representations and warranties shall be true and correct in all
respects) on and as of the Incremental Tranche A Funding Date, except to the extent such representations and warranties specifically
relate to an earlier date, in which case such representations and warranties shall have been true and correct in all material
respects on and as of such earlier date. The Borrower shall have delivered to the Administrative Agent updated copies of **Schedules
4**, **7.05(b)**, **7.06(c)**, **7.12**, **7.16**, **7.17** and **7.23**, to the extent required to satisfy the
foregoing requirements set forth in this **Section 6.03(g)**.
**Section
150.** **Incremental Tranche A Funding
Condition**. The Incremental Tranche A Funding
Condition shall have been satisfied as set forth on the Loans Schedule.
**Section
151.** **Incremental Tranche A Availability
Period**. The Incremental Tranche A Term Loans
shall be borrowed on or prior to the last day of the Incremental Tranche A Availability Period.
**Section
152.**
REPRESENTATIONS
AND WARRANTIES
The
Borrower and each other Obligor hereby jointly and severally represents and warrants to the Administrative Agent and each Lender on the
Closing Date and each Bringdown Date, as set forth below:
***Section
153.*** ***Power and
Authority***. Each Obligor and each of its
Subsidiaries (i) is duly incorporated or organized and validly existing under the laws of its jurisdiction of incorporation or
organization, (ii) has all requisite corporate or other power, and has all Governmental Approvals necessary to own its assets and
carry on its business as now being or as proposed to be conducted, except to the extent that failure to have the same would not,
individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect, (iii) is qualified to do business
and is in good standing in all jurisdictions in which the nature of the business conducted by it makes such qualification necessary
except where failure so to qualify would not, individually or in the aggregate, reasonably be expected to result in a Material
Adverse Effect, and (iv) has full power, authority and legal right to enter into and perform its obligations under each of the Loan
Documents to which it is a party and, in the case of the Borrower, to borrow the Loans hereunder.
70
***Section
154.*** ***Authorization;
Enforceability***. Each Transaction to which
an Obligor is a party (or to which it or any of its assets or properties is subject) are within such Obligor’s corporate or
other organizational powers and have been duly authorized by all necessary corporate or other organizational action including, if
required, approval by all necessary holders of its Equity Interests. This Agreement has been duly executed and delivered by each
Obligor and constitutes, and each of the other Loan Documents to which it is a party when executed and delivered by such Obligor
will constitute, a legal, valid and binding obligation of such Obligor, enforceable against such Obligor in accordance with its
terms, except as such enforceability may be limited by (i) bankruptcy, insolvency, reorganization, moratorium or similar laws of
general applicability affecting the enforcement of creditors’ rights and (ii) the application of general principles of equity
(regardless of whether such enforceability is considered in a proceeding in equity or at law).
***Section
155.*** ***Governmental and Other
Approvals; No Conflicts***. None of the
execution, delivery and performance by each Obligor of the Loan Documents to which it is a party or the consummation by each Obligor
of the Transactions (i) requires any Governmental Approval of, registration or filing with, or any other action by, any Governmental
Authority or any other Person, except for (x) such as have been obtained or made and are in full force and effect, (y) filings and
recordings in respect of perfecting or recording the Liens created pursuant to the Security Documents, and (z) filings required
under applicable securities Laws, (ii) will violate (1) any Law, (2) any Organic Document of any Obligor or any of its Subsidiaries
or (3) any order of any Governmental Authority, that in the case of clause (ii)(1) or clause (ii)(3), individually or in the
aggregate, would reasonably be expected to result in a Material Adverse Effect, (iii) will violate or result in a default under any
Material Agreement binding upon any Obligor or any of its Subsidiaries that, individually or in the aggregate, would reasonably be
expected to result in a Material Adverse Effect or (iv) will result in the creation or imposition of any Lien (other than Permitted
Liens) on any asset of any Obligor or any of its Subsidiaries.
***Section
156.*** ***Financial Statements; Material
Adverse Change***.
**Section
157.** **Financial Statements**.
The Borrower has heretofore furnished to the Administrative Agent (who shall forward to the Lenders) consolidated financial
statements required to be delivered pursuant to this Agreement. Such financial statements present fairly, in all material respects,
the consolidated financial position and results of operations and cash flows of the Borrower and its Subsidiaries as of such dates
and for such periods in accordance with GAAP, subject to year-end audit adjustments and the absence of footnotes in the case of the
statements of the type described in **Section 8.01(a)** and **(b)**.
**Section
158.** **No Material Adverse
Change**. Since December 31, 2021, no event,
circumstance or change has occurred that has caused or would reasonably be expected to cause, individually or in the aggregate, a
Material Adverse Change.
***Section
159.*** ***Properties***.
**Section
160.** **Property Generally**.
Each Obligor and each of its Subsidiaries has good and marketable title to, or valid leasehold interests in, or license to, all its
real and personal property material to its business, including (i) all properties and assets, whether tangible or intangible,
relating to its Products or Product Commercialization and Development Activities and (ii) all Material Intellectual Property, in
each case, subject only to Permitted Liens.
71
**Section
161.** **Intellectual Property**.
**Section
162.** **Except as set forth in Schedule
7.05(b)(i),**
**Section
163.** the Obligors are the sole and exclusive
legal and beneficial owners of all right, title and interest in and to all Material Intellectual Property and all other Intellectual
Property that is, in each case owned or purported to be owned by Borrower or any of its Subsidiaries, free and clear of:
***Section
164.*** *any Claims that would reasonably be
expected to result in material liability to any of the Obligors or have a material adverse effect on any Product Commercialization
and Development Activities with respect to any Product;*
***Section
165.*** *any Liens other than Permitted
Liens; and*
**Section
166.** the Obligors own or have sufficient and
valid written rights to use all Material Intellectual Property.
**Section
167.****Without limiting Section 7.05(b) (i), and
except as set forth in Schedule 7.05(b)(ii):**
**Section
168.** other than (1) customary restrictions in
in-bound licenses of Material Intellectual Property and non-disclosure Contracts, or (2) as would have been or is permitted by **Section
9.09**, there are no judgments, licenses, covenants not to sue, grants, Liens (other than Permitted Liens), or other Claims or
Contracts relating to any Material Intellectual Property, which materially restrict any Obligor with respect to its use,
enforcement, or other exploitation of any Material Intellectual Property or in connection with Product Commercialization and
Development Activities with respect to any Product;
**Section
169.** the operation and conduct of the business
of the Borrower or any of its Subsidiaries, including their exploitation of Material Intellectual Property in such Person’s
Ordinary Course, does not violate, infringe or constitute a misappropriation of any valid rights arising under any Intellectual
Property rights of any other Person in a manner that has resulted in, or would reasonably be expected to result in, material
liability or disruption to the businesses of the Borrower or any of its Subsidiaries (including any Product Commercialization and
Development Activities);
**Section
170.** (1) there are no material pending Claims,
or Claims threatened in writing, against Borrower or any of its Subsidiaries asserted by any other Person relating to any of such
Person’s Intellectual Property, including any material Claims alleging ownership, invalidity or unenforceability of any
Material Intellectual Property, or infringement, misappropriation, or violation of such Person’s Intellectual Property; and
(2) neither Borrower nor any of its Subsidiaries has received any notice from, or Claim by, any Person that the operation and
conduct of the businesses of the Borrower or any of its Subsidiaries (including their exploitation of Material Intellectual
Property), or any Product Commercialization and Development Activities with respect to any Product, infringes upon, violates or
constitutes a misappropriation of, any Intellectual Property of any other Person that has or would reasonably be expected to result
in material liability to the Borrower or any of its Subsidiaries;
**Section
171.** to the knowledge of the Obligors, no
Material Intellectual Property is being infringed, violated, or misappropriated by any other Person in any material respect, and
neither Borrower nor any of its Subsidiaries has put any other Person on notice of such actual or potential infringement, violation
or misappropriation of any such Material Intellectual Property or initiated the enforcement of any Claim with respect to any such
Material Intellectual Property;
72
**Section
172.** to the knowledge of the Obligors, all
current and former employees and contractors that have developed Material Intellectual Property for or on behalf of Borrower or any
of its Subsidiaries have executed written confidentiality and invention assignment Contracts with Borrower or such Subsidiary, as
applicable, that irrevocably and presently assign to Borrower or such Subsidiary, as applicable, all rights of such employees and
contractors in or to any such Material Intellectual Property, or ownership of such Material Intellectual Property has otherwise
vested automatically with an Obligor by operation of Law; and
**Section
173.** Borrower and each of its Subsidiaries has
taken reasonable precautions to protect the secrecy, confidentiality and value of its Material Intellectual Property consisting of
Technical Information; and
**Section
174.** **With respect to Material Intellectual
Property consisting of Patents, except as set forth in Schedule 7.05(b)(iii), and without limiting the representations and
warranties in Section 7.05(b)(i) and Section 7.05(b)(ii):**
**Section
175.** each of the issued claims in such Patents
is valid and enforceable;
**Section
176.** subsequent to the issuance of such
Patents, neither Borrower nor any of its Subsidiaries or, to the knowledge of Obligors, any of its or their
predecessors-in-interest, has filed any disclaimer or made or permitted any other voluntary reduction in the scope of the Inventions
claimed in such Patents;
**Section
177.** to the knowledge of the Obligors, (1) no
allowable or allowed subject matter of such Patents is subject to any competing conception claims of allowable or allowed subject
matter of any patent applications or patents of any third party or has been the subject of any interference, re-examination,
opposition, or any other post-grant proceedings, and (2) there is no basis for any such interference, re-examination, opposition, *inter
partes* review, post grant review, or any other post-grant proceedings, in each case of (1) and (2), (x) as of the Closing Date
and (y) as of any Bringdown Date that would not reasonably be expected to result in a Material Adverse Effect or a material adverse
effect on any Product Commercialization and Development Activities with respect to any Product;
**Section
178.** all material maintenance fees, annuities,
and the like due and payable on or with respect to any such Patents have been timely paid.
***Section
179.*** ***No Actions or
Proceedings***.
**Section
180.** **Litigation**.
Except as set forth in **Schedule 7.06(a)**, there is no litigation, investigation or proceeding pending or, to the knowledge of
any Obligor threatened in writing, with respect to such Obligor or any such Subsidiaries by or before any Governmental Authority or
arbitrator that, (i) individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect or (ii)
involves this Agreement or any other Loan Document.
**Section
181.** **Environmental Matters**.
Except with respect to any matters that (either individually or in the aggregate) would not reasonably be expected to result in a
Material Adverse Effect, no Obligor nor any of its Subsidiaries (i) has failed to comply with any Environmental Law in all material
respects or to obtain, maintain or comply with any material permit, license or other approval required under any Environmental Law,
(ii) has become subject to any material Environmental Liability, (iii) has received any material Environmental Claim, or has
knowledge that any is threatened, (iv) has entered into any agreement in which such Obligor or any Subsidiary has assumed or
undertaken material responsibility or obligations of any other person with respect to any Environmental Liability or (v) has
knowledge of any basis for any other material Environmental Liability.
73
**Section
182.** **Labor Matters**.
No Obligor or any of its Subsidiaries has engaged in unfair labor practices as defined in 29 U.S.C. § §152(8) and 158 of
the National Labor Relations Act and there are no pending or, to the knowledge of any Obligor, threatened in writing labor actions,
disputes, grievances, arbitration proceedings, or similar Claims or actions involving the employees of any Obligor or any of its
Subsidiaries, in each case, that would reasonably be expected to have a Material Adverse Effect. There are no strike or work
stoppages in existence or, to the knowledge of any Obligor, threatened in writing against such Obligor and to the knowledge of such
Obligor, no union organizing activity is taking place, in each case, that would reasonably be expected to have a Material Adverse
Effect. Except as set forth on **Schedule 7.06(c)** (as such schedule may be updated on any Bringdown Date), there are no
collective bargaining agreements covering employees of any Obligor or any of its Subsidiaries*.*
***Section
183.*** ***Compliance with Laws and
Agreements***.
**Section
184.** (i) Each Obligor is and, during the past
three (3) years, has been in compliance with all applicable Laws and all Contracts binding upon it or its property, except, in each
case, where the failure to do so would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse
Effect, (ii) no Default has occurred and is continuing, and (iii) the Obligors and their Subsidiaries are and, during the past three
(3) years have been, and all Product Commercialization and Development Activities of such Persons are being and, during the past
three (3) years have been, conducted in compliance with all applicable Healthcare Laws, except where such failure to comply would
not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.
(b)
To the knowledge of the Obligors, any physician, other licensed healthcare professional, or any other Person who is in a position to
refer patients or other business to the Borrower, any other Obligor or any Subsidiaries (collectively, a “***Referral Source***”)
who has a direct ownership, investment, or financial interest in the Borrower, any other Obligor or any such Subsidiary paid fair market
value for such ownership, investment or financial interest; any ownership or investment returns distributed to any Referral Source is
in proportion to such Referral Source’s ownership, investment or financial interest; and no preferential treatment or more favorable
terms were or are offered to such Referral Source compared to investors or owners who are not in a position to refer patients or other
business. No Obligor, nor any of its Subsidiaries, directly or indirectly, has or will guarantee a loan, make a payment toward a loan
or otherwise subsidize a loan for any Referral Source including, without limitation, any loans related to financing the Referral Source’s
ownership, investment or financial interest in the Borrower, any other Obligor or any such Subsidiary.
(c)
Without limiting the generality of the foregoing:
**Section
185.** **Except where the failure to do so would
not reasonably be expected to have any Material Adverse Effect, to the knowledge of the Obligors, (a) each Referral Source
arrangement complies with the Federal Anti-Kickback Statute, the Stark Law and all other applicable Healthcare Laws, whether U.S.,
or non-U.S.;**
74
**Section
186.** **each Obligor and each of its
Subsidiaries shall have implemented policies and procedures to monitor, collect, and report any payments or transfers of value to
certain healthcare providers and teaching hospitals, in accordance, in all material respects, with industry standards and the
Affordable Care Act of 2010 and the Physician Payments Sunshine Act and their implementing regulations and state disclosure and
transparency laws; and**
**Section
187.** **each Obligor and each of its
Subsidiaries, as applicable, meet all applicable Payor requirements and conditions of participation and are a party to valid
participation or other agreements required for payment by such Payors in all material respects. All billing, claims, reporting and
documentation practices of each Obligor and each of its Subsidiaries, as applicable are and, during the past three (3) years, have
been in compliance with all Healthcare Laws and legally enforceable Payor requirements in all material respects. Neither the Obligor
nor any of its Subsidiaries has billed, received or retained any payment or reimbursement in violation of applicable Healthcare Laws
or legally enforceable Payor requirements in any material respects. There are no pending audits, recoupments, appeals, or challenges
in excess of $1,000,000 with respect to any billings or claims submissions. No audit, investigation, validation review or program
integrity review related to the Obligor or any of its Subsidiaries has been conducted by any Payor or Governmental Authority within
the past three (3) years which would, individually or in the aggregate, reasonably be expected to have a Material Adverse
Effect.**
***Section
188.*** ***Taxes***.
Except as set forth on **Schedule 7.08**, each Obligor and its Subsidiaries has timely filed or caused to be filed all tax
returns and reports required to have been filed and has paid or caused to be paid all taxes required to have been paid by it, except
(a) taxes that are being contested in good faith by appropriate proceedings and for which such Obligor or such Subsidiary, as
applicable, has set aside on its books adequate reserves with respect thereto in accordance with GAAP or (b) to the extent that the
failure to do so would not reasonably be expected to have a Material Adverse Effect.
***Section
189.*** ***Full
Disclosure***. None of the reports, financial
statements, certificates or other written information (other than projections, forward-looking information, budgets, estimates and
information of a general economic or industry specific nature) furnished by or on behalf of the Obligors to the Administrative Agent
(on behalf of itself and the Lenders) in connection with the negotiation of this Agreement and the other Loan Documents or delivered
hereunder or thereunder (as modified or supplemented by other information so furnished) contains when furnished any material
misstatement of material fact or omits to state any material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not materially misleading; provided that, with respect to projected financial
information, the Borrower represents only that such information was prepared in good faith based upon assumptions believed to be
reasonable at the time delivered, and it being understood that such projected financial information and all other forward looking
information are not to be viewed as facts and are subject to uncertainties and contingencies, many of which are beyond the control
of the Borrower or any of its Subsidiaries, and that actual results during the period or periods covered thereby may differ from
such projected results and that the differences may be material.
75
***Section
190.*** ***Investment Company Act and
Margin Stock Regulation***.
**Section
191.** **Investment Company Act**.
No Obligor is an “investment company” as defined in, or subject to regulation under, the Investment Company Act of 1940,
as amended.
**Section
192.** **Margin Stock**.
No Obligor is engaged principally, or as one of its important activities, in the business of extending credit for the purpose,
whether immediate, incidental or ultimate, of buying or carrying Margin Stock, and no part of the proceeds of the Loans will be
used, whether immediately, incidentally or ultimately, to buy or carry any Margin Stock, to extend credit to others for the purpose
of buying or carrying any Margin Stock, or in any way that is in violation of Regulation T, U or X.
***Section
193.*** ***Solvency***.
The Obligors, on a consolidated basis, are and, immediately after giving effect to the making of the Loans, the use of proceeds
thereof, and the consummation of the Transactions, will be, Solvent.
***Section
194.*** ***Subsidiaries***.
Set forth on **Schedule 7.12** is a complete and correct list of all direct and indirect Subsidiaries of the Borrower (as such
schedule may be updated on any Bringdown Date). Each such Subsidiary is duly organized and validly existing under the jurisdiction
of its organization shown in said **Schedule 7.12**, and the percentage ownership by each Obligor of each such Subsidiary thereof
is as shown in said **Schedule 7.12**.
***Section
195.*** ***Excluded
Subsidiaries***. Each of the Excluded
Subsidiaries as of the Closing Date (a) holds no assets or property (other than *de minimis* assets or property necessary to
maintain its corporate existence or otherwise comply with applicable Law) and (b) has no revenue.
***Section
196.*** ***Material
Agreements***. Except as set forth on **Schedule
7.14**, no Obligor nor any of its Subsidiaries is in default under any Material Agreement (x) as of the Closing Date, in any
material respect and (y) as of any Bringdown Date, that would reasonably be expected to result in a Material Adverse Effect or a
material adverse effect on any Product Commercialization and Development Activities with respect to any Product, nor does any
Obligor have knowledge of any Claim against it or any of its Subsidiaries for any breach of any such Material Agreement in any
material respect.
***Section
197.*** ***Restrictive
Agreements***. Except as set forth in **Schedule
7.15**, as of the Closing Date, no Obligor or any of its Subsidiaries is subject to any Restrictive Agreement, except (i) those
permitted under **Section 9.11**, (ii) restrictions and conditions imposed by Law or by the Loan Documents, (iii) any stockholder
agreement, charter, by-laws, or other organizational documents of an Obligor or any of its Subsidiaries as in effect on the date
hereof, (iv) limitations associated with Permitted Liens, and (v) customary restrictions and conditions contained in agreements
relating to the sale of a Subsidiary or other property pending such sale, provided such restrictions and conditions apply
only to the Subsidiary or other property that is subject to such agreements and each such sale is permitted hereunder.
76
***Section
198.*** ***Real
Property***. **Schedule 7.16** correctly
sets forth all real property that is owned or leased by the Obligors (as such schedule may be updated on any Bringdown Date),
indicating in each case whether the respective property is owned or leased, the identity of the owner and lessee (if applicable) and
the location of the respective property. Except as set forth in **Schedule 7.16** (as such schedule may be updated on any
Bringdown Date), no Obligor owns or leases (as tenant thereof) any real property as of the Closing Date.
***Section
199.*** ***Pension
Matters***. **Schedule 7.17** sets forth
(as such schedule may be updated on any Bringdown Date), a complete and correct list of, and that separately identifies, (i) all
Title IV Plans, (ii) all Multiemployer Plans and (iii) all material Benefit Plans. Each Qualified Plan, and each trust thereunder,
has received a favorable determination or may rely upon an opinion letter for a prototype plan letter from the IRS or an application
for such a letter is currently being processed by the IRS with respect thereto and, as of the date of this Agreement, to the
knowledge of the Obligors, nothing has occurred that would reasonably be expected to prevent, or cause the loss of, such
qualification. Except for those that could not, in the aggregate, reasonably be expected to result in a Material Adverse Effect, (x)
each Benefit Plan is in compliance with applicable provisions of ERISA, the Code and other Laws, (y) there are no existing or
pending (or to the knowledge of any Obligor, threatened) claims (other than routine claims for benefits in the normal course),
sanctions, actions, lawsuits or other proceedings or investigation involving any Benefit Plan to which any Obligor or Subsidiary
thereof incurs or otherwise has or could have an obligation or any liability or Claim and (z) no ERISA Event is reasonably expected
to occur. The Borrower and each of its ERISA Affiliates has met all applicable requirements under the ERISA Funding Rules with
respect to each Title IV Plan, and no waiver of the minimum funding standards under the ERISA Funding Rules has been applied for or
obtained. As of the most recent valuation date for any Title IV Plan, the funding target attainment percentage (as defined in
Section 430(d)(2) of the Code) is at least sixty percent (60%), and neither any Obligor nor any of its ERISA Affiliates knows of any
facts or circumstances that would reasonably be expected to cause the funding target attainment percentage to fall below sixty
percent (60%) as of the most recent valuation date. As of the Closing Date, no ERISA Event has occurred in connection with which
obligations and liabilities (contingent or otherwise) remain outstanding.
***Section
200.*** ***Regulatory
Approvals***.
**Section
201.** Each Obligor and each of its Subsidiaries
holds, either directly or through licensees and agents, all Product Authorizations necessary or required for the Borrower and each
of its Subsidiaries to conduct, their respective operations and businesses in the manner currently conducted as of the Closing Date
and as of any Bringdown Date, in each case, except where the failure to hold any such Product Authorizations would not reasonably be
expected to result in a Material Adverse Effect.
77
**Section
202.** No Obligor nor its Subsidiaries has
received during the past three (3) years any written notice from the FDA or any Governmental Authority that (i) it is considering
suspending, revoking or materially limiting any Product Authorization, in each case, that would reasonably be expected to result in
a Material Adverse Effect, or (ii) as of the Closing Date, it is not likely to approve any applications made to such Governmental
Authority with respect to any of the Products or any Material Agreement. To the knowledge of the Obligors, the Obligors and their
Subsidiaries have made all required notices, registrations and reports (including field alerts or other reports of adverse drug
experiences) and other filings with respect to each Product and their Product Commercialization and Development Activities, in each
case, except where the failure to do so would not reasonably be expected to have a Material Adverse Effect.
**Section
203.** Except as set forth on **Schedule
7.18(c)**, and without limiting the generality of any other representation or warranty made by any Obligor hereunder or under any
other Loan Document (x) as of the Closing Date and (y) as of any Bringdown Date, in each case, except as would not reasonably be
expected to have a Material Adverse Effect: (i) no Obligor, nor any of its Subsidiaries nor, to the knowledge of any Obligor, any of
their respective agents, suppliers, licensors or licensees have received any inspection reports, warning letters or notices or
similar documents with respect to Products or any Product Commercialization and Development Activities from any Regulatory Authority
within the last three (3) years that asserts material lack of compliance with any applicable Healthcare Laws or Product
Authorizations; (ii) no Obligor, nor any of its Subsidiaries nor, to the knowledge of any Obligor, any of their respective agents,
suppliers, licensors or licensees have received any material notification from any Regulatory Authority within the last three (3)
years, asserting that Products or any Product Commercialization and Development Activities lack a required Product Authorization;
(iii) there is no pending regulatory action, investigation or inquiry (other than non-material routine or periodic inspections or
reviews) against any Obligor, any of its Subsidiaries or, to the knowledge of any Obligor, any of their respective suppliers,
licensors or licensees with respect to Products or any Product Commercialization and Development Activities, and, to the knowledge
of any Obligor, there is no basis in fact for any material adverse regulatory action against such Obligor or any of its Subsidiaries
or, to the knowledge of any Obligor, any of their respective suppliers agents, licensors or licensees with respect to Products or
any Product Commercialization and Development Activities; and (iv) without limiting the foregoing, (A) (1) there have been no
material product recalls, safety alerts, corrections, withdrawals, marketing suspensions, removals or the like conducted, undertaken
or issued by any Obligor or any of its Subsidiaries, whether voluntary, at the request, demand or order of any Regulatory Authority
or otherwise, with respect to Products, any Product Commercialization and Development Activities or any Material Product
Authorization within the last three (3) years, (2) no such product recall, safety alert, correction, withdrawal, marketing
suspension, removal or the like has been requested, demanded or ordered by any Regulatory Authority within the last three (3) years,
and, to the knowledge of any Obligor, there is no basis in fact for the issuance of any such product recall, safety alert,
correction, withdrawal, marketing suspension, removal or the like with respect to Products or any Product Commercialization and
Development Activities, and (B) no material criminal, injunctive, seizure, detention
or civil penalty action has been commenced or threatened in writing by any Regulatory Authority within the last three (3) years with
respect to or in connection with Products or any Product Commercialization and Development Activities, and there are no consent
decrees (including plea agreements) that relate to Products or any Product Commercialization and Development Activities, and, to the
knowledge of each Obligor, there is no basis in fact for the commencement of any material criminal injunctive, seizure, detention or
civil penalty action by any Regulatory Authority relating to Products or any Product Commercialization and Development Activities or
for the issuance of any consent decree. No Obligor nor any of its Subsidiaries, nor, to the knowledge of any Obligor, any of their
respective agents, suppliers, licensees or licensors, is employing or utilizing the services of any individual, in connection with
Product Commercialization and Development Activities with respect to Products, who has been debarred, suspended or excluded from any
federal healthcare program, which would reasonably be expect to have a Material Adverse Effect.
78
***Section
204.******[Reserved]***.
***Section
205.*** ***OFAC; Anti-Terrorism
Laws***.
**Section
206.** No Obligor nor any of its Subsidiaries is
in violation of any Anti-Terrorism Law or engages in or conspires to engage in any transaction that evades or avoids, or has the
purpose of evading or avoiding, or attempts to violate, any applicable Anti-Terrorism Laws.
**Section
207.** No Obligor nor any of its Subsidiaries,
nor, to the knowledge of any Obligor, any of their respective directors, officers, or employees (i) is currently the target of any
Sanctions, (ii) is located, organized or residing in any Designated Jurisdiction in violation of Sanctions, or (iii) is or has been
(within the previous five (5) years) engaged in any transaction with, or for the benefit of, any Person who is now or was then the
target of Sanctions or who is located, organized or residing in any Designated Jurisdiction, in violation of Sanctions. No Loan, nor
the proceeds from any Loan, has been or will be used, directly or, to the knowledge of any Obligor, indirectly, to lend, contribute
or provide to, or has been or will be otherwise made available for the purpose of funding, any activity or business in any
Designated Jurisdiction in violation of Sanctions or for the purpose of funding any activity or business of any Person located,
organized or residing in any Designated Jurisdiction or who is the subject of any Sanctions, in violation of Sanctions, or in any
other manner that will result in any violation by any party to this Agreement of Sanctions.
***Section
208.*** ***Anti-Corruption***. No Obligor nor any of its
Subsidiaries, nor, to the knowledge of any Obligor, any of their respective directors, officers or employees, directly or
indirectly, has (i) materially violated or is in material violation of any applicable anti-corruption Law, or (ii) made, offered to
make, promised to make or authorized the payment or giving of, directly or indirectly, any Prohibited Payment.
***Section
209.*** ***Priority of
Obligations***. Unless expressly permitted
under the terms of the Loan Documents, the Obligations constitute unsubordinated obligations of the Obligors, and except for any
obligations which have priority under applicable Law, rank at least pari passu in right of payment with all other unsubordinated
Indebtedness of the Obligors.
***Section
210.*** ***Royalty and Other
Payments***. Unless expressly permitted under
the terms of the Loan Documents and except as set forth on **Schedule 7.23** (as such schedule may be updated on any Bringdown
Date), no Obligor, nor any of its Subsidiaries, is obligated to pay any royalty, milestone payment or any other contingent payment
in respect of Ilevro, Nevanac, Maxidex, Triesence, Vigamox, Iheezo, Maxitrol, Iopidine, Moxeza or,
on and after the Incremental Tranche A Funding Date, any of the foregoing or VERKAZIA,
FLAREX, TOBRADEX ST, NATACYN or CATIONORM PLUS.
79
***Section
211.*** ***Non-Competes***.
Neither the Borrower, any other Obligor, nor any of their respective Subsidiaries, nor any of their respective directors, officers
or employees, is subject to a non-compete agreement that prohibits or will interfere in any material respect with any of the Product
Commercialization and Development Activities with respect to Ilevro, Nevanac, Maxidex, Triesence, Vigamox, Iheezo, Maxitrol, Iopidine or Moxeza, or,
on and after the Incremental Tranche A Funding Date, any of the foregoing or VERKAZIA,
FLAREX, TOBRADEX ST, NATACYN or CATIONORM PLUS, including the development, commercialization or marketing of Ilevro, Nevanac, Maxidex, Triesence, Vigamox, Iheezo, Maxitrol, Iopidine
or Moxeza, or, on and after the Incremental Tranche A Funding Date, any of the foregoing or VERKAZIA,
FLAREX, TOBRADEX ST, NATACYN or CATIONORM PLUS.
***Section
212.*** ***Reimbursement from Medical
Reimbursement Programs***. There is no
investigation, audit, claim review, or other action pending with respect to any Obligor or, to the knowledge of any Obligor,
threatened in writing which would reasonably be expected to result in a revocation, suspension, termination, probation, restriction,
limitation, or non-renewal of any provider number issued to any Obligor or result in the exclusion of any Obligor from Medicare or
Medicaid, nor is there any action pending or, to the knowledge of any Obligor, threatened in writing, pursuant to which any
Governmental Authority seeks to impose material sanctions with respect to such Obligor’s business, in each case that would
reasonably be expected to have a Material Adverse Effect.
**Section
213.**
AFFIRMATIVE
COVENANTS
Each
Obligor covenants and agrees with the Administrative Agent and the Lenders that, until the Commitments have expired or been terminated
and all Obligations (other than any inchoate indemnification obligations for which no claim has been made) have been paid in full in
cash:
***Section
214.*** ***Financial Statements and Other
Information***. The Borrower will furnish to
the Administrative Agent:
**Section
215.** as soon as available and in any event
within forty-five (45) days after the end of each the first three fiscal quarters of each fiscal year (i) the consolidated balance
sheets of the Borrower and its Subsidiaries as of the end of such fiscal quarter and (ii) the related consolidated statements of
income, shareholders’ equity and cash flows of the Borrower and its Subsidiaries for such quarter and the portion of the
fiscal year through the end of such fiscal quarter, in each case prepared in accordance with GAAP consistently applied, all in
reasonable detail and setting forth in comparative form the figures for the corresponding period in the preceding fiscal year,
together with (iii) a certificate of a Responsible Officer of the Borrower stating that (x) such financial statements fairly present
in all material respects the financial condition of the Borrower and its Subsidiaries as at such date and (y) the results of
operations of the Borrower and its Subsidiaries for the period ended on such date have been prepared in accordance with GAAP
consistently applied, subject to changes resulting from normal, year-end audit adjustments and except for the absence of notes; provided that documents required to be furnished pursuant to this **Section 8.01(a)** shall be deemed furnished on the date that such
documents are publicly available on “EDGAR” or the Borrower’s website (with the related certificate separately
delivered);
80
**Section
216.** as soon as available, and in any event
within ninety (90) days, after the end of each fiscal year (i) the consolidated balance sheets of the Borrower and its Subsidiaries
as of the end of such fiscal year and (ii) the related consolidated statements of income, shareholders’ equity and cash flows
of the Borrower and its Subsidiaries for such fiscal year, in each case prepared in accordance with GAAP consistently applied, all
in reasonable detail and setting forth in comparative form the figures for the previous fiscal year, accompanied by a report and
opinion thereon of KMJ Corbin & Company LLP or another firm of independent certified public accountants of recognized national
standing reasonably acceptable to the Administrative Agent, which report and opinion shall be prepared in accordance with generally
accepted auditing standards and shall not be subject to any “going concern” or like qualification or exception or
emphasis of matter of going concern footnote or any qualification or exception as to the scope of such audit, and in the case of
such consolidated financial statements, certified by a Responsible Officer of the Borrower; provided that documents required
to be furnished pursuant to this **Section 8.01(b)** shall be deemed furnished on the date that such documents are publicly
available on “EDGAR” or the Borrower’s website;
**Section
217.** together with the financial statements
required pursuant to **Section 8.01(a)** and **(b)**, a compliance certificate signed by a Responsible Officer of the Borrower
as of the end of the applicable accounting period (which delivery may be by electronic communication including fax or email and
shall be deemed to be an original, authentic counterpart thereof for all purposes) substantially in the form of **Exhibit L** (a
“***Compliance Certificate***”) including (i) details of any issues that are material that are raised by
auditors and any occurrence or existence of any event, circumstance, act or omission that would cause any representation or warranty
contained in **Section 7.07**, **Section 7.18** or **Section 7.22** to be incorrect in any material respect (or in any
respect if such representation or warranty is qualified by materiality or by reference to Material Adverse Effect or Material
Adverse Change) if such representation or warranty were to be made at the time of delivery of a Compliance Certificate and (ii) a
certification as to whether or not the Borrower is in compliance with the Minimum Net Revenues Covenant as of the last day of such
period. For the avoidance of doubt, no representation or warranty contained in **Section 7.07**, **Section 7.18** or **Section
7.22** is required to be, shall be or shall be deemed to be made in connection with a delivery of any Compliance
Certificate;
**Section
218.** after being prepared by the Borrower and
approved by its Board, and promptly following the Administrative Agent’s request therefor, a consolidated budget for the
Borrower and its Subsidiaries for the fiscal year to which such budget relates; provided that, for each fiscal year, on or
before the seventy-fifth (75th) day following the beginning of such fiscal year, the Borrower shall prepare, and its Board shall
approve such consolidated budgets for such fiscal year, and the Borrower shall notify the Administrative Agent promptly after the
Board has given such approval;
81
**Section
219.** promptly after the same are released,
copies of all press releases (other than any press release that is immaterial, routine or administrative in nature); provided that documents required to be furnished pursuant to this **Section 8.01(e)** shall be deemed furnished on the date that such
documents are publicly available on “EDGAR” or the Borrower’s website;
**Section
220.** promptly, and in any event within five (5)
Business Days after receipt thereof by an Obligor thereof, copies of each notice or other correspondence received from any
securities regulator or exchange to the authority of which any Obligor may become subject from time to time concerning any
investigation or possible investigation or other inquiry by such agency regarding financial or other operational results of such
Obligor, in each case, excluding any investigation or inquiry that is immaterial, routine or administrative in nature; provided that documents required to be furnished pursuant to this **Section 8.01(f)** shall be deemed furnished on the date that such
documents are publicly available on “EDGAR” or the Borrower’s website;
**Section
221.** promptly after the same are available,
copies of each annual report, proxy or financial statement or other report or communication sent to the stockholders of each Obligor
and its Subsidiaries (other than any report or any communication that is immaterial, routine or administrative in nature), and
copies of all annual, regular, periodic and special reports and registration statements which any Obligor or its Subsidiaries may
file or be required to file with any securities regulator or exchange to the authority of which such Obligor or such Subsidiary, as
applicable, may become subject from time to time; provided that documents required to be furnished pursuant to this **Section
8.01(g)** shall be deemed furnished on the date that such documents are publicly available on “EDGAR” or the
Borrower’s website;
**Section
222.** the information regarding insurance
maintained by the Borrower and its Subsidiaries as and when required under **Section 8.05**;
**Section
223.** promptly, and in any event within five (5)
Business Days after the Borrower obtains knowledge of any Claim related to any Product or inventory involving more than $1,000,000,
written notice thereof from a Responsible Officer of the Borrower which notice shall include a statement setting forth details of
such Claim;
**Section
224.** as soon as possible and in any event
within ten (10) Business Days after the end of each calendar month, a certificate signed by a Responsible Officer of the Borrower
certifying that as of the last day of such calendar month, the Borrower is in compliance with the minimum liquidity requirement set
forth in **Section 10.01** and attaching evidence reasonably satisfactory to the Administrative Agent, based upon the
Borrower’s bank account statements that the Borrower has met its minimum liquidity requirement set out in **Section
10.01**; and
**Section
225.** such other information respecting the
businesses, financial performance, operations condition of the assets or liabilities of the Obligors (including with respect to the
Collateral), taken as a whole, as the Administrative Agent may from time to time reasonably request.
82
***Section
226.*** ***Notices of Material
Events***. The Borrower will furnish to the
Administrative Agent written notice of the following (x) with respect to clause (a) below within three (3) Business Days of and (y)
with respect to clause (b) through (n) below, within five (5) Business Days, in each case, after a Responsible Officer of the
Borrower first learns of or acquires knowledge with respect to:
**Section
227.** the occurrence of any Default or Event of
Default;
**Section
228.** the occurrence of any event with respect
to the property or assets of the Borrower or any of its Subsidiaries resulting in a Loss aggregating $2,000,000 or more;
**Section
229.**(i) any proposed acquisition of stock, assets
or property by the Borrower or any of its Subsidiaries that would reasonably be expected to result in Material Environmental Liability,
and (ii) any spillage, leakage, discharge, disposal, leaching, migration or release of any Hazardous Material by the Borrower or any
of its Subsidiaries required to be reported to any Governmental Authority and that would reasonably be expected to result in Material
Environmental Liability;
**Section
230.** the assertion of any Claim under any
Environmental Law by any Person against, or with respect to the activities of, the Borrower or any of its Subsidiaries and any
alleged liability or non-compliance with any Environmental Laws or any permits, licenses or authorizations issued pursuant to
Environmental Laws, in each case, which would reasonably be expected to result in a Material Environmental Liability;
**Section
231.** the filing or commencement of any action,
suit or proceeding by or before any arbitrator or Governmental Authority against or affecting the Borrower or any of its Affiliates
that would reasonably be expected to result in a Material Adverse Effect;
**Section
232.** (i) the intention of any ERISA Affiliate
to file any notice of intent to terminate any Title IV Plan, a copy of such notice and (ii) the filing by any ERISA Affiliate of a
request for a minimum funding waiver under Section 412 of the Code with respect to any Title IV Plan or Multiemployer Plan, in each
case in writing and in reasonable detail (including a description of any action that any ERISA Affiliate proposes to take with
respect thereto, together with a copy of any notice filed with the PBGC or the IRS pertaining thereto);
**Section
233.** (i) the termination of any Material
Agreement other than in accordance with its terms and not as a result of a breach or default, (ii) the receipt by the Borrower or
any of its Subsidiaries of any notice of a material breach or default under any Material Agreement (and a copy thereof) asserting a
default by such Obligor or any of its Subsidiaries where such alleged default would permit such counterparty to terminate such
Material Agreement, (iii) the entering into of any new Material Agreement by any Obligor (and a copy thereof) or (iv) any material
amendment to a Material Agreement that would be adverse in any material respect to the Lenders (and a copy thereof); provided,
that the Borrower shall not be required to provide such notice if such documents become publicly available on “EDGAR” or
the Borrower’s website within the time period notice would otherwise be required pursuant to this **Section
8.02**;
83
**Section
234.** any material change in accounting policies
or financial reporting practices by the Borrower or any of its Subsidiaries (other than as required under GAAP);
**Section
235.** any labor controversy resulting in or
threatening to result in any strike, work stoppage, boycott, shutdown or other material labor disruption against or involving an
Obligor that would reasonably be expected to result in a Material Adverse Effect;
**Section
236.** any Contract entered into by the Borrower
or any of its Subsidiaries in connection with any material Claim of actual alleged violation, infringement or misappropriation of
any Intellectual Property by or against the Borrower or any of its Subsidiaries;
**Section
237.** the creation, development or other
acquisition (including any in-bound exclusive licenses) of any Material Intellectual Property by the Borrower or any Subsidiary
after the Closing Date; provided that, with respect to any such Material Intellectual Property created, developed or acquired
(including through any in-bound exclusive license) in any fiscal year, notice thereof pursuant to this **Section 8.02(k)** shall
be made in accordance with the timing of the financial statements for such fiscal year required pursuant to **Section
8.01(b)**;
**Section
238.** any change to any Obligor’s or any
of its Subsidiaries’ ownership of any Controlled Account, by delivering the Administrative Agent a notice setting forth a
complete and correct list of all such accounts as of the date of such change;
**Section
239.** any warning letters, untitled letters, or
other Governmental Authority correspondence regarding actions that would reasonably be expected to result in a Material Adverse
Effect; and
**Section
240.** any other development that results in, or
would reasonably be expected to result in, a Material Adverse Effect.
Each
notice delivered under this **Section 8.02** shall be accompanied by a statement of a Responsible Officer of the Borrower setting
forth the details of the event or development requiring such notice and any action taken or proposed to be taken with respect thereto.
Nothing in this **Section 8.02** is intended to waive, consent to or otherwise permit any action or omission that is otherwise prohibited
by this Agreement or any other Loan Document.
***Section
241.*** ***Existence***.
Such Obligor shall, and shall cause each of its Subsidiaries to, preserve, renew and maintain in full force and effect its legal
existence; provided that the foregoing shall not prohibit any merger, amalgamation, consolidation, liquidation or dissolution
permitted under **Section 9.03** or any Asset Sale permitted under **Section 9.09**.
84
***Section
242.*** ***Payment of
Obligations***. Such Obligor will, and will
cause each of its Subsidiaries to, pay and discharge its obligations, including (i) all material Taxes, fees, assessments and
governmental charges or levies imposed upon it or upon its properties or assets prior to the date on which penalties attach thereto,
and all lawful claims for labor, materials and supplies which, if unpaid, might become a Lien upon any properties or assets of such
Obligor or any of its Subsidiaries not constituting a Permitted Lien, except to the extent such Taxes, fees, assessments or
governmental charges or levies or such claims are being contested in good faith by appropriate proceedings and are adequately
reserved against in accordance with GAAP and (ii) all lawful claims which, if unpaid, would by law become a Lien upon its property
not constituting a Permitted Lien.
***Section
243.*** ***Insurance***.
Such Obligor will, and will cause each of its Subsidiaries to maintain, with financially sound and reputable insurance companies,
insurance in such amounts and against such risks as are customarily maintained by companies engaged in the same or similar
businesses operating in the same or similar locations. Upon the request of the Administrative Agent, the Borrower shall furnish the
Administrative Agent from time to time with (i) material information as to the insurance carried by it and, if so requested, copies
of all such insurance policies and (ii) a certificate from the Borrower’s insurance broker or other insurance specialist
stating that all premiums then due on the policies relating to insurance on the Collateral have been paid and that such policies are
in full force and effect. Receipt of notice of termination or cancellation of any such insurance policies or reduction of coverages
or amounts thereunder to levels which do not meet the levels required pursuant to the first sentence of this **Section 8.05** shall entitle the Secured Parties to renew any such policies, cause the coverages and amounts thereof to be maintained at levels
required pursuant to the first sentence of this **Section 8.05** or otherwise to obtain similar insurance in place of such
policies, and in each case, the Borrower will be responsible for the reasonable and documented cost of such insurance (to be payable
on demand). The amount of any such reasonable and documented expenses shall accrue interest at the Default Rate if not paid on
demand and shall constitute “Obligations.”
***Section
244.*** ***Books and Records; Inspection
Rights***. Such Obligor will, and will cause
each of its Subsidiaries to, keep proper books of record and account in which full, true and correct (in all material respects)
entries are made of all dealings and transactions in relation to its business and activities. Such Obligor will, and will cause each
of its Subsidiaries to, permit any representatives designated by the Administrative Agent, upon reasonable prior notice, to visit
and inspect its properties, to examine and make extracts from its books and records, and to discuss its affairs, finances and
condition (financial or otherwise) with its officers and independent accountants (so long as a representative of the Borrower is
provided a reasonable opportunity to participate in any such discussion), during normal business hours (but not more often than once
per year in total for all such visits and inspections unless an Event of Default has occurred and is continuing) as the
Administrative Agent may reasonably request; provided that such representative shall use its commercially reasonable efforts
to minimize disruption to the business and affairs of the Borrower as a result of any such visit, inspection, examination or
discussion. Notwithstanding anything to the contrary contained herein or any other provision of the Loan Documents, no Obligor nor
any of its Subsidiaries will be required to disclose or permit the inspection or discussion of, any document, information or other
matter (i) that constitutes trade secrets or proprietary information, (ii) in respect of which disclosure to any Lender (or their
respective representatives or contractors) is prohibited by any applicable Law or any binding agreement with a third party (so long
as such agreement is not entered into in contemplation of this Agreement) or (iii) that is subject to attorney-client or similar
privilege, which could reasonably be expected to be lost or forfeited if disclosed to the Administrative Agent or any Lender. The
Borrower shall pay all reasonable and documented costs of all such inspections.
85
***Section
245.*** ***Compliance with Laws and Other
Obligations***. Such Obligor will, and will
cause each of its Subsidiaries to, (i) comply with all Laws (including Anti-Terrorism Laws, Sanctions and Environmental Laws)
applicable to it and its business activities, (ii) comply with all Healthcare Laws and Governmental Approvals (including Product
Authorizations) applicable to it and its business activities and (iii) maintain in full force and effect (other than in accordance
with its terms), remain in compliance with, and perform all obligations under all Material Agreements to which it is a party,
except, in the case of **clauses (i)**, **(ii)** and **(iii)** above, where the failure to do so would not, individually or
in the aggregate, reasonably be expected to result in a Material Adverse Effect. Each Obligor has, and shall maintain in effect and
enforce policies and procedures reasonably designed to promote compliance by such Obligor, its Subsidiaries and their respective
directors, officers, employees and agents with Anti-Terrorism Laws and Sanctions.
***Section
246.*** ***Maintenance of Properties,
Etc.*** Such Obligor shall, and shall cause
each of its Subsidiaries to, maintain and preserve all of its assets and properties (including all assets and properties, whether
tangible or intangible, relating to its Products or Product Commercialization and Development Activities) necessary or useful in the
conduct of its business in good working order and condition in accordance with the general practice of other Persons of similar
character and size, ordinary wear and tear and damage from casualty or condemnation excepted and except where the failure to do so,
individually or in the aggregate, would not reasonably be expected to result in a Material Adverse Effect.
***Section
247.*** ***Governmental
Licenses***. Such Obligor shall, and shall
cause each of its Subsidiaries to, obtain and maintain all Governmental Approvals necessary in connection with the execution,
delivery and performance of the Loan Documents, the consummation of the Transactions or the operation and conduct of its business
and ownership of its properties (including its Product Commercialization and Development Activities), except where the failure to do
so would not reasonably be expected to have a Material Adverse Effect.
***Section
248.*** ***Use of
Proceeds***. The proceeds of the Loans will be
used only as provided in **Section 2.05**. No part of the proceeds of the Loans will be used, whether directly or indirectly, for
any purpose that entails a violation of any of the Regulations of the Board of Governors of the Federal Reserve System, including
Regulations T, U and X.
***Section
249.*** ***Certain Obligations Respecting
Subsidiaries; Further Assurances***.
**Section
250.** **Subsidiary Guarantors,
etc**. In the event that the Borrower or any of
its Subsidiaries shall form or acquire any new Subsidiary (other than an Excluded Subsidiary), or any Excluded Subsidiary ceases to
be an Excluded Subsidiary, the Borrower shall promptly (and in any event within forty-five (45) calendar days of such formation or
acquisition or such longer period as the Administrative Agent may agree to in its sole discretion) with respect to a formed or
acquired Subsidiary (other than an Excluded Subsidiary), and immediately with respect to an Excluded Subsidiary ceasing to be an
Excluded Subsidiary:
86
**Section
251.** **cause such Subsidiary to become a
“Subsidiary Guarantor” hereunder pursuant to a Guarantee Assumption Agreement and a “Grantor” under the
Security Agreement;**
**Section
252.** **take such action or cause such
Subsidiary to take such action (including joining the Security Agreement and delivering shares of stock together with undated
transfer powers executed in blank, applicable control agreements and other instruments) as shall be reasonably necessary or
desirable or reasonably requested by the Administrative Agent in order to create and perfect, in favor of the Administrative Agent,
for the benefit of the Secured Parties, valid and enforceable first priority Liens (subject only to Permitted Liens), on
substantially all of the personal property of such Subsidiary as collateral security for the Obligations hereunder as and when
required by the terms of the Security Agreement; provided that any such security interest or Lien shall be subject to the
relevant requirements of the Security Documents and the Intercompany Subordination Agreement;**
**Section
253.** **to the extent that the parent of such
Subsidiary is not a party to the Security Agreement or has not otherwise pledged or secured Equity Interests in its Subsidiaries in
accordance with the terms of the Security Agreement and this Agreement, cause the parent (if possible) of such Subsidiary to execute
and deliver a pledge or other security agreement in favor of the Administrative Agent, for the benefit of the Secured Parties, in
respect of all outstanding issued shares of such Subsidiary;**
**Section
254.** **deliver such proof of corporate action,
incumbency of officers, and other applicable documents as is consistent with those delivered by each Obligor pursuant to Section
6.01 or as the Administrative Agent shall reasonably request; and**
**Section
255.** **cause each such Subsidiary (other than
any Subsidiary that is not an Obligor) to become a party to the Intercompany Subordination Agreement.**
Notwithstanding
the foregoing, or anything else herein to the contrary, neither the Borrower nor any of its Subsidiaries shall form or acquire any Foreign
Subsidiary.
**Section
256.** **Further Assurances.**
**Section
257.** **Such Obligor will take such action from
time to time as shall reasonably be requested by the Administrative Agent to effectuate the purposes and objectives of this
Agreement and the Security Agreement; and**
**Section
258.** **In the event that such Obligor creates,
develops or otherwise acquires Intellectual Property or real property during the term of this Agreement, then the provisions of this
Agreement and the Security Agreement shall and hereby do automatically apply thereto and any such Intellectual Property or real
property shall automatically constitute and hereby does constitute part of the Collateral under the Security Documents (other than
Excluded Assets (as defined in the Security Agreement)), without further action by any party, in each case from and after the date
of such creation, development or acquisition; and**
87
**Section
259.** **Without limiting the generality of the
foregoing, each Obligor will, and will cause each Person that is required to be a Guarantor to, take such action from time to time
(including joining the Security Agreement and delivering shares of stock together with undated transfer powers executed in blank,
applicable control agreements and other instruments) as shall be required by the terms of the Security Documents or reasonably
requested by the Administrative Agent to create, in favor of the Administrative Agent for the benefit of the Secured Parties,
perfected security interests and Liens in substantially all of the personal property (other than Excluded Assets (as defined in the
Security Agreement)) of such Obligor as collateral security for the Obligations; provided that any such security interest or
Lien shall be subject to the relevant requirements of the Security Documents; provided, further that, without limiting
the right of the Administrative Agent to require a Lien or security interest in any newly acquired or created Subsidiary or asset,
upon the prior written request of the Borrower, the Borrower and the Administrative Agent shall consult, in good faith, as to
whether the cost of obtaining a Lien or security interest thereon would be unreasonably excessive relative to the benefit
thereof.**
***Section
260.*** ***Termination of Non-Permitted
Liens***. In the event that any Obligor shall
become aware of, or be notified by the Administrative Agent or any Lender of the existence of, any outstanding Lien against any
assets or property of such Obligor or any of its Subsidiaries, which Lien is not a Permitted Lien, such Obligor shall use its
commercially reasonable efforts to promptly terminate or cause the termination of such Lien.
***Section
261.*** ***Board Materials; Lender
Calls***.
**Section
262.** The Borrower shall deliver to the
Administrative Agent: (i) copies of any agenda and other written materials provided to the Borrower’s Board (or any committee
thereof) of the Borrower prior to any meeting of the board of directors (or such committee thereof), at or promptly after such
materials are furnished to the members of the Borrower’s Board (or such committee thereof), (ii) copies of all minutes of
meetings of the Borrower’s Board (or any committee thereof) at or promptly after such minutes are furnished to the members of
the Borrower’s Board (or such committee thereof), (iii) copies of all material written consents duly passed by the
Borrower’s Board (or any committee thereof) and (iv) promptly upon presentation of any regular periodic materials to the
Borrower’s Board (or any committee thereof) reporting on the current, past or future financial performance and business and
operations of the Borrower or any of its Subsidiaries (which shall include, among other things, development updates with respect to
material Products, and updates with respect to material events relating to other Material Agreements), copies of such materials; provided that any such material may be redacted by the Borrower to (A) exclude information relating to the performance of the Administrative
Agent or any Lender hereunder or to the Borrower’s strategy regarding the Loans or performance or non-performance under the
Loan Documents or any information that could raise a conflict of interest with Administrative Agent or Lenders as reasonably
determined based on advice of counsel, (B) preserve attorney-client privilege or required to comply with applicable laws or
regulations or (C) protect individually identifiable health information (as defined under HIPAA) or other confidential information
relating to healthcare patients to the extent required by applicable Healthcare Laws; provided, further that such
redactions are restricted so as to be only as extensive as is reasonably necessary in order to exclude information described in
clauses (A) through (C); and
88
**Section
263.** On dates and times to be mutually agreed
upon by the Borrower and the Administrative Agent following the Administrative Agent’s request therefor (but for the avoidance
of doubt, no more than once per fiscal quarter), the Borrower will hold a conference call with Administrative Agent, any Lender who
chooses to attend such conference call and senior management of the Borrower, at which conference call shall be reviewed the
financial results of the previous fiscal year and other material events and Administrative Agent and the Lenders shall have an
opportunity to ask questions.
***Section
264.*** ***Maintenance of Regulatory
Approvals, Contracts, Intellectual Property, Etc.*** Each Obligor shall, and shall cause each of its Subsidiaries (to the extent applicable) to, (i) maintain in full force and effect
all Material Product Authorizations, Material Agreements, Material Intellectual Property and other rights, interests or assets
(whether tangible or intangible) reasonably necessary for the business of such Obligor and its Subsidiaries, (ii) maintain in full
force and effect, and pay all costs and expenses relating to, such Material Product Authorizations, Material Agreements and Material
Intellectual Property owned, used or controlled by such Obligor or any such Subsidiary that are used in or necessary for any related
Product Commercialization and Development Activities, except as would not be reasonably expected to have a Material Adverse Effect,
(iii) promptly after obtaining knowledge thereof, notify the Administrative Agent of any material violation, misappropriation or
other infringement by any Person, or any material Claim, action or proceeding brought by any Person alleging the invalidity or
unenforceability, of any Material Intellectual Property, and use commercially reasonable efforts to stop, curtail or abate such
violation, action, misappropriation or infringement if determined appropriate by the Borrower in the exercise of its prudent
business judgment, and (iv) except as set forth on **Schedule 7.05(b)**, promptly after obtaining knowledge thereof, notify the
Administrative Agent of any Claim by any Person that the conduct of the business of any Obligor or any of its Subsidiaries,
including in connection with any Product Commercialization and Development Activities, has violated, misappropriated or otherwise
infringed any Intellectual Property of such Person, where such Claim would reasonably be expected to result in a liability to any
Obligor or any of their Subsidiaries of greater than $3,000,000.
***Section
265.*** ***ERISA Compliance and Pension
Plans***. Such Obligor shall comply, and shall
cause each of its Subsidiaries to comply, with the provisions of ERISA with respect to any Benefit Plans to which such Obligor or
such Subsidiary is a party as an employer, except where the failure to do so would not reasonably be expected to have a Material
Adverse Effect.
***Section
266.*** ***Cash
Management***. Such Obligor shall, and shall
cause each of its Subsidiaries to:
89
**Section
267.** subject to **Section 8.17(d)** and **(f)**,
maintain an aggregate amount of cash of the Borrower and the Subsidiary Guarantors greater than or equal to the Minimum Liquidity
Amount in deposit accounts, disbursement accounts, investment accounts (and other similar accounts), securities accounts and
lockboxes with a bank or financial institution within the U.S. that has executed and delivered to the Administrative Agent an
account control agreement, in form and substance reasonably acceptable to the Administrative Agent (each such agreement, a
“***Control Agreement***” and each such deposit account, disbursement account, investment account (or similar
account), securities account and lockbox, a “***Controlled Account***”); provided that each such
Controlled Account shall be a cash collateral account, with all cash, checks and other similar items of payment in such account
securing payment of the Obligations, and each Obligor shall have granted a Lien to the Administrative Agent, for the benefit of the
Secured Parties, over such Controlled Accounts;
(b)
subject to **Section 8.17(d)** and **(f)**, maintain each of its deposit accounts, disbursement accounts, investment accounts (or
similar accounts), securities accounts and lockboxes (other than, in each case, Excluded Accounts) as Controlled Accounts;
(c)
deposit promptly, and in any event no later than five (5) Business Days after the date of receipt thereof (or such longer period of time
as agreed by the Administrative Agent in its sole discretion), all cash, checks, drafts or other similar items of payment in an amount
in excess of $250,000 and relating to or constituting payments made in respect of any and all accounts and other rights and interests
into Controlled Accounts; and
(d)
at any time after the occurrence and during the continuance of an Event of Default, at the request of the Administrative Agent, each
Obligor shall cause all payments constituting proceeds of accounts to be directed into lockbox accounts under agreements in form and
substance satisfactory to the Administrative Agent.
***Section
268.*** ***Post-Closing
Obligations***.
(a)
Within seven (7) Business Days following the Closing Date (or such longer period of time as agreed by the Administrative Agent in its
sole discretion), the Administrative Agent shall have received (i) all certificates (in the case of Equity Interests that are certificated
securities (as defined in the UCC)) evidencing the issued and outstanding Equity Interests owned by each Obligor that are required to
be pledged or otherwise secured and so delivered under the Security Documents, which certificates in each case shall be accompanied by
undated instruments of transfer duly executed in blank and (ii) the original Melt Note, which note shall be accompanied by an undated
allonge, duly executed in blank.
(b)
Within thirty (30) days following the Closing Date (or such longer period of time as agreed by the Administrative Agent in its sole discretion),
the Administrative Agent shall have received endorsements for all such insurance policies required pursuant to the Loan Documents, naming
the Administrative Agent as lender loss payee or additional insured, as applicable, on behalf of the Secured Parties.
(c)
Within forty-five (45) days following the Closing Date (or such longer period of time as agreed by the Administrative Agent in its sole
discretion), the Borrower shall use its commercially reasonable efforts to obtain a Landlord Consent with respect to the leased properties
at (i) 102 Woodmont Blvd., (ii) 1000 Aviara Parkway, Suite 220, (iii) 1705 Route 46 W, Suite 4, and (iv) 658 Grassmere Park, Suite 104.
90
(d)
Within ninety (90) days following the Closing Date (or such longer period of time as agreed by the Administrative Agent in its sole discretion),
the Administrative Agent shall have received evidence that all deposit accounts, lockboxes, disbursement accounts, investment accounts,
securities accounts or other similar accounts (other than Excluded Accounts and accounts located at MUFG Union Bank, N.A.) of each Obligor
have either (i) been closed or (ii) are Controlled Accounts.
(e)
Within one hundred and twenty (120) days following the Closing Date (or such longer period of time as agreed by the Administrative Agent
in its sole discretion), the Administrative Agent shall have received evidence that the Borrower has made commercially reasonable efforts
(including by posting to customary job sites) to hire a senior counsel or other employee with a similar title and serving the customary
functions of a senior counsel.
(f)
Within one hundred and twenty (120) days following the Closing Date (or such longer period of time as agreed by the Administrative Agent
in its sole discretion), the Administrative Agent shall have received evidence that all deposit accounts, lockboxes, disbursement accounts,
investment accounts, securities accounts or other similar accounts (other than Excluded Accounts) of each Obligor that are located at
MUFG Union Bank, N.A. either (i) have been closed or (ii) are Controlled Accounts; provided that during the period while such
accounts are not Controlled Accounts, the aggregate balance of all such accounts shall not exceed $1,000,000 for more than three consecutive
Business Days.
(g)
Within ten (10) Business Days following the Closing Date (or such longer period of time as agreed by the Administrative Agent in its
sole discretion), the Administrative Agent shall have received a copy of a good standing certificate with respect to Visionology, Inc.,
certified as of a recent date by the Delaware Secretary of State.
***Section
269.******Warrants***.
On or prior to the date on which financial statements for the fiscal year ending December 31, 2024 are required to be delivered pursuant
to **Section 8.01(b)**, concurrently with the delivery of the Compliance Certificate for such fiscal year, the Borrower shall deliver
to the Administrative Agent a certificate of the chief financial officer (or other equivalent financial officer) of the Borrower in form
and substance reasonably satisfactory to the Administrative Agent, setting forth the Total Leverage Ratio as of the end of the fiscal
quarter ending December 31, 2024, together with a reasonably detailed calculation thereof. If the Total Leverage Ratio as of the end
of such fiscal quarter is greater than or equal to 5.00:1.00, then concurrently with the delivery of such certificate, the Borrower shall
deliver to the Administrative Agent duly executed warrants, substantially in the form attached hereto as **Exhibit I** (collectively,
the “**Warrants**”) for each Lender as of the end of such fiscal quarter, in an amount of common shares of the Borrower
equal to each such Lender’s Proportionate Share of the aggregate amount set forth below (it being understood that such aggregate
amount is subject to adjustment for stock splits, dividends, recapitalizations and any other similar event):
**Total Leverage Ratio** **Aggregate Number of Common Shares of the Borrower**
Greater than or equal to 5.00:1.00, but less than 7.00:1.00 375,000
Greater than or equal to 7.00:1.00 750,000
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***Section
270.*** ***Certain Additional Rights of
Lender (VCOC)***. The Borrower acknowledges
that one of the Lenders (or its direct or indirect member or partner) intends to qualify as a “venture capital operating
company” (as defined in the Department of Labor regulations located at 29 C.F.R. Section 2510.3-101, as modified by Section
3(42) of ERISA) (such Lender referred to in this paragraph as the “***VCOC Lender***”). Notwithstanding anything
to the contrary contained in this Agreement, the VCOC Lender shall have the following rights:
**Section
271.** the right to consult with and advise the
Borrower’s management regarding significant business activities and business and financial developments of the Borrower, with
the VCOC Lender having the right to call meetings to facilitate such consultation and advice at reasonable times and upon reasonable
advance notice, provided that (i) such meetings generally shall not occur more than once per quarter and (ii) such meetings may take
place in person, via telephone or video conference;
**Section
272.** the right to visit and inspect the
Borrower’s facilities and to inspect and examine the books and records of the Borrower in each case at reasonable times and
upon reasonable advance notice, provided that (i) such visitation and inspection generally shall not occur more than once per
quarter and (ii) the Borrower shall not be required to provide access to highly confidential or proprietary information;
**Section
273.** the right, in accordance with the terms of
this Agreement to receive monthly, quarterly and year-end financial reports; and
**Section
274.** the Borrower shall use its reasonable best
efforts to provide the VCOC Lender with true and correct copies of all documents, reports, financial data and other information
regarding the Borrower as the VCOC Lender may reasonably request, provided that the Borrower shall not be required to provide access
to highly confidential or proprietary information.
The
Borrower agrees to cause its management to consider, in good faith, the recommendations of the VCOC Lender provided to the Borrower in
connection with the exercise of the foregoing rights, provided that the Borrower retains ultimate discretion with respect to all such
matters. All rights granted to the VCOC Lender under this paragraph are in addition to any rights granted to the VCOC Lender in any other
capacity and nothing herein shall be construed to limit, restrict or impair any such rights of the VCOC Lender.
**Section
275.**
NEGATIVE
COVENANTS
Each
Obligor covenants and agrees with the Administrative Agent and the Lenders that, until the Commitments have expired or been terminated
and all Obligations (other than inchoate indemnification obligations for which no claim has been made), have been paid in full in cash:
92
***Section
276.*** ***Indebtedness***.
Such Obligor will not, and will not permit any of its Subsidiaries to, create, incur, assume or permit to exist any Indebtedness,
whether directly or indirectly, except:
**Section
277.** the Obligations;
**Section
278.** Indebtedness existing on the date hereof
and set forth on **Schedule 9.01(b)** and Permitted Refinancings thereof; provided that, if such Indebtedness is
intercompany Indebtedness, such Indebtedness shall be subject to the Intercompany Subordination Agreement;
**Section
279.** accounts payable to trade creditors for
goods and services and current operating liabilities (not the result of the borrowing of money) incurred in the ordinary course of
such Obligor’s or such Subsidiary’s business in accordance with customary terms and paid within the specified time,
unless contested in good faith by appropriate proceedings and reserved for in accordance with GAAP;
**Section
280.** Indebtedness consisting of guarantees
resulting from the endorsement of negotiable instruments for collection in the Ordinary Course;
**Section
281.** Indebtedness of an Obligor owing to any
other Obligor, in each case subject to the Intercompany Subordination Agreement;
**Section
282.** Indebtedness of any Subsidiary that is not
an Obligor owing to any other Subsidiary that is not an Obligor;
**Section
283.** Indebtedness of any Obligor (other than
the Borrower) owing to any Subsidiary that is not another Obligor, in each case subject to the Intercompany Subordination
Agreement;
**Section
284.** Guarantees by any Obligor of Permitted
Indebtedness of another Obligor;
**Section
285.** equipment and software financing and
leasing (including Capital Lease Obligations and purchase money Indebtedness) and Permitted Refinancings thereof; provided that (i) if secured, the collateral therefor consists solely of the assets being financed, the products and proceeds thereof and
books and records related thereto, and (ii) the aggregate outstanding principal amount of such Indebtedness does not exceed
$3,000,000 at any time;
**Section
286.** Indebtedness under Permitted Hedging
Agreements;
**Section
287.** Indebtedness assumed pursuant to any
Permitted Acquisition and Permitted Refinancings thereof; provided that (i) no such Indebtedness (individually) shall exceed
15% of the total purchase price paid in connection with such Permitted Acquisition, (ii) the aggregate outstanding principal amount
of Indebtedness permitted pursuant to this **Section 9.01(k)** shall not exceed $5,000,000 at any time outstanding and (iii) no
such Indebtedness was created or incurred in connection with, or in contemplation of, such Permitted Acquisition;
93
**Section
288.** unsecured Indebtedness in an aggregate
outstanding principal amount not to exceed $3,500,000;
**Section
289.** Indebtedness in respect of letters of
credit, bank guarantees, bankers’ acceptances, warehouse receipts or similar instruments issued or created, or related to
obligations or liabilities incurred, in the Ordinary Course, including in respect of workers compensation claims, health, disability
or other employee benefits or property, leases, commercial contracts, Indebtedness permitted pursuant to **Section 9.01(o)**,
property, casualty or liability insurance or self-insurance or other Indebtedness with respect to reimbursement-type obligations
regarding workers compensation claims;
**Section
290.** Indebtedness arising in connection with
the financing of insurance premiums in the Ordinary Course;
**Section
291.** Indebtedness in respect of (i) performance
bonds, bid bonds, appeal bonds, surety bonds, customs bonds, government bonds, performance and completion guarantees and similar
obligations arising in the Ordinary Course and (ii) customary indemnification obligations to purchasers in connection with Asset
Sales permitted by **Section 9.09**;
**Section
292.** Indebtedness in respect of netting
services, overdraft protections, business credit cards, purchasing cards, payment processing, automatic clearinghouse arrangements,
arrangements in respect of pooled deposit or sweep accounts, check endorsement guarantees, and otherwise in connection with deposit
accounts or cash management services;
**Section
293.** purchase price adjustments, indemnity
payments, incentive, non-compete, consulting or other similar arrangements, contingent obligations, royalties and other Deferred
Acquisition Consideration in connection with (i) any Permitted Acquisition, in each case that are permitted pursuant to the
definition of “Permitted Acquisition” and (ii) the Eyevance Acquisition, in each case that are permitted pursuant to the
definition of “Eyevance Acquisition”; or
**Section
294.** Indebtedness in respect of the Existing
Notes and any refinancing, extension, renewal or replacement thereof; provided that (i) any such refinancing, extension,
renewal or replacement shall not (A) exceed the outstanding principal amount of the Existing Notes being refinanced, extended,
renewed or replaced (including by application of any interest that may be paid-in-kind during the term of such refinanced, extended,
renewed or replaced Indebtedness), (B) have a maturity date that is prior to the date that is 91 days after the Maturity Date
hereunder, (C) contain any financial covenants, (D) contain any other terms that are less favorable in any material respect to the
Obligors and their respective Subsidiaries, and/or to the Administrative Agent or the other Secured Parties, than the terms
governing the Existing Notes being refinanced, extended, renewed or replaced, (E) have an applicable all-in yield (whether in the
form of interest rate, margin, interest rate floor, upfront fees, original issue discount or any other similar fees paid to all
lenders or holders generally; provided that upfront fees, original issue discount and other similar fees shall be equated to
interest rate assuming a four (4) year life to maturity (or, if less, the stated life to maturity at the time of incurrence of the
applicable Indebtedness)) which exceeds the rate of interest of the Existing Notes being refinanced, extended, renewed or replaced
plus 1.00% per annum, (F) grant any Lien (and such Indebtedness shall be unsecured) or (G) give any Guarantee that was not an
existing requirement of the Existing Notes and (ii) immediately prior to and immediately after such refinancing, extension, renewal
or replacement, no Default or Event of Default shall exist;
94
***Section
295.*** ***Liens***.
Such Obligor will not, and will not permit any of its Subsidiaries to, create, incur, assume or permit to exist any Lien on any
property now owned by it or such Subsidiary, except:
**Section
296.** Liens securing the Obligations;
**Section
297.** any Lien on any property or asset of such
Obligor or any of its Subsidiaries existing on the date hereof and set forth on **Schedule 9.02(b)** and renewals and extensions
thereof in connection with Permitted Refinancings of the Indebtedness being secured by such Lien; provided that (i) no such
Lien (including any renewal or extension thereof) shall extend to any other property or asset of such Obligor or any of its
Subsidiaries (other than improvements and accessions to such property or asset) and (ii) any such Lien shall secure only those
obligations which it secures on the date hereof and renewals, extensions and replacements thereof in connection with Permitted
Refinancings of the Indebtedness being secured by such Lien that do not increase the outstanding principal amount thereof (other
than by an amount equal to unpaid interest and premiums thereon, including tender premium, and required prepayment premiums, and any
customary underwriting discounts, fees, commissions and expenses associated with such extension, renewal or replacement);
**Section
298.** Liens securing Indebtedness permitted
under **Section 9.01(i)**; provided that such Liens are restricted solely to the collateral described in **Section
9.01(i)**;
**Section
299.** Liens imposed by any Law and arising in
the Ordinary Course, including (but not limited to) carriers’, warehousemen’s, landlords’, and mechanics’
liens, liens relating to leasehold improvements and other similar Liens arising in the Ordinary Course that (x) do not in the
aggregate materially detract from the value of the property subject thereto or materially impair the use thereof in the operations
of the business of such Person or (y) are being contested in good faith by appropriate proceedings, which proceedings have the
effect of preventing the forfeiture or sale of the property subject to such Liens and for which adequate reserves have been made if
required in accordance with GAAP;
**Section
300.** pledges or deposits made in the Ordinary
Course in connection with bids, contract leases, appeal bonds, workers’ compensation, unemployment insurance or other similar
social security legislation;
**Section
301.** Liens securing Taxes, assessments and
other governmental charges, the payment of which is not past due or is being contested in good faith by appropriate proceedings
promptly initiated and diligently conducted and for which such reserve or other appropriate provisions, if any, as shall be required
by GAAP shall have been made;
95
**Section
302.** any (i) servitudes, easements, rights of
way, restrictions and other similar encumbrances on real property imposed by any Law, (ii) Liens consisting of zoning or building
restrictions, (iii) easements, licenses, restrictions on the use of real property or minor imperfections in title thereto which, in
the aggregate, are not material, and which do not in any case materially detract from the value of the property subject thereto or
interfere with the ordinary conduct of the business of any of the Obligors or any of their Subsidiaries; and
**Section
303.** with respect to any real property, (i)
such defects or encroachments as might be revealed by an up-to-date survey of such real property; (ii) the reservations,
limitations, provisos and conditions expressed in the original grant, deed or patent of such property by the original owner of such
real property pursuant to all applicable Laws; and (iii) rights of expropriation, access or user or any similar right conferred or
reserved by or in any Law, which, in the aggregate for **clauses (i)**, **(ii)** and **(iii)**, are not material, and which
do not in any case materially detract from the value of the property subject thereto or interfere with the ordinary conduct of the
business of any of the Obligors or its Subsidiaries;
(i)
bankers liens, rights of setoff and similar Liens incurred on deposits or other assets credited to any deposit or securities account
made in the Ordinary Course;
(j)
Liens securing Indebtedness permitted under **Section 9.01(k)**; provided that (i) such Lien is not created in contemplation
of or in connection with such Permitted Acquisition pursuant to which such Indebtedness was assumed, (ii) such Lien shall not apply to
any other property or assets of the Borrower or any Subsidiary other than the assets subject to such Liens immediately prior to the consummation
of the Permitted Acquisition, and (iii) such Lien shall secure only those obligations that it secured immediately prior to the consummation
of such Permitted Acquisition, and extensions, renewals and replacements thereof that do not increase the outstanding principal amount
thereof;
96
**Section
304.** Liens securing Indebtedness permitted
under **Sections 9.01(m), (n), (o)** and **(p)**.
**Section
305.** any judgment Lien or Lien arising from
decrees or attachments not constituting an Event of Default;
**Section
306.** Liens arising from precautionary UCC
financing statement filings regarding operating leases of personal property and consignment arrangements entered into in the
Ordinary Course in an Arm’s Length Transaction;
**Section
307.** Liens which secure obligations in an
aggregate amount not to exceed $3,500,000 at any time outstanding;
**Section
308.** Liens in favor of customs and revenue
authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods and incurred
in the Ordinary Course;
**Section
309.** Permitted Licenses;
**Section
310.** Liens on cash and Cash Equivalent
Investments securing obligations under Permitted Hedging Agreements;
**Section
311.**(i) Liens to secure payment of workers’
compensation, employment insurance, old age pensions, social security and other like obligations incurred in the Ordinary Course (other
than Liens imposed by ERISA) and (ii) deposits in respect of letters of credit, bank guarantees or similar instruments issued for the
account of any Obligor or any Subsidiary in the Ordinary Course supporting obligations of the type set forth in clause (i) above;
**Section
312.** to the extent constituting a Lien,
customary cash escrow arrangements securing indemnification obligations associated with a Permitted Acquisition, the Eyevance
Acquisition or any other Investment permitted under **Section 9.05** not to exceed $2,500,000 in the aggregate;
**Section
313.** Liens of a collection bank arising under
Section 4-210 of the Uniform Commercial Code on items in the course of collection;
**Section
314.** Liens of sellers of goods to the Borrower
and any of its Subsidiaries arising under Article 2 of the Uniform Commercial Code or otherwise in the Ordinary Course, covering
only the goods sold and securing only the unpaid purchase price for such goods and related expenses;
97
**Section
315.** rights of first refusal, voting,
redemption, transfer or other restrictions (including call provisions and buy-sell provisions) with respect to the Equity Interests
of any Joint Venture or other Persons that are not Subsidiaries; and
**Section
316.** any Lien arising under conditional sale,
title retention, consignment or similar arrangements for the sale of goods in the Ordinary Course; provided that such Lien
attaches only to the goods subject to such sale, title retention, consignment or similar arrangement; provided that no Lien
otherwise permitted under any of the foregoing **clauses (c), (d), (e)**, **(g)** through **(k), (m), (n), (o)** and **(q)** through **(w)** of this **Section 9.02** shall apply to any Material Intellectual Property.
***Section
317.*** ***Fundamental Changes and
Acquisitions***. Such Obligor will not, and
will not permit any of its Subsidiaries to, (i) enter into any transaction of merger, amalgamation or consolidation, (ii) liquidate,
wind up or dissolve itself (or suffer any liquidation or dissolution), (iii) sell or issue any of its Disqualified Equity Interests
or (iv) other than Permitted Acquisitions, the Eyevance Acquisition and any Acquisition permitted by **Section 9.05(a)** or **Section
9.05(t)**, make any Acquisition or otherwise acquire any business or substantially all the property from, or Equity Interests of,
or be a party to any Acquisition of, any Person, except:
**Section
318.** the merger, amalgamation, consolidation,
dissolution, winding up or liquidation of any (i) Subsidiary with or into any Obligor; provided that with respect to any such
transaction involving (x) the Borrower, the Borrower must be the surviving or successor entity of such transaction or (y) any other
Obligor, an Obligor must be the surviving or successor entity of such transaction or the surviving Person shall concurrently
therewith become an Obligor or (ii) Subsidiary that is not an Obligor with or into any other Subsidiary that is not an
Obligor;
**Section
319.** the sale, lease, transfer or other
disposition by (i) any Obligor (other than the Borrower) of any or all of its property (upon voluntary liquidation, dissolution,
winding-up or otherwise) to the any other Obligor or to any entity that concurrently therewith shall become an Obligor or (ii) any
Subsidiary that not an Obligor of any or all of its property (upon voluntary liquidation, dissolution, winding-up or otherwise) to
any other Subsidiary that is not an Obligor;
**Section
320.** the sale, transfer or other disposition of
the Equity Interests of (i) any Subsidiary to an Obligor or (ii) any Subsidiary that is not an Obligor owned by a Subsidiary that is
not an Obligor, to any other Subsidiary that is not an Obligor;
**Section
321.** mergers, amalgamations, consolidations,
dissolutions or liquidations of any Subsidiary to effectuate any Asset Sales permitted under **Section 9.09**; provided that the Borrower shall be the surviving or receiving party, as applicable, with respect to any such merger, amalgamation,
consolidation, dissolution or liquidation that involves the Borrower; and
98
**Section
322.** in connection with any Permitted
Acquisition or other Investment permitted under **Section 9.05**, any Obligor or any of its Subsidiaries may merge into or
consolidate with any other Person or permit any other Person to merge into or consolidate with it, so long as (i) the Person
surviving such merger with any Subsidiary shall be a direct or indirect wholly-owned Subsidiary of the Borrower, (ii) in the case of
any such merger to which the Borrower is a party, the Borrower is the surviving Person, and (iii) in the case of any such merger to
which a Subsidiary Guarantor is a party, the surviving Person is such Subsidiary Guarantor or concurrently therewith becomes a
Subsidiary Guarantor.
***Section
323.*** ***Lines of
Business***. Such Obligor will not, and will
not permit any of its Subsidiaries to, engage in any business other than the business engaged in on the date hereof by such Persons
or a business reasonably related, incidental or complementary thereto or reasonable expansions or extensions thereof.
***Section
324.*** ***Investments***.
Such Obligor will not, and will not permit any of its Subsidiaries to, make, directly or indirectly, or permit to remain outstanding
any Investments except:
**Section
325.** Investments (but without giving effect to
the cash return provision contained in the definition thereof) outstanding on the date hereof and identified in **Schedule 9.05(a)** and
any renewals, amendments and replacements thereof that do not increase the amount thereof of any such Investment, net of cash
returns thereon, or require that any additional Investment be made (unless otherwise permitted hereunder);
**Section
326.** deposit accounts with banks (or similar
deposit-taking institutions) and securities accounts maintained by the Obligors and their respective Subsidiaries, which in the case
of the Obligors shall be Controlled Accounts (unless Excluded Accounts);
**Section
327.** extensions of credit in the nature of
accounts receivable or notes receivable arising from the sales of goods or services or the grant of trade credit in the Ordinary
Course in an Arm’s Length Transaction;
**Section
328.** Permitted Cash Equivalent Investments,
which in the case of the Obligors shall be maintained in Controlled Accounts subject to **Section 8.17(d)** and **(f)** (unless maintained in Excluded Accounts);
**Section
329.** Investments by (i) an Obligor in another
Obligor and (ii) a Subsidiary that is not an Obligor in any other Subsidiary that is not an Obligor;
**Section
330.** Investments by a Subsidiary that is not an
Obligor in an Obligor; provided that any Investment made by any Subsidiary that is not an Obligor pursuant to this **clause
(f)** shall be subordinated in right of payment to the Obligations pursuant to the Intercompany Subordination
Agreement;
99
**Section
331.** Permitted Hedging Agreements;
**Section
332.** Investments consisting of prepaid
expenses, deposits under commercial contracts for the purchase of assets, negotiable instruments held for collection or deposit,
security deposits with utilities, landlords and other like Persons and deposits in connection with workers’ compensation and
similar deposits, in each case, made in the Ordinary Course, and other deposits and cash collateral constituting Permitted
Liens;
**Section
333.** employee, officer and director loans,
travel advances and guarantees in accordance with the Borrower’s usual and customary practices with respect thereto (if
permitted by applicable Laws) and non-cash loans to employees, officers, or directors relating to the purchase of Equity Interests
of the Borrower pursuant to employee stock purchase plans or agreements, which in the aggregate shall not exceed $2,500,000
outstanding at any time;
**Section
334.** Investments received in connection with
any Insolvency Proceedings in respect of any customers, suppliers or clients or in settlement of delinquent obligations of, and
other disputes with, customers, suppliers or clients;
**Section
335.** the increase in value of any Investment
otherwise permitted pursuant to this **Section 9.05**;
**Section
336.**(i) non-cash Investments in joint ventures or
strategic alliances in the Ordinary Course consisting of the non-exclusive licensing of technology, the development of technology or
the providing of technical support, and (ii) cash Investments in joint ventures or strategic alliances; provided that, with respect
to such Investments under this sub-clause (ii), the aggregate amount of all such cash Investments made during any fiscal year shall not
exceed $2,500,000;
**Section
337.** Investments (except in Excluded
Subsidiaries) in an aggregate amount not to exceed $5,000,000;
**Section
338.** Investments of any Person in existence at
the time such Person becomes a Subsidiary; provided such Investment was not made in connection with or anticipation of such
Person becoming a Subsidiary and any modification, replacement, renewal or extension thereof;
**Section
339.** Investments permitted under **Section
9.03**;
**Section
340.** Permitted Acquisitions and earnest money
deposits in connection with Permitted Acquisitions and Investments acquired as a result of a Permitted Acquisition to the extent
that such Investments were not made in contemplation of or in connection with such Permitted Acquisition and were in existence prior
to the date of such Permitted Acquisition;
100
**Section
341.** Investments consisting of the non-cash
portion of the sales consideration received by the Borrower or any of its Subsidiaries in connection with any Asset Sale permitted
under **Section 9.09**;
**Section
342.** Investments consisting of the endorsement
of negotiable instruments for deposit or collection or similar transactions in the Ordinary Course;
**Section
343.** to the extent constituting Investments,
Guarantees of Indebtedness, which Guarantees are permitted under **Section 9.01**;
**Section
344.** (i) Investments contemplated by **Schedule
9.05(s)** and (ii) the Permitted Minority Investments;
**Section
345.** Investments consisting of Permitted
Liens;
**Section
346.** Investments in the Ordinary Course
consisting of UCC Article 3 endorsements for collection or deposit and UCC Article 4 customary trade arrangements with customers
consistent with past practices;
**Section
347.** to the extent constituting Investments,
purchases and acquisitions of inventory, supplies, materials and equipment; and
**Section
348.** the Eyevance Acquisition and Investments
acquired as a result of the Eyevance Acquisition to the extent that such Investments were not made in contemplation of or in
connection with the Eyevance Acquisition and were in existence prior to the date of the Eyevance Acquisition.
Notwithstanding
anything in this Agreement to the contrary, (i) the Obligors shall not, and shall not permit any of their Subsidiaries to (x) directly
or indirectly transfer, by means of contribution, sale, assignment, lease or sublease, license or sublicense, or other disposition of
any kind (including, for avoidance of doubt, as an Investment, Restricted Payment or Asset Sale), any Material Intellectual Property
other than (I) pursuant to Permitted Licenses or (II) as permitted pursuant to **Section 9.09(g)** or (y) permit any Person other
than an Obligor to license or own any interest in any Material Intellectual Property owned by such Obligor other than pursuant to (I)
Permitted Licenses or (II) as permitted pursuant to **Section 9.09(g)**, (ii) no Material Intellectual Property shall be contributed
as an Investment or distributed as a Restricted Payment to any Subsidiary other than an Obligor (other than pursuant to Permitted Licenses)
and (iii) neither any Obligor nor any of their Subsidiaries shall be permitted to directly or indirectly transfer, by means of contribution,
sale, assignment, lease or sublease, license or sublicense, or other disposition of any kind (including, for avoidance of doubt, as an
Investment, Restricted Payment or Asset Sale) any assets or property of any kind (including, without limitation, any Intellectual Property)
to any Excluded Subsidiary.
101
***Section
349.*** ***Restricted
Payments***. Such Obligor will not, and will
not permit any of its Subsidiaries to, declare or make, or agree to pay or make, directly or indirectly, any Restricted Payment; provided that (i) Restricted Payments consisting of the payment of interest, principal or fees in respect of any intercompany Indebtedness
permitted by **Section 9.01(e)** and **(f)** shall be permitted and (ii) the following Restricted Payments shall be permitted
so long as no Event of Default has occurred and is continuing or would reasonably be expected to occur or result from such
Restricted Payment:
**Section
350.** dividends with respect to the
Borrower’s Equity Interests payable solely in shares of its Qualified Equity Interests (or the equivalent thereof);
**Section
351.** the Borrower’s purchase, redemption,
retirement, or other acquisition of shares of its Equity Interests with the proceeds received from a substantially concurrent issue
of new shares of its Qualified Equity Interests;
**Section
352.**(1) each Subsidiary that is an Obligor may make
Restricted Payments (it being understood that Restricted Payments consisting of the payment of interest, principal or fees in respect
of intercompany Indebtedness permitted by **Section 9.01(e)** and **(f)** shall be covered by **Section 9.06(i)**) to any other
Obligor, and (2) each Subsidiary that is not an Obligor may make Restricted Payments to its equity holders generally; provided that any Obligor that owns the Equity Interests in such Subsidiary paying such Restricted Payment receives at least its proportional
share (including at least its proportional share of any portion of such Restricted Payment made in cash) thereof;
**Section
353.** any purchase, redemption, retirement or
other acquisition of Equity Interests of the Borrower held by consultants, officers, directors and employees or former consultants,
officers, directors or employees (or their transferees, estates, or beneficiaries under their estates) of Borrower and its
Subsidiaries not to exceed $1,500,000 in the aggregate in any fiscal year (it being agreed that, to the extent constituting an
Investment permitted by **Section 9.05(i)**, the amount of any Indebtedness of such Persons owing to the Borrower or any
Subsidiary forgiven in connection with such Restricted Payment shall be excluded from any determination pursuant to this **clause
(ii)(d)**); provided that the portion of such basket that is not used by the Borrower or its Subsidiaries in any fiscal
year shall be carried forward and shall increase such basket for succeeding fiscal years;
**Section
354.** cashless repurchases of Equity Interests
deemed to occur upon exercises of options and warrants or the settlement or vesting of other equity awards if such Equity Interests
represent a portion of the exercise price of such options or warrants or similar equity incentive awards;
**Section
355.** cash payments made by the Borrower to
redeem, purchase, repurchase or retire its obligations under options, warrants and other convertible securities issued by it in the
nature of customary cash payments in lieu of fractional shares in accordance with the terms thereof;
**Section
356.** Borrower may acquire (or withhold) its
Equity Interests pursuant to any employee stock option or similar plan to pay withholding taxes for which Borrower is liable in
respect of a current or former officer, director, employee, member of management or consultant upon such grant or award (or upon
vesting or exercise thereof) and the Borrower may make deemed repurchases in connection with the exercise of stock
options;
102
**Section
357.** any payment of interest, principal or fees
in respect of any Indebtedness owed by any Obligor or any of its Subsidiaries to any holder of more than ten percent (10%) of the
Equity Interests of any Obligor or any of its Subsidiaries, in each case to the extent permitted under **Section
9.07**;
**Section
358.** payments related to share withholdings for
individual taxes related to vested restricted stock units (RSUs), options and other equity grants made to employees, as permitted
under the Borrower’s 2017 and 2007 Incentive Stock and Awards Plans (as amended as of Closing Date), and required under
certain of Borrower’s equity grants and employment agreements (in each case as in effect on the Closing Date), in an aggregate
amount not to exceed (i) $10,000,000 for the fiscal year ending December 31, 2023 and (ii) $3,000,000 for the fiscal year ending
December 31, 2024; provided that together with the financial statements for the fiscal years ending December 31, 2023 and
December 31, 2024 required pursuant to **Section 8.01(a)** and **(b)**, concurrently with the delivery of the Compliance
Certificate for such accounting period, a Responsible Officer of the Borrower shall deliver to the Administrative Agent a
certificate setting forth the amount of the foregoing payments for such accounting period, together with supporting information in
form and substance reasonably satisfactory to the Administrative Agent; and
**Section
359.** Restricted Payments in an aggregate amount
not to exceed (1) $1,000,000 in any fiscal year or (2) $2,500,000 during the term of this Agreement.
***Section
360.*** ***Payments of
Indebtedness***. Such Obligor will not, and
will not permit any of its Subsidiaries to, make any payments in respect of any Indebtedness other than (i) payments of the
Obligations, (ii) scheduled payments in respect of the Existing Notes pursuant to the terms of the Existing Notes Indenture as in
effect on the date hereof, (iii) scheduled payments of other Indebtedness (and with respect to such Indebtedness that is subject to
a subordination or intercreditor agreement in respect of the Obligations, solely to the extent permitted pursuant to the terms of
such subordination or intercreditor agreement); (iv) intercompany indebtedness permitted under **Section 9.01** (subject to the
terms of the Intercompany Subordination Agreement, if applicable), (v) Indebtedness permitted to be incurred under **Sections
9.01(b), (i), (j), (k), (l), (m)** and **(p)**, (vi) payments of Deferred Acquisition Consideration in respect of the Eyevance
Acquisition, pursuant to, and in the amounts and at the times provided for in, the Eyevance Acquisition Agreements and payments of
Deferred Acquisition Consideration in respect of any Permitted Acquisition to the extent such Deferred Acquisition Consideration is
permitted hereunder; provided that, with respect to the Eyevance Milestone Payments and payments of such Deferred Acquisition
Consideration, both immediately before and immediately after giving effect to such payments, no Event of Default pursuant to Section
11.01(a), (b), (d) (solely with respect to a failure to observe or perform the covenant under Section 10.01) or (h) has occurred and
is continuing (it being understood and agreed that this proviso shall not apply to Deferred Acquisition Consideration that consists
of purchase price adjustments, royalty, non-compete and/or consulting payments) and (vii) Permitted Refinancings permitted
hereunder.
***Section
361.******Change in Fiscal Year***.
Such Obligor will not, and will not permit any of its Subsidiaries to, change the last day of its fiscal year from that in effect on
the date hereof without the prior written consent of Administrative Agent, except to change the fiscal year of a Subsidiary acquired
in connection with an Acquisition to conform its fiscal year to that of the Borrower.
***Section
362.******Sales of Assets, Etc.*** Such Obligor will not, and will not permit any of its Subsidiaries to, sell, lease or sublease (as lessor or sub-lessor), sale and leaseback,
assign, convey, exclusively license (in terms of geography or field of use), transfer, or otherwise dispose of any of its businesses,
assets or property of any kind, whether real, personal, or mixed and whether tangible or intangible, whether now owned or hereafter acquired
(including accounts receivable and Equity Interests of Subsidiaries), or forgive, release or compromise any amount owed to such Obligor
or Subsidiary, in each case, in one transaction or series of related transactions (any thereof, an “***Asset Sale***”),
except:
103
**Section
363.** sales, transfers and other dispositions of
receivables in connection with the compromise, settlement or collection thereof in the Ordinary Course;
**Section
364.** sales of inventory, including to end users
(through wholesalers or other typical sales channels) or to distributors, in the Ordinary Course in an Arm’s Length
Transaction;
**Section
365.** the forgiveness, release or compromise of
any amount owed to any Obligor or Subsidiary in the Ordinary Course;
**Section
366.** Permitted Licenses;
**Section
367.** transfers of assets, rights or property
(i) among Obligors or (ii) any Subsidiary that is not an Obligor to an Obligor or another Subsidiary that is not an
Obligor;
**Section
368.** dispositions (including by way of
abandonment or cancellation) of any equipment and other tangible property that is obsolete or worn out or no longer used or useful
in the business disposed of in the Ordinary Course in an Arm’s-Length Transaction;
**Section
369.** dispositions resulting from casualty
events;
**Section
370.** the unwinding of any Hedging Agreement
permitted by **Section 9.05** pursuant to its terms;
**Section
371.** in connection with any transaction
permitted under **Section 9.03**, **9.05**, **9.06** or **9.14**;
**Section
372.**(i) Asset Sales identified in **Schedule 9.09** and (ii) Asset Sales of the Permitted Minority Investments;
**Section
373.** so long as no Default or Event of Default
has occurred and is continuing (or could reasonably be expected to occur after giving effect to such Asset Sale), Asset Sales (other
than with respect to Material Intellectual Property) with a fair market value not in excess of $10,000,000 in aggregate;
**Section
374.** Asset Sales (other than with respect to
Material Intellectual Property) not in excess of $3,000,000 in the aggregate in any fiscal year in which any Obligor or any
Subsidiary will receive cash proceeds in an amount equal to no less than seventy-five percent (75%) of the total consideration
(fixed or contingent) paid or payable to such Obligor or such Subsidiary, but only so long as, unless otherwise waived by
Administrative Agent in its sole discretion, the net cash proceeds of such Asset Sale are utilized to repay or prepay, in whole or
in part, Indebtedness under and in accordance with **Section 3.03(b)** to the extent required thereby;
104
**Section
375.** dispositions in the Ordinary Course
consisting of the abandonment, lapse or cancellation of Intellectual Property (other than Material Intellectual Property) which, in
the reasonable good faith determination of Borrower, are not material to the conduct of the business of Borrower or any of its
Subsidiaries; and
**Section
376.** dispositions of cash and Permitted Cash
Equivalents Investment in the Ordinary Course or otherwise in transactions permitted hereunder.
***Section
377.*** ***Transactions with
Affiliates***. Such Obligor will not, and will
not permit any of its Subsidiaries to, directly or indirectly, enter into or permit to exist any transaction to sell, lease, license
or otherwise transfer any assets to, or purchase, lease, license or otherwise acquire any assets from, or otherwise engage in any
other transactions with, any of its Affiliates, unless such arrangement or transaction (i) is an Arm’s Length Transaction,
(ii) is between or among (x) Obligors, (y) Subsidiaries that are not Obligors or (z) an Obligor and a Subsidiary that is not an
Obligor; provided that, with respect to clause (z) only, the terms thereof are (A) no less favorable to the Obligor than
those that would be obtained in a comparable arm’s-length transaction with a non-affiliated Person and (B) such transaction is
otherwise permitted hereunder and under the other Loan Documents, (iii) constitutes customary compensation (including performance,
discretionary, retention, relocation, transaction and other special bonuses and payment, severance payments and payments pursuant to
employment agreements), other benefits (including retirement, health, stock option and other benefit plans, life insurance,
disability insurance and other equity (or equity-linked) awards) and indemnification of, and other employment arrangements with,
directors, officers, and employees of any Obligor or its Subsidiaries in the Ordinary Course, (iv) constitutes payment of customary
fees, reimbursement of expenses, and payment of indemnification to officers and directors and customary payment of insurance
premiums on behalf of officers and directors by the Obligors or their Subsidiaries, in each case, in the Ordinary Course, (v) are
the transactions set forth on **Schedule 9.10**) or (vi) is a transaction (with any series of related transactions being
aggregated for the purposes of this clause (vi)) including consideration of less than $100,000.
***Section
378.*** ***Restrictive
Agreements***. Such Obligor will not, and will
not permit any of its Subsidiaries to, directly or indirectly, enter into, incur or permit to exist any Restrictive Agreement other
than (i) restrictions and conditions imposed by applicable Laws or by the Loan Documents, (ii) Restrictive Agreements listed on **Schedule
7.15**, (iii) limitations associated with Permitted Liens or any document or instrument governing any Permitted Lien, (iv) any
documentation governing Indebtedness referenced in clause **(k)** (or any Permitted Refinancing thereof) or clause **(r)** of **Section
9.01**, (v) customary provisions in leases, subleases, Permitted Licenses and other Contracts restricting the assignment thereof
or restricting the assignment, pledge, transfer or sublease or sublicense of the property leased, licensed or otherwise the subject
thereof; (vi) any restrictions or conditions set forth in any agreement in effect at any time any Person becomes a Subsidiary (but
not any modification or amendment expanding the scope of any such restriction or condition); provided that such agreement was
not entered into in contemplation of such Person becoming a Subsidiary; (vii) restrictions or conditions in any Indebtedness
permitted pursuant to **Section 9.01** that is incurred or assumed by Subsidiaries that are not Obligors to the extent such
restrictions or conditions are no more restrictive in any material respect than the restrictions and conditions in the Loan
Documents; (viii) restrictions or conditions imposed by any agreement relating to purchase money Indebtedness and other secured
Indebtedness or to leases, subleases and licenses permitted by this Agreement if such restrictions or conditions apply only to the
property or assets securing such Indebtedness or the property leased, subleased or licensed; (ix) customary provisions in contracts
for the disposition of any assets; provided that the restrictions in any such contract shall apply only to the assets or
Subsidiary that is to be disposed of and such disposition is permitted hereunder; (x) customary provisions regarding confidentiality
or restricting assignment, pledges or transfer of any Permitted License or any other agreement entered into in the Ordinary Course;
(xi) customary provisions in joint venture agreements and other similar agreements applicable to joint ventures and applicable
solely to such joint venture; and (xii) restrictions or encumbrances in any agreement in effect at the time any Person becomes a
Subsidiary, so long as (x) such agreement was not entered into in contemplation of such Person becoming a Subsidiary and (y) such
restrictions or encumbrances do not extend beyond such Subsidiary or its assets.
105
***Section
379.*** ***Modifications and Terminations
of Material Agreements and Organic Documents***.
The Obligors will not, and will not permit any of their Subsidiaries to:
(a)
waive, amend, terminate, replace or otherwise modify any term or provision of any Organic Document in any way or manner materially adverse
to the interests of the Administrative Agent and the Lenders; or
(b)
waive, amend, replace or otherwise modify any term or provision of any Material Agreement in a manner materially adverse to the rights
and remedies the Administrative Agent and the Lenders hereunder; or
(c)
(x) take or omit to take any action that results in the termination of, or permits any other Person to terminate, any Material Agreement
or the Obligors’ or their Subsidiaries’ rights in or to Material Intellectual Property or (y) take any action that permits
any Material Agreement or the Borrower, such Subsidiary Guarantor, or their Subsidiaries’ rights in or to Material Intellectual
Property to be terminated by any counterparty thereto prior to its stated date of expiration.
***Section
380.*** ***Outbound
Licenses***. No Obligor shall, nor shall it
permit any of its Subsidiaries to, enter into or become or remain bound by any outbound license, covenant not to sue or other grant
of rights or immunities under Material Intellectual Property, except for Permitted Licenses.
***Section
381.*** ***Sales and
Leasebacks***. Except as disclosed on **Schedule
9.14**, except as otherwise consented to in writing by the Administrative Agent (such consent not to be unreasonably withheld),
each Obligor will not, and will not permit any of its Subsidiaries to, become liable, directly or indirectly, with respect to any
lease, whether an operating lease or a Capital Lease Obligation, of any property (whether real, personal, or mixed), whether now
owned or hereafter acquired, (i) which such Person has sold or transferred or is to sell or transfer to any other Person and (ii)
which such Obligor or Subsidiary intends to use for substantially the same purposes as property which has been or is to be sold or
transferred.
***Section
382.*** ***Hazardous Material* Section
383.**. Each Obligor will not, and will
not permit any of its Subsidiaries to, use, generate, manufacture, install, treat, release, store or dispose of any Hazardous
Material, except as would not reasonably be expected to result in a Material Environmental Liability.
106
***Section
384.*** ***Accounting
Changes***. Such Obligor will not, and will
not permit any of its Subsidiaries to, make any significant change in accounting treatment or reporting practices, except as
required or permitted by GAAP.
***Section
385.*** ***Compliance with
ERISA***. No ERISA Affiliate shall cause or
suffer to exist (i) any event that could result in the imposition of a Lien with respect to any Title IV Plan or Multiemployer Plan
or (ii) any other ERISA Event that could, in the aggregate, reasonably be expected to result in a Material Adverse Effect. No
Obligor or any of its Subsidiaries shall cause or suffer to exist any event that could result in the imposition of a Lien with
respect to any Benefit Plan.
***Section
386.*** ***Sanctions; Anti-Corruption Use
of Proceeds***.
**Section
387.** No Obligor nor any of its Subsidiaries or
their respective agents shall (i) conduct any business or engage in any transaction or dealing with any Sanctioned Person in
violation of Sanctions, including making or receiving any contribution of funds, goods or services to or for the benefit of any
Sanctioned Person; (ii) deal in, or otherwise engage in any transaction relating to, any property or interests in property blocked
pursuant to any Sanctions; or (iii) engage in or conspire to engage in any transaction that evades or avoids, or has the purpose of
evading or avoiding, or attempts to violate, any of the prohibitions set forth in any applicable Sanctions, the Patriot Act or any
other Anti-Terrorism Law.
**Section
388.** The Borrower will not, directly or, to the
knowledge of the Borrower, indirectly, use the proceeds of the Loans, or lend, contribute or otherwise make available such proceeds
to any subsidiary, joint venture partner or other Person, (i) in furtherance of an offer, payment, promise to pay, or authorization
of the payment or giving of money, or anything else of value, to any Person in violation of any applicable anti-corruption Law, or
(ii) (A) for the purpose of funding any activities or business of or with any Sanctioned Person or any Designated Jurisdiction in
violation of Sanctions or (B) in any other manner that would result in a violation of Sanctions by any party to this
Agreement.
**Section
389.**
FINANCIAL
COVENANTS
***Section
390.*** ***Minimum
Liquidity***. Subject to **Section 8.17(d)** and **(f)**,
the Obligors shall at all times maintain the Minimum Liquidity Amount in cash and/or Permitted Cash Equivalent Investments in one or
more Controlled Accounts that is free and clear of all Liens, other than Liens granted under the Loan Documents in favor of the
Administrative Agent and Liens permitted under **Section 9.02(i)** or **Section 9.02(s)**.
***Section
391.*** ***Minimum Net
Revenues***. Beginning with the fiscal quarter
of the Borrower ending on June 30, 2023, and with respect to each subsequent fiscal quarter, the Net Revenues of the Borrower and
its Subsidiaries for the twelve (12) consecutive month period ending on the last day of such fiscal quarter shall not be less than
the Minimum Net Revenues for such quarter (the “***Minimum Net Revenues Covenant***”).
107
**Section
392.**
EVENTS
OF DEFAULT
***Section
393.*** ***Events of
Default***. Each of the following events shall
constitute an “***Event of Default***”:
**Section
394.** **Principal Payment
Default**. The Borrower shall fail to pay any
principal of the Loan, when and as the same shall become due and payable, whether at the due date thereof, at a date fixed for
prepayment thereof or otherwise.
**Section
395.** **Other Payment Defaults**.
Any Obligor shall fail to pay interest or any other Obligation (other than an amount referred to in **Section 11.01(a)**) when
and as the same shall become due and payable, and such failure shall continue unremedied for a period of three (3) Business
Days.
**Section
396.** **Representations and
Warranties**. Any representation or warranty made
or deemed made by or on behalf of any Obligor or any of its Subsidiaries in or in connection with this Agreement or any other Loan
Document or any amendment or modification hereof or thereof, or in any report, certificate, financial statement or other document
furnished pursuant to or in connection with this Agreement or any other Loan Document or any amendment or modification hereof or
thereof, shall (i) have been incorrect or misleading when made or deemed made to the extent that such representation or warranty
contains any materiality or Material Adverse Effect qualifier; or (ii) have been incorrect in any material respect when made or
deemed made to the extent that such representation or warranty does not otherwise contain any materiality or Material Adverse Effect
qualifier.
**Section
397.** **Certain Covenants**.
Any Obligor shall fail to observe or perform any covenant, condition or agreement contained in **Section 8.01, Section 8.02**, **Section
8.03** (solely as to the Borrower), **Section 8.07**, **Section 8.10**, **Section 8.11**, **Section 8.16**, **Section
8.17**, **Section 8.18**, **Section 9** or **Section 10**; provided that an Event of Default under **Section
10.02** is subject to **Section 11.04** and an Event of Default with respect to **Section 10.02** shall not occur until the
Cure Expiration Date.
**Section
398.** **Other Covenants**.
Any Obligor shall fail to observe or perform any covenant, condition or agreement contained in this Agreement (other than those
specified in **Section 11.01(a)**, **(b)** or **(d)**) or any other Loan Document, and, in the case of any failure that is
capable of cure, such failure shall continue unremedied for a period of thirty (30) or more days after the earlier to occur of the
date on which (i) a Responsible Officer of any Obligor becomes aware of such failure or (ii) written notice thereof shall have been
given to any Obligor by the Administrative Agent or any Lender.
**Section
399.** **Payment Default on Other
Indebtedness**. Any Obligor or any of its
Subsidiaries shall fail to make any payment (whether of principal or interest and regardless of amount) in respect of any Material
Indebtedness, when and as the same shall become due and payable after giving effect to any applicable grace or cure period as
originally provided by the terms of such Indebtedness.
108
**Section
400.** **Other Defaults on Other
Indebtedness**. (i) Any material breach of, or
“event of default” or similar event under, any Contract governing any Material Indebtedness shall occur and such breach
or “event of default” or similar event shall continue unremedied, uncured or unwaived after the expiration of any grace
or cure period thereunder, or (ii) any event or condition occurs (x) that results in any Material Indebtedness becoming due prior to
its scheduled maturity or (y) that enables or permits (with or without the giving of notice, the lapse of time or both) the holder
or holders of such Material Indebtedness or any trustee or agent on its or their behalf to cause such Material Indebtedness to
become due, or to require the prepayment, repurchase, redemption or defeasance thereof, prior to its scheduled maturity; provided that
this **Section 11.01(g)** shall not apply to (x) secured Indebtedness that becomes due as a result of the voluntary sale or
transfer of the property or assets securing such Material Indebtedness, (y) any conversion of any convertible Indebtedness or
satisfaction of any condition giving rise to or permitting a conversion of any convertible Indebtedness; provided that the
Borrower or the applicable Subsidiary has the right to settle any such Indebtedness into Equity Interests of the Borrower or such
Subsidiary (and nominal cash payments in respect of fractional shares and cash payments in respect of accrued and unpaid interest)
in accordance with the terms or conditions thereof and (z) with respect to any Material Indebtedness consisting of Hedging
Agreements, termination events or equivalent events pursuant to the terms of such Hedging Agreements and not as a result of any
default thereunder by any Obligor or any Subsidiary.
**Section
401.** **Insolvency, Bankruptcy,
Etc**.
**Section
402.** **Any Obligor or any of its Material
Subsidiaries becomes insolvent, or generally does not or becomes unable to pay its debts or meet its liabilities as the same become
due, or admits in writing its inability to pay its debts generally, or declares any general moratorium on its indebtedness, or
proposes a compromise or arrangement or deed of company arrangement between it and any class of its creditors.**
**Section
403.** **Any Obligor or any of its Material
Subsidiaries commits an act of bankruptcy or makes an assignment of its property for the general benefit of its creditors or makes a
proposal (or files a notice of its intention to do so).**
**Section
404.** **Any Obligor or any of its Material
Subsidiaries institutes any proceeding seeking to adjudicate it an insolvent, or seeking liquidation, dissolution, winding-up,
reorganization, examinership, compromise, arrangement, adjustment, protection, moratorium, relief, stay of proceedings of creditors
generally (or any class of creditors), or composition of it or its debts or any other relief, under any Law, whether U.S., or
non-U.S., now or hereafter in effect relating to bankruptcy, winding-up, insolvency, reorganization, examinership, receivership,
plans of arrangement or relief or protection of debtors or at common law or in equity, or files an answer admitting the material
allegations of a petition filed against it in any such proceeding.**
109
**Section
405.** **Any Obligor or any of its Material
Subsidiaries applies for the appointment of, or the taking of possession by, a receiver, interim receiver, receiver/manager,
sequestrator, conservator, custodian, administrator, examiner, trustee, liquidator, voluntary administrator, receiver and manager or
other similar official for it or any substantial part of its property.**
**Section
406.** **Any Obligor or any of its Material
Subsidiaries takes any action, corporate or otherwise, to approve, effect, consent to or authorize any of the actions described in
this Section 11.01(h), or otherwise acts in furtherance thereof or fails to act in a timely and appropriate manner in defense
thereof.**
**Section
407.** **Any petition is filed, application made
or other proceeding instituted against or in respect of any Obligor or any of its Material Subsidiaries:**
**Section
408.** seeking to adjudicate it as
insolvent;
**Section
409.** seeking a receiving order against
it;
**Section
410.** seeking liquidation, dissolution,
winding-up, reorganization, compromise, arrangement, adjustment, protection, moratorium, relief, examinership, stay of proceedings
of creditors generally (or any class of creditors), deed of company arrangement or composition of it or its debts or any other
relief under any Law, whether U.S. or non-U.S., now or hereafter in effect relating to bankruptcy, winding-up, insolvency,
reorganization, receivership, plans of arrangement or relief or protection of debtors or at common law or in equity; or
**Section
411.** seeking the entry of an order for relief
or the appointment of, or the taking of possession by, a receiver, interim receiver, receiver/manager, examiner, sequestrator,
conservator, custodian, administrator, trustee, liquidator, voluntary administrator, receiver and manager or other similar official
for it or any substantial part of its property, and such petition, application or proceeding continues undismissed, or unstayed and
in effect, for a period of forty-five (45) days after the institution thereof; provided that if an order, decree or judgment
is granted or entered (whether or not entered or subject to appeal) against such Obligor or such Subsidiary thereunder in the
interim, such grace period will cease to apply; provided, further, that if such Obligor or Material Subsidiary files
an answer admitting the material allegations of a petition filed against it in any such proceeding, such grace period will cease to
apply.
**Section
412.** **Any other event occurs which, under the
Laws of any applicable jurisdiction, has an effect equivalent to any of the events referred to in this Section
11.01(h).**
**Section
413.** **Judgments**.
One or more final judgments for the payment of money in an aggregate amount in excess of $5,000,000 (to the extent not fully covered
(other than to the extent of customary deductibles) by insurance pursuant to which the insurer has not denied coverage) shall be
rendered against any Obligor or any of its Subsidiaries or any combination thereof and the same shall remain undischarged for a
period of forty-five (45) calendar days during which execution shall not be effectively stayed or bonded pending appeal, or any
action shall be legally taken by a judgment creditor to attach or levy upon any assets of any Obligor to enforce any such
judgment.
110
**Section
414.** **ERISA**.
An ERISA Event shall have occurred that when taken together with all other ERISA Events that have occurred, would reasonably be
expected to result in liability of the Borrower and its Subsidiaries in an aggregate amount in excess of $5,000,000.
**Section
415.** **Change of Control**.
A Change of Control shall have occurred.
**Section
416.** **Regulatory Matters, Etc.** If
any of the following occurs:(i) the FDA or any other Regulatory Authority initiates enforcement action against, or issues a warning
letter with respect to, any Obligor, any Product or any manufacturing facilities that any Obligor owns or controls related to the
foregoing that (x) causes any Obligor to discontinue or withdraw, or would reasonably be expected to cause any Obligor to
discontinue or withdraw, marketing or sales of a Product or causes a delay in the manufacture or sale of a Product and (y) would
reasonably be expected to result in a Material Adverse Effect, or (ii) a recall of a Product that would reasonably be expected to
result in a Material Adverse Effect.
**Section
417.** **Impairment of Security, Etc.** Subject
in all respects to any applicable post-closing periods and certain other time periods and exceptions under the Loan Documents for
any Obligor or Subsidiary to take perfection actions, if any of the following events occurs: (i) Any Lien created by any of the
Security Documents shall at any time (except as expressly permitted by the terms of any Loan Document) not constitute a valid and
perfected Lien on the applicable Collateral in favor of the Secured Parties, free and clear of all other Liens (other than Permitted
Liens) except due to the action or inaction of the Administrative Agent, (ii) except for expiration in accordance with its terms,
any of the Security Documents or any Guarantee of any of the Obligations (including that contained in **Section 13**) shall for
whatever reason cease to be in full force and effect, (iii) any Obligor shall, directly or indirectly, contest in any manner such
effectiveness, validity, binding nature or enforceability of any such Lien or any Loan Document, or (iv) any injunction, whether
temporary or permanent, shall be rendered against any Obligor that prevents the Obligors from conducting it business in the ordinary
course for more than thirty (30) calendar days.
**Section
418.** **Warrants.** The Borrower breaches any of its material obligations under any Warrant.
(o) **Key Person Event**. A Key Person Event shall have occurred.
***Section
419.*** ***Remedies***.
111
**Section
420.** **Defaults Other Than Bankruptcy
Defaults**. Upon the occurrence of any Event of
Default, then, and in every such event (other than an Event of Default described in **Section 11.01(h)**), and at any time
thereafter during the continuance of such event, the Administrative Agent may, upon notice to the Borrower, take any or all of the
following actions: (i) declare the Commitments, if any, of each Lender having such Commitments to be terminated, whereupon such
Commitments shall be terminated, (ii) declare the Loans then outstanding to be due and payable in whole (or in part, in which case
any principal not so declared to be due and payable may thereafter be declared to be due and payable), and thereupon the principal
of the Loans so declared to be due and payable, together with accrued interest thereon and all fees and other Obligations, including
any applicable Yield Protection Premium and the Exit Fee, shall become due and payable immediately (in the case of the Loans, at the
Prepayment Price therefor), without presentment, demand, protest or other notice of any kind, all of which are hereby expressly
waived by each Obligor, (iii) enforce any and all Liens and security interests created pursuant to Security Documents, and (iv)
exercise on behalf of itself and the other Secured Parties all rights and remedies available to it and the other Secured Parties
under the Loan Documents or at law or in equity.
**Section
421.** **Bankruptcy Defaults**.
In case of an Event of Default described in **Section 11.01(h)**, the obligation of each Lender to make Loans shall automatically
terminate and the principal of the Loans then outstanding, together with accrued interest thereon and all fees and other
Obligations, including any applicable Yield Protection Premium and the Exit Fee, shall automatically become due and payable
immediately (in the case of the Loans, at the Prepayment Price therefor), without presentment, demand, protest or other notice of
any kind, all of which are hereby expressly waived by each Obligor.
***Section
422.*** ***Additional
Remedies***. If an Event of Default has
occurred and is continuing, if any Obligor shall be in default under a Material Agreement, the Administrative Agent shall have the
right (but not the obligation) to cause the default or defaults under such Material Agreement to be remedied (including without
limitation by paying any unpaid amount thereunder) and otherwise exercise any and all rights of such Obligor, as the case may be,
thereunder, as may be necessary to prevent or cure any default. Without limiting the foregoing, upon any such default, each Obligor
shall promptly execute, acknowledge and deliver to the Administrative Agent such instruments as may reasonably be required of such
Obligor to permit the Administrative Agent to cure any default under the applicable Material Agreement or permit the Administrative
Agent to take such other action required to enable the Administrative Agent to cure or remedy the matter in default and preserve the
interests of the Administrative Agent. Any amounts paid by the Administrative Agent pursuant to this **Section 11.03** shall be
payable in accordance with **Section 14.03(a)**, shall accrue interest at the Default Rate if not paid when due, and shall
constitute “Obligations.” The Administrative Agent and the Lenders agree that in connection with any foreclosure or
other exercise of rights under this Agreement or any other Loan Document with respect to Intellectual Property, the rights of the
non-Affiliate licensees under Permitted Licenses will not be terminated, limited or otherwise adversely affected so long as no
default exists under the Permitted License that would permit the licensor to terminate such Permitted License (commonly known as a
non-disturbance); provided that the Administrative Agent shall be entitled to exercise any rights of the Obligors under such
licenses, including termination rights, upon the exercise of remedies during an Event of Default.
112
***Section
423.*** ***Minimum Net Revenues Covenant
Cure***(a). Notwithstanding anything to
the contrary contained in **Section 11.01(d)**, in the event the Borrower fails to comply with the requirements of **Section
10.02**, during the period from the last day of the relevant fiscal quarter in respect of which such Default has occurred and
until the expiration of the tenth (10th) Business Day subsequent to the date the financial statements are required to be
delivered for such fiscal quarter pursuant to **Section 8.01(a) or 8.01(b)** (the “***Cure Expiration
Date***”), the Borrower shall have the right to make a Net Revenues Cure Payment; provided that such payment shall
be made with either cash on hand (subject to pro forma compliance with **Section 10.01**) or cash raised from the issuance or
sale of Qualified Equity Interests in the Borrower for cash (the “***Minimum Net Revenues Cure Right***”). Upon
the Administrative Agent’s receipt of the applicable Net Revenues Cure Payment or application of such cash amounts, the
Borrower shall then be in compliance with the requirements of the Minimum Net Revenues Covenant, and the Borrower shall be deemed to
have satisfied the requirements of the Minimum Net Revenues Covenant as of the relevant date of determination with the same effect
as though there had been no failure to comply therewith at such date, and the applicable breach of the Minimum Net Revenues Covenant
and any related Default that had occurred shall be deemed cured for the purposes of this Agreement. Net Revenues shall be deemed
increased for the applicable fiscal quarter and any four fiscal quarter period that contains such fiscal quarter, solely for the
purpose of measuring the covenant set forth in **Section 10.02** and not for any other purpose under this Agreement, by an amount
equal to the Net Revenues Shortfall Amount (and the receipt by the Lenders of the Net Revenues Cure Payment pursuant to the Minimum
Net Revenues Cure Right and the related increase of Net Revenues by the Net Revenues Shortfall Amount shall be deemed to have no
other effect whatsoever under this Agreement other than as specifically provided in this **Section 11.04**). Any Net Revenues
Cure Payment shall be applied to the prepayment of all outstanding Obligations, which shall include the Yield Protection Premium, if
applicable, any accrued and unpaid interest and Commitment Fee, and the Exit Fee. Notwithstanding anything else in this Agreement,
the Borrower may not exercise a Minimum Net Revenues Cure Right more than four times over the life of the loan or more than two
times in any twelve month period.
**Section
424.**Upon the Administrative Agent’s receipt
of a notice from the Borrower that it intends to exercise the Minimum Net Revenues Cure Right (a “***Notice of Intent to Cure
Net*** Revenues ***Covenant***”), until the Cure Expiration Date to which such Notice of Intent to Cure Net Revenues
Covenant relates, no Lender shall be required to extend any credit pursuant to its Commitment during such period. Neither the Administrative
Agent nor any Lender shall exercise the right to accelerate the Loans or terminate the Commitments and none of the Administrative Agent
or any Lender shall exercise any right to foreclose on or take possession of the Collateral or exercise any other remedy pursuant to **Section 11.02** or **Section 11.03**, the other Loan Documents or applicable law prior to the Cure Expiration Date solely on
the basis of an Event of Default having occurred and continuing under **Section 10.02** (except to the extent that the Borrower has
confirmed in writing that it does not intend to exercise a Minimum Net Revenues Cure Right). If on or prior to the Cure Expiration Date,
the Oaktree Lender declines the exercise by the Borrower of the Minimum Net Revenues Cure Right by written notice to the Administrative
Agent and the Borrower to that effect, then the Borrower shall be deemed to have satisfied the requirements of the Minimum Net Revenues
Covenant as of the relevant date of determination with the same effect as though there had been no failure to comply therewith at such
date, and the applicable breach of the Minimum Net Revenues Covenant and any related default that had occurred shall be deemed cured
for the purposes of this Agreement.
113
***Section
425.*** ***Payment of Yield Protection
Premium and Exit Fee***. Notwithstanding
anything in this Agreement to the contrary, the Yield Protection Premium and the Exit Fee shall automatically be due and payable at
any time the Obligations become due and payable prior to the Maturity Date in accordance with the terms hereof as though such
Indebtedness was voluntarily prepaid and shall constitute part of the Obligations, whether due to acceleration pursuant to the terms
of this Agreement (in which case it shall be due immediately, upon the giving of notice to Borrower in accordance with **Section
11.02(a)**, or automatically, in accordance with **Section 11.02(b)**), by operation of law or otherwise (including, without
limitation, on account of any bankruptcy filing), in view of the impracticability and extreme difficulty of ascertaining the actual
amount of damages to the Lenders or profits lost by the Lenders as a result of such acceleration, and by mutual agreement of the
parties as to a reasonable estimation and calculation of the lost profits or damages of the Lenders as a result thereof. If the
Yield Protection Premium and/or Exit Fee become due and payable pursuant to the preceding sentence, the Yield Protection Premium and
Exit Fee, as applicable, shall be deemed to be principal of the Loans and interest shall accrue on the full principal amount of the
Loans (including the Yield Protection Premium and Exit Fee, as applicable) from and after the applicable triggering event. Any Yield
Protection Premium or Exit Fee (or, if required, both the Yield Protection Premium and the Exit Fee) payable pursuant to this
Agreement shall be presumed to be the liquidated damages sustained by each Lender as the result of the early termination,
acceleration or prepayment and each Obligor agrees that such Yield Protection Premium or Exit Fee is reasonable under the
circumstances currently existing. The Yield Protection Premium and Exit Fee shall also be payable in the event the Obligations
(and/or this Agreement) are satisfied or released by foreclosure (whether by power of judicial proceeding), deed in lieu of
foreclosure or by any other means or the Obligations are reinstated pursuant to Section 1124 of the Bankruptcy Code. If the Yield
Protection Premium and/or becomes due and payable pursuant to this Agreement, such Yield Protection Premium and/or Exit Fee under
this Agreement and or in the event the Yield Protection Premium and/or Exit Fee is determined not to be due and payable by order of
any court of competent jurisdiction, including, without limitation, by operation of the Bankruptcy Code, despite such a triggering
event having occurred, such Yield Protection Premium and Exit Fee, as applicable, shall nonetheless constitute Obligations under
this Agreement for all purposes hereunder. **Each Obligor hereby waives the provisions of
any present or future statute or law that prohibits or may prohibit the collection of the Yield Protection Premium or exit fee and
any defense to payment, whether such defense may be based in public policy, ambiguity, or otherwise****.** The Obligors,
the Administrative Agent and the Lenders acknowledge and agree that any Yield Protection Premium and the Exit Fee due and payable in
accordance with this Agreement shall not constitute unmatured interest, whether under Section 5.02(b)(3) of the Bankruptcy Code or
otherwise. Each Obligor further acknowledges and agrees, and waives any argument to the contrary, that payment of such amount does
not constitute a penalty or an otherwise unenforceable or invalid obligation. Each Obligor expressly agrees that (i) the Yield
Protection Premium and Exit Fee are each reasonable and each is the product of an arm’s-length transaction between
sophisticated business people, ably represented by counsel, (ii) the Yield Protection Premium and Exit Fee shall be payable
notwithstanding the then prevailing market rates at the time payment is made, (iii) there has been a course of conduct between the
Lenders and the Obligors giving specific consideration in this transaction for such agreement to pay the Yield Protection Premium
and Exit Fee, (iv) the Obligors shall be estopped hereafter from claiming differently than as agreed to in this **Section
11.05**, (v) their agreement to pay the Yield Protection Premium and Exit Fee is a material inducement to the Lenders to make the
Loans, and (vi) the Yield Protection Premium and Exit Fee represent a good faith, reasonable estimate and calculation of the lost
profits, losses or other damages of the Lenders and that it would be impractical and extremely difficult to ascertain the actual
amount of damages to the Lenders or profits lost by the Lenders as a result of such event.
114
**Section
426.**
THE
ADMINISTRATIVE AGENT
***Section
427.*** ***Appointment and
Duties***. Subject in all cases to clause (c)
below:
**Section
428.** **Appointment of the Administrative
Agent**. Each of the Lenders hereby irrevocably
appoints Oaktree Fund Administration, LLC (together with any successor Administrative Agent pursuant to **Section 12.09**) as the
Administrative Agent hereunder and authorizes the Administrative Agent to (i) execute and deliver the Loan Documents and accept
delivery thereof on its behalf from any Obligor or any of its Subsidiaries, (ii) take such action on its behalf and to exercise all
rights, powers and remedies and perform the duties as are expressly delegated to the Administrative Agent under such Loan Documents
and (iii) exercise such powers as are reasonably incidental thereto. Except as expressly set forth herein, the provisions of this **Section
12** (other than **Section 12.10**, and solely to the extent expressly set forth therein) are solely for the benefit of the
Administrative Agent and the Lenders, and no Obligor or any Affiliate thereof shall have rights as a third-party beneficiary of any
such provisions.
**Section
429.** **Duties as Collateral and Disbursing
Agent**. Without limiting the generality of **Section
12.01(a)**, the Administrative Agent shall have the sole and exclusive right and authority (to the exclusion of the Lenders), and
is hereby authorized, to (i) act as the disbursing and collecting agent for the Lenders with respect to all payments and collections
arising in connection with the Loan Documents (including in any proceeding described in **Section 11.01(h)** or any other
bankruptcy, insolvency or similar proceeding), and each Person making any payment in connection with any Loan Document to any
Secured Party is hereby authorized to make such payment to the Administrative Agent, (ii) file and prove claims and file other
documents necessary or desirable to allow the claims of the Secured Parties with respect to any Obligation in any proceeding
described in **Section 11.01(h)** or any other bankruptcy, insolvency or similar proceeding (but not to vote, consent or
otherwise act on behalf of such Secured Party), (iii) act as collateral agent for each Secured Party for purposes of acquiring,
holding, enforcing and perfecting all Liens created by the Loan Documents and all other purposes stated therein, (iv) manage,
supervise and otherwise deal with the Collateral, (v) take such other action as is necessary or desirable to maintain the perfection
and priority of the Liens created or purported to be created by the Loan Documents, (vi) except as may be otherwise specified in any
Loan Document, exercise all remedies given to the Administrative Agent and the other Secured Parties with respect to the Collateral,
whether under the Loan Documents, applicable Laws or otherwise, (vii) enter into non-disturbance agreements and similar agreements
and (viii) execute any amendment, consent or waiver under the Loan Documents on behalf of any Lender that has consented in writing
to such amendment, consent or waiver; provided that the Administrative Agent hereby appoints, authorizes and directs each
Lender to act as collateral sub-agent for the Administrative Agent and the Lenders for purposes of the perfection of all Liens with
respect to the Collateral, including any deposit account maintained by a Obligor with, and cash and Cash Equivalent Investments held
by, such Lender, and may further authorize and direct the Lenders to take further actions as collateral sub-agents for purposes of
enforcing such Liens or otherwise to transfer the Collateral subject thereto to the Administrative Agent, and each Lender hereby
agrees to take such further actions to the extent, and only to the extent, so authorized and directed.
115
**Section
430.** **Limited Duties**.
The Lenders and the Obligors hereby each acknowledge and agree that the Administrative Agent (i) has undertaken its role hereunder
purely as an accommodation to the parties hereto and the Transactions, (ii) is receiving no compensation for undertaking such role
and (iii) subject only to the notice provisions set forth in **Section 12.09**, may resign from such role at any time for any
reason or no reason whatsoever. Without limiting the foregoing, the parties hereto further acknowledge and agree that under the Loan
Documents, the Administrative Agent (i) is acting solely on behalf of the Lenders (except to the limited extent provided in **Section
12.11**), with duties that are entirely administrative in nature, notwithstanding the use of the defined term “the
Administrative Agent”, the terms “agent”, “administrative agent” and “collateral agent”
and similar terms in any Loan Document to refer to the Administrative Agent, which terms are used for title purposes only, (ii) is
not assuming any duty or obligation under any Loan Document other than as expressly set forth therein or any role as agent,
fiduciary or trustee of or for any Lender or any other Secured Party and (iii) shall have no implied functions, responsibilities,
duties, obligations or other liabilities under any Loan Document (fiduciary or otherwise), in each case, regardless of whether a
Default has occurred and is continuing, and each Lender hereby waives and agrees not to assert any claim against the Administrative
Agent based on the roles, duties and legal relationships expressly disclaimed in this **clause (c)**. Without in any way limiting
the foregoing, the Administrative Agent shall not, except as expressly set forth in this Agreement and in the other Loan Documents,
have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to any Obligor or any of
its Affiliates that is communicated to or obtained by the Person serving as the Administrative Agent or any of its Affiliates in any
capacity.
***Section
431.*** ***Binding
Effect***. Each Lender agrees that (i) any
action taken by the Administrative Agent or the Majority Lenders (or, if expressly required hereby, a greater proportion of the
Lenders) in accordance with the provisions of the Loan Documents, (ii) any action taken by the Administrative Agent in reliance upon
the instructions of the Majority Lenders (or, where so required, such greater proportion) and (iii) the exercise by the
Administrative Agent or the Majority Lenders (or, where so required, such greater proportion) of the powers set forth herein or
therein, together with such other powers as are reasonably incidental thereto, shall be authorized and binding upon all of the
Secured Parties.
***Section
432.*** ***Use of
Discretion***.
**Section
433.** **No Action without
Instructions**. The Administrative Agent shall
not be required to exercise any discretion or take, or to omit to take, any action, including with respect to enforcement or
collection, except (subject to **clause (b)** below) any action it is required to take or omit to take (i) under any Loan
Document or (ii) pursuant to written instructions from the Majority Lenders (or, where expressly required by the terms of this
Agreement, a greater proportion of the Lenders).
116
**Section
434.** **Right Not to Follow Certain
Instructions**. Notwithstanding **Section
12.03(a)** or any other term or provision of this **Section 12**, the Administrative Agent shall not be required to take, or to
omit to take, any action (i) unless, upon demand, the Administrative Agent receives an indemnification satisfactory to it from the
Lenders (or, to the extent applicable and acceptable to the Administrative Agent, any other Secured Party) against all liabilities
that, by reason of such action or omission, may be imposed on, incurred by or asserted against the Administrative Agent or any
Related Parties thereof or (ii) that is, in the opinion of the Administrative Agent, in its sole and absolute discretion, contrary
to any Loan Document, Law or the best interests of the Administrative Agent or any of its Affiliates or Related Parties, including,
for the avoidance of doubt, any action that may be in violation of the automatic stay in connection with any Insolvency
Proceeding.
***Section
435.*** ***Delegation of Rights and
Duties***. The Administrative Agent may, upon
any term or condition it specifies, delegate or exercise any of its rights, powers and remedies under, and delegate or perform any
of its duties or any other action with respect to, any Loan Document by or through any trustee, co-agent, employee, attorney-in-fact
and any other Person (including any Secured Party). The Administrative Agent and any such Person may perform any and all of its
duties and exercise its rights and powers by or through their respective Related Parties. Any such Person and its Related Parties
shall benefit from this **Section 12** to the extent provided by the Administrative Agent; provided, however, that the
exculpatory provisions of this **Section 12** shall apply to any such sub-agent and to the Related Parties of the Administrative
Agent and of any such sub-agent, and shall apply to their respective activities in connection with their activities as
Administrative Agent. The Administrative Agent shall not be responsible for the negligence or misconduct of any sub-agents except to
the extent that a court of competent jurisdiction determines in a final and non-appealable judgment that the Administrative Agent
acted with gross negligence or willful misconduct in the selection of such sub-agents.
***Section
436.*** ***Reliance and
Liability***.
**Section
437.** the Administrative Agent may, without
incurring any liability hereunder, (i) consult with any of its Related Parties and, whether or not selected by it, any other
advisors, accountants and other experts (including advisors to, and accountants and experts engaged by, any Obligor) and (ii) rely
and act upon any notice, request, certificate, consent, statement, instrument, document or other writing (including and electronic
message, Internet or intranet website posting or other distribution), telephone message or conversation or oral conversation, in
each case believed by it to be genuine and transmitted, signed or otherwise authenticated by the appropriate parties. In determining
compliance with any condition hereunder to the making of a Loan that by its terms must be fulfilled to the satisfaction of a Lender,
the Administrative Agent may presume that such condition is satisfactory to such Lender unless the Administrative Agent shall have
received written notice to the contrary from such Lender prior to the making of such Loan.
**Section
438.** Neither the Administrative Agent nor any
of its Related Parties shall be liable for any action taken or omitted to be taken by any of them under or in connection with any
Loan Document, and each Lender and the Borrower hereby waive and shall not assert (and the Borrower shall cause each other Obligor
to waive and agree not to assert) any right, claim or cause of action based thereon, except to the extent of liabilities resulting
primarily from the fraudulent conduct or behavior of the Administrative Agent or, as the case may be, such Related Party (each as
determined in a final, non-appealable judgment or order by a court of competent jurisdiction) in connection with the duties
expressly set forth herein. Without limiting the foregoing, the Administrative Agent:
117
**Section
439.** **shall not be responsible or otherwise
incur liability for any action or omission taken in reliance upon the instructions of, or with the consent of, the Majority Lenders
(or such other number or percentage of the Lenders as shall be necessary, or as the Administrative Agent shall believe in good faith
to be necessary, under the circumstances as provided in Section 14.04) or for the actions or omissions of any of its Related Parties
selected with reasonable care (other than employees, officers and directors of the Administrative Agent, when acting on behalf of
the Administrative Agent);**
**Section
440.** **shall not be responsible to any Secured
Party for the (a) validity, enforceability, effectiveness or genuineness of this Agreement, any other Loan Document or any other
agreement, instrument or document, or (b) due execution, legality, validity, enforceability, effectiveness, genuineness, sufficiency
or value of, or the attachment, perfection or priority of any Lien created or purported to be created under or in connection with,
any Loan Document;**
**Section
441.** **makes no warranty or representation,
and shall not be responsible, to any Secured Party for, and shall not have any duty to ascertain or inquire into, any statement,
document, information, certificate, report, representation or warranty made or furnished by or on behalf of any Related Party, in or
in connection with any Loan Document or any transaction contemplated therein, whether or not transmitted by the Administrative
Agent, including as to completeness, accuracy, scope or adequacy thereof, or for the scope, nature or results of any due diligence
performed by the Administrative Agent in connection with the Loan Documents, including, for the avoidance of doubt, the satisfaction
of any condition set forth in Section 6 of this Agreement or elsewhere herein (other than to confirm receipt of items expressly
required to be delivered to the Administrative Agent); and**
**Section
442.** **shall not have any duty to ascertain or
to inquire as to the performance or observance of any provision of any Loan Document or whether any condition set forth in any Loan
Document is satisfied or waived, including, without limiting the generality of the foregoing, as to the financial condition of any
Obligor or as to the existence or continuation or possible occurrence or continuation of any Default or Event of Default and shall
not be deemed to have notice or knowledge of such occurrence or continuation unless it has received a notice from the Borrower, any
Lender describing such Default or Event of Default clearly labeled “notice of default” (in which case the Administrative
Agent shall promptly give notice of such receipt to all Lenders);** and,
for each of the items set forth in **clauses (i)** through **(iv)** above, each Lender and the Borrower hereby waives and
agrees not to assert (and the Borrower shall cause each other Obligor to waive and agree not to assert) any right, claim or cause of
action it might have against the Administrative Agent based thereon.
118
***Section
443.*** ***Administrative Agent
Individually***. The Administrative Agent and
its Affiliates may make loans and other extensions of credit to, acquire stock and stock equivalents of, accept deposits from, act
as the financial advisor for or in any other advisory capacity for, or engage in any kind of business with, any Obligor or Affiliate
thereof as though it were not acting as the Administrative Agent and may receive separate fees and other payments therefor. To the
extent the Administrative Agent or any of its Affiliates makes any Loan or otherwise becomes a Lender hereunder, it shall have and
may exercise the same rights and powers hereunder and shall be subject to the same obligations and liabilities as any other Lender
and the terms “Lender”, “Majority Lender”, and any similar terms shall, except where otherwise expressly
provided in any Loan Document, include, without limitation, the Administrative Agent or such Affiliate, as the case may be, in its
individual capacity as Lender or as one of the Majority Lenders, respectively.
***Section
444.*** ***Lender Credit
Decision***. Each Lender acknowledges that it
has, independently and without reliance upon the Administrative Agent, any Lender or any of their Related Parties or upon any
document (including the Disclosure Documents) solely or in part because such document was transmitted by the Administrative Agent or
any of its Related Parties, conducted its own independent investigation of the financial condition and affairs of each Obligor and
has made and continues to make its own credit decisions in connection with entering into, and taking or not taking any action under,
any Loan Document or with respect to any transaction contemplated in any Loan Document, in each case based on such documents and
information as it shall deem appropriate.
***Section
445.*** ***Expenses;
Indemnities***.
**Section
446.** Each Lender agrees to reimburse the
Administrative Agent and each of its Related Parties (to the extent not reimbursed by any Obligor) promptly upon demand for such
Lender’s Proportionate Share of any costs and expenses (including fees, charges and disbursements of financial, legal and
other advisors and Other Taxes paid in the name of, or on behalf of, any Obligor) that may be incurred by the Administrative Agent
or any of its Related Parties in connection with the preparation, syndication, execution, delivery, administration, modification,
consent, waiver or enforcement (whether through negotiations, through any work-out, bankruptcy, restructuring or other legal or
other proceeding or otherwise) of, or legal advice in respect of its rights or responsibilities under, any Loan Document.
**Section
447.** Each Lender further agrees to indemnify
the Administrative Agent (or any sub-agent thereof) and any Related Parties of the Administrative Agent (or any such sub-agent) (to
the extent not paid by any Obligor), from and against such Lender’s aggregate Proportionate Share of the liabilities
(including taxes, interests and penalties imposed for not properly withholding or backup withholding on payments made to on or for
the account of any Lender) that may be imposed on, incurred by or asserted against the Administrative Agent (or any sub-agent
thereof) or any Related Parties of the Administrative Agent (or any such sub-agent) in any matter relating to or arising out of, in
connection with or as a result of any Loan Document, any Related Document or any other act, event or transaction related,
contemplated in or attendant to any such document, or, in each case, any action taken or omitted to be taken by the Administrative
Agent (or any sub-agent thereof) or any Related Parties of the Administrative Agent (or any such sub-agent) under or with respect to
any of the foregoing; provided that no Lender shall be liable to the Administrative Agent (or any sub-agent thereof) or any
Related Parties of the Administrative Agent (or any such sub-agent) to the extent such liability has resulted primarily from the
gross negligence or willful misconduct of the Administrative Agent (or any sub-agent thereof) or, as the case may be, such Related
Party of the Administrative Agent (or any sub-agent thereof), as determined by a court of competent jurisdiction in a final
non-appealable judgment or order.
119
***Section
448.*** ***Resignation of the
Administrative Agent***.
**Section
449.** At any time upon not less than 30 days
prior written notice to the Lenders and the Borrower, the Administrative Agent may resign as the “the Administrative
Agent” hereunder (in the sole and absolute discretion of the Administrative Agent). If the Administrative Agent delivers any
such notice, the Majority Lenders shall have the right, in consultation with the Borrower, to appoint a successor, which shall be
(i) a Lender holding at least thirty percent (30%) of the outstanding principal amount of the Loans or any Affiliate thereof or (ii)
any other financial institution consented to by the Borrower (provided that the consent of the Borrower shall not be required
to the extent an Event of Default has occurred and is continuing). If a successor Administrative Agent has not been appointed on or
before the effectiveness of the resignation of the resigning Administrative Agent (or such earlier date as shall be agreed by the
Majority Lenders) (the “***Resignation Effective Date***”), then the resigning Administrative Agent may (but
shall not be obligated to), on behalf of the Lenders, appoint any Person reasonably chosen by it as the successor Administrative
Agent, notwithstanding whether the Majority Lenders have appointed a successor or the Borrower has consented to such successor.
Whether or not a successor has been appointed, such resignation shall become effective on the Resignation Effective Date.
**Section
450.** Effective from the Resignation Effective
Date, (i) the resigning Administrative Agent shall be discharged from its duties and obligations under the Loan Documents to the
extent set forth in the applicable resignation notice, (ii) the Majority Lenders shall assume and perform all of the duties of the
Administrative Agent until a successor Administrative Agent shall have accepted a valid appointment hereunder, (iii) the resigning
Administrative Agent and its Related Parties shall no longer have the benefit of any provision of any Loan Document other than with
respect to (x) any actions taken or omitted to be taken while such resigning Administrative Agent was, or because the Administrative
Agent had been, validly acting as the Administrative Agent under the Loan Documents or (y) any continuing duties such resigning
Administrative Agent will continue to perform, and (iv) subject to its rights under **Section 12.04**, the resigning
Administrative Agent shall take such action as may be reasonably necessary to assign to the successor Administrative Agent its
rights as the Administrative Agent under the Loan Documents. Effective immediately upon its acceptance of a valid appointment as the
Administrative Agent, a successor Administrative Agent shall succeed to, and become vested with, all the rights, powers, privileges
and duties of the resigning Administrative Agent under the Loan Documents.
120
***Section
451.*** ***Release of Collateral or
Guarantors***. Each Lender hereby consents to
the release and hereby directs the Administrative Agent to release, and the Administrative Agent hereby agrees, (or, in the case of **Section
12.10(b)**, release or subordinate) the following:
**Section
452.** any Subsidiary of the Borrower from its
guaranty of any Obligation of any Obligor (i) if such Subsidiary ceases to be a Subsidiary of such Obligor as a result of a
transaction permitted under and in accordance with the Loan Documents (including pursuant to a waiver or consent), to the extent
that, after giving effect to such transaction, such Subsidiary would not be required to Guaranty any Obligations pursuant to **Section
8.11(a)** or (ii) upon (x) termination of the Commitments and (y) payment and satisfaction in full of all Loans and all other
Obligations that the Administrative Agent has been notified in writing are then due and payable (other than inchoate indemnification
and expense reimbursement obligations for which no claim has been made); and
**Section
453.** any Lien held by the Administrative Agent
for the benefit of the Secured Parties against (i) any Collateral that is disposed of by an Obligor as a result of a transaction
permitted under and in accordance with the Loan Documents (including pursuant to a valid waiver or consent), (ii) any property
subject to a Lien described in **Section 9.02(c)** or **(j)**, and (iii) all of the Collateral and all Obligors, upon (x)
termination of the Commitments and (y) payment and satisfaction in full of all Loans and all other Obligations that the
Administrative Agent has been notified in writing are then due and payable (other than inchoate indemnification and expense
reimbursement obligations for which no claim has been made).
Each
Lender hereby directs the Administrative Agent, and the Administrative Agent hereby agrees, upon receipt of reasonable advance notice
from the Borrower, to execute and deliver or file such documents and to perform other actions reasonably necessary to release the guarantees
and Liens when and as directed in this **Section 12.10** and deliver to the Borrower, at the expense of the Borrower, any portion
of such Collateral so released pursuant to this **Section 12.10** that is in possession of the Administrative Agent. In addition,
in connection with any Permitted Licenses, each Lender hereby authorizes Administrative Agent to, and at the request of the Borrower,
the Administrative Agent shall, negotiate and enter into a non-disturbance agreement and other similar agreements in form and substance
reasonably satisfactory to Administrative Agent.
121
Notwithstanding
the foregoing or anything to the contrary herein, (i) the release of any Obligor from its guaranty of any Obligations under this **Section
12.10** or otherwise hereunder shall only be permitted if any such permitted transaction or series of related transactions is not consummated
for the primary purpose of effecting a release of such Obligor from its Obligations under the Loan Documents in accordance with the terms
hereof, and (ii) the Administrative Agent may not effect a release of any Obligor that ceases to be an Obligor due solely to a disposition
of Equity Interests in (or issuance of Equity Interests by) such Obligor, unless in the case of this clause (ii) the transaction related
to such release is a disposition of Equity Interests for fair market value to an unaffiliated third party and for a bona fide primary
business purpose.
***Section
454.*** ***Additional Secured
Parties***. The benefit of the provisions of
the Loan Documents directly relating to the Collateral or any Lien granted thereunder shall extend to and be available to any
Secured Party that is not a Lender as long as, by accepting such benefits, such Secured Party agrees, as among the Administrative
Agent and all other Secured Parties, that such Secured Party is bound by (and, if requested by the Administrative Agent, shall
confirm such agreement in a writing in form and substance acceptable to the Administrative Agent) this **Section 12** and the
decisions and actions of the Administrative Agent and the Majority Lenders (or, where expressly required by the terms of this
Agreement, a greater proportion of the Lenders) to the same extent a Lender is bound; provided that, notwithstanding the
foregoing, (i) such Secured Party shall be bound by **Section 12.08** only to the extent of liabilities, costs and expenses with
respect to or otherwise relating to the Collateral held for the benefit of such Secured Party, in which case the obligations of such
Secured Party thereunder shall not be limited by any concept of Proportionate Share or similar concept, (ii) each of the
Administrative Agent and each Lender shall be entitled to act at its sole discretion, without regard to the interest of such Secured
Party, regardless of whether any Obligation to such Secured Party thereafter remains outstanding, is deprived of the benefit of the
Collateral, becomes unsecured or is otherwise affected or put in jeopardy thereby, and without any duty or liability to such Secured
Party or any such Obligation and (iii) such Secured Party shall not have any right to be notified of, consent to, direct, require or
be heard with respect to, any action taken or omitted in respect of the Collateral or under any Loan Document.
***Section
455.*** ***Agent May File Proofs of
Claim***. In case of the pendency of any
Insolvency Proceeding or any other judicial proceeding relating to any Obligor, the Administrative Agent (irrespective of whether
the principal of any Loan shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of
whether the Administrative Agent shall have made any demand on the Borrower or any other Obligor) shall be entitled and empowered
(but not obligated) by intervention or such proceeding or otherwise:
**Section
456.** to file and prove a claim for the whole
amount of the principal and interest owing and unpaid in respect of the Loans and all other Obligations that are owing and unpaid
and to file such other documents as may be necessary or advisable in order to have the claims of the Lenders and the Administrative
Agent (including any claim for the reasonable compensation, expenses, disbursements and advances of the Lenders and the
Administrative Agent and their respective agents and counsel and all other amounts due the Lenders and the Administrative Agent
under **Section 14.03**) allowed in such judicial proceeding; and
122
**Section
457.** to collect and receive any monies or other
property payable or deliverable on any such claims and to distribute the same; and any custodian, receiver, assignee, trustee,
liquidator, sequestrator, examiner or other similar official in any such judicial proceeding is hereby authorized by each Lender to
make such payments to the Administrative Agent and, in the event that the Administrative Agent shall consent to the making of such
payments directly to the Lenders, to pay to the Administrative Agent any amount due for the reasonable compensation, expenses,
disbursements and advances of the Administrative Agent and its agents and counsel, and any other amounts due to the Administrative
Agent under **Section 14.03**.
***Section
458.*** ***Acknowledgements of
Lenders***.
**Section
459.** If the Administrative Agent notifies a
Lender, or any Person who has received funds on behalf of a Lender (any such Lender or other recipient, a “***Payment
Recipient***”), that the Administrative Agent has determined in its sole discretion (whether or not after receipt of any
notice under immediately succeeding clause (b)) that any funds received by such Payment Recipient from the Administrative Agent or
any of its Affiliates were erroneously transmitted to, or otherwise erroneously or mistakenly received by, such Payment Recipient
(whether or not known to such Lender or other Payment Recipient on its behalf) (any such funds, whether transmitted or received as a
payment, prepayment or repayment of principal, interest, fees, distribution or otherwise, individually and collectively, an
“***Erroneous Payment***”) and demands in writing the return of such Erroneous Payment (or a portion thereof),
such Erroneous Payment shall at all times remain the property of the Administrative Agent pending its return or repayment as
contemplated below in this **Section 12.13** and held in trust for the benefit of the Administrative Agent, and such Lender shall
(or, with respect to any Payment Recipient who received such funds on its behalf, shall cause such Payment Recipient to) promptly,
but in no event later than two Business Days thereafter (or such later date as the Administrative Agent may, in its sole discretion,
specify in writing), return to the Administrative Agent the amount of any such Erroneous Payment (or portion thereof) as to which
such a demand was made, in same day funds (in the currency so received), together with interest thereon (except to the extent waived
in writing by the Administrative Agent in its sole discretion) in respect of each day from and including the date such Erroneous
Payment (or portion thereof) was received by such Payment Recipient to the date such amount is repaid to the Administrative Agent in
same day funds at the greater of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance
with banking industry rules on interbank compensation from time to time in effect. A notice of the Administrative Agent to any
Payment Recipient under this clause (a) shall be conclusive, absent manifest error.
123
**Section
460.** Without limiting immediately preceding
clause (a), each Payment Recipient hereby further agrees that if it receives a payment, prepayment or repayment (whether received as
a payment, prepayment or repayment of principal, interest, fees, distribution or otherwise) from the Administrative Agent (or any of
its Affiliates) (x) that is in a different amount than, or on a different date from, that specified in this Agreement or in a notice
of payment, prepayment or repayment sent by the Administrative Agent (or any of its Affiliates) with respect to such payment,
prepayment or repayment (a “***Payment Notice***”), (y) that was not preceded or accompanied by a Payment
Notice, or (z) that such Payment Recipient otherwise becomes aware was transmitted, or received, in error or by mistake (in whole or
in part), then in each such case: (i) it acknowledges and agrees that (A) in the case of immediately preceding clauses (x) or (y),
an error and mistake shall be presumed to have been made (absent written confirmation from the Administrative Agent to the contrary)
or (B) an error and mistake has been made (in the case of immediately preceding clause (z)), in each case, with respect to such
payment, prepayment or repayment; and (ii) such Payment Recipient shall promptly (and, in all events, within one Business Day of its
knowledge of the occurrence of any of the circumstances described in immediately preceding clauses (x), (y) and (z)) notify the
Administrative Agent of its receipt of such payment, prepayment or repayment, the details thereof (in reasonable detail) and that it
is so notifying the Administrative Agent pursuant to this **Section 12.13(b)(ii)**.
**Section
461.** Each Lender hereby authorizes the
Administrative Agent to set off, net and apply any and all amounts at any time owing to such Lender under any Loan Document, or
otherwise payable or distributable by the Administrative Agent to such Lender under any Loan Document with respect to any payment of
principal, interest, fees or other amounts, against any amount that the Administrative Agent has demanded to be returned under the
preceding **clause (a)** above.
124
**Section
462.**In the event that an Erroneous Payment (or portion
thereof) is not recovered by the Administrative Agent for any reason, after demand therefor by the Administrative Agent in accordance
with the preceding clause (a) above, from any Lender that has received such Erroneous Payment (or portion thereof) (and/or from any Payment
Recipient who received such Erroneous Payment (or portion thereof) on its respective behalf) (such unrecovered amount, an “***Erroneous
Payment Return Deficiency***”), upon the Administrative Agent’s notice to such Lender at any time, then effective immediately
(with the consideration therefor being acknowledged by the parties hereto), (i) such Lender shall be deemed to have assigned its Loans
(but not its Commitments) with respect to which such Erroneous Payment was made (the “***Erroneous Payment Impacted Loans***”)
in an amount equal to the Erroneous Payment Return Deficiency (or such lesser amount as the Administrative Agent may specify) (such assignment
of the Loans (but not Commitments) of the Erroneous Payment Impacted Loans, the “***Erroneous Payment Deficiency Assignment***”)
(on a cashless basis and such amount calculated at par plus any accrued and unpaid interest (with the assignment fee to be waived by
the Administrative Agent in such instance)), and is hereby (together with the Borrower) deemed to execute and deliver an Assignment and
Assumption with respect to such Erroneous Payment Deficiency Assignment, and such Lender shall deliver any Notes evidencing such Loans
to the Borrower or the Administrative Agent (but the failure of such Person to deliver any such notes shall not affect the effectiveness
of the foregoing assignment), (ii) the Administrative Agent as the assignee Lender shall be deemed to have acquired the Erroneous Payment
Deficiency Assignment, (iii) upon such deemed acquisition, the Administrative Agent as the assignee Lender shall become a Lender, as
applicable, hereunder with respect to such Erroneous Payment Deficiency Assignment and the assigning Lender shall cease to be a Lender,
as applicable, hereunder with respect to such Erroneous Payment Deficiency Assignment, excluding, for the avoidance of doubt, its obligations
under the indemnification provisions of this Agreement and its applicable Commitments which shall survive as to such assigning Lender,
(iv) the Administrative Agent and the Borrower shall each be deemed to have waived any consents required under this Agreement to any
such Erroneous Payment Deficiency Assignment, and (v) the Administrative Agent will reflect in the Register its ownership interest in
the Loans subject to the Erroneous Payment Deficiency Assignment. Subject to **Section 14.05**, (but excluding, in all events, any
assignment consent or approval requirements (whether from the Borrower or otherwise)), the Administrative Agent may, in its discretion,
sell any Loans acquired pursuant to an Erroneous Payment Deficiency Assignment and upon receipt of the proceeds of such sale, the Erroneous
Payment Return Deficiency owing by the applicable Lender shall be reduced by the net proceeds of the sale of such Loan (or portion thereof),
and the Administrative Agent shall retain all other rights, remedies and claims against such Lender (and/or against any recipient that
receives funds on its respective behalf). For the avoidance of doubt, no Erroneous Payment Deficiency Assignment will reduce the Commitments
of any Lender and such Commitments shall remain available in accordance with the terms of this Agreement. In addition, each party hereto
agrees that, except to the extent that the Administrative Agent has sold a Loan (or portion thereof) acquired pursuant to an Erroneous
Payment Deficiency Assignment, and irrespective of whether the Administrative Agent may be equitably subrogated, the Administrative Agent
shall be contractually subrogated to all the rights and interests of the applicable Lender under the Loan Documents with respect to each
Erroneous Payment Return Deficiency (the “***Erroneous Payment Subrogation Rights***”) (provided, that the Obligors’
Obligations under the Loan Documents in respect of the Erroneous Payment Subrogation Rights shall not be duplicative of such Obligations
in respect of Loans that have been assigned to the Administrative Agent under an Erroneous Payment Deficiency Assignment).
125
**Section
463.** The parties hereto agree that an Erroneous
Payment shall not pay, prepay, repay, discharge or otherwise satisfy any Obligations owed by the Borrower or any other Obligor;
provided, that this **Section 12.13** shall not be interpreted to increase (or accelerate the due date for), or have the effect
of increasing (or accelerating the due date for), the Obligations of the Borrower relative to the amount (and/or timing for payment)
of the Obligations that would have been payable had such Erroneous Payment not been made by the Administrative Agent; provided,
further, that for the avoidance of doubt, the last sentence of clause (d) above and this **clause (e)** shall not apply to the
extent such Erroneous Payment is, and solely with respect to the amount of such Erroneous Payment that is, comprised of funds
received by the Administrative Agent from the Borrower or any other Obligor for the purpose of making such Erroneous
Payment.
**Section
464.** To the extent permitted by applicable law,
no Payment Recipient shall assert any right or claim to an Erroneous Payment, and hereby waives, and is deemed to waive, any claim,
counterclaim, defense or right of set-off or recoupment with respect to any demand, claim or counterclaim by the Administrative
Agent for the return of any Erroneous Payment received, including without limitation waiver of any defense based on “discharge
for value” or any similar doctrine.
**Section
465.** Each party’s obligations, agreements
and waivers under this **Section 12.13(g)** shall survive the resignation or replacement of the Administrative Agent, any
transfer of rights or obligations by, or the replacement of, a Lender, the termination of the Commitments and/or the repayment,
satisfaction or discharge of all Obligations (or any portion thereof) under any Loan Document.
126
**Section
466.**
GUARANTY
***Section
467.*** ***The Guaranty***.
The Guarantors hereby unconditionally jointly and severally guarantee to the Administrative Agent and the Lenders, and their
successors and assigns, the full and punctual payment in full or performance (whether at stated maturity, by acceleration or
otherwise) of the Obligations, including (i) principal of and interest on the Loans, (ii) all fees and other amounts and Obligations
from time to time owing to the Administrative Agent and the Lenders by the Borrower and each other Obligor under this Agreement or
under any other Loan Document, in each case strictly in accordance with the terms hereof and thereof and (iii) the punctual and
faithful performance, keeping, observance and fulfillment by the Borrower and Guarantors of all the agreements, conditions,
covenants and obligations of the Borrower and Guarantors contained in the Loan Documents (such obligations being herein collectively
called the “***Guaranteed Obligations***”). The Guarantors hereby further jointly and severally agree that if
the Borrower or any other Obligor shall fail to pay any amount in full when due or perform any such obligation (whether at stated
maturity, by acceleration or otherwise), the Guarantors will promptly pay the same or perform such obligation at the place and in
the manner specified herein or in the relevant Loan Document, as the case may be, without any demand or notice whatsoever, and that
in the case of any extension of time of payment or performance or renewal of any of the Guaranteed Obligations, the same will be
promptly paid in full or performed when due (whether at extended maturity, by acceleration or otherwise) in accordance with the
terms of such extension or renewal.
***Section
468.*** ***Obligations
Unconditional***. The obligations of the
Guarantors under **Section 13.01** shall constitute a guaranty of payment and performance and not of collection and are absolute
and unconditional, joint and several, irrespective of the value, genuineness, validity, regularity or enforceability of the
Guaranteed Obligations under this Agreement or any other agreement or instrument referred to herein, or any substitution, release or
exchange of any other guarantee of or security for any of the Guaranteed Obligations, and, to the fullest extent permitted by all
applicable Laws, irrespective of any other circumstance whatsoever that might otherwise constitute a legal or equitable discharge or
defense of a surety or guarantor, it being the intent of this **Section 13.02** that the obligations of the Guarantors hereunder
shall be absolute and unconditional, joint and several, under any and all circumstances. Without limiting the generality of the
foregoing, it is agreed that the occurrence of any one or more of the following shall not alter or impair the liability of the
Guarantors hereunder, which shall remain absolute and unconditional as described above:
127
**Section
469.** at any time or from time to time, without
notice to the Guarantors, the time for any performance of or compliance with any of the Guaranteed Obligations shall be extended, or
such performance or compliance shall be waived;
**Section
470.** any of the acts mentioned in any of the
provisions of this Agreement or any other agreement or instrument referred to herein shall be done or omitted;
**Section
471.** the maturity of any of the Guaranteed
Obligations shall be accelerated, or any of the Guaranteed Obligations shall be extended, modified, supplemented or amended in any
respect, or any right under this Agreement or any other agreement or instrument referred to herein shall be waived or any other
guarantee of any of the Guaranteed Obligations or any security therefor shall be released or exchanged in whole or in part or
otherwise dealt with;
**Section
472.** any lien or security interest granted to,
or in favor of, the Secured Parties as security for any of the Guaranteed Obligations shall fail to be perfected or
preserved;
**Section
473.** any modification or amendment of or
supplement to this Agreement or any other Loan Document, including any such amendment which may increase the amount of, or the
interest rates applicable to, any of the Guaranteed Obligations guaranteed hereby;
**Section
474.** any change in the corporate, partnership,
limited liability company or other existence, structure or ownership of the Borrower, any Guarantor or any other guarantor of any of
the Guaranteed Obligations, or any Insolvency Proceeding or other similar proceeding affecting the Borrower, any Guarantor or any
other guarantor of the Guaranteed Obligations, or any of their respective assets, or any resulting release or discharge of any
obligation of the Borrower, any Guarantor or any other guarantor of any of the Guaranteed Obligations;
**Section
475.** the existence of any claim, setoff or
other rights which any Guarantor may have at any time against the Borrower, any other Guarantor or any other guarantor of any of the
Guaranteed Obligations, the Administrative Agent, any Secured Party or any other Person, whether in connection herewith or in
connection with any unrelated transactions; provided that, notwithstanding any other provisions in this Guaranty, nothing in
this Guaranty shall prevent the assertion of any such claim by separate suit or compulsory counterclaim;
**Section
476.** the unenforceability or invalidity of the
Guaranteed Obligations or any part thereof or the lack of genuineness, enforceability or validity of any agreement relating thereto
or with respect to the Collateral, if any, securing the Guaranteed Obligations or any part thereof, or any other invalidity or
unenforceability relating to or against the Borrower, any Guarantor or any other guarantor of any of the Guaranteed Obligations, for
any reason, related to this Agreement or any other Loan Document, or any provision of applicable Law, decree, order or regulation of
any jurisdiction purporting to prohibit the payment of any of the Guaranteed Obligations by the Borrower, any Guarantor or any other
guarantor of the Guaranteed Obligations;
128
**Section
477.** the disallowance, under any state or
federal bankruptcy, insolvency or similar law, of all or any portion of the claims of the Secured Parties or the Administrative
Agent for repayment of all or any part of the Guaranteed Obligations;
**Section
478.** the failure of any other guarantor to sign
or become party to this Agreement or any amendment, change, or reaffirmation hereof;
**Section
479.** any release, surrender, compromise,
settlement, waiver, subordination or modification, with or without consideration, of any Collateral securing the Guaranteed
Obligations or any part thereof, any other guaranties with respect to the Guaranteed Obligations or any part thereof, or any other
obligation of any person or entity with respect to the Guaranteed Obligations or any part thereof, or any nonperfection or
invalidity of any direct or indirect security for the Guaranteed Obligations; or
**Section
480.** any other act or omission to act or delay
of any kind by the Borrower, such Guarantor, any other guarantor of the Guaranteed Obligations, the Administrative Agent, any
Secured Party or any other Person or any other circumstance whatsoever which might, but for the provisions of this **Section
13.02**, constitute a legal or equitable discharge of any Guarantor’s obligations hereunder.
The
Guarantors hereby expressly waive diligence, presentment, demand of payment, protest and all notices whatsoever, and any requirement
that the Administrative Agent or any Lender exhaust any right, power or remedy or proceed against the Borrower or any other Guarantor
under this Agreement or any other agreement or instrument referred to herein, or against any other Person under any other guarantee of,
or security for, any of the Guaranteed Obligations.
***Section
481.*** ***Discharge Only Upon Payment in
Full.*** Subject to any prior release herefrom
of any Guarantor by the Administrative Agent in accordance with (and pursuant to authority granted to the Administrative Agent
under) the terms of this Agreement, each Guarantor’s obligations hereunder shall remain in full force and effect until all of
the Guaranteed Obligations shall have been paid in full in cash (other than inchoate indemnification obligations for which no claim
has been made), the Administrative Agent has received duly executed copies of all Warrants (if any) and all other financing
arrangements among the Borrower or any Guarantor and the Secured Parties under or in connection with this Agreement and each other
Loan Document shall have terminated (herein, the “***Termination Conditions***”), and until the prior and
complete satisfaction of the Termination Conditions all of the rights and remedies under this Guaranty and the other Loan Documents
shall survive. Notwithstanding the foregoing, the Administrative Agent hereby agrees to release any Subsidiary of the Borrower from
its guaranty of any Obligation of any Obligor if all of the Equity Interests in such Subsidiary owned by any Obligor or any of its
Subsidiaries are disposed of as a result of a transaction permitted under and in accordance with the Loan Documents (including
pursuant to a waiver or consent), to the extent that, after giving effect to such transaction, such Subsidiary would not be required
to guarantee any Obligations pursuant to **Section 8.12(a)**.
129
***481.04
Additional Waivers; General Waivers.***
(a) *Additional Waivers.* Notwithstanding anything herein to the contrary, each of the Guarantors hereby absolutely, unconditionally,
knowingly, and expressly waives:
(i)
any right it may have to revoke this Guaranty as to future indebtedness or notice of acceptance hereof;
(ii)
(A) notice of acceptance hereof; (B) notice of any other financial accommodations made or maintained under the Loan Documents or the
creation or existence of any Guaranteed Obligations; (C) notice of the amount of the Guaranteed Obligations, subject, however, to each
Guarantor’s right to make inquiry of the Administrative Agent and the Secured Parties to ascertain the amount of the Guaranteed
Obligations at any reasonable time; (D) notice of any adverse change in the financial condition of the Borrower or of any other fact
that might increase such Guarantor’s risk hereunder; (E) notice of presentment for payment, demand, protest, and notice thereof
as to any instruments among the Loan Documents; (F) notice of any Event of Default; and (G) all other notices (except if such notice
is specifically required to be given to such Guarantor under this Guaranty or under the other Loan Documents) and demands to which each
Guarantor might otherwise be entitled;
(iii)
its right, if any, to require the Administrative Agent and the Secured Parties to institute suit against, or to exhaust any rights and
remedies which the Administrative Agent and the Secured Parties now have or may hereafter have against, any other guarantor of the Guaranteed
Obligations or any third party, or against any Collateral provided by such other guarantors or any third party; and each Guarantor further
waives any defense arising by reason of any disability or other defense (other than the defense that the Guaranteed Obligations shall
have been fully and finally performed and indefeasibly paid) of any other guarantor of the Guaranteed Obligations or by reason of the
cessation from any cause whatsoever of the liability of any other guarantor of the Guaranteed Obligations in respect thereof;
(iv)
(A) any rights to assert against the Administrative Agent and the Secured Parties any defense (legal or equitable), set-off, counterclaim,
or claim which such Guarantor may now or at any time hereafter have against any other guarantor of the Guaranteed Obligations or any
third party liable to the Administrative Agent and the Secured Parties; (B) any defense, set-off, counterclaim or claim, of any kind
or nature, arising directly or indirectly from the present or future lack of perfection, sufficiency, validity or enforceability of the
Guaranteed Obligations or any security therefor; (C) any defense such Guarantor has to performance hereunder, and any right such Guarantor
has to be exonerated, arising by reason of: (1) the impairment or suspension of the Administrative Agent’s and the Secured Parties’
rights or remedies against any other guarantor of the Guaranteed Obligations; (2) the alteration by the Administrative Agent and the
Secured Parties of the Guaranteed Obligations; (3) any discharge of the obligations of any other guarantor of the Guaranteed Obligations
to the Administrative Agent and the Secured Parties by operation of law as a result of the Administrative Agent’s and the Secured
Parties’ intervention or omission; or (4) the acceptance by the Administrative Agent and the Secured Parties of anything in partial
satisfaction of the Guaranteed Obligations; and (D) the benefit of any statute of limitations affecting such Guarantor’s liability
hereunder or the enforcement thereof, and any act which shall defer or delay the operation of any statute of limitations applicable to
the Guaranteed Obligations shall similarly operate to defer or delay the operation of such statute of limitations applicable to such
Guarantor’s liability hereunder; and
130
(v)
any defense arising by reason of or deriving from (A) any claim or defense based upon an election of remedies by the Administrative Agent
and the other Secured Parties; or (B) any election by the Administrative Agent and the other Secured Parties under any provision of any
state or federal bankruptcy, insolvency or similar law to limit the amount of, or any Collateral securing, its claim against the Guarantors.
(b) *General Waivers*. Each Guarantor irrevocably waives, to the fullest extent permitted by law, any notice not provided for herein.
***Section
482.*** ***Reinstatement***.
The obligations of the Guarantors under this **Section 13** shall be automatically reinstated if and to the extent that for any
reason any payment by or on behalf of the Borrower in respect of the Guaranteed Obligations is at any time rescinded, annulled,
avoided, set aside, invalidated, declared to be fraudulent or must be otherwise restored or repaid by any holder of any of the
Guaranteed Obligations, whether as a result of any proceedings in bankruptcy or reorganization, equitable cause or otherwise, and
the Guarantors jointly and severally agree that they will indemnify the Secured Parties on demand for all reasonable costs and
expenses (including fees of counsel) incurred by such Persons in connection with such rescission, repayment or restoration,
including any such costs and expenses incurred in defending against any claim alleging that such payment constituted a preference,
fraudulent transfer or similar payment under any state or federal bankruptcy, insolvency or similar law. The provisions of this **Section
13.05** shall survive termination of this Guaranty.
***Section
483.*** ***Subrogation***.
The Guarantors hereby jointly and severally agree that, until the prior and complete satisfaction of all Termination Conditions,
they (i) shall have no right of subrogation with respect to the Guaranteed Obligations and (ii) waive any right to enforce any
remedy which the Secured Parties or the Administrative Agent now have or may hereafter have against the Borrower, any endorser or
any other guarantor of all or any part of the Guaranteed Obligations or any other Person, and each Guarantor waives any benefit of,
and any right to participate in, any security or Collateral that may from time to time be given to the Secured Parties and the
Administrative Agent to secure the payment or performance of all or any part of the Guaranteed Obligations or any other liability of
the Borrower to the Secured Parties. Should any Guarantor have the right, notwithstanding the foregoing, to exercise its subrogation
rights prior to complete satisfaction of the Termination Conditions, each Guarantor hereby expressly and irrevocably (A)
subordinates any and all rights at law or in equity to subrogation, reimbursement, exoneration, contribution, indemnification or
set-off that such Guarantor may have prior to the complete satisfaction of the Termination Conditions, and (B) waives any and all
defenses available to a surety, guarantor or accommodation co-obligor until all Termination Conditions are satisfied in full. Each
Guarantor acknowledges and agrees that this subordination is intended to benefit the Administrative Agent and the Secured Parties
and shall not limit or otherwise affect such Guarantor’s liability hereunder or the enforceability of this Guaranty, and that
the Administrative Agent, the Secured Parties and their respective successors and assigns are intended third party beneficiaries of
the waivers and agreements set forth in this **Section 13.06**.
131
***Section
484.*** ***Remedies***.
The Guarantors jointly and severally agree that, as between the Guarantors, on one hand, and the Administrative Agent and the
Lenders, on the other hand, the obligations of the Borrower under this Agreement and under the other Loan Documents may be declared
to be forthwith due and payable as provided in **Section 11** (and shall be deemed to have become automatically due and payable
in the circumstances provided in **Section 11**) for purposes of **Section 13.01** notwithstanding any stay, injunction or
other prohibition, including any such stay upon an Insolvency Proceeding, preventing such declaration (or such obligations from
becoming automatically due and payable) as against the Borrower and that, in the event of such declaration (or such obligations
being deemed to have become automatically due and payable), such obligations (whether or not due and payable by the Borrower) shall
forthwith become due and payable by the Guarantors for purposes of **Section 13.01**.
***Section
485.*** ***Instrument for the Payment of
Money***. Each Guarantor hereby acknowledges
that the guarantee in this **Section 13** constitutes an instrument for the payment of money, and consents and agrees that the
Administrative Agent and the Lenders, at their sole option, in the event of a dispute by such Guarantor in the payment of any moneys
due hereunder, shall have the right to proceed by motion for summary judgment in lieu of complaint pursuant to N.Y. Civ. Prac.
L&R § 3213.
***Section
486.*** ***Continuing
Guarantee***. The guarantee in this **Section
13** is a continuing guarantee, and shall apply to all Guaranteed Obligations whenever arising.
**486.01
Contribution with Respect to Guaranteed Obligations**.
(a)
To the extent that any Guarantor shall make a payment under this Guaranty (a “***Guarantor Payment***”) which, taking
into account all other Guarantor Payments then previously or concurrently made by any other Guarantor, exceeds the amount which otherwise
would have been paid by or attributable to such Guarantor if each Guarantor had paid the aggregate Guaranteed Obligations satisfied by
such Guarantor Payment in the same proportion as such Guarantor’s “Allocable Amount” (as defined below) (as determined
immediately prior to such Guarantor Payment) bore to the aggregate Allocable Amounts of each of the Guarantors as determined immediately
prior to the making of such Guarantor Payment, *then*, following the prior and complete satisfaction of the Termination Conditions,
such Guarantor shall be entitled to receive contribution and indemnification payments from, and be reimbursed by, each other Guarantor
for the amount of such excess, *pro rata* based upon their respective Allocable Amounts in effect immediately prior to such Guarantor
Payment.
(b)
As of any date of determination, the “***Allocable Amount***” of any Guarantor shall be equal to the maximum amount
of the claim which could then be recovered from such Guarantor under this Agreement without rendering such claim voidable or avoidable
under any state or federal bankruptcy, insolvency or similar law or other applicable Law.
132
(c)
This **13.10** is intended only to define the relative rights of the Guarantors, and nothing set forth in this **13.10** is intended
to or shall impair the obligations of the Guarantors, jointly and severally, to pay any amounts as and when the same shall become due
and payable in accordance with the terms of this Agreement.
(d)
The parties hereto acknowledge that the rights of contribution and indemnification hereunder shall constitute assets of the Guarantor
or Guarantors to which such contribution and indemnification is owing.
(e)
The rights of the indemnifying Guarantors against other Guarantors under this **Section 13.10** shall be exercisable only upon the
prior and complete satisfaction of the Termination Conditions.
***Section
487.*** ***General Limitations on Guarantee
Obligations***. In any action or proceeding
involving any provincial, territorial or state corporate law, or any state or federal bankruptcy, insolvency, reorganization or
other law affecting the rights of creditors generally, if the obligations of any Guarantor under **Section 13.01** would
otherwise be held or determined to be void, invalid or unenforceable, or subordinated to the claims of any other creditors, on
account of the amount of its liability under **Section 13.01**, then, notwithstanding any other provision hereof to the contrary,
the amount of such liability shall, without any further action by such Guarantor, the Administrative Agent, any Lender or any other
Person, be automatically limited and reduced to the highest amount that is valid and enforceable and not subordinated to the claims
of other creditors as determined in such action or proceeding.
**Section
488.**
MISCELLANEOUS
***Section
489.*** ***No Waiver***.
No failure on the part of the Administrative Agent or the Lenders to exercise and no delay in exercising, and no course of dealing
with respect to, any right, power or privilege under any Loan Document shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, power or privilege under any Loan Document preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The remedies provided herein are cumulative and not exclusive of any remedies
provided by Law.
***Section
490.*** ***Notices***.
All notices, requests, instructions, directions and other communications provided for herein (including any modifications of, or
waivers, requests or consents under, this Agreement) or in the other Loan Documents shall be given or made in writing (including by
telecopy or email) delivered, if to the Borrower, another Obligor, the Administrative Agent or any Lender, to its address specified
on the signature pages hereto or its Guarantee Assumption Agreement, as the case may be, or at such other address as shall be
designated by such party in a written notice to the other parties. Except as otherwise provided in this Agreement or therein, all
such communications shall be deemed to have been duly given upon receipt of a legible copy thereof, in each case given or addressed
as aforesaid. All such communications provided for herein by telecopy shall be confirmed in writing promptly after the delivery of
such communication (it being understood that non-receipt of written confirmation of such communication shall not invalidate such
communication).
133
***Section
491.*** ***Expenses, Indemnification,
Etc.***
**Section
492.** **Expenses**.
Each Obligor, jointly and severally, agrees to pay or reimburse (i) within ten (10) Business Days of receipt of a reasonably
detailed invoice the Administrative Agent and its Affiliates for all of their reasonable and documented out-of-pocket costs and
expenses (including the reasonable and documented out-of-pocket fees, expenses, charges and disbursements of Latham & Watkins
LLP, counsel to the Administrative Agent, the fees (if necessary) of local counsel and regulatory counsel for the Administrative
Agent in each relevant material jurisdiction, and any sales, goods and services or other similar Taxes applicable thereto, and
reasonable and documented printing, reproduction, document delivery, communication and travel costs) in connection with (x) the
negotiation, preparation, execution and delivery of this Agreement and the other Loan Documents and the making of the Loans
(exclusive of post-closing costs), (y) post-closing costs (including, without limitation (1) costs of the administration of this
Agreement and the other Loan Documents and (2) title, appraisal, survey, audit, environmental inspection, consulting, search,
recording, filing and similar coasts, fees and expenses incurred or sustained by the Administrative Agent or any of its Affiliates
in connection with the Collateral), and (z) the negotiation or preparation of any modification, supplement or waiver of any of the
terms of this Agreement or any of the other Loan Documents (whether or not consummated) and (ii) immediately, each of the
Administrative Agent and the Lenders for all of their documented out-of-pocket costs and expenses (including the fees and expenses
of any legal counsel) in connection with the enforcement, exercise or protection of their rights in connection with this Agreement
and the other Loan Documents after the occurrence of and in connection with an Event of Default, including their rights under this **Section
14.03**, including (1) in connection with the protection, sale or collection of, or other realization upon, any of the Collateral,
including all reasonable and documented out-of-pocket expenses of taking, collecting, holding, sorting, handling, preparing for
sale, selling, or the like, and other such expenses of sales and collections of Collateral and (2) such out-of-pocket expenses
incurred during any workout, restructuring or negotiations in respect of such Loans and in connection with any enforcement or
collection proceedings resulting from the occurrence of an Event of Default.
134
**Section
493.** **Indemnification**.
Each Obligor, jointly and severally, hereby indemnifies the Administrative Agent (and any sub-agent thereof), the Lenders and their
respective Affiliates, directors, officers, employees, attorneys, agents, advisors and controlling parties (each, an
“***Indemnified Party***”) from and against, and agrees to hold them harmless against, any and all Claims and
Losses of any kind including reasonable and documented out-of-pocket fees and disbursements of any counsel for each Indemnified
Party (limited to one legal counsel in each relevant jurisdiction), that may be incurred by or asserted or awarded against any
Indemnified Party, in each case arising out of or in connection with or relating to (i) this Agreement or any of the other Loan
Documents or the Transactions, (ii) any use made or proposed to be made with the proceeds of the Loans, (iii) any actual or alleged
presence or release of Hazardous Materials on or from any property owned or operated by any Obligor or any of its Subsidiaries, or
(iv) any actual or prospective claim, investigation, litigation or proceeding relating to any of the foregoing, whether based on
contract, tort, or any other theory, whether or not such investigation, litigation or proceeding is brought by any Obligor, any of
its Subsidiaries, shareholders or creditors, an Indemnified Party or any other Person, or an Indemnified Party is otherwise a party
thereto, and whether or not any of the conditions precedent set forth in **Section 6** are satisfied or the other transactions
contemplated by this Agreement are consummated, except to the extent such Claim or Loss is (i) found in a final, non-appealable
judgment by a court of competent jurisdiction to have resulted from such Indemnified Party’s gross negligence or willful
misconduct or (ii) is determined by a court of competent jurisdiction by final and non-appealable judgment to have resulted from a
claim brought by any Obligor against an Indemnified Party for material breach in bad faith or reckless disregard of such Indemnified
Party’s obligations hereunder or under any other Loan Document. No Obligor shall assert any claim against any Indemnified
Party, on any theory of liability, for consequential, indirect, special or punitive damages arising out of or otherwise relating to
this Agreement or any of the other Loan Documents or any of the Transactions or the actual or proposed use of the proceeds of the
Loans. None of the Administrative Agent and the Lenders shall assert any claim against any Obligor, their Subsidiaries and
Affiliates and their respective directors, officers, employees, attorneys, agents, advisors and controlling parties, on any theory
of liability, for consequential, indirect, special or punitive damages arising out of or otherwise relating to this Agreement or any
of the other Loan Documents or any of the Transactions or the actual or proposed use of the proceeds of the Loans. Notwithstanding
the foregoing in this **Section 14.03(b)**, the Obligors shall not be liable for any settlement of any proceeding effected
without the Obligors’ consent (which consent shall not be unreasonably withheld, delayed or conditioned), but if settled with
the Obligors’ written consent, or if there is a judgment against an Indemnified Party in any such proceeding, the Obligors
shall indemnify and hold harmless each Indemnified Party to the extent and in the manner set forth above. The Obligors shall not,
without the prior written consent of an Indemnified Party (which consent shall not be unreasonably withheld, conditioned or
delayed), effect any settlement of any pending or threatened proceeding against such Indemnified Party in respect of which indemnity
could have been sought hereunder by such Indemnified Party unless (a) such settlement includes an unconditional release of such
Indemnified Party from all liability or claims that are the subject matter of, or arise out of, such proceeding and (b) such
settlement does not include any statement as to, or any admission of fault, culpability, wrongdoing or a failure to act by or on
behalf of such Indemnified Party. This Section shall not apply with respect to (x) Taxes other than Taxes relating to a non-Tax
Claim or Loss governed by this **Section 14.03(a)** and (y) yield protection matters covered by **Section 5.01**, which shall
be governed exclusively by **Section 5.01**.
***Section
494.*** ***Amendments,
Etc.*** Except as otherwise expressly provided
in this Agreement, any provision of this Agreement and any other Loan Document may be modified or supplemented only by an instrument
in writing signed by the Borrower, the Administrative Agent and the Majority Lenders; provided that:
**Section
495.** any such modification or supplement that
is disproportionately adverse to any Lender as compared to other Lenders or subjects any Lender to any additional obligation shall
not be effective without the consent of such affected Lender;
**Section
496.** the consent of all of the Lenders shall be
required to:
135
**Section
497.** **amend, modify, discharge, terminate or
waive any of the terms of this Agreement or any other Loan Agreement if such amendment, modification, discharge, termination or
waiver would increase the amount of the Loans or Commitment, reduce the fees payable hereunder, reduce interest rates
(provided that the Majority Lenders may rescind an imposition of default interest hereunder) or other amounts payable with
respect to the Loans (excluding mandatory prepayments), extend any date fixed for payment of principal (excluding mandatory
prepayments) (it being understood that the waiver of any prepayment of Loans shall not constitute an extension of any date fixed for
payment of principal), interest or other amounts payable relating to the Loans or extend the repayment dates of the Loans (excluding
mandatory prepayments); provided that a waiver of any condition precedent set forth in Section 6.02 or of any Default or
Event of Default or a mandatory reduction in Commitments is not considered an increase in Commitments of any Lender;**
**Section
498.** **amend, modify, discharge, terminate or
waive any Security Document if the effect is to release all or substantially all of the Collateral subject thereto other than
pursuant to the terms hereof or thereof; or**
**Section
499.** **amend this Section 14.04 or the
definition of “Majority Lenders”.**
Notwithstanding
anything to the contrary herein, (A) the Administrative Agent and the Borrower may amend or modify this Agreement and any other Loan
Document to (1) cure any factual or typographical error, omission, defect or inconsistency therein, or (2) grant a new Lien for the benefit
of the Lenders, extend an additional Lien over additional property for the benefit of the Lenders or join additional Persons as Obligors
and (B) no Defaulting Lender shall have any right to approve or disapprove any amendment, waiver or consent hereunder (and any amendment,
waiver or consent which by its terms requires the consent of all Lenders or each affected Lender may be effected with the consent of
the applicable Lenders other than Defaulting Lenders), except that (x) the Commitment of any Defaulting Lender may not be increased or
extended without the consent of such Lender and (y) any waiver, amendment or modification requiring the consent of all Lenders or each
affected Lender that by its terms affects any Defaulting Lender more adversely than other affected Lenders shall require the consent
of such Defaulting Lender.
***Section
500.*** ***Successors and
Assigns***.
**Section
501.** **General**.
The provisions of this Agreement and the other Loan Documents shall be binding upon and inure to the benefit of the parties hereto
or thereto and their respective successors and assigns permitted hereby or thereby, except that no Obligor may assign or otherwise
transfer any of its rights or obligations hereunder or under any of the other Loan Documents (except in connection with an event
permitted under **Section 9.03**) without the prior written consent of the Administrative Agent. Any Lender may assign or
otherwise transfer any of its rights or obligations hereunder or under any of the other Loan Documents (i) to an assignee in
accordance with the provisions of **Section 14.05(b)**, (ii) by way of participation in accordance with the provisions of **Section
14.05(e)**, or (iii) by way of pledge or assignment of a security interest subject to the restrictions of **Section 14.05(f)**.
Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their
respective successors and assigns permitted hereby, Participants to the extent provided in **Section 14.05(e)** and, to the
extent expressly contemplated hereby, the Indemnified Parties) any legal or equitable right, remedy or claim under or by reason of
this Agreement.
136
**Section
502.** **Assignments by Lender**.
Any Lender may at any time assign to one or more Eligible Transferees (or, (i) if an Event of Default under **Section 11.01(a)**, **(b)** or **(h)** has occurred and is continuing, to any Person that is not a Defaulting Lender and (ii) if an Event of Default that is
not an Event of Default under **Section 11.01(a)**, **(b)** or **(h)** has occurred and is continuing (but no Event of
Default **Section 11.01(a)**, **(b)** or **(h)** has occurred and is continuing), to any Person that is not a Defaulting
Lender or a Company Competitor (that has been identified by name in writing by the Borrower to the Administrative Agent prior to the
date of such Event of Default)) all or a portion of its rights and obligations under this Agreement (including all or a portion of
the Loans at the time owing to it) and the other Loan Documents; provided that no such assignment shall be made to any
Obligor, any Affiliate of any Obligor, any employees or directors of any Obligor at any time and no such assignment shall be made
without the prior written consent of the Administrative Agent. The consent of the Borrower (such consent not to be unreasonably
withheld, conditioned or delayed) shall be required unless (x) an Event of Default has occurred and is continuing at the time of
such assignment or (y) such assignment is to an Eligible Transferee; provided that the Borrower shall be deemed to have
consented to any such assignment unless it shall object thereto by written notice to the Administrative Agent within five (5)
Business Days after having received written notice thereof. Subject to the recording thereof by the Administrative Agent pursuant to **Section
14.05(d)**, and to receipt by the Administrative Agent of a processing and recordation fee in the amount of $3,500
(provided that the Administrative Agent may, in its sole discretion, elect to waive such processing and recordation fee in
the case of any assignment) from and after the date such Assignment and Assumption is recorded in the Register, the assignee
thereunder shall be a party to this Agreement and, to the extent of the interest assigned by such Assignment and Assumption, have
the rights and obligations of the Lender under this Agreement and the other Loan Documents, and correspondingly the assigning Lender
shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this
Agreement (and, in the case of an Assignment and Assumption covering all of the Lender’s rights and obligations under this
Agreement, such Lender shall cease to be a party hereto) and the other Loan Documents but shall continue to be entitled to the
benefits of **Section 5** and **Section 14.03**. Any assignment or transfer by the Lender of rights or obligations under this
Agreement that does not comply with this **Section 14.05(b)** shall be treated for purposes of this Agreement as a sale by such
Lender of a participation in such rights and obligations in accordance with **Section 14.05(e)**. If an assignee is not a Lender,
the assignee shall provide the Administrative Agent with all “know your customer” documents requested by the
Administrative Agent pursuant to anti-money laundering rules and regulations.
**Section
503.** **Amendments to Loan
Documents**. Each of the Administrative Agent,
the Lenders and the Obligors agrees to enter into such amendments to the Loan Documents, and such additional Security Documents and
other instruments and agreements, in each case in form and substance reasonably acceptable to the Administrative Agent, the Lenders
and the Obligors, as shall reasonably be necessary to implement and give effect to any assignment made under this **Section
14.05**.
137
**Section
504.** **Register**.
The Administrative Agent, acting solely for this purpose as a non-fiduciary agent of the Borrower, shall maintain at one of its
offices in the United States a copy of each Assignment and Assumption delivered to it and a register for the recordation of the
names and addresses of the Lenders, and the Commitments of, and principal amounts (and stated interest) of the Loans owing to, each
Lender pursuant to the terms hereof from time to time (the “***Register***”). The entries in the Register shall
be conclusive absent manifest error, and the Borrower, the Administrative Agent and the Lenders shall treat each Person whose name
is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement. In addition, the
Administrative Agent shall maintain on the Register information regarding the designation, and revocation of designation, of any
Lender as a Defaulting Lender. The Register shall be available for inspection by the Borrower and any Lender, at any reasonable time
and from time to time upon reasonable prior written notice. Notwithstanding anything to the contrary, any assignment of any Loan
shall be effective only upon appropriate entries with respect thereto being made in the Register.
**Section
505.** **Participations**.
Any Lender may at any time, without the consent of, or notice to, the Borrower, sell participations to any Eligible Transferee
(other than a natural person, a Defaulting Lender or any Obligor or any of its Affiliates or Subsidiaries) (each, a
“***Participant***”) in all or a portion of the Lender’s rights and/or obligations under this Agreement
(including all or a portion of the Commitment and/or the Loans owing to it); provided that (i) such Lender’s
obligations under this Agreement and the other Loan Documents shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations and (iii) the Borrower shall continue to deal solely
and directly with such Lender in connection therewith. Any agreement or instrument pursuant to which any Lender sells such a
participation shall provide that such Lender shall retain the sole right to enforce the Loan Documents and to approve any amendment,
modification or waiver of any provision of the Loan Documents; provided that such agreement or instrument may provide that
such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver that would (i) increase
or extend the term of such Lender’s Commitment (it being understood and agreed that a waiver of any condition precedent set
forth in **Section 6.02** or of any Default or Event of Default or a mandatory reduction in Commitments is not considered an
increase of any Commitment), (ii) extend the date fixed for the payment of principal (excluding mandatory prepayments) of or
interest on the Loans or any portion of any fee hereunder payable to the Participant, (iii) reduce the amount of any such payment of
principal, or (iv) reduce the rate at which interest is payable thereon to a level below the rate at which the Participant is
entitled to receive such interest (other than a waiver of default interest). Subject to **Section 14.05(f)**, the Borrower agrees
that each Participant shall be entitled to the benefits of **Section 5.01** or **5.03** (subject to the requirements and
limitations therein, including the requirements under **Section 5.03(f)** (it being understood that the documentation required
under **Section 5.03(f)** shall be delivered to the participating Lender)) to the same extent as if it were a Lender and had
acquired its interest by assignment pursuant to **Section 14.05(b)**; provided that such Participant (i) shall not be
entitled to such benefits unless such Participant agrees, for the benefit of the Borrower, to comply with the documentation
requirements of **Section 5.03(e)(ii)** as if it were a Lender and complies with such requirements, (ii) agrees to be subject to
the provisions of **Section 5.04** as if it were an assignee under **Section 14.05(b)** and (iii) shall not be entitled to
receive any greater payment under **Section 5.01** or **5.03**, with respect to any participation, than its participating
Lender would have been entitled to receive, except to the extent such entitlement to receive a greater payment results from a change
in Law that occurs after the Participant acquired the applicable participation. To the extent permitted by Law, each Participant
also shall be entitled to the benefits of **Section 4.03(a)** as though it were a Lender. Each Lender that sells a participation
shall, acting solely for this purpose as a non-fiduciary agent of the Borrower, maintain a register on which it enters the name and
address of each Participant and the principal amounts (and stated interest) of each Participant’s interest in the Loans or
other obligations under the Loan Documents (the “***Participant Register***”); provided that no Lender
shall have any obligation to disclose all or any portion of the Participant Register (including the identity of any Participant or
any information relating to a Participant’s interest in any commitments, loans or its other obligations under any Loan
Document) to any Person except to the extent that such disclosure is necessary to establish that such commitment, loan or other
obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations. The entries in the Participant
Register shall be conclusive absent manifest error, and such Lender shall treat each Person whose name is recorded in the
Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the
contrary. For the avoidance of doubt, the Administrative Agent (in its capacity as Administrative Agent) shall have no
responsibility for maintaining a Participant Register.
138
**Section
506.** **Limitations on Rights of
Participants**. A Participant shall not be
entitled to receive any greater payment under **Section 5.01** or **5.03** than such Lender would have been entitled to
receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made
with the Borrower’s prior written consent.
**Section
507.** **Certain Pledges**.
Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under the Loan Documents to
secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank; provided that no such pledge or assignment shall release such Lender from any of its obligations hereunder or substitute any such pledgee or
assignee for such Lender as a party hereto.
**Section
508.** **Certain Additional
Payments**. In connection with any assignment of
rights and obligations of any Defaulting Lender hereunder, no such assignment shall be effective unless and until, in addition to
the other conditions thereto set forth herein, the parties to the assignment shall make such additional payments to the
Administrative Agent in an aggregate amount sufficient, upon distribution thereof as appropriate (which may be outright payment,
purchases by the assignee of participations or subparticipations, or other compensating actions, including funding, with the consent
of the Borrower and the Administrative Agent, the applicable Proportionate Share of Loans previously requested but not funded by the
Defaulting Lender, to each of which the applicable assignee and assignor hereby irrevocably consent), to (x) pay and satisfy in full
all payment liabilities then owed by such Defaulting Lender to the Administrative Agent or any Lender hereunder (and interest
accrued thereon) and (y) acquire (and fund as appropriate) its full Proportionate Share of all Loans. Notwithstanding the foregoing,
in the event that any assignment of rights and obligations of any Defaulting Lender hereunder shall become effective under
applicable Law without compliance with the provisions of this paragraph, then the assignee of such interest shall be deemed to be a
Defaulting Lender for all purposes of this Agreement until such compliance occurs.
139
***Section
509.*** ***Survival***.
The obligations of the Borrower under **Sections 5.01**, **5.03**, **14.03**, **14.05**, **14.06**, **14.09**, **14.10**, **14.11**, **14.12**, **14.13** and **14.14** and the obligations of the Guarantors under **Section 13** (solely to the extent guaranteeing any of the
obligations under the foregoing Sections) shall survive the repayment of the Obligations and the termination of the Commitments and,
in the case of the Lenders’ assignment of any interest in the Commitments or the Loans hereunder, shall survive, in the case
of any event or circumstance that occurred prior to the effective date of such assignment, the making of such assignment,
notwithstanding that the Lenders may cease to be “Lenders” hereunder. In addition, each representation and warranty
made, or deemed to be made by a Borrowing Notice, herein or pursuant hereto shall survive the making of such representation and
warranty.
***Section
510.*** ***Captions***.
The table of contents and captions and section headings appearing herein are included solely for convenience of reference and are
not intended to affect the interpretation of any provision of this Agreement.
***Section
511.*** ***Counterparts,
Effectiveness***. This Agreement may be
executed in any number of counterparts (including electronic imaging means), all of which taken together shall constitute one and
the same instrument and any of the parties hereto may execute this Agreement by signing any such counterpart. Delivery of an
executed signature page of this Agreement by electronic transmission (e.g. “pdf” or “tif” format) shall be
effective as delivery of a manually executed counterpart hereof. The words “execution,” “execute”,
“signed,” “signature,” and words of like import in or related to any document to be signed in connection
with this Agreement and the other Loan Documents and the transactions contemplated hereby and thereby shall be deemed to include
electronic signatures, the electronic matching of assignment terms and contract formations on electronic platforms approved by the
Administrative Agent, or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or
enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent
and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New
York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions
Act.
***Section
512.*** ***Governing
Law***. This
Agreement and the rights and obligations of the parties hereunder shall be governed by, and construed in accordance with, the law of
the State of New York, without regard to principles of conflicts of laws that would result in the application of the laws of any
other jurisdiction; provided that Section 5-1401 of the New York General Obligations Law shall apply.
140
***Section
513.******Jurisdiction, Service of Process and
Venue***.
**Section
514.** **Submission to
Jurisdiction**. Each party hereby irrevocably and
unconditionally agrees that it will not commence any action, litigation or proceeding of any kind or description, whether in law or
equity, whether in contract or tort or otherwise, against such other party in any way relating to this Agreement or any Loan
Document or the transactions relating hereto or thereto, in any forum other than the courts of the State of New York sitting in New
York County, and of the United States District Court of the Southern District of New York, and any appellate court from any thereof,
and each of the parties hereto irrevocably and unconditionally submits to the exclusive jurisdiction of such courts and agrees that
all claims in respect of any such action, litigation or proceeding may be heard and determined in such New York State court or, to
the fullest extent permitted by applicable Law, in such federal court. Each of the parties hereto agrees that a final judgment in
any such action, litigation or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law.
**Section
515.** **Service of Process**.
Each party hereto irrevocably consents to service of process in the manner provided for notices in **Section 14.02***.* Nothing in this Agreement will affect the right of any party hereto to serve process in any other manner permitted by applicable
Law.
**Section
516.** **Waiver of Venue, Etc**.
Each party hereto irrevocably waives to the fullest extent permitted by law any objection that it may now or hereafter have to the
laying of the venue of any suit, action or proceeding arising out of or relating to this Agreement or any other Loan Document and
hereby further irrevocably waives to the fullest extent permitted by law any claim that any such suit, action or proceeding brought
in any such court has been brought in an inconvenient forum. A final judgment (in respect of which time for all appeals has elapsed)
in any such suit, action or proceeding shall be conclusive and may be enforced in any court to the jurisdiction of which such party
is or may be subject, by suit upon judgment.
***Section
517.*** ***Waiver of Jury
Trial***. EACH PARTY HERETO HEREBY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY SUIT, ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY.
***Section
518.*** ***Waiver of
Immunity***. To the extent that any Obligor
may be or become entitled to claim for itself or its property or revenues any immunity on the ground of sovereignty or the like from
suit, court jurisdiction, attachment prior to judgment, attachment in aid of execution of a judgment or execution of a judgment, and
to the extent that in any such jurisdiction there may be attributed such an immunity (whether or not claimed), such Obligor hereby
irrevocably agrees not to claim and hereby irrevocably waives such immunity with respect to its obligations under this Agreement and
the other Loan Documents.
141
***Section
519.*** ***Entire
Agreement***. This Agreement and the other
Loan Documents constitute the entire agreement among the parties with respect to the subject matter hereof and thereof and supersede
any and all previous agreements and understandings, oral or written, relating to the subject matter hereof, including any
confidentiality (or similar) agreements. EACH OBLIGOR ACKNOWLEDGES, REPRESENTS AND WARRANTS THAT IN DECIDING TO ENTER INTO THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS OR IN TAKING OR NOT TAKING ANY ACTION HEREUNDER OR THEREUNDER, IT HAS NOT RELIED, AND WILL
NOT RELY, ON ANY STATEMENT, REPRESENTATION, WARRANTY, COVENANT, AGREEMENT OR UNDERSTANDING, WHETHER WRITTEN OR ORAL, OF OR WITH
ADMINISTRATIVE AGENT OR THE LENDERS OTHER THAN THOSE EXPRESSLY SET FORTH IN THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
***Section
520.*** ***Severability***.
If any provision hereof is found by a court to be invalid or unenforceable, to the fullest extent permitted by any Law the parties
agree that such invalidity or unenforceability shall not impair the validity or enforceability of any other provision hereof.
Without limiting the foregoing provisions of this **Section 14.14**, if and to the extent that the enforceability of any
provisions in this Agreement relating to Defaulting Lenders shall be limited by the Bankruptcy Code, or any other liquidation,
conservatorship, bankruptcy, assignment for the benefit of creditors, examinership, moratorium, rearrangement, receivership,
insolvency, reorganization, or similar debtor relief Laws of the United States or other applicable jurisdictions from time to time
in effect, as determined in good faith by the Administrative Agent, then such provisions shall be deemed to be in effect only to the
extent not so limited.
***Section
521.*** ***No Fiduciary
Relationship***. The Borrower acknowledges
that the Administrative Agent and the Lenders have no fiduciary relationship with, or fiduciary duty to, the Borrower arising out of
or in connection with this Agreement or the other Loan Documents, and the relationship between the Lenders and the Borrower is
solely that of creditor and debtor. This Agreement and the other Loan Documents do not create a joint venture among the
parties.
142
***Section
522.*** ***Confidentiality***. The Administrative Agent
and each Lender agree to keep confidential, and not disclose to any Person all non-public information provided to them by or on
behalf of any Obligor pursuant to this Agreement that is designated by such Obligor as confidential in accordance with its customary
procedures for handling its own confidential information; provided that nothing herein shall prevent the Administrative Agent
or any Lender from disclosing any such information (i) to the Administrative Agent, any other Lender, any Affiliate of a Lender or
subject to an agreement to comply with the provisions of this Section, any Eligible Transferee or other assignee permitted under **Section
14.05(b)**, (ii) subject to an agreement to comply with the provisions of this Section, to any actual or prospective direct or
indirect counterparty to any Hedging Agreement (or any professional advisor to such counterparty), (iii) to its employees, officers,
directors or agents (provided that such Persons were informed of the confidential nature of such confidential information and
instructed to keep such information confidential), or its attorneys, accountants, trustees and other professional advisors or those
of any of its affiliates (provided that such Persons were informed of the confidential nature of such confidential information and
instructed to keep such information confidential or are otherwise subject to professional obligations to maintain the
confidentiality of such confidential information) (collectively, its “***Related Parties***”), (iv) upon the
request or demand of any Governmental Authority or any Regulatory Authority purporting to have jurisdiction over such Person or its
Related Parties (including any self-regulatory authority, such as the National Association of Insurance Commissioners), (v) in
response to any order of any court or other Governmental Authority or as may otherwise be required pursuant to any Law, (vi) if
requested or required to do so in connection with any litigation or similar proceeding, (vii) that has been publicly disclosed
(other than as a result of a disclosure in violation of this **Section 14.16**), (viii) to the National Association of Insurance
Commissioners or any similar organization or any nationally recognized rating agency that requires access to information about a
Lender’s investment portfolio in connection with ratings issued with respect to such Lender, (ix) in connection with the
exercise of any remedy hereunder or under any other Loan Document, (x) on a confidential basis to (A) any rating agency in
connection with rating the Borrower or its Subsidiaries or the Loans or (B) the CUSIP Service Bureau or any similar agency in
connection with the issuance and monitoring of CUSIP numbers of other market identifiers with respect to the Loans or (xi) to any
other party hereto; provided that, in the case of disclosure pursuant to **clause (iv), (v)** and **(vi)** above, the
Administrative Agent or applicable Lender, as applicable, shall promptly provide notice to the Borrower to the extent reasonable and
not prohibited by Law or any applicable Governmental Authority.
***Section
523.*** ***Interest Rate
Limitation***. Notwithstanding anything herein
to the contrary, if at any time the interest rate applicable to any Loan, together with all fees, charges and other amounts that are
treated as interest on such Loan under applicable Law (collectively, “***charges***”), shall exceed the maximum
lawful rate (the “***Maximum Rate***”) that may be contracted for, charged, taken, received or reserved by the
Administrative Agent and the Lender holding such Loan in accordance with applicable Law, the rate of interest payable in respect of
such Loan hereunder, together with all charges payable in respect thereof, shall be limited to the Maximum Rate. To the extent
lawful, the interest and charges that would have been paid in respect of such Loan but were not paid as a result of the operation of
this Section shall be cumulated and the interest and charges payable to such Lender in respect of other Loans or periods shall be
increased (but not above the amount collectible at the Maximum Rate therefor) until such cumulated amount, together with interest
thereon at the Federal Funds Effective Rate for each day to the date of repayment, shall have been received by such Lender. Any
amount collected by such Lender that exceeds the maximum amount collectible at the Maximum Rate shall be applied to the reduction of
the principal balance of such Loan so that at no time shall the interest and charges paid or payable in respect of such Loan exceed
the maximum amount collectible at the Maximum Rate.
***Section
524.*** ***Judgment
Currency***.
**Section
525.** If, for the purposes of obtaining judgment
in any court, it is necessary to convert a sum due hereunder in Dollars into another currency, the parties hereto agree, to the
fullest extent permitted by Law, that the rate of exchange used shall be that at which, in accordance with normal banking
procedures, the Administrative Agent could purchase Dollars with such other currency at the buying spot rate of exchange in the New
York foreign exchange market on the Business Day immediately preceding that on which any such judgment, or any relevant part
thereof, is given.
143
**Section
526.** The obligations of the Obligors in respect
of any sum due to the Administrative Agent hereunder and under the other Loan Documents shall, notwithstanding any judgment in a
currency other than Dollars, be discharged only to the extent that on the Business Day following receipt by the Administrative Agent
of any sum adjudged to be so due in such other currency the Administrative Agent may, in accordance with normal banking procedures,
purchase Dollars with such other currency. If the amount of Dollars so purchased is less than the sum originally due to the
Administrative Agent in Dollars, the Borrower agrees, to the fullest extent that it may effectively do so, as a separate obligation
and notwithstanding any such judgment, to indemnify the Administrative Agent against such loss. If the amount of Dollars so
purchased exceeds the sum originally due to the Administrative Agent in Dollars, the Administrative Agent shall remit such excess to
the Borrower.
***Section
527.*** ***USA PATRIOT
Act***. The Administrative Agent and the
Lenders hereby notify the Obligors that pursuant to the requirements of the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed
into law October 26, 2001)) (the “***Patriot Act***”), they are required to obtain, verify and record
information that identifies the Obligors, which information includes the name and address of each Obligor and other information that
will allow such Person to identify such Obligor in accordance with the Patriot Act.
***Section
528.*** ***Acknowledgement and Consent to
Bail-In of Affected Financial Institutions***.
Notwithstanding anything to the contrary in any Loan Document or in any other agreement, arrangement or understanding among any such
parties, each party hereto acknowledges that any liability of any Affected Financial Institution arising under any Loan Document, to
the extent such liability is unsecured, may be subject to the Write-Down and Conversion Powers of the applicable Resolution
Authority and agrees and consents to, and acknowledges and agrees to be bound by:
**Section
529.** the application of any Write-Down and
Conversion Powers by the applicable Resolution Authority to any such liabilities arising hereunder which may be payable to it by any
party hereto that is an EEA Financial Institution; and
**Section
530.** the effects of any Bail-In Action on any
such liability, including, if applicable:
(i)a
reduction in full or in part or cancellation of any such liability;
(ii)
a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such Affected Financial Institution,
its parent undertaking, or a bridge institution that may be issued to it or otherwise conferred on it, and that such shares or other
instruments of ownership will be accepted by it in lieu of any rights with respect to any such liability under this Agreement or any
other Loan Document; or
(iii)
the variation of the terms of such liability in connection with the exercise of the Write-Down and Conversion Powers of any the applicable
Resolution Authority.
144
***Section
531.*** ***Certain ERISA
Matters***.
**Section
532.** Each Person that becomes party hereto
after the date hereof as a Lender (x) represents and warrants, as of the date such Person became a Lender party hereto, to, and (y)
covenants, from the date such Person became a Lender party hereto to the date such Person ceases being a Lender party hereto, for
the benefit of, the Administrative Agent and its Affiliates, and not, for the avoidance of doubt, to or for the benefit of Obligors,
that at least one of the following is and will be true:
**Section
533.** **such Lender is not using “plan
assets” (within the meaning of Section 3(42) of ERISA or otherwise) of one or more Employee Benefit Plans with respect to such
Lender’s entrance into, participation in, administration of and performance of the Loans, the Notes or this
Agreement;**
**Section
534.** **the transaction exemption set forth in
one or more PTEs, such as PTE 84-14 (a class exemption for certain transactions determined by independent qualified professional
asset managers), PTE 95-60 (a class exemption for certain transactions involving insurance company general accounts), PTE 90-1 (a
class exemption for certain transactions involving insurance company pooled separate accounts), PTE 91-38 (a class exemption for
certain transactions involving bank collective investment funds) or PTE 96-23 (a class exemption for certain transactions determined
by in-house asset managers), is applicable with respect to such Lender’s entrance into, participation in, administration of
and performance of the Loans, the Notes and this Agreement;**
**Section
535.** **(A) such Lender is an investment fund
managed by a “Qualified Professional Asset Manager” (within the meaning of Part VI of PTE 84-14), (B) such Qualified
Professional Asset Manager made the investment decision on behalf of such Lender to enter into, participate in, administer and
perform the Loans, the Notes and this Agreement, (C) the entrance into, participation in, administration of and performance of the
Loans, the Notes and this Agreement satisfies the requirements of sub-sections (b) through (g) of Part I of PTE 84- 14 and (D) to
the best knowledge of such Lender, the requirements of subsection (a) of Part I of PTE 84-14 are satisfied with respect to such
Lender’s entrance into, participation in, administration of and performance of the Loans, the Notes and this Agreement;
or**
**Section
536.** **such other representation, warranty and
covenant as may be agreed in writing between the Administrative Agent, in its sole discretion, and such Lender.**
In
addition, unless either (1) sub-clause (i) in the immediately preceding clause (a) is true with respect to a Lender making the representation
in clause (a) or (2) a Lender making the representation in clause (a) has provided another representation, warranty and covenant in accordance
with sub-clause (iv) in the immediately preceding clause (a), such Lender further (x) represents and warrants, as of the date such Person
became a Lender party hereto, to, and (y) covenants, from the date such Person became a Lender party hereto to the date such Person ceases
being a Lender party hereto, for the benefit of, the Administrative Agent and its Affiliates, and not, for the avoidance of doubt, to
or for the benefit of the Borrower, that none of the Administrative Agent or its Affiliates is a fiduciary with respect to the assets
of such Lender involved in such Lender’s entrance into, participation in, administration of and performance of the Loans, the Notes
and this Agreement (including in connection with the reservation or exercise of any rights by the Administrative Agent under this Agreement,
any other Loan Documents or any documents related hereto or thereto).
[Signature
Pages Follow]
145
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered as of the day and year first above written.
BORROWER:
**HARROW HEALTH, INC.**,
a Delaware corporation
By:
Name: Andrew R. Boll
Title: Chief Financial Officer and Secretary
Address for Notices:
c/o Harrow Health, Inc.
102 Woodmont Blvd., Suite 610
Nashville, TN 37205
Attn: Andrew R. Boll
Email:
With a copy to:
Holland & Knight LLP
511 Union Street, Suite 2700
Nashville, TN 37219
Attn: Elle McCulty
Email:
*Signature
Page to Credit Agreement and Guaranty*
SUBSIDIARY GUARANTOR(S):
**HARROW IP, LLC**,
a Delaware limited liability company
**HARROW EYE, LLC**,
a Delaware limited liability company
**IMPRIMISRX, LLC**,
a Delaware limited liability company
**IMPRIMIS NJOF, LLC**,
a New Jersey limited liability company
**IMPRIMISRX NJ, LLC**,
a New Jersey limited liability company
**VISIONOLOGY EQUITY, LLC**,
a Delaware limited liability company
**VISIONOLOGY, INC.**,
a Delaware corporation
**VISIONOLOGY MSO, INC.**,
a Delaware corporation
**IMPRIMISRX NASHVILLE, LLC**,
a Delaware limited liability company
By:
Name:
Title:
Address for Notices:
c/o Harrow Health, Inc.
102 Woodmont Blvd., Suite 610
Nashville, TN 37205
Attn: Andrew R. Boll
Email:
With a copy to:
Holland & Knight LLP
511 Union Street, Suite 2700
Nashville, TN 37219
Attn: Elle McCulty
*Signature Page to Credit
Agreement and Guaranty*
ADMINISTRATIVE AGENT:
**OAKTREE FUND ADMINISTRATION, LLC**
By: Oaktree Capital Management, L.P.
Its: Managing Member
By:
Name:
Title:
By:
Name:
Title:
Address for Notices:
Oaktree Fund Administration, LLC
333 S. Grand Avenue, 28th Floor
Los Angeles, CA 90071
Attn: Oaktree Agency
Email:
With a copy to:
Oaktree Capital Management, L.P.
333 S. Grand Avenue, 28th Floor
Los Angeles, CA 90071
Attn: Stephen DeNelsky; Tim Markov
Email:
*Signature
Page to Credit Agreement and Guaranty*
LENDERS:
**INPRS STRATEGIC CREDIT HOLDINGS, LLC**
By: Oaktree Capital Management, L.P.
Its: Manager
By:
Name:
Title:
By:
Name:
Title:
Address for Notices:
Oaktree Fund Administration, LLC
333 S. Grand Avenue, 28th Floor
Los Angeles, CA 90071
Attn: Oaktree Agency
Email:
With a copy to:
Oaktree Capital Management, L.P.
333 S. Grand Avenue, 28th Floor
Los Angeles, CA 90071
Attn: Stephen DeNelsky; Tim Markov
Email:
*Signature
Page to Credit Agreement and Guaranty*
**OAKTREE SPECIALTY LENDING CORPORATION**
By: Oaktree Fund Advisors, LLC
Its: Investment Advisor
By:
Name:
Title:
By:
Name:
Title:
Address for Notices:
Oaktree Fund Administration, LLC
333 S. Grand Avenue, 28th Floor
Los Angeles, CA 90071
Attn:
With a copy to:
Oaktree Capital Management, L.P.
333 S. Grand Avenue, 28th Floor
Los Angeles, CA 90071
Attn: Stephen DeNelsky; Tim Markov
Email:
*Signature
Page to Credit Agreement and Guaranty*
**OAKTREE STRATEGIC CREDIT FUND**
By: Oaktree Fund Advisors, LLC
Its: Investment Advisor
By:
Name:
Title:
By:
Name:
Title:
Address for Notices:
Oaktree Fund Administration, LLC
333 S. Grand Avenue, 28th Floor
Los Angeles, CA 90071
Attn: Oaktree Agency
Email:
With a copy to:
Oaktree Capital Management, L.P.
333 S. Grand Avenue, 28th Floor
Los Angeles, CA 90071
Attn:
*Signature
Page to Credit Agreement and Guaranty*
**OAKTREE ROUTE 66 MULTI-STRATEGY FUND, L.P.**
By: Oaktree Route 66 Multi-Strategy Fund GP, L.P.
Its: General Partner
By: Oaktree Route 66 Multi-Strategy Fund GP, Ltd.
Its: General Partner
By: Oaktree Capital Management, L.P.
Its: Director
By:
Name:
Title:
By:
Name:
Title:
Address for Notices:
Oaktree Fund Administration, LLC
333 S. Grand Avenue, 28th Floor
Los Angeles, CA 90071
Attn: Oaktree Agency
Email:
With a copy to:
Oaktree Capital Management, L.P.
333 S. Grand Avenue, 28th Floor
Los Angeles, CA 90071
Attn:
*Signature
Page to Credit Agreement and Guaranty*
**OAKTREE AZ STRATEGIC LENDING FUND, L.P.**
By: Oaktree AZ Strategic Lending Fund GP, L.P.
Its: General Partner
By: Oaktree Fund GP IIA, LLC
Its: General Partner
By: Oaktree Fund GP II, L.P.
Its: Managing Member
By:
Name:
Title: Authorized Signatory
By:
Name:
Title: Authorized Signatory
Address for Notices:
Oaktree Fund Administration, LLC
333 S. Grand Avenue, 28th Floor
Los Angeles, CA 90071
Attn: Oaktree Agency
Email:
With a copy to:
Oaktree Capital Management, L.P.
333 S. Grand Avenue, 28th Floor
Los Angeles, CA 90071
Attn: Stephen DeNelsky; Tim Markov
Email:
*Signature Page to Credit Agreement
and Guaranty*
**OAKTREE LOAN ACQUISITION FUND, L.P.**
By: Oaktree Fund GP IIA, LLC
Its: General Partner
By: Oaktree Fund GP II, L.P.
Its: Managing Member
By:
Name:
Title: Authorized Signatory
By:
Name:
Title: Authorized Signatory
Address for Notices:
Oaktree Fund Administration, LLC
333 S. Grand Avenue, 28th Floor
Los Angeles, CA 90071
Attn: Oaktree Agency
Email:
With a copy to:
Oaktree Capital Management, L.P.
333 S. Grand Avenue, 28th Floor
Los Angeles, CA 90071
Attn: Stephen DeNelsky; Tim Markov
Email:
*Signature
Page to Credit Agreement and Guaranty*
**OAKTREE LSL FUND DELAWARE HOLDINGS EURRC, L.P.**
By: Oaktree Life Sciences Lending Fund GP, L.P.
Its: General Partner
By: Oaktree Life Sciences Lending Fund GP Ltd.
Its: General Partner
By: Oaktree Capital Management, L.P.
Its: Director
By:
Name:
Title:
By:
Name:
Title:
Address for Notices:
Oaktree Fund Administration, LLC
333 S. Grand Avenue, 28th Floor
Los Angeles, CA 90071
Attn: Oaktree Agency
Email:
With a copy to:
Oaktree Capital Management, L.P.
333 S. Grand Avenue, 28th Floor
Los Angeles, CA 90071
Attn:
*Signature Page to Credit Agreement
and Guaranty*
**Schedule
1**
**Loans
Schedule**
**Tranche
A Term Loans**
**Lenders
and their respective Applicable Commitments:**
| Lender | | |
| --- | --- | --- |
| INPRS Strategic Credit Holdings, LLC | $662,000.00 | $127,307.69 |
| Oaktree Specialty Lending Corporation | $7,448,000.00 | $1,432,307.69 |
| Oaktree Strategic Credit Fund | $9,319,000.00 | $1,792,115.38 |
| Oaktree Route 66 Multi-Strategy Fund, L.P. | $1,218,000.00 | $234,230.77 |
| Oaktree AZ Strategic Lending Fund, L.P. | $8,122,000.00 | $1,561,923.08 |
| Oaktree LSL Fund Holdings EURRC S.à r.l. | $31,869,000.00 | $6,128,653.85 |
| Oaktree LSL Fund Delaware Holdings EURRC, L.P. | $6,362,000.00 | $1,223,461.54 |
| Total | $65,000,000 | $12,500,000 |
**Tranche
B Term Loans**
**Lenders
and their respective Applicable Commitments:**
| Lender | | |
| --- | --- | --- |
| INPRS Strategic Credit Holdings, LLC | $357,000.00 | $305,700.00 |
| Oaktree Specialty Lending Corporation | $4,011,000.00 | $3,437,700.00 |
| Oaktree Strategic Credit Fund | $5,018,000.00 | $4,301,100.00 |
| Oaktree Route 66 Multi-Strategy Fund, L.P. | $656,000.00 | $562,200.00 |
| Oaktree AZ Strategic Lending Fund, L.P. | $4,373,000.00 | $3,748,500.00 |
| Oaktree LSL Fund Holdings EURRC S.à r.l. | $17,160,000.00 | $14,708,700.00 |
| Oaktree LSL Fund Delaware Holdings EURRC, L.P. | $3,425,000.00 | $2,936,100.00 |
| Tranche B Commitment | $35,000,000 | $30,000,000 |
**The
following defined terms apply to the Incremental Tranche A Term Loans:**
“***Incremental
Tranche A Availability Period***” means the period starting on the First Amendment Effective Date and ending on the applicable
Commitment Termination Date.
“***Incremental
Tranche A Funding Condition***” means (a) the Eyevance Acquisition shall have been, or substantially concurrently with, or
within one (1) Business Day of, the borrowing of the Incremental Tranche A Term Loans shall be, consummated on the terms and conditions
set forth in the Eyevance Acquisition Agreements as in effect on the First Amendment Effective Date, or as amended, restated, amended
and restated, supplemented or otherwise modified in any manner not materially adverse to the interests of the Administrative Agent or
the Lenders in their respective capacities as such, unless consented to in writing by the Administrative Agent and the Lenders; provided,
that any increase in the consideration paid, whether in the form of Upfront Payment (as defined in the Eyevance APA), Lumpsum Payment
(as defined in the Eyevance License Agreement), Deferred Acquisition Consideration or otherwise shall be deemed materially adverse to
the Administrative Agent and the Lenders, in their respective capacities as such; provided that, if the Eyevance Acquisition is
not consummated as set forth above within one (1) Business Day of the borrowing of the Incremental Tranche A Term Loans, the Borrower
shall forthwith return to the Lenders all Incremental Tranche A Term Loans in full in immediately available funds and (b) the Eyevance
Specified Acquisition Agreement Representations shall be true and correct in all material respects, (unless such representations are
already qualified by reference to materiality, material adverse effect or similar language, in which case such representations and warranties
shall be true and correct in all respects) on and as of the Incremental Tranche A Funding Date, except to the extent such representations
and warranties specifically relate to an earlier date, in which case such representations and warranties shall have been true and correct
in all material respects on and as of such earlier date.
**The
following defined terms apply to the Tranche B Term Loans:**
“***Tranche
B Availability Period***” means the period starting on the Closing Date and ending on the applicable Commitment Termination
Date.
“***Tranche
B Funding Condition***” means that the Administrative Agent shall have received satisfactory evidence that (i) TRIESENCE has
become commercially available in the United States, (ii) the Novartis Milestone Payment has become due and payable in accordance with
the terms of the Novartis Purchase Agreement and (iii) the proceeds of the Tranche B Term Loan shall be used to pay a portion of the
Novartis Milestone Payment substantially concurrently with the borrowing on the Tranche B Term Loan on the Tranche B Funding Date.
---
## EX-31.1
SEC source: [ex31-1.htm](https://www.sec.gov/Archives/edgar/data/1360214/000149315224045295/ex31-1.htm)
**EXHIBIT
31.1**
CERTIFICATION
OF THE PRINCIPAL EXECUTIVE OFFICER UNDER
SECTION
302 OF THE SARBANES-OXLEY ACT
I,
Mark L. Baum, certify that:
(1) I have reviewed this quarterly report on Form 10-Q of Harrow, Inc.;
(2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
(3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
(4) The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in the report any change in this registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
(5) The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: November 14, 2024 */s/ Mark L. Baum*
Mark L. Baum
Chief Executive Officer
Principal Executive Officer
---
## EX-31.2
SEC source: [ex31-2.htm](https://www.sec.gov/Archives/edgar/data/1360214/000149315224045295/ex31-2.htm)
EXHIBIT
31.2
CERTIFICATION
OF THE PRINCIPAL FINANCIAL OFFICER UNDER
SECTION
302 OF THE SARBANES-OXLEY ACT
I,
Andrew R. Boll, certify that:
| (1) | I have reviewed this quarterly report on Form 10-Q of Harrow, Inc.; |
| --- | --- |
| (2) | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| (3) | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| (4) | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in the report any change in this registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
(5) The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: November 14, 2024 */s/ Andrew R. Boll*
Andrew R. Boll
Chief Financial Officer
(Principal Financial and Accounting Officer)
---
## EX-32.1
SEC source: [ex32-1.htm](https://www.sec.gov/Archives/edgar/data/1360214/000149315224045295/ex32-1.htm)
**Exhibit
32.1**
**CERTIFICATION
REQUIRED BY
SECTION 1350 OF TITLE 18 OF THE UNITED STATES CODE**
Pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002, each of the undersigned hereby certifies in his capacity as the specified officer of
Harrow, Inc. (the “Company”), that, to the best of his knowledge, the Quarterly Report of the Company on Form 10-Q for the
fiscal quarter ended September 30, 2024 fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities
Exchange Act of 1934, and that the information contained in such report fairly presents, in all material respects, the financial condition
and results of operations of the Company as of the dates and for the periods presented in the financial statements included in such report.
Date: November 14, 2024
*/s/ Mark L. Baum*
Mark L. Baum
*Chief Executive Officer*
*(Principal Executive Officer)*
Date: November 14, 2024
*/s/ Andrew R. Boll*
Andrew R. Boll
*Chief Financial Officer*
*(Principal Financial and Accounting Officer)*
This
certification accompanies this Report on Form 10-Q pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed
filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or
the Exchange Act, except to the extent that the Company specifically incorporates it by reference.