Note

Senior

Credit Facility

Subordinated

Convertible Note, net - CD Financial, LLC

and other Long Term Debt

As of

June 30, 2019

and

2018,

the Company had the following debt outstanding:

	Principal Amount						Interest Rate			Maturity Date
	June 30,
	2019			2018
Revolving advances under Senior Credit
Facility with PNC Bank, National Association	$	5,834		$	4,894			*		5/15/2024
Installment Note with PNC Bank		3,542			1,672			*		5/15/2024
Installment Note with PNC Equipment Finance, LLC		8			101			4.57	%	7/29/2019
Promissory Note with CD Financial, LLC		-			1,714			6.00	%	5/15/2019
Promissory Note with Vitamin Realty, LLC		-			686			4.00	%	5/15/2019
Capitalized lease obligations		269			269			4.01% -		12/1/2019 -
								9.38	%	2/1/2021
Total outstanding debt		9,653			9,336
Less: Revolving Advances		(5,834	)		(4,894	)
Prepaid financing costs		(50	)		(45	)
Current portion of long term debt, net		(1,047	)		(773	)
Long term debt, net	$	2,722		$	3,624

Convertible Note payable - CD Financial, LLC	$	-		$	5,350			6.00	%	7/24/2018
Less: Discount for embedded derivative		-			(66	)
Prepaid financing costs		-			(15	)
Convertible Note payable, net - CD Financial, LLC	$	-		$	5,269

* See table below

ENIOR CREDIT FACILITY

May 15, 2019,

the Company, MDC, AgroLabs, IHT, IHT Properties Corp. (“IHT Properties”) and Vitamin Factory (collectively, the “Borrowers”) amended the Revolving Credit, Term Loan and Security Agreement (the “Amended Loan Agreement”) with PNC Bank, National Association as agent and lender (“PNC”) and the other lenders party thereto entered into on

June 27, 2012,

as amended on

February 19, 2016.

The Amended Loan Agreement provides for a total of

$11,585

in senior secured financing (the “Senior Credit Facility”) as follows: (i) discretionary advances (“Revolving Advances”) based on eligible accounts receivable and eligible inventory in the maximum amount of

$8,000

(the “Revolving Credit Facility”), and (ii) a term loan in the amount of

$3,585

(the “Term Loan”). The Senior Credit Facility is secured by all assets of the Borrowers, including, without limitation, machinery and equipment, real estate owned by IHT Properties, and common stock of iBio owned by the Company. Revolving Advances bear interest at PNC’s Base Rate or the Eurodollar Rate, at Borrowers’ option, plus

2.50%.

The Term Loan bears interest at PNC’s Base Rate or the Eurodollar Rate at Borrowers’ option, plus

3.00%.

As of

June 30, 2019,

the Company had amounts outstanding utilizing the Eurodollar Rate of

$4,250

and

$3,455

under the Revolving Advances and Term Note, respectively, with interest rates as of

June 30, 2019

and

June 30, 2018

as follows (based on the respective base rate plus

2.50%

on Revolving Advances and

3.00%

on the Term Note in effect as of the respective dates):

	June 30,
	2019			2018

Revolving Credit Facility:
Base Rate Interest		5.50	%		5.00	%
Eurodollar Rate		4.881	%		n/a
Term Loan:
Base Rate Interest		5.75	%		5.50	%
Eurodollar Rate		5.381% and 5.3838	%		n/a

Upon and after the occurrence of any event of default under the Amended Loan Agreement, and during the continuation thereof, interest shall be payable at the interest rate then applicable plus

2%.

The Senior Credit Facility matures on

May 15, 2024 (

the “Senior Maturity Date”).

The principal balance of the Revolving Advances is payable on the Senior Maturity Date, subject to acceleration, based upon a material adverse event clause, as defined, subjective accelerations for borrowing base reserves, as defined or upon the occurrence of any event of default under the Amended Loan Agreement or earlier termination of the Amended Loan Agreement pursuant to the terms thereof. The Term Loan shall be repaid in

eighty-four

(

) consecutive monthly installments of principal, the

first

eighty-three

(

) of which shall be in the amount of

$43,

commencing on the

first

business day of

June, 2019,

and continuing on the

first

business day of each month thereafter, with a final payment of any unpaid balance of principal and interest payable on the Senior Maturity Date. The foregoing is subject to customary mandatory prepayment provisions and acceleration upon the occurrence of any event of default under the Amended Loan Agreement or earlier termination of the Amended Loan Agreement pursuant to the terms thereof.

The Revolving Advances are subject to the terms and conditions set forth in the Amended Loan Agreement and are made in aggregate amounts at any time equal to the lesser of (

)

$8,000

or (y) an amount equal to the sum of: (i) up to

85%,

subject to the provisions in the Amended Loan Agreement, of eligible accounts receivables (“Receivables Advance Rate”), plus (ii) up to the lesser of (A)

75%,

subject to the provisions in the Amended Loan Agreement, of the value of the eligible inventory (“Inventory Advance Rate” and together with the Receivables Advance Rate, collectively, the “Advance Rates”), (B)

85%

of the appraised net orderly liquidation value of eligible inventory (as evidenced by the most recent inventory appraisal reasonably satisfactory to PNC in its sole discretion exercised in good faith) and (C) the inventory sublimit in the aggregate at any

one

time (“Inventory Advance Rate” and together with the Receivables Advance Rate, collectively, the “Advance Rates”), minus (iii) the aggregate Maximum Undrawn Amount of all outstanding Letters of Credit, minus (iv) such reserves as PNC

may

reasonably deem proper and necessary from time to time.

The Amended Loan Agreement contains customary mandatory prepayment provisions, including, without limitation the requirement to use any sales proceeds from the sale of iBio Stock to repay the Term Loan and to prepay the outstanding amount of the Term Note in an amount equal to

twenty-five

percent (

25%

) of Excess Cash Flow for each fiscal year commencing with the fiscal year ended

June 30, 2016,

payable upon delivery of the financial statements to PNC referred to in and required by the Amended Loan Agreement for such fiscal year but in any event

not

later than

one hundred twenty

(

120

) days after the end of each such fiscal year, which amount shall be applied ratably to the outstanding principal installments of the Term Loan in the inverse order of the maturities thereof. The Amended Loan Agreement also contains customary representations and warranties, covenants and events of default, including, without limitation, (i) a fixed charge coverage ratio maintenance requirement and (ii) an event of default tied to any change of control as defined in the Amended Loan Agreement. As of

June 30, 2019,

the Company was in compliance with the fixed charge coverage ratio maintenance requirement and with the required annual payments of

25%

of the Excess Cash Flow for each fiscal year commencing with the fiscal year ended

June 30, 2016.

In connection with the Senior Credit Facility, PNC and CD Financial entered into the Intercreditor and Subordination Agreement (the “Intercreditor Agreement”), which was acknowledged by the Borrowers, pursuant to which, among other things, (a) the lien of CD Financial on assets of the Borrowers is subordinated to the lien of PNC on such assets during the effectiveness of the Senior Credit Facility, and (b) priorities for payment of the debt for the Company and its subsidiaries (as described in this Note

) are established.

In addition, in connection with the Senior Credit Facility, the following loan documents were executed: (i) a Stock Pledge Agreement with PNC, pursuant to which the Company pledged to PNC the iBio Stock; (ii) a Mortgage and Security Agreement with PNC with IHT Properties; and (iii) an Environmental Indemnity Agreement with PNC.

CD FINANCIAL

, LLC

June 27, 2012,

the Company also entered into an Amended and Restated Securities Purchase Agreement (the “CD SPA”) with CD Financial, which amended and restated the Securities Purchase Agreement, dated as of

February 21, 2008,

between the Company and CD Financial, pursuant to which the Company issued to CD Financial a

9.5%

Convertible Senior Secured Note in the original principal amount of

$4,500

(the “Original CD Note”). Pursuant to the CD SPA, the Company issued to CD Financial (i) the Amended and Restated Convertible Promissory Note in the principal amount of

$5,350

(the “CD Convertible Note”) and (ii) the Promissory Note in the principal amount of

$1,714

(the “Liquidity Note”, and collectively with the CD Convertible Note, the “CD Notes”). The CD Notes had an original maturity date of

July 7, 2017,

however, on

February 19, 2016,

the CD Notes were amended to extend the maturity date thereof to

February

29,

2020.

The proceeds of the CD Notes were used to refinance (a) the Original CD Note, (b) the CD MDC Note which was assigned by MDC to the Company, (c) past due interest in the aggregate amount of

$333

and (d) other expenses owed to CD Financial by the Company in the aggregate amount of approximately

$217.

The CD Notes were secured by all assets of the Borrowers, including, without limitation, machinery and equipment, real estate owned by IHT Properties, and iBio Stock owned by the Company. The CD Notes bore interest at an annual rate of

and had a default rate of

10%.

The CD Convertible Note was convertible at the option of CD Financial into common stock of the Company at a conversion price of

$0.65

per share, subject to customary adjustments including conversion price protection provisions.

Pursuant to the terms of the Amended Loan Agreement and the Intercreditor Agreement, during the effectiveness of the Senior Credit Facility, (i) the principal of the CD Convertible Note could

not

be repaid, (ii) the principal of the Liquidity Note could only be repaid if certain conditions under the Amended Loan Agreement were satisfied, and (iii) interest in respect of the CD Notes were only paid if certain conditions under the Intercreditor Agreement were satisfied.

The CD SPA contained customary representations and warranties, covenants and events of default, including, without limitation, an event of default tied to any change of control as defined in the CD SPA.

In connection with the CD SPA, the Borrowers entered into an Amended and Restated Security Agreement and Amended and Restated Subsidiary Guaranty.

May 15,

2019,

the Liquidity Note was satisfied in full with the repayment of principal and interest in the amount of

$1,718.

The Liquidity Note was permitted to be paid in full in the Amended Loan Agreement with PNC Bank.

July 31, 2018,

the Company authorized the issuance of

8,230,769

shares of the Company’s common stock (“Common Shares”) to CD Financial. The Common Shares were issued upon the exercise by CD Financial of its conversion right pursuant to the CD SPA and in accordance with Section

(b) of the CD Convertible Note. The CD Convertible Note was convertible at the option of CD Financial into Common Shares at a conversion price of

$0.65

per share, subject to customary adjustments. CD Financial exercised its conversion right with respect to the entire principal amount due under the CD Convertible Note. The Common Shares issued to CD Financial were issued at a conversion price of

$0.65

per Common Share.

As of

June 30, 2018,

the related embedded derivative liability with respect to conversion price protection provisions on the CD Convertible Note had an estimated fair value of

and as of

June 30, 2019

had been extinguished in connection with the above described conversion exercise by CD Financial on

July 24, 2018.

OTHER LONG TERM DEBT

Related Party Debt.

June 27, 2012,

MDC and the Company entered into a promissory note with Vitamin Realty Associates, LLC (“Vitamin Realty”) in the principal amount of approximately

$686

(the “Vitamin Note”). The principal amount of the Vitamin Note represents the aggregate amount of unpaid, past due rent owing by MDC under the Lease Agreement, dated as of

January 10, 1997,

between MDC, as lessor, and Vitamin Realty, as landlord, pertaining to the real property located at

225

Long Avenue, Hillside, New Jersey. (See Note

10.

Commitments and Contingencies (a) Leases – Related Parties Leases). The Vitamin Note was scheduled to mature on

February

29,

2020,

as amended on

February 19, 2016.

The Vitamin Note accrued interest at an annual rate of

per annum. Interest in respect of the Vitamin Note was payable on the

first

business day of each calendar month. Pursuant to the terms of the Amended Loan Agreement, during the effectiveness of the Senior Credit Facility, the Vitamin Note could only be repaid or prepaid if certain conditions set forth in the Amended Loan Agreement were satisfied.

May 15,

2019,

the Vitamin Note was satisfied in full with the repayment of principal and interest in the amount of

$689.

The Vitamin Note was permitted to be paid in full in the Amended Loan Agreement with PNC Bank.

Capitalized Lease Obligations.

February 1, 2019,

the Company entered into a capitalized lease obligation with First American Equipment Finance (“First American”) in the amount of

$233,

which lease is secured by certain machinery and equipment and matures on

February 1, 2021.

The Company sold certain machinery, purchased from equipment suppliers other than First American in the aggregate amount of

$233,

to First American for

$233

and leased the sold equipment back from First American for monthly payments in the amount of approximately

$10

with an imputed interest rate of

7.28%.

February 1, 2019,

the capitalized lease obligation entered into by the Company on

March 17, 2017

with First American in the amount of

$158,

which lease was secured by certain machinery and equipment, was satisfied with all payments being made under the capitalized lease obligation. The monthly lease payment was approximately

and had an imputed interest rate of

3.86%.

June 17, 2018,

the capitalized lease obligation the Company entered into on

June 9, 2016

with Marlin Leasing in the amount of

$65,

which lease was secured by certain machinery and equipment, was satisfied with all payments being made under the capitalized lease obligation. The monthly lease payment was approximately

and had an imputed interest rate of

6.4%.

March 6, 2018,

the capitalized lease obligation the Company entered into on

March 21, 2016

with Regents Capital Corporation (“Regents”) in the amount of

$123,

which lease was secured by certain machinery and equipment, was satisfied with all payments being made under the capitalized lease obligation. The quarterly lease payment was approximately

$16

and had an imputed interest rate of

11.43%.

February 14, 2018

and

April 17, 2018,

the Company entered into

two

separate capitalized lease obligations with Marlin Equipment Finance in the amount of

$38

and

$15,

respectively, which leases are secured by certain machinery and equipment and mature on

February 25, 2020

and

April 25, 2020,

respectively. The lease payments in the amounts of approximately

and

$1,

respectively, are payable monthly and have imputed interest rates of

9.26%

and

9.38%,

respectively.

December 22, 2017,

the Company entered into a capitalized lease obligation with First American Equipment Finance (“First American”) in the amount of

$143,

which lease is secured by certain machinery and equipment and matures on

December 1, 2019.

The Company sold certain machinery, purchased from equipment suppliers other than First American in the aggregate amount of

$143,

to First American for

$143

and leased the sold equipment back from First American for monthly payments in the amount of approximately

with an imputed interest rate of

6.56%.

December 8, 2015,

the Company entered into a capitalized lease obligation with Wells Fargo Equipment Finance, Manufacturer Services Group (“Wells Fargo”) in the amount of

$129

which matures on

December 8, 2020.

The lease payment amount of approximately

is payable monthly and has an imputed interest rate of

4.01%.

Equipment Financing

Not

September 22, 2014,

MDC entered into a Convertible Line of Credit Note (the “LC Note”) in the amount of

$350

with PNC Equipment Finance, LLC (“PNCEF”). The LC Note is convertible into a term note upon completion of the advances under the LC Note. During the period from

September 22, 2014

to and including the Conversion Date (defined below), the Company was able to borrow up to the full value of the LC Note (

$350

). The “Conversion Date” is the earliest to occur of (i)

July 31, 2015

or (ii) the date when the Company notifies PNCEF that

more advances will be requested or (iii) the date when PNCEF has made advances in an aggregate amount of

$350.

The Company completed the advances on

July 29, 2015

and converted the LC Note to a

four

year term note in the amount of

$350.

Prior to the Conversion Date, amounts outstanding under the LC Note bore interest at a rate per annum (“Floating Rate”) which is at all times equal to the sum of LIBOR Rate plus

325

basis points (

3.25%

). On the Conversion Date, the Company elected a fixed rate interest of

4.57%

as offered by PNCEF.

In addition, in connection with the LC Note, the following loan documents were executed: (i) a Security Agreement with PNCEF and MDC; (ii) a Guaranty and Security Agreement with PNCEF and the Company; and (iii) a Cross Collateralization Agreement with PNC, PNCEF and MDC.

July 29,

2019,

the LC Note was satisfied in full with the final monthly payment of principal and interest in the amount of

paid.