8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): September 9, 2013 (September 6, 2013)

SWK HOLDINGS CORPORATION

(Exact Name of the Registrant as Specified in Its Charter)

Delaware

(State or Other Jurisdiction of Incorporation)

000-27163	77-0435679
(Commission File Number)	(IRS Employer Identification No.)
15770 Dallas Parkway, Suite 1290, Dallas, TX	75248
(Address of Principal Executive Offices)	(Zip Code)

(972) 687-7250

(Registrant’s Telephone Number, Including Area Code)

(Former Name or Former Address, If Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01. Entry into a Material Definitive Agreement.

On September 6, 2013, SWK Holdings Corporation, a Delaware corporation (the "Company"), entered into a Loan Agreement, dated as of September 6, 2013 (the "Loan Agreement") by and among the Company, SWK Funding LLC, a Delaware limited liability company ("SWK Funding"), SWK Advisors LLC, a Delaware limited liability company ("SWK Advisors"), SWK HP Holdings GP LLC, a Delaware limited liability company ("SWK HP"), and Double Black Diamond, L.P., a Delaware limited partnership (the "Lender"), pursuant to which the Lender will provide the Company with up to a $30 million senior secured financing. The Company and SWK Funding are referred to as the "Borrowers." Pursuant to the Loan Agreement, SWK Advisors and SWK HP (collectively, the "Guarantors") guaranteed all obligations of the Borrowers owing under the Loan Agreement.

The credit facility provides for an initial $15 million Commitment (as defined in the Loan Agreement) to be available at closing, which the Company can draw over an 18 month period (the "Draw Period"). On or before the last day of the Draw Period, the Company can request the Commitment to be increased to $30 million upon the Company realizing net proceeds of at least $10 million in cash through Equity Issuances (as defined in the Loan Agreement). The Loan matures on September 6, 2017. The Loan Agreement provides that the loan shall accrue interest at the Libor Rate (as defined in the Loan Agreement) plus a 6.50% margin and principal is repayable in full at maturity.

Pursuant to the terms of the Loan Agreement, each Borrower and Guarantor entered into a Pledge Agreement granting the Lender a security interest in substantially all of their respective assets. The Loan Agreement also contains certain affirmative and negative covenants including a minimum asset coverage ratio requirement and a minimum interest coverage ratio requirement. The obligations under the Loan Agreement to repay the Loan may be accelerated upon the occurrence of an event of default under the Loan Agreement or in the event of a change of control.

In addition, the Company issued to the Lender, a Warrant with respect to 1,000,000 shares of the Company’s common stock at an exercise price of $1.3875 per share, which is subject to customary weighted-average anti-dilution protections. The Warrants may be exercised at any time upon the election of the holder, beginning on the date of issuance and ending of the seventh anniversary of the date of issuance. The issuance of the Warrants was not registered under the Securities Act as such issuance was exempt from registration under Section 4(2) of the Securities Act.

In connection with the Loan Agreement and the Warrant, the Company entered into a Registration Rights Agreement (the "Registration Rights Agreement") with the Lender and certain of its affiliates, which sets forth their rights to have their shares of Common Stock owned prior to the closing of the Loan Agreement and shares of Common Stock issuable upon exercise of the Warrants registered with the Securities and Exchange Commission (the "SEC") for public resale upon the request of the holders of at least 50% of the Registrable Securities (as defined in the Registration Rights Agreement). The Registration Rights Agreement terminates at such time as the Lender and its affiliates' total beneficial ownership of the Company's common stock is less than 5.0% and the Lender is no longer an affiliate of the Company.

In conjunction with the issuance of such Warrant, the Company’s Board of Directors agreed to waive certain restrictions set forth in the Second Amended and Restated Rights Agreement to allow Lender to acquire additional shares of the Company’s common stock solely as a result of the exercise of the Warrant or shares acquired directly from the Company pursuant to a rights offering or primary offering by the Company.

The Company, the Lender and certain affiliates of Lender owning shares of the Company’s common stock entered into a Voting Agreement pursuant to which such the Lender and its affiliates can only otherwise increase their ownership of the Company’s common stock through direct purchases of common stock from the Company. In addition, after such entities acquire a position in excess of 33% of the Company’s outstanding common stock, for a period of two years thereafter, such entities will grant to the Company’s Board of Directors sole voting control over the portion of shares in excess of 33% of the Company’s total outstanding shares. The Board of Directors must vote the excess shares in the same proportion of “yes” and “no” votes as the stockholders of the Company vote on the matter. As part of the Voting Agreement, for a period of three years, Lender was granted the exclusive right to backstop any rights offering as well as a right of first offer to purchase Lender’s pro-rata share of any new equity issuance by the Company.

Based solely on a Form 4 filed on March 1, 2012 with the SEC, Double Black Diamond Offshore Ltd. and Black Diamond Offshore Ltd. (together, the "Funds") reported beneficial ownership of 12,149,100 shares of the Company's common stock, which as of September 6, 2013 represented approximately 28% of our outstanding common stock. Carlson Capital, L.P. ("Carlson Capital") is the investment manager of the Funds and the Lender. Mr. Michael D. Weinberg, who serves as Chairman of the Board of the Company's Board of Directors, is employed by Carlson Capital and serves as their Managing Director -- Special Projects.

The foregoing descriptions of the material agreements entered into does not purport to describe all of the terms and provisions thereof and is qualified in its entirety by reference to the agreements, which are filed as exhibits to this Current Report on Form 8-K and are incorporated herein by reference.

Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

As discussed above, on September 6, 2013, the Borrowers entered into the Loan Agreement which provides for a revolving credit facility in the maximum principal amount of $30,000,000, with Guarantors providing a payment guaranty in connection therewith. Unless terminated earlier, the Loan Agreement will mature on September 6, 2017, and the principal amount outstanding thereunder, together with all accrued unpaid interest and other amounts owed thereunder, if any, will be payable in full upon such date.

The Loan Agreement provides that loans thereunder will accrue interest at the Libor Rate plus a 6.50% margin and principal is repayable in full at maturity.

The Loan Agreement also contains certain affirmative and negative covenants including a minimum asset coverage requirement and a minimum interest coverage ratio requirement. The obligations under the Loan Agreement to repay the Loan may be accelerated upon the occurrence of an event of default under the Loan Agreement or in the event of a change of control.

If an event of default under the Loan Agreement shall occur and be continuing, the commitments thereunder may be terminated and the principal amount outstanding thereunder, together with all accrued unpaid interest and other amounts owed thereunder, may be declared immediately due and payable.

Item 8.01 Other Events

On September 9, 2013, the Company issued a press release announcing its entering into the Loan Agreement and related transactions. A copy of such press release is attached hereto as Exhibit 99.1 and is incorporated by reference herein.

Item 9.01: Financial Statements and Exhibits

(d)     Exhibits

Exhibit No.	Description
4.1*	Common Stock Purchase Warrant to purchase 1,000,000 shares of the Company's common stock dated September 6, 2013 issued to Double Black Diamond, L.P.

10.1* Loan Agreement, dated as of September 6, 2013, by and among the Company, SWK Funding LLC, SWK Advisors LLC, SWK HP Holdings GP LLC, and Double Black Diamond, L.P.

10.2* Pledge and Security Agreement, dated as of September 6, 2013, by and among the Company, SWK Funding LLC, SWK Advisors LLC, SWK HP Holdings GP LLC, and Double Black Diamond, L.P.

10.3* Voting Agreement, dated as of September 6, 2013, by and among Double Black Diamond, L.P., Double Black Diamond Offshore Ltd., Black Diamond Offshore, Ltd. and the Company.

10.4* Registration Rights Agreement, dated as of September 6, 2013, by and among Double Black Diamond, L.P., Double Black Diamond Offshore Ltd., Black Diamond Offshore, Ltd. and the Company.

99.1*	Press Release regarding the Loan Agreement and related documents.
*	Filed herewith

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 hereunto duly authorized.

SWK HOLDINGS CORPORATION
By:	/s/ J. BRETT POPE
	J. Brett Pope
	Chief Executive Officer

Date: September 9, 2013

EX-4

Exhibit 4.1

THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER UNITED STATES FEDERAL OR STATE SECURITIES LAWS AND MAY NOT BE OFFERED FOR SALE, SOLD, OR OTHERWISE TRANSFERRED OR ASSIGNED FOR VALUE, DIRECTLY OR INDIRECTLY, NOR MAY THIS WARRANT OR THE COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT BE TRANSFERRED ON THE BOOKS OF THE COMPANY, WITHOUT REGISTRATION OF SUCH WARRANT OR SHARES OF COMMON STOCK, AS APPLICABLE, UNDER ALL APPLICABLE UNITED STATES FEDERAL OR STATE SECURITIES LAWS OR COMPLIANCE WITH AN APPLICABLE EXEMPTION THEREFROM, SUCH COMPLIANCE, AT THE OPTION OF THE COMPANY, TO BE EVIDENCED BY AN OPINION OF STOCKHOLDER’S COUNSEL, IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT NO VIOLATION OF SUCH REGISTRATION PROVISIONS WOULD REASONABLY BE EXPECTED TO RESULT FROM ANY PROPOSED TRANSFER OR ASSIGNMENT.

 

No. W-1	Right to Purchase 1,000,000
	Shares of Common Stock of
	SWK Holdings Corporation

SWK HOLDINGS CORPORATION

COMMON STOCK PURCHASE WARRANT

September 6, 2013

THIS CERTIFIES THAT, for value received, Double Black Diamond, L.P., a Delaware limited partnership, or its registered assigns (“Holder”), is entitled to purchase, subject to the conditions set forth below, at any time or from time to time during the Exercise Period (as defined in Section 1.1, below), 1,000,000 shares (“Shares”) of fully paid and non-assessable Common Stock, par value $0.001 per share (“Common Stock”), of SWK Holdings Corporation, a Delaware corporation (the “Company”), at an exercise price of $1.3875 per share (the “Warrant Price”), subject to the further provisions of this Warrant.

Section 1.     EXERCISE OF WARRANT.

The terms and conditions upon which this Warrant may be exercised, and upon which the Common Stock covered by this Warrant may be purchased, are as follows:

1.1     Exercise; Exercise Period. This Warrant may be exercised in full or in part (in lots of 100 shares or, if this Warrant is then exercisable for a lesser amount, in such lesser amount), at any time during normal business hours beginning on September 6, 2013, the original issuance date of this Warrant (the “Original Issue Date”) and prior to its expiration pursuant to Section 21 (the “Exercise Period”), by the Holder by surrender of this Warrant, with the form of Notice of Exercise attached to this Warrant duly executed by such Holder, to the Company at its principal office, accompanied by payment, by wire transfer of immediately available funds or by check payable to the order of the Company, in the amount obtained by multiplying the number of Shares designated by the Holder in the Notice of Exercise by the Warrant Price then in effect; provided that notwithstanding the fact that pursuant to Section 4 the Warrant Price may be adjusted to below the $0.001 par value per share, for purposes of paying the Warrant Price upon exercise of this Warrant, the Warrant Price shall in no event be less than $0.001.

1.2     Satisfaction of Securities Act. Notwithstanding the provisions of Section 8, each and every exercise of this Warrant is contingent upon the Company’s reasonable satisfaction that the issuance of Common Stock upon the exercise is exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), and all applicable state securities laws. Holder agrees to execute any and all documents deemed reasonably necessary by the Company to effect the exercise of this Warrant.

1.3     Issuance Of Shares and New Warrant. As soon as practicable after the exercise of this Warrant in full or in part, and in any event within 5 days after the delivery to the Company of the last item required to be delivered pursuant to this Section 1 with respect to such exercise, the Company at its expense (including the payment by it of any applicable issue taxes) shall cause to be issued, effective as of the date on which the Warrant was exercised, in full or in part, in the name of and delivered to the Holder, or as such holder (upon payment by such holder of any applicable transfer taxes) may direct, a certificate or certificates for the number of fully paid and nonassessable Shares to which such Holder shall be entitled on such exercise. Holder shall also be issued at such time a new Warrant representing the number of Shares (if any) for which the purchase rights under this Warrant remain unexercised and continuing in force and effect.

1.4     Cash Based Settlement. The Holder and the Company may agree to permit the Company to pay to the Holder, without the payment by the Holder of any additional consideration, the cash value of this Warrant or any portion of this Warrant by the surrender of this Warrant or such portion to the Company, with the form of Cash Based Settlement Agreement attached to this Warrant duly executed by such Holder and the Company. Upon execution of such agreement by such Holder and the Company, the Company shall pay in cash to the account designated in the Cash Based Settlement Agreement in immediately available funds an amount as is computed using the following formula:

X = Y (A-B)

where:

X = the amount of cash to be paid to the Holder.

Y = the number of Shares covered by this Warrant in respect of which the Holder is exercising.

A = the Fair Market Value of one Share.

B = the Warrant Price in effect under this Warrant at the time of the exercise.

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For purposes of this Warrant, the “Fair Market Value” of one Share shall mean:

(a)     If an equity security is traded on a national securities exchange, the fair market value shall be the volume-weighted average sale price of such equity security on such exchange over the 20 consecutive business days immediately preceding the effective date of exercise of the net issue election;

(b)     If an equity security is not so listed, the fair market value shall be the volume-weighted average sales price of such equity security reported over the 20 consecutive trading days immediately preceding the effective date of exercise of the net issue election by OTC Market Group or other similar group; and

(c)     If an equity security is not so listed or admitted to unlisted trading privileges and average volume-weighted prices are not reported, or such item is not an equity security, the fair market value shall be the price per share that could be obtained from a willing buyer for such item, as such price shall be mutually agreed upon in good faith by the Board of Directors of the Company and the Holder.

1.5     Conditional Exercise. Notwithstanding any other provision hereof, if an exercise of any portion of this Warrant is to be made in connection with a public offering, a sale of the Company (pursuant to a merger, sale of stock, or otherwise) or other transaction, such exercise may at the election of the Holder be conditioned upon the consummation of such transaction, in which case such exercise shall not be deemed to be effective until immediately prior to the consummation of such transaction.

Section 2.     TRANSFERS.

2.1     Transfers. Subject to Section 8 of this Warrant, this Warrant and all rights under this Warrant are transferable in whole or in part by the Holder. Any such transfer shall be recorded on the books of the Company upon the surrender of this Warrant, properly endorsed, to the Secretary of the Company at its principal offices and the payment to the Company of all transfer taxes and other governmental charges imposed on such transfer. In the event of a partial transfer, the Company shall issue to the several holders one or more appropriate new Warrants, as appropriate.

2.2     Registered Holder. Each Holder agrees that until such time as any transfer pursuant to Section 2.1 is recorded on the books of the Company, the Company may treat the registered Holder of this Warrant as the absolute owner; provided that nothing in this Warrant affects any requirement that transfer of any Warrant or share of Common Stock issued or issuable upon the exercise of such Warrant be subject to compliance with the Securities Act and all applicable state securities laws.

2.3     Form Of New Warrants. All Warrants issued in connection with transfers of this Warrant shall bear the same Original Issue Date and shall be substantially identical in form and provision to this Warrant except for the number of Shares purchasable under such Warrant.

Section 3.     CERTAIN AGREEMENTS OF COMPANY.

3.1     Reservation of Stock Issuable Upon Exercise. The Company shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock solely for the purpose of effecting the exercise of this Warrant such number of its shares of Common Stock as shall from time to time be sufficient to effect the exercise of this Warrant and if at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the exercise of this Warrant, in addition to such other remedies as shall be available to Holder, the Company shall use its best efforts to take such corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purposes.

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3.2     No Impairment. The Company shall not, by amendment of its Certificate of Incorporation or Bylaws, or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed by it hereunder, but shall at all times in good faith assist in the carrying out of all the provisions of this Warrant.

3.3     Listing. The Company shall promptly upon the written request of the Holder secure the listing of the shares of Common Stock issuable upon exercise of the Warrant upon each national securities exchange or automated quotation system, if any, upon which shares of Common Stock are then listed (subject to official notice of issuance upon exercise of this Warrant) and shall maintain, so long as any other shares of Common Stock shall be so listed, such listing of all shares of Common Stock from time to time issuable upon the exercise of this Warrant; and the Company shall so list on each national securities exchange or automated quotation system, as the case may be, and shall maintain such listing of, any other shares of capital stock of the Company issuable upon the exercise of this Warrant if and so long as any shares of the same class shall be listed on such national securities exchange or automated quotation system.

3.4     Fractional Shares. No fractional shares of Common Stock are to be issued upon the exercise of this Warrant. If the exercise of this Warrant would result in a fractional share of Common Stock, such fractional share shall be paid in cash in an amount equal to such fraction multiplied by the Fair Market Value of one Share.

Section 4.     ANTIDILUTION PROVISIONS.  In order to prevent dilution of the purchase rights granted under this Warrant, the Warrant Price and the number of Shares issuable upon exercise of this Warrant shall be subject to adjustment from time to time as provided in this Section 4.

4.1     Adjustment to Warrant Price Upon Issuance of Common Stock.  Except as provided in Section 4.2 and except in the case of an event described in either Section 4.4 or Section 4.5 , if the Company shall, at any time or from time to time after the Original Issue Date, issue or sell, or in accordance with Section 4.3 is deemed to have issued or sold, any shares of Common Stock without consideration or for consideration per share less than the Warrant Price in effect immediately prior to such issuance or sale (or deemed issuance or sale), then immediately upon such issuance or sale (or deemed issuance or sale), the Warrant Price in effect immediately prior to such issuance or sale (or deemed issuance or sale) shall be reduced to a Warrant Price equal to the quotient obtained by dividing:

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(a)     the sum of (A) the product obtained by multiplying the Common Stock Outstanding (as defined herein) immediately prior to such issuance or sale (or deemed issuance or sale) by the Warrant Price then in effect plus (B) One Hundred and Twenty-Five Percent (125%) of the aggregate consideration, if any, received by the Company upon such issuance or sale (or deemed issuance or sale); by

(b)     the sum of (A) the Common Stock Outstanding immediately prior to such issuance or sale (or deemed issuance or sale) plus (B) the aggregate number of shares of Common Stock issued or sold (or deemed issued or sold) by the Company in such issuance or sale (or deemed issuance or sale).

Notwithstanding anything in this Warrant to the contrary, in no event shall any adjustment be made to the Warrant Price pursuant to this Section 4 that results in an increase to the Warrant Price.

4.2     Exceptions To Adjustment Upon Issuance of Common Stock. Anything herein to the contrary notwithstanding, there shall be no adjustment to the Warrant Price with respect to any Excluded Issuance (as defined herein).

4.3     Effect of Certain Events on Adjustment to Warrant Price. Subject to Section 4.2, for purposes of determining the adjusted Warrant Price under Section 4.1 hereof, the following shall be applicable:

(a)     Issuance of Options. If the Company shall, at any time or from time to time after the Original Issue Date, in any manner grant or sell (whether directly or by assumption in a merger or otherwise) any Options (as defined herein), whether or not such Options or the right to convert or exchange any Convertible Securities issuable upon the exercise of such Options are immediately exercisable, and the price per share (determined as provided in this paragraph and in Section 4.3(d)) for which Common Stock is issuable upon the exercise of such Options or upon the conversion or exchange of Convertible Securities issuable upon the exercise of such Options is less than the Warrant Price in effect immediately prior to the time of the granting or sale of such Options, then the total maximum number of shares of Common Stock issuable upon the exercise of such Options or upon conversion or exchange of the total maximum amount of Convertible Securities issuable upon the exercise of such Options shall be deemed to have been issued as of the date of granting or sale of such Options (and thereafter shall be deemed to be outstanding for purposes of adjusting the Warrant Price under Section 4.1) at a price per share equal to the quotient obtained by dividing (A) the sum (which sum shall constitute the applicable consideration received for purposes of Section 4.1) of (x) the total amount, if any, received or receivable by the Company as consideration for the granting or sale of all such Options, plus (y) the minimum aggregate amount of additional consideration payable to the Company upon the exercise of all such Options, plus (z), in the case of such Options which relate to Convertible Securities, the minimum aggregate amount of additional consideration, if any, payable to the Company upon the issuance or sale of all such Convertible Securities and the conversion or exchange of all such Convertible Securities, by (B) the total maximum number of shares of Common Stock issuable upon the exercise of all such Options or upon the conversion or exchange of all Convertible Securities issuable upon the exercise of all such Options. Except as otherwise provided in Section 4.3(c), no further adjustment of the Warrant Price shall be made upon the actual issuance of Common Stock or of Convertible Securities upon exercise of such Options or upon the actual issuance of Common Stock upon conversion or exchange of Convertible Securities issuable upon exercise of such Options.

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(b)     Issuance of Convertible Securities. If the Company shall, at any time or from time to time after the Original Issue Date, in any manner grant or sell (whether directly or by assumption in a merger or otherwise) any Convertible Securities, whether or not the right to convert or exchange any such Convertible Securities is immediately exercisable, and the price per share (determined as provided in this paragraph and in Section 4.3(d)) for which Common Stock is issuable upon the conversion or exchange of such Convertible Securities is less than the Warrant Price in effect immediately prior to the time of the granting or sale of such Convertible Securities, then the total maximum number of shares of Common Stock issuable upon conversion or exchange of the total maximum amount of such Convertible Securities shall be deemed to have been issued as of the date of granting or sale of such Convertible Securities (and thereafter shall be deemed to be outstanding for purposes of adjusting the Warrant Price pursuant to Section 4.1), at a price per share equal to the quotient obtained by dividing (A) the sum (which sum shall constitute the applicable consideration received for purposes of Section 4.1) of (x) the total amount, if any, received or receivable by the Company as consideration for the granting or sale of such Convertible Securities, plus (y) the minimum aggregate amount of additional consideration, if any, payable to the Company upon the conversion or exchange of all such Convertible Securities, by (B) the total maximum number of shares of Common Stock issuable upon the conversion or exchange of all such Convertible Securities. Except as otherwise provided in Section 4.3(c), (A) no further adjustment of the Warrant Price shall be made upon the actual issuance of Common Stock upon conversion or exchange of such Convertible Securities and (B) no further adjustment of the Warrant Price shall be made by reason of the issue or sale of Convertible Securities upon exercise of any Options to purchase any such Convertible Securities for which adjustments of the Warrant Price have been made pursuant to the other provisions of this Section 4.3.

(c)     Change in Terms of Options or Convertible Securities. Upon any change in any of (A) the total amount received or receivable by the Company as consideration for the granting or sale of any Options or Convertible Securities referred to in Section 4.3(a) or Section 4.3(b) hereof, (B) the minimum aggregate amount of additional consideration, if any, payable to the Company upon the exercise of any Options or upon the issuance, conversion or exchange of any Convertible Securities referred to in Section 4.3(a) or Section 4.3(b) hereof, (C) the rate at which Convertible Securities referred to in Section 4.3(a) or Section 4.3(b) hereof are convertible into or exchangeable for Common Stock, or (D) the maximum number of shares of Common Stock issuable in connection with any Options referred to in Section 4.3(a) hereof or any Convertible Securities referred to in Section 4.3(b) hereof (in each case, other than in connection with an Excluded Issuance), then (whether or not the original issuance or sale of such Options or Convertible Securities resulted in an adjustment to the Warrant Price pursuant to this Section 4) the Warrant Price in effect at the time of such change shall be adjusted or readjusted, as applicable, to the Warrant Price which would have been in effect at such time pursuant to the provisions of this had such Options or Convertible Securities still outstanding provided for such changed consideration, conversion rate or maximum number of shares, as the case may be, at the time initially granted, issued or sold, but only if as a result of such adjustment or readjustment the Warrant Price then in effect is reduced.

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(d)     Calculation of Consideration Received. If the Company shall, at any time or from time to time after the Original Issue Date, issue or sell, or is deemed to have issued or sold in accordance with Section 4.3, any shares of Common Stock, Options or Convertible Securities: (A) for cash, the consideration received therefor shall be deemed to be the net amount received by the Company therefor; (B) for consideration other than cash, the amount of the consideration other than cash received by the Company shall be the Fair Market Value of such consideration; (C) for no specifically allocated consideration in connection with an issuance or sale of other securities of the Company, together comprising one integrated transaction, the amount of the consideration therefor shall be deemed to be the Fair Market Value of such portion of the aggregate consideration received by the Company in such transaction as is attributable to such shares of Common Stock, Options or Convertible Securities, as the case may be, issued in such transaction; or (D) to the owners of the non-surviving entity in connection with any merger in which the Company is the surviving corporation, the amount of consideration therefor shall be deemed to be the Fair Market Value of such portion of the net assets and business of the non-surviving entity as is attributable to such shares of Common Stock, Options or Convertible Securities, as the case may be, issued to such owners.

(e)     Record Date. For purposes of any adjustment to the Warrant Price or the number of Shares in accordance with this Section 4, in case the Company shall take a record of the holders of its Common Stock for the purpose of entitling them (A) to receive a dividend or other distribution payable in Common Stock, Options or Convertible Securities or (B) to subscribe for or purchase Common Stock, Options or Convertible Securities, then such record date shall be deemed to be the date of the issue or sale of the shares of Common Stock deemed to have been issued or sold upon the declaration of such dividend or the making of such other distribution or the date of the granting of such right of subscription or purchase, as the case may be.

(f)     Treasury Shares. The number of shares of Common Stock outstanding at any given time shall not include shares owned or held by or for the account of the Company or any of its wholly-owned subsidiaries, and the disposition of any such shares (other than the cancellation or retirement thereof or the transfer of such shares among the Company and its wholly-owned subsidiaries) shall be considered an issue or sale of Common Stock for the purpose of this .

4.4     Adjustment to Warrant Price and Shares Upon Dividend, Subdivision or Combination of Common Stock. If the Company shall, at any time or from time to time after the Original Issue Date, (i) pay a dividend or make any other distribution upon the Common Stock or any other capital stock of the Company payable in shares of Common Stock or in Options or Convertible Securities, or (ii) subdivide (by any stock split, recapitalization or otherwise) its outstanding shares of Common Stock into a greater number of shares, the Warrant Price in effect immediately prior to any such dividend, distribution or subdivision shall be proportionately reduced and the number of Shares issuable upon exercise of this Warrant shall be proportionately increased. If the Company at any time combines (by combination, reverse stock split or otherwise) its outstanding shares of Common Stock into a smaller number of shares, the Warrant Price in effect immediately prior to such combination shall be proportionately increased and the number of Shares issuable upon exercise of this Warrant shall be proportionately decreased. Any adjustment under this Section 4.4shall become effective at the close of business on the date the dividend, subdivision or combination becomes effective.

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4.5     Adjustment to Warrant Price and Shares Upon Reorganization, Reclassification, Consolidation or Merger. In the event of any (i) capital reorganization of the Company, (ii) reclassification of the stock of the Company (other than a change in par value or from par value to no par value or from no par value to par value or as a result of a stock dividend or subdivision, split-up or combination of shares), (iii) consolidation or merger of the Company with or into another Person, (iv) sale of all or substantially all of the Company’s assets to another Person or (v) other similar transaction (other than any such transaction covered by Section 4.4), in each case which entitles the holders of Common Stock to receive (either directly or upon subsequent liquidation) stock, securities or assets with respect to or in exchange for Common Stock, each Warrant shall, immediately after such reorganization, reclassification, consolidation, merger, sale or similar transaction, remain outstanding and shall thereafter, in lieu of or in addition to (as the case may be) the number of Shares then exercisable under this Warrant, be exercisable for the kind and number of shares of stock or other securities or assets of the Company or of the successor Person resulting from such transaction to which the Holder would have been entitled upon such reorganization, reclassification, consolidation, merger, sale or similar transaction if the Holder had exercised this Warrant in full immediately prior to the time of such reorganization, reclassification, consolidation, merger, sale or similar transaction and acquired the applicable number of Shares then issuable hereunder as a result of such exercise (without taking into account any limitations or restrictions on the exercisability of this Warrant); and, in such case, appropriate adjustment (in form and substance satisfactory to the Holder) shall be made with respect to the Holder’s rights under this Warrant to insure that the provisions of this Section 4 hereof shall thereafter be applicable, as nearly as possible, to this Warrant in relation to any shares of stock, securities or assets thereafter acquirable upon exercise of this Warrant (including, in the case of any consolidation, merger, sale or similar transaction in which the successor or purchasing Person is other than the Company, an immediate adjustment in the Warrant Price to the value per share for the Common Stock reflected by the terms of such consolidation, merger, sale or similar transaction, and a corresponding immediate adjustment to the number of Shares acquirable upon exercise of this Warrant without regard to any limitations or restrictions on exercise, if the value so reflected is less than the Warrant Price in effect immediately prior to such consolidation, merger, sale or similar transaction). The provisions of this Section 4.5shall similarly apply to successive reorganizations, reclassifications, consolidations, mergers, sales or similar transactions. The Company shall not effect any such reorganization, reclassification, consolidation, merger, sale or similar transaction unless, prior to the consummation thereof, the successor Person (if other than the Company) resulting from such reorganization, reclassification, consolidation, merger, sale or similar transaction, shall assume, by written instrument substantially similar in form and substance to this Warrant and reasonably satisfactory to the Holder, the obligation to deliver to the Holder such shares of stock, securities or assets which, in accordance with the foregoing provisions, such Holder shall be entitled to receive upon exercise of this Warrant. Notwithstanding anything to the contrary contained herein, with respect to any corporate event or other transaction contemplated by the provisions of this Section 4.5, the Holder shall have the right to elect prior to the consummation of such event or transaction, to give effect to the exercise rights contained in Section 1 instead of giving effect to the provisions contained in this Section 4.5with respect to this Warrant.

8

4.6     Certain Events. If any event of the type contemplated by the provisions of this Section 4 but not expressly provided for by such provisions (including, without limitation, the granting of stock appreciation rights, phantom stock rights or other rights with equity features) occurs, then the Board shall make an appropriate adjustment in the Warrant Price and the number of Shares issuable upon exercise of this Warrant so as to protect the rights of the Holder in a manner consistent with the provisions of this Section 4; provided, that no such adjustment pursuant to this Section 4.6 shall increase the Warrant Price or decrease the number of Shares issuable as otherwise determined pursuant to this Section 4.

4.7     Certificate as to Adjustment.

(a)     As promptly as reasonably practicable following any adjustment of the Warrant Price, but in any event not later than five business days thereafter, the Company shall furnish to the Holder a certificate of an executive officer setting forth in reasonable detail such adjustment and the facts upon which it is based and certifying the calculation thereof.

(i)     As promptly as reasonably practicable following the receipt by the Company of a written request by the Holder, but in any event not later than five business days thereafter, the Company shall furnish to the Holder a certificate of an executive officer certifying the Warrant Price then in effect and the number of Shares or the amount, if any, of other shares of stock, securities or assets then issuable upon exercise of the Warrant.

4.8     Definitions. For the purposes of this Section 4, the following terms have the respective meanings set forth below:

“Common Stock Outstanding” means, at any given time, the number of shares of Common Stock actually outstanding at such time; provided, that Common Stock Outstanding at any given time shall not include shares owned or held by or for the account of the Company or any of its controlled subsidiaries.

“Convertible Securities” means any securities (directly or indirectly) convertible into or exchangeable for Common Stock, but excluding Options.

“Excluded Issuances” means any issuance or sale (or deemed issuance or sale in accordance with Section 4.3) by the Company after the Original Issue Date of: (a) shares of Common Stock issued upon the exercise of this Warrant; (b) shares of Common Stock (as such number of shares is equitably adjusted for subsequent stock splits, stock combinations, stock dividends and recapitalizations) or Options issued to directors, officers, employees, or consultants of the Company in connection with their service as directors of the Company, their employment by the Company or their retention as consultants by the Company, in each case authorized by the Board and, if applicable, the stockholders of the Company; (c) shares of Common Stock (as such number of shares is equitably adjusted for subsequent stock splits, stock combinations, stock dividends and recapitalizations) issued directly or upon the exercise of the Options described in clause (b) above; (d) any securities issued pursuant to the Company’s Second Amended and Restated Rights Agreement (the “Rights Agreement”) by and between the Company and Computershare Trust Company, N.A., as Rights Agent, as amended from time to time, or any “poison pill” or similar stockholder rights plan now or hereafter in effect; or (e) Non-Participating Shares; provided that this clause (e) shall terminate as to any portion of this Warrant upon the transfer of such portion of this Warrant by Holder to a third party.

9

“Non-Participating Shares” means Options or shares of Common Stock issued by the Company where the Holder or its affiliates have a right to acquire their pro rata share (based on Common Stock outstanding at the time of issuance) of such Options or Common Stock being issued and such Holder or its affiliates elect not to acquire their pro rata share (based on Common Stock outstanding at the time of issuance) of such Options or Common Stock.

“Options” means any warrants or other rights or options to subscribe for or purchase Common Stock or Convertible Securities.

“Person” means any individual, sole proprietorship, partnership, limited liability company, corporation, joint venture, trust, incorporated organization or government or department or agency thereof.

Section 5.     RIGHTS PRIOR TO EXERCISE OF WARRANT.

This Warrant does not entitle Holder to any of the rights of a stockholder of the Company, including without limitation, the right to receive dividends or other distributions, to exercise any preemptive rights, to vote, or to consent or to receive notice as a stockholder of the Company. If, however, at any time prior to the expiration of this Warrant and prior to its exercise, any of the following events shall occur:

(a)     the Company shall declare any dividend payable in any securities upon its shares of Common Stock or make any distribution (other than a regular cash dividend) to the holders of its shares of Common Stock; or

(b)     the Company shall offer to the holders of its shares of Common Stock any additional shares of Common Stock or securities convertible into or exchangeable for shares of Common Stock or any right to subscribe for or purchase any of such additional shares of Common Stock or securities;

(c)     a capital reorganization, reclassification of the capital stock, dissolution, liquidation or winding up of the Company, whether voluntary or involuntary (other than in connection with a consolidation, merger, sale, transfer or lease of all or substantially all of its property, assets, and business as an entirety), shall be proposed and action by the Company with respect to such reorganization, reclassification, dissolution, liquidation or winding up has been approved by the Company’s Board of Directors;

(d)     the Company proposes to effect a public offering of its shares of common stock pursuant to a registration statement under the Securities Act of 1933,

then in any one or more of said events the Company shall give notice in writing of such event to Holder at his last address as it shall appear on the Company’s records at least 20 days prior to the date fixed as a record date or the date of closing the transfer books for the determination of the stockholders entitled to such dividends, distribution, or subscription rights, or for the determination of stockholders entitled to vote on such proposed dissolution, liquidation or winding up. Such notice shall specify such record date or the date of closing the transfer books, as the case may be. Failure to publish, mail or receive such notice or any defect in such notice or in the publication or mailing of such notice shall not affect the validity of any action taken in connection with such dividend, distribution or subscription rights, or such proposed dissolution, liquidation or winding up.

10

Section 6.      REGISTRATION RIGHTS Agreement. All Shares issuable upon exercise of this Warrant are subject to, and have the benefit of, that certain Registration Rights Agreement, dated September 6, 2013, between Holder and the Company (the “Registration Rights Agreement”).

Section 7.     SUCCESSORS AND ASSIGNS.

The terms and provisions of this Warrant shall inure to the benefit of, and be binding upon, the Company and Holder and their respective successors and permitted assigns.

Section 8.     RESTRICTED SECURITIES.

In order to enable the Company to comply with the Securities Act and applicable state laws, the Company may require as a condition of the transfer or exercise of this Warrant, Holder to give written assurance reasonably satisfactory to the Company that the Warrant, or in the case of an exercise of this Warrant the Shares subject to this Warrant, are either being acquired for his own account, for investment only, with no view to the distribution of the same, or that any disposition of all or any portion of this Warrant or the Shares issuable upon the due exercise of this Warrant shall not be made, unless and until:

(a)     There is then in effect a registration statement under the Securities Act covering such proposed disposition and such disposition is made in accordance with such registration statement; or

(b)     Holder has notified the Company of the proposed disposition and shall have furnished the Company with a detailed statement of the circumstances surrounding the proposed disposition, and Holder has furnished the Company with an opinion of counsel, reasonably satisfactory to the Company, that such disposition shall not require registration of such securities under the Securities Act and applicable state law.

Holder acknowledges that this Warrant is, and each of the shares of Common Stock issuable upon the due exercise of this Warrant shall be, a restricted security, that it understands the provisions of Rule 144 of the Securities and Exchange Commission, and that the certificate or certificates evidencing such shares of Common Stock shall bear a legend substantially similar to the following:

“THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES LAWS OF ANY STATE. THEY MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT COVERING THESE SECURITIES UNDER THE SAID ACT OR LAWS, OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY AND ITS COUNSEL THAT REGISTRATION IS NOT REQUIRED THEREUNDER.”

11

Section 9.     REPLACEMENT ON LOSS.

Upon receipt by the Company of reasonably satisfactory evidence of the ownership of and the loss, theft, destruction, or mutilation of any Warrant, and (i) in the case of loss, theft, or destruction, upon receipt by the Company of a reasonable indemnity satisfactory to it (it being understood that a written indemnification agreement or affidavit of loss of the Holder shall be a sufficient indemnity), or (ii) in the case of mutilation, upon receipt of such Warrant and upon surrender and cancellation of such Warrant, the Company shall execute and deliver in lieu of such Warrant a new Warrant representing the right to purchase an equal number of Shares.

Section 10.     PAYMENT OF EXPENSES.

The Company shall pay all expenses in connection with, and all taxes and other governmental charges that may be imposed with respect to, the issuance or delivery of Shares upon exercise of this Warrant; provided, that the Company shall not be required to pay any tax or governmental charge that may be imposed with respect to any applicable withholding or the issuance or delivery of the Shares to any Person other than the Holder, and no such issuance or delivery shall be made unless and until the Person requesting such issuance has paid to the Company the amount of any such tax, or has established to the satisfaction of the Company that such tax has been paid; and provided, further that the Company shall not be responsible for any income or similar taxes payable by Holder with respect to the issuance or delivery of Shares upon exercise of this Warrant.

Section 11.     ACCREDITED INVESTOR.

Holder hereby represents and warrants that it is an “accredited investor” as that term is defined in Regulation D promulgated pursuant to the Securities Act. Holder hereby acknowledges that but for the aforesaid representation the Company would not issue this Warrant to Holder.

Section 12.     Notices.

All notices, requests, consents, demands and other communications required or permitted under this Warrant shall be in writing, unless otherwise specifically provided in the Warrant, and shall be deemed sufficiently given or furnished if delivered by personal delivery, by facsimile, by delivery service with proof of delivery, or by registered or certified United States mail, postage prepaid, to the Company at the address of the Company specified below and to the Holder at the address specified below (unless changed by similar notice in writing given by the particular person whose address is to be changed). Any such notice or communication shall be deemed to have been given (a) in the case of personal delivery or delivery service, as of the date of first attempted delivery during normal business hours at the address provided herein, (b) in the case of facsimile, upon receipt, or (c) in the case of registered or certified United States mail, three days after deposit in the mail.

12

If to the Company:

SWK Holdings Corporation

15770 North Dallas Parkway

Suite 1290

Dallas, Texas 75248

Attention: J. Brett Pope, Chief Executive Officer

Facsimile: (972) 687-7255

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

Holland & Knight LLP

300 Crescent Court, Suite 1100

Dallas, Texas 75201

Attention: Ryan Magee

Facsimile: (214) 964-9501

If to the Holder:

c/o Carlson Capital, L.P.

2100 McKinney Avenue

Suite 1800

Dallas, Texas 75201

Attention: Christopher W. Haga; and G. Thomas Cason, III, General Counsel’s Office

Facsimile: (214) 932-9712

Section 13.      No Third Party Beneficiaries.

This Warrant is not intended to be for the benefit of, and shall not be enforceable by, any person or entity not a party hereto.

Section 14.      Specific Performance.

Each of the Company and the Holder acknowledges that a breach or threatened breach by such party of any of its obligations under this Warrant would give rise to irreparable harm to the other party hereto for which monetary damages would not be an adequate remedy and hereby agrees that in the event of a breach or a threatened breach by such party of any such obligations, the other party hereto shall, in addition to any and all other rights and remedies that may be available to it in respect of such breach, be entitled to equitable relief, including a restraining order, an injunction, specific performance and any other relief that may be available from a court of competent jurisdiction. The rights and remedies provided in this Warrant are cumulative and are not exclusive of, and are in addition to and not in substitution for, any other rights or remedies available at law, in equity or otherwise.

13

Section 15.     No Waiver.

No failure or delay (whether by course of conduct or otherwise) by a party in exercising any right, power or remedy that such party may have under the Warrant shall operate as a waiver thereof or of any other right, power or remedy, nor shall any single or partial exercise by a party of any such right, power or remedy preclude any other or further exercise thereof or of any other right, power or remedy. No waiver of any provision of the Warrant and no consent to any departure therefrom shall ever be effective unless it is in writing, and then such waiver or consent shall be effective only in the specific instances and for the purposes for which given and to the extent specified in such writing. No notice to or demand on any party shall in any case entitle any party to any other or further notice or demand in similar or other circumstances. This Warrant sets forth the entire understanding between the Parties hereto with respect to the transactions contemplated herein and supersede all prior discussions and understandings with respect to the subject matter hereof, and no waiver, consent, release, modification or amendment of or supplement to this Warrant shall be valid or effective against any party hereto unless the same is in writing and signed by such party.

Section 16.     Governing Law; Submission to Process.

This Warrant shall be governed by and construed in accordance with the internal laws of the State of Delaware, without giving effect to any choice or conflict of law provision (whether of the State of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Delaware. Each party hereby irrevocably (a) submits itself to the non-exclusive jurisdiction of the state and federal courts sitting in Dallas County, Texas, (b) agrees and consents that service of process may be made upon it in any legal proceeding relating to the Warrant by any means allowed under Delaware or federal law, and (c) waives any objection that it may now or hereafter have to the venue of any such proceeding being in such a court and any claim that any such proceeding brought in such a court has been brought in an inconvenient forum.

Section 17.      Severability. If any term or provision of this Warrant shall be determined to be illegal or unenforceable all other terms and provisions of this Warrant shall nevertheless remain effective and shall be enforced to the fullest extent permitted by applicable law.

Section 18.      Counterparts; Fax.

This Warrant may be separately executed in any number of counterparts and by different Parties hereto in separate counterparts, each of which when so executed shall be deemed to constitute one and the same Warrant. This Warrant may be validly executed and delivered in counterparts exchanged via facsimile, electronic mail in portable document format (.pdf) or other electronic transmission, each of which counterparts shall be deemed originals for all purposes.

Section 19.     Waiver of Jury Trial, Punitive Damages, etc.

Each party hereby knowingly, voluntarily, intentionally, and irrevocably (a) waives, to the maximum extent not prohibited by law, any right it may have to a trial by jury in respect of any litigation based hereon, or directly or indirectly at any time arising out of, under or in connection with the Warrant or any transaction contemplated thereby or associated therewith, before or after maturity; (b) waives, to the maximum extent not prohibited by law, any right it may have to claim or recover in any such litigation any “Special Damages” as defined below, (c) certifies that no party hereto nor any representative or agent or counsel for any party hereto has represented, expressly or otherwise, or implied that such party would not, in the event of litigation, seek to enforce the foregoing waivers, and (d) acknowledges that it has been induced to enter into this Warrant and the transactions contemplated hereby and thereby by, among other things, the mutual waivers and certifications contained in this Section. As used in this Section, “Special Damages” includes all special, consequential, exemplary, or punitive damages (regardless of how named), but does not include any payments or funds which any party hereto has expressly promised to pay or deliver to any other party hereto.

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Section 20.     Entire Agreement.

This Warrant, together with all exhibits and schedules to this Warrant, constitutes the entire agreement and understanding of the Parties with respect to the subject matter of this Warrant and supersedes any and all prior negotiations, correspondence, agreements, understandings, duties or obligations between the parties with respect to the subject matter of this Warrant.

Section 21.     EXPIRATION.

The right to exercise this Warrant shall expire at 5:00 p.m., New York, New York time, on September 6, 2020, after which the portion of this Warrant not exercised prior thereto shall be and become void.

Section 22.     RIGHTS AGREEMENT.

The Company acknowledges that the Holder has been designated as an Exempt Person (as defined under the Rights Agreement) by the Company’s Board of Directors for purposes of the Rights Agreement with respect to acquisitions by the Holder and its Affiliates (as defined under the Rights Agreement) of additional shares of Common Stock through the exercise of the Warrant. The Company agrees that it will not revoke the foregoing designation so long as Double Black Diamond, L.P. and/or its Affiliates hold the Warrant.

[Signature Page Follows]

15

IN WITNESS WHEREOF, the Company has executed this Warrant under seal as of the date first written above.

SWK HOLDINGS CORPORATION
By:	/s/ J. Brett Pope
Name: J. Brett Pope
Title:   Chief Executive Officer

16

NOTICE OF EXERCISE

To: SWK Holdings Corporation

The undersigned hereby subscribes for and exercises the right to acquire _____________ shares of Common Stock of the Company (or such number of other securities or property to which the undersigned is entitled in lieu thereof or in addition thereto under the provisions of the accompanying Warrant) and is hereby remitting payment in the form of the following (check applicable box):

☐	the enclosed bank draft, certified check or money order in lawful money of the United States of America payable to the Company; or
☐	wire transfer of immediately available funds to the account designated by the Corporation.

2.     The shares of Common Stock (or other securities or property) are to be registered as follows:

Name:
	(print clearly)

Address in full:

Number of shares of Common Stock:

3.     Such securities should be sent by courier to:

Name:
	(print clearly)

Address in full:

4.             ☐     Pursuant to Section 1.5 of the Warrant, this exercise is conditional upon the consummation of the following:

Dated:
	(Signature must conform to name of holder
	as specified on the face of the Warrant)

17

FORM OF ASSIGNMENT
(To be signed only on transfer of Warrant)

For value received, the undersigned hereby sells, assigns, and transfers unto ________, federal taxpayer identification number __________________, whose address is _________________, the right represented by the within Warrant to purchase __________ shares of Common Stock of SWK Holdings Corporation to which the within Warrant relates, and appoints _________________________ Attorney to transfer such right on the books of SWK Holdings Corporation with full power of substitution in the premises.

Dated:
	(Signature must conform to name of holder
	as specified on the face of the Warrant)
	(Address)

18

CASH BASED SETTLEMENT AGREEMENT

The undersigned hereby agree that, effective as of [________], this Warrant shall be deemed exercised with respect to _____________ shares of Common Stock of the Company in accordance with the cash based settlement provisions of Section of the Warrant.

The cash value of such shares of Common Stock (in the agreed amount of $_______) is to be wired to the following account:

Name:
	(print clearly)

Name of Bank:

ABA Number of Bank:

Account Number:

Dated:	SWK HOLDINGS CORPORATION
	By:	/s/
	Name:
	Title:

Dated:
	/s/
	(Signature must conform to name of holder
	as specified on the face of the Warrant)

 19

EX-10

Exhibit 10.1

LOAN AGREEMENT

Dated as of September 6, 2013

SWK HOLDINGS CORPORATION

and

SWK FUNDING LLC,

as Borrowers,

SWK ADVISORS LLC

and

SWK HP HOLDINGS GP LLC,

as Guarantors,

and

DOUBLE BLACK DIAMOND, L.P.,

as Lender

TABLE OF CONTENTS

 

ARTICLE I - DEFINITIONS AND REFERENCES			1
	Section 1.1	Terms Defined Above	1
	Section 1.2	Defined Terms	1
	Section 1.3	Exhibits and Schedules; Additional Definitions	18
	Section 1.4	Amendment of Defined Instruments	18
	Section 1.5	References and Titles	18
	Section 1.6	Calculations and Determinations	19
	Section 1.7	Joint Preparation; Construction of Indemnities and Releases	19

ARTICLE II - LOANS			19
	Section 2.1	Commitment	19
	Section 2.2	Loans; Borrowing Procedures and Limitations	19
	Section 2.3	Use of Proceeds	19
	Section 2.4	Interest Rates and Fees; Payment Dates	20
	Section 2.5	Mandatory Prepayments	20
	Section 2.6	Optional Prepayments	21
	Section 2.7	Increase in Commitment	21

ARTICLE III - PAYMENTS TO THE LENDER			22
	Section 3.1	General Procedures	22
	Section 3.2	Reimbursable Taxes	22
	Section 3.3	Status of Lender; FATCA	23

ARTICLE IV - CONDITIONS PRECEDENT			24
	Section 4.1	Closing Date Conditions	24
	Section 4.2	Funding Date Conditions	26

ARTICLE V - REPRESENTATIONS AND WARRANTIES OF THE CREDIT PARTIES			26
	Section 5.1	Organization and Good Standing	26
	Section 5.2	Authorization	27
	Section 5.3	No Conflicts or Consents	27
	Section 5.4	Enforceable Obligations	27
	Section 5.5	Initial Financial Statements	27
	Section 5.6	Other Obligations and Restrictions	27
	Section 5.7	Full Disclosure	28
	Section 5.8	Litigation	28
	Section 5.9	ERISA Plans and Liabilities	28
	Section 5.10	Insurance	28
	Section 5.11	Names and Places of Business	29
	Section 5.12	Capital Structure and Subsidiaries	29
	Section 5.13	Government Regulation	30
	Section 5.14	Solvency	30
	Section 5.15	Title to Properties; Licenses	30
	Section 5.16	Regulation T, U or X	30
	Section 5.17	Taxes	30
	Section 5.18	Foreign Corrupt Practices	31
	Section 5.19	OFAC	31
	Section 5.20	Investment Policy	31
	Section 5.21	Warrants	31
	Section 5.22	Eligible Assets	31

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ARTICLE VI - AFFIRMATIVE COVENANTS			32
	Section 6.1	Payment and Performance	32
	Section 6.2	Books, Financial Statements and Reports	32
	Section 6.3	Inspections	33
	Section 6.4	Notice of Material Events and Change of Address	33
	Section 6.5	Maintenance and Administration of Properties	34
	Section 6.6	Maintenance of Existence and Qualifications	35
	Section 6.7	Payment of Trade Liabilities, Taxes, etc	35
	Section 6.8	Insurance	35
	Section 6.9	Performance on a Credit Party’s Behalf	36
	Section 6.10	Interest	36
	Section 6.11	Compliance with Agreements and Law	36
	Section 6.12	Guaranties of Subsidiaries	36
	Section 6.13	Agreement to Deliver Security Documents	36
	Section 6.14	Investment Policy	37

ARTICLE VII - NEGATIVE COVENANTS			37
	Section 7.1	Indebtedness	37
	Section 7.2	Limitation on Liens	38
	Section 7.3	Limitation on Mergers, Issuances of Securities	38
	Section 7.4	Limitation on Dispositions of Property	38
	Section 7.5	Limitation on Dividends and Redemptions	38
	Section 7.6	Limitation on Investments and New Businesses	39
	Section 7.7	Transactions with Affiliates	39
	Section 7.8	Prohibited Contracts	39
	Section 7.9	Amendments to Organizational Documents; Other Material Agreements	40
	Section 7.10	Investment Policy	40
	Section 7.11	Underlying Agreements	40

ARTICLE VIII - FINANCIAL COVENANTS			40
	Section 8.1	Minimum Asset Coverage Ratio	40
	Section 8.2	Minimum Interest Coverage Ratio	40

ARTICLE IX - EVENTS OF DEFAULT AND REMEDIES			41
	Section 9.1	Events of Default	41
	Section 9.2	Remedies	43

ARTICLE X - GUARANTY			43
	Section 10.1	Guaranty	43
	Section 10.2	Guaranty of Payment	43
	Section 10.3	No Discharge or Diminishment of Guaranty	43
	Section 10.4	Defenses Waived	44
	Section 10.5	Rights of Subrogation	45
	Section 10.6	Reinstatement; Stay of Acceleration	45
	Section 10.7	Information	45
	Section 10.8	Maximum Liability	45
	Section 10.9	Liability Cumulative	45

ii 

ARTICLE XI - MISCELLANEOUS			46
	Section 11.1	Waivers and Amendments; Acknowledgments	46
	Section 11.2	Survival of Agreements; Cumulative Nature	47
	Section 11.3	Notices	47
	Section 11.4	Payment of Expenses; Indemnity	48
	Section 11.5	Successors and Assigns	50
	Section 11.6	Assignment of Loans and Note; Replacement of Note	50
	Section 11.7	Confidentiality	50
	Section 11.8	Governing Law; Submission to Process	51
	Section 11.9	Limitation on Interest	52
	Section 11.10	Severability	52
	Section 11.11	Counterparts; Fax	52
	Section 11.12	Waiver of Jury Trial, Punitive Damages, etc	52

 

Schedules and Exhibits:

Schedule 1	-	Disclosure Schedule
Schedule 2	-	Security Schedule
Schedule 3	-	Insurance Schedule
Schedule 4	-	Asset Schedule
Exhibit A	-	Promissory Note
Exhibit B	-	Prepayment Notice
Exhibit C	-	Certificate Accompanying Financial Statements
Exhibit D	-	Registration Rights Agreement
Exhibit E	-	Voting Agreement
Exhibit F	-	Warrant
Exhibit G	-	Investment Policy

iii 

LOAN AGREEMENT

THIS LOAN AGREEMENT is made as of September 6, 2013 (the “Closing Date”), by and among SWK Holdings Corporation, a Delaware corporation (“SWK Holdings”), and SWK Funding LLC, a Delaware limited liability company (“SWK Funding”), as borrowers (SWK Holdings and SWK Funding are referred to herein collectively as the “Borrowers” and each individually, a “Borrower”), SWK HP HOLDINGS GP LLC, a Delaware limited liability company (“HP Holdings”), and SWK ADVISORS, LLC, a Delaware limited liability company (“SWK Advisors”), as Guarantors (as hereinafter defined), and Double Black Diamond, L.P., a Delaware limited partnership (together with its successors and assigns, the “Lender”).

W I T N E S S E T H:

In consideration of the mutual covenants and agreements contained herein, the Loans to be made by the Lender, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

ARTICLE I - Definitions and References

Section 1.1     Terms Defined Above. As used in this Agreement, each term defined above has the meaning indicated above.

Section 1.2     Defined Terms. As used in this Agreement, each of the following terms has the meaning given to such term in this Section 1.2 or in the sections and subsections referred to below:

“2012 Annual Report” means the Annual Report of SWK Holdings on SEC Form 10-K for the Fiscal Year ended December 31, 2013, filed with the SEC on March 27, 2013.

“Adjusted Asset Value” means, as of any date, the Asset Value as of such date minus any portion of such Asset Value attributable to the value of any individual Eligible Asset’s contribution to Asset Value (other than Pledged Cash) in excess of the Concentration Limit as of such date for such Eligible Asset.

“Affiliate” means, as to any Person, each other Person that directly or indirectly (through one or more intermediaries or otherwise) controls, is controlled by, or is under common control with, such Person. A Person shall be deemed to be “controlled by” any other Person if such other Person possesses, directly or indirectly, power:

(a)     to vote 50% or more of the securities or other equity interests (on a fully diluted basis) having ordinary voting power for the election of directors, the managing general partner or partners or the managing member or members; or

(b)     to direct or cause the direction of the management and policies of such Person whether by contract or otherwise;  

 provided, that, for purposes of this Agreement and the other Loan Documents, the Borrowers and their Subsidiaries shall not be deemed Affiliates of the Lender or vice versa.

“Agreement” means this Loan Agreement.

“Anticipated Cash Flow” means, as of the end of any Fiscal Quarter, the sum of (a) 90% of all mandatory fixed minimum cash payments, including scheduled interest payments and mandatory amortization payments, in respect of Eligible Assets or other Permitted Investments of the Credit Parties falling due for payment irrespective of the occurrence of any event or the achievement or any threshold, and (b) 60% of all other cash payments in respect of Eligible Assets (including variable royalty payments, revenue sharing and revenue based amortization), in each case reasonably expected by the Borrowers to be received by the Credit Parties during the next four succeeding Fiscal Quarters.

“Approved Fund” means any Person (other than a natural Person) that is engaged in making, purchasing, holding or investing in loans and similar extensions of credit and that is administered or managed by (a) the Lender, (b) an Affiliate of the Lender or (c) an entity or an Affiliate of an entity that administers or manages the Lender.

“Asset Coverage Ratio” means, as of any date, the ratio of Adjusted Asset Value to Total Funded Debt.

“Asset File” means, with respect to each Permitted Investment all files, books, records, reports, data and other information, including each Underlying Agreement and any notices and other correspondence, received or generated by the Credit Parties in connection with, and which are material to, the administration and management of Permitted Investments.

“Asset Value” means, as of any date, the sum of the following:

(a)     an amount equal to 100% of any Pledged Cash or Permitted Investment Securities; plus

(b)     an amount equal to 90% of the outstanding principal balance of each Eligible Performing Loan as of the date of determination; plus

(c)     an amount equal to 60% of the Net Present Value of each Eligible Non-Loan Asset; plus

(d)     an amount to be agreed, from time to time, between the Borrowers and the Lender, with respect to any other Property of the Borrowers, which shall be subject to eligibility criteria and valuation procedures acceptable to the Lender in its sole discretion.

provided, however, that for purposes of calculating Asset Value, any Loan Asset that is a Non-Performing Loan or any Non-Loan Asset that is not an Eligible Non-Loan Asset shall not be assigned any value unless otherwise agreed between the Borrowers and the Lender.

“Available Amount” means, at any time, the difference of (a) the Commitment, minus (b) the aggregate amount of all Loans made pursuant to this Agreement prior to such time.

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“Bankruptcy Code” means the United States Bankruptcy Reform Act of 1978 (11 U.S.C. § 101, et seq.).

“Borrower Confidential Information” has the meaning given to such term in Section 11.7(a).

“Business Day” means a day, other than a Saturday or Sunday, on which commercial banks are open for business with the public in Dallas, Texas.

“Capital Lease” means a lease with respect to which the lessee is required concurrently to recognize the acquisition of an asset and the incurrence of a liability in accordance with GAAP.

“Capital Lease Obligation” means, with respect to any Person and a Capital Lease, the amount of the obligation of such Person as the lessee under such Capital Lease which should, in accordance with GAAP, appear as a liability on the balance sheet of such Person.

“Carlson” means Carlson Capital L.P., a Delaware limited partnership, and its Affiliates.

“Cash Equivalents” means Investments in:

(a)     marketable obligations, maturing within twelve months after acquisition thereof, issued or unconditionally guaranteed by the United States of America or an instrumentality or agency thereof and entitled to the full faith and credit of the United States of America;

(b)     demand deposits, and time deposits (including certificates of deposit) maturing within twelve months from the date of deposit thereof, with a domestic office of any national or state bank or trust company which is organized under the Laws of the United States of America or any state therein, which has capital, surplus and undivided profits of at least $500,000,000, and whose long term certificates of deposit are rated at least Aa3 by Moody’s or AA- by S & P;

(c)     open market commercial paper, maturing within 270 days after acquisition thereof, which are rated at least P-1 by Moody’s or A-1 by S & P; and

(d)     money market or other mutual funds substantially all of whose assets comprise securities of the types described in subsections (a) through (d) above.

“Change of Control” means the occurrence of any of the following events:

(a)     at any time after the Closing Date, the acquisition of ownership, directly or indirectly, beneficially or of record, by any Person or group (within the meaning of the Securities Exchange Act of 1934 and the rules of the SEC thereunder as in effect on the date hereof), other than any such acquisition resulting from a change in Carlson’s ownership of Equity Interests in SWK Holdings, of Equity Interests representing more than fifty percent (50%) of the aggregate ordinary voting power represented by the issued and outstanding Equity Interests of SWK Holdings; or

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(b)     SWK Holdings shall cease to own and control, directly or indirectly, 100% of the voting and economic interest in the Equity Interests in each other Credit Party other than in connection with a Disposition of such Equity Interests permitted hereunder or to which the Lender consents.

“Closing Date” has the meaning set forth in the introductory paragraph of this Agreement.

“Code” means the Internal Revenue Code of 1986, as amended from time to time, and any successor statute.

“Collateral” means all property of any kind which is subject to a Lien in favor of the Lender or which, under the terms of any Security Document, is purported to be subject to such a Lien.

“Commitment” means an amount initially equal to $15,000,000, as such amount may be increased from time to time pursuant to Section 2.7.

“Concentration Limit” means, at any time with respect to each Eligible Asset other than Pledged Cash, an amount equal to the lesser of (a) $10,000,000 and (b) an amount equal to 17.5% of the aggregate Asset Value of all Eligible Assets at such time.

“Consolidated” refers to the consolidation of any Person, in accordance with GAAP, with its properly consolidated subsidiaries. References herein to a Person’s Consolidated financial statements, financial position, financial condition or liabilities refer to the consolidated financial statements, financial position, financial condition or liabilities of such Person and its properly consolidated subsidiaries.

“Consolidated Interest Expense” means, as of the end of any Fiscal Quarter, for the Credit Parties on a Consolidated basis, an amount equal to, without duplication, all interest, premium payments, debt discount, fees, charges and related expenses of the Credit Parties in connection with borrowed money (including capitalized interest) or in connection with the deferred purchase price of assets, in each case to the extent treated as interest in accordance with GAAP and reasonably expected to fall due for payment during the next four succeeding Fiscal Quarters; provided, that, solely for the purpose of this definition, interest on any Loans for the applicable period shall be calculated (a) using the LIBOR Rate then in effect as of the end of such Fiscal Quarter, and (b) assuming the outstanding principal balance of any Loans then outstanding have been reduced by an amount equal to 90% of any unrestricted cash then available to the Borrowers to voluntarily prepay such Loans.

“Control Agreement” means any deposit account, securities account or blocked account control agreement, as applicable, to be executed and delivered by and among the Lender, the Credit Parties required by the Lender, and the applicable financial institution, that is approved by the Lender, for purposes of evidencing control by the Lender in one or more deposit accounts or securities accounts maintained by the applicable Credit Parties with any such specified financial institution, for purposes of perfection of the Lender’s Lien in such accounts.

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“Controlled Account” means a deposit account or a securities account of any Credit Party that, in each case, is subject to a Control Agreement.

“Credit Party” and “Credit Parties” mean, individually or collectively as the context requires, the Borrowers and the Guarantors.

“Default” means any Event of Default and any default, event or condition that would, with the giving of any requisite notices, the passage of any requisite periods of time, or both, constitute an Event of Default.

“Default Rate” means the rate per annum equal to 2.00% above the Floating Rate, provided that no Default Rate charged by the Lender shall ever exceed the Highest Lawful Rate.

“Disclosure Schedule” means Schedule 1 hereto.

“Disposition” means the sale, transfer, discounted pay-off or other disposition (including pursuant to a merger resulting in the subject Property no longer being owned by a Credit Party or a Subsidiary thereof) of any Property.

“Distribution” means (a) any dividend or other distribution made by a Credit Party on or in respect of any Equity Interest in such Credit Party or any other Credit Party, or (b) any payment made by a Credit Party to purchase, redeem, acquire or retire any Equity Interest in such Credit Party or any other Credit Party.

“Draw Period” means the period beginning on the Closing Date and ending on the date that is eighteen-months after the Closing Date.

“Eligible Asset” means any Pledged Cash, Permitted Investment Securities, Eligible Performing Loans, Eligible Non-Loan Assets, and any Property of a Credit Party that is assigned a positive value for purposes of calculating Asset Value pursuant to clause (d) of the definition thereof.

“Eligible Non-Loan Asset” means, as of any date, any Non-Loan Asset with respect to which each of the following conditions is satisfied:

(a)     the representations and warranties contained in Section 5.22 hereof are true in all material respects (provided that such materiality qualifier shall not apply to the extent a specific representation or warranty contains a materiality qualifier) as of such date (except in the case of representations and warranties that are made solely as of a specific date, which representations and warranties shall be true and correct in all material respects as of such date) with respect to such Non-Loan Asset;

(b)     the Lender has a valid and perfected first priority Lien (subject only to Permitted Liens) in such Non-Loan Asset;

(c)     such Non-Loan Asset was acquired and is maintained in accordance with the Investment Policy;

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(d)     no material breach or default exists beyond any applicable grace or cure period under any Underlying Agreement relating to such Non-Loan Asset;

(e)     no Obligor relating to such Non-Loan Asset has repudiated any material obligation, including any payment obligation, with respect thereto;

(f)     no right of set-off, or other defense to payment, has been asserted or exercised by an Obligor with respect thereto, other than the netting of any fees, costs, expenses or other items by such Obligor in accordance with, and in the normal course of administration of, the Underlying Agreements and/or such Non-Loan Asset;

(g)     each material Underlying Agreement with respect to such Non-Loan Asset constitutes the valid, binding obligation, and is enforceable against each applicable Obligor (as such enforcement may be limited by bankruptcy, insolvency or similar Laws of general application relating to the enforcement of creditors’ rights); and

(h)     to the extent the obligations of an Obligor with respect to such Non-Loan Asset are required to be secured in favor of any of the Borrowers or any other Credit Party pursuant to the terms of the Underlying Agreements related to such Non-Loan Asset, such Liens have been validly granted and perfected in accordance with the terms of the applicable Underlying Agreements and the representations and warranties in the applicable Underlying Agreements with respect to the collateral encumbered thereby are true and correct in all material respects (except in the case of representations and warranties that are made solely as of a specific date, which representations and warranties shall be true and correct in all material respects as of such date).

“Eligible Performing Loan” means, as of any date, any Performing Loan with respect to which each of the following conditions is satisfied:

(a)     the representations and warranties contained in Section 5.22 hereof are true in all material respects (provided that such materiality qualifier shall not apply to the extent a specific representation or warranty contains a materiality qualifier) as of such date (except in the case of representations and warranties that are made solely as of a specific date, which representations and warranties shall be true and correct in all material respects as of such date) with respect to such Performing Loan;

(b)     the Lender has a valid and perfected first priority Lien (subject only to Permitted Liens) in such Performing Loan; and

(c)     such Performing Loan was made in accordance with the Investment Policy;

(d)     each material Underlying Agreement with respect to such Performing Loan constitutes the valid, binding obligation, and is enforceable against each applicable Obligor (as such enforcement may be limited by bankruptcy, insolvency or similar Laws of general application relating to the enforcement of creditors’ rights); and

(e)     to the extent the obligations of an Obligor with respect to such Performing Loan are required to be secured in favor of any of the Borrowers or any other Credit Party pursuant to the terms of the Underlying Agreements related to such Performing Loan, such Liens have been validly granted and perfected in accordance with the terms of the applicable Underlying Agreements and the representations and warranties in the applicable Underlying Agreements with respect to the collateral encumbered thereby are true and correct in all material respects (except in the case of representations and warranties that are made solely as of a specific date, which representations and warranties shall be true and correct in all material respects as of such date).

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“Equity Documents” means the Warrant Agreement, the Voting Agreement, the Registration Rights Agreement, and all other agreements, certificates, documents and instruments delivered pursuant to such documents.

“Equity Interest” in a Person means any share of capital stock issued by such Person, any partnership, profits, capital, membership or other equity interest in such Person, any option, warrant or any other right to acquire any share of capital stock or any partnership, profits, capital, membership or other equity interest in such Person, and any other voting security issued by such Person.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and any successor statutes or statute, together with all rules and regulations promulgated with respect thereto.

“ERISA Affiliate” means each Credit Party and all members of a controlled group of corporations and all trades or businesses (whether or not incorporated) under common control that, together with such Credit Party, are treated as a single employer under Section 414 of the Internal Revenue Code.

“ERISA Plan” means any employee pension benefit plan subject to Title IV of ERISA maintained by any ERISA Affiliate with respect to which any Credit Party has a fixed or contingent liability.

“Event of Default” has the meaning given to such term in Section 9.1.

“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 and any agreements entered into pursuant to Section 1471(b)(1) of the Code.

“FCPA” means the Foreign Corrupt Practices Act of 1977, as amended.

“Fiscal Quarter” means a three-month period ending on March 31, June 30, September 30 or December 31 of any year.

“Fiscal Year” means a twelve-month period ending on December 31 of any year.

“Floating Rate” means, for any date of determination, a per annum rate equal to the sum of (a) the LIBOR Rate, plus (b) 6.50% per annum.

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“Funding Date” is any Business Day during the Draw Period on which a Loan is requested to be made to or for the account of the Borrowers.

“GAAP” means those generally accepted accounting principles and practices that are recognized as such by the Financial Accounting Standards Board (or any generally recognized successor) and that, in the case of the Credit Parties, are applied for all periods after the date hereof in a manner consistent with the manner in which such principles and practices were applied to the Initial Financial Statements. If any change in any accounting principle or practice is required by the Financial Accounting Standards Board (or any such successor) in order for such principle or practice to continue as a generally accepted accounting principle or practice, all reports and financial statements required hereunder with respect to any Credit Party may be prepared in accordance with such change, but all calculations and determinations to be made hereunder may be made in accordance with such change only after notice of such change is given to the Lender, and only to the extent the Borrowers and the Lender agree to such change insofar as it affects such calculations and determinations in any material respect.

“Governmental Authority” means the government of the United States of America, any other nation or any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.

“Guaranteed Obligations” has the meaning given to such term in Section 10.1.

“Guarantor” and “Guarantors” mean, individually or collectively as the context requires, the Borrowers, SWK Advisors, HP Holdings, and any other Subsidiary of the Borrowers that now or hereafter executes and delivers a guaranty to the Lender as required herein.

“Highest Lawful Rate” means the maximum nonusurious rate of interest that the Lender is permitted under applicable Law to contract for, take, charge, or receive with respect to any Obligations.

“HP Holdings” has the meaning given such term in the introductory paragraph of this Agreement.

“Indebtedness” of any Person means Liabilities in any of the following categories:

(a)     Liabilities for borrowed money;

(b)     Liabilities constituting an obligation to pay the deferred purchase price of property or services;

(c)     Liabilities evidenced by a bond, debenture, note or similar instrument;

(d)     Liabilities that (i) would under GAAP be shown on such Person’s balance sheet as a liability, and (ii) are payable more than one year from the date of creation or incurrence thereof (other than reserves for taxes and reserves for contingent obligations);

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(e)     Capital Lease Obligations;

(f)     Liabilities arising under conditional sales or other title retention agreements;

(g)     Liabilities owing under direct or indirect guaranties of Liabilities of any other Person or otherwise constituting obligations to purchase or acquire or to otherwise protect or insure a creditor against loss in respect of Liabilities of any other Person (such as obligations under working capital maintenance agreements, agreements to keep-well, or agreements to purchase Liabilities, assets, goods, securities or services), but excluding endorsements in the ordinary course of business of negotiable instruments in the course of collection;

(h)     Liabilities (for example, repurchase agreements, mandatorily redeemable preferred stock and sale/leaseback agreements) consisting of an obligation to purchase or redeem securities or other property, if such Liabilities arise out of or in connection with the sale or issuance of the same or similar securities or property;

(i)     Liabilities with respect to letters of credit or applications or reimbursement agreements therefor;

(j)     Liabilities with respect to banker’s acceptances;

(k)     Liabilities under any ERISA Plan;

(l)     Liabilities with respect to other obligations to deliver goods or services in consideration of advance payments therefor;

(m)     Unfunded commitments and/or future funding commitments of a Credit Party with respect to (i) an Eligible Asset or (ii) any other Investment not constituting an Eligible Asset; or

(n)     Liabilities consisting of Royalty Payments;

provided, however, that the “Indebtedness” of any Person shall not include Liabilities that were incurred by such Person in the ordinary course of business and on ordinary trade terms to vendors, suppliers, or other Persons providing goods and services for use by such Person in the ordinary course of its business, unless and until such Liabilities (i) are outstanding more than sixty (60) days past the due date therefor or (ii) exceed $250,000 in the aggregate, but then only to the extent of such excess.

“Indemnified Party” has the meaning given to such term in Section 11.4(b).

“Initial Financial Statements” means, with respect to SWK Holdings and its Consolidated Subsidiaries, (a) the audited consolidated balance sheet as of December 31, 2012 and the audited consolidated statements of income and cash flows for the twelve-month period ended December 31, 2012, and (b) the unaudited consolidated balance sheet as of June 30, 2013 and the unaudited consolidated statements of income and cash flows for the six-month period ended June 30, 2012, in each case together with the related notes and schedules thereto, if any.

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“Insolvency Event” means, with respect to any Person (a) the filing of a decree or order for relief by a court having jurisdiction over such Person or any substantial part of its property in an involuntary case under any applicable Insolvency Law now or hereafter in effect, or appointing a receiver, liquidator, assignee, custodian, trustee, or similar official for such Person or for any substantial part of its property, or ordering the winding up or liquidation of such Person’s affairs, and such decree or order shall remain unstayed and in effect for a period of 60 consecutive days, (b) the commencement by such Person of a voluntary case under any applicable Insolvency Law now or hereafter in effect, or the consent by such Person to the entry of an order for relief in an involuntary case under any such law, (c) the consent by such Person to the appointment of or taking possession by a receiver, liquidator, assignee, custodian, trustee, or similar official for such Person or for any substantial part of its property, or the making by such Person of any general assignment for the benefit of creditors, or (d) the failure by such Person generally to pay its debts as such debts become due, or the taking of action by such Person in furtherance of any of the foregoing.

“Insolvency Laws” means the Bankruptcy Code and all other applicable liquidation, conservatorship, bankruptcy, moratorium, rearrangement, receivership, insolvency, suspension of contractual obligations, reorganization, or similar debtor relief laws from time to time in effect affecting the rights of creditors generally.

“Insurance Schedule” means Schedule 3 attached hereto.

“Interest Coverage Ratio” means, as of any date of determination, the ratio of Anticipated Cash Flow to Consolidated Interest Expense for the four succeeding Fiscal Quarters following such date of determination.

“Internal Revenue Code” means the United States Internal Revenue Code of 1986, as amended from time to time and any successor statute or statutes, together with all rules and regulations promulgated with respect thereto.

“Investment” means any investment, made directly or indirectly, in any Person or asset, whether constituting Loan Assets or Non-Loan Assets and whether made (i) by purchase or acquisition of Equity Interests, Indebtedness or other obligations or securities, (ii) by purchase or acquisition of payment intangibles, contracts or contract rights, accounts payable, rights to receive royalty, milestone or other similar payments in relation to the development, marketing, promotion and/or sale of one or more products, (iii) by purchase or acquisition of intellectual property and any other tangible or intangible personal property, or (iv) by extension of credit, loan, advance, capital contribution, purchase consideration or otherwise, in each case whether made in cash, by the transfer of property, or by any other means.

“Investment Policy” means SWK Holdings’ investment objectives, policies, restrictions, and limitations as described on Exhibit G hereto, as the same may be amended, restated, supplemented, or otherwise modified from time to time by a Permitted Investment Policy Amendment.

“Law” means any statute, law, regulation, ordinance, rule, treaty, judgment, order, decree, permit, concession, franchise, license, agreement or other governmental restriction of the United States or any state or political subdivision thereof or of any foreign country or any department, province or other political subdivision thereof. Any reference to a Law includes any amendment or modification to such Law, and all regulations, rulings, and other Laws promulgated under such Law.

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“Liabilities” means, as to any Person, all indebtedness, liabilities and obligations of such Person, whether matured or unmatured, liquidated or unliquidated, primary or secondary, direct or indirect, absolute, fixed or contingent, and whether or not required to be considered liabilities pursuant to GAAP.

“LIBOR Rate” means, for any Fiscal Quarter, a per annum rate equal to the rate appearing on Reuters Screen LIBOR01 Page (or, if no such page exists, on any successor or substitute page providing rate quotations comparable to those currently provided on such page of the Reuters Service, as determined by the Lender from time to time for purposes of providing quotations of interest rates applicable to dollar deposits in the London interbank market) at which dollar deposits in amounts approximately equal to the aggregate outstanding principal amount of the Loans for a term of three months are offered in the London interbank market at approximately 11:00 a.m., London time, 2 Business Days prior to the first day of such Fiscal Quarter; provided that for the Fiscal Quarter ending September 30, 2013, “LIBOR Rate” means such rate determined as of 11:00 a.m., London time, on the Closing Date.

“Lien” means, with respect to any property or assets, any right or interest therein of a creditor to secure Liabilities owed to it or any other arrangement with such creditor which provides for the payment of such Liabilities out of such property or assets or which allows such creditor to have such Liabilities satisfied out of such property or assets prior to the general creditors of any owner thereof, including any lien, mortgage, security interest, pledge, deposit, production payment, rights of a vendor under any title retention or conditional sale agreement or lease substantially equivalent thereto, tax lien, mechanic’s or materialman’s lien, or any other charge or encumbrance for security purposes, whether arising by Law or agreement or otherwise, but excluding any right of offset which arises without agreement in the ordinary course of business.

“Liquidity” means, with respect to the Credit Parties as of any date of determination, an amount equal to the sum of (a) the aggregate amount of all Pledged Cash, plus (b) the aggregate amount of all Permitted Investment Securities, plus (c) the Available Amount.

“Loan” and “Loans” mean, individually or collectively as the context requires, each loan made pursuant to Section 2.1.

“Loan Asset” means any loan, advance or other extension of credit (including any commitment to provide such loan, advance or extension of credit) provided by a Credit Party that is a debt obligation with a stated principal or notional balance and accrues interest payable or compounded at periodic intervals.

“Loan Documents” means this Agreement, any Note, the Security Documents, and all other agreements, certificates, documents and instruments at any time executed by any Credit Party for the benefit of the Lender.

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“Material Adverse Change” means any circumstance or event that, individually or collectively with other circumstances or events, could reasonably be expected to result in a material and adverse change, from the state of affairs existing on the Closing Date or from the state of affairs represented or warranted in any Loan Document, with respect to (a) the Credit Parties’ financial condition (taken as a whole), (b) the Credit Parties’ business, income, assets, operations or properties (taken as a whole), (c) the Credit Parties’ ability to perform their obligations under this Agreement or any other Transaction Document, (d) the ability of the Lender to practically realize the benefits of any of their rights and remedies under the Transaction Documents, or (e) the enforceability of the material terms of any Transaction Document.

“Material Investment” means, as of any date, any Permitted Investment that either (a) represents more than 5% of Asset Value as of such date or (b) generates more than 5% of Anticipated Cash Flow over the four Fiscal Quarters commencing as of the first date of the current Fiscal Quarter.

“Maturity Date” means the four year anniversary of the Closing Date.

“Maximum Liability” has the meaning given to such term in Section 10.8.

“Moody’s” means Moody’s Investors Service, Inc., or its successor.

“Mortgage” means each deed of trust or mortgage from time to time given by any Credit Party to secure any of the Obligations, as each may be amended, supplemented or otherwise modified from time to time.

“Net Present Value” means, as of any date of determination with respect to any Eligible Asset that is a Non-Loan Asset, the net present value of such Eligible Asset as reasonably determined by the Lender using a valuation methodology, consistently applied, for assets of the type and income characteristics of such Eligible Asset in light of prevailing market conditions and customary business practice; provided that (a) the “Net Present Value” of any Eligible Asset shall only be determined or re-determined, as applicable, on (i) the day on which such Eligible Asset is initially added (or subsequently added after not constituting an Eligible Asset for any period of time) in the calculation of Asset Value, (ii) the last day of each Fiscal Quarter, (iii) each Funding Date, and (iv) any date on which any material breach or default has occurred and continued beyond any applicable grace or cure period under any Underlying Agreement related to such Eligible Asset, and (b) any determination or re-determination of “Net Present Value” with respect to any Eligible Asset that is a Non-Loan Asset shall be effective upon the Lender notifying the Borrowers in writing of such determination or re-determination, as applicable.

“Net Proceeds” means, with respect to any event, (a) the cash proceeds received in respect of such event including (i) any cash received in respect of any non-cash proceeds (including any cash payments received by way of deferred payment of principal pursuant to a note or installment receivable or purchase price adjustment receivable or otherwise, but excluding any interest payments), but only as and when received, (ii) in the case of a casualty, insurance proceeds and (iii) in the case of a condemnation or similar event, condemnation awards and similar payments, net of (b) the sum of (i) all reasonable fees and out-of-pocket expenses paid to third parties (other than Affiliates) in connection with such event, (ii) in the case of a Disposition of any Property (including pursuant to a sale and leaseback transaction or a casualty or a condemnation or similar proceeding), the amount of all payments required to be made as a result of such event to repay Indebtedness (other than Loans) secured by such asset or otherwise subject to mandatory prepayment as a result of such event and (iii) the amount of all taxes paid (or reasonably estimated to be payable) and the amount of any reserves established to fund contingent liabilities reasonably estimated to be payable, in each case during the year that such event occurred or the next succeeding year and that are directly attributable to such event (as determined reasonably and in good faith by an officer of the Borrowers).

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“Non-Loan Asset” means an Investment by a Credit Party (other than a Loan Asset) that, pursuant to the terms of such Investment’s Underlying Agreements, requires that mandatory cash payments be made from time to time to a Credit Party (a) on a scheduled or periodic basis and/or (b) or upon the occurrence, or achievement of, designated events or thresholds; for the avoidance of doubt, Capital Leases shall be treated as Non-Loan Assets.

“Non-Performing Loan” means any Loan Asset with respect to which (a) a payment default has occurred, (b) any event of default has occurred and has not been (i) waived by the relevant Credit Party and (ii) approved by the Lender in its sole discretion, (c) any restructuring or modification of such Loan Asset has occurred resulting in materially weaker credit characteristics than such Loan Asset immediately prior to such restructuring or modification, or (d) an Insolvency Event has occurred with respect to any related Obligor. As of the Closing Date the Loan Assets constituting Non-Performing Loans are set forth on Schedule 4.

“Note” means a promissory note in the form of Exhibit A that is delivered to the Lender by the Borrowers, as amended, restated, replaced, supplemented or otherwise modified from time to time in accordance the terms of this Agreement.

“Obligated Party” has the meaning given to such term in Section 10.2.

“Obligations” means all Liabilities from time to time owing by any Credit Party to the Lender under or pursuant to any of the Loan Documents. “Obligation” means any portion of the Obligations.

“Obligor” means, with respect to any Permitted Investment, any Person or Persons obligated to make payments pursuant to, or with respect to, such Permitted Investment, including any guarantor thereof or Person granting any security securing any portion thereof.

“OFAC” means the Office of Foreign Assets Control of the United States Department of the Treasury.

“Organizational Documents” means, with respect to any entity, such entity’s certificate or articles of incorporation, articles of organization, bylaws, regulations, operating agreement, partnership agreement, or other organizational documents.

“Performance Standard” means a standard of reasonable care, using a degree of skill and attention customarily used by prudent institutional owners of, sophisticated investors in, or prudent managers of investments similar to the Permitted Investments.

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“Performing Loan” means any Loan Asset that is not a Non-Performing Loan.

“Permitted Investments” means:

(a)     Cash Equivalents;

(b)     Investments existing on the Closing Date as set forth in Section 1.1(a) of the Disclosure Schedule; and

(c)     Investments consistent with SWK Holdings’ Investment Policy.

“Permitted Investment Policy Amendment” means any amendment, modification, termination or restatement of the Investment Policy that is either (a) approved in writing by the Lender, which approval shall not be unreasonably withheld, conditioned or delayed, or (b) required by applicable Law or Governmental Authority.

“Permitted Investment Securities” means, on any date, any Cash Equivalents to the extent pledged as additional Collateral pursuant to the Security Documents and on deposit in a Controlled Account.

“Permitted Liens” means:

(a)     statutory Liens for taxes, assessments or other governmental charges or levies that are not yet delinquent or that are being diligently contested in good faith by appropriate action and for which adequate reserves have been maintained in accordance with GAAP;

(b)     landlords’, carriers’, warehousemen’s, repairmen’s, mechanics’, materialmen’s, or other like Liens and contractual Liens, in each case only to the extent arising in the ordinary course of business and only to the extent securing obligations which are not delinquent or which are being contested in good faith by appropriate proceedings and for which adequate reserves have been maintained in accordance with GAAP;

(c)     minor defects and irregularities in title to any property, so long as such defects and irregularities neither secure Indebtedness nor materially impair the value of such property or the use of such property for the purposes for which such property is held;

(d)     deposits to secure the performance of bids, trade contracts, leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature, in each case in the ordinary course of business;

(e)     pledges and deposits made in the ordinary course of business in compliance with workers’ compensation, unemployment insurance and other social security laws or regulations;

(f)     judgment liens in respect of judgments that do not constitute an Event of Default;

(g)     Liens arising from UCC financing statement filings regarding operating leases entered into by any Credit Party in the ordinary course of business covering the property under the lease;

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(h)     Liens existing on any asset of any Person at the time such asset is acquired or at the time such Person becomes a Subsidiary of a Borrower, or is merged or consolidated with or into a Borrower or another Credit Party; provided, that (i) such Liens shall not have been created in contemplation of such event, (ii) such Liens do not at any time encumber any Property other than such asset and (iii) such Liens only secure Indebtedness of such Person permitted under Section 7.1(f);

(i)     Liens burdening only deposit accounts, securities accounts or other funds maintained with a financial institution in favor of such depository or securities intermediary that arise solely by virtue of any statutory or common law provisions relating to bankers’ liens, rights of set-off or similar rights and remedies as to such deposit accounts, securities accounts or funds or under any deposit account agreement or securities account agreement entered into in the ordinary course of business; provided that (i) no such deposit account or securities account is a dedicated cash collateral account or is subject to restrictions against access by the Credit Party, and (ii) no such deposit account or securities account is intended by the Credit Party to provide cash collateral to the applicable financial institution;

(j)     easements (including easements for pipelines, alleys, telephone lines, power lines and railways), rights-of-way, restrictions (including zoning restrictions), covenants, terms, conditions, exceptions, servitudes, permits, licenses, surface leases and other similar rights in respect of encroachments, protrusions and other similar encumbrances and minor title deficiencies on or with respect to any real property that (i) in the aggregate, are not substantial in amount, and (ii) do not in any case materially detract from the value of the property subject thereto or materially interfere with the ordinary conduct of the business of the Credit Parties;

(k)     Liens existing on the date hereof and set forth in Section 1.1(b) of the Disclosure Schedule;

(l)     Liens permitted under any Underlying Agreement; and

(m)     Liens under the Security Documents.

“Person” means an individual natural person, corporation, general partnership, limited partnership, limited liability company, association, joint stock company, trust or trustee thereof, estate or executor thereof, Governmental Authority, or any other legally recognizable entity.

“Pledged Cash” means, on any date, the aggregate amount of cash in dollars on deposit in a Controlled Account on such date.

“Prepayment Premium” means, with respect to any prepayment (other than a prepayment made with the proceeds of an offering of Equity Interests of SWK Holdings that is consummated in accordance with the terms and conditions of the Equity Documents), an amount equal to the product of (a) 1%, multiplied by (b) the amount of the principal prepayment to be made to the Lender.

“Pro Forma Compliance” means, as of any date of determination for purposes of calculating compliance with the covenants contained in Article VIII on a pro forma basis, calculating (a) Asset Value and Anticipated Cash Flow as if (i) in the case of the funding of a new Loan, the Eligible Asset to be financed with such Loan has been made or acquired by a Credit Party, (ii) in the case of a Disposition or discounting of an Eligible Asset, the Disposition or discount has occurred, and (iii) the four Fiscal Quarter calculation period commenced as of the first day of the current Fiscal Quarter in which the Loan funding, Disposition or discounting occurs, (b) Consolidated Interest Expense and Total Funded Debt as if (i) in the case of the funding of a new Loan or incurring other Indebtedness permitted hereunder, the Loan or other Indebtedness has been funded or incurred, (ii) in the case of a Disposition or discounting of an Eligible Asset, the Loans have been repaid by the amount the Borrowers have elected or are required to repay in connection with such Disposition or discounting, and (iii) the four Fiscal Quarter calculation period commenced as of first day of the current Fiscal Quarter in which the Loan funding, Disposition or discounting occurs, and (c) Liquidity, in the case of making a Permitted Investment, as if any unfunded commitment or future commitment to be incurred by a Credit Party in connection with such Permitted Investment, has been incurred and any Loan financing such Permitted Investment has been funded.

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“Property” means any interest in any kind of property or asset, whether real, personal or mixed, tangible or intangible.

“Registration Rights Agreement” means a registration rights agreement entered between SWK Holdings and the Lender, in the form attached hereto as Exhibit E.

“Regulation D” means Regulation D of the Board of Governors of the Federal Reserve System as from time to time in effect.

“Reimbursable Taxes” has the meaning given such term in Section 3.2(a).

“Royalty Payments” means any royalty payments, licensing, marketing or similar fees or compensation payable in cash by a Credit Party to an Obligor or other Person in connection with a Permitted Investment.

“S & P” means Standard & Poor’s Ratings Services (a division of The McGraw Hill Companies), or its successor.

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

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

“Security Documents” means the instruments listed in the Security Schedule and all other security agreements, deeds of trust, Mortgages, chattel mortgages, pledges, guaranties, financing statements, continuation statements, extension agreements and other agreements or instruments now, heretofore, or hereafter delivered by any Credit Party to the Lender in connection with this Agreement or any transaction contemplated hereby to secure or guarantee the payment of any part of the Obligations or the performance of any Credit Party’s other duties and obligations under the Loan Documents.

“Security Schedule” means Schedule 2 hereto.

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“Solvent” means, with respect to any Person, (a) the aggregate fair saleable value of such Person’s assets exceeds such Person’s liabilities, (b) such Person has sufficient cash flow to enable it to pay its debts as they mature, and (c) such Person does not have unreasonably low capital to conduct its business.

“Subsidiary” means, with respect to any Person, any corporation, association, partnership, limited liability company, joint venture, or other business or corporate entity, enterprise or organization which is directly or indirectly (through one or more intermediaries) controlled by or owned fifty percent (50%) or more by such Person. Unless expressly provided otherwise, all references herein and in any other Transaction Document to any “Subsidiary” or “Subsidiaries” means a Subsidiary or Subsidiaries of the Borrowers.

“SWK Advisors” has the meaning given such term in the introductory paragraph of this Agreement.

“SWK Funding” has the meaning given such term in the introductory paragraph of this Agreement.

“SWK Holdings” has the meaning given such term in the introductory paragraph of this Agreement.

“Termination Event” means (a) the occurrence with respect to any ERISA Plan of (i) a reportable event described in Section 4043(c)(5) or (6) of ERISA or (ii) any other reportable event described in Section 4043(c) of ERISA other than a reportable event not subject to the provision for 30-day notice to the Pension Benefit Guaranty Corporation pursuant to a waiver by such corporation under Section 4043(a) or 4043(b)(4) of ERISA, or (b) the withdrawal of any ERISA Affiliate from an ERISA Plan during a plan year in which it was a “substantial employer” as defined in Section 4001(a)(2) of ERISA, or (c) the filing of a notice of intent to terminate any ERISA Plan or the treatment of any ERISA Plan amendment as a termination under Section 4041(c) of ERISA, or (d) the institution of proceedings to terminate any ERISA Plan by the Pension Benefit Guaranty Corporation under Section 4042 of ERISA, or (e) any other event or condition which could reasonably be expected to result in grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any ERISA Plan.

“Total Funded Debt” means, as of any date, all Indebtedness of the Credit Parties on a consolidated basis described in clauses (a), (c), (e), (m)(ii) and (n) of the definition of “Indebtedness”.

“Transaction Documents” means the Loan Documents and the Equity Documents.

“UCC” means the Uniform Commercial Code (or any similar or equivalent legislation) as in effect in any applicable jurisdiction.

“Underlying Agreements” means any loan agreement, credit agreement, license agreement, royalty agreement, equity document or other agreement pursuant to which an Investment has been issued or created and each other agreement that governs the terms of or secures the obligations represented by such Investment.

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“Voting Agreement” means a voting agreement entered among the Lender and SWK Holdings, in the form attached hereto as Exhibit E.

“Warrant” means a warrant to purchase 1,000,000 shares of common stock, par value $0.001 per share, of SWK Holdings at a price equal to $1.3875 per share, pursuant to the Warrant Agreement.

“Warrant Agreement” means a warrant agreement entered between SWK Holdings and the Lender, in the form attached hereto as Exhibit G.

“Warrant Shares” means shares of common stock, par value $0.001 per share, of SWK Holdings, issuable upon exercise of or otherwise pursuant to the Warrant.

Section 1.3     Exhibits and Schedules; Additional Definitions. All Exhibits and Schedules attached to this Agreement are a part hereof for all purposes. Reference is hereby made to the Security Schedule for the meaning of certain terms defined therein and used but not defined herein, which definitions are incorporated herein by reference.

Section 1.4     Amendment of Defined Instruments. Unless the context otherwise requires or unless otherwise provided herein the terms defined in this Agreement which refer to a particular agreement, instrument or document also refer to and include all renewals, extensions, modifications, amendments and restatements of such agreement, instrument or document, provided that nothing contained in this section shall be construed to authorize any such renewal, extension, modification, amendment or restatement.

Section 1.5     References and Titles. All references in this Agreement to Exhibits, Schedules, articles, sections, subsections, definitions and other subdivisions refer to the Exhibits, Schedules, articles, sections, subsections, definitions and other subdivisions of this Agreement unless expressly provided otherwise. Exhibits and Schedules to any Transaction Document shall be deemed incorporated by reference in such Transaction Document. References to any document, instrument, or agreement (a) shall include all exhibits, schedules, and other attachments thereto, and (b) shall include all documents, instruments, or agreements issued or executed in replacement thereof. Titles appearing at the beginning of any subdivisions are for convenience only and do not constitute any part of such subdivisions and shall be disregarded in construing the language contained in such subdivisions. The words “this Agreement”, “this instrument”, “herein”, “hereof”, “hereby”, “hereunder” and words of similar import refer to this Agreement as a whole and not to any particular subdivision unless expressly so limited. The phrases “this section” and “this subsection” and similar phrases refer only to the sections or subsections hereof in which such phrases occur. The word “or” is not exclusive, and the word “including” (in its various forms) means “including without limitation”. References to a Person’s “discretion” means its sole and absolute discretion. Pronouns in masculine, feminine and neuter genders shall be construed to include any other gender, and words in the singular form shall be construed to include the plural and vice versa, unless the context otherwise requires. Accounting terms have the meanings assigned to them by GAAP, as applied by the accounting entity to which they refer. References to “days” shall mean calendar days, unless the term “Business Day” is used. Unless otherwise specified, references herein to any particular Person also refer to its successors and permitted assigns.

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Section 1.6     Calculations and Determinations. All calculations under the Loan Documents of interest chargeable with respect to the Loans and of fees shall be made on the basis of actual days elapsed (including the first day but excluding the last) and a year of 360 days. Each determination by the Lender of amounts to be paid under Article III or any other matters which are to be determined hereunder by the Lender shall, in the absence of manifest error, be conclusive and binding. Unless otherwise expressly provided herein or unless the Lender otherwise consents, all financial statements and reports furnished to the Lender hereunder shall be prepared and all financial computations and determinations pursuant hereto shall be made in accordance with GAAP.

Section 1.7     Joint Preparation; Construction of Indemnities and Releases. This Agreement and the other Transaction Documents have been reviewed and negotiated by sophisticated parties with access to legal counsel and no rule of construction shall apply hereto or thereto that would require or allow any Transaction Document to be construed against any party because of its role in drafting such Transaction Document. All indemnification and release provisions of this Agreement shall be construed broadly (and not narrowly) in favor of the Persons receiving indemnification or being released.

ARTICLE II - Loans

Section 2.1     Commitment. Subject to the terms and conditions of this Agreement, the Lender shall make Loans to the Borrowers in an aggregate amount not to exceed the Commitment. Amounts borrowed under this Agreement and subsequently pre-paid or repaid in whole or part may not be re-borrowed. The Lender’s obligation to make Loans pursuant to this Section 2.1 shall terminate on the earlier to occur of (a) the last day of the Draw Period, and (b) the date on which the outstanding principal amount of all Loans, the unpaid interest thereon, and all other Obligations become due and payable.

Section 2.2     Loans; Borrowing Procedures and Limitations.

(a)     Borrowing Notice; Funding Date. Subject to the prior satisfaction of all other applicable conditions to the making of a Loan set forth in this Agreement, in order to obtain a Loan, the Borrowers shall notify the Lender (which notice shall be irrevocable and shall contain the requested principal amount of such Loan and wire instructions for the proceeds of such Loan) by electronic mail, facsimile, or telephone by no later than 11:00 a.m. (Dallas, Texas time) 5 Business Days prior to the proposed Funding Date for such Loan, which Funding Date shall be a Business Day that is no later than the last day of the Draw Period. The Lender may rely on any telephone notice given by a Person whom the Lender believes is an officer or designee of any Borrower.

(b)     Minimum Amount. Each Loan shall be in a minimum amount of $3,000,000, with any increases over such minimal amount in integral multiples of $100,000.

Section 2.3     Use of Proceeds. The Borrowers will use the proceeds of the Loans as follows: (a) to pay expenses, costs, and fees incurred in connection with this Agreement and the other Transaction Documents, (b) for general working capital purposes, (c) to make or acquire new Investments of the type described in clause (d) of the definition of “Permitted Investments”, and (e) to pay expenses, costs, and fees incurred in connection with the consummation of Investments described in clause (c) of this sentence. In no event shall the proceeds of the Loans be used directly or indirectly by any Person (y) for personal, family, household or agricultural purposes, or (z) for the purpose, whether immediate, incidental or ultimate, of purchasing, acquiring or carrying any “margin stock” (as such term is defined in Regulation U promulgated by the Board of Governors of the Federal Reserve System) or to extend credit to others directly or indirectly for the purpose of purchasing or carrying any such margin stock.

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Section 2.4     Interest Rates and Fees; Payment Dates.

(a)     Interest Rates. Subject to subsection (b) below, the outstanding principal amount of the Loans shall bear interest on each day outstanding at the Floating Rate, and such interest shall be payable in arrears on the first day of each Fiscal Quarter and on the Maturity Date. Interest shall also be paid on the date of any prepayment or repayment of the Loans.

(b)     Default Rate. If an Event of Default shall have occurred and be continuing, the outstanding principal amount of the Loans shall bear interest at the Default Rate, whether at stated maturity, upon acceleration or otherwise, after as well as before judgment. Such interest shall be payable by the Borrowers upon demand by the Lender.

Section 2.5     Mandatory Prepayments.

(a)     If any Change of Control occurs, then, simultaneously with the occurrence of such Change in Control, the Borrowers shall prepay in full in cash all outstanding principal, interest, and other Obligations with respect to the Loans.

(b)     Within 3 Business Days after the date any Credit Party receives Net Proceeds in excess of $1,000,000 from any Disposition (including casualty losses or condemnations but excluding Dispositions that are permitted under Section 7.4) by a Credit Party of any Property not constituting a Permitted Investment, the Borrowers shall prepay the outstanding principal amount of the Obligations in an amount equal to 100% of such Net Proceeds (including condemnation awards and payments in lieu thereof) received by such Credit Party in connection with such Disposition, together with all accrued and unpaid interest thereon. Within 3 Business Days after the date any Credit Party receives Net Proceeds from any Disposition by any Credit Party of Property constituting a Permitted Investment, the Borrowers shall prepay the outstanding principal amount of the Obligations in the amount necessary, if any, to cause the Borrowers to be in Pro Forma Compliance after giving effect to such Disposition. Nothing contained in this Section 2.5(b) shall permit the Credit Parties to sell or otherwise dispose of any Property other than in accordance with Section 7.4.

(c)     Any mandatory prepayment made pursuant to this Section 2.5 or made during the continuance of an Event of Default (as a result of acceleration of the Obligations, foreclosure of Collateral, or otherwise) shall include, if such prepayment occurs before the Maturity Date, the Prepayment Premium determined for the applicable prepayment date with respect to the principal amount so prepaid.

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Section 2.6     Optional Prepayments.

(a)     The Borrowers may, at their option on the last Business Day of any Fiscal Quarter, upon notice as provided below, prepay the Loans in full or in part, in a minimum principal amount equal to the lesser of (i) $3,000,000 and (ii) aggregate principal amount of the Loans then outstanding, plus the Prepayment Premium determined for the prepayment date with respect to such principal amount (except to the extent such prepayment is made with the proceeds of an offering of Equity Interests in SWK Holdings), plus any accrued and unpaid interest thereon and any other Obligations owing under the Loan Documents. The Borrowers shall give the Lender irrevocable written notice of any optional prepayment pursuant to this Section 2.6 substantially in the form of Exhibit B hereto not less than 10 days and not more than 30 days prior to the date fixed for such prepayment (which date shall be a Business Day).

(b)     In the case of the prepayment of the Loans pursuant to this Section 2.6, the total outstanding principal amount of the Loans to be prepaid as set forth in the applicable notice of prepayment shall become due and payable on the date fixed for such prepayment, together with interest on such principal amount accrued to such date and any applicable Prepayment Premium. When the Obligations have been fully and indefeasibly paid in full in cash and no Commitments of the Lender that would give rise to any Obligations remain outstanding, the Note shall be surrendered to the Borrowers and cancelled and the Lender, at the Borrowers’ sole cost and expense, shall file all necessary UCC termination statements, execute such termination and/or release documents and/or take any other actions as may be reasonably requested by the Credit Parties to terminate any security interests that the Lender may have in the Collateral.

Section 2.7     Increase in Commitment. At the request of the Borrowers, the Lender shall increase the Commitment if each of the following conditions is satisfied:

(a)     SWK Holdings shall have consummated an offering or series of offerings of its Equity Interests consisting of common stock of SWK Holdings after the Closing Date in form and substance reasonably satisfactory to the Lender resulting in Net Proceeds of at least $10,000,000 in cash received by SWK Holdings on or before the last day of the Draw Period;

(b)     such requested increase in the Commitment shall be in a minimum amount of $3,000,000, with any increases over such minimum amount in integral multiples of $1,000,000;

(c)     such requested increase in the Commitment shall not cause the aggregate amount of the Commitment to exceed $30,000,000;

(d)     the Borrowers shall have delivered to the Lender a certificate of each Credit Party signed by an authorized officer of such Credit Party (i) certifying and attaching the resolutions adopted by each Credit Party approving or consenting to such increase and (ii) certifying that before and after giving effect to such increase, (A) the representations and warranties contained in Article V and the other Loan Documents are true in all material respects (provided that such materiality qualifier shall not apply to the extent a specific representation or warranty contains a materiality qualifier) as of such date (except in the case of representations and warranties that are made solely as of a specific date, which representations and warranties shall be true and correct in all material respects as of such date), and (B) no Default exists;

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(e)     the Borrowers shall have delivered to Lender a favorable opinion of counsel, reasonably acceptable to the Lender, as to such matters concerning the Credit Parties, the enforceability of the Loan Documents, and the validity of liens and security interests under the Security Documents, in each case after giving effect to the to the increase in the Commitment; and

(f)     the Borrower shall have delivered to Lender a Note made by Borrowers payable to the Lender in the aggregate principal amount of such requested increase.

ARTICLE III - Payments to the Lender

Section 3.1     General Procedures.

(a)     The Borrowers will make each payment that it owes under the Loan Documents to the Lender, in lawful money of the United States of America, without set-off, deduction or counterclaim, and in immediately available funds. Should any such payment become due and payable on a day other than a Business Day, the date for such payment shall be extended to the next succeeding Business Day, and, in the case of a payment of principal or past due interest, interest shall accrue and be payable thereon for the period of such extension.

(b)     When the Lender collects or receives money on account of the Obligations, the Lender shall apply all such money so collected or received, as follows:

(i)     first, for the payment of all fees, indemnities, expenses and other amounts (other than principal and interest) payable to the Lender under any Loan Document;

(ii)     second, for the payment of accrued and unpaid interest on the Loans;

(iii)     third, for the payment of principal of the Loans, together with any Prepayment Premium then owing;

(iv)     fourth, for the payment of any other Obligations then owing; and

(v)     fifth, to the Borrowers.

Section 3.2     Reimbursable Taxes. The Borrowers covenant and agree that:

(a)     the Credit Parties will indemnify the Lender against and reimburse the Lender for all present and future income, franchise, transfer, stamp, mortgage, court or documentary, intangible, recording, filing, withholding and other taxes, levies, costs and charges whatsoever imposed, assessed, levied or collected on or in respect of this Agreement or any Transaction Document or any payment made pursuant to any Loan Document (whether or not legally or correctly imposed, assessed, levied or collected), excluding, however, (i) taxes imposed on or measured by the Lender’s overall net income, and margin and franchise taxes imposed on it (in lieu of net income taxes), in each case by the jurisdiction (or any political subdivision thereof) under the Laws of which it is organized or otherwise resides for tax purposes or maintains the office through which it administers this Agreement and (ii) any U.S. federal withholding taxes imposed under FATCA (all such non-excluded taxes, levies, costs and charges being collectively called “Reimbursable Taxes”). Such indemnification shall be on an after-tax basis and paid within 5 Business Days after the Lender makes demand therefor.

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(b)     All payments on account of the principal of, and interest on, the Loans, and all other amounts payable by or on behalf of the Borrowers to the Lender hereunder or under any other Loan Document, shall be made in full in cash without set-off or counterclaim and shall be made free and clear of and without deductions or withholdings of any nature by reason of any Reimbursable Taxes. In the event of the Borrowers being compelled by Law to make any such deduction or withholding from any payment to the Lender, the Borrowers shall pay to the Lender on the due date of such payment such additional amounts as are needed to cause the amount received by the Lender after such deduction or withholding to equal the amount that would have been received by the Lender in the absence of such deduction or withholding. If the Borrowers should make any deduction or withholding as aforesaid, the Borrowers shall within fifteen (15) days thereafter forward to the Lender an official receipt or other official document evidencing payment of such deduction or withholding.

Section 3.3     Status of the Lender; FATCA

(a)     If the Lender is entitled to an exemption from or reduction of withholding tax under applicable Law with respect to payments made under any Loan Document, it will deliver to the Borrowers, at the time or times reasonably requested by the Borrowers, such properly completed and executed documentation reasonably requested by the Borrowers as will permit such payments to be made without withholding or at a reduced rate of withholding. In addition, the Lender, if reasonably requested by the Borrowers, shall deliver such other documentation prescribed by applicable Law or reasonably requested by the Borrowers as will enable the Borrowers to determine whether or not the Lender is subject to backup withholding or information reporting requirements.

(b)     If a payment made to the Lender under any Loan Document would be subject to U.S. federal withholding tax imposed by FATCA if the 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), the Lender shall deliver to the Borrowers at the time or times prescribed by Law and at such time or times reasonably requested by the Borrowers 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 as may be necessary for the Borrowers to comply with its obligations under FATCA and to determine that the Lender has complied with the Lender’s obligations under FATCA or to determine the amount to deduct and withhold from such payment. Solely for purposes of this clause (b), “FATCA” shall include any amendments made to FATCA after the date of this Agreement.

(c)     The 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 Borrowers in writing of its legal inability to do so.

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ARTICLE IV - Conditions Precedent

Section 4.1     Closing Date Conditions. The effectiveness of this Agreement is subject to the satisfaction, or waiver in accordance with Section 11.1, of the following conditions on or before the Closing Date:

(a)     Due Diligence; Tax Analysis. The Lender shall have completed a due diligence review of the Credit Parties and the Collateral satisfactory to the Lender in its sole discretion.

(b)     Investment Committee and Compliance Approval. The Lender shall have received all necessary investment committee and compliance approvals.

(c)     Closing Documents. The Lender shall have received all of the following, duly executed and delivered and in form and substance satisfactory to the Lender:

(i)     this Agreement;

(ii)     a Note made by Borrowers payable to the Lender in the aggregate principal amount of $15,000,000;

(iii)     each Equity Document;

(iv)     each Security Document listed in the Security Schedule;

(v)     all material third party consents required with respect to any Collateral;

(vi)     certain certificates of the Credit Parties including:

(A)     “Officer’s Certificates” of the Secretary and of the President (or officers holding equivalent positions) of each of the Credit Parties, which shall contain the names and specimen signatures of the officers or representatives authorized to execute the Transaction Documents and which shall certify to the truth, correctness and completeness of the following exhibits attached thereto: (1) a copy of resolutions duly adopted by the board of directors (or comparable governing body) of such Credit Party, and in full force and effect at the time this Agreement is entered into, authorizing the execution of this Agreement and the other Transaction Documents delivered or to be delivered in connection herewith to which such Credit Party is a party and the consummation of the transactions contemplated herein and therein, (2) a copy of the charter documents of such Credit Party and all amendments thereto, certified by the appropriate official of the state of organization, and (3) a copy of the bylaws (or equivalent governing documents) of such Credit Party; and

(B)     a “Closing Certificate” of the President or Chief Financial Officer (or an officer holding an equivalent position) of the Borrowers, dated as of the date of this Agreement, in which such officer certifies that (1) all representations and warranties made by any Credit Party in any Loan Document are true in all material respects (provided that such materiality qualifier shall not apply to the extent a specific representation or warranty contains a materiality qualifier) as of such date (except in the case of representations and warranties that are made solely as of a specific date, which representations and warranties shall be true and correct in all material respects as of such date), (2) no Default has occurred and is continuing, and (3) there has been no Material Adverse Change, and no event or circumstance has occurred that could reasonably be expected to cause a Material Adverse Change, in each case since December 31, 2012;

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(vii)     certificates evidencing the due formation, valid existence and good standing of each Credit Party in its state of organization, issued by the appropriate authorities of such jurisdiction, and certificates of each Credit Party’s good standing and due qualification to do business, issued by appropriate officials in any other jurisdiction where the nature and extent of its business and properties require due qualification and good standing;

(viii)    a favorable opinion of Holland & Knight LLP, counsel for the Credit Parties, as to such matters concerning the Credit Parties and Collateral as the Lender may request, including, without limitation, opinions as to the Credit Parties’ due organization, valid existence, good standing, and authority to enter into the Transaction Documents, the enforceability of the Transaction Documents, and validity of liens and security interests under the Security Documents;

(ix)      certificates evidencing the Credit Parties’ insurance in effect on the Closing Date;

(x)       a solvency certificate of the Chief Financial Officer (or an officer holding an equivalent position) of the Borrowers dated the Closing Date demonstrating that before and after giving effect to the consummation of the Loan Documents the Credit Parties are Solvent;

(xi)      the Initial Financial Statements;

(xii)     UCC, judgment, tax lien, and recording-district real property record searches in such jurisdictions as requested by the Lender evidencing the absence of Liens except for Liens being released on the Closing Date and Permitted Liens; and

(xiii)     such other agreements, instruments, certificates, or other documents as requested by the Lender;

(d)     Fees and Expenses. The Borrowers shall have paid all fees owed to the Lender and/or its Affiliates, as applicable, under this Agreement or any fee or reimbursement letters entered into between the Borrowers and the Lender or any Affiliate of the Lender.

(e)     Representations and Warranties. All representations and warranties made by any Credit Party in any Loan Document shall be true in all material respects (provided that such materiality qualifier shall not apply to the extent a specific representation or warranty contains a materiality qualifier) as of the Closing Date (except in the case of representations and warranties that are made solely as of a specific date, which representations and warranties shall be true and correct in all material respects as of such date).

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(f)      No Default. No Default shall have occurred that is continuing.

(g)     No Material Adverse Change. There shall have been no Material Adverse Change, and no event or circumstance shall have occurred that could reasonably be expected to cause a Material Adverse Change, in each case since December 31, 2012.

Section 4.2     Funding Date Conditions. The obligation of the Lender to make any Loan is subject to the satisfaction, or waiver in accordance with Section 11.1, of the following conditions on or before the applicable Funding Date:

(a)     Availability. The amount of the requested Loan shall not be greater than the Available Amount on the Funding Date (before giving effect to such requested Loan).

(b)     Funding Documents. The Lender shall have received all of the following, duly executed and delivered and in form and substance satisfactory to the Lender:

(i)      a “Compliance Certificate” in the form of Exhibit C showing Pro Forma Compliance with the Asset Coverage Ratio, the Interest Coverage Ratio and the minimum Liquidity requirement set forth in Section 8.3, in each case after giving effect to the Loan to be advanced on the Funding Date;

(ii)     an Officer’s Certificate from an office of the Borrowers certifying to the truth and accuracy of the matters set forth in clauses (b), (c) and (d) of this Section 4.2.

(c)     Representations and Warranties. All representations and warranties made by any Credit Party in any Loan Document shall be true in all material respects (provided that such materiality qualifier shall not apply to the extent a specific representation or warranty contains a materiality qualifier) as of such Funding Date (except in the case of representations and warranties that are made solely as of a specific date, which representations and warranties shall be true and correct in all material respects as of such date);

(d)     No Default. No Default shall have occurred that is continuing or shall result from the making of such Loan; and

(e)     No Material Adverse Change. There shall have been no Material Adverse Change, and no event or circumstance shall have occurred that could reasonably be expected to cause a Material Adverse Change, in each case since December 31, 2012.

ARTICLE V - Representations and Warranties of the Credit Parties

To induce the Lender to enter into this Agreement and to make the Loans, the Borrowers and each other Credit Party represent and warrant to the Lender that:

Section 5.1     Organization and Good Standing. Each Credit Party is duly organized, validly existing and in good standing under the Laws of its jurisdiction of organization, having all requisite powers and authority required to carry on its business and enter into and carry out the transactions contemplated hereby. Each Credit Party is duly qualified, in good standing, and authorized to do business in all other jurisdictions within the United States wherein the character of the properties owned or held by it or the nature of the business transacted by it makes such qualification necessary, except to the extent that the failure to obtain such qualification could not reasonably be expected to cause a Material Adverse Change. Each Credit Party has taken all actions and procedures customarily taken in order to enter, for the purpose of conducting business or owning property, each jurisdiction outside the United States wherein the character of the properties owned or held by it or the nature of the business transacted by it makes such actions and procedures desirable.

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Section 5.2     Authorization. Each Credit Party has duly taken all action necessary to authorize the execution and delivery by it of the Transaction Documents to which it is a party and to authorize the consummation of the transactions contemplated thereby and the performance of its obligations thereunder. The Borrowers are duly authorized to borrow the Loans pursuant to this Agreement.

Section 5.3     No Conflicts or Consents. The execution and delivery by each Credit Party of the Transaction Documents to which it is a party, the performance of its obligations under such Transaction Documents, and the consummation of the transactions contemplated by the Transaction Documents, do not and will not (a) conflict with any provision of (i) any Law applicable to the Credit Parties, (ii) its Organizational Documents, or (iii) any material agreement, judgment, license, order or permit applicable to or binding upon such Credit Party or its assets, (b) result in the acceleration of any Indebtedness owed by such Credit Party, or (c) result in or require the creation of any Lien upon any assets or properties of such Credit Party except as expressly contemplated or permitted in the Loan Documents. Except as expressly contemplated in the Transaction Documents, no permit, consent, approval, authorization or order of, and no notice to or filing with, any Governmental Authority or third party is required in connection with the execution, delivery or performance by any Credit Party of any Transaction Document or to consummate any transactions contemplated by the Transaction Documents.

Section 5.4     Enforceable Obligations. This Agreement is, and the other Transaction Documents when duly executed and delivered will be, legal, valid and binding obligations of the Credit Parties that are a party hereto or thereto, enforceable in accordance with their terms except as such enforcement may be limited by bankruptcy, insolvency or similar Laws of general application relating to the enforcement of creditors’ rights.

Section 5.5     Initial Financial Statements. The Borrowers have heretofore delivered to the Lender true, correct and complete copies of the Initial Financial Statements. The Initial Financial Statements fairly present the Consolidated financial position, income, and cash flows of the Persons reported on therein, in each case at the date thereof. The Initial Financial Statements were prepared in accordance with GAAP.

Section 5.6     Other Obligations and Restrictions. Except as shown in the Initial Financial Statements or disclosed in Section 5.6 of the Disclosure Schedule, no Credit Party has any material outstanding Liabilities of any kind (including contingent obligations, tax assessments, and unusual forward or long-term commitments). Except as shown in the Initial Financial Statements or disclosed in Section 5.6 of the Disclosure Schedule, no Credit Party is subject to or restricted by any franchise, contract, deed, charter restriction, or other instrument or restriction which could reasonably be expected to cause a Material Adverse Change.

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Section 5.7     Full Disclosure. No certificate, statement or other information delivered by or on behalf of any Credit Party or its Affiliates herewith or heretofore to the Lender in connection with the negotiation of this Agreement or in connection with any transaction contemplated hereby contains any untrue statement of a material fact or omits to state any material fact known to any Credit Party or their respective Affiliates necessary to make the statements contained herein or therein not misleading, in light of the circumstances under which they were made or deemed made, as of the date made or deemed made; provided that, with respect to projections, the Credit Parties represent only that such information was prepared in good faith based on assumptions believed to be reasonable at the time. No Material Adverse Change has occurred since December 31, 2012. There is no fact known to any Credit Party or their respective Affiliates that has not been disclosed to the Lender in writing which could reasonably be expected to cause a Material Adverse Change. As of the Closing Date, no Credit Party has any Material Investments, except for those contracts and agreements described in Section 5.7 of the Disclosure Schedule.

Section 5.8     Litigation. Except as disclosed in the Initial Financial Statements or in Section 5.8 of the Disclosure Schedule: (a) there are no actions, suits or legal, equitable, arbitrative or administrative proceedings pending, or to the knowledge of any Credit Party threatened, against any Credit Party or affecting any Collateral (including any that challenge or otherwise pertain to any Credit Party’s title to any Collateral) before any Governmental Authority that could reasonably be expected to cause a Material Adverse Change, and (b) there are no outstanding judgments, injunctions, writs, rulings or orders by any such Governmental Authority against any Credit Party or, to the knowledge of the Credit Parties, any Credit Party’s stockholders, partners, members, directors or officers or affecting any Collateral or any of its material assets or property that could reasonably be expected to cause a Material Adverse Change.

Section 5.9     ERISA Plans and Liabilities. No ERISA Affiliate maintains or participates in any ERISA Plans.

Section 5.10   Insurance. The Insurance Schedule contains a substantially accurate and complete description of all material policies of property and casualty, liability, workmen’s compensation and other forms of insurance owned or held by or on behalf of any Credit Party. Such policies constitute all policies of insurance required to be maintained under Section 6.8 hereof. All such policies are in full force and effect, all premiums due with respect thereto have been paid, and no notice of cancellation or termination has been received with respect to any such policy. Such policies are sufficient for compliance in all material respects with all requirements of Law and of all material agreements to which any Credit Party is a party; are valid, outstanding and enforceable policies; provide adequate insurance coverage in at least such amounts and against at least such risks (but including in any event public liability) as are usually insured against in the same general area by companies engaged in the same or a similar business for the assets and operations of the Credit Parties; will remain in full force and effect through the respective dates set forth in the Insurance Schedule without the payment of additional premiums; and will not in any material way be affected by, or terminate or lapse by reason of, the transactions contemplated by this Agreement and the other Transaction Documents.

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Section 5.11   Names and Places of Business. No Credit Party has, during the preceding five years, had, been known by, or used any other trade or fictitious name, except as disclosed in Section 5.11 of the Disclosure Schedule. Except as otherwise indicated in Section 5.11 of the Disclosure Schedule, the chief executive office and principal place of business of each Credit Party are (and for the preceding five years have been) located at the address of the Borrowers set out in Section 11.3. Except as indicated in Section 5.11 of the Disclosure Schedule, no Credit Party has any other office or place of business.

Section 5.12    Capital Structure and Subsidiaries.

(a)     Section 5.12(a) of the Disclosure Schedule sets forth, as of the Closing Date, a true, correct and complete description of SWK Holdings’ outstanding Equity Interests, all Equity Interests reserved for issuance and Equity Interests that have been authorized for issuance under SWK Holdings’ Organizational Documents. As of the Closing Date, (i) all such Equity Interests have been, or upon issuance will be, duly authorized and are validly issued, fully paid and non-assessable, and (ii) all such Equity Interests are free and clear of any Liens and other restrictions imposed through the actions or failure to act of SWK Holdings (including any restrictions on the right to vote, sell or otherwise dispose of any such Equity Interest) and free and clear of any preemptive rights, rescission rights, or other rights to subscribe for or to purchase or repurchase any such Equity Interest.

(b)     Section 5.12(b) of the Disclosure Schedule sets forth, as of the Closing Date, a true, correct and complete description of (i) the Borrowers’ Subsidiaries, (ii) each such Subsidiary’s outstanding Equity Interests, Equity Interests reserved for issuance and Equity Interests that have been authorized for issuance under such Subsidiary’s Organizational Documents, (iii) the ownership of each such outstanding Equity Interest and (iv) any other Equity Interests in any other Person that are owned by the Borrowers or their Subsidiaries. All of the Equity Interests of Borrowers’ Subsidiaries and any other outstanding Equity Interests set forth in Section 5.12(b) of the Disclosure Schedule, have been duly authorized and are validly issued, fully paid and non-assessable. Except as disclosed on Section 5.12(b) of the Disclosure Schedule, such Equity Interests that are owned by Borrowers or their Subsidiaries are free and clear of any Liens and other restrictions (including any restrictions on the right to vote, sell or otherwise dispose of any such Equity Interest) and all such Equity Interests are free and clear of any preemptive rights, rescission rights, or other rights to subscribe for or to purchase or repurchase any such Equity Interest.

(c)     Except as set forth on Section 5.12(c) of the Disclosure Schedule, as of the Closing Date, (i) there are no outstanding options, warrants, scrips, rights to subscribe for, puts, calls, rights of first refusal, agreements, understandings, claims or other commitments or rights of any character whatsoever relating to, or securities or rights convertible into or exchangeable for any Equity Interests of the Borrowers or any of their Subsidiaries, or arrangements by which the Borrowers or any of their Subsidiaries is or may become bound to issue additional Equity Interests of the Borrowers or any of their Subsidiaries or purchase or redeem any Equity Interests of the Borrowers or any of their Subsidiaries, (ii) there are no agreements or arrangements under which the Borrowers or any of their Subsidiaries is obligated to register the sale of any of its or their securities under the 1933 Act and (iii) there are no anti-dilution or price adjustment provisions contained in any security issued by the Borrowers (or in any agreement providing rights to security holders) that will be triggered by the issuance of the Warrant (including the issuance of the Warrant Shares upon exercise of the Warrant).

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(d)     The Borrowers have furnished to the Lender true and correct copies of the Borrowers’ and their Subsidiaries Organizational Documents (as in effect as of the Closing Date). In connection with SWK Holdings’ most recent sale of its Equity Interests occurring prior to the Closing Date (other than pursuant to any employee option plan), which sale took place on September 29, 2005, the per-share sales price was $1.5227.

Section 5.13     Government Regulation. Neither the Borrowers nor any other Credit Party is (a) an “investment company” or a company “controlled” by an “investment company” within the meaning of the Investment Company Act of 1940, as amended, or (b) subject to regulation under any Law which regulates the incurring by such Person of Indebtedness.

Section 5.14     Solvency. After giving effect to the execution of the Loan Documents by the parties thereto and the consummation of the transactions contemplated hereby and thereby, the Credit Parties, in the aggregate, will be Solvent.

Section 5.15     Title to Properties; Licenses. Section 5.15 to the Disclosure Schedule sets forth a list of all real property owned or leased by any Credit Party as of the Closing Date. Each Credit Party has good and defensible title to, or valid leasehold interests in, all of its other material properties and assets necessary or used in the ordinary conduct of its business, free and clear of all Liens, encumbrances, or adverse claims other than Permitted Liens and of all impediments to the use of such properties and assets in such Credit Party’s business other than Permitted Liens. Each Credit Party possesses all licenses, permits, franchises, patents, copyrights, trademarks and trade names, and other intellectual property (or otherwise possesses the right to use such intellectual property without violation of the rights of any other Person) that are necessary to carry out its business as presently conducted and as presently proposed to be conducted hereafter, except where the failure to possess the same does not (a) materially interfere with the ordinary conduct of business and (b) could not reasonably be expected to cause a Material Adverse Change, and no Credit Party is in violation in any material respect of the terms under which it possesses such intellectual property or the right to use such intellectual property.

Section 5.16     Regulation T, U or X. No Credit Party is engaged in the business of extending credit for the purpose of purchasing or carrying Margin Stock, and neither the making of the Loans hereunder nor the use of proceeds thereof will violate the provisions of Regulation T, U or X of the Federal Reserve Board.

Section 5.17     Taxes. Each Credit Party 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 for taxes that are being diligently contested in good faith by appropriate proceedings and for which such Credit Party has set aside on its books adequate reserves in accordance with GAAP. The charges, accruals and reserves on the books of each Credit Party in respect of taxes and other governmental charges are, in the reasonable opinion of such Credit Party, adequate. No tax Lien has been filed and, to the knowledge of the Credit Parties, no claim is being asserted with respect to any such tax or other such governmental charge.

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Section 5.18     Foreign Corrupt Practices. No Credit Party, nor any director, officer, agent, employee or Affiliate of any Credit Party are aware of or has taken any action, directly or indirectly, that would result in a material violation by such Persons of the FCPA, including without limitation, making use of the mails or any means or instrumentality of interstate commerce corruptly in furtherance of an offer, payment, promise to pay or authorization of the payment of any money, or other property, gift, promise to give, or authorization of the giving of anything of value to any “foreign official” (as such term is defined in the FCPA) or any foreign political party or official thereof or any candidate for foreign political office, in contravention of the FCPA; and, each Credit Party and their respective Affiliates have conducted their business in material compliance with the FCPA.

Section 5.19     OFAC. No Credit Party, nor any director, officer, agent, employee or Affiliate of any Credit Party are currently subject to any material United States sanctions administered by OFAC, and the Credit Parties will not directly or indirectly use the proceeds from the Loans or lend, contribute or otherwise make available such proceeds to any Subsidiary, joint venture partner or other Person, for the purpose of financing the activities of any Person currently subject to any United States sanctions administered by OFAC.

Section 5.20     Investment Policy. The Credit Parties are in compliance with the Investment Policy.

Section 5.21     Warrants. So long as the Warrant Agreement remains in effect and the Warrant is held by the Lender or Carlson:

(a)     Warrant Shares. The Warrant Shares are duly authorized and reserved for issuance, and, when issued upon exercise of or otherwise pursuant to the Warrant will be validly issued, fully paid and non-assessable, and free from all taxes, Liens, claims and encumbrances and will not be subject to preemptive rights or other similar rights and will not impose personal liability upon the holder thereof.

(b)     Application of Takeover Protections. SWK Holdings and its board of directors have taken all necessary action, if any, in order to render inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or other similar anti-takeover provision under SWK Holdings’ Organization Documents (or similar charter documents) or the laws of its state of incorporation that is or could become applicable to the Lender as a result of the Lender and SWK Holdings fulfilling their obligations or exercising their rights under the Transaction Documents, including, without limitation, as a result of SWK Holdings’ issuance of the Warrant or Warrant shares and the Lender’s ownership of the Warrant or Warrant shares.

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Section 5.22     Eligible Assets.

(a)     As of the Closing Date, each Credit Party is the sole and beneficial owner of each Eligible Asset disclosed on Schedule 4 as being owned by such Credit Party, in each case free and clear of all Liens other than Permitted Liens, with the full legal right and ability to pledge its rights and interests pursuant to the Security Documents.

(b)     Each Loan Asset disclosed on Schedule 4 carries a right to payment of principal as of the Closing Date in an amount not less than the outstanding principal balance of such Loan Asset as disclosed on Schedule 4. The Underlying Agreements that have been provided to the Lender with respect to each Eligible Asset are the only thereunder, including the rate of interest and any variable or revenue based payments. Copies of all material Underlying Agreements with respect to any Eligible Asset have been provided to the Lender, which are full, correct and complete. Except as otherwise set forth on Section 5.22(b) of the Disclosure Schedule, no modifications, amendments, waivers or supplements to any such material Underlying Agreement have been entered into and are effective other than such modifications, amendments, waivers or supplements that are permitted hereunder (or have otherwise been approved by the Lender in writing) and have been provided to the Lender.

(c)     Except as set forth on Section 5.22(c) of the Disclosure Schedule, no Eligible Asset disclosed on Schedule 4 contains any obligation of any Credit Party to make any further advances or payment to an Obligor that remains outstanding as of the Closing Date.

ARTICLE VI - Affirmative Covenants

To induce the Lender to enter into this Agreement and make the Loans, each Borrower and each other Credit Party warrants, covenants and agrees that until the Obligations have been fully and indefeasibly paid in full in cash and no Commitments of the Lender that would give rise to any Obligations remain outstanding:

Section 6.1     Payment and Performance. Each Credit Party will pay all amounts due under the Transaction Documents to which it is a party in accordance with the terms thereof and will observe, perform and comply with every covenant, term and condition set forth in the Transaction Documents to which it is a party.

Section 6.2     Books, Financial Statements and Reports. Each Credit Party will at all times maintain full and accurate books of account and records. The Borrowers will maintain and will cause their Subsidiaries to maintain a standard system of accounting, will maintain its Fiscal Year, and will furnish the following statements and reports to the Lender at the Borrowers’ expense:

(a)     as soon as available, and in any event within ninety (90) days after the end of each Fiscal Year, complete Consolidated financial statements of SWK Holdings together with all notes thereto, prepared in reasonable detail in accordance with GAAP, together with an unqualified opinion, based on an audit using generally accepted auditing standards, by an independent certified public accounting firm selected by the Borrowers and reasonably acceptable to the Lender, stating that such Consolidated financial statements have been so prepared. Such financial statements shall contain a Consolidated balance sheet of SWK Holdings as of the end of such Fiscal Year and Consolidated statements of earnings, cash flows, and stockholders’ equity of SWK Holdings for such Fiscal Year, each setting forth in comparative form the corresponding figures for the preceding Fiscal Year;

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(b)     as soon as available, and in any event within forty five (45) days after the end of each Fiscal Quarter, SWK Holdings’ Consolidated balance sheet as of the end of such Fiscal Quarter and Consolidated statements of SWK Holdings’ earnings and cash flows for the period from the beginning of the then current Fiscal Year to the end of such Fiscal Quarter, all in reasonable detail and prepared in accordance with GAAP, subject to changes resulting from normal year-end adjustments. In addition, the Borrowers shall, together with each such set of financial statements and each set of financial statements furnished under subsection (a) of this section, furnish a certificate signed by the Chief Financial Officer (or an officer holding an equivalent position) of SWK Holdings in the form of Exhibit C, (i) stating that such financial statements are accurate and complete (subject to normal year-end adjustments) and stating that, to the knowledge of Credit Parties, no Default exists at the end of such Fiscal Quarter or at the time of such certificate or specifying the nature and period of existence of any such Default and (ii) demonstrating the Borrower’s compliance with the financial covenants set forth in Article VIII,; and

(c)     such other information that the Lender may from time to time reasonably request concerning the Loan Documents, any Collateral, or any matter in connection with the Credit Parties’ businesses, properties, prospects, condition (financial or otherwise) and operations.

Section 6.3     Inspections. Each Credit Party will permit representatives appointed by the Lender (including the Lender’s officers, employees, independent accountants, auditors, agents, attorneys, appraisers and any other Persons), upon reasonable advance notice, to visit and inspect during normal business hours any of such Credit Party’s property, including its books of account, the Asset File with respect to any Permitted Investment, other books and records, and any facilities or other business assets, and to make extra copies therefrom and photocopies and photographs thereof, and to write down and record any information such representatives obtain; provided that so long as an Event of Default does not exist, the Borrowers shall not be required to reimburse the Lender for such examinations and inspections more frequently than once during any calendar quarter. Each Credit Party shall permit the Lender and its representatives to investigate and verify the accuracy of the information furnished to the Lender in connection with the Transaction Documents and to discuss all such matters with its officers, employees and representatives. Upon prior notice to the Borrowers, the Lender may (a) contact Obligors with respect to one or more Eligible Assets for the sole and exclusive purpose of verifying the existence and terms of such Eligible Assets, and/or (b) require the Credit Parties to contact any Obligor to request reports and other information to the extent such Credit Party is entitled to such reports and information pursuant to the applicable Underlying Agreements. Following the occurrence and during the continuance of an Event of Default, the Lender may contact any Obligor from time to time to discuss the performance and status of any Permitted Investment and to request reports and other information to the extent any Credit Party is entitled to such reports and information pursuant to the applicable Underlying Agreements.

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Section 6.4     Notice of Material Events and Change of Address. The Borrowers will promptly notify the Lender in writing (stating that such notice is being given pursuant to this Agreement) upon becoming aware of:

(a)     the occurrence of any Material Adverse Change;

(b)     the occurrence of any Default;

(c)     the acceleration of the maturity of any Indebtedness owed by any Credit Party or of any breach or default by any Credit Party under any Material Investment;

(d)     the occurrence of any Termination Event;

(e)     the filing of any suit or proceeding against any Credit Party in which (i) any Person seeks an award of more than $100,000 of damages or other amounts from any Credit Party or (ii) an adverse decision could reasonably be expected to cause a Material Adverse Change;

(f)     the creation or acquisition of any Subsidiary by any Credit Party;

(g)     the occurrence of (i) an Insolvency Event with respect to any Obligor or (ii) a payment default or material breach by an Obligor in respect of any Material Investment;

(h)     the termination of a Material Investment, or the repudiation of a material obligation under any Underlying Agreement with respect to a Material Investment by an Obligor; and

(i)     the receipt by any Credit Party of a written assertion or allegation by any Obligor or other Person that a Credit Party has breached its obligations under any Underlying Agreement with respect to any Eligible Asset, including any obligation to make a Royalty Payment when due.

The Borrowers will also notify the Lender and the Lender’s counsel in writing at least thirty (30) Business Days prior to the date that any Credit Party changes its name or the location of its chief executive office or its location under the UCC.

Section 6.5     Maintenance and Administration of Permitted Investments and other Properties.

(a)     Each Credit Party will maintain, preserve, protect, and keep all Collateral and all other property used or useful in the conduct of its business in good condition (normal wear and tear excepted) and in accordance with prudent industry standards, and will from time to time make all repairs, renewals and replacements needed to enable the business and operations carried on in connection therewith to be conducted at all times consistent with prudent industry practices, except, in each case, where the failure to do so could not reasonably be expected to cause a Material Adverse Change. Each Credit Party will maintain good and defensible title to all of its fee and leasehold interests in real property comprising the Collateral, if any, free and clear of all Liens, except for Permitted Liens. The Borrowers and each other Credit Party will manage and administer the Permitted Investments in accordance with (a) applicable Laws, (b) the terms and provisions of the Underlying Agreements, (c) the Investment Policy, (d) the Performance Standard and (e) the express terms of this Agreement.

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(b)     The Borrowers shall continuously maintain an Asset File with respect to each Permitted Investment in accordance with the Performance Standard, which shall be true, correct and complete in all material respects and remain at all times in the possession of the Borrowers and/or their agents.

(c)     Without limiting Section 6.5(a), each applicable Credit Party will maintain or cause the maintenance of the interests and rights that individually or in the aggregate, could, if not maintained, reasonably be expected to cause a Material Adverse Change, and maintain all material agreements, licenses, permits, and other rights required for the foregoing in full force and effect in accordance with their terms, timely make any payments due thereunder, and prevent any default thereunder which could result in a termination or loss thereof, except any such failure to pay or default that could not reasonably, individually or in the aggregate, be expected to cause a Material Adverse Change.

Section 6.6     Maintenance of Existence and Qualifications. Each Credit Party will maintain and preserve its existence and its rights and franchises in full force and effect and will qualify to do business in all states or jurisdictions where required by applicable Law, except where the failure to do so could not reasonably be expected to cause a Material Adverse Change.

Section 6.7     Payment of Trade Liabilities, Taxes, etc. Each Credit Party will (a) timely file all required tax returns including any extensions; (b) timely pay all taxes, assessments, and other governmental charges or levies imposed upon it or upon its income, profits or property before the same become delinquent; (c) within ninety (90) days past the original invoice billing date therefor same becomes due pay all Liabilities owed by it on ordinary trade terms to vendors, suppliers and other Persons providing goods and services used by it in the ordinary course of its business; (d) pay and discharge when due all other Liabilities now or hereafter owed by it; and (e) maintain appropriate accruals and reserves for all of the foregoing in accordance with GAAP. Each Credit Party may, however, delay paying or discharging any of the foregoing so long as it is diligently and in good faith contesting the validity thereof by appropriate proceedings, it has set aside on its books adequate reserves therefore that are required by GAAP, and the failure to make payment pending such contest could not reasonably be expected to result in a Material Adverse Change.

Section 6.8     Insurance. Each Credit Party will maintain insurance with responsible and reputable insurance companies or associations (including, without limitation, comprehensive general liability and hazard insurance) with respect to its properties (including all real properties leased or owned by it) and business, in such amounts and covering such risks as is required by any Governmental Authority having jurisdiction with respect thereto or as is carried generally in accordance with sound business practice by companies in similar businesses similarly situated, and, in any event in such amounts, adequacy and scope as required by the Insurance Schedule or otherwise reasonably satisfactory to the Lender. Following the occurrence and continuance of an Event of Default, if any Credit Party fails to maintain such insurance, the Lender may arrange for such insurance, but at the Borrowers’ expense and without any responsibility on the part of the Lender for obtaining the insurance, the solvency of the insurance companies, the adequacy of the coverage, or the collection of claims. Upon the occurrence and during the continuance of an Event of Default, the Lender shall have the sole right, in the name of the Credit Parties, to file claims under any insurance policies, to receive, receipt and give acquittance for any payments that may be payable thereunder, and to execute any and all endorsements, receipts, releases, assignments, reassignments or other documents that may be necessary to effect the collection, compromise or settlement of any claims under any such insurance policies.

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Section 6.9      Performance on a Credit Party’s Behalf. If any Credit Party fails to pay when due any taxes, the Lender may pay the same. If any Credit Party fails to pay when due any insurance premiums, expenses, attorneys’ fees or other amounts it is required to pay under any Loan Document (other than taxes), the Lender may pay the same after the occurrence and continuance of an Event of Default. The Borrowers shall promptly reimburse the Lender for any such payments and each amount paid by the Lender shall constitute an Obligation owed hereunder which is due and payable upon written demand by the Lender.

Section 6.10     Interest. The Borrowers hereby promise to the Lender to pay interest at the Default Rate on all past due Obligations (including Obligations to pay fees or to reimburse or indemnify the Lender that the Borrowers in this Agreement promised to pay to the Lender and which are not paid when due). Such interest shall accrue from the date such Obligations become due until they are paid.

Section 6.11     Compliance with Agreements and Law. Each Credit Party will perform all material obligations it is required to perform under the terms of each indenture, mortgage, deed of trust, security agreement, lease, franchise, agreement, contract or other instrument or obligation to which it is a party or by which it or any of its properties is bound, including each Underlying Agreement, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Change. Each Credit Party will conduct its business and affairs in compliance with all Laws applicable thereto except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Change. Each Credit Party will cause all licenses and permits necessary or appropriate for the conduct of its business and the ownership and operation of its property used and useful in the conduct of its business to be at all times maintained in good standing and in full force and effect except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Change.

Section 6.12     Guaranties of Subsidiaries. Each Subsidiary of the Borrowers created, acquired or coming into existence after the date hereof shall execute and deliver to the Lender an absolute and unconditional guaranty of the timely repayment of the Obligations and the due and punctual performance of the obligations of the Borrowers hereunder, which guaranty shall be satisfactory to the Lender in form and substance. The Borrowers will cause each of its Subsidiaries to deliver to the Lender, simultaneously with its delivery of such a guaranty, written evidence satisfactory to the Lender and its counsel, including legal opinions, that such Subsidiary has taken all company action necessary to duly approve and authorize its execution, delivery and performance of such guaranty and any other documents which it is required to execute.

Section 6.13     Agreement to Deliver Security Documents. Each Borrower agrees to deliver and to cause each other Credit Party to deliver, to further secure the Obligations whenever requested by the Lender in its reasonable discretion, deeds of trust, mortgages, chattel mortgages, security agreements, financing statements and other Security Documents in form and substance reasonably satisfactory to the Lender for the purpose of granting, confirming, and perfecting first and prior liens or security interests in any real or personal property now owned or hereafter acquired by any Credit Party.

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Section 6.14     Investment Policy. The Credit Parties will at all times be in compliance with the Investment Policy.

ARTICLE VII - Negative Covenants

To induce the Lender to enter into this Agreement and make the Loans, each Borrower and each other Credit Party warrants, covenants and agrees that until the Obligations have been fully and indefeasibly paid in full in cash and no Commitments of the Lender that would give rise to any Obligations remain outstanding:

Section 7.1     Indebtedness. No Credit Party will in any manner owe or be liable for Indebtedness except:

(a)     the Obligations;

(b)     Indebtedness existing on the date hereof and set forth in Section 7.1 of the Disclosure Schedule and extensions, renewals and replacements of any such Indebtedness; provided that the amount of any such Indebtedness may not be increased;

(c)     guarantees by any Credit Party of the Liabilities of any other Credit Party to the extent such Liabilities are permitted to be incurred under this Agreement;

(d)     Indebtedness incurred by any Credit Party (i) under worker’s compensation laws, unemployment insurance laws or similar legislation, and (ii) to secure public or statutory obligations of such Credit Party;

(e)     Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business or other cash management services in the ordinary course of business;

(f)     Indebtedness of any Person at the time such Person becomes a Subsidiary of a Borrower or is merged into or consolidated with or into any Credit Party in a transaction permitted by this Agreement; provided, that (i) such Indebtedness exists at the time such Person becomes a Subsidiary and is not created in contemplation of such event, (ii) neither the Borrowers nor any other Credit Party guarantees or is otherwise liable for such Indebtedness, (iii) the Borrowers are in Pro Forma Compliance, and (iv) the principal amount of such Indebtedness does not exceed $1,000,000 at any time outstanding, and (v) any such Indebtedness has a maturity date not sooner than 180 days after the Maturity Date;

(g)     Indebtedness constituting Royalty Payments, the effect of which is included in the calculation of Net Present Value of an Eligible Asset;

(h)     other Indebtedness constituting Royalty Payments so long as the aggregate amount payable by the Credit Parties in respect thereof does not exceed $500,000 during any twelve month period;

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(i)     Indebtedness constituting unfunded commitments or future funding commitments in connection with an Eligible Asset to the extent such Indebtedness is not incurred in violation of this Agreement; and

(j)     other Indebtedness constituting unfunded commitments or future funding commitments in connection with an Investment not otherwise constituting an Eligible Asset so long as the aggregate amount payable by the Credit Parties in respect thereof does not exceed $1,000,000 at any time outstanding.

Section 7.2     Limitation on Liens. Except for Permitted Liens, no Credit Party will create, assume or permit to exist any Lien upon any of the properties or assets which it now owns or hereafter acquires.

Section 7.3     Limitation on Mergers, Issuances of Securities. No Credit Party will merge or consolidate with or into any other Person; provided that any Credit Party may merge or may be consolidated into any other Credit Party (provided that in any such merger or consolidation with SWK Holdings, SWK Holdings shall be the survivor). Neither SWK Holdings nor its Subsidiaries will issue any Equity Interests; provided that, (i) the Subsidiaries of SWK Holdings may issue additional Equity Interests to SWK Holdings and its wholly-owned Subsidiaries in accordance with the Security Documents, and (ii) SWK Holdings may issue additional Equity Interests so long as such issuance does not violate the Equity Documents.

Section 7.4     Limitation on Dispositions of Property. No Credit Party will make any Disposition of any material Property (including any Eligible Asset) or any material interest therein, or discount, sell, pledge or assign any notes payable to it, accounts receivable or future income, except any Credit Party may:

(a)     make Dispositions with respect to:

(i)     office furniture, equipment or other similar property that is immaterial in value, surplus, worn out or obsolete or that is no longer used or useful in the business of the Borrowers, or the proceeds of which are or are to be used to purchase office furniture, equipment or other property of comparable suitability and value;

(ii)     any Permitted Investment (including any Eligible Asset); provided, that both before and after giving effect to such Disposition (A) the Borrowers are in Pro Forma Compliance and (B) no Default exists; and

(iii)     Distributions permitted pursuant to Section 7.5 hereof.

(b)     discount, write-off or down, or otherwise make Dispositions with respect to Non-Performing Loans or other non-performing assets in connection with the compromise or collection thereof; provided that both before and after giving effect thereto, (i) no Default exists, (ii) the Borrowers are in Pro Forma Compliance and (iii) no Material Adverse Change has occurred or will occur as a result thereof.

Section 7.5     Limitation on Dividends and Redemptions. No Credit Party will declare or make any Distribution, other than (a) Distributions payable to SWK Holdings or another Credit Party, solely to the extent not in violation of the restrictions set forth in Section 7.6, (b) the purchase or redemption of Equity Interests of a Credit Party held by then present or former directors, consultants, officers or employees in connection with such Person’s death, disability, retirement or termination of employment or under the terms of any agreement under which such Equity Interests were issued, (c) Distributions pursuant to and in accordance with employment arrangements with employees of Credit Parties in the ordinary course of business either existing on the Closing Date and set forth on Section 7.5 of the Disclosure Schedule or otherwise reasonably approved by the Lender in writing, (d) Distributions pursuant to and in accordance with arrangements with officers or directors of Credit Parties in the ordinary course of business either existing on the Closing Date and set forth on Section 7.5 of the Disclosure Schedule or otherwise approved by the Lender in its sole discretion in writing, and (e) subject to Section 7.3, Distributions by a Credit Party payable only in such Credit Party’s common stock or common equity, so long as the Borrowers’ Equity Interests in their Subsidiaries are not thereby reduced or diluted.

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Section 7.6     Limitation on Investments and New Businesses. No Credit Party will (a) engage directly or indirectly in any business or conduct any operations except in connection with or incidental to its present businesses and operations or (b) make any acquisitions of or capital contributions to or other Investments in any Person or property, other than Permitted Investments; provided, that, the Borrowers are in Pro Forma Compliance after making such Permitted Investment.

Section 7.7     Transactions with Affiliates. No Credit Party will engage in any transaction with any of its investors or Affiliates other than (a) transactions with the Lender pursuant to the Transaction Documents, (b) transactions set forth on Section 7.7 of the Disclosure Schedule , (c) transactions whereby SWK Holdings or any of its Subsidiaries manages investment capital for any of SWK Holdings’ investors consistent with the Investment Policy and past practices, (d) transactions with Carlson and/or its Affiliates, and (e) any other transaction that (i) is on an arm’s-length basis, (ii) is disclosed to the Lender in writing (which writing shall include a certification by an authorized officer of the applicable Credit Party that such transaction is on an arm’s-length basis), and (iii) involves payments, property, services and/or other consideration with an aggregate value not to exceed $50,000 given by or on behalf of a Credit Party in any 12 month period.

Section 7.8     Prohibited Contracts. Except as expressly provided for in the Transaction Documents, no Credit Party will, directly or indirectly, enter into, create, or otherwise allow to exist any contract or other consensual restriction on the ability of any Credit Party to: (a) pay Distributions to any Borrower, (b) redeem Equity Interests held in it by any Borrower, or (c)  repay loans and other indebtedness owing by it to any Borrower; provided, that the foregoing shall not apply to customary restrictions imposed on the granting, conveying, creation or imposition of any Lien on any property or assets of any Credit Party imposed by any contract, agreement or understanding related to the Liens described in clause (j) of the definition of “Permitted Liens” so long as such restriction only applies to the property or assets permitted to be encumbered by such Liens. No ERISA Affiliate will incur any obligation to contribute to any “multiemployer plan” as defined in Section 4001 of ERISA.

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Section 7.9     Amendments to Organizational Documents; Other Material Agreements. No Credit Party will enter into or permit any modification of, or waive any material right or obligation of any Person under its Organizational Documents other than amendments, modifications and waivers which could not, individually or in the aggregate, (a) have a Material Adverse Change or (b) adversely affect the Lender’s rights under any Transaction Document.

Section 7.10     Investment Policy. Other than with respect to Permitted Investment Policy Amendments, SWK Holdings will not amend, supplement, waive, or otherwise modify the Investment Policy.

Section 7.11     Underlying Agreements. No Credit Party will amend, modify, waive, supplement or grant a forbearance with respect to any Underlying Agreement of any Eligible Asset that has the effect of (a) deferring the payment of any monetary obligation due to any Credit Party thereunder by an Obligor in excess of $100,000, (b) allowing a monetary obligation in excess of $100,000 required to be paid in cash to any Credit Party, to be paid in-kind or other non-cash consideration, (c) having or reasonably likely to result in a Material Adverse Change. For the avoidance of doubt, the dollar amounts set forth in the foregoing clauses (a) and (b) shall apply solely with respect to the Credit Parties’ pro rata share of the relevant investment (for example, in the case where a Permitted Investment constitutes a partial interest in a syndicated Loan Asset, the foregoing clauses (a) and (b) shall be measured solely as they relate to the Credit Parties’ interest in such Loan Asset and not the overall loan facility). Without the prior consent of the Lender, no Credit Party will, with respect to a Material Investment, initiate litigation or commence an insolvency proceeding under the Bankruptcy Law for an Obligor’s default or breach under any Underlying Agreement with respect to such Material Investment. For the avoidance of doubt, as it relates to any Permitted Investments not otherwise constituting an Eligible Asset, the foregoing restrictions shall not apply to such Permitted Investments; provided, that no Credit Party will amend, modify, waive, supplement, or grant a forbearance with respect to any Underlying Agreement other than in compliance with the Performance Standard.

ARTICLE VIII - Financial Covenants

Section 8.1     Minimum Asset Coverage Ratio. The Borrowers shall not permit the Asset Coverage Ratio to be less than 1.6 to 1.0 at any time; provided, that, if the Borrowers prepay the Loans within 3 Business Days of Borrowers’ failure to comply with the foregoing requirement such that, after giving effect to such prepayment, the Asset Coverage Ratio is greater than or equal to 1.6 to 1.0, then no Event of Default shall be deemed to have occurred pursuant to this Section 8.1.

Section 8.2     Minimum Interest Coverage Ratio. Commencing with the Fiscal Quarter ending September 30, 2013, the Borrowers shall not permit the Interest Coverage Ratio to be less than 3.0 to 1.0 as of the last day of any Fiscal Quarter.

Section 8.3     Minimum Liquidity. The Borrowers shall not permit the aggregate Liquidity of the Credit Parties to be less than the aggregate amount of all unfunded commitments and/or future funding commitments of the Credit Parties with respect to any Eligible Assets at any time.

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ARTICLE IX - Events of Default and Remedies

Section 9.1     Events of Default. Each of the following events constitutes an Event of Default under this Agreement:

(a)     any Credit Party fails to pay (i) any principal owing in respect of any Loan when due and payable or (ii) any interest owing in respect of any Loan within 2 Business Days of when due and payable;

(b)     any Credit Party fails to pay any Obligation (other than the Obligations in subsection (a) above) within 5 Business Days after the same becomes due and payable;

(c)     any Credit Party fails to duly observe, perform or comply with any covenant, agreement or provision of Section 6.4, Article VII, or Article VIII;

(d)     any Credit Party fails (other than as referred to in subsections (a), (b), or (c) above) to duly observe, perform or comply with any covenant, agreement, condition or provision of any Transaction Document to which it is a party, and such failure remains unremedied for a period of 30 days after the occurrence of such Default;

(e)     any representation or warranty previously, presently or hereafter made in writing by or on behalf of any Credit Party in connection with any Transaction Document shall prove to have been false or incorrect in any material respect on any date on or as of which made, or any Transaction Document at any time ceases to be valid, binding and enforceable as warranted in Section 5.4;

(f)     any Credit Party fails to duly observe, perform or comply with any Underlying Agreement with respect to any Material Investment, and such failure (i) permits the related Obligor to terminate such Underlying Agreement or (ii) excuses such Obligor from performing its material obligations thereunder including any monetary obligation in excess of $250,000;

(g)     any Credit Party (i) fails to pay any portion, when such portion is due, of any of its Indebtedness in excess of $250,000, individually or in the aggregate, and such failure shall continue unremedied beyond any grace period applicable thereto, or (ii) breaches or defaults in the performance of any agreement or instrument by which any such Indebtedness is issued, evidenced, governed, or secured, and any such failure, breach or default continues beyond any applicable period of grace provided therefor and such breach or default results in such Indebtedness becoming due prior to its scheduled maturity or presently enables or permits the holder or holders of such Indebtedness or any trustee or agent on its or their behalf to cause such Indebtedness to become due or to require the prepayment, repurchase, redemption or defeasance thereof, prior to its scheduled maturity;

(h)     the occurrence of any Change of Control;

(i)     any Credit Party:

(i)     suffers the entry against it of a judgment, decree or order for relief by a Governmental Authority of competent jurisdiction in an involuntary proceeding commenced under any applicable bankruptcy, insolvency or other similar Law of any jurisdiction now or hereafter in effect, including the federal Bankruptcy Code, as from time to time amended, or has any such proceeding commenced against it which remains undismissed for a period of 60 days; or

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(ii)     commences a voluntary case under any applicable bankruptcy, insolvency or similar Law now or hereafter in effect, including the federal Bankruptcy Code, as from time to time amended; or applies for or consents to the entry of an order for relief in an involuntary case under any such Law; or makes a general assignment for the benefit of creditors; or is generally not paying (or admits in writing its inability to pay) its debts as such debts become due; or takes corporate or other action authorizing any of the foregoing; or

(iii)     suffers the appointment of or taking possession by a receiver, liquidator, assignee, custodian, trustee or similar official of all or a substantial part of its assets or of any part of the Collateral in a proceeding brought against or initiated by it, and such appointment or taking possession is neither made ineffective nor discharged within 60 days after the making thereof, or such appointment or taking possession is at any time consented to, requested by, or acquiesced to by it; or

(iv)     suffers the entry against it of a final judgment for the payment of money in excess of $250,000 (not covered by insurance satisfactory to the Lender in its reasonable discretion), unless the same is discharged within 60 days after the date of entry thereof or an appeal or appropriate proceeding for review thereof is taken within such period and a stay of execution pending such appeal is obtained; or

(v)     suffers a writ or warrant of attachment or any similar process to be issued by any Governmental Authority against all or any substantial part of its assets or any part of the Collateral, and such writ or warrant of attachment or any similar process is not stayed or released within 60 days after the entry or levy thereof or after any stay is vacated or set aside; or

(vi)     any Transaction Document after delivery thereof shall for any reason cease to be in full force and effect and valid, binding and enforceable in accordance with its terms against the Credit Parties party thereto or shall be repudiated by any of them, or, if applicable, cease to create a valid and perfected Lien of the priority required thereby on any of the Collateral purported to be covered thereby, or any Credit Party or any of their Affiliates shall so state in writing, in each case except to the extent permitted by the terms of this Agreement.

Upon the occurrence of an Event of Default described in subsection (i)(i), (i)(ii) or (i)(iii) of this section with respect to any Credit Party, all of the Obligations shall thereupon be immediately due and payable, without demand, presentment, notice of demand or of dishonor and nonpayment, protest, notice of protest, notice of intention to accelerate, declaration or notice of acceleration, or any other notice or declaration of any kind, all of which are hereby expressly waived by the Borrowers and each other Credit Party who at any time ratifies or approves this Agreement. During the continuance of any other Event of Default, the Lender at any time and from time to time may, upon notice to the Borrowers, declare any or all of the Obligations immediately due and payable, and all such Obligations shall thereupon be immediately due and payable, without demand, presentment, notice of demand or of dishonor and nonpayment, protest, notice of protest, notice of intention to accelerate, declaration or notice of acceleration, or any other notice or declaration of any kind, all of which are hereby expressly waived by the Borrowers and each Credit Party who at any time ratifies or approves this Agreement. Upon the acceleration of the Obligations pursuant to this Section 9.1, the Lender shall be entitled to a Prepayment Premium (if such acceleration occurs on or before the Maturity Date) in addition to all other amounts due and payable in respect of the Loans and any other Obligations.

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Section 9.2     Remedies. If any Event of Default shall occur and be continuing, the Lender may protect and enforce its rights under the Loan Documents by any appropriate proceedings, including proceedings for specific performance of any covenant or agreement contained in any Loan Document. All rights, remedies and powers conferred upon the Lender under the Loan Documents shall be deemed cumulative and not exclusive of any other rights, remedies or powers available under the Loan Documents or at Law or in equity.

ARTICLE X - Guaranty

Section 10.1     Guaranty. Each Guarantor hereby absolutely and unconditionally guarantees to the Lender the prompt payment when due, whether at stated maturity, upon acceleration or otherwise, and at all times thereafter, of the Obligations and all costs and expenses including, without limitation, all court costs and attorneys’ and paralegals’ fees and expenses paid or incurred by the Lender in endeavoring to collect all or any part of the Obligations from, or in prosecuting any action against, the Borrowers or any other Guarantor of all or any part of the Obligations (such costs and expenses, together with the Obligations, collectively the “Guaranteed Obligations”). Each Guarantor further agrees that the Guaranteed Obligations may be extended or renewed in whole or in part without notice to or further assent from it, and that it remains bound upon its guarantee notwithstanding any such extension or renewal.

Section 10.2     Guaranty of Payment. This guaranty is a guaranty of payment and not of collection. Each Guarantor hereby waives any right to require the Lender to sue the Borrowers, any other Guarantor or any other Person obligated for all or any part of the Guaranteed Obligations (each, an “Obligated Party”), or otherwise to enforce its payment against any collateral securing all or any part of the Guaranteed Obligations.

Section 10.3     No Discharge or Diminishment of Guaranty.

(a)     Except as otherwise provided for herein, the obligations of each Guarantor hereunder are unconditional and absolute and not subject to any reduction, limitation, impairment or termination for any reason (other than the indefeasible payment in full in cash of the Guaranteed Obligations), including: (i) any claim of waiver, release, extension, renewal, settlement, surrender, alteration, or compromise of any of the Guaranteed Obligations, by operation of law or otherwise; (ii) any change in the corporate existence, structure or ownership of the Borrowers, any other Guarantor, or any other Person liable for any of the Guaranteed Obligations; (iii) any insolvency, bankruptcy, reorganization or other similar proceeding affecting any Obligated Party, or their assets or any resulting release or discharge of any obligation of any Obligated Party; or (iv) the existence of any claim, setoff or other rights that such Guarantor may have at any time against any Obligated Party, the Lender, or any other Person, whether in connection herewith or in any unrelated transactions.

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(b)     The obligations of each Guarantor hereunder are not subject to any defense or setoff, counterclaim, recoupment, or termination whatsoever by reason of the invalidity, illegality, or unenforceability of any of the Guaranteed Obligations or otherwise, or any provision of applicable law or regulation purporting to prohibit payment by any Obligated Party, of the Guaranteed Obligations or any part thereof.

(c)     Further, the obligations of each Guarantor hereunder are not discharged or impaired or otherwise affected by: (i) the failure of the Lender to assert any claim or demand or to enforce any remedy with respect to all or any part of the Guaranteed Obligations; (ii) any waiver or modification of or supplement to any provision of any agreement relating to the Guaranteed Obligations; (iii) any release, non-perfection, or invalidity of any indirect or direct security for the obligations of the Borrowers for all or any part of the Guaranteed Obligations or any obligations of any other Person liable for any of the Guaranteed Obligations; (iv) any action or failure to act by the Lender with respect to any collateral securing any part of the Guaranteed Obligations; or (v) any default, failure or delay, willful or otherwise, in the payment or performance of any of the Guaranteed Obligations, or any other circumstance, act, omission or delay that might in any manner or to any extent vary the risk of such Guarantor or that would otherwise operate as a discharge of such Guarantor as a matter of law or equity (other than the indefeasible payment in full in cash of the Guaranteed Obligations).

Section 10.4     Defenses Waived. To the fullest extent permitted by applicable Law, each Guarantor hereby waives any defense based on or arising out of any defense of the Borrowers or any other Guarantor or the unenforceability of all or any part of the Guaranteed Obligations from any cause, or the cessation from any cause of the liability of the Borrowers or any other Guarantor, other than the indefeasible payment in full in cash of the Guaranteed Obligations. Without limiting the generality of the foregoing, each Guarantor irrevocably waives acceptance hereof, presentment, demand, protest and, to the fullest extent permitted by Law, any notice not provided for herein, as well as any requirement that at any time any action be taken by any Person against any Obligated Party, or any other Person. The Lender may, at its election, foreclose on any Collateral held by it by one or more judicial or nonjudicial sales, accept an assignment of any such Collateral in lieu of foreclosure or otherwise act or fail to act with respect to any collateral securing all or a part of the Guaranteed Obligations, compromise or adjust any part of the Guaranteed Obligations, make any other accommodation with any Obligated Party, or exercise any other right or remedy available to it against any Obligated Party, without affecting or impairing in any way the liability of such party under this Article X except to the extent the Guaranteed Obligations have been fully and indefeasibly paid in full in cash and no Commitments of the Lender that would give rise to any Obligations remain outstanding. To the fullest extent permitted by applicable Law, each Guarantor hereby waives any defense arising out of any such election even though that election may operate, pursuant to applicable Law, to impair or extinguish any right of reimbursement or subrogation or other right or remedy of such Guarantor against any Obligated Party or any security.

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Section 10.5     Rights of Subrogation. No Guarantor will assert any right, claim or cause of action, including, without limitation, a claim of subrogation, contribution or indemnification that it has against any Obligated Party, or any collateral, until the Guaranteed Obligations have been fully and indefeasibly paid in full in cash and no Commitments of the Lender that would give rise to any Obligations remain outstanding.

Section 10.6     Reinstatement; Stay of Acceleration. If at any time any payment of any portion of the Guaranteed Obligations is rescinded or must otherwise be restored or returned upon the insolvency, bankruptcy, or reorganization of any Credit Party or otherwise, each Guarantor’s obligations under this Article X with respect to that payment shall be reinstated at such time as though the payment had not been made and whether or not the Lender is in possession of this Agreement. If acceleration of the time for payment of any of the Guaranteed Obligations is stayed upon the insolvency, bankruptcy or reorganization of any Credit Party, all such amounts otherwise subject to acceleration under the terms of any agreement relating to the Guaranteed Obligations shall nonetheless be payable by the Guarantors forthwith on demand by the Lender.

Section 10.7     Information. Each Guarantor assumes all responsibility for being and keeping itself informed of each other Guarantor’s financial condition and assets, and of all other circumstances bearing upon the risk of nonpayment of the Guaranteed Obligations and the nature, scope and extent of the risks that such party assumes and incurs under this Article X, and agrees that the Lender shall not have any duty to advise any such party of information known to it regarding those circumstances or risks.

Section 10.8     Maximum Liability. In any action or proceeding involving any state corporate law, or any state, federal or foreign bankruptcy, insolvency, reorganization or other Law affecting the rights of creditors generally, if the obligations of any Guarantor under this Article X would otherwise be held or determined to be avoidable, invalid or unenforceable on account of the amount of such party’s liability under this Article X, then, notwithstanding any other provision of this Agreement to the contrary, the amount of such liability shall, without any further action by such Guarantor or the Lender, be automatically limited and reduced to the highest amount that is valid and enforceable as determined in such action or proceeding (such highest amount determined hereunder being the relevant Guarantor’s “Maximum Liability”). This Section 10.8 is intended solely to preserve the rights of the Lender to the maximum extent not subject to avoidance under applicable Law, and no Guarantor nor any other Person shall have any right or claim under this Section 10.8 with respect to such Maximum Liability, except to the extent necessary so that the obligations of any Guarantor hereunder shall not be rendered voidable under applicable law. Each Guarantor agrees that the Guaranteed Obligations may at any time and from time to time exceed the Maximum Liability of such Guarantor without impairing this guaranty or affecting the rights and remedies of the Lender hereunder; provided, that nothing in this sentence shall be construed to increase any Guarantor’s obligations hereunder beyond its Maximum Liability.

Section 10.9     Liability Cumulative. The liability of each Guarantor under this Article X is in addition to and shall be cumulative with all liabilities of such Credit Party to the Lender under this Agreement and the other Loan Documents to which such Credit Party is a party or in respect of any obligations or liabilities of the other Credit Parties, without any limitation as to amount, unless the instrument or agreement evidencing or creating such other liability specifically provides to the contrary.

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ARTICLE XI - Miscellaneous

Section 11.1     Waivers and Amendments; Acknowledgments.

(a)     Waivers and Amendments. No failure or delay (whether by course of conduct or otherwise) by the Lender in exercising any right, power or remedy that the Lender may have under any of the Loan Documents shall operate as a waiver thereof or of any other right, power or remedy, nor shall any single or partial exercise by the Lender of any such right, power or remedy preclude any other or further exercise thereof or of any other right, power or remedy. No waiver of any provision of any Loan Document and no consent to any departure therefrom shall ever be effective unless it is in writing and signed as provided below in this section, and then such waiver or consent shall be effective only in the specific instances and for the purposes for which given and to the extent specified in such writing. No notice to or demand on any Credit Party shall in any case entitle any Credit Party to any other or further notice or demand in similar or other circumstances. This Agreement and the other Transaction Documents set forth the entire understanding between the parties hereto with respect to the transactions contemplated herein and therein and supersede all prior discussions and understandings with respect to the subject matter hereof and thereof, and no waiver, consent, release, modification or amendment of or supplement to this Agreement or any other Loan Document shall be valid or effective against any party hereto unless the same is in writing and signed by such party.

(b)     Acknowledgments and Admissions. Each Credit Party hereby represents, warrants, acknowledges and admits that:

(i)     it has been advised by counsel in the negotiation, execution and delivery of the Loan Documents to which it is a party;

(ii)     it has made an independent decision to enter into this Agreement and the other Loan Documents to which it is a party, without reliance on any representation, warranty, covenant or undertaking by the Lender, whether written, oral or implicit, other than as expressly set out in this Agreement or in such Loan Documents delivered on or after the date hereof;

(iii)     there are no representations, warranties, covenants, undertakings or agreements by the Lender with respect to the Loan Documents except as expressly set out in this Agreement or in the other Loan Documents delivered on or after the date hereof;

(iv)     the Lender has no fiduciary obligation toward it with respect to any Loan Document or the transactions contemplated thereby;

(v)     the relationship pursuant to the Loan Documents between the Credit Parties, on one hand, and the Lender, on the other hand, is and shall be solely that of debtor and creditor, respectively;

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(vi)     no partnership or joint venture exists with respect to the Loan Documents between any Credit Party and the Lender;

(vii)    should a Default occur or exist, the Lender will determine in its discretion and for its own reasons what remedies and actions it will or will not exercise or take at that time;

(viii)   without limiting any of the foregoing, no Credit Party is relying upon any representation or covenant by the Lender, or any representative thereof, and no such representation or covenant has been made, that the Lender will, at the time of any Default, or at any other time, waive, negotiate, discuss, or take or refrain from taking any action permitted under the Loan Documents with respect to any such Default or any other provision of the Loan Documents; and

(ix)     the Lender has relied upon the truthfulness of the acknowledgments in this section in deciding to execute and deliver this Agreement and to become obligated hereunder.

(c)     Joint Acknowledgment. This Agreement and the other Transaction Documents represent the final agreement between the parties and may not be contradicted by evidence of prior, contemporaneous, or subsequent oral agreements of the parties. There are no unwritten oral agreements between the parties.

Section 11.2     Survival of Agreements; Cumulative Nature. All of the Credit Parties’ various representations, warranties, covenants and agreements in the Loan Documents shall survive the execution and delivery of this Agreement and the other Transaction Documents and the performance hereof and thereof, including the making of the Loans and delivery of the other Transaction Documents, and shall further survive until all of the Obligations are indefeasibly paid in full in cash to the Lender and no Commitments of the Lender that would give rise to any Obligations remain outstanding. All statements and agreements contained in any certificate or other instrument delivered by any Credit Party to the Lender pursuant to any Transaction Document shall be deemed representations and warranties by the Borrowers or agreements and covenants of the Borrowers under this Agreement. The representations, warranties, indemnities, and covenants made by the Credit Parties in the Loan Documents, and the rights, powers, and privileges granted to the Lender in the Loan Documents, are cumulative, and, except for expressly specified waivers and consents, no Loan Document shall be construed in the context of another to diminish, nullify, or otherwise reduce the benefit to the Lender of any such representation, warranty, indemnity, covenant, right, power or privilege. In particular and without limitation, no exception set out in this Agreement to any representation, warranty, indemnity, or covenant herein contained shall apply to any similar representation, warranty, indemnity, or covenant contained in any other Loan Document, and each such similar representation, warranty, indemnity, or covenant shall be subject only to those exceptions which are expressly made applicable to it by the terms of the various Loan Documents.

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Section 11.3     Notices. All notices, requests, consents, demands and other communications required or permitted under any Loan Document shall be in writing, unless otherwise specifically provided in such Loan Document, and shall be deemed sufficiently given or furnished if delivered by personal delivery, by facsimile, by delivery service with proof of delivery, or by registered or certified United States mail, postage prepaid, to the Borrowers and the Credit Parties at the address of the Borrowers specified below and to the Lender at the address specified below (unless changed by similar notice in writing given by the particular Person whose address is to be changed). Any such notice or communication shall be deemed to have been given (a) in the case of personal delivery or delivery service, as of the date of first attempted delivery during normal business hours at the address provided herein, (b) in the case of facsimile, upon receipt, or (c) in the case of registered or certified United States mail, three days after deposit in the mail.

If to the Borrowers and/or any Credit Party:

c/o SWK Holdings Corporation

15770 North Dallas Parkway

Suite 1290

Dallas, Texas 75248

Attention: J. Brett Pope, Chief Executive Officer

Facsimile: (972) 687-7255

with a copy to:

Holland & Knight LLP

300 Crescent Court, 11^th Floor

Dallas, Texas 75201

Attention: Ryan Magee

Facsimile (214) 964-9501

If to the Lender:

c/o Carlson Capital, L.P.

2100 McKinney Avenue

Suite 1800

Dallas, Texas 75201

Attention: Christopher W. Haga; and Thomas Cason, General Counsel’s Office

Facsimile: (214) 932-9712

Section 11.4     Payment of Expenses; Indemnity.

(a)     Payment of Expenses. The Borrowers will promptly (and in any event, within 10 days after any invoice or other statement or notice) pay: (i) all transfer, stamp, mortgage, court or documentary, intangible, recording, filing or other similar taxes, assessments or charges levied by any governmental or revenue authority in respect of this Agreement or any of the other Transaction Documents or any other document or transaction referred to herein or therein, (ii) all reasonable costs and expenses incurred by or on behalf of the Lender (including attorneys’ fees, consultants’ fees and engineering fees, travel costs and miscellaneous expenses) in connection with (1) the preparation and negotiation of this Agreement and the other Transaction Documents, (2) the filing, recording, re-filing and re-recording of any Transaction Documents and any other documents or instruments or further assurances required to be filed or recorded or re-filed or re-recorded by the terms of any Transaction Document, (3) monitoring or confirming (or preparation or negotiation of any document related to) any Credit Party’s compliance with any covenants or conditions contained in this Agreement or in any Transaction Document, and (3) any amendments or waivers of the provisions of any Transaction Document, and (iii) all costs and expenses incurred by or on behalf of the Lender (including without limitation attorneys’ fees, consultants’ fees and accounting fees) in connection with the preservation of any rights under the Transaction Documents or the defense or enforcement of any of the Transaction Documents (including this Section), any attempt to cure any breach thereunder by any Credit Party, or the defense of the Lender’s exercise of its rights thereunder.

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(b)     Indemnity. Each Credit Party agrees to indemnify the Lender, its Affiliates and each of their respective directors, officers, employees, equity owners, agents and advisors (each an “Indemnified Party”), upon demand, from and against any and all liabilities, obligations, broker’s fees, claims, losses, damages, penalties, fines, actions, judgments, suits, settlements, costs, expenses or disbursements (including fees and expenses of attorneys, accountants, experts and advisors) of any kind or nature whatsoever (in this section collectively called “liabilities and costs”) which to any extent (in whole or in part) may be imposed on, incurred by, or asserted against an Indemnified Party arising out of, resulting from, or in any other way associated with any of the Collateral, the Transaction Documents and the transactions and events (including the enforcement or defense thereof) at any time associated therewith or contemplated therein (whether arising in contract or in tort or otherwise). Among other things, the foregoing indemnification covers all liabilities and costs incurred by an Indemnified Party related to any breach of a Transaction Document by a Credit Party, any bodily injury to any Person or damage to any Person’s property.

The foregoing indemnification shall apply whether or not such liabilities and costs are in any way or to any extent owed, in whole or in part, under any claim or theory of strict liability or caused, in whole or in part by any negligent act or omission of any kind by the Lender (in each case whether alleged, arising or imposed in a legal proceeding brought by or against any Credit Party, the Lender, or any other Person);

provided, that the Lender shall not be entitled under this section to receive indemnification for that portion, if any, of any liabilities and costs that is proximately caused by its own gross negligence or willful misconduct, as determined in a final non-appealable judgment by a court of competent jurisdiction. If any Person (including the Borrowers, any other Credit Party or any of their respective Affiliates) ever alleges such gross negligence or willful misconduct by the Lender, the indemnification provided for in this section shall nonetheless be paid upon demand, subject to later adjustment or reimbursement, until such time as a court of competent jurisdiction enters a final non-appealable judgment as to the extent and effect of the alleged gross negligence or willful misconduct. As used in this section the term “Lender” shall refer not only to the Lender but also to each director, officer, agent, trustee, attorney, employee, representative and Affiliate of or for the Lender.

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Section 11.5     Successors and Assigns. All grants, covenants and agreements contained in the Transaction Documents shall bind and inure to the benefit of the parties thereto and their respective successors and assigns; provided, however, that no Credit Party may assign or transfer any of its rights or delegate any of its duties or obligations under any Transaction Document without the prior consent of the Lender.

Section 11.6     Assignment of Loans and Note; Replacement of Note.

(a)     Assignment of Loans and Note. The Lender may not assign all or part of any Loan or all or part of the Note to any Person without the prior written consent of the Borrowers, not to be unreasonably withheld, except for assignments (i) to any Affiliate of the Lender, (ii) to any Approved Fund or (iii) if an Event of Default is then in existence, to any Person. In the case of any such assignment, the Borrowers shall deliver a replacement Note for such Note (or such portion thereof) made payable to such Person as the Lender may request and substantially in the form of Exhibit A. For the avoidance of doubt, it shall be reasonable for the Borrowers to withhold consent to an assignment by the Lender if the assignment is to a direct competitor of the Borrowers.

(b)     Replacement of Note. Upon receipt by the Borrowers of evidence reasonably satisfactory to them of the loss, theft, destruction or mutilation of the Note, and satisfactory indemnification, if requested, the Borrowers, at their own expense, shall execute and deliver to the Lender, in lieu thereof, a new Note.

(c)     The Borrowers shall maintain a copy of each assignment and assumption delivered to it by the Lender and a register for the recordation of the names and addresses of any assignees, and the Commitments of, and principal amounts (and stated interest) of the Loans owing to, each such assignee pursuant to the terms hereof from time to time (the “Register”). The entries in the Register shall be conclusive absent manifest error, and the Borrowers and the Lender shall treat each Person whose name is recorded in the Register pursuant to the terms hereof as the Lender hereunder for all purposes of this Agreement. The Register shall be available for inspection by the Borrowers and the Lender, at any reasonable time and from time to time upon reasonable prior notice.

Section 11.7     Confidentiality.

(a)     Subject to subsection (d) below, notwithstanding the termination of this Agreement and except as otherwise provided in subsection (b) or subsection (c) below, the Lender shall maintain the confidentiality of any information delivered to the Lender by or on behalf of the Borrowers or any other Credit Party in connection with the transactions contemplated by or otherwise pursuant to the Transaction Documents that is proprietary or confidential in nature (collectively, the “Borrower Confidential Information”) and shall not, without the prior written consent of the Borrowers, disclose any Borrower Confidential Information to another Person or use any Borrower Confidential Information for purposes other than those contemplated herein and in the other Transaction Documents.

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(b)     Notwithstanding subsection (a) above, the Lender may disclose Borrower Confidential Information to its Affiliates and its and its Affiliates’ respective directors, officers, members, partners, employees, and agents (including attorneys, accountants, and consultants) to whom such disclosure is reasonably necessary for the execution or effectuation hereof; provided, that the Lender notifies all such Persons that the Borrower Confidential Information disclosed to them is subject to this Section 11.7 and requires them not to disclose or use such information in breach of this Section 11.7. Notwithstanding subsection (a) above, the Lender may also disclose Borrower Confidential Information (i) to any Person to any prospective purchaser or assignee of the Loans, or any portion thereof or any participation therein (if such Person has agreed in writing prior to its receipt of such Borrower Confidential Information to be bound by the provisions of this Section 11.7), (ii) to any federal or state regulatory authority having jurisdiction over it, (iii) to effect compliance with any law, rule, regulation or order applicable to it, including, without limitation, in connection with any required financial reporting disclosures by the Lender to the holders of its or any of its Affiliates’ Equity Interests, (iv) in response to any subpoena or other legal process, (v) in connection with any litigation to which it is a party, or (vi) if an Event of Default has occurred and is continuing, to the extent it may reasonably determine such delivery and disclosure to be necessary or appropriate in the enforcement or for the protection of the rights and remedies under the Transaction Documents.

(c)     If the Lender is requested or required by legal process (including law or regulation, oral questions, interrogatories, request for information or documents, subpoena, and civil investigative demand) to disclose any Borrower Confidential Information, then, to the extent legally permitted to do so, the Lender shall promptly notify the Borrowers of such request prior to complying with such process so that the Credit Parties may seek an appropriate protective order or waive the Lender’s compliance with this Section 11.7. Notwithstanding subsection (a) above, if, after the Lender gives such notice to the Borrowers and after providing the Credit Parties a reasonable opportunity to obtain a protective order or to grant such waiver (so long as the granting of such time does not put the Lender in breach of its obligations to disclose), the Lender is nonetheless legally compelled to disclose such information, the Lender may do so without violating this section.

(d)     Any Borrower Confidential Information which becomes publicly available by any reason other than (i) a breach by the Lender hereunder or (ii) a breach by a third party of a confidential obligation to the relevant party hereunder of which the Lender has knowledge, shall no longer be deemed to be Borrower Confidential Information.

Section 11.8     Governing Law; Submission to Process. Except to the extent that the law of another jurisdiction is expressly elected in a Transaction Document, this Agreement and the other Transaction Documents shall be governed by and construed in accordance with the internal laws of the State of Texas, without giving effect to any choice or conflict of law provision (whether of the State of Texas or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Texas. Each Credit Party hereby irrevocably (a) submits itself to the non-exclusive jurisdiction of the state and federal courts sitting in Dallas County, Texas, (b) agrees and consents that service of process may be made upon it and any of its Subsidiaries in any legal proceeding relating to the Transaction Documents or the Obligations by any means allowed under Texas or federal law, and (c) waives any objection that it may now or hereafter have to the venue of any such proceeding being in such a court and any claim that any such proceeding brought in such a court has been brought in an inconvenient forum. Each Credit Party hereby makes the foregoing submissions, agreements, consents and waivers on behalf of and with respect to each of its Subsidiaries, and each Guarantor (by its execution hereof or of a separate guaranty) hereby also makes such submissions, agreements, consents and waivers for itself.

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Section 11.9     Limitation on Interest. The Lender and the Credit Parties intend to contract in strict compliance with applicable usury Law from time to time in effect. In furtherance thereof such Persons stipulate and agree that none of the terms and provisions contained in the Transaction Documents shall ever be construed to provide for interest in excess of the Highest Lawful Rate from time to time in effect. Neither any Credit Party nor any present or future guarantors, endorsers, or other Persons hereafter becoming liable for payment of any Obligation shall ever be liable for unearned interest thereon or shall ever be required to pay interest thereon in excess of the Highest Lawful Rate from time to time in effect, and the provisions of this section shall control over all other provisions of the Loan Documents that may be in conflict or apparent conflict herewith.

Section 11.10   Severability. If any term or provision of any Transaction Document shall be determined to be illegal or unenforceable all other terms and provisions of the Transaction Documents shall nevertheless remain effective and shall be enforced to the fullest extent permitted by applicable Law.

Section 11.11   Counterparts; Fax. This Agreement may be separately executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to constitute one and the same Agreement. This Agreement and the Transaction Documents may be validly executed and delivered in counterparts exchanged via facsimile, electronic mail in portable document format (.pdf) or other electronic transmission, each of which counterparts shall be deemed originals for all purposes.

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Section 11.12    Waiver of Jury Trial, Punitive Damages, etc. Each Credit Party and the Lender each hereby knowingly, voluntarily, intentionally, and irrevocably (a) waives, to the maximum extent not prohibited by Law, any right it may have to a trial by jury in respect of any litigation based hereon, or directly or indirectly at any time arising out of, under or in connection with the Transaction Documents or any transaction contemplated thereby or associated therewith, before or after maturity; (b) waives, to the maximum extent not prohibited by Law, any right it may have to claim or recover in any such litigation any “Special Damages” as defined below, (c) certifis that no party hereto nor any representative or agent or counsel for any party hereto has represented, expressly or otherwise, or implied that such party would not, in the event of litigation, seek to enforce the foregoing waivers, and (d) acknowledges that it has been induced to enter into this Agreement, the other Transaction Documents and the transactions contemplated hereby and thereby by, among other things, the mutual waivers and certifications contained in this Section. As used in this Section, “Special Damages” includes all special, consequential, exemplary, or punitive damages (regardless of how named), but does not include any payments or funds which any party hereto has expressly promised to pay or deliver to any other party hereto.

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IN WITNESS WHEREOF, this Agreement is executed as of the date first written above.

BORROWERS:
SWK HOLDINGS CORPORATION,
a Delaware corporation
By:	/s/ J. Brett Pope
Name:  J. Brett Pope
Title:    Chief Executive Officer

SWK FUNDING LLC,
a Delaware limited liability company
By:	/s/  J. Brett Pope
Name:  J. Brett Pope
Title:    Chief Executive Officer

GUARANTORS:
SWK HP HOLDINGS GP LLC,
a Delaware limited liability company
By:	/s/ J. Brett Pope
Name:  J. Brett Pope
Title:    Chief Executive Officer

SWK ADVISORS LLC,
a Delaware limited liability company
By:	/s/  J. Brett Pope
Name:  J. Brett Pope
Title:    Chief Executive Officer

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LENDER:
DOUBLE BLACK DIAMOND, L.P.,
a Delaware limited partnership
By:	Carlson Capital, L.P., its Investment Advisor
By:	Asgard Investment Corp. II, its General Partner
By:	/s/ Clint D. Carlson
Name:  Clint D. Carlson
Title:    President

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EX-10

Exhibit 10.2

PLEDGE AND SECURITY AGREEMENT

THIS PLEDGE AND SECURITY AGREEMENT (as it may be amended, restated, supplemented or modified from time to time, this “Security Agreement”) is entered into as of September 6, 2013, by SWK Holdings Corporation, a Delaware corporation (“SWK Holdings”), SWK Funding LLC, a Delaware limited liability company (“SWK Funding”), SWK Advisors LLC, a Delaware limited liability company (“SWK Advisors”), SWK HP Holdings GP LLC, a Delaware limited liability company (“SWK HP GP”, and together with SWK Holdings, SWK Funding, and SWK Advisors, “Initial Grantors” and together with any additional grantors, whether now existing or hereafter formed, that become parties to this Security Agreement by executing a Supplement hereto, “Grantors” and each individually, a “Grantor”), and Double Black Diamond, L.P., a Delaware limited partnership (“Secured Party”).

PRELIMINARY STATEMENTS

A.On the date hereof, Initial Grantors and Secured Party executed a Loan Agreement (as amended, restated, replaced, modified or supplemented from time to time, the “Loan Agreement”) pursuant to which Secured Party agreed to make loans to SWK Holdings and SWK Funding from time to time up to an original aggregate principal amount of $15,000,000 (as the same may be increased from time to time) on the terms and subject to the conditions set forth in the Loan Agreement.

B.     Secured Party has conditioned its obligations under the Loan Agreement upon the execution and delivery by Grantors of this Security Agreement, and Grantors have agreed to enter into this Security Agreement to secure all obligations owing to Secured Party under the Loan Documents.

ACCORDINGLY, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, each Grantor and Secured Party hereby agree as follows:

ARTICLE I
DEFINITIONS

1.1     Terms Defined in Loan Agreement. All capitalized terms used herein (including in the introductory paragraph and the Preliminary Statements of this Security Agreement) and not otherwise defined shall have the meanings assigned to such terms in the Loan Agreement.

1.2     Terms Defined in UCC. Terms defined in the UCC (as defined below) which are not otherwise defined in this Security Agreement are used herein as defined in the UCC.

1.3     Definitions of Certain Terms Used Herein. As used in this Security Agreement, in addition to the terms defined in the introductory paragraph hereto and in the Preliminary Statements, the following terms shall have the following meanings:

“Account Debtor” means a Person who is obligated on an Account.

“Accounts” shall have the meaning set forth in Chapter 9 of the UCC.

“Advisory Contract” means any advisory, consulting, or similar agreement entered into by and between SWK Advisors and third parties from time to time in the ordinary course of SWK Advisors’ business.

“Article” means a numbered article of this Security Agreement, unless another document is specifically referenced.

“Assigned Contracts” means, collectively, all of each Grantor’s rights and remedies under, and all moneys and claims for money due or to become due to such Grantor under all contracts, including, without limitation, any Underlying Agreement, to which such Grantor is a party, and any and all amendments, supplements, extensions, and renewals thereof including all rights and claims of such Grantor now or hereafter existing: (a) under any insurance, indemnities, warranties, and guarantees provided for or arising out of or in connection with any of the foregoing agreements, (b) for any damages arising out of or for breach or default under or in connection with any of the foregoing agreements, (c) to all other amounts from time to time paid or payable under or in connection with any of the foregoing agreements, or (d) to exercise or enforce any and all covenants, remedies, powers and privileges thereunder.

“Chattel Paper” shall have the meaning set forth in Chapter 9 of the UCC.

“Collateral” shall have the meaning set forth in Article II.

“Collateral Account” means any Deposit Account under the sole dominion and control of Secured Party established by Secured Party as provided in Section 7.1.

“Commercial Tort Claims” means, collectively, those currently existing commercial tort claims (as such term is defined in Chapter 9 of the UCC) of any Grantor, including each such commercial tort claim set forth on Exhibit H.

“Control” shall have the meaning set forth in Chapter 8 or, if applicable, in Section 9-104, 9-105, 9-106 or 9-107 of Chapter 9 of the UCC.

“Control Agreement” means a Deposit Account Control Agreement or a Securities Account Control Agreement, as the context may require.

“Copyrights” means, collectively, with respect to any Person, all of such Person’s right, title, and interest in and to the following: (a) all copyrights, rights and interests in copyrights, works protectable by copyright, copyright registrations, and copyright applications, (b) all renewals of any of the foregoing, (c) all income, royalties, damages, and payments now or hereafter due and/or payable under any of the foregoing, including, without limitation, damages or payments for past or future infringements for any of the foregoing, (d) the right to sue for past, present, and future infringements of any of the foregoing, and (e) all rights corresponding to any of the foregoing throughout the world.

“Default” means any event or condition which constitutes an Event of Default or which upon notice, lapse of time or both would, unless cured or waived, become an Event of Default.

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“Deposit Account Control Agreement” means an agreement, in form and substance satisfactory to Secured Party, among the applicable Grantor, a banking institution holding such Grantor’s funds, and Secured Party with respect to collection and control of all deposits and balances held in a Deposit Account maintained by such Grantor with such banking institution.

“Deposit Account” shall have the meaning set forth in Chapter 9 of the UCC.

“Document” shall have the meaning set forth in Chapter 9 of the UCC.

“Equipment” shall have the meaning set forth in Chapter 9 of the UCC.

“Event of Default” means an event described in Section 5.1.

“Exhibit” refers to a specific exhibit to this Security Agreement, unless another document is specifically referenced.

“Fixtures” shall have the meaning set forth in Chapter 9 of the UCC.

“General Intangible” shall have the meaning set forth in Chapter 9 of the UCC.

“Goods” shall have the meaning set forth in Chapter 9 of the UCC.

“Instrument” shall have the meaning set forth in Chapter 9 of the UCC.

“Inventory” shall have the meaning set forth in Chapter 9 of the UCC.

“Investment Property” shall have the meaning set forth in Chapter 9 of the UCC.

“Letter-of-Credit Right” shall have the meaning set forth in Chapter 9 of the UCC.

“Licenses” means, collectively, with respect to any Person, all of such Person’s right, title, and interest in and to (a) any and all licensing agreements or similar arrangements in and to its Patents, Copyrights, or Trademarks, (b) all income, royalties, damages, claims, and payments now or hereafter due or payable under and with respect thereto, including, without limitation, damages and payments for past and future breaches thereof, and (c) all rights to sue for past, present, and future breaches thereof.

“Patents” means, collectively, with respect to any Person, all of such Person’s right, title, and interest in and to: (a) any and all patents and patent applications; (b) all inventions and improvements described and claimed therein; (c) all reissues, divisions, continuations, renewals, extensions, and continuations-in-part thereof; (d) all income, royalties, damages, claims, and payments now or hereafter due or payable under and with respect thereto, including, without limitation, damages and payments for past and future infringements thereof; (e) all rights to sue for past, present, and future infringements thereof; and (f) all rights corresponding to any of the foregoing throughout the world.

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“Pledged Collateral” means, collectively, all Instruments, Securities and other Investment Property of each Grantor, whether or not physically delivered to Secured Party pursuant to this Security Agreement.

“Proceeds” shall have the meaning set forth in Chapter 9 of the UCC and, in any event shall include, without limitation, all dividends or other income from the Pledged Collateral, collections thereon or distributions or payments with respect thereto.

“Receivables” means, collectively, the Accounts, Chattel Paper, Documents, Investment Property, Instruments and any other rights or claims of any Grantor to receive money which are General Intangibles or which are otherwise included as Collateral.

“Section” means a numbered section of this Security Agreement, unless another document is specifically referenced.

“Securities Account Control Agreement” means an agreement, in form and substance reasonably satisfactory to Secured Party, among the applicable Grantor, a securities intermediary holding such Grantor’s assets, including funds and securities, or an issuer of Securities, and Secured Party with respect to collection and control of all deposits, securities and other balances held in a Securities Account maintained by such Grantor with such securities intermediary.

“Securities Account” shall have the meaning set forth in Chapter 8 of the UCC.

“Security” has the meaning set forth in Chapter 8 of the UCC.

“Stock Rights” means, collectively, all dividends, instruments or other distributions and any other right or property which each Grantor shall receive or shall become entitled to receive for any reason whatsoever with respect to, in substitution for or in exchange for any Equity Interest constituting Collateral, any right to receive an Equity Interest and any right to receive earnings, in which such Grantor now has or hereafter acquires any right, issued by an issuer of such Equity Interest.

“Supplement” means a supplement to this Security Agreement, substantially in the form of Annex II attached hereto, by which a new Grantor is joined to this Security Agreement.

“Supporting Obligation” shall have the meaning set forth in Chapter 9 of the UCC.

“Trademarks” means, collectively, with respect to any Person, all of such Person’s right, title, and interest in and to the following: (a) all trademarks (including service marks), trade names, trade dress, and trade styles and the registrations and applications for registration thereof and the goodwill of the business symbolized by the foregoing, (b) all licenses of the foregoing, whether as licensee or licensor, (c) all renewals of the foregoing, (d) all income, royalties, damages, and payments now or hereafter due or payable with respect thereto, including, without limitation, damages, claims, and payments for past and future infringements thereof, (e) all rights to sue for past, present, and future infringements of the foregoing, including the right to settle suits involving claims and demands for royalties owing, and (f) all rights corresponding to any of the foregoing throughout the world.

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“UCC” means the Uniform Commercial Code, as in effect from time to time, of the State of Texas or of any other state the laws of which are required as a result thereof to be applied in connection with the attachment, perfection or priority of, or remedies with respect to, Secured Party’s Lien on any Collateral.

The foregoing definitions shall be equally applicable to both the singular and plural forms of the defined terms.

ARTICLE II
GRANT OF SECURITY INTEREST

Each Grantor hereby pledges, assigns and grants to Secured Party a security interest in all of its right, title and interest in, to and under all personal property and other assets, whether now owned by or owing to, or hereafter acquired by or arising in favor of such Grantor (including under any trade name or derivations thereof), and whether owned or consigned by or to, or leased from or to, such Grantor, and regardless of where located (all of which will be collectively referred to as the “Collateral”), including:

(i)       all Accounts;

(ii)      all Chattel Paper;

(iii)     all Copyrights, Patents and Trademarks;

(iv)     all Documents;

(v)      all Equipment;

(vi)     all Fixtures;

(vii)     all General Intangibles;

(viii)    all Goods;

(ix)      all Instruments;

(x)       all Inventory;

(xi)      all Investment Property;

(xii)      all cash or cash equivalents;

(xiii)     all letters of credit, Letter-of-Credit Rights and Supporting Obligations;

(xiv)    all Deposit Accounts with any bank or other financial institution;

(xv)     all Commercial Tort Claims listed on Exhibit H hereto;

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(xvi)    all Securities Accounts;

(xvii)   all Assigned Contracts;

(xviii)  and all accessions to, substitutions for and replacements, Proceeds (including Stock Rights), insurance proceeds and products of the foregoing, together with all books and records, customer lists, credit files, computer files, programs, printouts and other computer materials and records related thereto and any General Intangibles at any time evidencing or relating to any of the foregoing;

to secure the prompt and complete payment and performance of the Obligations in accordance with their terms. Notwithstanding anything to the contrary contained in clauses (i) through (xviii) above, the security interest created by this Security Agreement shall not extend to, and the term “Collateral” shall not include, any right, title or interest of SWK Advisors under any Advisory Contract to the extent that such Advisory Contract or applicable Law prohibits the creation of a security interest or Lien thereon or requires the consent of any Person other than the Grantors and their Affiliates (which consent has not been obtained) as a condition to the creation of such security interest or Lien, or which would be breached or give any party (other than the Grantors and their Affiliates) the right to terminate such Advisory Contract as a result of the creation of such security interest or Lien. For the avoidance of doubt, the Collateral shall include all Permitted Investments of each Grantor, whether now or hereafter existing, including, without limitation, each of the Permitted Investments set forth on Exhibit I attached hereto, and all Proceeds (including Stock Rights), insurance proceeds and products of such Permitted Investments, together with all Underlying Agreements and any other books and records relating to such Permitted Investments and any General Intangibles at any time evidencing or relating to such Permitted Investments.

ARTICLE III
REPRESENTATIONS AND WARRANTIES

Each of the Initial Grantors represents and warrants to Secured Party, and each Grantor that becomes a party to this Security Agreement pursuant to the execution of a Supplement represents and warrants (after giving effect to supplements to each of the Exhibits hereto with respect to such subsequent Grantor as attached to such Supplement), that:

3.1     Title, Perfection and Priority. Each Grantor has good and valid rights in and title to or the power to transfer the Collateral with respect to which it has purported to grant a security interest hereunder, free and clear of all Liens except for Liens permitted under Section 4.1(e), and has full corporate, limited liability company, or partnership, as applicable, power and authority to grant to Secured Party the security interest in such Collateral pursuant hereto. When financing statements have been filed in the appropriate offices against each Grantor in the locations listed on Exhibit G, Secured Party will have a fully perfected first priority security interest in that Collateral of each Grantor in which a security interest may be perfected by filing, subject only to Permitted Liens that have priority by operation of Law.

3.2     Type and Jurisdiction of Organization, Organizational and Identification Numbers. Each Grantor is a duly organized and validly existing corporation, limited liability company, or partnership, as applicable, and is in good standing under the Laws of its jurisdiction of organization. Each Grantor’s organizational number and federal employer identification number are set forth in Parts IV and V of Exhibit A, respectively.

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3.3     Principal Location. Each Grantor’s mailing address and the location of its place of business (if it has only one) or its chief executive office (if it has more than one place of business), are disclosed in Exhibit A. Each Grantor has no other places of business except those set forth in Exhibit A.

3.4     Collateral Locations. Each location where Collateral is located is listed on Exhibit A. All of such locations are owned by the Grantor designated on Exhibit A for such location except for locations (i) that are leased by a Grantor as lessee and designated in Part VII(b) of Exhibit A and (ii) where Inventory or other Collateral is held in a public warehouse or is otherwise held by a bailee or on consignment as designated in Part VII(c) of Exhibit A.

3.5     Deposit Accounts and Securities Accounts. All of each Grantor’s Deposit Accounts and Securities Accounts as of the date hereof are listed on Exhibit B.

3.6     Exact Names. Each Grantor’s name in which it has executed this Security Agreement is the exact name as it appears in such Grantor’s organizational documents, as amended, as filed with such Grantor’s jurisdiction of organization. Except as disclosed in Part VIII of Exhibit A, no Grantor has, during the past five years, been known by or used any other corporate or fictitious name, or been a party to any merger or consolidation, or been a party to any acquisition.

3.7     Letter-of-Credit Rights and Chattel Paper. Exhibit C lists all Letter-of-Credit Rights and Chattel Paper of each Grantor. All action by each Grantor necessary or desirable to protect and perfect Secured Party’s Lien on each item listed on Exhibit C (including the delivery of all originals and the placement of a legend on all Chattel Paper as required hereunder) has been duly taken.

3.8     Accounts and Chattel Paper.

(a)     The names of the obligors, amounts owing, due dates and other information with respect to each Grantor’s Accounts and Chattel Paper are and will be correctly stated in all records of such Grantor relating thereto and in all invoices with respect thereto furnished to Secured Party by such Grantor from time to time. As of the time when each Account or each item of Chattel Paper arises, the relevant Grantor shall be deemed to have represented and warranted that such Account or Chattel Paper, as the case may be, and all records relating thereto, are genuine and in all respects what they purport to be.

(b)     With respect to each Grantor’s Accounts, except as specifically disclosed to Secured Party, (i) all Accounts represent bona fide sales of Inventory or rendering of services to Account Debtors in the ordinary course of such Grantor’s business and are not evidenced by a judgment, Instrument or Chattel Paper, (ii) there are no setoffs, claims or disputes existing or asserted with respect thereto and such Grantor has not made any agreement with any Account Debtor for any extension of time for the payment thereof, any compromise or settlement for less than the full amount thereof, any release of any Account Debtor from liability therefor, or any deduction therefrom except a discount or allowance allowed by such Grantor in the ordinary course of its business for prompt payment and disclosed to Secured Party, (iii) to such Grantor’s knowledge, there are no facts, events or occurrences which in any way impair the validity or enforceability thereof or could reasonably be expected to reduce the amount payable thereunder as shown on such Grantor’s books and records and any invoices and statements with respect thereto, (iv) such Grantor has not received any notice of proceedings or actions which are threatened or pending against any Account Debtor which might result in any adverse change in such Account Debtor’s financial condition, and (v) such Grantor has no knowledge that any Account Debtor is unable generally to pay its debts as they become due.

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(c)     In addition, with respect to all of each Grantor’s Accounts, (i) the amounts shown on all invoices and statements with respect thereto are actually and absolutely owing to such Grantor as indicated thereon and are not in any way contingent, and (ii) to such Grantor’s knowledge, all Account Debtors have the capacity to contract.

3.9       Inventory. With respect to any Inventory of a Grantor, (a) such Inventory (other than Inventory in transit) is located at such Grantor’s locations set forth on Exhibit A, (b) no Inventory (other than Inventory in transit) is now, or shall at any time or times hereafter be stored at any other location except as permitted by Section 4.1(g), (c) such Grantor has good, indefeasible and merchantable title to such Inventory and such Inventory is not subject to any Lien or security interest or document whatsoever except for Permitted Liens, (d) except as specifically disclosed to Secured Party, such Inventory is of good and merchantable quality, free from any defects, (e) except as specifically disclosed to Secured Party, such Inventory is not subject to any licensing, patent, royalty, trademark, trade name or copyright agreements with any third parties which would require any consent of any third party upon sale or disposition of that Inventory or the payment of any monies to any third party upon such sale or other disposition, and (f) such Inventory has been produced in accordance with the Federal Fair Labor Standards Act of 1938, as amended, and all rules, regulations and orders thereunder, as applicable.

3.10     Intellectual Property. No Grantor has any interest in, or title to, any Patent, Trademark or Copyright except as set forth in Exhibit D. This Security Agreement is effective to create a valid and continuing Lien and, upon filing of appropriate financing statements in the offices listed on Exhibit G and this Security Agreement (or, if applicable, such short-form intellectual property security agreements as the parties may agree upon) with the United States Copyright Office and the United States Patent and Trademark Office (or such similar foreign office or governmental agency, as applicable), fully perfected first priority security interests in favor of Secured Party on each Grantor’s Patents, Trademarks and Copyrights, such perfected security interests are enforceable as such as against any and all creditors of and purchasers from such Grantor; and all action necessary or desirable to protect and perfect Secured Party’s Lien on such Grantor’s Patents, Trademarks or Copyrights shall have been duly taken.

3.11     Filing Requirements. As of the date hereof, no Grantor’s Equipment is covered by any certificate of title. None of the Collateral owned by each Grantor is of a type for which security interests or liens may be perfected by filing under any federal statute except for Patents, Trademarks and Copyrights held by such Grantor and described in Exhibit D. The legal description, county and street address of each property on which any Fixtures owned by any Grantor are located is set forth in Exhibit E together with the name and address of the record owner of each such property.

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3.12     No Financing Statements, Security Agreements. No financing statement or security agreement describing all or any portion of the Collateral which has not lapsed or been terminated naming any Grantor as debtor has been filed or is of record in any jurisdiction except (a) for financing statements or security agreements naming Secured Party as the secured party and (b) as permitted by Section 4.1(e).

3.13     Pledged Collateral.

(a)     Exhibit F sets forth a complete and accurate list of all Pledged Collateral owned by each Grantor as of the Closing Date. Each Grantor is the direct, sole beneficial owner and sole holder of record of the Pledged Collateral listed on Exhibit F as being owned by it, free and clear of any Liens, except for the security interest granted to Secured Party hereunder and Permitted Liens of the type described in clause (a) of the definition thereof. Each Grantor further represents and warrants that (i) all Pledged Collateral owned by it constituting an Equity Interest has been (to the extent such concepts are relevant with respect to such Pledged Collateral) duly authorized, validly issued, are fully paid and non-assessable, and (ii) with respect to any certificates delivered to Secured Party representing an Equity Interest, either such certificates are Securities as defined in Chapter 8 of the UCC as a result of actions by the issuer or otherwise, or, if such certificates are not Securities, such Grantor has so informed Secured Party so that Secured Party may take steps to perfect its security interest therein as a General Intangible.

(b)     In addition, (i) none of the Pledged Collateral consisting of an Equity Interest has been issued or transferred in violation of the securities registration, securities disclosure or similar laws of any jurisdiction to which such issuance or transfer may be subject, (ii) except as set forth on Exhibit F hereto, there are no existing options, warrants, calls or commitments of any character whatsoever relating to any Pledged Collateral or which obligate the issuer of any Equity Interest included in the Pledged Collateral to issue additional Equity Interests, and (iii) except for that certain right of first refusal described in Section 5.12(c) of the Disclosure Schedules to the Loan Agreement, no consent, approval, authorization, or other action by, and no giving of notice, filing with, any governmental authority or any other Person is required for the pledge by each Grantor of Pledged Collateral owned by it pursuant to this Security Agreement or for the execution, delivery and performance of this Security Agreement by any Grantor, or for the exercise by Secured Party of the voting or other rights provided for in this Security Agreement or for the remedies in respect of the Pledged Collateral pursuant to this Security Agreement, except as may be required in connection with such disposition by laws affecting the offering and sale of securities generally.

(c)     Except as set forth in Exhibit F or as otherwise specifically disclosed to Secured Party prior to the acquisition of any such Pledged Collateral, (i) each Grantor owns 100% of the issued and outstanding Equity Interests in the issuers of any Equity Interests constituting Pledged Collateral owned by such Grantor, and (ii) none of the Pledged Collateral which represents indebtedness owed to such Grantor is subordinated in right of payment to other indebtedness or subject to the terms of an indenture.

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ARTICLE IV
COVENANTS

From the date of this Security Agreement and thereafter until this Security Agreement is terminated, each of the Initial Grantors agrees, and from and after the effective date of any Supplement applicable to any Grantor (and after giving effect to supplements to each of the Exhibits hereto with respect to such subsequent Grantor as attached to such Supplement) and thereafter until this Security Agreement is terminated each such subsequent Grantor agrees:

4.1     General.

(a)     Collateral Records. Each Grantor will maintain complete and accurate books and records with respect to the Collateral owned by it, and furnish to Secured Party such reports relating to such Collateral as Secured Party shall from time to time request.

(b)     Authorization to File Financing Statements; Ratification. Each Grantor hereby authorizes Secured Party to file, and if requested will deliver to Secured Party, all financing statements and other documents and take such other actions as may from time to time be requested by Secured Party in order to maintain a first priority perfected security interest in and, if applicable, Control of, the Collateral owned by such Grantor. Any financing statement filed by Secured Party may be filed in any filing office in any UCC jurisdiction and may (i) indicate the relevant Grantor’s Collateral (1) as all assets of such Grantor or words of similar effect, regardless of whether any particular asset comprised in the Collateral falls within the scope of Chapter 9 of the UCC or such jurisdiction, or (2) by any other description which reasonably approximates the description contained in this Security Agreement, and (ii) contain any other information required by part 5 of Chapter 9 of the UCC for the sufficiency or filing office acceptance of any financing statement or amendment, including (A) whether such Grantor is an organization, the type of organization and any organization identification number issued to such Grantor, and (B) in the case of a financing statement filed as a fixture filing or indicating such Grantor’s Collateral as as-extracted collateral or timber to be cut, a sufficient description of real property to which the Collateral relates. Each Grantor also agrees to furnish any such information to Secured Party promptly upon request.

(c)     Further Assurances. Each Grantor will, if so requested by Secured Party, furnish to Secured Party, as often as Secured Party requests, statements and schedules further identifying and describing the Collateral owned by it and such other reports and information in connection with its Collateral as Secured Party may reasonably request, all in such detail as Secured Party may specify. Each Grantor also agrees to take any and all actions necessary to defend title to the Collateral against all persons and to defend the security interest of Secured Party in its Collateral and the priority thereof against any Lien not expressly permitted hereunder.

(d)     Disposition of Collateral. No Grantor will sell, lease or otherwise dispose of the Collateral owned by it except for dispositions permitted pursuant to Sections 7.4 and 7.5 of the Loan Agreement, as applicable.

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(e)     Liens. No Grantor will create, incur, or suffer to exist any Lien on its assets or the assets of any of its Subsidiaries, except (i) the security interest created by this Security Agreement, and (ii) other Permitted Liens.

(f)     Other Financing Statements. No Grantor will authorize the filing of any financing statement naming it or any other Credit Party as debtor covering all or any portion of its, or any of its Subsidiaries’ assets, except as permitted by Section 4.1(e). Each Grantor acknowledges that it is not authorized to file any financing statement or amendment or termination statement with respect to any financing statement without the prior written consent of Secured Party, subject to such Grantor’s rights under Section 9-509(d)(2) of the UCC.

(g)     Locations. No Grantor will, without Secured Party’s prior written consent, (i) maintain any Collateral owned by it at any location other than those locations listed on Exhibit A, (ii) otherwise change, or add to, such locations, or (iii) change its principal place of business or chief executive office from the location identified on Exhibit A.

(h)     Compliance with Terms. Each Grantor will perform and comply with all obligations in respect of the Collateral owned by it and all agreements to which it is a party or by which it is bound relating to such Collateral.

4.2     Receivables.

(a)     Certain Agreements on Receivables. No Grantor will make or agree to make any discount, credit, rebate or other reduction in the original amount owing on a Receivable or accept in satisfaction of a Receivable less than the original amount thereof, except as permitted under the Loan Agreement.

(b)     Collection of Receivables. Except as otherwise provided in the Loan Agreement, each Grantor will collect and enforce, at such Grantor’s sole expense, all amounts due or hereafter due to such Grantor under the Receivables owned by it.

(c)     Delivery of Invoices. Each Grantor will deliver to Secured Party immediately upon its request after the occurrence and during the continuation of an Event of Default duplicate invoices with respect to each Account owned by it bearing such language of assignment as Secured Party shall specify.

(d)     Electronic Chattel Paper. Each Grantor shall take all steps necessary to grant Secured Party Control of all electronic chattel paper in accordance with the UCC and all “transferable records” as defined in each of the Uniform Electronic Transactions Act and the Electronic Signatures in Global and National Commerce Act.

4.3     Titled Vehicles. Each Grantor will give Secured Party notice of its acquisition of any vehicle covered by a certificate of title and upon request by Secured Party (such request to be in Secured Party’s sole discretion), such Grantor will promptly deliver to Secured Party originals of certificates of title, manufacturer’s certificates of origin or other appropriate title documents for all new and used vehicles, trucks, tractors, and trailers owned by such Grantor, together with such executed documentation as Secured Party may request to enable Secured Party to note the Liens in favor of Secured Party thereon.

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4.4     Delivery of Instruments, Securities, Chattel Paper and Documents. Each Grantor will (a) deliver to Secured Party (or, upon Secured Party’s request, Secured Party’s agent) immediately upon execution of this Security Agreement, the originals of all Chattel Paper, certificated Investment Property and other Instruments constituting Collateral owned by it (if any then exist), (b) hold in trust for Secured Party upon such Grantor’s receipt thereof after the Closing Date and immediately thereafter deliver to Secured Party any such Chattel Paper, certificated Investment Property and Instruments constituting Collateral, (c) upon Secured Party’s request, deliver to Secured Party or its agent (and thereafter hold in trust for Secured Party upon receipt and immediately deliver to Secured Party or its agent) any Document evidencing or constituting Collateral, and (d) upon Secured Party’s request, deliver to Secured Party a duly executed amendment to this Security Agreement, in the form of Annex I hereto (each an “Amendment”), pursuant to which such Grantor will pledge such additional Collateral. Each Grantor hereby authorizes Secured Party to attach each Amendment to this Security Agreement and agrees that all additional Collateral owned by it set forth in such Amendments shall be considered to be part of the Collateral.

4.5     Uncertificated Pledged Collateral. Each Grantor will permit Secured Party from time to time to cause the appropriate issuers (and, if held with a securities intermediary, such securities intermediary) of uncertificated securities or other types of Pledged Collateral owned by such Grantor not represented by certificates to mark their books and records with the numbers and face amounts of all such uncertificated securities or other types of Pledged Collateral not represented by certificates and all rollovers and replacements therefor to reflect the Lien of Secured Party granted pursuant to this Security Agreement. With respect to any Pledged Collateral owned by it, each Grantor will take any actions necessary to cause (a) the issuers of uncertificated securities which are Pledged Collateral and (b) any securities intermediary which is the holder of any such Pledged Collateral, to cause Secured Party to have and retain Control over such Pledged Collateral. Without limiting the foregoing, each Grantor will, with respect to any such Pledged Collateral held with a securities intermediary, use its commercially-reasonable best efforts to cause such securities intermediary to enter into a Securities Account Control Agreement upon Secured Party’s request.

4.6     Pledged Collateral.

(a)     Changes in Capital Structure of Issuers. No Grantor will (i) permit or suffer any issuer of an Equity Interest constituting Pledged Collateral owned by it to dissolve, merge, liquidate, retire any of its Equity Interests or other Instruments or Securities evidencing ownership, reduce its capital, sell or encumber all or substantially all of its assets or merge or consolidate with any other entity, (ii) permit or suffer the organizational documents of any issuer of an Equity Interest constituting Pledged Collateral to be amended in a manner adverse to Secured Party, or (iii) vote any such Pledged Collateral in favor of any of the foregoing. Without the prior written consent of the Secured Party, no Grantor will cause or permit any Equity Interest constituting Pledged Collateral of any Grantor to constitute a Security governed by Article 8 of the UCC of the jurisdiction in which such issuer is organized unless either (A) all certificates or other documents constituting such Security have been delivered to the Secured Party and such Security is properly defined as such under Article 8 of the UCC of the applicable jurisdiction, whether as a result of actions by the issuer thereof or otherwise, or (B) the Secured Party has entered into a control agreement with the issuer of such Security or with a securities intermediary relating to such Security and such Security is defined as such under Article 8 of the UCC of the applicable jurisdiction, whether as a result of actions by the issuer thereof or otherwise.

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(b)     Registration of Pledged Collateral. Each Grantor will permit any registerable Pledged Collateral owned by it to be registered in the name of Secured Party or its nominee at any time at the option of Secured Party at any time that an Event of Default has occurred and is continuing.

(c)     Exercise of Rights in Pledged Collateral.

(i)     Without in any way limiting the foregoing and subject to clause (ii) below, each Grantor shall have the right to exercise all voting rights or other rights relating to the Pledged Collateral owned by it for all purposes not inconsistent with this Security Agreement, the Loan Agreement or any other Loan Document; provided however, that except as otherwise contemplated in Section 7.11 of the Loan Agreement, no vote or other right shall be exercised or action taken which would have the effect of impairing the rights of Secured Party in respect of such Pledged Collateral.

(ii)    Each Grantor will permit Secured Party or its nominee at any time after the occurrence and during the continuation of an Event of Default, without notice, to exercise all voting rights or other rights relating to the Pledged Collateral owned by such Grantor, including, without limitation, exchange, subscription or any other rights, privileges, or options pertaining to any Equity Interest or Investment Property constituting such Pledged Collateral as if it were the absolute owner thereof.

(iii)   Each Grantor shall be entitled to collect and receive for its own use all cash dividends and interest paid in respect of the Pledged Collateral owned by it to the extent not in violation of the Loan Agreement.

4.7     Intellectual Property.

(a)     Each Grantor will use its commercially-reasonable best efforts to secure all consents and approvals necessary or appropriate for the assignment to or benefit of Secured Party of any License held by such Grantor and to enforce the security interests granted hereunder.

(b)     Each Grantor shall notify Secured Party immediately if it knows or has reason to know that any application or registration relating to any Patent, Trademark or Copyright owned by a Grantor (now or hereafter existing) may become abandoned or dedicated, or of any adverse determination or development (including the institution of, or any such determination or development in, any proceeding in the United States Patent and Trademark Office, the United States Copyright Office or any court) regarding such Grantor’s ownership of any Patent, Trademark or Copyright, its right to register the same, or to keep and maintain the same.

(c)     In no event shall any Grantor, either directly or through any agent, employee, licensee or designee, file an application for the registration of any Patent, Trademark or Copyright with the United States Patent and Trademark Office, the United States Copyright Office or any similar office or agency without giving Secured Party prior written notice thereof, and, upon request of Secured Party, such Grantor shall execute and deliver any and all security agreements as Secured Party may request to evidence Secured Party’s first priority security interest on such Patent, Trademark or Copyright, and the General Intangibles of such Grantor relating thereto or represented thereby.

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(d)     Each Grantor shall take all actions necessary or requested by Secured Party to maintain and pursue each application, to obtain the relevant registration and to maintain the registration of each of its Patents, Trademarks and Copyrights (now or hereafter existing), including the filing of applications for renewal, affidavits of use, affidavits of noncontestability and opposition and interference and cancellation proceedings, unless such Grantor and Secured Party shall determine that such Patent, Trademark or Copyright is not material to the conduct of such Grantor’s business.

(e)     Each Grantor shall, unless it shall reasonably determine that such Patent, Trademark or Copyright is in no way material to the conduct of its business or operations, promptly sue for infringement, misappropriation or dilution and to recover any and all damages for such infringement, misappropriation or dilution, and shall take such other actions as Secured Party shall deem appropriate under the circumstances to protect such Patent, Trademark or Copyright. In the event that any Grantor institutes suit because any of its Patents, Trademarks or Copyrights constituting Collateral is infringed upon, or misappropriated or diluted by a third party, such Grantor shall comply with Section 4.8.

4.8     Commercial Tort Claims. Each Grantor shall (a) promptly, and in any event within two (2) Business Days after the same is acquired by it, notify Secured Party of any commercial tort claim (as defined in the UCC) acquired by it that could reasonably be expected to result in a judgment or settlement in Grantor’s favor in excess of $100,000 and, unless Secured Party otherwise consents, such Grantor shall deliver an Amendment, granting to Secured Party a first priority security interest in such Commercial Tort Claim and (b) not permit the aggregate expected amount of judgments or settlements in favor of Grantors in respect of all Commercial Tort Claims for which Secured Party has not been granted a first priority security interest pursuant to clause (a) to exceed $500,000.

4.9     Letter-of-Credit Rights. If any Grantor is or becomes the beneficiary of a letter of credit with a face amount in excess of $100,000, it shall promptly, and in any event within two (2) Business Days after becoming a beneficiary, notify Secured Party thereof and use its commercially-reasonable best efforts to cause the issuer and/or confirmation bank to consent to the assignment of any Letter-of-Credit Rights to Secured Party. No Grantor shall permit the aggregate face amounts of all letters of credit for which any Grantor is beneficiary and for which Grantors have not taken the steps set forth in the immediately preceding sentence to exceed $500,000.

4.10     Federal, State or Municipal Claims. Each Grantor will promptly notify Secured Party of any Collateral which constitutes a claim against the United States government or any state or local government or any instrumentality or agency thereof, the assignment of which claim is restricted by federal, state or municipal law.

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4.11     [Reserved.]

4.12     Control Agreements. For each Deposit Account and Securities Account that any Grantor at any time maintains, such Grantor will, upon the request of Secured Party and pursuant to a Control Agreement in form and substance satisfactory to Secured Party, use its commercially-reasonable best efforts to cause the depository bank that maintains such Deposit Account, or the securities intermediary that maintains such Securities Account, as applicable, to agree to comply upon and during the continuance of an Event of Default with instructions from Secured Party to such depository bank, securities intermediary or commodities intermediary directing the disposition of funds from time to time credited to such Deposit Account or Securities Account, without further consent of such Grantor, or take such other action as Secured Party may approve in order to perfect Secured Party’s security interest in such Deposit Account or Securities Account.

4.13     Change of Name or Location; Change of Fiscal Year. No Grantor shall (a) change its name as it appears in official filings in the state of its incorporation or organization, (b) change its chief executive office, principal place of business, mailing address, corporate offices or warehouses or locations at which Collateral is held or stored, or the location of such Grantor’s records concerning the Collateral as set forth in the Security Agreement, (c) change the type of entity that it is, (d) change its organization identification number, if any, issued by its state of incorporation or other organization, or (e) change its state of incorporation or organization, in each case, unless Secured Party shall have received at least thirty (30) days prior written notice of such change and Secured Party shall have acknowledged in writing that either (1) such change will not adversely affect the validity, perfection or priority of Secured Party’s security interest in the Collateral, or (2) any reasonable action requested by Secured Party in connection therewith has been completed or taken (including any action to continue the perfection of any Liens in favor of Secured Party in any Collateral), provided that, any new location shall be in the United States. No Grantor shall change its fiscal year, which currently ends on December 31.

4.14     Assigned Contracts. Each Grantor will use its commercially-reasonable best efforts to secure all consents and approvals necessary or appropriate for the assignment to or for the benefit of Secured Party of any Assigned Contract held by such Grantor and to enforce the security interests granted hereunder. Each Grantor shall fully perform all of its obligations under each of its Assigned Contracts, and shall enforce all of its rights and remedies thereunder, in each case, as it deems appropriate in its business judgment; provided however, that no Grantor shall take any action or fail to take any action with respect to its Assigned Contracts that is reasonably likely to result in a Material Adverse Change. If any Grantor shall fail after Secured Party’s demand to pursue diligently any right under its Assigned Contracts, or if an Event of Default then exists, Secured Party may directly enforce each Grantor’s rights and remedies under any Assigned Contract in its own or such Grantor’s name and may enter into such settlements or other agreements with respect thereto as Secured Party shall determine. In any suit, proceeding or action brought by Secured Party under any Assigned Contract for any sum owing thereunder or to enforce any provision thereof, such Grantor shall indemnify and hold Secured Party harmless from and against all expense, loss or damage suffered by reason of any defense, setoff, counterclaims, recoupment, or reduction of liability whatsoever of the obligor thereunder arising out of a breach by such Grantor of any obligation thereunder or arising out of any other agreement, indebtedness or liability at any time owing from such Grantor to or in favor of such obligor or its successors. All such obligations of such Grantor shall be and remain enforceable only against such Grantor and shall not be enforceable against Secured Party. Notwithstanding any provision hereof to the contrary, each Grantor shall at all times remain liable to observe and perform all of its duties and obligations under its Assigned Contracts, and Secured Party’s exercise of any of its respective rights with respect to the Collateral shall not release such Grantor from any of such duties and obligations. Secured Party shall not be obligated to perform or fulfill any of each Grantor’s duties or obligations under its Assigned Contracts or to make any payment thereunder, or to make any inquiry as to the nature or sufficiency of any payment or property received by it thereunder or the sufficiency of performance by any party thereunder, or to present or file any claim, or to take any action to collect or enforce any performance, any payment of any amounts, or any delivery of any property.

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4.15     New Subsidiaries. Unless otherwise agreed to by Secured Party, each Grantor shall cause any new direct or indirect Subsidiary of such Grantor created, acquired, or coming into existence after the Closing Date to enter into this Security Agreement by executing and delivering a Supplement to this Security Agreement in favor of Secured Party. Upon the execution and delivery of a Supplement by such new Subsidiary, such Subsidiary shall become a Grantor hereunder with the same force and effect as if originally named as a Grantor herein. The execution and delivery of a Supplement shall not require the consent of any other Grantor under this Security Agreement. The rights and obligations of each Grantor hereunder shall remain in full force and effect notwithstanding the addition of any new Grantor hereunder.

ARTICLE V
EVENTS OF DEFAULT AND REMEDIES

5.1     Events of Default. The occurrence of any “Event of Default” under, and as defined in, the Loan Agreement shall constitute an Event of Default hereunder.

5.2     Remedies.

(a)     Upon the occurrence of an Event of Default, Secured Party may exercise any or all of the following rights and remedies:

(i)      those rights and remedies provided in this Security Agreement, the Loan Agreement, or any other Loan Document; provided that, this Section 5.2(a) shall not be understood to limit any rights or remedies available to Secured Party prior to an Event of Default;

(ii)      those rights and remedies available to a secured party under the UCC (whether or not the UCC applies to the affected Collateral) or under any other applicable law (including, without limitation, any law governing the exercise of a bank’s right of setoff or bankers’ lien) when a debtor is in default under a security agreement;

(iii)     give notice of sole control or any other instruction under any Control Agreement and take any action therein with respect to the relevant Collateral;

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(iv)     without notice (except as specifically provided in the Loan Agreement, Section 8.1 hereof or elsewhere in this Security Agreement), demand or advertisement of any kind to any Grantor or any other Person, enter the premises of any Grantor where any Collateral is located (through self-help and without judicial process) to collect, receive, assemble, process, appropriate, sell, lease, assign, grant an option or options to purchase or otherwise dispose of, deliver, or realize upon, the Collateral or any part thereof in one or more parcels at public or private sale or sales (which sales may be adjourned or continued from time to time with or without notice and may take place at any Grantor’s premises or elsewhere), for cash, on credit or for future delivery without assumption of any credit risk, and upon such other terms as Secured Party may deem commercially reasonable;

(v)     concurrently with written notice to any Grantor, transfer and register in its name or in the name of its nominee the whole or any part of the Pledged Collateral, to exchange certificates or instruments representing or evidencing Pledged Collateral for certificates or instruments of smaller or larger denominations, to exercise the voting and all other rights as a holder with respect thereto, to collect and receive all cash dividends, interest, principal and other distributions made thereon and to otherwise act with respect to the Pledged Collateral as though Secured Party was the outright owner thereof;

(vi)     require any Grantor to assemble and make available to Secured Party the Collateral owned or possessed by it and all books and records relating thereto at any place or places specified by Secured Party, whether at such Grantor’s premises or elsewhere; and

(vii)     to enter, occupy and use, or cause any of its agents to enter, occupy and use, any premises where all or any part of the Collateral, or the books and records relating thereto, or both, are located, to take possession of all or any part of the Collateral or the books and records relating thereto, or both, to remove all or any part of the Collateral or the books and records relating thereto, or both, and to conduct sales of the Collateral, without any obligation to pay such Grantor for such use and occupancy.

(b)     Secured Party may comply with any applicable state or federal law requirements in connection with a disposition of the Collateral and compliance will not be considered to adversely affect the commercial reasonableness of any sale of the Collateral.

(c)     Secured Party shall have the right upon any such public sale or sales and, to the extent permitted by law, upon any such private sale or sales, to purchase the whole or any part of the Collateral so sold, free of any right of equity redemption, which equity redemption each Grantor hereby expressly releases.

(d)     Until Secured Party is able to affect a sale, lease, or other disposition of Collateral, Secured Party shall have the right to hold or use Collateral, or any part thereof, to the extent that it deems appropriate for the purpose of preserving Collateral or its value or for any other purpose deemed appropriate by Secured Party. Secured Party may, if it so elects, seek the appointment of a receiver or keeper to take possession of Collateral and to enforce any of Secured Party’s remedies, with respect to such appointment without prior notice or hearing as to such appointment.

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(e)     Notwithstanding the foregoing, Secured Party shall not be required to (i) make any demand upon, or pursue or exhaust any of their rights or remedies against, any Grantor, any other obligor, guarantor, pledgor or any other Person with respect to the payment of the Obligations or to pursue or exhaust any of their rights or remedies with respect to any Collateral therefor or any direct or indirect guarantee thereof, (ii) marshal the Collateral or any guarantee of the Obligations or to resort to the Collateral or any such guarantee in any particular order, or (iii) effect a public sale of any Collateral.

(f)     Each Grantor recognizes that Secured Party may be unable to effect a public sale of any or all the Pledged Collateral and may be compelled to resort to one or more private sales thereof in accordance with clause (a) above. Each Grantor also acknowledges that any private sale may result in prices and other terms less favorable to the seller than if such sale were a public sale and, notwithstanding such circumstances, agrees that any such private sale shall not be deemed to have been made in a commercially unreasonable manner solely by virtue of such sale being private. Secured Party shall be under no obligation to delay a sale of any of the Pledged Collateral for the period of time necessary to permit any Grantor or the issuer of the Pledged Collateral to register such securities for public sale under the Securities Act or under applicable state securities laws, even if such Grantor and the issuer would agree to do so.

5.3     Grant of Intellectual property License. For the purpose of enabling Secured Party to exercise the rights and remedies under this Article V at such time as Secured Party shall be lawfully entitled to exercise such rights and remedies, each Grantor hereby (a) grants to Secured Party an irrevocable, nonexclusive license (exercisable without payment of royalty or other compensation to such Grantor) to use, license or sublicense any intellectual property rights now owned or hereafter acquired by such Grantor, and wherever the same may be located, and including in such license access to all media in which any of the licensed items may be recorded or stored and to all computer software and programs used for the compilation or printout thereof and (b) irrevocably agrees that Secured Party may sell any of such Grantor’s Inventory directly to any person, including without limitation persons who have previously purchased such Grantor’s Inventory from such Grantor and in connection with any such sale or other enforcement of Secured Party’s rights under this Security Agreement, may sell Inventory which bears any Trademark owned by or licensed to such Grantor and any Inventory that is covered by any Copyright owned by or licensed to such Grantor and Secured Party may finish any work in process and affix any Trademark owned by or licensed to such Grantor and sell such Inventory as provided herein.

ARTICLE VI
ACCOUNT VERIFICATION; ATTORNEY IN FACT; PROXY

6.1     Account Verification. On and after the occurrence of an Event of Default and during its continuation, Secured Party shall have the right at any time at Grantors’ expense to (a) verify the validity, amount or any other material information relating to any Accounts and (b) enforce collection of any such Accounts and to adjust, settle or compromise the amount of payment thereof, all in the same manner as Grantors.

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6.2     Authorization for Secured Party to Take Certain Action.

(a)     Each Grantor irrevocably authorizes Secured Party at any time and from time to time in the sole discretion of Secured Party and appoints Secured Party as its attorney in fact (i) to execute on behalf of such Grantor as debtor and to file financing statements necessary or desirable in Secured Party’s sole discretion to perfect and to maintain the perfection and priority of Secured Party’s security interest in the Collateral, (ii) to file a carbon, photographic or other reproduction of this Security Agreement or any financing statement with respect to the Collateral as a financing statement and to file any other financing statement or amendment of a financing statement (which does not add new collateral or add a debtor) in such offices as Secured Party in its sole discretion deems necessary or desirable to perfect and to maintain the perfection and priority of Secured Party’s security interest in the Collateral, (iii) to contact and enter into one or more agreements with the issuers of uncertificated securities which are Pledged Collateral or with securities intermediaries holding Pledged Collateral as may be necessary or advisable to give Secured Party Control over such Pledged Collateral, (iv) to discharge past due taxes, assessments, charges, fees or Liens on the Collateral (except for such Liens as are specifically permitted hereunder), (v) to contact Account Debtors for any reason, (vi) to demand payment or enforce payment of the Receivables in the name of Secured Party or such Grantor and to endorse any and all checks, drafts, and other instruments for the payment of money relating to the Receivables, (vi) to sign such Grantor’s name on any invoice or bill of lading relating to the Receivables, drafts against any Account Debtor of such Grantor, assignments and verifications of Receivables, (viii) to exercise all of such Grantor’s rights and remedies with respect to the collection of the Receivables and any other Collateral, (ix) to settle, adjust, compromise, extend or renew the Receivables, (x) to settle, adjust or compromise any legal proceedings brought to collect Receivables, (xi) to prepare, file and sign such Grantor’s name on a proof of claim in bankruptcy or similar document against any Account Debtor of such Grantor, (xii) to prepare, file and sign Grantor’s name on any notice of Lien, assignment or satisfaction of Lien or similar document in connection with the Receivables, (xiii) to change the address for delivery of mail addressed to such Grantor to such address as Secured Party may designate and to receive, open and dispose of all mail addressed to such Grantor, (xiv) to endorse and collect any cash proceeds of the Collateral, (xv) to apply the proceeds of any Collateral received by Secured Party to the Obligations as provided in Section 7.1, and (xvi) to do all other acts and things necessary to carry out this Security Agreement; and such Grantor agrees to reimburse Secured Party on demand for any payment made or any expense incurred by Secured Party in connection with any of the foregoing; provided that, this authorization shall not relieve such Grantor of any of its obligations under this Security Agreement, the Loan Agreement or under any other Loan Document.

(b)     All acts of said attorney or designee taken in accordance with Section 6.2(a) above are hereby ratified and approved. The powers conferred on Secured Party under this Section 6.2 are solely to protect Secured Party’s interests in the Collateral and shall not impose any duty upon Secured Party to exercise any such powers. Secured Party agrees that, except for the powers granted in Section 6.2(a)(i)-(iv) and Section 6.2(a)(xvi), it shall not exercise any power or authority granted to it unless an Event of Default has occurred and is continuing.

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6.3     Proxy. EACH GRANTOR HEREBY IRREVOCABLY CONSTITUTES AND APPOINTS SECURED PARTY AS ITS PROXY AND ATTORNEY-IN-FACT (AS SET FORTH IN SECTION 6.2 ABOVE) WITH RESPECT TO ITS PLEDGED COLLATERAL, INCLUDING THE RIGHT TO VOTE SUCH PLEDGED COLLATERAL, WITH FULL POWER OF SUBSTITUTION TO DO SO. IN ADDITION TO THE RIGHT TO VOTE ANY SUCH PLEDGED COLLATERAL, THE APPOINTMENT OF SECURED PARTY AS PROXY AND ATTORNEY-IN-FACT SHALL INCLUDE THE RIGHT TO EXERCISE ALL OTHER RIGHTS, POWERS, PRIVILEGES AND REMEDIES TO WHICH A HOLDER OF SUCH PLEDGED COLLATERAL WOULD BE ENTITLED (INCLUDING GIVING OR WITHHOLDING WRITTEN CONSENTS OF SHAREHOLDERS, CALLING SPECIAL MEETINGS OF SHAREHOLDERS AND VOTING AT SUCH MEETINGS). SUCH PROXY SHALL BE EFFECTIVE, AUTOMATICALLY AND WITHOUT THE NECESSITY OF ANY ACTION (INCLUDING ANY TRANSFER OF ANY SUCH PLEDGED COLLATERAL ON THE RECORD BOOKS OF THE ISSUER THEREOF) BY ANY PERSON (INCLUDING THE ISSUER OF SUCH PLEDGED COLLATERAL OR ANY OFFICER OR AGENT THEREOF), UPON THE OCCURRENCE AND CONTINUANCE OF AN EVENT OF DEFAULT.

6.4     Nature of Appointment; Limitation of Duty. THE APPOINTMENT OF SECURED PARTY AS PROXY AND ATTORNEY-IN-FACT IN THIS ARTICLE VI IS COUPLED WITH AN INTEREST AND SHALL BE IRREVOCABLE UNTIL THE DATE ON WHICH THIS SECURITY AGREEMENT IS TERMINATED IN ACCORDANCE WITH SECTION 8.14. NOTWITHSTANDING ANYTHING CONTAINED HEREIN, NEITHER SECURED PARTY NOR ANY OF ITS AFFILIATES, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR REPRESENTATIVES SHALL HAVE ANY DUTY TO EXERCISE ANY RIGHT OR POWER GRANTED HEREUNDER OR OTHERWISE OR TO PRESERVE THE SAME AND SHALL NOT BE LIABLE FOR ANY FAILURE TO DO SO OR FOR ANY DELAY IN DOING SO, EXCEPT IN RESPECT OF DAMAGES ATTRIBUTABLE SOLELY TO THEIR OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT AS FINALLY DETERMINED BY A COURT OF COMPETENT JURISDICTION; PROVIDED THAT, IN NO EVENT SHALL THEY BE LIABLE FOR ANY PUNITIVE, EXEMPLARY, INDIRECT OR CONSEQUENTIAL DAMAGES.

ARTICLE VII
COLLECTION AND APPLICATION OF RECEIVABLES AND OTHER COLLATERAL PROCEEDS

7.1     Collection and Application of Receivables and Other Collateral Proceeds. Secured Party hereby authorizes each Grantor to collect such Grantor’s Receivables, and Secured Party may curtail or terminate said authority at any time after the occurrence and during the continuance of an Event of Default (but not at any other time). If required by Secured Party at any time after the occurrence and during the continuance of an Event of Default, any Proceeds constituting collections of such Receivables, when collected by such Grantor, (i) shall be forthwith (and, in any event, within two Business Days) be deposited by such Grantor in the exact form received, duly endorsed by such Grantor to Secured Party if required, in a Collateral Account maintained under the sole dominion and control of Secured Party, subject to withdrawal by Secured Party only as provided below in this Section, and (ii) until so turned over, shall be held by such Grantor in trust for Secured Party, segregated from other funds of such Grantor. Each such deposit of Proceeds of Receivables shall be accompanied by a report identifying in reasonable detail the nature and source of the payments included in the deposit. All Proceeds constituting collections of Receivables while held by the Collateral Account bank (or by such Grantor in trust for the benefit of Secured Party) shall continue to be collateral security for the Obligations and shall not constitute payment thereof until applied as hereinafter provided. At any time when an Event of Default has occurred and is continuing, at Secured Party’s election, Secured Party may apply all or any part of the funds on deposit in the Collateral Account established by the Grantors to the payment of the Obligations then due and owing, such application to be made as set forth below in this Section. In addition to the rights of Secured Party specified above with respect to payments of Receivables, if an Event of Default shall occur and be continuing, all Proceeds of Collateral received by any Grantor consisting of cash, checks and other near cash items shall be held by such Grantor in trust for Secured Party segregated from other funds of such Grantor, and shall, at the request of Secured Party, forthwith upon receipt by such Grantor, be turned over to Secured Party in the exact form received by such Grantor (duly endorsed by such Grantor to Secured Party, if required). All Proceeds received by Secured Party hereunder shall be held by Secured Party in a Collateral Account maintained under its sole dominion and control. All Proceeds while held by Secured Party in a Collateral Account (or by any Grantor in trust for Secured Party) shall continue to be held as collateral security for all the Obligations and shall not constitute payment thereof until applied as provided below in this Section. At any time after the occurrence and during the continuance of an Event of Default, at Secured Party’s election, Secured Party may apply all or any part of Proceeds of any Grantor held in any Collateral Account in payment of the Obligations in such order as Secured Party may elect in compliance with the Loan Agreement, and any part of such funds which Secured Party elects not so to apply and deems not required as collateral security for such Obligations shall be paid over from time to time by Secured Party to such Grantor or to whomsoever may be lawfully entitled to receive the same. Any balance of such Proceeds remaining after the Obligations shall have been indefeasibly paid in full in cash shall be paid over to Grantor or to whomsoever may be lawfully entitled to receive the same.

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ARTICLE VIII
GENERAL PROVISIONS

8.1     Waivers. Each Grantor hereby waives notice of the time and place of any public sale or the time after which any private sale or other disposition of all or any part of the Collateral may be made. To the extent such notice may not be waived under applicable law, any notice made shall be deemed reasonable if sent to such Grantor, addressed as set forth in Article IX, at least ten (10) days prior to (i) the date of any such public sale or (ii) the time after which any such private sale or other disposition may be made. To the maximum extent permitted by applicable law, each Grantor waives all claims, damages, and demands against Secured Party arising out of the repossession, retention or sale of the Collateral, except such as arise solely out of the gross negligence or willful misconduct of Secured Party as finally determined by a court of competent jurisdiction. To the extent it may lawfully do so, each Grantor absolutely and irrevocably waives and relinquishes the benefit and advantage of, and covenants not to assert against Secured Party, any valuation, stay, appraisal, extension, moratorium, redemption or similar laws and any and all rights or defenses it may have as a surety now or hereafter existing which, but for this provision, might be applicable to the sale of any Collateral made under the judgment, order or decree of any court, or privately under the power of sale conferred by this Security Agreement, or otherwise. Except as otherwise specifically provided herein, each Grantor hereby waives presentment, demand, protest or any notice (to the maximum extent permitted by applicable law) of any kind in connection with this Security Agreement or any Collateral.

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8.2     Limitation on Secured Party’s Duty with Respect to the Collateral. Secured Party shall have no obligation to clean-up or otherwise prepare the Collateral for sale. Secured Party shall use reasonable care with respect to the Collateral in its possession or under its control. Secured Party shall not have any other duty as to any Collateral in its possession or control or in the possession or control of any agent or nominee of Secured Party, or any income thereon or as to the preservation of rights against prior parties or any other rights pertaining thereto. To the extent that applicable law imposes duties on Secured Party to exercise remedies in a commercially reasonable manner, each Grantor acknowledges and agrees that it is commercially reasonable for Secured Party (i) to fail to incur expenses deemed significant by Secured Party to prepare Collateral for disposition or otherwise to transform raw material or work in process into finished goods or other finished products for disposition, (ii) to fail to obtain third party consents for access to Collateral to be disposed of, or to obtain or, if not required by other law, to fail to obtain governmental or third party consents for the collection or disposition of Collateral to be collected or disposed of, (iii) to fail to exercise collection remedies against Account Debtors, Obligors or other Persons obligated on Collateral or to remove Liens on or any adverse claims against Collateral, (iv) to exercise collection remedies against Account Debtors, Obligors and other Persons obligated on Collateral directly or through the use of collection agencies and other collection specialists, (v) to advertise dispositions of Collateral through publications or media of general circulation, whether or not the Collateral is of a specialized nature, (vi) to contact other Persons, whether or not in the same business as Grantors, for expressions of interest in acquiring all or any portion of such Collateral, (vii) to hire one or more professional auctioneers to assist in the disposition of Collateral, whether or not the Collateral is of a specialized nature, (viii) to dispose of Collateral by utilizing internet sites that provide for the auction of assets of the types included in the Collateral or that have the reasonable capacity of doing so, or that match buyers and sellers of assets, (ix) to dispose of assets in wholesale rather than retail markets, (x) to disclaim disposition warranties, such as title, possession or quiet enjoyment, (xi) to purchase insurance or credit enhancements to insure Secured Party against risks of loss, collection or disposition of Collateral or to provide to Secured Party a guaranteed return from the collection or disposition of Collateral, or (xii) to the extent deemed appropriate by Secured Party, to obtain the services of other brokers, investment bankers, consultants and other professionals to assist Secured Party in the collection or disposition of any of the Collateral. Each Grantor acknowledges that the purpose of this Section 8.2 is to provide non-exhaustive indications of what actions or omissions by Secured Party would be commercially reasonable in Secured Party’s exercise of remedies against the Collateral and that other actions or omissions by Secured Party shall not be deemed commercially unreasonable solely on account of not being indicated in this Section 8.2. Without limitation upon the foregoing, nothing contained in this Section 8.2 shall be construed to grant any rights to any Grantor or to impose any duties on Secured Party that would not have been granted or imposed by this Security Agreement or by applicable law in the absence of this Section 8.2.

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8.3     Compromises and Collection of Collateral. Each Grantor and Secured Party recognize that setoffs, counterclaims, defenses and other claims may be asserted by obligors with respect to certain of the Receivables, that certain of the Receivables may be or become uncollectible in whole or in part and that the expense and probability of success in litigating a disputed Receivable may exceed the amount that reasonably may be expected to be recovered with respect to a Receivable. In view of the foregoing, each Grantor agrees that Secured Party may at any time and from time to time, if an Event of Default has occurred and is continuing, compromise with the obligor on any Receivable, accept in full payment of any Receivable such amount as Secured Party in its sole discretion shall determine or abandon any Receivable, and any such action by Secured Party shall be commercially reasonable so long as Secured Party acts in good faith based on information known to it at the time it takes any such action.

8.4     Secured Party Performance of Debtor Obligations. Without having any obligation to do so, Secured Party may perform or pay any obligation that any Grantor has agreed to perform or pay in this Security Agreement, and such Grantor shall reimburse Secured Party for any amounts paid by Secured Party pursuant to this Section 8.4. Each Grantor’s obligation to reimburse Secured Party pursuant to the preceding sentence shall constitute Obligations payable on demand.

8.5     Specific Performance of Certain Covenants. Each Grantor acknowledges and agrees that a breach of any of the covenants contained herein will cause irreparable injury to Secured Party that Secured Party has no adequate remedy at law in respect of such breaches and therefore agrees that the covenants of such Grantor contained herein shall be specifically enforceable against such Grantor.

8.6     Dispositions Not Authorized. No Grantor is authorized to sell or otherwise dispose of the Collateral except as set forth in Section 4.1(d) and notwithstanding any course of dealing between such Grantor and Secured Party or other conduct of Secured Party, no authorization to sell or otherwise dispose of the Collateral (except as set forth in Section 4.1(d)) shall be binding upon Secured Party unless such authorization is in writing signed by Secured Party.

8.7     No Waiver; Amendments; Cumulative Remedies. No delay or omission of Secured Party to exercise any right or remedy granted under this Security Agreement shall impair such right or remedy or be construed to be a waiver of any Default or an acquiescence therein, and any single or partial exercise of any such right or remedy shall not preclude any other or further exercise thereof or the exercise of any other right or remedy. No waiver, amendment or other variation of the terms, conditions or provisions of this Security Agreement whatsoever shall be valid unless in writing signed by Secured Party and then only to the extent in such writing specifically set forth. All rights and remedies contained in this Security Agreement or by law afforded shall be cumulative and all shall be available to Secured Party until this Security Agreement has terminated in accordance with Section 8.14.

8.8     Limitation by Law; Severability of Provisions. All rights, remedies and powers provided in this Security Agreement may be exercised only to the extent that the exercise thereof does not violate any applicable provision of law, and all the provisions of this Security Agreement are intended to be subject to all applicable mandatory provisions of law that may be controlling and to be limited to the extent necessary so that they shall not render this Security Agreement invalid, unenforceable or not entitled to be recorded or registered, in whole or in part. Any provision in any this Security Agreement that is held to be inoperative, unenforceable, or invalid in any jurisdiction shall, as to that jurisdiction, be inoperative, unenforceable, or invalid without affecting the remaining provisions in that jurisdiction or the operation, enforceability, or validity of that provision in any other jurisdiction, and to this end the provisions of this Security Agreement are declared to be severable.

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8.9     Reinstatement. This Security Agreement shall remain in full force and effect and continue to be effective should any petition be filed by or against any Grantor for liquidation or reorganization, should any Grantor become insolvent or make an assignment for the benefit of any creditor or creditors or should a receiver or trustee be appointed for all or any significant part of any Grantor’s assets, and shall continue to be effective or be reinstated, as the case may be, if at any time payment or performance of the Obligations, or any part thereof, is, pursuant to applicable law, rescinded or reduced in amount, or must otherwise be restored or returned by any obligee of the Obligations, whether as a “voidable preference,” “fraudulent conveyance,” or otherwise, all as though such payment or performance had not been made. In the event that any payment, or any part thereof, of the Obligations in accordance with the Loan Agreement or any other Loan Document, is rescinded, reduced, restored or returned, the corresponding Obligations shall be reinstated and deemed reduced only by any amount paid and not so rescinded, reduced, restored or returned.

8.10     Benefit of Agreement. The terms and provisions of this Security Agreement shall be binding upon and inure to the benefit of Grantors, Secured Party and their respective successors and assigns, except that no Grantor shall have the right to assign its rights or delegate its obligations under this Security Agreement or any interest herein, without the prior written consent of Secured Party. No sales of participations, assignments, transfers, or other dispositions of any agreement governing the Obligations or any portion thereof or interest therein shall in any manner impair the Lien granted to Secured Party.

8.11     Survival of Representations. All representations and warranties of each Grantor contained in this Security Agreement shall survive the execution and delivery of this Security Agreement.

8.12     Taxes and Expenses. Any taxes payable or ruled payable by Federal or State authority in respect of this Security Agreement shall be paid by Grantors, together with interest and penalties, if any. Each Grantor shall reimburse Secured Party for any and all out-of-pocket expenses and internal charges (including attorneys’, auditors’ and accountants’ fees and time charges of attorneys, paralegals, auditors and accountants who may be employees of Secured Party) paid or incurred by Secured Party in connection with the administration, collection and enforcement of this Security Agreement and in the audit, analysis, administration, collection, preservation or sale of the Collateral (including the expenses and charges associated with any periodic or special audit of the Collateral). Any and all costs and expenses incurred by Grantors in the performance of actions required pursuant to the terms hereof shall be borne solely by Grantors.

8.13     Headings. The title of and section headings in this Security Agreement are for convenience of reference only, and shall not govern the interpretation of any of the terms and provisions of this Security Agreement.

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8.14     Termination. Subject to Section 8.9, this Security Agreement shall continue in effect (notwithstanding the fact that from time to time there may be no Obligations outstanding) until (i) the Loan Agreement has terminated in accordance with its terms, (ii) no commitments of Secured Party that would give rise to any Obligations remain outstanding, and (iii) all of the Obligations have been indefeasibly paid in full in cash.

8.15     ENTIRE AGREEMENT. THIS SECURITY AGREEMENT, THE LOAN AGREEMENT, AND THE OTHER LOAN DOCUMENTS EMBODY THE ENTIRE AGREEMENT AND UNDERSTANDING BETWEEN THE GRANTORS AND SECURED PARTY RELATING TO THE COLLATERAL AND COLLECTIVELY SUPERSEDE ALL PRIOR AGREEMENTS AND UNDERSTANDINGS BETWEEN THE GRANTORS AND SECURED PARTY RELATING TO THE COLLATERAL. THERE ARE NO ORAL AGREEMENTS AMONG THE PARTIES.

8.16     CHOICE OF LAW. THIS SECURITY AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF TEXAS.

8.17     CONSENT TO JURISDICTION. EACH GRANTOR HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS SITTING IN DALLAS COUNTY, TEXAS IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS SECURITY AGREEMENT, AND EACH GRANTOR HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF SECURED PARTY TO BRING PROCEEDINGS AGAINST ANY GRANTOR IN THE COURTS OF ANY OTHER JURISDICTION.

8.18     WAIVER OF JURY TRIAL. EACH GRANTOR AND SECURED PARTY HEREBY KNOWINGLY, VOLUNTARILY, INTENTIONALLY AND IRREVOCABLY (A) WAIVE, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS SECURITY AGREEMENT OR THE RELATIONSHIP ESTABLISHED HEREUNDER, (B) WAIVE, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY SUCH LITIGATION ANY “SPECIAL DAMAGES” AS DEFINED BELOW, (C) CERTIFY THAT NO PARTY HERETO NOR ANY REPRESENTATIVE OR AGENT OR COUNSEL FOR ANY PARTY HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE, OR IMPLIED THAT SUCH PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS, AND (D) ACKNOWLEDGE THAT IT HAS BEEN INDUCED TO ENTER INTO THIS SECURITY AGREEMENT, THE OTHER LOAN DOCUMENTS AND THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS CONTAINED IN THIS SECTION. AS USED IN THIS SECTION, “SPECIAL DAMAGES” INCLUDES ALL SPECIAL, CONSEQUENTIAL, EXEMPLARY, OR PUNITIVE DAMAGES (REGARDLESS OF HOW NAMED), BUT DOES NOT INCLUDE ANY PAYMENTS OR FUNDS WHICH ANY PARTY HERETO HAS EXPRESSLY PROMISED TO PAY OR DELIVER TO ANY OTHER PARTY HERETO.

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8.19     Counterparts. This Security Agreement may be executed in any number of counterparts, all of which taken together shall constitute one agreement, and any of the parties hereto may execute this Security Agreement by signing any such counterpart. This Security Agreement may be validly executed and delivered by facsimile, electronic mail in portable document format (.pdf) or other electronic transmission.

ARTICLE IX
NOTICES

9.1     Sending Notices. Any notice required or permitted to be given under this Security Agreement shall be sent and shall be deemed received in accordance with Section 11.3 of the Loan Agreement in each case addressed to each applicable Grantor or to Secured Party, as applicable, at the addresses set forth in Section 11.3 of the Loan Agreement.

9.2     Change in Address for Notices. Each Grantor and Secured Party may change the address for service of notice upon it by a notice in writing to the other parties hereto.

[The remainder of this page is intentionally left blank.]

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IN WITNESS WHEREOF, Grantors and Secured Party have executed this Security Agreement as of the date first above written.

GRANTORS:
SWK HOLDINGS CORPORATION,
a Delaware corporation
By:	/s/ J. Brett Pope
Name:  J. Brett Pope
Title:    Chief Executive Officer

SWK FUNDING LLC,
a Delaware limited liability company
By:	/s/ J. Brett Pope
Name:  J. Brett Pope
Title:    Chief Executive Officer

SWK ADVISORS LLC,
a Delaware limited liability company
By:	/s/ J. Brett Pope
Name: J. Brett Pope
Title: Chief Executive Officer

SWK HP HOLDINGS GP LLC,
a Delaware limited liability company
By:	/s/ J. Brett Pope
Name: J. Brett Pope
Title: Chief Executive Officer

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SECURED PARTY:
DOUBLE BLACK DIAMOND, L.P.,
a Delaware limited partnership
By:	Carlson Capital, L.P., its Investment Advisor
By:	Asgard Investment Corp. II, its General Partner
By:	/s/ Clint D. Carlson
	Name:  Clint D. Carlson
	Title:    President

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EX-10

Exhibit 10.3

VOTING AGREEMENT

This VOTING AGREEMENT (this “Agreement”), dated as of September 6, 2013 (the “Effective Date”), is entered into by and between Double Black Diamond, L.P., a Delaware limited partnership (“DBD LP”), Double Black Diamond Offshore Ltd., a Cayman Islands exempted company (“Double Offshore”), Black Diamond Offshore Ltd., a Cayman Islands exempted company (“Offshore,” and along with DBD LP and Double Offshore, collectively, the “Investor”) and SWK Holdings Corporation, a Delaware corporation (the “Company”, and together with Investor, the “Parties” and, each individually, a “Party”).

RECITALS:

WHEREAS, simultaneously herewith, Investor and the Company are entering into a Loan Agreement (as may be amended from time to time, the “Loan Agreement”) whereby, on the terms and subject to the conditions set forth therein, Investor will provide the Company with capital to fund additional financings in the life sciences industries consistent with the past business practices of the Company;

WHEREAS, as a material inducement to the Company entering into the Loan Agreement, Investor has agreed to enter into this Agreement to vote certain Excess Shares (as defined herein) in accordance with the terms herein; and

WHEREAS, as a material inducement to Investor entering into the Loan Agreement, the Company has agreed to enter into this Agreement to grant certain rights to Investor in connection with future equity issuances by the Company in accordance with the terms herein.

NOW, THEREFORE, in consideration of the foregoing and the covenants and agreements contained herein, and intending to be legally bound hereby, the Parties hereto agree as follows:

Section 1.     REPRESENTATIONS AND WARRANTIES.

1.1.     Representations and Warranties. Each Party represents and warrants to the other Party as follows:

(a)     Such Party has the requisite power, authority and legal capacity to enter into and deliver this Agreement and to carry out its obligations hereunder. This Agreement has been duly executed and delivered by such Party and, assuming its due authorization, execution and delivery by the other Party, is a legal, valid and binding obligation of such Party, enforceable against such Party in accordance with its terms.

(b)     The execution and delivery of this Agreement by such Party do not, and the performance of this Agreement by such Party will not, (i) conflict with or violate any laws or (ii) conflict with or violate any contract or other instrument to which such Party is a party or by which such Party is bound, including, without limitation, any voting agreement, stockholders agreement or voting trust, except to the extent waived on or prior to the date hereof.

(c)     The execution and delivery of this Agreement by such Party do not, and the performance of this Agreement by such Party will not, require such Party to obtain any consent, approval, authorization or permit of, or to make any filing with or notification to, any person.

(d)     As of the Effective Date and immediately prior to the issuance of warrants to Investor pursuant to that certain Warrant Agreement, dated as of the Effective Date, by the Company in favor of Investor (the “Warrant Agreement”), Investor and its Affiliates either directly or indirectly beneficially own 12,149,100 shares of Common Stock (the “Investor Shares”). Except for the Investor Shares, as of the Effective Date and immediately prior to the issuance of warrants to Investor pursuant to the Warrant Agreement, Investor and its Affiliates do not beneficially own any (i) shares of capital stock or voting securities of the Company, (ii) securities of the Company convertible into or exchangeable for shares of capital stock or voting securities of the Company or (iii) options or other rights to acquire (whether currently, upon lapse of time, following the satisfaction of any conditions, upon the occurrence of any event or any combination of the foregoing) from the Company any capital stock, voting securities or securities convertible into or exchangeable for capital stock or voting securities of the Company. For purposes of this Agreement, “Affiliate” means, as to any person or entity, each other person or entity that directly or indirectly (through one or more intermediaries or otherwise) controls, is controlled by, or is under common control with, such person or entity, provided that, for purposes of this Agreement, the Company and its subsidiaries shall not be deemed Affiliates of the Investor and vice versa. A person or entity shall be deemed to be “controlled by” any other person or entity if such other person or entity possesses, directly or indirectly, the power to direct or cause the direction of the management and policies of a person or entity, whether through the ownership of voting securities, by contract, or otherwise.

Section 2.     AGREEMENT TO VOTE

2.1.     Agreement to Vote.

(a)     During the Voting Period, Investor will (and, if applicable, will cause any of its Affiliates who have the right to vote or direct the voting of any Excess Shares to) (1) appear at any meeting of stockholders and shall appear or otherwise cause any Excess Shares to be counted as present thereat for purposes of calculating a quorum and (2) vote (or cause to be voted), in person or by proxy, on any matter properly brought before the stockholders of the Company for vote, any Excess Shares (as determined as of the time of the applicable stockholder vote) in the same proportion of “for” and “against” votes as the stockholders of the Company vote their shares on such matter (after excluding the votes of Investor and any of its Affiliates). For the avoidance of doubt, the voting obligations contained in this Section 2.1 shall not apply to any shares of Common Stock directly or indirectly owned by Investor or its Affiliates other than the Excess Shares and Investor and its Affiliates shall be permitted to vote such other shares in such manner as they determine in their sole discretion.

(b)     For the purposes of this Agreement, “Excess Shares” shall mean, as of any time (the “Determination Date”), any shares of Common Stock that (i) are directly or indirectly acquired by Investor or its Affiliates pursuant to either the Warrant Agreement or its rights as Backstop Agent in Section 4 hereof and (ii) when combined with all other shares of Common Stock owned directly or indirectly by Investor and its Affiliates as of the applicable Determination Date, entitle Investor, together with its Affiliates, to ownership of, and the unrestricted right to vote, the greater of (1) 33% of the outstanding Common Stock as of the applicable Determination Date and (2) 14,201,515 shares of Common Stock.

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(c)     For the purposes of this Agreement, the “Voting Period” shall mean the period beginning on the date that Investor or one of its Affiliates first acquires ownership of an Excess Share and ending on the two year anniversary of such date.

2.2.     Notice of Vote; Irrevocable Proxy. In order to allow Investor to vote the Excess Shares in the manner provided for in Section 2.1, prior to Investor being required to vote the Excess Shares in accordance with Section 2.1, the Company shall provide Investor with written notice stating the manner in which the stockholders of the Company have elected to vote (after excluding the votes of Investor and any of its Affiliates) on any matter properly brought before the stockholders of the Company for vote. Subject to the last sentence of this Section 2.2, by execution and delivery of this Agreement, the Investor does hereby appoint the Company, with full power of substitution and resubstitution, as the Investor’s true and lawful attorney and irrevocable proxy, to the fullest extent of the Investor’s rights with respect to the Excess Shares, to vote each of the Excess Shares solely with respect to the matters set forth in Section 2.1 hereof. The Investor intends this proxy to be irrevocable and coupled with an interest hereunder until the expiration of the Voting Period, at which time this irrevocable proxy shall automatically terminate. Notwithstanding anything to the contrary provided herein, this proxy shall be effective only if the Investor (A) fails to appear or otherwise fails to cause any Excess Shares to be counted as present for purposes of calculating a quorum at a meeting of the Company’s stockholders, or (B) fails to vote any Excess Shares in accordance with Section 2.1. The Investor hereby revokes any proxies previously granted by the Investor with respect to the Excess Shares, and represents to the Company that none of such previously-granted proxies are irrevocable.

Section 3.     RIGHT OF FIRST OFFER ON SUBSEQUENT ISSUANCES

3.1.     General.

(a)     During the period beginning on the Effective Date and ending on the three year anniversary of the Effective Date, Investor (or its designees) shall have the right, in its sole discretion, to purchase its Pro Rata Share (as of immediately prior to the issuance of any New Securities) of all or any part of any New Securities that the Company may from time to time issue or sell after the Effective Date.

(b)     For purposed of this Agreement, “New Securities” shall mean any shares of Common Stock or preferred stock of the Company, whether or not now authorized, and rights, options or warrants to purchase such Common Stock or preferred stock, and securities of any type whatsoever that are, or may become, convertible or exchangeable into such Common Stock or preferred stock; provided, that the term “New Securities” does not include:

(i)     shares of Common Stock issued pursuant to the Warrant Agreement;

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(ii)     shares of Common Stock (as such number of shares is equitably adjusted for subsequent stock splits, stock combinations, stock dividends and recapitalizations) issued directly or upon the exercise of options to directors, officers, employees, or consultants of the Company in connection with their service as directors of the Company, their employment by the Company or their retention as consultants by the Company, in each case authorized by the Board and, if applicable, the stockholders of the Company, including, without limitation, pursuant to any of the Company’s stock compensation plans as described in the Company’s filings under the Securities Exchange Act of 1934, as amended; and

(iii)     shares of the Company’s Common Stock issued in connection with any stock split or stock dividend.

(c)     For purposes of this Agreement, Investor’s “Pro Rata Share” shall mean, as of any time, the ratio of (i) the number of fully-diluted shares of Common Stock directly or indirectly owned by Investor and its Affiliates as of such time to (ii) the number of fully-diluted shares of Common Stock actually outstanding as of such (excluding and shares of Common Stock owned or held by or for the account of the Company or any of its controlled subsidiaries as of such time); provided that for purposes of this definition, “fully-diluted shares of Common Stock” shall only include shares of Common Stock underlying rights, options or warrants to purchase such Common Stock, and securities of any type whatsoever that are, or may become, convertible into Common Stock, to that extent that (x) all applicable vesting requirements have been satisfied and (y) the per share value of the Common Stock as of such time (which shall be deemed to be the closing price of a share of Common Stock on any stock exchange or automated quotation system on which the Common Stock is then listed or quoted) exceeds the exercise or conversion price per share of Common Stock for such rights, options or warrants to purchase such Common Stock, or securities of any type whatsoever that are, or may become, convertible into Common Stock, in each case, as of such time.

3.2.     Procedures.

(a)     If the Company proposes to undertake an issuance of New Securities, it shall give written notice to Investor of its intention to issue New Securities (the “ROFO Notice”), describing the type of New Securities and the price and the terms upon which the Company proposes to issue such New Securities. Investor (or its designee) shall have 15 days from receipt of any such ROFO Notice to agree to purchase up to Investor’s Pro Rata Share of such New Securities for the price and upon the terms specified in the ROFO Notice by giving written notice to the Company and stating in such notice the quantity of New Securities to be purchased (not to exceed Investor’s Pro Rata Share).

(b)     If Investor (or its designee) fails to provide such written notice within such 15 day period or provides written notice that it elects not to purchase all or any portion of the New Securities, then the Company shall have 90 days from the expiration of the periods set forth above to sell all or any New Securities that were not agreed to be purchased by Investor, at a price not less than, and upon terms not materially more favorable to the purchasers of such New Securities than, specified in the ROFO Notice. If the Company has not issued and sold such New Securities within such period, then after such period the Company shall not issue or sell any New Securities without again first complying with this Section 3.

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(c)     If Investor (or its designee) provides written notice within such 15 day period that it elects to purchase any or all of the New Securities, then the Company and Investor (or its designee) shall promptly thereafter proceed to consummate the sale or issuance of New Securities by the Company to Investor (or its designee) on the terms set forth in the ROFO Notice. The Company and its board of directors shall also take all necessary action, if any, in order to render inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or other similar anti-takeover provision under the Company’s charter, bylaws or similar charter documents or the laws of its state of incorporation that is or could become applicable to the Company as a result of the Company and Investor (or its designee) consummating any such sale or issuance of New Securities by the Company to Investor (or its designee). Any such sale or issuance to Investor (or its designee) shall be subject to compliance with applicable federal and state securities laws.

Section 4.     EXCLUSIVE RIGHT TO PROVIDE BACK STOP.

4.1.     General.

(a)     During the period beginning on the Effective Date and ending on the three year anniversary of the Effective Date, Investor (or its designee) shall have the right, in its sole discretion, to serve as the exclusive Backstop Agent for any of the unsubscribed portion of New Securities in any Rights Offering; provided, however, that Investor shall only have the right to so serve as Backstop Agent to the extent such backstop would not result in the impairment of any net operating losses of the Company.

(b)     For purposes of this Agreement, “Backstop Agent” means any person or entity that is engaged to purchase the unsubscribed portion of any rights offered in any Rights Offering.

(c)     For purposes of this Agreement, “Rights Offering” means any issuance of rights offered to the Company’s stockholders that entitles them to purchase New Securities in proportion to their existing holdings, or any other similar issuance to the Company’s stockholders (excluding any rights or securities issued pursuant to the Company’s Second Amended and Restated Rights Agreement by and between the Company and Computershare Trust Company, N.A., as Rights Agent, as amended from time to time, or any “poison pill” or similar stockholder rights plan now or hereafter in effect).

4.2.      Procedures.

(a)     If the Company proposes to undertake a Rights Offering with one or more Backstop Agents, it shall give written notice to Investor of its intention to undertake the Rights Offering (the “Rights Offering Notice”), describing the price and the terms upon which the Company proposes to offer New Securities in the Rights Offering and the terms on which the Company proposes to engage a Backstop Agent(s) for the Rights Offering. Investor (or its designee) shall have 15 days from receipt of any such Rights Offering Notice to agree to serve as the or a Backstop Agent for the Rights Offering upon the terms specified in the Rights Offering Notice by giving written notice to the Company and stating in such notice the portion of the Rights Offering for which Investor will serve as Backstop Agent.

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(b)     If Investor (or its designee) fails to provide such written notice within such 15 day period or provides written notice that it elects not to serve as Backstop Agent for all or any portion of the Rights Offering, then the Company shall have 90 days from the expiration of the periods set forth above to engage other Backstop Agents as to any portion of the Rights Offering to which Investor has agreed to serve as Backstop Agent and to consummate the Rights Offering, in each case, upon terms not materially more favorable to the other Backstop Agents and the stockholders of the Company than specified in the Rights Offering Notice. If the Company has not consummated the Rights Offering within such period, then after such period the Company shall not commence any Rights Offering without again first complying with this Section 4.

(c)     If Investor (or its designee) provides written notice within such 15 day period that it elects to serve as Backstop Agent for all or any portion of the Rights Offering, then the Company and Investor (or its designee) shall promptly thereafter execute and deliver a customary engagement letter providing for the terms on which Investor (or its designee) will serve as Backstop Agent. The Company and its board of directors shall also take all necessary action, if any, in order to render inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or other similar anti-takeover provision under the Company’s charter, bylaws or similar charter documents or the laws of its state of incorporation that is or could become applicable to the Company as a result of the Company and Investor (or its designee) consummating any such Rights Offering (including the issuance of any New Securities by the Company to Investor (or its designee) in connection with any such Rights Offering). Any such engagement shall be subject to compliance with applicable federal and state securities laws.

Section 5.     GENERAL PROVISIONS.

5.1.     Termination. This Agreement shall remain in effect until the earliest to occur of (a) immediately prior to the closing of (i) the sale of the Company (through a merger, consolidation, sale of all or substantially all of its assets or stock or similar transaction); (ii) the acquisition by a single purchaser of all of the issued and outstanding shares of Common Stock; (b) at any time indicated in the written agreement of the Company and Investor; (c) the effective time of any liquidation, winding up or dissolution of the Company; and (d) the seven year anniversary of the Effective Date.

5.2.     Headings. The headings and captions used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement. All references in this Agreement to sections, paragraphs, exhibits and schedules shall, unless otherwise provided, refer to sections and paragraphs of this Agreement and exhibits and schedules attached to this Agreement, all of which exhibits and schedules are incorporated in this Agreement by this reference.

5.3.     Assignment. To the fullest extent permitted by law, this Agreement shall not be assigned by either Party without the prior written consent of the other Party; provided that Investor shall be entitled to assign all or any part of this Agreement to any of its Affiliates; provided further that in connection with any permitted transfer of Excess Shares to any Affiliate of the Investor, such Affiliate shall, as a condition to such transfer, agree to perform the Investor’s obligations hereunder with respect to such Excess Shares, including with respect to the Investor’s obligations under Section 2 . The terms and provisions of this Agreement shall inure to the benefit of, and be binding upon, the Company and Investor and their respective successors and permitted assigns.

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5.4.     Notices. All notices, requests, consents, demands and other communications required or permitted under this Agreement shall be in writing, unless otherwise specifically provided in the Agreement, and shall be deemed sufficiently given or furnished if delivered by personal delivery, by facsimile, by delivery service with proof of delivery, or by registered or certified United States mail, postage prepaid, to the Company at the address of the Company specified below and to Investor at the address specified below (unless changed by similar notice in writing given by the particular person whose address is to be changed). Any such notice or communication shall be deemed to have been given (a) in the case of personal delivery or delivery service, as of the date of first attempted delivery during normal business hours at the address provided herein, (b) in the case of facsimile, upon receipt, or (c) in the case of registered or certified United States mail, three days after deposit in the mail.

If to the Company:

SWK Holdings Corporation

15770 North Dallas Parkway

Suite 1290

Dallas, Texas 75248

Attention: J. Brett Pope, Chief Executive Officer

Facsimile: (972) 687-7255

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

Holland & Knight LLP

300 Crescent Court, Suite 1100

Dallas, Texas 75201

Attention: Ryan Magee

Facsimile: (214) 964-9501

If to Investor:

c/o Carlson Capital, L.P.

2100 McKinney Avenue

Suite 1800

Dallas, Texas 75201

Attention: Christopher W. Haga; and G. Thomas Cason, III, General Counsel’s Office

Facsimile: (214) 932-9712

5.5.     No Third Party Beneficiaries. This Agreement is not intended to be for the benefit of, and shall not be enforceable by, any person or entity not a Party hereto.

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5.6.     Specific Performance. Each of the Company and Investor acknowledges that a breach or threatened breach by such Party of any of its obligations under this Agreement would give rise to irreparable harm to the other Party hereto for which monetary damages would not be an adequate remedy and hereby agrees that in the event of a breach or a threatened breach by such Party of any such obligations, the other Party hereto shall, in addition to any and all other rights and remedies that may be available to it in respect of such breach, be entitled to equitable relief, including a restraining order, an injunction, specific performance and any other relief that may be available from a court of competent jurisdiction. The rights and remedies provided in this Agreement are cumulative and are not exclusive of, and are in addition to and not in substitution for, any other rights or remedies available at law, in equity or otherwise.

5.7.     No Waiver. No failure or delay (whether by course of conduct or otherwise) by a Party in exercising any right, power or remedy that such Party may have under the Agreement shall operate as a waiver thereof or of any other right, power or remedy, nor shall any single or partial exercise by a Party of any such right, power or remedy preclude any other or further exercise thereof or of any other right, power or remedy. No waiver of any provision of the Agreement and no consent to any departure therefrom shall ever be effective unless it is in writing, and then such waiver or consent shall be effective only in the specific instances and for the purposes for which given and to the extent specified in such writing. No notice to or demand on any Party shall in any case entitle any Party to any other or further notice or demand in similar or other circumstances. This Agreement sets forth the entire understanding between the Parties hereto with respect to the transactions contemplated herein and supersede all prior discussions and understandings with respect to the subject matter hereof, and no waiver, consent, release, modification or amendment of or supplement to this Agreement shall be valid or effective against any Party hereto unless the same is in writing and signed by such Party.

5.8.     Governing Law; Submission to Process. This Agreement shall be governed by and construed in accordance with the internal laws of the State of Delaware, without giving effect to any choice or conflict of law provision (whether of the State of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Delaware. Each Party hereby irrevocably (a) submits itself to the non-exclusive jurisdiction of the state and federal courts sitting in Dallas County, Texas, (b) agrees and consents that service of process may be made upon it in any legal proceeding relating to the Agreement by any means allowed under Delaware or federal law, and (c) waives any objection that it may now or hereafter have to the venue of any such proceeding being in such a court and any claim that any such proceeding brought in such a court has been brought in an inconvenient forum.

5.9.     Severability. If any term or provision of this Agreement shall be determined to be illegal or unenforceable all other terms and provisions of this Agreement shall nevertheless remain effective and shall be enforced to the fullest extent permitted by applicable law.

5.10.     Counterparts; Fax. This Agreement may be separately executed in any number of counterparts and by different Parties hereto in separate counterparts, each of which when so executed shall be deemed to constitute one and the same Agreement. This Agreement may be validly executed and delivered in counterparts exchanged via facsimile, electronic mail in portable document format (.pdf) or other electronic transmission, each of which counterparts shall be deemed originals for all purposes.

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5.11.     Waiver of Jury Trial, Punitive Damages, etc. Each Party hereby knowingly, voluntarily, intentionally, and irrevocably (a) waives, to the maximum extent not prohibited by law, any right it may have to a trial by jury in respect of any litigation based hereon, or directly or indirectly at any time arising out of, under or in connection with the Agreement or any transaction contemplated thereby or associated therewith, before or after maturity; (b) waives, to the maximum extent not prohibited by law, any right it may have to claim or recover in any such litigation any “Special Damages” as defined below, (c) certifies that no Party hereto nor any representative or agent or counsel for any Party hereto has represented, expressly or otherwise, or implied that such Party would not, in the event of litigation, seek to enforce the foregoing waivers, and (d) acknowledges that it has been induced to enter into this Agreement and the transactions contemplated hereby and thereby by, among other things, the mutual waivers and certifications contained in this Section. As used in this Section, “Special Damages” includes all special, consequential, exemplary, or punitive damages (regardless of how named), but does not include any payments or funds which any Party hereto has expressly promised to pay or deliver to any other Party hereto.

5.12.     Entire Agreement. This Agreement, together with all exhibits and schedules to this Agreement, constitutes the entire agreement and understanding of the Parties with respect to the subject matter of this Agreement and supersedes any and all prior negotiations, correspondence, agreements, understandings, duties or obligations between the parties with respect to the subject matter of this Agreement.

[Signature page follows.]IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed as of the date first above written.

SWK HOLDINGS CORPORATION
By:	/s/ J. Brett Pope
Name: J. Brett Pope
Title:   Chief Executive Officer

INVESTOR:
Double Black Diamond, L.P.
By:	Carlson Capital, L.P., its Investment Advisor
By:	Asgard Investment Corp. II, its General Partner
By:	/s/ Clint D. Carlson
Name: Clint D. Carlson
Title:   President

Double Black Diamond OFFSHORE LtD.
By:	Carlson Capital, L.P., its Investment Advisor
By:	Asgard Investment Corp. II, its General Partner
By:	/s/ Clint D. Carlson
Name: Clint D. Carlson
Title:   President

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Black Diamond OFFSHORE, LTD.
By:	Carlson Capital, L.P., its Investment Advisor
By:	Asgard Investment Corp. II, its General Partner
By:	/s/ Clint D. Carlson
Name: Clint D. Carlson
Title:   President

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EX-10

Exhibit 10.4

REGISTRATION RIGHTS AGREEMENT

This REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is made and entered into as of the 6th day of September, 2013, by and among SWK Holdings Corporation, a Delaware corporation (the “Company”), and Double Black Diamond, L.P., a Delaware limited partnership (“DBD LP”), Double Black Diamond Offshore Ltd., a Cayman Islands exempted company (“Double Offshore”), Black Diamond Offshore Ltd., a Cayman Islands exempted company (“Offshore,” and along with DBD LP and Double Offshore, collectively, the “Investor”).

RECITALS:

The Company and the Investor are parties to that certain Warrant Agreement, dated as of the date of this Agreement (the “Warrant”), pursuant to which the Investor is entitled to purchase up to 1,000,000 shares of common stock, par value $0.001 per share (“Common Stock”), of the Company (such shares, the “Warrant Shares”);

The Investor’s execution and delivery of the Warrant are conditioned upon the execution and delivery of this Agreement; and

The parties to this Agreement deem it in their best interests to set forth certain rights of the Investor;

NOW, THEREFORE, in consideration of the foregoing recitals and the mutual promises set forth in this Agreement, the parties to this Agreement agree as follows:

Section 1.     REGISTRATION RIGHTS.

1.1     Definitions. As used in this Agreement, the following terms shall have the meanings set forth below:

“Affiliate” means, as to any person or entity, each other person or entity that directly or indirectly (through one or more intermediaries or otherwise) controls, is controlled by, or is under common control with, such person or entity, provided that, for purposes of this Agreement, the Company and its subsidiaries shall not be deemed Affiliates of any Holder and vice versa. A person or entity shall be deemed to be “controlled by” any other person or entity if such other person or entity possesses, directly or indirectly, the power to direct or cause the direction of the management and policies of a person or entity, whether through the ownership of voting securities, by contract, or otherwise.

“Approved Fund” means any Person (other than a natural Person) that is engaged in making, purchasing, holding or investing in loans and similar extensions of credit and that is administered or managed by (a) the Investor, (b) an Affiliate of the Investor or (c) an entity or an Affiliate of an entity that administers or manages the Investor.

“Common Stock” means the Company’s common stock, par value $0.001 per share.

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“Demand Registration” means either a Long-Form Demand Registration pursuant to Section 1.2(a) or a Demand Shelf Underwritten Offering pursuant to Section 1.4(a).

“Event of Default” means any Event of Default as that term is defined in the Loan Agreement.

“Form S-3” means Form S-3 under the Securities Act as is in effect on the date of this Agreement or any successor registration form under the Securities Act subsequently adopted by the SEC that permits inclusion or incorporation of substantial information by reference to other documents filed by the Company with the SEC.

“Holder” means the Investor, or any assignee of rights under this Agreement in accordance with this Agreement.

“Loan Agreement” means that certain Loan Agreement dated as of September 6, 2013, by and among the Company and SWK Funding, LLC, as Borrowers, and SWK Advisors LLC, as Guarantor, and the Investor, as Lender.

“Maximum Number of Demand Registrations” means 4 Demand Registrations pursuant to either Section 1.2(a) or Section 1.4(a).

The terms “register,” “registration,” and “registered” refer to a registration effected by preparing and filing a registration statement or similar document in compliance with the Securities Act and the declaration or ordering of effectiveness of such registration statement or document.

“Registrable Securities” means (a) all Common Stock owned or held by the Holder and its Affiliates, (b) the Warrant Shares and any other shares of Common Stock issued or issuable upon the exercise of warrants, options, or other derivative securities held by the Investor or acquired by the Investor after the date hereof; (c) any Common Stock issued or issuable upon conversion of any capital stock (or upon the conversion or exercise of any warrant, right or other security) of the Company acquired by the Investor after the date hereof; and (d) any shares of Common Stock of the Company issued as (or issuable upon the conversion or exercise of any warrant, right or other security which is issued as) a dividend or other distribution with respect to, or in exchange for or in replacement of, all such or shares of Common Stock described in clause (a), (b) or (c) above; excluding, in all cases, any securities sold by a person in a transaction in which rights under this Section 1 are not assigned in accordance with this Agreement or any securities sold in a registered public offering under the Securities Act or sold pursuant to Rule 144 promulgated under the Securities Act. Holders of Registrable Securities shall not be required to exercise their Warrants to receive Common Stock in order to exercise the registration rights granted under this Agreement until immediately before the closing of the offering to which the registration relates. The number of shares of “Registrable Securities then outstanding” shall mean the number of shares of fully-diluted Common Stock which are Registrable Securities and (a) are then issued and outstanding or (b) are then issuable pursuant to the exercise or conversion of then outstanding and then exercisable options, warrants or convertible securities.

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“Registration Expenses” means all expenses incurred in effecting any registration pursuant to this Agreement, including, without limitation, all registration, qualification and filing fees, printing expenses, escrow fees, fees and disbursements of counsel for the Company, reasonable fees and expenses incurred by one special counsel to all selling Holders, blue sky fees and expenses and expenses of any regular or special audits incident to or required by any such registration, but shall not include underwriting discounts, selling commissions and stock transfer taxes applicable to the sale of Registrable Securities.

“SEC” means the Securities and Exchange Commission.

“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

1.2     Long-Form Demand Registration.

(a)     Requested Long-Form Registration. Subject to the exceptions in Section 1.2(b) below, if the Company shall receive at any time after 180 days after the date of this Agreement, a written request (a “Long-Form Demand Notice”) of Holders holding more than 50% of the Registrable Securities then remaining, that the Company effect a registration on Form S-1 or any successor form or forms covering any portion of the Registrable Securities then outstanding (a “Long-Form Demand Registration”), the Company shall:

(i)     promptly give written notice of such Long-Form Demand Registration to all other Holders; and

(ii)     as soon as practicable, and in any event within 30 days of the receipt of such request, file a registration statement covering all Registrable Securities as are specified in such Long-Form Demand Notice, together with all Registrable Securities specified in writing by the other Holders and received by the Company within 20 days after such written notice from the Company is mailed; and

(iii)     use its reasonable best efforts to cause such registration statement to be declared effective by the SEC as soon as practicable.

(b)     At any time prior to the effective date of such registration statement, the Holders may withdraw the Long-Form Demand Notice or direction to the Company to include them in the registration, as applicable, by giving written notice to the Company. The Company shall not be obligated to effect, or to take any action to effect, any such registration pursuant to this Section 1.2:

(i)     Prior to the second anniversary of this Agreement;

(ii)     After the Company has initiated the Maximum Number of Demand Registrations pursuant to either Section 1.2(a) or Section 1.4(a) and such registrations have been declared or ordered effective and the Holders are able to register and sell at least 75% of the Registrable Securities requested to be included in such registration;

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(iii)     During the period starting with the date 60 days prior to the Company’s good faith estimate of the date of filing of, and ending on a date 180 days after the effective date of, a Company-initiated registration subject to Section 1.5; provided, that the Company is actively employing in good faith all reasonable best efforts to cause such registration statement to become effective;

(iv)     If the Holders propose to dispose of shares of Registrable Securities that may be immediately registered on Form S-3 pursuant to a request made under Section 1.4 of this Agreement; or

(v)     If the Company has within the 6 month period preceding the date of such request, already effected one Demand Registration for the Holders pursuant to either this Section 1.2or Section 1.4.

(c)     Right to Defer Registration. Notwithstanding the foregoing, if the Company shall furnish to the Holders a certificate signed by the president or chief executive officer of the Company stating that in the good faith judgment of the board of directors of the Company (the “Board”), it would be materially detrimental to the Company and its stockholders for such registration to be effected at such time because such registration (i) would have a material adverse effect on any significant acquisition, merger, consolidation, tender offer or any other similar material transaction involving the Company; (ii) would require premature disclosure of material information that the Company has a bona fide business purpose for preserving as confidential; or (iii) would render the Company unable to comply with requirements under the Securities Act or Exchange Act, the Company shall have the right to defer the filing of the registration statement no more than once during any 12-month period for a period of not more than 90 days after receipt of the request of the Holders under this Section 1.2; provided, that the Company shall not register, offer or sell any securities for the account of itself or any other stockholder during such period other than pursuant to (A) a registration statement relating either to the sale of securities to employees of the Company pursuant to a stock option, stock purchase, stock incentive or stock appreciation plan or arrangement, or a transaction pursuant to Rule 145 promulgated under the Securities Act; (B) a registration on any form that does not include substantially the same information as would be required to be included in a registration statement covering the sale of the Registrable Securities; or (C) a registration in which the only Common Stock being registered is Common Stock issuable upon conversion of debt securities that are also being registered).

(d)     Underwriting. The majority of the Holders shall have the right to select one or more underwriters (reasonably acceptable to the Company) to manage the offering and registration as part of the request made pursuant to Section 1.2(a), and the Company shall include such information in the written notice sent to all other Holders. Unless otherwise agreed by such underwriters and a majority of the Holders, no person may participate in any registration under this Agreement that is underwritten unless such person (i) agrees to sell such person’s securities on the basis provided in the proposed underwriting arrangements and (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents required under the terms of such underwriting arrangements; provided, that no Holder shall be required to make any representations or warranties to the Company or the underwriters other than representations and warranties regarding such Holder and such Holder’s intended method of distribution and shall not be required to indemnify the underwriters except with respect to written information about such Holder furnished by such Holder expressly for use in connection with such registration. Notwithstanding any other provision of this Section 1.2, if the representative of the underwriters advises in writing that marketing factors require a limitation on the number of shares to be underwritten, the Company shall so advise all Holders of Registrable Securities which would otherwise be underwritten pursuant to this Agreement, and the number of shares of Registrable Securities that may be included in the underwriting shall be allocated among all Holders in proportion (as nearly as practicable) to the number of Registrable Securities requested by such Holders to be included in the registration; provided, that the number of shares of Registrable Securities to be included in such underwriting shall not be reduced unless all other securities are first excluded entirely from the underwriting.

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1.3     Shelf Registration.

(a)     At any time after the effective date of this Agreement, upon the request of Holders holding more than 50% of the Registrable Securities then remaining, the Company shall, for the purposes of providing for the registration of, and the sale on a continuous or delayed basis of, the Registrable Securities, use its reasonable best efforts to qualify for registration on Form S-3 (or, to the extent such form is not available, Form S-1) or any comparable or successor form or forms or any similar registration (including pursuant to Rule 415 under the Securities Act) (a “Shelf Registration”), and as soon as practicable shall file a Shelf Registration that constitutes a shelf registration statement providing for the registration of, and the sale on a continuous or delayed basis of, the Registrable Securities, pursuant to Rule 415 under the Securities Act, to permit the distribution of the Registrable Securities in accordance with the customary methods of distribution under Shelf Registration elected by the Holder. No other person or entity shall be permitted to offer securities under the Shelf Registration unless the Holders shall consent in writing. While the Shelf Registration is effective, the Company shall use its reasonable best efforts, at its expense, to:

(i)     Facilitate sales by the Holders of Registrable Securities that are not Demand Shelf Underwritten Offerings (as defined herein), including by preparing and filing any prospectus, free writing prospectus under Rule 433 under the Securities Act, or documentation necessary or reasonably requested by the Holder to enable the Holders to effect any such sales;

(ii)     Effect such registration and all such qualifications and compliances as may be so reasonably requested and as would permit or facilitate the sale and distribution of all or such portion of such Holder’s or Holders’ Registrable Securities as are specified by the Holders.

(b)     Upon filing a Shelf Registration, the Company shall use its reasonable best efforts to:

(i)      Cause such registration statement to be declared effective by the SEC as soon as possible;

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(ii)     Keep such Shelf Registration effective with the SEC at all times (notwithstanding anything to the contrary in Section 1.3(c)(iii)) and to refile such Shelf Registration upon its expiration, until such time as Rule 144 or another similar exemption under the Securities Act is available for the sale of all of such Holder’s shares without limitation during a three-month period without registration; and

(iii)     Cooperate in any shelf take-down by amending or supplementing the prospectus statement related to such Shelf Registration as may reasonably be requested by the Holders or otherwise required, until the Holders no longer hold Registrable Securities.

(c)     Notwithstanding the foregoing, the Company shall not be obligated to effect any such registration, qualification or compliance pursuant to this Section 1.3:

(i)     For any Shelf Registration on Form S-1, prior to the second anniversary of this Agreement;

(ii)     If Form S-3 or Form S-1 registration is not available for such offering; or

(iii)     If the Company shall furnish to the Holders a certificate signed by the president or chief executive officer of the Company stating that in the good faith judgment of the Board, it would be materially detrimental to the Company and its stockholders for such Shelf Registration to be effected at such time because such registration (A) would have a material adverse effect on any acquisition, merger, consolidation, tender offer or any other similar material transaction involving the Company; (B) would require premature disclosure of material information that the Company has a bona fide business purpose for preserving as confidential; or (C) would render the Company unable to comply with requirements under the Securities Act or Exchange Act, in which event the Company shall have the right to defer the filing of the shelf registration statement no more than once during any 12-month period for a period of not more than 90 days after receipt of the request of the Holders under this Section 1.3; provided, that the Company shall not register, offer or sell any securities for the account of itself or any other stockholder during such period other than pursuant to (A) a registration statement relating either to the sale of securities to employees of the Company pursuant to a stock option, stock purchase, stock incentive or stock appreciation plan or arrangement or a transaction pursuant to Rule 145 promulgated under the Securities Act; (B) a registration on any form that does not include substantially the same information as would be required to be included in a registration statement covering the sale of the Registrable Securities; or (C) a registration in which the only Common Stock being registered is Common Stock issuable upon conversion of debt securities that are also being registered).

1.4     Demand Shelf Underwritten Offerings.

(a)     At any time after the date on which the Shelf Registration becomes effective, at the request of Holders holding more than 50% of the Registrable Securities then remaining, the Company shall facilitate in the manner described in this Agreement an underwritten or similar “takedown” sale from the Shelf Registration (a “Demand Shelf Underwritten Offering”), which may involve participation by the Company in an underwriting or purchase agreement with a broker/dealer and the delivery of legal opinions and comfort letters. The Holders shall be entitled to select the underwriter for any Demand Shelf Underwritten Offerings. If the Company receives from the such Holders a written request or requests (a “Shelf Demand Notice”) that the Company effect a Demand Shelf Underwritten Offering with respect to all or a part of the Registrable Securities owned by such Holder or Holders, then the Company shall promptly commence and undertake a Demand Shelf Underwritten Offering in accordance with its obligations pursuant to Section 1.6 of this Agreement.

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(b)     The applicable Holder having notified or directed the Company to commence a Demand Shelf Underwritten Offering or to include any of their Registrable Securities therein shall have the right to withdraw such notice or direction by giving written notice to the Company. The Company shall not be obligated to effect, or to take any action to effect, any such Demand Shelf Underwritten Offering pursuant to this Section 1.4:

(i)     After the Company has completed the Maximum Number of Demand Registrations pursuant to either Section 1.2(a) or Section 1.4(a) and the Holders are able to register and sell at least 75% of the Registrable Securities requested to be included in such Demand Shelf Underwritten Offering;s or

(ii)     During the period starting with the date 60 days prior to the Company’s good faith estimate of the date of filing of, and ending on a date 180 days after the effective date of, a Company-initiated registration subject to Section 1.5; provided, that the Company is actively employing in good faith all reasonable best efforts to cause such registration statement to become effective.

(c)     Right to Defer a Demand Shelf Underwritten Offering. Notwithstanding the foregoing, the Company shall not be obligated to effect any such Demand Shelf Underwritten Offering pursuant to this Section 1.4 if:

(i)      the Company shall furnish to the Holders a certificate signed by the president or chief executive officer of the Company stating that in the good faith judgment of the Board, it would be materially detrimental to the Company and its stockholders for such Demand Shelf Underwritten Offering to be effected at such time because such Demand Shelf Underwritten Offering (i) would have a material adverse effect on any significant acquisition, merger, consolidation, tender offer or any other similar material transaction involving the Company; (ii) would require premature disclosure of material information that the Company has a bona fide business purpose for preserving as confidential; or (iii) would render the Company unable to comply with requirements under the Securities Act or Exchange Act, the Company shall have the right to defer the Demand Shelf Underwritten Offering no more than once during any 12-month period for a period of not more than 60 days after receipt of the request of the Holders under this Section 1.4; provided, that the Company shall not register, offer or sell any securities for the account of itself or any other stockholder during such period other than pursuant to (A) a registration statement relating either to the sale of securities to employees of the Company pursuant to a stock option, stock purchase, stock incentive or stock appreciation plan or arrangement, or a transaction pursuant to Rule 145 promulgated under the Securities Act; (B) a registration on any form that does not include substantially the same information as would be required to be included in a registration statement covering the sale of the Registrable Securities; or (C) a registration in which the only Common Stock being registered is Common Stock issuable upon conversion of debt securities that are also being registered; or

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(ii)     if the Company has, within the 6 month period preceding the date of such request, already effected one Demand Registration for the Holders pursuant to either Section 1.2 or Section 1.4.

(d)     Underwriting. The majority of the Holders shall have the right to select one or more underwriters (reasonably acceptable to the Company) to manage the Demand Shelf Underwritten Offering as part of the request made pursuant to Section 1.4(a), and the Company shall include such information in the written notice sent to all other Holders. Unless otherwise agreed by such underwriters and a majority of the Holders, no person may participate in any Demand Shelf Underwritten Offering under this Agreement that is underwritten unless such person (i) agrees to sell such person’s securities on the basis provided in the proposed underwriting arrangements and (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents required under the terms of such underwriting arrangements; provided, that no Holder shall be required to make any representations or warranties to the Company or the underwriters other than representations and warranties regarding such Holder and such Holder’s intended method of distribution and shall not be required to indemnify the underwriters except with respect to written information about such Holder furnished by such Holder expressly for use in connection with such Demand shelf Underwritten Offering. Notwithstanding any other provision of this Section 1.4, if the representative of the underwriters advises in writing that marketing factors require a limitation on the number of shares to be underwritten, the Company shall so advise all Holders of Registrable Securities which would otherwise be underwritten pursuant to this Agreement, and the number of shares of Registrable Securities that may be included in the underwriting shall be allocated among all Holders in proportion (as nearly as practicable) to the number of Registrable Securities requested by such Holders to be included in the Demand Shelf Underwritten Offering; provided, that the number of shares of Registrable Securities to be included in such underwriting shall not be reduced unless all other securities are first excluded entirely from the underwriting.

1.5     Piggyback Registrations. If the Company proposes to register (including for this purpose a registration effected by the Company for stockholders, but excluding any registrations pursuant to Sections 1.2, 1.3, or 1.4) any of its securities under the Securities Act (other than pursuant to a registration (i) on Form S-4, Form S-8 or any successor forms thereto, or (ii) solely in connection with an employee benefit or stock ownership plan) and the registration form to be used may be used for the registration of Registrable Securities (a “Piggyback Registration”), the Company shall give prompt written notice to all Holders of Registrable Securities of its intention to effect such a registration (each, a “Piggyback Notice”). Subject to Sections 1.5(a) and 1.5(b) below, the Company shall include in such registration all shares of Registrable Securities that Holders request the Company to include in such registration by written notice given to the Company within 30 days after the date of sending of the Piggyback Notice. The Company shall have the right to terminate or withdraw any registration initiated by it under this Section 1.5 prior to the effectiveness of such registration whether or not any Holder has elected to include Registrable Securities in such registration.

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(a)     Priority on Primary Registrations. If a Piggyback Registration relates to an underwritten public offering of equity securities by the Company and the representative of the underwriters advises the Company in writing that in its opinion marketing factors require a limitation of the number of securities to be included in such registration, the Company shall include in such registration (i) first, the securities proposed to be sold by the Company; (ii) second, the Registrable Securities requested to be included in such registration by the Holders, pro rata among the Holders on the basis of the number of shares of Registrable Securities requested to be included by each such Holder; and (iii) third, other securities requested to be included in such registration.

(b)     Priority on Secondary Registrations. If a Piggyback Registration relates to an underwritten public offering of equity securities by holders of the Company’s securities (other than pursuant to this Agreement) and the representative of the underwriters advises the Company in writing that in its opinion marketing factors require a limitation of the number of securities to be included in such registration, the Company shall include in such registration (i) first, the securities requested to be included in such registration by the holders requesting such registration; (ii) second, the Registrable Securities requested to be included in such registration by the Holders, pro rata among the Holders on the basis of the number of shares of Registrable Securities requested to be included in such registration by each such Holder; and (iii) third, any other securities.

(c)     Underwritten Piggyback Registrations. If a Piggyback Registration relates to an underwritten public offering of equity securities by the Company, the Company shall not be required to include any of the Holders’ securities in such registration unless they accept the terms of the underwriting as agreed upon between the Company and its underwriters; provided, that no Holders shall be required to make any representations or warranties to the Company or the underwriters other than representations and warranties regarding such Holder and such Holder’s intended method of distribution and shall not be required to indemnify the underwriters except with respect to written information about such Holder furnished by such Holder expressly for use in connection with such registration. For purposes of the allocation of shares of Registrable Securities to be included in a registration pursuant to Sections 1.5(a) and (b), for any Holder which is an investment fund, partnership, limited liability company or corporation, (i) the partners, members, retired partners, retired members, stockholders and Affiliates of such Holder, or the estates and family members of any such partners, retired partners, members and retired members and any trusts for the benefit of any of the foregoing persons shall be deemed to be a single “Holder”; (ii) any pro rata allocation with respect to such “Holder” shall be based upon the aggregate amount of shares of Registrable Securities owned by all entities and individuals included in such “Holder,” as defined in this sentence; and (iii) such “Holder” may allocate the Registrable Securities allowed to be included in such registration by such “Holder” to its related entities and individuals in its sole discretion.

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1.6     Registration Procedures. Whenever required to effect the registration of any Registrable Securities under this Agreement, the Company shall, as expeditiously as reasonably possible:

(a)     Prepare and file with the SEC a registration statement with respect to such Registrable Securities and cause such registration statement to become effective; provided, that before filing a registration statement or prospectus or any amendments or supplements to a registration statement or prospectus, the Company shall furnish to counsel selected by the Holders of a majority of the Registrable Securities covered by such registration statement copies of all such documents proposed to be filed, which documents shall be subject to the review of such counsel.

(b)     Prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection with such registration statement as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement and to keep such registration statement effective until the Holders have completed the distribution described in the registration statement.

(c)     Furnish to the Holders such number of copies of a prospectus, including a preliminary prospectus, and each amendment and supplement to any such prospectus, in conformity with the requirements of the Securities Act, and such other documents as they may reasonably request in order to facilitate the disposition of the Registrable Securities owned by them that are included in such registration.

(d)     Register and qualify the securities covered by such registration statement under such other securities or blue sky laws of such jurisdictions as shall be reasonably requested by the Holders; provided, that the Company shall not be required in connection with such registration and qualification or as a condition to such registration and qualification (i) to qualify to do business or to file a general consent to service of process in any such states or jurisdictions or (ii) to subject itself to taxation in any jurisdiction.

(e)     In the event of any underwritten public offering, enter into and perform its obligations under an underwriting agreement, in usual and customary form, with the managing underwriter(s) of such offering.

(f)     Promptly notify in writing each Holder and the underwriters, if any, of the following events: (1) the filing of a registration statement, prospectus or any prospectus supplement related thereto, or any post-effective amendment to the registration statement and, with respect to the registration statement or any post-effective amendment thereto, when the same has become effective; (2) any request by the SEC or any other governmental entity for amendments or supplements to a registration statement or related prospectus or for additional information; (3) the receipt by the Company of any notification with respect to the suspension of the qualification or exception from qualification of any Registrable Shares for sale in any jurisdiction or the initiation or threat of any proceeding for such purpose.

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(g)     Notify each Holder of Registrable Securities covered by such registration statement, at any time when a prospectus relating to such registration statement is required to be delivered under the Securities Act, of the happening of any event as a result of which the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated in such prospectus or necessary to make the statements in such prospectus not misleading in the light of the circumstances then existing.

(h)     Upon the occurrence of any event described in Section 1.6(f)(2) or Section 1.6(g), promptly prepare a supplement or post-effective amendment to such registration Statement or a supplement to the related prospectus or any document incorporated or deemed to be incorporated therein by reference, or file any other required document, as requested by the SEC or governmental entity (in the case of an occurrence of an event described in Section 1.6(f)(2)) or so that, as thereafter delivered to the selling Holders, such registration statement or prospectus will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading (in the case of an occurrence of an event described in Section 1.6(f)(2)).

(i)     Furnish, at the request of any Holder requesting registration of Registrable Securities, on the date that such Registrable Securities are delivered to the underwriters for sale, if such securities are being sold through underwriters, or, if such securities are not being sold through underwriters, on the date that the registration statement with respect to such securities becomes effective, (i) an opinion, dated as of such date, of the counsel representing the Company for the purposes of such registration, in form and substance as is customarily given to underwriters in an underwritten public offering and reasonably satisfactory to a majority in interest of the Holders requesting registration, addressed to the underwriters, if any, and to the Holders requesting registration of Registrable Securities and (ii) a “comfort” letter dated as of such date, from the independent certified public accountants of the Company, in form and substance as is customarily given by independent certified public accountants to underwriters in an underwritten public offering and reasonably satisfactory to a majority in interest of the Holders requesting registration, addressed to the underwriters, if any, and to the Holders requesting registration of Registrable Securities.

(j)     Cause all such Registrable Securities registered pursuant to such registration statement to be listed on each securities exchange and trading system on which similar securities issued by the Company are then listed.

(k)     The Company shall not include in any Shelf Demand Offering or Demand Registration any securities that are not Registrable Shares without the prior written consent of the Investor.

(l)     Provide a transfer agent and registrar for all Registrable Securities registered pursuant to such registration statement and a CUSIP number for all such Registrable Securities, in each case not later than the effective date of such registration.

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(m)     Make available for inspection by any underwriter participating in any disposition pursuant to such registration statement and any attorney, accountant or other agent retained by any such underwriter, all financial and other records, pertinent corporate documents and properties of the Company, and cause the Company’s officers, directors, employees, and independent accountants to supply all information reasonably requested by any such underwriter, attorney, accountant or agent in connection with such registration statement.

(n)     In the event of the issuance of any stop order suspending the effectiveness of a registration statement, or of any order suspending or preventing the use of any related prospectus or suspending the qualification of any Registrable Securities included in such registration statement for sale in any jurisdiction, the Company shall use its reasonable best efforts promptly to obtain the withdrawal of such order.

(o)     Otherwise use its reasonable best efforts to comply with all applicable rules and regulations of the Commission and make available to its security holders, as soon as reasonably practicable, an earnings statement covering the period of at least 12 months, but not more than 18 months, beginning with the first month after the effective date of the Registration Statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act.

(p)     If any such registration or comparable statement refers to any Holder by name or otherwise as the holder of any securities of the Company and if, in the sole and exclusive judgment of such Holder, such Holder is or might be deemed to be a controlling person of the Company, such Holder shall have the right to require (i) the inclusion in such registration statement of language, in form and substance reasonably satisfactory to such Holder, to the effect that the holding of such securities by such Holder is not to be construed as a recommendation by such Holder of the investment quality of the Company’s securities covered by such registration statement and that such holding does not imply that such Holder shall assist in meeting any future financial requirements of the Company or (ii) in the event that such reference to such Holder by name or otherwise is not required by the Securities Act or any similar federal statute then in force, the deletion of the reference to such Holder; provided, that with respect to this clause (ii) such Holder shall furnish to the Company an opinion of counsel to such effect, which opinion of counsel shall be reasonably satisfactory to the Company.

(q)     Enter into such customary agreements (including underwriting and lock-up agreements in customary form) and take all such other customary actions as the Holders of such Registrable Securities or the managing underwriter of such offering request in order to expedite or facilitate the disposition of such Registrable Securities (including, without limitation, making appropriate officers of the Company available to participate in "road show" and other customary marketing activities (including one-on-one meetings with prospective purchasers of the Registrable Securities).

1.7     Expenses of Registration. All Registration Expenses incurred in connection with any registration, qualification or compliance pursuant to Sections 1.2, 1.3, 1.4 and 1.5 of this Agreement shall be borne by the Company; provided, that if the Holders bear the Registration Expenses for any registration proceeding begun pursuant to Sections 1.2, 1.3, or 1.4 and subsequently withdrawn by the Holders registering shares in such registration proceeding, such registration proceeding shall not be counted as a registration pursuant to Section 1.2, 1.3 or 1.4 as applicable. Furthermore, if a withdrawal by the Holders is based upon material adverse information relating to the Company that is different from the information known or available (upon request from the Company or otherwise) to the Holders requesting registration at the time of their request for registration under Sections 1.2, 1.3 or 1.4 such registration shall not be counted as a registration for purposes of Section 1.2, 1.3 or 1.4 as applicable, even though the Holders do not bear the Registration Expenses for such registration. All underwriting discounts, selling commissions and stock transfer taxes relating to securities so registered shall be borne by the Holders of such securities pro rata on the basis of the number of shares of securities so registered on their behalf, as shall any other expenses in connection with the registration required to be borne by the Holders of such securities.

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1.8     Furnish Information. It shall be a condition precedent to the obligations of the Company to take any action pursuant to Sections 1.2, 1.3, 1.4 or 1.5 that the selling Holders shall furnish to the Company such information regarding themselves, the Registrable Securities held by them and the intended method of disposition of such securities as shall be required to effect the timely registration of their Registrable Securities.

1.9     Indemnification. If any Registrable Securities are included in a registration statement under Sections 1.2, 1.3, 1.4 or 1.5:

(a)     By the Company. To the extent permitted by law, the Company shall indemnify and hold harmless each Holder, the partners, officers and directors of each Holder, any underwriter (as defined in the Securities Act) for such Holder and each person, if any, who controls such Holder or underwriter within the meaning of the Securities Act or the Securities Exchange Act of 1934 (the “Exchange Act”), against any losses, claims, damages or liabilities (joint or several) to which they may become subject under the Securities Act, the Exchange Act or other federal or state law, insofar as such losses, claims, damages or liabilities (or actions in respect of such losses, claims, damages, or liabilities) arise out of or are based upon any of the following statements, omissions or violations (collectively, “Violations” and, individually, a “Violation”):

(i)     any untrue statement or alleged untrue statement of a material fact contained in such registration statement, including any preliminary prospectus or final prospectus contained in such registration statement or any amendments or supplements to such registration statement;

(ii)     the omission or alleged omission to state in any such registration statement a material fact required to be stated in such registration statement or necessary to make the statements in such registration statement not misleading; or

(iii)     any violation or alleged violation by the Company of the Securities Act, the Exchange Act, any federal or state securities law, or any rule or regulation promulgated under the Securities Act, the Exchange Act or any federal or state securities law in connection with the offering covered by such registration statement;

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and the Company shall reimburse each such Holder, partner, officer, director, underwriter or controlling person for any legal or other expenses reasonably incurred by them, as incurred, in connection with investigating or defending any such loss, claim, damage, liability or action; provided, that the indemnity agreement contained in this Section 1.9(a) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Company (which consent shall not be unreasonably withheld), nor shall the Company be liable in any such case for any such loss, claim, damage, liability or action to the extent (and only to the extent) that it arises out of or is based upon a Violation which occurs in reliance upon and in conformity with written information furnished expressly for use in connection with such registration by such Holder, partner, officer, director, underwriter or controlling person of such Holder.

(b)     By Selling Holders. To the extent permitted by law, each selling Holder shall indemnify and hold harmless the Company, each of its directors, each of its officers who have signed the registration statement, each person, if any, who controls the Company within the meaning of the Securities Act, any underwriter and any other Holder selling securities under such registration statement or any of such other Holder’s partners, directors or officers or any person who controls such Holder within the meaning of the Securities Act or the Exchange Act, against any losses, claims, damages or liabilities (joint or several) to which the Company or any such director, officer, controlling person, underwriter or other such Holder, partner, director, officer or controlling person of such other Holder may become subject under the Securities Act, the Exchange Act or other federal or state law, insofar as such losses, claims, damages or liabilities (or actions in respect to such losses, claims, damages or liabilities) arise out of or are based upon any Violation, in each case to the extent (and only to the extent) that such Violation occurs in reliance upon and in conformity with written information about such Holder furnished by such Holder expressly for use in connection with such registration; and each such Holder shall reimburse any legal or other expenses reasonably incurred by the Company or any such director, officer, controlling person, underwriter or other Holder, partner, officer, director or controlling person of such other Holder in connection with investigating or defending any such loss, claim, damage, liability or action; provided, that the indemnity agreement contained in this Section 1.9(b) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Holder, which consent shall not be unreasonably withheld, nor shall the total amounts payable in indemnity by a Holder under this Section 1.9(b) in respect of any Violation exceed the net proceeds received by such Holder in the registered offering out of which such Violation arises.

(c)     Notice. Promptly after receipt by an indemnified party under this Section 1.9 of notice of the commencement of any action (including any governmental action), such indemnified party shall, if a claim in respect of such action is to be made against any indemnifying party under this Section 1.9, deliver to the indemnifying party a written notice of the commencement of such action and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume the defense of such action with counsel mutually satisfactory to the parties; provided, that an indemnified party shall have the right to retain its own counsel, with the fees and expenses to be paid by the indemnifying party, if representation of such indemnified party by the counsel retained by the indemnifying party would be inappropriate due to actual or potential conflict of interests between such indemnified party and any other party represented by such counsel in such proceeding. The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action, if prejudicial to the indemnifying party’s ability to defend such action, shall relieve such indemnifying party of any liability to the indemnified party under this Section 1.9, but the omission so to deliver written notice to the indemnifying party shall not relieve the indemnifying party of any liability that it may have to any indemnified party otherwise than under this Section 1.9.

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(d)     Defect Eliminated in Final Prospectus. The foregoing indemnity agreements of the Company and Holders are subject to the condition that, insofar as they relate to any Violation made in a preliminary prospectus but eliminated or remedied in the amended prospectus on file with the SEC at the time the registration statement in question becomes effective or the amended prospectus filed with the SEC pursuant to SEC Rule 424(b) (the “Final Prospectus”), such indemnity agreement shall not inure to the benefit of any person if a copy of the Final Prospectus was furnished to the indemnified party and was not furnished to the person asserting the loss, liability, claim or damage at or prior to the time such action is required by the Securities Act.

(e)     Contribution. In order to provide for just and equitable contribution to joint liability under the Securities Act in any case in which either (i) any Holder exercising rights under this Agreement, or any controlling person of any such Holder, makes a claim for indemnification pursuant to this Section 1.9 but it is judicially determined (by the entry of a final judgment or decree by a court of competent jurisdiction and the expiration of time to appeal or the denial of the last right of appeal) that such indemnification may not be enforced in such case notwithstanding the fact that this Section 1.9 provides for indemnification in such case or (ii) contribution under the Securities Act may be required on the part of any such selling Holder or any such controlling person in circumstances for which indemnification is provided under this Section 1.9, then, and in each such case, the Company and such Holder shall contribute to the aggregate losses, claims, damages or liabilities to which they may be subject (after contribution from others) in such proportion so that such Holder is responsible for the portion represented by the percentage that the public offering price of its Registrable Securities offered by and sold under the registration statement bears to the public offering price of all securities offered by and sold under such registration statement, and the Company and other selling Holders are responsible for the remaining portion; provided, that, in any such case, (A) no such Holder shall be required to contribute any amount in excess of the public offering price of all such Registrable Securities offered and sold by such Holder pursuant to such registration statement and (B) no person or entity guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person or entity who was not guilty of such fraudulent misrepresentation.

(f)     Survival. Unless otherwise expressly superceded by an underwriting agreement entered into in connection with any underwritten public offering, the obligations of the Company and Holders under this Section 1.9 shall survive the completion of any offering of Registrable Securities in a registration statement and shall survive the termination of this Agreement.

1.10     Limitations on Subsequent Registration Rights. From and after the date of this Agreement, the Company shall not, without the prior written consent of the Holders of a majority of the outstanding Registrable Securities, enter into any agreement with any holder or prospective holder of any securities of the Company which would allow such holder or prospective holder (a) to include securities in any registration unless such holder or prospective holder may include such securities only to the extent that the inclusion of such securities shall not reduce the number of Registrable Securities which are included or (b) to make a demand registration.

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1.11     Rule 144 Reporting. With a view to making available the benefits of certain rules and regulations of the Commission which may at any time permit the sale of the Registrable Securities to the public without registration:

(a)     Make and keep public information available, as those terms are understood and defined in Rule 144 under the Securities Act, at all times after the effective date of the first registration under the Securities Act filed by the Company for an offering of its securities to the general public;

(b)     Use reasonable best efforts to file with the Commission in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act (at any time after it has become subject to such reporting requirements); and

(c)     So long as a Holder owns any Registrable Securities, to furnish to the Holder immediately upon request (i) a written statement by the Company as to its compliance with the reporting requirements of said Rule 144 (at any time after 90 days after the effective date of the first registration statement filed by the Company for an offering of its securities to the general public) and of the Securities Act and the Exchange Act (at any time after it has become subject to the reporting requirements of the Exchange Act); (ii) a copy of the most recent annual or quarterly report of the Company; and (iii) such other reports and documents of the Company as a Holder may reasonably request in availing itself of any rule or regulation of the Commission allowing a Holder to sell any such securities without registration (at any time after the Company has become subject to the reporting requirements of the Exchange Act).

1.12     Termination of the Company’s Obligations. The terms and conditions set forth in this Agreement shall become effective as of the date of this Agreement, and shall continue in effect until the earliest to occur of:

(a)     the Holders no longer hold Registrable Shares; or

(b)     such time as the Holders own beneficially less than 5% of the outstanding Common Stock of the Company and are no longer deemed to be an “affiliate” or “control person” of the Company under Rule 144 or any successor statute;

provided, that the provisions of Section 1.7 and Section 1.9 shall survive such termination.

Section 2.     ASSIGNMENT AND AMENDMENT.

2.1     Assignment of Registration Rights and Refusal Rights. Notwithstanding anything in this Agreement to the contrary, the registration rights of the Holders under Section 1 of this Agreement may not be assigned without the prior written consent of the Company, which shall be at the Company’s sole discretion, except for transfers to (i) any Affiliate of Holder, (ii) any Approved Fund or (iii) if an Event of Default is then in existence, to any Person. Any assignment of these rights shall be assigned (with all related obligations) only to a transferee or assignee of Registrable Securities; provided, that no party may be assigned any of the foregoing rights unless the Company is given written notice by the assigning party at the time of such assignment stating the name and address of the assignee and identifying the securities of the Company as to which the rights in question are being assigned.

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2.2     Transferees. Any person who acquires Registrable Securities and to whom any rights under this Agreement are permitted to be assigned shall be bound by all of the terms and conditions of this Agreement and deemed a Holder to the same extent as the transferor and, as a condition to the transfer of any such rights, such person shall execute and deliver a counterpart signature page hereto thereby agreeing to be bound by and subject to the terms of this Agreement.

2.3     Amendment of Rights. Any provision of this Agreement may be amended and the observance of such provision may be waived (either generally or in a particular instance and either retroactively or prospectively) only with the written consent of the Company, and the Holders of a majority of the Registrable Securities. Any amendment or waiver effected in accordance with this Section 2.3 shall be binding upon the Investor, each permitted successor or assignee of such Investor and the Company.

2.4     Compliance with Pill. Without the prior consent of the Company, during the term of this Agreement, Investor agrees that it will not sell or otherwise dispose of any of the Registerable Securities if any officer or officers involved in the investment decisions of Investor have actual knowledge (without any duty of inquiry) that the person acquiring such Registrable Securities will as a result of such sale or disposition become an “Acquiring Person” as defined under the Second Amended and Restated Rights Agreement by and between the Company and Computershare Trust Company, N.A., as Rights Agent; provided, that this Section 2.4: (1) shall only apply to private sale transactions in which Investor knows the identity of the purchaser prior to the sale; and (2) shall not apply to sales of Registrable Securities into an open securities market.

Section 3.     GENERAL PROVISIONS.

3.1     Successors and Assigns. Except as otherwise provided in this Agreement, the provisions of this Agreement shall inure to the benefit of and be binding upon the respective successors and permitted assigns of the parties to this Agreement.

3.2     Headings. The headings and captions used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement. All references in this Agreement to sections, paragraphs, exhibits and schedules shall, unless otherwise provided, refer to sections and paragraphs of this Agreement and exhibits and schedules attached to this Agreement, all of which exhibits and schedules are incorporated in this Agreement by this reference.

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3.3     Notices. All notices, requests, consents, demands and other communications required or permitted under this Agreement shall be in writing, unless otherwise specifically provided in the Agreement, and shall be deemed sufficiently given or furnished if delivered by personal delivery, by facsimile, by delivery service with proof of delivery, or by registered or certified United States mail, postage prepaid, to the Company at the address of the Company specified below and to the Investor at the address specified below (unless changed by similar notice in writing given by the particular Person whose address is to be changed). Any such notice or communication shall be deemed to have been given (a) in the case of personal delivery or delivery service, as of the date of first attempted delivery during normal business hours at the address provided herein, (b) in the case of facsimile, upon receipt, or (c) in the case of registered or certified United States mail, three days after deposit in the mail.

If to the Company:

SWK Holdings Corporation

15770 North Dallas Parkway

Suite 1290

Dallas, Texas 75248

Attention: J. Brett Pope, Chief Executive Officer

Facsimile: (972) 687-7255

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

Holland & Knight LLP

300 Crescent Court, Suite 1100

Dallas, Texas 75201

Attention: Ryan Magee

Facsimile: (214) 964-9501

If to the Investor:

c/o Carlson Capital, L.P.

2100 McKinney Avenue

Suite 1800

Dallas, Texas 75201

Attention: Christopher W. Haga; and G. Thomas Cason, III, General Counsel’s Office

Facsimile: (214) 932-9712

3.4     Specific Performance. Each of the Company and the Investor acknowledges that a breach or threatened breach by such party of any of its obligations under this Agreement would give rise to irreparable harm to the other party hereto for which monetary damages would not be an adequate remedy and hereby agrees that in the event of a breach or a threatened breach by such party of any such obligations, the other party hereto shall, in addition to any and all other rights and remedies that may be available to it in respect of such breach, be entitled to equitable relief, including a restraining order, an injunction, specific performance and any other relief that may be available from a court of competent jurisdiction. The rights and remedies provided in this Agreement are cumulative and are not exclusive of, and are in addition to and not in substitution for, any other rights or remedies available at law, in equity or otherwise.

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3.5     No Waiver. No failure or delay (whether by course of conduct or otherwise) by a party in exercising any right, power or remedy that such party may have under the Agreement shall operate as a waiver thereof or of any other right, power or remedy, nor shall any single or partial exercise by a party of any such right, power or remedy preclude any other or further exercise thereof or of any other right, power or remedy. No waiver of any provision of the Agreement and no consent to any departure therefrom shall ever be effective unless it is in writing, and then such waiver or consent shall be effective only in the specific instances and for the purposes for which given and to the extent specified in such writing. No notice to or demand on any party shall in any case entitle any party to any other or further notice or demand in similar or other circumstances. This Agreement sets forth the entire understanding between the parties hereto with respect to the transactions contemplated herein and supersede all prior discussions and understandings with respect to the subject matter hereof, and no waiver, consent, release, modification or amendment of or supplement to this Agreement shall be valid or effective against any party hereto unless the same is in writing and signed by such party.

3.6     Governing Law; Submission to Process. This Agreement shall be governed by and construed in accordance with the internal laws of the State of Delaware, without giving effect to any choice or conflict of law provision (whether of the State of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Delaware. Each party hereby irrevocably (a) submits itself to the non-exclusive jurisdiction of the state and federal courts sitting in Dallas County, Texas, (b) agrees and consents that service of process may be made upon it in any legal proceeding relating to the Agreement by any means allowed under Delaware or federal law, and (c) waives any objection that it may now or hereafter have to the venue of any such proceeding being in such a court and any claim that any such proceeding brought in such a court has been brought in an inconvenient forum.

3.7     Severability. If any term or provision of this Agreement shall be determined to be illegal or unenforceable all other terms and provisions of this Agreement shall nevertheless remain effective and shall be enforced to the fullest extent permitted by applicable law.

3.8     Counterparts; Fax. This Agreement may be separately executed in any number of counterparts and by different Parties hereto in separate counterparts, each of which when so executed shall be deemed to constitute one and the same Agreement. This Agreement may be validly executed and delivered in counterparts exchanged via facsimile, electronic mail in portable document format (.pdf) or other electronic transmission, each of which counterparts shall be deemed originals for all purposes.

3.9     Waiver of Jury Trial, Punitive Damages, etc. Each party hereby knowingly, voluntarily, intentionally, and irrevocably (a) waives, to the maximum extent not prohibited by law, any right it may have to a trial by jury in respect of any litigation based hereon, or directly or indirectly at any time arising out of, under or in connection with the Agreement or any transaction contemplated thereby or associated therewith, before or after maturity; (b) waives, to the maximum extent not prohibited by law, any right it may have to claim or recover in any such litigation any “Special Damages” as defined below, (c) certifies that no party hereto nor any representative or agent or counsel for any party hereto has represented, expressly or otherwise, or implied that such party would not, in the event of litigation, seek to enforce the foregoing waivers, and (d) acknowledges that it has been induced to enter into this Agreement and the transactions contemplated hereby and thereby by, among other things, the mutual waivers and certifications contained in this Section. As used in this Section, “Special Damages” includes all special, consequential, exemplary, or punitive damages (regardless of how named), but does not include any payments or funds which any party hereto has expressly promised to pay or deliver to any other party hereto.

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3.10     Costs and Attorneys’ Fees. If any action, suit or other proceeding is instituted concerning or arising out of this Agreement or any transaction contemplated under this Agreement, the prevailing party shall recover all of such party’s costs and attorneys’ fees incurred in each such action, suit or other proceeding, including any and all appeals or petitions from any such action, suit or other proceeding.

3.11     Entire Agreement. This Agreement, together with all exhibits and schedules to this Agreement, constitutes the entire agreement and understanding of the parties with respect to the subject matter of this Agreement and supersedes any and all prior negotiations, correspondence, agreements, understandings, duties or obligations between the parties with respect to the subject matter of this Agreement.

3.12     Further Assurances. From and after the date of this Agreement, upon the request of the Investor or the Company, the Company and the Investor shall execute and deliver such instruments, documents or other writings as may be reasonably necessary or desirable to confirm and carry out and to effectuate fully the intent and purposes of this Agreement.

3.13     Adjustments for Stock Splits, etc. Wherever in this Agreement there is a reference to a specific number of shares of Common Stock or preferred stock of the Company of any class or series, or a price per share of such stock, then, upon the occurrence of any subdivision, combination or stock dividend of such class or series of stock, the specific number of shares or the price so referenced in this Agreement shall automatically be proportionally adjusted to reflect the affect on the outstanding shares of such class or series of stock by such subdivision, combination or stock dividend.

3.14     Aggregation of Stock. All shares of Common Stock held or acquired by the Investor and its Affiliates shall be aggregated together for the purpose of determining the availability of any rights under this Agreement. For purposes of the foregoing, the shares held by any Investor that (a) is a partnership or corporation shall be deemed to include shares held by affiliated partnerships or the partners, retired partners and stockholders of such holder or affiliated partnership, or members of the “immediate family” (as defined below) of any such partners, retired partners and stockholders, and any custodian or trustee for the benefit of any of the foregoing persons and (b) is an individual shall be deemed to include shares held by any members of the stockholder’s immediate family (“immediate family” shall include any spouse, father, mother, brother, sister, lineal descendant of spouse or lineal descendant) or to any custodian or trustee for the benefit of any of the foregoing persons.

[Signature Page Follows]

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IN WITNESS WHEREOF, the parties to this Agreement have executed this Agreement as of the date first written above.

SWK HOLDINGS CORPORATION
By:	/s/  J. Brett Pope
Name: J. Brett Pope
Title:   Chief Executive Officer

INVESTOR:
Double Black Diamond, L.P.
By:	Carlson Capital, L.P., its Investment Advisor
By:	Asgard Investment Corp. II, its General Partner
By:	/s/ Clint D. Carlson
Name: Clint D. Carlson
Title:   President

Double Black Diamond OFFSHORE LtD.
By:	Carlson Capital, L.P., its Investment Advisor
By:	Asgard Investment Corp. II, its General Partner
By:	/s/ Clint D. Carlson
Name: Clint D. Carlson
Title:   President

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Black Diamond OFFSHORE, LTD.
By:	Carlson Capital, L.P., its Investment Advisor
By:	Asgard Investment Corp. II, its General Partner
By:	/s/ Clint D. Carlson
Name: Clint D. Carlson
Title:   President

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EX-99

Exhibit 99.1

 

SWK Holdings Corporation Announces Closing of an Up to $30 Million Debt Financing

Raises Ownership Limit for Carlson Capital, L.P.

Dallas, TX, September 9, 2013 – SWK Holdings Corporation (SWKH.OB) (“SWK” or the “Company”), a life science focused specialty finance company, announced today that it has closed a credit facility of up to $30 million from a fund affiliated with Carlson Capital, L.P. (“Carlson”). The credit facility has a four-year term and provides financing against all of SWK's assets. In conjunction with the credit facility, SWK's Board of Directors has agreed to waive certain "NOL pill" provisions to allow Carlson to increase its ownership of the Company. Carlson has been SWK's largest shareholder since the fourth quarter of 2009 and currently owns approximately 28% of the Company's outstanding stock.

“We are very pleased to announce the Carlson credit facility. Carlson has been a great partner and shareholder, supporting the Company's execution of the specialty finance and asset management business we embarked upon last year. Their work in executing the facility is another example of that support,” said Brett Pope, Chief Executive Officer of SWK.

Winston Black, SWK Managing Director, stated “The credit facility marks a significant step in our progress towards building out our life science portfolio. We now have additional capacity to further our goal of providing creative capital solutions to smaller companies that have limited, and often highly dilutive, capital alternatives. "

The credit facility provides for an initial $15 million to be available at closing and is expandable to $30 million upon SWK’s completion of a $10 million equity raise. Interest under the credit facility accrues at Libor + 6.5%. Carlson was granted a senior secured pledge on all of the Company's assets and the credit facility contains customary covenants. In conjunction with the credit facility, Carlson received a seven-year warrant for 1,000,000 shares of SWK common stock, with an exercise price of $1.39 per share.

Carlson's future acquisition of additional SWK common stock, if any, can only be made pursuant to either a rights offering or primary offering of common shares, if SWK determines to pursue such an offering. Key terms are as follows:

● After Carlson acquires a position in excess of 33% of SWK's outstanding stock, for a period of two years, SWK's Board of Directors will have sole voting control over the portion of Carlson-owned shares that are acquired by Carlson pursuant to its rights under the warrant or as a result of a rights offering backstop and in excess of 33% of the company’s total outstanding shares. The Board of Directors must vote the excess shares in the same proportion of “yes” and “no” votes as the stockholders of the company vote on the matter;

● Carlson has been granted the exclusive right to backstop a rights offering for a period of three years from the agreement; and

● Carlson has a right of first offer to purchase its pro-rata share of any new equity issuance by the Company for a period of three years from the agreement.

About SWK Holdings Corporation

SWK Holdings Corporation is a specialized finance company with a focus on the global healthcare sector. SWK partners with ethical product marketers and royalty holders to provide flexible financing solutions at an attractive cost of capital to create long-term value for both SWK’s business partners and its investors. SWK believes its financing structures achieve an optimal partnership for companies, institutions and inventors seeking capital for expansion or capital and estate planning by allowing its partners to monetize future cash flow with minimal dilution to their equity stakes. Additional information on the life science finance market is available on the Company’s website at www.swkhold.com.

About Carlson Capital, L.P.

Carlson Capital, L.P. is an alternative asset management firm. Founded in 1993 by Clint Carlson, the firm currently manages over seven billion dollars across multiple hedge funds and seeks to generate attractive risk-adjusted returns with a focus on non-directional, relative value investment strategies, principally equity relative value, credit relative value and event-driven.

Statements in this release that are not strictly historical and any statements regarding events or developments that we believe or anticipate will or may occur in the future are "forward-looking" statements within the meaning of the federal securities laws. There are a number of important factors that could cause actual results, developments and business decisions to differ materially from those suggested or indicated by such forward-looking statements and you should not place undue reliance on any such forward-looking statements. Additional information regarding the factors that may cause actual results to differ materially from these forward-looking statements is available in our SEC filings, including our 2012 Annual Report on Form 10-K. These forward looking statements speak only as of the date of this release and the Company does not assume any obligation to update or revise any forward-looking statement, whether as a result of new information, future events and developments or otherwise

Representations made on behalf of or about SWK or its personnel are attributable solely to SWK and are not representations or guarantees by Carlson Capital, LP.

CONTACT: SWK Investor Relations at (972) 687-7250 or investor.relations@swkhold.com.

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