Exhibit 10.1
Certain portions
of this exhibit have been redacted because the information is both (i) not material and (ii) the type that the registrant treats
as private or confidential. Redacted information has been noted in this document with a placeholder identified by the mark “[*]”.
LOAN AND SECURITY
AGREEMENT
Dated as of June 28,
2024
among
CYTOSORBENTS
CORPORATION,
a Delaware corporation,
(“Parent”)
and
CYTOSORBENTS
MEDICAL INC.
a Delaware corporation,
(“Medical”;
and together with Parent,
jointly and severally,
individually and collectively, “Borrower”)
and
AVENUE CAPITAL
MANAGEMENT II, L.P.,
a Delaware limited
partnership
(as administrative
agent and collateral agent (in such capacity “Agent”)
and
AVENUE VENTURE
OPPORTUNITIES FUND II, L.P.,
a Delaware limited
partnership, (“Avenue 2“)
as a lender
and
AVENUE VENTURE
OPPORTUNITIES FUND, L.P.,
a Delaware limited
partnership (“Avenue“)
as a lender (in
such capacity, with Avenue 2, a “Lender” and collectively, the “Lenders”)
LOAN AND SECURITY
AGREEMENT
Borrower,
Lenders and Agent have entered or anticipate entering into one or more transactions pursuant to which each Lender agrees to make available
to Borrower a loan facility governed by the terms and conditions set forth in this document and one or more Supplements executed by Borrower,
Lenders and Agent which incorporate this document by reference. Each Supplement constitutes a supplement to and forms part of this document,
and will be read and construed as one with this document, so that this document and the Supplement constitute a single agreement between
the parties (collectively referred to as this “Agreement”).
Accordingly,
the parties agree as follows:
ARTICLE 1
- INTERPRETATION
1.1 Definitions.
The terms defined in Article 10 and in the Supplement will have the meanings therein specified for purposes of this Agreement.
1.2 Inconsistency.
In the event of any inconsistency between the provisions of any Supplement and this document, the provisions of the Supplement will
be controlling for the purpose of all relevant transactions.
ARTICLE 2
- THE COMMITMENT AND LOANS
2.1 The
Commitment. Subject to the terms and conditions of this Agreement, each Lender agrees to make term loans to Borrower from time to
time from the Closing Date and to and including the Termination Date in an aggregate principal amount not exceeding the Commitment. The
Commitment is not a revolving credit commitment, and Borrower does not have the right to repay and reborrow hereunder. The aggregate
Loans requested by Borrower to be made on a single Business Day shall be for a minimum principal amount set forth in the Supplement,
except to the extent the remaining Commitment is a lesser amount.
2.2 Notes
Evidencing Loans; Repayment. Each Loan shall be evidenced by a separate Note payable to the order of each Lender of such Loan, in
the total principal amount of the Loan. Principal and interest of each Loan shall be payable at the times and in the manner set forth
in the Note and regularly scheduled payments thereof shall be effected by automatic debit of the appropriate funds from Borrower’s
Primary Operating Account as specified in the Supplement hereto. Repayment of the Loans and payment of all other amounts owed to each
Lender will be paid by Borrower in the currency in which the same has been provided (i.e., United States Dollars).
2.3 Procedures
for Borrowing.
(a) At
least five (5) Business Days prior to a proposed Borrowing Date (or such lesser period of time as may be agreed upon by the Required
Lenders in their sole discretion), Lender shall have received from Borrower a written request for a borrowing hereunder (a “Borrowing
Request”). Each Borrowing Request shall be in substantially the form of Exhibit “B” to the Supplement,
shall be executed by a responsible executive or financial officer of Borrower, and shall state how much is requested, and shall be accompanied
by such other information and documentation as any Lender may reasonably request, including the executed Note(s) for the Loan(s) covered
by the Borrowing Request.
(b) No
later than 1:00 p.m. Pacific Standard Time on the Borrowing Date, if Borrower has satisfied the conditions precedent in Article 4
by 9:00 a.m. Pacific Standard Time on such Borrowing Date, each Lender shall make its Loan available to Borrower in immediately
available funds.
2.4 Interest.
Except as otherwise specified in the applicable Note and/or Supplement, Basic Interest on the outstanding principal balance of each Loan
shall accrue daily at the Designated Rate from the Borrowing Date. If the outstanding principal balance of such Loan is not paid at maturity,
interest shall accrue at the Default Rate until paid in full, as further set forth herein.
2.5 Intentionally
Omitted.
2.6 Interest
Rate Calculation. Basic Interest, along with charges and fees under this Agreement and any Loan Document, shall be calculated for
actual days elapsed on the basis of a 360-day year, which results in higher interest, charge or fee payments than if a 365-day year were
used. In no event shall Borrower be obligated to any pay Lender interest, charges or fees at a rate in excess of the highest rate permitted
by applicable law from time to time in effect.
2.7 Default
Interest. Any unpaid payments in respect of the Obligations shall bear interest from their respective maturities, whether scheduled
or accelerated, at the Default Rate, compounded monthly. Borrower shall pay such interest on demand.
2.8 Late
Charges. If Borrower is late in making any scheduled payment in respect of the Obligations by more than five (5) days, then
Borrower agrees to pay a late charge of five percent (5%) of the payment due, but not less than fifty dollars ($50.00) for any one such
delinquent payment. This late charge shall be charged by Agent, for the ratable benefit of the Lenders, for the purpose of defraying
the expenses incidental to the handling of such delinquent amounts. Borrower acknowledges that such late charge represents a reasonable
sum considering all of the circumstances existing on the date of this Agreement and represents a fair and reasonable estimate of the
costs that will be sustained by Lenders due to the failure of Borrower to make timely payments. Borrower further agrees that proof of
actual damages would be costly and inconvenient. Such late charge shall be paid without prejudice to the right of Lenders and Agent to
collect any other amounts provided to be paid or to declare a default under this Agreement or any of the other Loan Documents or from
exercising any other rights and remedies of Agent for the ratable benefit of the Lenders.
2.9 Lender’s
Records. Principal, Basic Interest and all other sums owed under any Loan Document shall be evidenced by entries in records maintained
by each Lender for such purpose. Each payment on and any other credits with respect to principal, Basic Interest and all other sums outstanding
under any Loan Document shall be evidenced by entries in such records. Absent manifest error, each Lender’s records shall be conclusive
evidence thereof.
2.10 Grant
of Security Interests; Filing of Financing Statements.
(a) To
secure the timely payment and performance of all of Borrower’s Obligations, Borrower hereby grants to Agent, for the ratable benefit
of the Lenders, continuing security interests in all of the Collateral. In connection with the foregoing, Borrower authorizes Agent to
prepare and file any financing statements describing the Collateral without otherwise obtaining Borrower’s signature or consent
with respect to the filing of such financing statements. Such financing statements may indicate the Collateral as “all assets of
the Debtor” or words of similar effect.
(b) In
furtherance of Borrower’s grant of the security interests in the Collateral pursuant to Section 2.10(a) above, Borrower
hereby pledges and grants to Agent, for the ratable benefit of the Lenders, a security interest in all the Shares, together with all
proceeds and substitutions thereof, all cash, stock and other moneys and property paid thereon, all rights to subscribe for securities
declared or granted in connection therewith, and all other cash and noncash proceeds of the foregoing, as security for the performance
of the Obligations. On the Closing Date or at any time thereafter following Agent’s request, the certificate or certificates for
the Shares will be delivered to the Agent, accompanied by an instrument of assignment duly executed in blank by Borrower, unless such
Shares have not been certificated. To the extent required by the terms and conditions governing the Shares, Borrower shall cause the
books of each entity whose Shares are part of the Collateral and any transfer agent to reflect the pledge of the Shares. Upon the occurrence
and during the continuance of an Event of Default hereunder, Agent, at the direction of the Required Lenders, may effect the transfer
of any securities included in the Collateral (including but not limited to the Shares) into the name of Agent and cause new certificates
representing such securities to be issued in the name of Agent or its transferee(s). Borrower will execute and deliver such documents,
and take or cause to be taken such actions, as Agent may reasonably request to perfect or continue the perfection of Agent’s security
interest in the Shares. Except as provided in the following sentence, Borrower shall be entitled to exercise any voting rights with respect
to the Shares and to give consents, waivers and ratifications in respect thereof, provided that no vote shall be cast or consent, waiver
or ratification given or action taken which would constitute a violation of any of the terms of this Agreement. All such rights to vote
and give consents, waivers and ratifications shall terminate upon the occurrence and continuance of an Event of Default and Agent’s,
at the direction of the Required Lenders, written notice to Borrower of Agent’s intent to exercise its rights and remedies under
this Agreement, including this Section 2.10(b).
(c) Borrower
is and shall remain absolutely and unconditionally liable for the performance of its Obligations, including, without limitation, any
deficiency by reason of the failure of the Collateral to satisfy all amounts due to each Lender under any of the Loan Documents.
(d) All
Collateral pledged by Borrower under this Agreement and any Supplement shall secure the timely payment and performance of all Obligations.
Except as expressly provided in this Agreement, no Collateral pledged under this Agreement or any Supplement shall be released until
such time as all Obligations have been satisfied and paid in full (other than inchoate indemnity obligations).
ARTICLE 3
- REPRESENTATIONS AND WARRANTIES
Borrower
represents and warrants that, except as set forth in the Supplement or the Schedule of Exceptions hereto, if any, as of the Closing Date
and each Borrowing Date:
3.1 Due
Organization. Borrower is a corporation duly organized and validly existing in good standing under the laws of the jurisdiction of
its incorporation, and is duly qualified to conduct business and is in good standing in each other jurisdiction in which its business
is conducted or its properties are located, except where the failure to be so qualified would not reasonably be expected to have a Material
Adverse Effect.
3.2 Authorization,
Validity and Enforceability. The execution, delivery and performance of all Loan Documents executed by Borrower are within Borrower’s
powers, have been duly authorized, and are not in conflict with Borrower’s certificate of incorporation or by-laws, or the terms
of any charter or other organizational document of Borrower, as amended from time to time; and all such Loan Documents constitute valid
and binding obligations of Borrower, enforceable in accordance with their terms (except as may be limited by bankruptcy, insolvency and
similar laws affecting the enforcement of creditors’ rights in general, and subject to general principles of equity).
3.3 Compliance
with Applicable Laws. Borrower has complied with all licensing, permit and fictitious name requirements necessary to lawfully conduct
the business in which it is engaged, and to any sales, leases or the furnishing of services by Borrower, including without limitation
those requiring consumer or other disclosures, the noncompliance with which would have a Material Adverse Effect.
3.4 No
Conflict. The execution, delivery, and performance by Borrower of all Loan Documents are not in conflict with any law, rule, regulation,
order or directive, or any indenture, agreement, or undertaking to which Borrower is a party or by which Borrower may be bound or affected,
except where such conflict with respect to such indenture, agreement, or undertaking would not reasonably be expected to have a Material
Adverse Effect. Without limiting the generality of the foregoing, the issuance of the Warrant and the grant of registration rights, if
any, in connection therewith do not violate any agreement or instrument by which Borrower is bound or require the consent of any holders
of Borrower’s securities other than consents which have been obtained prior to the Closing Date.
3.5 No
Litigation, Claims or Proceedings. Except as set forth in the Schedule of Exceptions hereto, here is no litigation, tax claim, proceeding
or dispute pending, or, to the knowledge of Borrower, threatened against or affecting Borrower, its property or the conduct of its business,
in each case where an adverse decision would reasonably be expected to result in a Material Adverse Effect or in damages in excess of
the Threshold Amount.
3.6 Correctness
of Financial Statements. Borrower’s financial statements which have been delivered to Lender fairly and accurately, in all
material respects, reflect Borrower’s financial condition in accordance with GAAP as of the latest date of such financial statements;
and, since that date there has been no Material Adverse Change.
3.7 No
Subsidiaries. As of the Closing Date, Parent is not a majority owner of or in a control relationship with any other business entity,
except for those listed on Schedule 3.7.
3.8 Environmental
Matters. To its knowledge after reasonable inquiry, Borrower has concluded that Borrower is in compliance with Environmental Laws,
except to the extent a failure to be in such compliance would not reasonably be expected to have a Material Adverse Effect.
3.9 No
Event of Default. No Default or Event of Default has occurred and is continuing.
3.10 Full
Disclosure. None of the representations or warranties made by Borrower in the Loan Documents as of the date such representations
and warranties are made or deemed made, and none of the written statements contained in any exhibit, report, statement or certificate
furnished by or on behalf of Borrower in connection with the Loan Documents (including disclosure materials delivered by or on behalf
of Borrower to Lenders prior to the Closing Date or pursuant to Section 5.2 hereof), taken as a whole, contains any untrue statement
of a material fact or omits any material fact required to be stated therein or necessary to make the statements made therein, in light
of the circumstances under which they are made, not misleading as of the time when made or delivered (it being recognized by Agent that
the projections and forecasts provided by Borrower in good faith and based upon reasonable assumptions are not viewed as facts and that
actual results during the period or periods covered by such projections and forecasts may differ from the projected or forecasted results).
3.11 Specific
Representations Regarding Collateral.
(a) Title.
Except for the security interests created by this Agreement and Permitted Liens, (i) Borrower is the unconditional legal and
beneficial owner of the Collateral, and (ii) the Collateral is genuine and subject to no Liens. There exist no prior assignments
or encumbrances of record with the U.S. Patent and Trademark Office or U.S. Copyright Office affecting any Collateral in favor of any
third party, other than Permitted Liens.
(b) Rights
to Payment. The names of the obligors, amount owing to Borrower, due dates and all other information with respect to the Rights to
Payment are correctly stated in all material respects in all Records relating to the Rights to Payment. Borrower further represents and
warrants, to its knowledge, that each Person appearing to be obligated on a Right to Payment has authority and capacity to contract and
is bound as it appears to be.
(c) Location
of Collateral. As of the Closing Date, Borrower’s chief executive office, Inventory, Records, Equipment, and any other
offices or places of business are located at the address(es) shown on the Supplement.
(d) Business
Names. Other than its full corporate name or as disclosed to the Agent from time to time, Borrower has not conducted business using
any trade names or fictitious business names except as shown on the Supplement.
3.12 Copyrights,
Patents, Trademarks and Licenses.
(a) Borrower
owns or is licensed or otherwise has the right to use all of the material patents, trademarks, service marks, trade names, copyrights,
contractual franchises, authorizations and other similar rights that are reasonably necessary for the operation of its business, without
known conflict with the rights of any other Person.
(b) To
Borrower’s knowledge, no slogan or other advertising device, product, process, method, substance, part or other material now employed,
or now contemplated to be employed, by Borrower infringes upon any rights held by any other Person.
(c) No
claim or litigation regarding any of the foregoing is pending or, to Borrower’s knowledge, threatened, and, to Borrower’s
knowledge, no patent, invention, device, application, principle or any statute, law, rule, regulation, standard or code is pending or
proposed which, in either case, could reasonably be expected to have a Material Adverse Effect.
3.13 Regulatory
Compliance. Borrower has met the minimum funding requirements of ERISA with respect to any employee benefit plans subject to ERISA.
No event has occurred resulting from Borrower’s failure to comply with ERISA that is reasonably likely to result in Borrower’s
incurring any liability that could have a Material Adverse Effect. Borrower is not required to be registered as an “investment
company” or a company “controlled” by an “investment company” within the meaning of the Investment Company
Act of 1940. Borrower is not engaged principally, or as one of its important activities, in the business of extending credit for the
purpose of purchasing or carrying margin stock (within the meaning of Regulations T and U of the Board of Governors of the Federal Reserve
System). Borrower has complied in all material respects with all the provisions of the Federal Fair Labor Standards Act.
3.14 Shares.
Borrower has full power and authority to create a first priority Lien on the Shares and no disability or contractual obligation exists
that would prohibit Borrower from pledging the Shares pursuant to this Agreement. To Borrower’s knowledge, there are no subscriptions,
warrants, rights of first refusal or other restrictions on transfer relative to, or options exercisable with respect to the Shares. The
Shares have been and will be duly authorized and validly issued, and are fully paid and non-assessable. To Borrower’s knowledge,
the Shares are not the subject of any present or threatened suit, action, arbitration, administrative or other proceeding, and Borrower
knows of no reasonable grounds for the institution of any such proceedings.
3.15 Compliance
with Anti-Corruption Laws. Borrower has not taken any action that would cause a violation of any anti-corruption law, including but
not limited to, the Foreign Corrupt Practices Act, the United Kingdom Bribery Act, and all other applicable anti-corruption laws. Borrower,
its employees, agents and representatives have not, directly or indirectly, offered, paid, given, promised or authorized the payment
of any money, gift or anything of value to any person acting in an official capacity for any government department, agency or instrumentality,
including state-owned or controlled companies or entities, and public international organizations, as well as a political party or official
thereof or candidate for political office. None of Borrower’s principals or staff are officers, employees or representatives of
governments, government agencies, or government-owned or controlled enterprises.
3.16 Survival.
The representations and warranties of Borrower as set forth in this Agreement survive the execution and delivery of this Agreement.
ARTICLE 4
- CONDITIONS PRECEDENT
4.1 Conditions
to First Loan. The obligation of each Lender to make its first Loan hereunder is, in addition to the conditions precedent specified
in Section 4.2 and in any Supplement, subject to the fulfillment of the following conditions and to the receipt by Lenders of the
documents described below, duly executed and in form and substance satisfactory to each Lender and its counsel:
(a) Resolutions.
A certified copy of the resolutions of the Board of Directors of Borrower authorizing the execution, delivery and performance by Borrower
of the Loan Documents.
(b) Incumbency
and Signatures. A certificate of the secretary of Borrower certifying the names of the officer or officers of Borrower authorized
to sign the Loan Documents, together with a sample of the true signature of each such officer.
(c) Legal
Opinion. The opinion of legal counsel for Borrower as to such matters as Agent may reasonably request, in form and substance satisfactory
to Agent.
(d) Charter
Documents. Copies of the organizational and charter documents of Borrower (e.g., Articles or Certificate of Incorporation and Bylaws),
as amended through the Closing Date, certified by an officer of Borrower as being true, correct and complete.
(e) This
Agreement. Counterparts of this Agreement and the initial Supplement, with all schedules completed and attached thereto, and disclosing
such information as is acceptable to the Required Lenders.
(f) Financing
Statements. Filing copies (or other evidence of filing satisfactory to Agent and its counsel) of such UCC financing statements, collateral
assignments, account control agreements, and termination statements, with respect to the Collateral as Agent shall request.
(g) Intellectual
Property Security Agreement. An Intellectual Property Security Agreement executed by each Borrower in form and substance satisfactory
to Agent.
(h) Lien
Searches. UCC lien, judgment, bankruptcy and tax lien searches of Borrower from such jurisdictions or offices as Lender may reasonably
request, all as of a date reasonably satisfactory to Agent and its counsel.
(i) Good
Standing Certificate. A certificate of status or good standing of Borrower as of a date acceptable to Lender from the jurisdiction
of Borrower’s organization and any foreign jurisdictions where Borrower is qualified to do business.
(j) Warrant.
A Warrant issued by Borrower to each Lender exercisable for such number, type and class of shares of Borrower’s capital stock,
and for an initial exercise price as is specified therein.
(k) Insurance
Certificates. Insurance certificates showing Agent as loss payee or additional insured.
(l) Payoff
Documentation. A duly executed payoff letter from Western Alliance Bank accompanied by written evidence (including any UCC termination
statements) that all Liens in favor of Western Alliance Bank will be terminated or released upon satisfaction of all Indebtedness owing
to Western Alliance Bank.
(m) Restricted
Account. Evidence satisfactory to Agent that the Restricted Account is open.
(n) Account
Control Agreements. Duly executed Account Control Agreements with respect to any Deposit Account, Securities Account, or Commodity
Account of Borrower (other than with respect to any Excluded Account).
(o) Other
Documents. Such other documents and instruments as Agent or Lenders may reasonably request to effectuate the intents and purposes
of this Agreement.
4.2 Conditions
to All Loans. The obligation of each Lender to make its initial Loan and each subsequent Loan is subject to the following further
conditions precedent that:
(a) No
Default. No Default or Event of Default has occurred and is continuing or will result from the making of any such Loan, and the representations
and warranties of Borrower contained in Article 3 of this Agreement and Part 3 of the Supplement are true and correct in all
material respects as of the Borrowing Date of such Loan (other than those representations and warranties expressly referring to a specific
date which are true and correct in all material respects as of such date).
(b) No
Material Adverse Change. No event has occurred and is continuing that has had or could reasonably be expected to have a Material
Adverse Change.
(c) Borrowing
Request. Borrower shall have delivered to Agent a Borrowing Request for the Loans.
(d) Note.
Borrower shall have delivered an executed Note to each Lender evidencing the Loan made by such Lender, substantially in the form attached
to the Supplement as an exhibit.
(e) Supplemental
Lien Filings. Borrower shall have executed and delivered such amendments or supplements to this Agreement and additional Security
Documents, financing statements and third party waivers as Agent may reasonably request in connection with the proposed Loan, in order
to create, protect or perfect or to maintain the perfection of Agent’s Liens on the Collateral.
(f) [Reserved].
(g) Financial
Projections. Borrower shall have delivered to Agent Parent’s consolidated business plan and/or financial projections or forecasts
as most recently approved by Borrower’s Board of Directors.
4.3 Post-Closing
Conditions. Borrower shall deliver to Agent the following:
(a) Within
ten (10) days of the Closing Date (or such late date as Agent may agree in its sole discretion) a duly executed Account Control
Agreement with respect to Borrower’s account(s) maintained at Chase Bank.
(b) Within
fifteen (15) days of the Closing Date (or such late date as Agent may agree in its sole discretion) a duly executed Account Control Agreement
with respect to any foreign-denominated account(s).
ARTICLE 5
- AFFIRMATIVE COVENANTS
During
the term of this Agreement and until its performance of all Obligations (other than inchoate indemnity obligations), Borrower will:
5.1 Notice
to Lenders. Promptly give written notice to Agent of:
(a) Any
litigation or administrative or regulatory proceeding affecting Borrower where the amount claimed against Borrower is at the Threshold
Amount or more, or where the granting of the relief requested could reasonably be expected to have a Material Adverse Effect; or of the
acquisition by Borrower of any commercial tort claim, including brief details of such claim and such other information as Agent may reasonably
request to enable Agent to better perfect its Lien in such commercial tort claim as Collateral.
(b) Any
substantial dispute which may exist between Borrower and any governmental or regulatory authority.
(c) The
occurrence of any Default or any Event of Default.
(d) Any
change in the location of any of Borrower’s places of business or Collateral at least thirty (30) days in advance of such change,
or of the establishment of any new, or the discontinuance of any existing, place of business.
(e) Any
dispute or default by Borrower or any other party under any joint venture, partnering, distribution, cross-licensing, strategic alliance,
collaborative research or manufacturing, license or similar agreement which could reasonably be expected to have a Material Adverse Effect.
(f) Any
other matter which has resulted or could reasonably be expected to result in a Material Adverse Change.
(g) Any
Subsidiary Borrower intends to acquire or create.
5.2 Financial
Statements. Deliver to Agent or cause to be delivered to Agent, in form and detail satisfactory to Agent the following financial
and other information, which Borrower warrants shall be accurate and complete in all material respects:
(a) Monthly
Financial Statements. As soon as available but no later than thirty (30) days after the end of each month, Parent’s unaudited
consolidated balance sheet as of the end of such period, and Parent’s unaudited consolidated income statement and, for each month
that is the last month of a fiscal quarter, cash flow statement for such period and for that portion of Parent’s financial reporting
year ending with such period (except that the cash flow statement shall cover the entire applicable fiscal quarter), prepared in accordance
with GAAP and attested by a responsible financial officer of Parent as being complete and correct in all material respects and fairly
presenting Parent’s and each Subsidiaries’ financial condition and the results of Parent’s and each Subsidiaries’
operations as of the date(s) and for the period(s) covered thereby, subject to the absence of footnotes and normal year-end
audit adjustments.
(b) Year-End
Financial Statements. As soon as available but no later than ninety (90) days after the end of each financial reporting year, a complete
copy of Parent’s consolidated audit report, which shall include balance sheet, income statement, statement of changes in equity
and statement of cash flows for such year, prepared in accordance with GAAP and certified by WithumSmith + Brown, PC or another independent
certified public accountant selected by Parent and reasonably satisfactory to Lender (the “Accountant”). The
Accountant’s certification shall not be qualified or limited due to a restricted or limited examination by the Accountant of any
material portion of Parent or any Subsidiary’s records.
(c) Compliance
Certificates. Simultaneously with the delivery of each set of financial statements referred to in paragraphs (a) and (b) above,
a certificate of the chief financial officer of Borrower (or other executive officer) substantially in the form of Exhibit “C”
to the Supplement (a “Compliance Certificate”) stating, among other things, whether any Default or Event
of Default exists on the date of such certificate, and if so, setting forth the details thereof and the action which Borrower is taking
or proposes to take with respect thereto.
(d) Government
Required Reports. Promptly after sending, issuing, making available, or filing, copies of all reports, proxy statements, and financial
statements that Borrower sends or makes available generally to its stockholders, and, not later than five (5) days after actual
filing or the date such filing was first due, all registration statements and reports that Borrower files or is required to file with
the Securities and Exchange Commission, or any other governmental or regulatory authority having similar authority.
(e) Other
Information. Such other financial statements, lists of property and accounts, budgets (as updated), sales projections, forecasts,
reports, 409A valuation reports (as updated), operating plans, financial exhibits, and information relating to equity and debt financings
consummated after the Closing Date (including post-closing capitalization table(s)), or other information as any Lender may from time
to time reasonably request.
(f) Board
Packages. In addition to the information described in Section 5.2(e), Borrower will promptly provide Agent with copies of all
notices, minutes, consents and other materials, financial or otherwise, which Borrower provides to its Board of Directors (collectively,
“Board Packages”); provided, however, that Borrower need not provide Agent with copies of routine Board
actions, such as option and stock grants under Borrower’s equity incentive plan in the normal course of business; and provided,
further, however, that such Board Packages may be redacted to the extent that (i) based on the advice of counsel,
Borrower’s Board of Directors determines such redaction is reasonably necessary to preserve the attorney-client privilege, to protect
highly confidential proprietary information, or for other similar reasons or (ii) such redacted material relates to Agent or any
Lender (or Borrower’s strategy regarding the Loans or Agent or any Lender).
5.3 [Reserved].
5.4 Existence.
Except as otherwise expressly permitted under this Agreement, maintain and preserve Borrower’s existence, present form of business,
and all rights and privileges necessary in the normal course of its business; and keep all Borrower’s property in good working
order and condition, ordinary wear and tear and casualty excepted.
5.5 Insurance.
Obtain and keep in force insurance in such amounts and types as is usual in the type of business conducted by Borrower, with insurance
carriers having a policyholder rating of not less than “A” and financial category rating of Class VII in “Best’s
Insurance Guide,” unless otherwise approved by the Required Lenders. Such insurance policies must be in form and substance reasonably
satisfactory to the Required Lenders, and shall list Agent as an additional insured or loss payee, as applicable, on endorsement(s) in
form reasonably acceptable to Agent. Borrower shall furnish to Agent such endorsements, and upon Agent’s or any Lender’s
request, copies of any or all such policies.
5.6 Accounting
Records. Maintain adequate books, accounts and records, and prepare all financial statements in accordance with GAAP, and in compliance
in all material respects with the regulations of any governmental or regulatory authority having jurisdiction over Parent or any Subsidiary
or Parent or any Subsidiary’s business; and permit employees or agents of Agent at such reasonable times as Agent may request,
at Borrower’s expense (not to exceed, together with the costs of any inspections under Section 5.9(a), Two Thousand Five Hundred
Dollars ($2,500) in any 12-month period unless an Event of Default has occurred and is continuing), to inspect Borrower’s properties,
and to examine, review and audit, and make copies and memoranda of Borrower’s books, accounts and records.
5.7 Compliance
with Laws. Comply with all laws (including Environmental Laws), rules, regulations applicable to, and all orders and directives of
any governmental or regulatory authority having jurisdiction over, Parent or any Subsidiary or Parent or any Subsidiary’s business,
and with all material agreements to which Parent or any Subsidiary is a party, except where the failure to so comply would not have a
Material Adverse Effect.
5.8 Taxes
and Other Liabilities. Pay all of Parent and each Subsidiary’s Indebtedness when due; pay all taxes and other governmental
or regulatory assessments before delinquency or before any penalty attaches thereto, except as may be contested in good faith by the
appropriate procedures and for which Borrower shall maintain appropriate reserves; and timely file all required tax returns (subject
to any applicable extensions).
5.9 Special
Collateral Covenants.
(a) Maintenance
of Collateral; Inspection. Do all things reasonably necessary to maintain, preserve, protect and keep all Collateral in good working
order and salable condition, ordinary wear and tear and casualty excepted, deal with the Collateral in all commercially reasonable ways
as are considered good practice by owners of like property, and use the Collateral lawfully and, to the extent applicable, only as permitted
by Borrower’s insurance policies. Maintain, or cause to be maintained, complete and accurate Records, in all material respects,
relating to the Collateral. Upon reasonable prior notice at reasonable times during normal business hours, at Borrower’s expense
(not to exceed, together with the costs of any inspections under Section 5.6, Two Thousand Five Hundred Dollars ($2,500) in any
12-month period unless an Event of Default has occurred and is continuing), Borrower hereby authorizes Agent’s officers, employees,
representatives and agents to inspect the Collateral and to discuss the Collateral and the Records relating thereto with Borrower’s
officers and employees, and, in the case of any Right to Payment, after consultation with, and together with, Borrower, with any Person
which is or may be obligated thereon.
(b) Documents
of Title. Not sign or authorize the signing of any financing statement or other document naming Borrower as debtor or obligor, or
acquiesce or cooperate in the issuance of any bill of lading, warehouse receipt or other document or instrument of title with respect
to any Collateral, except those negotiated to Agent, or those naming Agent as secured party, or if solely to create, perfect or maintain
a Permitted Lien.
(c) Change
in Location or Name. Without at least 30 days’ prior written notice to Agent and Lenders: (a) not relocate any Collateral
or Records, its chief executive office, or establish a place of business at a location other than as specified in the Supplement; and
(b) not change its name, mailing address, location of Collateral, jurisdiction of incorporation or its legal structure.
(d) [Reserved].
(e) Agreement
with Persons in Possession of Collateral. Use its commercially reasonable efforts to obtain and maintain such acknowledgments, consents,
waivers and agreements (each a “Waiver”) from the owner, operator, lienholder, mortgagee, landlord or any Person
in possession of tangible Collateral in excess of the Threshold Amount per location as Agent may require, all in form and substance reasonably
satisfactory to Agent. In addition, Agent shall have the right to require Borrower to use its commercially reasonable efforts to provide
Agent with a Waiver for any Collateral that is located in a jurisdiction that provides for statutory landlord’s Liens and for any
location at which the Person in possession of such Collateral in excess of the Threshold Amount has a Lien thereon. Notwithstanding anything
to the contrary in this Section 5.9(e), Borrower, Agent and Lenders acknowledge and agree that all material Intellectual Property
and Records that are maintained on items of Collateral for which Borrower is unable to provide a Waiver also shall be maintained or backed
up in a manner sufficient that Agent shall be able to have access to such Intellectual Property and Records in accordance with the exercise
of Agent’s rights hereunder.
(f) Certain
Agreements on Rights to Payment. Other than in the ordinary course of business, not make any material discount, credit, rebate or
other reduction in the original amount owing on a Right to Payment or accept in satisfaction of a Right to Payment less than the original
amount thereof.
5.10 Authorization
for Automated Clearinghouse Funds Transfer. (i) Authorize each Lender to initiate debit entries to Borrower’s Primary
Operating Account, specified in the Supplement hereto, through Automated Clearinghouse (“ACH”) transfers, in
order to satisfy the regularly scheduled payments of principal and interest; (ii) provide each Lender at least thirty (30) days’
notice of any change in Borrower’s Primary Operating Account; and (iii) grant each Lender any additional authorizations necessary
to begin ACH debits from a new account which becomes the Primary Operating Account.
5.11 Anti-Corruption
Laws. Provide true, accurate and complete information, in all material respects, in all product orders, reimbursement requests and
other communications relating to Parent, its Subsidiaries and their products.
5.12 LTM
Product Revenue. Borrower shall achieve LTM Product Revenue, tested monthly as of the last day of each month, of at least the amounts
set forth below:
Each
Month Ending
on or During the
Following Periods: |
LTM
Product
Revenue |
| June 30,
2024 – December 31, 2024 |
[*] |
| January 31,
2025 – December 31, 2025 |
[*] |
| January 31,
2026 and thereafter |
[*] |
ARTICLE 6
- NEGATIVE COVENANTS
During
the term of this Agreement and until the performance of all Obligations (other than inchoate indemnity obligations), Parent and its Subsidiaries
will not:
6.1 Indebtedness.
Be indebted for borrowed money, the deferred purchase price of property, or leases which would be capitalized in accordance with
GAAP; or become liable as a surety, guarantor, accommodation party or otherwise for or upon the obligation of any other Person, except
for Permitted Indebtedness.
6.2 Liens.
Create, incur, assume or permit to exist any Lien, or grant any other Person a negative pledge, on any of Borrower’s property,
except Permitted Liens and any negative pledge in respect of any asset subject to a Lien permitted by clause (c) of the definition
of Permitted Liens. Borrower, Agent and each Lender agree that this covenant is not intended to constitute a lien, deed of trust, equitable
mortgage, or security interest of any kind on any of Borrower’s real property, and this Agreement shall not be recorded or recordable.
Notwithstanding the foregoing, however, violation of this covenant by Borrower shall constitute an Event of Default.
6.3 Dividends.
Pay any dividends or purchase, redeem or otherwise acquire or make any other distribution with respect to any of Borrower’s capital
stock, except (a) dividends or other distributions solely of capital stock of Borrower, (b) so long as no Event of Default
has occurred and is continuing, repurchases of stock from employees or contractors upon termination of employment or services under reverse
vesting or similar repurchase plans not to exceed One Hundred Thousand Dollars ($100,000) in any calendar year, (c) the conversion
of Borrower’s convertible securities into other securities pursuant to the terms of such convertible securities or otherwise in
exchange thereof, and (d) the purchase, redemption or other acquisition of shares of Borrower’s capital stock with the proceeds
received from a substantially concurrent issue of new shares of its capital stock.
6.4 Fundamental
Changes. (a) Liquidate or dissolve (provided that a Subsidiary may liquidate or dissolve into a Borrower or another Subsidiary
of Borrower); (b) enter into, or permit any of Borrower’s Subsidiaries to enter into, any Change of Control; or (c) acquire,
or permit any of Borrower’s Subsidiaries to acquire, all or substantially all of the capital stock or property of another Person.
Notwithstanding anything to the contrary in this Section 6.4, Borrower may enter into a transaction that will constitute a Change
of Control so long as: (i) the Person that results from such Change of Control (the “Surviving Entity”)
shall have executed and delivered to Agent and Lenders an agreement in form and substance reasonably satisfactory to Agent and Lenders,
containing an assumption by the Surviving Entity of the due and punctual payment and performance of all Obligations and performance and
observance of each covenant and condition of Borrower in the Loan Documents; (ii) all such obligations of the Surviving Entity to
Lenders shall be guaranteed by any Person that directly or indirectly owns or controls 50% or more of the voting stock of the Surviving
Entity; (iii) immediately after giving effect to such Change of Control, no Event of Default or, event which with the lapse of time
or giving of notice or both, would result in an Event of Default shall have occurred and be continuing; and (iv) the credit risk
to Lenders, in each Lender’s sole discretion, with respect to the Obligations and the Collateral shall not be increased. In determining
whether the proposed Change of Control would result in an increased credit risk, Lenders may consider, among other things, changes in
Borrower’s management team, employee base, access to equity markets, venture capital support, financial position and/or disposition
of intellectual property rights which may reasonably be anticipated as a result of the Change of Control. In addition, (i) a Subsidiary
may merge or consolidate into another Subsidiary, (ii) this Section 6.4 shall not apply to any Transfer permitted under Section 6.5
and (iii) Borrower may consolidate or merge with any of Borrower’s Subsidiaries provided that Borrower is the continuing or
surviving Person.
6.5 Sales
of Assets. Sell, transfer, lease, license or otherwise dispose of (a “Transfer”) any of Borrower’s
assets except (i) non-exclusive licenses or similar arrangements of property in the ordinary course of business consistent with
industry practice, provided that such licenses neither result in a legal transfer of title of the licensed property nor have the same
effect as a sale of such property; (ii) Transfers of worn-out, obsolete or surplus property (each as determined by Borrower in its
reasonable judgment); (iii) Transfers of Inventory in the ordinary course of business; (iv) Transfers constituting Permitted
Liens; (v) Transfers permitted in Section 6.3, 6.4, 6.6 or 6.7 hereunder; (vi) making of royalty payments in accordance
with the terms of the [*] Agreement, the [*] Agreement and the [*] Agreement; and (vii) Transfers of assets (other than Intellectual
Property) for fair consideration and in the ordinary course of its business.
6.6 Loans/Investments.
Make or suffer to exist any loans, guaranties, advances, or investments (“Investments”), except for Permitted
Investments.
6.7 Transactions
with Related Persons. Directly or indirectly enter into any transaction with or for the benefit of a Related Person on terms more
favorable to the Related Person than would have been obtainable in an “arms’ length” dealing, except (a) sales
of equity securities by Borrower and incurrence of Subordinated Debt for capital raising purposes, (b) Permitted Investments and
Permitted Indebtedness and (c) sales of inventory from Borrower to any Subsidiary pursuant to standard transfer pricing arrangements
and in the ordinary course of business.
6.8 Other
Business. Engage in any material line of business other than the business Borrower conducts as of the Closing Date and any business
substantially similar or related or incidental thereto.
6.9 Financing
Statements and Other Actions. Fail to execute and deliver to Agent all financing statements, notices and other documents (including,
without limitation, any filings with the United States Patent and Trademark Office and the United States Copyright Office) from time
to time reasonably requested by Agent to maintain a perfected first priority security interest in the Collateral in favor of Agent, subject
to Permitted Liens; perform such other acts, and execute and deliver to Agent such additional conveyances, assignments, agreements and
instruments, as Agent may at any time reasonably request in connection with the administration and enforcement of this Agreement or Agent’s
rights, powers and remedies hereunder.
6.10 Compliance.
Become required to be registered as an “investment company” or controlled by an “investment company,” within
the meaning of the Investment Company Act of 1940, or become principally engaged in, or undertake as one of its important activities,
the business of extending credit for the purpose of purchasing or carrying margin stock, or use the proceeds of any Loan for such purpose.
Fail to meet the minimum funding requirements of ERISA, permit a Reportable Event or Prohibited Transaction, as defined in ERISA, to
occur, fail to comply with the Federal Fair Labor Standards Act or violate any law or regulation, which violation could reasonably be
expected to have a Material Adverse Effect or a material adverse effect on the Collateral or the priority of Agent’s Lien on the
Collateral, or permit any of its Subsidiaries to do any of the foregoing.
6.11 Other
Deposit and Securities Accounts. Maintain any Deposit Accounts or accounts holding securities owned by Borrower except (i) Deposit
Accounts and investment/securities accounts as set forth in the Supplement, and (ii) other Deposit Accounts and securities/investment
accounts, in each case, with respect to which Borrower and Agent shall have taken such action as Agent reasonably deems necessary to
obtain a perfected first priority security interest therein, subject to Permitted Liens. The provisions of the previous sentence shall
not apply to Deposit Accounts exclusively used for payroll, payroll taxes and other employee wage and benefit payments to or for the
benefit of Borrower’s employees and identified to Agent as such (all such accounts, “Excluded Accounts”).
6.12 Prepayment
of Indebtedness. Prepay, redeem or otherwise satisfy in any manner prior to the scheduled repayment thereof any Indebtedness (other
than the Loans and Indebtedness permitted by Section 6.1 hereof). Notwithstanding the foregoing, Agent and each Lender agrees
that the conversion or exchange into Borrower’s equity securities of any Indebtedness (other than the Loans) shall not be prohibited
by this Section 6.12.
6.13 Repayment
of Subordinated Debt. Repay, prepay, redeem or otherwise satisfy in any manner any Subordinated Debt, except in accordance with the
terms of any subordination agreement among Borrower, Agent and the holder(s) of such Subordinated Debt. Notwithstanding the foregoing,
each Lender agrees that the conversion or exchange into Borrower’s equity securities of any Subordinated Debt and the payment of
cash in lieu of fractional shares shall not be prohibited by this Section 6.13.
6.14 Subsidiaries.
(a) Acquire
or create any Subsidiary, unless such Subsidiary becomes, at Agent’s option, either a co-borrower hereunder or executes and delivers
to Agent one or more agreements, in form and substance reasonably satisfactory to Agent, containing a guaranty of the Obligations that
is secured by first priority Liens on such Person’s assets, subject to Permitted Liens. For clarity, the parties acknowledge and
agree that Agent, upon consultation with the Required Lenders shall have the exclusive right to determine whether any such Person will
be made a co-borrower hereunder or a guarantor of the Obligations. Prior to the acquisition or creation of any such Subsidiary, Borrower
shall notify Agent and Lenders thereof in writing, which notice shall contain the jurisdiction of such Person’s formation and include
a description of such Person’s fully diluted capitalization and Borrower’s purpose for its acquisition or creation of such
Subsidiary. Notwithstanding the foregoing, no foreign Subsidiary which accounts for less than five percent (5.00%) of Parent’s
consolidated Revenue and assets individually or ten percent (10.00%) of Parent’s consolidated Revenue and assets in aggregate shall
be required to become a co-Borrower hereunder or a guarantor of the Obligations.
(b) Sell,
transfer, encumber or otherwise dispose of Borrower’s ownership interest in any Subsidiary other than Permitted Liens and Transfers
permitted under Section 6.5.
(c) Cause
or permit a Subsidiary to do any of the following: (i) grant Liens on such Subsidiary’s assets, except for Liens that would
constitute Permitted Liens if incurred by Borrower and Liens on any property held or acquired by such Subsidiary in the ordinary course
of its business securing Indebtedness incurred or assumed for the purpose of financing all or any part of the cost of acquiring such
property; provided, that such Lien attaches solely to the property acquired with such Indebtedness and that the principal amount
of such Indebtedness does not exceed one hundred percent (100%) of the cost of such property; and (ii) issue any additional Shares,
except to Borrower or a wholly owned Subsidiary of Borrower.
6.15 Leases.
Create, incur, assume, or suffer to exist any obligation as lessee for the rental or hire of any personal property (“Personal
Property Leases”), except for Personal Property Leases of Equipment in the ordinary course of business that do not in the aggregate
require Borrower to make payments (including taxes, insurance, maintenance and similar expenses which Borrower is required to pay under
the terms of any such lease) in any calendar year in excess of One Hundred Thousand Dollars ($100,000) in aggregate amount (or such greater
amount as Agent may agree in advance in writing). For the avoidance of doubt, this Section 6.15 will not be applicable to Indebtedness
otherwise permitted under clause (f) of the definition of Permitted Indebtedness.
6.16 Anti-Corruption
Laws.
(a) Take
any action that would cause a violation of any anti-corruption law, including but not limited to, the Foreign Corrupt Practices Act,
the United Kingdom Bribery Act, and all other applicable anti-corruption laws.
(b) Directly
or indirectly, offer, pay, give, promise or authorize the payment of any money, gift, or anything of value to any person acting in an
official capacity for any government department, agency, or instrumentality, including state-owned or controlled companies or entities,
and public international organizations, as well as a political party or official thereof or candidates for political office, except in
compliance with applicable law.
ARTICLE 7
- EVENTS OF DEFAULT
7.1 Events
of Default; Acceleration. Upon the occurrence and during the continuation of any Event of Default, the obligation of each Lender
to make any additional Loan shall be suspended. The occurrence and continuation of any of the following (each, an “Event
of Default”) shall at the option of Agent, at the direction of the Required Lenders (1) make all sums of Basic Interest
and principal, as well as any other Obligations and amounts owing under any Loan Documents, immediately due and payable without notice
of default, presentment or demand for payment, protest or notice of nonpayment or dishonor or any other notices or demands, and (2) give
Agent the right to exercise any other right or remedy provided by contract or applicable law:
(a) Borrower
shall fail to pay any principal or interest under this Agreement or any Note, or fail to pay any fees or other charges when due under
any Loan Document, and such failure continues for three (3) Business Days or more after the same first becomes due; or an Event
of Default as defined in any other Loan Document shall have occurred.
(b) Any
representation or warranty made, or financial statement, certificate or other document provided, by Borrower under any Loan Document
shall prove to have been false or misleading in any material respect when made or deemed made herein.
(c) If
there occurs any circumstance or circumstances that has a Material Adverse Effect.
(d) (i) Borrower
shall fail to pay its debts generally as they become due; or (ii) Borrower shall commence any Insolvency Proceeding with respect
to itself, an involuntary Insolvency Proceeding shall be filed against Borrower, or a custodian, receiver, trustee, assignee for the
benefit of creditors, or other similar official, shall be appointed to take possession, custody or control of the properties of Borrower,
and such involuntary Insolvency Proceeding, petition or appointment is acquiesced to by Borrower or is not dismissed within forty five
(45) days; or (iii) the dissolution, winding up, or termination of the business or cessation of operations of Borrower (including
any transaction or series of related transactions deemed to be a liquidation, dissolution or winding up of Borrower pursuant to the provisions
of Borrower’s charter documents); or (iv) Borrower shall take any corporate action for the purpose of effecting, approving,
or consenting to any of the foregoing.
(e) Borrower
shall be and continue in default beyond any applicable period of grace or cure under any other agreement involving the borrowing of money,
the purchase of property, the advance of credit or any other monetary liability of any kind to any Lender or to any Person in an amount
in excess of the Threshold Amount.
(f) Any
governmental or regulatory authority shall take any judicial or administrative action, or any defined benefit pension plan maintained
by Borrower shall have any unfunded liabilities, any of which, in the reasonable judgment of Agent and each Lender, could reasonably
be expected to have a Material Adverse Effect.
(g) Any
sale, transfer or other disposition of all or a substantial or material part of the assets of Borrower, including without limitation
to any trust or similar entity, shall occur except as permitted under Section 6.5.
(h) Any
judgment(s) singly or in the aggregate in excess of the Threshold Amount shall be entered against Borrower which remain unsatisfied,
unvacated or unstayed pending appeal for fifteen (15) or more days after entry thereof (to the extent not covered by independent third-party
insurance as to which the insurer does not dispute coverage).
(i) Borrower
shall fail to perform or observe any covenant contained in Article 6 of this Agreement.
(j) Borrower
shall fail to perform or observe any covenant contained in Article 5 or elsewhere in this Agreement or any other Loan Document (other
than a covenant which is dealt with specifically elsewhere in this Article 7) and, if capable of being cured, the breach of such
covenant is not cured within fifteen (15) days after the sooner to occur of Borrower’s receipt of notice of such breach from Agent
or the date on which such breach first becomes known to any officer of Borrower (the “Notice Date”); provided,
however that if such breach is not capable of being cured within such 15-day period and Borrower timely notifies Agent and each
Lender of such fact and Borrower diligently pursues such cure, then the cure period shall be extended to the date requested in Borrower’s
notice but in no event more than thirty (30) days from the Notice Date.
(k) Borrower
shall fail to perform any requirement of Section 4.3 hereof.
7.2 Remedies
upon Default. Upon the occurrence and during the continuance of an Event of Default, Agent, at the direction of the Required Lenders,
shall be entitled to exercise any or all of the rights and remedies available to a secured party under the UCC or any other applicable
law, and exercise any or all of its rights and remedies provided for in this Agreement and in any other Loan Document. The obligations
of Borrower under this Agreement shall continue to be effective or be reinstated, as the case may be, if at any time any payment of any
Obligations is rescinded or must otherwise be returned by Agent or any Lender upon, on account of, or in connection with, the insolvency,
bankruptcy or reorganization of Borrower or otherwise, all as though such payment had not been made.
7.3 Sale
of Collateral. Upon the occurrence and during the continuance of an Event of Default, Agent, at the direction of the Required Lenders,
may sell all or any part of the Collateral, at public or private sales, to itself, a wholesaler, retailer or investor, for cash, upon
credit or for future delivery, and at such price or prices as Agent or the Required Lenders may deem commercially reasonable. To the
extent permitted by law, Borrower hereby specifically waives all rights of redemption and any rights of stay or appraisal which it has
or may have under any applicable law in effect from time to time. Any such public or private sales shall be held at such times and at
such place(s) as Agent, at the direction of the Required Lenders, may determine. In case of the sale of all or any part of the Collateral
on credit or for future delivery, the Collateral so sold may be retained by Agent until the selling price is paid by the purchaser, but
neither Agent nor any Lender shall incur any liability in case of the failure of such purchaser to pay for the Collateral and, in case
of any such failure, such Collateral may be resold. Agent may, at the direction of the Required Lenders, instead of exercising its power
of sale, proceed to enforce its security interest in the Collateral by seeking a judgment or decree of a court of competent jurisdiction.
Without limiting the generality of the foregoing, if an Event of Default is in existence,
(1) Subject
to the rights of any third parties, Agent may license, or sublicense, whether general, special or otherwise, and whether on an exclusive
or non-exclusive basis, any Copyrights, Patents or Trademarks included in the Collateral throughout the world for such term or terms,
on such conditions and in such manner as the Required Lenders shall in their sole discretion determine;
(2) Agent,
at the direction of the Required Lenders, may (without assuming any obligations or liability thereunder), at any time and from time to
time, enforce (and shall have the exclusive right to enforce) against any licensee or sublicensee all rights and remedies of Borrower
in, to and under any Copyright Licenses, Patent Licenses or Trademark Licenses and take or refrain from taking any action under any thereof,
and Borrower hereby releases Agent and each Lender from, and agrees to hold Agent and each Lender free and harmless from and against
any claims arising out of, any lawful action so taken or omitted to be taken with respect thereto other than claims arising out of Agent’s
or any Lender’s gross negligence or willful misconduct; and
(3) Upon
request by Agent, at the direction of the Required Lenders, Borrower will execute and deliver to Agent a power of attorney, in form and
substance reasonably satisfactory to Agent for the implementation of any lease, assignment, license, sublicense, grant of option, sale
or other disposition of a Copyright, Patent or Trademark. In the event of any such disposition pursuant to this clause 3, Borrower
shall supply its know-how and expertise relating to the products or services made or rendered in connection with Patents, the manufacture
and sale of the products bearing Trademarks, and its customer lists and other records relating to such Copyrights, Patents or Trademarks
and to the distribution of said products, to Agent.
(4) If,
at any time when Agent, at the direction of the Required Lenders, shall determine to exercise the right to sell the whole or any part
of the Shares hereunder, such Shares or the part thereof to be sold shall not, for any reason whatsoever, be effectively registered under
the Securities Act (or any similar statute), then Agent may, in its discretion (subject only to applicable requirements of law), sell
such Shares or part thereof by private sale in such manner and under such circumstances as Agent, at the direction of the Required Lenders
may deem necessary or advisable, but subject to the other requirements of this Article 7, and shall not be required to effect
such registration or to cause the same to be effected. Without limiting the generality of the foregoing, in any such event, Agent may,
at the direction of the Required Lenders in their sole discretion (i) in accordance with applicable securities laws proceed to make
such private sale notwithstanding that a registration statement for the purpose of registering such Shares or part thereof could be or
shall have been filed under the Securities Act (or similar statute), (ii) approach and negotiate with a single possible purchaser
to effect such sale, and (iii) restrict such sale to a purchaser who is an accredited investor under the Securities Act and who
will represent and agree that such purchaser is purchasing for its own account, for investment and not with a view to the distribution
or sale of such Shares or any part thereof. In addition to a private sale as provided above in this Article 7, if any of
the Shares shall not be freely distributable to the public without registration under the Securities Act (or similar statute) at the
time of any proposed sale pursuant to this Article 7, then Agent shall not be required to effect such registration or cause
the same to be effected but, in its discretion (subject only to applicable requirements of law), may require that any sale hereunder
(including a sale at auction) be conducted subject to restrictions:
(A) as
to the financial sophistication and ability of any Person permitted to bid or purchase at any such sale;
(B) as
to the content of legends to be placed upon any certificates representing the Shares sold in such sale, including restrictions on future
transfer thereof;
(C) as
to the representations required to be made by each Person bidding or purchasing at such sale relating to such Person’s access to
financial information about Borrower or any of its Subsidiaries and such Person’s intentions as to the holding of the Shares so
sold for investment for its own account and not with a view to the distribution thereof; and
(D) as
to such other matters as Agent may, in its discretion, deem necessary or appropriate in order that such sale (notwithstanding any failure
so to register) may be effected in compliance with the Bankruptcy Code and other laws affecting the enforcement of creditors’ rights
and the Securities Act and all applicable state securities laws.
(5) Borrower
recognizes that Agent may be unable to effect a public sale of any or all the Shares and may be compelled to resort to one or more private
sales thereof in accordance with clause (4) above. Borrower also acknowledges that any such 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. Agent shall be under no obligation to delay a sale of any of the Shares for the period of time necessary to permit the applicable
Subsidiary to register such securities for public sale under the Securities Act, or under applicable state securities laws, even if Borrower
and/or the Subsidiary would agree to do so.
7.4 Borrower’s
Obligations upon Default. Upon the request of Agent, at the direction of Lenders, after the occurrence and during the continuance
of an Event of Default, Borrower will:
(a) Assemble
and make available to Agent the Collateral at such place(s) as Agent shall reasonably designate, segregating all Collateral so that
each item is capable of identification; and
(b) Subject
to the rights of any lessor, permit Agent, by Agent’s officers, employees, agents and representatives, to enter any premises where
any Collateral is located, to take possession of the Collateral, to complete the processing, manufacture or repair of any Collateral,
and to remove the Collateral, or to conduct any public or private sale of the Collateral, all without any liability of Agent or any Lender
for rent or other compensation for the use of Borrower’s premises.
ARTICLE 8
- SPECIAL COLLATERAL PROVISIONS
8.1 Compromise
and Collection. Borrower and Agent recognize that setoffs, counterclaims, defenses and other claims may be asserted by obligors with
respect to certain of the Rights to Payment; that certain of the Rights to Payment may be or become uncollectible in whole or in part;
and that the expense and probability of success of litigating a disputed Right to Payment may exceed the amount that reasonably may be
expected to be recovered with respect to such Right to Payment. Borrower hereby authorizes Agent, after and during the continuance of
an Event of Default, to compromise with the obligor, accept in full payment of any Right to Payment such amount as Agent shall negotiate
with the obligor, or abandon any Right to Payment. Any such action by Agent shall be considered commercially reasonable so long as the
Required Lenders have made the determination in good faith based on information known to them at the time Agent takes any such action.
8.2 Performance
of Borrower’s Obligations. Without having any obligation to do so, upon reasonable prior notice to Borrower, Agent may, at
the direction of the Required Lenders, perform or pay any obligation which Borrower has agreed to perform or pay under this Agreement,
including, without limitation, the payment or discharge of taxes or Liens levied or placed on or threatened against the Collateral. In
so performing or paying, Agent and the Required Lenders shall determine the action to be taken and the amount necessary to discharge
such obligations. Borrower shall reimburse Agent on demand for any amounts paid by Agent and each Lender pursuant to this Section, which
amounts shall constitute Obligations secured by the Collateral and shall bear interest from the date of demand at the Default Rate.
8.3 Power
of Attorney. For the purpose of protecting and preserving the Collateral and Agent’s rights under this Agreement, Borrower
hereby irrevocably appoints Agent, with full power of substitution, as its attorney-in-fact with full power and authority, after the
occurrence and during the continuance of an Event of Default, to do any act which Borrower is obligated to do hereunder; to exercise
such rights with respect to the Collateral as Borrower might exercise; to use such Inventory, Equipment, Fixtures or other property as
Borrower might use; to enter Borrower’s premises; to give notice of Agent’s security interest in, and to collect the Collateral;
and before or after Default, to execute and file in Borrower’s name any financing statements, amendments and continuation statements,
Account Control Agreements or other Security Documents necessary or desirable to create, maintain, perfect or continue the perfection
of Agent’s security interests in the Collateral. Borrower hereby ratifies all that Agent shall lawfully do or cause to be done
by virtue of this appointment.
8.4 Authorization
for Agent to Take Certain Action. The power of attorney created in Section 8.3 is a power coupled with an interest and shall
be irrevocable. The powers conferred on Agent hereunder are solely to protect its interests in the Collateral and shall not impose any
duty upon Agent to exercise such powers. Agent shall be accountable only for amounts that it actually receives as a result of the exercise
of such powers and in no event shall Agent or any of its directors, officers, employees, agents or representatives be responsible to
Borrower for any act or failure to act, except for gross negligence or willful misconduct. After the occurrence and during the continuance
of an Event of Default, Agent may exercise this power of attorney without notice to or assent of Borrower, in the name of Borrower, or
in Agent’s own name, from time to time in Agent’s sole discretion and at Borrower’s expense. To further carry out the
terms of this Agreement, after the occurrence and during the continuance of an Event of Default, Agent may, at the direction of the Required
Lenders:
(a) Execute
any statements or documents or take possession of, and endorse and collect and receive delivery or payment of, any checks, drafts, notes,
acceptances or other instruments and documents constituting Collateral, or constituting the payment of amounts due and to become due
or any performance to be rendered with respect to the Collateral.
(b) Sign
and endorse any invoices, freight or express bills, bills of lading, storage or warehouse receipts; drafts, certificates and statements
under any commercial or standby letter of credit relating to Collateral; assignments, verifications and notices in connection with Accounts;
or any other documents relating to the Collateral, including without limitation the Records.
(c) Use
or operate Collateral or any other property of Borrower for the purpose of preserving or liquidating Collateral.
(d) File
any claim or take any other action or proceeding in any court of law or equity or as otherwise deemed appropriate by Agent for the purpose
of collecting any and all monies due or securing any performance to be rendered with respect to the Collateral.
(e) Commence,
prosecute or defend any suits, actions or proceedings or as otherwise deemed appropriate by Agent for the purpose of protecting or collecting
the Collateral. In furtherance of this right, upon the occurrence and during the continuance of an Event of Default, Agent may apply
for the appointment of a receiver or similar official to operate Borrower’s business.
(f) Prepare,
adjust, execute, deliver and receive payment under insurance claims, and collect and receive payment of and endorse any instrument in
payment of loss or returned premiums or any other insurance refund or return, and apply such amounts at Agent’s sole discretion,
toward repayment of the Obligations or replacement of the Collateral.
8.5 Application
of Proceeds. Any Proceeds and other monies or property received by Agent pursuant to the terms of this Agreement or any Loan Document
may be applied as follows:
(a) First,
to Agent, the aggregate amount of all reasonable out of pocket costs, expenses, indemnities and other amounts required to be reimbursed
to Agent, in its capacity as such, until paid in full;
(b) Second,
to Agent, for the ratable benefit of Lenders (in accordance with the portion funded by each Lender), the aggregate amount of all Obligations
arising on account of payments made by Agent in accordance with Section 8.2, until repaid in full;
(c) Third,
to Lenders, ratably in accordance with principal amount of the Loans held by each Lender, an amount equal to the aggregate reasonable
out of pocket costs, expenses, indemnities or other amounts then required to be reimbursed to Lenders, until paid in full;
(d) Fourth,
to Lenders, ratably in accordance with aggregate amount of any fees, premiums or similar payments due to each Lender in respect of the
Loans held by such Lender, an amount equal to the aggregate fees, premiums or other similar such payments due to such Lender in respect
of the Loans, until paid in full;
(e) Fifth,
to Lenders, ratably in accordance with accrued and unpaid interest in respect of the Loans and the other Obligations due to each Lender,
an amount equal to the aggregate accrued and unpaid interest on the Loans and other Obligations then due, until paid in full;
(f) Sixth,
to Lenders, ratably in accordance outstanding principal due to each Lender in respect of the Loans, an amount equal to the aggregate
principal outstanding in respect of the Loans then due, until paid in full;
(g) Seventh,
to Agent and each Lender, ratably in accordance with the any other Obligations due to such Lender, an amount equal to all other Obligations
due and payable to Agent and each Lender, until paid in full; and
(h) Last,
the balance, if any, to Borrower or as otherwise required by applicable law.
8.6 Deficiency.
If the Proceeds of any disposition of the Collateral are insufficient to cover all costs and expenses of such sale and the payment
in full of all the Obligations, plus all other sums required to be expended or distributed by Agent to Lenders, then Borrower shall be
liable for any such deficiency.
8.7 Agent
Transfer. Upon the transfer of all or any part of the Obligations, Agent may transfer all or part of the Collateral and shall be
fully discharged thereafter from all liability and responsibility with respect to such Collateral so transferred, and the transferee
shall be vested with all the rights and powers of Agent hereunder with respect to such Collateral so transferred, but with respect to
any Collateral not so transferred, Agent shall retain all rights and powers hereby given.
8.8 Agent’s
Duties.
(a) Agent
shall use reasonable care in the custody and preservation of any Collateral in its possession. Without limitation on other conduct which
may be considered the exercise of reasonable care, Agent shall be deemed to have exercised reasonable care in the custody and preservation
of such Collateral if such Collateral is accorded treatment substantially equal to that which Agent accords its own property, it being
understood that Agent shall not have any responsibility for ascertaining or taking action with respect to calls, conversions, exchanges,
maturities, declining value, tenders or other matters relative to any Collateral, regardless of whether Agent has or is deemed to have
knowledge of such matters; or taking any necessary steps to preserve any rights against any Person with respect to any Collateral. Under
no circumstances shall Agent be responsible for any injury or loss to the Collateral, or any part thereof, arising from any cause beyond
the reasonable control of Agent.
(b) Agent
may at any time deliver the Collateral or any part thereof to Borrower and the receipt of Borrower shall be a complete and full acquittance
for the Collateral so delivered, and Agent shall thereafter be discharged from any liability or responsibility therefor.
(c) Neither
Agent, nor any of its directors, officers, employees, agents, attorneys or any other person affiliated with or representing Agent shall
be liable for any claims, demands, losses or damages, of any kind whatsoever, made, claimed, incurred or suffered by Borrower or any
other party through the ordinary negligence of Agent, or any of its directors, officers, employees, agents, attorneys or any other person
affiliated with or representing Agent.
8.9 Termination
of Security Interests and Loan Documents. Upon the payment in full of the Obligations (other than inchoate indemnity obligations)
and satisfaction of all Borrower’s obligations under this Agreement and the other Loan Documents, and if Lenders have no further
obligations under their Commitment, the security interest granted hereby shall terminate, all rights to the Collateral shall revert to
Borrower and this Agreement and the other Loan Documents shall terminate; provided that (i) those obligations, liabilities, covenants
and terms that are expressly specified herein and in any other Loan Document as surviving that respective agreement’s termination,
including without limitation, Borrower’s indemnity obligations set forth in this Agreement, shall continue to survive notwithstanding
anything to the contrary set forth herein, and (ii) nothing set forth herein shall affect or be deemed to affect those obligations,
liabilities, covenants and terms set forth in any warrant instrument issued to a Lender’s parent company or set forth in any other
equity securities or convertible debt securities of Borrower acquired by any Lender in connection with this Agreement. Upon any such
termination, Agent shall return all Collateral in its possession or control to Borrower and, at Borrower’s expense, execute and
deliver to Borrower such documents as Borrower shall reasonably request to evidence such termination. In connection therewith, Borrower
agrees to provide each Lender with such information as may be reasonably requested by such Lender as to whether the securities issuable
upon the exercise of any Warrant issued in connection with this Agreement constitute “qualified small business stock” for
purposes of Section 1202(c) of the Internal Revenue Code and Section 18152.5 of the California Revenue and Taxation Code.
ARTICLE 9
- GENERAL PROVISIONS
9.1 Notices.
Any notice given by any party under any Loan Document shall be in writing and personally delivered, sent by overnight courier, or United
States mail, postage prepaid, or sent by facsimile or electronic mail, or other authenticated message, charges prepaid, to the other
party’s or parties’ addresses shown on the Supplement. Each party may change the address, facsimile number or email address
to which notices, requests and other communications are to be sent by giving written notice of such change to each other party. Notice
given by hand delivery shall be deemed received on the date delivered; if sent by overnight courier, on the next Business Day after delivery
to the courier service; if by first class mail, on the third Business Day after deposit in the U.S. Mail; and if by facsimile or electronic
mail, on the date of transmission.
9.2 Binding
Effect. The Loan Documents shall be binding upon and inure to the benefit of Borrower, Lenders, Agent and their respective successors
and assigns; provided, however, that Borrower may not assign or transfer Borrower’s rights or obligations under any Loan Document.
Each Lender reserves the right, with the written consent of the Required Lenders, to sell, assign, transfer, negotiate or grant participations
in all or any part of, or any interest in, such Lender’s rights and obligations under the Loan Documents provided that, so long
as no Event of Default has occurred and is continuing, no Lender shall assign any of such rights or obligations to any competitor of
Borrower. Without limiting the foregoing, any Lender may sell, assign, transfer, negotiate or grant participations in all or any part
of, or any interest in, such Lender’s rights and obligations under the Loan Documents to any Affiliate of such Lender. In connection
with any of the foregoing, Lenders and Agent may disclose all documents and information which Lenders and Agent now or hereafter may
have relating to the Loans, Borrower, or its business, provided that any Person who receives such information shall have agreed in writing
in advance to maintain the confidentiality of such information on terms no less favorable to Borrower than are set forth in Section 9.13
hereof.
9.3 No
Waiver. Any waiver, consent or approval by Agent and the Required Lenders of any Event of Default or breach of any provision, condition,
or covenant of any Loan Document must be in writing and shall be effective only to the extent set forth in writing and signed by Agent
and the Required Lenders. No waiver of any breach or default shall be deemed a waiver of any later breach or default of the same or any
other provision of any Loan Document. No failure or delay on the part of Agent or any Lender in exercising any power, right, or privilege
under any Loan Document shall operate as a waiver thereof, and no single or partial exercise of any such power, right, or privilege shall
preclude any further exercise thereof or the exercise of any other power, right or privilege. Agent and the Required Lenders have the
right, at their sole option, to continue to accept interest and/or principal payments due under the Loan Documents after default, and
such acceptance shall not constitute a waiver of said default or an extension of the maturity of any Loan unless the Required Lenders
agree otherwise in writing.
9.4 Rights
Cumulative. All rights and remedies existing under the Loan Documents are cumulative to, and not exclusive of, any other rights or
remedies available under contract or applicable law.
9.5 Unenforceable
Provisions. Any provision of any Loan Document executed by Borrower which is prohibited or unenforceable in any jurisdiction, shall
be so only as to such jurisdiction and only to the extent of such prohibition or unenforceability, but all the remaining provisions of
any such Loan Document shall remain valid and enforceable.
9.6 Accounting
Terms. Except as otherwise provided in this Agreement, accounting terms and financial covenants and information shall be determined
and prepared in accordance with GAAP.
9.7 Indemnification;
Exculpation. Borrower shall pay and protect, defend and indemnify each Lender, Agent and each Lender’s and Agent’s employees,
officers, directors, shareholders, affiliates, correspondents, agents and representatives (other than Lender, collectively “Agents”)
against, and hold each Lender, Agent and each of such Agents harmless from, all claims, actions, proceedings, liabilities, damages, losses,
expenses (including, without limitation, attorneys’ fees and costs) and other amounts incurred by each Lender, Agent and each of
such Agents, arising from (i) the matters contemplated by this Agreement or any other Loan Documents, (ii) any dispute between
Borrower and a third party, or (iii) any contention that Borrower has failed to comply with any law, rule, regulation, order or
directive applicable to Borrower’s business; provided, however, that this indemnification shall not apply to any of the foregoing
to the extent incurred as the result of any Lender’s, Agent’s or any of such Agents’ gross negligence or willful misconduct.
This indemnification shall survive the payment and satisfaction of all of Borrower’s Obligations to Lenders.
9.8 Reimbursement.
Borrower shall reimburse each Lender and Agent for all reasonable out of pocket costs and expenses, including without limitation reasonable
attorneys’ fees and disbursements expended or incurred by each Lender and Agent in any arbitration, mediation, judicial reference,
legal action or otherwise in connection with (a) the preparation and negotiation of the Loan Documents, (b) the amendment and
enforcement of the Loan Documents, including without limitation during any workout, attempted workout, and/or in connection with the
rendering of legal advice as to each Lender’s and Agent’s rights, remedies and obligations under the Loan Documents, (c) collecting
any sum which becomes due to each Lender under any Loan Document, (d) any proceeding for declaratory relief, any counterclaim to
any proceeding, or any appeal, or (e) the protection, preservation or enforcement of any rights of Lenders or Agent under the Loan
Documents. For the purposes of this section, attorneys’ fees shall include, without limitation, fees incurred in connection with
the following: (1) contempt proceedings; (2) discovery; (3) any motion, proceeding or other activity of any kind in connection
with an Insolvency Proceeding; (4) garnishment, levy, and debtor and third party examinations; and (5) post-judgment motions
and proceedings of any kind, including without limitation any activity taken to collect or enforce any judgment. All of the foregoing
costs and expenses shall be payable upon demand by any Lender or Agent, and if not paid within forty-five (45) days of presentation of
invoices shall bear interest at the Default Rate.
9.9 Execution
in Counterparts; Electronic Signatures. This Agreement and the other Loan Documents may be executed in any number of counterparts,
each of which shall be deemed an original, but all of which together shall constitute one and the same agreement. This Agreement and
each of the other Loan Documents may be executed by electronic signatures. Borrower, Agent and Lenders expressly agree to conduct the
transactions contemplated by this Agreement and the other Loan Documents by electronic means (including, without limitation, with respect
to the execution, delivery, storage and transfer of this Agreement and each of the other Loan Documents by electronic means and to the
enforceability of electronic Loan Documents). Delivery of an executed signature page to this Agreement and each of the other Loan
Documents by facsimile or other electronic mail transmission (including pdf or any electronic signature complying with the U.S. federal
ESIGN Act of 2000, e.g., www.docusign.com) shall be effective as delivery of a manually executed counterpart hereof and thereof, as applicable.
The words “execution,” “signed,” “signature” and words of like import herein shall be deemed to include
electronic signatures or the keeping of records in electronic form, each of which shall be of the same legal effect, validity and enforceability
as a manually executed signature or the use of a paper-based recordkeeping systems, as the case may be, to the extent and as provided
for in any applicable law, including, without limitation, any state law based on the Uniform Electronic Transactions Act.
9.10 Entire
Agreement. No amendment, modification, termination or waiver of any provision of this Agreement or any other Loan Document, no approval
or consent thereunder, or any consent to any departure by Borrower or any of its Subsidiaries therefrom, shall in any event be effective
unless the same shall be in writing and signed by Borrower, Agent and the Required Lenders provided that:
(a) no
such amendment, waiver or other modification that would have the effect of increasing or reducing a Lender’s Commitment shall be
effective as to such Lender without such Lender’s written consent;
(b) no
such amendment, waiver or modification that would affect the rights and duties of Agent shall be effective without Agent’s written
consent;
(c) no
such amendment, waiver or other modification shall, unless signed by all the Lenders directly affected thereby, (A) reduce the principal
of, rate of interest on or any fees with respect to any Loan or forgive any principal, interest (other than default interest) or fees
(other than late charges) with respect to any Loan (B) postpone the date fixed for, or waive, any payment of principal of any Loan
or of interest on any Loan (other than default interest) or any fees provided for hereunder (other than late charges or for any termination
of any commitment); (C) change the definition of the term “Required Lenders” or the percentage of Lenders which shall
be required for the Lenders to take any action hereunder; (D) release all or substantially all of any material portion of the Collateral,
authorize Borrower to sell or otherwise dispose of all or substantially all or any material portion of the Collateral or release any
Guarantor of all or any portion of the Obligations or its guaranty obligations with respect thereto, except, in each case with respect
to this clause (D), as otherwise may be expressly permitted under this Agreement or the other Loan Documents (including in connection
with any disposition permitted hereunder); (E) amend, waive or otherwise modify this Section 9.10 or the definitions of the
terms used in this Section 9.10 insofar as the definitions affect the substance of this Section 9.10; (F) consent to the
assignment, delegation or other transfer by Borrower of any of its rights and obligations under any Loan Document or release Borrower
of its payment obligations under any Loan Document, except, in each case with respect to this clause (F), pursuant to a merger or consolidation
permitted pursuant to this Agreement; (G) amend any of the provisions that provide for Lenders to receive their pro rata portion
of any fees, payments, setoffs or proceeds of Collateral hereunder; or (H) subordinate the Liens granted in favor of Agent securing
the Obligations.
(d) The
Loan Documents are intended by the parties as the final expression of their agreement and therefore contain the entire agreement between
the parties and supersede all prior understandings or agreements concerning the subject matter hereof.
9.11 Governing
Law and Jurisdiction.
(a) THIS
AGREEMENT AND THE LOAN DOCUMENTS SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF CALIFORNIA.
(b) ANY
LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF
CALIFORNIA OR OF THE UNITED STATES FOR THE NORTHERN DISTRICT OF CALIFORNIA, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF
BORROWER, AGENT AND EACH LENDER CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS.
EACH OF BORROWER, AGENT AND EACH LENDER IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED
ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION
IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO. BORROWER, AGENT AND EACH LENDER EACH WAIVE PERSONAL SERVICE OF ANY SUMMONS,
COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY CALIFORNIA LAW.
9.12 Waiver
of Jury Trial. TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW, BORROWER, AGENT AND EACH LENDER EACH WAIVES ITS RESPECTIVE RIGHTS
TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS,
OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF
THE PARTIES AGAINST ANY OTHER PARTY OR ANY PARTICIPANT OR ASSIGNEE, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE.
BORROWER, AGENT AND EACH LENDER EACH AGREES THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT
LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS
TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEMS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF
THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
9.13 Confidentiality.
Agent and each Lender agrees to hold in confidence all confidential information that it receives from Borrower pursuant to the Loan
Documents, except for disclosure as shall be reasonably required: (a) to legal counsel and accountants for Agent and each Lender;
(b) to other professional advisors to Agent and each Lender; (c) to regulatory officials having jurisdiction over Lender to
the extent required by law; (d) to Agent’s and each Lender’s investors and prospective investors (subject to the same
confidentiality obligation set forth herein), and in Agent’s and each Lender’s SEC filings as required by law; (e) as
required by law or legal process or in connection with any legal proceeding to which Agent, any Lender and Borrower are adverse parties;
(f) in connection with a disposition or proposed disposition of any or all of Agent’s and any Lender’s rights hereunder
to any assignee or participant (subject to the same confidentiality obligation set forth herein); (g) to Agent’s and each
Lender’s subsidiaries or Affiliates in connection with their business with Borrower (subject to the same confidentiality obligation
set forth herein); (h) as required by valid order of a court of competent jurisdiction, administrative agency or governmental body,
or by any applicable law, rule, regulation, subpoena, or any other administrative or legal process, or by applicable regulatory or professional
standards, including in connection with any judicial or other proceeding involving Agent or any Lender relating to this Agreement and
the transactions contemplated hereby; and (i) as required in connection with Agent’s and any Lender’s examination or
audit. For purposes of this section, Agent, each Lender and Borrower agree that “confidential information” shall mean any
information regarding or relating to Borrower other than: (i) information which is or becomes generally available to the public
other than as result of a disclosure by Agent or any Lender in violation of this section, (ii) information which becomes available
to Agent or any Lender from any other source (other than Borrower) which neither Agent nor the relevant Lender knows is bound by a confidentiality
agreement with respect to the information made available, and (iii) information that Agent or such Lender knows on a non-confidential
basis prior to Borrower disclosing it to Agent or such Lender. In addition, Borrower agrees that Agent and each Lender may use Borrower’s
name, logo and/or trademark in connection with certain promotional materials that Agent and any Lender may disseminate to the public,
including, but are not limited to, brochures, internet website, press releases and any other materials relating to the fact that Agent
and each Lender has a financing relationship with Borrower.
ARTICLE 10
- AGENCY.
10.1 Appointment.
Each Lender hereby irrevocably appoints Avenue Capital Management II, L.P. to act on its behalf as the administrative agent hereunder
and under the other Loan Documents and authorizes the Agent to take such actions on its behalf and to exercise such powers as are delegated
to the Agent by the terms hereof or thereof, together with such actions and powers as are reasonably incidental thereto.
10.2 Indemnity.
Each Lender agrees to indemnify the Agent in its capacity as such (to the extent not reimbursed by Borrowers and without limiting
the obligation of Borrowers to do so), according to its respective Commitment percentage in effect on the date on which indemnification
is sought under this Section 10.2, from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind whatsoever that may at any time be imposed on, incurred by or asserted against the
Agent in any way relating to or arising out of, this Agreement, a Supplement, any of the other Loan Documents or any documents contemplated
by or referred to herein or therein or the transactions contemplated hereby or thereby or any action taken or omitted by the Agent under
or in connection with any of the foregoing; The agreements in this Section shall survive the payment of each Loan and all other
amounts payable hereunder. Agent shall not be liable for any action taken or not taken by it (i) with the consent or at the request
of any Lender or as Agent shall believe in good faith shall be necessary, under the circumstances or (ii) in the absence of its
own gross negligence or willful misconduct.
10.3 Duties.
Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made
in or in connection with this Agreement or any other Loan Document, (ii) the contents of any certificate, report or other document
delivered hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of the covenants,
agreements or other terms or conditions set forth herein or therein or the occurrence of any default or Event of Default, (iv) the
validity, enforceability, effectiveness or genuineness of this Agreement, any other Loan Document or any other agreement, instrument
or document or (v) the satisfaction of any condition set forth in Section 4 or elsewhere herein, other than to confirm receipt
of items expressly required to be delivered to the Agent.
10.4 Reliance
by Agent. Agent may rely, and shall be fully protected in acting, or refraining to act, upon, any resolution, statement, certificate,
instrument, opinion, report, notice, request, consent, order, bond or other paper or document that it has no reason to believe to be
other than genuine and to have been signed or presented by the proper party or parties or, in the case of cables, telecopies and telexes,
to have been sent by the proper party or parties. In the absence of its gross negligence or willful misconduct, Agent may conclusively
rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon any certificates or opinions furnished
to Agent and conforming to the requirements of the Loan Agreement or any of the other Loan Documents. Agent may consult with counsel,
and any opinion or legal advice of such counsel shall be full and complete authorization and protection in respect of any action taken,
not taken or suffered by Agent hereunder or under any Loan Documents in accordance therewith. Agent shall have the right at any time
to seek instructions concerning the administration of the Collateral from any court of competent jurisdiction. Agent shall not be under
any obligation to exercise any of the rights or powers granted to Agent by this Agreement, the Loan Agreement and the other Loan Documents
at the request or direction of Lenders unless Agent shall have been provided by Lenders with adequate security and indemnity against
the costs, expenses and liabilities that may be incurred by it in compliance with such request or direction.
10.5 Collateral
Agent. The Agent shall also act as the “collateral agent” under the Loan Documents, and each of the Lenders hereby irrevocably
appoints and authorizes the Agent to act as the agent of such Lender for purposes of acquiring, holding and enforcing any and all Liens
on Collateral granted by Borrowers to secure any of the Obligations. Each Lender hereby authorizes Agent, on behalf of and for the ratable
benefit of Lenders, in its capacity as collateral agent, to enter into any of the Loan Documents as secured party for purposes of acquiring,
holding and enforcing all Liens on Collateral (and any other collateral from time to time securing the Obligations), and as Agent for
and representative of Lender thereunder, and each Lender agrees to be bound by the terms of each such document. All powers, rights and
remedies under the Loan Documents may be exercised solely by Agent, at the direction of the Required Lenders, for the benefit of Lenders
and Agent in accordance with the terms thereof. In the event of a foreclosure on any of the Collateral pursuant to a public or private
sale, either Agent or any Lender may be the purchaser of any or all of such Collateral at any such sale and Agent, as agent for and representative
of Lenders (but not any Lender or Lenders in its or their respective individual capacities unless Required Lenders shall otherwise agree
in writing) shall be entitled (subject to the proviso at the end of this sentence), for the purpose of bidding and making settlement
or payment of the purchase price for all or any portion of the Collateral sold at any such public sale, to use and apply any of the Obligations
as a credit on account of the purchase price for any Collateral payable by Agent at such sale; provided however, that neither Agent nor
any Lender shall “credit bid” at any foreclosure and/or other public or private sale absent the consent of the Required Lenders.
Without limiting the generality of the foregoing, Agent is hereby expressly authorized to execute any and all documents (including releases)
that bind Lenders with respect to (i) the Collateral and the rights of Lenders with respect thereto, as contemplated by and in accordance
with the provisions of the Loan Documents, and (ii) any other subordination agreement with respect to any Subordinated Debt.
10.6 Successor
Agents. Agent may resign upon thirty (30) days’ notice to the Lenders and Borrowers. If Agent shall resign in its capacity
under this Agreement and the other Loan Documents, then the Required Lenders shall appoint a successor agent, whereupon such successor
agent shall succeed to the rights, powers and duties of Agent in its capacity, and the term “Agent” shall mean such successor
agent effective upon such appointment and approval, and the former Agent’s rights, powers and duties as Agent in its capacity shall
be terminated, without any other or further act or deed on the part of such former Agent or any of the parties to this Agreement or any
Lender. If no applicable successor agent has accepted appointment as such Agent in its capacity by the date that is twenty (20) days
following such retiring Agent’s notice of resignation, such retiring Agent’s resignation shall nevertheless thereupon become
effective and the Lenders shall assume and perform all of the duties of such Agent hereunder until such time, if any, as the Required
Lenders appoint a successor agent as provided for above. After any retiring Agent’s resignation as Agent, the provisions of this
Section 10 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was an Agent under this Agreement
and the other Loan Documents.
ARTICLE 11
- DEFINITIONS
The
definitions appearing in this Agreement or any Supplement shall be applicable to both the singular and plural forms of the defined terms:
“Account”
means any “account,” as such term is defined in the UCC, now owned or hereafter acquired by Borrower or in which Borrower
now holds or hereafter acquires any interest and, in any event, shall include, without limitation, all accounts receivable, book debts
and other forms of obligations (other than forms of obligations evidenced by Chattel Paper, Documents or Instruments) now owned or hereafter
received or acquired by or belonging or owing to Borrower (including, without limitation, under any trade name, style or division thereof)
whether arising out of goods sold or services rendered by Borrower or from any other transaction, whether or not the same involves the
sale of goods or services by Borrower (including, without limitation, any such obligation that may be characterized as an account or
contract right under the UCC) and all of Borrower’s rights in, to and under all purchase orders or receipts now owned or hereafter
acquired by it for goods or services, and all of Borrower’s rights to any goods represented by any of the foregoing (including,
without limitation, unpaid seller’s rights of rescission, replevin, reclamation and stoppage in transit and rights to returned,
reclaimed or repossessed goods), and all monies due or to become due to Borrower under all purchase orders and contracts for the sale
of goods or the performance of services or both by Borrower or in connection with any other transaction (whether or not yet earned by
performance on the part of Borrower), now in existence or hereafter occurring, including, without limitation, the right to receive the
proceeds of said purchase orders and contracts, and all collateral security and guarantees of any kind given by any Person with respect
to any of the foregoing.
“Account
Control Agreement” means (i) any control agreement entered into among the depository institution at which a Borrower
or any Subsidiary maintains a Deposit Account or the securities intermediary or commodity intermediary at which a Borrower or any Subsidiary
maintains a Securities Account or a Commodity Account, pursuant to which Agent, for the benefit of Lenders, obtains control (within the
meaning of the UCC) over such Deposit Account, Securities Account, or Commodity Account or (ii) with respect to any foreign-denominated
account, such agreement(s) as may be necessary to obtain a perfected first priority security interest in favor of Agent therein.
“Affiliate”
means any Person which directly or indirectly controls, is controlled by, or is under common control with Borrower. “Control,”
“controlled by” and “under common control with” mean direct or indirect possession of the power to direct or
cause the direction of management or policies (whether through ownership of voting securities, by contract or otherwise); provided, that
control shall be conclusively presumed when any Person or affiliated group directly or indirectly owns ten percent (10%) or more of the
securities having ordinary voting power for the election of directors of a corporation.
“Agreement”
means this Loan and Security Agreement and each Supplement thereto, as each may be amended or supplemented from time to time.
“Bankruptcy
Code” means the Federal Bankruptcy Reform Act of 1978 (11 U.S.C. §101, et seq.), as amended.
“Basic
Interest” means the rate of interest payable on the outstanding balance of each Loan at the applicable Designated Rate.
“Borrowing
Date” means the Business Day on which the proceeds of a Loan are disbursed by any Lender.
“Borrowing
Request” means a written request from Borrower in substantially the form of Exhibit “B” to the
Supplement, requesting the funding of one or more Loans on a particular Borrowing Date.
“Business
Day” means any day other than a Saturday, Sunday or other day on which commercial banks in New York City or San Francisco
are authorized or required by law to close.
“Change
of Control” means: (a) any sale, license, or other disposition of all or substantially all of the assets of Borrower;
(b) any reorganization, consolidation, merger or other transaction involving Borrower; or (c) any transaction or series of
related transactions in which any Person or two or more affiliated Persons acting in concert shall have acquired by contract or otherwise,
the power to control the management of Borrower, or to control the equity interests of Borrower entitled to vote for members of the Board
of Directors or equivalent governing body of Borrower on a fully-diluted basis (and taking into account all such securities that such
Person or Persons have the right to acquire pursuant to any option right) representing 50% or more of the combined voting power of such
securities (other than in connection with a Qualified Public Offering or a sale to recognized venture capital investors in a transaction
or series of transactions effected by Borrower for financing purposes, so long as Borrower identifies to Agent and each Lender the venture
capital investors prior to the closing of the transaction and provides Agent and each Lender with a description of the material terms
of such transaction).
“Chattel
Paper” means any “chattel paper,” as such term is defined in the UCC, now owned or hereafter acquired by Borrower
or in which Borrower now holds or hereafter acquires any interest.
“Closing
Date” means the date of this Agreement.
“Collateral”
means all of Borrower’s right, title and interest in and to the following property, whether now owned or hereafter acquired
and wherever located: (a) all Receivables; (b) all Equipment; (c) all Fixtures; (d) all General Intangibles; (e) all
Inventory; (f) all Investment Property; (g) all Deposit Accounts; (h) all Shares; (i) all other Goods and personal
property of Borrower, whether tangible or intangible and whether now or hereafter owned or existing, leased, consigned by or to, or acquired
by, Borrower and wherever located; (j) all Records; and (k) all Proceeds of each of the foregoing and all accessions to, substitutions
and replacements for, and rents, profits and products of each of the foregoing.
Notwithstanding
the foregoing the term “Collateral” shall not include: (i) more than sixty-five percent (65%) of the issued and outstanding
capital stock, membership units or other securities entitled to vote owned or held of record by Borrower in any Subsidiary that is a
controlled foreign corporation (as defined in the Internal Revenue Code), provided that the Collateral shall include one hundred percent
(100%) of the issued and outstanding non-voting capital stock of such Subsidiary; (ii) “intent-to-use” trademarks at
all times prior to the first use thereof, whether by the actual use thereof in commerce, the recording of a statement of use with the
United States Patent and Trademark Office or otherwise, but only to the extent the granting of a security interest in such “intent
to use” trademarks would be contrary to applicable law; or (iii) any contract, Instrument or Chattel Paper in which Borrower
has any right, title or interest if and to the extent such contract, Instrument or Chattel Paper includes a provision containing
a restriction on assignment such that the creation of a security interest in the right, title or interest of Borrower therein would be
prohibited and would, in and of itself, cause or result in a default thereunder enabling another person party to such contract, Instrument
or Chattel Paper to enforce any remedy with respect thereto; provided, however, that the foregoing exclusion shall not apply if
(A) such prohibition has been waived or such other person has otherwise consented to the creation hereunder of a security interest
in such contract, Instrument or Chattel Paper, or (B) such prohibition would be rendered ineffective pursuant to Sections 9-407(a) or
9-408(a) of the UCC, as applicable and as then in effect in any relevant jurisdiction, or any other applicable law (including the
Bankruptcy Code or principles of equity); provided, further, that immediately upon the ineffectiveness, lapse or termination of
any such provision, the term “Collateral” shall include, and Borrower shall be deemed to have granted a security interest
in, all its rights, title and interests in and to such contract, Instrument or Chattel Paper as if such provision had never been
in effect; and provided further that the foregoing exclusion shall in no way be construed so as to limit, impair or otherwise affect
Agent’s unconditional continuing security interest in and to all rights, title and interests of Borrower in or to any payment obligations
or other rights to receive monies due or to become due under any such contract, Instrument or Chattel Paper and in any such monies
and other proceeds of such contract, Instrument or Chattel Paper.
“Commitment”
means the obligation of each Lender to make Loans to Borrower up to the aggregate principal amount set forth in the Supplement.
“Copyright
License” means any written agreement granting any right to use any Copyright or Copyright registration now owned or hereafter
acquired by Borrower or in which Borrower now holds or hereafter acquires any interest.
“Copyrights”
means all of the following now owned or hereafter acquired by Borrower or in which Borrower now holds or hereafter acquires any interest:
(i) all copyrights, whether registered or unregistered, held pursuant to the laws of the United States, any State thereof or of
any other country; (ii) all registrations, applications and recordings in the United States Copyright Office or in any similar office
or agency of the United States, any State thereof or any other country; (iii) all continuations, renewals or extensions thereof;
and (iv) any registrations to be issued under any pending applications.
“Default”
means an event which with the giving of notice, passage of time, or both would constitute an Event of Default.
“Default
Rate” means the applicable Designated Rate plus five percent (5%) per annum.
“Deposit
Accounts” means any “deposit accounts,” as such term is defined in the UCC, now owned or hereafter acquired
by Borrower or in which Borrower now holds or hereafter acquires any interest.
“Designated
Rate” means the rate of interest per annum described in the Supplement as being applicable to an outstanding Loan from
time to time.
“Documents”
means any “documents,” as such term is defined in the UCC, now owned or hereafter acquired by Borrower or in which Borrower
now holds or hereafter acquires any interest.
“Dollars”
or “$” means lawful currency of the United States.
“Environmental
Laws” means all federal, state or local laws, statutes, common law duties, rules, regulations, ordinances and codes, together
with all administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, any governmental
authorities, in each case relating to environmental, health, or safety matters.
“Equipment”
means any “equipment,” as such term is defined in the UCC, now owned or hereafter acquired by Borrower or in which Borrower
now holds or hereafter acquires any interest and any and all additions, substitutions and replacements of any of the foregoing, wherever
located, together with all attachments, components, parts, equipment and accessories installed thereon or affixed thereto.
“Event
of Default” means any event described in Section 7.1.
“Fixtures”
means any “fixtures,” as such term is defined in the UCC, now owned or hereafter acquired by Borrower or in which Borrower
now holds or hereafter acquires any interest.
[*]
“GAAP”
means generally accepted accounting principles and practices consistent with those principles and practices promulgated or adopted
by the Financial Accounting Standards Board and the Board of the American Institute of Certified Public Accountants, their respective
predecessors and successors. Each accounting term used but not otherwise expressly defined herein shall have the meaning given it by
GAAP.
“General
Intangibles” means any “general intangibles,” as such term is defined in the UCC, now owned or hereafter acquired
by Borrower or in which Borrower now holds or hereafter acquires any interest and, in any event, shall include, without limitation, all
right, title and interest that Borrower may now or hereafter have in or under any contract, all customer lists, Copyrights, Trademarks,
Patents, websites, domain names, and all applications therefor and reissues, extensions, or renewals thereof, other items of, and rights
to, Intellectual Property, interests in partnerships, joint ventures and other business associations, Licenses, permits, trade secrets,
proprietary or confidential information, inventions (whether or not patented or patentable), technical information, procedures, designs,
knowledge, know-how, software, data bases, data, skill, expertise, recipes, experience, processes, models, drawings, materials and records,
goodwill (including, without limitation, the goodwill associated with any Trademark, Trademark registration or Trademark licensed under
any Trademark License), claims in or under insurance policies, including unearned premiums, uncertificated securities, money, cash or
cash equivalents, deposit, checking and other bank accounts, rights to sue for past, present and future infringement of Copyrights, Trademarks
and Patents, rights to receive tax refunds and other payments and rights of indemnification.
“Goods”
means any “goods,” as such term is defined in the UCC, now owned or hereafter acquired by Borrower or in which Borrower
now holds or hereafter acquires any interest.
[*]
“Indebtedness”
of any Person means at any date, without duplication and without regard to whether matured or unmatured, absolute or contingent:
(i) all obligations of such Person for borrowed money; (ii) all obligations of such Person evidenced by bonds, debentures,
notes, or other similar instruments; (iii) all obligations of such Person to pay the deferred purchase price of property or services,
except trade accounts payable arising in the ordinary course of business; (iv) all obligations of such Person as lessee under capital
leases; (v) all obligations of such Person to reimburse or prepay any bank or other Person in respect of amounts paid under a letter
of credit, banker’s acceptance, or similar instrument, whether drawn or undrawn; (vi) all obligations of such Person to purchase
securities which arise out of or in connection with the sale of the same or substantially similar securities; (vii) all obligations
of such Person to purchase, redeem, exchange, convert or otherwise acquire for value any capital stock of such Person or any warrants,
rights or options to acquire such capital stock, now or hereafter outstanding, except to the extent that such obligations remain performable
solely at the option of such Person; (viii) all obligations to repurchase assets previously sold (including any obligation to repurchase
any accounts or chattel paper under any factoring, receivables purchase, or similar arrangement); (ix) obligations of such Person
under interest rate swap, cap, collar or similar hedging arrangements; and (x) all obligations of others of any type described in
clause (i) through clause (ix) above guaranteed by such Person.
“Insolvency
Proceeding” means with respect to a Person (a) any case, action or proceeding before any court or other governmental
authority relating to bankruptcy, reorganization, insolvency, liquidation, receivership, dissolution, winding-up or relief of debtors
with respect to such Person, or (b) any general assignment for the benefit of creditors, composition, marshalling of assets for
creditors, or other, similar arrangement in respect of such Person’s creditors generally or any substantial portion of its creditors,
undertaken under U.S. Federal, state or foreign law, including the Bankruptcy Code, but in each case, excluding any avoidance or similar
action against such Person commenced by an assignee for the benefit of creditors, bankruptcy trustee, debtor in possession, or other
representative of another Person or such other Person’s estate.
“Instruments”
means any “instrument,” as such term is defined in the UCC, now owned or hereafter acquired by Borrower or in which Borrower
now holds or hereafter acquires any interest.
“Intellectual
Property” means all of Borrower’s Copyrights, Trademarks, Patents, Licenses, trade secrets, source codes, customer
lists, proprietary or confidential information, inventions (whether or not patented or patentable), technical information, procedures,
designs, knowledge, know-how, software, data bases, skill, expertise, experience, processes, models, drawings, materials, records and
goodwill associated with the foregoing.
“Intellectual
Property Security Agreement” means any Intellectual Property Security Agreement executed and delivered by Borrower in favor
of Agent, as the same may be amended, supplemented, or restated from time to time.
“Inventory”
means any “inventory,” as such term is defined in the UCC, wherever located, now owned or hereafter acquired by Borrower
or in which Borrower now holds or hereafter acquires any interest, and, in any event, shall include, without limitation, all inventory,
goods and other personal property that are held by or on behalf of Borrower for sale or lease or are furnished or are to be furnished
under a contract of service or that constitute raw materials, work in process or materials used or consumed or to be used or consumed
in Borrower’s business, or the processing, packaging, promotion, delivery or shipping of the same, and all finished goods, whether
or not the same is in transit or in the constructive, actual or exclusive possession of Borrower or is held by others for Borrower’s
account, including, without limitation, all goods covered by purchase orders and contracts with suppliers and all goods billed and held
by suppliers and all such property that may be in the possession or custody of any carriers, forwarding agents, truckers, warehousemen,
vendors, selling agents or other Persons.
“Investment
Property” means any “investment property,” as such term is defined in the UCC, now owned or hereafter acquired
by Borrower or in which Borrower now holds or hereafter acquires any interest.
“Letter
of Credit Rights” means any “letter of credit rights,” as such term is defined in the UCC, now owned or hereafter
acquired by Borrower or in which Borrower now holds or hereafter acquires any interest, including any right to payment under any letter
of credit.
“License”
means any Copyright License, Patent License, Trademark License or other license of rights or interests now held or hereafter acquired
by Borrower or in which Borrower now holds or hereafter acquires any interest and any renewals or extensions thereof.
“Lien”
means any mortgage, deed of trust, pledge, hypothecation, assignment for security, security interest, encumbrance, levy, lien or
charge of any kind, whether voluntarily incurred or arising by operation of law or otherwise, against any property, any conditional sale
or other title retention agreement, any lease in the nature of a security interest, and the filing of any financing statement (other
than a precautionary financing statement with respect to a lease that is not in the nature of a security interest) under the UCC or comparable
law of any jurisdiction.
“Loan”
means an extension of credit by each Lender under this Agreement.
“Loan
Documents” means, individually and collectively, this Loan and Security Agreement, each Supplement, each Note, the Intellectual
Property Security Agreements, and any other security or pledge agreement(s), any Warrant issued by Borrower in connection with this Agreement,
and all other contracts, instruments, addenda and documents executed in connection with this Agreement or the extensions of credit which
are the subject of this Agreement.
“LTM
Product Revenue” means, as of the last day of any calendar month, Borrower’s Product Revenue (as defined in the Supplement)
for the trailing twelve (12) month period ending on such date.
“Material
Adverse Effect” or “Material Adverse Change” means (a) a material adverse change in, or
a material adverse effect upon, the operations, business, properties, or financial condition of Borrower and its Subsidiaries, taken
as a whole; (b) a material impairment of the ability of Borrower to perform under any Loan Document; or (c) a material adverse
effect upon the legality, validity, binding effect or enforceability against Borrower of any Loan Document.
“Note”
means a promissory note substantially in the form attached to the Supplement as Exhibit “A”, executed by
Borrower evidencing each Loan.
“Obligations”
means all debts, obligations and liabilities of Borrower to each Lender or Agent now or hereafter made, incurred or created under,
pursuant to or in connection with this Agreement or any other Loan Document (other than the Warrants), whether voluntary or involuntary
and however arising or evidenced, whether direct or acquired by such Lender or Agent by assignment or succession, whether due or not
due, absolute or contingent, liquidated or unliquidated, determined or undetermined, and whether Borrower may be liable individually
or jointly, or whether recovery upon such debt may be or become barred by any statute of limitations or otherwise unenforceable; and
all renewals, extensions and modifications thereof; and all attorneys’ fees and costs incurred by each Lender and Agent in connection
with the collection and enforcement thereof as provided for in any such Loan Document.
“Patent
License” means any written agreement granting any right with respect to any invention on which a Patent is in existence
now owned or hereafter acquired by Borrower or in which Borrower now holds or hereafter acquires any interest.
“Patents”
means all of the following property now owned or hereafter acquired by Borrower or in which Borrower now holds or hereafter acquires
any interest: (a) all letters patent of, or rights corresponding thereto in, the United States or any other country, all registrations
and recordings thereof, and all applications for letters patent of, or rights corresponding thereto in, the United States or any other
country, including, without limitation, registrations, recordings and applications in the United States Patent and Trademark Office or
in any similar office or agency of the United States, any State thereof or any other country; (b) all reissues, continuations, continuations-in-part
or extensions thereof; (c) all petty patents, divisionals, and patents of addition; and (d) all patents to be issued under
any such applications.
“Permitted
Indebtedness” means:
(a) Indebtedness
incurred for the acquisition of supplies, inventory or other property or services on normal trade credit;
(b) Indebtedness
incurred pursuant to one or more transactions permitted under Section 6.4;
(c) Indebtedness
of Borrower under this Agreement;
(d) Subordinated
Debt;
(e) any
Indebtedness approved by Agent and each Lender prior to the Closing Date as shown on Schedule 6.1;
(f) Indebtedness
secured by a Lien described in clause (c) of the defined term “Permitted Liens” not to exceed One Hundred Thousand Dollars
($100,000) in aggregate principal amount outstanding at any time;
(g) Indebtedness
incurred under corporate credit cards not to exceed (i) One Hundred Fifty Thousand Dollars ($150,000) in aggregate principal amount
outstanding at any time prior to achievement of the Tranche 2 Availability Milestone, and (ii) Five Hundred Thousand Dollars ($500,000)
in aggregate principal amount outstanding at any time after achievement of the Tranche 2 Availability Milestone;
(h) guaranties
and similar surety obligations in respect of Indebtedness otherwise constituting Permitted Indebtedness;
(i) Indebtedness
(in the aggregate outstanding amount of up to Five Hundred Thousand Dollars ($500,000) at any given time) incurred to finance insurance
premiums in the ordinary course of business;
(j) Indebtedness
(in the aggregate outstanding amount of up to One Hundred Thousand Dollars ($100,000) at any given time) incurred as a result of endorsing
negotiable instruments received in the ordinary course of business; and
(k) extensions,
refinancings and renewals of any of the foregoing; provided that the principal amount thereof is not increased.
“Permitted
Investment” means:
(a) accounts
receivable in the ordinary course of Borrower’s business;
(b) Investments
in domestic certificates of deposit issued by, and other domestic investments with, financial institutions organized under the laws of
the United States or a state thereof, having at least One Hundred Million Dollars ($100,000,000) in capital and a rating of at least
“investment grade” or “A” by Moody’s or any successor rating agency;
(c) Investments
in marketable obligations of the United States of America and in open market commercial paper given the highest credit rating by a national
credit agency and maturing not more than one year from the creation thereof;
(d) temporary
advances to cover incidental expenses to be incurred in the ordinary course of business;
(e) Investments
in joint ventures, strategic alliances, licensing and similar arrangements customary in Borrower’s industry and which do not require
Borrower to assume or otherwise become liable for the obligations of any third party not directly related to or arising out of such arrangement
or, without the prior written consent of Agent and each Lender, require Borrower to transfer ownership of non-cash assets to such joint
venture or other entity;
(f) Investments
in (i) one or more wholly-owned domestic direct or indirect Subsidiaries of Parent so long as in accordance with Section 6.14(a) of
this Agreement, each such Person has been made a co-borrower hereunder or has executed and delivered to Agent an agreement, in form and
substance reasonably satisfactory to Agent, containing a guaranty of the Obligations, and (ii) one or more direct or indirect foreign
Subsidiaries of Parent in an aggregate amount of One Million Dollars ($1,000,000) on a net basis (i.e. Investments net of any payments
received by Borrower from foreign Subsidiaries after the making of such Investments) at any time;
(g) Investments
approved by Agent and each Lender prior to the Closing Date as shown on Schedule 6.6;
(h) Investments
accepted in connection with Transfers permitted by Section 6.5;
(i) non-cash
loans approved by Borrower’s Board of Directors to employees, officers or directors relating to the purchase of equity securities
of Borrower pursuant to employee stock purchase plans or agreements approved by Borrower’s Board of Directors, limited to an aggregate
total of One Hundred Thousand Dollars ($100,000) at any time outstanding;
(j) Investments
(including debt obligations) received in connection with the bankruptcy or reorganization of customers or suppliers and in settlement
of delinquent obligations of, and other disputes with, customers or suppliers arising in the ordinary course of Borrower’s business;
(k) Investments
permitted under Section 6.11;
(l) Investments
consisting of notes receivable of, or prepaid royalties and other credit extensions to, customers and suppliers in the ordinary course
of business; and
(m) Investments
by wholly owned Subsidiaries in other wholly owned Subsidiaries or in Borrower.
“Permitted
Lien” means:
(n) licenses
or sublicenses of Intellectual Property in accordance with the terms of Section 6.5 hereof;
(a) involuntary
Liens which, in the aggregate, would not have a Material Adverse Effect and which in any event would not exceed, in the aggregate, the
Threshold Amount;
(b) Liens
for current taxes or other governmental or regulatory assessments which are not delinquent, or which are contested in good faith by the
appropriate procedures and for which appropriate reserves are maintained;
(c) security
interests on any property held or acquired by Borrower in the ordinary course of business securing Indebtedness incurred or assumed for
the purpose of financing all or any part of the cost of acquiring such property; provided, that such Lien attaches solely to the
property acquired with such Indebtedness and that the principal amount of such Indebtedness does not exceed one hundred percent (100%)
of the cost of such property;
(d) Liens
in favor of Agent;
(e) bankers’
liens, rights of setoff and similar Liens incurred on deposits made in the ordinary course of business as long as an Account Control
Agreement (or equivalent) for each account in which such deposits are held in a form acceptable to Agent has been executed and delivered
to Agent to the extent required under Section 6.11;
(f) materialmen’s,
mechanics’, repairmen’s, warehousemen’s, carriers’, landlord’s (subject to Section 5.9(e) hereof),
employees’ or other like Liens arising in the ordinary course of business and which are not delinquent for more than 45 days or
are being contested in good faith by appropriate proceedings;
(g) any
judgment, attachment or similar Lien, unless the judgment it secures exceeds the Threshold Amount and has not been discharged or execution
thereof effectively stayed and bonded against pending appeal within thirty (30) days of the entry thereof;
(h) Liens
securing Subordinated Debt;
(i) Liens
which have been approved by Agent and each Lender in writing prior to the Closing Date, as shown on Schedule 6.2 hereto;
(j) the
interests of licensors under inbound licenses to Borrower;
(k) the
interests of sub-lessees under subleases of real property;
(l) Liens
to secure payment of workers’ compensation, employment insurance, old-age pensions, social security and other like obligations
incurred in the ordinary course of business (other than Liens imposed by ERISA);
(m) deposits
to secure the performance of bids, trade contracts (other than for Indebtedness), leases (other than capital lease obligations), statutory
obligations, surety and appeal bonds, performance bonds and other obligations of a like nature arising as a matter of law and incurred
in the ordinary course of business; and
(n) zoning
restrictions, easements, rights of way, restrictions on use of real property and other similar encumbrances incurred in the ordinary
course of business which, in the aggregate, are not substantial in amount and do not materially detract from the value of the property
subject thereto or interfere with the ordinary conduct of the business of the Borrower or any of its Subsidiaries.
“Person”
means any individual, sole proprietorship, partnership, joint venture, trust, unincorporated organization, association, corporation,
limited liability company, institution, public benefit corporation, other entity or government (whether federal, state, county, city,
municipal, local, foreign, or otherwise, including any instrumentality, division, agency, body or department thereof).
“Proceeds”
means “proceeds,” as such term is defined in the UCC and, in any event, shall include, without limitation, (a) any
and all Accounts, Chattel Paper, Instruments, cash or other forms of money or currency or other proceeds payable to Borrower from
time to time in respect of the Collateral, (b) any and all proceeds of any insurance, indemnity, warranty or guaranty payable to
Borrower from time to time with respect to any of the Collateral, (c) any and all payments (in any form whatsoever) made or due
and payable to Borrower from time to time in connection with any requisition, confiscation, condemnation, seizure or forfeiture of all
or any part of the Collateral by any governmental authority (or any Person acting under color of governmental authority), (d) any
claim of Borrower against third parties (i) for past, present or future infringement of any Copyright, Patent or Patent License
or (ii) for past, present or future infringement or dilution of any Trademark or Trademark License or for injury to the goodwill
associated with any Trademark, Trademark registration or Trademark licensed under any Trademark License and (e) any and all other
amounts from time to time paid or payable under or in connection with any of the Collateral.
[*]
“Receivables”
means all of Borrower’s Accounts, Instruments, Documents, Chattel Paper, Supporting Obligations, and letters of credit
and Letter of Credit Rights.
“Records”
means all Borrower’s computer programs, software, hardware, source codes and data processing information, all written documents,
books, invoices, ledger sheets, financial information and statements, and all other writings concerning Borrower’s business.
“Related
Person” means any Affiliate of Borrower, or any officer, employee, director or equity security holder of Borrower or any
Affiliate.
“Required
Lenders” means the Lenders holding at least sixty six percent (66%) of the aggregate principal balance of the Loans.
“Restricted
Account” means an interest-bearing restricted deposit account maintained by Borrower solely for holding the portion of
the Tranche 1 proceeds funded to such account by Lenders. The Restricted Account shall be subject to a blocked Account Control Agreement
at all times.
“Rights
to Payment” means all Borrower’s accounts, instruments, contract rights, documents, chattel paper and all other rights
to payment, including, without limitation, the Accounts, all negotiable certificates of deposit and all rights to payment under any Patent
License, any Trademark License, or any commercial or standby letter of credit.
“Security
Documents” means this Loan and Security Agreement, the Supplement hereto, the Intellectual Property Security Agreement,
and any and all Account Control Agreements, collateral assignments, chattel mortgages, financing statements, amendments to any of the
foregoing and other documents from time to time executed or filed to create, perfect or maintain the perfection of Agent’s Liens
on the Collateral.
“Shares”
means: (a) one hundred percent (100%) of the issued and outstanding capital stock, membership units or other securities owned
or held of record by Borrower in any Subsidiary that is not a controlled foreign corporation (as defined in the Internal Revenue Code),
and (b) 65% of the issued and outstanding capital stock, membership units or other securities entitled to vote owned or held of
record by Borrower in any Subsidiary that is a controlled foreign corporation (as defined in the Internal Revenue Code).
“Subordinated
Debt” means Indebtedness (i) approved by Required Lenders; and (ii) where the holder’s right to payment
of such Indebtedness, the priority of any Lien securing the same, and the rights of the holder thereof to enforce remedies against Borrower
following default have been made subordinate to the Liens of Agent and to the prior payment to each Lender of the Obligations, either
(A) pursuant to a written subordination agreement approved by Required Lenders in their sole but reasonable discretion or (B) on
terms otherwise approved by Required Lenders in their sole but reasonable discretion.
“Subsidiary”
means any Person a majority of the equity ownership or voting stock of which is directly or indirectly now owned or hereafter acquired
by Borrower or by one or more other Subsidiaries.
“Supplement”
means that certain supplement to the Loan and Security Agreement, as the same may be amended or restated from time to time, and any
other supplements entered into between Borrower, Agent and each Lender, as the same may be amended or restated from time to time.
“Supporting
Obligations” means any “supporting obligations,” as such term is defined in the UCC, now owned or hereafter
acquired by Borrower or in which Borrower now holds or hereafter acquires any interest.
“Termination
Date” has the meaning specified in the Supplement.
“Threshold
Amount” has the meaning specified in the Supplement.
“Trademark
License” means any written agreement granting any right to use any Trademark or Trademark registration now owned or hereafter
acquired by Borrower or in which Borrower now holds or hereafter acquires any interest.
“Trademarks”
means all of the following property now owned or hereafter acquired by Borrower or in which Borrower now holds or hereafter acquires
any interest: (a) all trademarks, tradenames, corporate names, business names, trade styles, service marks, logos, other source
or business identifiers, prints and labels on which any of the foregoing have appeared or appear, designs and general intangibles of
like nature, now existing or hereafter adopted or acquired, all registrations and recordings thereof, and any applications in connection
therewith, including, without limitation, registrations, recordings and applications in the United States Patent and Trademark Office
or in any similar office or agency of the United States, any State thereof or any other country or any political subdivision thereof
and (b) reissues, extensions or renewals thereof.
“UCC”
means the Uniform Commercial Code as the same may, from time to time, be in effect in the State of California; provided, that
in the event that, by reason of mandatory provisions of law, any or all of the attachment, perfection or priority of, or remedies with
respect to, Agent’s Lien on any Collateral is governed by the Uniform Commercial Code as enacted and in effect in a jurisdiction
other than the State of California, the term “UCC” shall mean the Uniform Commercial Code as enacted and in effect in such
other jurisdiction solely for purposes of the provisions thereof relating to such attachment, perfection, priority or remedies and for
purposes of definitions related to such provisions. Unless otherwise defined herein, terms that are defined in the UCC and used herein
shall have the meanings given to them in the UCC.
“Warrant”
has the meaning specified in the Supplement.
[Signature page follows]
[Signature page to
Loan and Security Agreement]
IN WITNESS WHEREOF,
the parties have executed this Agreement as of the date first above written.
| |
|
| BORROWER: |
|
| |
|
| CYTOSORBENTS CORPORATION |
|
| |
|
| By: |
/s/
Phillip P. Chan |
|
| Name: |
Phillip P. Chan, MD, Ph.D. |
|
| Title: |
Chief Executive Officer |
|
| |
|
| CYTOSORBENTS MEDICAL INC. |
|
| |
|
| By: |
/s/ Phillip P.
Chan |
|
| Name: |
Phillip P. Chan, MD, Ph.D. |
|
| Title: |
Chief Executive Officer |
|
| |
|
| AGENT: |
|
| |
|
| AVENUE CAPITAL MANAGEMENT II, L.P. |
|
| |
|
| By: |
Avenue Capital Management II GenPar, LLC |
|
| Its: |
General Partner |
|
| |
|
| By: |
/s/ Sonia Gardner |
|
| Name: |
Sonia Gardner |
|
| Title: |
Member |
|
| |
|
| LENDERS: |
|
| |
|
| AVENUE VENTURE OPPORTUNITIES FUND,
L.P. |
|
| |
|
| By: |
Avenue Venture Opportunities Partners, LLC |
|
| Its: |
General Partner |
|
| |
|
| By: |
/s/ Sonia Gardner |
|
| Name: |
Sonia Gardner |
|
| Title: |
Authorized Signatory |
|
| |
|
| AVENUE VENTURE OPPORTUNITIES FUND
II, L.P. |
|
| |
|
| By: |
Avenue Venture Opportunities Partners II, LLC |
|
| Its: |
General Partner |
|
| |
|
| By: |
/s/ Sonia Gardner |
|
| Name: |
Sonia Gardner |
|
| Title: |
Authorized Signatory |
|
