AMENDMENT #3 TO CREDIT AGREEMENT AND AMENDMENT TO WARRANT CERTIFICATES



AMENDMENT #3 TO CREDIT AGREEMENT AND AMENDMENT TO WARRANT CERTIFICATES



This AMENDMENT #3 TO CREDIT AGREEMENT AND AMENDMENT TO WARRANT CERTIFICATES, dated as of March 31, 2017 (this “Third Amendment”), is made among KADMON PHARMACEUTICALS, LLC, a Pennsylvania limited liability company,  (the “Borrower”), certain Affiliates of the Borrower listed on the signature pages hereof under the heading “GUARANTORS” (each a “Guarantor” and, collectively, the “Guarantors”), and the lenders listed on the signature pages hereof under the heading “LENDERS” (each a “Lender” and, collectively, the “Lenders”), with respect to the Credit Agreement referred to below. 

RECITALS

WHEREAS, the Borrower, the Guarantors and the Lenders are parties to a Credit Agreement, dated as of August 28, 2015 (as subsequently amended or otherwise modified, including pursuant to this Third Amendment, the “Credit Agreement”);



WHEREAS, in connection with the making of the loans under the Credit Agreement, the Borrower executed and issued Warrant Certificates (as defined in the Credit Agreement) to the Lenders, which Warrant Certificates were originally issued on August 28, 2015 and, in connection with the amendment and restatement thereof, were reissued on December 21, 2016;



WHEREAS, on the terms and subject to the conditions set forth herein, the parties hereto desire to amend the Existing Credit Agreement (defined below) as set forth herein; and



WHEREAS, on the terms and subject to the conditions set forth herein, the parties also desire to amend the Existing Warrant Certificates (defined below) as set forth herein.



NOW, THEREFORE, in consideration of the mutual agreements, provisions and covenants contained herein, the parties hereto agree as follows:



“Borrower” is defined in the preamble.

“Credit Agreement” is defined in the first recital.

“Existing Credit Agreement” means the Credit Agreement as in effect immediately prior to the Third Amendment Effective Date.

“Existing Warrant Certificate” means any Warrant Certificate as in effect immediately prior to the Third Amendment Effective Date.

“Guarantor” is defined in the preamble.

“Third Amendment” is defined in the preamble.

“Third Amendment Effective Date” is defined in Section 4.

“Excluded Asset Sale” means any Asset Sale permitted pursuant to (i) clauses (a) through (h) of Section 9.09, and (ii) to the extent (but only to the extent) (x) such Asset Sale is consummated during the period from the Third Amendment Effective Date to December 31, 2017 and (y) is permitted pursuant to the proviso to Section 3.03(b)(i),  clause (j) of Section 9.09.

“Third Amendment” means Amendment #3 to the Credit Agreement, dated as of March 31, 2017, made among the Borrower, the Guarantors parties thereto and the Lenders parties thereto.



“Third Amendment Effective Date” means March 31, 2017, the date the parties hereto mutually agree that the Third Amendment became effective 

“Warrant Certificate” means each warrant certificate, substantially in the form of Exhibit I, executed and delivered by Holdings in favor of a Lender pursuant to Section 6.01(g)(iv), as any such certificate may be subsequently amended, replaced, substituted or otherwise modified.

“Repayment.  Until the Payment Date occurring on January 31, 2018, no payments of principal of the Loans shall be due.  Commencing with such Payment Date and on each Payment Date occurring thereafter, the Borrower shall repay the outstanding principal of the Loans at par in an amount equal to $380,000, by paying to each Lender its Proportionate Share of such amount on such Payment Date.  To the extent not previously paid, the outstanding principal amount of the Loans, together with all other outstanding Obligations, shall be due and payable on the Maturity Date.”



“Asset Sales. In the event of any contemplated Asset Sale or series of Asset Sales yielding Net Proceeds which, when aggregated with the Net Proceeds of all other Asset Sales (other than any Excluded Asset Sale) made after the date hereof, exceed $5,000,000, Borrower shall make a mandatory prepayment in respect of the Loans as follows: (x) if the assets sold represent substantially all of the assets or revenues of Borrower, or represent the sale of all or substantially all of the assets or revenues of any specific line of business which either on its own or together with other lines of business sold over the term of this Agreement account for revenue generated by such lines of business exceeding 20% of the revenue of Borrower in the immediately preceding year, Borrower shall make a mandatory prepayment of the Loans in an amount equal to the Redemption Price for all Loans applicable on the date of such Asset Sale; (y) in the case of any Asset Sale permitted under Section 9.09(i), Borrower shall make a mandatory prepayment of the Loans in an amount equal to 50% of the Net Proceeds of such Asset Sale, which amount shall be applied to the Redemption Price applicable on the date of such Asset Sale; and (z) in the case of all other Asset Sales not described in the foregoing clauses (x) and (y), Borrower shall make a mandatory prepayment of the Loans in an amount equal to the entire amount of the Net Proceeds of such Asset Sale, which amount shall be applied to the Redemption Price applicable on the date of such Asset Sale, credited (in all cases described in clauses (x), (y) and (z) above) in the order set forth in Section 3.03(b)(v).

“Asset Sales that (x) are not otherwise described in this Section 9.09 and (y) are in respect of assets or properties that, (1) if sold or otherwise disposed of during the period from the Third Amendment Effective Date to December 31, 2017 have a fair market value that does not exceed $17,000,000 in the aggregate for all properties and assets sold or otherwise disposed of during such period, and (2) if sold or otherwise disposed of at any other time have a fair market value that does not exceed $7,500,000 in the aggregate for all assets or properties sold or

disposed of since the Closing Date (exclusive of assets or properties sold or otherwise disposed of during the period described in clause (y)(1) above).”

“Future Capital Raising.  During the period commencing with the Third Amendment Effective Date and ending on December 31, 2017, Holdings shall have received an aggregate amount not less than $17,000,000 from: (a) gross cash proceeds resulting from one or more sales, offerings or issuances of its Qualified Equity Interests; (b) gross cash proceeds resulting from non-dilutive funding from, or arising out of, one or more strategic transactions (e.g., licensing deal, business development transaction etc.) entered into after the Third Amendment Effective Date (but on or prior to December 31, 2017) and approved by the Board of Directors of Holdings; or (c) cash Net Proceeds from one or more Asset Sales permitted pursuant to Section 9.09(j).”





“Exercise Price” means, subject to adjustment pursuant to Sections 4(a) and 4(b)(i)(2), a price per Warrant Share equal to $4.50.

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





“(b)        Payment of the Aggregate Exercise Price.   When due and payable hereunder, the Holder shall pay the Aggregate Exercise Price to the Company by delivery of a certified or official bank check payable to the order of the Company or by wire transfer of immediately available funds to an account designated in writing by the Company.”



“Upon the occurrence and during the continuance of any Event of Default, at the option of the Holder exercised by way of delivery of written notice to the Company (a “Redemption Notice”), the Holder shall have the right to terminate this Warrant

Certificate and demand a redemption of the Warrant Shares representing the then unexercised portion of this Warrant Certificate (an “Early Redemption”).”











IN WITNESS WHEREOF, the parties hereto have duly executed this Third Amendment, as of the date first above written.

BORROWER:





KADMON PHARMACEUTICALS, LLC



By _______________________________________

Harlan W. Waksal

President and Chief Executive Officer





GUARANTORS:





KADMON CORPORATION, LLC



By _______________________________________

Harlan W. Waksal

President and Chief Executive Officer





KADMON HOLDINGS, INC (f/k/a Kadmon Holdings, LLC)



By _______________________________________

Harlan W. Waksal

President and Chief Executive Officer





KADMON RESEARCH INSTITUTE, LLC



By _______________________________________

Harlan W. Waksal

President and Chief Executive Officer





THREE RIVERS RESEARCH INSTITUTE I, LLC



By _______________________________________

Harlan W. Waksal

President and Chief Executive Officer

THREE RIVERS BIOLOGICS, LLC



By _______________________________________

Harlan W. Waksal

President and Chief Executive Officer





THREE RIVERS GLOBAL PHARMA, LLC



By _______________________________________

Harlan W. Waksal

President and Chief Executive Officer



COLLATERAL REPRESENTATIVE:





PERCEPTIVE CREDIT HOLDINGS, LP

By Perceptive Credit Opportunities GP, LLC, its general partner



By ____________________________________

Sandeep Dixit

Chief Credit Officer



By ____________________________________

Name:

Title:



LENDERS:





PERCEPTIVE CREDIT HOLDINGS, LP

By Perceptive Credit Opportunities GP, LLC, its general partner



By ____________________________________

Sandeep Dixit

Chief Credit Officer



By ____________________________________

Name:

Title:



GOLDENTREE CREDIT OPPORTUNITIES, LP

By GoldenTree Asset Management, LP



By ____________________________________

Name:

Title:



GOLDENTREE CREDIT OPPORTUNITIES, LTD

By GoldenTree Asset Management, LP



By ____________________________________

Name:

Title:



GOLDENTREE INSURANCE FUND SERIES INTERESTS OF THE SALI MULTI-SERIES FUND, LPBY GOLDENTREE ASSET MANAGEMENT, LP

By GoldenTree Asset Management, LP



By ____________________________________

Name:

Title:



GT NM, LP

By GoldenTree Asset Management, LP



By ____________________________________

Name:

Title:



SAN BERNARDINO COUNTY EMPLOYEES’ RETIREMENT ASSOCIATION

By GoldenTree Asset Management, LP



By ____________________________________

Name:

Title: