FOURTH LOAN AGREEMENT Dated November 30, 2017 between STRUCTURED ALPHA LP as Lender - and - PROMETIC LIFE SCIENCES INC. as Borrower - and - PROMETIC BIOTHERAPEUTICS INC. as a Guarantor - and - PROMETIC BIOSEPARATIONS LTD as a Guarantor - and -...

INTERPRETATION

1.1

Definitions

1.2

Invalidity, etc.

1.3

Currency

1.4

Governing Law

1.5

This Agreement to Govern

THE FACILITY

2.1

Loan

2.2

Not Revolving

2.3

Purpose

2.4

Evidence of Obligations

2.5

Repayment/Prepayment

2.6

Manner of Payment

2.7

Application of Payments

INTEREST, FEES AND EXPENSES

3.1

Interest

3.2

Payment of Costs and Expenses

3.3

Indemnity

3.4

Unpaid Amounts

3.5

Maximum Interest Rate

BOARD RIGHTS

4.1

Issuance of Warrant #7

4.2

Board Rights

SECURITY

5.1

Security Pursuant to the Other Loan Agreements

5.2

Security Pursuant to this Agreement

5.3

Security Effective Notwithstanding Date of Loan

5.4

Security Release

5.5

Further Assurances – Security

5.6

Subordination by the Lender

REPRESENTATIONS AND WARRANTIES

6.1

Representations and Warranties of the Borrower and Obligors

6.2

Representations and Warranties of the Lender

6.3

Survival of Representations and Warranties

COVENANTS

7.1

Affirmative Covenants

7.2

Lender Entitled to Perform Covenants

7.3

Negative Covenants

CONDITIONS PRECEDENT

8.1

Conditions Precedent to the First Tranche

8.2

Conditions Precedent to the Second Tranche

EVENTS OF DEFAULT AND REMEDIES

9.1

Events of Default

9.2

Remedies Upon Default

9.3

Specific Performance

9.4

Set-Off/Cancellation of Principal

9.5

Distributions

GENERAL

10.1

Non-Disparagement

10.2

Amendment and Waiver

10.3

Notices

10.4

Further Assurances

10.5

Assignment

10.6

Counterparts

10.7

Entire Agreement

10.8

Termination

GUARANTEE

11.1

Guarantee

11.2

Indemnity

11.3

Payment and Performance

11.4

Continuing Obligation

11.5

Guarantee Unaffected

11.6

Waivers

11.7

Lender’s Right to Act

11.8

Action or Inaction

11.9

Lender’s Rights

11.10

Demand

11.11

No Representations

Definitions

all items which would then be classified as liabilities on that Person’s consolidated balance sheet, or the notes thereto, including, without limitation, the Loan; and

without duplication, any item which is then to that Person:

an obligation in respect of borrowed money, or for the deferred purchase price of property or services, or an obligation which is evidenced by a note, bond, debenture or any other similar instrument;

all Hedging Obligations;

a transfer with recourse or with an obligation to repurchase, to the extent of that Person’s liability;

an obligation secured by any Lien on any of that Person’s property to the extent attributable to that Person’s respective interest in such property, even though it has not assumed or become liable for its payment;

any Capital Lease obligations;

an obligation arising in connection with bankers’ acceptances, depository bills or depository notes or under letters of credit or letters of guarantee;

contingent liabilities relating to letters of credit, letters of guarantee and similar instruments;

the aggregate amount at which any shares in that Person’s capital which are redeemable or retractable at the option of the holder of such shares (except where the holder is that Person) may be redeemed or retracted, including the Warrant Obligations; or

any other obligation arising under arrangements or agreements that, in substance, provide financing, but for greater certainty, excluding advances received from [DELETED - NAME OF ENTITY] as disclosed in the Borrower’s financial statements.

Liens granted to the Lender under the Loan Documents;

pledges, deposits and Liens under any leases, worker’s compensation laws, unemployment insurance laws or similar legislation; Liens on deposits in connection with bids, tenders and contracts (other than for the payment of debt); deposits of cash or bonds or other direct obligations of the United States, Canada or any Canadian province or Isle of Man or United Kingdom to secure costs of litigation and surety or appeal bonds or deposits as security for import duties or for the payment of rents;

Liens imposed by law, such as carriers’, warehousemen’s, mechanics’, engineers’ suppliers’ of material, labourers’, materialmens’ and other similar liens or other liens arising out of judgments or awards with respect to which an appeal or other Proceeding for review is being prosecuted (and as to which any foreclosure or other enforcement Proceeding shall have been effectively stayed);

Liens for taxes, assessments and government charges and levies not yet subject to penalties for non-payment or which are being contested in good faith and by appropriate Proceedings (and as to which foreclosure or other enforcement Proceedings shall have been effectively stayed);

Liens to public utilities or to any Governmental Authority when required by the utility or other authority in connection with the supply of services or utilities to the Borrower or other Obligors;

undetermined or inchoate Liens, arising or potentially arising under statutory provisions which have not at the time been filed or registered in accordance with Applicable Law or of which written notice has not been duly given in accordance with Applicable Law or which, although filed or registered, relate to obligations not due or delinquent;

Liens granted by an Obligor to another Obligor for Intercompany Debt and subordinated in favour of the Lender’s rights under the Security in a manner satisfactory to the Lender acting reasonably;

Liens securing Debt permitted under Section 7.3(b)(vii);

Capital Grant Liens;

Liens granted from time to time to any bank or other financial institution in respect of any guaranteed investment certificate or other similar cash collateral instrument pledged in connection with the issuance of any letter of credit or letter of guarantee permitted pursuant to Section 7.3(b)(v);

Liens that are contractual rights of set off relating to the establishment of depository relations with banks not given in connection with the issuance of Debt;

Liens securing Debt permitted under Section 7.3(b)(ix) for so long as the Lender benefits from the highest ranking Lien that Telesta may grant the Lender without breaching the terms of the Debt permitted under Section 7.3(b)(ix); and

Liens consented to by the Lender in writing;

Invalidity, etc.

Currency

Governing Law

This Agreement to Govern

English Law Designation

Loan

Loan. Subject to the terms and conditions of this Agreement, the Lender hereby agrees to make available to the Borrower a non-revolving, delayed-draw term loan in the aggregate principal amount of $80,000,000 (the “Loan”). The Loan will consist of two tranches, each of which may be advanced pursuant to multiple Advances upon satisfaction of the conditions specified in Section 8.1 (with respect to the First Tranche) and Section 8.2 (with respect to the Second Tranche). Advances hereunder will be funded in immediately available funds to the Borrower’s bank account pursuant to wire instructions provided by the Borrower to the Lender.

First Tranche. Upon satisfaction of the conditions specified in Section 8.1, the Borrower may deliver a Borrowing Notice at least 14 calendar days before the funding date specified therein requesting an Advance in respect of the First Tranche (with such advance notice requirement being waived in respect of the first Advance to the extent it is drawn within 15 calendar days following the Closing Date); provided that the Borrower may not request, and the Lender will not be obligated to advance, any amounts exceeding $10,000,000 per calendar month, and provided further that the immediately preceding proviso will not apply in respect of the first two (2) draws under the First Tranche.

Second Tranche. Upon satisfaction of the conditions specified in Section 8.2, the Borrower may deliver a Borrowing Notice at least 14 calendar days before the funding date specified therein requesting an Advance in respect of the Second Tranche; provided that the Borrower may not request, and the Lender will not be obligated to advance, any amounts exceeding $10,000,000 per calendar month.

Not Revolving

Purpose

Evidence of Obligations

Repayment/Prepayment

The full Principal Amount, together with, as applicable, all interest accrued and unpaid and any other amounts owing, shall be repaid on the Maturity Date.

The Borrower may prepay all or any portion of the Principal Amount at any time upon five Business Days’ notice to the Lender.

Manner of Payment

Application of Payments

Interest

Interest shall accrue on the Principal Amount from day to day, both before and after default, demand, maturity and judgment, at the Interest Rate and shall be calculated on the basis of the actual number of days elapsed and on the basis of a year of 365 days. Interest accrued on the Principal Amount will be compounded monthly and shall be payable in cash by the Borrower to the Lender on each Interest Payment Date beginning on March 31, 2018.

For the purposes of the Interest Act (Canada) and disclosure under such Act, wherever interest to be paid under this Agreement is to be calculated on the basis of any period of time that is less than a calendar year (a “deemed year”), such rate of interest shall be expressed as a yearly rate by multiplying such rate of interest for the deemed year by the actual number of days in the calendar year in which the rate is to be ascertained and dividing it by the number of days in the deemed year.

Each determination by the Lender of interest to be payable hereunder shall be conclusive and binding for all purposes, absent manifest mathematical error in calculating such amount.

Payment of Costs and Expenses

any actual or proposed amendment of or supplement to any of the Loan Documents or any waiver thereunder; and

the defence, establishment, protection or enforcement of any of the rights or remedies of the Lender under any of the Loan Documents;

Indemnity

Unpaid Amounts

Maximum Interest Rate

In the event that any provision of this Agreement or any other Loan Document would oblige an Obligor to make any payment of interest or any other payment which is construed by a court of competent jurisdiction to be interest in an amount or calculated at a rate which would be prohibited by Applicable Law or would result in a receipt by the Lender of interest at a criminal rate (as such terms are construed under the Criminal Code (Canada)), then notwithstanding such provision, such amount or rate shall be deemed to have been adjusted nunc pro tunc to the maximum amount or rate of interest, as the case may be, as would not be so prohibited by Applicable Law or so result in a receipt by the Lender of interest at a criminal rate, such adjustment to be effected, to the extent necessary as follows:

firstly, by reducing the Principal Amount; and

thereafter by reducing any fees, commissions, premiums and other amounts which would constitute interest for the purposes of Section 347 of the Criminal Code (Canada).

If, notwithstanding the provisions of clause (a) of this Section 3.5 and after giving effect to all adjustments contemplated thereby, the Lender shall have received an amount in excess of the maximum permitted by such clause, then such excess shall be applied by the Lender to the reduction of the Principal Amount and not to the payment of interest, or if such excessive interest exceeds the Principal Amount, such excess shall be refunded to the Borrower.

Issuance of Warrant #7

Board Rights

Subject to TSX governance rules, if at any time the Lender ceases to have, on or after the Closing Date, the representation on the Board contemplated in this paragraph, then, at the then next annual general meeting of the Borrower (or earlier, should a vacancy on the Board arise prior to such meeting) and for so long as the Lender continues to hold at least a portion of the Warrants, the Borrower shall, upon receipt of a written request from the Lender, nominate (including as part of management’s proposed slate of directors) one individual designated by the Lender for election on the Board and the Borrower agrees to use its commercially reasonable best efforts to have such individual elected, appointed or reappointed to the Board.

For so long as the Lender continues to hold at least a portion of the Warrants and does not have the representation on the Board contemplated in the previous paragraph, the Lender will be entitled to have one representative attend all meetings of the Board as an observer. For greater clarity, the Lender shall only be entitled to a total of one board member or one observer, as applicable, pursuant to this Agreement, the First Loan Agreement, the Second Loan Agreement and the Third Loan Agreement.

No director on the Board that was appointed pursuant to this Section 4.2 shall be subject to a minimum shareholding policy or similar ownership policy in connection with such individual’s status as a director on the Board, and for greater certainty such director shall be entitled to all the rights, benefits and privileges afforded Board members.

Security Pursuant to the Other Loan Agreements

a pledge by each of the Borrower, PBL and PBI governed by Ontario law in respect of all of the shares and other Equity Interests held by each of them in any Obligor and Prometic Manufacturing Inc.;

a deed of movable and immovable hypothec by each of the Borrower, PBI, PBP, PPR and Telesta governed by Quebec law in respect of all of the applicable Obligor’s Collateral;

a general security agreement by each of PPR and Telesta governed by Ontario law in respect of all of PPR’s and Telesta’s Collateral;

a security agreement by PBT and NantPro governed by New York law in respect of all of the applicable Obligor’s Collateral;

a security agreement by PPR USA governed by New York law in respect of all of the applicable Obligor’s Collateral;

a debenture by PBL governed by Isle of Man law in respect of all PBL’s Collateral;

share charge by each of the Borrower and PBI governed by Isle of Man law in respect of all of the shares held by the Borrower and PBI in PBL;

a share charge by PBI governed by the laws of England and Wales in respect of all of the shares held by PBI in Pharma SMT Holdings;

a debenture by Pharma SMT governed by the laws of England and Wales in respect of all of Pharma SMT’s Collateral;

a debenture by Pharma SMT Holdings governed by the laws of England and Wales in respect of all of Pharma SMT Holdings’ Collateral;

a debenture by PBT UK governed by the laws of England and Wales in respect of all of PBT UK’s Collateral;

a share charge by the Borrower governed by the laws of England and Wales in respect of all of the shares held by the Borrower in PBT UK; and

a general security agreement or equivalent document by each Obligor sufficient to create a valid security interest in the Collateral in each jurisdiction in which it has tangible personal property having value greater than $100,000;

Security Pursuant to this Agreement

a confirmation of security agreement (“Confirmation of Security Agreement”); and

a deed of movable and immovable hypothec by each of the Borrower, PBI, PBP, PPR and Telesta governed by Quebec law in respect of all of the applicable Obligor’s Collateral;

Security Effective Notwithstanding Date of Loan

Security Release

the Lender agrees to execute all documents and/or instruments and/or forms necessary to affect the termination, release and discharge of the Security, upon which the Obligors shall be released from their obligations under the Security Documents; and

the Security Covenants shall no longer apply to the Obligors (but all of the other terms of this Agreement will remain in full force and effect).

Further Assurances – Security

Subordination by the Lender

Representations and Warranties of the Borrower and Obligors

Status. It is duly incorporated and existing under the laws of its jurisdiction of incorporation.

Power and Capacity. It has the power and capacity to carry on its business, to own its property and assets, and to enter into and perform its Obligations under the Loan Documents to which it is a party.

Due Authorization and Execution. It has taken all necessary action to authorize the execution, delivery and performance of the Loan Documents to which it is a party and each Loan Document has been, or upon execution and delivery will be, duly executed and delivered by it.

No Contravention. The execution and delivery of each of the Loan Documents to which it is a party and the performance by it of its Obligations thereunder does not and will not contravene, breach or result in any default under its articles, bylaws or any of its other constating documents, any Material Contract to which it is a party or by which it is bound, or any Applicable Law.

No Consents Required. Other than (i) such filings as are necessary to perfect the security interests granted to the Lender under the Security Documents, and (ii) approvals or filings required with respect to Warrant #7 and the related Common Shares, no authorization, consent or approval of, or filing with or notice to, any Person (including any governmental body, the TSX or any Securities Commission) is required in connection with the making of the Loan or the execution, delivery or performance by it of any of the Loan Documents to which it is party.

Enforceability. Each of the Loan Documents to which it is a party constitutes, or upon execution and delivery will constitute, a valid and binding obligation of it enforceable against it in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws relating to or affecting creditors’ rights generally and by general principles of equity.

No Litigation. Other than as disclosed in the Borrower’s financial statements for the period ending December 31, 2016 and as may be otherwise disclosed in writing at any time to the Lender, there is not currently in progress any court, administrative, regulatory or similar investigation or Proceeding (collectively “Proceedings”), against or involving it, which if adversely determined could reasonably be expected to have a Material Adverse Effect, nor, to the knowledge of the Obligor, as applicable, has any such Proceeding been threatened against any Obligor or any other event occurred which might give rise to any such Proceedings and there is no judgment or order of any court or governmental body outstanding against it.

Real Property. Other than as disclosed in Schedule 6.1(h) (as such Schedule may be amended or supplemented from time to time by notice from the relevant Obligor to the Lender), (A) the Obligors do not own any real property and, (B) except for office space, do not lease any real property.

Location. The jurisdiction of the chief executive office and registered office and location of material tangible assets of each of the Obligors is set out in Schedule 6.1(i) (as such Schedule may be amended or supplemented from time to time by notice from the relevant Obligor to the Lender).

Ownership of Assets. The Obligors have good and marketable title to their respective assets, free and clear of all Liens except Permitted Encumbrances and such Liens which have been disclosed to the Lender.

Material Contracts. Schedule 6.1(k) (as updated from time to time by notice from the Borrower to the Lender) lists all Material Contracts and all such Material Contracts are in good standing and neither the Borrower nor (to the Borrower’s knowledge) any counterparty thereto is in default thereunder (after giving effect to any applicable cure period).

Intellectual Property. The Obligors own or license all intellectual property required to carry-on business and all such licenses are in full force and effect, except where the loss of such license could not reasonably be expected to have a Material Adverse Effect.

Labour Matters. None of the Obligors is party to a collective bargaining agreement and, except as disclosed to the Lender in writing, there has been no attempt to unionize any of the employees of any Obligor.

Budgets and Financial Projections. All Budgets and other financial projections and forecasts provided by the Borrower to the Lender were prepared in good faith and based on assumptions believed by the Borrower to be reasonable at the time of provision to the Lender.

Issued Capital. Schedule 6.1(o) accurately reflects the beneficial and registered ownership of the Obligors (other than the Borrower) as at the Closing Date. Except as set out in such Schedule, no Obligor has any other Subsidiaries or material investments or joint ventures.

Taxes. Other than as disclosed to the Lender in writing, it has paid, when due and payable, all taxes, exigible from it or for the collection of which it is responsible under the laws of Canada or any other applicable jurisdiction, in the case of taxes on income, in respect of all fiscal years ended on or prior to the Closing Date, and in the case of all other taxes, in respect of all periods ended prior to the Closing Date, for which such taxes were due and payable prior to the Closing Date.

Financial Statements and No Material Change. The financial statements of the Obligors that have been made available to the Lender have been prepared in accordance with GAAP applied on a consistent basis, and fairly present the financial position and results of operations of the Obligors for the dates or periods reported on thereby subject to, in relation to any unaudited financial statements, any year-end adjustments. From the date of the last financial statements made available to the Lender (being the unaudited financial statements for the period ended December 31, 2016), there has been no change which could reasonably be expected to have a Material Adverse Effect.

Indebtedness. It has no Debt other than as permitted pursuant to Section 7.3(b) or 7.3(c) and has no other material liabilities, other than those incurred in the ordinary course of business, and has made no guarantee or agreement of support or indemnification of any indebtedness of any Person except indebtedness of another Obligor that is permitted by Section 7.3(b) or 7.3(c).

No Default. No Default or Event of Default has occurred and is continuing or would result from the entering into of the Closing Date.

Compliance with Laws. It has operated its business in compliance with all Applicable Law in all material respects.

Disclosure. No representation or warranty by the Borrower in this Agreement and no statement contained in any public disclosure or certificate or other document furnished or to be furnished to the Lender pursuant to this Agreement contains any untrue statement of a material fact, or omits to state a material fact necessary to make the statements contained therein, in light of the circumstances in which they are made, not misleading. To the Borrower’s knowledge after reasonable inquiry, there is no “material fact” or “material change” (as those terms are defined in applicable Securities Laws) in the affairs of the Borrower that has not been generally disclosed to the public.

Reporting Issuer Status. The Borrower is a reporting issuer under the Securities Laws of all Provinces of Canada and it is in compliance with such Securities Laws and is not listed as being in default of any requirement of the Securities Laws in any such province except where non-compliance could not reasonably be expected to have a Material Adverse Effect.

Share Capital. As of the Closing Date:

the authorized capital of the Borrower consists of (aa) an unlimited number of Common Shares; and (bb) an unlimited number of preferred shares issuable in series;

710,359,636 Common Shares are issued and outstanding as fully paid and non-assessable;

the Borrower is not a party to any agreement and, to the Borrower’s knowledge, no agreement exists that in any way affects the voting rights attaching to or control of any Equity Interests of the Borrower; and

other than CDS & Co., there are no shareholders of record and, to the best of the Borrower’s knowledge, no beneficial holders of 10% or more of the Common Shares.

Warrants.

Other than the Warrants, there are no options, warrants or rights convertible into Common Shares (other than as disclosed on SEDAR) for the period ended December 31, 2016.

Subject to TSX approval in respect thereof, Warrant #7 has been duly and validly created, authorized and issued. The Common Shares to be issued to the Lender upon the exercise of Warrant #7 were, as at the Closing Date, duly and validly authorized and reserved for issuance to the Lender, and, upon the exercise of Warrant #7 in accordance with its terms, including the fulfillment of the vesting conditions, and payment in full of the exercise price, such Common Shares will be duly authorized, validly issued as fully paid and non-assessable shares in the capital of the Borrower, and the Lender will be the legal and registered owner of such Common Shares and will have good title thereto free and clear of all Liens other than Permitted Encumbrances. Warrant #7 and Common Shares will be offered, issued, sold and delivered to the Lender in compliance with all applicable Securities Laws.

Compliance with TSX Rules. The Borrower is in compliance in all material respects with the rules and regulations of the TSX.

Disclosure Controls. The Borrower maintains an effective system of “disclosure controls and procedures” (as defined in National Instrument 52-109 – Certification of Disclosure in Issuers’ Annual and Interim Filings, or in Quebec, Regulation 52-109 respecting Certification of Disclosure in Issuers’ Annual and Interim Filings (“NI 52-109”)) that is designed to provide reasonable assurance that information required to be disclosed by the Borrower in reports that it files or submits under Securities Laws is recorded, processed, summarized and reported within the time periods specified in the Securities Commissions’ rules and forms, including controls and procedures designed to ensure that such information is accumulated and communicated to the Borrower’s management as appropriate to allow timely decisions regarding required disclosure. The Borrower has carried out evaluations of the effectiveness of its disclosure controls and procedures as contemplated under NI 52-109.

Accounting Controls. The Borrower maintains systems of “internal control over financial reporting” (as defined in NI 52-109) that materially comply with the requirements of NI 52-109 and have been designed by, or under the supervision of, the Borrower’s principal executive and principal financial officers, or Persons performing similar functions, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. Since the date of the most recent balance sheet of the Borrower publicly disclosed by the Borrower, the Borrower’s auditors and the audit committee of the Board have not been advised of: (A) any significant deficiencies in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the Borrower’s ability to record, process, summarize and report financial information; and (B) any fraud, whether or not material, that involves management or other employees who have a significant role in the Borrower’s internal control over financial reporting. Except as publicly disclosed by the Borrower, to the Borrower’s knowledge after reasonable inquiry, there are no material weaknesses in the Borrower’s internal controls.

Independent Accountants. Ernst and Young LLP, which has audited the financial statements of the Borrower, is an independent registered public accounting firm with respect to the Borrower and its Subsidiaries within the applicable rules and regulations adopted by the Securities Commissions. There has not been any reportable event (within the meaning of National Instrument 51-102 – Continuous Disclosure Obligation, or in Québec, Regulation 51-102 respecting Continuous Disclosure Obligations) with Ernst and Young LLP or any former auditors of the Borrower.

No Cease Trade Orders. No order ceasing or suspending trading in securities of the Borrower or prohibiting the sale of securities by the Borrower has been issued and the Borrower has not been served with or otherwise received notice of or become aware of any Proceedings for this purpose having been instituted, or being pending, contemplated or threatened.

Trading of Warrant #7. The first trade of Warrant #7 or the Common Shares acquired upon the exercise thereof by the holder thereof will be exempt from the prospectus requirements of the Securities Laws provided that:

the Borrower is and has been a reporting issuer in a jurisdiction of Canada for at least four months immediately preceding the date of such trade;

at least four months plus one day have elapsed from the distribution date (as defined in National Instrument 45-102 – Resale of Securities, or in Quebec, Regulation 45-102 respecting Resale of Securities (“NI 45-102”)) of Warrant #6;

a certificate representing Warrant #7 was issued with a legend stating the prescribed restricted period in accordance with Section 2.5 of NI 45-102;

such trade is not a control distribution as defined in NI 45-102;

no unusual effort is made to prepare the market or to create a demand for the securities that are the subject of the trade;

no extraordinary commission or consideration is paid to a Person in respect of such trade; and

if the selling security holder is an insider or officer of the Borrower, the selling security holder has no reasonable grounds to believe that the Borrower is in default of any Securities Law.

Representations and Warranties of the Lender

Survival of Representations and Warranties

Affirmative Covenants

Punctual Payment. It shall pay or cause to be paid (i) all amounts due and payable in respect of the Loan and (ii) all other Obligations falling due hereunder on the dates and in the manner specified in this Agreement.

Purpose. It shall use the proceeds of the Loan only for the purpose provided for in Section 2.3.

Existence. It shall do or cause to be done all things necessary to maintain (i) its corporate existence (except pursuant to a transaction permitted under Sections 7.3(d) or 7.3(f)), and (ii) its corporate power and capacity to own its property and assets.

Insurance. It shall maintain insurance in such amounts and in such manner as is reasonably prudent given the nature of its business.

Compliance with Applicable Law and Contracts. It shall comply in all material respects with the requirements of all Applicable Law, and all Material Contracts to which it is a party or by which it is bound.

Notice of Default, Litigation and Other Matters. It shall, as soon as practicable after it becomes aware of the same and provided it is not prohibited from doing so under Applicable Law, give notice to the Lender of the following events:

the commencement of any Proceeding against it which could reasonably be expected to have a Material Adverse Effect;

any material change in its business or any other development which could reasonably be expected to have a Material Adverse Effect; and

or any default or event of default or demand for repayment under any Material Contract;

Intellectual Property. It shall maintain its owned and licensed intellectual property necessary for it to conduct its material business activities.

Payment of Taxes. It shall, duly and timely file all tax returns required to be filed by it, pay all taxes shown to be due and payable on such returns, and pay all assessments and re-assessments, and all other taxes, government charges, penalties, interests and fines due and payable by it and which are claimed by any Governmental Authority to be due and owing (unless being contested in good faith) and make adequate provision on its books for taxes payable for the current period for which tax returns are not yet required to be filed.

Reporting Requirements.

The Borrower shall deliver to the Lender an annual information form and the continuous disclosure documents that must be sent to its shareholders pursuant to applicable Securities Laws in the Provinces of Canada in which the Borrower is a “reporting issuer” (as such term is defined in such applicable Securities Laws) within 15 days from the date such documents are required to be filed with Securities Commissions pursuant to applicable Securities Laws.

In the event the Borrower is no longer subject to applicable Securities Laws, the Borrower shall continue to provide to the Lender, (A) within 90 days after the end of each fiscal year, copies of its annual financial statements and related management’s discussion and analysis (“MD&A”), and (B) within 45 days after the end of each of the first three fiscal quarters of each fiscal year, interim financial statements and related MD&A which shall, at a minimum, contain such information required to be provided in such documents pursuant to applicable Securities Laws in the Provinces of Canada in which the Borrower is a “reporting issuer” (as such term is defined in such applicable Securities Laws). Each of such continuous disclosure documents will be prepared in accordance with disclosure requirements of applicable Securities Laws of the Provinces of Canada in which the Borrower is a “reporting issuer” (as such term is defined in such applicable Securities Laws) and GAAP.

Within 45 days after the end of each of the first three fiscal quarters and within 90 days after the end of each fiscal year, the Borrower shall deliver or cause to be delivered to the Lender a Compliance Certificate together with summaries of financial information available to management with respect to the Borrower and the Guarantors (which shall be the same summaries as those provide to the members of the Borrower’s board of directors).

Business Plan. It shall deliver or cause to be delivered to the Lender (and consult with the Lender with respect thereto) at least 5 Business Days prior to the end of the Borrower’s fiscal year end, a revised business plan for the business and operations of the Obligors, including therein a budget for the next 12 months showing the sources and uses of cash (the “Budget”).

Securities Laws. The Borrower shall take all reasonable steps and actions and do all such acts and things as may be required to: (A) as long as it meets the applicable minimum distribution requirements, if any, of such institutions, maintain the listing and posting for trading of the Common Shares on the TSX or other recognized stock exchange, and (B) maintain its status as a reporting issuer or equivalent in good standing or equivalent under the applicable Securities Laws in at least one Province of Canada.

Change of Control Notice. The Borrower shall provide the Lender with written notice of any contemplated Change of Control at least 45 days before the consummation of such Change of Control.

Delivery of Originals. The Borrower shall deliver originally executed copies of this Agreement and Warrant #7 to the Lender within 10 Business Days of execution of this Agreement.

Payment of Expenses. The Borrower shall provide to the Lender payment in full of all of its expenses payable in connection with Section 3.2, including the reasonable fees and expenses of its counsel, within 30 calendar days of the later of the Closing Date and the date the relevant invoice for such fees is received by the Borrower.

Notice of Default. The Borrower shall promptly notify the Lender of any Default that has occurred and is continuing or Event of Default and of which any of its chief executive officer, chief financial officer, chief legal officer or chief operating officer becomes aware.

Lender Entitled to Perform Covenants

Negative Covenants

Sell Property. Sell, transfer or otherwise dispose of any asset other than (i) sales of inventory in the ordinary course of business, (ii) grants of licenses entered into in the ordinary course of business in accordance with past practice (including, for greater certainty, the License), (iii) any assets the book value (net of transaction fees) of which does not exceed, in aggregate over the term of the Loan, $500,000, or (iv) to any other Obligor.

Indebtedness. Incur, guarantee or permit to exist any Debt other than (i) the Obligations, (ii) [intentionally deleted], (iii) Intercompany Debt, (iv) Debt consisting of trade-payables and similar obligations incurred in the ordinary course of business and consistent with past practice, (v) obligations in respect of letters of guarantee or letters of credit to be provided by any Obligor to a third party in the ordinary course of business, in aggregate not exceeding a face amount of $1,500,000, (vi) Debt disclosed in the Borrower’s financial statements for the period ending December 31, 2016, (vii) other Debt not to exceed $1,000,000 principal amount in aggregate, (viii) Eligible Convertible Debt, and (ix) the Existing [DELETED – NAME OF ENTITY] Debt and other Debt of [DELETED – NAME OF ENTITY] from time to time in respect of financing provided by the Government of Canada, a provincial or municipal government within Canada, or a subdivision or agency thereof pursuant to an economic incentive or similar program.

Financial Assistance. Other than as disclosed to the Lender in writing, provide financial assistance, by means of loan, guarantees, the provision of security or otherwise, to any Person, other than (i) the Borrower or any other Obligor, provided that such loan, guarantee, provision of security or otherwise, to any Obligor is subordinated to the Lender’s rights hereunder; (ii) to PRDT or Prometic Manufacturing Inc. in the ordinary course of business in accordance with past practice; (iii) in connection with the Prothera Financing; or (iv) to any other Person(s), in an outstanding principal amount not to exceed $500,000 at any time, in the ordinary course of business.

Amalgamations, etc. Enter into any transaction (including by way of reorganization, consolidation, amalgamation, liquidation or otherwise), other than a sale, transfer, other disposition or license grant permitted pursuant to Sections 7.3(a)(i), (ii), (iii) or (iv), whereby all or any portion of its property and assets would become property of any other Person other than an Obligor.

Affiliate Transactions. Enter into any transaction with any affiliate, other than another Obligor, except on terms no less favourable to the Obligor than could be obtained in an arm’s-length transaction, and provided such exception shall not include any Debt unless subordinated to the Obligations pursuant to a Subordination Agreement.

Fundamental Changes. Without the prior written consent of the Lender, effect any change in the jurisdiction of the location of its chief executive office or registered office or any material tangible assets, other than a change in such jurisdiction to any Province of Canada or State of the United States or to the United Kingdom (a “Permitted Change”), and without prior written notice to the Lender, effect any change of name, provided that, in each case, the relevant Obligor shall have executed and delivered to the Lender, prior to or contemporaneously with any such Permitted Change or change of name, any and all agreements, instruments, financing statements (or equivalent) or other documents as the Lender may have then reasonably requested in writing and which are necessary in order to maintain the Lender’s perfected Lien over the Collateral, in each case in form and substance satisfactory to the Lender, acting reasonably, and, where applicable, substantially similar to the form and substance of the relevant Security Documents listed in Section 5.1 and delivered on or prior to the Closing Date.

Restricted Payments. Unless otherwise provided for in the Borrower’s compensation policy disclosed to the Lender, pay any dividends (in cash or in kind) or make any other distributions (in cash or in kind) to any Person, or make any payments in respect of Debt other than: (i) payment made in the ordinary course of business and consistent with past practice, and (ii) Permitted Debt Payments.

Adjusted Quick Ratio. Permit the Adjusted Quick Ratio to fall (i) below 1.0 at any time within the 2017 calendar year, and (ii) below 1.25 at any time thereafter, to be tested, in each case, quarterly with reference to the financial statements of the Borrower for the most recently ended fiscal quarter commencing with the fiscal quarter ending on March 31, 2018.

Bonuses. Unless otherwise provided for in the most current Budget delivered to the Lender pursuant to Section 7.1(j), make any change to the existing compensation arrangements for employees that would in aggregate materially increase the annual compensation expenditures without the prior written consent of the Lender, which consent shall not be unreasonably withheld or delayed.

Material Expenditures. Without the prior written consent of the Lender, make any capital expenditure or restructuring expenditure, or any other expenditure in excess of $2,000,000, other than as expressly provided for in the most recent Budget provided to the Lender pursuant to Section 7.1(j), which consent shall not be unreasonably withheld or delayed.

Negative Pledge. Without the prior written consent of the Lender, (A) create, incur, assume or suffer to exist any Lien on its present or future property or assets, except for Permitted Encumbrances, or (B) enter into an agreement with any Person restricting the ability of that Obligor to grant Liens over its present or future property or assets unless such restriction is expressly stated not to extend or apply to any Liens granted or to be granted in favour of the Lender (it being understood that the prohibition in this clause (B) will not apply to an “anti-assignment clause” in any such agreement that restricts the ability of the Borrower to make an outright transfer, assignment or disposition of its rights in respect of that agreement).

No New Subsidiaries.

Capital Grants. Take, or omit to take, any action, if the result of such action or failure to take action could reasonably be expected to result, directly or indirectly, in a Capital Grant becoming repayable.

Material Contracts. Terminate, breach or amend in a manner that would be materially prejudicial to the Lender, any Material Contract.

Conditions Precedent to the First Tranche

The Lender shall have received the following in form and substance satisfactory to the Lender:

all share certificates, transfers and stock transfer forms or equivalent duly executed by the relevant Obligor in blank in relation to the Equity Interests in the capital stock of PPR USA;

an executed copy of the Compliance Certificate for the fiscal year ending December 31, 2016;

certificates of status, good standing, or the equivalent for each Obligor;

officer’s certificates attaching the articles, bylaws and authorizing resolutions of each Obligor;

certificate of insurance acceptable to the Lender, acting reasonably, showing the Lender as a loss payee and additional insured, as applicable, on all insurance policies that insure the assets to be secured by the Security and all third party liability policies of the Obligors; and

an opinion of counsel to the Borrower acceptable to the Lender and Lender’s counsel, acting reasonably, as to matters relating to the Obligors and the entering of into the Loan Documents that are dated on or about the Closing Date.

The Borrower shall have delivered an executed copy of this Agreement, the Omnibus Amendment Agreement, the Confirmation of Security Agreement and the Security Documents referred to in Section 5.2;

Warrant #7 shall have been issued by the Borrower to the Lender and the Lender shall have received a copy of the conditional approval letter from the TSX regarding the listing of the Common Shares issuable upon the exercise of Warrant #7 in accordance with its terms, including the fulfillment of the vesting conditions.

The filings and registrations shall have been made to perfect the Liens granted pursuant to the Security Documents in all jurisdictions reasonably required by the Lender, and the Security shall constitute, subject only to Permitted Encumbrances, a first ranking charge over the Collateral of the Obligors.

The Lender shall have received payment in full of all of its expenses payable in connection with this Agreement, including the reasonable fees and expenses of its counsel.

No Default or Event of Default shall have occurred and be continuing on the date the Loan is made, and no such Default or Event of Default would result from the Loan.

The representations and warranties set forth in Section 6.1 shall be true and correct as of the Closing Date.

No material adverse information shall have become known to the Lender with respect to the Borrower or any Guarantor which is inconsistent with or was omitted from the information previously disclosed to the Lender (including by way of public disclosure).

Conditions Precedent to the Second Tranche

all conditions specified under Section 8.1 have been satisfied;

the full amount available under the First Tranche has been advanced to the Borrower;

[DELETED – DETAILS OF CONDITIONS PRECEDENT];

[DELETED – DETAILS OF CONDITIONS PRECEDENT]; and

[DELETED – DETAILS OF CONDITIONS PRECEDENT].

Events of Default

default by the Borrower in payment of any amount owing under the Loan Documents (i) on the Maturity Date, or (ii) at any other time when due if such default continues for five Business Days following a written notice thereof from the Lender;

default by the Borrower or any other Obligor in the performance or observance of any other covenant, condition or Obligation contained in any Loan Document unless such default, if capable of being remedied, is remedied within 30 days following a written notice thereof

any representation or warranty made by the Borrower or any other Obligor in any Loan Document is found to be false or incorrect in any way so as to make it materially misleading when made or deemed to have been made unless such default, if capable of being remedied, is remedied within 20 days following a written notice thereof from the Lender; provided that such 20 day cure period shall be reduced to 10 days following such written notice from the Lender if such default was known by the chief executive officer, chief financial officer, chief legal officer or chief operating officer of the relevant Obligor and was not disclosed in the most recent Compliance Certificate delivered pursuant to Section 7.1(i)(iii);

the Borrower or any other Obligor admits its inability to pay its debts generally as they become due or otherwise acknowledges its insolvency;

the Borrower or any other Obligor institutes any Proceeding, or any Proceeding is commenced against or involving the Borrower:

seeking to adjudicate it as bankrupt or insolvent;

seeking liquidation, dissolution, winding up, reorganization, arrangement, protection or relief of it or any of its properties or assets or debts or making a proposal with respect to it under any law relating to bankruptcy, insolvency, compromise of debts or other similar laws; or

seeking appointment of a receiver, trustee in bankruptcy, agent, custodian or other similar official for it or for any material part of its properties and assets;

any execution, seizure, distress or other enforcement process, whether by court order or otherwise, becomes enforceable against any Collateral or any other property or asset of the Borrower in excess of $1,000,000 and such execution, seizure, distress or other enforcement process is not stayed within 60 days of notice or such other delays provided for under Applicable Law or any notice therefore;

any final judgment for the payment of monies in excess of $1,000,000 is rendered against the Borrower and such judgment is not discharged, or stayed pending appeal, within 30 days from the imposition of such judgment;

there shall occur, or fail to occur any event which, either singly or in the aggregate, could reasonably be expected to have a Material Adverse Effect;

a Change of Control of the Borrower shall have occurred without the consent of the Lender and compliance with Section 7.1(l) (unless waived by the Lender under any such consent);

any Capital Grant becomes repayable unless any such repayment is a Permitted Debt Payment;

the Borrower defaults in the payment when due of any amount in respect of any Debt the outstanding principal amount of which is $1,000,000 or more, or defaults in any other manner in respect of such Debt and as a result of which default, such Debt is accelerated;

the Borrower ceases to be a reporting issuer in at least one Province of Canada or ceases to be listed on, or ceases to be in compliance in all material respects with the listing requirements of, the TSX; or

the Borrower defaults in the issuance and delivery to the Lender, in accordance with the vesting conditions of Warrant #7, of Common Shares under, or any cash payable upon exercise of, Warrant #7, which default continues for three Business Days.

Remedies Upon Default

If any Event of Default shall occur and be continuing, all Obligations owing by the Borrower under the Loan Documents shall, at the option of the Lender, become immediately due and payable on the date of written demand therefor, to the date of actual payment thereof; provided, if the Event of Default described in Section 9.1(e) with respect to the Borrower shall occur, the Obligations shall automatically accelerate and the Principal Amount and all other Obligations shall automatically be and become immediately due and payable, all without notice, presentment, protest, demand, notice of dishonor or any other demand or notice whatsoever, all of which are hereby expressly waived by each Obligor. In such event the Lender may, in its discretion, exercise any right or recourse and/or proceed by any action, suit, remedy or Proceeding against any Obligor authorized or permitted by law for the recovery of all the Obligations of the Borrower to the Lender and proceed to exercise any and all rights hereunder and under the Security and no such remedy for the enforcement for the rights of the Lender shall be exclusive of or dependent on any other remedy but any one or more of such remedies may from time to time be exercised independently or in combination.

Upon the occurrence of any Event of Default and the acceleration of the Obligations as described in Section 9.2(a), the Lender may at its sole option:

realize upon all or any part of the Collateral, pursuant to the Security Documents; and

take such actions and commence such Proceedings as may be permitted at law or in equity (whether or not provided for herein or in the Loan Documents) at such times and in such manner as the Lender in its sole discretion may consider expedient,

Specific Performance

Set-Off/Cancellation of Principal

Distributions

Non-Disparagement

Amendment and Waiver

Notices

Any notice or other communication required or permitted to be given to the Obligors hereunder shall be in writing and shall be given by facsimile or email, other electronic means or by hand-delivery as hereinafter provided. Any such notice, if sent by facsimile or email, shall be deemed to have been received on the Business Day after the day of sending, or if delivered by hand shall be deemed to have been received at the time it is delivered to the applicable address noted below. Notice of change of address shall also be governed by this Section. Notices and other communications to the Obligors shall be addressed as follows:

Any notice or other communication required or permitted to be given to the Lender hereunder shall be in writing and shall be given by facsimile or email, other electronic means or by hand-delivery as hereinafter provided. Any such notice, if sent by facsimile or email , shall be deemed to have been received on the Business Day after the day of sending, or if delivered by hand shall be deemed to have been received at the time it is delivered to the applicable address noted below. Notice of change of address shall also be governed by this Section. Notices and other communications to the Lender shall be addressed as follows:

Further Assurances

Assignment

Counterparts

Entire Agreement

Termination

Guarantee

Indemnity

Payment and Performance

If the Borrower fails or refuses to punctually make any payment or perform the Guaranteed Obligations, each Guarantor shall unconditionally render any such payment or performance upon demand in accordance with the terms of the Guarantee.

Nothing but payment and satisfaction in full of the Guaranteed Obligations shall release the Guarantors from their obligations under the Guarantee.

Continuing Obligation

whether any other Person or Persons (an “Additional Guarantor”) becomes in any other way responsible to the Lender for, or in respect of all or any part of the Guaranteed Obligations;

whether any such Additional Guarantor ceases to be so liable;

the enforceability, validity, perfection or effect of perfection or non-perfection of any security interest securing the Guaranteed Obligations, or the validity or enforceability of any of the Guaranteed Obligations; or

whether any payment of any of the Guaranteed Obligations has been made and where such payment is rescinded or must otherwise be returned upon the occurrence of any action or event, including the insolvency or bankruptcy of the Borrower or otherwise, all as though such payment had not been made.

Guarantee Unaffected

Waivers

any defence based upon:

the unenforceability or invalidity of all or any part of the Guaranteed Obligations, or any security or other guarantee for the Guaranteed Obligations or any failure of the Lender to take proper care or act in a commercially reasonable manner in respect of any security for the Guaranteed Obligations or any Collateral subject to the Security, including in respect of any disposition of the Collateral or any set-off against the Guaranteed Obligations;

any act or omission of the Borrower or any other Person, including the Lender, that directly or indirectly results in the discharge or release of the Borrower or any other Person or any of the Guaranteed Obligations or any security for the Guaranteed Obligations; or

the Lender’s present or future method of dealing with the Borrower, any Additional Guarantor or any security (or any Collateral subject to the Security) or other guarantee for the Guaranteed Obligations;

any right (whether now or hereafter existing) to require the Lender, as a condition to the enforcement of the Guarantee:

to accelerate any of the Guaranteed Obligations or proceed and exhaust any recourse against the Borrower or any other Person;

to realize on any security that it holds;

to ▇▇▇▇▇▇▇▇ the assets of a Guarantor or the Borrower; or

to pursue any other remedy that a Guarantor may not be able to pursue itself and that might limit or reduce such Guarantor’s burden;

presentment, demand, protest and notice of any kind including, without limitation, notices of default and notice of acceptance of the Guarantee;

all suretyship defences and rights of every nature otherwise available under Ontario law and other Applicable Law;

any rights of subrogation or indemnification which it may have, until the Obligations of the Borrower and each other Guarantor under the Loan Documents have been paid in full; and

all other rights and defences (legal or equitable) the assertion or exercise of which would in any way diminish the liability of the Guarantors under the Guarantee.

Lender’s Right to Act

grant time, renewals, extensions, indulgences, releases and discharges to the Borrower;

take new or additional Security (including, without limitation, other guarantees) from the Borrower;

discharge or partially discharge any or all Security;

elect not to take Security from the Borrower or not to perfect Security;

cease or refrain from, or continue to, give credit or make loans or advances to the Borrower;

accept partial payment or performance from the Borrower or otherwise waive compliance by the Borrower with the terms of any of the documents or Security;

assign any such document or Security to any Person or Persons;

deal or dispose in any manner (whether commercially reasonably or not) with any Security (or any Collateral subject to the Security) or other guarantee for the Guaranteed Obligations; or

apply all dividends, compositions and moneys at any time received from any Obligor or others or from the security upon such part of the Guaranteed Obligations.

Action or Inaction

Lender’s Rights

Demand

No Representations

Name:

Title:

Name:

Title:

Name:

Title:

Structured Alpha LP, as lender (the “Lender”)