SUBORDINATION AGREEMENT

Exhibit 10.3

Execution Version

This SUBORDINATION AGREEMENT (this “Agreement”), dated as of February 8, 2021, is entered into by and among (i) AYTU BIOSCIENCE, INC., a Delaware corporation (“Subordinated Lender”), (ii) NEOS THERAPEUTICS, INC., a Delaware corporation (“Borrower”), and (iii) DEERFIELD PRIVATE DESIGN FUND III, L.P. and DEERFIELD PARTNERS, L.P. (each, a “Lender” and, collectively, the “Lenders”, and, together with any other institutions or other entities from time to time parties to the Facility Agreement (as hereinafter defined) as Lenders, the “Senior Lenders”).

RECITALS

A. Borrower and Lenders have entered into a Facility Agreement, dated as of May 11, 2016 (as the same has been amended prior to the date hereof and as the same may be further amended, restated, supplemented or otherwise modified from time to time hereafter, the “Facility Agreement”) pursuant to which, among other things, Lenders agreed, subject to the terms and conditions set forth in the Facility Agreement, to make certain loans and financial accommodations to Borrower.

B. All of Borrower’s obligations to Senior Lenders under the Facility Agreement and the other Senior Loan Documents (as hereinafter defined) are secured by liens on and security interests in the Collateral (as defined in the Facility Agreement).

C. On the date hereof, Borrower has issued to Subordinated Lender that certain Unsecured Convertible Promissory Note in the aggregate principal amount of up to $5,000,000 (the “Subordinated Note”).

D. As an inducement to and as one of the conditions precedent to the agreement of Senior Lenders to consent to the transactions contemplated by the Subordinated Loan Documents (as hereinafter defined), Lenders have required the execution and delivery of this Agreement by Subordinated Lender and Borrower in order to set forth the relative rights and priorities of Senior Lenders and Subordinated Lender under the Senior Loan Documents and the Subordinated Loan Documents (as hereinafter defined).

AGREEMENT

NOW, THEREFORE, in order to induce the Lenders to consent to the transactions contemplated by the Subordinated Loan Documents, and for other good and valuable consideration, the receipt and sufficiency of which hereby are acknowledged, the parties hereto hereby covenant and agree as follows:

1. Definitions. All capitalized terms used but not defined herein shall have the respective meanings ascribed thereto in the Facility Agreement. In addition, the following terms shall have the following meanings in this Agreement:

“Agreement” shall have the meaning ascribed thereto in the preamble hereof.

“Bankruptcy Code” shall mean Title 11 of the United States Code, as amended from time to time, and any successor statute and all rules and regulations promulgated thereunder.

“Borrower” shall have the meaning ascribed thereto in the preamble hereof.

“Distribution” shall mean, with respect to any indebtedness or other obligation, (a) any payment or distribution by any Person of cash or other property, by set-off or otherwise, on account of such indebtedness or obligation, including, without limitation, at maturity of such indebtedness, (b) any redemption, purchase or other acquisition of such indebtedness or obligation by any Person, or (c) the granting of any lien or security interest to or for the benefit of the holders of such indebtedness or obligation in or upon any property of any Person.

“Enforcement Action” shall mean (a) to take from or for the account of Borrower or any guarantor of the Subordinated Loan(s), by set-off or in any other manner, the whole or any part of any moneys which may now or hereafter be owing by Borrower or any such guarantor with respect to the Subordinated Loan (other than as expressly provided in Section 2.1 below); (b) to xxx for payment of, or to initiate or participate with others in any suit, action or proceeding against Borrower or any such guarantor, including, without limitation, commencement of an involuntary proceeding against Borrower under the Bankruptcy Code, to (i) enforce payment of or to collect the whole or any part of the Subordinated Loan (which shall include, for the avoidance of doubt, any demand or collection of payment at maturity), or (ii) commence judicial enforcement of any of the rights and remedies under the Subordinated Loan Documents or applicable law with respect to the Subordinated Loan; (c) to accelerate the Subordinated Loan(s); (d) to exercise any put option or to cause Borrower or any such guarantor to honor any redemption or mandatory prepayment obligation under any Subordinated Loan Document; or (e) to take any action under the provisions of any state or federal law, including, without limitation, the Uniform Commercial Code, or under any contract or agreement, to enforce, foreclose upon, take possession of or sell any property or assets of Borrower or any such guarantor, including the Collateral.

“Facility Agreement” shall have the meaning ascribed thereto Recital A.

“Lender” and “Lenders” shall have the meanings ascribed thereto in the preamble hereof.

“Paid in Full” or “Payment in Full” shall mean, with respect to the Senior Loans, the date of the full payment in cash and satisfaction in full of all of the obligations under the Senior Loan Documents (other than inchoate indemnity obligations for which a claim has not yet been made and any other obligations which, by their terms survive the termination of the Senior Loan Documents), and the termination of all obligations of Senior Lenders under the Senior Loan Documents (including, without limitation, any commitment to lend), and the termination of the Senior Loan Documents.

“Person” shall mean any natural person, corporation, general or limited partnership, limited liability company, firm, trust, association, government, governmental agency or other entity, whether acting in an individual, fiduciary or other capacity.

“Proceeding” shall mean any voluntary or involuntary insolvency, bankruptcy, receivership, custodianship, liquidation, dissolution, reorganization, assignment for the benefit of creditors, appointment of a custodian, receiver, trustee or other officer with similar powers or any other proceeding for the liquidation, dissolution or other winding up of a Person.

“Senior Lenders” shall have the meaning ascribed thereto in the preamble hereof.

“Senior Loan(s)” shall mean all obligations, liabilities and indebtedness of every nature of Borrower from time to time owed to Senior Lenders under the Facility Agreement and the other Senior Loan Documents, whether now existing or hereafter created, whether primary, secondary, direct, contingent, fixed or otherwise, heretofore, now and from time to time hereafter owing, due or payable, whether before or after the filing of a Proceeding under the Bankruptcy Code, together with (a) any amendments, modifications, renewals, refinancings, replacements or extensions thereof, and (b) any interest

accruing thereon after the commencement of a Proceeding, without regard to whether or not such interest, fees, costs or expenses are an allowed claims in any such Proceeding.

“Senior Loan Documents” shall mean the Facility Agreement, and all promissory notes or other instruments evidencing the Senior Loan or the obligation to pay the Senior Loan, any guaranties with respect to the Senior Loan, any security agreement or other collateral document securing the Senior Loan and all other documents, agreements and instruments now existing or hereafter entered into evidencing or pertaining to all or any portion of the Senior Loan.

“Subordinated Lender” shall have the meaning ascribed thereto in the preamble to this Agreement.

“Subordinated Loan(s)” shall mean all obligations, liabilities and indebtedness of every nature of Borrower from time to time owed to Subordinated Lender pursuant to the Subordinated Loan Documents, whether now existing or hereafter created, whether primary, secondary, direct, contingent, fixed or otherwise, heretofore, now and from time to time hereafter owing, due or payable, whether before or after the filing of a Proceeding under the Bankruptcy Code together with any amendments, modifications, renewals or extensions thereof.

“Subordinated Loan Documents” shall mean the Subordinated Note, any other agreement, promissory note or other instrument evidencing the Subordinated Loan, any guaranty with respect to the Subordinated Loan, any security agreement or other collateral document securing the Subordinated Loan and all other documents, agreements and instruments now existing or hereafter entered into evidencing or pertaining to all or any portion of the Subordinated Loan.

“Subordinated Note” shall have the meaning ascribed thereto in Recital C.

2. Subordination.

2.1. Subordination of Subordinated Loans to Senior Loans. Borrower covenants and agrees, and Subordinated Lender likewise covenants and agrees that, notwithstanding anything to the contrary contained in any of the Subordinated Loan Documents, the payment of any and all of the Subordinated Loans shall be subordinate and subject in right and time of payment, to the extent and in the manner hereinafter set forth, to the Payment in Full of all Senior Loans. Each holder of the Senior Loans, whether now outstanding or hereafter created, incurred, assumed or guaranteed, shall be deemed to have consented to the Subordinated Loans in reliance upon the provisions contained in this Agreement. Until the Senior Loans have been Paid in Full, Borrower shall not make, and Subordinated Lenders shall not accept, any Distribution on account of any Subordinated Loan, other than (i) regularly scheduled payments of capitalized payments-in-kind of accrued interest (but not, for the sake of clarity, any payments in cash) on the Subordinated Loan due and payable on a non-accelerated basis, (ii) payments effected through conversion of indebtedness under the Subordinated Loan to common stock of Borrower (or other qualified capital stock (on terms and conditions reasonably satisfactory to Senior Lenders) of Borrower) and (iii) payments effected through conversion of the indebtedness under the Subordinated Loan to other indebtedness so long as, to the extent Borrower is an obligor thereunder, such convertible indebtedness is subject to a subordination agreement on the same terms and conditions of this Agreement and otherwise satisfactory to Senior Lenders. Subordinated Lender expressly acknowledges and agrees that if Borrower’s failure to make any payments due and payable to the Subordinated Lender under the Subordinated Loan Documents is due solely to this Agreement prohibiting any such payments, such failure shall not constitute a default or event of default under the Subordinated Loan Documents.

2.2. Subordinated Loan Standstill. Until the Senior Loans are Paid in Full, Subordinated Lender shall not, without the prior written consent of Senior Lenders, take any Enforcement Action with respect to the Subordinated Loans.

2.3. Incorrect Payments. If any Distribution on account of the Subordinated Loan not permitted to be made by Borrower or accepted by Subordinated Lender under this Agreement is made to and received by Subordinated Lender, such Distribution shall not be commingled with any of the assets of Subordinated Lender, shall be held in trust by Subordinated Lender for the benefit of Senior Lenders and shall be promptly paid over to the Senior Lenders for application in accordance with the Senior Loan Documents to the payment of the Senior Loans then remaining unpaid, until all of the Senior Loans are Paid in Full.

2.4. Subordination of Liens and Security Interests; Agreement Not to Contest; Agreement to Release any Liens. Subordinated Lender hereby acknowledges, agrees, represents and warrants that none of the Subordinated Loans nor any portion thereof is as of the date hereof, or at any time in the future shall be, secured by any lien or security interest in any of the Collateral, the equity interests in Borrower or any other asset of Borrower, or guaranteed by any Person. Without limiting the foregoing, until the Senior Loans have been Paid in Full, all liens and security interests of Subordinated Lender in the Collateral, if any, shall be and hereby are subordinated for all purposes and in all respects to the liens and security interests of Senior Lenders in the Collateral, regardless of the time, manner or order of perfection of any such liens and security interests and regardless of any failure, whether intervening or continuing, of Senior Lenders’ liens and security interests to be perfected; provided, however, that each of the parties hereto acknowledges and agrees that the existence of any lien or security interest of Subordinated Lender would constitute an automatic and immediate Event of Default under the Facility Agreement and a breach of this Agreement. Subordinated Lender agrees that it will not at any time contest the validity, perfection, priority or enforceability of the Senior Loans, the Senior Loan Documents, or the liens and security interests of Senior Lenders in the Collateral securing the Senior Loans. In the event that any lien or security interest arises in favor of Subordinated Lender, immediately upon Senior Lenders’ request, Subordinated Lender shall or shall cause its agent to promptly execute and deliver to Senior Lenders such termination statements and releases as Senior Lenders shall reasonably request to effect the release of the liens and security interests of Subordinated Lender in any such Collateral.

2.5. Sale, Transfer or other Disposition of Subordinated Loan. The Subordinated Lender shall not sell, assign, pledge, dispose of or otherwise transfer all or any portion of the Subordinated Loans or any Subordinated Loan Document without the prior written consent of the Senior Lenders. Without limiting the foregoing, if any such sale, assignment, pledge, disposition or other transfer is made in contravention of this Agreement, the subordination effected hereby shall survive such sale, assignment, pledge, disposition or other transfer of all or any portion of the Subordinated Loans, and the terms of this Agreement shall be binding upon the successors and assigns of the Subordinated Lender.

2.6. Legends. Until the termination of this Agreement in accordance with Section 8 hereof, Subordinated Lender will cause to be clearly, conspicuously and prominently inserted on the face of each Subordinated Loan Document, the following legend:

“THIS INSTRUMENT OR OTHER AGREEMENT AND THE INDEBTEDNESS, RIGHTS AND OBLIGATIONS EVIDENCED HEREBY ARE SUBORDINATE IN THE MANNER AND TO THE EXTENT SET FORTH IN THAT CERTAIN SUBORDINATION AGREEMENT, DATED AS OF FEBRUARY 8, 2021 (AS AMENDED, RESTATED, SUPPLEMENTED OR MODIFIED FROM TIME TO

TIME, THE “SUBORDINATION AGREEMENT”), BY AND AMONG (I) NEOS THERAPEUTICS, INC. (THE “COMPANY”), (II) THE SUBORDINATED LENDER IDENTIFIED THEREIN, AND (III) DEERFIELD PRIVATE DESIGN FUND III, L.P. AND DEERFIELD PARTNERS, L.P., AND THEIR RESPECTIVE SUCCESSORS AND ASSIGNS (THE “SENIOR LENDERS”), TO CERTAIN INDEBTEDNESS, RIGHTS AND OBLIGATIONS OF OBLIGORS TO THE SENIOR LENDERS, AND ALL LIENS AND SECURITY INTERESTS OF SENIOR LENDER SECURING THE SAME, ALL AS DESCRIBED IN THE SUBORDINATION AGREEMENT, AND EACH HOLDER AND TRANSFEREE OF THIS INSTRUMENT OR AGREEMENT, BY ITS ACCEPTANCE HEREOF, IRREVOCABLY AGREES TO BE BOUND BY THE PROVISIONS OF THE SUBORDINATION AGREEMENT.”

2.7. Liquidation, Dissolution, Bankruptcy. In the event of any Proceeding involving Borrower:

(a) Any Distribution, whether in cash, securities or other property, that would otherwise, but for the terms hereof, be payable or deliverable in respect of the Subordinated Loan, shall be paid or delivered directly to the Senior Lenders (to be held and/or applied by Senior Lenders in accordance with the terms of the Senior Loan Documents) until all of the Senior Loans are Paid in Full. Subordinated Lender irrevocably authorizes, empowers and directs any debtor, debtor in possession, receiver, trustee, liquidator, custodian, conservator or other Person having authority, to pay or otherwise deliver all such Distributions to Senior Lenders. Subordinated Lender also irrevocably authorizes and empowers Senior Lenders, in the name of Subordinated Lender, to demand, xxx for, collect and receive any and all such Distributions.

(b) Subordinated Lender agrees that Senior Lenders may consent to the use of cash collateral or provide financing to the Borrower on such terms and conditions and in such amounts as Senior Lenders, in their sole discretion, may decide and, in connection therewith, the Borrower may grant to Senior Lenders liens and security interests upon all of the property of Borrower, which liens and security interests (i) shall secure payment of the Senior Loans (whether such Senior Loans arose prior to the commencement of any Proceeding or at any time thereafter) and all other financing provided by Senior Lenders during the Proceeding, and (ii) shall be superior in priority to the liens and security interests, if any, in favor of Subordinated Lender on the property of Borrower. Subordinated Lender agrees that it will not object to or oppose a sale or other disposition of any property securing all of any part of the Senior Loans free and clear of security interests, liens or other claims of Subordinated Lender under Section 363 of the Bankruptcy Code or any other provision of the Bankruptcy Code if Senior Lenders have consented to such sale or disposition. Subordinated Lender agrees not to assert any right it may have to “adequate protection” of Subordinated Lender’s interest in any Collateral in any Proceeding. Subordinated Lender waives any claim it may now or hereafter have arising out of Senior Lenders’ election, in any Proceeding instituted under the Bankruptcy Code, of the application of Section 1111(b)(2) of the Bankruptcy Code, and/or any borrowing or grant of a security interest under Section 364 of the Bankruptcy Code by the Borrower, as debtor in possession. Subordinated Lender further agrees that it will not seek to participate or participate on any creditors’ committee of the Borrower without Senior Lenders’ prior written consent.

of claim in respect of the Subordinated Loans requested by Senior Lenders in connection with any such Proceeding and hereby irrevocably authorizes, empowers and appoints Senior Lenders as its agent and attorney-in fact to (i) execute, verify, deliver and file such proofs of claim upon the failure of Subordinated Lender promptly to do so prior to thirty (30) days before the expiration of the time to file any such proof of claim, and (ii) vote such claim in any such Proceeding upon the failure of Subordinated Lender to do so prior to fifteen (15) days before the expiration of the time to vote any such claim; provided, however, that Senior Lenders shall have no obligation to execute, verify, deliver, file and/or vote any such proof of claim. In the event that Senior Lenders vote any claim in accordance with the authority granted hereby, Subordinated Lender shall not be entitled to change or withdraw such vote. Subordinated Lender hereby assigns to Senior Lenders or their nominee (and will, upon request of Senior Lenders, reconfirm in writing the assignment to Senior Lenders or its nominee of) all of its rights under such claims.

(d) The Senior Loans shall continue to be treated as the Senior Loans and the provisions of this Agreement shall continue to govern the relative rights and priorities of Senior Lenders and Subordinated Lender even if all or part of the Senior Loans or the security interests securing the Senior Loans are subordinated, set aside, avoided, invalidated or disallowed in connection with any such Proceeding, and this Agreement shall be reinstated if at any time any payment of any of the Senior Loans is rescinded or must otherwise be returned by any holder of the Senior Loans or any representative of such holder.

3. Modifications.

3.1. Modifications to Senior Loan Documents. Senior Lenders may at any time and from time to time without the consent of Subordinated Lenders, without providing any notice to the Senior Lenders, without incurring liability to Subordinated Lenders and without impairing or releasing the obligations of Subordinated Lender under this Agreement, change the manner or place of payment or alter any of the terms of the Senior Loans, or amend in any manner any agreement, note, guaranty or other instrument evidencing or securing or otherwise relating to the Senior Loans.

3.2. Modifications to Subordinated Loan Documents; Maximum Principal Amount of Subordinated Loan. Until the Senior Loans have been Paid in Full, and notwithstanding anything to the contrary contained in the Subordinated Loan Documents, Subordinated Lender shall not, without the prior written consent of the Senior Lenders, agree to any amendment, modification or supplement to the Subordinated Loan Documents other than, so long as a copy is provided to Senior Lenders, an amendment for the sole purpose of extending the maturity date of the Subordinated Loans. Nothing herein, including the provisions of this Agreement pertaining to subordination of liens on the Collateral, shall be construed to imply Senior Lenders’ consent to any Subordinated Loan Document which grants a lien upon any of the Collateral or the making of any other loans or other advances by Subordinated Lender.

4. Waiver of Certain Rights by Subordinated Lender.

4.1. Marshaling. Subordinated Lender hereby waives any rights it may have under applicable law to assert the doctrine of marshaling or to otherwise require Senior Lenders to marshal any property of Borrower or any other guarantor of the Senior Loans for the benefit of Subordinated Lender.

4.2. Rights Relating to Senior Lenders’ Actions with respect to the Collateral.

Subordinated Lender hereby waives, to the extent permitted by applicable law, any rights which it may have to enjoin or otherwise obtain a judicial or administrative order preventing any Senior Lender from taking, or refraining from taking, any action with respect to all or any part of the Collateral. Without limitation of the foregoing, Subordinated Lender hereby agrees (a) that it has no right to direct or object to the manner in which Senior Lender enforces its rights and remedies with respect to, or applies the proceeds of the Collateral resulting from the exercise by any Senior Lender of rights and remedies under the Senior Loan Documents to the Senior Loans, and (b) that no Senior Lender has assumed any obligation to act as the agent for Subordinated Lender with respect to the Collateral.

4.3. Rights Relating to Disclosures. Subordinated Lender hereby agrees that Senior Lenders have not assumed any obligation or duty to disclose information regarding Borrower or the Senior Loans to Subordinated Lender, and Senior Lenders shall not have a special or fiduciary relationship to Subordinated Lender. Subordinated Lender hereby fully waives and releases Senior Lenders from any affirmative disclosures which may be required of Senior Lenders under applicable law.

5. Construction. The terms of this Agreement were negotiated among business persons sophisticated in the area of business finance, and accordingly, in construing the terms of this Agreement, no rule or law which would require that this instrument be construed against the party who drafted this instrument shall be given any force or effect.

6. Modification of this Agreement. No modification or waiver of any provision of this Agreement, or consent to any departure by any party from the terms hereof, shall be effective in any event unless the same is in writing and signed by Senior Lenders or such other holder of the Senior Loans and Subordinated Lender or such other holder of the Subordinated Loans, and then such modification, waiver or consent shall be effective only in the specific instance and for the specific purpose given. Any notice to or demand on any party hereto in any event not specifically required hereunder shall not entitle the party receiving such notice or demand to any other or further notice or demand in the same, similar or other circumstances unless specifically required hereunder.

7. Further Assurances. Each party to this Agreement promptly will execute and deliver such further instruments and agreements and do such further acts and things as may be reasonably requested in writing by any other party hereto that may be necessary or desirable in order to effect fully the purposes of this Agreement.

8. Continuing Agreement. This is a continuing agreement and will remain in full force and effect until all of the obligations under the Senior Loan Documents have been Paid in Full after which this Agreement shall terminate without further action on the part of the parties hereto; provided, that if any payment is, subsequent to such termination, recovered from any holder of Senior Loans, this Agreement shall be reinstated. This Agreement will continue to be effective or will be reinstated, as the case may be, if at any time payment of all or any part of the Senior Loan Documents or the obligations thereunder is rescinded or must otherwise be returned by Senior Lenders upon insolvency, bankruptcy, or reorganization of any Obligor or otherwise, all as though such payment had not been made.

9. Notices. Any notice, request or other communication to be given or made under this Agreement shall be in writing. Such notice, request or other communication shall be deemed to have been duly given or made when it shall be delivered by hand, overnight mail, international courier (confirmed by facsimile), electronic mail or facsimile to the party to which it is required or permitted to be given or made at such party’s address specified below or at such other address as such party shall have designated by notice to the other parties:

If to Senior Lenders at:

Deerfield Management Company, L.P.

000 Xxxxx Xxxxxx, 00^xx Xxxxx

Xxx Xxxx, XX 00000

Attn: Xxxxx X. Xxxxx

Email: xxxxxx@xxxxxxxxx.xxx

If to Borrower, at:

Neos Therapeutics, Inc.

0000 X. Xxx 000, Xxxxx 000

Xxxxx Xxxxxxx, XX 00000

E-mail: xxxxxxxxxxx@xxxxxx.xxx

Attention: Xxxxxxx Xxxxxxxxxx

If to Subordinated Lender, at:

Aytu Bioscience, Inc.

000 Xxxxxxxxx Xxxxxxx, Xxxxx 000

Xxxxxxxxx, XX 00000

Email: xxxx.xxxxxxx@xxxxxxx.xxx

Attention: Xxxx Xxxxxxx

If mailed, notice shall be deemed to be given five (5) days after being sent, and if sent by personal delivery, email or prepaid courier, notice shall be deemed to be given when delivered.

10. Successors and Assigns. This Agreement shall inure to the benefit of, and shall be binding upon, the respective successors and assigns of Senior Lenders, Subordinated Lender and Borrower; provided, however, that neither Subordinated Lender nor Borrower may assign this Agreement in whole or in part without the prior written consent of Senior Lenders or as permitted by Section 2.5. Senior Lenders may, from time to time, without notice to Subordinated Lender, assign or transfer any or all of the Senior Loans or any interest therein to any Person and, notwithstanding any such assignment or transfer, or any subsequent assignment or transfer, the Senior Loans shall, subject to the terms hereof, be and remain the Senior Loans for purposes of this Agreement, and every permitted assignee or transferee of any of the Senior Loans or of any interest therein shall, to the extent of the interest of such permitted assignee or transferee in the Senior Loans, be entitled to rely upon the subordination provided under this Agreement and shall be entitled to enforce the terms and provisions hereof to the same extent as if such assignee or transferee were initially a party hereto.

11. No Waiver or Novation. No waiver shall be deemed to have been made by any party to this Agreement of any of its rights under this Agreement unless the same shall be in writing and duly signed by its duly authorized officers, and each waiver, if any, shall be a waiver only with respect to the specific instance involved and shall in no way impair the rights of any party to this Agreement in any other respect at any time. No executory agreement shall be effective to change, modify or to discharge, in whole or in part, this Agreement, unless such executory agreement is in writing and duly signed by the duly authorized officers of each party to this Agreement.

12. APPLICABLE LAW; CONSENT TO JURISDICTION.

12.1. As part of the consideration and mutual promises being exchanged and given in

connection with this Agreement, the parties hereto agree that all claims, controversies and disputes of any kind or nature arising under or relating in any way to the enforcement or interpretation of this Agreement or to the parties’ dealings, rights or obligations in connection herewith, including disputes relating to the negotiations for, inducements to enter into, or execution of, this Agreement, and disputes concerning the interpretation, enforceability, performance, breach, termination or validity of all or any portion of this Agreement shall be governed by the laws of the State of New York without giving effect to any laws, rules or provisions that would cause the application of the laws of any jurisdiction other than the State of New York.

12.2. The parties hereto agree that all claims, controversies and disputes of any kind or nature relating in any way to the enforcement or interpretation of this Agreement or to the parties’ dealings, rights or obligations in connection herewith, shall be brought exclusively in the state and federal courts sitting in The City of New York, borough of Manhattan. With respect to any such claims, controversies or disputes, each of the Parties hereby irrevocably:

12.2.1. submits itself and its property, generally and unconditionally, to the personal jurisdiction of the aforesaid courts and agrees that it will not bring any action in any court or tribunal other than the aforesaid courts;

12.2.2. waives, and agrees not to assert, by way of motion, as a defense, counterclaim or otherwise, in any action or proceeding (A) any claim that it is not personally subject to the jurisdiction of the above named courts for any reason other than the failure to serve process in accordance with this Section 12, (B) any claim that it or its property is exempt or immune from jurisdiction of any such court or from any legal process commenced in such courts (whether through service of notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise) and (C) to the fullest extent permitted by the applicable law, any claim that (1) the suit, action or proceeding in such court is brought in an inconvenient forum, (2) the venue of such suit, action or proceeding is improper or (3) this Agreement, or the subject matter hereof, may not be enforced in or by such courts; and

12.2.3. WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY DISPUTE ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY TO THIS AGREEMENT CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT SEEK TO ENFORCE THE FOREGOING WAIVER IN THE EVENT OF A LEGAL ACTION, (B) SUCH PARTY HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (C) SUCH PARTY MAKES THIS WAIVER VOLUNTARILY AND (D) SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 12.

13. Miscellaneous.

13.1. Conflict. In the event of any conflict between any term, covenant or condition of this Agreement and any term, covenant or condition of any of the Subordinated Loan Documents, the provisions of this Agreement shall control and govern.

13.2. Headings. The paragraph headings used in this Agreement are for convenience

only and shall not affect the interpretation of any of the provisions hereof.

13.3. Counterparts. This Agreement and any amendment hereto may be executed and delivered in any number of counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original, but all of which taken together shall constitute one and the same agreement. In the event that any signature to this Agreement or any amendment hereto is delivered by facsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature page were an original thereof. No party hereto shall raise the use of a facsimile machine or e-mail delivery of a “.pdf” format data file to deliver a signature to this Agreement or any amendment hereto or the fact that such signature was transmitted or communicated through the use of a facsimile machine or e-mail delivery of a “.pdf” format data file as a defense to the formation or enforceability of a contract, and each party hereto forever waives any such defense.

13.4. Severability. In the event that any provision of this Agreement is deemed to be invalid, illegal or unenforceable by reason of the operation of any law or by reason of the interpretation placed thereon by any court or governmental authority, the validity, legality and enforceability of the remaining provisions of this Agreement shall not in any way be affected or impaired thereby, and the affected provision shall be modified to the minimum extent permitted by law so as most fully to achieve the intention of this Agreement.

13.5. Relative Rights. This Agreement shall define the relative rights of Senior Lenders and Subordinated Lender. Nothing in this Agreement shall (a) impair, as between Borrower and Senior Lenders, the obligation of Borrower with respect to the payment of the Senior Loans and the Subordinated Loans in accordance with their respective terms, or (b) affect the relative rights of Senior Lenders or Subordinated Lender with respect to any other creditors of Borrower.

13.6. Entire Agreement. This Agreement (including the documents and instruments referred to herein) constitutes the entire agreement and supersedes all other prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof.

13.7. Interpretative Matters. Unless otherwise indicated or the context otherwise requires, (a) all references to Sections, Schedules, Appendices or Exhibits are to Sections, Schedules, Appendices or Exhibits contained in or attached to this Agreement, (b) words in the singular or plural include the singular and plural and pronouns stated in either the masculine, the feminine or neuter gender shall include the masculine, feminine and neuter, (c) the words “hereof,” “herein” and words of similar effect shall reference this Agreement in its entirety, and (d) the use of the word “including” in this Agreement shall be by way of example rather than limitation.

[SIGNATURES APPEAR ON FOLLOWING PAGES]

IN WITNESS WHEREOF, intending to be legally bound, and intending that this Agreement constitute an instrument executed and delivered under seal, the parties have caused this Agreement to be executed under seal as of the date first written above.

SENIOR LENDERS;

DEERFIELD PRIVATE DESIGN FUND III, L.P.

By:		Deerfield Mgmt III, L.P., its General Partner
By:		X.X. Xxxxx Capital III, LLC, its General Partner


By:			/s/ Xxxxx X. Xxxxx
Name:			Xxxxx X. Xxxxx
Title:			Authorized Signatory


DEERFIELD PARTNERS, L.P.


By:	Deerfield Mgmt, L.P., its General Partner
By:	X.X. Xxxxx Capital, LLC, its General Partner


By:			/s/ Xxxxx X. Xxxxx
Name:			Xxxxx X. Xxxxx
Title:			Authorized Signatory

[Signature Page to Subordination Agreement]

SUBORDINATED LENDER:

	AYTU BIOSCIENCE, INC.


	By:	/s/ Xxxxxx Xxxxxxx
	Name:	Xxxxxx Xxxxxxx
	Title:	Chief Executive Officer

[Signature Page to Subordination Agreement]

BORROWER:

	NEOS THERAPEUTICS, INC.


	By:	/s/ Xxxxxxx Xxxxxxxxxx
	Name:	Xxxxxxx Xxxxxxxxxx
	Title:	Chief Financial Officer

[Signature Page to Subordination Agreement]

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SUBORDINATION AGREEMENT

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