EXHIBIT 10.1
(MERRILL LYNCH LOGO) [w34817w3481700.gif]
May 9, 2007
VIA OVERNIGHT COURIER AND
FACSIMILE — 301-944-6700
Advancis Pharmaceutical Corporation
20425 Seneca Meadows Parkway
Germantwon, MD 20876
Attn: Mr. Robert Low
     Re:   Merrill Lynch Capital — Advancis
Gentlemen:
     Reference is made to that certain Credit and Security Agreement dated
June 30, 2006 (as amended, modified, restated or supplemented from time to time,
the “Credit Agreement”) between ADVANCIS PHARMACEUTICAL CORPORATION
(“Borrower”), and MERRILL LYNCH CAPITAL, a division of Merrill Lynch Business
Financial Services Inc., individually as a lender and as agent (“Merrill
Lynch”). All capitalized terms used herein and not defined herein shall have the
meaning ascribed to such terms in the Credit Agreement.
     Borrower has requested that Merrill Lynch agree that, in respect of the
fiscal quarters ending June 30, 2007, the covenants in Section 6.1 of the Credit
Agreement (Revenue/Invoiced Products) shall not be applicable to the Borrowers
(it being understood that any failure to comply with such covenants for such
quarters shall not cause or result in any Default or Event of Default) (the
“Consent Item”).
     Borrower represents and warrants to Merrill Lynch that: (a) after giving
effect to this Letter Agreement, no Default or Event of Default has occurred and
is continuing, and (b) all of the terms and conditions of the Credit Agreement
and other Financing Documents are hereby ratified and confirmed and continue
unchanged and in full force and effect. Borrower hereby confirms and agrees that
all security interests and liens granted to Merrill Lynch on behalf of Lenders
continue to be perfected, first priority liens and remain in full force and
effect and shall continue to secure the Obligations. All Collateral remains free
and clear of any liens other than liens in favor of Merrill Lynch or otherwise
permitted under the Credit Agreement.
     As a condition to the effectiveness of this letter agreement, Borrowers
shall pay to Administrative Agent a non-refundable waiver fee (“Consent Fee”) in
an amount equal to Fifteen Thousand Dollars ($15,000.00), which Consent Fee
shall be fully earned upon the execution by Merrill Lynch of this letter
agreement and such Consent Fee shall be due and payable in immediately available
funds.
     In reliance upon Borrower’s confirmation of the above representations and
warranties and upon (i) Borrower’s delivery of a fully executed original of this
letter agreement and (ii)

 

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payment in full of the Consent Fee, Merrill Lynch hereby consents to the Consent
Item. Such consent shall in no way constitute a waiver or consent of any Default
or Event of Default which may occur or have occurred but which is not
specifically referenced as a “Consent Item” nor shall it obligate Merrill Lynch
to provide any further waiver or consent of any Default or Event of Default
(whether similar or dissimilar, including any subsequent Events of Default
resulting from a failure to comply with Section 6.1 of the Credit Agreement).
     Please acknowledge your receipt of this letter and your agreement with the
terms set forth herein by signing below where indicated, and forward an
execution copy to me via facsimile and overnight courier.
     This letter may be executed in any number of counterparts and by different
parties on separate counterparts, each of which, when executed and delivered,
shall be deemed to be an original, and all of which, when taken together, shall
constitute but one the same agreement. Delivery of an executed counterpart of
this letter by facsimile shall be equally as effective as delivery of an
original executed counterpart by this letter.

            Very truly yours,

MERRILL LYNCH CAPITAL, a division of Merrill Lynch
Business Financial Services Inc., as Administrative Agent
and a Lender
      By:   /s/ Maurice Amsellem      Name:   Maurice Amsellem      Title:   VP 
   

Acknowledged and Agreed:
ADVANCIS PHARMACEUTICAL CORPORATION

      By:  
/s/ Robert C. Low
   
 
Name:  
Robert C. Low
   
 
Title:  
VP & CFO
   
 

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