BRIDGE LOAN NOTE

 

$640,697.00 July 19, 2012

 

FOR VALUE RECEIVED, the undersigned NEOGENIX ONCOLOGY, INC., a Maryland
corporation (the "Borrower"), hereby promises to pay to the order of PRECISION
BIOLOGICS, INC., a Delaware corporation (together with its successors or
assigns, the “Lender”), at such office as Lender may direct, in lawful money of
the United States and in immediately available funds, the principal amount of
SIX HUNDRED FORTY THOUSAND SIX HUNDRED NINETY-SEVEN AND NO/100 DOLLARS
($640,697.00), together with interest thereon and other agreed charges as
provided herein.

 

1.          Security Agreement. This instrument is the Bridge Loan Note
described in, and is entitled to the benefits of, that certain Security
Agreement of even date herewith by and between Borrower and Lender (as amended,
extended, modified, renewed or restated, the “Security Agreement”; capitalized
terms used herein and not otherwise defined shall have the meanings ascribed in
the Security Agreement). All of the terms, conditions, covenants and agreements
set forth in the Security Agreement are expressly made a part of this instrument
and are incorporated herein by this reference in the same manner and with the
same effect as if set forth herein verbatim and in full, and any holder of this
instrument shall be entitled to the benefits of and remedies provided in the
Security Agreement and the other Bridge Loan Documents.

 

2.          Disbursements. Borrower acknowledges that the principal amount of
this Note has been fully advanced to Borrower as of the date hereof.

 

3.          Interest. Prior to the occurrence of an Event of Default, the
outstanding principal balance hereof will bear interest at the fixed rate of
five percent (5%) per annum (the "Fixed Rate"). Upon the occurrence, and during
the continuation, of any Event of Default as defined herein, the outstanding
principal balance shall bear interest at the fixed rate of eight percent (8%)
per annum (the "Default Rate"). All interest on the outstanding principal amount
hereunder, whether accruing at the Fixed Rate or the Default Rate, shall be
calculated as simple interest on the basis of a 360-day year by multiplying the
outstanding principal amount by the applicable per annum rate, multiplying the
product thereof by the actual number of days elapsed, and dividing the product
so obtained by 360.

 

4.          Term and Payments.

 

(a)        If a Notice of Withdrawal is given by Lender pursuant to the Security
Agreement, then the principal amount hereof, together with interest accruing
thereon, shall be due and payable on  December 31, 2012.  Notwithstanding the
foregoing, if an Event of Default set forth in subsections (a) through (e) of
Section 5.1 of the Security Agreement shall occur following such Notice of
Withdrawal, then the principal amount hereof, together with interest accruing
thereon, shall be due and payable upon such Event of Default; provided, however,
that for purposes of this sentence Borrower's failure to perform the covenants
set forth in Sections 4.9 or 4.10 of the Security Agreement shall not be deemed
an Event of Default.

 

(b)        If  no Notice of Withdrawal is given by Lender pursuant to the
Security Agreement and the Case is timely initiated by Borrower, but Lender
shall thereafter default in the performance of its obligations with respect to
the DIP Loan or the APA, then the principal amount hereof, together with
interest accruing thereon, shall be due and payable in full on December 31,
2012.  Notwithstanding the foregoing, if an Event of Default set forth in
subsections (a) through (e) of Section 5.1 of the Security Agreement shall
occur following Lender's default in the performance of its obligations with
respect to the DIP Loan or the APA , then the principal amount hereof, together
with interest accruing thereon, shall be due and payable upon such Event of
Default; provided, however, that for purposes of this sentence Borrower's
failure to perform the covenants set forth in Sections 4.9 or 4.10 of the
Security Agreement shall not be deemed an Event of Default. 

 

 

 

 

(c)          If no Notice of Withdrawal is given by Lender pursuant to the
Security Agreement and Lender shall otherwise be in compliance with its
obligations with respect to the DIP Loan and the APA (to the extent then
applicable), then the principal amount hereof, together with interest accruing
thereon, shall be due and payable in full on the earlier of:

 

 

(i)          The date upon which the DIP Loan is approved by the Bankruptcy
Court on an interim basis and funding thereof is consummated; or

 

(ii)         The date upon which debtor-in-possession financing from a source
other than Lender is approved by the Bankruptcy Court on an interim basis and
funding thereof is consummated; or

 

(iii)        The date that is fifteen (15) days after initiation of the Case
unless, on or before such date (x) an interim order approving
debtor-in-possession financing under item (i) or item (ii) above has been
entered by the Bankruptcy Court, and (y) such approved debtor-in-possession
financing specifically provides for repayment of the Bridge Loan; or

 

(iv)         The date that is three (3) days after the entry of an interim order
approving debtor-in-possession financing under item (iii) above unless, on or
before such date, the Bridge Loan has been paid in full from proceeds of such
approved financing; or

 

(v)          The date upon which any transaction involving the sale of
Borrower's assets, including consummation of the transaction contemplated by the
APA, is closed and funded; or

 

(vi)         Immediately upon the occurrence of any Event of Default as defined
in the Security Agreement; or

 

(vii)        Immediately upon the occurrence of any repudiation of, or default
by Borrower in the performance of its obligations under, the APA.

  

(d)          The outstanding principal balance hereof may be prepaid by Borrower
at any time and from time to time, in whole or in part, without premium or
penalty. All payments made hereunder shall first be applied to accrued and
unpaid interest, with any balance remaining then being applied in reduction of
principal.

 

5.            Default and Acceleration. Upon the occurrence of any Event of
Default, this Bridge Loan Note and all other Obligations of Borrower to Lender
under the Bridge Loan Documents shall be subject to acceleration in accordance
with the terms of the Security Agreement and become immediately due and payable,
without presentment, demand, protest or notice of any kind, all of which are
hereby waived by Borrower.

 

[No further text this page; Signature page follows.]

 

 

 

 

IN WITNESS WHEREOF, Borrower has caused this instrument to be properly executed
and delivered as of the day and year first above written.

 

  BORROWER:       NEOGENIX ONCOLOGY, INC., a Maryland corporation       By: /s/
Philip M. Arlen     Philip M. Arlen     President and Chief Executive Officer