Exhibit 10.25(ii)

 

FIRST AMENDMENT
TO
LOAN AND SECURITY AGREEMENT

 

THIS FIRST AMENDMENT to Loan and Security Agreement (this “Amendment”) is
entered into as of December 28, 2011, by and among OXFORD FINANCE LLC (successor
in interest to Oxford Finance Corporation; in its individual capacity, “Oxford”
or “Lender”; in its capacity as Collateral Agent, “Collateral Agent”), HORIZON
TECHNOLOGY FINANCE CORPORATION (“HRZN;” individually, a “Lender” and
collectively, with Oxford in its capacity as a Lender, the “Lenders”), and
ANACOR PHARMACEUTICALS, INC., a Delaware corporation (“Borrower”).

 

RECITALS

 

A.                                    Collateral Agent, Lenders and Borrower
have entered into that certain Loan and Security Agreement dated as of March 18,
2011 (as the same may from time to time be amended, modified, supplemented or
restated, the “Loan Agreement”).

 

B.                                    Lenders have extended credit to Borrower
for the purposes permitted in the Loan Agreement.

 

C.                                    Oxford Finance LLC is successor in
interest to Oxford Finance Corporation in its capacity as Collateral Agent and a
Lender under the Loan Agreement.

 

D.                                    Borrower has requested that Collateral
Agent and Lenders amend the Loan Agreement to make certain revisions to the Loan
Agreement as more fully set forth herein.

 

E.                                      Collateral Agent and Lenders have agreed
to so amend certain provisions of the Loan Agreement, but only to the extent, in
accordance with the terms, subject to the conditions and in reliance upon the
representations and warranties set forth below.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the foregoing recitals and other good and
valuable consideration, the receipt and adequacy of which is hereby
acknowledged, and intending to be legally bound, the parties hereto agree as
follows:

 

1.                                      Definitions.  Capitalized terms used but
not defined in this Amendment shall have the meanings given to them in the Loan
Agreement.

 

2.                                      Amendments to Loan Agreement.

 

2.1                               All references in the Loan Documents to
“OXFORD FINANCE CORPORATION” shall mean and refer to “OXFORD FINANCE LLC
(successor in interest to Oxford Finance Corporation).”

 

2.2                               Sections 2.2(a)(ii) and (iii) (Term B Loan;
Term C Loan).  Sections 2.2(a)(ii) and (iii) of the Loan Agreement hereby are
amended and restated in their entireties to read as follows:

 

“(ii)                            Term B Loan.  Subject to the terms and
conditions of this Agreement, the Lenders agree, severally and not jointly,
during the Second Draw Period, to make term loans to Borrower in an aggregate
amount up to Eight Million Dollars ($8,000,000) according to each Lender’s Term
B Loan Commitment as set forth on Schedule 1.1 hereto (such term loans are
hereinafter referred to singly as a “Term B Loan”, and collectively as the “Term
B Loans”).  After repayment, no Term B Loan may be re-borrowed.

 

(iii)                               Term C Loan.  Subject to the terms and
conditions of this Agreement, the Lenders agree, severally and not jointly,
during the Third Draw Period, to make term loans to Borrower in an aggregate
amount up to Twelve Million Dollars ($12,000,000) according to each Lender’s
Term C Loan

 

1

--------------------------------------------------------------------------------

 

Commitment as set forth on Schedule 1.1 hereto (such term loans are hereinafter
referred to singly as a “Term C Loan”, and collectively as the “Term C Loans”;
each Term A Loan, Term B Loan or Term C Loan is hereinafter referred to singly
as a “Term Loan” and the Term A Loans, Term B Loans and Term C Loans are
hereinafter referred to collectively as the “Term Loans”).  After repayment, no
Term C Loan may be re-borrowed.”

 

2.3                               Section 3.2 (Conditions Precedent to all
Credit Extensions).  New Section 3.2(e) hereby is added to the Loan Agreement to
read as follows:

 

“(e)                            receipt by each Lender, with respect to each of
the Term A Loans, the Term B Loans and the Term C Loans, of duly executed
original Warrants, in form and substance satisfactory to each Lender, as
follows: (A) with respect to the Term A Loans, Borrower shall issue to each
Lender an Amended and Restated Warrant to Purchase Stock (the “Amended
Warrants”), which Amended warrants will replace in their entireties the Warrants
issued to each Lender on the Effective Date (the “Original Warrants”), which
Original Warrants shall be deemed null and void and of no further force or
effect upon receipt of the Amended Warrants; (B) with respect to the Term B
Loans, Borrower shall issue (i) one or more Warrants to Oxford to purchase, in
the aggregate, that number of shares of Borrower’s common stock, equal to Three
Hundred Sixty-Six Thousand Six Hundred Sixty-Seven and 00/100 Dollars
($366,667.00) divided by the Exercise Price (as defined below) at a price per
share equal to the Exercise Price and (ii) a Warrant to HRZN to purchase that
number of shares of Borrower’s common stock, equal to One Hundred Eighty Three
Thousand Three Hundred Thirty-Three and 00/100 Dollars ($183,333.00) divided by
the Exercise Price, at a price per share equal to the Exercise Price; and
(C) with respect to the Term C Loans, Borrower shall issue one or more Warrants
to each Lender, according to each Lender’s Term Loan C Commitment Percentage, to
purchase, in the aggregate, that number of shares of Borrower’s common stock,
equal to (i) the lesser of (a) five and one-half percent (5.50%) of the
aggregate funding amount of the Term C Loans and (b) Five Hundred Fifty Thousand
and 00/100 Dollars ($550,000) divided by (ii) the Exercise Price, at a price per
share equal to the Exercise Price. “Exercise Price” shall mean the lower of
(i) the average closing price of Borrower’s common stock on the NASDAQ Global
Market for the ten (10) trading days ending on the date immediately prior to the
applicable Funding Date, or (ii) the closing price of Borrower’s common stock on
the NASDAQ Global Market on the date immediately prior to the applicable Funding
Date.”

 

2.4                               Section 10 (Notices).  The address for notices
to HRZN in Section 10 of the Loan Agreement hereby is amended and restated in
its entirety to read as follows:

 

 

“Horizon Technology Finance Corporation

 

312 Farmington Avenue

 

Farmington, Connecticut 06032

 

Attention: Legal Department

 

Fax: (860) 676-8655

 

Email:

 

2.5                               Section 13.1 (Definitions).  The following
terms and their respective definitions hereby are added to or amended in
Section 13.1 of the Loan Agreement as follows:

 

“Amended Warrants” has the meaning assigned in Section 3.2(e).

 

“Exercise Price” has the meaning assigned in Section 3.2(e).

 

“First Amendment Date” means December 28, 2011.

 

“Original Warrants” has the meaning assigned in Section 3.2(e).

 

“Warrants” are those certain Warrants to Purchase Stock and/or Amended and
Restated Warrants to Purchase Stock, whether dated as of the Effective Date, or
any date thereafter, issued by Borrower in favor of each Lender.

 

2

--------------------------------------------------------------------------------

 

2.6                               Schedule 1.1 attached to the Loan Agreement
hereby is deleted and replaced in its entirety with Schedule 1.1 attached
hereto.

 

3.                                      Limitation of Amendments.

 

3.1                               The amendments set forth in Section 2, above,
are effective for the purposes set forth herein and shall be limited precisely
as written and shall not be deemed to (a) be a consent to any amendment, waiver
or modification of any other term or condition of any Loan Document, or
(b) otherwise prejudice any right or remedy which Collateral Agent or any Lender
may now have or may have in the future under or in connection with any Loan
Document.

 

3.2                               This Amendment shall be construed in
connection with and as part of the Loan Documents and all terms, conditions,
representations, warranties, covenants and agreements set forth in the Loan
Documents, except as herein amended, are hereby ratified and confirmed and shall
remain in full force and effect.

 

4.                                      Representations and Warranties.  To
induce Collateral Agent and Lender to enter into this Amendment, Borrower hereby
represents and warrants to Collateral Agent and Lender as follows:

 

4.1                               Immediately after giving effect to this
Amendment (a) the representations and warranties contained in the Loan Documents
are true, accurate and complete in all material respects as of the date hereof
(except as previously disclosed in writing to Lender and except to the extent
such representations and warranties relate to an earlier date, in which case
they are true and correct as of such date), and (b), no Event of Default has
occurred and is continuing;

 

4.2                               Borrower has the power and authority to
execute and deliver this Amendment and to perform its obligations under the Loan
Agreement, as amended by this Amendment;

 

4.3                               The organizational documents of Borrower
delivered to Collateral Agent and Lender on the Effective Date are true,
accurate and complete and have not been amended, supplemented or restated and
are and continue to be in full force and effect;

 

4.4                               The execution and delivery by Borrower of this
Amendment and the performance by Borrower of its obligations under the Loan
Agreement, as amended by this Amendment, have been duly authorized;

 

4.5                               The execution and delivery by Borrower of this
Amendment and the performance by Borrower of its obligations under the Loan
Agreement, as amended by this Amendment, do not and will not contravene (a) any
law or regulation binding on or affecting Borrower, (b) any contractual
restriction with a Person binding on Borrower, (c) any order, judgment or decree
of any court or other governmental or public body or authority, or subdivision
thereof, binding on Borrower, or (d) the organizational documents of Borrower;

 

4.6                               The execution and delivery by Borrower of this
Amendment and the performance by Borrower of its obligations under the Loan
Agreement, as amended by this Amendment, do not require any order, consent,
approval, license, authorization or validation of, or filing, recording or
registration with, or exemption by any governmental or public body or authority,
or subdivision thereof, binding on Borrower, except as already has been obtained
or made; and

 

4.7                               This Amendment has been duly executed and
delivered by Borrower and is the binding obligation of Borrower, enforceable
against Borrower in accordance with its terms, except as such enforceability may
be limited by bankruptcy, insolvency, reorganization, liquidation, moratorium or
other similar laws of general application and equitable principles relating to
or affecting creditors’ rights.

 

5.                                      Counterparts.  This Amendment may be
executed in any number of counterparts and all of such counterparts taken
together shall be deemed to constitute one and the same instrument.

 

3

--------------------------------------------------------------------------------

 

6.                                      Effectiveness.  This Amendment shall be
deemed effective upon (i) the due execution and delivery to Collateral Agent of
(a) this Amendment by each party hereto; (b) a Loan Payment/Advance Request
Form, substantially in the form of Annex A attached hereto; and (c) a Compliance
Certificate substantially in the form of Annex B attached hereto; (ii) the due
execution and delivery to each Lender of (x) Amended and Restated Warrants
issued with respect to the Term A Loan; and (y) Warrants dated as of the First
Amendment Date issued with respect to the Term B Loan; in each case of (x) and
(y), as contemplated in Section 3.2(e) of the Loan Agreement (Section 2.3 of
this Amendment); (iii) the due execution and delivery to each Lender of
Note(s) dated as of the First Amendment Date substantially in the form of Annex
C attached hereto, in form and substance satisfactory to such Lender;
(iv) receipt by Collateral Agent of an amendment fee in the amount of Twenty
Thousand Dollars ($20,000), to be shared between the Lenders in accordance with
their respective Pro Rata Shares, which fee may be debited (or ACH’d) from any
of Borrower’s bank accounts; and (v) Borrower’s payment of all Lenders’ Expenses
incurred through the date of this Amendment, which may be debited (or ACH’d)
from any of Borrower’s bank accounts.

 

7.                                      Return of Original Warrants.  Within ten
(10) Business Days following the First Amendment Date, Lenders shall surrender
and deliver the Original Warrants to Borrower.

 

[Balance of Page Intentionally Left Blank]

 

4

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed and delivered as of the date first written above.

 

COLLATERAL AGENT AND LENDER:

 

BORROWER:

 

 

 

OXFORD FINANCE LLC

 

ANACOR PHARMACEUTICALS, INC.

 

 

 

 

 

 

By:

/s/ John G. Henderson

 

By:

/s/ Geoffrey Parker

Name:

John G. Henderson

 

Name:

Geoffrey Parker

Title:

Vice President & General Counsel

 

Title:

SVP &CFO

 

 

 

 

 

 

LENDER:

 

 

 

 

 

HORIZON TECHNOLOGY FINANCE CORPORATION

 

 

 

 

 

 

 

 

By:

/s/ Robert D. Pomeroy, Jr.

 

 

Name:

Robert D. Pomeroy, Jr.

 

 

Title:

Chief Executive Officer

 

 

 

[Signature Page to First Amendment to Loan and Security Agreement]

 

--------------------------------------------------------------------------------

 

SCHEDULE 1.1

 

LENDERS AND COMMITMENTS

Term A Loans

 

Lender

 

Term Loan Commitment

 

Commitment Percentage

 

Oxford Finance LLC

 

$

6,666,666.67

 

66.666666667

%

Horizon Technology Finance Corporation

 

$

3,333,333.33

 

33.333333333

%

TOTAL

 

$

10,000,000.00

 

100.00

%

 

Term B Loans

 

Lender

 

Term Loan Commitment

 

Commitment Percentage

 

Oxford Finance LLC

 

$

5,333,333.33

 

66.666666667

%

Horizon Technology Finance Corporation

 

$

2,666,666.67

 

33.333333333

%

TOTAL

 

$

8,000,000.00

 

100.00

%

 

Term C Loans

 

Lender

 

Term Loan Commitment

 

Commitment Percentage

 

Oxford Finance LLC

 

$

8,000,000.00

 

66.666666666

%

Horizon Technology Finance Corporation

 

$

4,000,000.00

 

33.333333334

%

TOTAL

 

$

12,000,000.00

 

100.00

%

 

Aggregate (all Term Loans)

 

Lender

 

Term Loan Commitment

 

Commitment Percentage

 

Oxford Finance LLC

 

$

20,000,000.00

 

66.666666

%

Horizon Technology Finance Corporation

 

$

10,000,000.00

 

33.333334

%

TOTAL

 

$

30,000,000.00

 

100.00

%

 

--------------------------------------------------------------------------------

 

ANNEX A

 

Loan Payment/Advance Request Form

[see attached]

 

--------------------------------------------------------------------------------

 

DISBURSEMENT LETTER
December 28, 2011

 

The undersigned, being the duly elected and acting SVP and Chief Financial
Officer of ANACOR PHARMACEUTICALS, INC., a Delaware corporation with offices
located at 1020 East Meadow Circle, Palo Alto, California 94303-4230
(“Borrower”), does hereby certify to OXFORD FINANCE LLC (successor in interest
to Oxford Finance Corporation; “Oxford” and “Lender”), as collateral agent (the
“Collateral Agent”) and HORIZON TECHNOLOGY FINANCE CORPORATION (“Horizon”) in
connection with that certain Loan and Security Agreement dated as of March 18,
2011 by and among Borrower, Collateral Agent and the Lenders from time to time
party thereto (the “Loan Agreement”; with other capitalized terms used below
having the meanings ascribed thereto in the Loan Agreement) that:

 

1.                                       The representations and warranties made
by Borrower in Section 5 of the Loan Agreement and in the other Loan Documents
are true and correct in all material respects as of the date hereof.

 

2.                                       No event or condition has occurred that
would constitute an Event of Default under the Loan Agreement or any other Loan
Document.

 

3.                                       Borrower is in compliance with the
covenants and requirements contained in Sections 4, 6 and 7 of the Loan
Agreement.

 

4.                                       All conditions referred to in Section 3
of the Loan Agreement to the making of the Loan to be made on or about the date
hereof have been satisfied or waived by Collateral Agent.

 

5.                                       All conditions referred to in Section 6
of that certain First Amendment to Loan and Security Agreement to the making of
the Loan to be made on or about the date hereof have been satisfied or waived by
Collateral Agent.

 

6.                                       No Material Adverse Change has
occurred.

 

7.                                       The undersigned is a Responsible
Officer.

 

8.                                       The proceeds of the Term B Loan shall
be disbursed as follows:

 

Disbursement from Oxford:

 

 

 

Loan Amount

 

$

 5,333,333.33

 

Less:

 

 

 

— Oxford’s Legal Fees

 

$

 (21,966.00

)*

— Amendment Fee

 

$

 (13,333.33

)

— Interim Interest

 

$

 (5,731.11

)

 

 

 

 

Net Proceeds of Term B Loan due from Oxford:

 

$

 5,292,302.89

 

 

 

 

 

Disbursement from Horizon:

 

 

 

 

 

 

 

Loan Amount

 

$

 2,666,666.67

 

Less:

 

 

 

— Horizon’s Legal Fees

 

$

 (2,500.00

)

— Amendment Fee

 

$

 (6,666.67

)

— Interim Interest

 

$

 (2,865.56

)

 

 

 

 

Net Proceeds of Term B Loan due from Horizon:

 

$

 2,654,634.44

 

 

[Balance of Page Intentionally Left Blank]

 

--------------------------------------------------------------------------------

* Legal fees and costs are through the First Amendment Date.  Post-closing legal
fees and costs, payable after the First Amendment Date, to be invoiced and paid
post-closing.

 

--------------------------------------------------------------------------------

 

The aggregate net proceeds of the Term Loans shall be transferred to Borrower’s
account as follows:

 

Account Name:

Bank Name:

Bank Address:

 

Account Number:

ABA Number:

 

To the further credit of:

 

[Balance of Page Intentionally Left Blank]

 

--------------------------------------------------------------------------------

 

Dated as of the date first set forth above.

 

BORROWER:

 

 

 

 

 

ANACOR PHARMACEUTICALS, INC.

 

 

 

 

 

 

 

 

By

/s/ Geoffrey Parker

 

 

Name:

Geoffrey Parker

 

 

Title:

SVP & CFO

 

 

 

 

 

LENDER AND COLLATERAL AGENT:

 

 

 

 

 

OXFORD FINANCE LLC, as Collateral Agent and as a Lender

 

 

 

 

 

 

 

 

By:

/s/ John G. Henderson

 

 

Name:

John G. Henderson

 

 

Title:

Vice President & General Counsel

 

 

 

[Signature Page to Loan Payment/Advance Request Form; Disbursement Letter — Term
B Loan]

 

--------------------------------------------------------------------------------

 

ANNEX B

 

--------------------------------------------------------------------------------

 

COMPLIANCE CERTIFICATE

 

TO:

Oxford Finance LLC, as Collateral Agent and Horizon Technology Finance
Corporation, as Lender

 

 

FROM:

ANACOR PHARMACEUTICALS, INC.

 

 

DATE:

December 22, 2011

 

The undersigned authorized officer of ANACOR PHARMACEUTICALS, INC. (“Borrower”)
hereby certifies that in accordance with the terms and conditions of the Loan
and Security Agreement among Borrower, Collateral Agent, and the Lenders from
time to time party thereto (the “Agreement”),

 

(i)                                     Borrower is in complete compliance for
the period ending December 22, 2011 with all required covenants except as noted
below;

 

(ii)                                  There are no Events of Default, except as
noted below;

 

(iii)                               Except as noted below, all representations
and warranties of Borrower stated in the Loan Documents are true and correct in
all material respects on this date except as noted below; provided, however,
that such materiality qualifier shall not be applicable to any representations
and warranties that already are qualified or modified by materiality in the text
thereof; and provided, further that those representations and warranties
expressly referring to a specific date shall be true, accurate and complete in
all material respects as of such date.

 

(iv)                              Borrower, and each of its Subsidiaries, has
timely filed all required tax returns and reports, and Borrower has timely paid
all foreign, federal, state, and local taxes, assessments, deposits and
contributions owed by Borrower except as otherwise permitted pursuant to the
terms of Section 5.8 of the Agreement;

 

(v)                                 No Liens have been levied or claims made
against Borrower or any of its Subsidiaries relating to unpaid employee payroll
or benefits of which Borrower has not previously provided written notification
to Collateral Agent

 

Attached are the required documents, if any, supporting our certification(s). 
The Officer on behalf of Borrower further certifies that the attached financial
statements are prepared in accordance with Generally Accepted Accounting
Principles (GAAP) and are consistently applied from one period to the next
except as explained in an accompanying letter or footnotes and except, in the
case of unaudited financial statements,  for the absence of footnotes and
subject to year-end audit adjustments as to the interim financial statements. 
Capitalized terms used but not otherwise defined herein shall have the meanings
given them in the Agreement.

 

Please indicate compliance status since the last Compliance Certificate by
circling Yes, No, or N/A under “Complies” column.

 

 

 

Reporting Covenant

 

Requirement

 

Complies

1)

 

Financial statements

 

Quarterly within 45 days

 

Yes

 

No

 

N/A

 

 

 

 

 

 

 

 

 

 

 

2)

 

Annual (CPA Audited) statements

 

Within 180 days after Fiscal Year End

 

Yes

 

No

 

N/A

 

 

 

 

 

 

 

 

 

 

 

3)

 

Annual Financial Projections/Budget (prepared on a quarterly basis)

 

Annually (w/n 60 days of FYE) and when revised and approved by Borrower’s Board
of Directors

 

Yes

 

No

 

N/A

 

--------------------------------------------------------------------------------

 

4)

 

A/R  & A/P agings

 

When requested

 

Yes

 

No

 

N/A

 

 

 

 

 

 

 

 

 

 

 

5)

 

8-K, 10-K and 10-Q Filings

 

Within 5 days of filing

 

Yes

 

No

 

N/A

 

 

 

 

 

 

 

 

 

 

 

6)

 

Compliance Certificate

 

Quarterly within 45 days

 

Yes

 

No

 

N/A

 

 

 

 

 

 

 

 

 

 

 

7)

 

IP Report

 

when required

 

Yes

 

No

 

N/A

 

 

 

 

 

 

 

 

 

 

 

8)

 

Total amount of Borrower’s cash and cash equivalents at the last day of the
measurement period

 

 

 

$42.8 million, including short-term investments

 

 

 

 

 

 

 

 

 

Deposit and
Securities Accounts

 

(Please list all accounts; attach separate sheet if additional space needed)

 

 

 

 

 

 

 

 

 

 

 

 

 

Bank

 

Account Number

 

New Account?

 

Acct Control
Agmt in place?

1)

 

Bank of America

 

 

 

Yes

No

 

Yes

 

No

 

 

 

 

 

 

 

 

 

 

 

 

2)

 

State Street Bank

 

 

 

Yes

No

 

Yes

 

No

 

 

 

 

 

 

 

 

 

 

 

 

3)

 

 

 

 

 

Yes

No

 

Yes

 

No

 

 

 

 

 

 

 

 

 

 

 

 

4)

 

 

 

 

 

Yes

No

 

Yes

 

No

 

 

 

 

 

 

 

 

 

 

 

 

5)

 

 

 

 

 

Yes

No

 

Yes

 

No

 

 

 

 

 

 

 

 

 

 

 

 

6)

 

 

 

 

 

Yes

No

 

Yes

 

No

 

Financial Covenants

 

Requirement

 

Actual

 

Compliance

 

 

 

 

 

 

 

[none]

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Matters

 

 

 

 

 

 

 

 

 

 

 

Have there been any changes in senior management since the last Compliance
Certificate?

 

Yes

 

No

Have there been any transfers/sales/disposals/retirement of Collateral or IP
prohibited by the Agreement?

 

Yes

 

No

Have there been any new or pending claims or causes of action against Borrower
that involve more than $250,000?

 

Yes

 

No

 

Exceptions

 

 

 

 

No exceptions as of
December 22, 2011.

Please explain any exceptions with respect to the certification above: (If no
exceptions exist, state “No exceptions.” Attach separate sheet if additional
space needed.)

 

 

 

 

 

 

 

 

 

--------------------------------------------------------------------------------

 

 

 

 

LENDERS USE ONLY

 

 

 

 

 

12/22/11

 

 

 

 

ANACOR PHARMACEUTICALS, INC.

 

DATE

 

 

 

 

By:

/s/ Geoffrey M. Parker

 

 

Received by:

 

Verified by:

 

Name:

Geoffrey M. Parker

 

 

 

 

 

 

Title:

SVP and Chief Financial Officer

 

 

Date:

 

Date:

 

 

 

 

 

 

 

 

 

 

 

Compliance Status

 

Yes

No

 

--------------------------------------------------------------------------------

 

ANNEX C

 

FORM OF SECURED PROMISSORY NOTES

 

[see attached]

 

--------------------------------------------------------------------------------

 

SECURED PROMISSORY NOTE

 

$5,333,333.33

 

Dated: December 28, 2011

 

FOR VALUE RECEIVED, the undersigned, ANACOR PHARMACEUTICALS, INC., a Delaware
corporation with offices located at 1020 East Meadow Circle, Palo Alto,
California 94303-4230 (“Borrower”) HEREBY PROMISES TO PAY to the order of OXFORD
FINANCE LLC (successor in interest to Oxford Finance Corporation) (“Lender”) the
principal amount of FIVE MILLION THREE HUNDRED THIRTY THREE THOUSAND THREE
HUNDRED THIRTY THREE DOLLARS AND THIRTY THREE CENTS ($5,333,333.33) or such
lesser amount as shall equal the outstanding principal balance of the Term B
Loan made to Borrower by Lender, plus interest on the aggregate unpaid principal
amount of the Term B Loan, at the rates and in accordance with the terms of the
Loan and Security Agreement dated March 18, 2011, by and among Borrower, Lender,
Oxford Finance LLC (successor in interest to Oxford Finance Corporation), as
Collateral Agent, and the Lenders from time to time party thereto (as amended,
restated, supplemented or otherwise modified from time to time, the “Loan
Agreement”).  If not sooner paid, the entire principal amount and all accrued
and unpaid interest hereunder shall be due and payable on the Maturity Date as
set forth in the Loan Agreement.  Any capitalized term not otherwise defined
herein shall have the meaning attributed to such term in the Loan Agreement.

 

Borrower agrees to pay any initial partial monthly interest payment from the
date the Term B Loan is made to Borrower under this Secured Promissory Note
(this “Note”) to the first Payment Date (“Interim Interest”) on the first
Payment Date.

 

Principal, interest and all other amounts due with respect to the Term B Loan,
are payable in lawful money of the United States of America to Lender as set
forth in the Loan Agreement and this Note.  The principal amount of this Note
and the interest rate applicable thereto, and all payments made with respect
thereto, shall be recorded by Lender and, prior to any transfer hereof, endorsed
on the grid attached hereto which is part of this Note.

 

The Loan Agreement, among other things, (a) provides for the making of a secured
Term B Loan by Lender to Borrower, and (b) contains provisions for acceleration
of the maturity hereof upon the happening of certain stated events.

 

This Note may not be prepaid except as set forth in Section 2.2 (c) and
Section 2.2(d) of the Loan Agreement.

 

This Note and the obligation of Borrower to repay the unpaid principal amount of
the Term B Loan, interest on the Term B Loan and all other amounts due Lender
under the Loan Agreement is secured under the Loan Agreement.

 

Presentment for payment, demand, notice of protest and all other demands and
notices of any kind in connection with the execution, delivery, performance and
enforcement of this Note are hereby waived.

 

Borrower shall pay all reasonable fees and expenses, including, without
limitation, reasonable attorneys’ fees and costs, incurred by Lender in the
enforcement or attempt to enforce any of Borrower’s obligations hereunder not
performed when due.

 

This Note shall be governed by, and construed and interpreted in accordance
with, the internal laws of the State of California.

 

Note Register; Ownership of Note.  The ownership of an interest in this Note
shall be registered on a record of ownership maintained by Lender or its agent. 
Notwithstanding anything else in this Note to the contrary, the right to the
principal of, and stated interest on, this Note may be transferred only if the
transfer is registered on such record of ownership and the transferee is
identified as the owner of an interest in the obligation.  Borrower shall be
entitled to treat the registered holder of this Note (as recorded on such record
of ownership) as the owner in fact thereof for all purposes and shall not be
bound to recognize any equitable or other claim to or interest in this Note on
the part of any other person or entity.

 

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, Borrower has caused this Note to be duly executed by one of
its officers thereunto duly authorized on the date hereof.

 

 

BORROWER:

 

 

 

ANACOR PHARMACEUTICALS, INC.

 

 

 

 

 

By

/s/ Geoffrey Parker

 

Name:

Geoffrey Parker

 

Title:

SVP & CFO

 

Oxford Finance LLC

Term B Loan Note

 

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LOAN INTEREST RATE AND PAYMENTS OF PRINCIPAL

 

Date

 

Principal
Amount

 

Interest Rate

 

Scheduled
Payment Amount

 

Notation By

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

--------------------------------------------------------------------------------

 

SECURED PROMISSORY NOTE

 

$2,666,666.67

 

Dated: December 28, 2011

 

FOR VALUE RECEIVED, the undersigned, ANACOR PHARMACEUTICALS, INC., a Delaware
corporation with offices located at 1020 East Meadow Circle, Palo Alto,
California 94303-4230 (“Borrower”) HEREBY PROMISES TO PAY to the order of
HORIZON TECHNOLOGY FINANCE CORPORATION (“Lender”) the principal amount of TWO
MILLION SIX HUNDRED SIXTY SIX THOUSAND SIX HUNDRED SIXTY SIX DOLLARS AND SIXTY
SEVEN CENTS ($2,666,666.67) or such lesser amount as shall equal the outstanding
principal balance of the Term B Loan made to Borrower by Lender, plus interest
on the aggregate unpaid principal amount of the Term B Loan, at the rates and in
accordance with the terms of the Loan and Security Agreement dated March 18,
2011, by and among Borrower, Lender, Oxford Finance LLC (successor in interest
to Oxford Finance Corporation), as Collateral Agent and as a Lender, and the
Lenders from time to time party thereto (as amended, restated, supplemented or
otherwise modified from time to time, the “Loan Agreement”).  If not sooner
paid, the entire principal amount and all accrued and unpaid interest hereunder
shall be due and payable on the Maturity Date as set forth in the Loan
Agreement.  Any capitalized term not otherwise defined herein shall have the
meaning attributed to such term in the Loan Agreement.

 

Borrower agrees to pay any initial partial monthly interest payment from the
date the Term B Loan is made to Borrower under this Secured Promissory Note
(this “Note”) to the first Payment Date (“Interim Interest”) on the first
Payment Date.

 

Principal, interest and all other amounts due with respect to the Term B Loan,
are payable in lawful money of the United States of America to Lender as set
forth in the Loan Agreement and this Note.  The principal amount of this Note
and the interest rate applicable thereto, and all payments made with respect
thereto, shall be recorded by Lender and, prior to any transfer hereof, endorsed
on the grid attached hereto which is part of this Note.

 

The Loan Agreement, among other things, (a) provides for the making of a secured
Term B Loan by Lender to Borrower, and (b) contains provisions for acceleration
of the maturity hereof upon the happening of certain stated events.

 

This Note may not be prepaid except as set forth in Section 2.2 (c) and
Section 2.2(d) of the Loan Agreement.

 

This Note and the obligation of Borrower to repay the unpaid principal amount of
the Term B Loan, interest on the Term B Loan and all other amounts due Lender
under the Loan Agreement is secured under the Loan Agreement.

 

Presentment for payment, demand, notice of protest and all other demands and
notices of any kind in connection with the execution, delivery, performance and
enforcement of this Note are hereby waived.

 

Borrower shall pay all reasonable fees and expenses, including, without
limitation, reasonable attorneys’ fees and costs, incurred by Lender in the
enforcement or attempt to enforce any of Borrower’s obligations hereunder not
performed when due.

 

This Note shall be governed by, and construed and interpreted in accordance
with, the internal laws of the State of California.

 

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, Borrower has caused this Note to be duly executed by one of
its officers thereunto duly authorized on the date hereof.

 

 

BORROWER:

 

 

 

ANACOR PHARMACEUTICALS, INC.

 

 

 

 

 

By

/s/ Geoffrey Parker

 

Name:

Geoffrey Parker

 

Title:

SVP & CFO

 

Horizon Technology Finance Corporation

Term B Loan Note

 

--------------------------------------------------------------------------------

 

LOAN INTEREST RATE AND PAYMENTS OF PRINCIPAL

 

Date

 

Principal
Amount

 

Interest Rate

 

Scheduled
Payment Amount

 

Notation By

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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