EXHIBIT 10.1
LOAN AND SECURITY AGREEMENT
     THIS LOAN AND SECURITY AGREEMENT is made and dated as of August 30, 2006
and is entered into by and between EPICEPT CORPORATION, a Delaware corporation
(“EpiCept”), MAXIM PHARMACEUTICALS INC., a Delaware corporation (“Maxim”;
EpiCept and Maxim are sometimes referred to in this Agreement individually
and/or collectively as a “Borrower” or the “Borrowers”), and HERCULES TECHNOLOGY
GROWTH CAPITAL, INC., a Maryland corporation (“Lender”).
RECITALS
     A. Borrower has requested Lender to make available to Borrower a loan in an
aggregate principal amount of up to Ten Million Dollars ($10,000,000); and
     B. Lender is willing to make the loan on the terms and conditions set forth
in this Agreement.
AGREEMENT
     NOW, THEREFORE, Borrower and Lender agree as follows:
SECTION 1. DEFINITIONS AND RULES OF CONSTRUCTION
     1.1. Unless otherwise defined herein, the following capitalized terms shall
have the following meanings:
          “Account Control Agreement(s)” means any agreement entered into by and
among the Lender, Borrower and a third party Bank or other institution
(including a Securities Intermediary) in which Borrower maintains a Deposit
Account or an account in which Investment Property is held and which is intended
to perfect Lender’s security interest in any of the Collateral.
          “Advance” means any funds advanced under this Agreement.
          “Advance Date” means the funding date of any Advance.
          “Advance Request” means a request for an Advance submitted by Borrower
to Lender in substantially the form of Exhibit A.
          “Agreement” means this Loan and Security Agreement, as the same may
from time to time be amended, modified, supplemented or restated from time to
time in accordance with the terms hereof.
          “Borrower Products” means all products, technical data or technology
currently being designed, manufactured or sold by Borrower or which Borrower
intends to sell, license, or distribute in the future including any products
under development, collectively, together with all products, technical data or
technology that have been sold, licensed or distributed by Borrower since its
incorporation.
          “Cash” means all cash and cash equivalents.
          “Closing Date” means the date of this Agreement.
          “Collateral” means the property described in Section 3.
          “Contingent Obligation” means, as applied to any Person, any direct or
indirect liability, contingent or otherwise, of that Person with respect to
(i) any indebtedness, lease, dividend, letter of credit or other obligation of
another, including any such obligation directly or indirectly guaranteed,
endorsed, co-made or discounted or sold with recourse by that Person, or in
respect of which that Person is otherwise directly or indirectly liable;
(ii) any obligations with respect to undrawn letters of credit, corporate credit
cards or merchant services issued for the account of that Person; and (iii) all
obligations arising under any interest rate, currency or commodity swap
agreement, interest rate cap agreement, interest rate collar

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agreement, or other agreement or arrangement designated to protect a Person
against fluctuation in interest rates, currency exchange rates or commodity
prices; provided, however, that the term “Contingent Obligation” shall not
include endorsements for collection or deposit in the ordinary course of
business. The
amount of any Contingent Obligation shall be deemed to be an amount equal to the
stated or determined amount of the primary obligation in respect of which such
Contingent Obligation is made.
          “Copyrights” means all copyrights, whether registered or unregistered,
held pursuant to the laws of the United States, any State thereof, or of any
other country.
          “Copyright License” means any written agreement granting any right to
use any Copyright or Copyright registration, now owned or hereafter acquired by
Borrower or in which Borrower now holds or hereafter acquires any interest.
          “Deposit Accounts” means any “deposit accounts,” as such term is
defined in the UCC, and includes any checking account, savings account, or
certificate of deposit.
          “Event of Default” has the meaning given to it in Section 9.
          “Financial Statements” has the meaning given to it in Section 7.1.
          “Fully Diluted Capitalization” means, at any given time, the number of
shares of Borrower’s (i) common stock issued and outstanding, and (ii) common
stock ultimately issuable upon conversion, exercise or exchange of any
outstanding rights to purchase Borrower’s capital stock, including preferred
stock, options, warrants, employee stock plans and convertible debt.
          “GAAP” means generally accepted accounting principles in the United
States of America, as in effect from time to time.
          “Indebtedness” means indebtedness of any kind, including (a) all
indebtedness for borrowed money or the deferred purchase price of property or
services, including reimbursement and other obligations with respect to surety
bonds and letters of credit, (b) all obligations evidenced by notes, bonds,
debentures or similar instruments, (c) all capital lease obligations, and
(d) all Contingent Obligations.
          “Intellectual Property” means all Copyrights; Trademarks; Patents;
Licenses; trade secrets and inventions; Borrower’s applications therefor and
reissues, extensions, or renewals thereof; and Borrower’s goodwill associated
with any of the foregoing, together with Borrower’s rights to sue for past,
present and future infringement of Intellectual Property and the goodwill
associated therewith.
          “Interest Rate” means 11.7%.
          “Investment” means any beneficial ownership of (including stock,
partnership or limited liability company interests) of or in any Person, or any
loan, advance or capital contribution to any Person.
          “Lender” has the meaning given to it in the preamble to this
Agreement.
          “License” means any Copyright License, Patent License, Trademark
License or other license of rights or interests.
          “Lien” means any mortgage, deed of trust, pledge, hypothecation,
assignment for security, security interest, encumbrance, levy, lien or charge of
any kind, whether voluntarily incurred or arising by operation of law or
otherwise, against any property, any conditional sale or other title retention
agreement, any lease in the nature of a security interest, and the filing of any
financing statement (other than a precautionary financing statement with respect
to a lease that is not in the nature of a security interest) under the UCC or
comparable law of any jurisdiction naming the owner of the asset to which such
Lien relates as debtor.
          “Loan” means the Advance or Advances made under this Agreement.

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          “Loan Documents” means this Agreement, the Notes, Account Control
Agreements, all UCC Financing Statements, the Warrant, and any other documents
executed in connection with the Secured Obligations or the transactions
contemplated hereby, as the same may from time to time be amended, modified,
supplemented or restated.
          “Material Adverse Effect” means a material adverse effect upon:
(i) the business, operations, properties, assets, prospects or condition
(financial or otherwise) of Borrower; or (ii) the ability of Borrower to perform
the Secured Obligations in accordance with the terms of the Loan Documents, or
the ability of Lender to enforce any of its rights or remedies with respect to
the Secured Obligations; or (iii) the Collateral or Lender’s Liens on the
collateral or the priority of such Liens.
          “Maturity Date” means August 30, 2009, subject to extension pursuant
to Section 2.4.
          “Maximum Loan Amount” means $10,000,000.
          “Maximum Rate” shall have the meaning assigned to such term in
Section 2.5.
          “Merger” means any (i) reorganization, recapitalization, consolidation
or merger (or similar transaction or series of related transactions) of Borrower
or any Subsidiary, (ii) sale or exchange of outstanding shares (or similar
transaction or series of related transactions) of Borrower or any Subsidiary in
which the holders of Borrower or Subsidiary’s outstanding shares immediately
before consummation of such transaction or series of related transactions do
not, immediately after consummation of such transaction or series of related
transactions, retain shares representing at least more than fifty percent (50%)
of the voting power of the surviving entity of such transaction or series of
related transactions (or the parent of such surviving entity if such surviving
entity is wholly owned by such parent), in each case without regard to whether
Borrower or Subsidiary is the surviving entity; (iii) sale, lease, license or
transfer of any substantial part of the assets of Borrower or any Subsidiary; or
(iv) acquisition by Borrower or any Subsidiary of all or substantially all of
the capital stock or assets of another Person; provided however, that in all
cases a Subsidiary may be merged into Borrower or into another Subsidiary
without constituting a “Merger.”
          “Milestones” means any of the following: (1) Ceplene EMEA Approval;
(2) Positive Phase III data for NP-1; or (3) Positive Lidopain SP Phase III
trials (Adolor’s US trials), where “Positive” means the trial has met the
primary endpoint of such trial and is statistically significant (p value less
than or equal to 0.05).
          “Next Event” means the closing of Borrower’s next round of private
equity financing that occurs after the Closing Date but prior to the Maturity
Date.
          “Note” means a Promissory Note in substantially the form of Exhibit B.
          “Patent License” means any written agreement granting any right with
respect to any invention on which a Patent is in existence or a Patent
application is pending, in which agreement Borrower now holds or hereafter
acquires any interest.
          “Patents” means all all letters patent of, or rights corresponding
thereto, in the United States or in any other country, all registrations and
recordings thereof, and all applications for letters patent of, or rights
corresponding thereto, in the United States or any other country.
          “Permitted Indebtedness” means: (a) Indebtedness of Borrower in favor
of Lender arising under this Agreement or any other Loan Document;
(b) Indebtedness existing on the Closing Date and disclosed in Schedule 1A;
(c) Indebtedness of up to $500,000 outstanding at any time secured by a lien
described in clause (vi) of the defined term “Permitted Liens,” provided such
Indebtedness does not exceed the lesser of the cost or fair market value of the
equipment financed with such Indebtedness; (d) Indebtedness to trade creditors
incurred in the ordinary course of business, including Indebtedness incurred in
the ordinary course of business with corporate credit cards; (e) Indebtedness
that also constitutes a Permitted Investment; (f) Indebtedness

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owing from a Subsidiary to another Subsidiary; (g) Indebtedness owing from
Borrower to a Subsidiary; (g) Unsecured Indebtedness of up to $250,000
outstanding at any time; and (h) extensions, refinancings and renewals of any
items of Permitted Indebtedness, provided that the principal amount is not
increased or the terms modified to impose materially more burdensome terms upon
Borrower or its Subsidiary, as the case may be.
          “Permitted Investment” means: (a) Investments existing on the Closing
Date disclosed in Schedule 1B; (b) (i) marketable direct obligations issued or
unconditionally guaranteed by the United States of America or any agency or any
State thereof maturing within one year from the date of acquisition thereof,
(ii) commercial paper maturing no more than one year from the date of creation
thereof and currently having rating of at least A-2 or P-2 from either Standard
& Poor’s Corporation or Moody’s Investors Service, (iii) certificates of deposit
issued by any bank with assets of at least $500,000,000 maturing no more than
one year from the date of investment therein, and (iv) money market accounts;
(c) repurchases of stock from former employees, directors, or consultants of
Borrower under the terms of applicable repurchase agreements at the original
issuance price of such securities in an aggregate amount not to exceed $100,000
in any fiscal year, provided that no Event of Default has occurred, is
continuing or would exist after giving effect to the repurchases;
(d) Investments accepted in connection with Permitted Transfers; (e) Investments
(including debt obligations) received in connection with the bankruptcy or
reorganization of customers or suppliers and in settlement of delinquent
obligations of, and other disputes with, customers or suppliers arising in the
ordinary course of Borrower’s business; (f) Investments consisting of notes
receivable of, or prepaid royalties and other credit extensions, to customers
and suppliers who are not affiliates, in the ordinary course of business,
provided that this subparagraph (f) shall not apply to Investments of Borrower
in any Subsidiary; (g) additional Investments that do not exceed $100,000 in the
aggregate; (h) Investments in Epicept GmbH consisting of cash transfers from
time to time in amounts necessary to pay for operating expenses, the payment of
salaries, the operation of clinical trials, and the repayment of debt listed on
the Schedule, in each case incurred in the ordinary course of business;
(i) Investments in other Subsidiaries in an aggregate amount up to $100,000 per
year; (j) Loans or advances to officers, directors and employees in the ordinary
course of business in a principal amount of up to $100,000 per year (without
duplication of that permitted under Section 7.8); and (k) Joint ventures or
strategic alliances in the ordinary course of Borrower’s business consisting of
the nonexclusive licensing of technology, the development of technology or the
providing of technical support.
          “Permitted Liens” means any and all of the following: (i) Liens
existing on the Closing Date disclosed in Schedule 1C; (ii) Liens for taxes,
fees, assessments or other governmental charges or levies, either not delinquent
or being contested in good faith by appropriate proceedings; provided that
Borrower maintains adequate reserves therefor in accordance with GAAP;
(iii) Liens securing claims or demands of materialmen, artisans, mechanics,
carriers, warehousemen, landlords and other like Persons arising in the ordinary
course of Borrower’s business and imposed without action of such parties;
provided that the payment thereof is not yet required; (iv) Liens arising from
judgments, decrees or attachments in circumstances which do not constitute an
Event of Default hereunder; (v) the following deposits, to the extent made in
the ordinary course of business: deposits under worker’s compensation,
unemployment insurance, social security and other similar laws, or to secure the
performance of bids, tenders or contracts (other than for the repayment of
borrowed money) or to secure indemnity, performance or other similar bonds for
the performance of bids, tenders or contracts (other than for the repayment of
borrowed money) or to secure statutory obligations (other than liens arising
under ERISA or environmental liens) or surety or appeal bonds, or to secure
indemnity, performance or other similar bonds; (vi) purchase money liens and
liens in connection with capital leases on Equipment securing Indebtedness
permitted in clause (c) of “Permitted Indebtedness”; (vii) Liens created under
the Loan Documents; (viii) Liens and other encumbrances on real property that do
not materially detract from its value; (ix) leasehold interests in leases or
subleases and licenses granted in the ordinary course of business and not
interfering in any material respect with the business of Borrower; and (x) Liens
incurred in connection with the extension, renewal or refinancing of the
indebtedness secured by Liens of the type described in clauses (i) through
(x) above; provided that any extension, renewal or replacement Lien shall be
limited to the property encumbered by the

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existing Lien and the principal amount of the indebtedness being extended,
renewed or refinanced (as may have been reduced by any payment thereon) does not
increase.
          “Permitted Transfers” means (i) sales of Inventory in the normal
course of business, (ii) licenses and similar arrangements for the use of
Intellectual Property in the ordinary course of business, (iii) dispositions of
worn-out obsolete Equipment, (iv) leases or subleases of real estate; and
(v) other transfers of property in an amount of up to $100,000 per year.
          “Person” means any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated organization, association, corporation, limited
liability company, institution, other entity or government.
          “Preferred Stock” means at any given time any equity security issued
by Borrower that has any rights, preferences or privileges senior to Borrower’s
common stock.
          “Receivables” means (i) all of Borrower’s Accounts, Instruments,
Documents, Chattel Paper, Supporting Obligations, letters of credit, proceeds of
any letter of credit, and Letter of Credit Rights, and (ii) all customer lists,
software, and business records related thereto.
          “Secured Obligations” means Borrower’s obligation to repay to Lender
the Loan and all Advances (whether or not evidenced by any Note), together with
all principal, interest, fees, costs, professional fees and expenses, or other
liabilities or obligations for monetary amounts owed by Borrower to Lender
however arising, including the indemnity and insurance obligations in Section 6
and including such amounts as may accrue or be incurred before or after default
or workout or the commencement of any liquidation, dissolution, bankruptcy,
receivership or reorganization by or against Borrower, whether due or to become
due, matured or unmatured, liquidated or unliquidated, contingent or
non-contingent, and all covenants and duties of any kind or nature, present or
future, in each case, arising under this Agreement, the Notes, or any of the
other Loan Documents, as the same may from time to time be amended, modified,
supplemented or restated.
          “Subsidiary” means an entity, whether corporate, partnership, limited
liability company, joint venture or otherwise, in which Borrower owns or
controls 50% or more of the outstanding voting securities, including each entity
listed on Schedule 5.14 hereto.
          “Trademark License” means any written agreement granting any right to
use any Trademark or Trademark registration, now owned or hereafter acquired by
Borrower or in which Borrower now holds or hereafter acquires any interest.
          “Trademarks” means all trademarks (registered, common law or
otherwise) and any applications in connection therewith, including
registrations, recordings and applications in the United States Patent and
Trademark Office or in any similar office or agency of the United States, any
State thereof or any other country or any political subdivision thereof.
          “UCC” means the Uniform Commercial Code as the same is, from time to
time, in effect in the State of California; provided that in the event that, by
reason of mandatory provisions of law, any or all of the attachment, perfection
or priority of, or remedies with respect to, Lender’s Lien on any Collateral is
governed by the Uniform Commercial Code as the same is, from time to time, in
effect in a jurisdiction other than the State of California, then the term “UCC”
shall mean the Uniform Commercial Code as in effect, from time to time, in such
other jurisdiction solely for purposes of the provisions thereof relating to
such attachment, perfection, priority or remedies and for purposes of
definitions related to such provisions. Unless otherwise defined herein or in
the other Loan Documents, terms that are defined in the UCC and used herein or
in the other Loan Documents shall, unless the context indicates otherwise, have
the meanings given to them in the UCC.
          “Up-Front Payment” means $125,000.

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          “Warrant” means the warrant entered into in connection with the Loan
in substantially the form attached as Exhibit G.
     1.2. Unless otherwise specified, all references in this Agreement or any
Annex or Schedule hereto to a “Section,” “subsection,” “Exhibit,” “Annex,” or
“Schedule” shall refer to the corresponding Section, subsection, Exhibit, Annex,
or Schedule in or to this Agreement. Unless otherwise specifically provided
herein, any accounting term used in this Agreement or the other Loan Documents
shall have the meaning customarily given such term in accordance with GAAP, and
all financial computations hereunder shall be computed in accordance with GAAP,
consistently applied.
SECTION 2. THE LOAN
     2.1. Advances. Subject to the terms and conditions of this Agreement,
Lender will make one Advance to Borrower in an aggregate amount of $10,000,000
on the Closing Date.
     2.2. Advance Request. To obtain an Advance, Borrower shall complete, sign
and deliver an Advance Request and Note to Lender. Lender shall fund the Advance
in the manner requested by the Advance Request provided that each of the
conditions precedent to such Advance is satisfied as of the requested Advance
Date.
     2.3. Interest. The principal balance of the Advance shall bear interest
thereon from the Advance Date at a rate per annum equal to the Interest Rate
based on a year consisting of 360 days, with interest computed daily based on
the actual number of days in each month. The Interest Rate for the Advance will
be fixed on the date of the Advance, and will apply to the Advance for so long
as it is outstanding, including during the period of amortization.
     2.4. Payment. Borrower will pay interest in arrears on the Advance on the
first business day of each month, beginning the month after the Advance Date and
continuing for so long as any part of the Advance is outstanding. Borrower shall
repay the aggregate principal balance in 30 equal monthly installments of
principal and interest beginning March 1, 2007, and continuing on the first
business day of each month thereafter. The entire principal balance and all
accrued but unpaid interest hereunder, shall be due and payable on August 30,
2009. Notwithstanding the foregoing:
     (i) If Borrower receives at least $15,000,000 of cash proceeds from the
sale or issuance of its equity securities after the Closing Date and on or
before December 31, 2006, then Borrower shall make interest-only payments on the
outstanding principal balance of the Advance from September 1, 2006, through
May 1, 2007. Beginning June 1, 2007, and continuing through November 1, 2009,
Borrower shall make 30 equal payments of principal and interest to Lender. The
entire principal balance and all accrued but unpaid interest shall be due and
payable on November 30, 2009.
     (ii) If Borrower (i) receives at least $15,000,000 of net cash proceeds
from the sale or issuance of its equity securities after the Closing Date and on
or before December 31, 2006, and (ii) satisfies at least two of the three
Milestones, then Borrower shall make interest-only payments on the outstanding
principal balance of the Advance from September 1, 2006 through May 1, 2007.
Beginning June 1, 2007, and continuing through February 1, 2010, Borrower shall
make 33 equal payments of principal and interest to Lender. The entire principal
balance and all accrued but unpaid interest shall be due and payable on
February 28, 2010.
     (iii) If Borrower (i) receives at least $30,000,000 of net cash proceeds
from the sale or issuance of its equity securities after the Closing Date and on
or before December 31, 2006, and (ii) satisfies at least two of the three
Milestones, then Borrower shall make interest-only payments on the outstanding
principal balance of the Advance from September 1, 2006 through May 1, 2007.
Beginning June 1, 2007, and continuing through August 1, 2010, Borrower shall
make 39 equal payments of principal and interest to Lender. The entire principal
balance and all accrued but unpaid interest shall be due and payable on
August 30, 2010.

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     2.5. Maximum Interest. Notwithstanding any provision in this Agreement, the
Notes, or any other Loan Document, it is the parties’ intent not to contract
for, charge or receive interest at a rate that is greater than the maximum rate
permissible by law that a court of competent jurisdiction shall deem applicable
hereto (which under the laws of the State of California shall be deemed to be
the laws relating to permissible rates of interest on commercial loans) (the
“Maximum Rate”). If a court of competent jurisdiction shall finally determine
that Borrower has actually paid to Lender an amount of interest in excess of the
amount that would have been payable if all of the Secured Obligations had at all
times borne interest at the Maximum Rate, then such excess interest actually
paid by Borrower shall be applied as follows: first, to the payment of principal
outstanding on the Notes; second, after all principal is repaid, to the payment
of Lender’s accrued interest, costs, expenses, professional fees and any other
Secured Obligations; and third, after all Secured Obligations are repaid, the
excess (if any) shall be refunded to Borrower.
     2.6. Default Interest. If any amount is not paid within ten (10) days of
the date due, Borrower shall pay Lender, on demand, a late payment fee equal to
two percent (2%) of such amount. Upon the occurrence and during the continuation
of an Event of Default hereunder, all Secured Obligations, including principal,
interest, compounded interest, and professional fees, shall bear interest at a
rate per annum equal to the rate set forth in Section 2.2 plus five percent (5%)
per annum. In the event any interest is not paid when due hereunder and such
non-payment continues for (5) five consecutive days, delinquent interest shall
be added to principal and shall bear interest on interest, compounded at the
rate set forth in Section 2.3 or Section 2.6, as applicable.
     2.7. Optional Prepayment. Borrower shall have the option at any time, upon
at least three (3) business days prior written notice to Lender, to prepay all
or any part of the Advance, by paying the relevant principal amount together
with all interest, fees and expenses accrued and unpaid as of the date of such
prepayment; provided that Borrower shall pay a prepayment fee equal to (i) three
percent (3.0%) of the principal prepaid if prepaid during the first twelve
(12) months after the Closing Date; (ii) two percent (2.0%) of the principal
prepaid if prepaid during the second twelve (12) months after the Closing Date;
and (iii) one percent (1.0%) of the principal prepaid if prepaid thereafter.
     2.8. End of Term Fee. On the earliest to occur of (i) the Maturity Date,
(ii) the date that Borrower prepays the outstanding Obligations, or (iii) the
date that the Obligations otherwise become due and payable, Borrower shall pay
Lender a fee of $150,000.
SECTION 3. SECURITY INTEREST
     3.1. As security for the prompt, complete and indefeasible payment when due
(whether on the Payment Dates or otherwise) of all the Secured Obligations,
Borrower grants to Lender a security interest in all of Borrower’s personal
property now owned or hereafter acquired, including the following:
(collectively, the “Collateral”): (a) Receivables; (b) Equipment; (c) Fixtures;
(d) General Intangibles (including Intellectual Property); (e) Accounts;
(f) Inventory; (g) Investment Property; (h) Deposit Accounts; (i) Cash;
(j) Goods and other tangible and intangible personal property of Borrower
whether now or hereafter owned or existing, leased, consigned by or to, or
acquired by, Borrower and wherever located; and (k) to the extent not otherwise
included, all Proceeds of each of the foregoing and all accessions to,
substitutions and replacements for, and rents, profits and products of each of
the foregoing, provided that “Collateral” does not include (i) more than 65% of
the issued and outstanding voting capital stock of any Subsidiary that is
incorporated or organized in a jurisdiction other than the United States or any
state or territory thereof or the District of Columbia or (ii) Intellectual
Property (a) to the extent that the assignment of such Intellectual Property or
the granting of a security interest therein is prohibited or requires the
consent of any Person other than Borrower or an affiliate of Borrower under the
terms of any agreement between Borrower and any Person other than an affiliate
of Borrower, to the extent in either case that any such prohibition is
enforceable under applicable law and (b) any “intent to use” Trademark
applications for which a statement of use has not been filed (but only until
such statement is filed), provided that (A) upon the cessation of such
prohibition, such Intellectual Property shall automatically become part of the
Collateral and (B) Collateral

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* Confidential treatment has been requested for this information and a copy of
such information has been filed separately with the SEC.
Execution 8/30
shall in any case include any proceeds arising out of the disposition (including
the licensing) of any interest in the Intellectual Property.
     3.2. As long as an Event of Default is not continuing, Lender will release
its security interest in the Intellectual Property (but retain its security
interest in any proceeds arising out of the disposition (including the
licensing) of any interest in the Intellectual Property), upon delivery to
Lender of evidence reasonably satisfactory to Lender that all of the following
have occurred: (a) Borrowers receives gross proceeds after the Closing Date of
at least $15,000,000 in the aggregate from the sale or issuance of their
respective equity securities or an up-front payment from a strategic partnership
transaction; (b) Borrowers receive any one of (i) the forecasted milestone
payment from Myriad Genetics, Inc., (ii) the forecasted milestone payment from
Adolor Corporation or (iii) *** and (c) a settlement agreement relating to the
Maxim litigation has been executed by Epicept Corporation and the plaintiffs
party thereto.
* * * *
SECTION 4. CONDITIONS PRECEDENT TO LOAN
     The obligations of Lender to make the Loan hereunder are subject to the
satisfaction by Borrower of the following conditions:
     4.1. Initial Advance. On or prior to the Closing Date, Borrower shall have
delivered to Lender the following:
          (a) executed originals of the Loan Documents, a legal opinion of Weil,
Gotshal & Manges LLP, Borrower’s counsel, in substantially the form of Exhibit [
], and all other documents and instruments reasonably required by Lender to
effectuate the transactions contemplated hereby or to create and perfect the
Liens of Lender with respect to all Collateral, in all cases in form and
substance reasonably acceptable to Lender;
          (b) certified copy of resolutions of Borrower’s board of directors
evidencing approval of (i) the Loans and other transactions evidenced by the
Loan Documents and (ii) the Warrant and transactions evidenced thereby;
          (c) certified copies of the Certificate of Incorporation and the
Bylaws, as amended through the Closing Date, of Borrower;
          (d) a certificate of good standing for Borrower from its state of
incorporation and similar certificates from all other jurisdictions in which it
does business and where the failure to be qualified would have a Material
Adverse Effect;
          (e) the Up-Front Payment and reimbursement of Lender’s current and
reasonable expenses reimbursable pursuant to Section 11.11, which amounts may be
deducted from the initial Advance; and
          (f) such other documents as Lender may reasonably request.
     4.2. No Default. As of the Closing Date and each Advance Date, (i) no fact
or condition exists that would (or would, with the passage of time, the giving
of notice, or both) constitute an Event of Default and (ii) no event that has
had or could reasonably be expected to have a Material Adverse Effect has
occurred and is continuing.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF BORROWER
     Borrower represents, warrants and agrees that:
     5.1. Corporate Status. Borrower is a corporation duly organized, legally
existing and in good standing under the laws of the State of Delaware, and is
duly qualified as a foreign corporation in all

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jurisdictions in which the nature of its business or location of its properties
require such qualifications and where the failure to be so qualified could
reasonably be expected to have a Material Adverse Effect. Borrower’s present
name, former names (if any), locations of its chief executive office, place of
formation, tax identification number, organizational identification number and
other information are correctly set forth in Exhibit C.
     5.2. Collateral. Borrower owns all right, title and interest in and to the
Collateral, free of all Liens whatsoever, except for Permitted Liens. Borrower
has the full power and authority to grant and convey to Lender a Lien in the
Collateral as security for the Secured Obligations, free of all other Liens
other than Permitted Liens.
     5.3. Consents. Borrower’s execution, delivery and performance of the Notes,
this Agreement and all other Loan Documents, and Borrower’s execution of the
Warrant, (i) have been duly authorized by all necessary corporate action of
Borrower, (ii) will not result in the creation or imposition of any Lien upon
the Collateral, other than Permitted Liens and the Liens created by this
Agreement and the other Loan Documents, (iii) do not violate any provisions of
Borrower’s Certificate of Incorporation or Bylaws, (iv) do not violate or
conflict with any law, regulation, order, injunction, judgment, decree or writ
to which Borrower is subject and (v) except as described on Schedule 5.3, do not
violate any contract or agreement or require the consent or approval of any
other Person, except in the cases of clauses (ii), (iv) and (v) for such
creation, imposition, violation or conflict that could not reasonably be
expected to have a Material Adverse Effect. The individual or individuals
executing the Loan Documents and the Warrant are duly authorized to do so.
     5.4. Material Adverse Effect. Since August 9, 2006 , no event that has had
or could reasonably be expected to have a Material Adverse Effect has occurred
and is continuing, and Borrower is not aware of any event likely to occur that
is reasonably expected to result in a Material Adverse Effect.
     5.5. Actions Before Governmental Authorities. Except as described on
Schedule 5.5, there are no actions, suits or proceedings at law or in equity or
by or before any governmental authority now pending or, to the knowledge of
Borrower, threatened against Borrower or any business, property or rights of
Borrower (i) which relate to any Loan Document or (ii) as to which there is a
reasonable possibility of an adverse determination and which, if adversely
determined, would reasonably be expected to, individually or in the aggregate,
result in a Material Adverse Effect.
     5.6. Laws. Borrower is not in violation of any law, rule or regulation, or
in default with respect to any judgment, writ, injunction or decree of any
governmental authority, where such violation or default is reasonably expected
to result in a Material Adverse Effect. Borrower is not in default in any manner
under any provision of any indenture or other material agreement, contract or
instrument evidencing indebtedness, or any other material agreement, contract or
instrument to which it is a party or by which it or any of its properties or
assets are or may be bound and for which such default would reasonably be
expected to result in a Material Adverse Effect.
     5.7. Information Correct. No information, report, Advance Request,
financial statement, exhibit or schedule furnished, by or on behalf of Borrower
to Lender in connection with any Loan Document or included therein or delivered
pursuant thereto contained, contains or will contain any material misstatement
of fact or omitted, omits or will omit to state any material fact necessary to
make the statements therein, in the light of the circumstances under which they
were, are or will be made, not misleading.
     5.8. Tax Matters. Except as described on Schedule 5.8, (a) Borrower has
filed all federal, state and local tax returns that it is required to file,
(b) Borrower has duly paid or fully reserved for all taxes or installments
thereof (including any interest or penalties) as and when due, which have or may
become due pursuant to such returns, and (c) Borrower has paid or fully reserved
for any tax assessment received by Borrower for the three (3) years preceding
the Closing Date, if any (including any taxes being contested in good faith and
by appropriate proceedings).

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Execution 8/30
     5.9. Intellectual Property. Borrower owns, licenses or otherwise has the
right to use, the Intellectual Property that is necessary for the operation of
its business. Without limiting the generality of the foregoing, Borrower has the
right to freely transfer, license or assign such Intellectual Property without
condition, restriction or payment of any kind to any third party, and Borrower
owns or has the right to use, pursuant to valid licenses, all software
development tools, library functions, compilers and all other third-party
software and other items that are used in the design, development, promotion,
sale, license, manufacture, import, export, use or distribution of Borrower
Products. Except as described on Schedule 5.9, each of the material Copyrights,
Trademarks and Patents is valid and enforceable, and no part of the Intellectual
Property that is owned by Borrower has been judged invalid or unenforceable, in
whole or in part, and no claim has been made to Borrower that any part of the
Intellectual Property violates the rights of any third party except to the
extent such claim would not reasonably be expected to cause a Material Adverse
Effect. Exhibit D is a true, correct and complete list of each of Borrower’s
Patents, registered Trademarks, registered Copyrights, and material agreements
under which Borrower licenses Intellectual Property from third parties (other
than shrink-wrap software licenses and other licenses which if terminated could
not reasonably be expected to result in a Material Adverse Effect), together
with application or registration numbers, as applicable, owned by Borrower.
Borrower is not in breach of, nor has Borrower failed to perform any obligations
under, any of the foregoing contracts, licenses or agreements except for such
breaches or failures to perform that would not reasonably be expected to have a
Material Adverse Effect, and, to Borrower’s knowledge, no third party to any
such contract, license or agreement is in material breach thereof or has failed
to perform any material obligations thereunder.
     5.10. Borrower Products. Except as described on Schedule 5.10, no
Intellectual Property owned by Borrower or Borrower Product has been or is
subject to any actual or, to the knowledge of Borrower, threatened litigation,
proceeding (including any proceeding in the United States Patent and Trademark
Office or any corresponding state office or agency) or outstanding decree,
order, judgment, settlement agreement or stipulation that restricts in any
manner Borrower’s use, transfer or licensing thereof or that may affect the
validity, use or enforceability thereof. There is no decree, order, judgment,
agreement, stipulation, arbitral award or other provision entered into in
connection with any litigation or proceeding that obligates Borrower to grant
licenses or ownership interest in any future Intellectual Property related to
the operation or conduct of the business of Borrower or Borrower Products. There
is no outstanding or, to the knowledge of Borrower, threatened, dispute or
disagreement of which Borrower is aware with respect to any contract, license or
agreement between Borrower and any third party related to the Intellectual
Property. Borrower has not received any written notice or claim challenging or
questioning Borrower’s ownership in any Intellectual Property (or written notice
of any claim challenging or questioning the ownership in any licensed
Intellectual Property of the owner thereof) or suggesting that any third party
has any claim of legal or beneficial ownership with respect thereto nor, to
Borrower’s knowledge, is there a reasonable basis for any such claim; except for
such notices or claims that could not reasonably be expected to have a Material
Adverse Effect. To the knowledge of Borrower after due inquiry, neither
Borrower’s use of its Intellectual Property nor the production and sale of
Borrower Products infringes the intellectual property or other rights of others.
     5.11. Financial Accounts. Schedule 5.11 is a true, correct and complete
list of (a) all banks and other financial institutions at which Borrower
maintains Deposit Accounts and (b) all institutions at which Borrower maintains
an account holding Investment Property, and such exhibit correctly identifies
the name, address and telephone number of each bank or other institution, the
name in which the account is held, a description of the purpose of the account,
and the complete account number therefor.
     5.12. Employee Loans. Borrower has no outstanding loans to any employee,
officer or director of the Borrower nor has Borrower guaranteed the payment of
any loan made to an employee, officer or director of the Borrower by a third
party.
     5.13. Capitalization; Investments. Borrower’s capitalization and a list of
its Subsidiaries is set forth on Schedule 5.14. Borrower does not own any stock,
partnership interest or other equity securities of

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Execution 8/30
any Person, except for Permitted Investments. All information set forth on
Schedule 5.14 is true, correct and complete.
SECTION 6. INSURANCE; INDEMNIFICATION
     6.1. Coverage. So long as there are any Secured Obligations outstanding,
Borrower shall cause to be carried and maintained commercial general liability
insurance, on an occurrence basis, against risks customarily insured against in
Borrower’s line of business. Such risks shall include the risks of bodily
injury, including death, property damage, personal injury, advertising injury,
and contractual liability per the terms of the indemnification agreement found
in Section 6.4. Borrower must maintain a minimum of Two Million Dollars
($2,000,000.00) of commercial general liability insurance for each occurrence.
So long as there are any Secured Obligations outstanding, Borrower shall also
cause to be carried and maintained insurance upon the tangible Collateral,
insuring against all risks of physical loss or damage howsoever caused, in an
amount not less than the full replacement cost of such Collateral. Borrower
shall also carry and maintain a fidelity insurance policy in an amount not less
than $500,000.
     6.2. Certificates. Borrower shall deliver to Lender certificates of
insurance that evidence Borrower’s compliance with its insurance obligations in
Section 6.1 and the obligations contained in this Section 6.2. Borrower’s
insurance certificate shall state Lender is an additional insured for commercial
general liability, an additional insured and a loss payee for all risk property
damage insurance, subject to the insurer’s approval, a loss payee for fidelity
insurance, and a loss payee for property insurance. Attached to the certificates
of insurance will be additional insured endorsements for liability and lender’s
loss payable endorsements for all risk property damage insurance and fidelity.
All certificates of insurance will provide for a minimum of thirty (30) days
advance written notice to Lender of cancellation or any other change adverse to
Lender’s interests. Any failure of Lender to scrutinize such insurance
certificates for compliance is not a waiver of any of Lender’s rights, all of
which are reserved.
     6.3. Indemnity. Borrower shall and does hereby indemnify and hold Lender,
its officers, directors, employees, agents, in-house attorneys, representatives
and shareholders harmless from and against any and all claims, costs, expenses,
damages and liabilities (including such claims, costs, expenses, damages and
liabilities based on liability in tort, including strict liability in tort),
including reasonable attorneys’ fees and disbursements and other costs of
investigation or defense (including those incurred upon any appeal), that may be
instituted or asserted against or incurred by Lender or any such Person as the
result of credit having been extended, suspended or terminated under this
Agreement and the other Loan Documents or the administration of such credit, or
in connection with or arising out of the transactions contemplated hereunder and
thereunder, or any actions or failures to act in connection therewith, or
arising out of the disposition or utilization of the Collateral, excluding in
all cases claims resulting solely from Lender’s gross negligence or willful
misconduct. Borrower agrees to pay, and to save Lender harmless from, any and
all liabilities with respect to, or resulting from any delay in paying, any and
all excise, sales or other similar taxes (excluding taxes imposed on or measured
by the net income of Lender) that may be payable or determined to be payable
with respect to any of the Collateral or this Agreement.
SECTION 7. COVENANTS OF BORROWER
     Borrower agrees as follows:
     7.1. Financial Reports. Borrower shall furnish to Lender the Compliance
Certificate in the form of Exhibit F and the financial statements listed
hereinafter (the “Financial Statements”):
     (a) as soon as practicable (and in any event within 25 days) after the end
of each month, unaudited consolidated financial statements as of the end of such
month, including a balance sheet and related statements of operations and cash
flows substantially in accordance with GAAP without footnotes and subject to
normal year end adjustments, accompanied by a report detailing any material
contingencies (including the commencement of any material litigation by or
against

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Execution 8/30
Borrower) or any other occurrence that would reasonably be expected to have a
Material Adverse Effect, all certified by Borrower’s Chief Executive Officer or
Chief Financial Officer;
     (b) as soon as practicable (and in any event within 45 days) after the end
of each calendar quarter, unaudited interim financial statements as of the end
of such calendar quarter (prepared on a consolidated basis), in accordance with
GAAP (except for the absence of footnotes and subject to normal year end
adjustments) including a balance sheet and related statements of operations and
cash flows accompanied by a report detailing any material contingencies
(including the commencement of any material litigation by or against Borrower)
or any other occurrence that would reasonably be expected to have a Material
Adverse Effect, all certified by Borrower’s Chief Executive Officer or Chief
Financial Officer;
     (c) as soon as practicable (and in any event within ninety (90) days) after
the end of each fiscal year, (i) unqualified (except for a “going concern”
qualification based on Borrower’s recurring losses from operations and
stockholders deficit) audited financial statements as of the end of such year
(prepared on a consolidated basis), in accordance with GAAP including a balance
sheet and related statements of operations and cash flows, and setting forth in
comparative form the corresponding figures for the preceding fiscal year,
certified by a firm of independent certified public accountants selected by
Borrower and reasonably acceptable to Lender, accompanied by any draft
management report available at such time from such accountants; and
     (d) budgets, operating plans and other financial information reasonably
requested by Lender.
Notwithstanding the foregoing, Borrower may delay delivery to Lender of the
quarterly financial statements for up to five days, and of the annual financial
statements for up to 15 days, to the extent Borrower is eligible for an
exemption under rule 12b-25. The executed Compliance Certificate may be sent via
facsimile to Lender at (866) 468-8916 or via e-mail to
financialstatements@herculestech.com. All Financial Statements required to be
delivered pursuant to clauses (a), (b) and (c) shall be sent via e-mail to
financialstatements@herculestech.com with a copy to pshah@herculestech.com;
provided that if e-mail is not available or sending such Financial Statements
via e-mail is not possible, they shall be sent via facsimile to Lender at:
(866) 468-8916, attention Chief Credit Officer, reference EPICEPT CORPORATION.
     7.2. Management Rights. Borrower shall permit any representative that
Lender authorizes, including its attorneys and accountants, to inspect the
Collateral, examine and make copies and abstracts of the books of account and
records of Borrower at reasonable times and upon reasonable notice during normal
business hours. In addition, any such representative shall have the right to
meet with management and officers of Borrower to discuss such books of account
and records. In addition, Lender shall be entitled at reasonable times and
intervals to consult with and advise the management and officers of Borrower
concerning significant business issues affecting Borrower. Such consultations
shall not unreasonably interfere with Borrower’s business operations. The
parties intend that the rights granted Lender shall constitute “management
rights” within the meaning of 29 C.F.R Section 2510.3-101(d)(3)(ii), but that
any advice, recommendations or participation by Lender with respect to any
business issues shall not be deemed to give Lender, nor be deemed an exercise by
Lender of, control over Borrower’s management or policies.
     7.3. Further Assurances. Borrower shall from time to time execute, deliver
and file, alone or with Lender, any financing statements, security agreements,
collateral assignments, notices, control agreements, or other documents to
perfect or give the highest priority to Lender’s Lien on the Collateral.
Borrower shall from time to time procure any instruments or documents as may be
requested by Lender, and take all further action that may be necessary or
desirable, or that Lender may reasonably request, to perfect and protect the
Liens granted hereby and thereby. In addition, and for such purposes only,
Borrower hereby authorizes Lender to execute and deliver on behalf of Borrower
and to file such financing statements,

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Execution 8/30
collateral assignments, notices, control agreements, security agreements and
other documents without the signature of Borrower either in Lender’s name or in
the name of Lender as agent and attorney-in-fact for Borrower. Borrower shall
protect and defend Borrower’s title to the Collateral and Lender’s Lien thereon
against all Persons claiming any interest adverse to Borrower or Lender.
     7.4. Compromise of Agreements. Borrower shall not outside the ordinary
course of Borrower’s business as conducted through the Closing Date (a) grant
any material extension of the time of payment of any of the Receivables or
General Intangibles, (b) to any material extent, compromise, compound or settle
the same for less than the full amount thereof, (c) release, wholly or partly,
any Person liable for the payment thereof in excess of $50,000 in the aggregate,
or (d) allow any credit or discount whatsoever thereon other than trade
discounts granted by Borrower in the ordinary course of business of Borrower.
     7.5. Indebtedness. Borrower shall not create, incur, assume, guarantee or
be or remain liable with respect to any Indebtedness, or permit any Subsidiary
so to do, other than Permitted Indebtedness, or prepay any Indebtedness or take
any actions which impose on Borrower an obligation to prepay any Indebtedness
other than as permitted under the Loan Documents.
     7.6. Collateral. Borrower shall at all times keep the Collateral and all
other property and assets used in Borrower’s business or in which Borrower now
or hereafter holds any interest free and clear from any Liens whatsoever (except
for Permitted Liens), and shall give Lender prompt written notice of any legal
process affecting the Collateral, such other property and assets, or any Liens
thereon. Borrower shall cause its Subsidiaries to protect and defend such
Subsidiary’s title to its assets from and against all Persons claiming any
interest adverse to such Subsidiary, and Borrower shall cause its Subsidiaries
at all times to keep such Subsidiary’s property and assets free and clear from
any legal process or Liens whatsoever (except for Permitted Liens), and shall
give Lender prompt written notice of any legal process affecting such
Subsidiary’s assets.
     7.7. Investments. Borrower shall not directly or indirectly acquire or own,
or make any Investment in or to any Person, or permit any of its Subsidiaries so
to do, other than Permitted Investments.
     7.8. Distributions. Borrower shall not, and shall not allow any Subsidiary
to, (a) repurchase or redeem any class of stock or other equity interest other
than pursuant to employee, director or consultant repurchase plans or other
similar agreements; provided, however, in each case if the repurchase or
redemption price does not exceed the original consideration paid for such stock
or equity interest, or (b) declare or pay any cash dividend or make a cash
distribution on any class of stock or other equity interest, or (c) lend money
to any employees, officers or directors or guarantee the payment of any such
loans granted by a third party in excess of $100,000 in the aggregate or
(d) waive, release or forgive any indebtedness owed by any employees, officers
or directors in excess of $100,000 in the aggregate, provided any Subsidiary may
make distributions of any amount to Borrower.
     7.9. Transfers. Except for Permitted Transfers, Borrower shall not
voluntarily or involuntarily transfer, sell, lease, license, lend or in any
other manner convey any equitable, beneficial or legal interest in any material
portion of their assets.
     7.10. Taxes. Borrower and its Subsidiaries shall pay when due all taxes,
fees or other charges of any nature whatsoever (together with any related
interest or penalties) now or hereafter imposed or assessed against Borrower or
any Subsidiary, Lender or the Collateral or upon Borrower’s or any Subsidiary’s
ownership, possession, use, operation or disposition thereof or upon Borrower’s
rents, receipts or earnings arising therefrom. Borrower and its Subsidiaries
shall file on or before the due date therefor all personal property tax returns
in respect of the Collateral. Notwithstanding the foregoing, Borrower and its
Subsidiaries may contest, in good faith and by appropriate proceedings, taxes
for which Borrower and its Subsidiaries maintains adequate reserves therefor in
accordance with GAAP.
     7.11. Corporate Changes. Except as set forth on Schedule 7.11, neither
Borrower nor any Subsidiary shall (i) change its corporate name, legal form or
jurisdiction of formation without prior written

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Execution 8/30
notice to the Lender, (ii) permit or suffer a Merger to occur or (iii) relocate
its chief executive office or its principal place of business, or without notice
to Lender, relocate any equipment having an aggregate value of more than
$150,000.
     7.12. Payments. Borrower shall arrange for automatic debit and
corresponding payment to Lender on each Payment Date of all periodic obligations
payable to Lender under each Note or Advance. All payments to Lender shall be
wired to Lender’s bank account at the following address:
Hercules Technology Growth Capital, Inc.
C/O Union Bank of California
400 California Street, 2nd Floor
San Francisco, CA 94104
Acct.# 4720023798
ABA# 122000496
     7.13. Deposit Accounts. Borrower shall not maintain any Deposit Accounts,
or accounts holding Investment Property, except with respect to which Lender has
a perfected security interest in each such account other than payroll accounts
to the extent Borrower is prohibited by law from granting a security interest
therein.
     7.14. Post-Closing Covenants. Borrower shall take the actions set forth on
Schedule 7.14 within the time periods set forth on Schedule 7.14.
SECTION 8. RIGHT TO PURCHASE STOCK
     8.1. Lender or its assignee or nominee shall have the right, in its
discretion, to purchase equity securities of Borrower having an aggregate
purchase price of up to $1,000,000 in the Next Event on the same terms and
conditions afforded to other investors in the Next Event.
SECTION 9. EVENTS OF DEFAULT
     The occurrence of any one or more of the following events shall be an Event
of Default:
     9.1. Payments. Borrower fails to pay any interest or Lender Expenses within
three days of the date when due and any principal amount on the due date; or
     9.2. Covenants. Borrower breaches or defaults in the performance of any
covenant or Secured Obligation under this Agreement, the Notes, or any of the
other Loan Documents, and (a) with respect to a default under any covenant under
this Agreement (other than under Sections 6.1, 7.5, 7.6, 7.7, 7.8, 7.9 or 7.14)
such default continues for more than twenty (20) days after the earlier of the
date on which (i) Lender has given notice of such default to Borrower and (ii)
Borrower has actual knowledge of such default or (b) with respect to a default
under any of Sections 6.1, 7.5, 7.6, 7.7, 7.8, 7.9 or 7.14, the occurrence of
such default; or
     9.3. Material Adverse Effect. A circumstance has occurred that would
reasonably be expected to have a Material Adverse Effect.
     9.4. Other Loan Documents. The occurrence of any default under the Warrant,
any Loan Document, or any agreement between Borrower and Lender and such default
continues for more than ten (10) days after the earlier of (a) Lender has given
notice of such default to Borrower, or (b) Borrower has actual knowledge of such
default; or
     9.5. Representations. Any representation or warranty made by Borrower in
any Loan Document or in the Warrant shall have been false or misleading in any
material respect; or
     9.6. Insolvency. Borrower (a) shall make an assignment for the benefit of
creditors; or (b) shall admit in writing its inability to pay its debts as they
become due, or its inability to pay or perform under the Loan Documents; or
(c) shall file a voluntary petition in bankruptcy; or (d) shall file any
petition, answer, or

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Execution 8/30
document seeking for itself any reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under any present or
future statute, law or regulation pertinent to such circumstances; or (e) shall
seek or consent to or acquiesce in the appointment of any trustee, receiver, or
liquidator of Borrower or of all or any substantial part (i.e., 33-1/3% or more)
of the assets or property of Borrower; or (f) shall cease operations of its
business as its business has normally been conducted, or terminate substantially
all of its employees; or (g) Borrower or its directors or majority shareholders
shall take any action initiating any of the foregoing actions described in
clauses (a) through (f); or either (i) thirty (30) days shall have expired after
the commencement of an involuntary action against Borrower seeking
reorganization, arrangement, composition, readjustment, liquidation, dissolution
or similar relief under any present or future statute, law or regulation,
without such action being dismissed or all orders or proceedings thereunder
affecting the operations or the business of Borrower being stayed; or (ii) a
stay of any such order or proceedings shall thereafter be set aside and the
action setting it aside shall not be timely appealed; or (iii) Borrower shall
file any answer admitting or not contesting the material allegations of a
petition filed against Borrower in any such proceedings; or (iv) the court in
which such proceedings are pending shall enter a decree or order granting the
relief sought in any such proceedings; or thirty (30) days shall have expired
after the appointment, without the consent or acquiescence of Borrower, of any
trustee, receiver or liquidator of Borrower or of all or any substantial part of
the properties of Borrower without such appointment being vacated; or
     9.7. Attachments; Judgments. Any material portion of Borrower’s assets is
attached or seized, or a levy is filed against any such assets, or a judgment or
judgments is/are entered for the payment of money, individually or in the
aggregate, of at least $100,000, or Borrower is enjoined or in any way prevented
by court order from conducting any material part of its business; or
     9.8. Warrant. The registration statement filed pursuant to Section 6 of the
Warrant ceases to be effective as to the Common Stock before the Termination
Date, as those terms are defined in the Warrant.
     9.9. Other Obligations. Either (a) the occurrence of any default under any
agreement or obligation of Borrower involving any obligation in excess of
$100,000 or that, when aggregated with any other such defaults, would reasonably
be expected to have a Material Adverse Effect.
SECTION 10. REMEDIES
     10.1. General. Upon and during the continuance of any one or more Events of
Default, (i) Lender may, at its option, accelerate and demand payment of all or
any part of the Secured Obligations and declare them to be immediately due and
payable (provided that upon the occurrence of an Event of Default of the type
described in Section 9.6, the Notes and all of the Secured Obligations shall
automatically be accelerated and made due and payable, in each case without any
further notice or act), and (ii) Lender may notify any of Borrower’s account
debtors to make payment directly to Lender, compromise the amount of any such
account on Borrower’s behalf and endorse Lender’s name without recourse on any
such payment for deposit directly to Lender’s account. Lender may exercise all
rights and remedies with respect to the Collateral under the Loan Documents or
otherwise available to it under the UCC and other applicable law, including the
right to release, hold, sell, lease, liquidate, collect, realize upon, or
otherwise dispose of all or any part of the Collateral and the right to occupy,
utilize, process and commingle the Collateral. All Lender’s rights and remedies
shall be cumulative and not exclusive.
     10.2. Collection; Foreclosure. Upon the occurrence and during the
continuance of any Event of Default, Lender may, at any time or from time to
time, apply, collect, liquidate, sell in one or more sales, lease or otherwise
dispose of, any or all of the Collateral, in its then condition or following any
commercially reasonable preparation or processing, in such order as Lender may
elect. Any such sale may be made either at public or private sale at its place
of business or elsewhere. Borrower agrees that any such public or private sale
may occur upon ten (10) calendar days’ prior written notice to Borrower. Lender
may require Borrower to assemble the Collateral and make it available to Lender
at a place designated by Lender that is reasonably convenient to Lender and
Borrower. The proceeds of any sale, disposition or other

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realization upon all or any part of the Collateral shall be applied by Lender in
the following order of priorities:
First, to Lender in an amount sufficient to pay in full Lender’s costs and
professionals’ and advisors’ fees and expenses as described in Section 11.11;
Second, to Lender in an amount equal to the then unpaid amount of the Secured
Obligations (including principal, interest, and the Default Rate interest), in
such order and priority as Lender may choose in its sole discretion; and
Finally, after the full, final, and indefeasible payment in Cash of all of the
Secured Obligations to Borrower or its designated representatives, to the extent
permitted by applicable law.
Lender shall be deemed to have acted reasonably in the custody, preservation and
disposition of any of the Collateral if it complies with the obligations of a
secured party under the UCC.
     10.3. No Waiver. Lender shall be under no obligation to marshal any of the
Collateral for the benefit of Borrower or any other Person, and Borrower
expressly waives all rights, if any, to require Lender to marshal any
Collateral.
     10.4. Cumulative Remedies. The rights, powers and remedies of Lender
hereunder shall be in addition to all rights, powers and remedies given by
statute or rule of law and are cumulative. The exercise of any one or more of
the rights, powers and remedies provided herein shall not be construed as a
waiver of or election of remedies with respect to any other rights, powers and
remedies of Lender.
SECTION 11. MISCELLANEOUS
     11.1. Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under such law, such provision shall be ineffective only to the extent
and duration of such prohibition or invalidity, without invalidating the
remainder of such provision or the remaining provisions of this Agreement.
     11.2. Notice. Except as otherwise provided herein, any notice, demand,
request, consent, approval, declaration, service of process or other
communication (including the delivery of Financial Statements) that is required,
contemplated, or permitted under the Loan Documents or with respect to the
subject matter hereof shall be in writing, and shall be deemed to have been
validly served, given, delivered, and received upon the earlier of: (i) the
first business day after transmission by facsimile or hand delivery or deposit
with an overnight express service or overnight mail delivery service; or
(ii) the third calendar day after deposit in the United States mails, with
proper first class postage prepaid, in each case addressed to the party to be
notified as follows:
     (a) If to Lender:
HERCULES TECHNOLOGY GROWTH CAPITAL, INC.
Legal Department
Attention: Chief Legal Officer and Parag Shah
525 University Ave., Suite 700
Palo Alto, CA 94301
Facsimile: 650- 473-9194
Telephone: 650-289-3068
     (b) If to Borrower:
EPICEPT CORPORATION
270 Sylvan Avenue

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Execution 8/30
Englewood Cliffs, NJ 07632
Attention: Jack Talley, CEO
Facsimile: 201-837-0200
Telephone: 201-894-8980
with a copy to:
Alexander D. Lynch, Esq.
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, NY 10153
Facsimile: (212) 310-8007
or to such other address as each party may designate for itself by like notice.
A notice, demand, request, consent, approval, declaration, service of process or
other communication delivered to a party hereto that is otherwise in accordance
with this Section will be effective despite the failure to deliver a copy of
that notice to any other Person.
     11.3. Entire Agreement; Amendments. This Agreement, the Notes, and the
other Loan Documents constitute the entire agreement and understanding of the
parties hereto in respect of the subject matter hereof and thereof, and
supersede and replace in their entirety any prior proposals, term sheets,
letters, negotiations or other documents or agreements, whether written or oral,
with respect to the subject matter hereof or thereof (including Lender’s
proposal letter dated August 3, 2006). None of the terms of this Agreement, the
Notes or any of the other Loan Documents may be amended except by an instrument
executed by each of the parties hereto.
     11.4. No Strict Construction. The parties hereto have participated jointly
in the negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties hereto and no presumption or burden of
proof shall arise favoring or disfavoring any party by virtue of the authorship
of any provisions of this Agreement.
     11.5. No Waiver. The powers conferred upon Lender by this Agreement are
solely to protect its rights hereunder and under the other Loan Documents and
its interest in the Collateral and shall not impose any duty upon Lender to
exercise any such powers. No omission or delay by Lender at any time to enforce
any right or remedy reserved to it, or to require performance of any of the
terms, covenants or provisions hereof by Borrower at any time designated, shall
be a waiver of any such right or remedy to which Lender is entitled, nor shall
it in any way affect the right of Lender to enforce such provisions thereafter.
     11.6. Survival. All agreements, representations and warranties contained in
this Agreement, the Notes and the other Loan Documents or in any document
delivered pursuant hereto or thereto shall be for the benefit of Lender. All
indemnification obligations and requirements relating to the payment of money,
including reimbursement of expenses, shall survive the execution and delivery of
this Agreement and the expiration or other termination of this Agreement.
     11.7. Successors and Assigns. The provisions of this Agreement and the
other Loan Documents shall inure to the benefit of and be binding on Borrower
and its permitted assigns (if any). Borrower shall not assign its obligations
under this Agreement, the Notes or any of the other Loan Documents without
Lender’s express prior written consent, and any such attempted assignment shall
be void and of no effect. Lender may assign, transfer, or endorse its rights
hereunder and under the other Loan Documents subject to Section 11.14, and all
of such rights shall inure to the benefit of Lender’s successors and assigns.

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Execution 8/30
     11.8. Governing Law. This Agreement, the Notes and the other Loan Documents
have been negotiated and delivered to Lender in the State of California, and
shall have been accepted by Lender in the State of California. Payment to Lender
by Borrower of the Secured Obligations is due in the State of California. This
Agreement, the Notes and the other Loan Documents shall be governed by, and
construed and enforced in accordance with, the laws of the State of California,
excluding conflict of laws principles that would cause the application of laws
of any other jurisdiction.
     11.9. Consent to Jurisdiction and Venue. All judicial proceedings (to the
extent that the reference requirement of Section 11.10 is not applicable)
arising in or under or related to this Agreement, the Notes or any of the other
Loan Documents may be brought in any state or federal court located in the State
of California. By execution and delivery of this Agreement, each party hereto
generally and unconditionally: (a) consents to nonexclusive personal
jurisdiction in Santa Clara County, State of California; (b) waives any
objection as to jurisdiction or venue in Santa Clara County, State of
California; (c) agrees not to assert any defense based on lack of jurisdiction
or venue in the aforesaid courts; and (d) irrevocably agrees to be bound by any
judgment rendered thereby in connection with this Agreement, the Notes or the
other Loan Documents. Service of process on any party hereto in any action
arising out of or relating to this Agreement shall be effective if given in
accordance with the requirements for notice set forth in Section 11.2, and shall
be deemed effective and received as set forth in Section 11.2. Nothing herein
shall affect the right to serve process in any other manner permitted by law or
shall limit the right of either party to bring proceedings in the courts of any
other jurisdiction.
     11.10. Mutual Waiver of Jury Trial / Judicial Reference.
          (a) Because disputes arising in connection with complex financial
transactions are most quickly and economically resolved by an experienced and
expert person and the parties wish applicable state and federal laws to apply
(rather than arbitration rules), the parties desire that their disputes be
resolved by a judge applying such applicable laws. EACH OF BORROWER AND LENDER
SPECIFICALLY WAIVES ANY RIGHT IT MAY HAVE TO TRIAL BY JURY OF ANY CAUSE OF
ACTION, CLAIM, CROSS-CLAIM, COUNTERCLAIM, THIRD PARTY CLAIM OR ANY OTHER CLAIM
(COLLECTIVELY, “CLAIMS”) ASSERTED BY BORROWER AGAINST LENDER OR ITS ASSIGNEE OR
BY LENDER OR ITS ASSIGNEE AGAINST BORROWER. This waiver extends to all such
Claims, including Claims that involve Persons other than Borrower and Lender;
Claims that arise out of or are in any way connected to the relationship between
Borrower and Lender; and any Claims for damages, breach of contract, tort,
specific performance, or any equitable or legal relief of any kind, arising out
of this Agreement, any other Loan Document.
          (b) If the waiver of jury trial set forth in Section 11.10(a) is
ineffective or unenforceable, the parties agree that all Claims shall be
resolved by reference to a private judge sitting without a jury, pursuant to
Code of Civil Procedure Section 638, before a mutually acceptable referee or, if
the parties cannot agree, a referee selected by the Presiding Judge of the Santa
Clara County, California. Such proceeding shall be conducted in Santa Clara
County, California, with California rules of evidence and discovery applicable
to such proceeding.
          (c) In the event Claims are to be resolved by judicial reference,
either party may seek from a court identified in Section 11.10, any prejudgment
order, writ or other relief and have such prejudgment order, writ or other
relief enforced to the fullest extent permitted by law notwithstanding that all
Claims are otherwise subject to resolution by judicial reference.

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     11.11. Professional Fees. Borrower promises to pay Lender’s fees and
expenses necessary to finalize the Loan Documents, including but not limited to
reasonable attorneys fees, UCC searches, filing costs, and other miscellaneous
expenses. In addition, Borrower promises to pay any and all reasonable
attorneys’ and other professionals’ fees and expenses incurred by Lender after
the Closing Date in connection with or related to: (a) the Loan; (b) the
administration, collection, or enforcement of the Loan; (c) the amendment or
modification of the Loan Documents; (d) any waiver, consent, release, or
termination under the Loan Documents; (e) the protection, preservation, sale,
lease, liquidation, or disposition of Collateral or the exercise of remedies
with respect to the Collateral; (f) any legal, litigation, administrative,
arbitration, or out of court proceeding in connection with or related to
Borrower or the Collateral, and any appeal or review thereof; and (g) any
bankruptcy, restructuring, reorganization, assignment for the benefit of
creditors, workout, foreclosure, or other action related to Borrower, the
Collateral, the Loan Documents, including representing Lender in any adversary
proceeding or contested matter commenced or continued by or on behalf of
Borrower’s estate, and any appeal or review thereof.
     11.12. Confidentiality. Lender acknowledges that certain items of
Collateral and information provided to Lender by Borrower are confidential and
proprietary information of Borrower, if and to the extent such information is
marked as confidential by Borrower at the time of disclosure (the “Confidential
Information”). Accordingly, Lender agrees that any Confidential Information it
may obtain in the course of acquiring, administering, or perfecting Lender’s
security interest in the Collateral shall not be disclosed to any other person
or entity in any manner whatsoever, in whole or in part, without the prior
written consent of Borrower, except that Lender may disclose any such
information: (a) to its own directors, officers, employees, accountants, counsel
and other professional advisors and to its affiliates if Lender in its sole
discretion determines that any such party should have access to such information
in connection with such party’s responsibilities in connection with the Loan or
this Agreement and, provided that such recipient of such Confidential
Information either (i) agrees to be bound by the confidentiality provisions of
this paragraph or (ii) is otherwise subject to confidentiality restrictions that
reasonably protect against the disclosure of Confidential Information; (b) if
such information is generally available to the public; (c) if required or
appropriate in any report, statement or testimony submitted to any governmental
authority having or claiming to have jurisdiction over Lender; (d) if required
or appropriate in response to any summons or subpoena or in connection with any
litigation, to the extent permitted or deemed advisable by Lender’s counsel;
(e) to comply with any legal requirement or law applicable to Lender; (f) to the
extent reasonably necessary in connection with the exercise of any right or
remedy under any Loan Document, including Lender’s sale, lease, or other
disposition of Collateral after default; (g) to any participant or assignee of
Lender or any prospective participant or assignee; provided that such
participant or assignee or prospective participant or assignee agrees in writing
to be bound by this Section prior to disclosure; or (h) otherwise with the prior
consent of Borrower; provided that any disclosure made in violation of this
Agreement shall not affect the obligations of Borrower or any of its affiliates
or any guarantor under this Agreement or the other Loan Documents.
     11.13. Assignment of Rights. Borrower acknowledges and understands that
Lender may sell and assign all or part of its interest hereunder and under the
Note and Loan Documents to any person or entity (an “Assignee”). After such
assignment the term “Lender” as used in the Loan Documents shall mean and
include such Assignee, and such Assignee shall be vested with all rights, powers
and remedies of Lender hereunder with respect to the interest so assigned; but
with respect to any such interest not so transferred, Lender shall retain all
rights, powers and remedies hereby given. No such assignment by Lender shall
relieve Borrower of any of its obligations hereunder. Lender agrees that in the
event of any transfer by it of the Note(s), it will endorse thereon a notation
as to the portion of the principal of the Note(s), which shall have been paid at
the time of such transfer and as to the date to which interest shall have been
last paid thereon. As long as an Event of Default is not continuing, Lender will
provide Borrower with at least ten business days notice before any assignment to
an Assignee that is not an affiliate of Lender, in which case Borrower shall
have the option, at any time before the effectiveness of the proposed
assignment, to prepay the Advance in accordance with Section 2.7 without any
prepayment fee provided for in such Section.

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Execution 8/30
     11.14. Revival of Secured Obligations. This Agreement and the Loan
Documents shall remain in full force and effect and continue to be effective if
any petition is filed by or against Borrower for liquidation or reorganization,
if Borrower becomes insolvent or makes an assignment for the benefit of
creditors, if a receiver or trustee is appointed for all or any significant part
of Borrower’s assets, or if any payment or transfer of Collateral is recovered
from Lender. The Loan Documents and the Secured Obligations and Collateral
security shall continue to be effective, or shall be revived or reinstated, as
the case may be, if at any time payment and performance of the Secured
Obligations or any transfer of Collateral to Lender, or any part thereof is
rescinded, avoided or avoidable, reduced in amount, or must otherwise be
restored or returned by, or is recovered from, Lender or by any obligee of the
Secured Obligations, whether as a “voidable preference,” “fraudulent
conveyance,” or otherwise, all as though such payment, performance, or transfer
of Collateral had not been made. In the event that any payment, or any part
thereof, is rescinded, reduced, avoided, avoidable, restored, returned, or
recovered, the Loan Documents and the Secured Obligations shall be deemed,
without any further action or documentation, to have been revived and reinstated
except to the extent of the full, final, and indefeasible payment to Lender in
Cash.
     11.15. Counterparts. This Agreement and any amendments, waivers, consents
or supplements hereto may be executed in any number of counterparts, and by
different parties hereto in separate counterparts, each of which when so
delivered shall be deemed an original, but all of which counterparts shall
constitute but one and the same instrument.
     11.16. No Third Party Beneficiaries. No provisions of the Loan Documents
are intended, nor will be interpreted, to provide or create any third-party
beneficiary rights or any other rights of any kind in any person other than
Lender and Borrower unless specifically provided otherwise herein, and, except
as otherwise so provided, all provisions of the Loan Documents will be personal
and solely between the Lender and the Borrower.
     11.17. Specific Performance. The parties hereto hereby declare that it is
impossible to measure in money the damages which will accrue to Lender by reason
of Borrower’s failure to perform any of the obligations under this Agreement and
agree that the terms of this Agreement shall be specifically enforceable by
Lender. If Lender institutes any action or proceeding to specifically enforce
the provisions hereof, any Person against whom such action or proceeding is
brought hereby waives the claim or defense therein that Lender has an adequate
remedy at law, and such Person shall not offer in any such action or proceeding
the claim or defense that such remedy at law exists.
     11.18. Publicity. Lender may use Borrower’s name and logo, and include a
brief description of the relationship between Borrower and Lender, in Lender’s
marketing materials upon prior written approval of Borrower, such approval not
to be unreasonably withheld.
SECTION 12. CO-BORROWERS.
     12.1. Co-Borrowers. Borrowers are jointly and severally liable for the
Obligations and Lender may proceed against one Borrower to enforce the
Obligations without waiving its right to proceed against the other Borrower.
This Agreement and the Loan Documents are a primary and original obligation of
each Borrower and shall remain in effect notwithstanding future changes in
conditions, including any change of law or any invalidity or irregularity in the
creation or acquisition of any Obligations or in the execution or delivery of
any agreement between Lender and any Borrower. Each Borrower shall be liable for
existing and future Obligations as fully as if all of the Advance was advanced
to such Borrower. Lender may rely on any certificate or representation made by
any Borrower as made on behalf of, and binding on, all Borrowers. Each Borrower
appoints each other Borrower as its agent with all necessary power and authority
to give and receive notices, certificates or demands for and on behalf of both
Borrowers, to act as disbursing agent for receipt of any loans on behalf of each
Borrower and to apply to Lender on behalf of each Borrower for the Advance, any
waivers and any consents. This authorization cannot be revoked, and Lender need
not inquire as to one Borrower’s authority to act for or on behalf of another
Borrower.

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Execution 8/30
     12.2. Subrogation and Similar Rights. Each Borrower irrevocably waives,
until all Obligations are satisfied, all rights that it may have at law or in
equity (including, without limitation, any law subrogating the Borrower to the
rights of Lender under the Loan Documents) to seek contribution,
indemnification, or any other form of reimbursement from any other Borrower, or
any other Person now or hereafter primarily or secondarily liable for any of the
Obligations, for any payment made by the Borrower with respect to the
Obligations in connection with the Loan Documents or otherwise and all rights
that it might have to benefit from, or to participate in, any security for the
Obligations as a result of any payment made by the Borrower with respect to the
Obligations in connection with the Loan Documents or otherwise. Any agreement
providing for indemnification, reimbursement or any other arrangement prohibited
under this Section shall be null and void. If any payment is made to a Borrower
in contravention of this Section, such Borrower shall hold such payment in trust
for Lender and such payment shall be promptly delivered to Lender for
application to the Obligations, whether matured or unmatured.
     12.3. Waivers of Notice. Each Borrower waives, to the extent permitted by
law, notice of acceptance hereof; notice of the existence, creation or
acquisition of any of the Obligations; notice of an Event of Default except as
set forth herein; notice of the amount of the Obligations outstanding at any
time; notice of any adverse change in the financial condition of any other
Borrower or of any other fact that might increase the Borrower’s risk;
presentment for payment; demand; protest and notice thereof as to any
instrument; and all other notices and demands to which the Borrower would
otherwise be entitled by virtue of being a co-borrower or a surety. Each
Borrower waives any defense arising from any defense of any other Borrower, or
by reason of the cessation from any cause whatsoever of the liability of any
other Borrower. Lender’s failure at any time to require strict performance by
any Borrower of any provision of the Loan Documents shall not waive, alter or
diminish any right of Lender thereafter to demand strict compliance and
performance therewith. Each Borrower also waives any defense arising from any
act or omission of Lender that changes the scope of the Borrower’s risks
hereunder. Each Borrower hereby waives any right to assert against Lender any
defense (legal or equitable), setoff, counterclaim, or claims that such Borrower
individually may now or hereafter have against another Borrower or any other
Person liable to Lender with respect to the Obligations in any manner or
whatsoever.
     12.4. Subrogation Defenses. Until all Obligations are paid in full and
Lender has no further obligation to make Credit Extensions to Borrower, each
Borrower hereby waives any defense based on impairment or destruction of its
subrogation or other rights against any other Borrower and waives all benefits
which might otherwise be available to it under California Civil Code
Sections 2809, 2810, 2819, 2839, 2845, 2848, 2849, 2850, 2899, and 3433 and
California Code of Civil Procedure Sections 580a, 580b, 580d and 726, as those
statutory provisions are now in effect and hereafter amended, and under any
other similar statutes now and hereafter in effect.
     12.5. Right to Settle, Release.
     (a) The liability of Borrowers hereunder shall not be diminished by (i) any
agreement, understanding or representation that any of the Obligations is or was
to be guaranteed by another Person or secured by other property, or (ii) any
release or unenforceability, whether partial or total, of rights, if any, which
Lender may now or hereafter have against any other Person, including another
Borrower, or property with respect to any of the Obligations.
     (b) Without notice to any given Borrower and without affecting the
liability of any given Borrower hereunder, Lender may (i) compromise, settle,
renew, extend the time for payment, change the manner or terms of payment,
discharge the performance of, decline to enforce, or release all or any of the
Obligations with respect to any other Borrower by written agreement with such
other Borrower, (ii) grant other indulgences to another Borrower in respect of
the Obligations, (iii) modify in any manner any documents relating to the
Obligations with respect to any other Borrower by written agreement with such
other Borrower, (iv) release, surrender or exchange any deposits or other
property securing the Obligations, whether pledged by a Borrower or any other
Person, or (v) compromise, settle, renew, or

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Execution 8/30
extend the time for payment, discharge the performance of, decline to enforce,
or release all or any obligations of any guarantor, endorser or other Person who
is now or may hereafter be liable with respect to any of the Obligations.
     12.6. Subordination. All indebtedness of a Borrower now or hereafter
arising held by another Borrower is subordinated to the Obligations and the
Borrower holding the indebtedness shall take all actions reasonably requested by
Lender to effect, to enforce and to give notice of such subordination.

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Execution 8/30
     IN WITNESS WHEREOF, Borrower and Lender have duly executed and delivered
this Loan and Security Agreement as of the day and year first above written.

                      BORROWER:   MAXIM PHARMACEUTICALS, INC.    
 
      Signature:   /s/ Robert W. Cook    
 
         
 
   
 
      Print Name:   Robert W. Cook     
 
         
 
   
 
      Title:   SVP & CFO    
 
         
 
   
 
                        EPICEPT CORPORATION    
 
               
 
      Signature:   /s/ Robert W. Cook    
 
         
 
   
 
               
 
      Print Name:   Robert W. Cook     
 
         
 
   
 
               
 
      Title:   SVP & CFO    
 
         
 
   
 
                Accepted in Palo Alto, California:            
 
                LEND   ER:   HERCULES TECHNOLOGY GROWTH CAPITAL, INC.    
 
               
 
      Signature:   /s/ Scott Harney    
 
         
 
   
 
               
 
      Print Name:   Scott Harney     
 
         
 
   
 
               
 
      Title:   Chief Legal Officer     
 
         
 
   

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