Exhibit 10.7

 

LOAN AGREEMENT

 

This Loan Agreement (this “Agreement”) is dated as of February     , 2011
between Synergy Pharmaceuticals, Inc., a Florida corporation (the “Company”),
and the lender identified on the signature page hereto (the “Lender”).

 

WHEREAS, the Company is borrowing from Lender, and Lender is lending to the
Company, the aggregate principal amount of $950,000 upon the terms and
conditions set forth in this Agreement;

 

NOW, THEREFORE, the Company and the Lender agree as follows:

 

ARTICLE I.

DEFINITIONS

 

1.1           Definitions.  In addition to the terms defined elsewhere in this
Agreement: (a) capitalized terms that are not otherwise defined herein have the
meanings given to such terms in the Note (as defined herein), and (b) the
following terms have the meanings set forth in this Section :

 

“Action” shall have the meaning ascribed to such term in Section 2.1 (g).

 

“Affiliate” means any Person that, directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common control with a
Person, as such terms are used in and construed under Rule 405 under the
Securities Act.  With respect to a Lender, any investment fund or managed
account that is managed on a discretionary basis by the same investment manager
as such Lender will be deemed to be an Affiliate of such Lender.

 

“Board of Directors” means the board of directors of the Company.

 

“Business Day” means any day except any Saturday, any Sunday, any day which is a
federal legal holiday in the United States or any day on which banking
institutions in the State of New York are authorized or required by law or other
governmental action to close.

 

“Commission” means the Securities and Exchange Commission.

 

“Company Counsel” means Sichenzia Ross Friedman Ference LLP, with offices
located at 61 Broadway, New York, New York 10006.

 

“Note” means the Promissory Notes due, subject to the terms therein, April 1,
2011, issued by the Company to the Lender hereunder, in the form of Exhibit A
attached hereto.

 

“Disclosure Schedules” shall have the meaning ascribed to such term in Section.

 

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“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder.

 

“GAAP” shall have the meaning ascribed to such term in Section 2.1(e).

 

“Liens” means a lien, charge, security interest, encumbrance, right of first
refusal, preemptive right or other restriction.

 

“Material Adverse Effect” shall have the meaning assigned to such term in
Section 2.10.

 

“Material Permits” shall have the meaning ascribed to such term in
Section 2.1(i).

 

“Person” means an individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability company, joint
stock company, government (or an agency or subdivision thereof) or other entity
of any kind.

 

“Proceeding” means an action, claim, suit, investigation or proceeding
(including, without limitation, an informal investigation or partial proceeding,
such as a deposition), whether commenced or threatened.

 

“Lender Party” shall have the meaning ascribed to such term in Article III.

 

“SEC Reports” means all reports, schedules, forms, statements and other
documents, including any amendments, the exhibits thereto and documents
incorporated by reference therein, required to be filed by the Company under the
Securities Act and the Exchange Act, including pursuant to Section 13(a) or
15(d) thereof.

 

“Securities Act” means the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.

 

“Trading Market” means the following markets or exchanges on which the Common
Stock is listed or quoted for trading on the date in question: the American
Stock Exchange, the NASDAQ Capital Market, the NASDAQ Global Market, the NASDAQ
Global Select Market, the New York Stock Exchange or the OTC Bulletin Board.

 

“Transaction Documents” means this Agreement and the Note, all exhibits and
schedules thereto and hereto and any other documents or agreements executed in
connection with the transactions contemplated hereunder.

 

1.2           Purchase and Sale.

 

(a)   Simultaneously with the execution and delivery of this Agreement,

 

(i)            Lender is disbursing or causing to be disbursed in accordance
with a separate letter of instructions provided by the Company the principal sum
of $500,000; and

 

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(ii)           the Company is delivering or causing to be delivered to the
Lender, a Note payable to the Lender in the principal amount of $500,000.

 

(b)   On February 21, 2011,

 

(i)            Lender will disburse or cause to be disbursed in accordance with
a separate letter of instructions provided by the Company an additional
principal amount of $450,000; and

 

(ii)           The Company will deliver or cause to be delivered to the Lender,
a Note payable to the Lender in the principal amount of $450,000.

 

ARTICLE II.

REPRESENTATIONS AND WARRANTIES

 

2.1           Representations and Warranties of the Company.  The Company makes
the representations and warranties set forth below to the Lender.  Except as set
forth under the corresponding section of the disclosure schedules delivered to
the Lender concurrently herewith (the “Disclosure Schedules”) which Disclosure
Schedules shall be deemed a part hereof, and shall qualify any representation or
otherwise made herein to the extent of the disclosure contained in the
corresponding section of the Disclosure Schedules, or as set forth in the
Company’s filings with the Securities and Exchange Commission.

 

(a)           Organization and Qualification.  The Company is an entity duly
incorporated or otherwise organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation or organization (as
applicable), with the requisite corporate power and corporate authority to own
and use its properties and assets and to carry on its business as currently
conducted.  The Company is not in violation or default of any of the provisions
of its certificate or articles of incorporation, bylaws or other organizational
or charter documents.  The Company is duly qualified to conduct business and is
in good standing as a foreign corporation or other entity in each jurisdiction
in which the nature of the business conducted or property owned by it makes such
qualification necessary, except where the failure to be so qualified or in good
standing, as the case may be, could not have or reasonably be expected to result
in (i) a material adverse effect on the legality, validity or enforceability of
any Transaction Document, (ii) a material adverse effect on the results of
operations, assets, business  or condition (financial or otherwise) of the
Company, taken as a whole, or (iii) a material adverse effect on the Company’s
ability to perform in any material respect on a timely basis its obligations
under any Transaction Document (any of (i), (ii) or (iii), a “Material Adverse
Effect”) and no Proceeding has been instituted in any such jurisdiction
revoking, limiting or curtailing or seeking to revoke, limit or curtail such
power and authority or qualification.

 

(b)           Authorization; Enforcement.  The Company has the requisite
corporate power and authority to enter into and to consummate the transactions
contemplated by each of the Transaction Documents and otherwise to carry out its
obligations hereunder and thereunder.  The execution and delivery of each of the
Transaction Documents by the Company and the consummation by it of the
transactions contemplated hereby and thereby have been duly

 

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authorized by all necessary action on the part of the Company and no further
action is required by the Company, the Board of Directors or the Company’s
stockholders in connection therewith.  Each Transaction Document has been (or
upon delivery will have been) duly executed by the Company and, when delivered
in accordance with the terms hereof and thereof, will constitute the valid and
binding obligation of the Company enforceable against the Company in accordance
with its terms, except (i) as limited by general equitable principles and
applicable bankruptcy, insolvency, reorganization, moratorium and other laws of
general application affecting enforcement of creditors’ rights generally,
(ii) as limited by laws relating to the availability of specific performance,
injunctive relief or other equitable remedies and (iii) insofar as
indemnification and contribution provisions may be limited by applicable law.

 

(c)           No Conflicts.  The execution, delivery and performance of the
Transaction Documents by the Company and the consummation by the Company of the
other transactions contemplated hereby and thereby do not and will not:
(i) conflict with or violate any provision of the Company’s certificate or
articles of incorporation, bylaws or other organizational or charter documents,
or (ii) conflict with, or constitute a default (or an event that with notice or
lapse of time or both would become a default) under, result in the creation of
any Lien upon any of the properties or assets of the Company, or give to others
any rights of termination, amendment, acceleration or cancellation (with or
without notice, lapse of time or both) of, any agreement, credit facility, debt
or other instrument (evidencing a Company debt or otherwise) or other
understanding to which the Company is a party or by which any property or asset
of the Company is bound or affected, or (iii) conflict with or result in a
violation of any law, rule, regulation, order, judgment, injunction, decree or
other restriction of any court or governmental authority to which the Company is
subject (including federal and state securities laws and regulations), or by
which any property or asset of the Company is bound or affected; except in the
case of each of clauses (ii) and (iii), such as could not have or reasonably be
expected to result in a Material Adverse Effect.

 

(d)           Filings, Consents and Approvals.  The Company is not required to
obtain any consent, waiver, authorization or order of, give any notice to, or
make any filing or registration with, any court or other federal, state, local
or other governmental authority or other Person in connection with the
execution, delivery and performance by the Company of the Transaction Documents,
except for SEC filings.

 

(e)           Financial Statements. The financial statements included in the SEC
Reports have been prepared in accordance with United States generally accepted
accounting principles applied on a consistent basis during the periods involved
(“GAAP”), except that unaudited financial statements may not contain all
footnotes required by GAAP, and fairly present in all material respects the
financial position of the Company and its consolidated subsidiaries, if any, as
of the dates thereof and the results of operations and cash flows for the
periods then ended, subject, in the case of unaudited statements, to normal,
immaterial, year-end audit adjustments.

 

(f)            Material Changes. Since the date of the latest audited financial
statements included within the SEC Reports (i) there has been no event,
occurrence or development that has had or that could reasonably be expected to
result in a Material Adverse Effect, (ii) the Company

 

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has not incurred any liabilities (contingent or otherwise) other than (A) trade
payables and accrued expenses incurred in the ordinary course of business
consistent with past practice and (B) liabilities not required to be reflected
in the Company’s financial statements pursuant to GAAP, (iii) the Company has
not altered its method of accounting and (iv) the Company has not declared or
made any dividend or distribution of cash or other property to its stockholders
or purchased, redeemed or made any agreements to purchase or redeem any shares
of its capital stock.

 

(g)           Litigation.  Except as disclosed in the SEC Reports, there is no
action, suit, inquiry, notice of violation, proceeding or investigation pending
or, to the knowledge of the Company, threatened against or affecting the Company
or any its properties before or by any court, arbitrator, governmental or
administrative agency or regulatory authority (federal, state, county, local or
foreign) (collectively, an “Action”) which (i) adversely affects or challenges
the legality, validity or enforceability of any of the Transaction Documents or
the Note or (ii) could, if there were an unfavorable decision, have or
reasonably be expected to result in a Material Adverse Effect.

 

(h)           Compliance.  The Company has not received notice that it (i) is in
default under or in violation of (and no event has occurred that has not been
waived that, with notice or lapse of time or both, would result in a default by
the Company under), nor has the Company received notice of a claim that it is in
default under or that it is in violation of, any indenture, loan or credit
agreement or any other agreement or instrument to which it is a party or by
which it or any of its properties is bound (whether or not such default or
violation has been waived), (ii) is in violation of any order of any court,
arbitrator or governmental body, or (iii) is or has been in violation of any
statute, rule or regulation of any governmental authority, including without
limitation all foreign, federal, state and local laws applicable to its business
and all such laws that affect the environment, except in each case as could not
have or reasonably be expected to result in a Material Adverse Effect.

 

(i)            Regulatory Permits. The Company possesses all certificates,
authorizations and permits issued by the appropriate federal, state, local or
foreign regulatory authorities necessary to conduct its business as described in
the SEC Reports, except where the failure to possess such permits could not have
or reasonably be expected to result in a Material Adverse Effect (“Material
Permits”), and neither the Company nor any Subsidiary has received any notice of
proceedings relating to the revocation or modification of any Material Permit.

 

(j)            Title to Assets.  The Company has good and marketable title in
fee simple to all real property owned or leased by it that is material to the
business of the Company and good and marketable title in all personal property
owned or leased by it that is material to the business of the Company, in each
case free and clear of all Liens, except for Liens as do not materially affect
the value of such property and do not materially interfere with the use made and
proposed to be made of such property by the Company and Liens for the payment of
federal, state or other taxes, the payment of which is neither delinquent nor
subject to penalties.  Any real property and facilities held under lease by the
Company are held by it under valid, subsisting and enforceable leases with which
the Company is in compliance in all material respects.

 

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(k)           Certain Fees.  No brokerage or finder’s fees or commissions are or
will be payable by the Company to any broker, financial advisor or consultant,
finder, placement agent, investment banker, bank or other Person with respect to
the transactions contemplated by the Transaction Documents.  The Lender shall
have no obligation with respect to any fees or with respect to any claims made
by or on behalf of other Persons for fees of a type contemplated in this
Section that may be due in connection with the transactions contemplated by the
Transaction Documents.

 

(l)            Disclosure.  All disclosure furnished by or on behalf of the
Company to the Lender regarding the Company, its business and the transactions
contemplated hereby, including the Disclosure Schedules to this Agreement, is
true and correct and does not contain any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements made
therein, in light of the circumstances under which they were made, not
misleading.

 

(m)          Tax Status.            Except for matters that would not,
individually or in the aggregate, have or reasonably be expected to result in a
Material Adverse Effect, the Company has filed all necessary federal, state and
foreign income and franchise tax returns and has paid or accrued all taxes shown
as due thereon, and the Company has no knowledge of a tax deficiency which has
been asserted or threatened against the Company.

 

(n)           No General Solicitation. Neither the Company nor any person acting
on behalf of the Company has offered or sold any of the Notes by any form of
general solicitation or general advertising.  The Company has offered the Notes
for sale only to the Lender, who is an “accredited investor” within the meaning
of Rule 501 under the Securities Act.

 

(o)           Foreign Corrupt Practices.  Neither the Company, nor to the
knowledge of the Company, any agent or other person acting on behalf of the
Company, has (i) directly or indirectly, used any funds for unlawful
contributions, gifts, entertainment or other unlawful expenses related to
foreign or domestic political activity, (ii) made any unlawful payment to
foreign or domestic government officials or employees or to any foreign or
domestic political parties or campaigns from corporate funds, (iii) failed to
disclose fully any contribution made by the Company (or made by any person
acting on its behalf of which the Company is aware) which is  in violation of
law, or (iv) violated in any material respect any provision of the Foreign
Corrupt Practices Act of 1977, as amended.

 

2.2           Representations and Warranties of the Lender.  The Lender hereby,
represents and warrants as of the date hereof and as of the Closing Date to the
Company as follows:

 

(a)           Authority.  Each Transaction Document to which it is a party has
been duly executed by such Lender, and when delivered by such Lender in
accordance with the terms hereof, will constitute the valid and legally binding
obligation of such Lender, enforceable against it in accordance with its terms,
except (i) as limited by general equitable principles and applicable bankruptcy,
insolvency, reorganization, moratorium and other laws of general application
affecting enforcement of creditors’ rights generally, (ii) as limited by laws
relating to the availability of specific performance, injunctive relief or other
equitable remedies and (iii)

 

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insofar as indemnification and contribution provisions may be limited by
applicable law.

 

(b)           General Solicitation.  The Lender is not purchasing the Note as a
result of any advertisement, article, notice or other communication regarding
the Note published in any newspaper, magazine or similar media or broadcast over
television or radio or presented at any seminar or any other general
solicitation or general advertisement.

 

(c)           Lender Status.  At the time such Lender was offered the Notes, it
was, and as of the date hereof it is, it will be (i) an “accredited investor” as
defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Securities
Act.  Such Lender is not required to be registered as a broker-dealer under
Section 15 of the Exchange Act.

 

(d)           Experience of Such Lender.  Such Lender, either alone or together
with its representatives, has such knowledge, sophistication and experience in
business and financial matters so as to be capable of evaluating the merits and
risks of the prospective investment in the Notes, and has so evaluated the
merits and risks of such investment.  Such Lender is able to bear the economic
risk of an investment in the Notes and, at the present time, is able to afford a
complete loss of such investment.

 

ARTICLE III. INDEMNIFICATION OF LENDER

 

The Company will indemnify and hold the Lender  (a “Lender Party”) harmless from
any and all losses, liabilities, obligations, claims, contingencies, damages,
costs and expenses, including all judgments, amounts paid in settlements, court
costs and reasonable attorneys’ fees and costs of investigation that any such
Lender Party may suffer or incur as a result of or relating to (a) any breach of
any of the representations, warranties, covenants or agreements made by the
Company in this Agreement or in the other Transaction Documents or (b) any
action instituted against the Lender, or any of its Affiliates, by any
stockholder of the Company who is not an Affiliate of the Lender, with respect
to any of the transactions contemplated by the Transaction Documents (unless
such action is based upon a breach of the Lender’s representations, warranties
or covenants under the Transaction Documents or any agreements or understandings
such Lender may have with any such stockholder or any violations by the Lender
of state or federal securities laws or any conduct by such Lender which
constitutes fraud, gross negligence, willful misconduct or malfeasance). If any
action shall be brought against any Lender Party in respect of which indemnity
may be sought pursuant to this Agreement, such Lender Party shall promptly
notify the Company in writing, and the Company shall have the right to assume
the defense thereof with counsel of its own choosing reasonably acceptable to
the Lender Party.  Any Lender Party shall have the right to employ separate
counsel in any such action and participate in the defense thereof, but the fees
and expenses of such counsel shall be at the expense of such Lender Party except
to the extent that (i) the employment thereof has been specifically authorized
by the Company in writing, (ii) the Company has failed after a reasonable period
of time to assume such defense and to employ counsel or (iii) in such action
there is, in the reasonable opinion of such separate counsel, a material
conflict on any material issue between the position of the Company and the
position of such Lender Party, in which case the Company shall be responsible
for the reasonable fees and expenses of no more than one such separate counsel. 
The Company will not be liable to any Lender Party under this Agreement (y) for
any settlement by a Lender

 

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Party effected without the Company’s prior written consent, which shall not be
unreasonably withheld or delayed; or (z) to the extent, but only to the extent
that a loss, claim, damage or liability is attributable to any Lender Party’s
breach of any of the representations, warranties, covenants or agreements made
by such Lender Party in this Agreement or in the other Transaction Documents.

 

ARTICLE IV.

MISCELLANEOUS

 

4.1           Entire Agreement.  The Transaction Documents, together with the
exhibits and schedules thereto, contain the entire understanding of the parties
with respect to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters, which the parties
acknowledge have been merged into such documents, exhibits and schedules.

 

4.2           Notices.  Any and all notices or other communications or
deliveries required or permitted to be provided hereunder shall be in writing
and shall be deemed given and effective on the earliest of (a) the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile number set forth on the signature pages attached hereto prior to
5:30 p.m. (New York City time) on a Trading Day, (b) the next Trading Day after
the date of transmission, if such notice or communication is delivered via
facsimile at the facsimile number set forth on the signature pages attached
hereto on a day that is not a Trading Day or later than 5:30 p.m. (New York City
time) on any Trading Day, (c) the second Trading Day following the date of
mailing, if sent by U.S. nationally recognized overnight courier service, or
(d) upon actual receipt by the party to whom such notice is required to be
given.  The address for such notices and communications shall be as set forth on
the signature pages attached hereto.

 

4.3           Amendments; Waivers.  No provision of this Agreement may be
waived, modified, supplemented or amended except in a written instrument signed
by the Company and the Lender.  No waiver of any default with respect to any
provision, condition or requirement of this Agreement shall be deemed to be a
continuing waiver in the future or a waiver of any subsequent default or a
waiver of any other provision, condition or requirement hereof, nor shall any
delay or omission of any party to exercise any right hereunder in any manner
impair the exercise of any such right.

 

4.4           Headings.  The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof.

 

4.5           Successors and Assigns.  This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and permitted assigns. 
The Company may not assign this Agreement or any rights or obligations hereunder
without the prior written consent of the Lender (other than by merger).

 

4.6           No Third-Party Beneficiaries.  This Agreement is intended for the
benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person, except as otherwise set forth in Section .

 

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4.7           Governing Law. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of New York.

 

4.8           Survival.  The representations and warranties shall survive the
Closing and the delivery of the Notes for the applicable statue of limitations.

 

4.9           Execution.  This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other party, it being understood that both
parties need not sign the same counterpart.  In the event that any signature is
delivered by facsimile transmission or by e-mail delivery of a “.pdf” format
data file, such signature shall create a valid and binding obligation of the
party executing (or on whose behalf such signature is executed) with the same
force and effect as if such facsimile or “.pdf” signature page were an original
thereof.

 

4.10         Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their commercially reasonable efforts to find and employ an
alternative means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction. It is hereby
stipulated and declared to be the intention of the parties that they would have
executed the remaining terms, provisions, covenants and restrictions without
including any of such that may be hereafter declared invalid, illegal, void or
unenforceable.

 

4.11         Saturdays, Sundays, Holidays, etc.  If the last or appointed day
for the taking of any action or the expiration of any right required or granted
herein shall not be a Business Day, then such action may be taken or such right
may be exercised on the next succeeding Business Day.

 

4.12         Construction. The parties agree that each of them and/or their
respective counsel has reviewed and had an opportunity to revise the Transaction
Documents and, therefore, the normal rule of construction to the effect that any
ambiguities are to be resolved against the drafting party shall not be employed
in the interpretation of the Transaction Documents or any amendments hereto.

 

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IN WITNESS WHEREOF, the parties hereto have caused this Loan Agreement to be
duly executed by their respective authorized signatories as of the date first
indicated above.

 

SYNERGY PHARMACEUTICALS, INC.

Address for Notice:

 

Synergy Pharmaceuticals, Inc.

 

420 Lexington Avenue, Suite 1609

 

New York, NY 10170

By:

 

 

Fax: (212) 297-0019

 

Name:

Gary S. Jacob

 

 

Title:

CEO

 

 

 

 

 

With a copy to (which shall not constitute notice):

 

Sichenzia Ross Friedman Ference LLP

 

61 Broadway

 

New York, NY 10006

 

Attn: Jeffrey J. Fessler, Esq.

 

 

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

SIGNATURE PAGE FOR LENDER FOLLOWS]

 

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CONFIDENTIAL INVESTOR QUESTIONNAIRE

 

The Lender represents and warrants that he, she or it comes within one category
marked below, and that for any category marked, he, she or it has truthfully set
forth, where applicable, the factual basis or reason the Lender comes within
that category.  ALL INFORMATION IN RESPONSE TO THIS SECTION WILL BE KEPT
STRICTLY CONFIDENTIAL.  The undersigned agrees to furnish any additional
information which the Company deems necessary in order to verify the answers set
forth below.

 

Category A o

The undersigned is an individual (not a partnership, corporation, etc.) whose
individual net worth, or joint net worth with his or her spouse, presently
exceeds $1,000,000 (excluding the value of such person’s primary residence).

 

 

Category B o

The undersigned is an individual (not a partnership, corporation, etc.) who had
an income in excess of $200,000 in each of the two most recent years, or joint
income with his or her spouse in excess of $300,000 in each of those years (in
each case including foreign income, tax exempt income and full amount of capital
gains and losses but excluding any income of other family members and any
unrealized capital appreciation) and has a reasonable expectation of reaching
the same income level in the current year.

 

 

Category C o

The undersigned is a director or executive officer of the Company which is
issuing and selling the Notes.

 

 

Category D o

The undersigned is a bank; a savings and loan association; insurance company;
registered investment company; registered business development company; licensed
small business investment company (“SBIC”); or employee benefit plan within the
meaning of Title 1 of ERISA and (a) the investment decision is made by a plan
fiduciary which is either a bank, savings and loan association, insurance
company or registered investment advisor, or (b) the plan has total assets in
excess of $5,000,000 or (c) is a self directed plan with investment decisions
made solely by persons that are accredited investors. (describe entity)

 

 

 

 

Category E o

The undersigned is a private business development company as defined in section
202(a)(22) of the Investment Advisors Act of 1940. (describe entity)

 

 

 

 

Category F o

The undersigned is either a corporation, partnership, Massachusetts business
trust, or non-profit organization within the meaning of Section 501(c)(3) of the
Internal Revenue Code, in each case not formed for the specific purpose of
acquiring the Notes and with total assets in excess of $5,000,000. (describe
entity)

 

 

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Category G o

The undersigned is a trust with total assets in excess of $5,000,000, not formed
for the specific purpose of acquiring the Notes, where the purchase is directed
by a “sophisticated investor” as defined in Regulation 506(b)(2)(ii) under the
Act.

 

 

Category H o

The undersigned is an entity (other than a trust) in which all of the equity
owners are “accredited investors” within one or more of the above categories. If
relying upon this Category alone, each equity owner must complete a separate
copy of this Agreement. (describe entity)

 

 

 

 

Category I o

The undersigned is not within any of the categories above and is therefore not
an accredited investor.

 

 

 

The undersigned agrees that the undersigned will notify the Company at any time
on or prior to the Closing in the event that the representations and warranties
in this Agreement shall cease to be true, accurate and complete.

 

 

MANNER IN WHICH NOTE IS TO BE HELD.  (circle one)

 

 

 

(a)

Individual Ownership

 

(b)

Community Property

 

(c)

Joint Tenant with Right of Survivorship (both parties must sign)

 

(d)

Partnership*

 

(e)

Tenants in Common

 

(f)

Company*

 

(g)

Trust*

 

(h)

Other*

 

The undersigned is informed of the significance to the Company of the foregoing
representations and answers contained in the Confidential Investor Questionnaire
and such answers have been provided under the assumption that the Company will
rely on them.

 

12

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[LENDER SIGNATURE PAGES TO THE SYNERGY PHARMACEUTICALS, INC. LOAN AGREEMENT]

 

IN WITNESS WHEREOF, the undersigned have caused this Loan Agreement to be duly
executed by their respective authorized signatories as of the date first
indicated above.

 

 

Name of Lender:

 

Signature of Authorized Signatory of Lender:

 

 

 

 

Name of Authorized Signatory:

 

Title of Authorized Signatory:

 

Email Address of Lender:

 

 

 

 

Facsimile Number of Lender:

 

 

 

 

 

Address for Notice of Lender:

 

 

Address for Delivery of securities for Lender (if not same as address for
notice):

 

 

EIN Number (if applicable):  [PROVIDE THIS UNDER SEPARATE COVER]

 

[SIGNATURE PAGES CONTINUE]

 

13

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