Exhibit 10.17

AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

THIS AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (this “Agreement”) dated
as of September 27, 2010 between OXFORD FINANCE CORPORATION (“Lender”), and
TITAN PHARMACEUTICALS, INC., a Delaware corporation (“Borrower”), amends and
restates the terms of that certain Loan and Security Agreement by and among
Lender and Borrower, dated as of December 18, 2009 (as amended from time to
time, the “Original Agreement”), and provides the terms on which Lender shall
lend to Borrower and Borrower shall repay Lender. The parties agree as follows:

 

  1 ACCOUNTING AND OTHER TERMS

Accounting terms not defined in this Agreement shall be construed following
GAAP. Calculations and determinations must be made following GAAP. Capitalized
terms not otherwise defined in this Agreement shall have the meanings set forth
in Section 13. All other terms contained in this Agreement, unless otherwise
indicated, shall have the meaning provided by the Code to the extent such terms
are defined therein.

 

  2 LOAN AND TERMS OF PAYMENT

2.1 Promise to Pay. Borrower hereby unconditionally promises to pay Lender the
outstanding principal amount of the Credit Extension and accrued and unpaid
interest thereon and any other amounts due hereunder as and when due in
accordance with this Agreement.

2.1.1 Growth Capital Loan Facility.

(a) Growth Capital Loan A.

(i) Availability. On or about the date of the Original Agreement, Lender made an
advance to Borrower in the amount of Three Million Dollars ($3,000,000) (the
“Growth Capital Loan A”).

(ii) Repayment. Subject to the terms and conditions of this Agreement. Borrower
shall continue to make monthly payments of principal and interest on the Growth
Capital Loan A in accordance with the terms and conditions of the Promissory
Note dated as of December 23, 2009, issued in connection with the Growth Capital
Loan A, and the amortization schedule attached hereto as Annex A. Without
limiting the foregoing, all unpaid principal and accrued and unpaid interest and
all other amounts due on account of the Growth Capital Loan A are due and
payable in full on the Growth Capital Loan A Maturity Date. The Growth Capital
Loan A may only be prepaid in accordance with Sections 2.1.1(d) and/or 2.1.1(e).

(b) Growth Capital Loan B.

(i) Availability. Subject to the terms and conditions of this Agreement, on the
Closing Date Lender shall make one (1) advance to Borrower in the amount of Five
Million Dollars ($5,000,000) (the “Growth Capital Loan B”).

(ii) Repayment. Borrower shall make monthly payments of interest only, in
arrears, commencing on the first day of the month following the month in which
the Funding Date occurs and continuing thereafter on the first day of each
successive calendar month during the Interest Only Period. Commencing on the
Growth Capital Loan B Amortization Date, Borrower shall make thirty (30) equal
monthly payments of principal and interest, in arrears, which would fully
amortize the outstanding amount of the Growth Capital Loan B, in accordance with
the amortization schedule attached hereto as Annex B. All unpaid principal and
accrued and unpaid interest and all other amounts due on account of the Growth
Capital Loan B are due and payable in full on the Growth Capital Loan B Maturity
Date. The Growth Capital Loan B may only be prepaid in accordance with Sections
2.1.l(d) and/or 2.1.l(e).

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(c) Final Payments.

(i) On the Growth Capital Loan A Maturity Date, Borrower shall pay, in addition
to the unpaid principal and accrued interest and all other amounts due on such
date with respect to the Growth Capital Loan A, an amount equal to the Growth
Capital Loan A Final Payment.

(ii) On the Growth Capital Loan B Maturity Date, Borrower shall pay, in addition
to the unpaid principal and accrued interest and all other amounts due on such
date with respect to the Growth Capital Loan B, an amount equal to the Growth
Capital Loan B Final Payment.

(d) Permitted Prepayment. Borrower shall have the option to prepay all, but not
less than all, of the Growth Capital Advances made by Lender under this
Agreement, provided Borrower, (i) provides written notice to Lender of its
election to prepay the Growth Capital Advances at least fifteen (15) days prior
to such prepayment, and (ii) pays, on the date of such prepayment (A) all
outstanding principal plus accrued interest on the Growth Capital Advances,
(B) the Final Payments, plus (C) all other sums that have become due and
payable, including Lender Expenses, if any, and interest at the Default Rate
with respect to any past due amounts.

(e) Mandatory Prepayment Upon an Acceleration. If the Growth Capital Advances
are accelerated following the occurrence of an Event of Default, Borrower shall
immediately pay to Lender an amount equal to the sum of: (i) all outstanding
principal plus accrued and unpaid interest on the Growth Capital Advances,
(ii) the Final Payments, plus (iii) all other sums, if any, that shall have
become due and payable, including interest at the Default Rate with respect to
any past due amounts.

2.2 Payment of Interest on the Credit Extensions.

(a) Interest Rate. Subject to Section 2.2(b), the principal amount outstanding
under the Growth Capital Advances shall accrue interest, which interest shall be
payable in arrears, at a fixed per annum rate equal to the greater of (i) 13.00%
or (ii) the LIBOR Rate, as of the Funding Date, plus the LIBOR Margin, which
interest shall be payable monthly, in arrears, in accordance with Section 2.2(e)
below.

(b) Default Rate. Immediately upon the occurrence and during the continuance of
an Event of Default, Obligations shall bear interest at a rate per annum which
is five percentage points above the rate that is otherwise applicable thereto
(the “Default Rate”). Payment or acceptance of the increased interest rate
provided in this Section 2.2(b) is not a permitted alternative to timely payment
and shall not constitute a waiver of any Event of Default or otherwise prejudice
or limit any rights or remedies of Lender.

(c) 360-Day Year. Interest shall be computed on the basis of a 360-day year
consisting of twelve (12) months of thirty (30) days.

(d) Debit of Accounts. In the event not received by Lender when due, or as
Lender and Borrower may otherwise agree in writing, Lender may debit any of
Borrower’s deposit accounts, including the Designated Deposit Account, through
automatic debit of such accounts, Automated Clearinghouse (“ACH”) or other
transfers, for principal, interest and other Obligations owing by Borrower to
Lender when due. These debits shall not constitute a set-off.

(e) Payments. Unless otherwise provided, interest is payable monthly, in
arrears, on the first calendar day of each month. Payments of principal and/or
interest received after 12:00 p.m. Pacific time are considered received at the
opening of business on the next Business Day. When a payment is due on a day
that is not a Business Day, the payment is due the next Business Day and
additional fees or interest, as applicable, shall continue to accrue.

2.3 Fees. Borrower shall pay to Lender:

(a) Facility Fee. A fully earned, non-refundable loan fee, on account of the
Growth Capital Loan B, of One Hundred Twenty Five Thousand Dollars ($125,000)
(the “Facility Fee”), receipt of Twenty Five Thousand Dollars ($25,000) of which
hereby is acknowledged by Lender;

 

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(b) Final Payments. The Final Payments when due on the Growth Capital Loan A
Maturity Date or the Growth Capital Loan B Maturity Date, respectively, or
pursuant to the terms of Sections 2.1.1(d) or 2.1.1(e);and

(c) Lender Expenses. All Lender Expenses (including reasonable attorneys’ fees
and expenses, plus reasonable expenses for documentation and negotiation of this
Agreement) incurred through and after the Closing Date, when due.

 

  3 CONDITIONS OF LOANS

3.1 Conditions Precedent to Credit Extension. Lender’s obligation to make the
Credit Extension is subject to the condition precedent that Borrower shall
consent to or have delivered, in form and substance satisfactory to Lender, such
documents, and completion of such other matters, as Lender may reasonably deem
necessary or appropriate, including, without limitation:

(a) duly executed original signatures to the Loan Documents to which it is a
party;

(b) duly executed original signatures to the Control Agreement(s);

(c) duly executed original signatures to the Warrant;

(d) its Operating Documents and good standing certificates (or equivalents) of
Borrower certified by the Secretary of State of the States of Delaware and
California (and such other states and/or jurisdictions in which Borrower is
qualified to do and or doing business) as of a date no earlier than thirty
(30) days prior to the Closing Date;

(e) a duly executed original Secretary’s Certificate certifying the adoption and
ratification of, and completed Borrowing Resolutions for, Borrower;

(f) a landlord’s consent executed in favor of Lender with respect to each of
Borrower’s leased locations (other than Borrower’s New Jersey location);

(g) certified copies, dated as of a recent date, of financing statement
searches, as Lender shall request, accompanied by written evidence (including
any UCC termination statements) that the Liens indicated in any such financing
statements either constitute Permitted Liens or have been or, in connection with
the Credit Extension, will be terminated or released;

(h) the Perfection Certificate executed by Borrower;

(i) evidence satisfactory to Lender that the insurance policies required by
Section 6.5 hereof are in full force and effect, together with appropriate
evidence showing lender loss payable and/or additional insured clauses or
endorsements in favor of Lender; and

(j) payment of the fees and Lender Expenses then due as specified in Section 2.3
hereof.

3.2 Conditions Precedent to the Credit Extension. Lender’s obligation to make
the Credit Extension is subject to the following:

(a) Borrower shall have duly executed and delivered to Lender the Growth Capital
Loan B Promissory Note in the amount of the Growth Capital Loan B, and the
Disbursement Letter;

(b) the representations and warranties in Section 5 shall be true in all
material respects on the Funding Date of the Credit Extension; provided,
however, that such materiality qualifier shall not be applicable to any
representations and warranties that already are qualified or modified by
materiality in the text thereof; and provided, further that those
representations and warranties expressly referring to a specific date shall be
true, accurate and complete in all material respects as of such date, and no
Event of Default shall have occurred and be continuing or result from the Credit
Extension. The Credit Extension is Borrower’s representation and warranty on
that date that the representations and warranties in Section 5 remain true in
all material respects; provided, however, that such materiality qualifier shall
not be applicable to any representations and warranties that already are
qualified or modified by materiality in the text thereof; and provided, further
that those representations and warranties expressly referring to a specific date
shall be true, accurate and complete in all material respects as of such date;
and

 

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(c) in Lender’s sole discretion, there has not been a Material Adverse Change.

3.3 Covenant to Deliver. Borrower agrees to deliver to Lender each item required
to be delivered to Lender under this Agreement as a condition to the Credit
Extension. Borrower expressly agrees that a Credit Extension made prior to the
receipt by Lender of any such item shall not constitute a waiver by Lender of
Borrower’s obligation to deliver such item, and the Credit Extension in the
absence of a required item shall be made in Lender’s sole discretion.

 

  4 CREATION OF SECURITY INTEREST

4.1 Grant of Security Interest. Borrower hereby grants Lender, to secure the
payment and performance in full of all of the Obligations, a continuing security
interest in, and pledges to Lender, the Collateral, wherever located, whether
now owned or hereafter acquired or arising, and all proceeds and products
thereof. Borrower represents, warrants, and covenants that the security interest
granted herein is and shall at all times continue to be a first priority
perfected security interest in the Collateral (subject only to Permitted Liens
that may have superior priority to Lender’s Lien pursuant to the terms of this
Agreement). If Borrower shall acquire a commercial tort claim (as defined in the
Code), Borrower shall promptly notify Lender in a writing signed by Borrower of
the general details thereof (and further details as may be required by Lender in
the exercise of its reasonable discretion) and grant to Lender in such writing a
security interest therein and in the proceeds thereof, all upon the terms of
this Agreement, with such writing to be in form and substance reasonably
satisfactory to Lender.

If this Agreement is terminated. Lender’s Lien in the Collateral shall continue
until the Obligations (other than inchoate indemnity obligations) are repaid in
full in cash. Upon payment in full in cash of the Obligations (other than
inchoate indemnity obligations), Lender shall, at Borrower’s sole cost and
expense, release its Liens in the Collateral and all rights therein shall revert
to Borrower.

4.2 Authorization to File Financing Statements. Borrower hereby authorizes
Lender to file financing statements, without notice to Borrower, with all
appropriate jurisdictions to perfect or protect Lender’s interest or rights
hereunder, including a notice that any disposition of the Collateral, by either
Borrower or any other Person, shall be deemed to violate the rights of Lender
under the Code. Such financing statements may indicate the Collateral as “all
assets of the Debtor” or words of similar effect, or as being of an equal or
lesser scope, or with greater detail, all in Lender’s discretion.

 

  5 REPRESENTATIONS AND WARRANTIES

Borrower represents and warrants as follows:

5.1 Due Organization, Authorization; Power and Authority. Borrower is duly
existing and in good standing in its jurisdiction of formation and is qualified
and licensed to do business and is in good standing in any jurisdiction in which
the conduct of its business or its ownership of property requires that it be
qualified except where the failure to do so could not reasonably be expected to
have a material adverse effect on Borrower’s business. In connection with this
Agreement, Borrower has delivered to Lender a completed certificate signed by
Borrower, entitled “Perfection Certificate”. Borrower represents and warrants to
Lender that (a) Borrower’s exact legal name is that indicated on the Perfection
Certificate and on the signature page hereof; (b) Borrower is an organization of
the type and is organized in the jurisdiction set forth in the Perfection
Certificate; (c) the Perfection Certificate accurately sets forth Borrower’s
organizational identification number or accurately states that Borrower has
none; (d) the Perfection Certificate accurately sets forth Borrower’s place of
business, or, if more than one, Borrower’s chief executive office as well as
Borrower’s mailing address (if different than its chief executive office); (e)
Borrower (and none of its predecessors) has not, in the past five (5) years,
changed its jurisdiction of formation, organizational structure or type, or any
organizational number assigned by its jurisdiction; and (f) all other
information set forth on the Perfection Certificate pertaining to Borrower and
its Subsidiaries is accurate and complete (it being understood and agreed that
Borrower may from time to time update certain information in the Perfection
Certificate after the Closing Date to the extent permitted by one or more
specific provisions in this Agreement). If Borrower is not now a Registered
Organization but later becomes one, Borrower shall promptly notify Lender of
such occurrence and provide Lender with Borrower’s organizational identification
number.

 

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The execution, delivery and performance by Borrower of the Loan Documents to
which it is a party have been duly authorized, and do not (i) conflict with any
of Borrower’s organizational documents, (ii) contravene, conflict with,
constitute a default under or violate any material Requirement of Law,
(iii) contravene, conflict or violate any applicable order, writ, judgment,
injunction, decree, determination or award of any Governmental Authority by
which Borrower or any its Subsidiaries or any of their property or assets may be
bound or affected, (iv) require any action by, filing, registration, or
qualification with, or Governmental Approval from, any Governmental Authority
(except such Governmental Approvals which have already been obtained and are in
full force and effect) or (v) constitute an event of default under any material
agreement by which Borrower is bound. Borrower is not in default under any
agreement to which it is a party or by which it is bound in which the default
could have a material adverse effect on Borrower’s business.

5.2 Collateral. Borrower has good title to, has rights in, and the power to
grant a Lien to Lender in each item of the Collateral upon which it purports to
grant a Lien under the Loan Documents to which it is a party, free and clear of
any and all Liens except Permitted Liens. Borrower does not have any deposit
accounts other than the deposit accounts with Silicon Valley Bank, the deposit
accounts, if any, described in the Perfection Certificate delivered to Lender in
connection herewith, or of which Borrower has given Lender notice and taken such
actions as are necessary to give Lender a perfected security interest therein.

The Collateral is not in the possession of any third party bailee (such as a
warehouse) except as otherwise provided in the Perfection Certificate; and the
book value of any such Collateral does not exceed $250,000. None of the
components of the Collateral shall be maintained at locations other than as
provided in the Perfection Certificate or as permitted pursuant to Section 7.2.
In the event that Borrower, after the date hereof, intends to store or otherwise
deliver any portion of the Collateral (having an aggregate book value in excess
of $250,000) to a bailee, then Borrower will first receive the written consent
of Lender and such bailee must execute and deliver a bailee agreement in form
and substance satisfactory to Lender in its sole discretion. None of the
Collateral (other than office equipment and furniture having an aggregate book
value not in excess of $10,000) is now, or will at any time during the term
hereof, be located at or in Borrower’s leased premises in New Jersey.

Borrower is the sole owner of the Intellectual Property which it owns or
purports to own except for (a) (i) non-exclusive licenses of Intellectual
Property granted to third parties in the ordinary course of business, and
(ii) licenses of Intellectual Property that could not result in a legal transfer
of title of the licensed property that may be exclusive in respects other than
territory and that may be exclusive as to territory only as to discreet
geographical areas outside of the United States, (b) over-the-counter software
that is commercially available to the public, and (c) Intellectual Property
licensed to Borrower and, to the extent constituting material Intellectual
Property, as noted on the Perfection Certificate. Each Patent which it owns or
purports to own and which is material to Borrower’s business is valid and
enforceable, and no part of the Intellectual Property which Borrower owns or
purports to own and which is material to Borrower’s business has been judged
invalid or unenforceable, in whole or in part. To the best of Borrower’s
knowledge, no claim has been made 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 have a material adverse effect on Borrower’s business.
Except as noted on the Perfection Certificate, Borrower is not a party to, nor
is it bound by, any Restricted License.

5.3 Litigation. Except as set forth in the Perfection Certificate, there are no
actions or proceedings pending or, to the knowledge of the Responsible Officers,
threatened in writing by or against Borrower or any of its Subsidiaries
involving more than $100,000.

 

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5.4 No Material Deviation in Financial Statements. All consolidated financial
statements for Borrower and its Subsidiaries delivered to Lender fairly present
in all material respects the Borrower’s and such Subsidiaries’ consolidated
financial condition and consolidated results of operations. There has not been
any material deterioration in the Borrower’s and its Subsidiaries’ consolidated
financial condition since the date of the most recent financial statements
submitted to Lender.

5.5 Solvency. The fair salable value of Borrower’s assets (including goodwill
minus disposition costs) exceeds the fair value of its liabilities; Borrower is
not left with unreasonably small capital after the transactions in this
Agreement; and Borrower is able to pay its debts (including trade debts) as they
mature.

5.6 Regulatory Compliance. Borrower is not an “investment company” or a company
“controlled” by an “investment company” under the Investment Company Act of
1940, as amended. Borrower is not engaged as one of its important activities in
extending credit for margin stock (under Regulations X, T and U of the Federal
Reserve Board of Governors). Borrower has complied in all material respects with
the Federal Fair Labor Standards Act. Neither Borrower nor any of its
Subsidiaries is a “holding company” or an “affiliate” of a “holding company” or
a “subsidiary company” of a “holding company” as each term is defined and used
in the Public Utility Holding Company Act of 2005. Borrower has not violated any
laws, ordinances or rules, the violation of which could reasonably be expected
to have a material adverse effect on its business. None of Borrower’s or any of
its Subsidiaries’ properties or assets has been used by Borrower or any
Subsidiary or, to the best of Borrower’s knowledge, by previous Persons, in
disposing, producing, storing, treating, or transporting any hazardous substance
other than legally. Borrower and each of its Subsidiaries have obtained all
consents, approvals and authorizations of, made all declarations or filings
with, and given all notices to, all Governmental Authorities that are necessary
to continue their respective businesses as currently conducted.

5.7 Subsidiaries; Investments. Borrower does not own any stock, partnership
interest or other equity securities except for Permitted Investments.

5.8 Tax Returns and Payments; Pension Contributions. Borrower has timely filed
all required tax returns and reports, and has timely paid all foreign, federal,
state and local taxes, assessments, deposits and contributions owed by Borrower.
Borrower may defer payment of any contested taxes, provided that Borrower (a) in
good faith contests its obligation to pay the taxes by appropriate proceedings
promptly and diligently instituted and conducted, (b) notifies Lender in writing
of the commencement of, and any material development in, the proceedings,
(c) posts bonds or takes any other steps required to prevent the governmental
authority levying such contested taxes from obtaining a Lien upon any of the
Collateral that is other than a “Permitted Lien”. Borrower is unaware of any
claims or adjustments proposed for any of Borrower’s prior tax years which could
result in additional taxes becoming due and payable by Borrower. Borrower has
paid all amounts necessary to fund all present pension, profit sharing and
deferred compensation plans in accordance with their terms, as applicable, and
Borrower has not withdrawn from participation in, and has not permitted partial
or complete termination of, or permitted the occurrence of any other event with
respect to, any such plan which could reasonably be expected to result in any
liability of Borrower, including any liability to the Pension Benefit Guaranty
Corporation or its successors or any other governmental agency, as applicable.

5.9 Use of Proceeds. Borrower shall use the proceeds of the Credit Extension
solely as working capital and to fund its general business requirements and not
for personal, family, household or agricultural purposes.

5.10 Full Disclosure. No written representation, warranty or other statement of
Borrower in any certificate or written statement given to Lender, as of the date
such representation, warranty, or other statement was made, taken together with
all such written certificates and written statements given to Lender, contains
any untrue statement of a material fact or omits to state a material fact
necessary to make the statements contained in the certificates or statements not
misleading (it being recognized by Lender that the projections and forecasts
provided by Borrower in good faith and based upon reasonable assumptions are not
viewed as facts and that actual results during the period or periods covered by
such projections and forecasts may differ from the projected or forecasted
results).

 

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  6 AFFIRMATIVE COVENANTS

Borrower shall do all of the following:

6.1 Government Compliance.

(a) Maintain its and all its Subsidiaries’ legal existence and good standing in
their respective jurisdictions of formation and maintain qualification in each
jurisdiction in which the failure to so qualify would reasonably be expected to
have a Material Adverse Change. Borrower shall comply, and have each Subsidiary
comply, with all laws, ordinances and regulations to which it is subject,
noncompliance with which could have a material adverse effect on Borrower’s
business.

(b) Obtain all of the Governmental Approvals necessary for the performance by
Borrower of its obligations under the Loan Documents to which it is a party and
the grant of a security interest to Lender in all of its property. Borrower
shall promptly provide copies of any such obtained Governmental Approvals to
Lender.

6.2 Financial Statements, Reports, Certificates. Deliver to Lender:

(a) Quarterly Financial Statements. As soon as available, but no later than
forty-five (45) days after the last day of each of the first three quarters of
Borrower’s fiscal year, a company prepared consolidated financial statements
prepared under GAAP, consistently applied, certified by a Responsible Officer
and in a form reasonably acceptable to Lender;

(b) Annual Audited Financial Statements. As soon as available, but no later than
one hundred twenty (120) days after the last day of Borrower’s fiscal year,
audited consolidated financial statements prepared under GAAP, consistently
applied, together with an unqualified opinion on the financial statements from
an independent certified public accounting firm acceptable to Lender in its
reasonable discretion;

(c) Compliance Certificates. Concurrently with the delivery of any financial
statements pursuant to clauses (a), (b) and (c), a duly completed Compliance
Certificate signed by a Responsible Officer, certifying that as of the end of
such period, Borrower was in full compliance with all of the terms and
conditions of this Agreement, and setting forth such other information as Lender
shall reasonably request;

(d) Other Statements. Within five (5) days of delivery, unless earlier posted on
Borrower’s website, copies of all statements, reports and notices made available
to Borrower’s security holders or to any holders of Subordinated Debt;

(e) SEC Filings. Within five (5) days of filing, copies of all periodic and
other reports, proxy statements and other materials filed by Borrower with the
SEC, any Governmental Authority succeeding to any or all of the functions of the
SEC or with any national securities exchange, or distributed to its
shareholders, as the case may be. Notwithstanding the foregoing, documents
required to be delivered pursuant to the terms hereof (to the extent any such
documents are included in materials otherwise filed with the SEC) shall be
deemed to have been delivered to Lender on the date on which Borrower posts such
documents, or provides a link thereto, on Borrower’s website on the internet at
Borrower’s website address;

As to any information contained in the materials furnished pursuant to this
clause (f), Borrower shall not be required separately to furnish such
information under clauses (b), (c) and (e), but the foregoing shall not be in
derogation of the obligation of Borrower to furnish the information and
materials described in such clauses (b), (c) and (e) at the times specified
therein; provided, that Borrower shall provide paper copies to Lender of the
Compliance Certificates required by Section 6.2(d).

(f) Annual Financial Projections. Within 45 days after the end of each fiscal
year, commencing with the fiscal year ending 2010, annual financial projections
for the following fiscal year (on a quarterly basis) as approved by Borrower’s
board of directors, together with any related business forecasts used in the
preparation of such annual financial projections;

 

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(g) Legal Action Notice. A prompt report of any legal actions pending or
threatened in writing against Borrower or any of its Subsidiaries that could
reasonably be expected to result in damages or costs to Borrower or any of its
Subsidiaries of, individually or in the aggregate, $250,000 or more;

(h) Intellectual Property Notice. Prompt written notice of (i) any material
change in the composition of the Intellectual Property, (ii) the registration of
any copyright, including any subsequent ownership right of Borrower in or to any
copyright, patent or trademark not shown in the IP Agreement, and
(iii) Borrower’s knowledge of an event that could reasonably be expected to
materially and adversely affect the value of the Intellectual Property; and

(i) Other Financial Information. Budgets, sales projections, operating plans and
other financial information reasonably requested by Lender, including but not
limited to account statements with respect to each bank, investment or similar
account maintained by Borrower, within ten (10) days after the end of each month
or other receipt thereof.

6.3 Inventory; Returns. Keep all Inventory (other than clinical inventory) in
good and marketable condition, free from material defects. Returns and
allowances between Borrower and its Account Debtors shall follow Borrower’s
customary practices as they exist at the Closing Date. Borrower must promptly
notify Lender of all returns, recoveries, disputes and claims that involve more
than $100,000.

6.4 Taxes; Pensions. Timely file, and require each Subsidiary to timely file,
all required tax returns and reports and timely pay, and require each Subsidiary
to timely file, all foreign, federal, state and local taxes, assessments,
deposits and contributions owed by Borrower, except for deferred payment of any
taxes contested pursuant to the terms of Section 5.8 hereof, and shall deliver
to Lender, on demand, appropriate certificates attesting to such payments, and
pay all amounts necessary to fund all present pension, profit sharing and
deferred compensation plans in accordance with their terms.

6.5 Insurance. Keep its, and cause each Subsidiary to keep its respective
business and the Collateral insured for risks and in amounts standard for
companies in Borrower’s industry and locations and as Lender may reasonably
request; provided that Borrower’s Subsidiaries may be covered by Borrower’s
insurance policies. Insurance policies shall be in a form, with companies, and
in amounts that are reasonably satisfactory to Lender. All property policies
shall have a lender’s loss payable endorsement showing Lender as lender loss
payee and waive subrogation against Lender, and all liability policies shall
show, or have endorsements showing, Lender as an additional insured. All
policies (or the loss payable and additional insured endorsements) shall provide
that the insurer shall give Lender at least twenty (20) days notice before
canceling (other than cancellation based on non-payment of premium, with respect
to which the insurer shall provide at least ten (10) days notice before
canceling) or declining to renew its policy. At Lender’s request, Borrower shall
deliver certified copies of policies and evidence of all premium payments. If
Borrower or any Subsidiary fails to obtain insurance as required under this
Section 6.5 or to pay any amount or furnish any required proof of payment to
third persons and Lender, Lender may make all or part of such payment or obtain
such insurance policies required in this Section 6.5, and take any action under
the policies Lender deems prudent.

6.6 Operating Accounts.

(a) Maintain all of its and all of its domestic Subsidiaries’ operating and
other deposit accounts and securities accounts with Silicon Valley Bank, in each
case subject to Control Agreements in favor of and in form and substance
reasonably acceptable to Lender.

(b) Provide Lender five (5) days prior written notice before establishing any
Collateral Account at or with any bank or financial institution other than
Silicon Valley Bank. For each Collateral Account that Borrower at any time
maintains, Borrower shall cause the applicable bank or financial institution at
or with which any Collateral Account is maintained to execute and deliver a
Control Agreement or other appropriate instrument with respect to such
Collateral Account to perfect Lender’s Lien in such Collateral Account in
accordance with the terms hereunder. The provisions of the previous sentence
shall not apply to deposit accounts exclusively used for payroll, payroll taxes
and other employee wage and benefit payments to or for the benefit of Borrower’s
employees and identified to Lender by Borrower as such.

 

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6.7 Intentionally Omitted.

6.8 Protection and Registration of Intellectual Property Rights.

(a) (i) Protect, defend and maintain the validity and enforceability of its
Intellectual Property; (ii) promptly advise Lender in writing of material
infringements of its Intellectual Property; and (iii) not allow any Intellectual
Property material to Borrower’s business to be abandoned, forfeited or dedicated
to the public without Lender’s written consent.

(b) If Borrower (i) obtains any Patent, registered Trademark, registered
Copyright, registered mask work, or any pending application for any of the
foregoing, whether as owner, licensee or otherwise, or (ii) applies for any
Patent or the registration of any Trademark, then Borrower shall immediately
provide written notice thereof to Lender and shall execute such intellectual
property security agreements and other documents and take such other actions as
Lender shall request in its good faith business judgment to perfect and maintain
a first priority perfected security interest in favor of Lender in such
property. If Borrower decides to register any Copyrights or mask works in the
United States Copyright Office, Borrower shall: (x) provide Lender with at least
fifteen (15) days prior written notice of Borrower’s intent to register such
Copyrights or mask works together with a copy of the application it intends to
file with the United States Copyright Office (excluding exhibits thereto); and
(y) execute an intellectual property security agreement and such other documents
and take such other actions as Lender may reasonably request in its good faith
business judgment to perfect and maintain a first priority perfected security
interest in favor of Lender in the Copyrights or mask works intended to be
registered with the United States Copyright Office, and hereby authorizes Lender
to record such intellectual property security agreement with the United States
Copyright Office contemporaneously with filing the Copyright or mask work
application(s) with the United States Copyright Office. Borrower shall promptly
provide to Lender copies of all applications that it files for Patents or for
the registration of Trademarks, Copyrights or mask works, together with evidence
of the recording of the intellectual property security agreement necessary for
Lender to perfect and maintain a first priority perfected security interest in
such property.

(c) Provide written notice to Lender within ten (10) days of entering or
becoming bound by any Restricted License (other than over-the-counter software
that is commercially available to the public). Borrower shall take such steps as
Lender requests to obtain the consent of, or waiver by, any person whose consent
or waiver is necessary for (i) any Restricted License to be deemed “Collateral”
and for Lender to have a security interest in it that might otherwise be
restricted or prohibited by law or by the terms of any such Restricted License,
whether now existing or entered into in the future, and (ii) Lender to have the
ability in the event of a liquidation of any Collateral to dispose of such
Collateral in accordance with Lender’s rights and remedies under this Agreement
and the other Loan Documents.

6.9 Litigation Cooperation. From the date hereof and continuing through the
termination of this Agreement, make available to Lender at reasonable times,
without expense to Lender, Borrower and its officers, employees and agents and
Borrower’s books and records, to the extent that Lender may deem them reasonably
necessary to prosecute or defend any third-party suit or proceeding instituted
by or against Lender with respect to any Collateral or relating to Borrower.

6.10 Notices of Litigation and Default. Borrower will give prompt written notice
to Lender of any litigation or governmental proceedings pending or threatened
(in writing) against Borrower which would reasonably be expected to have a
material adverse effect with respect to Borrower. Without limiting or
contradicting any other more specific provision of this Agreement, promptly (and
in any event within three (3) Business Days) upon Borrower (or any officer
thereof) becoming aware of the existence of any Event of Default or event which,
with the giving of notice or passage of time, or both, would constitute an Event
of Default, Borrower shall give written notice to Lender of such occurrence,
which such notice shall include a reasonably detailed description of such Event
of Default or event which, with the giving of notice or passage of time, or
both, would constitute an Event of Default.

6.11 Formation or Acquisition of Subsidiaries. At the time that Borrower or any
Subsidiary forms any direct or indirect Subsidiary or acquires any direct or
indirect Subsidiary after the Closing Date, Borrower and such Subsidiary shall
(a) cause such new Subsidiary to provide to Lender a joinder to this Agreement
to cause such Subsidiary to become a co-borrower hereunder, together with such
appropriate financing statements and/or Control Agreements, all in form and
substance satisfactory to Lender (including being sufficient to grant Lender a
first priority Lien (subject to Permitted Liens) in and to the assets of such
newly formed or acquired Subsidiary), (b) provide to Lender appropriate
certificates and powers and financing statements, pledging all of the direct or
beneficial ownership interest in such new Subsidiary, in form and substance
satisfactory to Lender, and (c) provide to Lender all other documentation in
form and substance satisfactory to Lender, including one or more opinions of
counsel satisfactory to Lender, which in its opinion is appropriate with respect
to the execution and delivery of the applicable documentation referred to above.
Any document, agreement, or instrument executed or issued pursuant to this
Section 6.11 shall be a Loan Document.

 

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6.12 Dissolution of Ingenex. Borrower shall cause Ingenex to be dissolved, and
shall provide evidence of the same to Lender, in form and content reasonably
acceptable to Lender, by no later than December 31, 2010.

6.13 Further Assurances. Execute any further instruments and take further action
as Lender reasonably requests to perfect or continue Lender’s Lien in the
Collateral or to effect the purposes of this Agreement and the other Loan
Documents. Deliver to Lender, within five (5) days after the same are sent or
received, copies of all correspondence, reports, documents and other filings
with any Governmental Authority regarding compliance with or maintenance of
Governmental Approvals or Requirements of Law or that could reasonably be
expected to have a material effect on any of the Governmental Approvals or
otherwise on the operations of Borrower.

 

  7 NEGATIVE COVENANTS

Borrower shall not do any of the following without Lender’s prior written
consent, which consent may be granted or withheld in Lender’s sole discretion
exercised in good faith in a commercially reasonable manner:

7.1 Dispositions. Convey, sell, lease, transfer or otherwise dispose of
(collectively, “Transfer”), or permit any Subsidiary to Transfer, all or any
part of its business or property, except for Transfers (a) of Inventory in the
ordinary course of business; (b) of worn-out or obsolete Equipment; and (c) in
connection with Permitted Liens and Permitted Investments; and (d) of
non-exclusive licenses for the use of the property of Borrower or its
Subsidiaries (other than Ingenex) in the ordinary course of business and
licenses that could not result in a legal transfer of title of the licensed
property but that may be exclusive in respects other than territory and that may
be exclusive as to territory only as to discreet geographical areas outside of
the United States. Without limiting the foregoing, Borrower shall not Transfer
any property or asset to Ingenex.

7.2 Changes in Business, Management, Control, or Business Locations. (a) Engage
in or permit any Subsidiary to engage in any business other than the businesses
currently engaged in by Borrower or such Subsidiary, as applicable, or
reasonably related thereto; (b) liquidate or dissolve; or (c) (i) have a change
in any Key Person, unless replaced by a Person reasonably acceptable to Lender
within thirty (30) days of such change, or (ii) permit or suffer any Change in
Control. Borrower shall not, without at least fifteen (15) days prior written
notice to Lender: (1) add any new offices or business locations, including
warehouses (unless such new offices or business locations contain less than Ten
Thousand Dollars ($10,000) in Borrower’s assets or property), (2) change its
jurisdiction of organization, (3) change its organizational structure or type,
(4) change its legal name, or (5) change any organizational number (if any)
assigned by its jurisdiction of organization.

7.3 Mergers or Acquisitions. Merge or consolidate, or permit any Subsidiary to
merge or consolidate, with any other Person, or acquire, or permit any
Subsidiary to acquire, all or substantially all of the capital stock or property
of another Person. A Subsidiary may merge or consolidate into Borrower or
another Subsidiary.

7.4 Indebtedness. Create, incur, assume, or be liable for any Indebtedness, or
permit Borrower to do so, other than Permitted Indebtedness.

7.5 Encumbrance. Create, incur, allow, or suffer any Lien on any of the
Collateral, or assign or convey any right to receive income, including the sale
of any Accounts, or permit any of its Subsidiaries to do so, except for
Permitted Liens, permit any Collateral not to be subject to the first priority
security interest granted herein, or enter into any agreement, document,
instrument or other arrangement (except with or in favor of Lender) with any
Person which directly or indirectly prohibits or has the effect of prohibiting
Borrower or any Subsidiary from assigning, mortgaging, pledging, granting a
security interest in or upon, or encumbering any of Borrower’s or any
Subsidiary’s Intellectual Property, except as is otherwise permitted in
Section 7.1 hereof and the definition of “Permitted Liens” herein.

 

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7.6 Maintenance of Collateral Accounts. Maintain any Collateral Account except
pursuant to the terms of Section 6.6 hereof.

7.7 Distributions; Investments. (a) Pay any dividends or make any distribution
or payment in respect of any of its capital stock, or redeem, retire or purchase
any of its capital stock other than in connection with Permitted Distributions;
or (b) directly or indirectly acquire or own any Person, or make any Investment
in any Person, other than Permitted Investments, or permit any of its
Subsidiaries to do so.

7.8 Transactions with Affiliates. Directly or indirectly enter into or permit to
exist any material transaction with any Affiliate of Borrower, except for
(a) transactions that are in the ordinary course of Borrower’s business, upon
fair and reasonable terms (when viewed in the context of any series of
transactions of which it may be a part, if applicable) that are no less
favorable to Borrower than would be obtained in an arm’s length transaction with
a non-affiliated Person; or (b) transactions among Borrower and its Subsidiaries
and among Borrower’s Subsidiaries so long as no Event of Default exists or could
result therefrom.

7.9 Subordinated Debt. (a) Make or permit any payment on any Subordinated Debt,
except under the terms of the subordination, Intercreditor, or other similar
agreement to which such Subordinated Debt is subject, or (b) amend any provision
in any document relating to the Subordinated Debt which would increase the
amount thereof or adversely affect the subordination thereof to Obligations owed
to Lender.

7.10 Compliance. Become an “investment company” or a company controlled by an
“investment company”, under the Investment Company Act of 1940, as amended, or
undertake as one of its important activities extending credit to purchase or
carry margin stock (as defined in Regulation U of the Board of Governors of the
Federal Reserve System), or use the proceeds of the Credit Extension for that
purpose; fail to meet the minimum funding requirements of ERISA, permit a
Reportable Event or Prohibited Transaction, as defined in ERISA, to occur; fail
to comply with the Federal Fair Labor Standards Act or violate any other law or
regulation, if the violation could reasonably be expected to have a material
adverse effect on Borrower’s business, or permit any of its Subsidiaries to do
so; withdraw or permit any Subsidiary to withdraw from participation in, permit
partial or complete termination of, or permit the occurrence of any other event
with respect to, any present pension, profit sharing and deferred compensation
plan which could reasonably be expected to result in any liability of Borrower,
including any liability to the Pension Benefit Guaranty Corporation or its
successors or any other governmental agency.

7.11 Indebtedness Payments. (i) Prepay, redeem, purchase, defease or otherwise
satisfy in any manner prior to the scheduled repayment thereof any Indebtedness
for borrowed money (other than amounts due under this Agreement or due any
Lender) or lease obligations, (ii) amend, modify or otherwise change the terms
of any Indebtedness for borrowed money or lease obligations so as to accelerate
the scheduled repayment thereof or (iii) repay any notes to officers, directors
or shareholders; provided that Borrower may pay compensation to employees,
deferred as of the Closing Date, not to exceed $250,000 in the aggregate.

 

  8 EVENTS OF DEFAULT

Any one of the following shall constitute an event of default (an “Event of
Default”) under this Agreement:

8.1 Payment Default. Borrower fails to (a) make any payment of principal or
interest on the Credit Extension on its due date, or (b) pay any other
Obligations within three (3) Business Days after such Obligations are due and
payable (which three (3) day grace period shall not apply to payments due on the
Growth Capital Loan A Maturity Date or the Growth Capital Loan B Maturity Date,
as applicable). During the cure period, the failure to cure the payment default
is not an Event of Default;

 

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8.2 Covenant Default.

(a) Borrower fails or neglects to perform any obligation in Section 6.2, 6.4,
6.5, 6.6, 6.8, 6.11 or 6.12, or violates any covenant in Section 7; or

(b) Borrower fails or neglects to perform, keep, or observe any other term,
provision, condition, covenant or agreement contained in this Agreement or any
Loan Document to which it is a party, and as to any default (other than those
specified in this Section 8) under such other term, provision, condition,
covenant or agreement that can be cured, has failed to cure the default within
ten (10) days after the occurrence thereof; provided, however, that if the
default cannot by its nature be cured within the ten (10) day period or cannot
after diligent attempts by Borrower be cured within such ten (10) day period,
and such default is likely to be cured within a reasonable time, then Borrower
shall have an additional period (which shall not in any case exceed thirty
(30) days) to attempt to cure such default, and within such reasonable time
period the failure to cure the default shall not be deemed an Event of Default.
Grace periods provided under this section shall not apply, among other things,
to financial covenants or any other covenants set forth in subsection (a) above;

8.3 Material Adverse Change. A Material Adverse Change occurs;

8.4 Attachment; Levy; Restraint on Business. (a) (i) The service of process
seeking to attach, by trustee or similar process, any funds of Borrower or of
any entity under control of Borrower (including a Subsidiary) on deposit or
otherwise maintained with Silicon Valley Bank, or (ii) a notice of lien, levy,
or assessment is filed against any of Borrower’s assets by any government
agency, and the same under subclauses (i) and (ii) hereof are not, within ten
(10) days after the occurrence thereof, discharged or stayed (whether through
the posting of a bond or otherwise); or (b) (i) any material portion of
Borrower’s assets is attached, seized, levied on, or comes into possession of a
trustee or receiver, or (ii) any court order enjoins, restrains, or prevents
Borrower from conducting any part of its business;

8.5 Insolvency. (a) Borrower is unable to pay its debts (including trade debts)
as they become due or otherwise becomes insolvent; (b) Borrower begins an
Insolvency Proceeding; or (c) an Insolvency Proceeding is begun against Borrower
and not dismissed or stayed within thirty (30) days;

8.6 Other Agreements. There is a default in any agreement to which Borrower is a
party with a third party or parties resulting in a right by such third party or
parties, whether or not exercised, to accelerate the maturity of any
Indebtedness in an amount in excess of $100,000 or that could reasonably be
expected to have a Material Adverse Change;

8.7 Judgments. One or more final judgments, orders, or decrees for the payment
of money in an amount, individually or in the aggregate, of at least $100,000
(not covered by independent third-party insurance as to which liability has been
accepted by such insurance carrier) shall be rendered against Borrower and shall
remain unsatisfied, unvacated, or unstayed for a period often (10) days after
the entry thereof;

8.8 Misrepresentations. Borrower or any Person acting for Borrower makes any
representation, warranty, or other statement now or later in this Agreement, any
Loan Document or in any writing delivered to Lender or to induce Lender to enter
this Agreement or any Loan Document, and such representation, warranty, or other
statement is incorrect in any material respect when made;

8.9 Subordinated Debt. A default or breach occurs under any agreement between
Borrower and any creditor of Borrower that signed a subordination,
intercreditor, or other similar agreement with Lender, or any creditor that has
signed such an agreement with Lender breaches any material terms of such
agreement;

8.10 Governmental Approvals. Any Governmental Approval shall have been
(a) revoked, rescinded, suspended, modified in an adverse manner or not renewed
in the ordinary course for a full term or (b) subject to any decision by a
Governmental Authority that designates a hearing with respect to any
applications for renewal of any of such Governmental Approval or that could
result in the Governmental Authority taking any of the actions described in
clause (a) above, and such decision or such revocation, rescission, suspension,
modification or non-renewal (i) has, or could reasonably be expected to have, a
Material Adverse Change, or (ii) adversely affects the legal qualifications of
Borrower to hold such Governmental Approval in any applicable jurisdiction and
such revocation, rescission, suspension, modification or non-renewal could
reasonably be expected to affect the status of or legal qualifications of
Borrower to hold any Governmental Approval in any other jurisdiction.

 

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  9 LENDER’S RIGHTS AND REMEDIES

9.1 Rights and Remedies. While an Event of Default occurs and continues Lender
may, without notice or demand, do any or all of the following:

(a) declare in writing all Obligations immediately due and payable (but if an
Event of Default described in Section 8.5 occurs all Obligations are immediately
due and payable without any action by Lender);

(b) stop advancing money or extending credit for Borrower’s benefit under this
Agreement or under any other agreement between Borrower and Lender;

(c) settle or adjust disputes and claims directly with Account Debtors for
amounts on terms and in any order that Lender considers advisable in the
exercise of its commercially reasonable discretion, notify any Person owing
Borrower money of Lender’s security interest in such funds, and verify the
amount of such account;

(d) make any payments and do any acts it considers necessary or reasonable to
protect the Collateral and/or its security interest in the Collateral. Borrower
shall assemble the Collateral if Lender requests and make it available as Lender
reasonably designates. Lender may enter premises where the Collateral is
located, take and maintain possession of any part of the Collateral, and pay,
purchase, contest, or compromise any Lien which appears to be prior or superior
to its security interest and pay all expenses incurred. Borrower grants Lender a
license to enter and occupy any of its premises, without charge, to exercise any
of Lender’s rights or remedies;

(e) apply to the Obligations any (i) balances and deposits of Borrower it holds,
or (ii) any amount held by Lender owing to or for the credit or the account of
Borrower;

(f) ship, reclaim, recover, store, finish, maintain, repair, prepare for sale,
advertise for sale, and sell the Collateral. Lender is hereby granted a
non-exclusive, royalty-free license or other right to use, without charge,
Borrower’s labels, Patents, Copyrights, mask works, rights of use of any name,
trade secrets, trade names, Trademarks, service marks, and advertising matter,
or any similar property as it pertains to the Collateral, in completing
production of, advertising for sale, and selling any Collateral and, in
connection with Lender’s exercise of its rights under this Section, Borrower’s
rights under all licenses and all franchise agreements inure to Lender’s benefit
as collateral assignee;

(g) place a “hold” on any account maintained with Lender and/or deliver a notice
of exclusive control, any entitlement order, or other directions or instructions
pursuant to any Control Agreement or similar agreements providing control of any
Collateral;

(h) demand and receive possession of Borrower’s Books; and

(i) exercise all rights and remedies available to Lender under the Loan
Documents or at law or equity, including all remedies provided under the Code
(including disposal of the Collateral pursuant to the terms thereof).

9.2 Power of Attorney. Borrower hereby irrevocably appoints Lender as its lawful
attorney-in-fact, exercisable upon the occurrence and during the continuance of
an Event of Default, to: (a) endorse Borrower’s name on any checks or other
forms of payment or security; (b) sign Borrower’s name on any invoice or bill of
lading for any Account or drafts against Account Debtors; (c) settle and adjust
disputes and claims about the Accounts directly with Account Debtors, for
amounts and on terms Lender determines reasonable; (d) make, settle, and adjust
all claims under Borrower’s insurance policies; (e) pay, contest or settle any
Lien, charge, encumbrance, security interest, and adverse claim in or to the
Collateral, or any judgment based thereon, or otherwise take any action to
terminate or discharge the same; and (f) transfer the Collateral into the name
of Lender or a third party as the Code permits. Borrower hereby appoints Lender
as its lawful attorney-in-fact to sign Borrower’s name on any documents
necessary to perfect or continue the perfection of Lender’s security interest in
the Collateral regardless of whether an Event of Default has occurred until all
Obligations have been satisfied in full. Lender’s foregoing appointment as
Borrower’s attorney in fact, and all of Lender’s rights and powers, coupled with
an interest, are irrevocable until all Obligations have been fully repaid and
performed.

 

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9.3 Protective Payments. If Borrower fails to obtain the insurance called for by
Section 6.5 or fails to pay any premium thereon or fails to pay any other amount
which Borrower is obligated to pay under this Agreement or any other Loan
Document, Lender may obtain such insurance or make such payment, and all amounts
so paid by Lender are Lender Expenses and immediately due and payable, bearing
interest at the Default Rate, and secured by the Collateral. Lender will make
reasonable efforts to provide Borrower with notice of Lender obtaining such
insurance at the time it is obtained or within a reasonable time thereafter. No
payments by Lender are deemed an agreement to make similar payments in the
future or Lender’s waiver of any Event of Default.

9.4 Application of Payments and Proceeds. Borrower shall not have any right to
specify the order or the accounts to which Lender shall allocate or apply any
payments required to be made by Borrower to Lender or otherwise received by
Lender under this Agreement when any such allocation or application is not
specified elsewhere in this Agreement. If an Event of Default has occurred and
is continuing, Lender may apply any funds in its possession, whether from
Borrower account balances, payments, proceeds realized as the result of any
collection of Accounts or other disposition of the Collateral, or otherwise, to
the Obligations in such order as Lender shall determine in its sole discretion.
Any surplus shall be paid to Borrower or other Persons legally entitled thereto;
Borrower shall remain liable to Lender for any deficiency. If Lender, in its
good faith business judgment, directly or indirectly enters into a deferred
payment or other credit transaction with any purchaser at any sale of
Collateral, Lender shall have the option, exercisable at any time, of either
reducing the Obligations by the principal amount of the purchase price or
deferring the reduction of the Obligations until the actual receipt by Lender of
cash therefor.

9.5 Lender’s Liability for Collateral. So long as Lender complies with
reasonable practices regarding the safekeeping of the Collateral in the
possession or under the control of Lender, Lender shall not be liable or
responsible for: (a) the safekeeping of the Collateral; (b) any loss or damage
to the Collateral; (c) any diminution in the value of the Collateral; or (d) any
act or default of any carrier, warehouseman, bailee, or other Person. The Credit
Parties bear all risk of loss, damage or destruction of the Collateral.

9.6 No Waiver; Remedies Cumulative. Lender’s failure, at any time or times, to
require strict performance by Borrower of any provision of this Agreement or any
other Loan Document shall not waive, affect, or diminish any right of Lender
thereafter to demand strict performance and compliance herewith or therewith. No
waiver hereunder shall be effective unless signed by Lender and then is only
effective for the specific instance and purpose for which it is given. Lender’s
rights and remedies under this Agreement and the other Loan Documents are
cumulative. Lender has all rights and remedies provided under the Code, by law,
or in equity. Lender’s exercise of one right or remedy is not an election, and
shall not preclude Lender from exercising any other remedy under this Agreement
or other remedy available at law or in equity, and Lender’s waiver of any Event
of Default is not a continuing waiver. Lender’s delay in exercising any remedy
is not a waiver, election, or acquiescence.

9.7 Demand Waiver. Borrower, for itself an on behalf of each Subsidiary, waives
demand, notice of default or dishonor, notice of payment and nonpayment, notice
of any default, nonpayment at maturity, release, compromise, settlement,
extension, or renewal of accounts, documents, instruments, chattel paper, and
guarantees held by Lender on which Borrower is liable.

 

  10 NOTICES

All notices, consents, requests, approvals, demands, or other communication by
any party to this Agreement or any other Loan Document must be in writing and
shall be deemed to have been validly served, given, or delivered: (a) upon the
earlier of actual receipt and three (3) Business Days after deposit in the U.S.
mail, first class, registered or certified mail return receipt requested, with
proper postage prepaid; (b) upon transmission, when sent by electronic mail or
facsimile transmission; (c) one (1) Business Day after deposit with a reputable
overnight courier with all charges prepaid; or (d) when delivered, if
hand-delivered by messenger, all of which shall be addressed to the party to be
notified and sent to the address, facsimile number, or email address indicated
below. Lender or Borrower may change its mailing or electronic mail address or
facsimile number by giving the other party written notice thereof in accordance
with the terms of this Section 10.

 

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If to Borrower:   

TITAN PHARMACEUTICALS, INC.

400 Oyster Point Blvd., Suite 505

South San Francisco, CA 94080

Attn: Chief Financial Officer

Fax: (650)244-4956

Email: Sbhonsle@titanpharm.com

If to Lender:   

OXFORD FINANCE CORPORATION

133 N. Fairfax Street

Alexandria, VA 22314

Attn: Tim A. Lex, Chief Operating Officer

Fax: (703)519-5225

Email: tlex@oxfordfinance.com

 

  11 CHOICE OF LAW, VENUE , JURY TRIAL WAIVER AND JUDICIAL REFERENCE

California law governs the Lo an Documents without regard to principles of
conflicts of law. Borrower and Lender each submit to the exclusive jurisdiction
of the State and Federal courts in San Diego County, California; provided,
however, that nothing in this Agreement shall be deemed to operate to preclude
Lender from bringing suit or taking other legal action in any other jurisdiction
to realize on the Collateral or any other security for the Obligations, or to
enforce a judgment or other court order in favor of Lender. Borrower expressly
submits and consents in advance to such jurisdiction in any action or suit
commenced in any such court, and Borrower hereby waives any objection that it
may have based upon lack of personal jurisdiction improper venue, or forum non
conveniens and hereby consents to the granting of such legal or equitable relief
as is deemed appropriate by such court. Borrower hereby waives personal service
of the summons, complaints, and other process issued in such action or suit and
agrees that service of such summons, complaints, and other process may be made
by registered or certified mail addressed to Borrower at the address set forth
in Section 10 of this Agreement and that service so made shall be deemed
completed upon the earlier to occur of Borrower’s actual receipt thereof or
three (3) days after deposit in the U.S. mails, proper postage prepaid.

TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, BORROWER AND LENDER EACH
WAIVE THEIR RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION ARISING OUT OF
OR BASED UPON THIS AGREEMENT, THE LOAN DOCUMENTS OR ANY CONTEMPLATED
TRANSACTION, INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER CLAIMS. THIS
WAIVER IS A MATERIAL INDUCEMENT FOR BOTH PARTIES TO ENTER INTO THIS AGREEMENT.
EACH PARTY HAS REVIEWED THIS WAIVER WITH ITS COUNSEL .

WITHOUT INTENDING IN ANY WAY TO LIMIT THE PARTIES’ AGREEMENT TO WAIVE THEIR
RESPECTIVE RIGHT TO A TRIAL BY JURY, if the above waiver of the right to a trial
by jury is not enforceable, the parties hereto agree that any and all disputes
or controversies of any nature between them arising at any time shall be decided
by a reference to a private judge, mutually selected by the parties (or, if they
cannot agree, by the Presiding Judge of the San Diego County, California
Superior Court) appointed in accordance with California Code of Civil Procedure
Section 638 (or pursuant to comparable provisions of federal law if the dispute
falls within the exclusive jurisdiction of the federal courts), sitting without
a jury, in San Diego County, California; and the parties hereby submit to the
jurisdiction of such court. The reference proceedings shall be conducted
pursuant to and in accordance with the provisions of California Code of Civil
Procedure §§ 638 through 645.1, inclusive. The private judge shall have the
power, among others, to grant provisional relief, including without limitation,
entering temporary restraining orders, issuing preliminary and permanent
injunctions and appointing receivers. All such proceedings shall be closed to
the public and confidential and all records relating thereto shall be
permanently sealed. If during the course of any dispute, a party desires to seek
provisional relief, but a judge has not been appointed at that point pursuant to
the judicial reference procedures, then such party may apply to the San Diego
County, California Superior Court for such relief. The proceeding before the
private judge shall be conducted in the same manner as it would be before a
court under the rules of evidence applicable to judicial proceedings. The
parties shall be entitled to discovery which shall be conducted in the same
manner as it would be before a court under the rules of discovery applicable to
judicial proceedings. The private judge shall oversee discovery and may enforce
all discovery rules and order applicable to judicial proceedings in the same
manner as a trial court judge. The parties agree that the selected or appointed
private judge shall have the power to decide all issues in the action or
proceeding, whether of fact or of law, and shall report a statement of decision
thereon pursuant to the California Code of Civil Procedure § 644(a). Nothing in
this paragraph shall limit the right of any party at any time to exercise
self-help remedies, foreclose against collateral, or obtain provisional
remedies. The private judge shall also determine all issues relating to the
applicability, interpretation, and enforceability of this paragraph.

 

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  12 GENERAL PROVISIONS

12.1 Successors and Assigns. This Agreement binds and is for the benefit of the
successors and permitted assigns of each party. Borrower may not assign this
Agreement or any rights or obligations under it without Lender’s prior written
consent (which may be granted or withheld in Lender’s discretion). Lender has
the right, without the consent of or notice to Borrower, to sell, transfer,
negotiate, or grant participation in all or any part of, or any interest in,
Lender’s obligations, rights, and benefits under this Agreement and the other
Loan Documents.

12.2 Indemnification. Borrower agrees to indemnify, defend and hold Lender and
its directors, officers, employees, agents, attorneys, or any other Person
affiliated with or representing Lender (each, an “Indemnified Person”) harmless
against: (a) all obligations, demands, claims, and liabilities (collectively,
“Claims”) claimed or asserted by any other party in connection with the
transactions contemplated by the Loan Documents; and (b) all losses or expenses
(including Lender Expenses) in any way suffered, incurred, or paid by such
Indemnified Person as a result of, following from, consequential to, or arising
from transactions between Lender and Borrower (including reasonable attorneys’
fees and expenses), except for Claims and/or losses directly caused by such
Indemnified Person’s gross negligence or willful misconduct.

12.3 Time of Essence. Time is of the essence for the performance of all
Obligations in this Agreement.

12.4 Severability of Provisions. Each provision of this Agreement is severable
from every other provision in determining the enforceability of any provision.

12.5 Correction of Loan Documents. Upon prior written notice to Borrower, Lender
may correct patent errors and fill in any blanks in this Agreement and the other
Loan Documents consistent with the agreement of the parties.

12.6 Amendments in Writing; Integration. All amendments to this Agreement must
be in writing and signed by both Lender and Borrower. This Agreement and the
Loan Documents represent the entire agreement about this subject matter and
supersede prior negotiations or agreements. All prior agreements,
understandings, representations, warranties, and negotiations between the
parties about the subject matter of this Agreement and the Loan Documents merge
into this Agreement and the Loan Documents.

12.7 Counterparts. This Agreement may be executed in any number of counterparts
and by different parties on separate counterparts, each of which, when executed
and delivered, are an original, and all taken together, constitute one
Agreement.

12.8 Survival. All covenants, representations and warranties made in this
Agreement continue in full force until this Agreement has terminated pursuant to
its terms and all Obligations (other than inchoate indemnity obligations and any
other obligations which, by their terms, are to survive the termination of this
Agreement) have been satisfied. The obligation of Borrower in Section 12.2 to
indemnify Lender shall survive until the statute of limitations with respect to
such claim or cause of action shall have run.

 

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12.9 Confidentiality. In handling any confidential information, Lender shall
exercise the same degree of care that it exercises for its own proprietary
information, but disclosure of information may be made: (a) to Lender’s
Subsidiaries or Affiliates; (b) to prospective transferees or purchasers of any
interest in the Credit Extension (provided, however, Lender shall use
commercially reasonable efforts to obtain such prospective transferee’s or
purchaser’s agreement to the terms of this provision); (c) as required by law,
regulation, subpoena, or other order; (d) to Lender’s regulators or as otherwise
required in connection with Lender’s examination or audit; (e) as Lender
considers appropriate in exercising remedies under the Loan Documents; and
(f) to third-party service providers of Lender so long as such service providers
have executed a confidentiality agreement with Lender with terms no less
restrictive than those contained herein. Confidential information does not
include information that either: (i) is in the public domain or in Lender’s
possession when disclosed to Lender, or becomes part of the public domain after
disclosure to Lender; or (ii) is disclosed to Lender by a third party, if Lender
does not know that the third party is prohibited from disclosing the
information.

Lender may use confidential information for any purpose, including, without
limitation, for the development of client databases, reporting purposes, and
market analysis, so long as Lender does not disclose Borrower’s identity or the
identity of any person associated with Borrower unless otherwise expressly
permitted by this Agreement. The provisions of the immediately preceding
sentence shall survive the termination of this Agreement.

12.10 Attorneys’ Fees, Costs and Expenses. In any action or proceeding between
Borrower and Lender arising out of or relating to the Loan Documents, the
prevailing party shall be entitled to recover its reasonable attorneys’ fees and
other costs and expenses incurred, in addition to any other relief to which it
may be entitled.

12.11 Electronic Execution of Documents. The words “execution,” “signed,”
“signature” and words of like import in any Loan Document shall be deemed to
include electronic signatures or the keeping of records in electronic form, each
of which shall be of the same legal effect, validity and enforceability as a
manually executed signature or the use of a paper-based recordkeeping systems,
as the case may be, to the extent and as provided for in any applicable law,
including, without limitation, any state law based on the Uniform Electronic
Transactions Act.

12.12 Captions. The headings used in this Agreement are for convenience only and
shall not affect the interpretation of this Agreement.

12.13 Construction of Agreement. The parties mutually acknowledge that they and
their attorneys have participated in the preparation and negotiation of this
Agreement. In cases of uncertainty this Agreement shall be construed without
regard to which of the parties caused the uncertainty to exist.

12.14 Relationship. The relationship of the parties to this Agreement is
determined solely by the provisions of this Agreement. The parties do not intend
to create any agency, partnership, joint venture, trust, fiduciary or other
relationship with duties or incidents different from those of parties to an
arm’s-length contract.

12.15 Third Parties. Nothing in this Agreement, whether express or implied, is
intended to: (a) confer any benefits, rights or remedies under or by reason of
this Agreement on any persons other than the express parties to it and their
respective permitted successors and assigns; (b) relieve or discharge the
obligation or liability of any person not an express party to this Agreement; or
(c) give any person not an express party to this Agreement any right of
subrogation or action against any party to this Agreement.

12.16 Effect of Amendment and Restatement. Except as otherwise set forth herein,
this Agreement is intended to and does completely amend and restate, without
novation, the Original Agreement. All security interests granted under the
Original Agreement are hereby confirmed and ratified and shall continue to
secure all Obligations under this Agreement.

 

  13 DEFINITIONS

13.1 Definitions. As used in the Loan Documents, the word “shall” is mandatory,
the word “may” is permissive, the word “or” is not exclusive, the words
“includes” and “including” are not limiting, the singular includes the plural,
and numbers denoting amounts that are set off in brackets are negative. As used
in this Agreement, the following capitalized terms have the following meaning:

“Account” is any “account” as defined in the Code with such additions to such
term as may hereafter be made, and includes, without limitation, all accounts
receivable and other sums owing to Borrower.

 

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“Account Debtor” is any “account debtor” as defined in the Code with such
additions to such term as may hereafter be made.

“Affiliate” is, with respect to any Person, each other Person that owns or
controls directly or indirectly the Person, any Person that controls or is
controlled by or is under common control with the Person, and each of that
Person’s senior executive officers, directors, partners and, for any Person that
is a limited liability company, that Person’s managers and members.

“Agreement” is defined in the preamble hereof.

“Borrower” is defined in the preamble hereof.

“Borrower’s Books” are all Borrower’s books and records including ledgers,
federal and state tax returns, records regarding Borrower’s assets or
liabilities, the Collateral, business operations or financial condition, and all
computer programs or storage or any equipment containing such information.

“Borrowing Resolutions” are, with respect to any Person, those resolutions
adopted by such Person’s Board of Directors and delivered by such Person to
Lender approving the Loan Documents to which such Person is a party and the
transactions contemplated thereby, together with a certificate executed by its
secretary on behalf of such Person certifying that (a) such Person has the
authority to execute, deliver, and perform its obligations under each of the
Loan Documents to which it is a party, (b) that attached as Exhibit A to such
certificate is a true, correct, and complete copy of the resolutions then in
full force and effect authorizing and ratifying the execution, delivery, and
performance by such Person of the Loan Documents to which it is a party, (c) the
name(s) of the Person(s) authorized to execute the Loan Documents on behalf of
such Person, together with a sample of the true signature(s) of such Person(s),
and (d) that Lender may conclusively rely on such certificate unless and until
such Person shall have delivered to Lender a further certificate canceling or
amending such prior certificate.

“Business Day” is any day that is not a Saturday, Sunday or a day on which
Lender is closed.

“Cash Equivalents” means (a) marketable direct obligations issued or
unconditionally guaranteed by the United States or any agency or any State
thereof having maturities of not more than one (1) year from the date of
acquisition; (b) commercial paper maturing no more than one (1) year after its
creation and having the highest rating from either Standard & Poor’s Ratings
Group or Moody’s Investors Service, Inc.; (c) Lender’s certificates of deposit
issued maturing no more than one (1) year after issue; and (d) money market
funds at least ninety-five percent (95%) of the assets of which constitute Cash
Equivalents of the kinds described in clauses (a) through (c) of this
definition.

“Change in Control” is a transaction in which any “person” or “group” (within
the meaning of Section 13(d) and 14(d)(2) of the Securities Exchange Act of
1934, as amended) becomes the “beneficial owner” (as defined in Rule 13d-3 under
the Securities Exchange Act of 1934, as amended), directly or indirectly, of
greater than 49% of the shares of all classes of stock then outstanding of
Borrower ordinarily entitled to vote in the election of directors.

“Closing Date” is the date on which all of the conditions of Section 3 of this
Agreement have been satisfied or waived by Lender.

 

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“Code” is the Uniform Commercial Code, as the same may, from time to time, be
enacted and in effect in the State of California; provided, that, to the extent
that the Code is used to define any term herein or in any Loan Document and such
term is defined differently in different Articles or Divisions of the Code, the
definition of such term contained in Article or Division 9 shall govern;
provided further, 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 in effect in a jurisdiction other than the State of California,
the term “Code” shall mean the Uniform Commercial Code as enacted and in effect
in such other jurisdiction solely for purposes on the provisions thereof
relating to such attachment, perfection, priority, or remedies and for purposes
of definitions relating to such provisions.

“Collateral” is any and all properties, rights and assets of Borrower described
on Exhibit A.

“Collateral Account” is any Deposit Account, Securities Account, or Commodity
Account.

“Commodity Account” is any “commodity account” as defined in the Code with such
additions to such term as may hereafter be made.

“Compliance Certificate” is that certain certificate in the form attached hereto
as Exhibit B.

“Contingent Obligation” is, for any Person, any direct or indirect liability,
contingent or not, of that Person for (a) any indebtedness, lease, dividend,
letter of credit or other obligation of another such as an obligation directly
or indirectly guaranteed, endorsed, co-made, discounted or sold with recourse by
that Person, or for which that Person is directly or indirectly liable; (b) any
obligations for undrawn letters of credit for the account of that Person; and
(c) all obligations from any interest rate, currency or commodity swap
agreement, interest rate cap or collar agreement, or other agreement or
arrangement designated to protect a Person against fluctuation in interest
rates, currency exchange rates or commodity prices; but “Contingent Obligation”
does not include endorsements in the ordinary course of business. The amount of
a Contingent Obligation is the stated or determined amount of the primary
obligation for which the Contingent Obligation is made or, if not determinable,
the maximum reasonably anticipated liability for it determined by the Person in
good faith; but the amount may not exceed the maximum of the obligations under
any guarantee or other support arrangement.

“Control Agreement” is any control agreement entered into among the depository
institution at which Borrower maintains a Deposit Account or the securities
intermediary or commodity intermediary at which Borrower maintains a Securities
Account or a Commodity Account, Borrower, and Lender pursuant to which Lender
obtains control (within the meaning of the Code) over such Deposit Account,
Securities Account, or Commodity Account; provided that, Lender shall not
exercise control under any such Control Agreement unless an Event of Default
occurs.

“Copyrights” are any and all copyright rights, copyright applications, copyright
registrations and like protections in each work or authorship and derivative
work thereof, whether published or unpublished and whether or not the same also
constitutes a trade secret.

“Credit Extension” is the Growth Capital Advances.

“Default Rate” is defined in Section 2.2(b).

“Deposit Account” is any “deposit account” as defined in the Code with such
additions to such term as may hereafter be made.

“Designated Deposit Account” is any of Borrower’s deposit accounts, including
account numbers 3300680880 and 3300680895, maintained with Silicon Valley Bank.

“Disbursement Letter” is that certain form attached hereto as Exhibit D.

“Dollars,” “dollars” and “$” each mean lawful money of the United States.

“Equipment” is all “equipment” as defined in the Code with such additions to
such term as may hereafter be made, and includes without limitation all
machinery, fixtures, goods, vehicles (including motor vehicles and trailers),
and any interest in any of the foregoing.

 

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“ERISA” is the Employee Retirement Income Security Act of 1974, and its
regulations.

“Event of Default” is defined in Section 8.

“Final Payments” means, collectively, the Growth Capital Loan A Final Payment
and the Growth Capital Loan B Final Payment.

“Funding Date” is the date on which the Growth Capital Loan B is made to or on
account of Borrower.

“GAAP” is generally accepted accounting principles set forth in the opinions and
pronouncements of the Accounting Principles Board of the American Institute of
Certified Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board or in such other statements by such other Person as
may be approved by a significant segment of the accounting profession, which are
applicable to the circumstances as of the date of determination.

“General Intangibles” is all “general intangibles” as defined in the Code in
effect on the date hereof with such additions to such term as may hereafter be
made, and includes without limitation, all Intellectual Property, claims, income
and other tax refunds, security and other deposits, payment intangibles,
contract rights, options to purchase or sell real or personal property, rights
in all litigation presently or hereafter pending (whether in contract, tort or
otherwise), insurance policies (including without limitation key man, property
damage, and business interruption insurance), payments of insurance and rights
to payment of any kind.

“Governmental Approval” is any consent, authorization, approval, order, license,
franchise, permit, certificate, accreditation, registration, filing or notice,
of, issued by, from or to, or other act by or in respect of, any Governmental
Authority.

“Governmental Authority” is any nation or government, any state or other
political subdivision thereof, any agency, authority, instrumentality,
regulatory body, court, central bank or other entity exercising executive,
legislative, judicial, taxing, regulatory or administrative functions of or
pertaining to government, any securities exchange and any self-regulatory
organization.

“Growth Capital Advance” or “Growth Capital Advances” means, individually or
collectively, as the context dictates, the Growth Capital Loan A and or the
Growth Capital Loan B.

“Growth Capital Loan A” is defined in Section 2.1.1(a).

“Growth Capital Loan A Final Payment” means a fee (in addition to and not a
substitution for any other payment due hereunder) in the amount of One Hundred
Eighty Thousand Dollars ($180,000).

“Growth Capital Loan A Maturity Date” is January 1, 2013, or such earlier date
as the Growth Capital Loan A or any portion of the Obligations is accelerated,
whether by prepayment or otherwise.

“Growth Capital Loan B” is defined in Section 2.1.1(b).

“Growth Capital Loan B Amortization Date” means August 1, 2011.

“Growth Capital Loan B Final Payment” means a fee (in addition to and not a
substitution for any other payment due hereunder) in the amount of Three Hundred
Thousand Dollars ($300,000); provided that, if the Obligations are repaid prior
to the first anniversary of the Closing Date solely as a result of a Royalty
Monetization Deal, the “Growth Capital Loan B Final Payment” shall be reduced to
One Hundred Seventy Five Thousand Dollars ($175,000); provided further that, if
a Royalty Monetization Deal (and prepayment as a result thereof) does not occur
within the first anniversary of the Closing Date, the “Growth Capital Loan B
Final Payment” shall revert to Three Hundred Thousand Dollars ($300,000).

 

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“Growth Capital Loan B Maturity Date” is January 1, 2014, or such earlier date
as the Growth Capital Loan B or any portion of the Obligations is accelerated,
whether by prepayment or otherwise.

“Indebtedness” is (a) indebtedness for borrowed money or the deferred price of
property or services, such as reimbursement and other obligations for surety
bonds and letters of credit, (b) obligations evidenced by notes, bonds,
debentures or similar instruments, (c) capital lease obligations, and
(d) Contingent Obligations.

“Indemnified Person” is defined in Section 12.2.

“Ingenex” is Ingenex, Inc., a majority-owned Subsidiary of Borrower.

“Insolvency Proceeding” is any proceeding by or against any Person under the
United States Bankruptcy Code, or any other bankruptcy or insolvency law,
including assignments for the benefit of creditors, compositions, extensions
generally with its creditors, or proceedings seeking reorganization,
arrangement, or other relief.

“Intellectual Property” means all of Borrower’s right, title, and interest in
and to the following:

(a) its Copyrights, Trademarks and Patents;

(b) any and all trade secrets and trade secret rights, including, without
limitation, any rights to unpatented inventions, know-how, operating manuals;

(c) any and all source code;

(d) any and all design rights which may be available to Borrower;

(e) any and all claims for damages by way of past, present and future
infringement of any of the foregoing, with the right, but not the obligation, to
sue for and collect such damages for said use or infringement of the
Intellectual Property rights identified above; and

(f) all amendments, renewals and extensions of any of the Copyrights, Trademarks
or Patents.

“Interest Only Period” means the period of time commencing on the Funding Date
through the day before the Growth Capital Loan B Amortization Date.

“Inventory” is all “inventory” as defined in the Code in effect on the date
hereof with such additions to such term as may hereafter be made, and includes
without limitation all merchandise, raw materials, parts, supplies, packing and
shipping materials, work in process and finished products, including without
limitation such inventory as is temporarily out of Borrower’s custody or
possession or in transit and including any returned goods and any documents of
title representing any of the above.

“Investment” is any beneficial ownership interest in any Person (including
stock, partnership interest or other securities), and any loan, advance or
capital contribution to any Person.

“IP Agreement” is that certain Amended and Restated Intellectual Property
Security Agreement executed and delivered by Borrower to Lender dated as of the
Closing Date.

“Key Person” is any of the President or Executive Chairman of the Board of
Borrower.

“Lender” is defined in the preamble hereof.

“Lender Expenses” are all audit fees (provided that Borrower shall not be
responsible to reimburse Lender for audit fees incurred by Lender for more than
one (1) audit per fiscal year unless such additional audit is conducted
following the occurrence of an Event of Default) and reasonable expenses, costs,
and expenses (including reasonable attorneys’ fees and expenses) for preparing,
amending, negotiating, administering, defending and enforcing the Loan Documents
(including, without limitation, those incurred in connection with appeals or
Insolvency Proceedings) or otherwise incurred with respect to Borrower in
connection with the transactions contemplated hereby.

 

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“LIBOR Rate” means, an interest rate per annum (rounded upward, if necessary, to
the nearest l/l0,000th of one percent (0.0001%)) equal to LIBOR on the
applicable Funding Date.

“LIBOR Margin” is, with respect to the Growth Capital Loan A, 12.72%; and, with
respect to the Growth Capital Loan B, 12.71%.

“LIBOR” means the rate of interest per annum determined by Lender to be the per
annum rate of interest at which deposits in United States Dollars are offered to
Lender in the London interbank market (rounded upward, if necessary, to the
nearest l/10,000th of one percent (0.0001%)) in which Lender customarily
participates at 11:00 a.m. (local time in such interbank market) for a 3-month
period and published in The Wall Street Journal two (2) Business Days prior to
the making of any Growth Capital Advance and in an amount approximately equal to
the amount of such Growth Capital Advance.

“Lien” is a claim, mortgage, deed of trust, levy, charge, pledge, security
interest or other encumbrance of any kind, whether voluntarily incurred or
arising by operation of law or otherwise against any property.

“Loan Documents” are, collectively, this Agreement, the IP Agreement, the
Perfection Certificate, the Promissory Notes, the Disbursement Letter, any other
note, or notes or guaranties executed by Borrower or any Subsidiary, and any
other present or future agreement between Borrower and/or any Subsidiary and/or
for the benefit of Lender in connection with this Agreement, all as amended,
restated, or otherwise modified.

“Material Adverse Change” is (a) a material impairment in the perfection or
priority of Lender’s Lien in the Collateral or in the value of such Collateral;
(b) a material adverse change in the business, operations, or condition
(financial or otherwise) of Borrower; or (c) a material impairment of the
prospect of repayment of any portion of the Obligations.

“Obligations” are Borrower’s obligation to pay when due any debts, principal,
interest, Lender Expenses and other amounts Borrower owes Lender now or later,
whether under this Agreement, the Loan Documents, or otherwise, including,
without limitation, all obligations relating to letters of credit (including
reimbursement obligations for drawn and undrawn letters of credit), cash
management services, and foreign exchange contracts, if any, and including
interest accruing after Insolvency Proceedings begin and debts, liabilities, or
obligations of Borrower assigned to Lender, and the performance of Borrower’s
duties under the Loan Documents.

“Operating Documents” are, for any Person, such Person’s formation documents, as
certified with the Secretary of State of such Person’s state of formation on a
date that is no earlier than 30 days prior to the Closing Date, and, (a) if such
Person is a corporation, its bylaws in current form, (b) if such Person is a
limited liability company, its limited liability company agreement (or similar
agreement), and (c) if such Person is a partnership, its partnership agreement
(or similar agreement), each of the foregoing with all current amendments or
modifications thereto.

“Patents” means all patents, patent applications and like protections including
without limitation improvements, divisions, continuations, renewals, reissues,
extensions and continuations-in-part of the same.

“Perfection Certificate” is defined in Section 5.1.

“Permitted Distributions” means:

(a) purchases of capital stock from former employees, consultants and directors
pursuant to repurchase agreements or other similar agreements in an aggregate
amount not to exceed $100,000 in any fiscal year, provided that at the time of
such purchase no Event of Default has occurred and is continuing;

 

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(b) distributions or dividends consisting solely of Borrower’s capital stock;

(c) purchases for value of any rights distributed in connection with any
stockholder rights plan;

(d) purchases of capital stock or options to acquire such capital stock with the
proceeds received from a substantially concurrent issuance of capital stock or
convertible securities;

(e) purchases of capital stock pledged as collateral for loans to employees; and

(f) purchases of capital stock in connection with the exercise of stock options
or stock appreciation rights by way of cashless exercise or in connection with
the satisfaction of withholding tax obligations.

“Permitted Indebtedness” is:

(a) Borrower’s Indebtedness to Lender under this Agreement and any other Loan
Document;

(b) (i) any Indebtedness that does not exceed $100,000 in principal amount
existing on the Closing Date, and (ii) any Indebtedness in excess of $100,000 in
principal amount existing on the Closing Date and shown on the Perfection
Certificate;

(c) Subordinated Debt;

(d) unsecured Indebtedness to trade creditors incurred in the ordinary course of
business;

(e) capitalized leases and purchase money Indebtedness not to exceed $100,000 in
the aggregate in any fiscal year secured by Permitted Liens;

(f) Indebtedness for deferred compensation in accordance with, and subject to
the terms and conditions of, Section 7.1 l(iii); and

(g) refinanced Permitted Indebtedness, provided that the amount of such
Indebtedness is not increased except by an amount equal to a reasonable premium
or other reasonable amount paid in connection with such refinancing and by an
amount equal to any existing, but unutilized, commitment thereunder.

“Permitted Investments” are:

(a) Investments shown on the Perfection Certificate and existing on the Closing
Date;

(b) Investments permitted by Borrower’s investment policy, as amended from time
to time, provided that such investment policy (and any amendment thereto) has
been approved by Lender;

(c) Investments (i) by Borrower in Subsidiaries not to exceed $100,000 in the
aggregate in any fiscal year and (ii) by Subsidiaries in other Subsidiaries not
to exceed $100,000 in the aggregate in any fiscal year or in Borrower; provided
that neither Borrower nor any Subsidiary shall make any investment in Ingenex,
provided that Borrower may make investments in or for the benefit of Ingenex not
to exceed $60,000 per year on account of the license arrangement between Ingenex
and Pfizer;

(d) Investments consisting of Collateral Accounts in the name of Borrower or any
Subsidiary so long as Lender has a first priority, perfected security interest
in such Collateral Accounts;

(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 business;

 

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(f) Investments permitted by Section 7.3; and

(g) joint ventures or strategic alliances in the ordinary course of Borrower’s
business consisting of (A) (i) non-exclusive licenses of Intellectual Property
granted to third parties in the ordinary course of business, and (ii) licenses
of Intellectual Property that could not result in a legal transfer of title of
the licensed property that may be exclusive in respects other than territory and
that may be exclusive as to territory only as to discreet geographical areas
outside of the United States; (B) the development of such Intellectual Property;
or (C) the providing of technical support; provided that any cash investments by
Borrower do not exceed $100,000 in the aggregate in any fiscal year; provided
further that that the foregoing dollar limitation shall not be applicable in
connection with any joint venture or strategic alliance entered into for the
development of Probuphine, provided that (x) Borrower at all times maintains all
ownership and title to the Probuphine product line and the underlying
Intellectual Property related thereto, and (y) Borrower does not transfer any
cash or other Collateral to any joint venture counterparty or strategic alliance
counterparty in connection with any such joint venture or strategic alliance.

Notwithstanding the foregoing, Permitted Investments shall not include, and
Borrower and each Subsidiary is prohibited from purchasing, purchasing
participations in, entering into any type of swap or other equivalent derivative
transaction, or otherwise holding or engaging in any ownership interest in any
type of debt instrument, including, without limitation, any corporate or
municipal bonds with a long-term nominal maturity for which the interest rate is
reset through a dutch auction and more commonly referred to as an “auction rate
security.”

“Permitted Liens” are:

(a) (i) Liens securing Permitted Indebtedness described under clause (b) of the
definition of “Permitted Indebtedness” or (ii) Liens arising under this
Agreement or other Loan Documents;

(b) Liens for taxes, fees, assessments or other government charges or levies,
either not delinquent or being contested in good faith and for which Borrower
maintains adequate reserves on its Books, provided that no notice of any such
Lien has been filed or recorded under the Internal Revenue Code of 1986, as
amended, and the Treasury Regulations adopted thereunder, if such Lien would be
superior to any of Lender’s Liens securing the Obligations;

(c) Liens (including with respect to capital leases) (i) on property (including
accessions, additions, parts, replacements, fixtures, improvements and
attachments thereto, and the proceeds thereof) acquired or held by Borrower or
its Subsidiaries (other than Ingenex) incurred for financing such property
(including accessions, additions, parts, replacements, fixtures, improvements
and attachments thereto, and the proceeds thereof) other than Accounts, or
(ii) existing on property (and accessions, additions, parts, replacements,
fixtures, improvements and attachments thereto, and the proceeds thereof) when
acquired other than Accounts, if the Lien is confined to such property
(including accessions, additions, parts, replacements, fixtures, improvements
and attachments thereto, and the proceeds thereof);

(d) Liens incurred in the extension, renewal or refinancing of the indebtedness
secured by Liens described in (a) through (c), but any extension, renewal or
replacement Lien must be limited to the property encumbered by the existing Lien
and the principal amount of the indebtedness it secures may not increase;

(e) leases or subleases of real property granted in the ordinary course of
Borrower’s business, and leases, subleases, non-exclusive licenses or
sublicenses of personal property (other than Intellectual Property) granted in
the ordinary course of Borrower’s business, if the leases, subleases, licenses
and sublicenses do not prohibit granting Lender a security interest therein;

(f) (i) non-exclusive licenses of Intellectual Property granted to third parties
in the ordinary course of business, and (ii) licenses of Intellectual Property
that could not result in a legal transfer of title of the licensed property that
may be exclusive in respects other than territory and that may be exclusive as
to territory only as to discreet geographical areas outside of the United
States;

 

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(g) leases or subleases granted in the ordinary course of Borrower’s business,
including in connection with Borrower’s leased premises or leased property;

(h) Liens in favor of other financial institutions arising in connection with
Borrower’s deposit or securities accounts held at such institutions;

(i) Liens of carriers, warehousemen, suppliers, or other Persons that are
possessory in nature arising in the ordinary course of business so long as such
Liens attach only to Inventory, securing liabilities in the aggregate amount not
to exceed $100,000 and which are not delinquent or remain payable without
penalty or which are being contested in good faith and by appropriate
proceedings which proceedings have the effect of preventing the forfeiture or
sale of the property subject thereto;

(j) Liens to secure payment of workers’ compensation, employment insurance,
old-age pensions, social security and other like obligations incurred in the
ordinary course of business (other than Liens imposed by ERISA); and

(k) Liens other than those described above which do not at any time exceed
$25,000 in the aggregate.

“Person” is any individual, sole proprietorship, partnership, limited liability
company, joint venture, company, trust, unincorporated organization,
association, corporation, institution, public benefit corporation, firm, joint
stock company, estate, entity or government agency.

“Promissory Note” or “Promissory Notes” means the Secured Promissory Note issued
under the Original Agreement in connection with the Growth Capital Loan A or, as
the context dictates, the Growth Capital Loan B Secured Promissory Note in
substantially the form attached hereto as Exhibit C.

“Registered Organization” is any “registered organization” as defined in the
Code with such additions to such term as may hereafter be made

“Requirement of Law” is as to any Person, the organizational or governing
documents of such Person, and any law (statutory or common), treaty, rule or
regulation or determination of an arbitrator or a court or other Governmental
Authority, in each case applicable to or binding upon such Person or any of its
property or to which such Person or any of its property is subject.

“Responsible Officer” is any of the Executive Chairman, President, Chief
Financial Officer and Controller of Borrower.

“Restricted License” is any material license or other material agreement with
respect to which Borrower is the licensee (a) that prohibits or otherwise
restricts Borrower from granting a security interest in Borrower’s interest in
such license or agreement or any other property, or (b) for which a default
under or termination of could interfere with the Lender’s right to sell any
Collateral.

“Royalty Monetization Deal” means an arm’s-length, bona fide transaction
involving the sale, licensing or other transfer of all or a substantial portion
of the Borrower’s rights in Fanapt (iloperidone) together with the related
intellectual property, which transaction may be structured as a loan provided
such loan is repayable only from royalties from Fanapt, is non-recourse to the
Borrower and the proceeds of such transaction are utilized to repay in full the
Obligations.

“Securities Account” is any “securities account” as defined in the Code with
such additions to such term as may hereafter be made.

“Subordinated Debt” is (a) Indebtedness incurred by Borrower subordinated to
Borrower’s Indebtedness owed to Lender and which is reflected in a written
agreement in a manner and form reasonably acceptable to Lender and approved by
Lender in writing, and (b) to the extent the terms of subordination do not
change adversely to Lender, refinancings, refundings, renewals, amendments or
extensions of any of the foregoing.

 

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“Subsidiary” is, as to any Person, a corporation, partnership, limited liability
company or other entity of which shares of stock or other ownership interests
having ordinary voting power (other than stock or such other ownership interests
having such power only by reason of the happening of a contingency) to elect a
majority of the board of directors or other managers of such corporation,
partnership or other entity are at the time owned, or the management of which is
otherwise controlled, directly or indirectly through one or more intermediaries,
or both, by such Person. Unless the context otherwise requires, each reference
to a Subsidiary herein shall be a reference to a Subsidiary of Borrower.

“Trademarks” means any trademark and servicemark rights, whether registered or
not, applications to register and registrations of the same and like
protections, and the entire goodwill of the business of Borrower connected with
and symbolized by such trademarks.

“Transfer” is defined in Section 7.1.

“Warrant” is that certain Warrant to Purchase Stock dated as of the Closing Date
executed by Borrower in favor of Lender.

[Balance of Page Intentionally Left Blank]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the Closing Date.

 

BORROWER: TITAN PHARMACEUTICALS, INC. By   /s/ Sunil Bhonsle Name:   Sunil
Bhonsle Title:   President

 

LENDER: OXFORD FINANCE CORPORATION By   /s/ T.A. Lex Name:   T.A. Lex Title:  
COO

[Signature Page to Amended and Restated Loan and Security Agreement]

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EXHIBIT A – COLLATERAL DESCRIPTION

The Collateral consists of all of Borrower’s right, title and interest in and to
the following personal property:

All goods, Accounts (including health-care receivables), Equipment, Inventory,
contract rights or rights to payment of money (including but not limited to any
royalty or similar rights to payment arising under or related to that certain
Sublicense Agreement among Borrower and Novartis Pharma A.G. (and is successors
and assigns, “Novartis”) dated as of November 20, 1997 and that certain
Sublicense Agreement among Novartis and Vanda Pharmaceuticals, Inc. (and its
successors and assigns) dated as of June 4, 2004; each as amended from time to
time), leases, license agreements, franchise agreements, General Intangibles,
commercial tort claims, documents, instruments (including any promissory notes),
chattel paper (whether tangible or electronic), cash, deposit accounts,
fixtures, letters of credit rights (whether or not the letter of credit is
evidenced by a writing), securities, and all other investment property,
supporting obligations, and financial assets, whether now owned or hereafter
acquired, wherever located; and

All Borrower’s Books relating to the foregoing, and any and all claims, rights
and interests in any of the above and all substitutions for, additions,
attachments, accessories, accessions and improvements to and replacements,
products, proceeds and insurance proceeds of any or all of the foregoing.

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

 

EXHIBIT B – COMPLIANCE CERTIFICATE

 

TO: OXFORD FINANCE CORPORATION

FROM: TITAN PHARMACEUTICALS, INC.

   Date:                    

The undersigned authorized officer of TITAN PHARMACEUTICALS, INC. (“Borrower”)
certifies that under the terms and conditions of the Amended and Restated Loan
and Security Agreement between Borrower and Oxford Finance Corporation (the
“Agreement”):

(1) Borrower is in complete compliance for the period ending with all required
covenants except as noted below; (2) there are no Events of Default; (3) all
representations and warranties in the Agreement are true and correct in all
material respects on this date except as noted below; provided, however, that
such materiality qualifier shall not be applicable to any representations and
warranties that already are qualified or modified by materiality in the text
thereof; and provided, further that those representations and warranties
expressly referring to a specific date shall be true, accurate and complete in
all material respects as of such date; (4) Borrower, and each of its
Subsidiaries, has timely filed all required tax returns and reports, and
Borrower has timely paid all foreign, federal, state and local taxes,
assessments, deposits and contributions owed by Borrower except as otherwise
permitted pursuant to the terms of Section 5.8 of the Agreement; and (5) no
Liens have been levied or claims made against Borrower (or any of its
Subsidiaries) relating to unpaid employee payroll or benefits of which Borrower
has not previously provided written notification to Lender.

Attached are the required documents supporting the certification. The
undersigned certifies that these are prepared in accordance with GAAP
consistently applied from one period to the next except as explained in an
accompanying letter or footnotes. The undersigned acknowledges that no
borrowings may be requested at any time or date of determination that Borrower
is not in compliance with any of the terms of the Agreement, and that compliance
is determined not just at the date this certificate is delivered. Capitalized
terms used but not otherwise defined herein shall have the meanings given them
in the Agreement.

Please indicate compliance status by circling Yes/No under “Complies” column.

 

Reporting Covenant

  

Required

   Complies   Quarterly financial statements with Compliance Certificate   
Quarterly within 45 days      Yes    No    Annual financial statement (CPA
Audited) + CC    FYE within 120 days      Yes    No    10-Q, 10-K and 8-K   
Within 5 days after filing with SEC*      Yes    No    Account statements (bank,
investment, etc.)    Monthly (and/or upon receipt) within 10 days      Yes    No
  

 

* deemed delivered when posted on Borrower’s website

The following Intellectual Property was registered (or a registration
application submitted) after the Closing Date (if no registrations, state
“None”)

 

Financial Covenant

   Required      Actual      Complies  

None

        

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

 

The following are the exceptions with respect to the certification above: (If no
exceptions exist, state “No exceptions to note.”)

 

 

  

 

  

 

 

TITAN PHARMACEUTICALS, INC.     LENDER USE ONLY By:         Received by:    
Name:           AUTHORIZED SIGNER Title:                 Date:          
Verified:             AUTHORIZED SIGNER       Date:         Compliance
Status:        Yes    No

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

 

EXHIBIT C

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

 

GROWTH CAPITAL LOAN B

SECURED PROMISSORY NOTE

 

$5,000,000   Dated: September 27, 2010

FOR VALUE RECEIVED, the undersigned, TITAN PHARMACEUTICALS, INC., a Delaware
corporation (“Borrower”), HEREBY PROMISES TO PAY to the order of OXFORD FINANCE
CORPORATION (“Lender”) the principal amount of Five Million Dollars ($5,000,000)
or such lesser amount as shall equal the outstanding principal balance of the
Growth Capital Loan B made to Borrower by Lender pursuant to the Loan Agreement
(defined below), and to pay all other amounts due with respect to the Growth
Capital Loan B on the dates and in the amounts set forth in the Loan Agreement.
Capitalized terms, unless defined in this Growth Capital Loan B Secured
Promissory Note (this “Note”), shall have the meaning given such capitalized
term in the Loan Agreement.

Interest on the principal amount of this Note from the date of this Note shall
accrue at 13% per annum based on a 360-day year of twelve 30-day months or, if
applicable, the Default Rate. Commencing on August 1, 2011, and continuing on
the first day of each successive calendar month thereafter, Borrower shall make
to Lender thirty (30) equal payments of principal and accrued interest on the
then outstanding principal amount. Any and all remaining principal and interest
shall be due and payable on the Growth Capital Loan B Maturity Date. In addition
to the foregoing payments, on the Growth Capital Loan B Maturity Date (or upon
earlier repayment, whether as a result of acceleration or otherwise) the Growth
Capital Loan B Final Payment (as defined in and subject to the terms and
conditions of the Loan Agreement) shall be due and payable by Borrower to
Lender.

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

This Note is the Note referred to in, and is entitled to the benefits of, the
Amended and Restated Loan and Security Agreement, dated as of the Closing Date
(as defined therein), to which Borrower and Lender are parties (as amended from
time to time, the “Loan Agreement”). The Loan Agreement, among other things,
(a) provides for the making of this secured Growth Capital Loan B to Borrower,
and (b) contains provisions for acceleration of the maturity hereof upon the
happening of certain stated events.

This Note may not be prepaid except as provided in the Loan Agreement. This Note
and the obligation of Borrower to repay the unpaid principal amount of the
Growth Capital Loan B, interest on the Growth Capital Loan B and all other
amounts due Lender under the Loan Agreement is secured under the Loan Agreement.

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

Borrower shall pay all reasonable fees and expenses, including, without
limitation, reasonable attorneys’ fees and costs, incurred by Lender in the
enforcement or attempt to enforce any of Borrower’s obligations hereunder not
performed when due. This Note shall be governed by, and construed and
interpreted in accordance with, the laws of the State of California.

[Balance of Page Intentionally Left Blank]

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IN WITNESS WHEREOF, the parties hereto have caused this Note to be executed as
of the Closing Date.

 

TITAN PHARMACEUTICALS, INC. By:     Name:     Title    

[Signature Page to Growth Capital Loan B Secured Promissory Note]

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LOAN INTEREST RATE AND PAYMENTS OF PRINCIPAL

 

Date

   Principal
Amount      Interest Rate      Scheduled
Payment Amount      Notation By                                               
              

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EXHIBIT D

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DISBURSEMENT LETTER

The undersigned, being the duly elected and acting President of TITAN
PHARMACEUTICALS, INC., a Delaware corporation (“Borrower”), does hereby certify
to OXFORD FINANCE CORPORATION (“Lender”), in connection with that certain
Amended and Restated Loan and Security Agreement dated as of September 27, 2010
by and between Borrower and Lender (the “Loan Agreement”; with other capitalized
terms used below having the meanings ascribed thereto in the Loan Agreement)
that:

 

  1. The representations and warranties made by Borrower in Section 5 of the
Loan Agreement and in the other Loan Documents are true, correct and complete in
all material respects on the date hereof; provided, however, that such
materiality qualifier shall not be applicable to any representations and
warranties that already are qualified or modified by materiality in the text
thereof; and provided, further that those representations and warranties
expressly referring to a specific date shall be true, correct and complete in
all material respects as of such date.

 

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

 

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

 

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

 

  5. No Material Adverse Change has occurred.

 

  6. The proceeds of the Growth Capital Loan B shall be disbursed as follows:

 

Disbursement from Lender:

  

Growth Capital Loan B Amount

   $ 5,000,000.00   

Plus:

  

Deposit

   $ 25,000.00   

Less:

  

Legal Fees and costs

     ($ [TBD])            

Facility Fee

     ($125,000.00 )          

Less:

  

Legal Fees and costs

   $ [TBD ] 

Balance of Facility Fee

   $ 100,000.00            

Net proceeds due from Lender to Borrower:

   $              

[Balance of Page Intentionally Left Blank]

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

 

  7. The aggregate proceeds shall be wired to the Borrower as follows:

 

Account Name:    Titan Pharmaceuticals, Inc. Bank Name:    Silicon Valley Bank
Bank Address:    3003 Tasman Drive    Santa Clara, CA 95054 Account Number:   
3300680880 ABA Number:    121140399

Dated as of the date first set forth above.

 

BORROWER: TITAN PHARMACEUTICALS, INC. By     Name:     Title:    

 

LENDER: OXFORD FINANCE CORPORATION By     Name:     Title:    

[Signature Page to Disbursement Letter]

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ANNEX A

(Amortization Schedule – Growth Capital Loan A)

[hardcopy to be attached]

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ANNEX B

(Amortization Schedule – Growth Capital Loan B)

[hardcopy to be attached]