Exhibit 10.1

LOAN AND SECURITY AGREEMENT

THIS LOAN AND SECURITY AGREEMENT (the “Agreement”) dated as of October 25, 2006
by and among MERRILL LYNCH CAPITAL, a division of Merrill Lynch Business
Financial Services Inc. (“Merrill Lynch”); SILICON VALLEY BANK (“SVB”) (SVB and
Merrill Lynch each individually a “Lender”, and collectively the “Lenders”), SVB
in its capacity as agent for the Lenders (in such capacity, the “Agent”), SVB
and Merrill Lynch in their capacities as joint lead arrangers (in such capacity,
the “Arrangers”), and PONIARD PHARMACEUTICALS, INC., a Washington corporation
(“Borrower”) provides the terms on which Lenders shall lend to Borrower and
Borrower shall repay Lenders.  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.  The term
“financial statements” includes the notes and schedules.  The terms “including”
and “includes” always mean “including (or includes) without limitation,” in this
or any Loan Document. Capitalized terms in this Agreement shall have the
meanings as set forth in Section 13.  All other terms contained in this
Agreement, unless otherwise indicated, shall have the meanings provided by the
Code, to the extent such terms are defined therein.

2.                                      LOANS AND TERMS OF PAYMENT

2.1          Promise to Pay.

Borrower hereby unconditionally promises to pay Lenders the unpaid principal
amount of all Credit Extensions hereunder with all interest, fees and finance
charges due thereon as and when due in accordance with this Agreement.

2.1.1.           Term Loan Facility.

(a)           Availability.  Subject to the terms and conditions of this
Agreement, Lenders agree, severally and not jointly, to lend to Borrower, not
later than October 31, 2006, an advance (the “Term Loan Advance”) in an
aggregate amount equal to the Term Loan Commitment according to each Lender’s
pro rata share of the Term Loan Commitment (based upon the respective Commitment
Percentage of each Lender).  When repaid, the Term Loan Advance may not be
re-borrowed.  If the Term Loan Advance is not properly requested by Borrower in
accordance with the terms of this Agreement on or prior to October 31, 2006,
Borrower shall immediately pay to Agent, for the benefit of Lenders, the sum of
(i) all interest that would have been earned by the Lenders if the Term Loan had
been advanced in its entirety on October 31, 2006, and the principal amount
thereof repaid on each Payment Date through April 1, 2010 in accordance with the
terms hereof, and (ii) the Final Payment.

(b)           Borrowing Procedure.  To obtain the Term Loan Advance, Borrower
must notify Agent by facsimile or telephone by 12:00 p.m. Pacific time three (3)
Business Days prior to the date the Term Loan Advance is to be made.  If such
notification is by telephone, Borrower

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must promptly confirm the notification by delivering to Agent a completed
Payment/Advance Form in the form attached as Exhibit B (a “Payment Advance
Form”).  On the Funding Date, each Lender shall credit and/or transfer (as
applicable) to Borrower’s deposit account with SVB, an amount equal to its
Commitment Percentage multiplied by the amount of the Term Loan Advance.  Each
Lender may make the Term Loan Advance under this Agreement based on instructions
from a Responsible Officer or his or her designee or without instructions if the
Term Loan Advance is necessary to meet Obligations which have become due.  Each
Lender may rely on any telephone notice given by a person whom such Lender
believes is a Responsible Officer or designee. Borrower shall indemnify each
Lender for any loss Lender suffers due to such reliance.

2.2          Termination of Commitment to Lend.

Without limiting Lenders’ other rights hereunder, each Lender’s obligation to
lend the undisbursed portion of the Obligations shall terminate if, in such
Lender’s good faith business judgment, there has been a material adverse change
in the business, results of operation, condition (financial or otherwise) or the
prospect of repayment of the Obligations, or there has been any material adverse
deviation by Borrower from the most recent business plan of Borrower presented
to and accepted by Agent prior to the execution of this Agreement.

2.3          Repayment of Credit Extensions.

(a)           Principal and Interest Payments On Payment Dates.

(i)            Commencing on November 1, 2006, and continuing thereafter on the
first Business Day of each successive calendar month through April 1, 2010 (each
a “Payment Date”), Borrower shall make equal monthly payments of principal, plus
accrued interest (individually, the “Scheduled Payment”, and collectively,
“Scheduled Payments”).  All unpaid principal and accrued interest is due and
payable in full on April 1, 2010.  A Term Loan Advance may only be prepaid in
accordance with Sections 2.3(d) and 2.3(e).

(ii)           Payments received after 12:00 noon Pacific time are considered
received at the opening of business on the next Business Day.

(b)           Interest Rate.

(i)            Borrower shall pay interest on each Payment Date on the unpaid
principal amount of each Term Loan Advance until the Term Loan Advance has been
paid in full, at the per annum rate of interest equal to the Basic Rate
determined by Agent as of the Funding Date for each Term Loan Advance in
accordance with the definition of the Basic Rate.  Interest is computed on the
basis of a 360 day year for the actual number of days elapsed.

(ii)           Any amounts outstanding during the continuance of an Event of
Default shall bear interest at a per annum rate equal to five percent (5%) above
the highest interest rate otherwise applicable thereto (the “Default Rate”).

(iii)          In no event shall the interest charged hereunder, with respect to
the notes (if any) or any other obligations of Borrower under any Loan Documents
exceed the

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maximum amount permitted under the laws of the State of California or of any
other applicable jurisdiction.  Notwithstanding anything to the contrary herein
or elsewhere, if at any time the rate of interest payable hereunder or under any
note or other Loan Document (the “Stated Rate”) would exceed the highest rate of
interest permitted under any applicable law to be charged (the “Maximum Lawful
Rate”), then for so long as the Maximum Lawful Rate would be so exceeded, the
rate of interest payable shall be equal to the Maximum Lawful Rate; provided,
however, that if at any time thereafter the Stated Rate is less than the Maximum
Lawful Rate, Borrower shall, to the extent permitted by law, continue to pay
interest at the Maximum Lawful Rate until such time as the total interest
received is equal to the total interest which would have been received had the
Stated Rate been (but for the operation of this provision) the interest rate
payable.  Thereafter, the interest rate payable shall be the Stated Rate unless
and until the Stated Rate again would exceed the Maximum Lawful Rate, in which
event this provision shall again apply.  In no event shall the total interest
received by any Lender exceed the amount which it could lawfully have received
had the interest been calculated for the full term hereof at the Maximum Lawful
Rate. If, notwithstanding the prior sentence, any Lender has received interest
hereunder in excess of the Maximum Lawful Rate, such excess amount shall be
applied to the reduction of the principal balance of the Loans or to other
amounts (other than interest) payable hereunder, and if no such principal or
other amounts are then outstanding, such excess or part thereof remaining shall
be paid to Borrower.  In computing interest payable with reference to the
Maximum Lawful Rate applicable to any Lender, such interest shall be calculated
at a daily rate equal to the Maximum Lawful Rate divided by the number of days
in the year in which such calculation is made.

(c)           Final Payment.  On the 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 such Term Loan Advance, an amount equal to the
Final Payment.

(d)           Mandatory Prepayment Upon an Acceleration.  If the Term Loan is
accelerated following the occurrence of an Event of Default or otherwise,
Borrower shall immediately pay to Lenders an amount equal to the sum of:  (i)
all payments of principal plus accrued interest due and owing on such date and
not yet paid, plus (ii) all remaining payments of principal and all interest due
to be paid on such principal payments in the future, plus (iii) the Final
Payment, plus (iv) 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.

(e)           Permitted Prepayment of Loans.   Borrower shall have the option to
prepay all, but not less than all, of the Term Loan advanced by Lenders under
this Agreement, provided Borrower (i) provides written notice to Agent of its
election to prepay the Term Loan at least thirty (30) days prior to such
prepayment, and (ii) pays, on the date of such prepayment (A) all payments of
principal plus accrued interest due and owing on such date and not yet paid,
plus (B) all remaining payments of principal and all interest due to be paid on
such principal payments in the future, plus (C) the Final Payment, plus (D) 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.

(f)            Debit of Accounts.   Agent may debit any of Borrower’s deposit
accounts including Account Number 3300474313 maintained with SVB for principal
and interest

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payments or any amounts Borrower owes Agent or Lenders. Agent will promptly
notify Borrower when it debits Borrower’s accounts.  These debits shall not
constitute a set-off.

(g)           Payments.  All payments to be made by Borrower hereunder or under
any other Loan Document, including payments of principal and interest made
hereunder and pursuant to any other Loan Document, and all fees, expenses,
indemnities and reimbursements, shall be made without set-off, recoupment or
counterclaim, in lawful money of the United States and in immediately available
funds.

2.4          Fees.

Borrower will pay to Agent:

(a)           Final Payment.  The Final Payment, when due;

(b)           Agent Expenses. All Agent Expenses (including reasonable
attorneys’ fees and reasonable expenses) incurred through and after the Closing
Date, when due; and

(c)           Lender’s Expenses.  All Lender’s Expenses (including reasonable
attorneys’ fees and reasonable expenses) incurred through and after the Closing
Date, when due.  Agent shall provide Borrower notice if the aggregate total
amount of attorneys’ fees included in Agent Expenses and Lender’s Expenses is
expected to exceed $20,000.

A good faith deposit of $50,000 has already been paid to Agent by Borrower and
will be applied against the Agent Expenses and Lender’s Expenses.  Any portion
of the deposit not utilized to pay Agent Expenses and Lender Expenses will be
refunded to Borrower.

2.5          Additional Costs.

If any new law or regulation increases any Lender’s costs or reduces its income
for any loan, Borrower shall pay the increase in cost or reduction in income or
additional expense; provided, however, that Borrower shall not be liable for any
amount attributable to any period before 180 days prior to the date such Lender
notifies Borrower of such increased costs.  Each Lender agrees that it shall
allocate any increased costs among its customers similarly affected in good
faith and in a manner consistent with such Lender’s customary practice.

3.                                      CONDITIONS OF LOANS

3.1          Conditions Precedent to Initial Credit Extension.

The Lenders’ agreement to make the initial Credit Extension is subject to the
condition precedent that Agent shall have received, in form and substance
satisfactory to Agent, such documents and completion of such other matters, as
Agent may reasonably deem necessary or appropriate, including, without
limitation, subject to the condition precedent that Agent shall have received in
form and substance satisfactory to the Agent the following:

(a)           this Agreement;

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(b)           a certificate of the Secretary of Borrower with respect to
articles, by-laws, incumbency, specimen signature and corporate resolutions
authorizing the execution, delivery and performance of this Agreement;

(c)           Perfection Certificate by Borrower;

(d)           Intercreditor Agreement between the Lenders;

(e)           Warrants to Purchase Stock;

(f)            Financing statement (Forms UCC-1);

(g)           Deposit Account Control Agreements/Securities Account Control
Agreements (SVB and other financial institutions);

(h)           Certificates evidencing Borrower’s equity ownership of NRX
Manufacturing Group, Inc. together with an assignment executed in blank;

(i)            Evidence of insurance;

(j)            payment of the fees and Agent Expenses and Lender’s Expenses then
due specified in Section 2.4 hereof;

(k)           Certificate of Foreign Qualification from the State of California;

(l)            Certificate of Good Standing/Legal Existence from the
jurisdiction of incorporation;

(m)          A legal opinion issued to Agent and Lenders by counsel to Borrower,
in form and substance satisfactory to Agent; and

(n)           such other documents, and completion of such other matters, as
Agent may reasonably deem necessary or appropriate.

3.2          Conditions Precedent to all Credit Extensions.

The obligations of Lenders to make each Credit Extension, including the initial
Credit Extension, is subject to the following:

(a)           timely receipt of any Payment/Advance Form; and

(b)           the representations and warranties in Section 5 shall be true,
correct and complete in all material respects on the date of the Payment/Advance
Form and on the effective date of each Credit Extension; provided, that those
representations and warranties expressly referring to a specific date shall be
true, accurate and complete in all respects as of that date, and no Event of
Default shall have occurred and be continuing, or result from the Credit
Extension. Each 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.

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4.                                      CREATION OF SECURITY INTEREST

4.1          Grant of Security Interest.

Borrower hereby grants Agent, for the ratable benefit of the Lenders; and to
each Lender, to secure the payment and performance in full of all of the
Obligations and the performance of each of Borrower’s duties under the Loan
Documents, a continuing security interest in, and pledges and assigns to the
Agent, for the ratable benefit of the Lenders, and to each Lender the
Collateral, wherever located, whether now owned or hereafter acquired or
arising, and all proceeds and products thereof.  Borrower warrants and
represents that the security interest granted herein shall be a first priority
security interest in the Collateral, subject to only Permitted Liens.

Except as noted on Section 4.1 of Borrower’s Disclosure Schedule, Borrower is
not a party to, nor is bound by, any material license or other similar agreement
with respect to which the Borrower is the licensee that prohibits or otherwise
restricts Borrower from granting a security interest in Borrower’s interest in
such license or agreement or any other property.  Borrower shall provide written
notice to Agent within ten (10) days of entering into or becoming bound by, any
such license or agreement which is reasonably likely to have a material impact
on Borrower’s business or financial condition.  If such licenses or other
agreements meet the definition of Collateral set forth in Section 13 of this
Agreement, Borrower shall take such steps as Agent reasonably requests to obtain
the consent of, or waiver by, any person whose consent or waiver is necessary
for such licenses or other agreements to be deemed “Collateral” and for Agent to
have a security interest in it that might otherwise be restricted or prohibited
by law or by the terms of any such Collateral, whether now existing or entered
into in the future.

Borrower agrees that any disposition of the Collateral in violation of this
Agreement, by either the Borrower or any other Person, shall be deemed to
violate the rights of the Lenders under the Code.  If the Agreement is
terminated, Lenders’ and Agent’s lien and security interest in the Collateral
shall continue until Borrower fully satisfies its Obligations.  If Borrower
shall at any time, acquire a commercial tort claim (as defined in the Code) or
Letter-of-Credit Right, Borrower shall promptly notify Agent in a writing signed
by Borrower of the brief details thereof and grant to Agent and Lenders 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
satisfactory to Agent.

4.2          Authorization to File Financing Statements.

Borrower hereby authorizes Agent to file financing statements, without notice to
Borrower, with all appropriate jurisdictions, in order to perfect or protect
Agent’s and Lenders’ interest or rights hereunder.

5.                                      REPRESENTATIONS AND WARRANTIES

Except as set forth in the Perfection Certificate or any Schedule, Borrower
represents and warrants to Agent and each Lender as follows:

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5.1          Due Organization and Authorization.

Each of Borrower and its Subsidiaries is duly organized, validly existing and in
good standing in its state of incorporation and duly qualified to do business
in, and in good standing in, each jurisdiction in which the nature of the
business conducted by it or its ownership of property requires that it be
qualified, except where the failure to be or do so could not reasonably be
expected to cause a Material Adverse Change.  In connection with this Agreement,
the Borrower delivered to the Agent a certificate signed by the Borrower and
entitled “Perfection Certificate”.  The Borrower represents and warrants to the
Agent and each Lender that: (a) the Borrower’s exact legal name is that
indicated on the Perfection Certificate and on the signature page hereof; (b)
the 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 the Borrower’s organizational identification
number or accurately states that the Borrower has none; (d) the Perfection
Certificate accurately sets forth the Borrower’s place of business, or, if more
than one, its chief executive office as well as the Borrower’s mailing address
if different; and (e) all other information set forth on the Perfection
Certificate pertaining to the Borrower is accurate and complete in all material
respects.  If the Borrower does not now have an organizational identification
number, but later obtains one, Borrower shall forthwith notify the Agent of such
organizational identification number.

The execution, delivery and performance of the Loan Documents have been duly
authorized, and do not conflict with Borrower’s organizational documents, nor
constitute an event of default under any material agreement by which Borrower is
bound.  Borrower is not in default under any agreement to which or by which it
is bound in which the default could reasonably be expected to cause a Material
Adverse Change.

5.2          Collateral.

Borrower has good title to the Collateral, free of Liens except Permitted
Liens.  Borrower has no deposit account, other than the deposit accounts with
Lenders and deposit accounts described in the Perfection Certificate delivered
to Agent in connection herewith.  The Accounts are bona fide, existing
obligations of the account debtors.  The Collateral is not in the possession of
any third party bailee (such as a warehouse).  Except as hereafter disclosed to
the Lenders in writing by Borrower, none of the components of the Collateral
shall be maintained at locations other than as provided in the Perfection
Certificate.  In the event that Borrower, after the date hereof, intends to
store or otherwise deliver any portion of the Collateral to a bailee, then
Borrower will first receive the written consent of Lenders and such bailee must
acknowledge in writing that the bailee is holding such Collateral for the
benefit of Agent and Lenders.  All Inventory is in all material respects of good
and marketable quality, free from material defects.

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5.3          Intellectual Property.

Borrower and its Subsidiaries solely own, or have sufficient rights to use and
otherwise exercise and exploit and license all Intellectual Property necessary
or material for use in connection with their respective businesses as currently
being conducted.  Neither Borrower nor any of its Subsidiaries has received any
notice that any current activities of any of them may violate or infringe upon
the patent rights of any Person.  Except as set forth on Section 5.3(i) of
Borrower’s Disclosure Schedule, to the knowledge of Borrower, each Patent owned
or licensed by Borrower or its Subsidiaries that is necessary or material for
use in its business as currently conducted is enforceable and there is no
existing or expected infringement (or challenge) by another Person of (or to)
any of the Intellectual Property of Borrower or its Subsidiaries that could
reasonably be expected to cause a Material Adverse Change.  Section 5.3(ii) of
Borrower’s Disclosure Schedule sets forth, as of September 29, 2006, (i) all
domestic and foreign registered patents and patent applications of Borrower; and
(ii) all domestic and foreign registered and applied for trademarks, trade names
and service marks of Borrower.  Borrower has no domestic or foreign copyrights
or copyright registrations, nor does Borrower use any material unregistered
copyrights in the ordinary course of its business.

5.4          Litigation.

Except as shown in the Perfection Certificate, there are no actions or
proceedings pending or, to the knowledge of Borrower, threatened by or against
Borrower or any Subsidiary in which an adverse decision could reasonably be
expected to cause a Material Adverse Change.

5.5          No Material Deterioration in Financial Statements.

All consolidated financial statements for Borrower and its Subsidiaries,
delivered to Agent were prepared in accordance with GAAP consistently applied
during the periods involved (except in the case of unaudited interim statements,
to the extent that they may not include footnotes, may be condensed or summary
statements or may conform to the SEC’s rules and instructions for Reports on
Form 10-Q) and fairly present in all material respects Borrower’s consolidated
financial condition as of the dates thereof and Borrower’s consolidated results
of operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end adjustments).  There has not been any
material deterioration in Borrower’s consolidated financial condition since the
date of the most recent financial statements submitted to Agent.

5.6          Solvency.

Based on the financial condition of Borrower as of the Closing Date, the fair
salable value of Borrower’s assets (including goodwill minus disposition costs)
exceeds the fair value of its liabilities; the 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.

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5.7          Regulatory Compliance.

Borrower is not an “investment company” or a company “controlled”  by an
“investment company”, or a “subsidiary” of an “investment company” under the
Investment Company Act of 1940.  Borrower is not engaged as one of its important
activities in extending credit for margin stock (under Regulations T and U of
the Federal Reserve Board of Governors).  Borrower has complied in all material
respects with the Federal Fair Labor Standards Act.  Borrower has not violated
any Laws, the violation of which could reasonably be expected to cause a
Material Adverse Change.  None of Borrower’s or any Subsidiary’s properties or
assets has been used by Borrower or any Subsidiary or, to Borrower’s knowledge,
by previous Persons, in disposing, producing, storing, treating, or transporting
any hazardous substance other than legally.  Borrower and each Subsidiary has
timely filed all required tax returns and paid, or made adequate provision to
pay, all material taxes, except those being contested in good faith with
adequate reserves under GAAP.  Borrower and each Subsidiary has obtained all
consents, approvals and authorizations of, made all declarations or filings
with, and given all notices to, all Government Authorities that are necessary to
continue its business as currently conducted, except where the failure to do so
would not reasonably be expected to cause a Material Adverse Change.

Neither Borrower, nor to the knowledge of Borrower, any of its Affiliates or
agents acting on behalf of Borrower in any capacity in connection with the
transactions contemplated by this Agreement is (i) in violation of any
Anti-Terrorism Law, (ii) engages in or conspires to engage in any transaction
that evades or avoids, or has the purpose of evading or avoiding, or attempts to
violate, any of the prohibitions set forth in any Anti-Terrorism Law, or
(iii) is a Blocked Person.  Neither Borrower nor, to the knowledge of Borrower,
any of its Affiliates or agents acting on behalf of Borrower in any capacity in
connection with the transactions contemplated by this Agreement, (x) conducts
any business or engages in making or receiving any contribution of funds, goods
or services to or for the benefit of any Blocked Person, or (y) deals in, or
otherwise engages in any transaction relating to, any property or interest in
property blocked pursuant to Executive Order No. 13224, any similar executive
order or other Anti-Terrorism Law.

5.8          Subsidiaries.

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

5.9          Full Disclosure.

No written representation, warranty or other statement of Borrower in any
certificate or written statement given to Agent or any Lender (taken together
with all such written certificates and written statements given to Agent or any
Lender) contains any untrue statement of a material fact or omits to state a
material fact necessary to make any representation, warranty or other statement
contained in the certificates or written statements, in light of the
circumstances under which they were made, not misleading as of the date such
written representation, warranty or other statement was made, it being
recognized by Agent and Lenders that the projections and forecasts provided by
Borrower in good faith and based upon reasonable assumptions are not

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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.

6.                                      AFFIRMATIVE COVENANTS

Borrower shall do all of the following for so long as Agent or any Lender has an
obligation to make any Credit Extension, or there are outstanding Obligations:

6.1          Government Compliance.

Borrower shall maintain its and all Subsidiaries’ legal existence and good
standing as a Registered Organization and maintain qualification in each
jurisdiction in which the failure to so qualify would reasonably be expected to
have a material adverse effect on Borrower’s business or operations.  Borrower
shall comply, and have each Subsidiary comply, with all Laws to which it is
subject, noncompliance with which could have a material adverse effect on
Borrower’s business or operations or would reasonably be expected to cause a
Material Adverse Change.

6.2          Financial Statements, Reports, Certificates.

(a)           Borrower shall deliver to Agent:  (i) as soon as available, but no
later than thirty (30) days after the last day of each month, a company prepared
unaudited consolidated financial statements, consisting of a balance sheet and
income statement covering Borrower’s consolidated operations for the monthly
period ending the last day of such month, together with a Compliance Certificate
signed by a Responsible Officer in the form of Exhibit C and in a form
reasonably acceptable to Agent; (ii) as soon as available, but no later than one
hundred eighty (180) days after the last day of Borrower’s fiscal year, or
within five (5) days of filing with the SEC, if earlier, audited consolidated
financial statements prepared under GAAP, consistently applied, together with
the report of an independent registered accounting firm issued in connection
therewith; (iii) within five (5) days of filing, copies of all reports on Form
10-K, Form 10-Q and Form 8-K filed with the SEC; (iv) financial projections and
operating plans approved by the Borrower’s board of directors for each fiscal
year not less than thirty (30) days prior to each such fiscal year; and (v)
other financial information reasonably requested by Agent.  Borrower may comply
with the requirements of clauses (ii) and (iii) above by maintaining an
electronic link to its SEC reports on Borrower’s website.

(b)           Borrower will keep proper books of record and account in
accordance with GAAP in which full, true and correct entries shall be made of
all dealings and transactions in relation to its business and activities. 
Borrower shall allow, at the sole cost of Borrower, Agent to visit and inspect
any of its properties, to examine and make abstracts or copies from any of their
respective books and records, to conduct a collateral audit and analysis of its
operations and the Collateral, to verify the amount and age of the accounts, the
identity and credit of the respective account debtors, to review the billing
practices of Borrower and to discuss its respective affairs, finances and
accounts with their respective officers, employees and independent public
accountants as often as may reasonably be requested.  Notwithstanding the
foregoing, such audits shall be conducted at Borrower’s expense no more often
than once every twelve (12) months unless an Event of Default has occurred and
is continuing.

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(c)           (i) Borrower will give prompt written notice to Agent of any
litigation or governmental proceedings pending or threatened (in writing)
against Borrower which would reasonably be expected to result in a Material
Adverse Change with respect to Borrower; (ii) Borrower shall provide to Agent
evidence of the payments required to be made to AnorMED, Inc. pursuant to a
License Agreement between them; and (iii) Without limiting or contradicting any
other more specific provision of this Agreement, promptly (and in any event
within three (3) Business Days) upon Borrower 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 Agent 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.

6.3          Inventory; Returns.

Borrower shall keep all 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 Agent of all returns, recoveries, disputes
and claims, that involve more than $100,000.

6.4          Taxes.

Borrower shall make, and cause each Subsidiary to make, timely payment of all
material federal, state, and local taxes or assessments (other than taxes and
assessments which Borrower is contesting in good faith, with adequate reserves
maintained in accordance with GAAP) and will deliver to Agent, on demand,
appropriate certificates attesting to such payments.

6.5          Insurance.

Borrower shall keep its business and the Collateral insured for risks and in
amounts, customary for similarly situated companies in Borrower’s industry as
Lenders and Agent may reasonably request.  Insurance policies shall be in a
form, with companies, and in amounts that are satisfactory to Agent in Agent’s
reasonable discretion.  All property policies shall have a lenders’ loss payable
endorsement showing each Lender as an additional loss payee and all liability
policies shall show the Lenders and Agent as an additional insured and all
policies shall provide that the insurer must give Agent on behalf of Lenders at
least 20 days notice before canceling its policy.  At Agent’s request, Borrower
shall deliver certified copies of policies and evidence of all premium
payments.  Proceeds payable under any policy shall, at Agent’s option, be
payable to Agent on behalf of Lenders on account of the Obligations. 
Notwithstanding the foregoing, so long as no Event of Default has occurred and
is continuing, Borrower shall have the option of applying the proceeds of any
casualty policy toward the replacement or repair of destroyed or damaged
property; provided that (i) such replaced or repaired property (a) shall be of
equal or like value as the replaced or repaired Collateral, and (b) shall be
deemed Collateral in which Agent has been granted a first priority security
interest pursuant to the terms hereunder.

6.6          Primary Accounts.

(a)           In order to permit the Agent to monitor the Borrower’s financial
performance and condition, Borrower, and all Borrower’s Subsidiaries, shall
maintain

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Borrower’s, and such Subsidiaries’, primary depository and operating accounts
and securities accounts with Agent or Agent’s Affiliates, which accounts shall
represent at least 85% of the dollar value of the Borrower’s cash and cash
equivalents at all financial institutions. Any Guarantor shall maintain all
depository, operating and securities account with Agent.

(b)           Borrower shall identify to Agent, in writing, any bank or
securities account opened by Borrower with any institution other than Agent.  In
addition, for each such account that the Borrower or any Guarantor at any time
opens or maintains, Borrower shall, at the Agent’s on behalf of Lenders request
and option, pursuant to an agreement in form and substance acceptable to the
Lenders and Agent cause the depository bank or securities intermediary to agree
that such account is the Collateral of the Agent, on behalf of Lenders pursuant
to 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 the Borrower’s
employees.

6.7          Registration of Intellectual Property Rights.

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

6.8          Financial Covenant.

Borrower shall maintain, as of the last day of each month, minimum unrestricted
cash and cash equivalents in an amount not less than $7,500,000.

6.9          Use of Proceeds.

Borrower shall use the Term Loan for working capital needs.  No portion of the
Term Loan will be used for personal, family, agricultural or household use.

6.10        Achievement of Milestones.

Not later than December 31, 2007, Borrower shall have provided evidence to
Agent, satisfactory to Agent in its good faith business judgment, of both (a)
positive Phase II data for the Picoplatin drug development program, and (b)
commencement of enrollment of persons in a Phase III trial for Picoplatin.

6.11        Notice of Management Change.

Borrower shall notify Agent of the separation of any of the following parties
from employment at Borrower within ten (10) days of such separation:  the Chief
Executive Officer, the Chief Financial Officer, the Chief Medical Officer, any
Senior Vice President, and any executive Vice President of Borrower.

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6.12        Further Assurances.

Borrower shall execute any further documents, instruments and agreements and
take further action as Agent reasonably requests to perfect or continue Agent’s
for the benefit of Lenders security interest in the Collateral or to effect the
purposes of this Agreement.

7.                                      NEGATIVE COVENANTS

Borrower shall not do any of the following without the Agent’s prior written
consent, which shall not be unreasonably withheld or delayed, for so long as
Agent or any Lender has an obligation to make Credit Extensions or there are any
outstanding Obligations:

7.1          Dispositions.

Convey, sell, lease, transfer or otherwise dispose of (collectively a
“Transfer”), or permit any of its Subsidiaries to Transfer, all or any part of
its business or property, except for Transfers (i) of Inventory in the ordinary
course of business; (ii) of non-exclusive licenses and similar arrangements for
the use of the property of Borrower or its Subsidiaries in the ordinary course
of business; (iii) of worn-out or obsolete Equipment; (iv) of assets
constituting all or part of the Non-Core Technologies; (v) in connection with
partnerships, joint ventures or similar arrangements (including out-licenses)
relating to Borrower’s Picoplatin and future product development programs to the
extent approved by Borrower’s board of directors; (vi) the manufacturing
facility and other assets located in Denton, Texas as of the Closing Date; (vii)
in connection with Permitted Liens and Permitted Investments; and (viii) other
Transfers which in the aggregate do not exceed $100,000 in any fiscal year.

7.2          Changes in Business, Ownership, Management or Locations of
Collateral.

Engage in or permit any of its Subsidiaries to engage in any business other than
the businesses currently engaged in by Borrower or reasonably related thereto,
or consummate any offering of equity securities, whether in a single transaction
or a series of related transactions, following which the shareholders of
Borrower who were shareholders immediately preceding such securities offering
would, on a fully diluted basis, beneficially own less than 50% of the common
stock of Borrower immediately after giving effect to the such transaction or
transactions.  Borrower shall not, without at least thirty (30) days prior
written notice to Agent: (i) relocate its chief executive office, or add any new
offices or business locations, including warehouses (unless such new offices or
business locations contain less than One Hundred Thousand Dollars ($100,000) in
Borrower’s assets or property), or (ii) change its jurisdiction of organization,
or (iii) change its status as a registered organization (within the meaning of
the Code) in the State of Washington, or (iv) change its legal name, or (v)
change any organizational number (if any) assigned by its jurisdiction of
organization.

7.3          Mergers or Acquisitions.

Merge or consolidate, or permit any of its Subsidiaries to merge or consolidate,
with any other Person, or acquire, or permit any of its Subsidiaries to acquire,
all or substantially all of the capital stock or property of another Person,
except where (i) no Event of Default has occurred and is continuing or would
result from such action during the term of this Agreement;

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(ii) Borrower is the surviving entity after such transaction is consummated (to
the extent Borrower was a party thereto); and (iii) no material adverse change
in financial position or outlook of the combined entity is reasonably likely to
result. A Subsidiary may merge or consolidate into another Subsidiary or into
Borrower.

7.4          Indebtedness.

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

7.5          Encumbrance.

Create, incur, or allow any Lien on any of its property, 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, or permit any Collateral
not to be subject to the first priority security interest granted herein, except
that the Collateral may also be subject to Permitted Liens.  In addition, except
as permitted by Section 7.1 of this Agreement, Borrower shall not sell,
transfer, assign, mortgage, pledge, lease, grant a security interest in, or
encumber, or enter into any agreement, document, instrument or other arrangement
(except with or in favor of the Agent and Lenders) with any Person which
directly or indirectly prohibits or has the effect of prohibiting Borrower from
selling, transferring, assigning, mortgaging, pledging, leasing, granting a
security interest in or upon, or encumbering any of Borrower’s Intellectual
Property.

7.6          Distributions; Investments.

(i) 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; or (ii) pay any dividends or make any distribution or payment or
redeem, retire or purchase any capital stock, except for (A) exchange of shares
of Borrower’s common stock, payment of cash for any fractional shares and other
transactions related to Borrower’s one-for-six reverse stock split effective
September 22, 2006; (B) antidilution adjustments and repurchases, distributions
and similar transactions (including payment of cash for any fractional shares)
pursuant to the terms of outstanding convertible securities; and (C) semi-annual
cash dividends payable pursuant to the terms of the Company’s outstanding Series
I Convertible Exchangeable Preferred Stock not to exceed $251,000 in the
aggregate for any such payment.

7.7          Transactions with Affiliates.

Except as approved by the majority of the disinterested members of Borrower’s
board of directors, 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 that are no less favorable to Borrower than would be obtained in an arm’s
length transaction with a non--affiliated Person, and (b) transactions with
Subsidiaries not otherwise prohibited hereunder, including Permitted Investments
in Subsidiaries and Permitted Indebtedness to and from Subsidiaries.

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7.8          Subordinated Debt.

Make or permit any payment on any Subordinated Debt, except under the terms of
the Subordinated Debt, or amend any material provision in any document relating
to the Subordinated Debt.

7.9          Compliance with Anti-Terrorism Laws.

Agent hereby notifies Borrower that pursuant to the requirements of
Anti-Terrorism Laws, and Agent’s policies and practices, Agent is required to
obtain, verify and record certain information and documentation that identifies
Borrower and its principals, which information includes the name and address of
Borrower and its principals and such other information that will allow Agent to
identify such party in accordance with Anti-Terrorism Laws.  Borrower will not,
nor will Borrower permit any Subsidiary or Affiliate to, directly or indirectly,
knowingly enter into any documents, instruments, agreements or contracts with
any Person listed on the OFAC Lists.  Borrower shall immediately notify Agent if
Borrower has knowledge that Borrower or any Subsidiary or Affiliate is listed on
the OFAC Lists or (a) is convicted on, (b) pleads nolo contendere to, (c) is
indicted on, or (d) is arraigned and held over on charges involving money
laundering or predicate crimes to money laundering.  Borrower will, nor will
Borrower permit any Subsidiary or Affiliate to, directly or indirectly,
(i) conduct any business or engage in any transaction or dealing with any
Blocked Person, including, without limitation, the making or receiving of any
contribution of funds, goods or services to or for the benefit of any Blocked
Person, (ii) deal in, or otherwise engage in any transaction relating to, any
property or interests in property blocked pursuant to Executive Order No. 13224,
any similar executive order or other Anti-Terrorism Law, or (iii) engage in or
conspire to engage in any transaction that evades or avoids, or has the purpose
of evading or avoiding, or attempts to violate, any of the prohibitions set
forth in Executive Order No. 13224 or other Anti-Terrorism Law.

7.10        Compliance.

Become an “investment company” or a company controlled by an “investment
company,” under the Investment Company Act of 1940 or undertake as one of its
important activities extending credit to purchase or carry margin stock, or use
the proceeds of any 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, if such failure or violation could
reasonably be expected to cause a Material Adverse Change, or permit any of its
Subsidiaries to do so.

8.                                      EVENTS OF DEFAULT

Any one of the following is an Event of Default:

8.1          Payment Default.

Borrower fails to pay any of the Obligations within three (3) Business Days
after their due date. During the additional three Business Day period the
failure to cure the payment default

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shall not constitute an Event of Default (but no Credit Extension shall be made
during such cure period).

8.2          Covenant Default.

(a)           If Borrower fails to perform any obligation under Sections 6.2,
6.6, 6.8, 6.9 or 6.10 or violates any of the covenants contained in Section 7 of
this Agreement, or

(b)           If Borrower fails or neglects to perform, keep, or observe any
other term, provision, condition, covenant, or agreement contained in this
Agreement, in any of the Loan Documents, or in any other present or future
agreement between Borrower and any Lender and has failed to cure such default
within ten (10) days after the occurrence thereof; provided, however, that (i)
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 reasonable 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 have cured such default shall not be
deemed an Event of Default (provided that no Credit Extensions will be made
during such cure period) and (ii) if the default cannot by its nature be cured,
then Borrower shall have a reasonable period (which shall not in any case exceed
ten (10) days) to minimize the impact of the default such that the default is
not material, and within such reasonable time period the default shall not be
deemed an Event of Default (provided that no Credit Extensions will be made
during such period).

8.3          Material Adverse Change.

A Material Adverse Change occurs.

8.4          Attachment.

(i) Any material portion of Borrower’s assets is attached, seized, levied on, or
comes into possession of a trustee or receiver and the attachment, seizure or
levy is not removed in ten (10) days; (ii) the service of process upon the
Borrower seeking to attach, by trustee or similar process, any funds of the
Borrower on deposit with the Lenders and/or Agent, or any entity under the
control of Lenders and/or Agent (including a subsidiary); (iii) Borrower is
enjoined, restrained, or prevented by court order from conducting a material
part of its business; (iv) a judgment or other claim becomes a Lien on a
material portion of Borrower’s assets; or (v) a notice of lien, levy, or
assessment is filed against any of Borrower’s assets by any government agency
and not paid within ten (10) days after Borrower receives notice.  These are not
Events of Default if stayed or if a bond is posted pending contest by Borrower
(but no Credit Extensions shall be made during the cure period).

8.5          Insolvency.

(i) Borrower is unable to pay its debts (including trade debts) as they become
due; (ii) Borrower begins an Insolvency Proceeding; or (iii) an Insolvency
Proceeding is begun against Borrower and not dismissed or stayed within sixty
(60) days (but no Credit Extensions shall be made before any Insolvency
Proceeding is dismissed).

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8.6          Other Agreements.

If there is a default in (a) the License Agreement between Borrower and AnorMED,
Inc. due to Borrower’s failure to make any payment required thereunder; or (b)
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 Two
Hundred Fifty Thousand Dollars ($250,000) or that could result in a Material
Adverse Change.

8.7          Judgments.

If a judgment or judgments for the payment of money in an amount, individually
or in the aggregate, of at least Two Hundred Fifty Thousand Dollars ($250,000)
shall be rendered against Borrower and shall remain unsatisfied and unstayed for
a period of ten (10) Business Days (provided that no Credit Extensions will be
made prior to the satisfaction or stay of such judgment).

8.8          Misrepresentations.

If Borrower or any Person acting for Borrower makes any material
misrepresentation or material misstatement now or later in any warranty or
representation in this Agreement or in any writing delivered to Agent and/or
Lenders or to induce Agent and/or Lenders to enter this Agreement or any Loan
Document.

8.9          Criminal Proceeding.

The institution by any Governmental Authority of criminal proceedings against
Borrower which are reasonably likely to result in a Material Adverse Change.

8.10        Subordinated Debt.

Any Person holding any Subordinated Debt terminates the applicable subordination
agreement or asserts that it is terminated.

8.11        Lien Priority.

Any Lien created hereunder or by any other Loan Document shall at any time fail
to constitute a valid and perfected Lien on all of the Collateral purported to
be secured thereby, subject to no prior or equal Lien except Permitted Liens, or
any Borrower shall so assert.

9.                                      RIGHTS AND REMEDIES

9.1          Rights and Remedies.

When an Event of Default occurs and continues Agent may, without notice or
demand, do any or all of the following:

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(a)           Declare 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 Agent and/or Lenders);

(b)           Stop advancing money or extending credit for Borrower’s benefit
under this Agreement or under any other agreement between Borrower and Agent
and/or Lenders;

(c)           Settle or adjust disputes and claims directly with account debtors
for amounts, on terms and in any order that Agent considers advisable and notify
any Person owing Borrower money of Agent’s for the benefit of Lenders’ security
interest in such funds and verify the amount of such account.  Borrower shall
collect all payments in trust for Agent for the benefit of Lenders and, if
requested by Agent, immediately deliver the payments to Lenders in the form
received from the account debtor, with proper endorsements for deposit;

(d)           Make any payments and do any acts it considers necessary or
reasonable to protect its security interest in the Collateral.  Borrower shall
assemble the Collateral if Agent requests and make it available as Agent
designates.  Agent 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 Agent for the benefit of
Lenders a license to enter and occupy any of its premises, without charge, to
exercise any of Agent’s rights or remedies;

(e)           Apply to the Obligations any (i) balances and deposits of Borrower
it holds, or (ii) any amount held by Agent or Lenders 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.  Agent 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 solely to the extent required in completing production
of, advertising for sale, and selling any Collateral and, in connection with
Agent’s exercise of its rights under this Section, Borrower’s rights under all
licenses and all franchise agreements inure to Agent’s for benefit of Lenders;
and

(g)           Place a “hold” on any account maintained with Agent 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; and

(h)           Dispose of the Collateral according to the Code or exercise any
other right or remedy permitted hereunder, under any other Loan Document or
under applicable Law.

9.2          Power of Attorney.

Borrower hereby irrevocably appoints Agent as its lawful attorney-in-fact, to be
effective upon the occurrence and during the continuance of an Event of Default,
to:  (i) endorse Borrower’s name on any checks or other forms of payment or
security; (ii) sign Borrower’s

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name on any invoice or bill of lading for any Account or drafts against account
debtors, (iii) settle and adjust disputes and claims about the Accounts directly
with account debtors, for amounts and on terms Agent determines reasonable; (iv)
make, settle, and adjust all claims under Borrower’s insurance policies; and
(v) transfer the Collateral into the name of Agent for the benefit of Lenders or
a third party as the Code permits.  Borrower hereby appoints Agent as its lawful
attorney-in-fact to sign Borrower’s name on any documents necessary to perfect
or continue the perfection of any security interest regardless of whether an
Event of Default has occurred until all Obligations have been satisfied in full
and Agent and Lenders are under no further obligation to make Credit Extensions
hereunder.  Agent’s foregoing appointment as Borrower’s attorney in fact, and
all of Agent’s rights and powers, coupled with an interest, are irrevocable
until all Obligations have been fully repaid and performed and Lenders’ and
Agent’s obligation to provide Credit Extensions terminates.

9.3          Accounts, Notification and Collection.

In the event that an Event of Default occurs and is continuing, Agent may notify
any Person owing Borrower money of Agent’s security interest in the funds and
verify and/or collect the amount of the Account.  Upon the occurrence and during
the continuation of an Event of Default, any amounts received by Borrower shall
be held in trust by Borrower for Agent, and, if requested by Agent, Borrower
shall immediately deliver such receipts to Agent in the form received from the
account debtor, with proper endorsements for deposit.

9.4          Agent Expenses.

Any amounts paid by Agent as provided herein are Agent Expenses and are
immediately due and payable and shall bear interest at the then applicable rate
and be secured by the Collateral.  No payments by Agent shall be deemed an
agreement to make similar payments in the future or Agent’s and Lenders’ waiver
of any Event of Default.

9.5          Agent’s Liability for Collateral.

So long as the Agent and Lenders comply with reasonable banking practices
regarding the safekeeping of Collateral, the Agent and Lenders 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.  Borrower bears all risk of loss, damage or destruction of the
Collateral.

9.6          Application of Proceeds.

Notwithstanding anything to the contrary contained in this Agreement, upon the
occurrence and during the continuance of an Event of Default, (a)  Borrower
irrevocably waives the right to direct the application of any and all payments
at any time or times thereafter received by Agent from or on behalf of Borrower
or any Guarantor of all or any part of the Obligations, and, as between Borrower
on the one hand and Agent and Lenders on the other, Agent shall have the
continuing and exclusive right to apply and to reapply any and all payments
received against the Obligations in such manner as Agent may deem advisable
notwithstanding any previous application by Agent, and (b) the proceeds of any
sale of, or other realization upon, all or any part of the Collateral shall be
applied:  first, to Agent Expenses; second, to Lender’s Expenses;

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third, to accrued and unpaid interest on the Obligations (including any interest
which, but for the provisions of the United States Bankruptcy Code, would have
accrued on such amounts); fourth, to the principal amount of the Obligations
outstanding; and fifth to any other indebtedness or obligations of Borrower
owing to Agent or any Lender under the Loan Documents.  Any balance remaining
shall be delivered to Borrower or to whoever may be lawfully entitled to receive
such balance or as a court of competent jurisdiction may direct.  In carrying
out the foregoing, (x) amounts received shall be applied in the numerical order
provided until exhausted prior to the application to the next succeeding
category, and (y) each of the Persons entitled to receive a payment in any
particular category shall receive an amount equal to its pro rata share of
amounts available to be applied pursuant thereto for such category.

9.7          Remedies Cumulative.

Agent’s rights and remedies under this Agreement, the Loan Documents, and all
other agreements are cumulative.  Agent has all rights and remedies provided
under the Code, by law, or in equity. Agent’s exercise of one right or remedy is
not an election, and Agent’s waiver of any Event of Default is not a continuing
waiver. Agent’s delay is not a waiver, election, or acquiescence. No waiver
hereunder shall be effective unless signed by Agent and each Lender and then is
only effective for the specific instance and purpose for which it was given. 
Agent and Lenders shall have no obligation to marshal any assets in favor of
Borrower or any Guarantor, or against or in payment of any of the other
Obligations or any other obligation owed to Agent or Lenders by Borrower or any
Guarantor.

9.8          Demand Waiver.

Borrower 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 Agent on which Borrower is liable.

10.                               NOTICES

Notices or demands by either party about this Agreement must be in writing and
personally delivered or sent by an overnight delivery service or by
telefacsimile at the addresses listed below.  A party may change its notice
address by written notice to the other party.

If to Borrower:

Poniard Pharmaceuticals, Inc.
7000 Shoreline Court
South San Francisco, California 94080
Attn: Caroline Loewy, Chief Financial Officer
Fax: (650) 583-3789

 

 

If to Agent or SVB:

Silicon Valley Bank
185 Berry Street, Suite 3000
San Francisco, California 94107
Attn: Peter Scott
Fax: (415) 856-0810

 

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If to Merrill Lynch:

Merrill Lynch Capital
222 N. LaSalle Street, 16th Floor
Chicago, Illinois 60601
Attn: Account Manager for MLC/SVB/Poniard
Fax: (866) 231-8408

 

11.                               CHOICE OF LAW, VENUE AND JURY TRIAL WAIVER

California law governs the Loan Documents without regard to principles of
conflicts of law.  Borrower, Lenders and Agent each submit to the exclusive
jurisdiction of the State and Federal courts in California and Borrower accepts
jurisdiction of the courts and venue in Santa Clara County, California. 
NOTWITHSTANDING THE FOREGOING, THE AGENT SHALL HAVE THE RIGHT TO BRING ANY
ACTION OR PROCEEDING AGAINST THE BORROWER OR ITS PROPERTY IN THE COURTS OF ANY
OTHER JURISDICTION WHICH THE AGENT DEEMS NECESSARY OR APPROPRIATE IN ORDER TO
REALIZE ON THE COLLATERAL OR TO OTHERWISE ENFORCE THE LENDERS’ OR AGENT’S RIGHTS
AGAINST THE BORROWER OR ITS PROPERTY.

BORROWER, AGENT AND LENDERS 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 Santa Clara 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 Santa Clara 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
Santa Clara 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

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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.

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 Agent’s prior written consent which may be granted
or withheld in Agent’s discretion.  Lenders and Agent have the right, without
the consent of or notice to Borrower, to sell, transfer, assign, negotiate, or
grant participation in all or any part of, or any interest in, Lenders’
obligations, rights and benefits under this Agreement, the Loan Documents or any
related agreement, including, without limitation, an assignment to any Affiliate
or related party.

12.2        Indemnification.

Borrower hereby indemnifies, defends and holds Agent and the Lenders and their
respective officers, employees, and agents (collectively called the
“Indemnitees”) harmless from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, claims, costs, expenses
and disbursements of any kind or nature whatsoever (including the reasonable
fees and disbursements of counsel for such Indemnitee) in connection with any
investigative, response, remedial, administrative or judicial matter or
proceeding, whether or not such Indemnitee shall be designated a party thereto
and including any such proceeding initiated by or on behalf of Borrower, and the
reasonable expenses of investigation by engineers, environmental consultants and
similar technical personnel and any commission, fee or compensation claimed by
any broker (other than any broker retained by Agent or Lenders) asserting any
right to payment for the transactions contemplated hereby, which may be imposed
on, incurred by or asserted against such Indemnitee as a result of or in
connection with the transactions contemplated hereby and the use or intended use
of the proceeds of the Term Loan, except that Borrower shall not have any
obligation hereunder to an Indemnitee with respect to any liabilities,
obligations, losses, damages, penalties, claims, costs, expenses and
disbursements caused by or resulting from the gross negligence or willful
misconduct of any Indemnitee, as determined by a final non-appealable judgment
of a court of competent jurisdiction.  To the extent that the undertaking set
forth in the immediately preceding sentence may be unenforceable, Borrower shall
contribute the maximum portion which it is permitted to pay and satisfy under
applicable law to the payment and satisfaction of all such indemnified
liabilities incurred by the Indemnitees or any of them.

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12.3        Expenses.

Borrower hereby agrees to promptly pay (a) all reasonable costs and expenses of
Agent (including, without limitation, the reasonable fees, costs and expenses of
counsel to, and independent appraisers and consultants retained by Agent) in
connection with the examination, review, due diligence investigation,
documentation, negotiation, closing and syndication of the transactions
contemplated by this Agreement and the Loan Documents, in connection with the
performance by Agent of its rights and remedies this Agreement and under the
Loan Documents and in connection with the continued administration of this
Agreement and under the Loan Documents including: (i) any amendments,
modifications, consents and waivers to and/or under this Agreement or any and
all Loan Documents and (ii) any periodic public record searches conducted by or
at the request of Agent (including, without limitation, title investigations,
UCC searches, fixture filing searches, judgment, pending litigation and tax lien
searches and searches of applicable corporate, limited liability, partnership
and related records concerning the continued existence, organization and good
standing of certain Persons), (b) without limitation of the preceding
clause (a), all reasonable costs and expenses of Agent (including recordation
and transfer taxes) in connection with the creation, perfection and maintenance
of Liens pursuant to this Agreement and the Loan Documents, (c) without
limitation of the preceding clause (a), all costs and expenses of Agent in
connection with (i) protecting, storing, insuring, handling, maintaining or
selling any Collateral; (ii) any litigation, dispute, suit or proceeding
relating to this Agreement and any Loan Document; and (iii) any workout,
collection, bankruptcy, insolvency and other enforcement proceedings under this
Agreement and any and all of the Loan Documents, and (d) all costs and expenses
incurred by Lenders in connection with any litigation, dispute, suit or
proceeding relating to this Agreement and any Loan Document and in connection
with any workout, collection, bankruptcy, insolvency and other enforcement
proceedings under this Agreement or under any and all Loan Documents, provided,
however, that to the extent that the costs and expenses referred to in this
clause (d) consist of fees, costs and expenses of counsel, Borrower shall be
obligated to pay such fees, costs and expenses for counsel to Agent and for only
one counsel acting for all Lenders (other than Agent) and provided further that,
in all cases and notwithstanding any other provision in this Agreement or the
Loan Documents to the contrary, if Borrower prevails in any action or proceeding
between Borrower and Agent and/or Lenders arising out of or relating to this
Agreement and any Loan Documents, Borrower shall be entitled to recover from
Agent and Lenders all attorneys fees and other costs and expenses incurred, in
addition to any other relief to which it may be entitled.

12.4        Right of Set-Off.

Borrower and any guarantor hereby grant to Agent for the ratable benefit of
Lenders, a lien, security interest and right of set-off as security for all
Obligations to Agent and each Lender, hereunder, whether now existing or
hereafter arising upon and against all deposits, credits, collateral and
property, now or hereafter in the possession, custody, safekeeping or control of
Agent or any entity under the control of the Agent (including an Agent
subsidiary) or in transit to any of them.  At any time after the occurrence and
during the continuance of an Event of Default, without demand or notice, Agent
may set-off the same or any part thereof and apply the same to any liability or
obligation of Borrower and any guarantor even though unmatured and regardless of
the adequacy of any other collateral securing the Obligations.  ANY AND ALL
RIGHTS TO REQUIRE AGENT TO EXERCISE ITS RIGHTS OR REMEDIES

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WITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE OBLIGATIONS, PRIOR TO
EXERCISING ITS RIGHT OF SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER
PROPERTY OF THE BORROWER OR ANY GUARANTOR, ARE HEREBY KNOWINGLY, VOLUNTARILY AND
IRREVOCABLY WAIVED.

12.5        Time of Essence.

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

12.6        Severability of Provision.

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

12.7        Amendments in Writing, Integration.

All amendments to this Agreement must be in writing signed by Agent, each 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.

12.8        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.

12.9        Survival.

All covenants, representations and warranties made in this Agreement continue in
full force while any Obligations remain outstanding.  The obligation of Borrower
in Section 12.2 to indemnify each Lender and Agent shall survive until the
statute of limitations with respect to such claim or cause of action shall have
run.

12.10      Administrative Agent.

(a)  Each Lender hereby irrevocably appoints and authorizes Agent to enter into
each of the Loan Documents to which it is a party (other than this Agreement) on
its behalf and to take such actions as Agent on its behalf and to exercise such
powers under the Loan Documents as are delegated to Agent by the terms thereof,
together with all such powers as are reasonably incidental thereto.  Subject to
the terms of the other Loan Documents, Agent is authorized and empowered to
amend, modify, or waive any provisions of this Agreement or the other Loan
Documents on behalf of Lenders.  The provisions of this Section 12.10 are solely
for the benefit of Agent and Lenders and neither Borrower nor any Guarantor
shall have any rights as a third party beneficiary of any of the provisions
hereof.  In performing its functions and duties under

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this Agreement, Agent shall act solely as agent of Lenders and does not assume
and shall not be deemed to have assumed any obligation toward or relationship of
agency or trust with or for Borrower or any Guarantor.  Agent may perform any of
its duties hereunder, or under the Loan Documents, by or through its agents or
employees.

The duties of Agent shall be mechanical and administrative in nature.  Agent
shall not have by reason of this Agreement a fiduciary relationship in respect
of any Lender.  Nothing in this Agreement or any of the Loan Documents is
intended to or shall be construed to impose upon Agent any obligations in
respect of this Agreement or any of the Loan Documents except as expressly set
forth herein or therein.  Agent may consult with legal counsel, independent
public accountants and other experts selected by it and shall not be liable for
any action taken or omitted to be taken by it in good faith in accordance with
the advice of such counsel, accountants or experts.

Neither Agent nor any of its directors, officers, agents or employees shall be
liable to any Lender for any action taken or not taken by it in connection with
this Agreement or the Loan Documents, except that Agent shall be liable with
respect to its specific duties set forth hereunder but only to the extent of its
own gross negligence or willful misconduct in the discharge thereof as
determined by a final non-appealable judgment of a court of competent
jurisdiction.  Neither Agent nor any of its directors, officers, agents or
employees shall be responsible for or have any duty to ascertain, inquire into
or verify (a) any statement, warranty or representation made in connection with
this Agreement or the Loan Documents or any borrowing hereunder; (b) the
performance or observance of any of the covenants or agreements specified in
this Agreement or the Loan Documents; (c) the satisfaction of any condition
specified in this Agreement or the Loan Documents; (d) the validity,
effectiveness, sufficiency or genuineness of this Agreement or the Loan
Documents, any Lien purported to be created or perfected thereby or any other
instrument or writing furnished in connection therewith; (e) the existence or
non-existence of any Event of Default; or (f) the financial condition of
Borrower.  Agent shall not incur any liability by acting in reliance upon any
notice, consent, certificate, statement, or other writing (which may be a bank
wire, telex, facsimile or electronic transmission or similar writing) believed
by it to be genuine or to be signed by the proper party or parties.  Agent shall
not be liable for any apportionment or distribution of payments made by it in
good faith and if any such apportionment or distribution is subsequently
determined to have been made in error the sole recourse of any Lender to whom
payment was due but not made, shall be to recover from other Lenders any payment
in excess of the amount to which they are determined to be entitled (and such
other Lenders hereby agree to return to such Lender any such erroneous payments
received by them).

Each Lender shall, in accordance with its pro rata share of the Obligations,
indemnify Agent (to the extent not reimbursed by Borrower) upon demand against
any cost, expense (including counsel fees and disbursements), claim, demand,
action, loss or liability (except such as result from Agent’s gross negligence
or willful misconduct as determined by a final non-appealable judgment of a
court of competent jurisdiction) that Agent may suffer or incur in connection
with this Agreement or the Loan Documents or any action taken or omitted by
Agent hereunder or thereunder.  If any indemnity furnished to Agent for any
purpose shall, in the opinion of Agent, be insufficient or become impaired,
Agent may call for additional indemnity

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and cease, or not commence, to do the acts indemnified against even if so
requested by Lenders until such additional indemnity is furnished.

Each Lender acknowledges that it has, independently and without reliance upon
Agent or any other Lender, and based on such documents and information as it has
deemed appropriate, made its own credit analysis and decision to enter into this
Agreement.  Each Lender also acknowledges that it will, independently and
without reliance upon Agent or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking any action under this Agreement and the
Loan Documents.

Lenders irrevocably authorize Agent, at its option and in its discretion, to
release any Lien granted to or held by Agent under this Agreement or any Loan
Document (i) upon payment in full of all Obligations; or (ii) constituting
property sold or disposed of as part of or in connection with any disposition
permitted under this Agreement (it being understood and agreed that Agent may
conclusively rely without further inquiry on a certificate of a responsible
officer of Borrower as to the sale or other disposition of property being made
in full compliance with the provisions of this Agreement).

Agent shall not be deemed to have knowledge or notice of the occurrence 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 except with respect to defaults in
the payment of principal, interest and fees required to be paid to Agent for the
account of Lenders, unless Agent shall have received written notice from a
Lender or Borrower referring to this Agreement, describing such event and
stating that such notice is a “notice of default”.  Agent will notify each
Lender of its receipt of any such notice.  Agent shall take such action with
respect to such event in accordance with the terms hereof.  Agent may (but shall
not be obligated to) take such action, or refrain from taking such action, with
respect to such Event of Default or event which, with the giving of notice or
passage of time, or both, would constitute an Event of Default as it shall deem
advisable or in the best interests of Lenders.

(b)  Agent may retire or be retired as Agent as follows:  (i) Agent may at any
time give notice of its resignation to the Lenders and Borrower and upon receipt
of any such notice of resignation, the Lenders shall have the right to appoint a
successor Agent and (ii) following the occurrence of any Event of Default, Agent
may be replaced and succeeded as Agent by any other Lender if so provided for
under any intercreditor agreement among Lenders so long as such Lender shall
give notice to Borrower promptly upon becoming such successor Agent.  Upon the
acceptance of a successor’s appointment as Agent hereunder (or, in the case of
the replacement of Agent by any other Lender as contemplated in clause (ii) of
the preceding sentence, immediately upon such Lender becoming Agent), such
successor shall succeed to and become vested with all of the rights, powers,
privileges and duties of the retiring Agent, the retiring Agent’s resignation
shall become immediately effective and the retiring Agent shall be discharged
from all of its duties and obligations hereunder and under the other Loan
Documents.  The provisions of this Loan Agreement and the other Loan Documents
shall continue in effect for the benefit of any retiring Agent and its
sub-agents after the effectiveness of its resignation hereunder and under the
other Loan Documents in respect of any actions taken or omitted to be taken by
any of them while the retiring Agent was acting or was continuing to act as
Agent.

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12.11      Arrangers.

Notwithstanding the provisions of this Agreement or any of the Loan Documents,
the Arrangers shall have no powers, rights, duties, responsibilities or
liabilities with respect to this Agreement and the other Loan Documents.

12.12      Confidentiality.

In handling any confidential information, Lenders and Agent shall exercise the
same degree of care that it exercises for its own proprietary information, but
disclosure of information may be made: (i) to Lenders’ and Agent’s subsidiaries
or affiliates in connection with their business with Borrower; (ii) to
prospective transferees or purchasers of any interest in the Credit Extensions
(provided, however, Lenders and Agent shall use commercially reasonable efforts
in obtaining such prospective transferee’s or purchaser’s agreement to the terms
of this provision); (iii) as required by law, regulation, subpoena, or other
order, (iv) as reasonably required in connection with Lenders’ and Agent’s
examination or audit; and (v) as Agent in its good faith business judgment deems
necessary in exercising remedies under this Agreement.  Confidential information
does not include information that either: (a) is in the public domain or in
Lenders’ and/or Agent’s possession when disclosed to Lenders and/or Agent, or
becomes part of the public domain after disclosure to Lenders and/or Agent; or
(b) is disclosed to Lenders and/or Agent by a third party, if Lenders and/or
Agent does not know that the third party is prohibited from disclosing the
information.

12.13      Publicity.

Borrower will not directly or indirectly publish, disclose or otherwise use in
any public disclosure, advertising material, promotional material, press release
or interview, any reference to the name, logo or any trademark of Agent or any
Lender or any of their Affiliates or any reference to this Agreement or the
financing evidenced hereby, in any case except as required by Law, subpoena or
judicial or similar order.  Agent and each Lender hereby acknowledge that
Borrower is a public company subject to the reporting and disclosure
requirements under federal and state securities laws and the Nasdaq Marketplace
Rules, which Laws require public disclosure and discussion of the material terms
of this transaction and the filing with the SEC of this Agreement and certain of
the Loan Documents at and after the Closing Date.

Each Lender and Borrower hereby authorizes Merrill Lynch to publish the name of
such Lender and Borrower, the existence of the financing arrangements referenced
under this Agreement, the primary purpose and/or structure of those
arrangements, the amount of credit extended under each facility, the title and
role of each party to this Agreement, and the total amount of the financing
evidenced hereby in any “tombstone”, comparable advertisement or press release
which Merrill Lynch elects to submit for publication.  In addition, each Lender
and Borrower agrees that Merrill Lynch may provide lending industry trade
organizations with information necessary and customary for inclusion in league
table measurements after the Closing Date.  With respect to any of the
foregoing, Merrill Lynch shall provide Borrower with an opportunity to review
and confer with Merrill Lynch regarding the contents of any such tombstone,
advertisement or information, as applicable, prior to its submission for
publication and, following such review period, Merrill Lynch may, from time to
time, publish such

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information in any media form desired by Merrill Lynch, until such time that
Borrower shall have requested Merrill Lynch cease any such further publication.

12.14      No Strict Construction.

The parties hereto have participated jointly in the negotiation and drafting of
this Agreement.  In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the parties hereto and no presumption or burden of proof shall arise favoring
or disfavoring any party by virtue of the authorship of any provisions of this
Agreement.  The headings in this Agreement are for convenience of reference
only, are not part of this Agreement and do not affect its interpretation.

12.15      Effective Date.

Notwithstanding anything set forth in this Agreement or any Loan Document to the
contrary, this Agreement and all of the Loan Documents shall not be effective
until the date on which the Agent and each Lender executes this Agreement as
indicated on the signature page to this Agreement.

13.                               DEFINITIONS

13.1        Definitions.

In this Agreement:

“Accounts” are all existing and later arising accounts, contract rights, and
other obligations owed Borrower in connection with its sale or lease of goods
(including licensing software and other technology) or provision of services,
all credit insurance, guaranties, other security and all merchandise returned or
reclaimed by Borrower and Borrower’s Books relating to any of the foregoing, as
such definition may be amended from time to time according to the Code.

“Affiliate” is a 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.

“Agent” means, SVB, not in its individual capacity, but solely in its capacity
as agent on behalf of and for the benefit of the Lenders.

“Agent Expenses” are all audit fees and expenses and reasonable costs or
expenses (including reasonable attorneys’ fees and expenses) for preparing,
negotiating, administering, defending and enforcing the Loan Documents
(including appeals or Insolvency Proceedings).

“Anti-Terrorism Laws” means any Laws relating to terrorism or money laundering,
including Executive Order No. 13224 (effective September 24, 2001), the USA
PATRIOT Act, the Laws comprising or implementing the Bank Secrecy Act, and the
Laws administered by OFAC.

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“Basic Rate” is, as of the Funding Date the per annum rate of interest (based on
a year of 360 days) equal to the sum of (a) U.S. Treasury note yield to maturity
for a term equal to thirty-six months as quoted in the Wall Street Journal on
the Funding Date, plus (b) the Loan Margin.

“Blocked Person” means any Person:  (a) listed in the annex to, or is otherwise
subject to the provisions of, Executive Order No. 13224, (b) a Person owned or
controlled by, or acting for or on behalf of, any Person that is listed in the
annex to, or is otherwise subject to the provisions of, Executive Order
No. 13224, (c) a Person with which any Lender is prohibited from dealing or
otherwise engaging in any transaction by any Anti-Terrorism Law, (d) a Person
that commits, threatens or conspires to commit or supports “terrorism” as
defined in Executive Order No. 13224, or (e) a Person that is named a “specially
designated national” or “blocked person” on the most current list published by
OFAC or other similar list.

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

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

“Closing Date” is the date of this Agreement.

“Code” is the Uniform Commercial Code as adopted in California as amended and in
effect from time to time.

“Collateral” is the property described on Exhibit A.

“Commitment Percentage” means with respect to (a) SVB, fifty percent (50%), and
(b) Merrill Lynch, fifty percent (50%).

“Contingent Obligation” is, for any Person, any direct or indirect liability,
contingent or not, of that Person for (i) 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; (ii) any
obligations for undrawn letters of credit for the account of that Person; and
(iii) 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
the guarantee or other support arrangement.

“Copyrights” are all copyright rights, applications or registrations and like
protections in each work or authorship or derivative work, whether published or
not (whether or not it is a trade secret) now or later existing, created,
acquired or held.

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“Credit Extension” is the Term Loan Advance, or any other extension of credit by
any Lender for Borrower’s benefit.

“Equipment” is all present and future machinery, equipment, tenant improvements,
furniture, fixtures, vehicles, tools, parts and attachments in which Borrower
has any interest.

“Final Payment” is a payment (in addition to and not a substitution for the
regular monthly payments of principal plus accrued interest) due on the Maturity
Date for the Term Loan Advance equal to the Loan Amount multiplied by the Final
Payment Percentage.

“Final Payment Percentage” is 9.0%.

“Funding Date” is any date on which a Term Loan Advance is made to or on account
of Borrower.

“GAAP” is generally accepted accounting principles.

“Governmental Authority” is any nation or government, any state or other
political subdivision thereof, and any agency, department or Person exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government and any corporation or other Person owned or controlled
(through stock or capital ownership or otherwise) by any of the foregoing,
whether domestic or foreign.

“Guarantor” is any present or future guarantor of the Obligations.

“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.

“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” is:

(a)           Copyrights, Trademarks, Patents, and Mask Works including
amendments, renewals, extensions, and all licenses, options to license or other
rights to use and all license fees and royalties from the use;

(b)           Any trade secrets, including any inventions, and any intellectual
property rights, including all licenses, options to license or other rights to
use and all license fees and royalties from the use of such rights, and those
for computer software and computer software products, now or later existing,
created, acquired or held; and

(c)           All design rights which may be available to Borrower now or later
created, acquired or held.

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“Inventory” is present and future inventory in which Borrower has any interest,
including merchandise, raw materials, parts, supplies, packing and shipping
materials, work in process and finished products intended for sale or lease or
to be furnished under a contract of service, of every kind and description now
or later owned by or in the custody or possession, actual or constructive, of
Borrower, including inventory temporarily out of its custody or possession or in
transit and including returns on any accounts or other proceeds (including
insurance proceeds) from the sale or disposition of any of the foregoing and any
documents of title.

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

“Law” means any and all federal, state, local and foreign statutes, laws,
judicial decisions, regulations, guidances, guidelines, ordinances, rules,
judgments, orders, decrees, codes, plans, injunctions, permits, concessions,
grants, franchises, governmental agreements and governmental restrictions,
whether now or hereafter in effect, which are applicable to Borrower in any
particular circumstance.

“Lenders’ Expenses” are all audit fees and expenses and reasonable costs or
expenses (including reasonable attorneys’ fees and expenses) for preparing,
negotiating, administering, defending and enforcing the Loan Documents
(including appeals or Insolvency Proceedings).

“Letter-of-Credit Right” has the meaning set forth in the Code.

“Lien” is a mortgage, lien, deed of trust, charge, pledge, security interest or
other encumbrance.

“Loan Amount” is the original principal amount of the Term Loan Advance.

“Loan Documents” are, collectively, this Agreement, any note or notes or
guaranties executed by Borrower or any Guarantor, and any other present or
future document, instruments or agreement between Borrower and/or for the
benefit of Lenders and Agent in connection with this Agreement, all as amended,
extended or restated.

“Loan Margin” is three percentage points.

“Mask Works” are all mask works or similar rights available for the protection
of semiconductor chips, now owned or later acquired.

“Material Adverse Change” is: (i) a material impairment in the perfection or
priority of Lenders’ security interest in the Collateral or in the value of such
Collateral; (ii) a material adverse change in the business, operations, or
condition (financial or otherwise) of the Borrower; or (iii) a material
impairment of the prospect of repayment of any portion of the Obligations.

“Maturity Date” is April 1, 2010.

“Non-Core Technologies” are those products, product lines, and technologies that
Borrower’s board of directors, in its good faith business judgment, determines
are not appropriate

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for future development by Borrower, including STR (including holmium and
samarium technologies), Annexin, TGFb, and humanized antibodies.

“Obligations” are debts, principal, interest, Final Payment, Prepayment Fee,
Agent Expenses, Lender’s Expenses, and other amounts Borrower owes Lenders
and/or Agent now or later and including interest accruing after Insolvency
Proceedings begin and debts, liabilities, or obligations of Borrower assigned to
Lenders and/or Agent.

“OFAC” is the U.S. Department of Treasury Office of Foreign Assets Control.

“OFAC Lists” are, collectively, the Specially Designated Nationals and Blocked
Persons List maintained by OFAC pursuant to Executive Order No. 13224, 66 Fed.
Reg. 49079 (Sept. 25, 2001) and/or any other list of terrorists or other
restricted Persons maintained pursuant to any of the rules and regulations of
OFAC or pursuant to any other applicable Executive Orders.

“Patents” are patents, patent applications and like protections, including
improvements, divisions, continuations, renewals, reissues, extensions and
continuations in part of the same.

“Payment Date” is defined in Section 2.3(a).

“Permitted Indebtedness” is:

(a)           Borrower’s indebtedness to Lenders and Agent under this Agreement
or the Loan Documents;

(b)           Indebtedness existing on the Closing Date and shown on the
Perfection Certificate;

(c)           Subordinated Debt;

(d)           Indebtedness to trade creditors and with respect to surety bonds
and similar obligations incurred in the ordinary course of business;

(e)           Indebtedness secured by Permitted Liens;

(f)            Indebtedness of Borrower to any Subsidiary and Contingent
Obligations of any Subsidiary with respect to obligations of Borrower (provided
that the primary obligations are not prohibited hereby), and Indebtedness of any
Subsidiary to any other Subsidiary and Contingent Obligations of any Subsidiary
with respect to obligations of any other Subsidiary (provided that the primary
obligations are not prohibited hereby);

(g)           Other Indebtedness not otherwise permitted by Section 7.4 not
exceeding $100,000 in the aggregate outstanding at any time; and

(h)           Extensions, refinancings, modifications, amendments and
restatements of any items of Permitted Indebtedness (a) through (f) above,
provided that the principal amount thereof is not increased or the terms thereof
are not modified to impose more burdensome terms upon Borrower or its
Subsidiary, as the case may be.

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“Permitted Investments” are:

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

(b)           (i) marketable direct obligations issued or unconditionally
guaranteed by the United States or its agency or any state maturing within 1
year from its acquisition, (ii) commercial paper maturing no more than 1 year
after its creation and having the highest rating from either Standard & Poor’s
Corporation or Moody’s Investors Service, Inc., (iii) SVB’s certificates of
deposit issued maturing no more than 1 year after issue, and (iv) any other
investments administered through the Lenders;

(c)           Investments consisting of the endorsement of negotiable
instruments for deposit or collection or similar transactions in the ordinary
course of Borrower;

(d)           Investments accepted in connection with Transfers permitted by
Section 7.1;

(e)           Investments of Subsidiaries in or to other Subsidiaries or
Borrower and Investments by Borrower in Subsidiaries not to exceed $50,000 in
the aggregate in any fiscal year;

(f)            Investments consisting of (i) travel advances and employee
relocation loans and other employee loans and advances in the ordinary course of
business, and (ii) loans to employees, officers or directors relating to the
purchase of equity securities of Borrower or its Subsidiaries pursuant to
employee stock purchase plans or agreements approved by Borrower’s Board of
Directors;

(g)           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;

(h)           Investments consisting of notes receivable of, or prepaid
royalties and other credit extensions, to customers and suppliers who are not
Affiliates, in the ordinary course of business; provided that this paragraph (h)
shall not apply to Investments of Borrower in any Subsidiary;

(i)            Investments in connection with Transfers permitted by Section 7.1
or in connection with a transaction approved by Borrower’s board of directors, a
significant purpose of which is to in-license, receive an option to in-license
or develop technology with a third party;

(j)            Investments permitted by Section 7.3; and

(k)           Other Investments not otherwise permitted by Section 7.7 not
exceeding $50,000 in the aggregate outstanding at any time.

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“Permitted Liens” are:

(a)           Liens existing on the Closing Date and shown on the Perfection
Certificate or 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, if they have no priority over
any of Agent’s security interests;

(c)           Purchase money Liens (i) on Equipment acquired or held by Borrower
incurred for financing the acquisition of the Equipment, or (ii) existing on
equipment when acquired, if the Lien is confined to the equipment and the
proceeds of the equipment;

(d)           Leases or subleases and licenses or sublicenses granted in the
ordinary course of Borrower’s business or pursuant to Section 7.1 of this
Agreement and any interest or title of a lessee. licensee or licensor under such
leases, licenses or sublicenses;

(e)           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 may not increase;

(f)            Liens arising from judgments, decrees or attachments in
circumstances not constituting an Event of Default under Section 8.4 or 8.7; and

(g)           Liens in favor of other financial institutions arising in
connection with Borrower’s deposit accounts held at such institutions, provided
that Agent has a perfected security interest in the amounts held in such deposit
accounts.

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

“Proceeds” has the meaning described in the Code as in effect from time to time.

“Registered Organization” means an organization organized solely under the law
of a single state or the United States and as to which the state or the United
States must maintain a public record showing the organization to have been
organized.

“Repayment Period” is a period of time equal to forty-two (42) consecutive
months commencing on November 1, 2006.

“Responsible Officer” is each of the Chief Executive Officer, the Chief
Financial Officer and the Principal Accounting Officer of Borrower.

“Schedule” is any attached schedule of exceptions.

“Scheduled Payment” is defined in Section 2.3(a).

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“SEC” is the U.S. Securities and Exchange Commission.

“Subordinated Debt”  is debt incurred by Borrower subordinated to Borrower’s
debt to Lenders (pursuant to a subordination agreement entered into between the
Agent, the Borrower and the subordinated creditor), on terms acceptable to
Agent.

“Subsidiary” is any Person, corporation, partnership, limited liability company,
joint venture, or any other business entity of which more than 50% of the voting
stock or other equity interests is owned or controlled, directly or indirectly,
by the Person or one or more Affiliates of the Person.

“Supporting Obligation” means a letter-of-credit right, secondary obligation or
obligation of a secondary obligor or that supports the payment or performance of
an account, chattel paper, a document, a general intangible, an instrument or
investment property.

 “Term Loan” is a Term Loan Advance of Fifteen Million Dollars ($15,000,000).

“Term Loan Advance” or “Term Loan Advances” is defined in Section 2.1.1(a).

“Term Loan Commitment” means with respect to each Lender, the total amount of
the Credit Extensions which may be made hereunder.  With respect to SVB this
means an amount of up to $7,500,000, with respect to Merrill Lynch this means an
amount of up to $7,500,000.

“Trademarks” are trademark and service mark rights, registered or not,
applications to register and registrations and like protections, and the entire
goodwill of the business of Assignor connected with the trademarks.

“USA Patriot Act” shall mean United States Public Law 107-56, Uniting and
Strengthening America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism (USA) PATRIOT ACT) Act of 2001, as amended from time to time,
and the rules and regulations promulgated thereunder from time to time in
effect.

(Signatures are on the following page)

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

PONIARD PHARMACEUTICALS, INC.

 

 

 

 

 

By:

 

/S/ Gerald McMahon

 

 

Name:

 

Gerald McMahon

 

 

Title:

 

Chairman, President and

 

 

 

 

Chief Executive Officer

 

 

 

 

 

 

 

AGENT:

 

 

 

SILICON VALLEY BANK

 

 

 

 

 

By:

 

/S/ Peter Scott

 

 

Name:

 

Peter Scott

 

 

Title:

 

Senior Vice President

 

 

 

 

 

 

LENDERS:

 

 

 

MERRILL LYNCH CAPITAL, a division of
Merrill Lynch Business Financial Services Inc.

 

 

 

 

 

By:

 

/S/ Chris York

 

 

Name:

 

Chris York

 

 

Title:

 

Vice President

 

 

 

 

 

 

SILICON VALLEY BANK

 

 

 

 

 

By:

 

/S/ Peter Scott

 

 

Name:

 

Peter Scott

 

 

Title:

 

Senior Vice President

 

 

 

Effective as of October 25, 2006

 

 

36

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EXHIBIT A

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

All goods, equipment, inventory, contract rights or rights to payment of money,
license agreements, franchise agreements, general intangibles (including payment
intangibles), accounts (including health-care receivables), 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), commercial tort claims,
securities, and all other investment property, financial assets, whether now
owned or hereafter acquired, wherever located; all Supporting Obligations and
all of the 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
and accessions to and Proceeds thereof.

All Letter-Of-Credit Rights (whether or not the letter of credit is evidenced by
a writing); 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.

Provided, however, the Collateral does not include any Intellectual Property

Notwithstanding the foregoing, the Collateral shall include all accounts,
license and royalty fees and other revenues, proceeds, or income arising out of
or relating to any of the foregoing Intellectual Property.  To the extent a
court of competent jurisdiction holds that a security interest in any
Intellectual Property is necessary to have a security interest in any accounts,
license and royalty fees and other revenues, proceeds, or income arising out of
or relating to any of the foregoing Intellectual Property, then the Collateral
shall, effective as of the Closing Date, include the Intellectual Property, to
the extent (and only to the extent) necessary to permit perfection of the
Lenders’ security interest in such accounts, license and royalty fees and other
revenues, proceeds, or income arising out of or relating to any of the
Intellectual Property.

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

EXHIBIT B

Loan Payment/Advance Request Form

Fax To:

 

 

Date:

 

 

 

LOAN PAYMENT:

Poniard Pharmaceuticals, Inc. (Borrower)

From Account #

 

 

To Account #

 

 

 

 

(Deposit Account #)

 

 

(Loan Account #)

 

 

 

 

Principal $

 

 

and/or Interest $

 

 

All Borrower’s representation and warranties in the Loan and Security Agreement
are true, correct and complete in all material respects on the date of the
telephone transfer request for an advance, but those representations and
warranties expressly referring to another date shall be true, correct and
complete in all material respects as of such date:

Authorized Signature

 

 

Phone Number:

 

 

LOAN ADVANCE:

Complete Outgoing Wire Request section below if all or a portion of the funds
from this loan advance are for an outgoing wire.

From Account #

 

 

To Account #

 

 

 

 

(Loan Account #)

 

 

(Deposit Account #)

 

 

 

 

Amount of Advance $

 

 

 

 

 

All Borrower’s representation and warranties in the Loan and Security Agreement
are true, correct and complete in all material respects on the date of the
telephone transfer request for an advance, but those representations and
warranties expressly referring to another date shall be true, correct and
complete in all material respects as of such date:

Authorized Signature

 

 

Phone Number:

 

 

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

OUTGOING WIRE REQUEST

Complete only if all or a portion of funds from the loan advance above are to be
wired.

Deadline for same day processing is 12:00 pm, P.S.T.

Beneficiary Name:

 

 

Amount of Wire: $

 

 

 

 

Beneficiary Bank:

 

 

Account Number:

 

 

 

 

City and State:

 

 

 

 

Beneficiary Bank Transit (ABA) #:

 

 

Beneficiary Bank Code (Swift, Sort, Chip, etc.):

 

 

 

 

 

 

 

 

 

Intermediary Bank:

 

 

(For International Wire Only)

 

 

 

 

Transit (ABA) #:

 

 

 

 

For Further Credit to:

 

 

 

 

Special Instruction:

 

 

By signing below, I (we) acknowledge and agree that my (our) funds transfer
request shall be processed in accordance with and subject to the terms and
conditions set forth in the agreements(s) covering funds transfer service(s),
which agreements(s) were previously received and executed by me (us).

Authorized Signature:

 

 

2nd Signature (If Required):

 

 

 

 

Print Name/Title:

 

 

Print Name/Title:

 

 

 

 

Telephone #

 

 

Telephone #

 

 

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

EXHIBIT C

Compliance Certificate

TO:                                               SILICON VALLEY BANK, as Agent

FROM:                            PONIARD PHARMACEUTICALS, Inc.

The undersigned authorized officer of Poniard Pharmaceuticals, Inc. certifies
that under the terms and conditions of the Loan and Security Agreement among
Borrower, Lenders and Agent (the “Agreement”), (i) Borrower is in compliance for
the period ending                         with all required covenants except as
noted below and (ii) all representations and warranties in the Agreement are
true and correct in all material respects on this date (except for those
representations and warranties expressly referring to a specific date, which
were true and correct in all respects as of that date).  Attached are the
required documents supporting the certification.  In addition, the undersigned
certifies that (1) Borrower has timely filed all required tax returns and paid,
or made adequate provision to pay, all material taxes, except those being
contested in good faith with adequate reserves under GAAP and (ii) no liens has
been levied or claims made against Borrower relating to unpaid employee payroll
or benefits which Borrower has not previously notified in writing to Agent.  The
Officer certifies that these are prepared in accordance with Generally Accepted
Accounting Principles (GAAP) consistently applied from one period to the next
except as explained in an accompanying letter or footnotes.  The Officer
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.

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

Reporting Covenant

 

Required

 

Complies

 

 

 

 

 

 

 

Monthly financial statements with Compliance Certificate

 

Monthly within 30 days

 

Yes

 

No

 

 

 

 

 

 

 

Annual (CPA Audited)

 

FYE within earlier of 180 days or 5 days after filing with SEC

 

Yes

 

No

 

 

 

 

 

 

 

Financial Projections approved by Board

 

Annually at least 30 days prior to fiscal year end

 

Yes

 

No

 

Financial Covenant

 

Required

 

Complies

 

 

 

 

 

 

 

Minimum cash and cash equivalents, measured at the end of each month

 

$

7,500,000

 

Yes

 

No

 

Achievement of Milestones not later than December 31, 2007.  (Attach evidence
per Section 6.10)

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

 

Comments Regarding Exceptions:  See Attached.

BANK USE ONLY

 

 

 

Received by:

 

 

 

 

AUTHORIZED SIGNER

 

 

 

Sincerely,

Date:

 

 

 

 

 

 

Verified:

 

 

Signature

 

 

AUTHORIZED SIGNER

 

 

 

Date

 

 

Title

 

 

 

 

Compliance Status:

Yes  ¨      No   ¨

 

Date:

 

 

 

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