Exhibit 10.28

 

 

EXECUTION VERSION

 

Portions of this exhibit marked [*] are requested to be treated confidentially.

 

AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

THIS AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (this “Agreement”), dated
as of August 2, 2012 (the “Restatement Date”) by and among MIDCAP FUNDING III,
LLC, a Delaware limited liability company, with an office located at 7255
Woodmont Avenue, Suite 200, Bethesda, Maryland 20814 (“MidCap”), as
administrative agent (“Agent”), the Lenders listed on Schedule 1 hereto and
otherwise party hereto from time to time (each a “Lender”, and collectively the
“Lenders”), and FURIEX PHARMACEUTICALS, INC., a Delaware corporation, APBI
HOLDINGS, LLC, a North Carolina limited liability company, DEVELOPMENT PARTNERS,
LLC, a Delaware limited liability company, and GENUPRO, INC., a North Carolina
corporation (either individually or collectively as the context may require, the
“Borrower”), provides the terms on which Lenders agree to lend to Borrower and
Borrower shall repay Lenders.

RECITALS

MidCap, the Borrower and the Lenders party thereto (the “Existing Lenders”) are
party to that certain Loan and Security Agreement, dated as of August 18, 2011
(the “Original Closing Date”) by and among MidCap, as Agent (the “Existing
Agent”), Borrower and the Existing Lenders (as amended, restated, supplemented
or otherwise modified from time to time, the “Existing Loan Agreement”) and the
Existing Agent, the Borrower and the Existing Lenders wish to amend and restate
the Existing Loan Agreement in its entirety with this Agreement, it being their
intention that this Amended and Restated Loan Agreement and the execution and
the delivery of the promissory notes and other documents or agreements executed
in connection herewith shall not be a novation of the 'Term Loan' or 'Term
Loans' (as such terms are defined in the Existing Loan Agreement and as used
herein, collectively, the “Existing Term Loan”) and 'Obligations' (as defined in
the Existing Loan Agreement and as used herein, including, without limitation,
the Existing Term Loan, collectively, the “Existing Obligations”) of the
Borrower or any Loan Party pursuant to the Existing Loan Agreement and the 'Loan
Documents' (as such terms are defined in the Existing Loan Agreement and as used
herein, the “Existing Loan Documents”), but shall merely restate and, where
applicable, amend or modify the terms of such Existing Obligations, so that the
Obligations (as hereinafter defined) represent, among other things, the
amendment, restatement, renewal, extension and modification of the Existing
Obligations and the Loan Documents (as hereinafter defined) shall restructure,
restate, renew, extend, amend and modify the Existing Loan Agreement and the
other Existing Loan Documents executed in connection therewith.

In consideration of the premises and the covenants and agreements contained
herein, the parties hereto agree as follows:

1.           ACCOUNTING AND OTHER TERMS

Accounting terms not defined in this Agreement shall be construed in accordance
with GAAP. Calculations and determinations must be made in accordance with GAAP.
Capitalized terms not otherwise defined in this Agreement shall have the
meanings set forth in Section 14. All other terms contained in this Agreement,
unless otherwise indicated, shall have the meaning provided by the Code to the
extent such terms are defined therein.

2.           LOAN AND TERMS OF PAYMENT

2.1     Promise to Pay. Borrower hereby unconditionally promises to pay to each
Lender in accordance with its respective Pro Rata Share, the outstanding
principal amount of all Credit Extensions made by the Lenders, and accrued and
unpaid interest thereon, and any other amounts due hereunder as and when due in
accordance with this Agreement.

 

 
 

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2.2     Term Loans.

(a) Availability. Subject to the terms and conditions of this Agreement, the
Lenders agree, severally and not jointly, to make a term loan to Borrower in an
aggregate amount up to FORTY MILLION AND NO/100 Dollars ($40,000,000.00)
according to each Lender's Term Loan Commitment as set forth on Schedule 1
hereto (the “Term Loan”), which shall be funded as follows: (i) $30,000,000 of
the Term Loan shall be funded on the Restatement Date and shall be comprised of
(A) $[*] from [*] (representing all of its Term Loan Commitment as of the
Restatement Date), (B) $[*] from [*] (representing all of its Term Loan
Commitment as of the Restatement Date) and (C) $[*] from [*] (representing a
portion of its Term Loan Commitment as of the Restatement Date) (the “Initial
Funding”) and (ii) $[*] of the Term Loan shall be funded on August 20, 2012 by
[*] (representing the remaining portion of its Term Loan Commitment) (such
August 20, 2012 funding, the “Subsequent Funding”). For the avoidance of doubt,
the Initial Funding and the Subsequent Funding shall constitute one Term Loan.
After repayment, the Term Loan may not be re-borrowed. As of the Restatement
Date, $9,729,729.72 of the Existing Term Loan outstanding under the Existing
Loan Agreement shall constitute part of the Term Loan funded pursuant to the
Initial Funding under this Agreement and shall constitute a portion of the
Obligations. On the Restatement Date, the Existing Term Loan shall be deemed
assigned by the Existing Lenders to the Lenders hereunder as of the Restatement
Date in accordance with each Lender's Pro Rata Share and in accordance with (i)
Term Loan Commitment allocations as set forth on Schedule 1 hereto and (ii)
Section 12.15.

(b) Interest Payments and Repayment. Commencing on the first (1st) Payment Date
following the Restatement Date and continuing on the Payment Date of each
successive month thereafter through and including the Maturity Date, Borrower
shall make monthly payments of interest to each Lender in accordance with its
respective Pro Rata Share, in arrears, and calculated as set forth in Section
2.3. Commencing on the Amortization Date, and continuing on the Payment Date of
each successive month thereafter through and including the Maturity Date,
Borrower shall make consecutive monthly payments of principal to each Lender in
accordance with its respective Pro Rata Share, as calculated by Agent based
upon: (i) the amount of such Lender's Term Loans, (ii) the effective rate of
interest, as determined in Section 2.3, and (iii) a straight-line amortization
schedule for each Credit Extension beginning on the Amortization Date and ending
on the Maturity Date. All unpaid principal and accrued interest with respect to
the Term Loans is due and payable in full on the Maturity Date. The Term Loans
may be prepaid only in accordance with Sections 2.2(c) and 2.2(d).

(c) Mandatory Prepayments. If the Term Loan is accelerated following the
occurrence of an Event of Default, Borrower shall immediately pay to each Lender
in accordance with its respective Pro Rata Share, an amount equal to the sum of:
(i) all outstanding principal of the Term Loan and all other Obligations, and
all accrued and unpaid interest thereon, plus (ii) the Final Payment, plus (iii)
the Prepayment Fee, plus (iv) all other sums that shall have become due and
payable, including Lenders' Expenses.

(d) Permitted Prepayment of Loans. Borrower shall have the option to prepay all,
but not less than all, of the Term Loan advanced by the Lenders under this
Agreement; provided, however, that Borrower (i) provides written notice to Agent
of its election to prepay the Term Loan at least ten (10) days prior to such
prepayment, and (ii) pays to each Lender in accordance with its respective Pro
Rata Share, on the date of such prepayment, an amount equal to the sum of:
(A) all outstanding principal of the Term Loan and all other Obligations, and
all accrued interest thereon, plus (B) the Final Payment, plus (C) the
Prepayment Fee, plus (D) all other sums that shall have become due and payable,
including Lenders' Expenses.

2.3     Payment of Interest on the Credit Extensions.

(a) Computation of Interest. Interest on the Credit Extensions and all fees
payable hereunder shall be computed on the basis of a 360-day year and the
actual number of days elapsed in the period during which such interest accrues.
In computing interest on any Credit Extension, the date of the making of such
Credit Extension shall be included and the date of payment shall be excluded;
provided, however, that if any Credit Extension is repaid on the same day on
which it is made, such day shall be included in computing interest on such
Credit Extension.

(b) Interest Rate Determination. Subject to the provisions of Section 2.3(c)
below, the Term Loan shall bear interest at a fixed rate on the outstanding
principal amount thereof from the Funding Date for the Term Loan until paid in
full at a rate per annum equal to ten percent (10%).

 

[*] Confidential treatment requested; certain information omitted and filed
separately with the SEC.

 

 
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(c) Default Rate. Upon the occurrence and during the continuance of an Event of
Default, at the election of the Agent or Required Lenders, Obligations shall
bear interest at a rate per annum that is four percent (4.0%) above the rate
that is otherwise applicable thereto (the “Default Rate”). Any such election to
apply the Default Rate by Agent or Required Lenders may, in Agent's or Required
Lenders' sole discretion, become effective retroactively as of the date of such
Event of Default having occurred. Payment or acceptance of the increased
interest rate provided in this Section 2.3(c) is not a permitted alternative to
timely payment and shall not constitute a waiver of any Event of Default or
otherwise prejudice or limit any rights or remedies of Agent or Lenders.

(d) Debit of Accounts. Any Lender may debit any of Borrower's Deposit Accounts,
including the Designated Deposit Account, for principal and interest payments
when due or any other amounts Borrower owes the Lenders under the Loan Documents
when due. These debits shall not constitute a set-off.

(e) Payments. Payments of principal and/or interest received after 12:00 Noon
Eastern Time are considered received at the opening of business on the next
Business Day. When a payment is due on a day that is not a Business Day, the
payment is due the next Business Day and additional fees or interest, as
applicable, shall continue to accrue until paid. 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. All payments required under this Agreement are to
be made directly to Agent unless otherwise directed by Agent in writing.

(f) Maximum Lawful Rate. In no event shall the interest charged hereunder, with
respect to the Term Loan and corresponding promissory notes (if any) or any
other obligations of Borrower under any of the Loan Documents exceed the maximum
amount permitted under the Laws of the State of Maryland. Notwithstanding
anything to the contrary herein or elsewhere, if at any time the rate of
interest payable hereunder or under any promissory 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, then such excess amount shall be applied to the reduction
of the principal balance of such Lender's Term Loan 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.

2.4     Fees and Expenses. Borrower shall pay the following fees and expenses:

(a) Fees under Fee Letter. The fees payable by Borrower pursuant to the Fee
Letter to the persons identified therein;

(b) Final Payment. The Final Payment, when due under Section 2.2(c) or 2.2(d),
or otherwise on the Maturity Date, to each Lender, in accordance with its
respective Pro Rata Share;

(c) Prepayment Fee. The Prepayment Fee, if and when due under Section 2.2(c) or
2.2(d), to each Lender, in accordance with its respective Pro Rata Share
immediately prior to application of the corresponding prepayment; and

(d) Lenders' Expenses. All of Lenders' Expenses incurred through and after the
Restatement Date, when due (and in the absence of any other due date specified
herein, such Lenders' Expenses shall be due upon demand).

 

 
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2.5     Additional Costs. If any new Law or regulation increases a Lender's
costs or reduces its income for the Term 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
one hundred eighty (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.

2.6     Payments and Taxes. Any and all payments made by Borrower under this
Agreement or any other Loan Document shall be made free and clear of and without
deduction for any and all present or future taxes, levies, imposts, duties,
deductions, withholdings, assessments, fees or other charges imposed by any
governmental authority (including any interest, additions to tax or penalties
applicable thereto) other than any taxes imposed on or measured by any Lender's
overall net income and franchise taxes imposed on it (in lieu of net income
taxes), by a jurisdiction (or any political subdivision thereof) as a result of
any Lender being organized or resident, conducting business (other than a
business deemed to arise from such Lender having executed, delivered or
performed its obligations or received a payment under, or enforced, or otherwise
with respect to, this Agreement or any other Loan Document) or having its
principal office in such jurisdiction (“Indemnified Taxes”). If any Indemnified
Taxes shall be required by Law to be withheld or deducted from or in respect of
any sum payable under this Agreement or any other Loan Document to any Lender,
(a) an additional amount shall be payable as may be necessary so that, after
making all required withholdings or deductions (including withholdings or
deductions applicable to additional sums payable under this Section) such Lender
receives an amount equal to the sum it would have received had no such
withholdings or deductions been made, (b) Borrower shall make such withholdings
or deductions, (c) Borrower shall pay the full amount withheld or deducted to
the relevant taxing authority or other authority in accordance with applicable
Law, and (d) Borrower shall deliver to such Lender evidence of such payment.
Borrower's obligation hereunder shall survive the termination of this Agreement.

2.7     Secured Promissory Notes. The Term Loan shall be evidenced by one or
more Secured Promissory Note(s) in substantially the form attached as Exhibit D
hereto (or an amended and restated version thereto in form and substance
satisfactory to Agent) (each a “Secured Promissory Note”), and shall be
repayable as set forth herein. Borrower irrevocably authorizes each Lender to
make or cause to be made, on or about the Funding Date of the Term Loan or at
the time of receipt of any payment of principal on such Lender's Secured
Promissory Note, an appropriate notation on such Lender's Secured Promissory
Note Record reflecting the making of such Term Loan or (as the case may be) the
receipt of such payment. The outstanding amount of the Term Loan set forth on
such Lender's Secured Promissory Note Record shall be prima facie evidence of
the principal amount thereof owing and unpaid to such Lender, but the failure to
record, or any error in so recording, any such amount on such Lender's Secured
Promissory Note Record shall not limit or otherwise affect the obligations of
Borrower hereunder or under any Secured Promissory Note to make payments of
principal of or interest on any Secured Promissory Note when due. Upon receipt
of an affidavit of an officer of a Lender as to the loss, theft, destruction, or
mutilation of its Secured Promissory Note, Borrower shall issue, in lieu
thereof, a replacement Secured Promissory Note in the same principal amount
thereof and of like tenor.

3.           CONDITIONS OF LOANS

3.1     Conditions Precedent to the Making of the Initial Funding. Each Lender's
obligation to fund its Term Loan Commitment is subject to the condition
precedent that Agent shall consent to or shall have received, in form and
substance satisfactory to Agent and Lenders, such documents, and completion of
such other matters, as Agent may reasonably deem necessary or appropriate,
including, without limitation:

(a)     duly executed original signatures to this Agreement, the Global
Reaffirmation Agreement, the Fee Letter and the other Loan Documents to which
Borrower is a party;

(b)     duly executed original Secured Promissory Notes in favor of each Lender
with a face amount equal to such Lender's Term Loan Commitment;

(c)     the formation documents of Borrower certified by the Secretary of State
of the state of organization of Borrower as of a date no earlier than thirty
(30) days prior to the Restatement Date;

 

 
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(d)     good standing certificates dated as of a date no earlier than thirty
(30) days prior to the Restatement Date from each Borrower's state of
organization and each state in which the nature of Borrower's business requires
it to be qualified to transact business;

(e)     a duly executed original Secretary's Certificate dated as of the
Restatement Date which includes copies of the completed Borrowing Resolutions
for Borrower;

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

(g)     a legal opinion of Borrower's counsel dated as of the Restatement Date
together with the duly executed original signatures thereto;

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

(i)       payment of the fees due and owing under the Fee Letter and the
Lenders' Expenses described in Section 2.4(d);

(j)       timely receipt by the Agent of an executed disbursement letter;

(k)     the representations and warranties in Section 5 shall be true, correct
and complete in all respects on the Restatement Date; provided, however, that
those representations and warranties expressly referring to a specific date
shall be true, accurate and complete in all respects as of such date, and no
Default or Event of Default shall have occurred and be continuing or result from
the making of the Term Loan. The making of the Term Loan shall constitute
Borrower's representation, warranty and confirmation that the conditions set
forth in this clause (m) have been satisfied; and;

(l)       in such Lender's sole discretion, there has not been any Material
Adverse Change or any material impairment in the general affairs, management,
results of operation, financial condition or the prospect of repayment of the
Obligations, or any material adverse deviation by Borrower from the most recent
business plan of Borrower presented to and accepted by Agent.

3.2     Conditions to Subsequent Funding. [*](or its assignee's) obligation to
make the Subsequent Funding is subject to the following conditions:

(a)     The Initial Funding conditions shall have been satisfied and the Initial
Funding shall have been made;

(b)     the representations and warranties in Section 5 shall be true, correct
and complete in all material respects on the Restatement Date; provided,
however, that such materiality qualifier shall not be applicable to any
representations and warranties that already are qualified or modified by
materiality in the text thereof; and provided, further that those
representations and warranties expressly referring to a specific date shall be
true, accurate and complete in all material respects as of such date, and no
Default or Event of Default shall have occurred and be continuing or result from
the making of the Subsequent Funding. The making of the Subsequent Funding shall
constitute Borrower's representation, warranty and confirmation that the
conditions set forth in this clause (b) have been satisfied; and

(c)     in such Lender's sole discretion, there has not been any Material
Adverse Change or any material impairment in the general affairs, management,
results of operation, financial condition or the prospect of repayment of the
Obligations, or any material adverse deviation by Borrower from the most recent
business plan of Borrower presented to and accepted by Agent.

 

[*] Confidential treatment requested; certain information omitted and filed
separately with the SEC.

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

4.           CREATION OF SECURITY INTEREST

4.1     Grant of Security Interest. Borrower hereby grants to Agent, for the
ratable benefit of the Lenders, to secure the payment and performance in full of
all of the Obligations, a continuing security interest in, and pledges to Agent,
for the ratable benefit of the Lenders, the Collateral, wherever located,
whether now owned or hereafter acquired or arising, and all proceeds and
products thereof. Borrower represents, warrants, and covenants that the security
interest granted herein is and shall at all times continue to be a first
priority perfected security interest in the Collateral, subject only to
Permitted Liens that may have priority by operation of applicable Law. If
Borrower shall acquire a commercial tort claim (as defined in the Code),
Borrower shall promptly notify Agent in a writing signed by Borrower of the
general details thereof (and further details as may be reasonably required by
Agent) and grant to Agent, for the ratable benefit of the 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
reasonably 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 to perfect or protect Agent's and each Lender's
interest or rights hereunder, including a notice that any disposition of the
Collateral not permitted hereunder, by either Borrower or any other Person,
shall be deemed to violate the rights of Agent and the Lenders under the Code.

5.           REPRESENTATIONS AND WARRANTIES

Borrower represents and warrants as follows at all times unless expressly
provided below:

5.1     Due Organization, Authorization: Power and Authority.

(a)             Borrower and each of its Subsidiaries are duly existing and in
good standing, as Registered Organizations in their respective jurisdictions of
formation and are qualified and licensed to do business and are in good standing
in any jurisdiction in which the conduct of their business or their ownership of
property requires that they be qualified except where the failure to be so
qualified could not reasonably be expected to result in a Material Adverse
Change. Borrower represents and warrants that (i) Borrower's exact legal name is
that indicated on Schedule 5.1 and on the signature page hereof; (ii) Borrower
is an organization of the type and is organized in the jurisdiction set forth on
Schedule 5.1; (iii) Schedule 5.1 accurately sets forth Borrower's organizational
identification number or accurately states that Borrower has none; (iv) Schedule
5.1 accurately sets forth Borrower's place of business, or, if more than one,
its chief executive office as well as Borrower's mailing address (if different
than its chief executive office); and (v) Borrower has not, in the past five (5)
years, changed its jurisdiction of formation, organizational structure or type,
or any organizational number assigned by its jurisdiction. Further, in
connection with the Existing Loan Agreement, Borrower delivered to Agent a
completed Perfection Certificate signed by Borrower (the “Perfection
Certificate”). All information set forth on the Perfection Certificate
pertaining to Borrower and each of its Subsidiaries is accurate and complete as
of the Restatement Date other than with respect to changes that are reflected in
the Schedules attached to this Agreement (it being understood and agreed that
Borrower may from time to time update certain information in the Perfection
Certificate after the Restatement Date, to the extent permitted by one or more
specific provisions in this Agreement).

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

 

 
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5.2     Collateral.

(a)             Collateral Accounts. Borrower has good title to, has rights in,
and has the power to grant a security interest in and transfer each item of the
Collateral upon which it purports to grant a Lien hereunder, free and clear of
any and all Liens, except Permitted Liens. Borrower has no Deposit Accounts,
Securities Accounts, Commodity Accounts or other investment accounts other than
the Collateral Accounts with the banks and/or financial institutions listed on
Schedule 5.2(a), for which Borrower has given Agent notice and taken such
actions as are necessary to grant to Agent, for the ratable benefit of Lenders,
a perfected security interest therein.

(b)             Accounts. The Accounts are bona fide, existing obligations of
the Account Debtors.

(c)              Inventory. All Sale Inventory is in all material respects of
good and marketable quality, free from material defects. All Development
Inventory manufactured for use in and/or used in clinical trials has been
synthesized in accordance with current 'Good Manufacturing Practices' making it
suitable for use in humans.

(d)             Intellectual Property and License Agreements. A list of all of
Borrower's copyrights, copyright applications, trademarks, trademark
applications, patents and patent applications (“Subject Intellectual Property”)
and all license agreements (including all in-bound license agreements, but
excluding over-the-counter software that is commercially available to the
public) is set forth on Schedule 5.2(d), which indicates, for each item of
property: (i) the name of Borrower owning such Subject Intellectual Property or
licensee to such license agreement; (ii) Borrower's identifier for such property
(i.e., name of patent, license, etc.), (iii) whether such property is Subject
Intellectual Property (or application therefor) owned by Borrower or is property
to which Borrower has rights pursuant to a license agreement, and (iv) the
expiration date of such Subject Intellectual Property or license agreement. In
the case of any license agreement, Schedule 5.2(d) further indicates, for each:
(A) the name and address of the licensor, (B) the name and date of the license
agreement pursuant to which Intellectual Property is licensed, (C) whether or
not such license agreement grants an exclusive license to Borrower, and (D)
whether there are any restrictions in such license agreement as to the ability
of Borrower to grant a security interest in and/or to transfer any of its rights
as a licensee under such license agreement. Except as noted on Schedule 5.2(d),
Borrower is the sole owner of its Subject Intellectual Property, except for
non-exclusive licenses granted to its customers in the Ordinary Course of
Business. Each Patent is properly filed and maintained, no part of the Subject
Intellectual Property has been judged invalid or unenforceable, in whole or in
part, and to the best of Borrower's knowledge (x) no claim has been made that
any part of the Subject Intellectual Property violates the rights of any third
party, except to the extent such claim could not reasonably be expected to
result in a Material Adverse Change and (y) each Patent is valid and
enforceable.

(e)             Location of Collateral. On the Restatement Date, the Collateral,
exclusive of Development Inventory, is located at the address(es) identified on
Schedule 5.2(e), and is not in the possession of any third party bailee (such as
a warehouse) except as disclosed Schedule 5.2(e), and as of the Restatement
Date, no such third party bailee possesses components of the Collateral,
exclusive of Development Inventory, in excess of [*]Dollars ($[*]) or which
constitutes Borrowers' Books. None of the components of the Collateral, other
than Development Inventory, shall be maintained at locations other than as
disclosed Schedule 5.2(e) on the Restatement Date or as permitted pursuant to
Section 7.2. In the event that Borrower, after the Restatement Date, intends to
store or otherwise deliver any portion of the Collateral, other than Development
Inventory, to a bailee in excess of [*] Dollars ($[*]) or which constitutes
Borrowers' Books, then Borrower will first receive the written consent of Agent
and such bailee must execute and deliver a bailee agreement in form and
substance satisfactory to Agent in its sole discretion. Without limiting the
foregoing, in the event that (x) PPD is in default under its lease for the
premises located at 3900 Paramount Parkway, Suite 150, Morrisville, North
Carolina 27560 or (y) such lease is terminated and Borrower enters into a new or
separate lease with the owner of such premises or if the owner confirms
Borrower's sublease shall remain in effect, then in either case of (x) or (y),
upon the request of Agent, Borrower shall obtain an Access Agreement executed by
such owner and by Borrower in favor of Agent.

 

[*] Confidential treatment requested; certain information omitted and filed
separately with the SEC.

 

 
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5.3     Litigation. Except for routine proceedings (which shall not include any
enforcement action or other adverse proceedings) with the FDA or other similar
regulatory agencies, or as otherwise disclosed on Schedule 5.3 hereto, there are
no actions or proceedings pending or, to the knowledge of the Responsible
Officers, threatened in writing by or against Borrower or any of its
Subsidiaries involving more than [*] Dollars ($[*]).

5.4     No Material Deterioration in Financial Condition; Financial Statements.
All consolidated financial statements for Borrower and any of its Subsidiaries
delivered to Agent fairly present, in conformity with GAAP, in all material
respects Borrower's consolidated financial condition and Borrower's consolidated
results of operations; provided, however, the interim financial statements of
Borrower lack footnotes and are subject to year-end audit adjustments, all in
accordance with GAAP. There has not been any material deterioration in
Borrower's consolidated financial condition since the date of the most recent
financial statements and projections submitted to Agent.

5.5     Solvency. The fair salable value of Borrower's assets (including
goodwill minus disposition costs) exceeds the fair value of its liabilities.
After giving effect to the transactions described in this Agreement, (a)
Borrower is not left with unreasonably small capital in relation to its business
as presently conducted, and (b) Borrower is able to pay its debts (including
trade debts) as they mature.

5.6     Regulatory Compliance.

(a)     Borrower is not an “investment company” or a company “controlled” by an
“investment company” under the Investment Company Act of 1940, as amended.
Borrower is not engaged as one of its important activities in extending credit
for margin stock (under Regulations X, T and U of the Federal Reserve Board of
Governors). Borrower has complied in all material respects with the Federal Fair
Labor Standards Act. Neither Borrower nor any of its Subsidiaries is a “holding
company” or an “affiliate” of a “holding company” or a “subsidiary company” of a
“holding company”, as each term is defined and used in the Public Utility
Holding Company Act of 2005. Borrower has not violated any Laws, ordinances or
rules, the violation of which could reasonably be expected to have a Material
Adverse Change. None of Borrower's or any of its Subsidiaries' 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 in material compliance with applicable Laws.
Borrower has obtained all Required Permits, or has contracted with third parties
holding Required Permits, necessary for compliance with all Laws and all such
Required Permits are current. Borrower and each of its Subsidiaries have
obtained all consents, approvals and authorizations of, made all declarations or
filings with, and given all notices to, all Governmental Authorities that are
necessary to continue their respective businesses as currently conducted.

(b)     None of the Borrower, its Affiliates or any of their respective agents
acting or benefiting 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 or benefiting 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.

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

 

[*] Confidential treatment requested; certain information omitted and filed
separately with the SEC.

 

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

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

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

5.11   Regulatory Developments.

(a)     All Products and all Required Permits are listed on Schedule 5.11 (as
updated from time to time pursuant to Section 6.2(e)), and Borrower has
delivered to Agent a copy of all Required Permits as of the date hereof and to
the extent requested by Agent pursuant to Section 6.2(e).

(b)     Without limiting the generality of Section 5.6 above, with respect to
any Development Compound or Sale Compound of Borrower, Borrower has received and
such Product is the subject of, all Required Permits needed in connection with
the testing and/or manufacture, as applicable, with respect to such Product as
such testing is currently being conducted by or on behalf of Borrower with
respect to Development Compounds or Sale Compounds, and Borrower has not
received any notice from any applicable Governmental Authority, specifically
including the FDA, that such Governmental Authority is conducting an
investigation or review of (i) Borrower's manufacturing facilities and processes
for any Sale Compound which have disclosed any material deficiencies or
violations of Laws and/or the Required Permits related to the manufacture of
such Sale Compound, or (ii) any such Required Permit or that any such Required
Permit has been revoked or withdrawn, nor has any such Governmental Authority
issued any order or recommendation stating that the testing of such Development
Compound or manufacturing of such Sale Compound by Borrower should cease.

(c)     Without limiting the generality of Section 5.6 above, with respect to
any Sale Compound that may be marketed or sold by Borrower, Borrower has
received, and such Sale Compound is the subject of, all Required Permits needed
in connection with the marketing and sales of such Sale Compound that may be
marketed or sold by Borrower, and Borrower has not received any notice from any
applicable Governmental Authority, specifically including the FDA, that such
Governmental Authority is conducting an investigation or review of any such
Required Permit or approval or that any such Required Permit has been revoked or
withdrawn, nor has any such Governmental Authority issued any order or
recommendation stating that such marketing or sales of such Sale Compound cease
or that such Sale Compound be withdrawn from the marketplace.

(d)     Without limiting the generality of Section 5.6 above, there have been no
serious adverse clinical test results related to the safety or efficacy of
Development Compounds resulting in the termination of all clinical studies for
such Development Compound or recalls of Sale Compounds (whether voluntary or
involuntary), in each case which have resulted in or could reasonably be
expected to result in a Material Adverse Change.

 

 
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(e)     Borrower has not experienced any material failures in its manufacturing
of any Sale Compound such that the amount of such Sale Compound successfully
manufactured by Borrower in accordance with all specifications thereof and the
required payments related thereto in any month shall decrease significantly with
respect to the quantities of such Sale Compound produced in the prior month,
which such decrease has resulted in or could reasonably be expected to result in
a Material Adverse Change.

6.           AFFIRMATIVE COVENANTS

Borrower covenants and agrees to do all of the following:

6.1     Organization and Existence; Government Compliance.

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

(b)         Obtain and keep in full force and effect, all of the Governmental
Approvals, if any, necessary for the performance by Borrower of its obligations
under the Loan Documents to which it is a party and the grant of a security
interest to Agent for the ratable benefit of the Lenders, in all of the
Collateral. Borrower shall promptly provide copies of any such obtained
Governmental Approvals to Agent.

(c)         In connection with the testing of each Development Compound or the
manufacture, marketing or sale of each and any Sale Compound by Borrower,
Borrower shall comply fully and completely in all respects with all Required
Permits at all times issued by any Governmental Authority the noncompliance with
which could reasonably be expected to result in a Material Adverse Change,
specifically including the FDA, with respect to such testing of any Development
Compound or such manufacture, marketing or sales of any Sale Compound by
Borrower as such activities are at any such time being conducted by Borrower.

6.2     Financial Statements, Reports, Certificates.

(a)             Deliver to Agent: (i) as soon as available, but no later than
forty-five (45) days after the last day of each month, a company prepared
consolidated balance sheet, income statement and cash flow statement covering
Borrower's consolidated operations for such month certified by a Responsible
Officer and in a form reasonably acceptable to Agent; (ii) as soon as available,
but no later than one hundred fifty (150) days after the last day of Borrower's
fiscal year, audited consolidated financial statements prepared under GAAP,
consistently applied, together with an unqualified opinion on the financial
statements from an independent certified public accounting firm acceptable to
Agent in its reasonable discretion; (iii) as soon as available after approval
thereof by Borrower's Board of Directors, but no later than ninety (90) days
after the last day of Borrower's fiscal year, Borrower's financial projections
for the current fiscal year as approved by Borrower's Board of Directors, which
shall reflect financial projections on no less than a quarterly basis;
(iv) other than with respect to reports made available in accordance with clause
(v), below, within five (5) days of delivery, copies of all statements, reports
and notices made available to all of Borrower's security holders; (v) so long as
Borrower is subject to the reporting requirements under the Securities Exchange
Act of 1934, as amended, within five (5) days of filing, all reports on Form
10-K, 10-Q and 8-K filed with the Securities and Exchange Commission or a link
thereto on Borrower's or another website on the Internet; (vi) a prompt report
of any legal actions pending or threatened against Borrower or any of its
Subsidiaries that could be reasonably expected to result in damages or costs to
Borrower or any of its Subsidiaries of [*] Dollars ($[*]) or more or could
result in a Material Adverse Change; and (vii) budgets, sales projections,
operating plans and other financial information reasonably requested by Agent.

(b)             Within forty-five (45) days after the last day of each month,
deliver to Agent with the monthly financial statements described above, a duly
completed Compliance Certificate signed by a Responsible Officer.

 

[*] Confidential treatment requested; certain information omitted and filed
separately with the SEC.

 

 
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(c)              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 and Lenders to visit and inspect (such visit
or inspection to be during normal business hours so long as no Default or Event
of Default exists) any of its properties, to examine and make abstracts or
copies from any of Borrower's 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 desired. Notwithstanding the
foregoing, such audits shall be conducted at Borrower's expense no more often
than once every twelve (12) months unless a Default or Event of Default has
occurred and is continuing.

(d)             Within thirty (30) days of (i) acquiring and/or obtaining any
new Subject Intellectual Property, or (ii) enters into or becomes bound by any
additional license agreement (other than products that are commercially
available to the public), or upon any material change in Borrower's existing
Subject Intellectual Property, deliver to Agent an updated Schedule 5.2(d)
reflecting same. Borrower shall use its commercially reasonable efforts to
obtain the consent of, or waiver by, any person whose consent or waiver is
necessary for (x) all licenses or 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 license or agreement, whether now
existing or entered into in the future, and (y) Agent to have the ability in the
event of a liquidation of any Collateral to dispose of such Collateral in
accordance with Agent's rights and remedies under this Agreement and the other
Loan Documents.

(e)             If, after the Restatement Date, Borrower determines to
manufacture, sell or market any new Sale Compound, Borrower shall give prior
written notice to Agent of such determination (which shall include a brief
description of such Sale Compound, plus a list of all Required Permits relating
to such new Sale Compound (and a copy of such Required Permits if requested by
Agent), along with a copy of an updated Schedule 5.11; provided, however, that
if Borrower shall at any time obtain any new or additional Required Permits from
the FDA, DEA, or parallel state or local authorities, or foreign counterparts of
the FDA, DEA, or parallel state or local authorities, with respect to any
Product which has previously been disclosed to Agent, Borrower shall promptly
give written notice to Agent of such new or additional Required Permits (along
with a copy thereof if requested by Agent).

6.3     Inventory; Returns.    Keep all Sale Inventory in good and marketable
condition, free from material defects and keep all Development Inventory
manufactured for use in and/or used in clinical trials synthesized in accordance
with current 'Good Manufacturing Practices' and suitable for use in humans.
Returns and allowances between Borrower and its Account Debtors shall follow
such customary practices as may be established by Borrower and consistent with
industry practice if it engages in the sale of Sale Inventory. Borrower must
promptly notify Agent of all returns, recoveries, disputes and claims with
respect to Sale Inventory that involve more than [*] Dollars ($[*]).

 

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

6.5     Insurance.    Keep its business and the Collateral insured for risks and
in amounts standard for companies in Borrower's industry and location and as
Agent may reasonably request. Insurance policies shall be in a form, with
companies, and in amounts that are reasonably satisfactory to Agent. All
property policies shall have a lender's loss payable endorsement showing Agent
as lender loss payee and waive subrogation against Agent, and all liability
policies shall show, or have endorsements showing, Agent, as an additional
insured. All policies (or the loss payable and additional insured endorsements)
shall provide that the insurer shall endeavor to give Agent at least thirty (30)
days notice before canceling, amending, or declining to renew 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 the Lenders on account of the
Obligations. If Borrower fails to obtain insurance as required under this
Section 6.5 or to pay any amount or furnish any required proof of payment to
third persons and Agent, Agent may make all or part of such payment or obtain
such insurance policies required in this Section 6.5, and take any action under
the policies Agent deems prudent.

 

[*] Confidential treatment requested; certain information omitted and filed
separately with the SEC.

 

 
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6.6     Operating Accounts.

(a)             Except for those Collateral Accounts listed on Schedule 5.2(a),
maintain all of its, and all of its Subsidiaries', operating and other Deposit
Accounts, Securities Accounts, Investment Accounts and Commodity Accounts with
Silicon Valley Bank or its affiliates, as applicable, which operating and other
Deposit Accounts, Securities Accounts, Investment Accounts and Commodity
Accounts with Silicon Valley Bank or its affiliates shall contain no less than
[*] percent ([*]%) of Borrower's total cash and Cash Equivalents.

(b)             Provide Agent five (5) days prior written notice before
establishing any Collateral Account at or with any bank or financial
institution. In addition, for each Collateral Account that Borrower at any time
maintains, Borrower shall cause the applicable bank or financial institution at
or with which any Collateral Account is maintained to execute and deliver a
Control Agreement or other appropriate instrument with respect to such
Collateral Account to perfect Agent's Lien in such Collateral Account in
accordance with the terms hereunder, which Control Agreement may not be
terminated without prior written consent of Agent. The provisions of the
previous sentence shall not apply to deposit accounts exclusively used for
payroll, payroll taxes and other employee wage and benefit payments to or for
the benefit of Borrower's employees and identified to Agent by Borrower as such.

6.7     Protection of Intellectual Property Rights. Borrower shall own, or be
licensed to use or otherwise have the right to use, all Material Intellectual
Property. All Subject Intellectual Property of Borrower is and shall be
protected and/or duly and properly registered, filed or issued in the
appropriate office and jurisdictions for such registrations, filings or
issuances, all in a manner consistent with industry standards for similar
businesses except where the failure to do so would not reasonably be expected to
result in a Material Adverse Change. Borrower shall not become a party to, nor
become bound by, any material license or similar agreement with respect to which
Borrower is the licensee thereunder that prohibits or otherwise restricts
Borrower from granting a security interest in Borrower's rights under such
license agreement. Borrower shall at all times conduct its business without
knowingly committing infringement of any Intellectual Property rights of others.
Borrower shall, to the extent it determines, in the exercise of its reasonable
business judgment, that it is prudent to do the following: (a) protect, defend
and maintain the validity and enforceability of its Intellectual Property; (b)
promptly advise Agent in writing of material infringements of its Intellectual
Property; and (c) not allow any Material Intellectual Property to be abandoned,
forfeited or dedicated to the public without Agent's prior written consent. If
Borrower (i) obtains any patent, registered trademark or servicemark, registered
copyright, registered mask work, or any pending application for any of the
foregoing, whether as owner, licensee or otherwise, or (ii) applies for any
patent or the registration of any trademark or servicemark, then Borrower shall
concurrently provide written notice thereof to Agent in accordance with Section
6.2(d) and concurrently with such notice, shall provide to Agent copies of all
applications that it filed for patents or for the registration of trademarks,
servicemarks, copyrights or mask works.

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

6.9     Notices of Litigation and Default. 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. 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.

6.10   Creation/Acquisition of Subsidiaries.  In the event Borrower or any
Subsidiary creates or acquires any Subsidiary, Borrower and such Subsidiary
shall promptly notify Agent of the creation or acquisition of such new
Subsidiary and take all such action as may be reasonably required by Agent to
cause each such domestic Subsidiary to become a co-Borrower hereunder or to
guarantee the Obligations of Borrower under the Loan Documents and, in each
case, grant a continuing pledge and security interest in and to the assets of
such Subsidiary (substantially as described on Exhibit A hereto); and Borrower
shall grant and pledge to Agent, for the ratable benefit of the Lenders, a
perfected security interest in the stock, units or other evidence of ownership
of each Subsidiary.

 

[*] Confidential treatment requested; certain information omitted and filed
separately with the SEC.

 

 
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6.11   Financial Covenant. Borrower shall maintain at all times unrestricted
cash and unrestricted Cash Equivalents on hand in Collateral Accounts maintained
at Silicon Valley Bank or its affiliates and subject to a Control Agreement of
not less than (a) $7,500,000 through and including the second anniversary of the
Restatement Date, (b) $5,000,000 through and including the third anniversary of
the Restatement Date and (c) $2,500,000 thereafter.

6.12   [*] Royalties. Borrower shall at all times maintain the right to receive
(a) royalty payments of at least [*] percent ([*]%) of the [*]and (b) all such
other royalty and milestone payments (other than as described in clause (a) of
this Section 6.12) under and pursuant to the [*] as in effect on the Restatement
Date without giving effect to any future amendments, restatements, supplements
or other modifications thereto.

6.13   Further Assurances.

(a)              Execute any further instruments and take further action as
Agent reasonably requests to perfect or continue Agent's Lien in the Collateral
or to effect the purposes of this Agreement.

(b)             Deliver to Agent, within five (5) days after the same are sent
or received, copies of all material correspondence, reports, documents and other
filings with any Governmental Authority that could reasonably be expected to
have a material adverse effect on any of the Governmental Approvals material to
Borrower's business or otherwise result in a Material Adverse Change.

6.14   Post-Closing Obligations. Borrowers shall complete each of the post
closing obligations and/or deliver to Agent each of the documents, instruments,
agreements and information listed on Schedule 6.14 attached hereto, on or before
the date set forth for each such item thereon, each of which shall be completed
or provided in form and substance satisfactory to Agent and Lenders.

7.           NEGATIVE COVENANTS

Borrower shall not do any of the following without the prior written consent of
Agent and Required Lenders:

7.1     Dispositions. Convey, sell, lease, transfer, assign, grant a security in
or otherwise dispose of (collectively, “Transfer”), or permit any of its
Subsidiaries to Transfer, all or any part of its business or property, except
for (a) the sale, lease or disposition of Inventory in the Ordinary Course of
Business; (b) the sale, lease or disposition of worn-out or obsolete Equipment;
(c) the payment of cash or Cash Equivalents in the Ordinary Course of Business
solely for the payment of costs and expenses associated with operation of
Borrower's business, including without limitation expenditures relating to (i)
Borrower's Phase I, Phase II and Phase III development activities and (ii) the
acquisition (including in-licensing) of additional compounds so long as
immediately after any such acquisition Borrower [*] based on the financial
projections delivered to Agent; (d) transfers of Intellectual Property pursuant
to outbound license agreements with third parties in the Ordinary Course of
Business so long as (i) Borrower receives not less than $[*] of net cash
payments from each such license agreement that grants rights with respect to the
US market or globally which such amounts have been fully-earned and are
non-refundable at the time such license agreement is consummated and (ii) at all
times Borrower shall have rights necessary to receive future milestone and
royalty payments for at least two of Borrower's existing Products (“Permitted IP
Dispositions”); (e) in connection with Permitted Liens; or (f) the [*]Permitted
Transfer. Without limiting the foregoing, Borrower agrees that it shall not
grant a security interest or otherwise encumber any of its Intellectual Property
without Agent's and Required Lenders' prior written consent.

 

[*] Confidential treatment requested; certain information omitted and filed
separately with the SEC.

 

 
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7.2     Changes in Business, Management, Ownership or Business Locations.
(a) Other than the manufacture, marketing and sale of Sale Inventory, engage in
or permit any of its Subsidiaries to engage in any business other than the
businesses currently engaged in by Borrower and such Subsidiary, as applicable,
or reasonably related thereto; (b) liquidate or dissolve; (c) (i) (A) have a
change in any Responsible Officer position that does not result in a qualified
replacement or (B) the failure to fill a vacancy with respect to any Responsible
Officer position with a suitable qualified replacement within (60) days
following such vacancy, or (ii) enter into any transaction or series of related
transactions which would constitute or cause a Change of Control; or (d) add any
new offices or business locations, including warehouses (where such new offices
or business locations contain more than [*] Dollars ($[*]) in Borrower's assets
or property or any of Borrowers' Books unless, prior to the addition of such new
office, business location or warehouse, Borrower obtains an Access Agreement
executed by the owner of such premises and Borrower in favor of agent (e) change
its jurisdiction of organization; (f) other than the creation or acquisition of
Subsidiaries in accordance with and subject to the conditions set forth in
Section 6.10 of this Agreement, change its organizational structure or type; (g)
change its legal name; or (h) change any organizational number (if any) assigned
by its jurisdiction of organization.

7.3     [*].

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. (a) Create, incur, allow, or suffer 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, (b) permit any Collateral not to be subject to the first priority
security interest granted herein, or (c) enter into any agreement, document,
instrument or other arrangement (except with or in favor of Agent) with any
Person which directly or indirectly prohibits or has the effect of prohibiting
Borrower or any Subsidiary from collaterally assigning, mortgaging, pledging,
granting a security interest in or Lien upon any of Borrower's or any
Subsidiary's property (including, without limitation, Intellectual Property),
all of the foregoing except as is otherwise permitted in Section 7.1 hereof and
the definition of “Permitted Liens” herein.

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

7.7     [*].

7.8     Transactions with Affiliates. Directly or indirectly enter into or
permit to exist any material transaction with any Affiliate of Borrower, except
for transactions that are in the Ordinary Course of 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.

7.9     [Reserved].

7.10   Compliance. Become an “investment company” or a company controlled by an
“investment company”, under the Investment Company Act of 1940, as amended or
undertake as one of its important activities extending credit to purchase or
carry margin stock (as defined in Regulation U of the Board of Governors of the
Federal Reserve System), or use the proceeds of 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 or
regulation, if the violation could reasonably be expected to result in a
Material Adverse Change, or permit any of its Subsidiaries to do so; withdraw or
permit any Subsidiary to withdraw from participation in, permit partial or
complete termination of, or permit the occurrence of any other event with
respect to, any present pension, profit sharing and deferred compensation plan
which could reasonably be expected to result in any liability of Borrower,
including any liability to the Pension Benefit Guaranty Corporation or its
successors or any other governmental agency.

 

[*] Confidential treatment requested; certain information omitted and filed
separately with the SEC.

 

 
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7.11   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 not, 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.

8.           EVENTS OF DEFAULT

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

8.1     Payment Default. Borrower fails to (a) make any payment of principal or
interest on any Credit Extension on its due date, or (b) pay any other
Obligations within three (3) Business Days after such Obligations are due and
payable (which three (3) Business Day grace period shall not apply to payments
due on the Maturity Date or the date of acceleration pursuant to Section 9.1 (a)
hereof). During the cure period, the failure to cure the payment default is not
an Event of Default (but no Credit Extension will be made during the cure
period);

8.2     Covenant Default.

(a)              Borrower fails or neglects to perform any obligation in
Sections 6.1(c), 6.2, 6.4, 6.5, 6.6, 6.7, 6.10, 6.11, 6.12, 6.13 or 6.14 or
violates any covenant in Section 7; or

(b)             Borrower or any of its Subsidiaries fails or neglects to
perform, keep, or observe any other term, provision, condition, covenant or
agreement contained in this Agreement or any Loan Documents, and as to any
default (other than those specified in this Section 8) under such other term,
provision, condition, covenant or agreement that can be cured, has failed to
cure the default within twenty (20) days after the occurrence thereof; provided,
however, that if the default cannot by its nature be cured within the twenty
(20) day period or cannot after diligent attempts by Borrower be cured within
such twenty (20) day period, and such default is likely to be cured within a
reasonable time, then Borrower shall have an additional period (which shall not
in any case exceed thirty (30) days) to attempt to cure such default, and within
such reasonable time period the failure to cure the default shall not be deemed
an Event of Default (but no Credit Extensions shall be made during such cure
period). Grace periods provided under this Section shall not apply, among other
things, to any covenant set forth in subsection (a) above;

8.3     Material Adverse Change. A Material Adverse Change occurs;

8.4     Attachment; Levy; Restraint on Business.

(a)            (i) The service of process seeking to attach, by trustee or
similar process, any funds of Borrower or of any entity under control of
Borrower (including a Subsidiary) on deposit with the Lenders or any Lender
Affiliate, or (ii) a notice of lien, levy, or assessment is filed against any of
Borrower's assets by any government agency, and the same under subclauses (i)
and (ii) hereof are not, within ten (10) days after the occurrence thereof,
discharged or stayed (whether through the posting of a bond or otherwise);
provided, however, no Credit Extensions shall be made during any ten (10) day
cure period; and

(b)            (i) any material portion of Borrower's assets is attached,
seized, levied on, or comes into possession of a trustee or receiver, or
(ii) any court order enjoins, restrains, or prevents Borrower from conducting
any material portion of its business;

 

 
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8.5     Insolvency. (a) Borrower is unable to pay its debts (including trade
debts) as they become due or otherwise becomes insolvent; (b) Borrower begins an
Insolvency Proceeding; or (c) an Insolvency Proceeding is begun against Borrower
and not dismissed or stayed within thirty (30) days (but no Credit Extensions
shall be made while any of the conditions described in clause (a) exist and/or
until any Insolvency Proceeding is dismissed);

8.6     Other Agreements. There is a default in any agreement to which Borrower
is a party with a third party or parties resulting in a right by such third
party or parties, whether or not exercised, to accelerate the maturity of any
Indebtedness in an amount in excess of [*] Dollars ($[*])or that could
reasonably be expected to result in a Material Adverse Change and such default
has not been waived in writing by such third party or parties;

8.7     Judgments. One or more judgments, orders, or decrees for the payment of
money in an amount, individually or in the aggregate, of at least [*] Dollars
($[*]) (not covered by independent third-party insurance as to which liability
has been accepted by such insurance carrier) shall be rendered against Borrower
and shall remain unsatisfied, unvacated, or unstayed for a period of fifteen
(15) days after the entry thereof, provided, however, that no Credit Extensions
will be made prior to the satisfaction, vacation, or stay of such judgment,
order or decree;

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

8.9     [Reserved];

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

8.11   Criminal Proceeding. The institution by any Governmental Authority of
criminal proceedings against Borrower either (a) involving fraud, moral
turpitude, or a felony, or (b) that could reasonably be expected to result in a
Material Adverse Change;

8.12   Lien Priority. Except as permitted by Agent, 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;

8.13   Change in Control. A Change in Control shall have occurred;

8.14   Withdrawals, Recalls, Adverse Test Results and Other Matters not
Involving [*]. The institution of any proceeding by FDA or similar Governmental
Authority to order the withdrawal of any Sale Compound from the market or to
enjoin Borrower or any representative of Borrower from manufacturing, marketing,
selling or distributing any Sale Compound, which, in each case, could reasonably
be expected to result in a Material Adverse Change, (b) the institution of any
action or proceeding by any DEA, FDA, or any other Governmental Authority to
revoke, suspend, reject, withdraw, limit, or restrict any Required Permit held
by Borrower or any representative of Borrower, which, in each case, could
reasonably be expected to result in a Material Adverse Change, (c) the
commencement of any enforcement action against Borrower by DEA, FDA, or any
other Governmental Authority; (d) the recall of any Sale Compound from the
market, the voluntary withdrawal of any Sale Compound from the market, or
actions to discontinue the sale of any Sale Compound, which in each case could
reasonably be expected to result in a Material Adverse Change, or (e) the
occurrence of serious adverse test results related to the safety or efficacy of
a Development Compound resulting in the termination of all clinical studies for
such Development Compound which could reasonably be expected to result in a
Material Adverse Change; or

 

[*] Confidential treatment requested; certain information omitted and filed
separately with the SEC.

 

 
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8.15   Withdrawals and Other Matters Involving [*].  (a) The institution of any
proceeding by [*] in [*] or similar Governmental Authority in [*] to order the
withdrawal of any marketing authorization granting the right to sell [*] in [*]
or [*] or to enjoin Borrower or [*] (or any of its permitted assignees under the
[*]) from manufacturing, marketing, selling or distributing [*] in [*] or [*],
which, in each case, could reasonably be expected to result in a Material
Adverse Change, (b) the institution of any proceeding by [*] or similar
Government Authority to (i) order the withdrawal of the marketing authorization
granting the right to sell [*] in [*] or (ii) indefinitely enjoin Borrower or
[*] (or any of its permitted assignees under the [*]) from, marketing or selling
[*] in [*], (c) the indefinite voluntary withdrawal of [*] from the market in
(i) [*] or [*], in each case where such voluntary withdrawal could reasonably be
expected to result in a Material Adverse Change, or (ii) [*], (d)  [*], for any
reason, indefinitely ceases to be sold or marketed in [*] or Borrower is no
longer contractually entitled to royalty payments with respect to [*] in [*].

9.           RIGHTS AND REMEDIES

9.1     Rights and Remedies.

(a)              Upon the occurrence and during the continuance of an Event of
Default, Agent may, and at the written direction of the Required Lenders shall,
without notice or demand, do any or all of the following: (i) deliver notice of
the Event of Default to Borrower, (ii) by notice to Borrower declare all
Obligations immediately due and payable (but if an Event of Default described in
Section 8.5 occurs all Obligations shall be immediately due and payable without
any action by Agent or the Lenders), or (iii) by notice to Borrower suspend or
terminate the obligations, if any, of the Lenders to advance money or extend
credit for Borrower's benefit under this Agreement or under any other agreement
between Borrower and Agent and/or the Lenders (but if an Event of Default
described in Section 8.5 occurs all obligations, if any, of the Lenders to
advance money or extend credit for Borrower's benefit under this Agreement or
under any other agreement between Borrower and Agent and/or the Lenders shall be
immediately terminated without any action by Agent or the Lenders).

(b)             Without limiting the rights of Agent and Lenders set forth in
Section 9.1(a) above, upon the occurrence and during the continuance of an Event
of Default Agent shall have the right, at the written direction of the Required
Lenders, without notice or demand, to do any or all of the following:

 

(i)   foreclose upon and/or sell or otherwise liquidate, the Collateral;

 

(ii)   apply to the Obligations any (a) balances and deposits of Borrower that
Agent or any Lender holds or controls, or (b) any amount held or controlled by
Agent or any Lender owing to or for the credit or the account of Borrower;
and/or

 

(iii)   commence and prosecute an Insolvency Proceeding or consent to Borrower
commencing any Insolvency Proceeding.

 

(c)             Without limiting the rights of Agent and Lenders set forth in
Sections 9.1(a) and (b) above, upon the occurrence and during the continuance of
an Event of Default Agent shall have the right, without notice or demand, to do
any or all of the following:

(i)          settle or adjust disputes and claims directly with Account Debtors
for amounts on terms and in any order that Agent considers advisable, notify any
Person owing Borrower money of Agent's security interest in such funds, and
verify the amount of such Account;

(ii)         make any payments and do any acts it considers necessary or
reasonable to protect the Collateral and/or its security interest in the
Collateral. Borrower shall assemble the Collateral if 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 a
license to enter and occupy any of its premises, without charge, to exercise any
of Agent's rights or remedies;

 

[*] Confidential treatment requested; certain information omitted and filed
separately with the SEC.

 

 
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(iii)        ship, reclaim, recover, store, finish, maintain, repair, prepare
for sale, and/or advertise for sale, 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 as it pertains to the Collateral, in completing
production of, advertising for sale, and selling any Collateral and, in
connection with Agent's exercise of its rights under this Section 9.1,
Borrower's rights under all licenses and all franchise agreements inure to Agent
for the benefit of the Lenders;

(iv)        place a “hold” on any account maintained with Agent or the Lenders
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;

(v)         demand and receive possession of Borrower's Books; and

(vi)        subject to clauses 9.1(a) and (b), exercise all rights and remedies
available to Agent under the Loan Documents or at law or equity, including all
remedies provided under the Code (including disposal of the Collateral pursuant
to the terms thereof).

Notwithstanding any provision of this Section 9.1 to the contrary, upon the
occurrence of any Event of Default, Agent shall have the right to exercise any
and all remedies referenced in this Section 9.1 without the written consent of
Required Lenders following the occurrence of an Exigent Circumstance. As used in
the immediately preceding sentence, “Exigent Circumstance” means any event or
circumstance that, in the reasonable judgment of Agent, imminently threatens the
ability of Agent to realize upon all or any material portion of the Collateral,
such as, without limitation, fraudulent removal, concealment, or abscondment
thereof, destruction or material waste thereof, or failure of Borrower after
reasonable demand to maintain or reinstate adequate casualty insurance coverage,
or which, in the judgment of Agent, could result in a material diminution in
value of the Collateral.

9.2     Power of Attorney. Borrower hereby irrevocably appoints Agent as its
lawful attorney-in-fact, exercisable upon the occurrence and during the
continuance of an Event of Default, to: (a) endorse Borrower's name on any
checks or other forms of payment or security; (b) sign Borrower's name on any
invoice or bill of lading for any Account or drafts against Account Debtors; (c)
settle and adjust disputes and claims about the Accounts directly with Account
Debtors, for amounts and on terms Agent determines reasonable; (d) make, settle,
and adjust all claims under Borrower's insurance policies; (e) pay, contest or
settle any Lien, charge, encumbrance, security interest, and adverse claim in or
to the Collateral, or any judgment based thereon, or otherwise take any action
to terminate or discharge the same; and (f) transfer the Collateral into the
name of Agent 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 Agent's security interest in
the Collateral regardless of whether an Event of Default has occurred until all
Obligations have been satisfied in full and Agent and the 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 Agent's and the Lenders' obligation to
provide Credit Extensions terminates.

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

 

 
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9.4     Application of Payments and 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 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 the Lenders Expenses; second, 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); third, to the principal amount of the Obligations outstanding;
and fourth, 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. Any reference in this Agreement to an
allocation between or sharing by the Lenders of any right, interest or
obligation “ratably,” “proportionally” or in similar terms shall refer to Pro
Rata Share unless expressly provided otherwise. Agent, or if applicable, each
Lender, shall promptly remit to the other Lenders such sums as may be necessary
to ensure the ratable repayment of each Lender's portion of any Term Loan and
the ratable distribution of interest, fees and reimbursements paid or made by
Borrower. Notwithstanding the foregoing, a Lender receiving a scheduled payment
shall not be responsible for determining whether the other Lenders also received
their scheduled payment on such date; provided, however, if it is later
determined that a Lender received more than its ratable share of scheduled
payments made on any date or dates, then such Lender shall remit to the Agent or
other Lenders such sums as may be necessary to ensure the ratable payment of
such scheduled payments, as instructed by Agent. Any payment or distribution of
any kind or character, whether in cash, properties or securities, shall be
received by a Lender in excess of its ratable share, then the portion of such
payment or distribution in excess of such Lender's ratable share shall be
received by such Lender in trust for and shall be promptly paid over to the
other Lender for application to the payments of amounts due on the other
Lender's claims. To the extent any payment for the account of Borrower is
required to be returned as a voidable transfer or otherwise, the Lenders shall
contribute to one another as is necessary to ensure that such return of payment
is on a pro rata basis. If any Lender shall obtain possession of any Collateral,
it shall hold such Collateral for itself and as agent and bailee for the Agent
and other Lenders for purposes of perfecting Agent's security interest therein.
Notwithstanding anything to the contrary herein, any warrants issued to the
Lenders by Borrower, the stock issuable thereunder, any equity securities
purchased by Lenders, any amounts paid thereunder, any dividends, and any other
rights in connection therewith shall not be subject to the terms and conditions
of this Agreement. Nothing herein shall affect any Lender's rights under any
such warrants, stock, or other equity securities to administer, manage,
transfer, assign, or exercise such warrants, stock, or other equity securities
for its own account.

9.5     Liability for Collateral. So long as Agent and the Lenders comply with
reasonable banking practices regarding the safekeeping of the Collateral in the
possession or under the control of Agent and the Lenders, Agent and the 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     No Waiver; Remedies Cumulative. Agent's failure, at any time or times,
to require strict performance by Borrower of any provision of this Agreement or
any other Loan Document shall not waive, affect, or diminish any right of Agent
thereafter to demand strict performance and compliance herewith or therewith. No
waiver hereunder shall be effective unless signed by Agent and then is only
effective for the specific instance and purpose for which it is given. Agent's
rights and remedies under this Agreement and the other Loan Documents 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
in exercising any remedy is not a waiver, election, or acquiescence.

 

 
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9.7     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.

9.8     Borrower Liability. Each Borrower hereby appoints the others as agent
for the others for all purposes hereunder, including with respect to requesting
the Term Loan hereunder. Each Borrower hereunder shall be jointly and severally
obligated to repay the Term Loan made hereunder and all other Obligations,
regardless of which Borrower actually receives said Term Loan, as if each
Borrower hereunder directly received the Term Loan.  Each Borrower waives
(a) any suretyship defenses available to it under the Code or any other
applicable law, and (b) any right to require the Lenders or Agent to: (i)
proceed against any Borrower or any other person; (ii) proceed against or
exhaust any security; or (iii) pursue any other remedy.  The Lenders or Agent
may exercise or not exercise any right or remedy they have against any Borrower
or any security (including the right to foreclose by judicial or non-judicial
sale) without affecting any Borrower's liability.  Notwithstanding any other
provision of this Agreement or other related document, each Borrower irrevocably
waives all rights that it may have at law or in equity (including, without
limitation, any law subrogating Borrower to the rights of the Lenders and Agent
under this Agreement) to seek contribution, indemnification or any other form of
reimbursement from any other Borrower, or any other Person now or hereafter
primarily or secondarily liable for any of the Obligations, for any payment made
by Borrower with respect to the Obligations in connection with this Agreement or
otherwise and all rights that it might have to benefit from, or to participate
in, any security for the Obligations as a result of any payment made by Borrower
with respect to the Obligations in connection with this Agreement or otherwise. 
Any agreement providing for indemnification, reimbursement or any other
arrangement prohibited under this Section shall be null and void.  If any
payment is made to a Borrower in contravention of this Section, such Borrower
shall hold such payment in trust for the Lenders and Agent and such payment
shall be promptly delivered to Agent for application to the Obligations, whether
matured or unmatured.

 

 

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10.         NOTICES

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

If to any Borrower:

 

Furiex Pharmaceuticals, Inc.

3900 Paramount Parkway, Suite 150

Morrisville, North Carolina 27560

Attention: President and Chief Financial Officer

Fax: (919) 456-7850

E-Mail: June.Almenoff@furiex.com

Marshall.Woodworth@furiex.com

 

If to Agent :

 

MidCap Funding III, LLC

7255 Woodmont Avenue, Suite 200

Bethesda, Maryland 20814

Attention: Portfolio Management- Life Sciences

Fax: (301) 941-1450

E-Mail: Lviera@midcapfinancial.com

 

with a copy to:

 

Midcap Financial, LLC 

7255 Woodmont Avenue, Suite 200

Bethesda, Maryland 20814

Attention: General Counsel

Fax: (301) 941-1450

E-Mail: Rgoodridge@midcapfinancial.com

 

If to Lenders: To the address specified on the signature page of such Lender
attached hereto or on any Assignment Agreement to which such Lender has become a
party to this Agreement in accordance with Section 12.1.

 

 
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11.         CHOICE OF LAW, VENUE AND JURY TRIAL WAIVER

THIS AGREEMENT, EACH SECURED PROMISSORY NOTE AND EACH OTHER LOAN DOCUMENT, AND
ALL MATTERS RELATING HERETO OR THERETO OR ARISING THEREFROM (WHETHER SOUNDING IN
CONTRACT LAW, TORT LAW OR OTHERWISE), SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF MARYLAND,
WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES. NOTWITHSTANDING THE FOREGOING,
AGENT AND LENDERS SHALL HAVE THE RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST
BORROWER OR ITS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION WHICH AGENT AND
LENDERS (IN ACCORDANCE WITH THE PROVISIONS OF SECTION 9.1) DEEM NECESSARY OR
APPROPRIATE TO REALIZE ON THE COLLATERAL OR TO OTHERWISE ENFORCE AGENT'S AND
LENDERS' RIGHTS AGAINST BORROWER OR ITS PROPERTY. BORROWER EXPRESSLY SUBMITS AND
CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY
SUCH COURT, AND BORROWER HEREBY WAIVES ANY OBJECTION THAT IT MAY HAVE BASED UPON
LACK OF PERSONAL JURISDICTION, IMPROPER VENUE, OR FORUM NON CONVENIENS AND
HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED
APPROPRIATE BY SUCH COURT. BORROWER HEREBY WAIVES PERSONAL SERVICE OF THE
SUMMONS, COMPLAINTS, AND OTHER PROCESS ISSUED IN SUCH ACTION OR SUIT AND AGREES
THAT SERVICE OF SUCH SUMMONS, COMPLAINTS, AND OTHER PROCESS MAY BE MADE BY
REGISTERED OR CERTIFIED MAIL ADDRESSED TO BORROWER AT THE ADDRESS SET FORTH IN
SECTION 10 OF THIS AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED
UPON THE EARLIER TO OCCUR OF BORROWER'S ACTUAL RECEIPT THEREOF OR THREE (3) DAYS
AFTER DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE PREPAID.

 

TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, BORROWER, 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.

Borrower, Agent and each Lender agree that the Term Loan (including the Initial
Funding and the Subsequent Funding), as well as the Existing Term Loan, shall be
deemed to be made in, and the transactions contemplated hereunder and in any
other Loan Document shall be deemed to have been performed in, the State of
Maryland.

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). Any Lender may
at any time assign to one or more Eligible Assignees all or any portion of such
Lender's Loan, together with all related obligations of such Lender hereunder.
Borrower and Agent shall be entitled to continue to deal solely and directly
with such Lender in connection with the interests so assigned until Agent shall
have received and accepted an effective assignment agreement in form and
substance acceptable to Agent, executed, delivered and fully completed by the
applicable parties thereto (each, an “Assignment Agreement”), and shall have
received such other information regarding such Eligible Assignee as Agent
reasonably shall require. Notwithstanding anything set forth in this Agreement
to the contrary, any Lender may at any time pledge or assign a security interest
in all or any portion of its rights under this Agreement to secure obligations
of such Lender, including any pledge or assignment to secure obligations to a
Federal Reserve Bank; provided, however, that no such pledge or assignment shall
release such Lender from any of its obligations hereunder or substitute any such
pledgee or assignee for such Lender as a party hereto.

12.2   Indemnification.

(a)             Borrower agrees to indemnify, defend and hold Agent and the
Lenders and their respective directors, officers, employees, agents, attorneys,
or any other Person affiliated with or representing Agent or the Lenders (each,
an “Indemnified Person”) harmless against: (i) all obligations, demands, claims,
and liabilities (collectively, “Claims”) asserted by any other party in
connection with the transactions contemplated by the Loan Documents; and (ii)
all losses or Lenders' Expenses incurred, or paid by Indemnified Person from,
following, or arising from transactions between Agent, and/or the Lenders and
Borrower (including reasonable attorneys' fees and expenses) pursuant to or in
connection with the Loan Documents, except for Claims and/or losses directly
caused by such Indemnified Person's gross negligence or willful misconduct
(collectively, the “Indemnified Liabilities”).

 

 
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(b)             Borrower hereby further indemnifies, defends and holds each
Indemnified Person 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 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 Indemnified Person 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 Indemnified Person
as a result of or in connection with the transactions contemplated hereby and
the use or intended use of the proceeds of the loan proceeds.

(c)              To the extent that the undertaking set forth in this Section
12.2 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.

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

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

12.5   Correction of Loan Documents. Agent and the Lenders may correct patent
errors and fill in any blanks in this Agreement and the other Loan Documents
consistent with the agreement of the parties.

12.6   Integration. This Agreement and the Loan Documents represent the entire
agreement about this subject matter and supersede prior negotiations or
agreements. All prior agreements, understandings, representations, warranties,
and negotiations between the parties about the subject matter of this Agreement
and the Loan Documents merge into this Agreement and the Loan Documents.

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

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

12.9   Confidentiality. In handling any confidential information of Borrower,
the 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:
(a) to the Lenders' and Agent's Subsidiaries or Affiliates; (b) to prospective
transferees or purchasers of any interest in the Credit Extensions (provided,
however, the Lenders and Agent shall use commercially reasonable efforts to
obtain such prospective transferee's or purchaser's agreement to the terms of
this provision); (c) as required by Law, regulation, subpoena, or other order;
(d) to regulators or as otherwise required in connection with an examination or
audit; (e) as Agent considers appropriate in exercising remedies under the Loan
Documents; and (f) to third party service providers of the Lenders and/or Agent
so long as such service providers have executed a confidentiality agreement with
the Lenders and Agent with terms no less restrictive than those contained
herein. Confidential information does not include information that either: (i)
is in the public domain or in the Lenders' and/or Agent's possession when
disclosed to the Lenders and/or Agent, or becomes part of the public domain
after disclosure to the Lenders and/or Agent; or (ii) is disclosed to the
Lenders and/or Agent by a third party, if the Lenders and/or Agent does not know
that the third party is prohibited from disclosing the information. Agent and/or
Lenders may use confidential information for any purpose, including, without
limitation, for the development of client databases, reporting purposes, and
market analysis, so long as Agent and/or Lenders, as applicable, do not disclose
Borrower's identity or the identity of any Person associated with Borrower
unless otherwise expressly permitted by this Agreement. The provisions of the
immediately preceding sentence shall survive the termination of this Agreement.
The agreements provided under this Section 12.9 supersede all prior agreements,
understanding, representations, warranties, and negotiations between the parties
about the subject matter of this Section 12.9.

 

 
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12.10    Right of Set Off. Borrower hereby grants to Agent and to each Lender, 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 the Lenders or any
entity under the control of Agent or the Lenders (including a Agent affiliate)
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 or the
Lenders may set off the same or any part thereof and apply the same to any
liability or obligation of Borrower 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 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 BORROWER ARE
HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.

12.11    [Reserved.]

12.12    Amendments.

(a)         No amendment, modification, termination or waiver of any provision
of this Agreement or any other Loan Document, nor approval or consent
thereunder, or any consent to any departure by Borrower therefrom, shall in any
event be effective unless the same shall be in writing and signed by Borrower,
Agent and the Required Lenders, provided, however, that

(i)          no such amendment, waiver or other modification that would have the
effect of increasing or reducing a Lender's Term Loan Commitment or Commitment
Percentage shall be effective as to such Lender without such Lender's written
consent;

(ii)         no such amendment, waiver or modification that would affect the
rights and duties of Agent shall be effective without Agent's written consent or
signature;

(iii)        no such amendment, waiver or other modification shall, unless
signed by all the Lenders directly affected thereby, (A) reduce the principal
of, rate of interest on or any fees with respect to the Term Loan or forgive any
principal, interest (other than default interest) or fees (other than late
charges) with respect to the Term Loan (B) postpone the date fixed for, or
waive, any payment of principal of the Term Loan or of interest on the Term Loan
(other than default interest) or any fees provided for hereunder (other than
late charges or for any termination of any commitment); (C) change the
definition of the term “Required Lenders” or the percentage of Lenders which
shall be required for Lenders to take any action hereunder; (D) release all or
substantially all or any material portion of the Collateral, authorize Borrower
to sell or otherwise dispose of all or substantially all or any material portion
of the Collateral or release any Guarantor of all or any portion of the
Obligations or its guaranty obligations with respect thereto, except, in each
case with respect to this clause (D), as otherwise may be expressly permitted
under this Agreement or the other Loan Documents (including in connection with
any disposition permitted hereunder); (E) amend, waive or otherwise modify this
Section 12.12 or the definitions of the terms used in this Section 12.12 insofar
as the definitions affect the substance of this Section 12.12; (F) consent to
the assignment, delegation or other transfer by any Borrower or any Guarantor of
any of its rights and obligations under any Loan Document or release Borrower or
any Guarantor of its payment obligations under any Loan Document, except, in
each case with respect to this clause (F), pursuant to a merger or consolidation
permitted pursuant to this Agreement; (G) amend any of the provisions of Section
9.4 or amend any of the definitions Pro Rata Share, Term Loan Commitment,
Commitment Percentage or that provide for the Lenders to receive their Pro Rata
Shares of any fees, payments, setoffs or proceeds of Collateral hereunder; (H)
subordinate the Liens granted in favor of Agent securing the Obligations; or (I)
amend any of the provisions of Section 12.10. It is hereby understood and agreed
that all Lenders shall be deemed directly affected by an amendment, waiver or
other modification of the type described in the preceding clauses (C), (D), (E),
(F), (G) and (H) of the preceding sentence;

 

 
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(iv)        the provisions of the foregoing clauses (i), (ii) and (iii) are
subject to the provisions of any interlender or agency agreement among the Agent
and Lenders pursuant to which any Lender may agree to give its consent in
connection with any amendment, waiver or modification of the Loan Documents only
in the event of the unanimous agreement of all Lenders.

(b)         Other than as expressly provided for in Section 12.12(a)(i) through
(iii) above, Agent may, if requested by the Required Lenders, from time to
time designate covenants in this Agreement less restrictive by notification to a
representative of the Borrower.

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 applicable Law, subpoena or judicial or similar order, in which case Borrower
shall endeavor to give Agent prior written notice of such publication or other
disclosure; provided, however, that for the avoidance of doubt, Borrower may
publish the name of Lenders and Agent, 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 financing evidenced hereby and such other information (including
copies of the Loan Documents) necessary to satisfy the reporting requirements
under the Securities Exchange Act of 1934, as amended. Each Lender and Borrower
hereby authorizes each Lender 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 such Lender elects
to submit for publication. In addition, each Lender and Borrower agrees that
each Lender may provide lending industry trade organizations with information
necessary and customary for inclusion in league table measurements after the
Restatement Date. With respect to any of the foregoing authorizations granted to
Lenders, such authorization shall be subject to such Lender providing Borrower
and the other Lenders with an opportunity to review and confer with such Lender
regarding, and approve, the contents of any such tombstone, advertisement or
information, as applicable, prior to its initial submission for publication, but
subsequent publications of the same tombstone, advertisement or information
shall not require Borrower's approval.

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.

12.15    Amendment and Restatement; No Novation.

(a)     On the Restatement Date upon the satisfaction of the conditions
precedent in Section 3.1, the Existing Loan Agreement shall be amended and
restated in its entirety. The Existing Term Loan outstanding on the Restatement
Date shall be reallocated in accordance with the terms set forth in Section 2.1.

(b)     The parties hereto acknowledge and agree that (i) this Agreement and the
other Loan Documents, whether executed and delivered in connection herewith or
otherwise, do not constitute a novation or termination of the Existing
Obligations under the Existing Loan Agreement as in effect prior to the
Restatement Date and which remain outstanding and are in all respects continuing
(as amended and restated hereby), (ii) the Liens and security interests as
granted under the Existing Loan Agreement and other Existing Loan Documents
securing payment of such Existing Obligations are in all respects continuing and
in full force and effect after giving effect to this Agreement and the
transactions contemplated hereby and all such Liens granted to the Existing
Agent shall be deemed to constitute Liens granted to the Agent on behalf of the
Lenders under this Agreement, (iii) references in the Existing Loan Documents or
the Loan Documents to the “Loan Agreement” shall be deemed to be references to
this Agreement (as the same may be amended, restated, supplemented or otherwise
modified from time to time), and to the extent necessary to effect the
foregoing, each such Loan Document is hereby deemed amended accordingly, (iv)
all of the terms and provisions of the Existing Loan Agreement shall continue to
apply for the period prior to the Restatement Date, including any determinations
of payment dates, interest rates, Events of Default or any amount that may be
payable to the Agent or the Lenders (or their assignees or replacements
hereunder), (v) the Existing Obligations under the Existing Loan Agreement shall
continue to be paid or prepaid on or prior to the Restatement Date, and shall
from and after the Restatement Date continue to be owing and be subject to the
terms of this Agreement, (vi) all references in the Loan Documents to the
“Lenders” or a “Lender” shall be deemed to refer to such terms as defined in
this Agreement, and to the extent necessary to effect the foregoing, each such
Loan Document is hereby deemed amended accordingly and (vii) any Defaults or
Events of Default that are continuing under the Existing Loan Agreement shall
constitute Defaults or Events of Default under this Agreement unless the same
shall have been specifically waived in writing in accordance with this
Agreement, and to the extent necessary to effect the foregoing, each such Loan
Document is hereby deemed amended accordingly.

 

 
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(c)     The Borrower, Loan Parties, Agent and Lenders acknowledge and agree that
all principal, interest, fees, costs, reimbursable expenses and indemnification
obligations accruing or arising under or in connection with the Existing Loan
Agreement which remain unpaid and outstanding as of the Restatement Date shall
be and remain outstanding and payable as an obligation under this Agreement and
the other Loan Documents.

(d)     The parties hereto agree that as of the Restatement Date, (i) the
Lenders signatory hereto shall become “Lenders” under this Agreement and the
other Loan Documents and (ii) each Lender shall have the Term Loan Commitment
set forth on Schedule 1 hereto. Borrower hereby directs Agent to apply the
proceeds of the Term Loan made on the Restatement Date to the repayment on the
Restatement Date of certain outstanding loans and obligations of the Borrower
owing to the Existing Lenders and to the payment of certain fees and expenses
relating thereto. 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.

13.         AGENT

13.1   Appointment and Authorization of Agent. Each Lender hereby irrevocably
appoints, designates and authorizes Agent to take such action on its behalf
under the provisions of this Agreement and each other Loan Document and to
exercise such powers and perform such duties as are expressly delegated to it by
the terms of this Agreement or any other Loan Document, together with such
powers as are reasonably incidental thereto. Notwithstanding any provision to
the contrary contained elsewhere herein or in any other Loan Document, Agent
shall not have any duties or responsibilities, except those expressly set forth
herein, nor shall Agent have or be deemed to have any fiduciary relationship
with any Lender or participant, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against Agent. Without
limiting the generality of the foregoing sentence, the use of the term “agent”
herein and in the other Loan Documents with reference to Agent is not intended
to connote any fiduciary or other implied (or express) obligations arising under
agency doctrine of any applicable Law. Instead, such term is used merely as a
matter of market custom, and is intended to create or reflect only an
administrative relationship between independent contracting parties.

13.2   Delegation of Duties. Agent may execute any of its duties under this
Agreement or any other Loan Document by or through its, or its Affiliates',
agents, employees or attorneys-in-fact and shall be entitled to obtain and rely
upon the advice of counsel and other consultants or experts concerning all
matters pertaining to such duties. Agent shall not be responsible for the
negligence or misconduct of any agent or attorney-in-fact that it selects in the
absence of gross negligence or willful misconduct.

13.3   Liability of Agent. Except as otherwise provided herein, no Agent-Related
Person shall (a) be liable for any action taken or omitted to be taken by any of
them under or in connection with this Agreement or any other Loan Document or
the transactions contemplated hereby (except for its own gross negligence or
willful misconduct in connection with its duties expressly set forth herein), or
(b) be responsible in any manner to any Lender or participant for any recital,
statement, representation or warranty made by Borrower or any officer thereof,
contained herein or in any other Loan Document, or in any certificate, report,
statement or other document referred to or provided for in, or received by Agent
under or in connection with, this Agreement or any other Loan Document, or the
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement or any other Loan Document, or for any failure of Borrower or any
other party to any Loan Document to perform its obligations hereunder or
thereunder. No Agent-Related Person shall be under any obligation to any Lender
or participant to ascertain or to inquire as to the observance or performance of
any of the agreements contained in, or conditions of, this Agreement or any
other Loan Document, or to inspect the properties, books or records of Borrower
or any Affiliate thereof.

 

 
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13.4   Reliance by Agent. Agent shall be entitled to rely, and shall be fully
protected in relying, upon any writing, communication, signature, resolution,
representation, notice, consent, certificate, affidavit, letter, telegram,
facsimile, telex or telephone message, electronic mail message, statement or
other document or conversation believed by it to be genuine and correct and to
have been signed, sent or made by the proper Person or Persons, and upon advice
and statements of legal counsel (including counsel to Borrower), independent
accountants and other experts selected by Agent. Agent shall be fully justified
in failing or refusing to take any action under any Loan Document unless it
shall first receive such advice or concurrence of all Lenders as it deems
appropriate and, if it so requests, it shall first be indemnified to its
satisfaction by the Lenders against any and all liability and expense which may
be incurred by it by reason of taking or continuing to take any such action.
Agent shall in all cases be fully protected in acting, or in refraining from
acting, under this Agreement or any other Loan Document in accordance with a
request or consent of all Lenders and such request and any action taken or
failure to act pursuant thereto shall be binding upon all the Lenders.

13.5   Notice of Default. Agent shall not be deemed to have knowledge or notice
of the occurrence of any Default and/or Event of Default, unless Agent shall
have received written notice from a Lender or Borrower, describing such default
or Event of Default. Agent will notify the Lenders of its receipt of any such
notice. Agent shall take such action with respect to an Event of Default as may
be directed in writing by the Required Lenders in accordance with Section 9(a);
provided, however, that while an Event of Default has occurred and is
continuing, Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Event of Default as Agent
shall deem advisable or in the best interest of the Lenders, including without
limitation, satisfaction of other security interests, liens or encumbrances on
the Collateral not permitted under the Loan Documents, payment of taxes on
behalf of Borrower, payments to landlords, warehouseman, bailees and other
Persons in possession of the Collateral and other actions to protect and
safeguard the Collateral, and actions with respect to insurance claims for
casualty events affecting Borrower and/or the Collateral.

13.6   Credit Decision; Disclosure of Information by Agent. Each Lender
acknowledges that no Agent-Related Person has made any representation or
warranty to it, and that no act by Agent hereafter taken, including any consent
to and acceptance of any assignment or review of the affairs of Borrower or any
Affiliate thereof, shall be deemed to constitute any representation or warranty
by any Agent-Related Person to any Lender as to any matter, including whether
Agent-Related Persons have disclosed material information in their possession.
Each Lender represents to Agent that it has, independently and without reliance
upon any Agent-Related Person and based on such documents and information as it
has deemed appropriate, made its own appraisal of, and investigation into, the
business, prospects, operations, property, financial and other condition and
creditworthiness of Borrower and its respective Subsidiaries, and all applicable
bank or other regulatory Laws relating to the transactions contemplated hereby,
and made its own decision to enter into this Agreement and to extend credit to
Borrower hereunder. Each Lender also represents that it will, independently and
without reliance upon any Agent-Related Person and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not taking action under
this Agreement and the other Loan Documents, and to make such investigations as
it deems necessary to inform itself as to the business, prospects, operations,
property, financial and other condition and creditworthiness of Borrower. Except
for notices, reports and other documents expressly required to be furnished to
the Lenders by Agent herein, Agent shall not have any duty or responsibility to
provide any Lender with any credit or other information concerning the business,
prospects, operations, property, financial and other condition or
creditworthiness of Borrower or any of its Affiliates which may come into the
possession of any Agent-Related Person.

 

 
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13.7   Indemnification of Agent. Whether or not the transactions contemplated
hereby are consummated, each Lender shall, severally and pro rata based on its
respective Pro Rata Share, indemnify upon demand each Agent-Related Person (to
the extent not reimbursed by or on behalf of Borrower and without limiting the
obligation of Borrower to do so), and hold harmless each Agent-Related Person
from and against any and all Indemnified Liabilities (which shall not include
legal expenses of Agent incurred in connection with the closing of the
transactions contemplated by this Agreement) incurred by it; provided, however,
that no Lender shall be liable for the payment to any Agent-Related Person of
any portion of such Indemnified Liabilities to the extent determined in a
judgment by a court of competent jurisdiction to have resulted from such
Agent-Related Person's own gross negligence or willful misconduct; provided,
however, that no action taken in accordance with the directions of the Required
Lenders shall be deemed to constitute gross negligence or willful misconduct for
purposes of this Section 13.7. Without limitation of the foregoing, each Lender
shall, severally and pro rata based on its respective Pro Rata Share, reimburse
Agent upon demand for its ratable share of any costs or out-of-pocket expenses
(including Lenders' Expenses incurred after the closing of the transactions
contemplated by this Agreement) incurred by Agent (in its capacity as Agent, and
not as a Lender) in connection with the preparation, execution, delivery,
administration, modification, amendment or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in respect of
rights or responsibilities under, this Agreement, any other Loan Document, or
any document contemplated by or referred to herein, to the extent that Agent is
not reimbursed for such expenses by or on behalf of Borrower. The undertaking in
this Section 13.7 shall survive the payment in full of the Obligations, the
termination of this Agreement and the resignation of Agent.

13.8   Agent in its Individual Capacity. With respect to its Credit Extensions,
MidCap shall have the same rights and powers under this Agreement as any other
Lender and may exercise such rights and powers as though it were not Agent, and
the terms “Lender” and “Lenders” include MidCap in its individual capacity.

13.9   Successor Agent.

(a)             Agent may at any time assign its rights, powers, privileges and
duties hereunder to (i) another Lender, or (ii) any Person to whom Agent, in its
capacity as a Lender, has assigned (or will assign, in conjunction with such
assignment of agency rights hereunder) 50% or more of its Loan, in each case
without the consent of the Lenders or Borrowers. Following any such assignment,
Agent shall give notice to the Lenders and Borrowers. An assignment by Agent
pursuant to this subsection (a) shall not be deemed a resignation by Agent for
purposes of subsection (b) below.

(b)             Without limiting the rights of Agent to designate an assignee
pursuant to subsection (a) above, Agent may at any time give notice of its
resignation to the Lenders and Borrowers. Upon receipt of any such notice of
resignation, Required Lenders shall have the right to appoint a successor Agent.
If no such successor shall have been so appointed by Required Lenders and shall
have accepted such appointment within ten (10) Business Days after the retiring
Agent gives notice of its resignation, then the retiring Agent may, on behalf of
the Lenders, appoint a successor Agent; provided, however, that if Agent shall
notify Borrowers and the Lenders that no Person has accepted such appointment,
then such resignation shall nonetheless become effective in accordance with such
notice from Agent that no Person has accepted such appointment and, from and
following delivery of such notice, (i) the retiring Agent shall be discharged
from its duties and obligations hereunder and under the other Loan Documents,
and (ii) all payments, communications and determinations provided to be made by,
to or through Agent shall instead be made by or to each Lender directly, until
such time as Required Lenders appoint a successor Agent as provided for above in
this subsection (b).

(c)              Upon (i) an assignment permitted by subsection (a) above, or
(ii) the acceptance of a successor's appointment as Agent pursuant to subsection
(b) above, such successor shall succeed to and become vested with all of the
rights, powers, privileges and duties of the retiring (or retired) Agent, and
the retiring Agent shall be discharged from all of its duties and obligations
hereunder and under the other Loan Documents (if not already discharged
therefrom as provided above in this subsection (c)). The fees payable by
Borrowers to a successor Agent shall be the same as those payable to its
predecessor unless otherwise agreed between Borrower and such successor. After
the retiring Agent's resignation hereunder and under the other Loan Documents,
the provisions of this Section 13 shall continue in effect for the benefit of
such retiring Agent and its sub-agents 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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13.10    Agent May File Proofs of Claim. In case of the pendency of any
receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement,
adjustment, composition or other judicial proceeding relative to Borrower, Agent
(irrespective of whether the principal of any Loan, shall then be due and
payable as herein expressed or by declaration or otherwise and irrespective of
whether Agent shall have made any demand on Borrower) shall be entitled and
empowered, by intervention in such proceeding or otherwise:

(a)              to file and prove a claim for the whole amount of the principal
and interest owing and unpaid in respect of the Credit Extensions and all other
Obligations that are owing and unpaid and to file such other documents as may be
necessary or advisable in order to have the claims of the Lenders and Agent
(including any claim for the reasonable compensation, expenses, disbursements
and advances of the Lenders and Agent and their respective agents and counsel
and all other amounts due the Lenders and Agent allowed in such judicial
proceeding); and

(b)             to collect and receive any monies or other property payable or
deliverable on any such claims and to distribute the same;

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Lender to make such payments to Agent and, in the event that Agent shall
consent to the making of such payments directly to the Lenders, to pay to Agent
any amount due for the reasonable compensation, expenses, disbursements and
advances of Agent and its agents and counsel, and any other amounts due Agent
under Section 2.4(d). To the extent that Agent fails timely to do so, each
Lender may file a claim relating to such Lender's claim.

 

13.11    Collateral and Guaranty Matters. The Lenders irrevocably authorize
Agent, at its option and in its discretion, to release any Guarantor and any
Lien on any Collateral granted to or held by Agent under any Loan Document (a)
upon the date that all Obligations due hereunder have been fully and
indefeasibly paid in full and no Term Loan Commitments or other obligations of
any Lender to provide funds to Borrower under this Agreement remain outstanding,
(b) that is transferred or to be transferred as part of or in connection with
any Transfer permitted hereunder or under any other Loan Document, or (c) as
approved in accordance with Section 12.12. Upon request by Agent at any time,
all Lenders will confirm in writing Agent's authority to release its interest in
particular types or items of Property, pursuant to this Section 13.11.

13.12    Cooperation of Borrower. If necessary, Borrower agrees to (a) execute
any documents (including new Secured Promissory Notes) reasonably required to
effectuate and acknowledge each assignment of a Term Loan Commitment or Loan to
an assignee in accordance with Section 12.1, (b) make Borrower's management
available to meet with Agent and prospective participants and assignees of Term
Loan Commitments or Credit Extensions and (c) assist Agent or the Lenders in the
preparation of information relating to the financial affairs of Borrower as any
prospective participant or assignee of a Term Loan Commitment or Term Loan
reasonably may request. Subject to the provisions of Section 12.9 Borrower
authorizes each Lender to disclose to any prospective participant or assignee of
a Term Loan Commitment, any and all information in such Lender's possession
concerning Borrower and its financial affairs which has been delivered to such
Lender by or on behalf of Borrower pursuant to this Agreement, or which has been
delivered to such Lender by or on behalf of Borrower in connection with such
Lender's credit evaluation of Borrower prior to entering into this Agreement.

14.         DEFINITIONS

As used in this Agreement, the following terms have the following meanings:

“Access Agreement” means a landlord consent, bailee letter or warehouseman's
letter, in form and substance reasonably satisfaction to Agent, in favor of
Agent executed by such landlord, bailee or warehouseman, as applicable, for any
third party location.

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

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

“Affiliate” means, with respect to any Person, 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.

 

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

“Agent-Related Person” means the Agent, together with its Affiliates, and the
officers, directors, employees, agents, advisors, auditors and attorneys-in-fact
of such Persons; provided, however, that no Agent-Related Person shall be an
Affiliate of Borrower.

“Agreement” has the meaning given it in the preamble of this Agreement.

“Amortization Date” means August 1, 2013.

“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.

“Approved Drug” has the meaning given it in the definition of “Sale Compound”.

“Approved Fund” means any (a) investment company, fund, trust, securitization
vehicle or conduit that is (or will be) engaged in making, purchasing, holding
or otherwise investing in commercial loans and similar extensions of credit in
the Ordinary Course of Business, or (b) any Person (other than a natural person)
which temporarily warehouses loans for any Lender or any entity described in the
preceding clause (a) and that, with respect to each of the preceding clauses (a)
and (b), is administered or managed by (i) a Lender, (ii) an Affiliate of a
Lender or (iii) a Person (other than a natural person) or an Affiliate of a
Person (other than a natural person) that administers or manages a Lender.

“Assignment Agreement” has the meaning given it in Section 12.1.

“Blocked Person” means: (a) any Person 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” has the meaning given it in the preamble of this Agreement.

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

“Borrowing Resolutions” means, with respect to any Person, those resolutions, in
form and substance satisfactory to Agent, adopted by such Person's Board of
Directors or other appropriate governing body and delivered by such Person to
Agent approving the Loan Documents to which such Person is a party and the
transactions contemplated thereby, as well as any other approvals as may be
necessary or desired to approve the entering into the Loan Documents or the
consummation of the transactions contemplated thereby or in connection
therewith.

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

 

 
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“Cash Equivalents” means (a) marketable direct obligations issued or
unconditionally guaranteed by the United States or any agency or any State
thereof having maturities of not more than one (1) year from the date of
acquisition, (b) commercial paper maturing no more than one (1) year after its
creation and having the highest rating from either Standard & Poor's Ratings
Group or Moody's Investors Service, Inc., (c) certificates of deposit issued
maturing no more than one (1) year after issue, and (d) money market funds at
least ninety-five percent (95%) of the assets of which constitute Cash
Equivalents of the kinds described in clauses (a) through (b) of this
definition. For the avoidance of doubt, the direct purchase by Borrower,
co-borrower, or any subsidiary of Borrower of any Auction Rate Securities, or
purchasing participations in, or entering into any type of swap or other
derivative transaction, or otherwise holding or engaging in any ownership
interest in any type of Auction Rate Security by Borrower, co-borrower, or any
subsidiary of Borrower shall be conclusively determined by the Lenders as an
ineligible Cash Equivalent, and any such transaction shall expressly violate
each other provision of this agreement governing Permitted Investments.
Notwithstanding the foregoing, Cash Equivalents does not include, and each
Borrower and Subsidiary is prohibited from purchasing, purchasing participations
in, entering into any type of swap or other equivalent derivative transaction,
or otherwise holding or engaging in any ownership interest in any type of debt
instrument, including, without limitation, any corporate or municipal bonds with
a long-term nominal maturity for which the interest rate is reset through a
dutch auction and more commonly referred to as an auction rate security.

“Change in Control” means any event, transaction, or occurrence as a result of
which (a) [*]; (b) [*]; or (c) [*].

 

“Claims” has the meaning given it in Section 12.2.

“Code” means the Uniform Commercial Code in effect on the date hereof, as the
same may, from time to time, be enacted and in effect in the State of Maryland;
provided, however, that to the extent that the Code is used to define any term
herein or in any Loan Document and such term is defined differently in different
Articles or Divisions of the Code, the definition of such term contained in
Article or Division 9 shall govern; and provided, further, that in the event
that, by reason of mandatory provisions of Law, any or all of the attachment,
perfection, or priority of, or remedies with respect to, Agent's Lien on any
Collateral is governed by the Uniform Commercial Code in effect in a
jurisdiction other than the State of Maryland, the term “Code” shall mean the
Uniform Commercial Code as enacted and in effect in such other jurisdiction
solely for purposes of the provisions thereof relating to such attachment,
perfection, priority, or remedies and for purposes of definitions relating to
such provisions.

 

“Collateral” means all property, now existing or hereafter acquired, mortgaged
or pledged to, or purported to be subjected to a Lien in favor of Agent, for the
benefit of Agent and Lenders, pursuant to this Agreement and the other Loan
Documents, including, without limitation, all of the property described in
Exhibit A hereto.

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

“Commitment Percentage” means, as to any Lender, the percentage set forth
opposite such Lender's name on Schedule 1, as amended from time to time.

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

“Communication” has the meaning given it in Section 10.

“Compliance Certificate” means a certificate, duly executed by an authorized
officer of Borrower, appropriately completed and substantially in the form of
Exhibit C.

 

[*] Confidential treatment requested; certain information omitted and filed
separately with the SEC.

 

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

“Control Agreement” means any control agreement entered into among the
depository institution at which Borrower maintains a Deposit Account or the
securities intermediary or commodity intermediary at which Borrower maintains a
Securities Account or a Commodity Account, Borrower, and Agent pursuant to which
Agent obtains control (within the meaning of the Code) for the benefit of the
Lenders over such Deposit Account, Securities Account or Commodity Account.

“Credit Extension” means any Term Loan or any other extension of credit by Agent
or the Lenders for Borrower's benefit.

“DEA” means the Drug Enforcement Administration of the United States of America,
and any successor agency thereof.

“Default” means any event which with notice or passage of time or both, would
constitute an Event of Default.

“Default Rate” has the meaning given it in Section 2.3(c).

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

“Designated Deposit Account” means Borrower's deposit account, account number
[*],maintained with Silicon Valley Bank and over which Agent has been granted
control for the ratable benefit of the Lenders.

 

“Development Compound” means any therapeutic compound being tested by any
Borrower or any of its Subsidiaries, including without limitation, those drug
compounds set forth on Schedule 5.11, for use in Phase I, Phase II or Phase III
trials; provided, in the event Borrower fails to comply with the obligations
under Section 6.2(d) to give notice to Agent and update Schedule 5.11 with
respect to any new Development Compound, any such improperly undisclosed
Development Compound shall be deemed to be included in this definition.

“Development Inventory” means the Borrower's inventory of Development Compounds.

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

“Drug Application” means a new drug application, an abbreviated drug
application, or a product license application for any Product, as appropriate,
as those terms are defined in the FDCA.

“Eligible Assignee” means (a) a Lender, (b) an Affiliate of a Lender, (c) an
Approved Fund, and (d) any other Person (other than a natural person) approved
by Agent; provided, however, that notwithstanding the foregoing, “Eligible
Assignee” shall not include Borrower, any Guarantor or any of Borrower's or any
Guarantor's Affiliates or Subsidiaries. Notwithstanding the foregoing, in
connection with assignments by a Lender due to a forced divestiture at the
request of any regulatory agency, the restrictions set forth herein shall not
apply and Eligible Assignee shall mean any Person or party becoming an assignee
incident to such forced divestiture.

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

“ERISA” means the Employee Retirement Income Security Act of 1974, and all
regulations promulgated thereunder.

 

[*] Confidential treatment requested; certain information omitted and filed
separately with the SEC.

 

 
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“European Union” means the European Union and/or the countries that make up the
European Union as of the Restatement Date.

“Event of Default” has the meaning given it in Section 8.

“Existing Agent” has the meaning given to it in the preamble to this Agreement.

“Existing Lenders” has the meaning given to it in the preamble to this
Agreement.

“Existing Loan Agreement” has the meaning given to it in the preamble to this
Agreement.

“FDA” means the Food and Drug Administration of the United States of America, or
any successor entity thereto.

“FDCA” means the Federal Food, Drug and Cosmetic Act, as amended, 21 U.S.C.
Section 301 et seq., and all regulations promulgated thereunder.

“Fee Letter” means that certain Fee Letter, dated as of the Restatement Closing
Date by and among Borrower, Agent and the other parties thereto, as the same may
be amended, restated, supplemented or otherwise modified from time to time.

“Final Payment” means a payment (in addition to and not a substitution for the
regular monthly payments of principal plus accrued interest) due on the earlier
to occur of (a) the Maturity Date, (b) the acceleration of any Term Loan, and
(c) the prepayment of the Term Loan pursuant to Section 2.2(c) or (d), equal to
the Term Loan Commitments multiplied by the Final Payment Percentage.

“Final Payment Percentage” means two and one half of one percent (2.5%).

“Foreign Subsidiary” means, with respect to any Person, a Subsidiary of such
Person that is a “controlled foreign corporation” under Section 957 of the IRC.

“Funding Date” means any date on which a Credit Extension is made to or on
account of Borrower which shall be a Business Day.

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

“General Intangibles” means all “general intangibles”, as defined in the Code,
with such additions to such term as may hereafter be made, and includes without
limitation, all copyright rights, copyright applications, copyright
registrations and like protections in each work of authorship and derivative
work, whether published or unpublished, any patents, trademarks, service marks
and, to the extent permitted under applicable Law, any applications therefor,
whether registered or not, any trade secret rights, including any rights to
unpatented inventions, payment intangibles, royalties, contract rights,
goodwill, franchise agreements, purchase orders, customer lists, route lists,
telephone numbers, domain names, claims, income and other tax refunds, security
and other deposits, options to purchase or sell real or personal property,
rights in all litigation presently or hereafter pending (whether in contract,
tort or otherwise), insurance policies (including without limitation key man,
property damage, and business interruption insurance), payments of insurance and
rights to payment of any kind.

“Global Reaffirmation Agreement” means that certain Omnibus Amendment and
Reaffirmation Agreement, dated as of the Restatement Date, among Borrower and
Agent, as the same may be amended, restated, replaced, supplemented or otherwise
modified from time to time.

 

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

 

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

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

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

“Indemnified Liabilities” has the meaning given it in Section 12.2.

“Indemnified Person” has the meaning given it in Section 12.2.

“Insolvency Proceeding” means 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” includes without limitation, all copyright rights,
copyright applications, copyright registrations and like protections in each
work of authorship and derivative work, whether published or unpublished, any
patents, patent applications and like protections, including improvements,
divisions, continuations, renewals, reissues, extensions, and
continuations-in-part of the same, trademarks, trade names, service marks, mask
works, rights of use of any name, domain names, or any other similar rights, any
applications therefor, whether registered or not, know-how, operating manuals,
trade secret rights, clinical and non-clinical data, rights to unpatented
inventions, and any claims for damage by way of any past, present, or future
infringement of any of the foregoing.

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

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

“IRC” means the Internal Revenue Code of 1986.

“Laws” means any and all federal, state, provincial, territorial, 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 any Borrower in any particular circumstance.

“Lender” means any one of the Lenders.

“Lenders” means the Persons identified on Schedule 1 hereto, and each assignee
that becomes a party to this Agreement pursuant to Section 12.1.

“Lenders' Expenses” means [*].

 

[*] Confidential treatment requested; certain information omitted and filed
separately with the SEC.

 

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

“Loan Documents” means, collectively, this Agreement, the Perfection
Certificate, the Pledge Agreement, the Fee Letter, the Global Reaffirmation
Agreement, the Secured Promissory Notes and any other note, or notes or
guaranties executed by Borrower or any Guarantor in connection with the
indebtedness governed by this Agreement, and any other present or future
agreement between Borrower and/or for the benefit of the Lenders and Agent in
connection with this Agreement, all as amended, restated, supplemented or
otherwise modified.

“Loan Party” means Borrower and each Guarantor.

“Material Adverse Change” means (a) a material impairment in the perfection or
priority of the Agent's Lien in the Collateral or in the value of such
Collateral, taken as a whole; (b) a material adverse change in the business,
operations, or condition (financial or otherwise) or prospects of Borrower,
taken as a whole; or (c) a material impairment of the prospect of repayment of
any portion of the Obligations.

“Material Intellectual Property” means Borrower's Intellectual Property and
license agreements that are material to the condition (financial or other),
business or operations of Borrower, as determined by Agent. For purposes hereof,
over the counter software that is commercially available to the public shall not
be deemed “material.”

“Maturity Date” means August 2, 2016.

“[*]” means [*].

[*].

“[*]” means that certain Agreement dated [*] between [*], as amended by that
certain [*] dated as of [*] by and among [*] Borrower hereby represents and
warrants that, as of the Restatement Date, there are no other amendments,
restatements, supplements or other modifications to the [*] other than as set
forth in this definition.

[*].

“Obligations” means all of Borrower's obligations to pay when due any debts,
principal, interest, Lenders' Expenses, the Prepayment Fee, the Final Payment,
and other amounts Borrower owes the Lenders now or later, under this Agreement
or the other Loan Documents, including, without limitation, interest accruing
after Insolvency Proceedings begin (whether or not allowed) and debts,
liabilities, or obligations of Borrower assigned to the Lenders and/or Agent,
and the performance of Borrower's duties under the Loan Documents.

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

“OFAC Lists” means, 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.

“Operating Documents” means, for any Person, (a) such Person's formation
documents, as certified with the Secretary of State of such Person's state of
formation on a date that is no earlier than 30 days prior to the Restatement
Date, (b)(i) if such Person is a corporation, its bylaws in current form, (ii)
if such Person is a limited liability company, its limited liability company
agreement (or similar agreement), or (iii) if such Person is a partnership, its
partnership agreement (or similar agreement), and (c) any other organizational
documents of Borrower, in each case for clauses (a) through (c), together with
all current amendments or modifications thereto and corporate, company, partner,
member or shareholder resolutions associated therewith.

 

[*] Confidential treatment requested; certain information omitted and filed
separately with the SEC.

 

 
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“Ordinary Course of Business” means, in respect of any transaction involving any
Loan Party, the ordinary course of business of such Loan Party, as conducted by
such Loan Party in accordance with past practices.

“Original Closing Date” has the meaning given it in the preamble of this
Agreement.

“Payment/Advance Form” means that certain form attached hereto as Exhibit B.

“Payment Date” means the first calendar day of each calendar month.

“Perfection Certificate” has the meaning given it in Section 5.1.

“Permits” means licenses, certificates, accreditations, product clearances or
approvals, provider numbers or provider authorizations, marketing
authorizations, other authorizations, registrations, permits, consents and
approvals required in connection with the conduct of Borrower's or any
Subsidiary's business or to comply with any applicable Laws, including, without
limitation, drug listings and drug establishment registrations under 21 U.S.C.
Section 510, registrations issued by DEA under 21 U.S.C. Section 823 (if
applicable to any Product), and those issued by State governments for the
conduct of Borrower's or any Subsidiary's business.

“Permitted Indebtedness” means:

(a)          Borrower's Indebtedness to the Lenders and Agent under this
Agreement and the other Loan Documents;

(b)         Indebtedness existing on the Restatement Date and described on
Schedule 7.4;

(c)         unsecured Indebtedness to trade creditors incurred in the Ordinary
Course of Business;

(d)         Indebtedness secured by Permitted Liens; and

(e)         extensions, refinancings, modifications, amendments and restatements
of any items of Permitted Indebtedness (a) through (d) above, provided, however,
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.

“Permitted Investments” means:

(a)          Investments existing on the Restatement Date and described on
Schedule 7.7;

(b)         Investments consisting of Cash Equivalents; and

(c)          Investments in Subsidiaries that exist as of the Restatement Date
and are Borrowers or that are otherwise created in accordance with Section 6.10
and subject to the terms thereof.

“Permitted IP Dispositions” has the meaning given it in Section 7.1.

 

 
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“Permitted Liens” means:

(a)         Liens existing on the Restatement Date and shown on the Perfection
Certificate or arising under this Agreement and the other Loan Documents;

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

(c)         purchase money Liens (i) on Equipment acquired or held by Borrower
incurred for financing the acquisition of the Equipment securing no more than
[*] ($[*]) in the aggregate amount outstanding, or (ii) existing on Equipment
when acquired, if the Lien is confined to the property and improvements and the
proceeds of the Equipment;

(d)         statutory Liens securing claims or demands of materialmen,
mechanics, carriers, warehousemen, landlords and other Persons imposed without
action of such parties, provided, however, that they have no priority over any
of Agent's Lien and the aggregate amount of such Liens does not any time exceed
[*] Dollars ($[*]);

(e)         leases or subleases of real property granted in the Ordinary Course
of Business, and leases, subleases, non-exclusive licenses or sublicenses of
property (other than real property or Intellectual Property) granted in the
Ordinary Course of Business, if the leases, subleases, licenses and sublicenses
do not prohibit granting Agent a security interest;

(f)          banker's liens, rights of setoff and Liens in favor of financial
institutions incurred made in the Ordinary Course of Business arising in
connection with Borrower's deposit accounts or securities accounts held at such
institutions to secure payment of fees and similar costs and expenses subject to
Borrower's compliance with Section 6.6(b) hereof;

(g)        Liens to secure payment of workers' compensation, employment
insurance, old-age pensions, social security and other like obligations incurred
in the Ordinary Course of Business (other than Liens imposed by ERISA);

(h)         Liens arising from judgments, decrees or attachments in
circumstances not constituting an Event of Default under Section 8.5 or 8.7;

(i)          easements, reservations, rights-of-way, restrictions, minor defects
or irregularities in title and similar charges or encumbrances affecting real
property not constituting a Material Adverse Change;

(j)          non-exclusive licenses of Intellectual Property granted to third
parties in the Ordinary Course of Business and/or Permitted IP Dispositions; and

(k)          Liens incurred in the extension, renewal or refinancing of the
indebtedness secured by Liens described in (a) and (c) above, 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.

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

“PPD” means PPD Development, LP, a Texas limited partnership.

 

[*] Confidential treatment requested; certain information omitted and filed
separately with the SEC.

 

 
37

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

 

 

“Prepayment Fee” means with respect to the Term Loan subject to prepayment prior
to the Maturity Date, whether by mandatory or voluntary prepayment, acceleration
or otherwise, an additional fee payable to the Lenders in amount equal to:

(a)          for a prepayment made on or after the Restatement Date through and
including the date which is twelve (12) months after the Restatement Date, four
percent (4.0%) multiplied by the original Term Loan Commitments;

(b)         for a prepayment made after the date which is twelve (12) months
after the Restatement Date through and including the date which is twenty-four
(24) months after the Restatement Date, three percent (3.0%) multiplied by the
original Term Loan Commitments; and

(c)         for a prepayment made after the date which is twenty-four (24)
months after the Restatement Date through and including the date which is
thirty-six (36) months after the Restatement Date, one percent (1.0%) multiplied
by the original Term Loan Commitments.

“Pro Rata Share” means, as determined by Agent, with respect to each Lender, a
percentage (expressed as a decimal, rounded to the ninth decimal place)
determined by dividing the amount of Term Loans held by such Lender by the
aggregate amount of all outstanding Term Loans.

“Products” means the Development Compounds and/or Sale Compounds.

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

“Required Lenders” means Lenders having (a) more than 60% of the Term Loan
Commitments of all Lenders, or (b) if such Term Loan Commitments have expired or
been terminated, more than 60% of the aggregate outstanding principal amount of
the Term Loan; provided, however, that so long as a party that is a Lender
hereunder on the Restatement Date does not assign any portion of its Term Loan
Commitment or its portion of the Term Loan, the term “Required Lenders” shall
include such Lender. For purposes of this definition only, a Lender shall be
deemed to include itself, and any Lender that is an Affiliate or Approved Fund
of such Lender.

“Required Permit” means a Permit (a) issued or required under Laws applicable to
the business of Borrower or any of its Subsidiaries or necessary in the
manufacturing, importing, exporting, possession, ownership, warehousing,
marketing, promoting, sale, labeling, furnishing, distribution or delivery of
goods or services under Laws applicable to the business of Borrower or any of
its Subsidiaries or any Drug Application (including without limitation, at any
point in time, all licenses, approvals and permits issued by the FDA or any
other applicable Governmental Authority necessary for the testing of any
Development Compound or the manufacture, marketing or sale of any Sale Compound
by any applicable Borrower(s) as such activities are being conducted by such
Borrower with respect to such Product at such time), and (b) issued by any
Person from which Borrower or any of their Subsidiaries have received an
accreditation.

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

“Reserve Percentage” means, on any day, for any Lender, the maximum percentage
prescribed by the Board of Governors of the Federal Reserve System (or any
successor Governmental Authority) for determining the reserve requirements
(including any basic, supplemental, marginal, or emergency reserves) that are in
effect on such date with respect to eurocurrency funding (currently referred to
as “eurocurrency liabilities”) of that Lender, but so long as such Lender is not
required or directed under applicable regulations to maintain such reserves, the
Reserve Percentage shall be zero.

“Responsible Officer” means any of the Chairman, President, Chief Medical
Officer or Chief Financial Officer of Borrower.

“Restatement Date” has the meaning given to it in the preamble to this
Agreement.

 

 
38

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

 

 

“Sale Compound” means any therapeutic compound approved for marketing (“Approved
Drug”) that is manufactured, marketed or sold by any Borrower or any of its
Subsidiaries, it being acknowledged and understood that as of the Restatement
Date, neither Borrower nor any of its Subsidiaries manufactures and sells
Approved Drugs; provided, in the event Borrower or its Subsidiaries engages in
the manufacture or sale of Approved Drugs subsequent to the Restatement Date and
Borrower fails to comply with the obligations under Section 6.2(d) to give
notice to Agent and update Schedule 5.11 prior to manufacturing or selling any
new Approved Drug, any such improperly undisclosed Approved Drug shall be deemed
to be included in this definition.

“Sale Inventory” means the inventory of Sale Compounds manufactured and held for
sale by any Borrower or any of its Subsidiaries, including without limitation
such inventory of Sale Compounds as is temporarily out of Borrower's custody or
possession or in transit and including any returned Sale Compounds inventory.

“Secretary's Certificate” means, with respect to any Person, a certificate, in
form and substance satisfactory to Agent, executed by such Person's secretary on
behalf of such Person certifying that (a) such Person has the authority to
execute, deliver, and perform its obligations under each of the Loan Documents
to which it is a party, (b) that attached as Exhibit A to such certificate is a
true, correct, and complete copy of the Borrower Resolutions then in full force
and effect authorizing and ratifying the execution, delivery, and performance by
such Person of the Loan Documents to which it is a party, (c) the name(s) of the
Person(s) authorized to execute the Loan Documents on behalf of such Person,
together with a sample of the true signature(s) of such Person(s), and (d) that
Agent and the Lenders may conclusively rely on such certificate unless and until
such Person shall have delivered to Agent a further certificate canceling or
amending such prior certificate.

“Secured Promissory Note” has the meaning given it in Section 2.7.

“Secured Promissory Note Record” means a record maintained by each Lender with
respect to the outstanding Obligations and credits made thereto.

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

“Subject Intellectual Property” has the meaning given it in Section 2.5(d).

“Subsidiary” means, with respect to any Person, any Person of which more than
50.0% of the voting stock or other equity interests (in the case of Persons
other than corporations) is owned or controlled, directly or indirectly, by such
Person or one or more of Affiliates of such Person.

“[*]” means, either individually or collectively as the context may require,
[*], a Delaware corporation and [*], a company organized and existing under the
laws of [*].

“Term Loan” has the meaning given it in Section 2.2(a).

“Term Loan Commitment” means, for any Lender, the obligation of such Lender to
fund a portion of the Term Loan, up to the principal amount shown on Schedule 1.
“Term Loan Commitments” means the aggregate amount of such commitments of all
Lenders.

“Transfer” has the meaning given it in Section 7.1.

 

[SIGNATURES APPEAR ON FOLLOWING PAGE(S)]

 

[*] Confidential treatment requested; certain information omitted and filed
separately with the SEC.

 
39

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

 

 

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

 

 

BORROWER:

 

 

 

FURIEX PHARMACEUTICALS, INC.

By:/s/ Marshall Woodworth

Name: Marshall Woodworth

Title: Chief Financial Officer

APBI HOLDINGS, LLC

By: /s/ Marshall Woodworth Name: Marshall Woodworth

Title: Chief Financial Officer

DEVELOPMENT PARTNERS, LLC

By: /s/ Marshall Woodworth Name: Marshall Woodworth

Title: Chief Financial Officer

GENUPRO, INC.

By: /s/ Marshall Woodworth Name: Marshall Woodworth

Title: Chief Financial Officer

FURIEX PHARMACEUTICALS, INC.

AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

SIGNATURE PAGE

 

 

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

 

 

 

AGENT:

 

 

 

MIDCAP FUNDING III, LLC,

as Agent for Lenders

By:/s/ Josh Groman

Name: Josh Groman

Title: Managing Director

FURIEX PHARMACEUTICALS, INC.

AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

SIGNATURE PAGE

 

 

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

 

 

 

LENDERS:

 

 

 

MIDCAP FUNDING III, LLC,

as a Lender

By:/s/ Josh Groman

Name: Josh Groman

Title: Managing Director

Address for notices:

MidCap Funding III, LLC

7255 Woodmont Avenue, Suite 200

Bethesda, Maryland 20814

Attention: Portfolio Management- Life Sciences

Fax: (301) 941-1450

E-Mail: Lviera@midcapfinancial.com

with a copy to:

Midcap Financial, LLC

7255 Woodmont Avenue, Suite 200

Bethesda, Maryland 20814

Attention: General Counsel

Fax: (301) 941-1450

E-Mail: Rgoodridge@midcapfinancial.com

FURIEX PHARMACEUTICALS, INC.

AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

SIGNATURE PAGE

 

 

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

 

 

 

MIDCAP FUNDING RE HOLDINGS, LLC

 

as a Lender

 

 

By:/s/ Josh Groman

Name: Josh Groman

Title: Managing Director

Address for notices:

Midcap Funding RE Holdings, LLC

7255 Woodmont Avenue, Suite 200

Bethesda, Maryland 20814

Attention: Portfolio Management- Life Sciences

Fax: (301) 941-1450

E-Mail: Lviera@midcapfinancial.com

with a copy to:

Midcap Funding RE Holdings, LLC

7255 Woodmont Avenue, Suite 200

Bethesda, Maryland 20814

Attention: General Counsel

Fax: (301) 941-1450

E-Mail: Rgoodridge@midcapfinancial.com

FURIEX PHARMACEUTICALS, INC.

AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

SIGNATURE PAGE

 

 

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

 

 

 

SILICON VALLEY BANK,

 

as a Lender

 

 

By: /s/ Chris J. Stoecker

Name: Chris J. Stoecker

Title: SVP

Address for notices:

Silicon Valley Bank

3005 Carrington Mill Boulevard, Suite 530

Morrisville, North Carolina 27560

Attention: Chris Stoecker, Relationship Manager

Fax: (919) 461-3908

 

FURIEX PHARMACEUTICALS, INC.

AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

SIGNATURE PAGE

 

 

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

 

 

EXHIBITS AND SCHEDULES

 

EXHIBITS

 

 

 

Exhibit A

 Collateral

Exhibit B

Loan Payment / Advance Request Form

Exhibit C

Compliance Certificate

SCHEDULES

Schedule 1

Lenders and Commitments

Schedule 5.1

Organizational Information

Schedule 5.2

Collateral Disclosures

Schedule 5.3

Litigation

Schedule 5.11

Products and Required Permits

Schedule 6.14

Post Closing Obligations

Schedule 7.4

Indebtedness

Schedule 7.7

Investments

 

 

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

 

 

EXHIBIT A

 

COLLATERAL

 

 

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

(a)      all goods, Accounts (including health-care insurance receivables),
Equipment, Inventory, contract rights or rights to payment of money, leases,
license agreements, franchise agreements, General Intangibles, commercial tort
claims, documents, instruments (including any promissory notes), chattel paper
(whether tangible or electronic), cash, deposit accounts, investment accounts,
commodity accounts and other Collateral Accounts, all certificates of deposit,
fixtures, letters of credit rights (whether or not the letter of credit is
evidenced by a writing), securities, and all other investment property,
supporting obligations, and financial assets, whether now owned or hereafter
acquired, wherever located; and

(b)     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.

Notwithstanding the foregoing, the Collateral shall not include any Intellectual
Property of any Loan Party, whether now owned or hereafter acquired, except to
the extent that it is necessary under applicable law to have a Lien and security
interest in any such Intellectual Property in order to have a perfected Lien and
security interest in and to IP Proceeds (defined below), and for the avoidance
of any doubt, the Collateral shall include, and Agent shall have a Lien and
security interest in, (i) all IP Proceeds, and (ii) all payments with respect to
IP Proceeds that are received after the commencement of a bankruptcy or
insolvency proceeding.  The term “IP Proceeds” means, collectively, all cash,
Accounts, license and royalty fees, claims, products, awards, judgments,
insurance claims, and other revenues, proceeds or income, arising out of,
derived from or relating to any Intellectual Property of any Loan Party, and any
claims for damage by way of any past, present or future infringement of any
Intellectual Property of any Loan Party (including, without limitation), all
cash, royalty fees, other proceeds, Accounts and General Intangibles that
consist of rights of payment to or on behalf of a Loan Party and the proceeds
from the sale, licensing or other disposition of all or any part of, or rights
in, any Intellectual Property by or on behalf of a Loan Party).

 

Agent and Lenders further acknowledge that the Collateral shall not include more
than 65% of the voting securities of any Subsidiary that is not organized under
the laws of the United States or any of its states if such pledge would cause a
material increase in the Borrower's federal income tax liability.

Pursuant to the terms of a certain negative pledge arrangement with Agent and
Lenders, Borrower has agreed not to encumber any of its Intellectual Property
without Agent's and Lenders' prior written consent.

 

 

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

 

 

EXHIBIT B

LOAN PAYMENT/ADVANCE REQUEST FORM

 

Deadline is Noon E.S.T.

 

Date: __________________, 201__

 

LOAN PAYMENT:

 

From Account #________________________________              To Account  

#________________________________________________                                                  
(Deposit Account
#)                                                                                            
(Loan Account #)

Principal $____________________________________ and/or Interest

$________________________________________________

 

Authorized
Signature:                                                                Phone
Number:                                                                                                                            

Print Name/Title:                                             

 

 

 

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 representations and warranties in the Loan and Security Agreement
are true, correct and complete in all material respects on the date of the
request for an advance; provided, however, that such materiality qualifier shall
not be applicable to any representations and warranties that already are
qualified or modified by materiality in the text thereof; and provided, further,
that those representations and warranties expressly referring to a specific date
shall be true, accurate and complete in all material respects as of such date:

 

Authorized
Signature:                                                                Phone
Number:                                                                                                                            

Print Name/Title:                                             

 

 

 

Outgoing Wire Request:

 

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

 

Beneficiary
Name:                                                                                                                                                                        
                                                          

                                                                                                       
Amount of Wire:
$                                                                                                                          

Beneficiary Lender: ____________________________

                                                                                                       
Account
Number:                                                                                                                           

City and State:                                                 

 

Beneficiary Lender Transit (ABA) #:               
                                                                                
Beneficiary Lender Code (Swift, Sort, Chip, etc.):                

(For International Wire Only)

 

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

 

 

Intermediary
Lender:                                                                                                                           
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.

 

Authorized Signature: ___________________________

Print
Name/Title:                                                                         

Telephone
#:                                                                                      

2nd Signature (if required): ___________________________

Print
Name/Title:                                                                                  

Telephone
#:                                                                                        

 

 

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

 

 

EXHIBIT C

 

COMPLIANCE CERTIFICATE

 

TO:

MidCap Funding III, LLC, as Agent

FROM:

__________________________________

DATE:

________________, 201__

 

The undersigned authorized officer of __________________________________________
(“Borrower”) certifies that under the terms and conditions of the Amended and
Restated Loan and Security Agreement, dated August 2, 2012, between Borrower,
Agent and the Lenders party thereto (as amended, restated, supplemented or
otherwise modified from time to time, the “Agreement”):

(1)      Borrower is in complete compliance with all required covenants for the
month ending _______________, 201__, except as noted below;

(2)      there are no Events of Default;

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

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

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

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

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

 

Reporting Covenant

Required

Complies

Monthly Financial Statements

Monthly within 45 days

Yes               No

Audited Financial Statements

 

Annually within 150 days after FYE

Yes               No

Board Approved Projections

 

Annually within 90 days after FYE

Yes               No

Compliance Certificate

 

Monthly within 45 days

Yes               No

 

 

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

 

 

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

 

 

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

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

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

 

 

[NAME OF BORROWER]

 

 

By:                                                    

Name:                                               

Title:                                                 

AGENT USE ONLY

 

Received by:                                                

authorized signer

Date:                                                              

 

Verified:                                                        

authorized signer

Date:                                                             

 

Compliance Status:           Yes              No

 

 

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

 

 

EXHIBIT D

FORM OF SECURED PROMISSORY NOTE

 

$[__________]

[__________ __], 20[__]

 

FOR VALUE RECEIVED, FURIEX PHARMACEUTICALS, INC., a Delaware corporation, APBI
HOLDINGS, LLC, a North Carolina limited liability company, DEVELOPMENT PARTNERS,
LLC, a Delaware limited liability company, and GENUPRO, INC., a North Carolina
corporation (either individually or collectively as the context may require, the
“Borrower”) hereby promises to pay to the order of [_______________], or the
holder of this Note (“Lender”) in care of MIDCAP FUNDING III, LLC, as agent
under the Loan Agreement (as defined below), with an address of 7255 Woodmont
Avenue, Suite 200, Bethesda, Maryland 20814, or such other place of payment as
the holder of this Secured Promissory Note (this “Promissory Note”) may specify
from time to time in writing, in lawful money of the United States of America,
the principal amount of [__________] and No/100 Dollars ($[__________]), or such
other principal amount as Lender has advanced to Borrower, together with
interest in accordance with the Loan Agreement (as hereinafter defined) (or if
and when applicable, at a rate equal to the Default Rate (as defined in the Loan
Agreement) based upon a year consisting of 360 days, with interest computed
daily based on the actual number of days in each month until the principal
balance is paid in full.

This Promissory Note is executed and delivered in connection with that certain
Amended and Restated Loan and Security Agreement of August 2, 2012 by and among
Borrower, MidCap Funding III, LLC, as agent for Lenders, and Lender, and the
other lenders named therein from time to time (as the same may from time to time
be amended, modified, restated or supplemented in accordance with its terms, the
“Loan Agreement”), and is entitled to the benefit and security of the Loan
Agreement and the other Loan Documents (as defined in the Loan Agreement), to
which reference is made for a statement of all of the terms and conditions
thereof. All payments shall be made in accordance with the Loan Agreement. All
terms defined in the Loan Agreement shall have the same definitions when used
herein, unless otherwise defined herein. An Event of Default under the Loan
Agreement shall constitute a default under this Promissory Note, and upon any
such Event of Default, all principal and interest and other obligations owing
under this Promissory Note may be accelerated and declared immediately due and
payable as provided for in the Loan Agreement. Reference to the Loan Agreement
shall not affect or impair the absolute and unconditional obligation of Borrower
to pay all principal and interest and premium, if any, under this Promissory
Note upon demand or as otherwise provided herein

Borrower waives presentment and demand for payment, notice of dishonor, protest
and notice of protest under the Uniform Commercial Code as in effect in the
State of Maryland or any applicable law. Borrower agrees to make all payments
under this Promissory Note without setoff, recoupment or deduction and
regardless of any counterclaim or defense. This Promissory Note has been
negotiated and delivered to Lender and is payable in the State of Maryland. This
Promissory Note shall be governed by and construed and enforced in accordance
with, the laws of the State of Maryland, excluding any conflicts of law rules or
principles that would cause the application of the laws of any other
jurisdiction. Without limiting the generality of the preceding paragraph, the
provisions of Section 11 of the Loan Agreement regarding jurisdiction, venue and
jury trial waiver are incorporated herein.

[SIGNATURES APPEAR ON THE FOLLOWING PAGE]

 

 

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

 

 

IN WITNESS WHEREOF, Borrower, as of the day and year first above written, has
caused this Promissory Note to be executed under seal.

 

 

FURIEX PHARMACEUTICALS, INC.

 

 

By: ___________________________(SEAL)

Name: ___________________________________

Title: ____________________________________

 

 

APBI HOLDINGS, LLC

 

By: ___________________________(SEAL)

Name: ___________________________________

Title: ____________________________________

 

 

DEVELOPMENT PARTNERS, LLC

 

 

By: ___________________________(SEAL)

Name: ___________________________________

Title: ____________________________________

GENUPRO, INC.

 

 

By: ___________________________(SEAL)

Name: ___________________________________

Title: ____________________________________

 

 

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

 

 

SCHEDULE 1

 

LENDERS AND COMMITMENTS

 

Lender

 

Term Loan Commitment

Commitment Percentage

MidCap Funding III, LLC

$[*]

[*]%

Midcap Funding RE Holdings, LLC

$[*]

[*]%

Silicon Valley Bank

$[*]

[*]%

TOTAL

$40,000,000

100%

 

[*] Confidential treatment requested; certain information omitted and filed
separately with the SEC.

 

 

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

 

 

SCHEDULE 5.1

ORGANIZATIONAL INFORMATION

 

Legal Name of Borrower

Type of Legal Entity

State of Organization

Organizational Identification Number

Tax Identification Number

Principal Place of Business

Furiex Pharmaceuticals, Inc.

Corporation

Delaware

4744208

27-1197863

3900 Paramount Parkway, Suite 150 Morrisville, NC 27560

APBI Holdings, LLC

Limited Liability Company

North Carolina

0703248

N/A

3900 Paramount Parkway, Suite 150 Morrisville, NC 27560

Development Partners, LLC

Limited Liability Company

Delaware

3728473

20-0417496

3900 Paramount Parkway, Suite 150 Morrisville, NC 27560

GenuPro, Inc.

Corporation

North Carolina

0459382

56-2085866

3900 Paramount Parkway, Suite 150 Morrisville, NC 27560

 

 
 

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

 

 

SCHEDULE 5.2(a)

COLLATERAL ACCOUNTS

Furiex Pharmaceuticals, Inc. maintains the following Deposit Accounts and
Securities Accounts:

Bank Name

Account Number

Branch Address

[*]

[*]

[*]

 

[*] Confidential treatment requested; certain information omitted and filed
separately with the SEC.

 

 

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

 

 

SCHEDULE 5.2(d)

  

INTELLECTUAL PROPERTY

[*]

 

 

[*] Confidential treatment requested; certain information omitted and filed
separately with the SEC.

 

 

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

 

 

SCHEDULE 5.2(d)

LOCATION OF COLLATERAL

3900 Paramount Parkway, Suite 150

Morrisville, NC 27560

 

300 North Third Street

Wilmington, NC 28401

 

 

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

 

 

SCHEDULE 5.3

LITIGATION

None.

 

 

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

 

 

 

SCHEDULE 5.11

PRODUCTS AND REQUIRED PERMITS

1.  PRODUCTS

a. PPD-10558

b. JNJ-32729463

c. JNJ-27018966

 

2. REQUIRED PERMITS

a.   The following regulatory applications for performing human clinical trials:

(i) PPD10558 - IND No. 76,475

(ii) JNJ-32729463 - IND No. 102,844 (Tablets), IND No. 107,488 (IV); CTA No.
61-3910-4036748

         (Germany), CTA No. 73/UR/CEBK/01/11 (Poland), Protocol Reference No.
EC267853/11 (Chile)

(iii) JNJ-27018966 - IND No. 79,214

 

 

 

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

 

 

SCHEDULE 6.14

POST CLOSING OBLIGATIONS

 

Borrowers shall satisfy and complete each of the following obligations, or
provide Agent each of the items listed below, as applicable, on or before the
date indicated below, all to the satisfaction of Agent in its sole and absolute
discretion:

 

(a)     By not later than 10 days after the Restatement Date, deliver to Agent
an amendment to that certain Landlord's Waiver and Consent, dated as of August
18, 2011, by and among PPD Development, LP, Furiex Pharmaceuticals, Inc. and
Agent in form and substance satisfactory to Agent.

Borrower's failure to complete and satisfy any of the above obligations on or
before the date indicated above, or Borrower's failure to deliver any of the
above listed items on or before the date indicated above, shall constitute an
immediate an automatic Event of Default.]

 

 

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SCHEDULE 7.4

INDEBTEDNESS AS OF THE RESTATEMENT DATE

 

 

None.

 

 

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SCHEDULE 7.7

INVESTMENTS AS OF THE RESTATEMENT DATE

 

 

See the Collateral Accounts listed on Schedule 5.2(a) hereto.

 

Furiex Pharmaceuticals, Inc. has the following subsidiaries:

 

●

100% membership interest in APBI Holdings, LLC, a North Carolina limited
liability company

●

100% membership interest in Development Partners, LLC, a Delaware limited
liability company

●

500,000 shares of common stock of GenuPro, Inc. a North Carolina corporation
representing 100% of its issued and outstanding shares