Exhibit 10.3

 

ANTHERA PHARMACEUTICALS, INC.

 

LOAN AND SECURITY AGREEMENT

 

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This LOAN AND SECURITY AGREEMENT (the “Agreement”) is entered into as of
April 3, 2013, by and between Square 1 Bank (“Bank”) and ANTHERA
PHARMACEUTICALS, INC. (“Borrower”).

 

RECITALS

 

Borrower wishes to obtain credit from time to time from Bank, and Bank desires
to extend credit to Borrower.  This Agreement sets forth the terms on which Bank
will advance credit to Borrower, and Borrower will repay the amounts owing to
Bank.

 

AGREEMENT

 

The parties agree as follows:

 

1.                                      DEFINITIONS AND CONSTRUCTION.

 

1.1                               Definitions.  As used in this Agreement, all
capitalized terms shall have the definitions set forth on Exhibit A.  Any term
used in the Code and not defined herein shall have the meaning given to the term
in the Code.

 

1.2                               Accounting Terms.  Any accounting term not
specifically defined on Exhibit A shall be construed in accordance with GAAP and
all calculations shall be made in accordance with GAAP.  The term “financial
statements” shall include the accompanying notes and schedules.

 

2.                                      LOAN AND TERMS OF PAYMENT.

 

2.1                               Credit Extensions.

 

(a)                                 Promise to Pay.  Borrower promises to pay to
Bank, in lawful money of the United States of America, the aggregate unpaid
principal amount of all Credit Extensions made by Bank to Borrower, together
with interest on the unpaid principal amount of such Credit Extensions at rates
in accordance with the terms hereof.

 

(b)                                 Term Loan.

 

(i)                                    Subject to and upon the terms and
conditions of this Agreement, Bank agrees to make one (1) term loan to Borrower
in an aggregate principal amount not to exceed Ten Million Dollars ($10,000,000)
(the “Term Loan”).  Borrower hereby requests that Bank make the Term Loan on or
about the Closing Date.  The proceeds of the Term Loan shall be used exclusively
to directly fund the Cash Security Account.

 

(ii)                                Interest shall accrue from the date of the
Term Loan at the rate specified in Section 2.3(a) and shall be payable monthly
beginning on the 1st day of the month immediately following the Term Loan and
continuing on the same day of each month thereafter through the Term Loan
Maturity Date, at which time all amounts due in connection with the Term Loan
(including, for the sake of clarity, any principal funded under the Term Loan)
and any other amounts due under this Agreement shall be immediately due and
payable.  The Term Loan, once repaid, may not be reborrowed.  Borrower may
prepay the Term Loan in whole or in part from time to time without penalty or
premium.

 

2.2                               Intentionally Omitted.

 

2.3                               Interest Rates, Payments, and Calculations.

 

(a)                                 Term Loan.  Except as set forth in
Section 2.3(b), the Term Loan shall bear interest, on the outstanding daily
balance thereof, at an annual rate equal to 1.00%.

 

(b)                                 Late Fee; Default Rate.  If any payment is
not made within 15 days after the date such payment is due, Borrower shall pay
Bank a late fee equal to the lesser of (i) 5% of the amount of such

 

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unpaid amount or (ii) the maximum amount permitted to be charged under
applicable law.  All Obligations shall bear interest, from and after the
occurrence and during the continuance of an Event of Default, at a rate equal to
5 percentage points above the interest rate applicable immediately prior to the
occurrence of the Event of Default.

 

(c)                                  Payments.  Any payment required to be made
to Bank under this Agreement (including, without limitation, interest, all Bank
Expenses, and all Periodic Payments) may be made by debit or automated clearing
house payment initiated by Bank from any of Borrower’s deposit accounts, and
Borrower shall tender to Bank such authorization forms as Bank may require to
implement such debit or automated clearing house payment.  Any interest not paid
when due shall be compounded by becoming a part of the Obligations, and such
interest shall thereafter accrue interest at the rate then applicable hereunder.

 

(d)                                 Computation.  All interest chargeable under
the Loan Documents shall be computed on the basis of a 360 day year for the
actual number of days elapsed.

 

2.4                               Crediting Payments.  Prior to the occurrence
of an Event of Default, Bank shall credit a wire transfer of funds, check or
other item of payment to such deposit account or Obligation as Borrower
specifies. After the occurrence and during the continuance of an Event of
Default, Bank shall have the right, in its sole discretion, to immediately apply
any wire transfer of funds, check, or other item of payment Bank may receive to
conditionally reduce Obligations, but such applications of funds shall not be
considered a payment on account unless such payment is of immediately available
federal funds or unless and until such check or other item of payment is honored
when presented for payment.  Notwithstanding anything to the contrary contained
herein, any wire transfer or payment received by Bank after 5:30 p.m. Eastern
time shall be deemed to have been received by Bank as of the opening of business
on the immediately following Business Day.  Whenever any payment to Bank under
the Loan Documents would otherwise be due (except by reason of acceleration) on
a date that is not a Business Day, such payment shall instead be due on the next
Business Day, and additional fees or interest, as the case may be, shall accrue
and be payable for the period of such extension.

 

2.5                               Fees.  Borrower shall pay to Bank the
following:

 

(a)                                 Facility Fee.  On or before the Closing
Date, a fee equal to $50,000, which shall be nonrefundable;

 

(b)                                 Bank Expenses.  On the Closing Date, all
Bank Expenses incurred through the Closing Date. After the Closing Date, all
Bank Expenses, as and when they become due.

 

2.6                               Term.  This Agreement shall become effective
on the Closing Date and, subject to Section 12.7, shall continue in full force
and effect for so long as any Obligations remain outstanding or Bank has any
obligation to make Credit Extensions under this Agreement.  Notwithstanding the
foregoing, Bank shall have the right to terminate its obligation to make Credit
Extensions under this Agreement immediately and without notice upon the
occurrence and during the continuance of an Event of Default.

 

3.                                      CONDITIONS OF LOANS.

 

3.1                               Conditions Precedent to Closing.  The
agreement of Bank to enter into this Agreement as of the Closing Date is subject
to the condition precedent that Bank shall have received, in form and substance
satisfactory to Bank, each the following items and completed each of the
following requirements:

 

(a)                                 this Agreement;

 

(b)                                 an officer’s certificate of Borrower with
respect to incumbency and resolutions authorizing the execution and delivery of
this Agreement;

 

(c)                                  payment of the fees and Bank Expenses then
due specified in Section 2.5, which may be debited from any of Borrower’s
accounts with Bank;

 

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(d)                                 a Borrower Information Certificate;

 

(e)                                  Borrower shall open and fund not less than
$10,000,000 in the Cash Security Account as collateral for Borrower’s
Obligations hereunder;

 

(f)                                   such authorization forms as Bank may
require to implement debit or automated clearing house payments in accordance
with Section 2.3(c) of this Agreement;

 

(g)                                 confirmation, satisfactory to Bank, that all
obligations owed to Hercules Growth Capital have been satisfied and all security
interests granted in favor of Hercules Growth Capital have been terminated and
released;

 

(h)                                 a financing statement (Form UCC-1); and

 

(i)                                    such other documents or certificates, and
completion of such other matters, as Bank may reasonably request,

 

3.2                               Conditions Precedent to all Credit
Extensions.  The obligation of Bank to make each Credit Extension, including the
initial Credit Extension, is contingent upon Borrower’s compliance with
Section 3.1 above, and is further subject to the following conditions:

 

(a)                                 timely receipt by Bank of the Loan
Advance/Paydown Request Form; and

 

(b)                                 the representations and warranties contained
in Section 5 shall be true and correct in all material respects on and as of the
date of such Loan Advance/Paydown Request Form and on the effective date of each
Credit Extension as though made at and as of each such date, and no Event of
Default shall have occurred and be continuing, or would exist after giving
effect to such Credit Extension (provided, however, that those representations
and warranties expressly referring to another date shall be true, correct and
complete in all material respects as of such date).  The making of each Credit
Extension shall be deemed to be a representation and warranty by Borrower on the
date of such Credit Extension as to the accuracy of the facts referred to in
this Section 3.2.

 

4.                                      CREATION OF SECURITY INTEREST.

 

4.1                               Grant of Security Interest.  Borrower grants
and pledges to Bank a continuing security interest in the Collateral to secure
prompt repayment of any and all Obligations and to secure prompt performance by
Borrower of each of its covenants and duties under the Loan Documents.  Such
security interest constitutes a valid, first priority security interest in the
presently existing Collateral and will constitute a valid, first priority
security interest in later acquired Collateral, if any.  Borrower authorizes
Bank to file such financing statements and take such other actions as Bank
reasonably determines from time to time may be necessary or appropriate to
perfect the security interest granted hereunder.

 

4.2                               Perfection of Security Interest.  Borrower
from time to time may deposit with Bank specific cash collateral to secure
specific Obligations; Borrower authorizes Bank to hold such specific balances in
pledge and to decline to honor any drafts thereon or any request by Borrower or
any other Person to pay or otherwise transfer any part of such balances for so
long as the specific Obligations are outstanding.  Borrower shall take such
other actions as Bank requests to perfect its security interest granted under
this Agreement.

 

5.                                      REPRESENTATIONS AND WARRANTIES.

 

Borrower represents and warrants as follows:

 

5.1                               Due Organization and Qualification.  Borrower
is a corporation duly existing under the laws of the state in which it is
organized and qualified and licensed to do business in any state in which the
conduct

 

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of its business or its ownership of property requires that it be so qualified,
except where the failure to do so would not reasonably be expected to cause a
Material Adverse Effect.

 

5.2                               Due Authorization; No Conflict.  The
execution, delivery, and performance of the Loan Documents are within Borrower’s
powers, have been duly authorized, and are not in conflict with nor constitute a
breach of any provision contained in Borrower’s Certificate of Incorporation or
Bylaws, nor will they constitute an event of default under any material
agreement by which Borrower is bound.  Borrower is not in default under any
agreement by which it is bound, except to the extent such default would not
reasonably be expected to cause a Material Adverse Effect.

 

5.3                               Collateral.  Borrower has rights in or the
power to transfer the Collateral.

 

5.4                               Name; Location of Chief Executive Office. 
Except as disclosed in the Schedule, Borrower has not done business under any
name other than that specified on the signature page hereof, and its exact legal
name is as set forth in the first paragraph of this Agreement.  The chief
executive office of Borrower is located at the address indicated in Section 10
hereof.

 

5.5                               Litigation.  Except as set forth in the
Schedule, there are no actions or proceedings pending by or against Borrower or
any Subsidiary before any court or administrative agency in which there is a
reasonable likelihood of an adverse decision that would reasonably be expected
to have a Material Adverse Effect.

 

5.6                               No Material Adverse Change in Financial
Statements.  All consolidated financial statements related to Borrower and any
Subsidiary that have been delivered by Borrower to Bank fairly present in all
material respects Borrower’s consolidated financial condition as of the date
thereof and Borrower’s consolidated results of operations for the period then
ended.  There has not been a material adverse change in the consolidated
financial condition of Borrower since the date of the most recent of such
financial statements submitted to Bank.

 

5.7                               Solvency, Payment of Debts.  Borrower is able
to pay its debts (including trade debts) as they mature; the fair saleable value
of Borrower’s assets (including goodwill minus disposition costs) exceeds the
fair value of its liabilities; and Borrower is not left with unreasonably small
capital after the transactions contemplated by this Agreement.

 

5.8                               Compliance with Laws and Regulations. 
Borrower has met the minimum funding requirements of ERISA with respect to any
employee benefit plans subject to ERISA.  No event has occurred resulting from
Borrower’s failure to comply with ERISA that is reasonably likely to result in
Borrower’s incurring any liability that could have a Material Adverse Effect. 
Borrower is not an “investment company” or a company “controlled” by an
“investment company” within the meaning of the Investment Company Act of 1940. 
Borrower is not engaged principally, or as one of its important activities, in
the business of extending credit for the purpose of purchasing or carrying
margin stock (within the meaning of Regulations T and U of the Board of
Governors of the Federal Reserve System).  Borrower has not violated any
statutes, laws, ordinances or rules applicable to it, the violation of which
would reasonably be expected to have a Material Adverse Effect.  Borrower has
filed or caused to be filed all tax returns required to be filed, and have paid,
or have made adequate provision for the payment of, all taxes reflected therein
except those being contested in good faith with adequate reserves under GAAP or
where the failure to file such returns or pay such taxes would not reasonably be
expected to have a Material Adverse Effect.

 

5.9                               Government Consents.  Borrower has obtained
all consents, approvals and authorizations of, made all declarations or filings
with, and given all notices to, all governmental authorities that are necessary
for the continued operation of Borrower’s business as currently conducted,
except where the failure to do so would not reasonably be expected to cause a
Material Adverse Effect.

 

5.10                        Full Disclosure.  No representation, warranty or
other statement made by Borrower in any certificate or written statement
furnished to Bank taken together with all such certificates and written
statements furnished to Bank contains any untrue statement of a material fact or
omits to state a material fact necessary in order to make the statements
contained in such certificates or statements not misleading in light of the
circumstances in which they were made, it being recognized by Bank that the
projections and forecasts provided by Borrower in good

 

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faith and based upon reasonable assumptions are not to be viewed as facts and
that actual results during the period or periods covered by any such projections
and forecasts may differ from the projected or forecasted results.

 

6.                                      AFFIRMATIVE COVENANTS.

 

Borrower covenants that, until payment in full of all outstanding Obligations,
and for so long as Bank may have any commitment to make a Credit Extension
hereunder, Borrower shall do all of the following:

 

6.1                               Good Standing and Government Compliance. 
Borrower shall maintain its and each of its Subsidiaries’ corporate existence
and good standing in the respective states of formation, shall maintain
qualification and good standing in each other jurisdiction in which the failure
to so qualify  would reasonably be expected to have a Material Adverse Effect,
and shall furnish to Bank the organizational identification number issued to
Borrower by the authorities of the state in which Borrower is organized, if
applicable.  Borrower shall meet, and shall cause each Subsidiary to meet, the
minimum funding requirements of ERISA with respect to any employee benefit plans
subject to ERISA.  Borrower shall comply, and shall cause each Subsidiary to
comply, with all statutes, laws, ordinances and government rules and regulations
to which it is subject, and shall maintain, and shall cause each of its
Subsidiaries to maintain, in force all licenses, approvals and agreements, the
loss of which or failure to comply with which would reasonably be expected to
have a Material Adverse Effect.

 

6.2                               Taxes.  Borrower shall make, and cause each
Subsidiary to make, due and timely payment or deposit of all material federal,
state, and local taxes, assessments, or contributions required of it by law,
including, but not limited to, those laws concerning income taxes, F.I.C.A.,
F.U.T.A. and state disability, and will execute and deliver to Bank, on demand,
proof satisfactory to Bank indicating that Borrower or a Subsidiary has made
such payments or deposits and any appropriate certificates attesting to the
payment or deposit thereof; provided that Borrower or a Subsidiary need not make
any payment if the amount or validity of such payment is contested in good faith
by appropriate proceedings and is reserved against (to the extent required by
GAAP) by Borrower or such Subsidiary.

 

6.3                               Cash Security Account.  Borrower shall at all
times maintain the Cash Security Account, with a balance of Cash in such Cash
Security Account at all times of not less than the lesser of (a) $10,000,000 and
(b) the aggregate amount of all Obligations.

 

6.4                               Financial Statements, Reports, Certificates. 
Borrower shall deliver to Bank: (i) as soon as available, but no later than
thirty (30) days after the last day of each month, a company prepared
consolidated and consolidating balance sheet, income statement and cash flow
statement covering such Borrower’s consolidated operations for such month
certified by a Responsible Officer; (ii) as soon as available, but no later than
one hundred twenty (120) days after the last day of Borrower’s fiscal year,
audited consolidated (and Borrower-prepared consolidating) 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 Bank in its reasonable discretion (it being understood that
Deloitte & Touche or any other accounting firm of national standing is
acceptable to Bank); (iii) as soon as available after approval thereof by such
Borrower’s governing board, but no later than forty-five (45) days after the
last day of such Borrower’s fiscal year, and as amended and/or updated, such
Borrower’s financial projections for the current fiscal year; (iv) within five
(5) days of delivery, copies of all statements, reports and notices made
available to all of such Borrower’s security holders or to any holders of
Subordinated Debt; (v) in the event that such Borrower is or becomes 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 such
Borrower’s or another website on the Internet; (vi) budgets, sales projections,
operating plans and other financial information reasonably requested by Bank;
and (vii) such additional information, reports or statements regarding the
Borrower or its businesses as Bank may from time to time reasonably request.

 

(a) Within 30 days after the last day of each month, Borrower shall deliver to
Bank with the monthly financial statements a Compliance Certificate certified as
of the last day of the applicable month and signed by a Responsible Officer in
substantially the form of Exhibit C hereto.

 

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(b) As soon as possible and in any event within 3 Business Days after becoming
aware of the occurrence or existence of an Event of Default hereunder, a written
statement of a Responsible Officer setting forth details of the Event of
Default, and the action which Borrower has taken or proposes to take with
respect thereto.

 

6.5                               Further Assurances. At any time and from time
to time Borrower shall execute and deliver such further instruments and take
such further action as may reasonably be requested by Bank to effect the
purposes of this Agreement.

 

7.                                      NEGATIVE COVENANTS.

 

Borrower covenants and agrees that, so long as any credit hereunder shall be
available and until the outstanding Obligations are paid in full or for so long
as Bank may have any commitment to make any Credit Extensions, Borrower will not
do any of the following without Bank’s prior written consent, which shall not be
unreasonably withheld:

 

7.1                               Change in Name, Location or Executive Office;
Change in Business; Change in Fiscal Year; Change in Control.  Change its name
or the state of Borrower’s formation or relocate its chief executive office
without 30 days prior written notification to Bank; engage in any business, or
permit any of its Subsidiaries to engage in any business, other than or
reasonably related or incidental to the businesses currently engaged in by
Borrower; change its fiscal year end; have a Change in Control.

 

7.2                               Mergers.  Merge or consolidate with or into
any other business organization (other than mergers or consolidations of a
Subsidiary into Borrower), except where each of the following conditions is
applicable:  (i) such transaction does not result in a Change in Control, and
(ii) Borrower is the surviving entity.

 

8.                                      EVENTS OF DEFAULT.

 

Any one or more of the following events shall constitute an Event of Default by
Borrower under this Agreement:

 

8.1                               Payment Default.  If Borrower fails to pay any
of the Obligations when due;

 

8.2                               Other Defaults.

 

(a)                                 If Borrower fails to perform any obligation
under Section 6.2 (Taxes), Section 6.3 (Cash Security Account), Section 6.4
(Financial Statements, Reports, Certificates), or violates any of the covenants
contained in Article 7 of this Agreement; or

 

(b)                                 If Borrower fails or neglects to perform or
observe any other material term, provision, condition, covenant contained in
this Agreement, or in any of the other Loan Documents, or in any other present
or future agreement between Borrower and Bank and as to any default under such
other term, provision, condition or covenant that can be cured, has failed to
cure such default within 10 days after Borrower receives notice thereof or any
officer of Borrower becomes aware thereof; provided, however, that if the
default cannot by its nature be cured within the 10 day period or cannot after
diligent attempts by Borrower be cured within such 10 day period, and such
default is likely to be cured within a reasonable time, then Borrower shall have
an additional reasonable period (which shall not in any case exceed 30 days) to
attempt to cure such default, and within such reasonable time period the failure
to have cured such default shall not be deemed an Event of Default but no Credit
Extensions will be made;

 

8.3                               Reserved.

 

8.4                               Attachment.  If any material portion of
Borrower’s assets is attached, seized, subjected to a writ or distress warrant,
or is levied upon, or comes into the possession of any trustee, receiver or
person acting in a similar capacity and such attachment, seizure, writ or
distress warrant or levy has not been removed, discharged

 

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or rescinded within 10 days, or if Borrower is enjoined, restrained, or in any
way prevented by court order from continuing to conduct all or any material part
of its business affairs, or if a judgment or other claim becomes a lien or
encumbrance upon any material portion of Borrower’s assets, or if a notice of
lien, levy, or assessment is filed of record with respect to any material
portion of Borrower’s assets by the United States Government, or any department,
agency, or instrumentality thereof, or by any state, county, municipal, or
governmental agency, and the same is not paid within ten days after Borrower
receives notice thereof, provided that none of the foregoing shall constitute an
Event of Default where such action or event is stayed or an adequate bond has
been posted pending a good faith contest by Borrower (provided that no Credit
Extensions will be made during such cure period);

 

8.5                               Insolvency.  If Borrower becomes insolvent, or
if an Insolvency Proceeding is commenced by Borrower, or if an Insolvency
Proceeding is commenced against Borrower and is not dismissed or stayed within
45 days (provided that no Credit Extensions will be made prior to the dismissal
of such Insolvency Proceeding);

 

8.6                               Other Agreements.  If there is a payment
default on any (a) Indebtedness (other than the Obligations) of Borrower or any
Subsidiary having an aggregate principal amount (including undrawn committed or
available amounts and including amounts owing to all creditors under any
combined or syndicated credit arrangement) of more than Two Hundred Fifty
Thousand Dollars ($250,000), or (b) Indebtedness owed pursuant to the MidCap
Loan Documents (the Indebtedness referred to in this Section 8.6(a) and
8.6(b) being referred to as the “Material Indebtedness”) or any other event
shall occur or condition shall exist under any contractual obligation relating
to any such Material Indebtedness, if the effect of such event or condition is
to accelerate, or to permit the acceleration of (without regard to any
subordination terms with respect thereto), the maturity of such Material
Indebtedness or any such Material Indebtedness shall become or be declared to be
due and payable, or be required to be prepaid, redeemed, defeased or repurchased
(other than by a regularly scheduled required prepayment), prior to the stated
maturity thereof.

 

8.7                               Judgments.  If a final, uninsured judgment or
judgments for the payment of money in an amount, individually or in the
aggregate, of at least $250,000 shall be rendered against Borrower and shall
remain unsatisfied and unstayed for a period of 10 days (provided that no Credit
Extensions will be made prior to the satisfaction or stay of the judgment); or

 

8.8                               Misrepresentations.  If any material
misrepresentation or material misstatement exists now or hereafter in any
warranty or representation set forth herein or in any certificate delivered to
Bank by any Responsible Officer pursuant to this Agreement or to induce Bank to
enter into this Agreement or any other Loan Document.

 

9.                                      BANK’S RIGHTS AND REMEDIES.

 

9.1                               Rights and Remedies.  Upon the occurrence and
during the continuance of an Event of Default, Bank may, at its election,
without notice of its election and without demand, do any one or more of the
following, all of which are authorized by Borrower:

 

(a)                                 Declare all Obligations, whether evidenced
by this Agreement, by any of the other Loan Documents, or otherwise, immediately
due and payable (provided that upon the occurrence of an Event of Default
described in Section 8.6 (insolvency), all Obligations shall become immediately
due and payable without any action by Bank);

 

(b)                                 Demand that Borrower pay in advance all
Letter of Credit fees scheduled to be paid or payable over the remaining term of
the Letters of Credit, and Borrower shall promptly deposit and pay such amounts;

 

(c)                                  Cease advancing money or extending credit
to or for the benefit of Borrower under this Agreement or under any other
agreement between Borrower and Bank;

 

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(d)                                 Make such payments and do such acts as Bank
considers necessary or reasonable to protect its security interest in the
Collateral.  Borrower agrees to make the Collateral available to Bank as Bank
may designate.  Borrower authorizes Bank to take and maintain possession of the
Collateral, or any part of it, and to pay, purchase, contest, or compromise any
encumbrance, charge, or lien which in Bank’s determination appears to be prior
or superior to its security interest and to pay all expenses incurred in
connection therewith;

 

(e)                                  Set off and apply to the Obligations any
and all (i) balances and deposits of Borrower held by Bank, including
specifically and without limitation any balances and deposits held in the Cash
Security Account, and (ii) indebtedness at any time owing to or for the credit
or the account of Borrower held by Bank;

 

(f)                                   Apply for the appointment of a receiver,
trustee, liquidator or conservator of the Collateral, without notice and without
regard to the adequacy of the security for the Obligations and without regard to
the solvency of Borrower, any guarantor or any other Person liable for any of
the Obligations; and

 

(g)                                 Any deficiency that exists after disposition
of the Collateral as provided above will be paid immediately by Borrower.

 

Bank may comply with any applicable state or federal law requirements in
connection with a disposition of the Collateral and compliance will not be
considered adversely to affect the commercial reasonableness of any sale of the
Collateral.

 

9.2                               No Obligation to Pursue Others.  Bank has no
obligation to attempt to satisfy the Obligations by collecting them from any
other person liable for them and Bank may release, modify or waive any
collateral provided by any other Person to secure any of the Obligations, all
without affecting Bank’s rights against Borrower.  Borrower waives any right it
may have to require Bank to pursue any other Person for any of the Obligations.

 

9.3                               Remedies Cumulative.  Bank’s rights and
remedies under this Agreement, the Loan Documents, and all other agreements
shall be cumulative.  Bank shall have all other rights and remedies not
inconsistent herewith as provided under the Code, by law, or in equity.  No
exercise by Bank of one right or remedy shall be deemed an election, and no
waiver by Bank of any Event of Default on Borrower’s part shall be deemed a
continuing waiver.  No delay by Bank shall constitute a waiver, election, or
acquiescence by it.  No waiver by Bank shall be effective unless made in a
written document signed on behalf of Bank and then shall be effective only in
the specific instance and for the specific purpose for which it was given. 
Borrower expressly agrees that this Section 9.7 may not be waived or modified by
Bank by course of performance, conduct, estoppel or otherwise.

 

9.4                               Demand; Protest.  Except as otherwise provided
in this Agreement, Borrower waives demand, protest, notice of protest, notice of
default or dishonor, notice of payment and nonpayment and any other notices
relating to the Obligations.

 

10.                               NOTICES.

 

Unless otherwise provided in this Agreement, all notices or demands by any party
relating to this Agreement or any other agreement entered into in connection
herewith shall be in writing and (except for financial statements and other
informational documents which may be sent by first-class mail, postage prepaid)
shall be personally delivered or sent by a recognized overnight delivery
service, certified mail, postage prepaid, return receipt requested, or by
telefacsimile to Borrower or to Bank, as the case may be, at its addresses set
forth below:

 

If to Borrower:

 

ANTHERA PHARMACEUTICALS, INC.

 

 

25801 Industrial B Boulevard, Suite B

 

 

Hayward, CA 94545

 

 

Attn: Paul Truex, Chief Executive Officer

 

 

FAX: (650) 456-2100

 

8

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If to Bank:

 

Square 1 Bank

 

 

406 Blackwell Street, Suite 240

 

 

Durham, North Carolina 27701

 

 

Attn: Loan Operations Manager

 

 

FAX: (919) 314-3080

 

 

 

with a copy to:

 

Square 1 Bank

 

 

2420 Sand Hill Road, Suite 100

 

 

Menlo Park, CA 94025

 

 

Attn: Ben Colombo

 

 

FAX: (650) 543-2780

 

The parties hereto may change the address at which they are to receive notices
hereunder, by notice in writing in the foregoing manner given to the other.

 

11.                               CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.

 

This Agreement shall be governed by, and construed in accordance with, the
internal laws of the State of California, without regard to principles of
conflicts of law.  Jurisdiction shall lie in the State of California.  All
disputes, controversies, claims, actions and similar proceedings arising with
respect to Borrower’s account or any related agreement or transaction shall be
brought in the Superior Court of San Mateo County, California or the United
States District Court for the Northern District of California except as provided
below with respect to arbitration of such matters.  BANK AND BORROWER EACH
ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY IS A CONSTITUTIONAL ONE, BUT THAT IT
MAY BE WAIVED.  EACH OF THEM, AFTER CONSULTING OR HAVING HAD THE OPPORTUNITY TO
CONSULT, WITH COUNSEL OF THEIR CHOICE, KNOWINGLY, VOLUNTARILY AND INTENTIONALLY
WAIVES ANY RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN ANY LITIGATION BASED
UPON OR ARISING OUT OF THIS AGREEMENT OR ANY RELATED INSTRUMENT OR LOAN DOCUMENT
OR ANY OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY COURSE OF
CONDUCT, DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN), OR ACTION OF ANY OF
THEM.  THESE PROVISIONS SHALL NOT BE DEEMED TO HAVE BEEN MODIFIED IN ANY RESPECT
OR RELINQUISHED BY BANK OR BORROWER, EXCEPT BY A WRITTEN INSTRUMENT EXECUTED BY
EACH OF THEM.  If the jury waiver set forth in this Section 11 is not
enforceable, then any dispute, controversy, claim, action or similar proceeding
arising out of or relating to this Agreement, the Loan Documents or any of the
transactions contemplated therein shall be settled by final and binding
arbitration held in San Mateo County, California in accordance with the then
current Commercial Arbitration Rules of the American Arbitration Association by
one arbitrator appointed in accordance with those rules.  The arbitrator shall
apply California law to the resolution of any dispute, without reference to
rules of conflicts of law or rules of statutory arbitration. Judgment upon any
award resulting from arbitration may be entered into and enforced by any state
or federal court having jurisdiction thereof.  Notwithstanding the foregoing,
the parties may apply to any court of competent jurisdiction for preliminary or
interim equitable relief, or to compel arbitration in accordance with this
Section.  The costs and expenses of the arbitration, including without
limitation, the arbitrator’s fees and expert witness fees, and reasonable
attorneys’ fees, incurred by the parties to the arbitration may be awarded to
the prevailing party, in the discretion of the arbitrator, or may be apportioned
between the parties in any manner deemed appropriate by the arbitrator.  Unless
and until the arbitrator decides that one party is to pay for all (or a share)
of such costs and expenses, both parties shall share equally in the payment of
the arbitrator’s fees as and when billed by the arbitrator.

 

12.                               GENERAL PROVISIONS.

 

12.1                        Successors and Assigns.  This Agreement shall bind
and inure to the benefit of the respective successors and permitted assigns of
each of the parties and shall bind all persons who become bound as a debtor to
this Agreement; provided, however, that neither this Agreement nor any rights
hereunder may be assigned by Borrower without Bank’s prior written consent,
which consent may be granted or withheld in Bank’s sole discretion.  Bank shall
have the right without the consent of or notice to Borrower to sell, assign,
transfer, negotiate, or grant participation in all or any part of, or any
interest in, Bank’s obligations, rights and benefits hereunder.

 

9

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12.2                        Indemnification.  Borrower shall defend, indemnify
and hold harmless Bank and its officers, employees, and agents against:  (a) all
obligations, demands, claims, and liabilities claimed or asserted by any other
party in connection with the transactions contemplated by this Agreement; and
(b) all losses or Bank Expenses in any way suffered, incurred, or paid by Bank,
its officers, employees and agents as a result of or in any way arising out of,
following, or consequential to transactions between Bank and Borrower whether
under this Agreement, or otherwise (including without limitation reasonable
attorneys fees and expenses), except for losses caused by Bank’s gross
negligence or willful misconduct.

 

12.3                        Time of Essence.  Time is of the essence for the
performance of all obligations set forth in this Agreement.

 

12.4                        Severability of Provisions.  Each provision of this
Agreement shall be severable from every other provision of this Agreement for
the purpose of determining the legal enforceability of any specific provision.

 

12.5                        Amendments in Writing, Integration.  All amendments
to or terminations of this Agreement or the other Loan Documents must be in
writing.  All prior agreements, understandings, representations, warranties, and
negotiations between the parties hereto with respect to the subject matter of
this Agreement and the other Loan Documents, if any, are merged into this
Agreement and the Loan Documents.

 

12.6                        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, shall be deemed to be an original, and
all of which, when taken together, shall constitute but one and the same
Agreement.  Executed copies of the signature pages of this Agreement sent by
facsimile or transmitted electronically in Portable Document Format (“PDF”), or
any similar format, shall be treated as originals, fully binding and with full
legal force and effect, and the parties waive any rights they may have to object
to such treatment.

 

12.7                        Survival.  All covenants, representations and
warranties made in this Agreement shall continue in full force and effect so
long as any Obligations remain outstanding or Bank has any obligation to make
any Credit Extension to Borrower.  The obligations of Borrower to indemnify Bank
with respect to the expenses, damages, losses, costs and liabilities described
in Section 12.2 shall survive until all applicable statute of limitations
periods with respect to actions that may be brought against Bank have run.

 

12.8                        Confidentiality.  In handling any confidential
information, Bank and all employees and agents of Bank shall exercise the same
degree of care that Bank exercises with respect to its own proprietary
information of the same types to maintain the confidentiality of any non-public
information thereby received or received pursuant to this Agreement except that
disclosure of such information may be made (i) to the subsidiaries or Affiliates
of Bank or Borrower in connection with their present or prospective business
relations with Borrower, (ii) to prospective transferees or purchasers of any
interest in the Credit Extensions, provided that they have entered into a
comparable confidentiality agreement in favor of Borrower and have delivered a
copy to Borrower, (iii) as required by law, regulations, rule or order,
subpoena, judicial order or similar order, (iv) as may be required in connection
with the examination, audit or similar investigation of Bank and (v) as Bank may
determine in connection with the enforcement of any remedies hereunder. 
Confidential information hereunder shall not include information that either: 
(a) is in the public domain or in the knowledge or possession of Bank when
disclosed to Bank, or becomes part of the public domain after disclosure to Bank
through no fault of Bank; or (b) is disclosed to Bank by a third party, provided
Bank does not have actual knowledge that such third party is prohibited from
disclosing such information.

 

[Balance of Page Intentionally Left Blank]

 

10

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

 

 

ANTHERA PHARMACEUTICALS, INC.

 

 

 

 

 

 

By:

 

 

 

 

 

Name:

 

 

 

 

 

Title:

 

 

 

 

 

 

SQUARE 1 BANK

 

 

 

 

 

 

 

By:

 

 

 

 

 

Name:

 

 

 

 

 

Title:

 

 

[Signature Page to Loan and Security Agreement]

 

11

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EXHIBIT A

 

DEFINITIONS

 

“Affiliate” means, with respect to any Person, any Person that owns or controls
directly or indirectly such Person, any Person that controls or is controlled by
or is under common control with such Person, and each of such Person’s senior
executive officers, directors, and general partners.

 

“Authorized Officer” means someone designated as such in the corporate
resolution provided by Borrower to Bank in which this Agreement and the
transactions contemplated hereunder are authorized by Borrower’s board of
directors. If Borrower provides subsequent corporate resolutions to Bank after
the Closing Date, the individual(s) designated as “Authorized Officer(s)” in the
most-recently provided resolution shall be the only “Authorized Officers” for
purposes of this Agreement.

 

“Bank Expenses” means all reasonable costs or expenses (including reasonable
attorneys’ fees and expenses) incurred in connection with the preparation,
negotiation, administration, and enforcement of the Loan Documents;  and Bank’s
reasonable attorneys’ fees and expenses (whether generated in-house or by
outside counsel) incurred in amending, enforcing or defending the Loan Documents
(including fees and expenses of appeal), incurred before, during and after an
Insolvency Proceeding, whether or not suit is brought.

 

“Business Day” means any day that is not a Saturday, Sunday, or other day on
which banks in the State of North Carolina are authorized or required to close.

 

“Cash” means unrestricted cash and cash equivalents.

 

“Cash Security Account” means segregated deposit account, account No. 7015395,
held at Bank as collateral for Borrower’s Obligations.

 

“Change in Control” shall mean a transaction other than a bona fide equity
financing or series of financings on terms and from investors reasonably
acceptable to Bank in which any “person” or “group” (within the meaning of
Section 13(d) and 14(d)(2) of the Securities Exchange Act of 1934) becomes the
“beneficial owner” (as defined in Rule 13d-3 under the Securities Exchange Act
of 1934), directly or indirectly, of a sufficient number of shares of all
classes of stock then outstanding of Borrower ordinarily entitled to vote in the
election of directors, empowering such “person” or “group” to elect a majority
of the Board of Directors of Borrower, who did not have such power before such
transaction; provided that any such transaction occurring solely in the
secondary securities markets and without any action by or on behalf of the
Borrower shall not be considered a Change in Control.

 

“Closing Date” means the date of this Agreement.

 

“Code” means the California Uniform Commercial Code as amended or supplemented
from time to time.

 

“Collateral” means Cash in the amount not to exceed $10,000,000 held in the Cash
Security Account and pledged to Bank as security for the Obligations, along with
any proceeds and substitutions thereof; provided, however, the aggregate amount
of all assets constituting “Collateral” shall not exceed 101% of the amount of
the outstanding Obligations.

 

“Contingent Obligation” means, as applied to any Person, any direct or indirect
liability, contingent or otherwise, of that Person with respect to (i) any
indebtedness, lease, dividend, letter of credit or other obligation of another,
including, without limitation, any such obligation directly or indirectly
guaranteed, endorsed, co-made or discounted or sold with recourse by that
Person, or in respect of which that Person is otherwise directly or indirectly
liable; (ii) any obligations with respect to undrawn letters of credit,
corporate credit cards or merchant services issued for the account of that
Person; and (iii) all obligations arising under any interest rate, currency or
commodity swap agreement, interest rate cap agreement, interest rate collar
agreement, or other agreement or arrangement designated to protect a Person
against fluctuation in interest rates, currency exchange rates or commodity
prices; provided, however, that the term “Contingent Obligation” shall not
include endorsements for collection or deposit in the ordinary course of
business.  The amount of any Contingent Obligation shall be deemed to be an
amount equal to the

 

1

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stated or determined amount of the primary obligation in respect of which such
Contingent Obligation is made or, if not stated or determinable, the maximum
reasonably anticipated liability in respect thereof as determined by such Person
in good faith; provided, however, that such amount shall not in any event exceed
the maximum amount of the obligations under the guarantee or other support
arrangement.

 

“Credit Extension” means the Term Loan or any other extension of credit by Bank,
to or for the benefit of Borrower hereunder.

 

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

 

“Event of Default” has the meaning assigned in Article 8..

 

“GAAP” means generally accepted accounting principles, consistently applied, as
in effect from time to time in the United States.

 

“Indebtedness” means (a) all indebtedness for borrowed money or the deferred
purchase price of property or services, including without limitation
reimbursement and other obligations with respect to surety bonds and letters of
credit, (b) all obligations evidenced by notes, bonds, debentures or similar
instruments, (c) all capital lease obligations, and (d) all Contingent
Obligations, including but not limited to any sublimit contained herein.

 

“Insolvency Proceeding” means any proceeding commenced by or against any Person
or entity under any provision of the United States Bankruptcy Code, as amended,
or under any other bankruptcy or insolvency law, including assignments for the
benefit of creditors, formal or informal moratoria, compositions, extension
generally with its creditors, or proceedings seeking reorganization,
arrangement, or other relief.

 

“IRC” means the Internal Revenue Code of 1986, as amended, and the regulations
thereunder.

 

“Letter of Credit” means a commercial or standby letter of credit or similar
undertaking issued by Bank at Borrower’s request.

 

“Loan Documents” means, collectively, this Agreement, any note or notes executed
by Borrower, and any other document, instrument or agreement entered into in
connection with this Agreement, all as amended or extended from time to time.

 

“Material Adverse Effect” means a material adverse effect on (i) the operations,
business or financial condition of Borrower and its Subsidiaries taken as a
whole, other than an effect in and of itself reasonably attributable to (A) the
failure of any non-clinical or clinical trial to demonstrate the desired safety
or efficacy of any biologic or drug or (B) the denial, delay or limitation of
approval of, or taking of any other regulatory action by, the United States Food
and Drug Administration or any other governmental entity with respect to any
biologic or drug, (ii) the ability of Borrower to repay the Obligations or
otherwise perform its obligations under the Loan Documents, or (iii) Borrower’s
interest in, or the perfection or priority of Bank’s security interest in the
Collateral.

 

“MidCap Loan Documents” means, collectively, that certain Credit and Security
Agreement dated on or about April 3, 2013 by and among MidCap Financial SBIC,
LP, certain Lenders party thereto, and Borrower (as the same may be amended,
restated, supplemented or otherwise modified from time to time, the “Credit
Agreement”), that certain Secured Promissory Note issued by Borrower in
connection therewith, and any other document, instrument or agreement entered
into in connection with the Credit Agreement, in each case as the same may be
amended, restated, supplemented or otherwise modified from time to time.

 

“Obligations” means all debt, principal, interest, Bank Expenses and other
amounts owed to Bank by Borrower pursuant to this Agreement or any other
agreement, whether absolute or contingent, due or to become due, now existing or
hereafter arising, including any interest that accrues after the commencement of
an Insolvency Proceeding and including any debt, liability, or obligation owing
from Borrower to others that Bank may have obtained by assignment or otherwise.

 

2

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“Periodic Payments” means all installments or similar recurring payments that
Borrower may now or hereafter become obligated to pay to Bank pursuant to the
terms and provisions of any instrument, or agreement now or hereafter in
existence between Borrower and Bank.

 

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

 

“Responsible Officer” means each of the Chief Executive Officer, the Chief
Operating Officer, the Chief Financial Officer and the Controller of Borrower,
as well as any other officer or employee identified as an Authorized Officer in
the corporate resolution delivered by Borrower to Bank in connection with this
Agreement.

 

“Schedule” means the schedule of exceptions attached hereto and approved by
Bank, if any.

 

“Subsidiary” means any corporation, partnership or limited liability company or
joint venture in which (i) any general partnership interest or (ii) more than
50% of the stock, limited liability company interest or joint venture of which
by the terms thereof ordinary voting power to elect the Board of Directors,
managers or trustees of the entity, at the time as of which any determination is
being made, is owned by Borrower, either directly or through an Affiliate.

 

“Term Loan Maturity Date” means April 3, 2017.

 

3

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EXHIBIT B

 

LOAN ADVANCE / PAYDOWN REQUEST FORM

 

[Please refer to New Borrower Kit]

 

EXHIBIT C

 

COMPLIANCE CERTIFICATE

 

[Please refer to New Borrower Kit]

 

1

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SCHEDULE OF EXCEPTIONS

 

Prior Names  (Section 5.5) – None.

 

Litigation  (Section 5.6) – None.

 

2

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CORPORATE RESOLUTION

 

The undersigned duly elected and qualified Secretary of Anthera
Pharmaceuticals, Inc. (the “Company”) do hereby certify that the following is a
true and correct copy of certain resolutions adopted at a meeting of the
Company’s Board of Directors held on                                      in
accordance with applicable law and the Company’s bylaws, and that such
resolutions are now unmodified and in full force and effect:

 

BE IT RESOLVED, that:

 

1.                                      Any one (1) of the following, duly
elected officers of the Company (each, an “Authorized Officer”) whose genuine
original signature appears next to his or her name is authorized to act for, on
behalf of, and in the name of the Company in connection with the resolutions
below:

 

Title

 

Name

 

Authorized Signature

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2.                                      Any Authorized Officer may borrow money
from time to time from Bank, and may negotiate and procure loans, letters of
credit, foreign exchange contracts and other financial accommodations from Bank,
including without limitation, that certain Loan and Security Agreement dated as
of April 3, 2013, and also to execute and deliver to Bank one or more renewals,
extensions, or modifications thereof;

 

3.                                      Give security for any liabilities of the
Company to Bank by grant, security interest, assignment or lien upon certain
cash collateral of the Company;

 

4.                                      Discount with the Bank, commercial or
other business paper belonging to the Company made or drawn by or upon third
parties, without limit as to amount;

 

5.                                      The Bank is authorized and directed to
pay the proceeds of any such loans or discounts as directed by the persons so
authorized to sign; and

 

6.                                      Execute and deliver in form and content
as may be required by the Bank any and all notes, evidences of indebtedness,
applications for letters of credit, guaranties, subordination agreements, loan
and security agreements, financing statements, assignments, liens and other
agreements, instruments or documents to carry out the purposes of these
Resolutions, any or all of which may relate to all or to substantially all of
the Company’s property and assets;

 

The Authorized Officers may designate additional or alternate individuals as
being authorized to request loan advances, to do and perform such other acts and
things, to pay any and all fees and costs, and to execute and deliver such other
documents and agreements as he or she may in his or her discretion deem
reasonably necessary or proper in order to carry into effect the provisions of
these Resolutions.

 

Any and all acts authorized pursuant to these resolutions and performed prior to
the passage of these resolutions are hereby ratified and approved, and the
authority conferred herein may be exercised singly by any such officer, and
these resolutions shall continue in full force and effect until written notice
of modification or revocation is received and accepted Bank (such notice to have
no effect on any action previously taken by the Bank in reliance on these
Resolutions).  Bank may rely upon any form of notice, which it in good faith
believes to be genuine or what it purports to be.

 

The Resolutions are in full force and effect as of the date of this Certificate
and are intended to replace, as of this date, any Resolutions previously given
by the Company to Bank in connection with the matters described herein; these
Resolutions and any borrowings or financial accommodations under these
Resolutions have been properly noted in the corporate books and records, and
have not been

 

1

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rescinded, revoked or modified; neither the foregoing Resolutions nor any
actions to be taken pursuant to them are or will be in contravention of any
provision of the articles of incorporation or bylaws of the Company or of any
agreement, indenture or other instrument to which the Company is a party or by
which it is bound; and to the extent the articles of incorporation or bylaws of
the Company or any agreement, indenture or other instrument to which the Company
is a party or by which it is bound require the vote or consent of shareholders
of the Company to authorize any act, matter or thing described in the foregoing
Resolutions, such vote or consent has been obtained.

 

In Witness Whereof, I have affixed my name as Secretary and have caused the
corporate seal (where available) of said Company to be affixed on April 3, 2013.

 

 

 

 

 

Secretary*

 

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

*If the certifying officer is designated as the only signer in these resolutions
then another corporate officer must also sign.

 

 

 

 

2

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USA PATRIOT ACT
NOTICE
OF
CUSTOMER IDENTIFICATION

 

IMPORTANT INFORMATION ABOUT PROCEDURES FOR OPENING A NEW ACCOUNT

 

To help the government fight the funding of terrorism and money laundering
activities, Federal law requires all financial institutions to obtain, verify,
and record information that identifies each person who opens an account.

 

WHAT THIS MEANS FOR YOU:  when you open an account, we will ask your name,
address, date of birth, and other information that will allow us to identify
you.  We may also ask to see your driver’s license or other identifying
documents.

 

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Phone:

 

SQUARE 1 BANK

Fax

 

CLIENT AUTHORIZATION

 

General Authorization

 

I hereby authorize Square 1 Bank to use my company name, logo, and information
relating to our banking relationship in its marketing and advertising campaigns
which is intended for Square 1 Bank’s customers, prospects and shareholders.

 

Square 1 Bank will forward any advertising or article including client for prior
review and approval.

 

 

 

 

Signature

 

 

 

 

 

 

 

Printed Name

Title

 

 

 

 

 

 

 

Company

 

 

 

 

 

 

 

Mailing Address

 

 

 

 

 

 

 

City, State, Zip Code

 

 

 

 

 

 

 

Phone Number

 

 

 

 

 

 

 

Fax Number

 

 

 

 

 

 

 

E-Mail

 

 

 

 

 

April 3, 2013

 

Date

 

 

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