EXHIBIT 10.35
 
Customer No.:                             
Loan No.:                                     
 
NEGATIVE PLEDGE AGREEMENT
 
THIS NEGATIVE PLEDGE AGREEMENT (“Agreement”) is entered into, as of September
30, 2002, by and between RBC CENTURA BANK (“Bank”), with a mailing address of
3201 Beechleaf Court, Suite 100, Raleigh, North Carolina 27604-1051, and SALIX
PHARMACEUTICALS, LTD., a Delaware corporation and SALIX PHARMACEUTICALS, INC. a
California corporation, jointly and severally (collectively, “Borrower”), with a
mailing address of 8540 Colonnade Center Drive, Suite 501, Raleigh, North
Carolina, 27615.
 
RECITALS
 
A.    Bank has agreed to make certain advances of money and to extend certain
financial accommodation to Borrower (the “Loans”) in the amounts and manner set
forth in that certain Commercial Promissory Note and that certain Loan and
Security Agreement, each entered into contemporaneously herewith by and between
Bank and Borrower (as the same may be amended, modified or supplemented from
time to time, respectively, the “Note” and the “Loan Agreement”). Capitalized
terms not defined herein shall have the meaning ascribed in the Loan Agreement.
 
B.    Bank is willing to make the Loans to Borrower, but only upon the
condition, among others, that Borrower enter into this Agreement.
 
NOW, THEREFORE, for good and valuable consideration, receipt and sufficiency of
which are hereby acknowledged, and intending to be legally bound, the parties
hereto agree as follows:
 
AGREEMENT
 
1.    From the date of this Agreement through the end of the term hereof as
provided hereinbelow, Borrower shall not, without the Bank’s prior written
approval, directly or indirectly, through its actions and/or those of others,
whether voluntarily or involuntarily, sell, transfer, assign, mortgage, pledge,
lease, grant a security interest in or encumber (other than to Bank), or permit
any other person to sell, transfer, assign, mortgage, pledge, lease, grant a
security interest in or encumber any of the Copyrights, Patents or Trademarks
listed on Exhibits A, B and C attached hereto or Borrower’s other Intellectual
Property and/or any parts or parcels thereof or interests or rights therein,
including, without limitation, the following:
 
a.    Any and all copyrights, copyright applications, copyright registrations
and like protections in each work of authorship and derivative work thereof,
whether published or unpublished and whether or not the same also constitutes a
trade secret, now or hereafter existing, created, acquired or held;
 
b.    Any and all mask works or similar rights, now or hereafter existing,
created, acquired or held;

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c.    Any and all trade secrets, and any and all intellectual property rights in
computer software and computer software products now or hereafter existing,
created, acquired or held;
 
d.    Any and all design rights which may be available to Borrower now or
hereafter existing, created, acquired or held;
 
e.    All and all patents, patent applications and like protections including,
without limitation, improvements, divisions, continuations, renewals, reissues,
extensions and continuations-in-part of the same;
 
f.    Any and all trademark and service mark rights, whether registered or not,
applications to register and registrations of the same and like protections, and
the entire goodwill of the business of Borrower connected with or symbolized by
such trademarks;
 
g.    Any and all claims for damages by way of past, present and future
infringements of any of the rights included above, with the right, but not the
obligation, to sue for and collect such damages for said use or infringement of
the intellectual property rights identified above;
 
h.    Any and all licenses or other rights to use any Copyrights, Patents,
Trademarks or mask works, and all license fees and royalties arising from such
use to the extent permitted by such license or rights;
 
i.    Any and all amendments, extensions, renewals, re-issues, divisions and
continuations of any of the foregoing; and
 
j.    Any and all proceeds and products of the foregoing, including without
limitation all payments under insurance or any indemnity or warranty payable in
respect of any of the foregoing.
 
Notwithstanding the foregoing or any other provision of this Agreement, Borrower
may, without consent or approval of the Bank, enter into licenses or sublicenses
with respect to its Intellectual Property provided all of the following
requirements are met: (i) such license or sublicense is within the ordinary
course of the Borrower’s business and consistent with past practices with
respect to frequency and amount; (ii) such license or sublicense is bona fide
and entered into with third parties with terms that are commercially reasonable;
and (iii) the Bank’s rights under this Agreement and the Loan Documents are not
materially adversely affected by such licenses or sublicense; and (iv) the
Borrower promptly notifies the Bank of such license or sublicense likely to have
a material impact on the business or financial condition of Borrower.
 
2.    The Note and Loan Agreement and the terms and provisions thereof are
incorporated herein in their entirety by this reference. The term of this
Agreement shall be coterminous with the term of the security interests granted
in the Loan Agreement. Notwithstanding any limitation of, moratorium on and/or
termination of Bank’s obligation to make Credit Extensions under the Note and/or
Loan Agreement, Borrower’s obligations under this Agreement shall remain in full
force and effect for so long as any Obligations are outstanding. It shall be an
Event of Default under the Note and/or Loan Agreement if there is a breach or
violation of any of the terms and provisions of this Agreement.

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3.    Borrower hereby agrees to execute such other agreements, documents and
records and to perform or refrain from performing such acts as mayreasonably be
deemed necessary or appropriate by Bank to enforce Bank’s rights hereunder and
under the Loan Agreement.
 
4.    This Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective personal representatives, executors, heirs,
successors and permitted assigns.
 
5.    This Agreement shall be governed by and construed in accordance with the
laws of the State of North Carolina, excluding therefrom any principle of such
laws which might result in the application of the laws of another jurisdiction.
In addition, (i) no amendment of, or waiver of a right under, this Agreement
will be binding unless it is in writing and signed by the party to be charged,
(ii) to the extent a provision of this Agreement is unenforceable, this
Agreement will be construed as if the unenforceable provision were omitted,
(iii) a successor to or assignee of Bank’s rights and obligations under the Loan
Agreement will succeed to Bank’s rights under this Agreement and (iv) all
notices and other communications required or permitted herein shall be in
writing and shall be deemed given when mailed by certified mail, postage
prepaid, return receipt requested, addressed to the addresses set forth above.
 
6.    This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original but all of which taken together shall constitute the
same instrument.
 
[THE NEXT PAGE IS THE SIGNATURE PAGE]

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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed with
authority duly obtained, as of the date first written above.
 
SALIX PHARMACEUTICALS, LTD.,
a Delaware corporation
By:
 
/s/    Adam C. Derbyshire         

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Name:    Adam C. Derbyshire
Title:    Vice President, CFO
Date:  September 30, 2002                                            
SALIX PHARMACEUTICALS, INC.,
a California corporation
By:
 
/s/    Adam C. Derbyshire        

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Name:    Adam C. Derbyshire
Title:    Vice President, CFO
Date:  September 30, 2002                                            
RBC CENTURA BANK
By:
 
/s/    Brent Keating

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Name:    Brent Keating
   
Title:    Group Executive
Date:  September 30, 2002                                            

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EXHIBIT A
 
COPYRIGHTS
 
Description

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Registration
Number

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Registration
Date

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NONE.
             

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EXHIBIT B
 
PATENTS
 
A.    Description

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Registration/
Application
Number

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Registration/
Application
Date

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1.    Use of 2-hydroxy-5-phenylazobenzoic acid derivatives as colon cancer
chemopreventative and chemotherapeutic agents.
  
5,498,608
  
March 12, 1996
2.    The above identified U.S. patent is the subject of numerous extension
applications in other countries, most of which are being abandoned due to lack
of commercial significance.
         
3.    Patent rights for currently marketed product, Colazal, are via license
from innovator, Biorex Pharmaceuticals Ltd. Patent rights for mesalamine pellets
product currently under development are via license from innovator, Dr. Falk
Pharma GmbH. Patent for rifaximine product currently under development has
expired.
         

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EXHIBIT C
 
TRADEMARKS
 
Mark
    
Design
    
Class
    
Application No.
    
Filing Date
COLAZAL
           
5
    
Reg. No. 2,534,835
    
April 14, 2000
Note:  Registrations pending for refaximin product will be assigned to licensor,
Alfa Wasserman, under terms of license agreement.