fs1ex10xii_iaso.htm


    Exhibit 10.12

    
       

    

    
      		 


    

     

    LOAN
AGREEMENT

    


    This
Agreement dated as of December 3, 2008, is among Bank of America, N.A. (the
"Bank"), PARAMOUNT BIOSCIENCES, LLC (“PARAMOUNT BIOSCIENCES, LLC”), VENTRUS
BIOSCIENCES, INC. (“VENTRUS BIOSCIENCES, INC.”), BALBOA BIOSCIENCES, INC.
(“BALBOA BIOSCIENCES, INC.”), ASPHELIA PHARMACEUTICALS, INC. (“ASPHELIA
PHARMACEUTICALS, INC.”), PACIFIC BEACH BIOSCIENCES, INC. (“PACIFIC BEACH
BIOSCIENCES, INC.”) CORONADO BIOSCIENCES INC. (“CORONADO BIOSCIENCES, INC.”) and
MT. COOK PHARMA, INC. (“MT. COOK PHARMA, INC.”) (PARAMOUNT BIOSCIENCES, LLC.,
VENTRUS BIOSCIENCES, INC., BALBOA BIOSCIENCES, INC., ASPHELIA PHARMACEUTICALS,
INC., PACIFIC BEACH BIOSCIENCES, INC., CORONADO BIOSCIENCES, INC. and MT. COOK
PHARMA, INC. are sometimes referred to collectively as the "Borrowers" and
individually as the “Borrower”).

    


    1.           FACILITY
NO. 1:  LINE OF CREDIT AMOUNT AND TERMS

    


    1.1           Line of Credit
Amount.

    


    
      	
              (a)

            	
              During
      the availability period described below, the Bank will provide a line of
      credit to the Borrowers.  The amount of the line of credit (the
      "Facility No. 1 Commitment") is Two Million and 00/100 Dollars
      ($2,000,000.00).

            


    

    


    
      	
              (b)

            	
              This
      is a revolving line of credit.  During the availability period,
      the Borrowers may repay principal amounts and reborrow
    them.

            


    

    


    
      	
              (c)

            	
              The
      Borrowers agree not to permit the principal balance outstanding to exceed
      the Facility No. 1 Commitment.  If the Borrowers exceed this
      limit, the Borrowers will immediately pay the excess to the Bank upon the
      Bank's demand.

            


    

    


    1.2           Availability
Period.  The line of credit is available between the date of
this Agreement and November 6, 2009, or such earlier date as the availability
may terminate as provided in this Agreement (the "Facility No. 1 Expiration
Date").

    


    The
availability period for this line of credit will be considered renewed if and
only if the Bank has sent to the Borrowers a written notice of renewal effective
as of the Facility No. 1 Expiration Date for the line of credit (the “Renewal
Notice”).  If this line of credit is renewed, it will continue to be
subject to all the terms and conditions set forth in this Agreement except as
modified by the Renewal Notice.  If this line of credit is renewed,
the term “Expiration Date” shall mean the date set forth in the Renewal Notice
as the Expiration Date and the same process for renewal will apply to any
subsequent renewal of this line of credit.

    


    1.3           Repayment
Terms.

    


    
      	
              (a)

            	
              The
      Borrowers will pay interest on January 1, 2009, and then on the same day
      of each month thereafter until payment in full of any principal
      outstanding under this facility.

            


    

    


    
      	
              (b)

            	
              The
      Borrowers will repay in full any principal, interest or other charges
      outstanding under this facility no later than the Facility No. 1
      Expiration Date.

            


    

    


    1.4           Interest
Rate.

    


    
      	
              (a)

            	
              The
      interest rate is a rate per year equal to the BBA LIBOR (Adjusted
      Periodically) Rate plus 1 percentage
point(s).

            


    

    


    
      	
              (b)

            	
              The
      interest rate will be adjusted on the 1st of every month (the “Adjustment
      Date”) and remain fixed until the next Adjustment Date.  If the
      Adjustment Date in any particular month would otherwise fall on a day that
      is not a banking day then, at the Bank’s option, the Adjustment Date for
      that particular month will be the first banking day immediately following
      thereafter.

            


    

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    
      	
              (c)

            	
              The
      BBA LIBOR Rate (Adjusted Periodically) is a rate of interest equal to the
      rate per annum equal to the British Bankers Association LIBOR Rate (“BBA
      LIBOR”), as published by Reuters (or other commercially available source
      providing quotations of BBA LIBOR as selected by the Bank from time to
      time) as determined for each Adjustment Date at approximately 11:00 a.m.
      London time two (2) London Banking Days prior to the Adjustment Date, for
      U.S. Dollar deposits (for delivery on the first day of such interest
      period) with a term of three months, as adjusted from time to time in the
      Bank’s sole discretion for reserve requirements, deposit insurance
      assessment rates and other regulatory costs.  If such rate is
      not available at such time for any reason, then the rate for that interest
      period will be determined by such alternate method as reasonably selected
      by the Bank.  A "London Banking Day" is a day on which banks in
      London are open for business and dealing in offshore
    dollars.

            


    

    


    
      	
              (d)

            	
              Each
      prepayment of an amount bearing interest at the rate provided by this
      paragraph, whether voluntary, by reason of acceleration or otherwise, will
      be accompanied by the amount of accrued interest on the amount prepaid,
      and a prepayment fee as described below.  A "prepayment" is a
      payment of an amount on a date other than an Adjustment
    Date.

            


    

    


    
      	
              (e)

            	
              The
      prepayment fee will be the sum of fees calculated separately for each
      Prepaid Installment, as follows:

            


    

    


    
      	
               
      

            	
              (i)

            	
              The
      Bank will first determine the amount of interest which would have accrued
      each month for the Prepaid Installment had it remained outstanding until
      the applicable Original Payment Date, using the interest rate applicable
      to the Prepaid Installment under this
Agreement;

            


    

    


    
      	
               
      

            	
              (ii)

            	
              the
      Bank will then subtract from each monthly interest amount determined in
      (i), above, the amount of interest which would accrue for that Prepaid
      Installment if it were reinvested from the date of prepayment through the
      Original Payment Date, using the Treasury
Rate.

            


    

    


    
      	
               
      

            	
              (iii)

            	
              if
      (i) minus (ii) for the Prepaid Installment is greater than zero, the Bank
      will discount the monthly differences to the date of prepayment by the
      Treasury Rate.  The Bank will then add together all of the
      discounted monthly differences for the Prepaid
  Installment.

            


    

    


    (f)           The
following definitions will apply to the calculation of the prepayment
fee:

    


    
      	
               
      

            	
              (i)

            	
              "Original
      Payment Dates" mean the dates on which the prepaid principal would have
      been paid if there had been no prepayment.  If any of the
      principal would have been paid later than the end of the fixed rate
      interest period in effect at the time of prepayment, then the Original
      Payment Date for that amount will be the last day of the interest
      period.

            


    

    


    
      	
               
      

            	
              (ii)

            	
              "Prepaid
      Installment" means the amount of the prepaid principal which would have
      been paid on a single Original Payment
Date.

            


    

    


    
      	
               
      

            	
              (iii)

            	
              "Treasury
      Rate" means the interest rate yield for U.S. Government Treasury
      Securities which the Bank determines could be obtained by reinvesting a
      specified Prepaid Installment in such securities from the date of
      prepayment through the Original Payment Date.  The Bank may
      adjust the Treasury Rate to reflect the compounding, accrual basis, or
      other costs of the prepaid amount.  Each of the rates is the
      Bank's estimate only and the Bank is under no obligation to actually
      reinvest any prepayment.  The rates will be based on information
      from either the Telerate or Reuters information services, The Wall Street
      Journal, or other information sources the Bank deems
      appropriate.

            


    

    


    2.           COLLATERAL

    


    2.1           Personal
Property.  The personal property listed below now owned or
owned in the future by the parties listed below will secure the Borrowers’
obligations to the Bank under this Agreement or, if the collateral is owned by a
guarantor, will secure the guaranty, if so indicated in the security
agreement.  The collateral is further defined in security agreement(s)
executed by the owners of the collateral.

    


    
      	
              (a)

            	
              Securities
      and other investment property owned by Paramount Biosciences, LLC as
      described in the Pledge Agreement required by the
  Bank.

            


    

    


    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    Regulation
U of the Board of Governors of the Federal Reserve System places certain
restrictions on loans secured by margin stock (as defined in the
Regulation).  The Bank and the Borrowers shall comply with Regulation
U.  If any of the collateral is margin stock, the Borrowers shall
provide to the Bank a Form U-1 Purpose Statement.

    


    3.           FEES
AND EXPENSES

    


    3.1           Fees.

    


    
      	
              (a)

            	
              Periodic
      Fee.  The Borrowers agree to pay a fee in the amount of
      Forty Thousand and 00/100 Dollars
($40,000.00).

            


    

    


    This fee
is due on the date of this Agreement, and on the same day of each following year
until the expiration of the availability period.

    


    
      	
              (b)

            	
              Unused Commitment
      Fee.  The Borrowers agree to pay a fee on any difference
      between the Facility No. 1 Commitment and the amount of credit they
      actually use, determined by the average of the daily amount of credit
      outstanding during the specified period.  The fee will be
      calculated at .175% per year.

            


    

    


    This fee
is due on April 1, 2009, and on the same day of each following quarter until the
expiration of the availability period.

    


    
      	
              (c)

            	
              Late
      Fee.  To the extent permitted
      by law, the Borrowers agree to pay a late fee in
      an amount not to exceed four percent (4%) of any payment that is more than
      fifteen (15) days late; provided that such late fee shall be reduced to
      two percent (2%) of any required principal and interest payment that is
      not paid within fifteen (15) days of the date it is due if the loan is
      secured by a mortgage on an owner-occupied residence.  The
      imposition and payment of a late fee shall not constitute a waiver of the
      Bank’s rights with respect to the
  default.

            


    

    


    3.2           Expenses.  The
Borrowers agree to immediately repay the Bank for expenses that include, but are
not limited to, filing, recording and search fees, appraisal fees, title report
fees, and documentation fees.

    


    3.3           Reimbursement
Costs.

    


    
      	
              (a)

            	
              The
      Borrowers agree to reimburse the Bank for any expenses it incurs in the
      preparation of this Agreement and any agreement or instrument required by
      this Agreement.  Expenses include, but are not limited to,
      reasonable attorneys' fees, including any allocated costs of the Bank's
      in-house counsel to the extent permitted by applicable
  law.

            


    

    


    4.           DISBURSEMENTS,
PAYMENTS AND COSTS

     

    4.1           Disbursements and
Payments.

    


    
      	
              (a)

            	
              Each
      payment by the Borrowers will be made in U.S. Dollars and immediately
      available funds by direct debit to a deposit account as specified below
      or, for payments not required to be made by direct debit, by mail to the
      address shown on the Borrowers' statement or at one of the Bank’s banking
      centers in the United States.

            


    

    


    
      	
              (b)

            	
              Each
      disbursement by the Bank and each payment by the Borrowers will be
      evidenced by records kept by the Bank.  In addition, the Bank
      may, at its discretion, require the Borrowers to sign one or more
      promissory notes.

            


    

    


    4.2           Requests for Credit; Equal
Access by all Borrowers.  If there is more than one Borrower,
any Borrower (or a person or persons authorized by any one of the Borrowers),
acting alone, can borrow up to the full amount of credit provided under this
Agreement.

    


    4.3           Telephone and Telefax
Authorization.

    


    
      	
              (a)

            	
              The
      Bank may honor telephone or telefax instructions for advances or
      repayments given, or purported to be given, by any one of the individuals
      authorized to sign loan agreements on behalf of any of the Borrowers, or
      any other individual designated by any one of such authorized
      signers.

            


    

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    
      	
              (b)

            	
              Advances
      will be deposited in and repayments will be withdrawn from the account
      numbers set forth below for each Borrower or such other of the Borrowers’
      accounts with the Bank as designated in writing by the
      Borrowers.

            


    

     

    
      	
              Borrower

            	
              Account
      Number

            
	
              Paramount
      Biosciences, LLC

            	
              NY-4832047884

            
	
              Ventrus
      Biosciences, Inc.

            	
              NY-4834476356

            
	
              Balboa
      Biosciences, Inc.

            	
              NY-4832042326

            
	
              Asphelia
      Pharmaceuticals, Inc.

            	
              NY-4834450754

            
	
              Pacific
      Beach Biosciences, Inc.

            	
              NY-4834453340

            
	
              Coronado
      Biosciences, Inc.

            	
              NY-4834446865

            
	
              Mt.
      Cook Pharma, Inc.

            	
              NY-4832042245

            


    

     

    
    

    
    

    
      	
              (c)

            	
              The
      Borrowers will indemnify and hold the Bank harmless from all liability,
      loss, and costs in connection with any act directly resulting from
      telephone or telefax instructions the Bank reasonably believes are made by
      any individual authorized by the Borrowers to give such instructions,
      except to the extent any such liability, loss or costs are attributable to
      the gross negligence, bad faith or willful misconduct of any person
      seeking indemnification hereunder.  This paragraph will survive
      this Agreement's termination, and will benefit the Bank and its officers,
      employees, and agents.

            


    

    


    4.4           Direct Debit
(Pre-Billing).

    


    
      	
              (a)

            	
              The
      Borrowers agree that the Bank will debit the deposit account numbers
      identified above, or such other of the Borrowers’ accounts with the Bank
      as designated in writing by the Borrowers (each, a “Designated Account”)
      on the date each payment of principal and interest and any fees from the
      Borrowers become due (the “Due
Date”).

            


    

    


    
      	
              (b)

            	
              Prior
      to each Due Date, the Bank will mail to each Borrower a statement of the
      amounts that will be due from it on that Due Date (the "Billed
      Amount").  The bill will be mailed a specified number of
      calendar days prior to the Due Date, which number of days will be mutually
      agreed from time to time by the Bank and the Borrowers.  The
      calculations in the bill will be made on the assumption that no new
      extensions of credit or payments will be made between the date of the
      billing statement and the Due Date, and that there will be no changes in
      the applicable interest rate.

            


    

    


    
      	
              (c)

            	
              The
      Bank will debit each Designated Account for the Billed Amount for each
      Borrower, regardless of the actual amount due on that date (the "Accrued
      Amount").  If any Billed Amount debited to a Designated Account
      differs from the Accrued Amount, the discrepancy will be treated as
      follows:

            


    

    


    
      	
               
      

            	
              (i)

            	
              If
      the Billed Amount is less than the Accrued Amount, the Billed Amount for
      the following Due Date will be increased by the amount of the
      discrepancy.  The Borrowers will not be in default by reason of
      any such discrepancy.

            


    

    


    
      	
               
      

            	
              (ii)

            	
              If
      the Billed Amount is more than the Accrued Amount, the Billed Amount for
      the following Due Date will be decreased by the amount of the
      discrepancy.

            


    

    


    Regardless
of any such discrepancy, interest will continue to accrue based on the actual
amount of principal outstanding without compounding.  The Bank will
not pay the Borrowers interest on any overpayment.

    


    
      	
              (d)

            	
              Each
      Borrower will maintain sufficient funds in its Designated Account to cover
      each debit.  If there are insufficient funds in any Designated
      Account on the date the Bank enters any debit authorized by this
      Agreement, the Bank may reverse the
debit.

            


    

    


    
      	
              (e)

            	
              The
      Borrowers may terminate this direct debit arrangement at any time by
      sending written notice to the Bank at the address specified at the end of
      this Agreement.

            


    

    


    4.5           Banking Days.  Unless otherwise
provided in this Agreement, a banking day is a day other than a Saturday, Sunday
or other day on which commercial banks are authorized to close, or are in fact
closed, in the state where the Bank's lending office is located, and, if such
day relates to amounts bearing interest at an offshore rate (if any), means any
such day on which dealings in dollar deposits are conducted among banks in the
offshore dollar interbank market.  All payments and disbursements
which would be due on a day which is not a banking day will be due on the next
banking day.  All payments received on a day which is not a banking
day will be applied to the credit on the next banking day.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    4.6           Interest
Calculation.  Except as otherwise stated in this Agreement, all
interest and fees, if any, will be computed on the basis of a 360-day year and
the actual number of days elapsed.  This results in more interest or a
higher fee than if a 365-day year is used.  Installments of principal
which are not paid when due under this Agreement shall continue to bear interest
until paid.

    


    4.7           Default
Rate.  Upon the occurrence of any default or after maturity or
after judgment has been rendered on any obligation under this Agreement, all
amounts outstanding under this Agreement, including any interest, fees, or costs
which are not paid when due, will at the option of the Bank bear interest at a
rate which is 6.0 percentage point(s) higher than the rate of interest otherwise
provided under this Agreement.  This may result in compounding of
interest.  This will not constitute a waiver of any
default.

    


    5.           CONDITIONS

     

    Before
the Bank is required to extend any credit to the Borrowers under this Agreement,
it must receive any documents and other items it may reasonably require, in form
and content acceptable to the Bank, including any items specifically listed
below.

    


    5.1           Authorizations.  If
any Borrower or any guarantor is anything other than a natural person, evidence
that the execution, delivery and performance by such Borrower and/or such
guarantor of this Agreement and any instrument or agreement required under this
Agreement have been duly authorized.

    


    5.2           Governing
Documents.  If required by the Bank, a copy of the Borrowers'
organizational documents.

    


    5.3           Security
Agreements.  Signed original security agreements covering the
personal property collateral which the Bank requires.

    


    5.4           Perfection and Evidence of
Priority. Evidence that the security interests and liens in favor of the
Bank are valid, enforceable, properly perfected in a manner acceptable to the
Bank and prior to all others' rights and interests, except those the Bank
consents to in writing.  All title documents for motor vehicles which
are part of the collateral must show the Bank's interest.

    


    5.5           Payment of
Fees.  Payment of all fees and other amounts due and owing to
the Bank, including without limitation payment of all accrued and unpaid
expenses incurred by the Bank as required by the paragraph entitled
"Reimbursement Costs."

    


    5.6           Good
Standing.  Certificates of good standing for each Borrower as
applicable from its state of formation and from any other state in which such
Borrowers is  required to qualify to conduct its
business.

    


    5.7           Insurance.  Evidence
of insurance coverage, as required in the "Covenants" section of this
Agreement.

    


    5.8           Guaranty.   Guaranty
in form and substance satisfactory to the Bank from Paramount Biosciences, LLC
guaranteeing all obligations of the Borrowers.

    


    6.           REPRESENTATIONS
AND WARRANTIES

    


    When the
Borrowers sign this Agreement, and until the Bank is repaid in full, the
Borrowers make the following representations and warranties.  Each
request for an extension of credit constitutes a renewal of these
representations and warranties as of the date of the request:

    


    6.1           Formation.  If
any Borrower is anything other than a natural person, it is duly formed and
existing under the laws of the state or other jurisdiction where
organized.

    


    6.2           Authorization.  This
Agreement, and any instrument or agreement required hereunder, are within each
Borrower's powers, have been duly authorized, and do not conflict with any of
its organizational papers.

    


    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    


    6.3           Enforceable
Agreement.  This Agreement is a legal, valid and binding
agreement of each Borrower, enforceable against each Borrower in accordance with
its terms, and any instrument or agreement required hereunder, when executed and
delivered, will be similarly legal, valid, binding and enforceable.

    


    6.4           Good
Standing.  In each state in which each Borrower does business,
it is properly licensed, in good standing, and, where required, in compliance
with fictitious name statutes.

    


    6.5           No
Conflicts.  This Agreement does not conflict with any law,
agreement, or obligation by which any Borrower is bound.

    


    6.6           Financial
Information.  All financial and other information that has been
or will be supplied to the Bank is sufficiently complete to give the Bank
accurate knowledge of the Borrowers' (and any guarantor's) financial condition,
including all material contingent liabilities.  Since the date of the
most recent financial statement provided to the Bank, there has been no material
adverse change in the business condition (financial or otherwise), operations,
or properties of any Borrower (or any guarantor).  If any Borrower is
comprised of the trustees of a trust, the foregoing representations shall also
pertain to the trustor(s) of the trust.

    


    6.7           Lawsuits.  There
is no lawsuit, tax claim or other dispute pending or threatened against any
Borrower which, if lost, would impair such Borrower’s financial condition or
ability to repay the loan, except as have been disclosed in writing to the
Bank.

    


    6.8           Collateral.  All
collateral required in this Agreement is owned by the grantor of the security
interest free of any title defects or any liens or interests of others, except
those which have been approved by the Bank in writing.

    


    6.9           Permits,
Franchises.  Each Borrower possesses all permits, memberships,
franchises, contracts and licenses required and all trademark rights, trade name
rights, patent rights, copyrights and fictitious name rights necessary to enable
it to conduct the business in which it is now engaged.

    


    6.10           Other
Obligations.  No Borrower is in default on any obligation for
borrowed money, or any purchase money obligation, except as have been disclosed
in writing to the Bank.

    


    6.11           Tax
Matters.  No Borrower has any knowledge of any pending
assessments or adjustments of its income tax for any year and all taxes due have
been paid, except as have been disclosed in writing to the Bank.

    


    6.12           No Event of
Default.  There is no event which is, or with notice or lapse
of time or both would be, a default under this Agreement.

    


    6.13           Insurance.  Each
Borrower has obtained, and maintained in effect, the insurance coverage required
in the "Covenants" section of this Agreement.

    


    7.           COVENANTS

    


    The
Borrowers agree, so long as credit is available under this Agreement and until
the Bank is repaid in full:

    


    7.1           Use of
Proceeds.

    


    
      	
              (a)

            	
              To
      use the proceeds of Facility No. 1 only for working
    capital.

            


    

    


    
      	
              (b)

            	
              The
      proceeds of the credit extended under this Loan Agreement may not be used
      directly or indirectly to purchase or carry any "margin stock" as that
      term is defined in Regulation U of the Board of Governors of the Federal
      Reserve System, or extend credit to or invest in other parties for the
      purpose of purchasing or carrying any such "margin stock," or to reduce or
      retire any indebtedness incurred for such
  purpose.

            


    

    


    7.2           Bank as Principal
Depository.  To maintain the Bank as their principal depository
bank, including for the maintenance of business, cash management, operating and
administrative deposit accounts.

    


    7.3           Negative
Covenants.  Not to, without the Bank’s written
consent:

    


    (a)           Liquidate
or dissolve any Borrower’s business.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    (b)           Voluntarily
suspend any Borrower’s business for more than seven (7) days in any three
hundred sixty five (365) day period.

    


    7.4           Notices to
Bank.  To promptly notify the Bank in writing of:

    


    
      	
              (a)

            	
              Any
      lawsuit over Two Hundred Fifty Thousand and 00/100 Dollars ($250,000.00)
      against any Borrower (or any guarantor or, if any Borrower is comprised of
      the trustees of a trust, any
trustor).

            


    

    


    
      	
              (b)

            	
              Any
      substantial dispute between any governmental authority and any Borrower
      (or any guarantor or, if any Borrower is comprised of the trustees of a
      trust, any trustor).

            


    

    


    
      	
              (c)

            	
              Any
      event of default under this Agreement, or any event which, with notice or
      lapse of time or both, would constitute an event of
    default.

            


    

    


    
      	
              (d)

            	
              Any
      material adverse change in any Borrower's (or any guarantor’s, or, if any
      Borrower is comprised of the trustees of a trust, any trustor’s) business
      condition (financial or otherwise), operations or properties, or ability
      to repay the credit.

            


    

    


    
      	
              (e)

            	
              Any
      change in any Borrower's name, legal structure, principal residence (for
      an individual), state of registration (for a registered entity), place of
      business, or chief executive office if such Borrower has more than one
      place of business.

            


    

    


    For
purposes of this Agreement, “Obligor” shall mean any guarantor, any party
pledging collateral to the Bank, or, if the Borrower is comprised of the
trustees of a trust, any trustor.

    


    7.5           Insurance.

    


    
      	
              (a)

            	
              General Business
      Insurance.  To maintain insurance satisfactory to the
      Bank as to amount, nature and carrier covering property damage (including
      loss of use and occupancy) to any of the Borrowers' properties, business
      interruption insurance, public liability insurance including coverage for
      contractual liability, product liability and workers' compensation, and
      any other insurance which is usual for the Borrowers'
      business.  Each policy shall provide for at least 30 days prior
      notice to the Bank of any cancellation
thereof.

            


    

    


    7.6           Compliance with
Laws.  To comply with the laws (including any fictitious or
trade name statute), regulations, and orders of any government body with
authority over any Borrower's business.  The Bank shall have no
obligation to make any advance to any Borrowers except in compliance with all
applicable laws and regulations and any Borrowers shall fully cooperate with the
Bank in complying with all such applicable laws and regulations.

    


    7.7           ERISA
Plans.  Promptly during each year, to pay and cause any
subsidiaries to pay contributions adequate to meet at least the minimum funding
standards under ERISA with respect to each and every Plan; file each annual
report required to be filed pursuant to ERISA in connection with each Plan for
each year; and notify the Bank within ten (10) days of the occurrence of any
Reportable Event that might constitute grounds for termination of any capital
Plan by the Pension Benefit Guaranty Corporation or for the appointment by the
appropriate United States District Court of a trustee to administer any
Plan.  "ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time.  Capitalized terms in this
paragraph shall have the meanings defined within ERISA.

    


    7.8           Books and
Records.  To maintain adequate books and records.

    


    7.9           Audits.  To
allow the Bank and its agents to inspect each Borrower's properties and examine,
audit, and make copies of books and records at any reasonable
time.  If any of the Borrowers' properties, books or records are in
the possession of a third party, the Borrowers authorize that third party to
permit the Bank or its agents to have access to perform inspections or audits
and to respond to the Bank's requests for information concerning such
properties, books and records.

    


    7.10           Perfection of
Liens.  To help the Bank perfect and protect its security
interests and liens, and reimburse it for related costs it incurs to protect its
security interests and liens.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    7.11        Cooperation.  To
take any action reasonably requested by the Bank to carry out the intent of this
Agreement.

    


    8.           DEFAULT
AND REMEDIES

    


    If any of
the following events of default occurs, the Bank may do one or more of the
following: declare the applicable Borrower in default, stop making any
additional credit available to such Borrower, and require such Borrower to repay
its entire debt immediately and without prior notice.  If an event
which, with notice or the passage of time, will constitute an event of default
has occurred and is continuing, the Bank has no obligation to make advances or
extend additional credit under this Agreement. In addition, if any event of
default occurs, the Bank shall have all rights, powers and remedies available
under any instruments and agreements required by or executed in connection with
this Agreement, as well as all rights and remedies available at law or in
equity.  If an event of default occurs under the paragraph
entitled  "Bankruptcy," below, with respect to any Borrower, then the
entire debt owed by such Borrower that is outstanding under this Agreement will
automatically be due immediately.

    


    8.1           Failure to
Pay.  With respect to any Borrower, such Borrower fails to make
a payment under this Agreement when due.

    


    8.2           Other Bank
Agreements. With respect to any Borrower, any default occurs under any
other agreement such Borrower (or any Obligor) or any of such Borrower’s
subsidiaries has with the Bank or any affiliate of the Bank.

    


    8.3           Cross-default.  With
respect to any Borrower, any default occurs under any agreement in connection
with any credit such Borrower (or any Obligor) or any of such Borrower’s
subsidiaries has obtained from anyone else or which such Borrower (or any
Obligor) or any of the Borrower’s subsidiaries has guaranteed.

    


    8.4           False
Information.  Any Borrower or any Obligor has given the Bank
false or misleading information or representations.

    


    8.5           Bankruptcy.  With
respect to any Borrower,  such Borrower, any Obligor, or any general
partner of any such Borrower or of any Obligor files a bankruptcy petition, a
bankruptcy petition is filed against any of the foregoing parties, or such
Borrower, any Obligor, or any general partner of any Borrower or of any Obligor
makes a general assignment for the benefit of creditors.

    


    8.6           Receivers.  With
respect to any Borrower, a receiver or similar official is appointed for a
substantial portion of such Borrower's or any Obligor's business, or the
business is terminated, or, if any Obligor is anything other than a natural
person, such Obligor is liquidated or dissolved.

    


    8.7           Lien
Priority.  The Bank fails to have an enforceable first lien
(except for any prior liens to which the Bank has consented in writing) on or
security interest in any property given as security for this Agreement (or any
guaranty).

    


    8.8           Judgments.  With
respect to any Borrower, any judgments or arbitration awards are entered against
such Borrower or any Obligor, or such Borrower or any Obligor enters into any
settlement agreements with respect to any litigation or arbitration, in an
aggregate amount of Two Hundred Fifty Thousand and 00/100 Dollars ($250,000.00)
or more in excess of any insurance coverage.

    


    8.9           Death.  If
any Borrower or any Obligor is a natural person, such Borrower or such Obligor
dies or becomes legally incompetent; if any Borrower or any Obligor is a trust,
a trustor dies or becomes legally incompetent; if any Borrower or any Obligor is
a partnership, any general partner dies or becomes legally
incompetent.

    


    8.10         Material Adverse
Change.  With respect to any Borrower, a material adverse
change occurs, or is reasonably likely to occur, in such Borrower's (or any
Obligor's) business condition (financial or otherwise), operations or
properties, or ability to repay the credit; or the Bank reasonably determines
that it is insecure for any other reason.

    


    8.11         Government
Action.  Any government authority takes action that the Bank
believes materially adversely affects any Borrower's or any Obligor's financial
condition or ability to repay.

    


    8.12         Default under Related
Documents.  Any default occurs under any guaranty,
subordination agreement, security agreement, deed of trust, mortgage, or other
document required by or delivered in connection with this Agreement or any such
document is no longer in effect, or any guarantor purports to revoke or disavow
the guaranty.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    8.13         ERISA
Plans.  Any one or more of the following events occurs with
respect to a Plan of any Borrower subject to Title IV of ERISA, provided such
event or events could reasonably be expected, in the judgment of the Bank, to
subject any Borrower to any tax, penalty or liability (or any combination of the
foregoing) which, in the aggregate, could have a material adverse effect on the
financial condition of such Borrower:

    


    
      	
              (a)

            	
              A
      reportable event shall occur under Section 4043(c) of ERISA with respect
      to a Plan.

            


    

    


    
      	
              (b)

            	
              Any
      Plan termination (or commencement of proceedings to terminate a Plan) or
      the full or partial withdrawal from a Plan by any Borrower or any ERISA
      Affiliate.

            


    

    


    8.14         Other Breach Under
Agreement.  A default occurs under any other term or condition
of this Agreement not specifically referred to in this Article.  This
includes any failure or anticipated failure by any Borrower (or any other party
named in the Covenants section) to comply with the financial covenants set forth
in this Agreement, whether such failure is evidenced by financial statements
delivered to the Bank or is otherwise known to the Borrowers or the
Bank.

    


    9.           
ENFORCING THIS AGREEMENT; MISCELLANEOUS

     

    9.1           GAAP.  Except
as otherwise stated in this Agreement, all financial information provided to the
Bank and all financial covenants will be made under generally accepted
accounting principles, consistently applied.

    


    9.2           Governing
Law.  This Agreement shall be governed by and construed in
accordance with the laws of New York.  To the extent that the Bank has
greater rights or remedies under federal law, whether as a national bank or
otherwise, this paragraph shall not be deemed to deprive the Bank of such rights
and remedies as may be available under federal law.

    


    9.3           Successors and
Assigns.  This Agreement is binding on the Borrowers’ and the
Bank's successors and assignees.  The Borrowers agree that they may
not assign this Agreement without the Bank's prior consent.  The Bank
may sell participations in or assign this loan, and may exchange information
about the Borrowers (including, without limitation, any information regarding
any hazardous substances) with actual or potential participants or
assignees.  If a participation is sold or the loan is assigned, the
purchaser will have the right of set-off against the Borrowers.

    


    9.4           Dispute Resolution
Provision.  This paragraph, including the subparagraphs below,
is referred to as the “Dispute Resolution Provision.”  This Dispute
Resolution Provision is a material inducement for the parties entering into this
agreement.

    


    
      	
              (a)

            	
              This
      Dispute Resolution Provision concerns the resolution of any controversies
      or claims between the parties, whether arising in contract, tort or by
      statute, including but not limited to controversies or claims that arise
      out of or relate to: (i) this agreement (including any renewals,
      extensions or modifications); or (ii) any document related to this
      agreement (collectively a "Claim").  For the purposes of this
      Dispute Resolution Provision only, the term “parties” shall include any
      parent corporation, subsidiary or affiliate of the Bank involved in the
      servicing, management or administration of any obligation described or
      evidenced by this agreement.

            


    

    


    
      	
              (b)

            	
              At
      the request of any party to this agreement, any Claim shall be resolved by
      binding arbitration in accordance with the Federal Arbitration Act (Title
      9, U.S. Code) (the "Act").  The Act will apply even though this
      agreement provides that it is governed by the law of a specified
      state.

            


    

    


    
      	
              (c)

            	
              Arbitration
      proceedings will be determined in accordance with the Act, the
      then-current rules and procedures for the arbitration of financial
      services disputes of the American Arbitration Association or any successor
      thereof ("AAA"), and the terms of this Dispute Resolution
      Provision.  In the event of any inconsistency, the terms of this
      Dispute Resolution Provision shall control.  If AAA is unwilling
      or unable to (i) serve as the provider of arbitration or (ii) enforce any
      provision of this arbitration clause, the Bank may designate another
      arbitration organization with similar procedures to serve as the provider
      of arbitration.

            


    

    


    
      	
              (d)

            	
              The
      arbitration shall be administered by AAA and conducted, unless otherwise
      required by law, in any U.S. state where real or tangible personal
      property collateral for this credit is located or if there is no such
      collateral, in the state specified in the governing law section of this
      agreement.  All Claims shall be determined by one arbitrator;
      however, if Claims exceed Five Million Dollars ($5,000,000), upon the
      request of any party, the Claims shall be decided by three
      arbitrators.  All arbitration hearings shall commence within
      ninety (90) days of the demand for arbitration and close within ninety
      (90) days of commencement and the award of the arbitrator(s) shall be
      issued within thirty (30) days of the close of the
      hearing.  However, the arbitrator(s), upon a showing of good
      cause, may extend the commencement of the hearing for up to an additional
      sixty (60) days.  The arbitrator(s) shall provide a concise
      written statement of reasons for the award.  The arbitration
      award may be submitted to any court having jurisdiction to be confirmed
      and have judgment entered and
enforced.

            


    

    


    
      	
              (e)

            	
              The
      arbitrator(s) will give effect to statutes of limitation in determining
      any Claim and may dismiss the arbitration on the basis that the Claim is
      barred. For purposes of the application of any statutes of limitation, the
      service on AAA under applicable AAA rules of a notice of Claim is the
      equivalent of the filing of a lawsuit.  Any dispute concerning
      this arbitration provision or whether a Claim is arbitrable shall be
      determined by the arbitrator(s), except as set forth at subparagraph (h)
      of this Dispute Resolution Provision.  The arbitrator(s) shall
      have the power to award legal fees pursuant to the terms of this
      agreement.

            


    

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    
      	
              (f)

            	
              This
      paragraph does not limit the right of any party to: (i) exercise self-help
      remedies, such as but not limited to, setoff; (ii) initiate judicial or
      non-judicial foreclosure against any real or personal property collateral;
      (iii) exercise any judicial or power of sale rights, or (iv) act in a
      court of law to obtain an interim remedy, such as but not limited to,
      injunctive relief, writ of possession or appointment of a receiver, or
      additional or supplementary
remedies.

            


    

    


    
      	
              (g)

            	
              The
      filing of a court action is not intended to constitute a waiver of the
      right of any party, including the suing party, thereafter to require
      submittal of the Claim to
arbitration.

            


    

    


    
      	
              (h)

            	
              Any
      arbitration or trial by a judge of any Claim will take place on an
      individual basis without resort to any form of class or representative
      action (the “Class Action Waiver”).  Regardless of anything else
      in this Dispute Resolution Provision, the validity and effect of the Class
      Action Waiver may be determined only by a court and not by an
      arbitrator.  The parties to this Agreement acknowledge that the
      Class Action Waiver is material and essential to the arbitration of any
      disputes between the parties and is nonseverable from the agreement to
      arbitrate Claims. If the Class Action Waiver is limited, voided or found
      unenforceable, then the parties’ agreement to arbitrate shall be null and
      void with respect to such proceeding, subject to the right to appeal the
      limitation or invalidation of the Class Action Waiver.  The Parties acknowledge and
      agree that under no circumstances will a class action be
      arbitrated.

            


    

    


    
      	
              (i)

            	
              By
      agreeing to binding arbitration, the parties irrevocably and voluntarily
      waive any right they may have to a trial by jury in respect of any
      Claim.  Furthermore, without intending in any way to limit this
      agreement to arbitrate, to the extent any Claim is not arbitrated, the
      parties irrevocably and voluntarily waive any right they may have to a
      trial by jury in respect of such Claim.  This waiver of jury
      trial shall remain in effect even if the Class Action Waiver is limited,
      voided or found unenforceable.  WHETHER THE CLAIM IS DECIDED BY
      ARBITRATION OR BY TRIAL BY A JUDGE, THE PARTIES AGREE AND UNDERSTAND THAT
      THE EFFECT OF THIS AGREEMENT IS THAT THEY ARE GIVING UP THE RIGHT TO TRIAL
      BY JURY TO THE EXTENT PERMITTED BY
LAW.

            


    

    


    9.5           Severability;
Waivers.  If any part of this Agreement is not enforceable, the
rest of the Agreement may be enforced.  The Bank retains all rights,
even if it makes a loan after default.  If the Bank waives a default,
it may enforce a later default.  Any consent or waiver under this
Agreement must be in writing.

    


    9.6           Attorneys'
Fees.  The Borrowers shall reimburse the Bank for any
reasonable costs and attorneys' fees incurred by the Bank in connection with the
enforcement or preservation of any rights or remedies under this Agreement and
any other documents executed in connection with this Agreement, and in
connection with any amendment, waiver, "workout" or restructuring under this
Agreement.  In the event of a lawsuit or arbitration proceeding, the
prevailing party is entitled to recover costs and reasonable attorneys' fees
incurred in connection with the lawsuit or arbitration proceeding, as determined
by the court or arbitrator.  In the event that any case is commenced
by or against the Borrowers under the Bankruptcy Code (Title 11, United States
Code) or any similar or successor statute, the Bank is entitled to recover costs
and reasonable attorneys' fees incurred by the Bank related to the preservation,
protection, or enforcement of any rights of the Bank in such a case from the
applicable Borrower (or the Obligor) to which such case relates.  As
used in this paragraph, "attorneys' fees" includes the allocated costs of the
Bank's in-house counsel.

    


    9.7           Joint and Several
Liability.  This paragraph shall apply if two or more Borrowers
sign this agreement:

    


    
      	
              (a)

            	
              The
      parties hereto agree and understand that the Borrowers liability hereunder
      will be several, and not joint, with respect to the payment of all
      obligations arising under this Agreement.  Notwithstanding the
      foregoing, any Obligor’s obligations with respect to any Borrower shall be
      joint and several. The Bank may bring an action against any Obligor,
      whether an action is brought against any other
  Borrower(s).

            


    

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    
      	
              (b)

            	
              Each
      Borrower waives any right to assert against the Bank any defense, setoff,
      counterclaim, or claims which such Borrower may have against the other
      Borrower(s) or any other party liable to the Bank for the obligations of
      the Borrowers under this Agreement.

            


    

    


    
      	
              (c)

            	
              Each
      Borrower waives any defense by reason of any other Borrower’s or any other
      person's defense, disability, or release from liability.  The
      Bank can exercise its rights against each Borrower even if any other
      Borrower or any other person no longer is liable because of a statute of
      limitations or for other reasons.

            


    

    


    
      	
              (d)

            	
              Each
      Borrower agrees that it is solely responsible for keeping itself informed
      as to the financial condition of any Obligor and of all circumstances
      which bear upon the risk of nonpayment.  Each Borrower waives
      any right it may have to require the Bank to disclose to such Borrower any
      information which the Bank may now or hereafter acquire concerning the
      financial condition of the Obligor.

            


    

    


    
      	
              (e)

            	
              Each
      Borrower waives all rights to notices of default or nonperformance by any
      other Borrower or any Obligor under this Agreement.  Each
      Borrower further waives all rights to notices of the existence or the
      creation of new indebtedness by any other Borrower and all rights to any
      other notices to any party liable on any of the credit extended under this
      Agreement.

            


    

    


    
      	
              (f)

            	
              The
      Borrowers represent and warrant to the Bank that each will derive benefit,
      directly and indirectly, from the collective administration and
      availability of credit under this Agreement.  The Borrowers
      agree that the Bank will not be required to inquire as to the disposition
      by any Borrower of funds disbursed in accordance with the terms of this
      Agreement.

            


    

    


    
      	
              (g)

            	
              Until
      all obligations of a Borrower to the Bank under this Agreement have been
      paid in full and any commitments of the Bank or facilities provided by the
      Bank under this Agreement have been terminated, such Borrower (a) waives
      any right of subrogation, reimbursement, indemnification and contribution
      (contractual, statutory or otherwise), including without limitation, any
      claim or right of subrogation under the Bankruptcy Code (Title 11, United
      States Code) or any successor statute, which such Borrower may now or
      hereafter have against any other Borrower or any Obligor with respect to
      the indebtedness incurred under this Agreement; (b) waives any right to
      enforce any remedy which the Bank now has or may hereafter have against
      such Borrower, and waives any benefit of, and any right to participate in,
      any security now or hereafter held by the
Bank.

            


    

    


    
      	
              (h)

            	
              Each
      Borrower waives any right to require the Bank to proceed against any
      Obligor or any other person; proceed against or exhaust any security; or
      pursue any other remedy.  Further, each Borrower consents to the
      taking of, or failure to take, any action which might in any manner or to
      any extent vary the risks of the Borrowers under this Agreement or which,
      but for this provision, might operate as a discharge of the
      Borrowers.

            


    

    


    
      	
              9.8

            	
              Set-Off.

            


    

     

    
      	
              (a)

            	
              In
      addition to any rights and remedies of the Bank provided by law, upon the
      occurrence and during the continuance of any event of default under this
      Agreement, the Bank is authorized, at any time, to set off and apply any
      and all Deposits of the Borrower or any Obligor held by the Bank against
      any and all Obligations owing to the Bank by such Borrower.  The
      set-off may be made irrespective of whether or not the Bank shall have
      made demand under this Agreement or any guaranty, and although such
      Obligations may be contingent or unmatured or denominated in a currency
      different from that of the applicable
Deposits.

            


    

     

    
      	
              (b)

            	
              The
      set-off may be made without prior notice to the Borrower or any other
      party, any such notice being waived by the Borrower (on its own behalf and
      on behalf of each Obligor) to the fullest extent permitted by
      law.  The Bank agrees promptly to notify the Borrower after any
      such set-off and application; provided, however, that
      the failure to give such notice shall not affect the validity of such
      set-off and application.

            


    

     

    
      	
              (c)

            	
              For
      the purposes of this paragraph, “Deposits” means any deposits (general or
      special, time or demand, provisional or final, individual or joint) and
      any instruments owned by a given Borrower or any Obligor which come into
      the possession or custody or under the control of the
      Bank.  “Obligations” means all obligations, now or hereafter
      existing, of a given Borrower to the Bank under this Agreement and under
      any other agreement or instrument executed in connection with this
      Agreement, and the obligations to the Bank of any
  Obligor.

            


    

    


    9.9           One
Agreement.  This Agreement and any related security or other
agreements required by this Agreement, collectively:

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    
      	
              (a)

            	
              represent
      the sum of the understandings and agreements between the Bank and the
      Borrowers concerning this credit;

            


    

    


    
      	
              (b)

            	
              replace
      any prior oral or written agreements between the Bank and the Borrowers
      concerning this credit; and

            


    

    


    
      	
              (c)

            	
              are
      intended by the Bank and the Borrowers as the final, complete and
      exclusive statement of the terms agreed to by
  them.

            


    

    


    In the
event of any conflict between this Agreement and any other agreements required
by this Agreement, this Agreement will prevail.  Any reference in any
related document to a “promissory note” or a “note” executed by the Borrowers
and dated as of the date of this Agreement shall be deemed to refer to this
Agreement, as now in effect or as hereafter amended, renewed, or
restated.

    


    9.10         Notices.  Unless
otherwise provided in this Agreement or in another agreement between the Bank
and the Borrowers, all notices required under this Agreement shall be personally
delivered or sent by first class mail, postage prepaid, or by overnight courier,
to the addresses on the signature page of this Agreement, or sent by facsimile
to the fax numbers listed on the signature page, or to such other addresses as
the Bank and the Borrowers may specify from time to time in
writing.  Notices and other communications shall be effective (i) if
mailed, upon the earlier of receipt or five (5) days after deposit in the U.S.
mail, first class, postage prepaid, (ii) if telecopied, when transmitted, or
(iii) if hand-delivered, by courier or otherwise (including telegram, lettergram
or mailgram), when delivered.

    


    9.11         Headings.  Article
and paragraph headings are for reference only and shall not affect the
interpretation or meaning of any provisions of this Agreement.

    


    9.12         Counterparts.  This
Agreement may be executed in as many counterparts as necessary or convenient,
and by the different parties on separate counterparts each of which, when so
executed, shall be deemed an original but all such counterparts shall constitute
but one and the same agreement.

    


    9.13         Borrower Information;
Reporting to Credit Bureaus.  The Borrower authorizes the Bank
at any time to verify or check any information given by the Borrower to the
Bank, check the Borrower’s credit references, verify employment, and obtain
credit reports.  The Borrower agrees that the Bank shall have the
right at all times to disclose and report to credit reporting agencies and
credit rating agencies such information pertaining to the Borrower and/or all
guarantors as is consistent with the Bank's policies and practices from time to
time in effect.

    


    9.14         Limitation of Interest and
Other Charges.  If, at any time, the rate of interest, together
with all amounts which constitute interest and which are reserved, charged or
taken by the Bank as compensation for fees, services or expenses incidental to
the making, negotiating or collection of the loan evidenced hereby, shall be
deemed by any competent court of law, governmental agency or tribunal to exceed
the maximum rate of interest permitted to be charged by the Bank to the Borrower
under applicable law, then, during such time as such rate of interest would be
deemed excessive, that portion of each sum paid attributable to that portion of
such interest rate that exceeds the maximum rate of interest so permitted shall
be deemed a voluntary prepayment of principal.  As used herein, the
term “applicable law” shall mean the law in effect as of the date hereof;
provided, however, that in the event there is a change in the law which results
in a higher permissible rate of interest, then this Agreement shall be governed
by such new law as of its effective date.

    


    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    
      The
Borrower executed this Agreement as of the date stated at the top of the first
page, intending to create an instrument executed under seal.

    

     

    
      
        Borrower:

      

       

      	 
      	 
	PARAMOUNT
      BIOSCIENCES, LLC	 	
              Bank:

            
	 	 	 	 
	 	 	 	
              Bank
      of America, N.A.

            
	
              By:

            	/s/ 
      Lindsay A. Rosenwald	
              (Seal)

            	 
	 	
              Lindsay
      A. Rosenwald, M.D., Member

            	 	 
	 
      	
            	 


    

     

    
      
        Borrower:

         

      

      	
              BALBOA
      BIOSCIENCES, INC.

            	
              By:

            	/s/ 
      Jeffry Lubatkin
	 	 	 	
              
                Jeffrey
      Lubatkin, SVP; SR CLIENT MANAGER

              

            
	 	 	 	 	 
	 	 	 	 	
               

            
	
              By:

            	/s/ 
      Stephen Pilatzke	
              (Seal)

            	 	 
	 	
                    
                Stephen
      Pilatzke, Corporate Treasurer

              

            	 	 	 
	 
      	
            	 	 


       

    

    


    
      	
              Borrower:

            
	 
      
	
              PACIFIC
      BEACH BIOSCIENCES, INC..

            
	 
      
	 
      
	 
      
	
              By:

            	/s/ 
      Stephen Pilatzke	
              (Seal)

            
	 
      	
              Stephen
      Pilatzke, Corporate Treasurer

            


    

     

    
      	 
      
	
              Borrower:

            
	 
      
	
              ASPHELIA
      PHARMACEUTICALS, INC.

            
	 
      
	 
      
	 
      
	
              By:

            	/s/ 
      Stephen Pilatzke	
              (Seal)

            
	 
      	
              Stephen
      Pilatzke, Corporate Treasurer

            


    

     

    
      	Borrower:
	 	 
      
	VENTRUS
      BIOSCIENCES, INC.
	 	 
      
	 	 
      
	 	 
      
	
              By:

            	/s/  Stephen Pilatzke	
              (Seal)

            
	 	
              Stephen
      Pilatzke, Corporate Treasurer

            


    

    


    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    
      	
              Borrower:

            
	 
      
	
              CORONADO
      BIOSCIENCES, INC.

            
	 
      
	 
      
	 
      
	
              By:

            	/s/ 
      Stephen Pilatzke	
              (Seal)

            
	 
      	
               Stephen
      Pilatzke, Corporate Treasurer

            


    

     

    
      	
              Borrower:

            
	 
      
	
              MT.
      COOK PHARMA, INC.

            
	 
      
	 
      
	 
      
	
              By:

            	/s/ 
      Stephen Pilatzke	
              (Seal)

            
	 
      	
              Stephen
      Pilatzke, Corporate Treasurer

            


    

     

    
      	
              Address
      where notices to Pacific Beach Biosciences, Inc are to be
      sent:

            	 
      	
              Address
      where notices to the Bank are to be sent:

            
	 
      	 
      	 
      
	
              c/o
      Paramount Biosciences, LLC

              787
      Seventh Avenue

              48th
      Floor

              New
      York, NY   10019

            	 
      	
              Farmington
      - Attn:  Notice Desk

              P.O.
      Box 5080

              Hartford,
      CT 06102

              CT2-515-BB-11

            
	 
      	 
      	 
      
	
              Telephone:

            	
              (212)
      554-4300

            	 
      	
              Facsimile:

            	
              (860)
      409-5486

            
	 
      	 
      	 
      
	
              Address
      where notices to Ventrus Biosciences, Inc. are to be sent:

            	 
      	 
      
	 
      	 
      	 
      
	
              c/o
      Paramount Biosciences, LLC

              787
      Seventh Avenue

              48th
      Floor

              New
      York, NY   10019

            	 
      	 
      
	 
      	 
      	 
      
	
              Telephone:

            	
              
                (212)
      554-4300

              

            	 
      	 
      	 
      
	 
      	 
      	 
      
	
              Address
      where notices to Balboa Biosciences, Inc. are to be sent:

            	 
      	 
      
	 
      	 
      	 
      
	
              c/o
      Paramount Biosciences, LLC

              787
      Seventh Avenue

              48th
      Floor

              New
      York, NY   10019

            	 
      	 
      
	 
      	 
      	 
      
	
              Telephone:

            	
              
                (212)
      554-4300

              

            	 
      	 
      	 
      
	
               

              Address
      where notices to Asphelia Pharmaceuticals, Inc. are to be
      sent:

            	 
      	 
      
	 
      	 
      	 
      
	
              c/o
      Paramount Biosciences, LLC

              787
      Seventh Avenue

              48th
      Floor

              New
      York, NY   10019

            	 
      	 
      
	 	 	 	 	 
	
              Telephone:

            	
              
                (212)
      554-4300

              

            	 
      	 
      	 
      


       

      
        
          
          

        

        
          15

          
            

          

        

        
          
          

        

      

       

      	
              Address
      where notices to Paramount Biosciences, LLC are to be
sent:

            	 
      	 
      
	 
      	 
      	 
      
	
              787
      Seventh Avenue

              48th
      Floor

              New
      York, NY 10019

            	 
      	 
      
	
              Telephone:

            	
              
                (212)
      554-4300

              

            	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      
	
              Address
      where notices to Coronado Biosciences, Inc. are to be
sent:

            	 
      	 
      
	 
      	 
      	 
      
	
              c/o
      Paramount Biosciences, LLC

              787
      Seventh Avenue

              48th
      Floor

              New
      York, NY   10019

            	 
      	 
      
	 
      	 
      	 
      
	
              Telephone:

            	
              
                (212)
      554-4300

              

            	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      


    

    


    


    
      	
              Address
      where notices to MT. Cook Pharma, Inc. are to be sent:

            
	 
      
	
              c/o
      Paramount Biosciences, LLC

              787
      Seventh Avenue

              48th
      Floor

              New
      York, NY   10019

            
	 
      
	
              Telephone:

            	
              (212)
      554-4300

            


    

    


    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

    


    Federal
law requires Bank of America, N.A. (the “Bank”) to provide the
following three notices. The notices are not part of the foregoing
agreement or instrument and may not be altered.  Please read the
notices carefully.

    


    (1)           USA
PATRIOT ACT NOTICE

    


    Federal
law requires all financial institutions to obtain, verify and record information
that identifies each person who opens an account or obtains a
loan.  The Bank will ask for the Borrower’s legal name, address, tax
ID number or social security number and other identifying
information.  The Bank may also ask for additional information or
documentation or take other actions reasonably necessary to verify the identity
of the Borrower, guarantors or other related persons.

    


    Notices
#2 and #3 apply only to individual Borrowers or Guarantors and individuals who
are pledging collateral, granting a lien on real property or are otherwise
obligated to the Bank (“Obligors”):

    


    (2)           AFFILIATE
SHARING NOTICE

    


    From time
to time the Bank may share information about the Obligor’s experience with Bank
of America Corporation (or any successor company) and its subsidiaries and
affiliated companies (the “Affiliates”), including, but not limited to, the Bank
of America Companies listed in notice #3 below.  The Bank may also
share with the Affiliates credit-related information contained in any
applications, from credit reports and information it may obtain about the
Obligor from outside sources.

    


    If the
Obligor is an individual, the Obligor may instruct the Bank not to share this
information with the Affiliates.  The Obligor can make this election
by (1) calling the Bank at 1.888.341.5000, (2) visiting the Bank online at www.bankofamerica.com,
selecting “Privacy & Security,” and then selecting “Set Your Privacy
Preferences," or (3) contacting the Obligor’s client manager or local banking
center.  To help the Bank complete the Obligor’s request, the Obligor
should include the Obligor’s name, address, phone number, account number(s) and
social security number.

    


    If the
Obligor makes this election, certain products or services may not be made
available to the Obligor.  This request will apply to information from
applications, consumer reports and other outside sources
only.  Through the normal course of doing business, including
servicing the Obligor’s accounts and better serving the Obligor’s financial
needs, the Bank will continue to share transaction and account experience
information, as well as other general information among the
Affiliates.

    


    (3)           AFFILIATE
MARKETING NOTICE – YOUR CHOICE TO LIMIT MARKETING

     

    
      	
              ·      

            	
              The
      Bank of America companies listed below are providing this notice
      #3.

            


    

    


    
      	
              ·      

            	
              Federal
      law gives you the right to limit some but not all marketing from all the
      Bank of America affiliated companies. Federal law also requires us to give
      you this notice to tell you about your choice to limit marketing from all
      the Bank of America affiliated
companies.

            


    

    


    
      	
              ·      

            	
              You
      may limit all the Bank of America affiliated companies, such as the
      banking, loan, credit card, insurance and securities companies, from
      marketing their products or services to you based upon your personal
      information that they receive from other Bank of America companies. 
      This information includes your income, your account history, and your
      credit score.

            


    

    


    
      	
              ·      

            	
              Your
      choice to limit marketing offers from all the Bank of America affiliated
      companies will apply for at least 5 years from when you tell us your
      choice.  Before your choice to limit marketing expires, you will
      receive a renewal notice that will allow you to continue to limit
      marketing offers from all the Bank of America affiliated companies for at
      least another 5 years.

            


    

    


    
      	
              ·      

            	
              You
      may tell us your choice to limit marketing offers and you may tell us the
      choices for other customers who are joint account holders with
      you.

            


    

    


    
      	
              ·      

            	
              This
      limitation will not apply in certain circumstances, such as when you have
      an account or service relationship with the Bank of America company that
      is marketing to you.

            


    

    


    
      	
              ·      

            	
              For
      individuals with business purpose accounts, this limitation will only
      apply to marketing to individuals and not marketing to a
      business.

            


    

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

    To
limit marketing offers, contact us at 800.282.2884

    


    Effective
October 1, 2008

    


    Bank
of America Companies:

    
      	
              Banks
      and Trust Companies

              Bank
      of America, N.A.

              LaSalle
      Bank National Association

              LaSalle
      Bank Midwest National Association

            	
              Brokerage
      and Investments

              BACAP
      Alternative Advisors, Inc.

              Bank
      of America Capital Advisors LLC

              Banc
      of America Investment Advisors, Inc.

              Banc
      of America Investment Services, Inc.

              Banc
      of America Securities LLC

              LaSalle
      Financial Services, Inc.

              U.S.
      Trust Hedge Fund Management, Inc.

              UST
      Securities Corp.

            
	 	 
	
              Credit
      Card

              Bank
      of America Consumer Card Services,

              LLC

              Bank
      of America

              Fleet
      Credit Card Services, L.P.

            	
              Real
      Estate

              HomeFocus Services, LLC

            
	 	 
	
              Insurance
      and Annuities

              BA
      Insurance Services, Inc.

              Banc
      of America Agency of Texas, Inc.

              Banc
      of America Insurance Services, Inc.,

                  dba
      Banc of America Insurance Agency in

                  New
      York State

              General
      Fidelity Insurance Company

              General
      Fidelity Life Insurance Company

              LaSalle
      Financial Services, Inc.

            	
              Administrative
      Services

              LaSalle
      Healthcare Administrative Services, LLC 

                 

                Merchant
      Services

                BA
      Merchant Services, LLC

                LaSalle
      Merchant Services, LLC

              

            


    

    


    
      
        
        

      

      
        18