Document:

EX-10.29  FIRST AMENDMENT TO LOAN AGREEMENT

 

Exhibit 10.29

EXECUTION
VERSION

FIRST AMENDMENT

TO

LOAN AGREEMENT

     This FIRST AMENDMENT TO LOAN AGREEMENT (this “Amendment”) is dated and
entered into as of July 5, 2006, by and between SIRION THERAPEUTICS, INC. a North
Carolina corporation (“Borrower”), and PHARMABIO DEVELOPMENT INC., a North Carolina
corporation, doing business as NovaQuest (“Lender”).

RECITALS

     WHEREAS, Borrower and Lender are parties to that certain Loan Agreement, dated as of February
14, 2006 (the “Loan Agreement”), pursuant to which Lender agreed to make certain credit
facilities available to Borrower, subject to and upon the terms and conditions of the Loan
Agreement;

     WHEREAS, contemporaneously with the execution of this Amendment, Borrower is acquiring Sytera,
Inc., a Delaware corporation (“Sytera”),
through a merger (the “First Merger”) of
Sytera with and into Borrower with Borrower continuing as the surviving corporation in the First
Merger, consummated pursuant to that certain Agreement and Plan of Merger and Reorganization among
Sirion, Sytera, Sytera II, Inc. and Kenneth J. Widder, M.D., as Stockholders’ Representative for
the holders of Sytera capital stock, and Barry Butler, as Stockholders’ Representative for the
holders of Sirion capital stock; and

     WHEREAS, in connection with the First Merger, Borrower and Lender desire to amend the Loan
Agreement pursuant to Section 8.1 thereof as described herein.

AGREEMENT

     NOW THEREFORE, the parties agree as follows:

     1. Defined Terms. All initially capitalized terms used but not defined in
this
Amendment shall have the meanings assigned to them in the Loan Agreement.

     2. Amendments to Loan Agreement. The Loan Agreement is hereby amended as
follows:

          a. Section 2.1 (a)(iii) of the Loan Agreement is deleted in its entirely and
replaced with the following new Section 2.1(a)(iii):

          “(iii) Upon the occurrence of Milestone Two following the occurrence of
Milestone One, an additional Two Million Five Hundred Thousand Dollars ($2,500,000)
shall be available, at which point the Commitment shall equal an aggregate principal
amount of Five Million Dollars ($5,000,000), subject to the terms and conditions of
this Agreement. “Milestone Two” shall mean the earlier to occur of (A) the
consummation by Borrower of two or more Licensing Transactions that collectively
provide for the payment by Borrower of aggregate up-front

 

 

consideration in excess of Two Million Dollars ($2,000,000), (B) the consummation
by Borrower of at least four Licensing Transactions, without regard to the amount
of up-front consideration, or (C) the closing of the First Merger.”

          b. Section 2.6 of the Loan Agreement is deleted in its entirety and replaced with the
following new Section 2.6:

          “2.6 Automatic Conversion.

          (a) Unless otherwise determined by Borrower’s Board of Directors (including the
affirmative vote of any director designated by Lender), all outstanding principal
amounts of Advances and any accrued but unpaid interest amounts thereon will
automatically be converted into shares of Borrower’s capital stock upon the earlier of
(i) immediately before the closing of the Second Merger (as defined below) prior to
October 31, 2006 in accordance with Section 2.6(b)(i) below or (ii) the first closing
of a Qualified Financing in accordance with Section 2.6(b)(ii) below, and in each such
case Lender’s obligation to make Advances hereunder shall be terminated.

          (b) The number of shares of Borrower’s capital stock into which such principal and
interest shall be converted shall be determined as follows:

               (i) If, on or before October 31, 2006, Borrower is
acquired, directly or indirectly, by a publicly traded “shell” company (or any wholly
owned subsidiary of such company) whose securities are registered under the Securities
Act of 1933, as amended “Pubco”), whether through a reorganization, transfer
of assets, consolidation, merger, issue or sale of securities or any other voluntary
action (the “Second Merger”), then, immediately before the closing of the
Second Merger, the aggregate outstanding principal of, and all accrued but unpaid
interest on, all Advances shall be converted into one hundred thousand (100,000)
shares of Borrower’s Series A-l Preferred Stock.

               (ii) Upon the first closing of a Qualified Financing, the aggregate
outstanding principal of, and all accrued but unpaid interest on, all Advances shall
be converted into that number of shares of New Securities issued in the Qualified
Financing that on an as-converted to Common Stock basis (i.e., as if the New
Securities were converted to Common Stock based on the conversion rate of the New
Securities) when added to the aggregate Fully-Diluted Common Stock immediately before
the first closing of such Qualified Financing (such sum, the “Pre-Money
Fully-Diluted Common Stock”) would be equal to twenty-five percent (25%) of the
Pre-Money Fully-Diluted Common Stock (excluding, if applicable, any shares issued or
issuable to Barry Butler or Roger Vogel in exchange for their respective membership
interests in Rx Development Resources. LLC).

          (c) Borrower will not, by amendment of its Articles of Incorporation or Bylaws, or
through any reorganization, recapitalization, reclassification, merger, consolidation,
transfer of assets, dissolution, issue or sale of securities, or any other action,
avoid or seek to avoid the observance or performance

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of any of the terms of this Section 2.6, but will at all times in good faith assist in
carrying out all the provisions of this Section 2.6 and in taking all such action as be
necessary or appropriate in order to protect the rights of Lender against impairment.

          (d) In the event of any conversion of the Advances pursuant to this Section
2.6: (i) Lender shall surrender all promissory notes or other instruments evidencing
the Advances for conversion and cancellation at the offices of Borrower and shall
execute all reasonably necessary documents in connection with the conversion such
Advances; (ii) Borrower shall promptly issue to Lender a certificate representing the
appropriate number of shares of Borrower capital stock to be issued to Lender in
connection with such conversion; and (iii) if applicable, Borrower shall pay to Lender
cash in an amount equal to any portion of the Advances that would otherwise convert
into fractional shares of Borrower’s capital stock.”

          c. Section 3.2(a) of the Loan Agreement is deleted in its entirety and replaced with the
following new Section 3.2(a):

          “(a) except as set forth in any schedule of exceptions delivered to Lender
on the date of any such Advance (which schedule of exceptions shall be acceptable to
Lender in its sole discretion), the representations and warranties contained in
ARTICLE IV shall be true and correct in all material respects on and as of the date of
such Advance (except that those representations and warranties which are qualified as
to material, materiality, Material Adverse Effect or similar expressions, or are
subject to the same or similar type exceptions, shall be true and correct in all
respects), before and after giving effect to such Advance, as though made on and as of
such date;”

          d. The introductory language to Article V of the Loan Agreement is deleted in its entirety and
replaced with the following new introductory language:

          “Except as otherwise expressly required by the terms of any binding agreements
relating to, or entered into by Borrower in connection with, the transactions
contemplated by the First Merger or the Second Merger, so long as any of the Advances
or other obligations of Borrower shall remain unpaid or outstanding or Lender shall
have any Commitment hereunder, Borrower shall comply with the following covenants:”

          e. Exhibit A to the Loan Agreement is hereby amended to add the following new definition:

          “First Merger” shall mean a merger of Sytera, Inc., a Delaware corporation, with
and into Borrower with Borrower continuing as the surviving corporation, consummated
pursuant to that certain Agreement and Plan of Merger and Reorganization among
Borrower, Sytera, Inc., Sytera II, Inc. and Kenneth J. Widder, M.D., as Stockholders’
Representative for the holders of Sytera capital stock, and Barry Butler, as
Stockholders’ Representative for the holders of Sirion capital stock.

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          f. The definition of “Qualified Financing” in Exhibit A to the Loan Agreement
is deleted in its entirety and replaced with the following new definition:

          “Qualified Financing” shall mean Borrower’s sale to venture capital, private
equity, institutional or similar investors (other than Lender or Lender’s Affiliates),
one or more of which did not previously hold shares of capital stock of Borrower, of
New Securities, in a single transaction, or in a series of related transactions, in
which (i) the consideration paid to Borrower by such venture capital, private equity,
institutional or similar investors (other than Lender or Lender’s Affiliates) in such
transaction(s) is at least Twenty-Five Million Dollars ($25,000,000), and (ii) the
pre-money valuation of Borrower is at least Thirty-Five Million Dollars ($35,000,000).”

     3. No Other Amendments. The Loan Agreement, as amended by this Amendment, is and shall
continue to be in full force and effect and is hereby in all respects ratified and confirmed.

     4. Headings. The section headings herein are for convenience of reference only and
shall not affect the interpretation of this Amendment. All paragraph references herein are to
sections of this Amendment unless specified otherwise.

     5. Governing
Law. This Amendment, and the rights and obligations of the parties
arising hereunder or in connection herewith, including, without limitation, the interpretation,
performance, enforcement, breach or termination thereof and any remedies relating thereto, shall be
governed by and construed in accordance with the Laws of the State of North Carolina, as applied to
agreements executed and performed entirely in the State of North Carolina, without regard to its
conflicts of law rules.

[signature page follows]

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[Signature Page to First Amendment to Loan Agreement]

     IN WITNESS WHEREOF, the parties hereto have caused this Loan Agreement to be executed by their
respective officers thereunto duly authorized, as of the date first above written.

	 	 	 	 	 
	 	

BORROWER:

SIRION THERAPEUTICS, INC.

 	 
	 	By:  	/s/
Barry Butler	 
	 	Name:  	 	 
	 	Title:  	 	 
	 
	 	LENDER:

PHARMABIO DEVELOPMENT INC. 
(D/B/A NOVAQUEST)

 	 
	 	By:  	 	 
	 	Name:  	 	 
	 	Title:  	 	 
	 

 

 

[Signature Page to First Amendment to Loan Agreement]

     IN WITNESS WHEREOF, the parties hereto have caused this Loan Agreement to be executed by their
respective officers thereunto duly authorized, as of the date first above written.

	 	 	 	 	 	 
	 	 	BORROWER:
	 
	 	 	 	 
	 	 	SIRION THERAPEUTICS, INC.
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 	 	Name:
	 	 	Title:
	 
	 	 	 	 
	 	 	LENDER:
	 
	 	 	 	 
	 	 	PHARMABIO DEVELOPMENT INC.

(D/B/A NOVAOUEST)
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Kerry E. Zook
	 

	 	 	 	 
	 	 	Name: Kerry E. Zook
	 	 	Title: Vice PresidentEX-10.30  SECURITY AGREEMENT

 

Exhibit 10.30

			
	 	 	 
	Confidential
	 	EXECUTION VERSION

SECURITY AGREEMENT

     This Security Agreement (as amended, amended and restated, supplemented or otherwise
modified from time to time, this “Agreement”) dated as of
February 14, 2006 (the “Effective Date”),
among Sirion Therapeutics, Inc., a North Carolina corporation (the “Debtor”), and PharmaBio
Development Inc., a North Carolina corporation (the “Secured Party”).

BACKGROUND

     A. The Debtor and the Secured Party have, in connection with the execution and delivery
of this Agreement, entered into the Loan Agreement, dated as of the date hereof (as amended,
amended and restated, supplemented or otherwise modified from time to time, the “Loan Agreement”).

     B. The Debtor will receive substantial benefits from the execution, delivery and performance
of the obligations under the Loan Agreement and is, therefore, willing to enter into this
Agreement.

     C. The Debtor is or, as to Collateral (as hereinafter defined) acquired by the Debtor after
the date hereof, will be the legal or beneficial owner of the Collateral pledged by it hereunder.

     D. This Agreement is given by the Debtor for the benefit of the Secured Party to secure the
payment and performance of all of the Obligations (as hereinafter defined).

     NOW THEREFORE, in consideration of the foregoing and other benefits accruing to the Debtor,
the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:

ARTICLE I

Definitions

     1.1 Definitions. Capitalized terms used but not defined in the text of this
Agreement shall have the meanings ascribed to them on Exhibit A attached hereto and
incorporated herein by reference.

ARTICLE II

Security Interest

     2.1 Security Interest.

          (a) As security for the punctual and complete payment and performance in full of the
Obligations, the Debtor hereby grants to the Secured Party a security interest of first

 

 

priority in and lien on, and pledges and hypothecates, all of the
Debtor’s right, title and interest in, to and under the
Collateral. The security interest granted hereunder to secure the
Obligations is referred to herein as the “Security Interest.”

          
(b) Without limiting the foregoing, the Secured Party is hereby
authorized to file one or more financing statements, continuation
statements, filings with the United States Patent and Trademark Office
or United States Copyright Office (or any successor office or any
similar office in any foreign country) or other documents for the
purpose of perfecting or continuing the Security Interest granted by
the Debtor, without the signature of the Debtor, and naming the
Debtor as debtor and the Secured Party as secured party, or otherwise
describing the transactions contemplated by this Agreement;
provided, that, so long as no Event of Default has occurred
and is continuing, the Secured Party shall provide copies of all such
documents to the Debtor a reasonable time in advance of any such
filing (and, in the event that an Event of Default shall have
occurred and be continuing, such copy shall be provided to the Debtor
substantially concurrently with the filing thereof); provided,
further, that the failure by the Secured Party to provide
such copies shall not affect the validity of any such filing.

     
2.2 No Assumption of Liability. The Security Interest is
granted as security only and shall not subject the Secured Party to,
or in any way alter or modify, any obligation or liability of the
Debtor with respect to or arising out of the Collateral.

ARTICLE III

Representations and Warranties

     
The Debtor represents and warrants to the Secured Party that:

     
3.1 Title and Authority. The Debtor has good and valid rights
in and title to the Collateral with respect to which it has
purported to grant a Security Interest hereunder and has full power
and authority to grant to the Secured Party the Security Interest in
such Collateral pursuant hereto and to execute, deliver and perform
its obligations in accordance with the terms of this Agreement,
without the consent or approval of any other Person other than any
consent or approval which has been obtained.

     
3.2 Filings. Fully completed UCC financing statements or other
appropriate filings, recordings or registrations containing a
description of the Collateral have been filed, or delivered to the
Secured Party for filing, in each governmental, municipal or other
office in which such filings are necessary to perfect the Security
Interest for the benefit of the Secured Party in respect of all
Collateral in which the Security Interest may be perfected by filing,
recording or registration in the United States (or any political
subdivision thereof) and its territories and possessions, and no
further or subsequent filing, refiling, recording, rerecording,
registration or reregistration is necessary in any such jurisdiction,
except as provided under applicable Law with respect to the filing of
continuation statements.

     
3.3 Validity of Security Interest. The Security Interest
constitutes (a) a legal and valid security interest in all the
Collateral securing the payment and performance of the Obligations,
(b) subject to the filings described in Section 3.2 above,
a perfected security interest in all

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Collateral in which a security interest may be perfected by filing, recording
or registering a financing statement or analogous document in the United States (or any political subdivision thereof) and its territories
and possessions pursuant to the UCC or other applicable Law in such jurisdictions, (c) a security interest that shall be perfected
in all Collateral in which a security interest may be perfected upon the receipt and registering or recording of an appropriate notice of
security interest with the United States Patent and Trademark Office, as applicable, and (d) a perfected security interest in all Collateral
in which a security interest may be perfected by possession or control by the Secured Party, in each case, to the extent required
pursuant to the provisions hereof. The Security Interest is and shall be prior to any other Lien on any of the Collateral.

     3.4   Limitations on and Absence
of Other Liens. Except for Permitted Liens, the Collateral is owned by the Debtor free and clear of any Lien. The Debtor has not filed or
consented to the filing of (a) any financing statement or analogous document under the UCC or any other applicable Laws covering any Collateral,
(b) any assignment in which the Debtor assigns any Collateral or makes any security agreement or similar instrument covering any Collateral
with the United States Patent and Trademark Office or (c) any assignment in which the Debtor assigns any Collateral or makes any security
agreement or similar instrument covering any Collateral with any foreign Governmental or Regulatory Authority, which financing statement
or analogous document, assignment, security agreement or similar instrument is still in effect.

     3.5   Authority and Consents. The
Debtor is a corporation duly organized, validly existing and in good standing under the laws of the State of North Carolina. The Debtor
has all necessary corporate power and authority to execute and deliver the Transaction Documents and to consummate the Transactions. The execution
and delivery of the Transaction Documents and consummation of the
Transactions have been duly authorized by all necessary corporate action on the
part of the Debtor and no other corporate proceedings on the part of the Debtor are necessary to authorize the Transaction Documents or to
consummate the Transactions. The Transaction Documents have been duly and validly executed and delivered by the Debtor and constitute valid,
legal and binding agreements of the Debtor, enforceable against the Debtor in accordance with their respective terms. No consent, authorization
or order of, or filing or registration with, any Governmental or Regulatory Authority is required to be obtained or made by the Debtor for the
execution, delivery and performance of the Transaction Documents or the consummation of the Transactions. Neither the execution, delivery and performance
of the Transaction Documents by the Debtor nor the consummation by the Debtor of the Transactions will (a) conflict with or result in any
breach of any provision of the Articles of Incorporation or Bylaws of the Debtor; (b) violate any Law applicable to the Debtor or the Transactions;
or (c) result in the creation of any Lien upon any assets of the Debtor pursuant to the terms or provisions of, or will not
conflict with, result in the breach or violation of, or constitute, either by itself or upon notice or the passage of time or both, a
default under any agreement, mortgage, deed of trust, lease, franchise, license, indenture, permit or other instrument to which the Debtor
is a party or by which the Debtor or any of its properties may be bound.

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ARTICLE IV

Covenants

     4.1
Change of Name; Location of Collateral and Records; Place of Business. The Debtor
agrees promptly to notify the Secured Party in writing of any change in (a) its corporate name,
(b) the location of its chief executive office or its principal place of business, or (c) its
organizational identification number. The Debtor agrees not to effect or permit any change
referred to in the preceding sentence unless all filings have been made (or will be made within
one (1) Business Day of such change) under the UCC or otherwise that are required in order for the
Secured Party to continue at all times following such change to have a valid, legal and perfected
first priority security interest in all the Collateral subject to no Liens. The Debtor agrees
promptly to notify the Secured Party if any material portion of the Collateral owned or held by
the Debtor is damaged or destroyed.

     4.2
Protection of Security. The Debtor shall, at its own cost and expense, take any
and all actions necessary to defend title to the Collateral against all Persons and to defend the
Security Interest of the Secured Party in the Collateral and the priority thereof against any
Lien.

     4.3
Further Assurances. The Debtor agrees, at its own expense, promptly to execute,
acknowledge, deliver and cause to be duly filed all such further instruments and documents and
take all such actions as the Secured Party may from time to time reasonably request to better
assure, preserve, protect and perfect the Security Interest and the
rights and remedies created hereby, including the payment of any filing or other similar fees required in connection with the
performance of this Agreement, the granting of the Security Interest and the filing of any
financing statements or other documents in connection herewith or therewith. If any amount
payable under or in connection with any of the Collateral shall be or become evidenced by any
promissory note or other instrument, such note or instrument shall be promptly pledged and
delivered to the Secured Party, duly endorsed in a manner satisfactory to the Secured Party.

     4.4
Inspection and Verification. The Secured Party and such Persons as the Secured
Party may reasonably designate shall have the right, at all reasonable times and upon reasonable
notice under the circumstances, to inspect the Collateral, all records related thereto (and to make
extracts and copies from such records) and the premises upon which any of the Collateral is
located, to discuss the Debtor’ affairs with the officers of the Debtor and their independent
accountants and to verify under reasonable procedures, the validity, amount, quality, quantity,
value, condition and status of, or any other matter relating to, the Collateral.

     4.5
Taxes; Encumbrances. At its option, the Secured Party may discharge past due
Taxes, assessments, charges, fees, Liens, security interests or other encumbrances at any time
levied or placed on the Collateral, and may pay for the maintenance and preservation of the
Collateral to the extent the Debtor fails to do so as required by this Agreement, and the Debtor
agrees to reimburse the Secured Party on demand for any payment made or any expense incurred by the
Secured Party pursuant to the foregoing authorization; provided, however, that nothing in this
Section 4.5 shall be interpreted as excusing the Debtor from the performance of, or imposing any
obligation on the Secured Party to cure or perform, any covenants or other promises of the

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Debtor with respect to Taxes, assessments, charges, fees, Liens, security interests or other
encumbrances and maintenance as set forth herein or in the other Transaction Documents.

     4.6
Continuing Obligations of the Debtor. The Debtor shall observe and perform in all
material respects all the conditions and obligations to be observed and performed by it under each
contract, agreement or instrument relating to the Collateral, all in accordance with the terms and
conditions thereof, and the Debtor agrees to indemnify and hold harmless the Secured Party from
and against any and all liability for such performance.

     4.7
No Other Liens. Except for Permitted Liens or as approved by Debtor’s Board of
Directors as set forth in Section 6.2(k) of the Investors’ Rights Agreement, the Debtor shall not
make or permit to be made an assignment for security, pledge or hypothecation of the Collateral or
grant any other Lien in respect of the Collateral other than the Security Interest securing the
Obligations.

     4.8
Certain Covenants and Provisions Regarding Patent and Trademark
Collateral.

          (a) The Debtor agrees that it will not do any act, or omit to do any act, whereby any
Patent constituting Collateral that is material to the conduct of the Debtor’s business may become
invalidated or dedicated to the public, and agrees that it shall continue to mark any products
covered by any such Patent with the relevant patent number as necessary and sufficient to
establish and preserve its maximum rights under applicable patent Laws.

          (b) The Debtor will, for each Trademark constituting Collateral which is material to the
conduct of the Debtor’s business, use its commercially reasonable efforts to (i)maintain such
Trademark in full force free from, any claim of abandonment or
invalidity for non-use, (ii)
maintain the quality of products and services offered under such Trademark, (iii) display such
Trademark with notice of Federal or foreign registration to the extent necessary and sufficient to
establish and preserve its rights under applicable Law and (iv) not knowingly use or knowingly
permit the use of such Trademark in violation of any third party rights.

          (c) The Debtor shall notify the Secured Party as soon as practicable if it knows or has
reason to know that any Patent or Trademark constituting Collateral which is material to the
conduct of its business may become abandoned, lost or dedicated to the public, or of any adverse
determination or development including the institution of, or any such determination or
development in, any proceeding in the United States Patent and Trademark Office or any court or
similar office of any foreign country) regarding the Debtor’s ownership of any such Patent or
Trademark, its right to register the same, or to keep and maintain the same.

          (d) In no event shall the Debtor, either itself or through any agent, employee, licensee or
designee, file an application for any Patent or Trademark (or for the registration of any
Trademark) constituting Collateral with the United States Patent and Trademark Office or any
office or agency in any political subdivision of the United States or in any other country or any
political subdivision thereof, unless it promptly informs the Secured Party after such filing and,
upon request of the Secured Party, executes and delivers any and all agreements, instruments,
documents and papers as the Secured Party may reasonably request to
evidence the Secured Party’s
security interest in such Patent or Trademark or application therefor, and the

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\

Debtor hereby appoints the Secured Party as its attorney-in-fact to execute and file such writings
solely for the foregoing purposes, all acts of such attorney being hereby ratified and confirmed;
such power, being coupled with an interest, is irrevocable while this Agreement is in effect.

          (e) The Debtor will take all necessary steps that are consistent with its reasonable business
judgment and the practice in any proceeding before the United States Patent and Trademark Office
or any office or agency in any political subdivision of the United States or in any other country
or any political subdivision thereof, to maintain and pursue each material application relating to
the Patents or Trademarks constituting Collateral (and to obtain the relevant grant or
registration) and to maintain each issued Patent and each registration of Trademarks constituting
Collateral that is material to the conduct of the Debtor’s business, including timely filings of
applications for renewal, affidavits of use, affidavits of incontestability and payment of
maintenance fees, and, if consistent with good business judgment, to initiate opposition,
interference and cancellation proceedings against third parties.

          (f) In the event that the Debtor has reason to believe that any Collateral consisting of a
Patent or Trademark has been infringed, misappropriated or diluted by a third party in any
material respect, the Debtor promptly shall notify the Secured Party and shall, if consistent with
the Debtor’s reasonable business judgment, promptly sue for infringement, misappropriation or
dilution and to recover any and all damages for such infringement, misappropriation or dilution,
and take such other actions as are appropriate under the circumstances to protect such Collateral.

ARTICLE V

Remedies

     5.1
Remedies upon Default.

          (a) Upon the occurrence and during the continuance of an Event of Default, it is agreed
that the Secured Party shall have the right to exercise any and all rights afforded to a secured
party under the UCC or other applicable Law and to take any of or all the following actions at the
same or different times: (i) with respect to any Collateral consisting of Intellectual Property,
Contracts or Contract Rights on demand, to cause the Security Interest to become an assignment,
transfer and conveyance of any of or all such Collateral by the Debtor to the Secured Party, or to
license or sublicense, whether general, special or otherwise, and whether on an exclusive or
nonexclusive basis, any such Collateral worldwide on such terms and conditions and in such manner
as the Secured Party shall determine, and (ii) with or without legal process and with or without
prior notice or demand for performance, to take possession of the Collateral and without liability
for trespass to enter any premises where the Collateral may be located for the purpose of taking
possession of or removing the Collateral and the Debtor agrees to deliver each item of Collateral
to the Secured Party on demand. Without limiting the generality of the foregoing, the Debtor
agrees that the Secured Party shall have the right, subject to the requirements of applicable Law,
to sell or otherwise dispose of all or any part of the Collateral, at public or private sale, as
the Secured Party shall deem appropriate. Each such purchaser at any such sale shall hold the
property sold absolutely, free from any claim or right on the part of the Debtor, and

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the Debtor hereby waives (to the extent permitted by Law) all rights of redemption, stay and
appraisal which the Debtor now has or may at any time in the future have under any Law now
existing or hereafter enacted.

          (b) At any public (or, to the extent permitted by applicable Law, private) sale made
pursuant to this Section, the Secured Party may bid for or purchase, free (to the extent permitted
by Law) from any right of redemption, stay, valuation or appraisal on the part of the Debtor (all
said rights being also hereby waived and released to the extent permitted by applicable Law), the
Collateral or any part thereof offered for sale and may make payment on account thereof by using
any Obligation then due and payable to the Secured Party from the Debtor as a credit against the
purchase price, and the Secured Party may, upon compliance with the
terms of sale, hold, retain and
dispose of such property without further accountability to the Debtor therefor. For purposes
hereof, a written agreement to purchase the Collateral or any portion thereof shall be treated as a
sale thereof; the Secured Party shall be free to carry out such sale pursuant to such agreement and
the Debtor shall not be entitled to the return of the Collateral or any portion thereof subject
thereto, notwithstanding the fact that after the Secured Party shall have entered into such an
agreement, all Events of Default shall have been remedied and the Obligations paid in full;
provided that the Secured Party shall deliver to the Debtor any monies or Proceeds it
receives, from the Debtor or otherwise, on account of the Obligations in excess of such amount
required to pay in full the Obligations. As an alternative to exercising the power of sale herein
conferred upon it, the Secured Party may proceed by a suit or suits at law or in equity to foreclose this Agreement and to sell the Collateral or any portion thereof pursuant to a judgment or
decree of a court or courts having competent jurisdiction or pursuant to a proceeding by a
court-appointed receiver.

     5.2
Grant of License to Use Intellectual Property. For the purpose of enabling the
Secured Party to exercise rights and remedies under this Article at such time as the Secured Party
shall be lawfully entitled to exercise such rights and remedies, the Debtor hereby grants to the
Secured Party an irrevocable, nonexclusive license (exercisable without payment of royalty or other
compensation to the Debtor) to use, license or sublicense any of the Collateral now owned or
hereafter acquired by the Debtor, and wherever the same may be located, and including in such
license reasonable access to all media in which any of the licensed items may be recorded or stored
and to all computer software and programs used for the compilation or printout thereof, in each
case subject to the terms and conditions and to the extent allowable under any agreement with a
third party pursuant to which such Collateral was initially licensed. The use of such license by
the Secured Party shall be exercised, at the option of the Secured Party, upon the occurrence and
during the continuation of an Event of Default; provided that any license, sublicense or
other transaction entered into by the Secured Party in accordance herewith shall be binding upon
the Debtor notwithstanding any subsequent cure of an Event of Default.

     5.3
Secured Party Appointed Attorney-in-Fact. The Debtor hereby appoints the Secured Party the
attorney-in-fact of the Debtor for the purpose of carrying out the provisions of this Agreement and
taking any action and executing any instrument that the Secured Party may deem necessary or
advisable to accomplish the purposes hereof, which appointment is irrevocable and coupled with an
interest while this Agreement is in effect.

7

 

     5.4 Third Party Approvals or Consents Related to Remedies. In the event that
the Secured Party desires to exercise any remedies, consensual rights or attorney-in-fact powers
set forth in this Agreement and determines it necessary to obtain any approvals or consents of any
Governmental or Regulatory Authority or any other Person therefor, then, upon the request of the
Secured Party, the Debtor agrees to use its best efforts to assist and aid the Secured Party to
obtain as soon as practicable any necessary approvals or consents for the exercise of any such
remedies, rights and powers.

ARTICLE
VI

Miscellaneous

     6.1 Entire Agreement; Amendments. This Agreement and the other Transaction
Documents embody the entire agreement and understanding between the Parties with respect to the
subject matter thereof and supersede all prior agreements (oral or written), understandings,
negotiations and discussions dealing with the same subject matter. No statement, representation,
warranty, covenant or agreement of any kind not expressly set forth in the Transaction Documents
shall affect, or be used to interpret, change or restrict, the express terms and provisions of this
Agreement. The Parties, from time to time during the term of this Agreement, may modify any of the
provisions hereof only by an instrument in writing duly executed by the Parties.

     6.2 Notices. All communications and notices hereunder shall (except as otherwise
expressly permitted herein) be in writing and given as provided in Section 8.2 of the Loan
Agreement.

     6.3 Security Interest Absolute. All rights of the Secured Party hereunder, the
Security Interest, and all obligations of the Debtor hereunder, shall be absolute and unconditional
irrespective of (a) any lack of validity or enforceability of any other Transaction Document, any
agreement with respect to any of the Obligations, or any other agreement or instrument relating to any of the foregoing, (b) any change in the time, manner or place of payment of, or in any other
term of, all or any of the Obligations, or any other amendment or waiver of or any consent to any
departure from any other Transaction Document or any other agreement or instrument, (c) any
exchange, release or nonperfection of any Lien on other collateral, or any release or amendment or
waiver of or consent under or departure from any guaranty, securing or guarantying all or any of
the Obligations, or (d) any other circumstance that might otherwise constitute a defense available
to, or a discharge of, the Debtor in respect of the Obligations or this Agreement.

     6.4 Survival of Agreement. All covenants, agreements, representations and warranties
made by the Debtor herein and in the certificates or other instruments prepared or delivered in
connection with or pursuant to this Agreement or the Loan Agreement shall be considered to have
been relied upon by the Secured Party and shall survive the payment of any amounts or supply of any
services by the Secured Party to the Debtor, regardless of any investigation made by the Secured
Party or on its behalf, and shall continue in full force and effect until this Agreement shall
terminate.

8

 

     6.5
No Waiver; Remedies. No failure or delay on the part of the Secured Party in either exercising or enforcing any right under this Agreement will operate as a waiver of, or impair, any such right. No single or partial exercise or enforcement of any such right will preclude
any other or further exercise or enforcement thereof or the exercise or enforcement of any other
right. No waiver of any such right will have effect unless given in a signed writing. No waiver of
any such right will be deemed a waiver of any other right. The rights and remedies set forth in
this Agreement are cumulative and not exclusive of any rights or remedies provided by Law or
otherwise.

     6.6 Severability. In the event any one or more of the provisions contained in this
Agreement should be held invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein shall not in any way be affected or
impaired thereby (it being understood that the invalidity of a particular provision in a particular
jurisdiction shall not in and of itself affect the validity of such provision in any other
jurisdiction). The Parties shall endeavor in good-faith negotiations to replace the invalid,
illegal or unenforceable provisions with valid provisions the economic effect of which comes as
close as possible to that of the invalid, illegal or unenforceable provisions to be replaced
thereby. It is understood and agreed among the Parties that this Agreement shall create separate
security interests in the Collateral securing the Obligations as provided in Section 2.1, and that
any determination by any court with jurisdiction that the security interest securing any Obligation
is invalid for any reason shall not in and of itself invalidate the Security Interest securing any
other Obligations hereunder.

     6.7 Interpretation. The headings contained in this Agreement are used only as a matter
of convenience, and in no way define, limit, construe or describe the scope or intent of any
section of this Agreement.

     6.8 Counterparts. This Agreement and any amendment hereto may be executed in any number of
counterparts and any Party may execute any such counterpart, each of which when executed and
delivered shall be deemed to be an original and all of which counterparts taken together shall
constitute but one and the same instrument. The execution of this Agreement and any such amendment
by any Party will not become effective until counterparts hereof have been executed by both
Parties. The exchange of copies of this Agreement or amendments thereto and of signature pages by
facsimile transmission or by email transmission in portable digital format, or similar format,
shall constitute effective execution and delivery of such instrument(s) as to the Parties and may
be used in lieu of the original Agreement or amendment for all purposes. Signatures of the Parties
transmitted by facsimile or by email transmission in portable digital format, or similar format,
shall be deemed to be their original signatures for all purposes.

     6.9 Termination. This Agreement and the Security Interest (a) shall terminate when
all the Obligations have been indefeasibly satisfied in full (at which time the Secured Party shall
execute and deliver to the Debtor, at the Debtor’s expense, all UCC termination statements and
similar documents that the Debtor shall reasonably request to evidence such termination) and (b)
shall continue to be effective or shall be reinstated, as the case may be, if at any time any
payment in respect of any Obligation is rescinded or must otherwise be restored by the Secured
Party upon any bankruptcy or reorganization of the Debtor or otherwise. Any execution and de-

9

 

livery of termination statements or documents pursuant to this Section 6.9 shall be without
recourse to or warranty by the Secured Party.

     6.10
Governing Law. This Agreement, and the rights and obligations of the Parties
arising hereunder or in connection herewith, including, without limitation, the interpretation, performance, enforcement, breach or termination thereof and any remedies relating thereto, shall be
governed by and construed in accordance with the Laws of the State of North Carolina, as applied
to agreements executed and performed entirely in the State of North Carolina, without regard to
its conflicts of law rules.

     6.11 Binding Effect; Assignment. This Agreement shall be binding upon and inure to the
benefit of the Debtor and the Secured Party and their respective successors and assigns, provided
that Debtor may not assign or transfer any or all of its rights or delegate any or all of its
obligations under this Agreement, including by operation of law, without the prior written consent
of the Secured Party, and any attempted assignment or transfer by the Debtor without consent shall
be null and void. Nothing in this Section 6.11 shall preclude the transfer of the Debtor’s rights
and obligations under this Agreement in conjunction with a merger in which the Debtor is not the
surviving entity.

     6.12
Disclaimer. Neither Lender nor Debtor, nor any of such Party’s Affiliates,
directors, officers, employees, subcontractors or agents shall have, under any legal theory (including, but not limited to, contract, negligence and tort liability), any liability to the.
other Party for any loss of opportunity or goodwill, or any type of special, incidental, indirect
or consequential damage or loss, in connection with or arising out of this Agreement.

     6.13 Jurisdiction. Any action or proceeding seeking to enforce any provision of, or
based upon any right arising out of, this Agreement may be brought against either Party in the
courts of the State of North Carolina, or, if it has or can acquire jurisdiction, in the United
States District Court for the Eastern District of North Carolina, and each of the Parties consents
to the exclusive jurisdiction of such courts (and of the appropriate appellate courts) in any such
action or proceeding.

[signature page follows.]

10

 

[Signature Page to Security Agreement]

     IN
WITNESS WHEREOF, the Parties have duly executed this Agreement as of the day and year
first above written.

	 	 	 	 	 
	 	SIRION THERAPEUTICS, INC. 

 	 
	 	By:  	/s/ Barry Butler
 	 
	 	 	Name:  	Barry Butler 	 
	 	 	Title:  	President & CEO 	 
	 

	 	 	 	 	 
	 	PHARMABIO DEVELOPMENT INC. 

 	 
	 	By:  	/s/ Tom Perkins
 	 
	 	 	Name:  	TOM PERKINS 	 
	 	 	Title:  	SVP 	 
	 

 

 

EXHIBIT A

DEFINITIONS

     “Affiliate” shall mean any individual or entity directly or indirectly controlling,
controlled by or under common control with, the specified individual or entity. For purposes of
this Agreement, a person shall be deemed to control another person if such person possesses,
directly or indirectly, the power to direct or cause the direction of the management, business and
affairs of such other person, whether through the ownership of voting securities, by contract, or
otherwise.

     “Business Day” shall mean any day, other than a Saturday, Sunday or legal holiday, during
which banks in North Carolina are open for the conduct of their banking business.

     “Collateral” shall mean all right, title and interest of Debtor in, to and under any and all
property, assets or rights, tangible or intangible, whether now existing or hereafter existing or
acquired from time to time, including, without limitation, the following: (a) all Accounts,
Consumer Goods, Contract Rights, Contracts, Commercial Tort Claims, Commodity Accounts, Commodity
Contracts, Deposit Accounts, Documents, Electronic Chattel Paper, Equipment, General Intangibles,
Goods, Instruments, Inventory, Investment Property, Letter-of-Credit Rights, Letters-of-Credit,
monies, Payment Intangibles, Promissory Notes, Receivables, Software, and Tangible Chattel Paper;
(b) all Intellectual Property, (c) all regulatory applications, filings, approvals or similar items
related to the Intellectual Property or otherwise, and all records and reports that are required to
be maintained under applicable governmental regulations and all related correspondence to and from
Governmental or Regulatory Authorities, and all clinical data related to any such regulatory
applications, filings, approvals or similar items; (d) all books, records, computer information,
files, documents, data or other materials related to or arising out
of or in connection with any and all of the foregoing; and (e) all Proceeds, including Cash Proceeds and Non-cash Proceeds, of
any and all of the foregoing.

     “Contracts” shall mean all contracts, agreements and licenses between Debtor and one or more
other parties, or under or with respect to which Debtor has rights.

     “Contract Rights” shall mean all rights of Debtor (including, without limitation, all rights
to payment or property) under each Contract.

     “Copyrights” shall mean, collectively, all copyrights (whether such copyrights are statutory
or common law, whether established or registered in the United States or any other country or any
political subdivision thereof, whether registered or unregistered and whether published or
unpublished) and all copyright registrations and applications, and in each case, whether now owned
or hereafter created or acquired, together with any and all (i) rights and privileges arising under
applicable Law with respect to the use of such copyrights, (ii) reissues, renewals, continuations
and extensions thereof, (iii) income, fees, royalties, damages, claims and payments now or
hereafter due or payable with respect thereto, including, without limitation, damages and payments
for past, present or future infringements thereof, (iv) rights corresponding thereto throughout the
world and (v) rights to sue for past, present or future infringements thereof.

 

 

     “Equipment” shall mean any “equipment,” as such term is defined in the Uniform Commercial
Code as in effect on the date hereof in the State of North Carolina, now or hereafter owned by
Debtor and, in any event, shall include, but shall not be limited to, all machinery, equipment,
furnishings, fixtures and vehicles now or hereafter owned by Debtor and any and all additions,
substitutions and replacements of any of the foregoing, wherever located, together with all
attachments, components, parts, equipment and accessories installed thereon or affixed thereto.

     “Event of Default” shall have the same definition as that provided in the Loan Agreement.

     “Governmental or Regulatory Authority” means any foreign, federal, state, or local court, or
governmental or regulatory agency or authority.

     “Intellectual Property” shall mean all intellectual property, proprietary rights and similar
property or rights of every kind and nature now owned or hereafter acquired, including, without
limitation, Patents, Trademarks, Copyrights, domain names, trade secrets and trade secret rights,
inventions, designs, confidential or proprietary technical and business information, Know-How,
show-how or other data or information, software and databases and all embodiments or fixations
thereof and related documentation, registrations and franchises, and all additions, improvements
and accessions to, and books and records describing or used in connection with, any of the
foregoing.

     “Inventory” shall mean all raw materials, work-in-process, and finished inventory of Debtor
of every type or description and all documents of title covering such inventory, and shall
specifically include all “inventory” as such term is defined in the Uniform Commercial Code as in
effect on the date hereof in the State of North Carolina, now or hereafter owned by Debtor.

     “Investors’ Rights Agreement” shall mean the Investors’ Rights Agreement among the Parties and
certain founding shareholders of Debtor, dated as of the date hereof, being entered into
contemporaneously herewith.

     “Know-How” shall mean all know-how and other information, including, without limitation,
ideas, discoveries, inventions, data, techniques, specifications, processes, procedures,
manufacturing and technical information, results from experiments and tests, instructions,
methods, formulae, designs, plans, sketches, records, confidential analyses, interpretations of
information, and trade secrets, or any similar items, in any media form, whether or not tangible,
including, without limitation, any paper or electronic form.

     “Law” means any federal, state, provincial, local or foreign law, statute, rule, regulation,
order, writ, injunction, judgment or decree of any Governmental or Regulatory Authority.

     “Lien” shall mean any lien, security interest, mortgage, pledge, encumbrance, charge or
claim.

     “Loan Documents” shall mean the Loan Agreement, the Note, this Agreement, and any other
documents required or necessary to consummate the transactions contemplated by the Loan Agreement.

2

 

     “Note” shall have the same definition as that provided in the Loan Agreement.

     “Obligations” shall mean any and all obligations (whether or not constituting future
advances, obligatory or otherwise) of the Debtor to the Secured Party or its Affiliates, including
without limitation, from time to time arising under or in respect of the Loan Documents
(including, without limitation, the obligations to pay any and all amounts, indemnities and other
payments related to or in respect of the obligations contained in the Loan Documents), in each
case whether (i) such obligations are direct or indirect, secured or unsecured, joint or several,
absolute or contingent, due or to become due whether at stated maturity, by acceleration or
otherwise, (ii) arising in the regular course of business or otherwise, (iii) for payment or
performance or (iv) now existing or hereafter arising (including, without limitation, interest and
other obligations arising or accruing after the commencement of any bankruptcy, insolvency,
reorganization or similar proceeding with respect to the Debtor or any other Person, or which
would have arisen or accrued but for the commencement of such proceeding, even if such obligation
or the claim therefor is not enforceable or allowable in such proceeding).

     “Party” shall mean the Debtor or the Secured Party and “Parties” means the Debtor and the
Secured Party.

     “Patents” shall mean: (a) any U.S. or foreign patent to which Debtor now or hereafter has
title and any application for a U.S. or foreign patent made by Debtor prior to or after the date
hereof; (b) any reissue, renewal, division, continuation, continuation-in-part, or extension of or
for any such patents or patent applications; and (c) any and all rights of enforcement with
respect to any such patents and patent applications, including all rights of recovery or otherwise
based on past, present and future infringement or misuse of said patents and patent applications
and any and all causes of action related thereto.

     “Permitted Liens” means (a) Liens for any Taxes not yet due and payable, or if obligations
with respect to such Taxes are being contested in good faith by appropriate proceedings promptly
instituted and diligently conducted, (b) Liens in favor of the Secured Party, (c) purported Liens
evidenced by the filing of precautionary UCC financing statements relating to operating leases,
and (d) Liens securing capital leases and purchase money financing of equipment so long as such
Lien encumbers only the assets acquired pursuant to such lease or financing and any additions,
parts, replacements, fixtures, improvements and attachments thereto, and the proceeds thereof.

     “Person” means any natural person, corporation, trust, joint venture, association, company,
partnership, limited liability company or any Governmental or Regulatory Authority.

     “Proceeds” shall have the meaning assigned that term under the Uniform Commercial Code as in
effect in the State of North Carolina on the date hereof or under other relevant Law and, in any
event, shall include, but not be limited to, (a) proceeds arising or related to any sale,
conveyance, assignment or transfer of any of the Collateral; (b) any and all proceeds of any
insurance, indemnity, warranty or guaranty payable to Debtor or Secured Party from time to time
with respect to any of the Collateral; (c) any and all payments (in any form whatsoever) made or
due and payable to Debtor from time to time in connection with any requisition, confiscation,
condemnation, seizure or forfeiture of all or any part of the Collateral by any Governmental or
Regulatory Authority (or any

3

 

person acting under color of Governmental or Regulatory Authority); and (d) any and all other
amounts from time to time paid or payable under or in connection with any of the Collateral.

     “Receivable” shall mean any “account” as such term is defined in the Uniform Commercial Code
as in effect on the date hereof and as in effect from time to time in the State of North Carolina,
and, in any event, shall include, but shall not be limited to, all of Debtor’s rights to payment
for goods sold, leased or licensed or services performed by Debtor, whether now in existence or
arising from time to time hereafter, including, without limitation, rights evidenced by an account,
note, Contract, security agreement, chattel paper or other evidence of indebtedness or security,
together with (a) all security pledged, assigned, hypothecated or granted to or held by Debtor to
secure the foregoing; (b) all of Debtor’s right, title and interest in and to any goods, the sale
of which gave rise thereto; (c) all guarantees, endorsements and indemnifications on, or of, any of
the foregoing; (d) all powers of attorney for the execution of any evidence of indebtedness or
security or other writing in connection therewith, (e) all books, records, ledger cards, and
invoices relating thereto; (f) all evidences of the filing of financing statements and other
statements and the registration of other instruments in connection therewith and amendments
thereto, notices to other creditors or secured parties, and certificates from filing or other
registration offices; (g) all credit information, reports and memoranda relating thereto; and (h)
all other writings related in any way to the foregoing.

     “Tax” means any present or future tax, levy, impost, duty, assessment, charge, fee, deduction
or withholding of any nature and whatever called (including interest
and penalties thereon) by any Governmental or Regulatory Authority, on whomsoever and wherever imposed, levied, collected,
withheld or assessed.

     “Trademarks” shall mean (a) any registered or unregistered domestic or foreign
servicemarks, trademarks, servicemark applications, trademark applications, and trade, business
and product names to which Debtor now or hereafter has title; and (b) all of Debtor’s right, title
and interest to register trademark claims under any state or federal trademark Law or Law of any
foreign country and to apply for, renew, and extend the trademark registrations and trademark
rights, the right to sue or bring opposition or cancellation proceedings for past, present, and
future infringements or misuse of the trademarks, registrations, or trademark rights and all
rights corresponding thereto in the United States and any foreign country.

     “Transaction Documents” shall mean, collectively, the Loan Documents and the Investor Rights
Agreement.

     ‘Transactions” shall mean, collectively, the transactions contemplated by the Transaction
Documents.

     “UCC” shall mean the Uniform Commercial Code as in effect in any applicable jurisdiction.

4

 

     Additional defined terms are set forth in the location indicated below:

	 	 	 
	Defined Term	 	Location
	“Agreement”
	 	Preamble
	“Debtor”
	 	Preamble
	“Effective Date”
	 	Preamble
	“Loan Agreement”
	 	Background
	“Security Interest”
	 	§2.1(a)
	“Secured Party”
	 	Preamble

     All capitalized terms not expressly defined herein are used as such terms are defined in the
Uniform Commercial Code as in effect on the date hereof and as in effect from time to time in the
State of North Carolina.

5

 

FINAL

SCHEDULE “A”

Collateral

     “Collateral” shall mean all right, title and interest of Debtor in, to and under any and all
property, assets or rights, tangible or intangible, whether now existing or hereafter existing or
acquired from time to time, including, without limitation, the following: (a) all Accounts,
Consumer Goods, Contract Rights, Contracts, Commercial Tort Claims, Commodity Accounts, Commodity
Contracts, Deposit Accounts, Documents, Electronic Chattel Paper, Equipment, General Intangibles,
Goods, Instruments, Inventory, Investment Property, Letter-of-Credit Rights, Letters-of-Credit,
monies, Payment Intangibles, Promissory Notes, Receivables, Software,
and Tangible Chattel Paper;
(b) all Intellectual Property; (c) all regulatory applications, filings, approvals or similar items
related to the Intellectual Property or otherwise, and all records and reports that are required to
be maintained under applicable governmental regulations and all related correspondence to and from
governmental or regulatory authorities, and all clinical data related to any such regulatory
applications, filings, approvals or similar items; (d) all books, records, computer information,
files, documents, data or other materials related to or arising out of or in connection with any
and all of the foregoing; and (e) all Proceeds, including Cash Proceeds and Non-cash Proceeds, of
any and all of the foregoing.

     “Contract Rights” shall mean all rights of Debtor (including, without limitation, all rights
to payment or property) under each Contract.

     “Contracts” shall mean all contracts, agreements and licenses between Debtor and one or more
other parties, or under or with respect to which Debtor has rights.

     “Copyrights” shall mean, collectively, all copyrights (whether such copyrights are statutory
or common law, whether established or registered in the United States or any other country or any
political subdivision thereof, whether registered or unregistered and whether published or
unpublished) and all copyright registrations and applications, and in each case, whether now owned
or hereafter created or acquired, together with any and all (i) rights and privileges arising under
applicable law with respect to the use of such copyrights, (ii) reissues, renewals, continuations
and extensions thereof, (iii) income, fees, royalties, damages, claims and payments now or
hereafter due or payable with respect thereto, including, without limitation, damages and payments
for past, present or future infringements thereof, (iv) rights corresponding thereto throughout the
world and (v) rights to sue for past, present or future infringements thereof.

     “Debtor” shall mean Sirion Therapeutics, Inc.

     “Equipment” shall mean any “equipment,” as such term is defined in the Uniform
Commercial Code as in effect on February 14, 2006 in the State of North Carolina, now or
hereafter owned by Debtor and, in any event, shall include, but shall not be limited to, all

 

 

machinery, equipment, furnishings, fixtures and vehicles now or hereafter owned by Debtor and
any and all additions, substitutions and replacements of any of the foregoing, wherever located,
together with all attachments, components, parts, equipment and accessories installed thereon or
affixed thereto.

     “Intellectual Property” shall mean all intellectual property, proprietary rights and similar
property or rights of every kind and nature now owned or hereafter acquired, including, without
limitation, Patents, Trademarks, Copyrights, domain names, trade secrets and trade secret rights,
inventions, designs, confidential or proprietary technical and business information, Know-How,
show-how or other data or information, software and databases and all embodiments or fixations
thereof and related documentation, registrations and franchises, and all additions, improvements
and accessions to, and books and records describing or used in connection with, any of the
foregoing.

     “Inventory” shall mean all raw materials, work-in-process, and finished inventory of Debtor of
every type or description and all documents of title covering such inventory, and shall
specifically include all “inventory” as such term is defined in the Uniform Commercial Code as in
effect on February 14, 2006 in the State of North Carolina, now or hereafter owned by Debtor.

     “Know-How” shall mean all know-how and other information, including, without limitation,
ideas, discoveries, inventions, data, techniques, specifications, processes, procedures,
manufacturing and technical information, results from experiments and tests, instructions, methods,
formulae, designs, plans, sketches, records, confidential analyses, interpretations of information,
and trade secrets, or any similar items, in any media form, whether
or not tangible, including,
without limitation, any paper or electronic form.

     “Patents” shall mean: (a) any U.S. or foreign patent to which Debtor now or hereafter has
title and any application for a U.S. or foreign patent made by Debtor prior to or after February
14, 2006; (b) any reissue, renewal, division, continuation, continuation-in-part, or extension of or
for any such patents or patent applications; and (c) any and all rights of enforcement with respect
to any such patents and patent applications, including all rights of recovery or otherwise based on
past, present and future infringement or misuse of said patents and patent applications and any and
all causes of action related thereto.

     “Proceeds” shall have the meaning assigned that term under the Uniform Commercial Code as in
effect in the State of North Carolina on February 14, 2006 or under other relevant law and, in any
event, shall include, but not be limited to, (a) proceeds arising or related to any sale,
conveyance, assignment or transfer of any of the Collateral; (b) any and all proceeds of any
insurance, indemnity, warranty or guaranty payable to Debtor or Secured Party from time to time
with respect to any of the Collateral; (c) any and all payments (in any form whatsoever) made or
due and payable to Debtor from time to time in connection with any requisition, confiscation,
condemnation, seizure or forfeiture of all or any part of the Collateral by any governmental or
regulatory authority (or any person acting under color of governmental or regulatory authority);
and (d) any and all other amounts from time to time paid or payable under or in connection with any
of the Collateral.

2

 

     “Receivable” shall mean any “account” as such term is defined in the Uniform Commercial Code
as in effect on February 14, 2006 and as in effect from time to time in the State of North Carolina,
and, in any event, shall include, but shall not be limited to, all of Debtor’s rights to payment
for goods sold, leased or licensed or services performed by Debtor, whether now in existence or
arising from time to time hereafter, including, without limitation, rights evidenced by an account,
note, Contract, security agreement, chattel paper or other evidence of indebtedness or security,
together with (a) all security pledged, assigned, hypothecated or granted to or held by Debtor to
secure the foregoing; (b) all of Debtor’s right, title and interest in and to any goods, the sale
of which gave rise thereto; (c) all guarantees, endorsements and indemnifications on, or of, any of
the foregoing; (d) all powers of attorney for the execution of any evidence of indebtedness or
security or other writing in connection therewith, (e) all books, records, ledger cards, and
invoices relating thereto; (f) all evidences of the filing of financing statements and other
statements and the registration of other instruments in connection therewith and amendments
thereto, notices to other creditors or secured parties, and certificates from filing or other
registration offices; (g) all credit information, reports and memoranda relating thereto; and (h)
all other writings related in any way to the foregoing.

     “Secured Party” shall mean PharmaBio Development Inc.

     “Trademarks” shall mean (a) any registered or unregistered domestic or foreign service marks,
trademarks, service mark applications, trademark applications, and trade, business and product
names to which Debtor now or hereafter has title; and (b) all of Debtor’s right, title and
interest to register, trademark claims under any state or federal trademark law or law of any
foreign country and to apply for; renew, and extend the trademark registrations and trademark
rights, the right to sue or bring opposition or cancellation proceedings for past, present, and
future infringements or misuse of the trademarks, registrations, or trademark rights and all
rights corresponding thereto in the United States and any foreign country.

     All capitalized terms not expressly defined herein are used as such terms are defined in
the Uniform Commercial Code as in effect on February 14, 2006 and as in effect from time to
time in the State of North Carolina,

     The rights of Secured Party with respect to the Collateral described above are subject
to the terms of a security agreement between Secured Party and Debtor.

3

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