Document:

EXHIBIT
10.10

 

[ * ] = CERTAIN CONFIDENTIAL INFORMATION
CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF
THE SECURITIES ACT OF 1933, AS AMENDED.

 

LICENSE AGREEMENT

 

This LICENSE AGREEMENT
executed this 7 day of November, 2002 is made by and between BioMedicines Inc.,
a Delaware corporation with principal offices located at 2000 Powell Street, Suite 1640,
Emeryville, California 94608 (“BioMedicines”) and Chiron Corporation, a
Delaware corporation with principal offices located at 4560 Horton Street,
Emeryville, California 94608 (“Chiron”).

 

WITNESSETH:

 

WHEREAS, Chiron has
the right to grant licenses under certain patent rights in technology relating
to recombinant human omega interferon (“Omega Interferon” or “rhIFN-?”);

 

WHEREAS, Chiron has
agreed to grant to BioMedicines an exclusive license under such patents on the
terms and conditions set forth herein; and

 

WHEREAS, simultaneously
with the execution of this Agreement, BioMedicines is issuing to Chiron a
warrant for shares of BioMedicines preferred shares (as defined hereinbelow).

 

NOW THEREFORE, in
consideration of the foregoing and the covenants and promises contained in this
Agreement and the Warrant, the parties agree as follows:

 

ARTICLE 1.

DEFINITIONS

 

1.01                        “Affiliate” shall mean a
corporation or other business entity controlled by, controlling, or under
common control with a Party.  For this
purpose, control shall mean the direct or indirect ownership of at least fifty
percent (50%) of the voting stock or at least fifty percent (50%) interest in
the income of such corporation or other business.

 

1.02                        “Agreement” shall mean this
Agreement.

 

1.03                        “Chiron Patent Rights”
shall mean collectively Chiron’s right, title and interest in the following
intellectual property rights: (a) the patents listed in Exhibit A and
(b) any and all extensions or restorations by existing or future extension
or restoration mechanisms, including without limitation, supplementary
protection certificates or the equivalent thereof, substitutions,
confirmations, reregistrations, reexaminations, revalidations, reissues,
renewals, extensions or additions to any such foregoing patents.

 

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1.04                        “Confidential Information”
shall mean (a) any information of either Party, which, if written, is
marked confidential by the disclosing Party or, if oral, is reduced to writing,
marked confidential by the disclosing Party, and provided to the non-disclosing
Party within thirty (30) days of the oral disclosure, (b) all information
relating to the prosecution, maintenance or defense of the Chiron Patent Rights
and (c) Net Sales.

 

1.05                        “Default” shall mean, with
respect to either Party, such Party shall have failed to perform any material
obligation set forth herein; provided however, that such Party shall have not
brought, or not commenced substantial remedial action to bring, the facts
underlying such representation or warranty into conformance with such
representation or warranty or shall not have performed, or commenced
substantial remedial action to perform, such material obligation, within sixty
(60) days after receipt of written notice from the other Party specifying in
detail the material obligation which has not been performed and requesting that
the failure to perform be remedied within sixty (60) days.

 

1.06                        “Effective Date” shall mean
the date upon which the Warrant is issued by BioMedicines to Chiron pursuant to
Section 5.01 hereof.

 

1.07                        “First Commercial Sale”
shall mean the initial transfer of a Licensed Product to a Third Party in
exchange for cash or some equivalent to which value can be assigned for
purposes of determining Net Sales.

 

1.08                        “Field” shall mean the
treatment, diagnosis or prevention of disease in humans and animals.

 

1.09                        “Force Majeure” shall mean
any occurrence beyond the reasonable control of a Party that prevents or
substantially interferes with the performance by the Party of any of its
obligations hereunder, if such occurs by reason of any act of God, flood, fire,
explosion, breakdown of plant, earthquake, strike, lockout, labor dispute,
casualty or accident, or war, revolution, civil commotion, acts of public
enemies, blockage or embargo, or any injunction, law, order, proclamation,
regulation, ordinance, demand or requirement of any government or of any
subdivision, authority or representative or any such government, inability to
procure or use materials, labor, equipment, transportation, or energy
sufficient to meet manufacturing needs without the necessity of allocation, or
any other cause whatsoever, whether similar or dissimilar to those above
enumerated, beyond the reasonable control of such Party, if and only if the
Party affected shall have used reasonable efforts to avoid such occurrence and
to remedy it promptly if it shall have occurred and shall have notified the
other Party in writing of the reasons for the delay or default.

 

1.10                        “GAAP” shall mean United
States generally accepted accounting principles consistently applied.

 

1.11                        “Licensed Products” shall
mean any and all rhIFN-? healthcare products, the manufacture, use, sale or
offer to sell of which would, but for the licenses granted in this Agreement,
infringe one or more of the Valid Claims of the Chiron Patent Rights.

 

1.12                        “Net Sales” shall mean all
revenues recognized in accordance with GAAP from the sale of Licensed Products
by BioMedicines, its Affiliates or sublicensees to Third Parties, less returns

 

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED
IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE
SECURITIES ACT OF 1933, AS AMENDED.

 

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and allowances (actually paid and allowed, including, but not limited
to, prompt payment and volume discounts, charge backs from wholesalers and
other allowances granted to customers, whether in cash or trade), freight,
packing, insurance, rebates actually paid and allowed, and sales and other
taxes based on sales prices when included in gross sales, but not including
taxes when assessed on income derived from such sales.

 

1.13                        “Party” shall mean
BioMedicines or Chiron, as the case may be, and “Parties”
shall mean BioMedicines and Chiron collectively.

 

1.14                        “Person” shall mean an
individual, a partnership, a joint venture, a corporation, a trust, an estate,
an unincorporated organization, or any other entity, or a government or any
department or agency thereof.

 

1.15                        “Territory” shall mean the
United States of America.

 

1.16                        “Third Party” shall mean
any Person other than Chiron and BioMedicines.

 

1.17                        “Valid Claim” shall mean a
claim of an issued and unexpired patent included within the Chiron Patent
Rights which has not been held permanently revoked, unenforceable or invalid by
a decision of a court or other governmental agency of competent jurisdiction,
unappealable or unappealed within the time allowed for appeal, and which has
not been disclaimed, denied or admitted to be invalid or unenforceable through
reissue or disclaimer or otherwise.

 

1.18                        “Warrant” shall have the
meaning set forth in Section 5.01 hereof.

 

ARTICLE 2.

LICENSE GRANT

 

2.01                        License
Grant to BioMedicines.

 

(a)                                  Grant
to BioMedicines.  On the terms and conditions
set forth herein, Chiron hereby grants to BioMedicines and its Affiliates an
exclusive license, with the right to grant sublicenses solely pursuant to Section 2.01(b),
under the Chiron Patent Rights to make, have made, use, have used, sell, have sold
and offer for sale Licensed Products in the Field anywhere in the Territory.

 

(b)                                 Sublicenses.  BioMedicines shall not have the right to
grant sublicenses under this Agreement without the prior written consent of
Chiron, such consent not to be unreasonably withheld; provided however, that
Chiron’s consent to any sublicense hereunder is subject to the following:

 

(i)                                     BioMedicines
agrees that it shall require that its sublicensees be bound and be fully
responsible for complying with all obligations hereunder;

 

(ii)                                  BioMedicines
agrees not receive from its sublicensees anything of value in lieu of cash
consideration without the express prior written consent of Chiron.

 

[ * ] = CERTAIN CONFIDENTIAL INFORMATION
CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF
THE SECURITIES ACT OF 1933, AS AMENDED.

 

3

 

Furthermore, BioMedicines agrees to provide to Chiron a fully executed
copy of any sublicense agreement within [*] days of
execution.

 

Any and all payments BioMedicines receives as
consideration for a sublicense granted by BioMedicines pursuant to this Section 2.01(b) shall
be treated as Net Sales under this Agreement.

 

(c)                                  No
Other Licenses.  Other than to Chiron
Patent Rights, this Agreement confers no license or rights by implication,
estoppel or otherwise to BioMedicines under any patent applications or patents
of Chiron regardless of whether such patents are dominant or subordinate to
Chiron Patent Rights.

 

2.02                        Chiron Reserved Rights. 
During the term of this Agreement, Chiron shall have an unrestricted
right to use the Chiron Patent Rights for any research or commercial purpose
other than the development and commercialization of Licensed Products.

 

ARTICLE 3.

REPRESENTATIONS, WARRANTIES AND COVENANTS;

LIMITATION OF LIABILITY

 

3.01                        Representations
and Warranties of BioMedicines.

 

(a)                                  Corporate
Power.  BioMedicines is duly
organized and validly existing under the laws of the State of Delaware and has
full corporate power and authority to enter into this Agreement and to carry
out the provisions hereof.

 

(b)                                 Due
Authorization.  BioMedicines is duly
authorized to execute and deliver this Agreement and to perform its obligations
hereunder.  The Person executing this
Agreement on BioMedicines’ behalf has been duly authorized to do so by all
requisite corporate action.

 

(c)                                  Binding
Agreement.  This Agreement is a legal
and valid obligation binding upon BioMedicines, and enforceable in accordance
with its terms.  The execution, delivery
and performance of this Agreement by BioMedicines does not conflict with any
material agreement, instrument or understanding, oral or written, to which it
is a party or by which it may be bound, nor violate any material law or
regulation of any court, governmental body or administrative or other agency
having jurisdiction over it.

 

3.02                        Representations
and Warranties of Chiron.

 

(a)                                  Corporate
Power.  Chiron is duly organized and
validly existing under the laws of the State of Delaware and has full corporate
power and authority to enter into this Agreement and carry out the provisions
hereof.

 

(b)                                 Due
Authorization.  Chiron is duly
authorized to execute and deliver this Agreement and to perform its obligations
hereunder.  The Person executing this
Agreement on Chiron’s behalf has been duly authorized to do so by all requisite
corporate action.

 

[ * ] = CERTAIN CONFIDENTIAL INFORMATION
CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF
THE SECURITIES ACT OF 1933, AS AMENDED.

 

4

 

(c)                                  Binding
Agreement.  This Agreement is a legal
and valid obligation binding upon Chiron, and enforceable in accordance with
its terms.  The execution, delivery and
performance of this Agreement by Chiron does not conflict with any material
agreement, instrument or understanding, oral or written, to which it is a party
or by which it may be bound, nor violate any material law or regulation of any
court, governmental body or administrative or other agency having jurisdiction
over it.

 

(d)                                 No
Other Warranties.  Chiron offers as
warranties the statements set forth herein. 
Chiron makes no other warranties. 
Chiron does not warrant the validity or enforceability of the Chiron
Patent Rights and makes no representations whatsoever with regard to the scope
of the Chiron Patent Rights, or that the Chiron Patent Rights may be exploited
without infringing other patents or other intellectual property rights of Third
Parties.  CHIRON MAKES NO WARRANTIES,
EXPRESSED OR IMPLIED, OF THE MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE OR INFRINGEMENT OF ANY SUBJECT MATTER DEFINED BY THE CLAIMS OF THE
CHIRON PATENT RIGHTS. Chiron does not represent that it will commence legal
actions of any kind against third parties for infringement of any of the Chiron
Patent Rights.

 

3.03                        Limitation of Liability. 
IN NO EVENT WILL EITHER PARTY BE LIABLE FOR ANY SPECIAL, INCIDENTAL,
CONSEQUENTIAL OR INDIRECT DAMAGES ARISING IN ANY WAY OUT OF THIS AGREEMENT,
HOWEVER CAUSED AND ON ANY THEORY OF LIABILITY. THIS LIMITATION WILL APPLY EVEN
IF THE OTHER PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGE AND
NOTWITHSTANDING ANY FAILURE OF ESSENTIAL PURPOSE OF ANY LIMITED WARRANTY
PROVIDED HEREIN.

 

ARTICLE 4.

DEVELOPMENT AND COMMERCIALIZATION

 

4.01                        Diligence.  BioMedicines, in its
sole discretion, shall have the right to make all decisions relating to the
development and commercialization of Licensed Products including, but not
limited to, all decisions relating to the research, pre-clinical, and clinical
development of Licensed Products, and the promotion, advertising, marketing and
pricing of Licensed Products. 
BioMedicines shall use its commercially reasonable efforts to actively
develop and market at least one Licensed Product in the Territory as
expeditiously as possible.

 

4.02                        Diligence Reports. 
BioMedicines shall deliver to Chiron, on [*]
until the [*], a reasonably detailed report of
BioMedicines development activities for the prior [*]
period.

 

ARTICLE 5.

CONSIDERATION

 

5.01                        Warrant.  In consideration for
the grant of the rights and licenses set forth in Section 2.01, in
addition to the other payments set forth in this Article 5, BioMedicines
shall issue to

 

[ * ] = CERTAIN CONFIDENTIAL INFORMATION
CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF
THE SECURITIES ACT OF 1933, AS AMENDED.

 

5

 

Chiron within thirty (30) days of the Effective Date of this Agreement,
a warrant for 150,000 shares of BioMedicines Common Stock in the form of Exhibit B
hereto (the “Warrant”).

 

5.02                        Royalties.

 

(a)                                  In
consideration for the grant of the rights and licenses set forth in Section 2.01,
in addition to the other payments set forth in this Article 5,
BioMedicines shall pay to Chiron in immediately available funds a royalty of [*] on aggregate Net Sales.

 

(b)                                 Royalties
under this Section 5.03 shall be payable on a Licensed Product-by-Licensed
Product basis, and shall be imposed only once with respect to any sale of the
same unit of Licensed Product by BioMedicines or its sublicensees, and no
multiple royalties shall be payable by BioMedicines because any Licensed
Product is covered by more than one of the Chiron Patent Rights or one or more
claims of the Chiron Patent Rights.

 

(c)                                  BioMedicines’
obligation to pay royalties to Chiron shall expire upon the expiration of the
last to expire of the Chiron Patent Rights.

 

5.03                        Payment
of Royalties; Reports.

 

(a)                                  First
Commercial Sale.  BioMedicines shall
report to Chiron the date of First Commercial Sale of a Licensed Product within
thirty (30) days of such occurrence.

 

(b)                                 Royalty
Statements.  BioMedicines shall
deliver to Chiron, within sixty (60) days after the end of each calendar
quarter, a statement setting forth the Net Sales of Licensed Products during
such calendar quarter (including the country of manufacture and an itemized
calculation of the amount of Net Sales in the United States, its territories
and possessions) and the royalties due hereunder.  Each such statement shall be accompanied by a
remittance of the royalties in United States Dollars due for such calendar
quarter.  Net Sales and royalties
computations contained in any such statement shall be certified by BioMedicines
as accurate to the best of its ability consistent with BioMedicines’ standard
practices in performing such computations.

 

(c)                                  Manner
of Payment.  All payments hereunder
shall be in United States dollars in immediately available funds and shall be
made by wire transfer to such bank account as may be designated in writing from
time to time by Chiron.

 

(d)                                 Currency.  If Net Sales are in a currency other than
United States Dollars, the Net Sales, for the purpose of calculating payments
hereunder shall be determined in the applicable foreign currency and then
converted into United States Dollars at the end of each calendar quarter using
an exchange rate equal to the simple average of the daily “U.S. Dollar Noon
Buying Rates,” on each business day of the applicable calendar quarter, as
published at 12:00pm daily New York time by the Federal Reserve Bank of New
York (available on Bloomberg L.P. and Reuters). 
Any loss of exchange, value, taxes or other expenses incurred in the
transfer or conversion to U.S. dollars shall be paid entirely by BioMedicines
for the currency conversion of Net Sales.

 

[ * ] = CERTAIN CONFIDENTIAL INFORMATION
CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF
THE SECURITIES ACT OF 1933, AS AMENDED.

 

6

 

(e)                                  Taxes.  All taxes levied on account of royalties
payable to BioMedicines hereunder shall be paid by BioMedicines.  In the event laws or regulations require
withholding of taxes from any payment of royalties, the taxes will be deducted
by BioMedicines from the royalty payment and will be paid by BioMedicines to
the proper taxing authority. 
BioMedicines will furnish Chiron with the original copies of all
official receipts for such taxes.  In the
event of any such withholding, the Parties agree to confer regarding other
measures to minimize such withholding.

 

(f)                                    Overdue
Payments.  Any overdue payments under
this Agreement, including without limitation, royalty payments made hereunder
after the date such payment is due, shall bear interest at the lesser of [*] above the [*] as
published in the Wall Street Journal as of the date such payment was due, or (b) the
maximum rate permitted by applicable law (the “Interest Rate”).  The Interest Rate shall be calculated based
on a 360-day year from the date payment was due until received by Chiron.

 

ARTICLE 6.

RECORDS; AUDIT

 

6.01                        Record Retention. 
BioMedicines shall keep complete and accurate records in sufficient
detail to permit Chiron to confirm the accuracy of reported royalties hereunder,
including without limitation, general accounting ledgers, invoice/sale
registers, original invoices and shipping documents, tax returns, inventory and
manufacturing records, sublicense and distributor agreements and price lists,
product catalogs and other marketing materials. 
Such records shall be retained by BioMedicines for at least the longer
of one (1) year after completion of the audit thereof (if an audit has
been requested) or three (3) years following the calendar year in which
any such payments were made hereunder.

 

6.02                        Royalty Audit. 
Once per [*] period and once within [*] after termination of this Agreement, BioMedicines agrees
to make its records for payment of royalties due available for examination by
Chiron during normal business hours.  Chiron shall have the option to engage, at its
own expense, an independent certified public accountant reasonably acceptable
to BioMedicines to examine, in confidence, BioMedicines’ records as may be
necessary to determine the correctness of any payment of royalties hereunder
made by BioMedicines.  The report of such
accountant shall be limited to a certificate verifying any report made or
payment submitted by BioMedicines during such period but may include, in the event
the accountant shall be unable to verify the correctness of any such payment,
information relating to why such payment is unverifiable.  All information contained in any such
certificate shall be deemed to be the Confidential Information of BioMedicines
hereunder.  If any audit performed under
this Section 6.02 shall indicate that any payment due hereunder was
underpaid, BioMedicines shall promptly pay the amount of any underpayment.  If any audit performed under this Section 6.02
shall indicate that any payment hereunder was in error to Chiron’s detriment by
more than [*] for any [*]
period, BioMedicines shall pay the cost of the audit.

 

[ * ] = CERTAIN CONFIDENTIAL INFORMATION
CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF
THE SECURITIES ACT OF 1933, AS AMENDED.

 

7

 

ARTICLE 7.

PATENTS

 

7.01                        Patent
Prosecution and Maintenance.

 

During the term of this Agreement, Chiron, using its
sole business judgment, and at its expense, shall have the right to maintain
and prosecute the Chiron Patent Rights. 
If Chiron elects to not prosecute, maintain, or defend any patent within
Chiron Patent Rights, Chiron shall timely notify BioMedicines of such decision,
and BioMedicines may, at BioMedicines’ sole expense (including attorney’s fees)
elect to prosecute, maintain, and/or defend such patent upon providing written
notice of such election to Chiron.

 

7.02                        Enforcement
of Chiron Patent Rights.

 

(a)                                  Notification
of Infringement.  If either Party
learns of an infringement by a Third Party of the Chiron Patent Rights, such
Party shall promptly notify the other Party and shall provide such other Party
with available evidence of such infringement.

 

(b)                                 Enforcement
by Chiron.  Chiron shall have the
first right to elect to enforce the Chiron Patent Rights against Third
Parties.  In the event Chiron shall so
elect, Chiron shall determine the strategy and BioMedicines shall reasonably
assist and, at Chiron’s request, cooperate with Chiron in any such
enforcement.  Chiron shall bear all
associated costs and expenses (including attorneys’ fees).  In the event damages or recoveries directly
related to Omega Interferon or the Licensed Products are awarded in such
action, such amounts shall first be applied to reimburse Chiron and
BioMedicines for any out of pocket costs and expenses (including attorney’s
fees) incurred in connection with such action, and the remainder shall be
shared [*] by the Parties.

 

(c)                                  Enforcement
by BioMedicines.  If within [*] days after written request by BioMedicines, Chiron
elects not to enforce the Chiron Patent Rights against any Third Party
infringing in the Field, BioMedicines shall have the right, but not the
obligation, to enforce the Chiron Patent Rights against such Third Party.  BioMedicines shall consult with Chiron and
keep Chiron regularly advised of BioMedicines’ strategies, plans, progress and
results of any such enforcement action. 
BioMedicines shall bear all associated costs and expenses (including
attorneys’ fees).  In the event damages
or recoveries shall be awarded in such action, such amounts shall be applied
first to reimburse BioMedicines and Chiron for any out of pocket costs incurred
in connection with such action.  Remaining
amounts will be retained by BioMedicines and treated as Net Sales in the year
in which such amounts are received by BioMedicines for purposes of
determination of royalties payable by BioMedicines to Chiron.

 

7.03                        Third
Party Claims.  Each Party shall
promptly notify the other upon becoming aware of any Third Party claim or
action against BioMedicines for infringement of Third Party patent rights
through the use of the Chiron Patent Rights in the making, using, selling or
importing of Licensed Products.  Chiron
shall have the right to defend the Chiron Patent Rights against Third Party
claims that the Chiron Patent Rights are invalid or unenforceable and shall
bear all associated costs and expenses (including attorneys’ fees) and pay all
damages and settlement amounts.  Chiron
shall consult with BioMedicines and keep BioMedicines regularly advised of
Chiron’s strategies, plans, progress and results of any such defense.  In the event that Chiron shall decide not to
defend Chiron Patent Rights, it shall notify BioMedicines of such intention
without delay and in sufficient time to enable BioMedicines to defend the
Chiron Patent Rights

 

[ * ] = CERTAIN CONFIDENTIAL INFORMATION
CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF
THE SECURITIES ACT OF 1933, AS AMENDED.

 

8

 

ARTICLE 8.

CONFIDENTIALITY

 

8.01                        Confidentiality.  For the term of this Agreement and any
extensions and for a period of [*] years
thereafter, each Party agrees to keep confidential and not publish or otherwise
disclose or use for any purpose other than as provided for in this Agreement,
any Confidential Information disclosed to it by the other Party, except that
each Party shall not be prevented from disclosing information:

 

(a)                                  which
it can demonstrate by written records was previously known to it;

 

(b)                                 which
is, or becomes in the future, public knowledge through no fault or omission
attributable to the receiving Party;

 

(c)                                  which
is lawfully obtained without restriction by the receiving party from sources
independent of the disclosing Party without breach of a confidentiality
obligation; or

 

(d)                                 which
was independently discovered or developed by the disclosing Party without
access to or the use of the other Party’s Confidential Information, as can be
documented by written records created at the time of such independent discovery
or development.

 

8.02                        This
Agreement.  The Parties agree
that the material terms of the Agreement and the Warrant shall be considered
Confidential Information of both Parties. 
Notwithstanding the foregoing, (i) the Parties shall be permitted
to disclose in filings with the Securities Exchange Commission (“SEC”) those
terms of this Agreement an the Warrant required to be disclosed under law or
regulation; provided that the Parties shall consult with one another concerning
which terms of this Agreement and the Warrant shall be requested to be redacted
in any SEC filings, and provided however, that in the event of a filing each
party shall seek confidential treatment in its SEC filings for the financial
terms of this Agreement and the Warrant, (ii) each Party shall have the
right to disclose in confidence the terms of the Agreement to parties retained
by such Party to perform legal, accounting or similar services and who have a
need to know such terms in order to provide such services and (iii) at the
request of either Party, the Parties shall mutually agree on a press release to
be issued upon execution of this Agreement or reasonably soon thereafter.

 

8.03                        Authorized
Disclosure.

 

(a)                                  Each
Party may disclose Confidential Information belonging to the other Party to the
extent such disclosure is reasonably necessary in the following:

 

(i)                                     enforcing
and or defending rights or obligations under this Agreement;  and

 

(ii)                                  complying
with any court order;

 

provided however that the Party required to or
intending to disclose the other Party’s Confidential Information under this Section 8.03
shall have first given prompt notice to the other

 

[ * ] = CERTAIN CONFIDENTIAL INFORMATION
CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF
THE SECURITIES ACT OF 1933, AS AMENDED.

 

9

 

Party to enable it to seek any available exemptions from or limitations
on such disclosure, and shall reasonably cooperate in such efforts by the other
Party.

 

(b)                                 Notwithstanding
the foregoing, in the event a Party is required to make a disclosure of the
other Party’s Confidential Information pursuant to this Section 8.03, it
will give reasonable advance notice to the other Party of such disclosure and
use reasonable commercial efforts to secure confidential treatment of such
information.  In any event, the Parties
agree to take all reasonable action to avoid disclosure of Confidential
Information hereunder.

 

ARTICLE 9.

INDEMNIFICATION

 

9.01                        Indemnification
by BioMedicines.

 

(a)                                  BioMedicines
shall indemnify, defend and hold harmless Chiron, its officers, directors,
employees, stockholders, agents and representatives (collectively, “Chiron
Indemnitees”) from any and all losses, demands, damages, liabilities, costs and
expenses, including reasonable attorneys’ fees (collectively, “Losses”),
arising out of or relating to the research, development, marketing, design,
manufacture, distribution, use and/or sale of Licensed Products by, on behalf
of, or under authority of, BioMedicines or its sublicensees.  Notwithstanding the foregoing, no Chiron
Indemnitee shall be entitled to indemnification under this Section 9.01
against any Losses arising out of such Chiron Indemnitee’s negligence or
willful misconduct.

 

(b)                                 Each
Chiron Indemnitee shall notify BioMedicines in writing promptly upon becoming
aware of any pending or threatened claim, suit, proceeding or other action (“Claim”)
to which such indemnification may apply. 
Failure to provide such notice shall constitute a waiver of BioMedicines’
indemnity obligations hereunder if and to the extent that BioMedicines is
materially damaged thereby.  BioMedicines
shall have the right to assume and control the defense of the Claim at its own
expense.  If the right to assume and
control the defense is exercised, the Chiron Indemnitee shall have the right to
participate in, but not control, such defense at its own expense, and
BioMedicines’ indemnity obligations shall be deemed not to include attorneys’
fees and litigation expenses incurred by the Chiron Indemnitee after the
assumption of the defense by BioMedicines. 
If BioMedicines does not assume the defense of the Claim, the Chiron
Indemnitee may defend the Claim, at BioMedicines’ expense; provided that the
Chiron Indemnitee shall not settle or compromise the Claim without the consent
of BioMedicines, which consent shall not be unreasonably withheld.  The Chiron Indemnitee shall cooperate with
BioMedicines and will make available to BioMedicines all pertinent information
under the Chiron Indemnitee’s control.

 

9.02                        Indemnification
by Chiron.

 

(a)                                  Chiron
shall indemnify, defend and hold harmless BioMedicines, its officers,
directors, employees, stockholders, agents and representatives (collectively, “BioMedicines
Indemnitees”) from any and all losses, demands, damages, liabilities, costs and
expenses, including reasonable attorneys’ fees (collectively, “Losses”),
arising out of or relating to the

 

[ * ] = CERTAIN CONFIDENTIAL INFORMATION
CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF
THE SECURITIES ACT OF 1933, AS AMENDED.

 

10

 

warranties and representations made by Chiron in the Agreement.  Notwithstanding the foregoing, no
BioMedicines Indemnitee shall be entitled to indemnification under this Section 9.02
against any Losses arising out of such BioMedicines Indemnitee’s negligence or
willful misconduct.

 

(b)                                 Each
BioMedicines Indemnitee shall notify Chiron in writing promptly upon becoming
aware of any pending or threatened claim, suit, proceeding or other action (“Claim”)
to which such indemnification may apply. 
Failure to provide such notice shall constitute a waiver of Chiron’s
indemnity obligations hereunder if and to the extent that BioMedicines is
materially damaged thereby.  Chiron shall
have the right to assume and control the defense of the Claim at its own
expense.  If the right to assume and
control the defense is exercised, the BioMedicines Indemnitee shall have the
right to participate in, but not control, such defense at its own expense, and
Chiron’s indemnity obligations shall be deemed not to include attorneys’ fees
and litigation expenses incurred by the BioMedicines Indemnitee after the
assumption of the defense by Chiron.  If
Chiron does not assume the defense of the Claim, the BioMedicines Indemnitee
may defend the Claim, at Chiron’s expense; provided that the BioMedicines
Indemnitee shall not settle or compromise the Claim without the consent of
Chiron, which consent shall not be unreasonably withheld.  The BioMedicines Indemnitee shall cooperate
with Chiron and will make available to Chiron all pertinent information under
the BioMedicines Indemnitee’s control.

 

9.03                        Damage.  Notwithstanding anything to the contrary in
this Agreement, in no event shall either Party be responsible for any
incidental or consequential damages, including without limitation lost profits
or opportunities, and/or damages in connection with Default and/or termination
of this Agreement, incurred by the other Party or any indemnitee hereunder.

 

9.04                        Insurance.  Each party shall
maintain, through self-insurance or commercially-placed insurance, adequate
coverage for the indemnification obligations set forth herein, consistent with
pharmaceutical industry practices.

 

ARTICLE 10.

TERMINATION

 

10.01                 Term.  This Agreement shall
commence on the Effective Date and automatically terminate upon the expiration
of the last to expire of Chiron Patent Rights in the Territory.

 

10.02                 Termination by BioMedicines.  BioMedicines
may terminate, in whole or in part, any of the licenses granted by Chiron to
BioMedicines under Chiron Patent Rights with ninety (90) days’ prior written
notice to Chiron.  All licenses so
terminated shall revert back to Chiron.

 

10.03                 Termination for Discontinuation of
Development.  In the event that BioMedicines and its
sublicensees have discontinued all development and commercialization activities
relating to Licensed Products, this Agreement shall terminate and all licenses
under the Chiron Patent Rights granted to BioMedicines and its sublicensees
hereunder shall revert to Chiron thirty (30) days thereafter.

 

[ * ] = CERTAIN CONFIDENTIAL INFORMATION
CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF
THE SECURITIES ACT OF 1933, AS AMENDED.

 

11

 

10.04                 Termination for Default. 
In the event of a Default by BioMedicines in its capacity as a licensee
under this Agreement, Chiron may terminate the licenses under the Chiron Patent
Rights granted to BioMedicines and its sublicensees hereunder by written notice
to BioMedicines, and upon BioMedicines’ receipt of such notice, all licenses
under the Chiron Patent Rights granted to BioMedicines and its sublicensees
hereunder shall revert to Chiron.

 

10.05                 Insolvency or
Bankruptcy.

 

(a)                                  Rights
in Bankruptcy.  All rights and
licenses granted under or pursuant to this Agreement by the Parties are, and
shall otherwise be deemed to be, for purposes of Section 365(n) of the
United States Bankruptcy Code, licenses of rights to “intellectual property” as
defined under Section 101 of the United States Bankruptcy Code.  The Parties agree that each Party, in its
capacity as a licensee of such rights under this Agreement, shall retain all
licenses granted to it hereunder and may fully exercise all of its rights and
elections under the United States Bankruptcy Code, subject to payment to the
other Party of any royalties or other payments due pursuant to Article 5.  The Parties further agree that, in the event
of commencement of a bankruptcy proceeding by or against either Party under the
United States Bankruptcy Code, the Party hereto which is not a party to such
proceeding shall be entitled to a complete duplicate of (or complete access to,
as appropriate) any such intellectual property, and all embodiments of such
intellectual property, and same, if not already in its possession, shall be
promptly delivered to it (i) upon any such commencement of a bankruptcy
proceeding upon its written request therefore, unless the Party subject to such
proceeding elects to continue to perform all of its obligations under this
Agreement, or (ii) if not delivered under (i) above, upon the
rejection of this Agreement by or on behalf of the Party subject to such
proceeding upon written request therefore by any non-subject Party.

 

10.06                 Surviving
Obligations.  The provisions of
Articles 1, 3, 6, 8, 9, 11 and Sections 5.04 (c) and (g) and Section 10.7
shall survive any termination or expiration of this Agreement.  Termination, relinquishment or expiration of
this Agreement for any reason shall be without prejudice to any rights which
shall have accrued to the benefit of either Party prior to such termination,
relinquishment or expiration.

 

10.07                 Effects of Termination. 
Upon termination of this Agreement in its entirety or otherwise with
respect to rights in any Licensed Product in accordance with Section 10.02,
BioMedicines and its sublicensees shall thereupon have the right to sell that
amount of any such Licensed Product that BioMedicines and its sublicensees then
have on hand, provided however, that with respect to any such Licensed
Product for which any payment is due under Article 5 hereof, BioMedicines
shall make such payment to Chiron as required therein.

 

ARTICLE 11.

 

MISCELLANEOUS
PROVISIONS

 

11.01                 Assignment.  Neither this Agreement nor any interest
hereunder shall be assignable by either Party without the prior written consent
of the other Party; provided that either Party may assign this Agreement and
all of its rights and obligations hereunder, without such consent, to an entity
which acquires all or substantially all of the research program or product
rights to which

 

[ * ] = CERTAIN CONFIDENTIAL INFORMATION
CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF
THE SECURITIES ACT OF 1933, AS AMENDED.

 

12

 

this Agreement pertains, whether by merger, consolidation,
reorganization, acquisition, sale, license or otherwise.  This Agreement shall be binding upon the
successors and permitted assigns of the Parties, and the name of a Party
appearing herein shall be deemed to include the names of such Party’s
successors and permitted assigns to the extent necessary to carry out the
intent of this Agreement.  Any assignment
not in accordance with this Section 11.01 shall be void.

 

11.02                 Further Actions. 
Each Party agrees to execute, acknowledge and deliver such further
instruments, and to do all such other acts, as may be necessary or appropriate
in order to carry out the purposes and intent of this Agreement.

 

11.03                 Force Majeure. 
Neither Party shall be liable to the other for loss or damages, nor
shall have any right to terminate this Agreement for any default or delay
attributable to any Force Majeure, if the Party affected shall give prompt
notice of any such cause to the other Party.  The Party giving such notice shall thereupon
be excused from such of its obligations hereunder as it is thereby disabled
from performing for so long as it is so disabled, provided however, that such
affected Party commences and continues to take reasonable and diligent actions
to cure such cause.

 

11.04                 Notices.  All notices and other communications required
by this Agreement shall be in writing and shall be deemed given if delivered
personally or by facsimile transmission (receipt verified), mailed by
registered or certified mail (return receipt requested), postage prepaid, or
sent by express courier service, to the parties at the following addresses (or
at such other address for a Party as shall be specified by like notice, provided
however, that notices of a change of address shall be effective only upon
receipt thereof):

 

If to BioMedicines, addressed to:

 

BioMedicines Inc.

2000 Powell Street, Suite 1640

Emeryville, California 94608

Attention: Mark Moran, M.D.

Facsimile: (510) 652-2623

 

If to Chiron addressed to:

 

Chiron Corporation

4560 Horton Street

Emeryville, California 94608

Attention: Chief Executive Officer

Facsimile: (510) 655-9910

 

With a copy to: General Counsel

Facsimile: (510) 654-5360

 

11.05                 Amendment.  No amendment, modification or supplement of
any provision of this Agreement shall be valid or effective unless made in
writing and signed by a duly authorized officer of each Party.

 

[ * ] = CERTAIN CONFIDENTIAL INFORMATION
CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF
THE SECURITIES ACT OF 1933, AS AMENDED.

 

13

 

11.06                 Waiver.  No provision of the
Agreement shall be waived by any act, omission or knowledge of any Party or its
agents or employees, except by an instrument in writing expressly waiving such
provision and signed by a duly authorized officer of the waiving Party.

 

11.07                 Counterparts. 
This Agreement may be executed in any number of counterparts, each of
which need not contain the signature of more than one Party, but all such
counterparts taken together shall constitute one and the same agreement.

 

11.08                 Descriptive Headings. 
The descriptive headings of this Agreement are for convenience only, and
shall be of no force or effect in construing or interpreting any of the
provisions of this Agreement.

 

11.09                 Governing Law.  This Agreement shall be governed by and
interpreted in accordance with the substantive laws of the State of California,
without reference to the conflicts of law principles thereof, and the Parties
hereby submit to the exclusive jurisdiction of the California courts, both
state and federal.

 

11.10                 Severability.  Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement is held to be
prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of this Agreement. 
Invalidity, non-enforceability or expiration of any or all of the Chiron
Patent Rights shall not affect BioMedicines’ license rights in and to the
remaining Chiron Patent Rights.

 

11.11                 Entire
Agreement of the Parties.  This
Agreement (including all Exhibits attached hereto, which are incorporated
herein by reference) constitutes and contains the complete, final and exclusive
understanding and agreement of the Parties and cancels and supersedes any and
all prior negotiations, correspondence, representations, promises,
understandings and agreements, whether oral or written, between the Parties
respecting the subject matter thereof.

 

11.12                 Dispute Resolution. 
The Parties agree that in the event of a dispute between them arising
from, concerning or in any way relating to this Agreement, the Parties shall
undertake good faith efforts to resolve any such dispute in good faith.  In the event the Parties shall be unable to
resolve any such dispute, the matter shall be first referred to the general
counsel for each Party for further review and resolution and, if necessary,
then to the chief executive officer of each Party.  If after such efforts the Parties are unable to
resolve such dispute, a Party may seek any remedy available under applicable
law.

 

11.13                 Independent Contractors. 
The relationship between Chiron and BioMedicines created by this
Agreement is one of independent contractors, and neither Party shall have the
power or authority to bind or obligate the other except as expressly set forth
in this Agreement.

 

11.14                 Use of Name.  No right, express or
implied, is granted to either Party by this Agreement to use in any manner any
trademark or trade name of the other Party, including the names “BioMedicines”
and “Chiron”, without the prior written consent of the owning Party.

 

[ * ] = CERTAIN CONFIDENTIAL INFORMATION
CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF
THE SECURITIES ACT OF 1933, AS AMENDED.

 

14

 

11.15                 Further Actions. 
Each Party agrees to execute, acknowledge and deliver such further
instruments, and to do all such other acts, as may be necessary or appropriate
in order to carry out the purposes and intent of this Agreement.

 

[ * ] = CERTAIN CONFIDENTIAL INFORMATION
CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF
THE SECURITIES ACT OF 1933, AS AMENDED.

 

15

 

IN WITNESS WHEREOF, the Parties
hereto have executed this Agreement in duplicate by their respective duly
authorized officers.

 

	
  BIOMEDICINES INC.

  
	
   

  
	
   

  	
  /s/ S. M. Moran

  	
   

  
	
   

  	
   

  
	
  By:

  	
  Mark Moran, M.D.

  
	
   

  	
   

  
	
  Title: Chief Executive Officer

  
	
   

  
	
   

  
	
  CHIRON CORPORATION

  
	
   

  
	
   

  
	
   

  	
  /s/ Craig A. Wheeler

  	
   

  
	
   

  	
   

  
	
  By:

  	
  Craig A. Wheeler

  
	
   

  	
   

  
	
  Title:

  	
  Vice President

  
	
   

  	
  and President, Chiron BioPharmaceuticals

  

 

[ * ] = CERTAIN CONFIDENTIAL INFORMATION
CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF
THE SECURITIES ACT OF 1933, AS AMENDED.

 

16

 

EXHIBIT A

 

Chiron
Patent Rights

 

[*]

 

A-1

 

THIS WARRANT AND THE UNDERLYING SECURITIES
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”).  THEY MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
AS TO SUCH SECURITIES UNDER THE ACT OR AN OPINION OF COUNSEL SATISFACTORY TO
THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.

 

BIOMEDICINES,
INC.

 

WARRANT
TO PURCHASE COMMON STOCK

 

	
  No. 
  CSW-1

  	
   

  	
  November 7,
  2002

  

 

Void
After November 7, 2007

(or
earlier as provided herein)

 

THIS CERTIFIES THAT, for value
received, CHIRON CORPORATION, a Delaware
corporation, (the “Holder” or “Purchaser”), is entitled to subscribe for and
purchase at the Exercise Price (defined below) from BIOMEDICINES,
INC., a Delaware
corporation, with its principal office at 2000 Powell Street, Suite 1640,
Emeryville, California 94608 (the “Company”) up to one hundred
fifty thousand (150,000) shares of Common Stock of the Company
(other “Common Stock”), as provided herein.

 

1.                                      DEFINITIONS.
As used herein, the
following terms shall have the following respective meanings:

 

“Exercise Period” shall mean the time period
commencing with the date hereof and ending with (a) the earlier of (i) November 7,
2007 or (ii) the third (3rd) anniversary of the date of the closing of the
initial public offering of the Company’s Common Stock pursuant to a
registration statement under the Securities Act of 1933, as amended, or (b) such
earlier time as this Warrant is terminated in accordance with the terms herein.

 

“Exercise Price” shall mean $6.00 per share, subject
to adjustment pursuant to Section 5.1 below.

 

“Exercise Shares” shall mean the shares of the Company’s
Common Stock issuable upon exercise of this Warrant, subject to adjustment
pursuant to the terms herein, including but not limited to adjustment pursuant
to Section 5.1 below.

 

2.                                      EXERCISE
OF WARRANT. The
rights represented by this Warrant may be exercised in whole or in part at any
time and from time to time during the Exercise Period, by delivery of the
following to the Company at its address set forth above (or at such other
address as it may designate by notice in writing to the Holder):

 

(a)                                  An executed
Notice of Exercise in the form attached hereto;

 

1

 

(b)                                  Payment of the
Exercise Price in cash or by check; and

 

(c)                                  This Warrant.

 

Upon the exercise of the rights represented by this
Warrant, a certificate or certificates for the Exercise Shares so purchased,
registered in the name of the Holder or persons affiliated with the Holder, if
the Holder so designates, shall be issued and delivered to the Holder within
thirty (30) days after the rights represented by this Warrant shall have been
so exercised.

 

The person in whose name any certificate or
certificates for Exercise Shares are to be issued upon exercise of this Warrant
shall be deemed to have become the holder of record of such shares on the date
on which this Warrant was surrendered and payment of the Exercise Price was
made, irrespective of the date of delivery of such certificate or certificates,
except that, if the date of such surrender and payment is a date when the stock
transfer books of the Company are closed, such person shall be deemed to have
become the holder of such shares at the close of business on the next
succeeding date on which the stock transfer books are open.

 

2.1                               Net
Exercise.  Notwithstanding any provisions herein to the
contrary, if the fair market value of one share of the Company’s Common Stock
is greater than the Exercise Price (at the date of calculation as set forth
below), in lieu of exercising this Warrant by payment of cash, the Holder may
elect (the “Conversion Right”) to receive shares equal to the value (as
determined below) of this Warrant (or the portion thereof being canceled) by
surrender of this Warrant at the principal office of the Company together with
the properly endorsed Notice of Exercise in which event the Company shall issue
to the Holder a number of shares of Common Stock computed using the following
formula:

 

	
   

  	
   

  	
  X = 

  	
  Y
  (A-B)

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  A

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

Where X = the number of shares of Common Stock to be
issued to the Holder

 

Y =                                  the
number of shares of Common Stock purchasable under the Warrant or, if only a
portion of the Warrant is being exercised, the portion of the Warrant being
canceled (at the date of such calculation)

 

A =                                the
fair market value of one share of the Company’s Common Stock (at the date of
such calculation)

 

B =                              Exercise
Price (as adjusted to the date of such calculation)

 

For purposes of the above calculation, the fair market
value of one share of Common Stock shall be:

 

(a)                                  the average
daily Market Price (as defined below) during the period of the most recent ten (10) days,
ending on the last business day before the effective date of exercise of the
Conversion Right, on which the national securities exchanges were open for
trading and; or

 

[ * ] = CERTAIN CONFIDENTIAL INFORMATION
CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF
THE SECURITIES ACT OF 1933, AS AMENDED.

 

2

 

(b)                                  if no class of
Common Stock is then listed or admitted to trading on any national securities
exchange or quoted in the over-counter market, the fair market value shall be
the Market Price on the last business day before the effective date of exercise
of the Conversion Right.

 

(c)                                  If the Common
Stock is traded on a national securities exchange or admitted to unlisted
trading privileges on such an exchange, or is listed on the National Market
System (the “National Market System”) of the Nasdaq, the Market Price as of a
specified day shall be the last reported sale price of Common Stock on such
exchange or on the National Market System on such date or if no such sale is
made on such day, the mean of the closing bid and asked prices for such day on
such exchange or on the National Market System. 
If the Common Stock is not so listed or admitted to unlisted trading
privileges, the Market Price as of a specified day shall be the mean of the
last bid and asked prices reported on such date (x) by the Nasdaq or (y) if
reports are unavailable under clause (x) above by the National Quotation Bureau
Incorporated.  If the Common Stock is not
so listed or admitted to unlisted trading privileges and bid and ask prices are
not reported, the Market Price as of a specified day shall be determined in
good faith by the Board of Directors of the Company.

 

2.2                               Company’s
Repurchase Option.  Notwithstanding any
provision herein to the contrary, if the Common Stock is traded on a national
securities exchange or admitted to unlisted trading privileges on such an
exchange, or is listed on the National Market System, and the reported closing
price per share of the Common Stock exceeds three hundred percent (300%) of the
Exercise Price for thirty (30) consecutive trading days (the “Reference Period”),
the Company may, at its option, purchase this Warrant from the Holder at a
price equal to the product of: (A) the number of shares for which this
Warrant is exercisable multiplied by (B) the difference of (i) the
highest reported closing price per share of the Common Stock during the period
beginning with the first day of the Reference Period and ending the day before
the Repurchase Date (as defined below) less (ii) the Exercise Price.  If the Company elects to purchase this
Warrant, the Company will notify the Holder in writing.  The Company and the Holder shall effect the
purchase with respect to any portion of this Warrant that has not been
exercised by the holder on the twentieth (20th) day following the date of the
Company’s written notice regarding the purchase or such earlier date as the
Company and the Holder may agree (the “Repurchase Date”).  On the Repurchase Date the Company shall pay
the Holder the purchase price determined in accordance with the provisions hereof,
and the Warrant shall thereafter be void and may not be exercised.

 

3.                                      COVENANTS OF THE
COMPANY.

 

3.1                               Covenants
as to Exercise Shares.  The Company covenants and
agrees that all Exercise Shares that may be issued upon the exercise of the
rights represented by this Warrant will, upon issuance, be validly issued and
outstanding, fully paid and nonassessable, and free from all taxes, liens and
charges with respect to the issuance thereof. 
The Company further covenants and agrees that the Company will at all
times during the Exercise Period, have authorized and reserved, free from
preemptive rights, a sufficient number of shares of its Common Stock to provide
for the exercise of the rights represented by this Warrant.  If at any time during the Exercise Period the
number of authorized but unissued shares of Common Stock shall not be
sufficient to permit exercise of this Warrant, the Company will take such
corporate

 

[ * ] = CERTAIN CONFIDENTIAL INFORMATION
CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF
THE SECURITIES ACT OF 1933, AS AMENDED.

 

3

 

action as may, in the opinion of its counsel, be necessary to increase
its authorized but unissued shares of Common Stock to such number of shares as
shall be sufficient for such purposes.

 

3.2                               Notices
of Record Date.  In the event of any taking by the Company of
a record of the holders of any class of securities for the purpose of
determining the holders thereof who are entitled to receive any dividend (other
than a cash dividend which is the same as cash dividends paid in previous
quarters) or other distribution, the Company shall mail to the Holder, at least
ten (10) days prior to the date specified herein, a notice specifying the
date on which any such record is to be taken for the purpose of such dividend
or distribution.

 

3.3                               Notice
of Expiration.  If this Warrant has not been fully exercised
on or before the date thirty (30) days prior to the end of the Exercise Period,
the Company shall thereafter provide Holder with at least twenty (20) days
advance written notice of the date on which this Warrant is to expire.  If the Company fails to provide such notice,
the Exercise Period shall be extended until the date thirty (30) days after the
date said notice is provided to Holder.

 

4.                                      REPRESENTATIONS
OF HOLDER AND THE COMPANY.

 

4.1                               Acquisition of Warrant for Personal Account.
 The
Holder represents and warrants that it is acquiring the Warrant and the
Exercise Shares solely for its account for investment and not with a view to or
for sale or distribution of said Warrant or Exercise Shares or any part
thereof, other than potential transfers between affiliates (including
affiliated funds).  The Holder also
represents that the entire legal and beneficial interests of the Warrant and
Exercise Shares the Holder is acquiring is being acquired for, and will be held
for, its account only.

 

4.2                               Securities
Are Not Registered.

 

(a)                                  The Holder understands that the Warrant
and the Exercise Shares have not been registered under the Securities Act of
1933, as amended (the “Act”) on the basis that no distribution or public
offering of the stock of the Company is to be effected.  The Holder realizes that the basis for the
exemption may not be present if, notwithstanding its representations, the
Holder has a present intention of acquiring the securities for a fixed or
determinable period in the future, selling (in connection with a distribution
or otherwise), granting any participation in, or otherwise distributing the
securities.  The Holder has no such
present intention, other than potential transfers between affiliates (including
affiliated funds).

 

(b)                                  The Holder recognizes that the Warrant
and the Exercise Shares must be held indefinitely unless they are subsequently
registered under the Act or an exemption from such registration is available.

 

(c)                                  The Holder is aware that neither the
Warrant nor the Exercise Shares may be sold pursuant to Rule 144 adopted
under the Act unless certain conditions are met, including, among other things,
the existence of a public market for the shares, the availability of certain
current public information about the Company, the resale following the required
holding period under Rule 144 and the number of shares being sold during
any three month period not exceeding specified limitations.  Holder is aware that the conditions for
resale

 

[ * ] = CERTAIN CONFIDENTIAL INFORMATION
CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF
THE SECURITIES ACT OF 1933, AS AMENDED.

 

4

 

set forth in Rule 144 have not been satisfied and that the
Comopany presently has no plans to satisfy these conditions in the foreseeable
future.

 

4.3                               CORPORATE ACTIONS.  The Company
represents that all corporate actions on the part of the Company, its officers,
directors and shareholders necessary for the sale and issuance of the Common
Stock pursuant hereto and the performance of the Company’s obligations
hereunder were taken prior to and are effective as of the effective date of
this Warrant.  The Company represents and
warrants that it shall at all times reserve and keep available out of its
authorized but unissued shares of Common Stock, such number of shares of Common
Stock as shall from time to time be sufficient to effect the exercise of this
Warrant.

 

5.                                      ADJUSTMENT OF
EXERCISE PRICE AND EFFECT OF ORGANIC CHANGES.

 

5.1                               Adjustment
of Exercise Price.  In the event of changes in
the outstanding Common Stock of the Company by reason of stock dividends,
splits, recapitalizations, reclassifications, combinations or exchanges of
shares, separations, reorganizations, liquidations, or the like, the number and
class of shares available under the Warrant in the aggregate and the Exercise
Price shall be correspondingly adjusted to give the Holder of the Warrant, on
exercise for the same aggregate Exercise Price, the total number, class, and
kind of shares as the Holder would have owned had the Warrant been exercised
prior to the event and had the Holder continued to hold such shares until after
the event requiring adjustment.  The form
of this Warrant need not be changed because of any adjustment in the number of
Exercise Shares subject to this Warrant.

 

5.2                               Reorganization,
Reclassification, Consolidation, Merger or Sale.  If any recapitalization, reclassification or reorganization of the
capital stock of the Company, or any consolidation or merger of the Company
with another corporation, or the sale of all or substantially all of its assets
or other transaction other than a Cash Liquidity Event (as defined below) shall
be effected in such a way that holders of the Company’s Common Stock shall be
entitled to receive stock, securities, or other assets or property (an “Organic
Change”), then, as a condition of such Organic Change, lawful and adequate
provisions shall be made by the Company whereby the Holder hereof shall
thereafter have the right to purchase and receive (in lieu of the shares of the
Common Stock of the Company immediately theretofore purchasable and receivable
upon the exercise of the rights represented hereby) such shares of stock,
securities or other assets or property as may be issued or payable with respect
to or in exchange for a number of outstanding shares of such Common Stock equal
to the number of shares of such stock immediately theretofore purchasable and
receivable upon the exercise of the rights represented hereby.  In the event of any Organic Change,
appropriate provision shall be made by the Company with respect to the rights
and interests of the Holder of this Warrant to the end that the provisions
hereof (including, without limitation, provisions for adjustments of the
Exercise Price and of the number of shares purchasable and receivable upon the
exercise of this Warrant) shall thereafter be applicable, in relation to any
shares of stock, securities or assets thereafter deliverable upon the exercise
hereof.  The Company will not effect any
such consolidation, merger or sale unless, prior to the consummation thereof,
the successor corporation (if other than the Company) resulting from such consolidation
or the corporation purchasing such assets shall assume by written instrument
mailed or delivered to the registered Holder hereof at the last address of such
Holder appearing on the books of the Company, the obligation to deliver to such

 

[ * ] = CERTAIN CONFIDENTIAL INFORMATION
CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF
THE SECURITIES ACT OF 1933, AS AMENDED.

 

5

 

Holder such shares of stock, securities or assets as, in accordance
with the foregoing provisions, such Holder may be entitled to purchase.

 

5.3                               Early
Termination. 
In the
event of, at any time during the Exercise Period, any consolidation or merger
of the Company with or into any other corporation, person or other entity or a
sale, lease or other disposition of all or substantially all of the assets of
the Company in which the Exercise Shares are exchanged for cash (each, a “Cash
Liquidity Event”), the Company shall provide to the Holder twenty (20) days
advance written notice of such Cash Liquidity Event, and this Warrant shall
terminate unless exercised prior to the date such Cash Liquidity Event is
consummated.

 

5.4                               Certain
Events.  If any change in the outstanding Common Stock of the
Company or any other event occurs as to which the other provisions of this Section 5
are not strictly applicable or if strictly applicable would not fairly protect
the purchase rights of the Holder of the Warrant in accordance with such provisions,
then the Board of Directors of the Company shall make an adjustment in the
number and class of shares available under the Warrant, the Exercise Price or
the application of such provisions, so as to protect such purchase rights as
aforesaid.  The adjustment shall be such
as to give the Holder of the Warrant upon exercise for the same aggregate
Exercise Price the total number, class and kind of shares as he would have
owned had the Warrant been exercised prior to the event and had he continued to
hold such shares until after the event requiring adjustment.

 

5.5                               Notice
of Adjustments, Organic Changes, etc.  Except as otherwise
provided herein, in the event of any adjustment to the number of shares of
Common Stock pursuant to this Article 5, the Company shall provide to
Holder within thirty (30) days of such adjustment a certificate signed by its
Chief Financial Officer setting forth, in reasonable detail the event requiring
the adjustment, the amount of the adjustment, the method by which such adjustment
was calculated and the Exercise Price and the number of shares of Common Stock
purchasable hereunder after giving effect to such adjustment.

 

6.                                      REGISTRATION
RIGHTS. The Holder
will become a party to that certain Amended and Restated Investor Rights Agreement
dated September 12, 2000, to include any Common Stock of the Company
issued upon exercise of the Warrant in the definition of “Registrable
Securities” for purposes of Sections 1.3, 1.4, 1.5, 1.7, 1.8, 1.9, 1.10, 1.11,
1.13, 1.15, 1.16 and 3 thereof.

 

7.                                      FRACTIONAL
SHARES. No
fractional shares shall be issued upon the exercise of this Warrant as a
consequence of any adjustment pursuant hereto. 
All Exercise Shares (including fractions) issuable upon exercise of this
Warrant may be aggregated for purposes of determining whether the exercise
would result in the issuance of any fractional share.  If, after aggregation, the exercise would
result in the issuance of a fractional share, the Company shall, in lieu of
issuance of any fractional share, pay the Holder otherwise entitled to such
fraction a sum in cash equal to the product resulting from multiplying the then
current fair market value of an Exercise Share by such fraction.

 

8.                                      DISPOSITION
OF SECURITIES. The
Holder agrees not to make any disposition of all or any part of the Warrant or
Exercise Shares in any event unless (i) such disposition

 

[ * ] = CERTAIN CONFIDENTIAL INFORMATION
CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF
THE SECURITIES ACT OF 1933, AS AMENDED.

 

6

 

is in compliance with the Act, and the Holder
shall have provided the Company with a description of the proposed disposition,
provided that such description shall not be required, if the disposition is
permitted under Rule 144 of the Act or (ii) there is in effect a
registration statement under the Act covering the proposed disposition and such
disposition is made in accordance with the registration statement.

 

Notwithstanding the other provisions of this Section 8,
the Holder may assign Common Stock (or other securities) of the Company held by
such Holder to (i) any partner or retired partner of the Holder, if the
Holder is a partnership, (ii) any member or former member of the Holder,
if the Holder is a limited liability company, (iii) any affiliate,
including affiliated funds, (iv) any family member or trust for the
benefit the Holder or a family member, if the Holder is an individual, (v) any
successor to the Company, by merger, consolidation or otherwise, or that
acquires all or substantially all of the assets of the Holder; provided that
the Company is given written notice thereof

 

9.                                      NO
STOCKHOLDER RIGHTS. This
Warrant in and of itself shall not entitle the Holder to any voting rights or
other rights as a stockholder of the Company.

 

10.                               TRANSFER OF WARRANT. Subject to applicable
laws, this Warrant and all rights hereunder are transferable, by the Holder in
person or by duly authorized attorney, upon delivery of this Warrant and the
form of assignment attached hereto to any transferee designated by Holder.

 

11.                               LOST, STOLEN, MUTILATED
OR DESTROYED WARRANT. If this Warrant is lost, stolen, mutilated or destroyed, the Company may,
on such terms as to indemnity or otherwise as it may reasonably impose (which
shall, in the case of a mutilated Warrant, include the surrender thereof),
issue a new Warrant of like denomination and tenor as the Warrant so lost,
stolen, mutilated or destroyed.  Any such
new Warrant shall constitute an original contractual obligation of the Company,
whether or not the allegedly lost, stolen, mutilated or destroyed Warrant shall
be at any time enforceable by anyone.

 

12.                               NOTICES, ETC. All notices required or
permitted hereunder shall be in writing and shall be deemed effectively given: (a) upon
personal delivery to the party to be notified, (b) when sent by confirmed
telex or facsimile if sent during normal business hours of the recipient, if
not, then on the next business day, (c) five (5) days after having
been sent by registered or certified mail, return receipt requested, postage
prepaid, or (d) one (1) day after deposit with a nationally
recognized overnight courier, specifying next day delivery, with written verification
of receipt.  All communications shall be
sent to the Company at the address listed on the signature page and to
Holder at 4560 Horton Street, Emeryville, California 94608 or at such other
address as the Company or Holder may designate by ten (10) days advance
written notice to the other parties hereto.

 

13.                               ACCEPTANCE. Receipt of this Warrant by
the Holder shall constitute acceptance of and agreement to all of the terms and
conditions contained herein.

 

14.                               GOVERNING LAW. This Warrant and all rights,
obligations and liabilities hereunder shall be governed by the laws of the
State of California.

 

[ * ] = CERTAIN CONFIDENTIAL INFORMATION
CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF
THE SECURITIES ACT OF 1933, AS AMENDED.

 

7

 

IN WITNESS WHEREOF, the Company
has caused this Warrant to be executed by its duly authorized officer as of November 7,
2002.

 

	
   

  	
  BIOMEDICINES, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ S. M. Moran

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Mark Moran

  
	
   

  	
  Title:

  	
  Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
  2000 Powell Street

  
	
   

  	
   

  	
  Suite 1640

  
	
   

  	
   

  	
  Emeryville, CA 94608

  
					

 

[ * ] = CERTAIN CONFIDENTIAL INFORMATION
CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF
THE SECURITIES ACT OF 1933, AS AMENDED.

 

8

 

NOTICE
OF EXERCISE

 

TO:
BIOMEDICINES, INC.

 

(1)                                  o                                    The
undersigned hereby elects to purchase                            shares
of the Common Stock of BIOMEDICINES, INC.
(the “Company”) pursuant to the terms of the attached Warrant, and tenders
herewith payment of the exercise price in full, together with all applicable
transfer taxes, if any.

 

o                                    The
undersigned hereby elects to purchase                            shares
of the Common Stock of BIOMEDICINES, INC. (the
“Company”) pursuant to the terms of the net exercise provisions set forth in Section 2.1
of the attached Warrant, and shall tender payment of all applicable transfer
taxes, if any.

 

(2)                                  Please issue a
certificate or certificates representing said shares of Common Stock in the
name of the undersigned or in such other name as is specified below:

 

 

(Name)

 

 

 

(Address)

 

(3)                                  The
undersigned represents that (i) the aforesaid shares of Common Stock are
being acquired for the account of the undersigned for investment and not with a
view to, or for resale in connection with, the distribution thereof and that
the undersigned has no present intention of distributing or reselling such
shares, except as permitted by applicable law; (ii) the undersigned is
aware of the Company’s business affairs and financial condition and has
acquired sufficient information about the Company to reach an informed and
knowledgeable decision regarding its investment in the Company; (iii) the
undersigned is experienced in making investments of this type and has such
knowledge and background in financial and business matters that the undersigned
is capable of evaluating the merits and risks of this investment and protecting
the undersigned’s own interests; (iv) the undersigned understands that the
shares of Common Stock issuable upon exercise of this Warrant have not been
registered under the Securities Act of 1933, as amended (the “Securities Act”),
by reason of a specific exemption from the registration provisions of the
Securities Act, which exemption depends upon, among other things, the bona fide
nature of the investment intent as expressed herein, and, because such
securities have not been registered under the Securities Act, they must be held
indefinitely unless subsequently registered under the Securities Act or an
exemption from such registration is available; (v) the undersigned is
aware that the aforesaid shares of Common Stock may not be sold pursuant to Rule 144
adopted under the Securities Act unless certain conditions are met and until
the undersigned has held the shares for the number of years prescribed by Rule 144,
that among the conditions for use of the Rule is the availability of
current information to the public about the Company and the Company has not
made such information available and has no present plans to do so; and (vi) the
undersigned agrees not to make any disposition of all or any part of the
aforesaid shares of Common Stock unless and until there is then in effect a

 

[ * ] = CERTAIN CONFIDENTIAL INFORMATION
CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF
THE SECURITIES ACT OF 1933, AS AMENDED.

 

 

registration statement under the Securities Act covering such proposed
disposition and such disposition is made in accordance with said registration
statement, or the undersigned has provided the Company with an opinion of
counsel satisfactory to the Company, stating that such registration is not
required.

 

	
   

  	
   

  	
   

  	
   

  
	
  (Date)

  	
  (Signature)

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (Print name)

  

 

[ * ] = CERTAIN CONFIDENTIAL INFORMATION
CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF
THE SECURITIES ACT OF 1933, AS AMENDED.

 

 

ASSIGNMENT
FORM

 

(To assign the foregoing Warrant, execute
this

form and supply required information.  Do
not 

use this form to purchase shares.)

 

FOR VALUE RECEIVED, the
foregoing Warrant and all rights evidenced thereby are hereby assigned to

 

	
  Name:

  	
   

  
	
  (Please
  Print)

  
	
   

  
	
  Address:

  	
   

  
	
  (Please
  Print)

  
			

 

 

	
  Dated:

  
	
   

  
	
  Holder’s

  
	
  Signature:

  	
   

  	
   

  
	
   

  
	
  Holder’s

  
	
  Address:

  	
   

  	
   

  
				

 

 

NOTE: The signature
to this Assignment Form must correspond with the name as it appears on the
face of the Warrant, without alteration or enlargement or any change
whatever.  Officers of corporations and
those acting in a fiduciary or other representative capacity should file proper
evidence of authority to assign the foregoing Warrant.

 

[ * ] = CERTAIN CONFIDENTIAL INFORMATION
CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF
THE SECURITIES ACT OF 1933, AS AMENDED.Exhibit 10.21

 

TERM LOAN AND SECURITY AGREEMENT

 

Dated as of April 15, 2005

 

by and among

 

SILICON VALLEY BANK.

as Agent and a Lender

 

HORIZON TECHNOLOGY FUNDING COMPANY LLC

as a Lender

 

And

 

INTARCIA THERAPEUTICS, INC.

a Delaware corporation

2000 Powell Street, Suite 1640

Emeryville, California  94608

As Borrower

 

CREDIT AMOUNT:  Ten
Million Dollars ($10,000.00)

 

	
   

  	
   

  	
  Commitment

  	
   

  	
  Commitment Percentage

  	
   

  
	
  Horizon Technology Funding Company LLC:

  	
   

  	
  $

  	
  8,000,000.00

  	
   

  	
  80.0

  	
  %

  
	
  Silicon Valley Bank:

  	
   

  	
  $

  	
  2,000,000.00

  	
   

  	
  20.0

  	
  %

  

 

Repayment Period: 
36 months

 

Final Payment Percentage: 9.0%

 

Commitment Termination Date: July 1, 2005, which
shall be extended to December 31, 2005, provided the Term Advance Event
occurs before July 1, 2005.

 

The terms and
information set forth on this cover page are a part of the attached Term
Loan and Security Agreement, dated as of the date first written above (this “Agreement”),
entered into by and among, SILICON VALLEY
BANK, a California-chartered bank, with its principal place of
business at 3003 Tasman Drive, Santa Clara, California (“SVB”), as Agent, and
the Lenders, including without limitation, SVB and HORIZON TECHNOLOGY FUNDING COMPANY LLC, a Delaware Limited
Liability Company, with its principal place of business at 76 Batterson Park Road,
Farmington, Connecticut 06032 (“Horizon”) and INTARCIA
THERAPEUTICS, INC., a Delaware corporation, with its chief executive
office located at 2000 Powell Street, Suite 1640, Emeryville,
California  94608 (“Borrower”).  The terms and conditions of this Agreement
agreed to between the parties hereto are as follows:

 

1

 

AGREEMENT

 

1                                         DEFINITIONS
AND CONSTRUCTION.

 

1.1                               Definitions.  As used in this Agreement, the following
terms shall have the following definitions:

 

“Accounts” are all existing and later arising accounts, contract
rights, and other obligations owed Borrower     in
connection with its sale or lease of goods (including licensing software and
other technology) or provision of services, all credit insurance, guaranties,
other security and all merchandise returned or reclaimed by Borrower and
Borrower’s Books relating to any of the foregoing, as such definition may be amended
from time to time according to the Code.

 

“Affiliate” means any Person that owns or
controls directly or indirectly ten percent or more of the stock of another
entity, any Person that controls or is controlled by or is under common control
with such Persons or any Affiliate of such Persons or each of such Person’s
officers, directors, joint venturers or partners.

 

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

 

“Agreement” shall mean this Term Loan and
Security Agreement, as the same may from time to time be amended or
supplemented.

 

“Borrower” shall have the meaning set forth
on the cover page hereof.

 

“Borrower’s Books” are all Borrower’s books
and records including ledgers, records regarding Borrower’s assets or
liabilities, the Collateral, business operations or financial conditions and
all computer programs or discs or any equipment containing the foregoing.

 

“Business Day” means any day that is not a
Saturday, Sunday, or other day on which banking institutions are authorized or
required to close in California or the Commonwealth of Massachusetts.

 

“Claim” is defined in Section 10.3.

 

“Closing Date” means the date that each of
the conditions precedent listed in Section 3.1 has been satisfied or
waived in writing by Lenders.

 

“Code” means the Uniform Commercial Code as
adopted and in effect from time to time in the State of California, including
without limitation, the Uniform Commercial Code, provided that if by reason of
mandatory provisions of law, the creation and/or perfection or the effect of
perfection or non-perfection of the security interest in any Collateral is
governed by the Uniform Commercial Code as in effect in a jurisdiction other
than California, the term “Code” shall also mean the Uniform Commercial Code as
in effect from time to time in such jurisdiction for purposes of the provisions
hereof relating to such creation, perfection or effect of perfection or
non-perfection.

 

“Collateral” is any and all properties, right
and assets of Borrower in the property described on Exhibit A granted
by Borrower to Agent and Lenders, or arising under the Code, now, or in the
future, in which Borrower obtains an interest, or the power to transfer rights.

 

“Commitment Termination Date” means the date
following such term on the cover page of this Agreement.

 

“Commitment” or “Commitment Amount” means
with respect to each Lender, the amount set forth following such term on the
cover page of this Agreement under the column titled “Commitment Amount”
and “Commitments” means all such amounts collectively.

 

2

 

“Commitment Percentage” means with respect to
each Lender, the percentage set forth on the cover page of this Agreement
under the column titled “Commitment Percentage.”

 

“Copyrights” are all copyright rights, applications or
registrations and like protections in each work or authorship or derivative
work, whether published or not (whether or not it is a trade secret) now or
later existing, created, acquired or held.

 

“Credit Amount” means the amount set forth
following such term on the cover page of this Agreement.

 

“Credit Extension” is each Term Advance or
any other extensions of credit by Lenders for Borrower’s benefit.

 

“Default” means any event which with the
passing of time or the giving of notice or both would become an Event of
Default hereunder.

 

“Default Rate” means the per annum rate of
interest equal to the aggregate of the effective interest rate for each Term
Advance, plus 3.0%, but such rate shall in no event be more than the highest
rate permitted by applicable law to be charged on commercial loans.

 

“Environmental Laws” means all foreign,
federal, state or local laws, statutes, common law duties, rules, regulations,
ordinances and codes, together with all administrative orders, directed duties,
requests, licenses, authorizations and permits of, and agreements with, any
Governmental Authorities, in each case relating to environmental, health,
safety and land use matters, including the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, the Clean Air Act, the
Federal Water Pollution Control Act of 1972, the Solid Waste Disposal Act, the
Federal Resource Conservation and Recovery Act, the Toxic Substances Control
Act and the Emergency Planning and Community Right-to-Know Act.

 

“Equipment” is all present and future
machinery, equipment, tenant improvements, furniture, fixtures, vehicles,
tools, parts and attachments in which Borrower has any interest.

 

“Equity Securities” of any Person shall mean (a) all
common stock, preferred stock, participations, shares, partnership interests or
other equity interests in and of such Person (regardless of how designated and
whether or not voting or non-voting) and (b) all warrants, options and
other rights to acquire any of the foregoing.

 

“Event of Default” has the meaning given to
such term in Section 8.

 

“Final Payment” means, with respect to each Term
Advance,  is a payment (in addition to
and not in substitution for the regular monthly payments of principal and accrued
interest) due on the Maturity Date for such Term Advance equal to the original
principal amount of such Term Advance multiplied by the Final Payment
Percentage.

 

“Final Payment Percentage” means the
percentage set forth following such terms on the cover page of this
Agreement.

 

“Financing Statements” means any UCC-1
Financing Statements.

 

“Funding Date” means any date on which a Term
Advance is made to or on account of Borrower under this Agreement.

 

“GAAP” is generally accepted accounting
principles.

 

“Governmental Authority” means (a) any
federal, state, county, municipal or foreign government, or political
subdivision thereof, (b) any governmental or quasi-governmental agency,
authority, board, bureau, commission, department, instrumentality or public
body, (c) any court or administrative tribunal or (d) with respect to
any Person, any arbitration tribunal or other non-governmental authority to
whose jurisdiction that Person has consented.

 

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

 

3

 

“Hazardous Materials” means all those
substances which are regulated by, or which may form the basis of liability
under, any Environmental Law, including all substances identified under any
Environmental Law as a pollutant, contaminant, hazardous waste, hazardous
constituent, special waste, hazardous substance, hazardous material, or toxic
substance, or petroleum or petroleum derived substance or waste.

 

“Horizon” is Horizon Technology Funding Company
LLC.

 

“Indebtedness” means, with respect to
Borrower or any Subsidiary, the aggregate amount of, without duplication, (a) all
obligations of such Person for borrowed money, (b) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments, (c) all
obligations of such Person to pay the deferred purchase price of property or
services (excluding trade payables aged less than 180 days), (d) all
capital lease obligations of such Person, (e) all obligations or
liabilities of others secured by a lien on any asset of such Person, whether or
not such obligation or liability is assumed, (f) all obligations or
liabilities of others guaranteed by such Person; and (g) any other obligations
or liabilities which are required by GAAP to be shown as debt on the balance
sheet of such Person or to which reference is made by footnotes thereto.  Unless otherwise indicated, the term “Indebtedness”
shall include all Indebtedness of Borrower and the Subsidiaries.

 

“Intellectual Property” is any Copyrights, Copyright
rights, Copyright applications, Copyright registrations and like protections in
each work of authorship and derivative work, whether published or unpublished,
now owned or later acquired; any Patents, Trademarks, service marks and applications
therefor; any trade secret rights, including any rights to unpatented
inventions, now owned or hereafter acquired.

 

“Inventory” is present and future inventory
(as defined in the Code, based on the location of the Collateral) in which
Borrower has any interest  in which
Borrower has any interest, including merchandise, raw materials, parts,
supplies, packing and shipping materials, work in process and finished products
intended for sale or lease or to be furnished under a contract of service, of every
kind and description now or later owned by or in the custody or possession,
actual or constructive, of Borrower, including inventory temporarily out of its
custody or possession or in transit and including returns on any accounts or
other proceeds (including insurance proceeds) from the sale or disposition of
any of the foregoing and any documents of title.

 

“IPO” is an initial public offering of
Borrower’s securities pursuant to an effective registration statement of
Borrower filed under the Securities Act of 1933, as amended.

 

“Lenders” shall have the meaning set forth on
the cover page hereof.

 

“Lenders’ Expenses” means all reasonable
costs or expenses (including reasonable attorneys’ fees and expenses) of Agent
and Lenders incurred in connection with the preparation, negotiation,
documentation, administration, funding, and enforcement of the Loan Documents;
and Agent’s and Lenders’ reasonable attorneys’ fees and expenses incurred in
amending, modifying, enforcing or defending the Loan Documents, including the
exercise of any rights or remedies afforded hereunder or under applicable law,
whether or not suit is brought, and all such fees and costs incurred by Agent
and Lenders in connection with Agent’s and Lenders’ enforcement of their right
in a bankruptcy or insolvency proceeding filed by or against Borrower or its
assets.

 

“Lien” means any voluntary or involuntary
security interest, pledge, bailment, lease, mortgage, hypothecation,
conditional sales and title retention agreement, encumbrance or other lien with
respect to the Property in favor of any Person.

 

“Loan Documents” means, collectively, this
Agreement, any guaranties executed by any Guarantor, and any other present or
future agreement between Borrower and/or for the benefit of Lenders in connection
with this Agreement, all as amended or extended from time to time.

 

“Material Adverse Change” is: (a) a
material impairment in the perfection or priority of Agent and Lenders’
security interest in the Collateral or in the value of such Collateral; (b) a
material adverse change in the business, operations, or condition (financial or
otherwise) of Borrower; or (c) a material impairment of the prospect of
repayment of any portion of the Obligations.

 

4

 

“Maturity Date” is July 1, 2005, which
shall be extended until December 1, 2008 upon the occurrence of the Term
Advance Event, or if earlier, the date of prepayment or acceleration of such Term
Advance by Agent following an Event of Default.

 

“Note” is defined in Section 2.4(a).

 

“Obligations” means all liabilities,
agreements, debt, principal, interest, fees, charges, expenses and attorney’s
fees, Prepayment Fees, and costs and other amounts, obligations, covenants, and
duties owing by Borrower to Lenders or Agent of any kind and description
(whether pursuant to or evidenced by the Loan Documents, or by any other
agreement among Agent, Lenders and Borrower, and whether or not for the payment
of money), whether direct or indirect, absolute or contingent, due or to become
due, now existing or hereafter arising, including the principal, interest and
Final Payment due with respect to the Term Advances, and further including all
Lenders’ Expenses that Borrower is required to pay or reimburse by the Loan
Documents, by law, or otherwise, whether before or after bankruptcy or
insolvency, and all such fees and cost incurred by Lenders or Agent in
connection with Lenders’ or Agent’s enforcement of their rights in bankruptcy
or insolvency proceeding filed by or against Borrower or its assets.

 

“Patents” are patents, patent applications
and like protections, including improvements, divisions, continuations,
renewals, reissues, extensions and continuations-in-part of the same.

 

“Payment Date” is the first Business Day of
each calendar month.

 

“Perfection Certificate” is defined in Section 5.1.

 

“Permitted Indebtedness” shall mean and
include:

 

(a)                                          Indebtedness
of Borrower to Lenders;

 

(b)                                         Indebtedness
of Borrower secured by Liens permitted under clause (e) of the definition of
Permitted Liens with respect to Collateral;

 

(c)                                          Indebtedness
arising from the endorsement of instruments in the ordinary course of business;

 

(d)                                         Indebtedness
existing on the date hereof and set forth on the Perfection Certificate;

 

(e)                                          Subordinated
Indebtedness;

 

(f)                                            Other
Indebtedness not otherwise permitted by Section 7.8 not exceeding Two
Hundred Fifty Thousand Dollars ($250,000.00) in the aggregate outstanding at
any time; and

 

(g)                                         Extensions,
refinancings, modifications, amendments and restatements of any items of
Permitted Indebtedness (a) through (h) above, provided that the
principal amount thereof is not increased or the terms thereof are not modified
to impose more burdensome terms upon Borrower or its Subsidiaries, as the case
may be.

 

“Permitted Liens” shall mean:

 

With respect to the Collateral: (a) the
Lien created by this Agreement; (b) Liens for fees, taxes, levies,
imposts, duties or other governmental charges of any kind which are not yet
delinquent or which are being contested in good faith by proceedings which
suspend the collection thereof (provided, however, that such proceedings do not
involve any substantial danger of the sale, forfeiture or loss of any material
item of collateral which in the aggregate is material to Borrower and that
Borrower has adequately bonded such Lien or reserves sufficient to

 

5

 

discharge such Lien have been provided on the
books of Borrower); (c) Liens identified on the Perfection Certificate; (d) Liens
to secure payment of worker’s compensation, employment insurance, old age
pensions or other social security obligations of Borrower in the ordinary
course of business of Borrower; (e) Liens upon any equipment or other
personal property acquired by Borrower after the date hereof to secure (i) the
purchase price of such equipment or other personal property or (ii) lease
obligations or indebtedness incurred solely for the purpose of financing the
acquisition of such equipment or other personal property; provided that (A) such
Liens are confined solely to the equipment or other personal property so
acquired and the amount secured does not exceed the acquisition price thereof,
and (B) no such Lien shall be created, incurred, assumed or suffered to
exist in favor of Borrower’s officers, directors or shareholders holding five
percent (5%) or more of Borrower’s Equity Securities; (f) carriers’,
warehousemen’s, mechanics’, landlords’, materialmen’s, repairmen’s or other
similar Liens arising in the ordinary course of business which are not
delinquent or remain payable without penalty or which are being contested in
good faith and by appropriate proceedings; (g) exclusive and non-exclusive
licenses of Intellectual Property entered into in the ordinary course of
business; (h) banker’s liens, rights of setoff and similar Liens incurred
on deposits made in the ordinary course of business; (i) liens arising
from judgments, decrees or attachments in circumstances not constituting an
Event of Default under Section 8.5 or 8.7; (j) Liens in favor of other
financial institutions arising in connection with Borrower’s deposit accounts
or securities accounts held at such institutions; (k) easements, reservations,
rights-of-way, restrictions, minor defects or irregularities in title and similar
charges or encumbrances affecting real property not constituting a material
adverse effect on the business or condition (financial or otherwise) of
Borrower; and (l) Liens in favor of Agent or either Lender.

 

“Person” means and includes any individual,
any partnership, any corporation, any business trust, any joint stock company,
any limited liability company, any unincorporated association or any other
entity and any domestic or foreign national, state or local government, any
political subdivision thereof, and any department, agency, authority or bureau
of any of the foregoing.

 

“Prepayment Fee” is

 

(A)                              If
Borrower prepays the Term Advances for any reason (other than as set forth in (B) below)
prior to the Maturity Date, the Borrower shall pay to Lenders a Prepayment Fee
calculated as follows:

 

(i)                                     four
percent (4.0%) of the principal portion of the Term Advances prepaid on or
before one year from the applicable Funding Date; and

 

(ii)                                  two
percent (2.0%) of the principal portion of the Term Advances prepaid after one
year, but on or before two years from the applicable Funding Date; and

 

(iii)                               one
percent (1.0%) of the principal portion of the Term Advances prepaid after two
years from the applicable Funding Date.

 

(B)                                The
Prepayment Fee shall be reduced by fifty percent (50.0%) in the event such
prepayment was made with the proceeds of a loan or advance with SVB (other than
this Agreement) and such Prepayment Fee as set forth in this subsection (B) shall
be payable to Horizon.

 

“Prime Rate” 
is SVB’s most recently announced  “prime
rate,” even if it is not SVB’s lowest rate.

 

“Property” means any interest in any kind of
property or asset, whether real, personal or mixed, whether tangible or
intangible.

 

“Repayment Period” means the period beginning
on January 1, 2006, and continuing for the Repayment Period set forth
following such term on the cover page of this Agreement.

 

“Responsible Officer” means either the
President or Chief Financial Officer of Borrower.

 

“Subordinated
Indebtedness” means Indebtedness subordinated in right of payment and lien to
the Obligations in writing on terms and conditions acceptable to Lenders in
their sole discretion.

 

6

 

“Subsidiary” means any corporation, any
Person, or any other business entity of which a majority of the outstanding
capital stock entitled to vote for the election of directors (otherwise than as
the result of a default) is owned by Borrower directly or indirectly through
Subsidiaries.

 

“SVB” means Silicon Valley Bank.

 

“Term Advance” or “Term Advances” is defined
in Section 2.1(a).

 

“Term Advance Event” shall mean Borrower has
requested a Term Advance in the aggregate principal amount of Five Million
Dollars ($5,000,000.00).

 

“Term Loan” is a Term Advance or Term
Advances of up to Ten Million Dollars ($10,000,000.00).

 

“Third Party Equipment” is defined in Section 4.6.

 

“Trademarks” are trademark and service mark
rights, registered or not, applications to register and registrations and like
protections, and the entire goodwill of the business of Borrower connected with
the trademarks.

 

“Warrants” means separate warrants in favor
of each of the Lenders or their designees to purchase securities of Borrower.

 

1.2                               Other
Interpretive Provisions.  References in
this Agreement to “Articles,” “Sections,” “Exhibits, “Schedules” and “Annexes”
are to recitals, articles, sections, exhibits, schedules and annexes herein and
hereto unless otherwise indicated. 
References in this Agreement and each of the other Loan Documents to any
document, instrument or agreement shall include (a) all exhibits,
schedules, annexes and other attachments thereto, (b) all documents,
instruments or agreements issued or executed in replacement thereof, and (c) such
document, instrument or agreement, or replacement or predecessor thereto, as
amended, modified and supplemented from time to time and in effect at any given
time.  The words “hereof,” “herein” and “hereunder”
and words of similar import when used in this Agreement or any other Loan Document
shall refer to this Agreement or such other Loan Document, as the case may be,
as a whole and not to any particular provision of this Agreement or such other
Loan Document, as the case may be.  The
words “include” and “including” and words or similar import when used in this
Agreement or any other Loan Document shall not be construed to be limiting or
exclusive.  Unless otherwise indicated in
this Agreement or any other Loan Document, all accounting terms used in this
Agreement or any other Loan Document shall be construed, and all accounting and
financial computations hereunder or thereunder shall be computed, in accordance
with generally accepted accounting principles as in effect in the United States
of America from time to time.

 

2                                         LOANS;
REPAYMENT.

 

2.1                               Term
Loan

 

(a)                                          Availability.  Subject to the terms and conditions of this
Agreement and relying upon the representations and warranties herein set forth
as and when made or deemed to be made, Lenders agree, severally and not
jointly, to lend to Borrower from time to time prior to the Commitment
Termination Date, advances (each an “Term Advance” and collectively the “Term
Advances”) in an aggregate amount not to exceed the Term Loan, according to
each Lender’s pro rata share of the Term Loan (based upon the respective
Commitment Percentage of each Lender).  When
repaid, Term Advances may not be-reborrowed. 
Lenders’ obligation to lend hereunder shall terminate on the earlier of (i) the
occurrence and continuance of an Event of Default, or (ii) the Commitment
Termination Date.  For the purposes of
this Section, from the Closing Date until July 1, 2005, Borrower may only
request one (1) Term Advance in the minimum amount of Five Million Dollars
($5,000,000.00).  Upon the occurrence of
the Term Advance Event, until December 31, 2005, Borrower may only request
one (1) Term Advance in the minimum amount of Five Million Dollars
($5,000,000.00).

 

7

 

(b)                                         Interest
Payments.  Commencing on the first
Payment Date of the month following the month in which the Funding Date occurs
(or commencing on the Funding Date if the Funding Date if the Funding Date is
the first Business Day of the month) and continuing through December 1,
2005, Borrower shall make consecutive monthly payments of interest in advance at
the rate set forth in Section 2.1(d). 
If the Funding Date occurs on other than the first Business Day of the
month, the initial interest only payment shall include interest accrued from
the Funding Date until the Payment Date.

 

(c)                                          Repayment.  Commencing on January 1, 2006, and
continuing on the Payment Date of each month thereafter, for each Term Advance,
Borrower shall make consecutive equal monthly payments of principal and
interest, in advance, calculated by the Agent based upon: (1) the amount
of the Term Advance, (2) the effective interest rate set forth in Section 2.1(d),
and (3) an amortization schedule equal to the Repayment Period.    All unpaid principal and accrued interest shall
be due and payable in full on the Maturity Date.   Payments received after 12:00 noon Pacific
time are considered received at the opening of business on the next Business
Day.

 

(d)                                         Interest
Rate.  Borrower shall pay interest monthly
on the unpaid principal amount of each Term Advance until the Term Advance has
been paid in full.  Interest shall accrue
at the fixed per annum rate of interest equal to the greater of: (i) the
aggregate of the Prime Rate determined as of the Funding Date plus 2.85%, and (ii) 8.0%.

 

(e)                                          Final
Payment.  On the Maturity Date with
respect to such Term Advance, Borrower shall pay, in addition to the unpaid
principal and accrued interest and all other amounts due on such date with
respect to such Term Advance, an amount equal to the Final Payment.

 

2.2                               Termination
of Commitment to Lend. 
Notwithstanding anything in the Loan Documents, each Lender’s obligation
to lend the undisbursed portion of the Obligations shall terminate if, (a) prior
to Borrower’s IPO, both of the following conditions occur: (i) Borrower
has insufficient cash, cash equivalents and investment securities to satisfy
the Obligations on its own; and (ii) it is the clear intention of Borrower’s
investors not to continue to fund the Borrower in the amounts and timeframe
necessary to enable Borrower to satisfy the Obligations as they become due and
payable, or (b) following Borrower’s IPO, in Lenders’ sole but reasonable discretion,
there has been a Material Adverse Change.

 

2.3                               Other Payment
Terms.

 

(a)                                          Place
and Manner.  Borrower shall make all
payments due to Agent or Lenders in lawful money of the United States.  All payments of principal, interest, fees and
other amounts payable by Borrower hereunder shall be made, in immediately
available funds, by debit to any account of Borrower with Agent not later than 12:00
noon Pacific time, on the date on which such payment is made.  Borrower authorizes and directs Agent, to
debit the amount of each such payment to any account (including deposit and
investment accounts) of Borrower, and to disburse to each Lender its respective
share of such payment on each date payment is due.  Agent shall disburse payments to Horizon as
follows:

 

Horizon Payment

 

	
   

  	
  Credit:

  	
   

  	
  Horizon
  Technology Funding Company LLC

  	
   

  
	
   

  	
  Bank Name:

  	
   

  	
  ABN
  Amro/LaSalle Bank NA CDO Trust Services

  
	
   

  	
  Bank
  Address:

  	
   

  	
  135 South
  LaSalle Street, Suite 1625

  	
   

  
	
   

  	
   

  	
   

  	
  Chicago,
  Illinois 60603

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Attn:
  Timothy E. Williams, 312-904-0283

  	
   

  	
   

  

 

8

 

	
   

  	
  Account No.:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  FFCT-
  Reference Account No.:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  ABA Routing
  No.:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Reference:

  	
   

  	
  Intarcia
  Therapeutics, Inc. Invoice #

  	
   

  	
   

  

 

Any payment received by Agent or one Lender for the
account of the other Lender shall be paid promptly to such Lender, in like
funds, for the Credit Extensions in respect of which such payment, but in any
event, within two (2) Business Days of receipt of the same by the Agent
from the Borrower. Any and all wire fees associates with the transfer of funds
to any Lender, shall be at the sole cost and expense of the Borrower.

 

(b)                                         Date.  Whenever any payment due hereunder shall fall
due on a day other than a Business Day, such payment shall be made on the next
succeeding Business Day, and such extension of time shall be included in the
computation of interest or fees, as the case may be.

 

(c)                                          Default
Rate.  If either (i) any amounts
required to be paid by Borrower under this Agreement or the other Loan
Documents (including principal, Prepayment Fees, and  the Final Payment payable with respect to any Term
Advance, accrued and unpaid interest, and any fees or other amounts) remain
unpaid after such amounts are due, or (ii) an Event of Default has
occurred and is continuing, Borrower shall pay interest on the aggregate,
outstanding balance hereunder from the date due or from the date of the Event
of Default, as applicable, until such past due amounts are paid in full or
until all Events of Default are cured, as applicable, at a per annum rate equal
to the Default Rate.  Interest is
computed on the basis of a 360 day year for the actual number of days elapsed.

 

2.4                               Procedure
for Making Credit Extensions.

 

(a)                                          Notice.  Whenever Borrower desires that Lenders make a
Term Advance, Borrower must notify Agent in writing (or by telephone with
prompt confirmation in writing of a completed Payment/Advance Form in the
form of attached as Exhibit B
(the “Payment/Advance Form) of the date on which it desires Lenders to make
such Term Advance. Each Term Advance shall be evidenced by a Secured Promissory
Note made by Borrower to the Lender, in the form of Exhibit D attached hereto (the “Note”)
and shall be repayable as set forth herein, provided that the entire unpaid
principal balance of the Term Loan and any accrued and unpaid interest thereon
shall be due and payable on the Maturity Date.  
Such notice shall (i) be made at least five (5) Business Days
in advance of the desired Funding Date, and (ii) be irrevocable. Within
two (2) Business Days following receipt of such notice, Agent shall notify
each Lender by telephone or facsimile of the principal amount (including such
Lender’s Commitment Percentage thereof) and Funding Date of the Term Advance being
requested by Borrower.  Borrower’s
request for a Term Advance shall be deemed to be a representation and warranty
by Borrower that no Default or Event of Default has occurred and is continuing,
and that the representations and warranties set forth in Section 5 are
true and correct as of the time of such notice as if made at such time.  Subject to the terms and conditions of this
Agreement, as soon as practicable on the Funding Date, each Lender shall
transfer an amount equal to its Commitment Percentage multiplied by the amount
of the Term Advance to the account specified in Section 2.4(b) in
immediately available funds.  Each Lender’s
obligation to make its Commitment Percentage of the Credit Extension shall be
expressly subject to the satisfaction of the conditions set forth in
Sections 3.1 and 3.2.

 

9

 

(b)                                         Disbursement.  Each Lender shall disburse its pro rata
portion of such Credit Extension by wire transfer to Borrower at Silicon Valley
Bank, 3003 Tasman Drive, Santa Clara, CA 95054, Account No.                     ,
ABA Routing No.                      ,
Account Name: Intarcia Therapeutics, Inc. 
Notwithstanding anything stated herein to the contrary, no Lender shall
have any obligation to advance funds on behalf of the other Lender.

 

2.5                               Prepayments.

 

(a)                                          Mandatory
Prepayment Upon an Acceleration.  If
the Term Advances are accelerated following the occurrence of an Event of
Default, Borrower shall immediately pay to Lenders an amount equal to the sum
of: (i) all outstanding  principal
plus accrued interest, (ii) the Final Payment plus (iii) the
Prepayment Fee, plus (iv) all other sums, if any, that shall have become
due and payable, including interest at the Default Rate with respect to any
past due amounts.

 

(b)                                         Permitted
Prepayment of Credit Extensions.  
Borrower shall have the option to prepay any of the Term Advances
advanced by Lenders under this Agreement, provided Borrower (i) provides
written notice to Agent of its election to prepay such Term Advance at least three
(3) Business Days prior to such prepayment, and (ii) pays, on the
date of such prepayment (A) all outstanding  principal plus accrued interest with regard
to such Term Advance, (B) the Final Payment with regard to such Term Advance
plus (C) the Prepayment Fee with regard to such Term Advance, plus (D) all
other sums, if any, that shall have become due and payable, including interest
at the Default Rate with respect to any past due amounts with respect to such Term
Advance.

 

2.6                               Commitment Fee;
Facility Fee.  Borrower shall pay to Agent:

 

(a)                                          Good
Faith Deposit.  Borrower has paid a
good faith deposit in the amount of Fifteen Thousand Dollars ($15,000.00) (the “Good
Faith Deposit”) which shall be applied toward the Lenders’ Expenses and the
balance, if any, returned to Borrower.

 

(b)                                         Prepayment
Fee. The Prepayment Fee, when due hereunder.

 

(c)                                          Final
Payment.  The Final Payment, when due
hereunder

 

(d)                                         Lenders’
Expenses.  All Lenders’ Expenses
(including reasonable attorneys’ fees and expenses, for documentation and
negotiation of this Agreement ) incurred through and after the Closing Date,
when due.

 

2.7                               Additional Costs.  If any new law or regulation increases SVB’s
costs or reduces its income for any loan, Borrower shall pay the increase in
cost or reduction in income or additional expense; provided, however, that
Borrower shall not be liable for any amount attributable to any period before
180 days prior to the date SVB notifies Borrower of such increased costs.  SVB agrees that it shall allocate any
increased costs among its customers similarly affected in good faith and in a
manner consistent with SVB’s customary practice.

 

3                                         CONDITIONS
OF CREDIT EXTENSIONS.

 

3.1                               Conditions
Precedent to Closing.  At the time of
the execution and delivery of this Agreement, the Lenders shall have received,
in form and substance reasonably satisfactory to Lenders, all of the following:

 

10

 

(a)                                          This
Agreement duly executed by Borrower and each of the Lenders.

 

(b)                                         The
separate Warrants to be issued to each Lender or their designees, each duly
executed by Borrower.

 

(c)                                          Perfection
Certificate by Borrower;

 

(d)                                         The
separate Note(s) in favor of each Lender or their designees, each duly executed
by Borrower;

 

(e)                                          A
certificate of the secretary or assistant secretary of Borrower with copies of
the following documents attached:  (i) the
articles of incorporation and bylaws of Borrower certified by Borrower as being
in full force and effect on the date thereof, (ii) incumbency and
representative signatures, and (iii) resolutions authorizing the execution
and delivery of this Agreement and each of the other Loan Documents.

 

(f)                                            A
good standing certificate from Borrower’s state of incorporation and the state
in which Borrower’s principal place of business is located, together with
certificates of the applicable governmental authorities stating that Borrower
is in compliance with the franchise tax laws of each such state, each dated as
of a recent date.

 

(g)                                         Certificates
of foreign qualification.

 

(h)                                         Landlord’s
Agreement.

 

(i)                                             Financing
Statements (UCC-1).

 

(j)                                             Evidence
of the insurance coverage required by Section 6.6 of this Agreement.

 

(k)                                          Account
Control Agreements (as necessary).

 

(l)                                             Payment
of Lenders’ Fees then due as specified herein.

 

(m)                                       All
necessary consents of shareholders and other third parties with respect to the
execution, delivery and performance of this Agreement, the Warrants and the
other Loan Documents.

 

(n)                                         A
legal opinion of Borrower’s counsel (authority).

 

(o)                                         Such
other documents, and completion of such other matters, as Lenders may deem
necessary or appropriate, including, without limitation, documents necessary to
perfect a lien on bank accounts.

 

3.2                               Conditions
Precedent to Credit Extensions.  The
obligation of Lenders to make each Credit Extension, including the initial Credit
Extension, is further subject to the following conditions:

 

(a)                                          No
Default or Event of Default shall have occurred and be continuing..

 

(b)                                         Borrower,
has executed any Payment/Advance Form.

 

11

 

(c)                                          Borrower,
has executed the Note(s).

 

(d)                                         Such
other documents, and completion of such other matters, as Agent may deem
necessary or appropriate.

 

(e)                                          The
representation and warranties contained in this Agreement and the Loan
Documents to which Borrower is a party, shall be true and correct in all
material respects as if made on such Funding Date.

 

(f)                                            The
Funding Date of the requested Credit Extension shall not be later than the
Commitment Termination Date.

 

(g)                                         The
Borrower shall have paid all reasonable legal fees and disbursement and other
expenses incurred by the Agent and Lenders in connection with the funding of
each Credit Extension.

 

3.3                               Covenant to
Deliver.  Borrower agrees (not as a
condition but as a covenant) to deliver to Agent each item required to be
delivered to Agent and/or Lenders as a condition to each Credit Extension, if
such Credit Extension is advanced. 
Borrower expressly agrees that the extension of such Credit Extension
prior to the receipt by Agent or Lenders of any such item shall not constitute
a waiver by Agent or Lenders of Borrower’s obligation to deliver such item, and
any such extension in the absence of a required item shall be in Lenders’ sole
discretion.

 

4                                         CREATION
OF SECURITY INTEREST.

 

4.1                               Grant of Security
Interest. Borrower hereby grants Agent, for the ratable benefit of the
Lenders, and to each Lender, to secure the payment and performance in full of
all of the Obligations and the performance of each of Borrower’s duties under
the Loan Documents, a continuing security interest in, and pledges and assigns
to Agent, for the ratable benefit of the Lenders, and to each Lender, the
Collateral, wherever located, whether now owned or hereafter acquired or
arising, and all proceeds and products thereof. 
Subject to Section 5.5, Borrower warrants and represents that the
security interest granted herein shall be a first priority security interest in
the Collateral.

 

Except
as noted on the Perfection Certificate, Borrower is not a party to, nor is
bound by, any material license (other than over the counter software that is
commercially available to the public) or other material agreement with respect
to which Borrower is the licensee that prohibits or otherwise restricts
Borrower from granting a security interest in Borrower’s interest in such
license or agreement or any other property. 
Borrower shall provide written notice to Agent within ten (10) days
of entering or becoming bound by, any such license or agreement which is
reasonably likely to have a material impact on Borrower’s business or financial
condition.  Borrower shall take such
steps as Agent reasonably requests to obtain the consent of, authorization by
or waiver by, any person whose consent or waiver is necessary for all such
licenses or contract rights to be deemed “Collateral” and for Lenders to have a
security interest in it that might otherwise be restricted or prohibited by law
or by the terms of any such license or agreement, whether now existing or
entered into in the future.

 

 If Borrower shall, at any time, acquire a
commercial tort claim, Borrower shall promptly notify Agent in a writing signed
by Borrower of the brief details thereof and grant to Agent and Lenders in such
writing a security interest therein and in the proceeds thereof, all upon the
terms of this Agreement, with such writing to be in form and substance
satisfactory to Agent.

 

12

 

4.2                               Duration of
Security Interest.  Lenders’ security
interest in the Collateral shall continue until the payment in full and the
satisfaction of all Obligations and the termination of the Commitment,
whereupon such security interest shall terminate. Agent shall, at Borrower’s
sole cost and expense, execute such further documents and take such further
actions as may be reasonably necessary to effect the release contemplated by
this Section 4.2, including duly executing and delivering termination
statements for filing in all relevant jurisdictions under the Code.  Borrower agrees that any disposition of the
Collateral in violation of this Agreement, by either the Borrower or any other
Person, shall be deemed to violate the rights of the Agent and Lenders under
the Code.

 

4.3                               Location and
Possession of Collateral.  The
Collateral is and shall remain in the possession of Borrower at its location
listed on the cover page hereof or as set forth in the Perfection
Certificate.  Borrower shall remain in
full possession, enjoyment and control of the Collateral (except only as may be
otherwise required by Agent for perfection of its security interest therein)
and so long as no Event of Default has occurred and is continuing, shall be
entitled to manage, operate and use the same and each part thereof with the
rights and franchises appertaining thereto; provided, however, that the
possession enjoyment, control and use of the Collateral shall at all time be
subject to the observance and performance of the terms of this Agreement.

 

4.4                               Delivery of
Additional Documentation Required. 
Borrower shall from time to time execute and deliver to Agent on behalf
of Lenders, at the request of Agent, all financing statements and other
documents Agent may reasonably request, in form satisfactory to Agent, to
perfect and continue Agent’s perfected security interests in the Collateral and
in order to consummate fully all of the transactions contemplated under the
Loan Documents.  In addition, Borrower
hereby authorizes Agent to file UCC financing statements, without notice to
Borrower, with all appropriate jurisdictions, in order to perfect or protect
Agent’s and Lenders’ interest or rights hereunder, including a notice that any
disposition of the Collateral by either Borrower or any other Person, shall be
deemed to violate the rights of the Lenders under the Code.

 

4.5                               Right to Inspect.  Each Lender (through any of its officers,
employees, or agents) shall have the right, upon reasonable prior notice, from
time to time during Borrower’s usual business hours, to inspect Borrower’s
books and records and to make copies thereof and to inspect, test, and appraise
the Collateral in order to verify Borrower’s financial condition or the amount,
condition of, or any other matter relating to, the Collateral.

 

4.6                               Lien
Subordination.  Lenders agree that
the Liens granted to them hereunder in Third Party Equipment shall be
subordinate to the Liens of future lenders providing equipment financing and
equipment lessors for equipment and other personal property acquired by
Borrower after the date hereof (“Third Party Equipment”); provided, that, in
the case of equipment financings and leasing such Liens are confined solely to
the equipment so financed and the proceeds thereof and are Permitted
Liens.  Notwithstanding the foregoing,
the Obligations hereunder shall not be subordinate in right of payment to any
obligations to other equipment lenders or equipment lessors and Lenders’ rights
and remedies hereunder shall not in any way be subordinate to the rights and
remedies of any such lender or equipment lessors.  Lenders agree to execute and deliver such
agreements and documents as may be reasonably requested by Borrower from time
to time which set forth the lien subordination described in this Section 4.6
and are reasonably acceptable to Lenders. 
Lenders shall have no obligation to execute any agreement or document
which would impose obligations, restrictions or lien priority on Lender which
are less favorable to Lenders than those described in this Section 4.6.

 

5                                         REPRESENTATIONS
AND WARRANTIES.  Except as set
forth in the Perfection Certificate, borrower represents, warrants and
covenants as follows:

 

5.1                               Organization and
Qualification.  Borrower and each
Subsidiary is duly existing and in good standing in its state of formation and
qualified and licensed to do business in, and in good standing in, any state in
which the conduct of its business or its ownership of property requires that it
be qualified, except where the failure to do so would not reasonably be
expected to cause a Material Adverse Change.  
In connection with this Agreement, Borrower delivered to Agent and
Lenders a perfection certificate signed by Borrower and entitled

 

13

 

“Perfection Certificate”.  Borrower represents and warrants to Agent and
each Lender that: (a) Borrower’s exact legal name is that indicated on the
Perfection Certificate and on the signature page hereof;  and (b) Borrower is an organization of
the type, and is organized in the jurisdiction, set forth in the Perfection
Certificate; and (c) the Perfection Certificate accurately sets forth
Borrower’s organizational identification number or accurately states that
Borrower has none; and (d) the Perfection Certificate accurately sets
forth Borrower’s place of business, or, if more than one, its chief executive
office as well as Borrower’s mailing address if different, and (e) all
other information set forth on the Perfection Certificate pertaining to
Borrower is accurate and complete.  If
Borrower does not now have an organizational identification number, but later
obtains one, Borrower shall forthwith notify Agent of such organizational
identification number.

 

The
execution, delivery and performance of the Loan Documents have been duly
authorized, and do not conflict with Borrower’s organizational documents, nor
shall they constitute an event of default under any material agreement by which
Borrower is bound.  Borrower is not in
default under any agreement to which or by which it is bound in which the
default would reasonably be expected to cause a Material Adverse Change.

 

5.2                               Authority.  Borrower has all necessary power and
authority to execute, deliver, and perform in accordance with the terms
thereof, the Loan Documents to which it is a party.  Borrower has all requisite power and
authority to own and operate its properties and to carry on its businesses as
now conducted.

 

5.3                               Conflict with
Other Instruments, etc.  Neither the
execution and delivery of any Loan Document to which Borrower is a party nor
the consummation of the transactions therein contemplated nor compliance with
the terms, conditions and provisions thereof will conflict with or result in a
breach of any of the terms, conditions or provisions of the articles of
incorporation and the by-laws, or other organizational documents of Borrower or
any law or any regulation, order, writ, injunction or decree of any court or
governmental instrumentality or any material agreement or instrument to which
Borrower is a party or by which it or any of its properties is bound or to
which it or any of its properties is subject, or constitute a default
thereunder or result in the creation or imposition of any Lien, other than
Permitted Liens.

 

5.4                               Authorization;
Enforceability.  The execution and
delivery of this Agreement, the granting of the security interest in the
Collateral, the incurring of the Term Loan, the execution and delivery of the
other Loan Documents to which Borrower is a party and the consummation of the
transactions herein and therein contemplated have each been duly authorized by
all necessary action on the part of Borrower. 
The Loan Documents have been duly executed and delivered and constitute
legal, valid and binding obligations of Borrower, enforceable in accordance
with their respective terms, except as the enforceability thereof may be
limited by bankruptcy, insolvency or other similar laws of general application
relating to or affecting the enforcement of creditors’ rights or by general
principles of equity.

 

5.5                               No Prior
Encumbrances.  Borrower has good and
marketable title to the Collateral, free and clear of Liens, except for
Permitted Liens. Borrower has no other deposit account, other than the deposit
accounts with SVB and deposit accounts described in the Perfection Certificate
delivered to the Agent in connection herewith. The Collateral is not in the
possession of any third party bailee (such as a warehouse).  In the event that Borrower, after the date
hereof, intends to store or otherwise deliver any portion of the Collateral to
a bailee, then Borrower will first receive the written consent of Agent and
such bailee must acknowledge in writing that the bailee is holding such
Collateral for the benefit of Lenders.

 

5.6                               Litigation.  There are no actions or proceedings pending
by or against Borrower before any court or administrative agency in which an
adverse decision could have a material adverse effect on Borrower or the
aggregate value of the Collateral. 
Borrower does not have knowledge of any such pending or threatened
actions or proceedings.  Borrower will
promptly notify Lenders in writing if any action, proceeding or governmental
investigation involving Borrower is commenced that is reasonably expected to
result in damages or costs to Borrower of Two Hundred Fifty Thousand Dollars ($250,000.00)
or more.

 

14

 

5.7                               Financial
Statements. All financial statements relating to Borrower or any Affiliate
that have been or may hereafter be delivered by Borrower to each Lender present
fairly in all material respects Borrower’s financial condition as of the date
thereof and Borrower’s results of operations for the period then ended.

 

5.8                               Security Interest.  Assuming the proper filing of one or more financing
statement(s) identifying the Collateral with the proper state and/or local
authorities, the security interests in the Collateral granted to Agent pursuant
to this Agreement (i) constitute and will continue to constitute first
priority security interests and (ii) are and will continue to be superior
and prior to the rights of all other creditors of Borrower.  The Collateral may also be subject to
Permitted Liens.

 

5.9                               No Material
Adverse Effect.  No event has
occurred and no condition exists which would reasonably be expected to have a
material adverse effect on the financial condition, business or operations of
Borrower since the date of the most recent financial statement submitted to
Agent.

 

5.10                        Full Disclosure.  No representation, warranty or other
statement made by Borrower in any Loan Document (including the Perfection
Certificate), certificate or written statement furnished to Lenders or either
of them contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained in such
certificates or statements not misleading. 
There is no fact known to Borrower which materially adversely affects,
or which could in the future be reasonably expected to materially adversely
affect, its ability to perform its obligations under this Agreement.

 

5.11                        Solvency, Etc.  Borrower is Solvent (as defined below) and,
after the execution and delivery of the Loan Documents and the consummation of
the transactions contemplated thereby, Borrower will be Solvent.  “Solvent” shall mean, with respect to any
Person on any date, that on such date (a) the fair value of the property
of such Person is greater than the fair value of the liabilities (including,
without limitation, contingent liabilities) of such Person, (b) the
present fair saleable value of the assets of such Person is not less than the
amount that will be required to pay the probable liability of such Person on
its debts as they become absolute and matured, (c) such Person is able to
pay such debts (including trade debt) and liabilities as they mature and (d) such
Person is not engaged in business or a transaction, and is not about to engage
in business or a transaction, for which such Person’s property would constitute
an unreasonably small capital.

 

5.12                        Taxes.  The
Borrower has filed all federal, state, and local tax returns which are required
to be filed and has paid all taxes due pursuant to such returns or pursuant to
any assessment received by the Borrower other than such taxes, if any, as are
being contested in good faith as to which adequate reserves have been
provided.  The charges, accruals and
reserves on the books of the Borrower in respect to any taxes or other
governmental charges are adequate.

 

6                                         AFFIRMATIVE
COVENANTS.  Borrower covenants
and agrees that, until the full and complete payment of the obligations and the
termination of the commitments, borrower shall do all of the following:

 

6.1                               Good Standing.  Borrower shall maintain its corporate
existence and its good standing in its jurisdiction of incorporation and
maintain qualification in each jurisdiction in which the failure to so qualify
would reasonably be expected to have a material adverse effect on the financial
condition, operations or business of Borrower. 
Borrower shall maintain in force all licenses, approvals and agreements,
the loss of which would reasonably be expected to have a material adverse
effect on its financial condition, operations or business.

 

6.2                               Government
Compliance.  Borrower shall comply
with all statutes, laws, ordinances and government rules and regulations
to which it is subject, noncompliance with which would reasonably be expected
to materially adversely affect the financial condition, operations or business
of Borrower.

 

15

 

6.3                               Financial
Statements, Reports, Certificates.

 

(a)                                  Borrower
shall deliver to each Lender:  (a) as
soon as available, but in any event within thirty (30) days after the end of
each month, a company prepared balance sheet, income statement and cash flow
statement covering Borrower’s operations during such period, certified by
Borrower’s president, treasurer or chief financial officer (each, a “Responsible
Officer”); (b) as soon as available, but in any event within one hundred
twenty (120) days after the end of Borrower’s fiscal year (commencing with
Borrower’s fiscal year ending December 31, 2005), audited financial
statements of Borrower prepared in accordance with generally accepted
accounting principles, consistently applied, together with an unqualified
opinion on such financial statements of a nationally recognized or other
independent public accounting firm reasonably acceptable to Agent;  (c) as soon as available, but in any
event within forty-five (45) days after the end of Borrower’s fiscal year,
annual financial projections; (d) a prompt report of any legal actions
pending or threatened against Borrower or any Subsidiary that could result in
damages or costs to Borrower or any Subsidiary of Two Hundred Fifty Thousand
Dollars ($250,000.00) or more; and (d) such other financial information as
Lender may reasonably request from time to time.  From and after such time as Borrower becomes
a publicly reporting company, promptly as they are available and in any event, within
ten (10) days of filing of Borrower’s Form 10-K, 10-Q, and 8-K with
the Securities and Exchange Commission after the end of each fiscal year of
Borrower, the financial statements of Borrower filed with such Form 10-K,
10-Q and 8-K.  In addition, Borrower
shall deliver to each Lender (i) promptly upon becoming available, copies
of all statements, reports and notices sent or made available generally by Borrower
to its security holders; and (ii) such other financial information as
Lenders may reasonably request from time to time.

 

6.4                               Certificates of
Compliance.  Each time financial
statements are furnished pursuant to Section 6.3 above, there shall be
delivered to Agent, a Compliance Certificate signed by a Responsible Officer in
the form of Exhibit C.

 

6.5                               Taxes.  Borrower shall make due and timely payment or
deposit of all federal, state, and local taxes, assessments, or contributions
required of it by law or imposed upon any properties belonging to it, and will
execute and deliver to Agent, on demand, appropriate certificates attesting to
the payment or deposit thereof; and Borrower will make timely payment or
deposit of all tax payments and withholding taxes required of it by applicable
laws, including those laws concerning F.I.C.A., F.U.T.A., state disability, and
local, state, and federal income taxes, and will, upon request, furnish Agent
with proof satisfactory to Agent and Lenders indicating that Borrower has made
such payments or deposits; provided that Borrower need not make any payment if
the amount or validity of such payment is contested in good faith by
appropriate proceedings and as to which payment in full is bonded or is
adequately reserved against by Borrower.

 

6.6                               Insurance.  Borrower shall keep its business and the
Collateral insured for risks and in amounts, and as Lenders and Agent may
reasonably request.  Insurance policies
shall be in a form, with companies, and in amounts that are satisfactory to
Agent.  All property policies shall have
a lender’s loss payable endorsement showing each Lender as an additional loss
payee and all liability policies shall show the Lenders and Agent as an
additional insured and all policies shall provide that the insurer must give
Agent on behalf of Lenders at least twenty (20) days notice before canceling
its policy.  At Agent’s request, Borrower
shall deliver certified copies of policies and evidence of all premium
payments.  Proceeds payable under any
policy shall, at Agent’s option, be payable to Agent on behalf of Lenders on
account of the Obligations.  Notwithstanding
the foregoing, so long as no Event of Default has occurred and is continuing,
Borrower shall have the option of applying the proceeds of any casualty policy,
toward the replacement or repair of destroyed or damaged property; provided
that (i) any such replaced or repaired property (a) shall be of equal
or like value as the replaced or repaired Collateral and (b) shall be
deemed Collateral in which Lenders have been granted a first priority security
interest and (ii) after the occurrence and during the continuation of an
Event of Default all proceeds payable under such casualty policy shall, at the
option of Agent, be payable to Agent, for the ratable benefit of the Lenders,
on account of the Obligations.  If Borrower
fails to obtain insurance as required under Section 6.6 or to pay any
amount or furnish any required proof of payment to third persons and Agent,
Agent may make all or part of such payment or obtain such insurance policies
required in Section 6.6, and take any action under the policies Agent
deems prudent.

 

16

 

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

 

6.8                               Operating
Accounts.  In order to permit the
Agent to monitor the Borrower’s financial performance and condition, and until
payment in full of all Obligations hereunder, Borrower shall maintain its
primary operating accounts with Agent. 
Borrower shall identify to Agent, in writing, of any bank or securities
account opened by Borrower with any institution other than SVB or its
affiliates.  In addition, for each such
account that the Borrower at any time opens or maintains, Borrower shall, at
the Agent’s request and option, pursuant to an agreement in form and substance
reasonably acceptable to the Agent cause the depositary bank or securities
intermediary to agree that such account is the collateral of the Lenders
pursuant to the terms hereunder.  The
provisions of this paragraph shall not apply to deposit accounts exclusively
used for payroll, payroll taxes and other employee wage and benefit payments to
or for the benefit of the Borrower’s employees.

 

6.9                               Payment of
Principal, Interest and Expenses. 
Borrower covenants and agrees that it will duly and punctually pay or
cause to be paid to the Agent, for and on the behalf of the Lenders, all
amounts owing under this Agreement.

 

6.10                        Notice of Material
Adverse Change; Event of Default. 
Borrower shall give Agent prompt written notice of any Material Adverse
Change in the Borrower, any Event of Default, or of any material loss,
destruction or damage to its properties and assets.

 

7                                         NEGATIVE
COVENANTS.  Borrower covenants
and agrees that until the full and complete payment of the obligations and
termination of the commitments, borrower will not do any of the following:

 

7.1                               Changes in Business, Ownership, Management or
Locations of Collateral.  (i) Engage in or permit any
of its Subsidiaries to engage in any business other than the businesses
currently engaged in by Borrower or reasonably related thereto, or (ii) have
a material change in its ownership of greater than forty-nine percent (49.0%)  (other than by the sale of Borrower’s equity
securities in a public offering or to venture capital, strategic or corporate
investors so long as Borrower identifies to Agent the investors prior to the
closing of the investment) or (iii) suffer a material change in management
such that both the Chief Financial Officer and the Chief Executive Office are
no longer actively involved in the management of the Borrower and  replacements, reasonably acceptable to the
Lenders are not made within ninety (90) days thereof. Borrower shall not, without
at least ten (10) days prior
written notice to Agent: (a) relocate its chief executive office, or add
any new offices or business locations, including warehouses  (unless such new offices or business
locations contain less than One Hundred Thousand Dollars ($100,000.00) in
Borrower’s assets or property), or (b) change its jurisdiction of
organization, or (c) change its organizational structure or type, or (d) change
its legal name, or (e) change any organizational number (if any) assigned
by its jurisdiction of organization.

 

7.2                               Liens.  Create, incur, assume or suffer to exist any
Lien of any kind upon any Collateral, including the Intellectual Property, or
assign or convey any right to receive income, including the sale of any
Accounts, whether now owned or hereafter acquired, except Permitted Liens.

 

7.3                               Dispositions of
Collateral.  Convey, sell, lease,
transfer, assign or otherwise dispose of (collectively a “Transfer”), or permit
any of its Subsidiaries to Transfer, all or any part of its business or
property, including the Intellectual Property, except for Transfers of (a) Inventory
in the ordinary course of business; (b)  exclusive licenses and similar
arrangements for the use of the property of Borrower or its Subsidiaries in the
ordinary course of business; (c)  worn-out or obsolete Equipment; or (d) other
Transfers which do not in the aggregate exceed One Hundred Thousand Dollars
($100,000.00) in any fiscal year.  Borrower
shall not enter into an agreement with any Person other than the Lenders which
restricts the subsequent granting to Agent or Lenders of a security interest in
the Intellectual Property.

 

17

 

7.4                               Distributions.
Except as expressly permitted in the Section 7.4: (i) Pay any dividends
or make any distributions on its Equity Securities; (ii) purchase, redeem,
retire, defease or otherwise acquire for value any of its Equity Securities
(other than repurchases pursuant to the terms of employee stock purchase plans,
employee restricted stock agreements or similar arrangements in an aggregate
amount not to exceed $100,000 in any fiscal year); (iii) return any
capital to any holder of its Equity Securities as such; (iv) make any
distribution of assets, Equity Securities, obligations or securities to any
holder of its Equity Securities as such; or (v) set apart any sum for any
such purpose; provided, however, that Borrower may pay dividends payable solely
in common stock.

 

7.5                               Mergers or
Acquisitions.  Merge or consolidate
with or into any other Person or acquire all or substantially all of the
capital stock or assets of another Person. 
A Subsidiary may merge or consolidate into another Subsidiary or into
Borrower provided Borrower is the surviving legal entity, and as long as no
Event of Default is occurring prior thereto or arises as a result therefrom.

 

7.6                               Transactions With
Affiliates. Enter into any contractual obligation with any Affiliate or
engage in any other transaction with any Affiliate except upon terms at least
as favorable to Borrower as an arms-length transaction with Persons who are not
Affiliates of Borrower.

 

7.7                               Indebtedness
Payments.  Repay any notes to
officers, directors or shareholders, prior to all Obligations to Lenders being
fully satisfied.

 

7.8                               Indebtedness.  Create, incur, assume or permit to exist any
Indebtedness except Permitted Indebtedness.

 

7.9                               Compliance.  Become an “investment company” or a company
controlled by an “investment company,” under the Investment Company Act of 1940
or undertake as one of its important activities extending credit to purchase or
carry margin stock, or use the proceeds of any Credit Extension for that
purpose; fail to meet the minimum funding requirements of ERISA, or permit a
Reportable Event or Prohibited Transaction, as defined in ERISA, to occur; fail
to comply with the Federal Fair Labor Standards Act or violate any other law or
regulation, if the violation would reasonably be expected to have a material
adverse effect on Borrower’s business or operations or would reasonably be expected
to cause a Material Adverse Change, or permit any of its Subsidiaries to do so

 

8                                         EVENTS
OF DEFAULT.  Any one or more of
the following events shall constitute an event of default by borrower under
this agreement (“Events of Default”):

 

8.1                               If Borrower fails to
pay within three (3) days of the date due and payable or the date declared
due and payable in accordance with the Loan Documents: (i) any payment on
the relevant Payment Date or any Final Payment or any Prepayment Fee on the
relevant Maturity Date, or (ii) any other portion of the Obligations.
During such three (3) day period the failure to cure the default shall not
constitute an Event of Default (but no Credit Extension shall be made during
such cure period).

 

8.2                               If Borrower fails to
perform any obligation under Sections 6.3, or 6.8 or violates any of the
covenants contained in Section 7 of this Agreement.

 

8.3                               If Borrower fails or
neglects to perform, keep, or observe any other material term, provision, representation,
warranty, condition, covenant or agreement contained in this Agreement, any of
the Loan Documents (other than as set forth in Section 8.1, 8.2 or 8.4
through 8.13), or in any present or future agreement between Borrower , Agent
and Lenders and as to any default under such other material term, provision, representation,
warranty, condition, covenant or agreement that can be cured, has failed to
cure the default within ten (10) days after the occurrence thereof;
provided, however, that if the default cannot by its nature be cured within the
ten (10) day period or cannot after diligent attempts by Borrower be cured
within such ten (10) day period, and such default is likely to be cured
within a reasonable time, then Borrower shall have an additional period  (which shall not in any

 

18

 

case exceed thirty (30)
days) to attempt to cure such default, and within such reasonable time period
the failure to have cured such default shall not be deemed an Event of Default
(provided that no Credit Extensions shall be made during such cure
period).  Grace periods provided under
this Section shall not apply, among to covenants that are required to be
satisfied or completed by a date certain.

 

8.4                               If, prior to
Borrower’s IPO, both of the following conditions occur: (a) Borrower has
insufficient cash, cash equivalents and investment securities to satisfy the
Obligations on its own; and (b) it is the clear intention of Borrower’s
investors not to continue to fund the Borrower in the amounts and timeframe
necessary to enable Borrower to satisfy the Obligations as they become due and
payable. If, following Borrower’s IPO, there occurs a Material Adverse Change.

 

8.5                               If any material
portion of Borrower’s assets is attached, seized, subjected to a writ or distress
warrant, or is levied upon, or comes into the possession of any trustee,
receiver or Person acting in a similar capacity and such attachment, seizure,
writ or distress warrant or levy has not been removed, discharged or rescinded
within ten (10) days, or if Borrower is enjoined, restrained, or in any
way prevented by court order from continuing to conduct all or any material
part of its business affairs, or if a judgment or other claim becomes a lien or
encumbrance upon any material portion of Borrower’s assets, or if a notice of
lien, levy, or assessment is filed of record with respect to any of Borrower’s
assets by the United States Government, or any department, agency, or
instrumentality thereof, or by any state, county, municipal, or governmental
agency, and the same is not paid within ten (10) days after Borrower
receives notice thereof, provided that none of the foregoing shall constitute
an Event of Default where such action or event is stayed or an adequate bond
has been posted pending a good faith contesting by Borrower.

 

8.6                               Defaults shall exist
under any agreements with any third party or parties which consists of the
failure to pay any Indebtedness at maturity or which results in a right by such
third party or parties, whether or not exercised, to accelerate the maturity of
Indebtedness of Borrower in an aggregate amount in excess of Two Hundred Fifty
Thousand Dollars ($250,000) or a default shall exist under any financing
agreement with a Lender or any of a Lender’s Affiliates.

 

8.7                               If a judgment or
judgments for the payment of money in an amount, individually or in the
aggregate, of at least Two Hundred Fifty Thousand Dollars ($250,000) shall be
rendered against Borrower and shall remain unsatisfied and unstayed for a
period of ten (10) days.

 

8.8                               If any material
misrepresentation or material misstatement exists now or in the future in any
warranty, representation, statement, or report made to Lenders or either of
them by Borrower or any officer, employee, agent, or director of Borrower.

 

8.9                               If Borrower shall
breach any material term of the Warrants.

 

8.10                        If any Loan Document shall
in any material respect cease to be, or Borrower shall assert that any Loan
Document is not, a legal, valid and binding obligation of Borrower enforceable
in accordance with its terms.

 

8.11                        If a proceeding, petition
or case shall have been instituted in a court having jurisdiction in the
premises seeking a decree or order for relief in respect of Borrower in an
involuntary case under any applicable bankruptcy, reorganization, insolvency or
other similar law now or hereafter in effect, or under any insolvency,
arrangement, reorganization, moratorium, receivership, readjustment of debt,
dissolution or liquidation law or statute of any jurisdiction now or hereafter in
effect (whether at law or in equity) or for the appointment of a receiver,
liquidator, assignee, custodian, trustee (or similar official) of Borrower or
for any substantial part of its property, or for the winding-up or liquidation
of its affairs, and such proceeding shall remain undismissed or unstayed and in
effect for a period of thirty (30) consecutive days or such court shall enter a
decree or order granting the relief sought in such proceeding.

 

19

 

8.12                        If Borrower shall commence
a voluntary case, petition, or proceeding under any applicable bankruptcy,
reorganization insolvency or other similar law now or hereafter in effect, or
under any insolvency, arrangement, reorganization, moratorium, receivership,
adjustment of debt, dissolution or liquidation law or statute of any
jurisdiction now or hereafter in effect (whether at law or equity), shall
consent to the entry of an order for relief in an involuntary case under any
such law, or shall consent to the appointment of or taking possession by a
receiver, liquidator, assignee, trustee, custodian (or other similar official)
of Borrower or for any substantial part of its property, or shall make a
general assignment for the benefit of creditors, or shall fail generally to pay
its debts as they become due, or shall take any corporate action in furtherance
of any of the foregoing.

 

8.13                        (a) Any guaranty of
any Obligations terminates or ceases for any reason to be in full force; or (b) any
Guarantor does not perform any obligation or covenant under any guaranty of the
Obligations; or (c) any material misrepresentation or material
misstatement exists now or later in any warranty or representation in any
guaranty of the Obligations or in any certificate delivered to Agent in
connection with the guaranty; or (d) any circumstance described in Section 7
or 8 occurs to any Guarantor, or (e) the liquidation, winding up,
termination of existence, or insolvency of any Guarantor.

 

9                                         AGENT’S
AND LENDERS’ RIGHTS AND REMEDIES.

 

9.1                               Rights and
Remedies.  Upon the occurrence and
during the continuance of any Default or Event of Default, neither Agent nor
Lenders shall have any further obligation to advance money or extend credit to
or for the benefit of Borrower.  In
addition, upon the occurrence and during the continuance of an Event of
Default, Lenders or Agent on behalf of Lenders, shall have the rights, options,
duties and remedies of a secured party as permitted by law and, in addition to
and without limitation of the foregoing, Lenders may, at the election of
Lenders, without notice of election and without demand, do any one or more of
the following, all of which are authorized by Borrower:

 

(a)                                          Declare
all Obligations, whether evidenced by this Agreement, by any of the other Loan
Documents, or otherwise, including (i) all accrued and unpaid principal
and interest with respect to each Credit Extension, (ii) any accrued and
unpaid interest, and (iii) all other sums, if any, that shall have become
due and payable hereunder, immediately due and payable (provided that upon the
occurrence of an Event of Default described in Section 8.11 or 8.12 all
Obligations shall automatically become immediately due and payable without any
action by Lenders);

 

(b)                                         Make
such payments and do such acts as Agent or Lenders consider necessary or
reasonable to protect Agent’s security interest in the Collateral.  Borrower agrees to assemble the Collateral if
Agent, on behalf of Lenders, so requires, and to make the Collateral available
to Agent as Agent may designate. 
Borrower authorizes Agent and its lawful representatives to enter the
premises where the Collateral is located, to take and maintain possession of
the Collateral, or any part of it, and to pay, purchase, contest, or compromise
any Lien which in Lenders’ determination appears to be prior or superior to
their security interest and to pay all expenses incurred in connection
therewith.  With respect to any of
Borrower’s owned premises, Borrower hereby grants Agent and its lawful
representatives, on behalf of Lenders, a license to enter into possession of
such premises and to occupy the same, without charge, for up to one hundred
twenty (120) days in order to exercise any of Agent’s or Lenders’ rights or
remedies provided herein, at law, in equity, or otherwise;

 

(c)                                          Ship,
reclaim, recover, store, finish, maintain, repair, prepare for sale, advertise
for sale, and sell (in the manner provided for herein) the Collateral.  Lenders and their agents and any purchasers
at or after foreclosure are hereby granted an irrevocable, perpetual, fully
paid, royalty-free license or other right, solely pursuant to the provisions of
this Section 9.1, to use, without charge, Borrower’s intellectual
property, including without limitation, labels, patents,

 

20

 

copyrights, rights of use of any name, trade secrets,
trade names, trademarks, service marks, and advertising matter, or any Property
of a similar nature, now or at any time hereafter owned or acquired by Borrower
or in which Borrower now or at any time hereafter has any rights provided,
however, that such license shall only be exercisable in connection with the
disposition of Collateral upon Lenders’ or Agent’s exercise of their remedies
hereunder;

 

(d)                                         Sell
the Collateral at either a public or private sale, or both, by way of one or
more contracts or transactions, for cash or on terms, in such manner and at
such places (including Borrower’s premises) as Lenders determine are
commercially reasonable;

 

(e)                                          Agent
or any Lender may credit bid and purchase at any public sale; and

 

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

 

9.2                               Set Off Right.
Borrower hereby grants to Agent for the ratable benefit of Lenders, and to each
Lender, a lien, security interest and right of set off as security for all
Obligations to Agent and each Lender, hereunder, whether now existing or
hereafter arising upon and against all deposits, credits, collateral and property,
now or hereafter in the possession, custody, safekeeping or control of Agent or
any entity under the control of Agent (including an Agent subsidiary) or in
transit to any of them.  At any time
after the occurrence and during the continuance of an Event of Default, without
demand or notice, Agent or Lenders, as appropriate, may set-off the same or any
part thereof and apply the same to any liability or obligation of Borrower then
due regardless of the adequacy of any other collateral securing the Obligations.  ANY AND ALL RIGHTS TO REQUIRE AGENT TO
EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL WHICH
SECURES THE OBLIGATIONS, PRIOR TO EXERCISING ITS RIGHT OF SETOFF WITH RESPECT
TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF BORROWER, ARE HEREBY KNOWINGLY,
VOLUNTARILY AND IRREVOCABLY WAIVED.

 

9.3                               Effect of Sale.  Any sale, whether under any power of sale
hereby given or by virtue of judicial proceedings, shall operate to divest all
right, title, interest, claim and demand whatsoever, either at law or in
equity, of Borrower in and to the Property sold, and shall be a perpetual bar,
both at law and in equity, against Borrower, its successors and assigns, and
against any and all Persons claiming the Property sold or any part thereof under,
by or through Borrower, its successors or assigns.

 

9.4                               Power of Attorney
in Respect of the Collateral. 
Borrower does hereby irrevocably appoint Agent on behalf of Lenders
(which appointment is coupled with an interest), the true and lawful attorney
in fact of Borrower with full power of substitution, for it and in its name to
file any notices of security interests, financing statements and continuations
and amendments thereof pursuant to the Code or federal law, as may be necessary
to perfect, or to continue the perfection of Agent’s security interests in the
Collateral.   Borrower does hereby
irrevocably appoint Agent on behalf of Lenders (which appointment is coupled
with an interest) on the occurrence and during the continuance of an Event of
Default, the true and lawful attorney in fact of Borrower with full power of
substitution, for it and in its name:  (a) to
ask, demand, collect, receive, receipt for, sue for, compound and give
acquittance for any and all rents, issues, profits, avails, distributions,
income, payment draws and other sums in which a security interest is granted
under Section 4 with full power to settle, adjust or compromise any claim
thereunder as fully as if Agent were a Borrower itself, (b) to receive
payment of and to endorse the name of Borrower to any items of Collateral
(including checks, drafts and other orders for the payment of money) that come
into Agent’s possession or under Agent’s control, (c) to make all demands,
consents and waivers, or take any other action with respect to, the Collateral,
(d) in Agent’s discretion to file any claim or take any other action or
proceedings, either in their own names or in the name of Borrower or otherwise,
which Agent or Lenders may reasonably deem necessary or appropriate to protect
and preserve the right, title and interest of Agent, on behalf of

 

21

 

Lenders, in and to the
Collateral, or (e) to otherwise act with respect thereto as though Agent,
on behalf of Lenders, were the outright owner of the Collateral.

 

9.5                               Lenders’ Expenses.  Any amounts paid by Lenders as provided
herein shall constitute Lenders’ Expenses and are immediately due and payable,
and shall bear interest at the then applicable rate hereunder and be secured by
the Collateral.  No payments by Lenders
shall be deemed an agreement to make similar payments in the future or Agent’s
and Lenders’ waiver of any Event of Default.

 

9.6                               Remedies
Cumulative.  Agent’s and Lenders’
rights and remedies under this Agreement, the Loan Documents, and all other
agreements shall be cumulative.  Agent
and Lenders shall have all other rights and remedies not inconsistent herewith
as provided under the Code, by law, or in equity.  No exercise by Agent or any Lender of one
right or remedy shall be deemed an election, and no waiver by Lenders of any
Event of Default on Borrower’s part shall be deemed a continuing waiver.  No delay by Agent or any Lender shall
constitute a waiver, election, or acquiescence by it or either of them.

 

9.7                               Application of
Collateral Proceeds.  The proceeds
and/or avails of the Collateral, or any part thereof, and the proceeds and the
avails of any remedy hereunder (as well as any other amounts of any kind held
by Agent, on behalf of Lenders, at the time of or received by Agent, on behalf
of Lenders, after, the occurrence of an Event of Default hereunder) shall be
paid to and applied as follows:

 

(a)                                          First,
to the payment of out-of-pocket costs and expenses, including all amounts
expended to preserve the value of the Collateral, of foreclosure or suit, if
any, and of such sale and the exercise of any other rights or remedies, and of
all proper fees, expenses, liability and advances, including reasonable legal
expenses and attorneys’ fees, incurred or made hereunder by Agent or any
Lender, including without limitation, Lenders’ Expenses;

 

(b)                                         Second,
to the payment to Lenders of the amount then owing or unpaid on the Credit
Extensions, including any accrued and unpaid interest, and all other
Obligations with respect to all Credit Extensions, provided, however, that if
such proceeds shall be insufficient to pay in full the whole amount so due,
owing or unpaid upon the Credit Extensions, then to the unpaid interest thereon,
and then to the payment of other amounts then payable to Lenders under any of
the Loan Documents; and

 

(c)                                          Third,
to the payment of the surplus, if any, to Borrower, its successors and assigns,
or to whomsoever may be lawfully entitled to receive the same.

 

9.8                               Reinstatement of
Rights.  If Agent or Lenders shall
have proceeded to enforce any right under this Agreement or any other Loan
Document by foreclosure, sale, entry or otherwise, and such proceedings shall
have been discontinued or abandoned for any reason or shall have been
determined adversely, then and in every such case (unless otherwise ordered by
a court of competent jurisdiction), Agent and Lenders shall be restored to
their former position and rights hereunder with respect to the Property subject
to the security interest created under this Agreement.

 

10                                  WAIVERS;
INDEMNIFICATION.

 

10.1                        Demand; Protest.  Borrower waives demand, protest, notice of
protest, notice of default or dishonor, notice of payment and nonpayment,
notice of any default, nonpayment at maturity, release, compromise, settlement,
extension, or renewal of accounts, documents, instruments, chattel paper, and
guarantees at any time held by Agent on which Borrower may in any way be
liable.

 

22

 

10.2                        Agent’s Liability for
Collateral.  So long as Agent
complies with its obligations, if any, under the Code, Lenders shall not in any
way or manner be liable or responsible for: 
(a) the safekeeping of the Collateral; (b) any loss or damage
thereto occurring or arising in any manner or fashion from any cause other than
Lender’s gross negligence or willful misconduct; (c) any diminution in the
value thereof; or (d) any act or default of any carrier, warehouseman,
bailee, forwarding agency, or other Person whomsoever.  All risk of loss, damage or destruction of
the Collateral shall be borne by Borrower.

 

10.3                        Indemnification and
Waiver.  Whether or not the
transactions contemplated hereby shall be consummated:

 

(a)                                          Indemnification.
Borrower agrees upon demand to pay or reimburse Lenders and Agent for all
liabilities, obligations and out-of-pocket expenses, including reasonable fees
and expenses of counsel for Lenders or Agent, from time to time arising in
connection with the enforcement or collection of sums due under the Loan
Documents, and in connection with any amendment or modification of the Loan
Documents or any “work-out” in connection with the Loan Documents.  Borrower hereby indemnifies, defends and
holds Agent and the Lenders and their respective directors, officers,
employees, and agents harmless against:  (a) all
obligations, demands, claims, and liabilities asserted by any other party or
Person in connection with the transactions contemplated by the Loan Documents;
and (b) all losses, or Lenders’ Expenses incurred, or paid by Lenders
and/or Agent from, following, or arising from transactions between Lenders and
Borrower (including reasonable attorneys’ fees and expenses), except for losses
caused by Lenders’ or Agent’s gross negligence or willful misconduct.

 

(b)                                         Waivers.
(i) Borrower shall give Agent written notice within one hundred eighty
(180) days of obtaining knowledge of the occurrence of any claim or cause of
action it believes it has, or may seek to assert to allege against a Lender or
Agent whether such claim is based in law or equity, arising under or related to
this Agreement or any of the other Loan Documents or to the transactions
contemplated hereby or thereby, or any act or omission to act by a Lender or
Agent with respect hereto or thereto, and that if it shall fail to give such
notice to a Lender or Agent with regard to any such claim or cause of action,
Borrower shall be deemed to have waived, and shall be forever barred from
bringing or asserting such claim or cause of action in any suit, action or
proceeding in any court or before any governmental agency or authority or any
arbitrator.  (ii) NOTWITHSTANDING
ANYTHING TO THE CONTRARY CONTAINED IN THIS AGREEMENT OR ANYWHERE ELSE, BORROWER
AGREES THAT IT SHALL NOT SEEK FROM LENDERS OR AGENT UNDER ANY THEORY OF
LIABILITY (INCLUDING ANY THEORY IN TORTS), ANY SPECIAL, INDIRECT, CONSEQUENTIAL
OR PUNITIVE DAMAGES.

 

(c)                                          Survival;
Defense.  The obligations in this Section 10.3
shall survive payment of all other Obligations pursuant to Section 12.8 of
this Agreement.  At the election of the
Agent and the Lenders and their respective directors, officers, employees, and
agents, Borrower shall defend such Agent and/or the Lenders and their
respective directors, officers, employees, and agents using legal counsel
satisfactory to such Agent and the Lenders and their respective directors,
officers, employees, and agents in such Person’s reasonable discretion, at the
sole cost and expense of Borrower.  All
amounts owing under this Section 10.3 shall be paid within thirty (30)
days after written demand.

 

23

 

11                                  NOTICES.

 

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

 

	
   

  	
  If
  to Borrower:

  	
  Intarcia
  Therapeutics, Inc.

  
	
   

  	
   

  	
  2000
  Powell Street, Suite 1640

  
	
   

  	
   

  	
  Emeryville,
  California 94608

  
	
   

  	
   

  	
  Attention:

  
	
   

  	
   

  	
  Fax:

  
	
   

  	
   

  	
   

  
	
   

  	
  If
  to SVB:

  	
  Silicon
  Valley Bank

  
	
   

  	
   

  	
  185
  Berry Street, Suite 3000

  
	
   

  	
   

  	
  San
  Francisco, California 94107

  
	
   

  	
   

  	
  Attention:
  Ms. Cheryl Chen

  
	
   

  	
   

  	
  Fax:

  
	
   

  	
   

  	
   

  
	
   

  	
  With
  a copy to:

  	
  Riemer &
  Braunstein LLP

  
	
   

  	
   

  	
  Three
  Center Plaza

  
	
   

  	
   

  	
  Boston,
  Massachusetts 02108

  
	
   

  	
   

  	
  Attn:
  David A. Ephraim, Esquire

  
	
   

  	
   

  	
  Fax:
  (617) 880-3456

  
	
   

  	
   

  	
   

  
	
   

  	
  If
  to Horizon:

  	
  Horizon
  Technology Funding Company LLC

  
	
   

  	
   

  	
  76
  Batterson Park Road

  
	
   

  	
   

  	
  Farmington,
  Connecticut 06032

  
	
   

  	
   

  	
  Attn:
  Legal Department

  
	
   

  	
   

  	
  Fax:
  (860) 676-8655

  

 

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

 

12                                  GENERAL
PROVISIONS.

 

12.1                        Successors and Assigns.  This Agreement binds and is for the benefit
of the successors and permitted assigns of each party.  Borrower may not assign this Agreement or any
rights or Obligations under it without Agent’s prior written consent which may
be granted or withheld in Agent’s discretion. 
Lenders and Agent have the right, without the consent of or notice to
Borrower, to sell, transfer, assign, negotiate, or grant participation in all
or any part of, or any interest in, Lenders’ obligations, rights and benefits
under this Agreement, the Loan Documents or any related agreement, including,
without limitation, an assignment to any Affiliate or any related party.

 

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

 

24

 

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

 

12.4                        Entire Agreement;
Construction; Amendments and Waivers.

 

(a)                                          This
Agreement and each of the other Loan Documents including any supplemental loan
documents dated as of the date hereof, taken together, constitute and contain
the entire agreement among Borrower, Agent and Lenders and supersede any and
all prior agreements, negotiations, correspondence, understandings and
communications between the parties, whether written or oral, respecting the
subject matter hereof.  Borrower
acknowledges that it is not relying on any representation or agreement made by
any Lender or Agent or any employee, attorney or agent thereof, other than the
specific agreements set forth in this Agreement and the Loan Documents.

 

(b)                                         This
Agreement is the result of negotiations between and has been reviewed by each
of Borrower and Lenders executing this Agreement as of the date hereof and
their respective counsel; accordingly, this Agreement shall be deemed to be the
product of the parties hereto, and no ambiguity shall be construed in favor of
or against Borrower, Agent or Lenders. 
Borrower, Agent and Lenders agree that they intend the literal words of
this Agreement and the other Loan Documents and that no parol evidence shall be
necessary or appropriate to establish Borrower’s, Agent’s or any Lender’s
actual intentions.

 

(c)                                          Any
and all amendments, modifications, discharges or waivers of, or consents to any
departures from any provision of this Agreement or of any of the other Loan
Documents shall not be effective without the written consent of each Agent and
Lenders.  Notwithstanding the foregoing,
in all cases, any material change of maturity dates, any interest rate
reduction, or any release of any Collateral or any guarantor, or any
forbearances or waiver of rights under the Loan Documents shall require the
written consent of each Lender.  Any waiver
or consent with respect to any provision of the Loan Documents shall be
effective only in the specific instance and for the specific purpose for which
it was given.  No notice to or demand on
Borrower in any case shall entitle Borrower to any other or further notice or
demand in similar or other circumstances. 
Any amendment, modification, waiver or consent effected in accordance
with this Section 12.4 shall be binding upon Agent, each Lender and on
Borrower.

 

12.5                        Reliance by Agent and
Lenders.  All covenants, agreements,
representations and warranties made herein by Borrower shall be deemed to be
material to and to have been relied upon by Lenders, notwithstanding any
investigation by Lenders.

 

12.6                        No Set-Offs by Borrower.  All sums payable by Borrower pursuant to this
Agreement or any of the other Loan Documents shall be payable without notice or
demand and shall be payable in United States Dollars without set-off or
reduction of any manner whatsoever.

 

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

 

12.8                        Survival.  All covenants, representations and warranties
made in this Agreement continue in full force until this Agreement has
terminated pursuant to its terms, and all Obligations have been satisfied.  The

 

25

 

obligation of Borrower in
Section 10.3 to indemnify each Lender and Agent shall survive until the
statute of limitations with respect to such claim or cause of action shall have
run.

 

13                                  Relationship
of Parties.  Borrower, agent and each
lender acknowledge, understand and agree that the relationship between the
borrower, on the one hand, and agent and lenders, on the other, is, and at all
time shall remain solely that of a borrower and lenders.  Neither agent nor any lender shall under any
circumstances be construed to be partners or joint venturers of borrower or any
of its affiliates; nor shall agent or any lender under any circumstances be
deemed to be in a relationship of confidence or trust or a fiduciary
relationship with borrower or any of its affiliates, or to owe any fiduciary duty
to borrower or any of its affiliates. 
Neither agent nor any lender undertakes or assumes any responsibility or
duty to borrower or any of its affiliates to select, review, inspect,
supervise, pass judgment upon or otherwise inform borrower or any of its
affiliates of any matter in connection with its or their property, any
collateral held by agent or the operations of borrower or any of its
affiliates.  Borrower and each of its
affiliates shall rely entirely on their own judgment with respect to such matters,
and any review, inspection, supervision, exercise of judgment or supply of
information undertaken or assumed by agent or any lender in connection with
such matters is solely for the protection agent or such lender and neither
borrower nor any affiliate is entitled to rely thereon.

 

14                                  Confidentiality.  In handling any confidential information,
Lenders and Agent shall exercise the same degree of care that it exercises for
its own proprietary information, but disclosure of information may be made: (a) to
Lenders’ and Agent’s subsidiaries or affiliates in connection with their
business with Borrower; (b) to prospective transferees or purchasers of
any interest in the Credit Extensions (provided, however, Lenders and Agent
shall use commercially reasonable efforts in obtaining such prospective
transferee’s or purchaser’s agreement to the terms of this provision); (c) as
required by law, regulation, subpoena, or other order; (d) as required in
connection with Lenders’ and Agent’s examination or audit; and (e) as
Agent reasonably considers appropriate in exercising remedies under this
Agreement.  Confidential information does
not include information that either: (i) is in the public domain or in
Lenders’ and/or Agent’s possession when disclosed to Lenders and/or Agent, or
becomes part of the public domain after disclosure to Lenders and/or Agent; or (ii) is
disclosed to Lenders and/or Agent by a third party, if Lenders and/or Agent
does not know that the third party is prohibited from disclosing the
information.

 

15                                  Choice
of Law and Venue; Jury Trial Waiver. 
California law governs the Loan Documents without regard to principles
of conflicts of law.  Borrower and
Lenders, and Agent each submit to the exclusive jurisdiction of the State and
Federal courts in California and Borrower accepts jurisdiction of the courts
and venue in Santa Clara County, California. 
NOTWITHSTANDING THE FOREGOING, AGENT SHALL HAVE THE RIGHT TO BRING ANY
ACTION OR PROCEEDING AGAINST BORROWER OR ITS PROPERTY IN THE COURTS OF ANY
OTHER JURISDICTION WHICH AGENT DEEMS NECESSARY OR APPROPRIATE IN ORDER TO
REALIZE ON THE COLLATERAL OR TO OTHERWISE ENFORCE THE LENDERS’ OR AGENT’S
RIGHTS AGAINST BORROWER OR ITS PROPERTY.

 

BORROWER,
AGENT, AND LENDERS EACH WAIVE THEIR RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE
OF ACTION ARISING OUT OF OR BASED UPON THIS AGREEMENT, THE LOAN DOCUMENTS OR
ANY CONTEMPLATED TRANSACTION, INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL
OTHER CLAIMS. THIS WAIVER IS A MATERIAL INDUCEMENT FOR BOTH PARTIES TO ENTER
INTO THIS AGREEMENT.  EACH PARTY HAS
REVIEWED THIS WAIVER WITH ITS COUNSEL

 

26

 

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

 

	
   

  	
  BORROWER:

  
	
   

  	
   

  	
   

  
	
   

  	
  INTARCIA THERAPEUTICS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ K. Alice
  Leung

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   President

  
	
   

  	
   

  	
   

  
	
   

  	
  AGENT AND LENDER:

  
	
   

  	
   

  	
   

  
	
   

  	
  SILICON VALLEY BANK

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Peter
  Scott

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Senior Relationship Manager

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  LENDERS:

  
	
   

  	
   

  	
   

  
	
   

  	
  HORIZON TECHNOLOGY FUNDING

  COMPANY LLC

  
	
   

  	
  By:

  	
  Horizon Technology Finance, LLC,

  
	
   

  	
   

  	
  its sole member

  
	
   

  	
   

  
	
   

  	
  By:

  	
     /s/
  Robert D. Pomeroy, Jr.

  
	
   

  	
  Name:

  	
  Robert D.
  Pomeroy, Jr.

  
	
   

  	
  Title:

  	
  Managing
  Member

  
	
   

  	
   

  	
   

  
	
   

  	
  SILICON VALLEY BANK

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
   

  
	
   

  	
  Name: 

  	
   

  
	
   

  	
  Title: 

  	
   

  
								

 

27

 

LIST OF EXHIBITS AND SCHEDULES

 

Exhibit A                                               Collateral
Description

 

Exhibit B                                                 Payment/Advance
Form

 

Exhibit C                                                 Compliance
Certificate

 

Exhibit D                                                Secured
Promissory Note

 

28

 

EXHIBIT A

 

The Collateral consists of all right, title and
interest of Borrower in and to the following:

 

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

 

All Borrower’s Books relating to the foregoing and
any and all claims, rights and interests in any of the above and all
substitutions for, additions, attachments, accessories, accessions and
improvements to and replacements, products, proceeds and insurance proceeds of
any or all of the foregoing.

 

The Collateral does not include:

 

Any Copyright rights, Copyright applications,
Copyright registrations, Mask Works, and like protections in each work of
authorship and derivative work, whether published or unpublished, now owned or
later acquired; any Patents, Trademarks, service marks and applications
therefor; any trade secret rights, including any rights to unpatented
inventions, now owned or hereafter acquired. 
Notwithstanding the foregoing, the Collateral shall include all
accounts, license and royalty fees and other revenues, proceeds, or income
arising out of or relating to any of the foregoing.  To the extent a court of competent
jurisdiction holds that a security interest in any Intellectual Property is
necessary to have a security interest in any accounts, license and royalty fees
and other revenues, proceeds, or income arising out of or relating to any of
the foregoing Intellectual Property, then the Collateral shall, effective as of
the Closing Date, include the Intellectual Property, to the extent necessary to
permit perfection of the Lenders’ security interest in such accounts, license
and royalty fees and other revenues, proceeds, or income arising out of or
relating to any of the Intellectual Property.

 

29

 

EXHIBIT B

 

Loan Payment/Advance Request Form 

Deadline for same day processing is 12:00 P.S.T.

 

	
  Fax To:

  	
  Date:

  
	
   

  
	
  LOAN PAYMENT:

  
	
   

  
	
  Intarcia Therapeutics, Inc.

  
	
   

  
	
  From Account #

  	
  To Account #

  
	
  (Deposit Account #)

  	
  (Loan Account #)

  
	
   

  
	
  Principal $

  	
  and/or
  Interest $

  	
   

  
	
   

  	
   

  	
   

  
	
  Authorized Signature:

  	
  Phone Number:

  
	
   

  
	
  LOAN ADVANCE:

  
	
  Complete Outgoing Wire Request section below if
  all or a portion of the funds from this loan advance are for an outgoing
  wire.

  
	
   

  
	
  From Account #

  	
  To Account #

  
	
  (Loan Account #)

  	
  (Deposit Account #)

  
	
   

  
	
  Amount of Advance $

  
	
   

  
	
  All Borrower’s
  representation and warranties in the Loan and Security Agreement are true,
  correct and complete in all material respects on the date of the telephone
  transfer request for an advance, but those representations and warranties
  expressly referring to another date shall be true, correct and complete in
  all material respects as of such date:

  
	
   

  
	
  Authorized Signature:

  	
  Phone Number:

  
	
   

  
	
  OUTGOING
  WIRE REQUEST

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

  
	
   

  
	
  Deadline for same day
  processing is 12:00pm, P.S.T.

  
	
   

  
	
  Beneficiary Name:

  	
  Amount of Wire: $

  
	
   

  	
   

  
	
  Beneficiary Bank:

  	
  Account Number:

  
	
   

  	
   

  
	
  City and Sate:

  
	
   

  
	
  Beneficiary Bank Transit
  (ABA) #:                  
       

  	
  Beneficiary Bank Code
  (Swift, Sort, Chip, etc.):

  
	
   

  	
   

  
	
   

  	
  (For
  International Wire Only)

  
	
  Intermediary Bank:

  	
  Transit (ABA) #:

  
	
   

  
	
  For Further Credit to:

  
	
   

  
	
  Special Instruction:

  
	
   

  
	
  By signing below, I (we)
  acknowledge and agree that my (our) funds transfer request shall be processed
  in accordance with and subject to the terms and conditions set forth in the
  agreements(s) covering funds transfer service(s), which agreements(s) were
  previously received and executed by me (us).

  
	
   

  
	
  Authorized Signature:

  	
  2nd Signature (If
  Required):

  
	
   

  	
   

  
	
  Print Name/Title:

  	
  Print Name/Title:

  
	
   

  	
   

  
	
  Telephone #

  	
  Telephone #

  
							

 

30

 

EXHIBIT C

COMPLIANCE CERTIFICATE

 

TO:                            SILICON VALLEY BANK, AS AGENT

FROM:         INTARCIA THERAPEUTICS, INC.

 

The undersigned authorized officer of Intarcia
Therapeutics, Inc. certifies that under the terms and conditions of the Term
Loan and Security Agreement between Borrower, Lenders, and Agent (the “Agreement”),
(i) Borrower is in complete compliance for the period ending                         
with all required covenants except as noted below and (ii) there are no
Events of Default, and all representations and warranties in the Agreement are
true and correct in all material respects on this date.  Attached are the required documents supporting
the certification.  The Officer certifies
that these are prepared in accordance with Generally Accepted Accounting
Principles (GAAP) consistently applied from one period to the next except as
explained in an accompanying letter or footnotes.  The Officer acknowledges that no borrowings
may be requested at any time or date of determination that Borrower is not in
compliance with any of the terms of the Agreement, and that compliance is
determined not just at the date this certificate is delivered.

 

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

 

	
  Reporting
  Covenant

  	
   

  	
  Required

  	
   

  	
  Complies

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Monthly financial
  statements w/ CC

  	
   

  	
  Monthly within 30 days

  	
   

  	
  Yes

  	
   

  	
  No

  
	
  Annual financial
  statements (CPA Audited) w/CC

  	
   

  	
  FYE within 120 days

  (commencing 12/31/05)

  	
   

  	
  Yes

  	
   

  	
  No

  
	
  Annual Financial
  Projections

  	
   

  	
  FYE with 45 days

  	
   

  	
  Yes

  	
   

  	
  No

  
	
  10-Q, 10-K and 8-K

  	
   

  	
  Within 10 days after
  filing with SEC

  	
   

  	
  Yes

  	
   

  	
  No

  

 

	
  Comments Regarding
  Exceptions: See Attached.

  	
  AGENT USE ONLY

  
	
   

  	
  Received by: 

  	
   

  	
   

  
	
  Intarcia
  Therapeutics, Inc.

  	
   

  	
  AUTHORIZED
  SIGNER

  	
   

  
	
   

  	
   

  
	
  Sincerely,

  	
  Date:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Signature 

  	
  Verified: 

  	
   

  	
   

  
	
   

  	
   

  	
  AUTHORIZED
  SIGNER 

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  Date:

  	
   

  	
   

  
	
  Title 

  	
   

  
	
   

  	
  Compliance Status:

  	
  Yes        No

  
	
   

  	
   

  	
   

  
	
  Date

  	
   

  
							

 

31

 

EXHIBIT
D

SECURED PROMISSORY NOTE

 

	
  $

  	
   

  	
  Dated:                     ,2005

  

 

FOR
VALUE RECEIVED, the undersigned, INTARCIA THERAPEUTICS, INC., a Delaware
corporation (“Borrower”), HEREBY PROMISES TO PAY to the order of [Horizon/Silicon
Valley Bank]  (“Lender”) the
principal amount of                          
Dollars ($                  )
or such lesser amount as shall equal the outstanding principal balance of the Term
Advance made to Borrower by Lender, plus interest on the aggregate unpaid
principal amount of such Term Advance, at the rates and in accordance with the
terms of the Term Loan and Security Agreement by and between Borrower and
Silicon Valley Bank, as Agent, and the Lenders, including without limitation,
Silicon Valley Bank and Horizon Technology Funding Company LLC (the “Loan
Agreement”).   If not sooner paid, the
entire principal amount and all accrued interest hereunder and under the Loan
Agreement shall be due and payable on Maturity Date as set forth in the Loan
Agreement..

 

Principal,
interest and all other amounts due with respect to the Term Advance, are
payable in lawful money of the United States of America to Lender as set forth
in the Loan Agreement.  The principal
amount of this Note and the interest rate applicable thereto, and all payments
made with respect thereto, shall be recorded by Lender and, prior to any
transfer hereof, endorsed on the grid attached hereto which is part of this
Note.

 

The
Loan Agreement, among other things, (a) provides for the making of a
secured Term Loan to Borrower, and (b) contains provisions for
acceleration of the maturity hereof upon the happening of certain stated
events.

 

This
Note may not be prepaid except as set forth in Section 2.5 of the
Loan Agreement.

 

This
Note and the obligation of Borrower to repay the unpaid principal amount of the
Term Loan, interest on the Term Loan and all other amounts due Lender under the
Loan Agreement is secured under the Loan Agreement.

 

Presentment
for payment, demand, notice of protest and all other demands and notices of any
kind in connection with the execution, delivery, performance and enforcement of
this Note are hereby waived.

 

Borrower
shall pay all reasonable fees and expenses, including, without limitation,
reasonable attorneys’ fees and costs, incurred by Lender in the enforcement or
attempt to enforce any of Borrower’s obligations hereunder not performed when
due.  This Note shall be governed by, and
construed and interpreted in accordance with, the laws of the State of California.

 

Note
Register; Ownership of Note.  The ownership of an interest
in this Note shall be registered on a record of ownership maintained by Lender
or its agent.  Notwithstanding anything
else in this Note to the contrary, the right to the principal of, and stated interest
on, this Note may be transferred only if the transfer is registered on such
record of ownership and the transferee is identified as the owner of an
interest in the obligation.  Borrower
shall be entitled to treat the registered holder of this Note (as recorded on
such record of ownership) as the owner in fact thereof for all purposes and
shall not be bound to recognize any equitable or other claim to or interest in
this Note on the part of any other person or entity.

 

32

 

IN WITNESS WHEREOF, Borrower has caused this Note to be duly executed
by one of its officers thereunto duly authorized on the date hereof.

 

	
   

  	
  BORROWER:

  
	
   

  	
   

  
	
   

  	
  INTARCIA THERAPEUTICS, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
   

  
					

 

33

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00083-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00083-of-00352.parquet"}]]