Document:

Exhibit 10.1

LOAN AND SECURITY AGREEMENT

THIS LOAN AND SECURITY AGREEMENT (the “Agreement”)
dated as of October 25, 2006 by and among MERRILL LYNCH CAPITAL, a division of
Merrill Lynch Business Financial Services Inc. (“Merrill Lynch”); SILICON
VALLEY BANK (“SVB”) (SVB and Merrill Lynch each individually a “Lender”, and
collectively the “Lenders”), SVB in its capacity as agent for the Lenders (in
such capacity, the “Agent”), SVB and Merrill Lynch in their capacities as joint
lead arrangers (in such capacity, the “Arrangers”), and PONIARD
PHARMACEUTICALS, INC., a Washington corporation (“Borrower”) provides the terms
on which Lenders shall lend to Borrower and Borrower shall repay Lenders.  The parties agree as follows:

1.                                      ACCOUNTING AND
OTHER TERMS

Accounting terms not defined in this Agreement shall
be construed following GAAP. Calculations and determinations must be made
following GAAP.  The term “financial
statements” includes the notes and schedules. 
The terms “including” and “includes” always mean “including (or
includes) without limitation,” in this or any Loan Document. Capitalized terms
in this Agreement shall have the meanings as set forth in Section 13.  All other terms contained in this Agreement,
unless otherwise indicated, shall have the meanings provided by the Code, to
the extent such terms are defined therein.

2.                                      LOANS AND
TERMS OF PAYMENT

2.1          Promise to Pay.

Borrower hereby unconditionally promises to pay
Lenders the unpaid principal amount of all Credit Extensions hereunder with all
interest, fees and finance charges due thereon as and when due in accordance
with this Agreement.

2.1.1.           Term Loan Facility.

(a)           Availability.  Subject to the terms and conditions of this
Agreement, Lenders agree, severally and not jointly, to lend to Borrower, not
later than October 31, 2006, an advance (the “Term Loan Advance”) in an
aggregate amount equal to the Term Loan Commitment according to each Lender’s
pro rata share of the Term Loan Commitment (based upon the respective
Commitment Percentage of each Lender). 
When repaid, the Term Loan Advance may not be re-borrowed.  If the Term Loan Advance is not properly
requested by Borrower in accordance with the terms of this Agreement on or
prior to October 31, 2006, Borrower shall immediately pay to Agent, for the
benefit of Lenders, the sum of (i) all interest that would have been earned by
the Lenders if the Term Loan had been advanced in its entirety on October 31,
2006, and the principal amount thereof repaid on each Payment Date through April
1, 2010 in accordance with the terms hereof, and (ii) the Final Payment.

(b)           Borrowing Procedure.  To obtain the Term Loan Advance, Borrower
must notify Agent by facsimile or telephone by 12:00 p.m. Pacific time three
(3) Business Days prior to the date the Term Loan Advance is to be made.  If such notification is by telephone,
Borrower

 

must promptly confirm the notification by delivering
to Agent a completed Payment/Advance Form in the form attached as Exhibit B
(a “Payment Advance Form”).  On the
Funding Date, each Lender shall credit and/or transfer (as applicable) to
Borrower’s deposit account with SVB, an amount equal to its Commitment
Percentage multiplied by the amount of the Term Loan Advance.  Each Lender may make the Term Loan Advance
under this Agreement based on instructions from a Responsible Officer or his or
her designee or without instructions if the Term Loan Advance is necessary to
meet Obligations which have become due. 
Each Lender may rely on any telephone notice given by a person whom such
Lender believes is a Responsible Officer or designee. Borrower shall indemnify
each Lender for any loss Lender suffers due to such reliance.

2.2          Termination of
Commitment to Lend.

Without limiting Lenders’ other rights hereunder, each
Lender’s obligation to lend the undisbursed portion of the Obligations shall
terminate if, in such Lender’s good faith business judgment, there has been a
material adverse change in the business, results of operation, condition
(financial or otherwise) or the prospect of repayment of the Obligations, or
there has been any material adverse deviation by Borrower from the most recent
business plan of Borrower presented to and accepted by Agent prior to the
execution of this Agreement.

2.3          Repayment of Credit
Extensions.

(a)           Principal and Interest
Payments On Payment Dates.

(i)            Commencing on November
1, 2006, and continuing thereafter on the first Business Day of each successive
calendar month through April 1, 2010 (each a “Payment Date”), Borrower shall
make equal monthly payments of principal, plus accrued interest (individually,
the “Scheduled Payment”, and collectively, “Scheduled Payments”).  All unpaid principal and accrued interest is
due and payable in full on April 1, 2010. 
A Term Loan Advance may only be prepaid in accordance with Sections
2.3(d) and 2.3(e).

(ii)           Payments received after
12:00 noon Pacific time are considered received at the opening of business on
the next Business Day.

(b)           Interest Rate.

(i)            Borrower shall pay
interest on each Payment Date on the unpaid principal amount of each Term Loan
Advance until the Term Loan Advance has been paid in full, at the per annum
rate of interest equal to the Basic Rate determined by Agent as of the Funding
Date for each Term Loan Advance in accordance with the definition of the Basic
Rate.  Interest is computed on the basis
of a 360 day year for the actual number of days elapsed.

(ii)           Any amounts outstanding
during the continuance of an Event of Default shall bear interest at a per
annum rate equal to five percent (5%) above the highest interest rate otherwise
applicable thereto (the “Default Rate”).

(iii)          In no event shall the
interest charged hereunder, with respect to the notes (if any) or any other
obligations of Borrower under any Loan Documents exceed the

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maximum amount permitted under the laws of the State
of California or of any other applicable jurisdiction.  Notwithstanding anything to the contrary
herein or elsewhere, if at any time the rate of interest payable hereunder or
under any note or other Loan Document (the “Stated Rate”) would exceed the
highest rate of interest permitted under any applicable law to be charged (the “Maximum
Lawful Rate”), then for so long as the Maximum Lawful Rate would be so
exceeded, the rate of interest payable shall be equal to the Maximum Lawful
Rate; provided, however, that if
at any time thereafter the Stated Rate is less than the Maximum Lawful Rate,
Borrower shall, to the extent permitted by law, continue to pay interest at the
Maximum Lawful Rate until such time as the total interest received is equal to
the total interest which would have been received had the Stated Rate been (but
for the operation of this provision) the interest rate payable.  Thereafter, the interest rate payable shall
be the Stated Rate unless and until the Stated Rate again would exceed the
Maximum Lawful Rate, in which event this provision shall again apply.  In no event shall the total interest received
by any Lender exceed the amount which it could lawfully have received had the
interest been calculated for the full term hereof at the Maximum Lawful Rate.
If, notwithstanding the prior sentence, any Lender has received interest
hereunder in excess of the Maximum Lawful Rate, such excess amount shall be
applied to the reduction of the principal balance of the Loans or to other
amounts (other than interest) payable hereunder, and if no such principal or
other amounts are then outstanding, such excess or part thereof remaining shall
be paid to Borrower.  In computing interest
payable with reference to the Maximum Lawful Rate applicable to any Lender,
such interest shall be calculated at a daily rate equal to the Maximum Lawful
Rate divided by the number of
days in the year in which such calculation is made.

(c)           Final Payment.  On the Maturity Date, 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 Loan Advance, an amount equal to the
Final Payment.

(d)           Mandatory Prepayment
Upon an Acceleration.  If the Term
Loan is accelerated following the occurrence of an Event of Default or
otherwise, Borrower shall immediately pay to Lenders an amount equal to the sum
of:  (i) all payments of principal plus
accrued interest due and owing on such date and not yet paid, plus (ii) all remaining
payments of principal and all interest due to be paid on such principal
payments in the future, plus (iii) the Final Payment, 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.

(e)           Permitted Prepayment
of Loans.   Borrower shall have the
option to prepay all, but not less than all, of the Term Loan advanced by
Lenders under this Agreement, provided Borrower (i) provides written
notice to Agent of its election to prepay the Term Loan at least thirty (30)
days prior to such prepayment, and (ii) pays, on the date of such prepayment
(A) all payments of principal plus accrued interest due and owing on such
date and not yet paid, plus (B) all remaining payments of principal and all
interest due to be paid on such principal payments in the future, plus (C) the
Final Payment, 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.

(f)            Debit of Accounts.   Agent may debit any of Borrower’s deposit
accounts including Account Number 3300474313 maintained with SVB for principal
and interest

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payments or any amounts Borrower owes Agent or
Lenders. Agent will promptly notify Borrower when it debits Borrower’s
accounts.  These debits shall not
constitute a set-off.

(g)           Payments.  All payments to be made by Borrower hereunder
or under any other Loan Document, including payments of principal and interest
made hereunder and pursuant to any other Loan Document, and all fees, expenses,
indemnities and reimbursements, shall be made without set-off, recoupment or
counterclaim, in lawful money of the United States and in immediately available
funds.

2.4          Fees.

Borrower will pay to Agent:

(a)           Final Payment.  The Final Payment, when due;

(b)           Agent Expenses.
All Agent Expenses (including reasonable attorneys’ fees and reasonable
expenses) incurred through and after the Closing Date, when due; and

(c)           Lender’s Expenses.  All Lender’s Expenses (including reasonable
attorneys’ fees and reasonable expenses) incurred through and after the Closing
Date, when due.  Agent shall provide
Borrower notice if the aggregate total amount of attorneys’ fees included in
Agent Expenses and Lender’s Expenses is expected to exceed $20,000.

A good faith deposit of $50,000 has already been paid
to Agent by Borrower and will be applied against the Agent Expenses and Lender’s
Expenses.  Any portion of the deposit not
utilized to pay Agent Expenses and Lender Expenses will be refunded to
Borrower.

2.5          Additional Costs.

If any new law or regulation increases any Lender’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 such Lender notifies Borrower of such increased
costs.  Each Lender agrees that it shall
allocate any increased costs among its customers similarly affected in good
faith and in a manner consistent with such Lender’s customary practice.

3.                                      CONDITIONS OF
LOANS

3.1          Conditions Precedent to
Initial Credit Extension.

The Lenders’ agreement to make the initial Credit
Extension is subject to the condition precedent that Agent shall have received,
in form and substance satisfactory to Agent, such documents and completion of
such other matters, as Agent may reasonably deem necessary or appropriate,
including, without limitation, subject to the condition precedent that Agent
shall have received in form and substance satisfactory to the Agent the
following:

(a)           this Agreement;

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(b)           a certificate of the
Secretary of Borrower with respect to articles, by-laws, incumbency, specimen
signature and corporate resolutions authorizing the execution, delivery and
performance of this Agreement;

(c)           Perfection Certificate
by Borrower;

(d)           Intercreditor Agreement
between the Lenders;

(e)           Warrants to Purchase
Stock;

(f)            Financing statement
(Forms UCC-1);

(g)           Deposit Account Control
Agreements/Securities Account Control Agreements (SVB and other financial
institutions);

(h)           Certificates evidencing
Borrower’s equity ownership of NRX Manufacturing Group, Inc. together with an
assignment executed in blank;

(i)            Evidence of insurance;

(j)            payment of the fees
and Agent Expenses and Lender’s Expenses then due specified in Section 2.4
hereof;

(k)           Certificate of Foreign
Qualification from the State of California;

(l)            Certificate of Good
Standing/Legal Existence from the jurisdiction of incorporation;

(m)          A legal opinion issued
to Agent and Lenders by counsel to Borrower, in form and substance satisfactory
to Agent; and

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

3.2          Conditions Precedent to
all Credit Extensions.

The obligations of Lenders to make each Credit
Extension, including the initial Credit Extension, is subject to the following:

(a)           timely receipt of any
Payment/Advance Form; and

(b)           the representations and
warranties in Section 5 shall be true, correct and complete in all material
respects on the date of the Payment/Advance Form and on the effective date of
each Credit Extension; provided, that those representations and warranties
expressly referring to a specific date shall be true, accurate and complete in
all respects as of that date, and no Event of Default shall have occurred and
be continuing, or result from the Credit Extension. Each Credit Extension is
Borrower’s representation and warranty on that date that the representations
and warranties in Section 5 remain true in all material respects.

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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 the 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.  Borrower warrants and represents that the
security interest granted herein shall be a first priority security interest in
the Collateral, subject to only Permitted Liens.

Except as noted on Section 4.1 of Borrower’s
Disclosure Schedule, Borrower is not a party to, nor is bound by, any material
license or other similar agreement with respect to which the 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 into 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. 
If such licenses or other agreements meet the definition of Collateral
set forth in Section 13 of this Agreement, Borrower shall take such steps as
Agent reasonably requests to obtain the consent of, or waiver by, any person
whose consent or waiver is necessary for such licenses or other agreements to
be deemed “Collateral” and for Agent to have a security interest in it that
might otherwise be restricted or prohibited by law or by the terms of any such
Collateral, whether now existing or entered into in the future.

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 Lenders under the Code.  If the Agreement is terminated, Lenders’ and
Agent’s lien and security interest in the Collateral shall continue until
Borrower fully satisfies its Obligations. 
If Borrower shall at any time, acquire a commercial tort claim (as
defined in the Code) or Letter-of-Credit Right, 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.

4.2          Authorization to File
Financing Statements.

Borrower hereby authorizes Agent to file financing
statements, without notice to Borrower, with all appropriate jurisdictions, in
order to perfect or protect Agent’s and Lenders’ interest or rights hereunder.

5.                                      REPRESENTATIONS
AND WARRANTIES

Except as set forth in the Perfection Certificate or
any Schedule, Borrower represents and warrants to Agent and each Lender as
follows:

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5.1          Due Organization and
Authorization.

Each of Borrower and its Subsidiaries is duly
organized, validly existing and in good standing in its state of incorporation
and duly qualified to do business in, and in good standing in, each
jurisdiction in which the nature of the business conducted by it or its
ownership of property requires that it be qualified, except where the failure
to be or do so could not reasonably be expected to cause a Material Adverse
Change.  In connection with this
Agreement, the Borrower delivered to the Agent a certificate signed by the
Borrower and entitled “Perfection Certificate”. 
The Borrower represents and warrants to the Agent and each Lender that:
(a) the Borrower’s exact legal name is that indicated on the Perfection
Certificate and on the signature page hereof; (b) the Borrower is an
organization of the type, and is organized in the jurisdiction, set forth in
the Perfection Certificate; (c) the Perfection Certificate accurately sets
forth the Borrower’s organizational identification number or accurately states
that the Borrower has none; (d) the Perfection Certificate accurately sets
forth the Borrower’s place of business, or, if more than one, its chief
executive office as well as the Borrower’s mailing address if different; and
(e) all other information set forth on the Perfection Certificate pertaining to
the Borrower is accurate and complete in all material respects.  If the Borrower does not now have an
organizational identification number, but later obtains one, Borrower shall
forthwith notify the 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 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 could reasonably be expected to cause a Material
Adverse Change.

5.2          Collateral.

Borrower has good title to the Collateral, free of
Liens except Permitted Liens.  Borrower
has no deposit account, other than the deposit accounts with Lenders and deposit
accounts described in the Perfection Certificate delivered to Agent in
connection herewith.  The Accounts are
bona fide, existing obligations of the account debtors.  The Collateral is not in the possession of
any third party bailee (such as a warehouse). 
Except as hereafter disclosed to the Lenders in writing by Borrower,
none of the components of the Collateral shall be maintained at locations other
than as provided in the Perfection Certificate. 
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 Lenders and such bailee must acknowledge
in writing that the bailee is holding such Collateral for the benefit of Agent and
Lenders.  All Inventory is in all
material respects of good and marketable quality, free from material defects.

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5.3          Intellectual Property.

Borrower and its
Subsidiaries solely own, or have sufficient rights to use and otherwise
exercise and exploit and license all Intellectual Property necessary or
material for use in connection with their respective businesses as currently
being conducted.  Neither Borrower nor
any of its Subsidiaries has received any notice that any current activities of
any of them may violate or infringe upon the patent rights of any Person.  Except as set forth on Section 5.3(i) of
Borrower’s Disclosure Schedule, to the knowledge of Borrower, each Patent owned
or licensed by Borrower or its Subsidiaries that is necessary or material for
use in its business as currently conducted is enforceable and there is no
existing or expected infringement (or challenge) by another Person of (or to)
any of the Intellectual Property of Borrower or its Subsidiaries that could reasonably
be expected to cause a Material Adverse Change.  Section 5.3(ii) of Borrower’s Disclosure
Schedule sets forth, as of September 29, 2006, (i) all domestic and foreign
registered patents and patent applications of Borrower; and (ii) all domestic
and foreign registered and applied for trademarks, trade names and service
marks of Borrower.  Borrower has no
domestic or foreign copyrights or copyright registrations, nor does Borrower
use any material unregistered copyrights in the ordinary course of its
business.

5.4          Litigation.

Except as shown in the Perfection Certificate, there
are no actions or proceedings pending or, to the knowledge of Borrower,
threatened by or against Borrower or any Subsidiary in which an adverse
decision could reasonably be expected to cause a Material Adverse Change.

5.5          No Material
Deterioration in Financial Statements.

All consolidated financial statements for Borrower and
its Subsidiaries, delivered to Agent were prepared in accordance with GAAP
consistently applied during the periods involved (except in the case of
unaudited interim statements, to the extent that they may not include
footnotes, may be condensed or summary statements or may conform to the SEC’s
rules and instructions for Reports on Form 10-Q) and fairly present in all
material respects Borrower’s consolidated financial condition as of the dates
thereof and Borrower’s consolidated results of operations and cash flows for
the periods then ended (subject, in the case of unaudited statements, to normal
year-end adjustments).  There has not
been any material deterioration in Borrower’s consolidated financial condition
since the date of the most recent financial statements submitted to Agent.

5.6          Solvency.

Based on the financial condition of Borrower as of the
Closing Date, the fair salable value of Borrower’s assets (including goodwill
minus disposition costs) exceeds the fair value of its liabilities; the
Borrower is not left with unreasonably small capital after the transactions in
this Agreement; and Borrower is able to pay its debts (including trade debts)
as they mature.

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5.7          Regulatory Compliance.

Borrower is not an “investment company” or a company “controlled”  by an “investment company”, or a “subsidiary”
of an “investment company” under the Investment Company Act of 1940.  Borrower is not engaged as one of its
important activities in extending credit for margin stock (under
Regulations T and U of the Federal Reserve Board of Governors).  Borrower has complied in all material
respects with the Federal Fair Labor Standards Act.  Borrower has not violated any Laws, the
violation of which could reasonably be expected to cause a Material Adverse
Change.  None of Borrower’s or any
Subsidiary’s properties or assets has been used by Borrower or any Subsidiary
or, to Borrower’s knowledge, by previous Persons, in disposing, producing,
storing, treating, or transporting any hazardous substance other than
legally.  Borrower and each Subsidiary
has timely filed all required tax returns and paid, or made adequate provision
to pay, all material taxes, except those being contested in good faith with
adequate reserves under GAAP.  Borrower
and each Subsidiary has obtained all consents, approvals and authorizations of,
made all declarations or filings with, and given all notices to, all Government
Authorities that are necessary to continue its business as currently conducted,
except where the failure to do so would not reasonably be expected to cause a
Material Adverse Change.

Neither Borrower, nor to the knowledge of Borrower,
any of its Affiliates or agents acting on behalf of Borrower in any capacity in
connection with the transactions contemplated by this Agreement is (i) in
violation of any Anti-Terrorism Law, (ii) engages in or conspires to
engage in any transaction that evades or avoids, or has the purpose of evading
or avoiding, or attempts to violate, any of the prohibitions set forth in any
Anti-Terrorism Law, or (iii) is a Blocked Person.  Neither Borrower nor, to the knowledge of
Borrower, any of its Affiliates or agents acting on behalf of Borrower in any
capacity in connection with the transactions contemplated by this Agreement,
(x) conducts any business or engages in making or receiving any
contribution of funds, goods or services to or for the benefit of any Blocked
Person, or (y) deals in, or otherwise engages in any transaction relating
to, any property or interest in property blocked pursuant to Executive Order
No. 13224, any similar executive order or other Anti-Terrorism Law.

5.8          Subsidiaries.

Borrower does not own any stock, partnership interest
or other equity securities except for Permitted Investments.

5.9          Full Disclosure.

No written representation, warranty or other statement
of Borrower in any certificate or written statement given to Agent or any
Lender (taken together with all such written certificates and written
statements given to Agent or any Lender) contains any untrue statement of a
material fact or omits to state a material fact necessary to make any
representation, warranty or other statement contained in the certificates or
written statements, in light of the circumstances under which they were made,
not misleading as of the date such written representation, warranty or other
statement was made, it being recognized by Agent and Lenders that the
projections and forecasts provided by Borrower in good faith and based upon
reasonable assumptions are not

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viewed as facts and that actual results during the
period or periods covered by such projections and forecasts may differ from the
projected or forecasted results.

6.                                      AFFIRMATIVE
COVENANTS

Borrower shall do all of the following for so long as
Agent or any Lender has an obligation to make any Credit Extension, or there
are outstanding Obligations:

6.1          Government Compliance.

Borrower shall maintain its and all Subsidiaries’
legal existence and good standing as a Registered Organization and maintain
qualification in each jurisdiction in which the failure to so qualify would
reasonably be expected to have a material adverse effect on Borrower’s business
or operations.  Borrower shall comply,
and have each Subsidiary comply, with all Laws to which it is subject,
noncompliance with which could have a material adverse effect on Borrower’s
business or operations or would reasonably be expected to cause a Material
Adverse Change.

6.2          Financial Statements,
Reports, Certificates.

(a)           Borrower shall deliver
to Agent:  (i) as soon as available, but
no later than thirty (30) days after the last day of each month, a company
prepared unaudited consolidated financial statements, consisting of a balance
sheet and income statement covering Borrower’s consolidated operations for the
monthly period ending the last day of such month, together with a Compliance
Certificate signed by a Responsible Officer in the form of Exhibit C and
in a form reasonably acceptable to Agent; (ii) as soon as available, but no
later than one hundred eighty (180) days after the last day of Borrower’s
fiscal year, or within five (5) days of filing with the SEC, if earlier,
audited consolidated financial statements prepared under GAAP, consistently
applied, together with the report of an independent registered accounting firm
issued in connection therewith; (iii) within five (5) days of filing, copies of
all reports on Form 10-K, Form 10-Q and Form 8-K filed with the SEC; (iv) financial
projections and operating plans approved by the Borrower’s board of directors
for each fiscal year not less than thirty (30) days prior to each such fiscal
year; and (v) other financial information reasonably requested by Agent.  Borrower may comply with the requirements of
clauses (ii) and (iii) above by maintaining an electronic link to its SEC
reports on Borrower’s website.

(b)           Borrower will keep
proper books of record and account in accordance with GAAP in which full, true
and correct entries shall be made of all dealings and transactions in relation
to its business and activities.  Borrower
shall allow, at the sole cost of Borrower, Agent to visit and inspect any of
its properties, to examine and make abstracts or copies from any of their respective
books and records, to conduct a collateral audit and analysis of its operations
and the Collateral, to verify the amount and age of the accounts, the identity
and credit of the respective account debtors, to review the billing practices
of Borrower and to discuss its respective affairs, finances and accounts with
their respective officers, employees and independent public accountants as
often as may reasonably be requested. 
Notwithstanding the foregoing, such audits shall be conducted at
Borrower’s expense no more often than once every twelve (12) months unless an
Event of Default has occurred and is continuing.

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(c)           (i) Borrower will give
prompt written notice to Agent of any litigation or governmental proceedings
pending or threatened (in writing) against Borrower which would reasonably be
expected to result in a Material Adverse Change with respect to Borrower; (ii)
Borrower shall provide to Agent evidence of the payments required to be made to
AnorMED, Inc. pursuant to a License Agreement between them; and (iii) Without
limiting or contradicting any other more specific provision of this Agreement,
promptly (and in any event within three (3) Business Days) upon Borrower
becoming aware of the existence of any Event of Default or event which, with
the giving of notice or passage of time, or both, would constitute an Event of
Default, Borrower shall give written notice to Agent of such occurrence, which
such notice shall include a reasonably detailed description of such Event of
Default or event which, with the giving of notice or passage of time, or both,
would constitute an Event of Default.

6.3          Inventory; Returns.

Borrower shall keep all Inventory in good and
marketable condition, free from material defects.  Returns and allowances between Borrower and
its account debtors shall follow Borrower’s customary practices as they exist
at the Closing Date.  Borrower must
promptly notify Agent of all returns, recoveries, disputes and claims, that
involve more than $100,000.

6.4          Taxes.

Borrower shall make, and cause each Subsidiary to
make, timely payment of all material federal, state, and local taxes or
assessments (other than taxes and assessments which Borrower is contesting in
good faith, with adequate reserves maintained in accordance with GAAP) and will
deliver to Agent, on demand, appropriate certificates attesting to such
payments.

6.5          Insurance.

Borrower shall keep its business and the Collateral
insured for risks and in amounts, customary for similarly situated companies in
Borrower’s industry as Lenders and Agent may reasonably request.  Insurance policies shall be in a form, with
companies, and in amounts that are satisfactory to Agent in Agent’s reasonable
discretion.  All property policies shall
have a lenders’ 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 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) 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 Agent has been granted a first priority security interest pursuant to the
terms hereunder.

6.6          Primary Accounts.

(a)           In order to permit the
Agent to monitor the Borrower’s financial performance and condition, Borrower,
and all Borrower’s Subsidiaries, shall maintain

 11
 

 

Borrower’s, and such Subsidiaries’, primary depository
and operating accounts and securities accounts with Agent or Agent’s
Affiliates, which accounts shall represent at least 85% of the dollar value of
the Borrower’s cash and cash equivalents at all financial institutions. Any
Guarantor shall maintain all depository, operating and securities account with
Agent.

(b)           Borrower shall identify
to Agent, in writing, any bank or securities account opened by Borrower with
any institution other than Agent.  In
addition, for each such account that the Borrower or any Guarantor at any time
opens or maintains, Borrower shall, at the Agent’s on behalf of Lenders request
and option, pursuant to an agreement in form and substance acceptable to the
Lenders and Agent cause the depository bank or securities intermediary to agree
that such account is the Collateral of the Agent, on behalf of Lenders pursuant
to the terms hereunder.  The provisions
of the previous sentence 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.

6.7          Registration of
Intellectual Property Rights.

Borrower shall: 
(i) protect, defend and maintain the validity and enforceability of the
Intellectual Property material to Borrower’s business; (ii) promptly advise
Lenders in writing of material infringements of the Intellectual Property; and
(iii) not allow any Intellectual Property material to the Borrower’s business
to be abandoned, forfeited or dedicated to the public without Lenders’ written
consent.

6.8          Financial Covenant.

Borrower shall maintain, as of the last day of each
month, minimum unrestricted cash and cash equivalents in an amount not less
than $7,500,000.

6.9          Use of Proceeds.

Borrower shall use the Term Loan for working capital
needs.  No portion of the Term Loan will be
used for personal, family, agricultural or household use.

6.10        Achievement of Milestones.

Not later than December 31, 2007, Borrower shall have
provided evidence to Agent, satisfactory to Agent in its good faith business
judgment, of both (a) positive Phase II data for the Picoplatin drug
development program, and (b) commencement of enrollment of persons in a Phase
III trial for Picoplatin.

6.11        Notice of Management
Change.

Borrower shall notify Agent of the separation of any
of the following parties from employment at Borrower within ten (10) days of
such separation:  the Chief Executive
Officer, the Chief Financial Officer, the Chief Medical Officer, any Senior
Vice President, and any executive Vice President of Borrower.

 12
 

 

6.12        Further Assurances.

Borrower shall execute any further documents,
instruments and agreements and take further action as Agent reasonably requests
to perfect or continue Agent’s for the benefit of Lenders security interest in
the Collateral or to effect the purposes of this Agreement.

7.                                      NEGATIVE
COVENANTS

Borrower shall not do any of the following without the
Agent’s prior written consent, which shall not be unreasonably withheld or
delayed, for so long as Agent or any Lender has an obligation to make Credit
Extensions or there are any outstanding Obligations:

7.1          Dispositions.

Convey, sell, lease, transfer or otherwise dispose of
(collectively a “Transfer”), or permit any of its Subsidiaries to Transfer, all
or any part of its business or property, except for Transfers (i) of Inventory
in the ordinary course of business; (ii) of non-exclusive licenses and
similar arrangements for the use of the property of Borrower or its
Subsidiaries in the ordinary course of business; (iii) of worn-out
or obsolete Equipment; (iv) of assets constituting all or part of the Non-Core
Technologies; (v) in connection with partnerships, joint ventures or similar
arrangements (including out-licenses) relating to Borrower’s Picoplatin and
future product development programs to the extent approved by Borrower’s board
of directors; (vi) the manufacturing facility and other assets located in
Denton, Texas as of the Closing Date; (vii) in connection with Permitted Liens
and Permitted Investments; and (viii) other Transfers which in the aggregate do
not exceed $100,000 in any fiscal year.

7.2          Changes in Business,
Ownership, Management or Locations of Collateral.

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 consummate any offering of equity securities,
whether in a single transaction or a series of related transactions, following
which the shareholders of Borrower who were shareholders immediately preceding
such securities offering would, on a fully diluted basis, beneficially own less
than 50% of the common stock of Borrower immediately after giving effect to the
such transaction or transactions. 
Borrower shall not, without at least thirty (30) days prior written
notice to Agent: (i) 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) in
Borrower’s assets or property), or (ii) change its jurisdiction of
organization, or (iii) change its status as a registered organization (within
the meaning of the Code) in the State of Washington, or (iv) change its legal
name, or (v) change any organizational number (if any) assigned by its
jurisdiction of organization.

7.3          Mergers or Acquisitions.

Merge or consolidate, or permit any of its
Subsidiaries to merge or consolidate, with any other Person, or acquire, or
permit any of its Subsidiaries to acquire, all or substantially all of the
capital stock or property of another Person, except where (i) no Event of
Default has occurred and is continuing or would result from such action during
the term of this Agreement;

 13
 

 

(ii) Borrower is the surviving entity after such
transaction is consummated (to the extent Borrower was a party thereto); and
(iii) no material adverse change in financial position or outlook of the
combined entity is reasonably likely to result. A Subsidiary may merge or
consolidate into another Subsidiary or into Borrower.

7.4          Indebtedness.

Create, incur, assume, or be liable for any
Indebtedness, or permit any Subsidiary to do so, other than Permitted
Indebtedness.

7.5          Encumbrance.

Create, incur, or allow any Lien on any of its
property, or assign or convey any right to receive income, including the sale
of any Accounts, or permit any of its Subsidiaries to do so, except for
Permitted Liens, or permit any Collateral not to be subject to the first
priority security interest granted herein, except that the Collateral may also
be subject to Permitted Liens.  In
addition, except as permitted by Section 7.1 of this Agreement, Borrower shall
not sell, transfer, assign, mortgage, pledge, lease, grant a security interest
in, or encumber, or enter into any agreement, document, instrument or other
arrangement (except with or in favor of the Agent and Lenders) with any Person
which directly or indirectly prohibits or has the effect of prohibiting
Borrower from selling, transferring, assigning, mortgaging, pledging, leasing,
granting a security interest in or upon, or encumbering any of Borrower’s
Intellectual Property.

7.6          Distributions;
Investments.

(i) Directly or indirectly acquire or own any
Person, or make any Investment in any Person, other than Permitted Investments,
or permit any of its Subsidiaries to do so; or (ii) pay any dividends or
make any distribution or payment or redeem, retire or purchase any capital
stock, except for (A) exchange of shares of Borrower’s common stock, payment of
cash for any fractional shares and other transactions related to Borrower’s
one-for-six reverse stock split effective September 22, 2006; (B) antidilution
adjustments and repurchases, distributions and similar transactions (including
payment of cash for any fractional shares) pursuant to the terms of outstanding
convertible securities; and (C) semi-annual cash dividends payable pursuant to
the terms of the Company’s outstanding Series I Convertible Exchangeable
Preferred Stock not to exceed $251,000 in the aggregate for any such payment.

7.7          Transactions with
Affiliates.

Except as approved by the majority of the
disinterested members of Borrower’s board of directors, directly or indirectly
enter into or permit to exist any material transaction with any Affiliate of
Borrower except for (a) transactions that are in the ordinary course of
Borrower’s business, upon fair and reasonable terms that are no less favorable
to Borrower than would be obtained in an arm’s length transaction with a non--affiliated
Person, and (b) transactions with Subsidiaries not otherwise prohibited hereunder,
including Permitted Investments in Subsidiaries and Permitted Indebtedness to
and from Subsidiaries.

 14
 

 

7.8          Subordinated Debt.

Make or permit any payment on any Subordinated Debt,
except under the terms of the Subordinated Debt, or amend any material provision
in any document relating to the Subordinated Debt.

7.9          Compliance with
Anti-Terrorism Laws.

Agent hereby notifies Borrower that pursuant to the
requirements of Anti-Terrorism Laws, and Agent’s policies and practices, Agent
is required to obtain, verify and record certain information and documentation
that identifies Borrower and its principals, which information includes the
name and address of Borrower and its principals and such other information that
will allow Agent to identify such party in accordance with Anti-Terrorism
Laws.  Borrower will not, nor will
Borrower permit any Subsidiary or Affiliate to, directly or indirectly,
knowingly enter into any documents, instruments, agreements or contracts with
any Person listed on the OFAC Lists. 
Borrower shall immediately notify Agent if Borrower has knowledge that
Borrower or any Subsidiary or Affiliate is listed on the OFAC Lists or
(a) is convicted on, (b) pleads nolo
contendere to, (c) is indicted on, or (d) is arraigned and
held over on charges involving money laundering or predicate crimes to money
laundering.  Borrower will, nor will
Borrower permit any Subsidiary or Affiliate to, directly or indirectly,
(i) conduct any business or engage in any transaction or dealing with any
Blocked Person, including, without limitation, the making or receiving of any
contribution of funds, goods or services to or for the benefit of any Blocked
Person, (ii) deal in, or otherwise engage in any transaction relating to,
any property or interests in property blocked pursuant to Executive Order
No. 13224, any similar executive order or other Anti-Terrorism Law, or
(iii) engage in or conspire to engage in any transaction that evades or
avoids, or has the purpose of evading or avoiding, or attempts to violate, any
of the prohibitions set forth in Executive Order No. 13224 or other
Anti-Terrorism Law.

7.10        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, 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,
if such failure or violation could reasonably be expected to cause a Material
Adverse Change, or permit any of its Subsidiaries to do so.

8.                                      EVENTS OF DEFAULT

Any one of the following is an Event of Default:

8.1          Payment Default.

Borrower fails to pay any of the Obligations within
three (3) Business Days after their due date. During the additional three
Business Day period the failure to cure the payment default

 15
 

 

shall not constitute an Event of Default (but no
Credit Extension shall be made during such cure period).

8.2          Covenant Default.

(a)           If Borrower fails to
perform any obligation under Sections 6.2, 6.6, 6.8, 6.9 or 6.10 or violates
any of the covenants contained in Section 7 of this Agreement, or

(b)           If Borrower fails or
neglects to perform, keep, or observe any other term, provision, condition,
covenant, or agreement contained in this Agreement, in any of the Loan
Documents, or in any other present or future agreement between Borrower and any
Lender and has failed to cure such default within ten (10) days after the
occurrence thereof; provided, however, that (i) 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 reasonable period (which shall not in any 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 will be made during such cure period) and
(ii) if the default cannot by its nature be cured, then Borrower shall have a
reasonable period (which shall not in any case exceed ten (10) days) to
minimize the impact of the default such that the default is not material, and
within such reasonable time period the default shall not be deemed an Event of
Default (provided that no Credit Extensions will be made during such period).

8.3          Material Adverse Change.

A Material Adverse Change occurs.

8.4          Attachment.

(i) Any material portion of Borrower’s assets is
attached, seized, levied on, or comes into possession of a trustee or receiver
and the attachment, seizure or levy is not removed in ten (10) days;
(ii) the service of process upon the Borrower seeking to attach, by
trustee or similar process, any funds of the Borrower on deposit with the Lenders
and/or Agent, or any entity under the control of Lenders and/or Agent
(including a subsidiary); (iii) Borrower is enjoined, restrained, or
prevented by court order from conducting a material part of its business;
(iv) a judgment or other claim becomes a Lien on a material portion of
Borrower’s assets; or (v) a notice of lien, levy, or assessment is filed
against any of Borrower’s assets by any government agency and not paid within
ten (10) days after Borrower receives notice. 
These are not Events of Default if stayed or if a bond is posted pending
contest by Borrower (but no Credit Extensions shall be made during the cure
period).

8.5          Insolvency.

(i) Borrower is unable to pay its debts
(including trade debts) as they become due; (ii) Borrower begins an Insolvency
Proceeding; or (iii) an Insolvency Proceeding is begun against Borrower
and not dismissed or stayed within sixty (60) days (but no Credit Extensions
shall be made before any Insolvency Proceeding is dismissed).

 16
 

 

8.6          Other Agreements.

If there is a default in (a) the License Agreement
between Borrower and AnorMED, Inc. due to Borrower’s failure to make any
payment required thereunder; or (b) any agreement to which Borrower is a party
with a third party or parties resulting in a right by such third party or
parties, whether or not exercised, to accelerate the maturity of any
Indebtedness in an amount in excess of Two Hundred Fifty Thousand Dollars
($250,000) or that could result in a Material Adverse Change.

8.7          Judgments.

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) Business Days (provided that
no Credit Extensions will be made prior to the satisfaction or stay of such
judgment).

8.8          Misrepresentations.

If Borrower or any Person acting for Borrower makes
any material misrepresentation or material misstatement now or later in any
warranty or representation in this Agreement or in any writing delivered to
Agent and/or Lenders or to induce Agent and/or Lenders to enter this Agreement
or any Loan Document.

8.9          Criminal Proceeding.

The institution by any Governmental Authority of
criminal proceedings against Borrower which are reasonably likely to result in
a Material Adverse Change.

8.10        Subordinated Debt.

Any Person holding any Subordinated Debt terminates
the applicable subordination agreement or asserts that it is terminated.

8.11        Lien Priority.

Any Lien created hereunder or by any other Loan
Document shall at any time fail to constitute a valid and perfected Lien on all
of the Collateral purported to be secured thereby, subject to no prior or equal
Lien except Permitted Liens, or any Borrower shall so assert.

9.                                      RIGHTS AND
REMEDIES

9.1          Rights and Remedies.

When an Event of Default occurs and continues Agent
may, without notice or demand, do any or all of the following:

 17

(a)           Declare all Obligations
immediately due and payable (but if an Event of Default described in Section
8.5 occurs all Obligations are immediately due and payable without any action
by Agent and/or Lenders);

(b)           Stop advancing money or
extending credit for Borrower’s benefit under this Agreement or under any other
agreement between Borrower and Agent and/or Lenders;

(c)           Settle or adjust
disputes and claims directly with account debtors for amounts, on terms and in
any order that Agent considers advisable and notify any Person owing Borrower
money of Agent’s for the benefit of Lenders’ security interest in such funds
and verify the amount of such account. 
Borrower shall collect all payments in trust for Agent for the benefit
of Lenders and, if requested by Agent, immediately deliver the payments to
Lenders in the form received from the account debtor, with proper endorsements
for deposit;

(d)           Make any payments and
do any acts it considers necessary or reasonable to protect its security
interest in the Collateral.  Borrower
shall assemble the Collateral if Agent requests and make it available as Agent
designates.  Agent may enter premises
where the Collateral is located, take and maintain possession of any part of
the Collateral, and pay, purchase, contest, or compromise any Lien which
appears to be prior or superior to its security interest and pay all expenses
incurred. Borrower grants Agent for the benefit of Lenders a license to enter
and occupy any of its premises, without charge, to exercise any of Agent’s
rights or remedies;

(e)           Apply to the
Obligations any (i) balances and deposits of Borrower it holds, or
(ii) any amount held by Agent or Lenders owing to or for the credit or the
account of Borrower;

(f)            Ship, reclaim,
recover, store, finish, maintain, repair, prepare for sale, advertise for sale,
and sell the Collateral.  Agent is hereby
granted a non-exclusive, royalty-free license or other right to use, without
charge, Borrower’s labels, patents, copyrights, mask works, rights of use of
any name, trade secrets, trade names, trademarks, service marks, and
advertising matter, or any similar property solely to the extent required in
completing production of, advertising for sale, and selling any Collateral and,
in connection with Agent’s exercise of its rights under this Section, Borrower’s
rights under all licenses and all franchise agreements inure to Agent’s for
benefit of Lenders; and

(g)           Place a “hold” on any
account maintained with Agent and/or deliver a notice of exclusive control, any
entitlement order, or other directions or instructions pursuant to any control
agreement or similar agreements providing control of any Collateral; and

(h)           Dispose of the
Collateral according to the Code or exercise any other right or remedy
permitted hereunder, under any other Loan Document or under applicable Law.

9.2          Power of Attorney.

Borrower hereby irrevocably appoints Agent as its
lawful attorney-in-fact, to be effective upon the occurrence and during the
continuance of an Event of Default, to: 
(i) endorse Borrower’s name on any checks or other forms of payment
or security; (ii) sign Borrower’s

 18
 

 

name on any invoice or bill of lading for any Account
or drafts against account debtors, (iii) settle and adjust disputes and
claims about the Accounts directly with account debtors, for amounts and on
terms Agent determines reasonable; (iv) make, settle, and adjust all claims
under Borrower’s insurance policies; and (v) transfer the Collateral into
the name of Agent for the benefit of Lenders or a third party as the Code permits.  Borrower hereby appoints Agent as its lawful
attorney-in-fact to sign Borrower’s name on any documents necessary to perfect
or continue the perfection of any security interest regardless of whether an
Event of Default has occurred until all Obligations have been satisfied in full
and Agent and Lenders are under no further obligation to make Credit Extensions
hereunder.  Agent’s foregoing appointment
as Borrower’s attorney in fact, and all of Agent’s rights and powers, coupled
with an interest, are irrevocable until all Obligations have been fully repaid
and performed and Lenders’ and Agent’s obligation to provide Credit Extensions
terminates.

9.3          Accounts, Notification
and Collection.

In the event that an Event of Default occurs and is
continuing, Agent may notify any Person owing Borrower money of Agent’s
security interest in the funds and verify and/or collect the amount of the
Account.  Upon the occurrence and during
the continuation of an Event of Default, any amounts received by Borrower shall
be held in trust by Borrower for Agent, and, if requested by Agent, Borrower
shall immediately deliver such receipts to Agent in the form received from the
account debtor, with proper endorsements for deposit.

9.4          Agent Expenses.

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

9.5          Agent’s Liability for
Collateral.

So long as the Agent and Lenders comply with
reasonable banking practices regarding the safekeeping of Collateral, the Agent
and Lenders shall not be liable or responsible for: (a) the safekeeping of the
Collateral; (b) any loss or damage to the Collateral; (c) any diminution
in the value of the Collateral; or (d) any act or default of any carrier,
warehouseman, bailee, or other Person. 
Borrower bears all risk of loss, damage or destruction of the
Collateral.

9.6          Application of Proceeds.

Notwithstanding anything to the contrary contained in
this Agreement, upon the occurrence and during the continuance of an Event of
Default, (a)  Borrower irrevocably waives the right to direct the
application of any and all payments at any time or times thereafter received by
Agent from or on behalf of Borrower or any Guarantor of all or any part of the
Obligations, and, as between Borrower on the one hand and Agent and Lenders on
the other, Agent shall have the continuing and exclusive right to apply and to
reapply any and all payments received against the Obligations in such manner as
Agent may deem advisable notwithstanding any previous application by Agent, and
(b) the proceeds of any sale of, or other realization upon, all or any
part of the Collateral shall be applied: 
first, to Agent Expenses; second, to Lender’s Expenses;

 19
 

 

third,
to accrued and unpaid interest on the Obligations (including any interest
which, but for the provisions of the United States Bankruptcy Code, would have
accrued on such amounts); fourth, to the principal amount of the
Obligations outstanding; and fifth to any other indebtedness or
obligations of Borrower owing to Agent or any Lender under the Loan Documents.  Any balance remaining shall be delivered to
Borrower or to whoever may be lawfully entitled to receive such balance or as a
court of competent jurisdiction may direct. 
In carrying out the foregoing, (x) amounts received shall be
applied in the numerical order provided until exhausted prior to the
application to the next succeeding category, and (y) each of the Persons
entitled to receive a payment in any particular category shall receive an
amount equal to its pro rata share of amounts available to be applied pursuant
thereto for such category.

9.7          Remedies Cumulative.

Agent’s rights and remedies under this Agreement, the
Loan Documents, and all other agreements are cumulative.  Agent has all rights and remedies provided
under the Code, by law, or in equity. Agent’s exercise of one right or remedy
is not an election, and Agent’s waiver of any Event of Default is not a
continuing waiver. Agent’s delay is not a waiver, election, or acquiescence. No
waiver hereunder shall be effective unless signed by Agent and each Lender and
then is only effective for the specific instance and purpose for which it was
given.  Agent and Lenders shall have no
obligation to marshal any assets in favor of Borrower or any Guarantor, or against
or in payment of any of the other Obligations or any other obligation owed to
Agent or Lenders by Borrower or any Guarantor.

9.8          Demand Waiver.

Borrower waives demand, 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 held by Agent on which
Borrower is liable.

10.                               NOTICES

Notices or demands by either party about this
Agreement must be in writing and personally delivered or sent by an overnight
delivery service or by telefacsimile at the addresses listed below.  A party may change its notice address by
written notice to the other party.

	
  If to Borrower:

  	
  Poniard Pharmaceuticals, Inc.

  7000 Shoreline Court

  South San Francisco, California 94080

  Attn: Caroline Loewy, Chief Financial Officer

  Fax: (650) 583-3789

  
	
   

  	
   

  
	
  If to Agent or
  SVB:

  	
  Silicon Valley Bank

  185 Berry Street, Suite 3000

  San Francisco, California 94107

  Attn: Peter Scott

  Fax: (415) 856-0810

  

 

 20
 

 

 

	
  If to Merrill Lynch:

  	
  Merrill Lynch Capital

  222 N. LaSalle Street, 16th Floor

  Chicago, Illinois 60601

  Attn: Account Manager for MLC/SVB/Poniard

  Fax: (866) 231-8408

  

 

11.                               CHOICE OF LAW, VENUE
AND JURY TRIAL WAIVER

California law governs the Loan Documents without
regard to principles of conflicts of law. 
Borrower, 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, THE AGENT
SHALL HAVE THE RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST THE BORROWER OR
ITS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION WHICH THE AGENT DEEMS
NECESSARY OR APPROPRIATE IN ORDER TO REALIZE ON THE COLLATERAL OR TO OTHERWISE
ENFORCE THE LENDERS’ OR AGENT’S RIGHTS AGAINST THE 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. WITHOUT INTENDING IN ANY
WAY TO LIMIT THE PARTIES’ AGREEMENT TO WAIVE THEIR RESPECTIVE RIGHT TO A TRIAL
BY JURY, if the above waiver of the right to a trial by jury is not
enforceable, the parties hereto agree that any and all disputes or
controversies of any nature between them arising at any time shall be decided
by a reference to a private judge, mutually selected by the parties (or, if
they cannot agree, by the Presiding Judge of the Santa Clara County, California
Superior Court) appointed in accordance with California Code of Civil Procedure
Section 638 (or pursuant to comparable provisions of federal law if the dispute
falls within the exclusive jurisdiction of the federal courts), sitting without
a jury, in Santa Clara County, California; and the parties hereby submit to the
jurisdiction of such court.  The
reference proceedings shall be conducted pursuant to and in accordance with the
provisions of California Code of Civil Procedure §§ 638 through 645.1,
inclusive.  The private judge shall have
the power, among others, to grant provisional relief, including without
limitation, entering temporary restraining orders, issuing preliminary and
permanent injunctions and appointing receivers.  All such proceedings shall be closed to the
public and confidential and all records relating thereto shall be permanently
sealed.  If during the course of any
dispute, a party desires to seek provisional relief, but a judge has not been
appointed at that point pursuant to the judicial reference procedures, then
such party may apply to the Santa Clara County, California Superior Court for
such relief.  The proceeding before the
private judge shall be conducted in the same manner as it would be before a
court under the rules of evidence applicable to judicial proceedings.  The parties shall be entitled to discovery
which shall be conducted in the same manner as it would be before a court under
the rules of discovery applicable to judicial proceedings.  The private judge shall oversee discovery and
may enforce

 21
 

 

all discovery rules and order applicable to judicial
proceedings in the same manner as a trial court judge.  The parties agree that the selected or
appointed private judge shall have the power to decide all issues in the action
or proceeding, whether of fact or of law, and shall report a statement of
decision thereon pursuant to the California Code of Civil Procedure §
644(a).  Nothing in this paragraph shall
limit the right of any party at any time to exercise self-help remedies,
foreclose against collateral, or obtain provisional remedies.  The private judge shall also determine all
issues relating to the applicability, interpretation, and enforceability of
this paragraph.

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 related party.

12.2        Indemnification.

Borrower hereby indemnifies, defends and holds Agent
and the Lenders and their respective officers, employees, and agents
(collectively called the “Indemnitees”)
harmless from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, claims, costs, expenses and
disbursements of any kind or nature whatsoever (including the reasonable fees
and disbursements of counsel for such Indemnitee) in connection with any
investigative, response, remedial, administrative or judicial matter or
proceeding, whether or not such Indemnitee shall be designated a party thereto
and including any such proceeding initiated by or on behalf of Borrower, and
the reasonable expenses of investigation by engineers, environmental
consultants and similar technical personnel and any commission, fee or
compensation claimed by any broker (other than any broker retained by Agent or
Lenders) asserting any right to payment for the transactions contemplated
hereby, which may be imposed on, incurred by or asserted against such
Indemnitee as a result of or in connection with the transactions contemplated
hereby and the use or intended use of the proceeds of the Term Loan, except
that Borrower shall not have any obligation hereunder to an Indemnitee with
respect to any liabilities, obligations, losses, damages, penalties, claims, costs,
expenses and disbursements caused by or resulting from the gross negligence or
willful misconduct of any Indemnitee, as determined by a final non-appealable
judgment of a court of competent jurisdiction. 
To the extent that the undertaking set forth in the immediately
preceding sentence may be unenforceable, Borrower shall contribute the maximum
portion which it is permitted to pay and satisfy under applicable law to the
payment and satisfaction of all such indemnified liabilities incurred by the
Indemnitees or any of them.

 22
 

 

12.3        Expenses.

Borrower hereby agrees to promptly pay (a) all
reasonable costs and expenses of Agent (including, without limitation, the
reasonable fees, costs and expenses of counsel to, and independent appraisers
and consultants retained by Agent) in connection with the examination, review,
due diligence investigation, documentation, negotiation, closing and
syndication of the transactions contemplated by this Agreement and the Loan
Documents, in connection with the performance by Agent of its rights and
remedies this Agreement and under the Loan Documents and in connection with the
continued administration of this Agreement and under the Loan Documents
including: (i) any amendments, modifications, consents and waivers to and/or
under this Agreement or any and all Loan Documents and (ii) any periodic
public record searches conducted by or at the request of Agent (including,
without limitation, title investigations, UCC searches, fixture filing
searches, judgment, pending litigation and tax lien searches and searches of
applicable corporate, limited liability, partnership and related records
concerning the continued existence, organization and good standing of certain
Persons), (b) without limitation of the preceding clause (a), all reasonable
costs and expenses of Agent (including recordation and transfer taxes) in
connection with the creation, perfection and maintenance of Liens pursuant to
this Agreement and the Loan Documents, (c) without limitation of the
preceding clause (a), all costs and expenses of Agent in connection with
(i) protecting, storing, insuring, handling, maintaining or selling any
Collateral; (ii) any litigation, dispute, suit or proceeding relating to
this Agreement and any Loan Document; and (iii) any workout, collection,
bankruptcy, insolvency and other enforcement proceedings under this Agreement
and any and all of the Loan Documents, and (d) all costs and expenses
incurred by Lenders in connection with any litigation, dispute, suit or
proceeding relating to this Agreement and any Loan Document and in connection
with any workout, collection, bankruptcy, insolvency and other enforcement
proceedings under this Agreement or under any and all Loan Documents, provided, however,
that to the extent that the costs and expenses referred to in this
clause (d) consist of fees, costs and expenses of counsel, Borrower shall
be obligated to pay such fees, costs and expenses for counsel to Agent and for
only one counsel acting for all Lenders (other than Agent) and provided further that, in all cases and
notwithstanding any other provision in this Agreement or the Loan Documents to
the contrary, if Borrower prevails in any action or proceeding between Borrower
and Agent and/or Lenders arising out of or relating to this Agreement and any
Loan Documents, Borrower shall be entitled to recover from Agent and Lenders
all attorneys fees and other costs and expenses incurred, in addition to any
other relief to which it may be entitled.

12.4        Right of Set-Off.

Borrower and any guarantor hereby grant to Agent for
the ratable benefit of Lenders, 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 the 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 may set-off the same or any part
thereof and apply the same to any liability or obligation of Borrower and any
guarantor even though unmatured and regardless of the adequacy of any other collateral
securing the Obligations.  ANY AND ALL
RIGHTS TO REQUIRE AGENT TO EXERCISE ITS RIGHTS OR REMEDIES

 23
 

 

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 THE BORROWER OR ANY GUARANTOR, ARE
HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.

12.5        Time of Essence.

Time is of the essence for the performance of all
Obligations in this Agreement.

12.6        Severability of Provision.

Each provision of this Agreement is severable from
every other provision in determining the enforceability of any provision.

12.7        Amendments in Writing,
Integration.

All amendments to this Agreement must be in writing
signed by Agent, each Lender and Borrower. 
This Agreement and the Loan Documents represent the entire agreement
about this subject matter, and supersede prior negotiations or agreements.  All prior agreements, understandings,
representations, warranties, and negotiations between the parties about the subject
matter of this Agreement and the Loan Documents merge into this Agreement and
the Loan Documents.

12.8        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, are an original, and all taken together,
constitute one Agreement.

12.9        Survival.

All covenants, representations and warranties made in
this Agreement continue in full force while any Obligations remain
outstanding.  The obligation of Borrower
in Section 12.2 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.

12.10      Administrative Agent.

(a)  Each Lender
hereby irrevocably appoints and authorizes Agent to enter into each of the Loan
Documents to which it is a party (other than this Agreement) on its behalf and
to take such actions as Agent on its behalf and to exercise such powers under
the Loan Documents as are delegated to Agent by the terms thereof, together
with all such powers as are reasonably incidental thereto.  Subject to the terms of the other Loan
Documents, Agent is authorized and empowered to amend, modify, or waive any
provisions of this Agreement or the other Loan Documents on behalf of
Lenders.  The provisions of this Section
12.10 are solely for the benefit of Agent and Lenders and neither Borrower nor
any Guarantor shall have any rights as a third party beneficiary of any of the
provisions hereof.  In performing its
functions and duties under

 24
 

 

this Agreement, Agent shall act solely as agent of
Lenders and does not assume and shall not be deemed to have assumed any
obligation toward or relationship of agency or trust with or for Borrower or
any Guarantor.  Agent may perform any of
its duties hereunder, or under the Loan Documents, by or through its agents or
employees.

The duties of Agent shall be mechanical and
administrative in nature.  Agent shall
not have by reason of this Agreement a fiduciary relationship in respect of any
Lender.  Nothing in this Agreement or any
of the Loan Documents is intended to or shall be construed to impose upon Agent
any obligations in respect of this Agreement or any of the Loan Documents
except as expressly set forth herein or therein.  Agent may consult with legal counsel,
independent public accountants and other experts selected by it and shall not
be liable for any action taken or omitted to be taken by it in good faith in
accordance with the advice of such counsel, accountants or experts.

Neither Agent nor any of its directors, officers,
agents or employees shall be liable to any Lender for any action taken or not
taken by it in connection with this Agreement or the Loan Documents, except
that Agent shall be liable with respect to its specific duties set forth
hereunder but only to the extent of its own gross negligence or willful
misconduct in the discharge thereof as determined by a final non-appealable
judgment of a court of competent jurisdiction. 
Neither Agent nor any of its directors, officers, agents or employees
shall be responsible for or have any duty to ascertain, inquire into or verify
(a) any statement, warranty or representation made in connection with this
Agreement or the Loan Documents or any borrowing hereunder; (b) the performance
or observance of any of the covenants or agreements specified in this Agreement
or the Loan Documents; (c) the satisfaction of any condition specified in
this Agreement or the Loan Documents; (d) the validity, effectiveness,
sufficiency or genuineness of this Agreement or the Loan Documents, any Lien
purported to be created or perfected thereby or any other instrument or writing
furnished in connection therewith; (e) the existence or non-existence of
any Event of Default; or (f) the financial condition of Borrower.  Agent shall not incur any liability by acting
in reliance upon any notice, consent, certificate, statement, or other writing
(which may be a bank wire, telex, facsimile or electronic transmission or
similar writing) believed by it to be genuine or to be signed by the proper
party or parties.  Agent shall not be
liable for any apportionment or distribution of payments made by it in good
faith and if any such apportionment or distribution is subsequently determined
to have been made in error the sole recourse of any Lender to whom payment was
due but not made, shall be to recover from other Lenders any payment in excess
of the amount to which they are determined to be entitled (and such other
Lenders hereby agree to return to such Lender any such erroneous payments
received by them).

Each Lender shall, in accordance with its pro rata
share of the Obligations, indemnify Agent (to the extent not reimbursed by
Borrower) upon demand against any cost, expense (including counsel fees and
disbursements), claim, demand, action, loss or liability (except such as result
from Agent’s gross negligence or willful misconduct as determined by a final
non-appealable judgment of a court of competent jurisdiction) that Agent may
suffer or incur in connection with this Agreement or the Loan Documents or any
action taken or omitted by Agent hereunder or thereunder.  If any indemnity furnished to Agent for any
purpose shall, in the opinion of Agent, be insufficient or become impaired,
Agent may call for additional indemnity

 25
 

 

and cease, or not commence, to do the acts indemnified
against even if so requested by Lenders until such additional indemnity is
furnished.

Each Lender acknowledges that it has, independently
and without reliance upon Agent or any other Lender, and based on such
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement.  Each Lender also acknowledges that it will,
independently and without reliance upon Agent or any other Lender, and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking any action
under this Agreement and the Loan Documents.

Lenders irrevocably authorize Agent, at its option and
in its discretion, to release any Lien granted to or held by Agent under this
Agreement or any Loan Document (i) upon payment in full of all
Obligations; or (ii) constituting property sold or disposed of as part of
or in connection with any disposition permitted under this Agreement (it being
understood and agreed that Agent may conclusively rely without further inquiry
on a certificate of a responsible officer of Borrower as to the sale or other
disposition of property being made in full compliance with the provisions of
this Agreement).

Agent shall not be deemed to have knowledge or notice
of the occurrence of any Event of Default or event which, with the giving of
notice or passage of time, or both, would constitute an Event of Default except
with respect to defaults in the payment of principal, interest and fees
required to be paid to Agent for the account of Lenders, unless Agent shall
have received written notice from a Lender or Borrower referring to this
Agreement, describing such event and stating that such notice is a “notice of
default”.  Agent will notify each Lender
of its receipt of any such notice.  Agent
shall take such action with respect to such event in accordance with the terms
hereof.  Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with
respect to such Event of Default or event which, with the giving of notice or
passage of time, or both, would constitute an Event of Default as it shall deem
advisable or in the best interests of Lenders.

(b)  Agent may
retire or be retired as Agent as follows: 
(i) Agent may at any time give notice of its resignation to the Lenders
and Borrower and upon receipt of any such notice of resignation, the
Lenders shall have the right to appoint a successor Agent and (ii) following
the occurrence of any Event of Default, Agent may be replaced and
succeeded as Agent by any other Lender if so provided for under
any intercreditor agreement among Lenders so long as such Lender shall give
notice to Borrower promptly upon becoming such successor Agent.  Upon the acceptance of a successor’s
appointment as Agent hereunder (or, in the case of the replacement of Agent by
any other Lender as contemplated in clause (ii) of the preceding sentence,
immediately upon such Lender becoming Agent), such successor shall succeed to
and become vested with all of the rights, powers, privileges and duties of the
retiring Agent, the retiring Agent’s resignation shall become immediately
effective and the retiring Agent shall be discharged from all of its duties and
obligations hereunder and under the other Loan Documents.  The provisions of this Loan Agreement and the
other Loan Documents shall continue in effect for the benefit of any retiring
Agent and its sub-agents after the effectiveness of its resignation hereunder
and under the other Loan Documents in respect of any actions taken or omitted
to be taken by any of them while the retiring Agent was acting or was
continuing to act as Agent.

 26
 

 

12.11      Arrangers.

Notwithstanding the provisions of this Agreement or
any of the Loan Documents, the Arrangers shall have no powers, rights, duties,
responsibilities or liabilities with respect to this Agreement and the other
Loan Documents.

12.12      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: (i) to
Lenders’ and Agent’s subsidiaries or affiliates in connection with their
business with Borrower; (ii) 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); (iii) as required by
law, regulation, subpoena, or other order, (iv) as reasonably required in
connection with Lenders’ and Agent’s examination or audit; and (v) as Agent in
its good faith business judgment deems necessary in exercising remedies under
this Agreement.  Confidential information
does not include information that either: (a) 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
(b) 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.

12.13      Publicity.

Borrower will not directly or indirectly publish,
disclose or otherwise use in any public disclosure, advertising material,
promotional material, press release or interview, any reference to the name,
logo or any trademark of Agent or any Lender or any of their Affiliates or any
reference to this Agreement or the financing evidenced hereby, in any case
except as required by Law, subpoena or judicial or similar order.  Agent and each Lender hereby acknowledge that
Borrower is a public company subject to the reporting and disclosure
requirements under federal and state securities laws and the Nasdaq Marketplace
Rules, which Laws require public disclosure and discussion of the material
terms of this transaction and the filing with the SEC of this Agreement and
certain of the Loan Documents at and after the Closing Date.

Each Lender and Borrower hereby authorizes Merrill
Lynch to publish the name of such Lender and Borrower, the existence of the
financing arrangements referenced under this Agreement, the primary purpose
and/or structure of those arrangements, the amount of credit extended under
each facility, the title and role of each party to this Agreement, and the
total amount of the financing evidenced hereby in any “tombstone”, comparable
advertisement or press release which Merrill Lynch elects to submit for
publication.  In addition, each Lender
and Borrower agrees that Merrill Lynch may provide lending industry trade
organizations with information necessary and customary for inclusion in league
table measurements after the Closing Date. 
With respect to any of the foregoing, Merrill Lynch shall provide
Borrower with an opportunity to review and confer with Merrill Lynch regarding
the contents of any such tombstone, advertisement or information, as
applicable, prior to its submission for publication and, following such review
period, Merrill Lynch may, from time to time, publish such

 27
 

 

information in any media form desired by Merrill
Lynch, until such time that Borrower shall have requested Merrill Lynch cease
any such further publication.

12.14      No Strict Construction.

The parties hereto have participated jointly in the
negotiation and drafting of this Agreement. 
In the event an ambiguity or question of intent or interpretation
arises, this Agreement shall be construed as if drafted jointly by the parties
hereto and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any provisions of this
Agreement.  The headings in this
Agreement are for convenience of reference only, are not part of this Agreement
and do not affect its interpretation.

12.15      Effective Date.

Notwithstanding anything set forth in this Agreement
or any Loan Document to the contrary, this Agreement and all of the Loan
Documents shall not be effective until the date on which the Agent and each
Lender executes this Agreement as indicated on the signature page to this
Agreement.

13.                               DEFINITIONS

13.1        Definitions.

In this Agreement:

“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” is a
Person that owns or controls directly or indirectly the Person, any Person that
controls or is controlled by or is under common control with the Person, and
each of that Person’s senior executive officers, directors, partners and, for
any Person that is a limited liability company, that Person’s managers and
members.

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

“Agent Expenses”
are all audit fees and expenses and reasonable costs or expenses (including
reasonable attorneys’ fees and expenses) for preparing, negotiating,
administering, defending and enforcing the Loan Documents (including appeals or
Insolvency Proceedings).

“Anti-Terrorism Laws”
means any Laws relating to terrorism or money laundering, including Executive
Order No. 13224 (effective September 24, 2001), the USA PATRIOT Act,
the Laws comprising or implementing the Bank Secrecy Act, and the Laws
administered by OFAC.

 28
 

 

“Basic Rate” is, as
of the Funding Date the per annum rate of interest (based on a year of 360
days) equal to the sum of (a) U.S. Treasury note yield to maturity for a term
equal to thirty-six months as quoted in the Wall Street Journal on the Funding
Date, plus (b) the Loan Margin.

“Blocked Person”
means any Person:  (a) listed in the
annex to, or is otherwise subject to the provisions of, Executive Order
No. 13224, (b) a Person owned or controlled by, or acting for or on
behalf of, any Person that is listed in the annex to, or is otherwise subject
to the provisions of, Executive Order No. 13224, (c) a Person with
which any Lender is prohibited from dealing or otherwise engaging in any
transaction by any Anti-Terrorism Law, (d) a Person that commits,
threatens or conspires to commit or supports “terrorism” as defined in
Executive Order No. 13224, or (e) a Person that is named a “specially
designated national” or “blocked person” on the most current list published by
OFAC or other similar list.

“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 condition and all computer programs or discs or any equipment
containing the information.

“Business Day” is
any day that is not a Saturday, Sunday or a day on which the Agent is closed.

“Closing Date” is
the date of this Agreement.

“Code” is the
Uniform Commercial Code as adopted in California as amended and in effect from
time to time.

“Collateral” is the
property described on Exhibit A.

“Commitment Percentage” means
with respect to (a) SVB, fifty percent (50%), and (b) Merrill Lynch, fifty
percent (50%).

“Contingent Obligation”
is, for any Person, any direct or indirect liability, contingent or not, of
that Person for (i) any indebtedness, lease, dividend, letter of credit or
other obligation of another such as an obligation directly or indirectly
guaranteed, endorsed, co-made, discounted or sold with recourse by that
Person, or for which that Person is directly or indirectly liable;
(ii) any obligations for undrawn letters of credit for the account of that
Person; and (iii) all obligations from any interest rate, currency or
commodity swap agreement, interest rate cap or collar agreement, or other
agreement or arrangement designated to protect a Person against fluctuation in
interest rates, currency exchange rates or commodity prices; but “Contingent
Obligation” does not include endorsements in the ordinary course of
business.  The amount of a Contingent
Obligation is the stated or determined amount of the primary obligation for
which the Contingent Obligation is made or, if not determinable, the maximum
reasonably anticipated liability for it determined by the Person in good faith;
but the amount may not exceed the maximum of the obligations under the
guarantee or other support arrangement.

“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.

 29
 

 

“Credit Extension”
is the Term Loan Advance, or any other extension of credit by any Lender for
Borrower’s benefit.

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

“Final Payment” is
a payment (in addition to and not a substitution for the regular monthly
payments of principal plus accrued interest) due on the Maturity Date for the
Term Loan Advance equal to the Loan Amount multiplied by the Final Payment
Percentage.

“Final Payment Percentage”
is 9.0%.

“Funding Date” is
any date on which a Term Loan Advance is made to or on account of Borrower.

“GAAP” is generally
accepted accounting principles.

“Governmental
Authority” is any nation or government, any state or other political
subdivision thereof, and any agency, department or Person exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government and any corporation or other Person owned or controlled (through
stock or capital ownership or otherwise) by any of the foregoing, whether
domestic or foreign.

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

“Indebtedness” is
(a) indebtedness for borrowed money or the deferred price of property or
services, such as reimbursement and other obligations for surety bonds and
letters of credit, (b) obligations evidenced by notes, bonds, debentures or
similar instruments, (c) capital lease obligations and (d) Contingent
Obligations.

“Insolvency Proceeding”
is any proceeding by or against any Person under the United States Bankruptcy
Code, or any other bankruptcy or insolvency law, including assignments for the
benefit of creditors, compositions, extensions generally with its creditors, or
proceedings seeking reorganization, arrangement, or other relief.

“Intellectual Property”
is:

(a)           Copyrights, Trademarks,
Patents, and Mask Works including amendments, renewals, extensions, and all
licenses, options to license or other rights to use and all license fees and
royalties from the use;

(b)           Any trade secrets,
including any inventions, and any intellectual property rights, including all
licenses, options to license or other rights to use and all license fees and
royalties from the use of such rights, and those for computer software and
computer software products, now or later existing, created, acquired or held;
and

(c)           All design rights which
may be available to Borrower now or later created, acquired or held.

 30
 

 

“Inventory” is
present and future inventory 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.

“Investment” is any
beneficial ownership of (including stock, partnership interest or other
securities) any Person, or any loan, advance or capital contribution to any
Person.

“Law”
means any and all federal, state, local and foreign statutes, laws, judicial
decisions, regulations, guidances, guidelines, ordinances, rules, judgments,
orders, decrees, codes, plans, injunctions, permits, concessions, grants,
franchises, governmental agreements and governmental restrictions, whether now or
hereafter in effect, which are applicable to Borrower in any particular
circumstance.

“Lenders’ Expenses”
are all audit fees and expenses and reasonable costs or expenses (including
reasonable attorneys’ fees and expenses) for preparing, negotiating, administering,
defending and enforcing the Loan Documents (including appeals or Insolvency
Proceedings).

“Letter-of-Credit
Right” has the meaning set forth in the Code.

“Lien” is a
mortgage, lien, deed of trust, charge, pledge, security interest or other encumbrance.

“Loan Amount” is
the original principal amount of the Term Loan Advance.

“Loan Documents”
are, collectively, this Agreement, any note or notes or guaranties executed by
Borrower or any Guarantor, and any other present or future document, instruments
or agreement between Borrower and/or for the benefit of Lenders and Agent in
connection with this Agreement, all as amended, extended or restated.

“Loan Margin” is
three percentage points.

“Mask Works” are
all mask works or similar rights available for the protection of semiconductor
chips, now owned or later acquired.

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

“Maturity Date”
is April 1, 2010.

“Non-Core Technologies” are
those products, product lines, and technologies that Borrower’s board of
directors, in its good faith business judgment, determines are not appropriate

 31
 

 

for future development by Borrower, including STR
(including holmium and samarium technologies), Annexin, TGFb, and humanized
antibodies.

“Obligations” are
debts, principal, interest, Final Payment, Prepayment Fee, Agent Expenses,
Lender’s Expenses, and other amounts Borrower owes Lenders and/or Agent now or
later and including interest accruing after Insolvency Proceedings begin and
debts, liabilities, or obligations of Borrower assigned to Lenders and/or
Agent.

“OFAC” is
the U.S. Department of Treasury Office of Foreign Assets Control.

“OFAC Lists”
are, collectively, the Specially Designated Nationals and Blocked Persons List
maintained by OFAC pursuant to Executive Order No. 13224, 66 Fed. Reg.
49079 (Sept. 25, 2001) and/or any other list of terrorists or other
restricted Persons maintained pursuant to any of the rules and regulations of
OFAC or pursuant to any other applicable Executive Orders.

“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
defined in Section 2.3(a).

“Permitted Indebtedness”
is:

(a)           Borrower’s indebtedness
to Lenders and Agent under this Agreement or the Loan Documents;

(b)           Indebtedness existing
on the Closing Date and shown on the Perfection Certificate;

(c)           Subordinated Debt;

(d)           Indebtedness to trade
creditors and with respect to surety bonds and similar obligations incurred in
the ordinary course of business;

(e)           Indebtedness secured by
Permitted Liens;

(f)            Indebtedness of
Borrower to any Subsidiary and Contingent Obligations of any Subsidiary with
respect to obligations of Borrower (provided that the primary obligations are
not prohibited hereby), and Indebtedness of any Subsidiary to any other
Subsidiary and Contingent Obligations of any Subsidiary with respect to
obligations of any other Subsidiary (provided that the primary obligations are
not prohibited hereby);

(g)           Other Indebtedness not
otherwise permitted by Section 7.4 not exceeding $100,000 in the aggregate
outstanding at any time; and

(h)           Extensions,
refinancings, modifications, amendments and restatements of any items of
Permitted Indebtedness (a) through (f) 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 Subsidiary, as the case may be.

 32
 

 

“Permitted Investments”
are:

(a)           Investments shown on
the Perfection Certificate and existing on the Closing Date; and

(b)           (i) marketable
direct obligations issued or unconditionally guaranteed by the United States or
its agency or any state maturing within 1 year from its acquisition, (ii)
commercial paper maturing no more than 1 year after its creation and having the
highest rating from either Standard & Poor’s Corporation or Moody’s
Investors Service, Inc., (iii) SVB’s certificates of deposit issued maturing no
more than 1 year after issue, and (iv) any other investments administered
through the Lenders;

(c)           Investments consisting
of the endorsement of negotiable instruments for deposit or collection or
similar transactions in the ordinary course of Borrower;

(d)           Investments accepted in
connection with Transfers permitted by Section 7.1;

(e)           Investments of
Subsidiaries in or to other Subsidiaries or Borrower and Investments by
Borrower in Subsidiaries not to exceed $50,000 in the aggregate in any fiscal
year;

(f)            Investments consisting
of (i) travel advances and employee relocation loans and other employee loans
and advances in the ordinary course of business, and (ii) loans to employees,
officers or directors relating to the purchase of equity securities of Borrower
or its Subsidiaries pursuant to employee stock purchase plans or agreements
approved by Borrower’s Board of Directors;

(g)           Investments (including
debt obligations) received in connection with the bankruptcy or reorganization
of customers or suppliers and in settlement of delinquent obligations of, and
other disputes with, customers or suppliers arising in the ordinary course of
business;

(h)           Investments consisting
of notes receivable of, or prepaid royalties and other credit extensions, to
customers and suppliers who are not Affiliates, in the ordinary course of
business; provided that this paragraph (h) shall not apply to Investments of
Borrower in any Subsidiary;

(i)            Investments in
connection with Transfers permitted by Section 7.1 or in connection with a
transaction approved by Borrower’s board of directors, a significant purpose of
which is to in-license, receive an option to in-license or develop technology
with a third party;

(j)            Investments permitted
by Section 7.3; and

(k)           Other Investments not
otherwise permitted by Section 7.7 not exceeding $50,000 in the aggregate
outstanding at any time.

 33
 

 

“Permitted Liens”
are:

(a)           Liens existing on the
Closing Date and shown on the Perfection Certificate or arising under this
Agreement or other Loan Documents;

(b)           Liens for taxes, fees,
assessments or other government charges or levies, either not delinquent or
being contested in good faith and for which Borrower maintains adequate
reserves on its Books, if they have no priority over any of Agent’s security
interests;

(c)           Purchase money Liens
(i) on Equipment acquired or held by Borrower incurred for financing the
acquisition of the Equipment, or (ii) existing on equipment when acquired,
if the Lien is confined to the equipment and the proceeds of the equipment;

(d)           Leases or subleases and
licenses or sublicenses granted in the ordinary course of Borrower’s business
or pursuant to Section 7.1 of this Agreement and any interest or title of a
lessee. licensee or licensor under such leases, licenses or sublicenses;

(e)           Liens incurred in the
extension, renewal or refinancing of the indebtedness secured by Liens
described in (a) through (c), but any extension, renewal or replacement Lien
must be limited to the property encumbered by the existing Lien and the
principal amount of the indebtedness may not increase;

(f)            Liens arising from
judgments, decrees or attachments in circumstances not constituting an Event of
Default under Section 8.4 or 8.7; and

(g)           Liens in favor of other
financial institutions arising in connection with Borrower’s deposit accounts
held at such institutions, provided that Agent has a perfected security
interest in the amounts held in such deposit accounts.

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

“Proceeds” has the
meaning described in the Code as in effect from time to time.

“Registered Organization” means
an organization organized solely under the law of a single state or the United
States and as to which the state or the United States must maintain a public
record showing the organization to have been organized.

“Repayment Period”
is a period of time equal to forty-two (42) consecutive months commencing on
November 1, 2006.

“Responsible Officer”
is each of the Chief Executive Officer, the Chief Financial Officer and the Principal
Accounting Officer of Borrower.

“Schedule” is any
attached schedule of exceptions.

“Scheduled Payment”
is defined in Section 2.3(a).

 34
 

 

“SEC” is the U.S.
Securities and Exchange Commission.

“Subordinated Debt”  is debt incurred by Borrower subordinated to
Borrower’s debt to Lenders (pursuant to a subordination agreement entered into
between the Agent, the Borrower and the subordinated creditor), on terms
acceptable to Agent.

“Subsidiary” is any
Person, corporation, partnership, limited liability company, joint venture, or
any other business entity of which more than 50% of the voting stock or other
equity interests is owned or controlled, directly or indirectly, by the Person
or one or more Affiliates of the Person.

“Supporting
Obligation” means a letter-of-credit right, secondary obligation or
obligation of a secondary obligor or that supports the payment or performance
of an account, chattel paper, a document, a general intangible, an instrument
or investment property.

 “Term Loan” is a Term Loan Advance of
Fifteen Million Dollars ($15,000,000).

“Term Loan Advance”
or “Term Loan Advances” is defined
in Section 2.1.1(a).

“Term Loan Commitment”
means with respect to each Lender, the total amount of the Credit Extensions
which may be made hereunder.  With respect
to SVB this means an amount of up to $7,500,000, with respect to Merrill Lynch
this means an amount of up to $7,500,000.

“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 Assignor connected with the trademarks.

“USA Patriot Act”
shall mean United States Public Law 107-56, Uniting and Strengthening America
by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism
(USA) PATRIOT ACT) Act of 2001, as amended from time to time, and the rules and
regulations promulgated thereunder from time to time in effect.

(Signatures are on the following page)

 35
 

 

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

	
  

  	
  PONIARD PHARMACEUTICALS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /S/ Gerald McMahon

  	
   

  
	
   

  	
  Name:

  	
   

  	
  Gerald McMahon

  	
   

  
	
   

  	
  Title:

  	
   

  	
  Chairman, President and

  	
   

  
	
   

  	
   

  	
   

  	
  Chief Executive Officer

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  AGENT:

  
	
   

  	
   

  
	
   

  	
  SILICON VALLEY BANK

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /S/ Peter Scott

  	
   

  
	
   

  	
  Name:

  	
   

  	
  Peter Scott

  	
   

  
	
   

  	
  Title:

  	
   

  	
  Senior Vice President

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  LENDERS:

  
	
   

  	
   

  
	
   

  	
  MERRILL
  LYNCH CAPITAL, a division of

  Merrill Lynch Business Financial Services Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /S/ Chris York

  	
   

  
	
   

  	
  Name:

  	
   

  	
  Chris York

  	
   

  
	
   

  	
  Title:

  	
   

  	
  Vice President

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SILICON
  VALLEY BANK

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /S/ Peter Scott

  	
   

  
	
   

  	
  Name:

  	
   

  	
  Peter Scott

  	
   

  
	
   

  	
  Title:

  	
   

  	
  Senior Vice President

  	
   

  
	
   

  	
   

  
	
  Effective as of
  October 25, 2006

  	
   

  
								

 

 36

 

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, financial assets, whether now owned or hereafter acquired, wherever
located; all Supporting Obligations and all of the 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 and accessions to and Proceeds thereof.

All Letter-Of-Credit Rights (whether or not the letter
of credit is evidenced by a writing); 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.

Provided, however,
the Collateral does not include any Intellectual Property

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 Intellectual Property.  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 (and only 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.

 

EXHIBIT
B

Loan Payment/Advance Request Form

	
  Fax To:

  	
   

  	
   

  	
  Date:

  	
   

  	
   

  

 

LOAN PAYMENT:

Poniard Pharmaceuticals, Inc.
(Borrower)

	
  From Account #

  	
   

  	
   

  	
  To Account #

  	
   

  
	
   

  	
   

  	
   

  
	
  (Deposit Account #)

  	
   

  	
   

  	
  (Loan Account #)

  	
   

  
	
   

  	
   

  	
   

  
	
  Principal $

  	
   

  	
   

  	
  and/or Interest $

  	
   

  
									

 

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:

  	
   

  

 

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 12:00 pm, P.S.T.

	
  Beneficiary
  Name:

  	
   

  	
   

  	
  Amount of Wire: $

  	
   

  
	
   

  	
   

  	
   

  
	
  Beneficiary Bank:

  	
   

  	
   

  	
  Account Number:

  	
   

  
	
   

  	
   

  	
   

  
	
  City and State:

  	
   

  
	
   

  	
   

  	
   

  
	
  Beneficiary Bank Transit (ABA) #:

  	
   

  	
   

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

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Intermediary Bank:

  	
   

  	
   

  	
  (For International Wire Only)

  	
   

  
	
   

  	
   

  	
   

  	
  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 #

  	
   

  
									

 

 

EXHIBIT
C

Compliance Certificate

TO:                                               SILICON
VALLEY BANK, as Agent

FROM:                            PONIARD PHARMACEUTICALS, Inc.

The undersigned authorized officer of Poniard
Pharmaceuticals, Inc. certifies that under the terms and conditions of the Loan
and Security Agreement among Borrower, Lenders and Agent (the “Agreement”), (i)
Borrower is in compliance for the period ending                        
with all required covenants except as noted below and (ii) all
representations and warranties in the Agreement are true and correct in all
material respects on this date (except for those representations and warranties
expressly referring to a specific date, which were true and correct in all
respects as of that date).  Attached are
the required documents supporting the certification.  In addition, the undersigned certifies that
(1) Borrower has timely filed all required tax returns and paid, or made
adequate provision to pay, all material taxes, except those being contested in
good faith with adequate reserves under GAAP and (ii) no liens has been levied
or claims made against Borrower relating to unpaid employee payroll or benefits
which Borrower has not previously notified in writing to Agent.  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 with Compliance
  Certificate

  	
   

  	
  Monthly within 30 days

  	
   

  	
  Yes

  	
   

  	
  No

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Annual (CPA Audited)

  	
   

  	
  FYE within earlier of 180 days or 5 days after
  filing with SEC

  	
   

  	
  Yes

  	
   

  	
  No

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Financial Projections approved by Board

  	
   

  	
  Annually at least 30 days prior to fiscal year end

  	
   

  	
  Yes

  	
   

  	
  No

  

 

	
  Financial Covenant

  	
   

  	
  Required

  	
   

  	
  Complies

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Minimum cash and
  cash equivalents, measured at the end of each month

  	
   

  	
  $

  	
  7,500,000

  	
   

  	
  Yes

  	
   

  	
  No

  
								

 

Achievement of Milestones
not later than December 31, 2007. 
(Attach evidence per Section 6.10)

 

 

	
  Comments Regarding
  Exceptions:  See Attached.

  	
  BANK USE ONLY

  
	
   

  	
   

  
	
   

  	
  Received by:

  	
   

  	
   

  
	
   

  	
   

  	
  AUTHORIZED SIGNER

  	
   

  
	
   

  	
   

  
	
  Sincerely,

  	
  Date:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  Verified:

  	
   

  	
   

  
	
  Signature

  	
   

  	
   

  	
  AUTHORIZED
  SIGNER

  	
   

  
	
   

  	
   

  	
  Date

  	
   

  	
   

  
	
  Title

  	
   

  	
   

  
	
   

  	
   

  	
  Compliance Status:

  	
  Yes   ̈      No    ̈

  	
   

  
	
  Date:Exhibit 10.2

SECURED TERM PROMISSORY NOTE

	
  $7,500,000

  	
  Advance Date; October
  25, 2006

  
	
   

  	
  Maturity Date: April 1,
  2010

  

 

FOR VALUE RECEIVED, PONIARD PHARMACEUTICALS, INC., a Washington
corporation, for itself and each of its Subsidiaries (the “Borrower”) hereby
promises to pay to the order of Merrill Lynch Capital, a division of Merrill
Lynch Business Financial Services Inc., or the holder of this Note (the “Lender”)
in care of Silicon Valley Bank, as agent under the Loan Agreement (as defined
below), 3003 Tasman Drive, Santa Clara CA 95054 or such other place of payment
as the holder of this Secured Term Promissory Note (this “Promissory Note”) may
specify from time to time in writing, in lawful money of the United States of
America, the principal amount of Seven Million Five Hundred Thousand Dollars
($7,500,000) or such other principal amount as Lender has advanced to Borrower,
together with interest at a fixed rate equal to the U.S. Treasury Note yield to
maturity for a term equal to thirty-six months in effect on the Advance Date
above and as then reported in the Wall Street Journal, plus 3.00% per annum
(or if and when applicable, at a
rate equal to the ”Default Rate” specified in Section 2.3(b) of the Loan
Agreement referenced below)  based upon a year consisting of 360 days,
with interest computed daily based on the actual number of days in each month
until the principal balance is paid in full.

This Promissory Note is executed and delivered in connection with that
certain Loan and Security Agreement dated October 25, 2006, by and among
Borrower, Silicon Valley Bank, as agent for the Lenders, and Silicon Valley
Bank and Merrill Lynch Capital, as Lenders (as the same may from time to time
be amended, modified or supplemented in accordance with its terms, the “Loan
Agreement”), and is entitled to the benefit and security of the Loan Agreement
and the other Loan Documents (as defined in the Loan Agreement), to which
reference is made for a statement of all of the terms and conditions thereof.  All payments shall be made in accordance with
the Loan Agreement.  All terms defined in
the Loan Agreement shall have the same definitions when used herein, unless
otherwise defined herein.  An Event of
Default under the Loan Agreement shall constitute a default under this
Promissory Note, and upon any such Event of Default and default, all principal
and interest and other obligations owing under this Promissory Note may be
accelerated and declared immediately due and payable as provided for in the
Loan Agreement.  Reference to the Loan
Agreement shall not affect or impair the absolute and unconditional obligation
of the Borrower to pay all principal and interest and premium, if any, under
this Promissory Note upon demand or as otherwise provided herein

Borrower waives presentment and demand for payment, notice of dishonor,
protest and notice of protest under the UCC or any applicable law.   Borrower agrees to make all payments under
this Promissory Note without setoff, recoupment or deduction and regardless of
any counterclaim or defense.  This
Promissory Note has been negotiated and delivered to Lender and is payable in
the State of California.  This Promissory
Note shall be governed by and construed and enforced in accordance with, the
laws of the State of California, excluding any conflicts of law rules or
principles that would cause the application of the laws of any other
jurisdiction.  Without limiting the
generality of the preceding paragraph, the provisions of Section 12 of the Loan
Agreement regarding jurisdiction, venue and jury trial waiver are incorporated
herein.

 

	
   

  	
  PONIARD PHARMACEUTICALS, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /S/ Gerald McMahon

  	
   

  
	
   

  	
  Title:

  	
   

  	
  Gerald McMahon

  	
   

  
	
   

  	
   

  	
  Chairman, President and

  
	
   

  	
   

  	
  Chief Executive Officer

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