Document:

Loan and Security Agreement

 Exhibit 10.2 
 AKESIS PHARMACEUTICALS, INC. 
 LOAN AND SECURITY AGREEMENT 

 This LOAN AND SECURITY AGREEMENT is entered into as of December 15, 2006, by and between Square 1 Bank
(“Bank”) and AKESIS PHARMACEUTICALS, INC. (“Borrower”). 
 RECITALS 
 Borrower wishes to obtain credit from time to time from Bank, and Bank desires to extend credit to Borrower. This Agreement sets forth the terms on which Bank will
advance credit to Borrower, and Borrower will repay the amounts owing to Bank. 
 AGREEMENT 
 The parties agree as follows: 
  

	 	1.	DEFINITIONS AND CONSTRUCTION. 

 1.1 Definitions. As used in this Agreement, all capitalized terms shall have the definitions set forth on Exhibit A. Any term used in the Code and not defined herein shall have the meaning given to the term in the Code.

 1.2 Accounting Terms. Any accounting term not specifically defined on Exhibit A shall be construed in
accordance with GAAP and all calculations shall be made in accordance with GAAP. The term “financial statements” shall include the accompanying notes and schedules. 
  

	 	2.	LOAN AND TERMS OF PAYMENT. 

 2.1
Credit Extensions. 
 (a) Promise to Pay. Borrower promises to pay to Bank, in lawful money of the United
States of America, the aggregate unpaid principal amount of all Credit Extensions made by Bank to Borrower in accordance with the terms hereof, together with interest on the unpaid principal amount of such Credit Extensions at rates in accordance
with the terms hereof. 
 (b) Term Advances. 
 (i) Subject to and upon the terms and conditions of this Agreement, Bank agrees to make Term Advances to Borrower. The aggregate
outstanding amount of Term Advances shall not exceed the Term Line. 
 (ii) Interest shall accrue from the date of
each Term Advance at the rate specified in Section 2.3(a), and shall be payable in accordance with Section 2.3(c). Any Term Advances that are outstanding on June 15, 2007 shall be payable in 30 equal monthly installments of principal,
plus all accrued interest, beginning on July 15, 2007, and continuing on the same day of each month thereafter through the Term Maturity Date, at which time all amounts due in connection with Term Advances made under this Section 2.1(b)
and any other amounts due under this Agreement shall be immediately due and payable. Term Advances, once repaid, may not be reborrowed. Borrower may prepay any Term Advances, at any time and from time to time, without penalty or premium. 

(iii) When Borrower desires to obtain a Term Advance, Borrower shall notify Bank (which notice shall be irrevocable) by
facsimile transmission to be received no later than 3:00 p.m. Eastern time one Business Day before the day on which the Term Advance is to be made. Such notice shall be substantially in the form of Exhibit C. The notice shall be signed by a
Responsible Officer or its designee. 
 2.2 Intentionally Omitted. 
  

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 2.3 Interest Rates, Payments, and Calculations. 
 (a) Interest Rates. 
 (i) Term Advances. Except as set forth in Section 2.3(b), the Term Advances shall bear interest, on the outstanding daily balance thereof, at a rate equal to 0.75% above the Prime Rate. 

(b) Late Fee; Default Rate. If any payment is not made within 10 days after the date such payment is due, Borrower shall
pay Bank a late fee equal to the lesser of (i) 5% of the amount of such unpaid amount or (ii) the maximum amount permitted to be charged under applicable law. All Obligations shall bear interest, from and after the occurrence and during
the continuance of an Event of Default, at a rate equal to 5 percentage points above the interest rate applicable immediately prior to the occurrence of the Event of Default. 
 (c) Payments. Interest hereunder shall be due and payable on the 15th day of each month during the term hereof. Bank shall,
at its option, charge such interest, all Bank Expenses, and all Periodic Payments against any of Borrower’s deposit accounts or against the Term Line, in which case those amounts shall thereafter accrue interest at the rate then applicable
hereunder. Any interest not paid when due shall be compounded by becoming a part of the Obligations, and such interest shall thereafter accrue interest at the rate then applicable hereunder. 
 (d) Computation. In the event the Prime Rate is changed from time to time hereafter, the applicable rate of interest
hereunder shall be increased or decreased, effective as of the day the Prime Rate is changed, by an amount equal to such change in the Prime Rate. All interest chargeable under the Loan Documents shall be computed on the basis of a 360 day year for
the actual number of days elapsed. 
 2.4 Crediting Payments. Prior to the occurrence of an Event of Default,
Bank shall credit a wire transfer of funds, check or other item of payment to such deposit account or Obligation as Borrower specifies, except that to the extent Borrower uses the Advances to purchase Collateral, Borrower’s repayment of the
Advances shall apply on a “first-in-first-out” basis so that the portion of the Advances used to purchase a particular item of Collateral shall be paid in the chronological order the Borrower purchased the Collateral. After the occurrence
and during the continuance of an Event of Default, Bank shall have the right, in its sole discretion, to immediately apply any wire transfer of funds, check, or other item of payment Bank may receive to conditionally reduce Obligations, but such
applications of funds shall not be considered a payment on account unless such payment is of immediately available federal funds or unless and until such check or other item of payment is honored when presented for payment. Notwithstanding anything
to the contrary contained herein, any wire transfer or payment received by Bank after 1:00 p.m. Eastern time shall be deemed to have been received by Bank as of the opening of business on the immediately following Business Day. Whenever any payment
to Bank under the Loan Documents would otherwise be due (except by reason of acceleration) on a date that is not a Business Day, such payment shall instead be due on the next Business Day, and additional fees or interest, as the case may be, shall
accrue and be payable for the period of such extension. 
 2.5 Fees. Borrower shall pay to Bank the following:

 (a) Facility Fee. On the Closing Date, a fee equal to $4,000, which shall be nonrefundable; 
 (b) Bank Expenses. On the Closing Date, all Bank Expenses incurred through the Closing Date (provided that Bank Expenses
for legal fees shall not exceed $10,000 on the Closing Date if there have been two turns or less of the Loan Documents), and, after the Closing Date, all Bank Expenses, as and when they become due. 
 2.6 Term. This Agreement shall become effective on the Closing Date and, subject to Section 12.7, shall continue in
full force and effect for so long as any Obligations remain outstanding or Bank has any obligation to make Credit Extensions under this Agreement. Notwithstanding the foregoing, Bank shall have 

  

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the right to terminate its obligation to make Credit Extensions under this Agreement immediately and without notice upon the occurrence and during the
continuance of an Event of Default. 
  

	 	3.	CONDITIONS OF LOANS. 

 3.1
Conditions Precedent to Initial Credit Extension. The obligation of Bank to make the initial Credit Extension is subject to the condition precedent that Bank shall have received, in form and substance satisfactory to Bank, the following:

 (a) this Agreement; 
 (b) an officer’s certificate of Borrower with respect to incumbency and resolutions authorizing the execution and delivery of this Agreement; 
 (c) a financing statement (Form UCC-1); 
 (d) agreement to provide insurance; 
 (e) payment of the fees and Bank Expenses then due specified in Section 2.5; 
 (f) current SOS Reports indicating that except for Permitted Liens, there are no other security interests or Liens of record in the Collateral; 
 (g) Borrower’s most recent 10K with current financial statements, including audited statements for Borrower’s most
recently ended fiscal year, together with an unqualified opinion, company prepared consolidated and consolidating balance sheets and income statements for the most recently ended month in accordance with Section 6.2, and such other updated
financial information as Bank may reasonably request; 
 (h) evidence that Borrower has received at least $3,000,000 in
New Equity; 
 (i) current Compliance Certificate in accordance with Section 6.2, together with a current
Schedule; 
 (j) a Warrant in form and substance satisfactory to Bank; and 
 (k) such other documents or certificates, and completion of such other matters, as Bank may reasonably deem necessary or
appropriate. 
 3.2 Conditions Precedent to all Credit Extensions. The obligation of Bank to make each Credit
Extension, including the initial Credit Extension, is further subject to the following conditions: 
 (a) timely
receipt by Bank of the Payment/Advance Form as provided in Section 2.1; and 
 (b) the representations and
warranties contained in Section 5 shall be true and correct in all material respects on and as of the date of such Payment/Advance Form and on the effective date of each Credit Extension as though made at and as of each such date, and no Event
of Default shall have occurred and be continuing, or would exist after giving effect to such Credit Extension (provided, however, that those representations and warranties expressly referring to another date shall be true, correct and complete in
all material respects as of such date). The making of each Credit Extension shall be deemed to be a representation and warranty by Borrower on the date of such Credit Extension as to the accuracy of the facts referred to in this Section 3.2.

  

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	 	4.	CREATION OF SECURITY INTEREST. 

 4.1 Grant of Security Interest. Borrower grants and pledges to Bank a continuing security interest in the Collateral to secure prompt repayment of any and all Obligations and in order to secure prompt performance by Borrower
of each of its covenants and duties under the Loan Documents. Except as set forth in the Schedule, such security interest constitutes a valid, first priority security interest in the presently existing Collateral, and will constitute a valid, first
priority security interest in later-acquired Collateral. Borrower also hereby agrees to not sell, transfer, assign, mortgage, pledge, lease, grant a security interest in, or encumber any of its intellectual property. Notwithstanding any termination,
Bank’s Lien on the Collateral shall remain in effect for so long as any Obligations are outstanding. 
 4.2
Perfection of Security Interest. Borrower authorizes Bank to file at any time financing statements, continuation statements, and amendments thereto that (i) either specifically describe the Collateral or describe the Collateral as
all assets of Borrower of the kind pledged hereunder, and (ii) contain any other information required by the Code for the sufficiency of filing office acceptance of any financing statement, continuation statement, or amendment, including
whether Borrower is an organization, the type of organization and any organizational identification number issued to Borrower, if applicable. Borrower shall from time to time endorse and deliver to Bank, at the request of Bank, all Negotiable
Collateral and other documents that Bank may reasonably request, in form satisfactory to Bank, to perfect and continue perfected Bank’s security interests in the Collateral and in order to fully consummate all of the transactions contemplated
under the Loan Documents. Borrower shall have possession of the Collateral, except where expressly otherwise provided in this Agreement or where Bank chooses to perfect its security interest by possession in addition to the filing of a financing
statement. Where Collateral is in possession of a third party bailee, Borrower shall take such steps as Bank reasonably requests for Bank to (i) obtain an acknowledgment, in form and substance satisfactory to Bank, of the bailee that the bailee
holds such Collateral for the benefit of Bank, (ii) obtain “control” of any Collateral consisting of investment property, deposit accounts, letter-of-credit rights or electronic chattel paper (as such items and the term
“control” are defined in Revised Article 9 of the Code) by causing the securities intermediary or depositary institution or issuing bank to execute a control agreement in form and substance satisfactory to Bank. Borrower will not create
any chattel paper without placing a legend on the chattel paper acceptable to Bank indicating that Bank has a security interest in the chattel paper. Borrower from time to time may deposit with Bank specific cash collateral to secure specific
Obligations; Borrower authorizes Bank to hold such specific balances in pledge and to decline to honor any drafts thereon or any request by Borrower or any other Person to pay or otherwise transfer any part of such balances for so long as the
specific Obligations are outstanding. 
 4.3 Right to Inspect. Bank (through any of its officers, employees, or
agents) shall have the right, upon reasonable prior notice, from time to time during Borrower’s usual business hours but no more than once a year (unless an Event of Default has occurred and is continuing), at Borrower’s expense, to
inspect Borrower’s Books and to make copies thereof and to check, test, and appraise the Collateral in order to verify Borrower’s financial condition or the amount, condition of, or any other matter relating to, the Collateral. 

 

	 	5.	REPRESENTATIONS AND WARRANTIES. 

 Borrower
represents and warrants as follows: 
 5.1 Due Organization and Qualification. Borrower and each Subsidiary is a
corporation duly existing under the laws of the state in which it is incorporated and qualified and licensed to do business in any state in which the conduct of its business or its ownership of property requires that it be so qualified, except where
the failure to do so would not reasonably be expected to cause a Material Adverse Effect. 
 5.2 Due Authorization;
No Conflict. The execution, delivery, and performance of the Loan Documents are within Borrower’s powers, have been duly authorized, and are not in conflict with nor constitute a breach of any provision contained in Borrower’s Articles
of Incorporation or Bylaws, nor will they constitute an event of default under any material agreement by which Borrower is bound, except to the extent such default could not reasonably be expected to cause a Material Adverse Effect. Borrower is not
in default under any agreement by which it is bound, except to the extent such default would not reasonably be expected to cause a Material Adverse Effect. 
  

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 5.3 Collateral. Borrower has rights in or the power to transfer the
Collateral, and its title to the Collateral is free and clear of Liens, adverse claims, and restrictions on transfer or pledge except for Permitted Liens. Except as set forth in the Schedule, all Collateral is located solely in the Collateral
States. All Inventory is in all material respects of good and merchantable quality, free from all material defects, except for Inventory for which adequate reserves have been made. Except as set forth in the Schedule, none of the Collateral is
maintained or invested with a Person other than Bank or Bank’s Affiliates. 
 5.4 Intellectual Property.
Borrower is the sole owner of its patents, trademarks, copyrights and other intellectual property, except for non-exclusive licenses granted by Borrower to its customers in the ordinary course of business. To Borrower’s knowledge, (i) each
of Borrower’s material patents, trademarks and copyrights is valid and enforceable, (ii) no material part of its intellectual property has been judged invalid or unenforceable, in whole or in part, and (iii) no claim has been made to
Borrower in writing that any part of its intellectual property violates the rights of any third party except to the extent such claim would not reasonably be expected to cause a Material Adverse Effect. 
 5.5 Name; Location of Chief Executive Office. Except as disclosed in the Schedule, Borrower has not done business under any
name other than that specified on the signature page hereof, and its exact legal name is as set forth in the first paragraph of this Agreement. The chief executive office of Borrower is located in the Chief Executive Office State at the address
indicated in Section 10 hereof. 
 5.6 Litigation. Except as set forth in the Schedule, there are no
actions or proceedings pending by or against Borrower or any Subsidiary before any court or administrative agency in which a likely adverse decision would reasonably be expected to have a Material Adverse Effect. 
 5.7 No Material Adverse Change in Financial Statements. All consolidated and consolidating financial statements related to
Borrower and any Subsidiary that have been delivered by Borrower to Bank fairly present in all material respects Borrower’s consolidated and consolidating financial condition as of the date thereof and Borrower’s consolidated and
consolidating results of operations for the period or periods then ended. There has not been a material adverse change in the consolidated or in the consolidating financial condition of Borrower since the date of the most recent of such financial
statements submitted to Bank. 
 5.8 Solvency, Payment of Debts. Borrower is able to pay its debts (including
trade debts) as they mature; the fair saleable value of Borrower’s assets (including goodwill minus disposition costs) exceeds the fair value of its liabilities; and Borrower is not left with unreasonably small capital after the transactions
contemplated by this Agreement. 
 5.9 Compliance with Laws and Regulations. Borrower and each Subsidiary have
met the minimum funding requirements of ERISA with respect to any employee benefit plans subject to ERISA. No event has occurred resulting from Borrower’s failure to comply with ERISA that is reasonably likely to result in Borrower’s
incurring any liability that could reasonably be expected to have a Material Adverse Effect. Borrower is not an “investment company” or a company “controlled” by an “investment company” within the meaning of the
Investment Company Act of 1940. Borrower is not engaged principally, or as one of the important activities, in the business of extending credit for the purpose of purchasing or carrying margin stock (within the meaning of Regulations T and U of the
Board of Governors of the Federal Reserve System). Borrower has complied in all material respects with all the provisions of the Federal Fair Labor Standards Act. Borrower is in compliance with all environmental laws, regulations and ordinances
except where the failure to comply is not reasonably likely to have a Material Adverse Effect. Borrower has not violated any statutes, laws, ordinances or rules applicable to it, the violation of which would reasonably be expected to have a Material
Adverse Effect. Borrower and each Subsidiary have filed or caused to be filed all tax returns required to be filed, and have paid, or have made adequate provision for the payment of, all taxes reflected therein except those being contested in good
faith with adequate reserves under GAAP or where the failure to file such returns or pay such taxes would not reasonably be expected to have a Material Adverse Effect. 
  

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 5.10 Subsidiaries. Except as set forth on the Schedule, Borrower does not
own any stock, partnership interest or other equity securities of any Person. 
 5.11 Government Consents.
Borrower and each Subsidiary have obtained all consents, approvals and authorizations of, made all declarations or filings with, and given all notices to, all governmental authorities that are necessary for the operation of Borrower’s business
as currently conducted, except where the failure to do so would not reasonably be expected to cause a Material Adverse Effect. 
 5.12 Inbound Licenses. Except as disclosed on the Schedule, Borrower is not a party to, nor is bound by, any license or other agreement that prohibits or otherwise restricts Borrower from granting a security interest in
Borrower’s interest in such license or agreement or any other property. 
 5.13 Full Disclosure. No
representation, warranty or other statement made by Borrower in any certificate or written statement furnished to Bank taken together with all such certificates and written statements furnished to Bank contains any untrue statement of a material
fact or omits to state a material fact necessary in order to make the statements contained in such certificates or statements not misleading, it being recognized by Bank that the projections and forecasts provided by Borrower in good faith and based
upon reasonable assumptions are not to be viewed as facts and that actual results during the period or periods covered by any such projections and forecasts may differ from the projected or forecasted results. 
  

	 	6.	AFFIRMATIVE COVENANTS. 

 Borrower covenants that,
until payment in full of all outstanding Obligations, and for so long as Bank may have any commitment to make a Credit Extension hereunder, Borrower shall do all of the following: 
 6.1 Good Standing and Government Compliance. Borrower shall maintain its and each of its Subsidiaries’ corporate
existence and good standing in the Borrower State, shall maintain qualification and good standing in each other jurisdiction in which the failure to so qualify would reasonably be expected to have a Material Adverse Effect, and shall furnish to Bank
the organizational identification number issued to Borrower by the authorities of the state in which Borrower is organized, if applicable. Borrower shall meet, and shall cause each Subsidiary to meet, the minimum funding requirements of ERISA with
respect to any employee benefit plans subject to ERISA. Borrower shall comply in all material respects with all applicable Environmental Laws, and maintain all material permits, licenses and approvals required thereunder where the failure to do so
would reasonably be expected to have a Material Adverse Effect. Borrower shall comply, and shall cause each Subsidiary to comply, with all statutes, laws, ordinances and government rules and regulations to which it is subject, and shall maintain,
and shall cause each of its Subsidiaries to maintain, in force all licenses, approvals and agreements, the loss of which or failure to comply with which would reasonably be expected to have a Material Adverse Effect. 
 6.2 Financial Statements, Reports, Certificates. Borrower shall deliver to Bank: (i) as soon as available, but in any
event within 30 days after the end of each calendar month, a company prepared consolidated and consolidating balance sheet and income statement covering Borrower’s operations during such period, in a form reasonably acceptable to Bank and
certified by a Responsible Officer; (ii) all reports on Forms 10-K and 10-Q filed with the Securities and Exchange Commission filed within the statutory filing requirements and with respect to Forms 10-K, including, audited consolidated and
consolidating financial statements of Borrower prepared in accordance with GAAP, consistently applied, together with an opinion of a registered independent certified public accounting firm which is unqualified or otherwise consented to in writing by
Bank on such financial statements; (iii) copies of all statements, reports and notices sent or made available generally by Borrower to its security holders or to any holders of Subordinated Debt; (iv) promptly upon receipt of notice
thereof, a report of any legal actions pending or threatened in writing against Borrower or any Subsidiary that could reasonably be expected to result in liability to Borrower or any Subsidiary of $100,000 or more; (v) promptly upon receipt,
each management letter prepared by Borrower’s independent certified public accounting firm regarding Borrower’s management control systems; and (vi) such budgets, sales projections, operating plans or other financial information as
Bank may reasonably request from time to time. 
  

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 (a) Within 30 days after the last day of each calendar quarter, Borrower shall
deliver to Bank a Compliance Certificate certified as of the last day of the applicable month and signed by a Responsible Officer in substantially the form of Exhibit D hereto. 
 (b) As soon as possible and in any event within 3 Business Days after becoming aware of the occurrence or existence of an Event of
Default hereunder, a written statement of a Responsible Officer setting forth details of the Event of Default, and the action which Borrower has taken or proposes to take with respect thereto. 
 Borrower may deliver to Bank on an electronic basis any certificates, reports or information required pursuant to this Section 6.2, and Bank shall
be entitled to rely on the information contained in the electronic files, provided that Bank in good faith believes that the files were delivered by a Responsible Officer. If Borrower delivers this information electronically, it shall also deliver
to Bank by U.S. Mail, reputable overnight courier service, hand delivery, facsimile or .pdf file within 5 Business Days of submission of the unsigned electronic copy the certification of monthly financial statements and the quarterly Compliance
Certificate, each bearing the physical signature of the Responsible Officer. 
 6.3 Inventory; Returns. Borrower
shall keep all Inventory in good and merchantable condition, free from all material defects except for Inventory for which adequate reserves have been made. Returns and allowances, if any, as between Borrower and its account debtors shall be on the
same basis and in accordance with the usual customary practices of Borrower, as they exist on the Closing Date. Borrower shall promptly notify Bank of all returns and recoveries and of all disputes and claims involving more than $100,000.

 6.4 Taxes. Borrower shall make, and cause each Subsidiary to make, due and timely payment or deposit of all
material federal, state, and local taxes, assessments, or contributions required of it by law, including, but not limited to, those laws concerning income taxes, F.I.C.A., F.U.T.A. and state disability, and will deliver to Bank, on demand, proof
reasonably satisfactory to Bank indicating that Borrower or a Subsidiary has made such payments or deposits and any appropriate certificates attesting to the payment or deposit thereof; provided that Borrower or a Subsidiary need not make any
payment if the amount or validity of such payment is contested in good faith by appropriate proceedings and is reserved against (to the extent required by GAAP) by Borrower. 
 6.5 Insurance. 
 (a) Borrower, at its expense, shall keep the Collateral insured against loss or damage by fire, theft, explosion, sprinklers, and all other hazards and risks, and in such amounts, as ordinarily insured against by other owners in
similar businesses conducted in the locations where Borrower’s business is conducted on the date hereof. Borrower shall also maintain liability and other insurance in amounts and of a type that are customary to businesses similar to
Borrower’s. 
 (b) All such policies of insurance shall be in such form, with such companies, and in such amounts
as are reasonably satisfactory to Bank. All policies of property insurance shall contain a lender’s loss payable endorsement, in a form satisfactory to Bank, showing Bank as an additional loss payee, and all liability insurance policies shall
show the Bank as an additional insured and shall specify that the insurer must give at least 10 days notice to Bank before canceling its policy for any reason. Upon Bank’s request, Borrower shall deliver to Bank certified copies of the policies
of insurance and evidence of all premium payments. If no Event of Default has occurred and is continuing, proceeds payable under any casualty policy will, at Borrower’s option, be payable to Borrower to replace the property subject to the
claim, provided that any such replacement property shall be deemed Collateral in which Bank has been granted a first priority security interest. If an Event of Default has occurred and is continuing, all proceeds payable under any such policy shall,
at Bank’s option, be payable to Bank to be applied on account of the Obligations. 
  

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 6.6 Accounts. Borrower shall maintain all its depository, operating and
investment accounts with Bank. 
 6.7 Intentionally Omitted. 
 6.8 Inbound Licenses. Prior to entering into or becoming bound by any material inbound license or other similar agreement,
Borrower shall provide written notice to Bank of the material terms of such license or agreement with a description of its likely impact on Borrower’s business or financial condition. 
 6.9 Further Assurances. At any time and from time to time Borrower shall execute and deliver such further instruments and
take such further action as may reasonably be requested by Bank to effect the purposes of this Agreement. 
  

	 	7.	NEGATIVE COVENANTS. 

 Borrower covenants and agrees
that, so long as any credit hereunder shall be available and until the outstanding Obligations are paid in full or for so long as Bank may have any commitment to make any Credit Extensions, Borrower will not do any of the following without
Bank’s prior written consent, which shall not be unreasonably withheld: 
 7.1 Dispositions. Convey, sell,
lease, license, transfer or otherwise dispose of (collectively, to “Transfer”), or permit any of its Subsidiaries to Transfer, all or any part of its business or property, including its intellectual property, or move cash balances on
deposit with Bank to accounts opened at another financial institution, other than Permitted Transfers. 
 7.2 Change
in Name, Location, Executive Office, or Executive Management; Change in Business; Change in Fiscal Year; Change in Control. Change its name or the Borrower State or relocate its chief executive office without 10 days prior written notification
to Bank; replace its chief executive officer or chief financial officer without prompt written notification to Bank thereafter; engage in any business, or permit any of its Subsidiaries to engage in any business, other than the business currently
engaged in by Borrower (or any business related or incidental thereto); change its fiscal year end; have or effect a Change in Control. 
 7.3 Mergers or Acquisitions. Merge or consolidate, or permit any of its Subsidiaries to merge or consolidate, with or into any other business organization (other than mergers or consolidations relating
to the reincorporation or other reorganization into a different jurisdiction or mergers or consolidations of a Subsidiary into another Subsidiary or into Borrower). 
 7.4 Indebtedness. Create, incur, assume, guarantee or be or remain liable with respect to any Indebtedness, or permit any
Subsidiary so to do, other than Permitted Indebtedness, or prepay any Indebtedness (other than trade payables incurred in the ordinary course of business) or take any actions which impose on Borrower an obligation to prepay any Indebtedness, except
Indebtedness to Bank. 
 7.5 Encumbrances. Create, incur, assume or allow any Lien with respect to any of its
property, or assign or otherwise convey any right to receive income, including the sale of any Accounts, or permit any of its Subsidiaries so to do, except for Permitted Liens. Agree with any Person other than Bank not to grant a security interest
in, or otherwise encumber, any of its or covenant to any other Person that Borrower in the future will refrain from creating, incurring, assuming or allowing any Lien with respect to any of Borrower’s property, or permit any Subsidiary to do
so. 
 7.6 Distributions. Pay any dividends or make any other distribution or payment on account of or in
redemption, retirement or purchase of any capital stock, except that Borrower may (i) repurchase the stock of former employees pursuant to stock repurchase agreements as long as an Event of Default does not exist prior to such repurchase or
would not exist after giving effect to such repurchase, and (ii) repurchase the stock of former employees pursuant to stock repurchase agreements by the cancellation of indebtedness owed by such former employees to Borrower regardless of
whether an Event of Default exists. 
  

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 7.7 Investments. Directly or indirectly acquire or own, or make any
Investment in or to any Person, or permit any of its Subsidiaries so to do, other than Permitted Investments, or maintain or invest any of its property with a Person other than Bank or Bank’s Affiliates or permit any Subsidiary to do so unless
such Person has entered into a control agreement with Bank, in form and substance reasonably satisfactory to Bank, or suffer or permit any Subsidiary to be a party to, or be bound by, an agreement that restricts such Subsidiary from paying dividends
or otherwise distributing property to Borrower. 
 7.8 Transactions with Affiliates. Directly or indirectly
enter into or permit to exist any material transaction with any Affiliate of Borrower except for 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. 
 7.9 Subordinated Debt. Make any
payment in respect of any Subordinated Debt, or permit any of its Subsidiaries to make any such payment, except in compliance with the terms of such Subordinated Debt, or amend any provision affecting Bank’s rights contained in any
documentation relating to the Subordinated Debt without Bank’s prior written consent. 
 7.10 Inventory and
Equipment. Store the Inventory or the Equipment with a bailee, warehouseman, or similar third party unless the third party has been notified of Bank’s security interest and Bank (a) has received an acknowledgment from the third party
that it is holding or will hold the Inventory or Equipment for Bank’s benefit or (b) is in possession of the warehouse receipt, where negotiable, covering such Inventory or Equipment. Except for Inventory sold in the ordinary course of
business and except for such other locations as Bank may approve in writing, Borrower shall keep the Inventory and Equipment only at the locations set forth in Section 10, the locations set forth on the Schedule and such other locations of
which Borrower gives Bank prior written notice and as to which Bank files a financing statement where needed to perfect its security interest. 
 7.11 No Investment Company; Margin Regulation. Become or be controlled by an “investment company,” within the meaning of the Investment Company Act of 1940, or become principally engaged in, or
undertake as one of its important activities, the business of extending credit for the purpose of purchasing or carrying margin stock, or use the proceeds of any Credit Extension for such purpose. 
  

	 	8.	EVENTS OF DEFAULT. 

 Any one or more of the
following events shall constitute an Event of Default by Borrower under this Agreement: 
 8.1 Payment Default.
If Borrower fails to pay any of the Obligations when due; 
 8.2 Covenant Default. 
 (a) If Borrower fails to perform any obligation under Sections 6.2, 6.4, 6.5 or 6.6 or violates any of the covenants contained in
Article 7 of this Agreement; or 
 (b) If Borrower fails or neglects to perform or observe any other material term,
provision, condition, covenant contained in this Agreement, in any of the Loan Documents, or in any other present or future agreement between Borrower and Bank and as to any default under such other term, provision, condition or covenant that can be
cured, has failed to cure such default within 15 days after Borrower receives notice thereof or any officer of Borrower becomes aware thereof; provided, however, that if the default cannot by its nature be cured within the 15 day period or cannot
after diligent attempts by Borrower be cured within such 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 an additional 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 but no Credit Extensions will be made; 
  

 10 

 8.3 Material Adverse Change. If there occurs a material adverse change in
Borrower’s business or financial condition, or if there is a material impairment in the prospect of repayment of any portion of the Obligations or a material impairment in the perfection, value or priority of Bank’s security interests in
the Collateral. 
 8.4 Intentionally Omitted. 
 8.5 Attachment. If any material portion of Borrower’s assets is attached, seized, subjected to a writ or distress
warrant, or is levied upon, or comes into the possession of any trustee, receiver or person acting in a similar capacity and such attachment, seizure, writ or distress warrant or levy has not been removed, discharged or rescinded within 10 days, or
if Borrower is enjoined, restrained, or in any way prevented by court order from continuing to conduct all or any material part of its business affairs, or if a judgment or other claim becomes a lien or encumbrance upon any material portion of
Borrower’s assets, or if a notice of lien, levy, or assessment is filed of record with respect to any of Borrower’s assets by the United States Government, or any department, agency, or instrumentality thereof, or by any state, county,
municipal, or governmental agency, and the same is not paid within ten days after Borrower receives notice thereof, provided that none of the foregoing shall constitute an Event of Default where such action or event is stayed or an adequate bond has
been posted pending a good faith contest by Borrower (provided that no Credit Extensions will be made during such cure period); 
 8.6 Insolvency. If Borrower becomes insolvent, or if an Insolvency Proceeding is commenced by Borrower, or if an Insolvency Proceeding is commenced against Borrower and is not dismissed or stayed within 45 days (provided that
no Credit Extensions will be made prior to the dismissal of such Insolvency Proceeding); 
 8.7 Other
Agreements. If there is a default or other failure to perform in 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 $100,000 or that would reasonably be expected to have a Material Adverse Effect; 
 8.8 Subordinated Debt. If Borrower makes any payment on account of Subordinated Debt, except to the extent the payment is allowed under any subordination agreement entered into with Bank; 
 8.9 Judgments. If a judgment or judgments for the payment of money in an amount, individually or in the aggregate, of at
least $100,000 shall be rendered against Borrower and shall remain unsatisfied and unstayed for a period of 15 days (provided that no Credit Extensions will be made prior to the satisfaction or stay of the judgment); or 
 8.10 Misrepresentations. If any material misrepresentation or material misstatement exists when made in any warranty or
representation set forth herein or in any certificate delivered to Bank by any Responsible Officer pursuant to this Agreement or to induce Bank to enter into this Agreement or any other Loan Document. 
  

	 	9.	BANK’S RIGHTS AND REMEDIES. 

 9.1 Rights and Remedies. Upon the occurrence and during the continuance of an Event of Default, Bank may, at its election, without notice of its election and without demand, do any one or more of the following, all of which
are authorized by Borrower: 
 (a) Declare all Obligations, whether evidenced by this Agreement, by any of the other
Loan Documents, or otherwise, immediately due and payable (provided that upon the occurrence of an Event of Default described in Section 8.6 (insolvency), all Obligations shall become immediately due and payable without any action by Bank);

  

 11 

 (b) Demand that Borrower (i) deposit cash with Bank in an amount equal to the
amount of any Letters of Credit remaining undrawn, as collateral security for the repayment of any future drawings under such Letters of Credit, and (ii) pay in advance all Letter of Credit fees scheduled to be paid or payable over the
remaining term of the Letters of Credit, and Borrower shall promptly deposit and pay such amounts; 
 (c) Cease
advancing money or extending credit to or for the benefit of Borrower under this Agreement or under any other agreement between Borrower and Bank; 
 (d) Settle or adjust disputes and claims directly with account debtors for amounts, upon terms and in whatever order that Bank reasonably considers advisable; 
 (e) Make such payments and do such acts as Bank considers reasonably necessary or reasonable to protect its security interest in
the Collateral. Borrower agrees to assemble the Collateral if Bank so requires, and to make the Collateral available to Bank as Bank may designate. Borrower authorizes Bank to enter the premises where the Collateral is located, to take and maintain
possession of the Collateral, or any part of it, and to pay, purchase, contest, or compromise any encumbrance, charge, or lien which in Bank’s determination appears to be prior or superior to its security interest and to pay all expenses
incurred in connection therewith. With respect to any of Borrower’s owned premises, Borrower hereby grants Bank a license to enter into possession of such premises and to occupy the same, without charge, in order to exercise any of Bank’s
rights or remedies provided herein, at law, in equity, or otherwise; 
 (f) Set off and apply to the Obligations any
and all (i) balances and deposits of Borrower held by Bank, and (ii) indebtedness at any time owing to or for the credit or the account of Borrower held by Bank; 
 (g) Ship, reclaim, recover, store, finish, maintain, repair, prepare for sale, advertise for sale, and sell (in the manner provided
for herein) the Collateral. Bank is hereby granted a license or other right, solely pursuant to the provisions of this Section 9.1, to use, without charge, Borrower’s labels, patents, copyrights, rights of use of any name, trade secrets,
trade names, trademarks, service marks, and advertising matter, or any property of a similar nature, as it pertains to the Collateral, in completing production of, advertising for sale, and selling any Collateral and, in connection with Bank’s
exercise of its rights under this Section 9.1, Borrower’s rights under all licenses and all franchise agreements shall inure to Bank’s benefit; 
 (h) Sell the Collateral at either a public or private sale, or both, by way of one or more contracts or transactions, for cash or
on terms, in such manner and at such places (including Borrower’s premises) as Bank determines is commercially reasonable, and apply any proceeds to the Obligations in whatever manner or order Bank deems appropriate. Bank may sell the
Collateral without giving any warranties as to the Collateral. Bank may specifically disclaim any warranties of title or the like. This procedure will not be considered adversely to affect the commercial reasonableness of any sale of the Collateral.
If Bank sells any of the Collateral upon credit, Borrower will be credited only with payments actually made by the purchaser, received by Bank, and applied to the indebtedness of the purchaser. If the purchaser fails to pay for the Collateral, Bank
may resell the Collateral and Borrower shall be credited with the proceeds of the sale; 
 (i) Bank may credit bid and
purchase at any public sale; 
 (j) Apply for the appointment of a receiver, trustee, liquidator or conservator of the
Collateral, without notice and without regard to the adequacy of the security for the Obligations and without regard to the solvency of Borrower, any guarantor or any other Person liable for any of the Obligations; and 
 (k) Any deficiency that exists after disposition of the Collateral as provided above will be paid immediately by Borrower.

  

 12 

 Bank may comply with any applicable state or federal law requirements in connection with a disposition of the Collateral
and compliance will not be considered adversely to affect the commercial reasonableness of any sale of the Collateral. 
 9.2 Power of Attorney. Effective only upon the occurrence and during the continuance of an Event of Default, Borrower hereby irrevocably appoints Bank (and any of Bank’s designated officers, or employees) as
Borrower’s true and lawful attorney to: (a) send requests for verification of Accounts or notify account debtors of Bank’s security interest in the Accounts; (b) endorse Borrower’s name on any checks or other forms of
payment or security that may come into Bank’s possession; (c) sign Borrower’s name on any invoice or bill of lading relating to any Account, drafts against account debtors, schedules and assignments of Accounts, verifications of
Accounts, and notices to account debtors; (d) dispose of any Collateral; (e) make, settle, and adjust all claims under and decisions with respect to Borrower’s policies of insurance; (f) settle and adjust disputes and claims
respecting the accounts directly with account debtors, for amounts and upon terms which Bank determines to be reasonable; and (g) file, in its sole discretion, one or more financing or continuation statements and amendments thereto, relative to
any of the Collateral without the signature of Borrower where permitted by law; provided Bank may exercise such power of attorney to sign the name of Borrower on any of the documents described in clause (g) above, regardless of whether an Event
of Default has occurred. The appointment of Bank as Borrower’s attorney in fact, and each and every one of Bank’s rights and powers, being coupled with an interest, is irrevocable until all of the Obligations have been fully repaid and
performed and Bank’s obligation to provide advances hereunder is terminated. 
 9.3 Accounts Collection. At
any time after the occurrence and during the continuation of an Event of Default, Bank may notify any Person owing funds to Borrower of Bank’s security interest in such funds and verify the amount of such Account. At any time after the
occurrence and during the continuation of an Event of Default, Borrower shall collect all amounts owing to Borrower for Bank, receive in trust all payments as Bank’s trustee, and immediately deliver such payments to Bank in their original form
as received from the account debtor, with proper endorsements for deposit. 
 9.4 Bank Expenses. If Borrower
fails to pay any amounts or furnish any required proof of payment due to third persons or entities, as required under the terms of this Agreement, then Bank may do any or all of the following after reasonable notice to Borrower: (a) make
payment of the same or any part thereof; (b) set up such reserves under the Term Line as Bank deems necessary to protect Bank from the exposure created by such failure; or (c) obtain and maintain insurance policies of the type discussed in
Section 6.5 of this Agreement, and take any action with respect to such policies as Bank deems prudent. Any amounts so paid or deposited by Bank shall constitute Bank Expenses, shall be immediately due and payable, and shall bear interest at
the then applicable rate hereinabove provided, and shall be secured by the Collateral. Any payments made by Bank shall not constitute an agreement by Bank to make similar payments in the future or a waiver by Bank of any Event of Default under this
Agreement. 
 9.5 Bank’s Liability for Collateral. Bank has no obligation to clean up or otherwise prepare
the Collateral for sale. All risk of loss, damage or destruction of the Collateral shall be borne by Borrower. 
 9.6
No Obligation to Pursue Others. Bank has no obligation to attempt to satisfy the Obligations by collecting them from any other person liable for them and Bank may release, modify or waive any collateral provided by any other Person to secure
any of the Obligations, all without affecting Bank’s rights against Borrower. Borrower waives any right it may have to require Bank to pursue any other Person for any of the Obligations. 
 9.7 Remedies Cumulative. Bank’s rights and remedies under this Agreement, the Loan Documents, and all other agreements
shall be cumulative. Bank shall have all other rights and remedies not inconsistent herewith as provided under the Code, by law, or in equity. No exercise by Bank of one right or remedy shall be deemed an election, and no waiver by Bank of any Event
of Default on Borrower’s part shall be deemed a continuing waiver. No delay by Bank shall constitute a waiver, election, or acquiescence by it. No waiver by Bank shall be effective unless made in a written document signed on behalf of Bank and
then shall be effective only in the specific instance and for the specific purpose for which it was given. Borrower expressly agrees that this Section 9.7 may not be waived or modified by Bank by course of performance, conduct, estoppel or
otherwise. 
  

 13 

 9.8 Demand; Protest. Except as otherwise provided in this Agreement,
Borrower waives demand, protest, notice of protest, notice of default or dishonor, notice of payment and nonpayment and any other notices relating to the Obligations. 
  

	 	10.	NOTICES. 

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

			
	 If to Borrower:
	  	AKESIS PHARMACEUTICALS, INC.
		  	888 Prospect Street, Suite 320
		  	La Jolla, CA 92037
		  	Attn: Chief Financial Officer
		  	FAX: (858) 348-2183
		
	 If to Bank:
	  	Square 1 Bank
		  	406 Blackwell Street, Suite 240
		  	Crowe Building
		  	Durham, NC 27701
		  	Attn: Manager
		  	FAX: (919) 314-3080
		
	 with a copy to:
	  	Square 1 Bank
		  	12481 High Bluff Dr., Ste. 350
		  	San Diego, CA 92130
		  	Attn: Scott Foote, Vice President
		  	FAX: (858) 436-3501

 The parties hereto may change the address at which they are to receive notices hereunder, by
notice in writing in the foregoing manner given to the other. 
 Notwithstanding the foregoing, the parties acknowledge and agree that, in
the event that Borrower is obligated by the terms of any Loan Document to deliver to Bank any documents or information that Borrower has made publicly available in its filings with the U.S. Securities and Exchange Commission, Borrower’s
obligation to deliver such documents or information to Bank shall be deemed satisfied upon the filing of such documents or information with the U.S. Securities and Exchange Commission and delivery to Bank of a link to a website where such filings
can be obtained. 
  

	 	11.	CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER. 

 This Agreement shall
be governed by, and construed in accordance with, the internal laws of the State of California, without regard to principles of conflicts of law. BANK AND BORROWER WAIVE ANY RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING
OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREIN, INCLUDING CLAIMS BASED ON CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER COMMON LAW OR STATUTORY BASES. Borrower submits to the exclusive jurisdiction of the state and federal courts
located in the County of San Diego, State of California. If the jury waiver set forth in this Section is not enforceable, then any dispute, controversy or claim arising out of or relating to this Agreement or any of the transactions contemplated
herein will be finally settled by binding arbitration in San Diego, California in accordance with the then-current Commercial Arbitration Rules of the 

  

 14 

 
American Arbitration Association by one arbitrator appointed in accordance with said rules. The arbitrator shall apply California law to the resolution of
any dispute, without reference to rules of conflicts of law or rules of statutory arbitration. Judgment on the award rendered by the arbitrator may be entered in any court having jurisdiction thereof. Notwithstanding the foregoing, the parties may
apply to any court of competent jurisdiction for preliminary or interim equitable relief, or to compel arbitration in accordance with this paragraph. The expenses of the arbitration, including the arbitrator’s fees and expert witness fees,
incurred by the parties to the arbitration, may be awarded to the prevailing party, in the discretion of the arbitrator, or may be apportioned between the parties in any manner deemed appropriate by the arbitrator. Unless and until the arbitrator
decides that one party is to pay for all (or a share) of such expenses, both parties shall share equally in the payment of the arbitrator’s fees as and when billed by the arbitrator. 
  

	 	12.	GENERAL PROVISIONS. 

 12.1
Successors and Assigns. This Agreement shall bind and inure to the benefit of the respective successors and permitted assigns of each of the parties and shall bind all persons who become bound as a debtor to this Agreement; provided,
however, that neither this Agreement nor any rights hereunder may be assigned by Borrower without Bank’s prior written consent, which consent may be granted or withheld in Bank’s sole discretion. Bank shall have the right without the
consent of Borrower to sell, transfer, negotiate, or grant participation in all or any part of, or any interest in, Bank’s obligations, rights and benefits hereunder. Unless an Event of Default has occurred and is continuing hereunder, Bank
shall give Borrower 30 days prior written notice before the consummation of any such sale, transfer, negotiation, or granting of a participation in all or any part of, or any interest in, Bank’s obligations, rights and benefits hereunder.

 12.2 Indemnification. Borrower shall defend, indemnify and hold harmless Bank and its officers, employees, and
agents against: (a) all obligations, demands, claims, and liabilities claimed or asserted by any other party in connection with the transactions contemplated by this Agreement; and (b) all losses or Bank Expenses in any way suffered,
incurred, or paid by Bank, its officers, employees and agents as a result of or in any way arising out of, following, or consequential to transactions between Bank and Borrower whether under this Agreement, or otherwise (including without limitation
reasonable attorneys fees and expenses), except for losses caused by Bank’s gross negligence or willful misconduct. 
 12.3 Time of Essence. Time is of the essence for the performance of all obligations set forth in this Agreement. 
 12.4 Severability of Provisions. Each provision of this Agreement shall be severable from every other provision of this Agreement for the purpose of determining the legal enforceability of any specific provision. 
 12.5 Amendments in Writing, Integration. All amendments to or terminations of this Agreement or the other Loan Documents must be in
writing. All prior agreements, understandings, representations, warranties, and negotiations between the parties hereto with respect to the subject matter of this Agreement and the other Loan Documents, if any, are merged into this Agreement and the
Loan Documents. 
 12.6 Counterparts. This Agreement may be executed in any number of counterparts and by
different parties on separate counterparts, each of which, when executed and delivered, shall be deemed to be an original, and all of which, when taken together, shall constitute but one and the same Agreement. 
 12.7 Survival. All covenants, representations and warranties made in this Agreement shall continue in full force and effect
so long as any Obligations remain outstanding or Bank has any obligation to make any Credit Extension to Borrower. The obligations of Borrower to indemnify Bank with respect to the expenses, damages, losses, costs and liabilities described in
Section 12.2 shall survive until all applicable statute of limitations periods with respect to actions that may be brought against Bank have run. 
  

 15 

 12.8 Confidentiality. Bank acknowledges that, subject to the express
exceptions contained in this Section 12.8, all information relating to Borrower’s business that is provided or made available to Bank pursuant to the terms of any of the Loan Documents constitutes confidential information of Borrower. Bank
agrees that it will hold in strict confidence and, subject to the express exceptions contained in this Section 12.8, not disclose to any Person any portion of the confidential information, except as approved in writing by Borrower. In handling
any confidential information, Bank and all employees and agents of Bank shall exercise the same degree of care that Bank exercises with respect to its own proprietary information of the same types to maintain the confidentiality of such confidential
information, except that disclosure of such information may be made (i) to the subsidiaries or Affiliates of Bank in connection with their present or prospective business relations with Borrower, (ii) to prospective transferees or
purchasers of any interest in the Loans, provided that they have entered into a comparable confidentiality agreement in favor of Borrower and have delivered a copy to Borrower, (iii) as required by law, regulations, rule or order, subpoena,
judicial order or similar order, (iv) as may be required in connection with the examination, audit or similar investigation of Bank and (v) as Bank may determine in connection with the enforcement of any remedies hereunder. Confidential
information hereunder shall not include information that either: (a) is in the public domain or in the knowledge or possession of Bank when disclosed to Bank, or becomes part of the public domain after disclosure to Bank through no fault of
Bank; or (b) is disclosed to Bank by a third party, provided Bank does not have actual knowledge that such third party is prohibited from disclosing such information. 
 [REMAINDER OF PAGE LEFT INTENTIONALLY BLANK] 
  

 16 

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

  

			
	AKESIS PHARMACEUTICALS, INC.
		
	By:	 	/s/ Jay Lichter, Ph.D
	Title:	 	President and Chief Executive Officer

  

			
	SQUARE 1 BANK
		
	By:	 	/s/ Mike Berrier
	Title:	 	Senior Vice President and Risk Manager

 EXHIBIT A 
 DEFINITIONS 
 “Accounts” means all presently existing and hereafter arising accounts, contract rights, payment intangibles and all other
forms of obligations owing to Borrower arising out of the sale or lease of goods (including, without limitation, the licensing of software and other technology) or the rendering of services by Borrower and any and all credit insurance, guaranties,
and other security therefor, as well as all merchandise returned to or reclaimed by Borrower and Borrower’s Books relating to any of the foregoing. 
 “Affiliate” means, with respect to any Person, any Person that owns or controls directly or indirectly such Person, any Person that controls or is controlled by or is under common control with such Person, and each of such
Person’s senior executive officers, directors, and partners. 
 “Bank Expenses” means all reasonable costs or expenses (including reasonable
attorneys’ fees and expenses, whether generated in-house or by outside counsel) incurred in connection with the preparation, negotiation, administration, and enforcement of the Loan Documents; reasonable Collateral audit fees; and Bank’s
reasonable attorneys’ fees and expenses (whether generated in-house or by outside counsel) incurred in amending, enforcing or defending the Loan Documents (including fees and expenses of appeal), incurred before, during and after an Insolvency
Proceeding, whether or not suit is brought. 
 “Borrower State” means Nevada, the state under whose laws Borrower is organized, or such other state
into which Borrower may reincorporate in accordance with the terms and conditions of this Agreement. 
 “Borrower’s Books” means all of
Borrower’s books and records including: ledgers; records concerning Borrower’s assets or liabilities, the Collateral, business operations or financial condition; and all computer programs, or tape files, and the equipment, containing such
information. 
 “Business Day” means any day that is not a Saturday, Sunday, or other day on which banks in the State of California are authorized
or required to close. 
 “Cash” means unrestricted cash and cash equivalents. 
 “Change in Control” shall mean a transaction in which any “person” or “group” (within the meaning of Section 13(d) and 14(d)(2) of the Securities Exchange Act of 1934) becomes the
“beneficial owner” (as defined in Rule 13d-3 under the Securities Exchange Act of 1934), directly or indirectly, of a sufficient number of shares of all classes of stock then outstanding of Borrower ordinarily entitled to vote in the
election of directors, empowering such “person” or “group” to elect a majority of the Board of Directors of Borrower, who did not have such power before such transaction. 
 “Chief Executive Office State” means California, where Borrower’s chief executive office is located, or such other state where Borrower’s chief
executive office may be relocated in accordance with the terms and conditions of this Agreement. 
 “Closing Date” means the date of this
Agreement. 
 “Code” means the California Uniform Commercial Code as amended or supplemented from time to time. 
 “Collateral” means the property described on Exhibit B attached hereto and all Negotiable Collateral to the extent not described on Exhibit B, except to the
extent any such property (i) is nonassignable by its terms without the consent of the licensor thereof or another party (but only to the extent such prohibition on transfer is enforceable under applicable law, including, without limitation,
Sections 9406 and 9408 of the Code), (ii) the granting of a security interest therein is contrary to applicable law, provided that upon the cessation of any such restriction or prohibition, such property shall automatically become part of the
Collateral, or (iii) constitutes the capital stock of a controlled foreign corporation (as defined in the IRC), in excess of 65% of the voting power of all classes of capital stock of such controlled foreign corporation entitled to vote.

  

 1 

 “Collateral State” means the state or states where the Collateral is located, which is California. 

“Contingent Obligation” means, as applied to any Person, any direct or indirect liability, contingent or otherwise, of that Person with respect to
(i) any indebtedness, lease, dividend, letter of credit or other obligation of another, including, without limitation, any such obligation directly or indirectly guaranteed, endorsed, co-made or discounted or sold with recourse by that Person,
or in respect of which that Person is otherwise directly or indirectly liable; (ii) any obligations with respect to undrawn letters of credit, corporate credit cards or merchant services issued for the account of that Person; and (iii) all
obligations arising under any interest rate, currency or commodity swap agreement, interest rate cap agreement, interest rate collar agreement, or other agreement or arrangement designated to protect a Person against fluctuation in interest rates,
currency exchange rates or commodity prices; provided, however, that the term “Contingent Obligation” shall not include endorsements for collection or deposit in the ordinary course of business. The amount of any Contingent Obligation
shall be deemed to be an amount equal to the stated or determined amount of the primary obligation in respect of which such Contingent Obligation is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect
thereof as determined by such Person in good faith; provided, however, that such amount shall not in any event exceed the maximum amount of the obligations under the guarantee or other support arrangement. 
 “Credit Extension” means each Term Advance, or any other extension of credit by Bank to or for the benefit of Borrower hereunder. 
 “Environmental Laws” means all laws, rules, regulations, orders and the like issued by any federal state, local foreign or other governmental or
quasi-governmental authority or any agency pertaining to the environment or to any hazardous materials or wastes, toxic substances, flammable, explosive or radioactive materials, asbestos or other similar materials. 
 “Equipment” means all present and future machinery, equipment, tenant improvements, furniture, fixtures, vehicles, tools, parts and attachments which Borrower
owns or leases. 
 “ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the regulations thereunder. 
 “Event of Default” has the meaning assigned in Article 8. 
 “GAAP” means United States generally accepted accounting principles, consistently applied, as in effect from time to time. 
 “Indebtedness” means (a) all indebtedness for borrowed money or the deferred purchase price of property or services, including without limitation reimbursement and other obligations with respect to surety bonds and letters of
credit, (b) all obligations evidenced by notes, bonds, debentures or similar instruments, (c) all capital lease obligations, and (d) all Contingent Obligations. 
 “Insolvency Proceeding” means any proceeding commenced by or against any Person or entity under any provision of the United States Bankruptcy Code, as amended, or under any other bankruptcy or insolvency
law, including assignments for the benefit of creditors, formal or informal moratoria, compositions, extension generally with its creditors, or proceedings seeking reorganization, arrangement, or other relief. 
 “Inventory” means all present and future inventory in which Borrower has any interest. 
 “Investment” means any beneficial ownership of (including stock, partnership or limited liability company interest or other securities) any Person, or any loan, advance or capital contribution to any Person.

 “IRC” means the Internal Revenue Code of 1986, as amended, and the regulations thereunder. 
 “Letter of Credit” means a commercial or standby letter of credit or similar undertaking issued by Bank at Borrower’s request. 
  

 2 

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

 “Loan Documents” means, collectively, this Agreement, any note or notes executed by Borrower, and any other document, instrument or agreement
entered into in connection with this Agreement, all as amended or extended from time to time. 
 “Material Adverse Effect” means a material adverse
effect on (i) the operations, business or financial condition of Borrower and its Subsidiaries taken as a whole, (ii) the ability of Borrower to repay the Obligations or otherwise perform its obligations under the Loan Documents, or
(iii) Borrower’s interest in, or the value, perfection or priority of Bank’s security interest in the Collateral. 
 “Negotiable
Collateral” means all of Borrower’s present and future letters of credit of which it is a beneficiary, drafts, instruments (including promissory notes), securities, documents of title, and chattel paper, and Borrower’s Books relating
to any of the foregoing. 
 “New Equity” means cash proceeds received after November 1, 2006 from the sale and issuance of Borrower’s
equity securities to Avalon Ventures. 
 “Obligations” means all debt, principal, interest, Bank Expenses and other amounts owed to Bank by
Borrower pursuant to this Agreement or any other agreement, whether absolute or contingent, due or to become due, now existing or hereafter arising, including any interest that accrues after the commencement of an Insolvency Proceeding and including
any debt, liability, or obligation owing from Borrower to others that Bank may have obtained by assignment or otherwise. 
 “Periodic Payments”
means all installments or similar recurring payments that Borrower may now or hereafter become obligated to pay to Bank pursuant to the terms and provisions of any instrument, or agreement now or hereafter in existence between Borrower and Bank.

 “Permitted Indebtedness” means: 
 (a)
Indebtedness of Borrower in favor of Bank arising under this Agreement or any other Loan Document; 
 (b) Indebtedness existing on the Closing Date
and disclosed in the Schedule; 
 (c) Indebtedness not to exceed $100,000 in the aggregate in any fiscal year of Borrower secured by a lien described
in clause (c) of the defined term “Permitted Liens,” provided such Indebtedness does not exceed the lesser of the cost or fair market value of the equipment financed with such Indebtedness; 
 (d) Subordinated Debt; 
 (e) Indebtedness to trade creditors
incurred in the ordinary course of business; and 
 (f) Extensions, refinancings and renewals of any items of Permitted Indebtedness, provided that
the principal amount is not increased or the terms modified to impose more burdensome terms upon Borrower or its Subsidiary, as the case may be. 
 “Permitted Investment” means: 
 (a) Investments existing on the Closing Date disclosed in the Schedule; 
 (b) (i) Marketable direct obligations issued or unconditionally guaranteed by the United States of America or any agency or any State thereof maturing within one
year from the date of acquisition thereof, (ii) commercial paper maturing no more than one year from the date of creation thereof and currently having rating of at least A-2 or P-2 from either Standard & Poor’s Corporation or
Moody’s Investors Service, (iii) Bank’s certificates of deposit maturing no more than one year from the date of investment therein, and (iv) Bank’s money market accounts or deposit accounts; 
  

 3 

 (c) Repurchases of stock from former employees or directors of Borrower under the terms of applicable repurchase
agreements as permitted by Section 7.6; 
 (d) Investments accepted in connection with Permitted Transfers; 
 (e) Investments of Subsidiaries in or to other Subsidiaries or Borrower and Investments by Borrower in Subsidiaries not to exceed $250,000 in the aggregate in any
fiscal year; 
 (f) Investments not to exceed $100,000 in the aggregate in any fiscal year 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 plan 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 Borrower’s 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 subparagraph (h) shall not apply to Investments of Borrower in any Subsidiary; and 
 (i) Joint
ventures or strategic alliances in the ordinary course of Borrower’s business consisting of the non-exclusive licensing of technology, the development of technology or the providing of technical support, provided that any cash Investments by
Borrower do not exceed $250,000 in the aggregate in any fiscal year. 
 “Permitted Liens” means the following: 
 (a) Any Liens existing on the Closing Date and disclosed in the Schedule (excluding Liens to be satisfied with the proceeds of the Advances) or arising under this
Agreement or the other Loan Documents; 
 (b) Liens for taxes, fees, assessments or other governmental charges or levies, either not delinquent or
being contested in good faith by appropriate proceedings and for which Borrower maintains adequate reserves, provided the same have no priority over any of Bank’s security interests; 
 (c) Liens not to exceed $250,000 in the aggregate (i) upon or in any Equipment (other than Equipment financed by an Term Advance) acquired or held by
Borrower or any of its Subsidiaries to secure the purchase price of such Equipment or indebtedness incurred solely for the purpose of financing the acquisition or lease of such Equipment, or (ii) existing on such Equipment at the time of its
acquisition, provided, in each case, that the Lien is confined solely to the property so acquired and improvements thereon, and the proceeds of such Equipment; 
 (d) Liens incurred in connection with the extension, renewal or refinancing of the indebtedness secured by Liens of the type described in clauses (a) through (c) of this definition, provided that any extension, renewal or
replacement Lien shall be limited to the property encumbered by the existing Lien and the principal amount of the indebtedness being extended, renewed or refinanced does not increase; 
 (e) Liens incurred in connection with Subordinated Debt; and 
 (f) Liens arising from judgments, decrees or
attachments in circumstances not constituting an Event of Default under Sections 8.5 (attachment) or 8.9 (judgments). 
  

 4 

 “Permitted Transfer” means the conveyance, sale, lease, license, transfer or disposition by Borrower or any
Subsidiary of: 
 (a) Inventory in the ordinary course of business; 
 (b) licenses and similar arrangements for the use of the property of Borrower or its Subsidiaries in the ordinary course of business; 
 (c) worn-out or obsolete Equipment not financed with the proceeds of Term Advances; or 
 (d) other assets of
Borrower or its Subsidiaries that do not in the aggregate exceed $100,000 during any fiscal year. 
 “Person” means any individual, sole
proprietorship, partnership, limited liability company, joint venture, trust, unincorporated organization, association, corporation, institution, public benefit corporation, firm, joint stock company, estate, entity or governmental agency.

 “Prime Rate” means the variable rate of interest, per annum, most recently announced by Bank, as its “prime rate,” whether or not such
announced rate is the lowest rate available from Bank. 
 “Responsible Officer” means each of the Chief Executive Officer, the Chief Operating
Officer, the Chief Financial Officer or the Controller of Borrower. 
 “Schedule” means the schedule of exceptions attached hereto and approved by
Bank, if any, as may updated from time to time. 
 “SOS Reports” means the official reports from the Secretaries of State of each Collateral State,
Chief Executive Office State and the Borrower State and other applicable federal, state or local government offices identifying all current security interests filed in the Collateral and Liens of record as of the date of such report. 
 “Subordinated Debt” means any debt incurred by Borrower that is subordinated in writing to the debt owing by Borrower to Bank on terms reasonably acceptable to
Bank (and identified as being such by Borrower and Bank). 
 “Subsidiary” means any corporation, partnership or limited liability company or joint
venture in which (i) any general partnership interest or (ii) more than 50% of the stock, limited liability company interest or joint venture of which by the terms thereof ordinary voting power to elect the Board of Directors, managers or
trustees of the entity, at the time as of which any determination is being made, is owned by Borrower, either directly or through another Subsidiary. 
 “Term Advance(s)” means a cash advance or cash advances under the Term Line. 
 “Term Line” means one or more Credit
Extension(s) of up to $1,000,000 in the aggregate 
 “Term Maturity Date” means December 15, 2009. 
  

 5 

			
	DEBTOR	  	AKESIS PHARMACEUTICALS, INC.
		
	SECURED PARTY:	  	SQUARE 1 BANK

 EXHIBIT B 
 COLLATERAL DESCRIPTION ATTACHMENT TO LOAN AND SECURITY AGREEMENT 
 All personal property of Borrower
(herein referred to as “Borrower” or “Debtor”) whether presently existing or hereafter created or acquired, and wherever located, including, but not limited to: 
 (a) all accounts (including health-care-insurance receivables), chattel paper (including tangible and electronic chattel paper), deposit accounts,
documents (including negotiable documents), equipment (including all accessions and additions thereto), financial assets, general intangibles (including patents, trademarks, copyrights, goodwill, payment intangibles and software), goods (including
fixtures), instruments (including promissory notes), inventory (including all goods held for sale or lease or to be furnished under a contract of service, and including returns and repossessions), investment property (including securities and
securities entitlements), letter of credit rights, money, and all of Debtor’s books and records with respect to any of the foregoing, and the computers and equipment containing said books and records; 
 (b) any and all cash proceeds and/or noncash proceeds of any of the foregoing, including, without limitation, insurance proceeds, and all
supporting obligations and the security therefor or for any right to payment. All terms above have the meanings given to them in the California Uniform Commercial Code, as amended or supplemented from time to time, including revised Division 9 of
the Uniform Commercial Code-Secured Transactions. 
 Notwithstanding the foregoing, the Collateral shall not include any
copyrights, patents, trademarks, servicemarks and applications therefor, now owned or hereafter acquired, or any claims for damages by way of any past, present and future infringement of any of the foregoing (collectively, the “Intellectual
Property”); provided, however, that the Collateral shall include all accounts and general intangibles that consist of rights to payment and proceeds from the sale, licensing or disposition of all or any part, or rights in, the foregoing (the
“Rights to Payment”). Notwithstanding the foregoing, if a judicial authority (including a U.S. Bankruptcy Court) holds that a security interest in the underlying Intellectual Property is necessary to have a security interest in the Rights
to Payment, then the Collateral shall automatically, and effective as of December 15, 2006, include the Intellectual Property to the extent necessary to permit perfection of Bank’s security interest in the Rights to Payment.Stock Repurchase Agreement, dated December 19, 2006

 Exhibit 10.1 
 STOCK REPURCHASE AGREEMENT 
 THIS STOCK REPURCHASE AGREEMENT (the
“Agreement”) is made as of the 19th day of December, 2006, by and among Alloy, Inc., a Delaware corporation (the “Company”), and Matthew L. Feshbach (“Feshbach”) and certain entities
controlled by Feshbach as listed on Schedule I hereto (each, a “Stockholder” and collectively, the “Stockholders”). 
 WHEREAS, the Stockholders currently own shares of common stock, $0.01 par value per share, of the Company (“Common Stock”); 
 WHEREAS, the Stockholders desire for the Company to repurchase such number of shares of Common Stock owned by the Stockholders as set forth on
Schedule I hereto (hereinafter, the “Shares”) upon the terms set forth herein; 
 WHEREAS, subject to the terms set
forth herein, the Company wishes to repurchase the Shares; and 
 WHEREAS, effective as of the date hereof, Feshbach has resigned as a
director of the Company. 
 NOW, THEREFORE, in consideration of the mutual covenants herein contained and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto covenant and agree as follows: 
 1.
Repurchase of the Shares and Restricted Shares. The Company hereby repurchases from each Stockholder, and each Stockholder hereby sells, transfers and conveys to the Company, the number of Shares set forth opposite such Stockholder’s name on
Schedule I hereto (with respect to each Stockholder, such “Stockholder’s Shares”) at a price per share equal to $10.50 for an aggregate purchase price of ten million dollars and fifty cents ($10,000,000.50) (the
“Purchase Price”). Further, pursuant to those certain restricted stock agreements executed by the Company and Feshbach, the Company hereby elects to repurchase from Feshbach, and Feshbach hereby sells, transfers and conveys to the Company,
6,248 shares of restricted stock granted by the Company to Feshbach in connection with his services as a board member of the Company which rights of repurchase by the Company with respect to such shares has not yet lapsed as of the date hereof (the
“Restricted Shares”) at an aggregate price per share equal to $0.01 (the “Restricted Share Purchase Price”). 
 2. Settlement. 
 (a) The repurchase and sale of the Stockholder’s Shares will take place on the date hereof and shall be
settled by use of the Deposit/Withdrawal at Custodian (“DWAC”) system on Tuesday, December 26, 2006 on which date (i) Stockholder will by 10 AM EST place for 

 
withdrawal the Stockholder’s Shares by the Company’s transfer agent American Stock Transfer & Trust Company (“AST”), DWAC
Account # 2941, and (ii) Company will deliver instructions to AST to withdraw the Stockholder’s Shares. Upon confirmation that the Stockholder’s Shares have been received by AST, Company pay shall pay the Purchase Price and the
Restricted Purchase Price by issuing a wire to the Stockholder in accordance with the instructions set forth on Exhibit A for the Purchase Price For purposes of this Agreement, the term “Business Day” means any day other than a
Saturday, Sunday or other day that is a statutory holiday under the federal laws of the United States or the laws of the State of New York. 
 (b) On the date hereof, the Company shall take action to repurchase the Restricted Shares, including without limitation, delivering instructions to Merrill Lynch, the Company’s stock plan administrator to cancel the Restricted Shares,
and the Company will pay to Feshbach the Restricted Share Purchase Price therefor by check to be mailed to Feshbach at the address set forth on Exhibit A. 
 3. Representations and Warranties of the Stockholders. The Stockholders, jointly and severally, represent and warrant to the Company as follows: 
 (a) Organization and Standing of the Stockholders. Each Stockholder (if not an individual) is duly organized, validly existing and in good standing under
the laws of its jurisdiction of incorporation or organization and has full corporate power and authority to conduct its business as presently conducted and to own such Stockholder’s Shares and, with respect to Feshbach, the Restricted Shares.

 (b) Ownership of Shares. Each Stockholder is the record and beneficial owner of such Stockholder’s Shares and, with respect to
Feshbach, the Restricted Shares, free and clear of any liens, encumbrances, security interests or restrictions on transfer and has good, marketable and unencumbered title to such Stockholder’s Shares and, with respect to Feshbach, the
Restricted Shares, and full legal right, power and authority to enter into this Agreement and to sell, transfer, convey, assign, and deliver such Stockholder’s Shares and, with respect to Feshbach, the Restricted Shares, pursuant to this
Agreement. 
 (c) Authority for Agreement. The execution and delivery of this Agreement by each Stockholder, and the consummation by each
Stockholder of the transactions contemplated hereby, have been duly authorized by all necessary corporate or similar action on the part of such Stockholder (if not an individual). This Agreement has been duly executed and delivered by each
Stockholder, and constitutes a valid and binding obligation of each Stockholder, enforceable against each Stockholder in accordance with its terms. 
 (d) Conflicts. Neither the execution and delivery of this Agreement, the consummation of the transactions contemplated hereby, or the compliance with the provisions hereof by each Stockholder, will conflict with or result in any breach of
any terms, conditions or provisions of, or constitute a default under, or require a consent or waiver under, the organizational documents of any Stockholder (if not an individual) or any agreement to which any Stockholder is a party or by which any
Stockholder or any of its properties or assets are subject or bound, or violate any judgment, order, statute, rule, regulation or other provision of law applicable to any Stockholder. 
  

 2 

 (e) Litigation. There is no action, proceeding or investigation pending or, to the knowledge of the
Stockholders, threatened against any Stockholder, or any basis therefor known to any Stockholder, which questions the validity or legality, or otherwise relates to, this Agreement or any of the transactions contemplated hereby. 
 (f) Consents. No consent, approval, order or authorization of, or registration, qualification, designation, declaration or filing with, any person,
entity or governmental authority is required on the part of any Stockholder in connection with the execution and delivery of this Agreement, or the repurchase of any Stockholder’s Shares and, with respect to Feshbach, the Restricted Shares, or
the other transactions as contemplated by this Agreement. 
 (g) Experience and Knowledge. Each Stockholder acknowledges and agrees that it
(i) has extensive knowledge and experience in financial and business matters, (ii) has had access to all information as to the Company as any Stockholder has desired, (iii) has made its own inquiry and investigation into, and, based
thereon, has formed an independent judgment concerning, the operations of the Company and its business and (iv) has received sufficient and satisfactory answers to all questions posed to the Company to evaluate the merits and risks of the
transactions contemplated by this Agreement. 
 (h) Disclosure. The Stockholder represents that it has no knowledge of a material fact about
the operations, affairs, condition or prospects of the business or the financial condition of the Company that has not been disclosed to the Company. 
 4. Representations and Warranties of the Company. The Company represents and warrants to each Stockholder as follows: 
 (a) Organization and Standing of the Company. The Company is duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation and has full corporate power and authority to
conduct its business as presently conducted. 
 (b) Authority for Agreement. The execution and delivery of this Agreement by the Company, and
the consummation by the Company of the transactions contemplated hereby, have been duly authorized by all necessary corporate action on the part of the Company. This Agreement has been duly executed and delivered by the Company, and constitutes a
valid and binding obligation of the Company, enforceable against the Company in accordance with its terms. 
 (c) Conflicts. Neither the
execution and delivery of this Agreement, the consummation of the transactions contemplated hereby, or the compliance with the provisions hereof by the Company, will conflict with or result in any breach of any terms, conditions or provisions of, or
constitute a default under, or require a consent or waiver under, the organizational documents of the Company or any agreement to which the Company is a party or by which Company or any of its properties or assets are subject or bound, or violate
any judgment, order, statute, rule, regulation or other provision of law applicable to the Company. 
 (d) Litigation. There is no action,
proceeding or investigation pending or, to the knowledge of the Company, threatened against the Company, or any basis therefor known to the 

  

 3 

 
Company, which questions the validity or legality, or otherwise relates to, this Agreement or any of the transactions contemplated hereby. 
 (e) Consents. No consent, approval, order or authorization of, or registration, qualification, designation, declaration or filing with, any person,
entity or governmental authority is required on the part of the Company in connection with the execution and delivery of this Agreement or the consummation of the transactions as contemplated by this Agreement, other than applicable securities law
filings. 
 (f) Disclosure. The Company represents that it has no knowledge of a material fact about the operations, affairs, condition or
prospects of the business or the financial condition of the Company that would be required to be disclosed to the public, but has not been so disclosed . 
 5. Survival of Representations, Warranties and Covenants. All representations, warranties and covenants contained herein shall survive the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby. 
 6. Release. Each of the Stockholders does hereby remise, release and forever discharge the Company, its
subsidiaries and affiliates, each of their respective successors and assigns and each of the present and former stockholders, directors, officers, employees, agents, affiliates and representatives of each of the foregoing (each a “Company
Released Party”) of and from any and all actions, causes of action, suits, debts, covenants, contracts, controversies, agreements, promises, damages, judgments, executions, claims and demands of every type and nature whatsoever
(collectively, “Claims”) that such Stockholder or its successors, assigns, heirs, executors or administrators ever had, now has or, to the extent arising from or in connection with any act, omission or state of facts taken or
existing on or prior to the date hereof, may have after the date hereof, against any Company Released Party, whether asserted, unasserted, absolute, contingent, known or unknown, at law or in equity, other than (i) Claims pursuant to or arising
from this Agreement or, (ii) with respect to Feshbach, any Claim relating to the Company’s obligation to indemnify Feshbach in his capacity as a director of the Company pursuant to the terms of the Company’s certificate of
incorporation or by-laws or to the fullest extent provided by the laws of the State of Delaware. 
 7. Public Announcements. Attached hereto
as Exhibit B is a press release (the “Press Release”) relating to this Agreement that will be issued by the Company following the execution of this Agreement. Except for the issuance of the Press Release and subject to the
Company’s legal and regulatory obligations under the Exchange Act and otherwise, no party hereto shall make any other public announcement, regulatory filing or other public statement relating to this Agreement or the transactions contemplated
hereby that is inconsistent in any manner with, or provides any additional information not set forth in, the Press Release without the prior written consent of the other parties hereto. 
 8. Indemnification. 
 (a) Each Stockholder,
jointly and severally with the other Stockholders, shall indemnify and hold harmless the Company, its subsidiaries and affiliates, each of their respective 

  

 4 

 
successors and assigns and each of the directors, officers, employees, agents and representatives of each of the foregoing, from and against any and all
losses, claims, damages, liabilities, payments, obligations and expenses (including reasonable attorneys’ and accountants’ fees) sustained, suffered or incurred by any such person or entity arising out of or resulting from the breach of
any representation, warranty or covenant of any Stockholder contained in this Agreement. In no event shall the aggregate amount of indemnification be greater than $10,000,000. 
 (b) The Company shall indemnify and hold harmless each Stockholder and its successors, assigns, heirs, executors, administrators and legal
representatives, from and against any and all losses, claims, damages, liabilities, payments, obligations and expenses (including reasonable attorneys’ and accountants’ fees) sustained, suffered or incurred by any such person or entity
arising out of or resulting from the breach of any representation, warranty or covenant of the Company contained in this Agreement or in any certificate delivered by the Company pursuant to this Agreement. 
 9. Miscellaneous. 
 (a) Entire Agreement.
This Agreement constitutes the entire agreement of the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and undertakings, both written and oral. WITHOUT LIMITING THE GENERALITY OF THIS SECTION 9(a) AND
NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY, NO PARTY IS MAKING ANY REPRESENTATION OR WARRANTY WHATSOEVER, ORAL OR WRITTEN, EXPRESS OR IMPLIED, IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OTHER THAN THOSE SET
FORTH IN SECTIONS 3 AND 4 OF THIS AGREEMENT AND NO PARTY IS RELYING ON ANY STATEMENT, REPRESENTATION OR WARRANTY, ORAL OR WRITTEN, EXPRESS OR IMPLIED, MADE BY ANY OTHER PARTY EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES SET FORTH IN SECTIONS 3 AND
4 OF THIS AGREEMENT. 
 (b) Severability. In the event that any court having jurisdiction shall determine that any provision contained in
this Agreement shall be unreasonable or unenforceable in any respect, then such covenant or other provision shall be deemed limited to the extent that such court deems it reasonable and enforceable, and as so limited shall remain in full force and
effect. In the event that such court shall deem any such covenant or other provision wholly unenforceable, the remaining covenants and other provisions of this Agreement shall nevertheless remain in full force and effect. 
 (c) Assignment. This Agreement shall be binding upon the successors, permitted assigns, heirs, executors, administrators and legal representatives of
each Stockholder and upon the successors and assigns of the Company. No Stockholder may assign its rights or delegate its obligations under this Agreement without the prior written consent of the Company. 
 (d) Amendment; Waiver. This Agreement may not be amended, modified or waived except by an instrument in writing signed by the Company and the
Stockholders. 
  

 5 

 (e) Governing Law; Exclusive Jurisdiction. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York, without giving effect to the conflict of law principles thereof. The parties (i) hereby irrevocably and unconditionally submit to the jurisdiction of the United States District Court for the
Southern District of New York and the state courts of New York sitting therein for the purpose of any suit, action or other proceeding arising out of or based upon this Agreement, (ii) agree not to commence any suit, action or other proceeding
arising out of or based upon this Agreement except in the United States District Court for the Southern District of New York and the state courts of New York sitting therein, and (iii) hereby waive, and agree not to assert, by way of motion, as
a defense, or otherwise, in any such suit, action or proceeding, any claim that it is not subject personally to the jurisdiction of the above-named courts, that its property is exempt or immune from attachment or execution, that the suit, action or
proceeding is brought in an inconvenient forum, that the venue of the suit, action or proceeding is improper or that this Agreement or the subject matter hereof may not be enforced in or by such court. Each of the parties to this Agreement consents
to personal jurisdiction for any equitable action sought in the U.S. District Court for the Southern District of New York or any court of the State of New York sitting therein having subject matter jurisdiction. 
 (f) Expenses. The Company and each Stockholder shall each pay its, his or her own fees and expenses (including legal fees) in connection with this
Agreement and the transactions contemplated hereby. All transfer or similar taxes required to be paid in respect of the transfer by a Stockholder of such Stockholder’s Shares shall be paid by such Stockholder. 
 (g) Counterparts. This Agreement may be executed in one or more counterparts, and by the different parties hereto in separate counterparts, each of which
when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement. 
 (h) Notices.

 (i) All notices, waivers and other communications under this Agreement shall be in writing and shall be delivered by hand
or facsimile or mailed by overnight courier or by registered or certified mail, postage prepaid: 
 (A) if to the Stockholder,
at the address or facsimile number of the Stockholder set forth on Schedule I hereto; and 
 (B) if to the Company, to:

 Alloy, Inc. 
 151 West 26th Street 
 11th Floor 
 New York, NY 10001 
 Attention: Matthew C. Diamond 
                   Gina R. DiGioia, Esq. 
  

 6 

 Facsimile: (212) 244-4311 
 with a copy to: 
 Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. 
 One Financial Center 
 Boston, MA 02111 
 Attention: Dean G. Zioze, Esq. 
 Facsimile: 617-542-2241 
 (ii) Any notice so addressed shall be deemed to be given: if delivered by hand or facsimile, on the date of such delivery if delivered
prior to 5:00 p.m. on a Business Day or, if delivered after 5:00 p.m. or on a day other than a Business Day, on the next Business Day; if mailed by courier, on the first Business Day following the date of such mailing; and if mailed by registered or
certified mail, on the third Business Day after the date of such mailing. 
 (i) Further Assurances. Each Stockholder shall, from time to
time after the Closing at the request of the Company, without further consideration, execute and deliver further instruments of transfer and assignment and other documents and take such other action as the Company may reasonably request to more
effectively transfer and assign to, and vest in, the Company the Shares or the Restricted Shares and all rights thereto, and to otherwise fully implement the provisions of this Agreement. 
 (j) Specific Performance. The rights and remedies of the parties hereto shall be cumulative. The transactions contemplated by this Agreement are unique
transactions and any failure on the part of any party to complete the transactions contemplated by this Agreement on the terms of this Agreement will not be fully compensable in damages and the breach or threatened breach of the provisions of this
Agreement would cause the other parties hereto irreparable harm. Accordingly, in addition to and not in limitation of any other remedies available to the parties hereto for a breach or threatened breach of this Agreement, the parties shall be
entitled to seek specific performance of this Agreement and seek an injunction restraining any such party from such breach or threatened breach. 
 (k) Waiver of Jury Trial. EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY THAT MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE IT HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT TO ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUR OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. 
 [Remainder of Page Intentionally Left Blank] 
  

 7 

 IN WITNESS WHEREOF, the Company and the Stockholders have executed this Stock Repurchase Agreement
as of the date first written above. 
  

			
	THE COMPANY:
	
	ALLOY, INC.
		
	By:	 	/s/ Matthew C. Diamond
	Name:	 	Matthew C. Diamond
	Title:	 	Chief Executive Officer
	
	MATTHEW L. FESHBACH
	
	/s/ Matthew L. Feshbach
	Individually
	
	THE STOCKHOLDER:
	
	MLF OFFSHORE PORTFOLIO COMPANY, L.P.
		
	By:	 	/s/ Matthew L. Feshbach
	Name:	 	Matthew L. Feshbach
	Title:	 	Director of MLF Cayman GP, LTD, General
Partner of MLF Offshore Portfolio Company, LP.

  

 8 

 SCHEDULE I 
  

			
	 MLF Offshore Portfolio Company, L.P.
 Address: c/o MLF
Investments LLC
 455 N. Indian Rocks Rd., Suite B
 Belleair
Bluffs, FL 33770
	 	 952,381 Shares of Common Stock
  
 Payment: $10,000,000.50

  

 9 

 EXHIBIT A 
 Wire Instructions are: 
 Deutsche Bank Trust Company 
 ABA: 021-001-033 
 Acct: Deutsche Bank Prime Brokerage 
 Acct: 00884205 
 FFC: MLF Offshore Portfolio Company, LP

 FFC: 106-07310 
 Feshbach Address: 
 Matthew L. Feshbach 
 c/o MLF Investments LLC 
 455 N. Indian Rocks Rd., Suite B 
 Belleair Bluffs, FL 33770 
  

 10 

 EXHIBIT B 
  

					
		 		 	Press Contacts:
			
		 		 	 Gary Yusko
 Chief
Financial Officer
 gyusko@alloy.com
 212 329 8431

 FOR IMMEDIATE RELEASE 
 ALLOY HAS REPURCHASED 952,381 SHARES OF ITS COMMON STOCK 
 FOR $10 MILLION FROM 
 MLF OFFSHORE PORTFOLIO COMPANY, L.P., 
 ALLOY’S LARGEST SHAREHOLDER; 
 MATTHEW FESHBACH HAS RESIGNED FROM ALLOY’S BOARD OF 
 DIRECTORS 
 New York, NY — December 19, 2006
— Alloy, Inc. (Nasdaq: ALOY), a non-traditional media and marketing services company primarily targeting the 10 to 24 year old demographic group, announced today that it has repurchased 952,381 shares of Alloy’s common stock from MLF
Offshore Portfolio Company, L.P., Alloy’s largest shareholder and controlled by Matthew L. Feshbach, a member of the Alloy Board of Directors, at $10.50 per share for an aggregate purchase price of $10 million. The audit committee of
Alloy’s board of directors, comprised solely of independent directors, approved the terms of the purchase agreement executed by the Company and MLF Offshore. Upon the closing of the repurchase transaction, Mr. Feshbach, either directly or
through MLF Offshore, now beneficially owns 966,788 shares of Alloy’s common stock, representing approximately 7.1% of Alloy’s issued and outstanding shares (excluding treasury shares). 
 In connection with the purchase agreement, Mr. Feshbach has resigned as a member of Alloy’s board of directors effective as of today. Alloy does not intend to
seek a replacement for Mr. Feshbach on its board of directors. Upon Mr. Feshbach’s resignation, Alloy’s board of directors is now comprised of eight persons, five of whom qualify as independent under applicable NASDAQ rules.

 Matt Diamond, Alloy’s Chairman and Chief Executive Officer stated, “Matt has been very helpful over the past several years, particularly in
assisting the Company with its spinoff of dELiA*s, Inc.” Mr. Diamond added, “His desire to reallocate his fund’s capital to a new investment has also presented the Company with an opportunity to use a portion of its substantial
cash and free cash flow to repurchase approximately 6.6% of its common stock very efficiently.” 

 About Alloy 
 Alloy, Inc., under the banner of Alloy Media + Marketing (AM+M), is a widely recognized pioneer in nontraditional marketing. Working with AM+M, marketers reach consumers through a host of programs incorporating Alloy’s diverse array of
media and marketing assets and expertise in direct mail, college and high school media, interactive, display media, college guides, promotional and social network marketing. For further information regarding Alloy, please visit our corporate website
at (www.alloymarketing.com). 
 Forward-Looking Statements 
 This announcement may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including statements regarding
our expectations and beliefs regarding our future results and performance. Because these statements apply to future events, they are subject to risks and uncertainties. When used in this announcement, the words “anticipate”,
“believe”, “estimate”, “expect”, “expectation”, “project” and “intend” and similar expressions are intended to identify such forward-looking statements. Our actual results could differ
materially from those projected in the forward-looking statements. Additionally, you should not consider past results to be an indication of our future performance. Factors that might cause or contribute to such differences include, among others,
our ability to: increase revenues; generate high margin sponsorship and multiple revenue streams; increase visitors to our Web sites (www.alloy.com, www.delias.com, and www.ccs.com) and build customer loyalty; develop our sales and marketing teams
and capitalize on these efforts; develop commercial relationships with advertisers and the continued resilience in advertising spending to reach the teen market; manage the risks and challenges associated with integrating newly acquired businesses;
and identify and take advantage of strategic, synergistic acquisitions and other revenue opportunities. Other relevant factors include, without limitation: our competition; seasonal sales fluctuations; the uncertain economic and political climate in
the United States and throughout the rest of the world, and the potential that such climate may deteriorate further; and general economic conditions. For a discussion of certain of the foregoing factors and other risk factors see the “Risk
Factors That May Affect Future Results” section included in our annual report on Form 10-K for the year ended January 31, 2006, and in subsequent filings that we make with the Securities and Exchange Commission. We do not intend to update
any of the forward-looking statements after the date of this announcement to conform these statements to actual results, to changes in management’s expectations or otherwise, except as may be required by law.

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