Document:

Exhibit 10.1

 

	
   

  	
  EXECUTION

  
	
   

  	
  VERSION

  

 

AMENDED AND RESTATED

LOAN AND SECURITY AGREEMENT

 

THIS AMENDED
AND RESTATED LOAN AND SECURITY AGREEMENT (the “Agreement”) dated as of September 2,
2008 by and among GE Business Financial Services Inc. (“GEBFS”); SILICON
VALLEY BANK (“SVB”) (GEBFS and SVB each individually a “Lender”,
and collectively the “Lenders”), GE Business Financial Services Inc. in
its capacity as agent for the Lenders (in such capacity, the “Agent”),
GEBFS and SVB in their capacities as joint lead arrangers (in such capacity,
the “Arrangers”), and PONIARD PHARMACEUTICALS, INC., a Washington
corporation (“Borrower”) provides the terms on which Lenders shall lend
to Borrower and Borrower shall repay Lenders. 
The parties agree as follows:

 

WHEREAS, GEBFS,
formerly known as Merrill Lynch Capital, a division of Merrill Lynch Business
Financial Services Inc. (“GEBFS/Merrill”), in its capacity as agent for
the Original Lenders (defined below) (the “Original Agent”), as a joint
lead arranger and as a lender, and Silicon Valley Bank, as a joint lead
arranger and as a lender (the “Original Lenders”), and Borrower entered
into that certain Loan and Security Agreement (as amended, restated,
supplemented or otherwise modified from time to time, the “Original Loan
Agreement”), dated as of October 25, 2006 (the “Original Closing
Date”), pursuant to which Original Lenders agreed to make certain loans and
other credit available to the Borrower; and

 

WHEREAS, the
Original Lenders made advances to Borrower in the aggregate original principal
amount of $15,000,000 pursuant to the Original Loan Agreement (the “Original
Term Loan Advances”); and

 

WHEREAS,
Borrower desires that Lenders make additional Term Loan Advances pursuant to
the terms and conditions of this Agreement; and

 

WHEREAS,
Borrower and Lenders desire (a) to continue the Original Loan Agreement
but to make certain additional amendments and modifications thereto, and (b) that
this Agreement amend and restate in its entirety the Original Loan Agreement
and re-evidence the obligations of Borrower outstanding thereunder as
Obligations of Borrower under this Agreement all as reflected in this
Agreement, which upon execution will supersede and replace the Term Loan
Advance under the Original Loan Agreement effective as of the Closing Date;

 

NOW THEREFORE,
as an additional inducement for Lenders to establish the loan arrangement and
to direct such loans as may be made hereunder to Borrower as described above,
Borrower desires to amend and restate the Original Loan Agreement and covenants
and agrees as follows:

 

1.                                      ACCOUNTING AND
OTHER TERMS

 

Accounting
terms not defined in this Agreement shall be construed following GAAP.
Calculations and determinations must be made following GAAP.  The term “financial statements” includes the
notes and schedules.  The terms “including”
and “includes” always mean “including (or includes) without limitation,” in
this Agreement or any other Loan Document. Capitalized terms in this Agreement
shall have the meanings as set forth in Section 13.

 

 

All other terms contained in this Agreement, unless otherwise
indicated, shall have the meanings provided by the Code, to the extent such
terms are defined therein.

 

2.                                      LOANS AND
TERMS OF PAYMENT

 

2.1                               Promise
to Pay.

 

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

 

2.1.1.                                Term
Loan Facility.

 

(a)                                  Availability.  Subject to the terms and conditions of this
Agreement, the Lenders, severally and not jointly, (i) have advanced, on October 31,
2006, the Original Term Loan Advance and agree to convert on the Closing Date
all of the remaining principal balance of the Original Term Loan Advance into
Term Loan Advances hereunder in accordance with Section 2.6 hereof, (ii) agree
to make an additional advance on the Closing Date to Borrower and (iii) an
additional advance on or before the Subsequent Funding Termination Date (the
advances described in (i), (ii) and (iii), each a “Term Loan Advance”
and, collectively, the “Term Loan Advances”), in each case in an
aggregate amount not exceeding the Term Loan Commitment according to each
Lender’s pro rata share of the Term Loan Commitment (based upon the respective
Commitment Percentage of each Lender). 
The Term Loan Advance made on the Closing Date described in clauses (i) and
(ii) above (the “Closing Date Term Loan Advance”) shall be in the
aggregate principal amount of $17,600,000. 
In addition, subject to the terms and conditions of this Agreement,
Lenders agree, severally and not jointly, to lend to Borrower, not later than
Subsequent Funding Termination Date, one additional Term Loan Advance in an
aggregate principal amount of $10,000,000 according to each Lender’s pro rata
share of the Term Loan Commitment (based upon the respective Commitment
Percentage of each Lender) (the “Post Closing Term Loan Advance”).  When repaid, the Term Loan Advance may not be
re-borrowed.

 

(b)                                 Borrowing
Procedure; Funding of Post Closing Date Term Loan Advance.

 

(i)                                     To obtain the Post
Closing Term Loan Advance hereunder, Borrower will notify Agent (which notice
shall be irrevocable) by facsimile (or by telephone, provided that such telephonic
notice shall be promptly confirmed in writing, but in any event on or before
the following Business Day) by 3:00 p.m. (New York time) on the date that
is 3 Business Days prior to the day the Post Closing Term Loan Advance is to be
made (or such shorter period of time as Agent may agree). Agent and Lenders may
act without liability upon the basis of such written or telephonic notice
believed by Agent to be from any authorized officer of Borrower.  Agent and Lenders shall have no duty to
verify the authenticity of the signature appearing on any such written notice.

 

(ii)                                  Promptly after
receiving a request for the Post Closing Term Loan Advance, Agent shall notify
each Lender of the contents of such request and such Lender’s Commitment
Percentage of the requested Post Closing Term Loan Advance.  Upon the terms and subject to the conditions
set forth herein, each Lender, severally and not jointly, shall make

 

2

 

available to Agent its Commitment Percentage of the
requested Post Closing Term Loan Advance, in lawful money of the United States of
America in immediately available funds, to the Collection Account prior to
11:00 a.m. (New York time) on the specified date.  Agent shall, unless it shall have determined
that one of the conditions set forth in Section 3.1 or 3.2, as applicable,
has not been satisfied, by 4:00 p.m. (New York time) on such day, credit
the amounts received by it in like funds to Borrower by wire transfer to, unless otherwise
specified in a Disbursement Letter, the following deposit account of Borrower
(or such other deposit account as specified in writing by an authorized officer
of Borrower and acceptable to Agent):

 

	
  Bank:

  	
  Silicon Valley Bank

  
	
   

  	
  Santa Clara, CA USA

  
	
  FBO:

  	
  Poniard

  
	
  ABA Number:
  121140399

  
	
  Account
  Number: 

  

 

(iii)                               Unless Agent shall have received notice from a
Lender prior to the date of the Post Closing Term Loan Advance that such Lender
will not make available to Agent such Lender’s Commitment Percentage of the
Post Closing Term Loan Advance, Agent may assume that such Lender has made such
amount available to it on the date of the Post Closing Term Loan Advance in accordance with
clause (ii) above, and may (but shall not be obligated to), in reliance
upon such assumption, make available a corresponding amount for the account of
Borrower on such date.  If and to the
extent that such Lender shall not have so made such amount available to Agent,
such Lender and Borrower severally agree to repay to Agent forthwith on demand
such corresponding amount together with interest thereon, for each day from the
day such amount is made available to Borrower until the day such amount is
repaid to Agent, at (i) in the case of Borrower, a rate per annum equal to
the interest rate applicable thereto pursuant to Section 2.3(b), and (ii) in
the case of such Lender, a floating rate per annum equal to, for each day from
the day such amount is made available to Borrower until such amount is
reimbursed to Agent, the weighted average of the rates on overnight federal
funds transactions among members of the Federal Reserve System, as determined
by Agent in its sole discretion.  If such
Lender shall repay such corresponding amount to Agent, the amount so repaid shall
constitute such Lender’s loan included in the Post Closing Term Loan
Advance for
purposes of this Agreement.

 

2.1.2                                               Notes.  Upon request of any Lender, the Term Loan Advances of such Lender shall
be evidenced by a promissory note substantially in the form of Exhibit C
hereto (each a “Note” and, collectively, the “Notes”) executed
and delivered by Borrower.  Each Note
shall represent the obligation of Borrower to pay to such Lender the lesser of (a) the
aggregate unpaid principal amount of the Term Loan Advances made by such Lender
to or on behalf of Borrower under this Agreement or (b) the amount of such
Lender’s Commitment, in each case together with interest thereon as prescribed
in Section 2.3(b).

 

2.2                               Termination
of Commitment to Lend.

 

Without
limiting Lenders’ other rights hereunder, each Lender’s obligation to lend the
undisbursed portion of the Obligations shall terminate if, in Lenders’ good
faith business judgment, there has been a material adverse change since July 31,
2008 in the business, results of operation, condition (financial or otherwise)
or the prospect of repayment of the Obligations, or 

 

3

 

there has been any material adverse deviation by Borrower from the most
recent business plan of Borrower presented to and accepted by Agent prior to
the execution of this Agreement.

 

2.3                               Repayment
of Credit Extensions.

 

(a)                                  Principal and
Interest Payments On Payment Dates.

 

(i)                                     With respect to
the (A) Closing Date Term Loan Advance, commencing on October 1, 2008
and continuing thereafter on the Payment Date of each calendar month
thereafter, Borrower shall make forty one (41) equal monthly payments of
principal in the amount of $419,048 and one (1) final payment of principal
in the amount of $419,032 on the Applicable Term Loan Maturity Date and (B) Post
Closing Date Term Loan Advance, commencing on the first day of the first
calendar month following the date of the Post Closing Date Term Loan Advance
and continuing thereafter on the Payment Date of each calendar month
thereafter, Borrower shall make forty one (41) equal monthly payments of
principal in the amount of $238,095 and one (1) final payment of principal
in the amount of $238,105 on the Applicable Term Loan Maturity Date
(individually, each is a “Scheduled Payment”, and collectively, the “Scheduled
Payments”).  A Term Loan Advance may
only be prepaid in accordance with Sections 2.3(c) and 2.3(d).

 

(ii)                                  Payments received
after 3:00 p.m. (New York time) are considered received at the opening of
business on the next Business Day.

 

(iii)                               Notwithstanding the foregoing, all unpaid principal and accrued
interest with respect to a Term Loan Advance is due and payable in full to
Agent, for the ratable benefit of Lenders, on the earlier of (A) the first
day of the forty second (42nd) month following the date such Term
Loan Advance was made or (B) the date that such Term Loan Advance
otherwise becomes due and payable hereunder, whether by acceleration of the
Obligations pursuant to Section 9.1 or otherwise (the earlier of (A) or
(B), the “Applicable Term Loan Maturity Date”). Without limiting the
foregoing, all Obligations shall be due and payable on the Applicable Term Loan
Maturity Date for the last Term Loan Advance made.

 

(b)                                 Interest Rate.

 

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

 

(ii)                                  Any amounts
outstanding during the continuance of an Event of Default shall bear interest
at a per annum rate equal to 5.0% above the highest interest rate otherwise
applicable thereto (the “Default Rate”).

 

(iii)                               In no event shall the
interest charged hereunder, with respect to the notes (if any) or any other
obligations of Borrower under any other Loan Document exceed the maximum amount
permitted under the laws of the State of New York or of any other applicable
jurisdiction.  Notwithstanding anything
to the contrary herein or elsewhere, if at any time the rate

 

4

 

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

 

(c)                                  Mandatory
Prepayment Upon an Acceleration.  If
the Term Loan is accelerated following the occurrence of an Event of Default or
otherwise, Borrower shall immediately pay to Lenders an amount equal to the sum
of:  (i) all payments of principal
plus accrued interest due and owing on such date and not yet paid, plus (ii) all
remaining payments of principal and all interest due to be paid on such
principal payments in the future, plus (iii) the Final Payment, plus (iv) all
other sums, if any, that shall have become due and payable, including interest
at the Default Rate with respect to any past due amounts.

 

(d)                                 Permitted
Prepayment of Loans.   Borrower shall
have the option to prepay all, but not less than all, of the Term Loan advanced
by Lenders under this Agreement, provided Borrower (i) provides written
notice to Agent of its election to prepay the Term Loan at least 30 days prior
to such prepayment, and (ii) pays, on the date of such prepayment (A) all
payments of principal plus accrued interest due and owing on such date and not
yet paid, plus (B) all remaining payments of principal and all interest
due to be paid on such principal payments in the future, plus (C) the
Final Payment, plus (D) all other sums, if any, that shall have become due
and payable, including interest at the Default Rate with respect to any past
due amounts.

 

(e)                                  Debit of Accounts.   All principal and interest payments or other
amounts Borrower owes Lenders under this Agreement and the other Loan Documents
due to Agent and Lenders shall be effected by automatic debit of the
appropriate funds from Borrower’s operating account specified on the EPS Setup
Form. Agent will promptly notify Borrower when it debits Borrower’s
accounts.  These debits shall not
constitute a set-off.

 

(f)                                    Payments.  All payments to be made by Borrower hereunder
or under any other Loan Document, including payments of principal and interest
made hereunder and pursuant to any other Loan Document, and all fees, expenses,
indemnities and reimbursements, shall be

 

5

 

made without set-off, recoupment or counterclaim, in lawful money of
the United States and in immediately available funds.  All payments required under this Agreement
are to be made to Agent to the Collection Account (defined below) for the
account of Lenders.  As used herein, the
term “Collection Account” means the following account of Agent (or such
other account as Agent shall identify to Borrower in writing):

 

	
  Bank Name:

  	
  Deutsche Bank

  
	
  ABA Number:

  	
  021001033

  
	
  Account
  Number:

  	
   

  
	
  Ref:

  	
  Poniard
  Pharmaceuticals,

  
	
   

  	
  Inc./ CFN#
  HFS2787

  

 

(g)                                 Withholdings and Increased Costs.  All
payments shall be made free and clear of any taxes, withholdings, duties,
impositions or other charges (other than taxes on the overall net income of any
Lender and comparable taxes), such that Agent and Lenders will receive the
entire amount of any Obligations, regardless of source of payment.  If Agent or any Lender shall have
determined that the introduction of or any change in, after the date hereof,
any law, treaty, governmental (or quasi-governmental) rule, regulation,
guideline or order reduces the rate of return on Agent or such Lender’s capital
as a consequence of its obligations hereunder or increases the cost to Agent or
such Lender of agreeing to make or making, funding or maintaining any Term Loan
Advance, then Borrower shall from time to time upon demand by Agent or such
Lender (with a copy of such demand to Agent) promptly pay to Agent for its own
account or for the account of such Lender, as the case may be, additional
amounts sufficient to compensate Agent or such Lender for such reduction or for
such increased cost.  A certificate as to
the amount of such reduction or such increased cost submitted by Agent or such
Lender (with a copy to Agent) to Borrower shall be conclusive and binding on
Borrower, absent manifest error, provided that, neither Agent nor any Lender
shall be entitled to payment of any amounts under this Section 2.3(g) unless
it has delivered such certificate to Borrower within 180 days after the
occurrence of the changes or events giving rise to the increased costs to, or
reduction in the amounts received by, Agent or such Lender.  Each Lender agrees that it shall allocate any
increased costs among its customers similarly affected in good faith and in a
manner consistent with such Lender’s customary practice.  This provision shall survive the termination
of this Agreement.

 

2.4                               Fees.

 

Borrower will
pay to Agent:

 

(a)                                  Agency Fee.  On the Closing Date, a non-refundable agency
fee in an amount equal to $200,000 for the account of Agent, which fee shall be
fully earned when paid;

 

(b)                                 Unused Line Fee.  On the Subsequent Funding Termination Date, a
non-refundable unused line fee in an amount equal to 2.0% of the undrawn amount, if any, of the Term
Loan Commitment for the benefit of Lenders in accordance with their Commitment
Percentage (the “Unused Line Fee”), which Unused Line Fee shall be fully
earned by and for the ratable account of the Lenders as of the Subsequent Funding
Termination Date;

 

6

 

(c)                                  Original Loan
Agreement Amendment Letter.  The
amounts payable under the Original Loan Agreement Amendment Letter to the
Lenders when due and payable in accordance with the terms thereof (the “Original
Loan Agreement Fees”);

 

(d)                                 Final Payment.  Upon the earlier of the Applicable Term Loan Maturity Date, the
repayment in full of all outstanding principal amounts with respect to any Term
Loan Advance or the date that the Term
Loan otherwise becomes due and payable hereunder, whether by acceleration of
the Obligations pursuant to Section 9.1 or otherwise, Borrower shall pay
to Agent, for the ratable accounts of Lenders in accordance with their
Commitment Percentage, the Final Payment;
and

 

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

 

2.5                               Authorization and Issuance of the Warrants.

 

Borrower has duly authorized (a) the issuance to SVB (or its
affiliate or designee) of a Warrant to Purchase Common Stock evidencing SVB’s
(or such affiliate’s or designee’s) right to acquire Common Stock of Borrower, (b) the
issuance to GEBFS (or its affiliate or designee) of a Warrant to Purchase
Common Stock evidencing GEBFS’s (or such affiliate’s or designee’s) right to
acquire Common Stock of Borrower, and (c) the reissuance to GEBFS (or its
affiliate or designee) of the Warrant to Purchase Common Stock dated as of the
Original Closing Date that was originally issued to GEBFS/Merrill, evidencing
GEBFS’s (or its affiliate’s or designee’s) right to acquire Common Stock of
Borrower (collectively, the “Warrants to Purchase Stock”).  The exercise period of the Warrants in clause
(a) and (b) above shall expire ten (10) years from the date each
such Warrant referenced above is originally issued.  The exercise period of the Warrant in clause (c) above
shall expire October 25, 2011.

 

2.6                               Amendment and Restatement; No Novation; Continuance of Security
Interests.

 

This Agreement constitutes an amendment and restatement of the Original
Loan Agreement (other than the Original Loan Agreement Amendment Letter)
effective from and after the Closing Date. 
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby are not intended by the parties to be, and
shall not constitute, a novation or an accord and satisfaction of the
Obligations under the Original Loan Agreement or the loan documents executed in
connection therewith.  On the Closing
Date, the credit facilities and the terms and conditions thereof described in
the Original Loan Agreement (other than the Original Loan Agreement Amendment
Letter) shall be amended and converted into the credit facilities and the terms
and conditions thereof described in this Agreement, and all Term Loan Advances,
other Credit Extensions and other Obligations of Borrower outstanding as of
such date under the Original Loan Agreement (other than the obligations
evidenced by the Original Loan Agreement Amendment Letter) shall be deemed to
be Term Loan Advances, other Credit Extensions and other Obligations of
Borrower outstanding under the corresponding facilities described herein (such
that all Original Term Loan  Advances
outstanding on the Closing Date shall become Term Loan Advances under this
Agreement), without further action by any Person.

 

7

 

All Liens and
security interests previously granted to Original Agent in its capacity as
agent for Original Lenders, pursuant to the Original Loan Agreement are
acknowledged and reconfirmed and remain in full force and effect, secure the
Obligations hereunder and are not intended to be released, replaced or
impaired.  Notwithstanding the foregoing,
this Agreement amends, restates and replaces the Original Loan Agreement in its
entirety other than the Original Loan Agreement Amendment Letter.  The parties hereto expressly agree and
acknowledge that the terms and conditions of the Original Loan Agreement
Amendment Letter survive the execution, delivery and effectiveness of this
Agreement.

 

3.                                      CONDITIONS OF
LOANS

 

3.1                               Conditions
Precedent to Initial Credit Extension.

 

The Lenders’
agreement to make its pro rata portion of the Closing Date Term Loan Advance is
subject to the condition precedent that Agent shall have received, in form and
substance satisfactory to the Lenders, such documents and completion of such
other matters, as the Lenders may reasonably deem necessary or appropriate,
including, without limitation, subject to the condition precedent that Agent
shall have received in form and substance satisfactory to the Lenders the
following:

 

(a)                                  this Agreement;

 

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

 

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

 

(d)                                 Perfection Certificate
by Borrower;

 

(e)                                  Note in favor of
GEBFS;

 

(f)                                    Guaranty Agreement;

 

(g)                                 Intercreditor
Agreement between the Lenders;

 

(h)                                 Warrants to Purchase
Stock;

 

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

 

(j)                                     Control Agreements
(SVB and other financial institutions);

 

(k)                                  Disbursement Letter;

 

(l)                                     Original Loan
Agreement Amendment Letter;

 

(m)                               EPS Setup Form;

 

8

 

(n)                                 Certificates
evidencing Borrower’s equity ownership of NeoRx together with an assignment
executed in blank;

 

(o)                                 Evidence of insurance;

 

(p)                                 UCC financing
statement, tax lien and judgments searches in such jurisdictions required by
the Lenders;

 

(q)                                 payment of the fees
and Agent Expenses and Lenders’ Expenses then due specified in Section 2.4
hereof;

 

(r)                                    Certificate of Good
Standing/Legal Existence from the jurisdiction of incorporation for Borrower
and Guarantor;

 

(s)                                  Certificate of
Foreign Qualification from the State of California and in each other jurisdiction where Borrower’s failure to be so qualified
could reasonably be expected to have a material adverse effect on any of (i) the
operations, business, assets, properties, or condition (financial or otherwise)
of Borrower, (ii) the ability of Borrower to perform any of its
obligations under this Agreement or under any other Loan Document, (iii) the
legality, validity or enforceability of this Agreement or any other Loan
Document, (iv) the rights and remedies of Agent or Lenders under this
Agreement or under any other Loan Document or (v) the validity, perfection
or priority of any lien in favor of Agent, on behalf of itself and Lenders, on
any of the Collateral, in each case as of a recent date acceptable to the
Lenders;

 

(t)                                    A legal opinion
issued to Agent and Lenders by counsel to Borrower and Guarantor dated as of
the Closing Date, in form and substance satisfactory to the Lenders; and

 

(u)                                 Such other documents,
and completion of such other matters, as the Lenders may reasonably deem
necessary or appropriate.

 

3.2                               Conditions
Precedent to all Credit Extensions.

 

The
obligations of Lenders to make its pro rata portion of the each Credit
Extension, including the Closing Date Term Loan Advance, is subject to the
following:

 

(a)                                  timely receipt of a
Disbursement Letter;

 

(b)                                 (i) the
representations and warranties in Section 5 shall be true, correct and
complete in all material respects on the effective date of each Credit
Extension; provided, that those representations and warranties expressly
referring to a specific date shall be true, accurate and complete in all
respects as of that date, and (ii) no Event of Default or Default shall
have occurred and be continuing, or result from the Credit Extension;

 

(c)                                  Agent shall have received such other
documents, agreements, instruments or information as the Lenders shall
reasonably request;

 

(d)                                 with respect to the
Post Closing Date Term Loan Advance, Agent
shall have received evidence satisfactory to the Lenders that Borrower has, at
the time of and after

 

9

 

giving effect to such Term Loan Advance, unrestricted cash and Cash
Equivalents maintained in deposit accounts subject to a Control Agreement in
an amount equal to or greater than the product of (A) twelve times (B) the
Cash Burn Amount (as defined below).  As
used herein, the term “Cash Burn Amount” means, with respect to
Borrower, as of any date of determination and based on the financial statements
most recently delivered to Agent and Lenders in accordance with this Agreement:

 

(a)                                  (i) the sum of, without duplication, (A) net
income (loss), plus (B) depreciation and amortization, minus (C) non-financed
capital expenditures, in each case of clauses (A), (B) and (C), for the
immediately preceding six month period on a trailing basis, divided by (ii) six,

 

minus

 

(b)                                 (i) the current
portion of interest bearing liabilities (including, without limitation, capital
leases) due and payable in the immediately succeeding six months divided by (ii) six.

 

If sub-clause (A) in clause (a) above is a net loss, the sum
of (A) + (B) + (C) in clause (a) above should be expressed
as a positive number.

 

4.                                      CREATION OF
SECURITY INTEREST

 

4.1                               Grant
of Security Interest.

 

Borrower
hereby grants Agent, for the benefit of itself and Lenders, to secure the
payment and performance in full of all of the Obligations and the performance
of each of Borrower’s duties under this Agreement and the other Loan Documents,
a continuing Lien on and security interest in, and pledges and assigns to the
Agent, for the benefit of itself and Lenders, the Collateral, wherever located,
whether now owned or hereafter acquired or arising, and all proceeds and products
thereof, it being expressly agreed and acknowledged that all Liens and security
interests previously granted to Original Agent in its capacity as agent for
Original Lenders, pursuant to the Original Loan Agreement are acknowledged and
reconfirmed and remain in full force and effect, secure the Obligations
hereunder pursuant to the terms hereof and are not intended to be released,
replaced or impaired.  Borrower warrants
and represents that the security interest granted herein shall be a first
priority security interest in the Collateral, subject to only Permitted Liens.

 

Except as
noted on Schedule 4.1, Borrower is not a party to, nor is bound by, any
material license or other similar agreement with respect to which the Borrower
is the licensee that prohibits or otherwise restricts Borrower from granting a
security interest in Borrower’s interest in such license or agreement or any
other property.  Borrower shall provide
written notice to Agent within 10 days of entering into or becoming bound by,
any such license or agreement which is reasonably likely to have a material
impact on Borrower’s business or financial condition.  If such licenses or other agreements meet the
definition of Collateral set forth in Section 13 of this Agreement,
Borrower shall take such steps as Agent reasonably requests to obtain the
consent of, or waiver by, any person whose consent or waiver is necessary for
such licenses or other agreements to be deemed “Collateral” and for Agent to
have a security

 

10

 

interest in it that might otherwise be restricted or prohibited by law
or by the terms of any such Collateral, whether now existing or entered into in
the future.

 

Borrower
agrees that any disposition of the Collateral in violation of this Agreement,
by either the Borrower or any other Person, shall be deemed to violate the
rights of the Lenders under the Code.  If
the Agreement is terminated, Lenders’ and Agent’s lien and security interest in
the Collateral shall continue until Borrower fully satisfies its Obligations,
Lenders’ obligation to make Credit Extensions has terminated and Agent and
Borrower have each executed a payoff letter in form and substance acceptable to
Agent.  If Borrower shall at any time,
acquire a commercial tort claim (as defined in the Code) or Letter-of-Credit
Right, Borrower shall promptly notify Agent in a writing signed by Borrower of
the brief details thereof and grant to Agent and Lenders in such writing a
security interest therein and in the proceeds thereof, all upon the terms of
this Agreement, with such writing to be in form and substance satisfactory to
Agent.

 

4.2                               Authorization
to File Financing Statements.

 

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

 

5.                                      REPRESENTATIONS
AND WARRANTIES

 

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

 

5.1                               Due
Organization and Authorization.

 

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

 

The execution,
delivery and performance of this Agreement and the other Loan Documents have
been duly authorized, and do not conflict with Borrower’s organizational

 

11

 

documents, nor constitute an event of default under any Material
Agreement by which Borrower is bound. 
Borrower is not in default under any agreement to which or by which it
is bound in which the default could reasonably be expected to cause a Material
Adverse Change.

 

5.2                               Collateral.

 

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

 

5.3                               Intellectual
Property.

 

Borrower and
its Subsidiaries solely own, or have sufficient rights to use and otherwise
exercise and exploit and license all Intellectual Property necessary or
material for use in connection with their respective businesses as currently
being conducted.  Neither Borrower nor
any of its Subsidiaries has received any notice that any current activities of
any of them may violate or infringe upon the patent rights of any Person.  To the knowledge of Borrower, each Patent
owned or licensed by Borrower or its Subsidiaries that is necessary or material
for use in its business as currently conducted is enforceable and there is no
existing or expected infringement (or challenge) by another Person of (or to)
any of the Intellectual Property of Borrower or its Subsidiaries that could
reasonably be expected to cause a Material Adverse Change.  Schedule 5.3(ii) sets forth, as
of August 26, 2008, (i) all domestic and foreign registered patents
and patent applications of Borrower; and (ii) all domestic and foreign
registered and applied for trademarks, trade names and service marks of
Borrower.  Borrower has no domestic or
foreign copyrights or copyright registrations, nor does Borrower use any
material unregistered copyrights in the ordinary course of its business.

 

5.4                               Litigation.

 

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

 

5.5                               No
Material Deterioration in Financial Statements.

 

All
consolidated financial statements for Borrower and its Subsidiaries, delivered
to Agent were prepared in accordance with GAAP consistently applied during the
periods involved (except in the case of unaudited interim statements, to the
extent that they may not include footnotes, may be condensed or summary
statements or may conform to the SEC’s rules and

 

12

 

instructions for Reports on Form 10-Q) and fairly present in all
material respects Borrower’s consolidated financial condition as of the dates
thereof and Borrower’s consolidated results of operations and cash flows for
the periods then ended (subject, in the case of unaudited statements, to normal
year-end adjustments).  There has not
been any material deterioration in Borrower’s consolidated financial condition
since the date of the most recent financial statements submitted to Agent.

 

5.6                               Solvency.

 

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

 

5.7                               Regulatory
Compliance.

 

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

 

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

 

13

 

5.8                               Subsidiaries.

 

Borrower does
not own any stock, partnership interest or other equity securities except for
Permitted Investments.  NeoRx does not
own any assets or property or conduct any business except as described on Schedule
5.8 attached hereto.

 

5.9                               Taxes;
Pension.

 

All tax returns, reports and
statements, including information returns, required by any governmental
authority to be filed by Borrower and its Subsidiaries have been filed with the
appropriate governmental authority and all taxes, levies, assessments and
similar charges have been paid prior to the date on which any fine, penalty,
interest or late charge may be added thereto for nonpayment thereof (or any
such fine, penalty, interest, late charge or loss has been paid).  Proper and accurate amounts have been
withheld by Borrower and its Subsidiaries from its respective employees for all
periods in compliance with applicable laws and such withholdings have been
timely paid to the respective governmental authorities.  Borrower and its Subsidiaries has paid
all amounts necessary to fund all present pension, profit sharing and deferred
compensation plans in accordance with their terms, and neither Borrower nor any of its Subsidiaries has
withdrawn from participation in, or has permitted partial or complete
termination of, or permitted the occurrence of any other event with respect to,
any such plan which could reasonably be expected to result in any liability of Borrower or a Subsidiary, including
any liability to the Pension Benefit Guaranty Corporation or its successors or
any other governmental authority.

 

5.10                        Full
Disclosure.

 

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

 

6.                                      AFFIRMATIVE
COVENANTS

 

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

 

6.1                               Government
Compliance.

 

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

 

14

 

it is subject, noncompliance with which could have a material adverse
effect on Borrower’s business or operations or would reasonably be expected to
cause a Material Adverse Change.

 

6.2                               Financial
Statements, Reports, Certificates.

 

(a)                                  Borrower shall
deliver to Agent:  (i) as soon as
available, but no later than 30 days after the last day of each month, a
company prepared unaudited consolidated financial statements, consisting of a
balance sheet and income statement covering Borrower’s consolidated operations
for the monthly period ending the last day of such month, together with a
Compliance Certificate signed by a Responsible Officer in the form of Exhibit B
and in a form reasonably acceptable to Agent; (ii) as soon as available,
but no later than 180 days after the last day of Borrower’s fiscal year, or
within 5 days of filing with the SEC, if earlier, audited consolidated
financial statements prepared under GAAP, consistently applied, together with
the report of an independent registered accounting firm issued in connection
therewith; (iii) within 5 days of earlier of filing or the required date
for filing, copies of all reports on Form 10-K, Form 10-Q and Form 8-K
filed with the SEC; (iv) financial projections and operating plans
approved by the Borrower’s board of directors for each fiscal year not less
than 30 days prior to each such fiscal year; (v) as soon as available, but
no later than within 3 Business Days after a material default or termination of
any Material Real Property Lease, written notice of such material default or
termination of such lease; and (vi) other financial information reasonably
requested by the Lenders.  Borrower may
comply with the requirements of clauses (ii) and (iii) above by
maintaining an electronic link to its SEC reports on Borrower’s website.

 

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

 

(c)                                  (i) Borrower
will give prompt written notice to Agent of any litigation or governmental
proceedings pending or threatened (in writing) against Borrower which would
reasonably be expected to result in a Material Adverse Change with respect to
Borrower; (ii) Borrower shall provide to Agent evidence of the payments
required to be made to Genzyme Corporation, as successor to AnorMED, Inc.,
pursuant to a License Agreement between them promptly after each such payment
but in any event within 5 days of each such payment; and (iii) without
limiting or contradicting any other more specific provision of this Agreement,
promptly (and in any event within 3 Business Days) upon Borrower becoming aware
of the existence of any Event of Default or Default, Borrower shall give
written notice to Agent of such occurrence, which such notice shall include a
reasonably detailed description of such Event of Default or Default.

 

15

 

6.3                               Inventory;
Returns.

 

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

 

6.4                               Taxes.

 

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

 

6.5                               Insurance.

 

Borrower shall keep its business and the Collateral insured for risks
and in amounts, customary for similarly situated companies in Borrower’s
industry as Lenders and Agent may reasonably request. Insurance policies shall
be in a form, with companies, and in amounts that are satisfactory to Agent in
Agent’s reasonable discretion. All property policies shall have a lenders’ loss
payable endorsement showing Agent as an additional lenders’ loss payee and all
liability policies shall show the Lenders and Agent as an additional insured
and all policies shall provide that the insurer must give Agent on behalf of
Lenders at least 20 days notice before canceling its policy. At any Lender’s
request, Borrower shall deliver certified copies of policies and evidence of
all premium payments. Proceeds payable under any policy shall, at Agent’s
option, be payable to Agent on behalf of Lenders on account of the Obligations.
Notwithstanding the foregoing, so long as no Event of Default or Default has
occurred and is continuing, Borrower shall have the option of applying the
proceeds of any casualty policy toward the replacement or repair of destroyed
or damaged property in an aggregate amount not to exceed $350,000 per fiscal
year; provided that such replaced or repaired property (a) shall be of
equal or like value as the replaced or repaired Collateral, (b) shall be
deemed Collateral in which Agent has been granted a first priority security
interest pursuant to the terms hereunder, and (c) shall be obtained within
365 days of the receipt of such proceeds.

 

6.6                               Primary
Accounts.

 

Neither Borrower nor any Subsidiary shall
directly or indirectly maintain or establish any deposit account or securities
account, unless Agent, Borrower or such Subsidiary and the depository institution
or securities intermediary at which the account is or will be maintained enter
into a Control Agreement. The provisions of the previous sentence shall
not apply to deposit accounts exclusively used for payroll, payroll taxes and
other employee wage and benefit payments to or for the benefit of the Borrower’s
employees.

 

6.7                               Registration
of Intellectual Property Rights.

 

Borrower shall: (i) protect, defend and maintain the validity and
enforceability of the Intellectual Property material to Borrower’s business; (ii) promptly
advise Lenders in writing of material infringements of the Intellectual
Property; and (iii) not allow any Intellectual Property

 

16

 

material to the Borrower’s
business to be abandoned, forfeited or dedicated to the public without Lenders’
written consent.

 

6.8                               Financial
Covenants.

 

(a)                                  Borrower
shall maintain minimum unrestricted cash and Cash Equivalents in an amount not
less than (i) at all times prior to the date of the Post Closing Term Loan
Advance, the lesser of (A) $11,440,000 and (B) the outstanding
principal balance of the Term Loan Advances plus $4,000,000 and (ii) on
the date of the Post Closing Term Loan Advance and at all times thereafter, the
lesser of (A) $17,940,000 and (B) the outstanding principal balance
of the Term Loan Advances plus $4,000,000, in each such case cash and Cash
Equivalents shall be at all times subject to a Control Agreement.

 

(b)                                 Borrower
shall maintain, at all times, cash and Cash Equivalents accounts with SVB or
SVB’s Affiliates (the “SVB Accounts”) in an amount not less than 85% of
the dollar value of the Borrower’s cash and Cash Equivalents at all financial
institutions.

 

6.9                               Use
of Proceeds.

 

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

 

6.10                        Notice of
Management Change.

 

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

 

6.11                        Leased
Real Property.

 

(a)                                  Borrower shall use
commercially reasonable efforts to obtain a landlord waiver, in form and
substance reasonably acceptable to the Lenders, for each Material Real Property
Lease existing on the Closing Date on or before October 14, 2008.

 

(b)                                 Upon any Lender’s
request,  promptly (and in any event within 10
Business Days) deliver to Agent: (a) evidence in form reasonably
satisfactory to the Lenders that rental payments were made with respect to any
Material Real Property Lease, and (b) a certification by an officer of
Borrower that no default or event of default exists under any Material Real
Property Lease. Borrower shall provide
Agent 30 days prior written notice of its intention to enter into a Material
Real Property Lease and prior to the effectiveness thereof, Borrower
shall cause the landlord of such property to enter into and deliver to Agent a
fully executed landlord waiver, in form and substance reasonably acceptable to
Agent.

 

17

 

6.12                        Further
Assurances.

 

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

 

7.                                      NEGATIVE
COVENANTS

 

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

 

7.1                               Dispositions.

 

Convey, sell, lease, transfer or otherwise dispose of (collectively a “Transfer”),
or permit any of its Subsidiaries to Transfer, all or any part of its business
or property, except for Transfers (i) of Inventory in the ordinary course
of business; (ii) of non-exclusive licenses and similar arrangements for
the use of the property of Borrower or its Subsidiaries in the ordinary course
of business; (iii) of worn-out or obsolete Equipment in an aggregate
amount not to exceed $250,000; (iv) of assets constituting all or part of
the Non-Core Technologies; (v) in connection with partnerships, joint
ventures or similar arrangements (including out-licenses) relating to Borrower’s
Picoplatin and future product development programs to the extent approved by
Borrower’s board of directors and so long as no Event of Default or Default
shall have occurred and be continuing at the time of, or would result from,
such Transfer; (vi) in connection with Permitted Liens and Permitted
Investments; and (vii) other Transfers which in the aggregate do not
exceed $100,000 in any fiscal year.

 

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

 

Engage in or permit any of its Subsidiaries to engage in any business
other than the businesses currently engaged in by Borrower or reasonably
related thereto, or consummate any offering of equity securities, whether in a
single transaction or a series of related transactions, following which the
shareholders of Borrower who were shareholders immediately preceding such
securities offering would, on a fully diluted basis, beneficially own less than
50% of the common stock of Borrower immediately after giving effect to the such
transaction or transactions. Borrower shall not, without at least 30 days prior
written notice to Agent: (i) relocate its chief executive office, or add
any new offices or business locations, including warehouses (unless such new
offices or business locations contain less than $100,000 in Borrower’s assets
or property), or (ii) change the fiscal year end of Borrower. Borrower
shall not (i) change its jurisdiction of organization, or (ii) change
its status as a registered organization (within the meaning of the Code) in the
State of Washington, or (iii) change its legal name, or (iv) change
any organizational number (if any) assigned by its jurisdiction of
organization, or (vi) remove or maintain any of the Collateral from the
continental United States (other than (A) inventory manufactured outside
of the United States that has not been imported into the United States, and (B) such
other Collateral maintained outside of the United States in the ordinary course
of business but provided that the aggregate value of all Collateral described
in this clause (2) cannot exceed $500,000 at any time).

 

18

 

7.3                               Mergers
or Acquisitions.

 

Merge or consolidate, or permit any of its Subsidiaries to merge or
consolidate, with any other Person, or acquire, or permit any of its
Subsidiaries to acquire, all or substantially all of the capital stock or
property of another Person, except where (i) no Default or Event of
Default has occurred and is continuing or would result from such action during
the term of this Agreement; (ii) Borrower is the surviving entity after
such transaction is consummated (to the extent Borrower was a party thereto); (iii) no
material adverse change in financial position or outlook of the combined entity
is reasonably likely to result, (iv) Borrower has given Lenders at least
15 days prior written notice of such proposed transaction, (v) Lenders
shall have received all documents, instruments, agreements and information as
Lenders reasonably require in connection with such proposed transaction, (vi) the
board of directors (or other comparable governing body) of the target or
selling entity shall have duly approved such proposed transaction and (vii) Borrower
maintains at the time of such transaction minimum unrestricted cash and Cash
Equivalents in an amount not less than (A) if prior to the date of the
Post Closing Term Loan Advance, $11,440,000 and (B) if on the date of the
Post Closing Term Loan Advance and at all times thereafter, $17,940,000, in
each such case cash and Cash Equivalents shall be at all times subject to a
Control Agreement. A Subsidiary may merge or consolidated into any other
Subsidiary or into Borrower.

 

7.4                               Indebtedness.

 

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

 

7.5                               Encumbrance.

 

Create, incur, or allow any Lien on any of its assets or property
(including, without limitation, its Intellectual Property), or assign or convey
any right to receive income, including the sale of any Accounts, or permit any
of its Subsidiaries to do so, except for Permitted Liens, or permit any
Collateral not to be subject to the first priority security interest granted
herein, except that the Collateral may also be subject to Permitted Liens. In
addition, except as permitted by Section 7.1 of this Agreement, Borrower
shall not sell, transfer, assign, mortgage, pledge, lease, grant a security
interest in, or encumber, or enter into any agreement, document, instrument or
other arrangement with any Person (except with or in favor of the Agent and
Lenders) which directly or indirectly prohibits or has the effect of
prohibiting Borrower from selling, transferring, assigning, mortgaging,
pledging, leasing, granting a security interest in or upon, or encumbering any
of Borrower’s Intellectual Property.

 

7.6                               Distributions;
Investments.

 

(i) Directly or indirectly acquire or own any Person, or make any
Investment in any Person, other than Permitted Investments, acquire or create any Subsidiary or
permit any of its Subsidiaries to do so; or (ii) pay any dividends or make
any distribution or payment or redeem, retire or purchase any capital stock,
except for (x) payment of cash in lieu of the issuance on any fractional
shares pursuant to the terms of outstanding convertible securities not to
exceed $100,000 in the aggregate for all such payments during any fiscal year
and (y) semi-annual cash

 

19

 

dividends payable pursuant to
the terms of the Company’s outstanding Series I Convertible Exchangeable
Preferred Stock not to exceed $251,000 in the aggregate for any such payment.

 

7.7                               Transactions
with Affiliates.

 

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

 

7.8                               Subordinated
Debt.

 

Make or permit any payment on any Subordinated Debt, except under the
terms of the subordination, intercreditor, or other similar agreement, by and
between Agent and the holder of such Subordinated Debt, to which such
Subordinated Debt is subject, or amend or waive any material provision in any
document relating to the Subordinated Debt.

 

7.9                               Compliance
with Anti-Terrorism Laws.

 

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

 

7.10                        Compliance.

 

Become an “investment company” or a company controlled by an “investment
company,” under the Investment Company Act of 1940 or undertake as one of its
important activities extending credit to purchase or carry margin stock, or use
the proceeds of any Credit Extension for that purpose; fail to meet the minimum
funding requirements of ERISA, permit a

 

20

 

Reportable Event or Prohibited
Transaction, as defined in ERISA, to occur; fail to comply with the Federal
Fair Labor Standards Act or violate any other Law, if such failure or violation
could reasonably be expected to cause a Material Adverse Change, or permit any
of its Subsidiaries to do so.

 

7.11                        NeoRx.

 

Borrower shall not permit NeoRx to at any time own any assets or
property or conduct any business except as described on Schedule 5.8
attached hereto as of the Closing Date.

 

7.12                        Amendments to Other Agreements.

 

Amend, modify or waive any provision of any Material Agreement (unless
the net effect of such amendment, modification or waiver is not adverse in any
material respect to Borrower, Agent or Lenders) without the prior written
consent of the Lenders. A description of all Material Agreements as of the
Closing Date is set forth on Schedule 7.12 hereto.

 

8.                                      EVENTS
OF DEFAULT

 

Any one of the following is an Event of Default:

 

8.1                               Payment
Default.

 

Borrower fails to pay any of the Obligations within 3 Business Days
after their due date (which 3 Business Day grace period shall not apply to
payments due on the Applicable Term Loan Maturity Date). During the additional
3 Business Day period the failure to cure the payment default shall not
constitute an Event of Default (but no Credit Extension shall be made during
such cure period).

 

8.2                               Covenant
Default.

 

(a)                                  If
Borrower fails to perform any obligation under Sections 6.1 (solely as it
relates to maintaining its existence in its jurisdiction of formation), 6.2,
6.6, 6.8, or 6.9 or violates any of the covenants contained in Section 7
of this Agreement, or

 

(b)                                 If
Borrower fails or neglects to perform, keep, or observe any other term,
provision, condition, covenant, or agreement contained in this Agreement, in
any of the other Loan Documents, and has failed to cure such default within 10
days after the occurrence thereof; provided, however, that (i) if the
default cannot by its nature be cured within the 10 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 30
days) to attempt to cure such default, and within such reasonable time period
the failure to have cured such default shall not be deemed an Event of Default
(provided that no Credit Extensions will be made during such cure period) and (ii) if
the default cannot by its nature be cured, then Borrower shall have a
reasonable period (which shall not in any case exceed 10 days) to minimize the
impact of the default such that the default is not material, and within such
reasonable time period the default shall not be deemed an Event of Default
(provided that no Credit Extensions will be made during such period).

 

21

 

8.3                               Material
Adverse Change.

 

A Material Adverse Change occurs.

 

8.4                               Attachment.

 

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

 

8.5                               Insolvency.

 

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

 

8.6                               Other
Agreements.

 

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

 

8.7                               Judgments.

 

If a judgment or judgments for the payment of money in an amount,
individually or in the aggregate, of at least $250,000 shall be rendered
against Borrower or any Guarantor and shall remain unsatisfied and unstayed for
a period of 10 Business Days (provided that no Credit Extensions will be made
prior to the satisfaction or stay of such judgment).

 

8.8                               Misrepresentations.

 

If Borrower or any Person acting for Borrower makes any material
misrepresentation or material misstatement now or later in any warranty or
representation in this Agreement or in any

 

22

 

writing delivered to Agent
and/or Lenders or to induce Agent and/or Lenders to enter this Agreement or any
other Loan Document.

 

8.9                               Criminal
Proceeding.

 

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

 

8.10                        Subordinated
Debt.

 

Any Person holding any Subordinated Debt terminates the applicable
subordination agreement, asserts that it is terminated or accelerates the
Subordinated Debt in violation of the applicable subordination terms.

 

8.11                        Lien
Priority; Enforceability of Documents.

 

(a) Any Lien created hereunder or under any other Loan Document
shall at any time fail to constitute a valid and perfected Lien on all of the
Collateral purported to be secured thereby, subject to no prior or equal Lien
except Permitted Liens, or Borrower shall so assert, (b) without limiting clauses (a) or
(c) of this Section 8.11, any
provision of any other Loan Document (other than an immaterial provision) shall
fail to be valid and binding on, or enforceable against, Borrower, or any
Guarantor, if applicable, party thereto, or (c) any subordination
provision set forth in any document evidencing or relating to the Subordinated
Debt shall, in whole or in part, terminate or otherwise fail or cease to be
valid and binding on, or enforceable against, any agent for, or holder of, the
Subordinated Debt (or such person shall so state in writing), or Borrower, or
any Guarantor, if applicable, shall state in writing that any of the events
described in clause (a), (b) or (c) above shall
have occurred.

 

9.                                      RIGHTS
AND REMEDIES

 

9.1                               Rights
and Remedies.

 

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

 

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

 

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

 

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

 

23

 

the payments to Lenders in the
form received from the account debtor, with proper endorsements for deposit;

 

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

 

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

 

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

 

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

 

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

 

9.2                               Power
of Attorney.

 

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

 

24

 

an interest, are irrevocable
until all Obligations have been fully repaid and performed and Lenders’ and
Agent’s obligation to provide Credit Extensions terminates.

 

9.3                               Accounts,
Notification and Collection.

 

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

 

9.4                               Agent
Expenses.

 

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

 

9.5                               Agent’s
Liability for Collateral.

 

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

 

9.6                               Application
of Proceeds.

 

Notwithstanding anything to the contrary contained in this Agreement,
upon the occurrence and during the continuance of an Event of Default, (a) 
Borrower irrevocably waives the right to direct the application of any and all
payments at any time or times thereafter received by Agent from or on behalf of
Borrower or any Guarantor of all or any part of the Obligations, and, as
between Borrower on the one hand and Agent and Lenders on the other, Agent
shall have the continuing and exclusive right to apply and to reapply any and
all payments received against the Obligations in such manner as Agent may deem
advisable notwithstanding any previous application by Agent and, with respect
to application of payments to Lenders, in a manner consistent with each Lender’s
Commitment Percentage, and (b) the proceeds of any sale of, or other
realization upon, all or any part of the Collateral shall be applied:  first, to Agent Expenses; second,
to Lenders’ Expenses; third, to accrued and unpaid interest on the
Obligations (excluding any interest which, but for the provisions of the United
States Bankruptcy Code, would have accrued on such amounts); fourth, to
the principal amount of the Obligations outstanding; and fifth to any
other Obligations of Borrower owing to Agent or any Lender (including without
limitation interest which, but for the provisions of the United States
Bankruptcy Code, would have accrued on the Obligations). Any balance remaining
shall be delivered to Borrower or to whoever may be lawfully entitled to
receive such balance or as a court of competent jurisdiction may direct. In
carrying out the foregoing, (x) amounts received shall be applied in the
numerical

 

25

 

order provided until exhausted
prior to the application to the next succeeding category, and (y) each of
the Persons entitled to receive a payment in any particular category shall
receive an amount equal to its pro rata share of amounts available to be
applied pursuant thereto for such category.

 

9.7                               Remedies
Cumulative.

 

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

 

9.8                               Demand
Waiver.

 

Borrower waives demand, notice of default or dishonor, notice of
payment and nonpayment, notice of any default, nonpayment at maturity, release,
compromise, settlement, extension, or renewal of accounts, documents,
instruments, chattel paper, and guarantees held by Agent on which Borrower is
liable.

 

10.                               NOTICES

 

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

 

	
   

  	
  If to
  Borrower:

  	
  Poniard
  Pharmaceuticals, Inc.

  7000 Shoreline Court

  South San Francisco, California 94080

  Attn: Caroline Loewy, Chief Financial Officer

  Fax: (650) 583-3789

  
	
   

  	
   

  	
   

  
	
   

  	
  If to Agent
  or GEBFS:

  	
  GE Business
  Financial Services Inc.

  c/o GE Healthcare Financial Services, Inc., LSF

  83 Wooster Heights Road, Fifth Floor

  Danbury, Connecticut 06810

  Attn: Senior Vice President of Risk

  Fax: (203) 205-2192

  

 

26

 

	
   

  	
  with a copy
  to:

  	
  GE Business
  Financial Services Inc.

  c/o GE Healthcare Financial Services, Inc.

  Two Bethesda Metro Center, Suite 600

  Bethesda, Maryland 20814

  Attn: General Counsel
 Fax: (301)
  664-9866

  
	
   

  	
   

  	
   

  
	
   

  	
  If to SVB:

  	
  Silicon
  Valley Bank

  185 Berry Street, Suite 3000

  San Francisco, California 94107

  Attn: Peter Scott

  Fax: (415) 856-0810

  

 

11.                               CHOICE
OF LAW, VENUE AND JURY TRIAL WAIVER

 

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

 

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

 

12.                               GENERAL
PROVISIONS

 

12.1                        Successors
and Assigns.

 

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

 

27

 

12.2                        Indemnification.

 

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

 

12.3                        Expenses.

 

Borrower hereby agrees to promptly pay (a) all reasonable costs
and expenses of Agent and the Lenders (including, without limitation, the
reasonable fees, costs and expenses of counsel to, and independent appraisers
and consultants retained by Agent or any Lender) in connection with the examination,
review, due diligence investigation, documentation, negotiation, closing and
syndication of the transactions contemplated by this Agreement and the other
Loan Documents, in connection with the performance by Agent or any Lender of
its rights and remedies this Agreement and under the other Loan Documents and
in connection with the continued administration of this Agreement and under the
other Loan Documents including: (i) any amendments, modifications,
consents and waivers to and/or under this Agreement or any and all other Loan
Documents and (ii) any periodic public record searches conducted by or at
the request of Agent or any Lender (including, without limitation, title
investigations, UCC searches, fixture filing searches, judgment, pending litigation
and tax lien searches and searches of applicable corporate, limited liability,
partnership and related records concerning the continued existence,
organization and good standing of certain Persons), (b) without limitation
of the preceding clause (a), all reasonable costs and expenses of Agent
and Lenders (including recordation and transfer taxes) in connection with the
creation, perfection and maintenance of Liens pursuant to this Agreement and
the other Loan Documents, (c) without limitation of the preceding
clause (a), all costs and expenses of Agent and the Lenders in connection
with (i) protecting, storing, insuring, handling, maintaining or selling
any Collateral; (ii) any litigation, dispute, suit or proceeding relating
to this Agreement and any other Loan Document; and (iii) any workout,
collection, bankruptcy, insolvency and other enforcement proceedings

 

28

 

under this Agreement and any and all of the other Loan Documents, and (d) all
costs and expenses incurred by Lenders in connection with any litigation,
dispute, suit or proceeding relating to this Agreement and any other Loan
Document and in connection with any workout, collection, bankruptcy, insolvency
and other enforcement proceedings under this Agreement or under any and all
other Loan Documents, provided, however, that to the extent that the costs
and expenses referred to in this clause (d) consist of fees, costs
and expenses of counsel, Borrower shall be obligated to pay such fees, costs
and expenses for counsel to Agent and for only one counsel acting for all
Lenders (other than Agent) and provided
further that, in all cases and notwithstanding any other provision
in this Agreement or the other Loan Documents to the contrary, if Borrower
prevails in any action or proceeding between Borrower and Agent and/or Lenders
arising out of or relating to this Agreement and any other Loan Documents,
Borrower shall be entitled to recover from Agent and Lenders all attorneys fees
and other costs and expenses incurred, in addition to any other relief to which
it may be entitled.

 

12.4                        Right of
Set-Off.

 

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

 

12.5                        Time of
Essence.

 

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

 

12.6                        Severability
of Provision.

 

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

 

12.7                        Amendments
in Writing, Integration.

 

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

 

29

 

between the parties about the
subject matter of this Agreement and the other Loan Documents merge into this
Agreement and the other Loan Documents.

 

12.8                        Counterparts.

 

This Agreement may be executed in any number of counterparts and by
different parties on separate counterparts, each of which, when executed and
delivered, are an original, and all taken together, constitute one Agreement. Delivery of an executed signature page of
this Agreement and any other Loan Document by facsimile transmission or
electronic transmission shall be as effective as delivery of a manually
executed counterpart hereof.

 

12.9                        Survival.

 

All covenants, representations and warranties made in this Agreement
continue in full force while any Obligations remain outstanding. The
obligations of Borrower under Sections 2.3(g), 12.2 and 12.3 shall survive
until the statute of limitations with respect to such obligation, claim or
cause of action shall have run.

 

12.10                 Administrative
Agent.

 

(a)                                  Each
Lender hereby appoints GEBFS as Agent under this Agreement and the other Loan
Documents, under the terms and conditions set forth herein. Each Lender hereby
irrevocably appoints and authorizes Agent to enter into each of the Loan
Documents to which it is a party (other than this Agreement) on its behalf and
to take such actions as Agent on its behalf and to exercise such powers under
this Agreement and the other Loan Documents as are delegated to Agent by the
terms thereof, together with all such powers as are reasonably incidental
thereto. Subject to the terms of the other Loan Documents, Agent is authorized
and empowered to amend, modify, or waive any provisions of this Agreement or
the other Loan Documents on behalf of Lenders. The provisions of this Section 12.10
are solely for the benefit of Agent and Lenders and neither Borrower nor any
Guarantor shall have any rights as a third party beneficiary of any of the
provisions hereof. In performing its functions and duties under this Agreement,
Agent shall act solely as agent of Lenders and does not assume and shall not be
deemed to have assumed any obligation toward or relationship of agency or trust
with or for Borrower or any Guarantor. Agent may perform any of its duties
hereunder, or under the other Loan Documents, by or through its agents or
employees. With respect to its participation in the Loan Agreement hereunder,
Agent shall have the same rights and powers hereunder as any other Lender and
may exercise the same rights and powers as though it were not performing the
duties and functions delegated to it hereunder and the term “Lender” or “Lenders”
or any similar term shall unless the context clearly indicates otherwise
include Agent in its individual capacity.

 

The duties of Agent shall be mechanical and administrative in nature. Agent
shall not have by reason of this Agreement a fiduciary relationship in respect
of any Lender. Nothing in this Agreement or any of the other Loan Documents is
intended to or shall be construed to impose upon Agent any duty of obligations
in respect of this Agreement or any of the other Loan Documents except as
expressly set forth herein or therein or to otherwise perform any act or to
exercise any power in any jurisdiction in which it shall be illegal, or shall
be deemed to impose any duty or obligation on Agent to perform any act or
exercise any right or power if such

 

30

 

performance or exercise (a) would
subject Agent to a tax in a jurisdiction where it is not then subject to a tax
or (b) would require Agent to qualify to do business in any jurisdiction
where it is not so qualified. Agent may consult with legal counsel, independent
public accountants and other experts selected by it and shall not be liable for
any action taken or omitted to be taken by it in good faith in accordance with
the advice of such counsel, accountants or experts. Agent shall have the right
at any time to seek instructions concerning the administration of the
Collateral from any court of competent jurisdiction.

 

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

 

Each Lender shall, in accordance with its pro rata share of the
Obligations, indemnify Agent (to the extent not reimbursed by Borrower) upon
demand against any cost, expense (including counsel fees and disbursements),
claim, demand, action, loss or liability (except such as result from Agent’s gross
negligence or willful misconduct as determined by a final non-appealable
judgment of a court of competent jurisdiction) that Agent may suffer or incur
in connection with this Agreement or the other Loan Documents or any action
taken or omitted by Agent hereunder or thereunder or disbursements of any kind
of nature whatsoever with respect to Agent’s performance of its duties under
this Agreement, the Loan Agreement and the other Loan Documents. Such
reimbursement shall not in any respect release Borrower from any liability or
obligation. If any indemnity furnished to Agent for any purpose shall, in the
opinion of Agent, be insufficient or become impaired, Agent may call for
additional indemnity and cease, or not commence, to do the acts indemnified
against even if so requested by Lenders until such additional indemnity is
furnished. Agent shall not be under any obligation to exercise any of the
rights or powers granted to Agent by this Agreement, the Loan Agreement and the
other Loan Documents at the request or direction of Lenders unless Agent shall
have been provided by

 

31

 

Lenders with adequate security
and indemnity against the costs, expenses and liabilities that may be incurred
by it in compliance with such request or direction. Agent’s right to
indemnification shall survive termination of this Agreement.

 

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

 

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

 

Agent shall not be deemed to have knowledge or notice of the occurrence
of any Event of Default or Default unless Agent shall have received written
notice from a Lender or Borrower referring to this Agreement, describing such
event and stating that such notice is a “notice of default”. Agent will notify
each Lender of its receipt of any such notice. Agent shall take such action
with respect to such event in accordance with the terms hereof. Agent may (but
shall not be obligated to) take such action, or refrain from taking such
action, with respect to such Event of Default or Default as it shall deem
advisable or in the best interests of Lenders.

 

(b)           Agent may resign at any time by giving not
less than 30 days prior written notice thereof to Lenders and Borrower. Upon
any such resignation, the other Lender shall have the right to appoint a
successor Agent. If no successor Agent shall have been so appointed by the
other Lender and shall have accepted such appointment within 30 days after the
resigning Agent’s giving notice of resignation, then the resigning Agent may,
on behalf of Lenders, appoint a successor Agent, which shall be a commercial
bank or financial institution or a subsidiary of a commercial bank or financial
institution if such commercial bank or financial institution is organized under
the laws of the United States of America or of any state thereof and has a
combined capital and surplus of at least $300,000,000. If no successor Agent
has been appointed pursuant to the foregoing, within 30 days after the date
such notice of resignation was given by the resigning Agent, such resignation
shall become effective and the other Lender shall thereafter perform all the
duties of Agent hereunder until such time, if any, as a successor Agent is
appointed as provided above. Upon the acceptance of any appointment as Agent
hereunder by a successor Agent, such successor Agent shall succeed to and
become vested with all the rights, powers, privileges and duties of the
resigning Agent. Upon the earlier of the acceptance of any appointment as Agent
hereunder by a successor Agent or the effective date of the resigning Agent’s
resignation, the resigning Agent shall be discharged from its duties and
obligations under this Agreement and the other Loan Documents, except that any
indemnity rights or other rights in favor of such resigning Agent shall
continue. After any resigning Agent’s resignation

 

32

 

hereunder, the provisions of
this Section 12 shall inure to its benefit as to any actions taken or
omitted to be taken by it while it was acting as Agent under this Agreement and
the other Loan Documents.

 

12.11      Arrangers.

 

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

 

12.12      Confidentiality.

 

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

 

12.13      Publicity.

 

Borrower will not directly or indirectly publish, disclose or otherwise
use in any public disclosure, advertising material, promotional material, press
release or interview, any reference to the name, logo or any trademark of Agent
or any Lender or any of their Affiliates or any reference to this Agreement or
the financing evidenced hereby, in any case except as required by Law, subpoena
or judicial or similar order. Agent and each Lender hereby acknowledge that
Borrower is a public company subject to the reporting and disclosure requirements
under federal and state securities laws and the Nasdaq Marketplace Rules, which
Laws require public disclosure and discussion of the material terms of this
transaction and the filing with the SEC of this Agreement and certain of the
other Loan Documents at and after the Closing Date; provided Borrower agrees
and acknowledges that it shall provide proposed disclosures and filings to
Agent at least 3 Business Days in advance of filing and Agent and Lenders may
require Borrower to request that the SEC grant confidential treatment as to
certain terms thereof when filed.

 

Each Lender and Borrower hereby authorizes GEBFS to publish the name of
such Lender and Borrower, the existence of the financing arrangements
referenced under this Agreement, the primary purpose and/or structure of those
arrangements, the amount of credit extended under

 

33

 

each facility, the title and role of each party to this Agreement, and
the total amount of the financing evidenced hereby in any “tombstone”,
comparable advertisement or press release which GEBFS elects to submit for
publication. In addition, each Lender and Borrower agrees that GEBFS may
provide lending industry trade organizations with information necessary and
customary for inclusion in league table measurements after the Closing Date. With
respect to any of the foregoing, GEBFS shall provide Borrower with an
opportunity to review and confer with GEBFS regarding the contents of any such
tombstone, advertisement or information, as applicable, prior to its submission
for publication and, following such review period, GEBFS may, from time to
time, publish such information in any media form desired by GEBFS, until such
time that Borrower shall have requested GEBFS cease any such further
publication.

 

12.14      No Strict Construction.

 

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

 

12.15      Effective Date.

 

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

 

13.                               DEFINITIONS

 

13.1        Definitions.

 

In this Agreement:

 

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

 

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

 

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

 

34

 

“Agent Expenses” are
fees and expenses owing to Agent pursuant to Section 12.3.

 

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

 

“Applicable Term Loan  Maturity Date” is defined in Section 2.3(a)(iii).

 

“Basic Rate” is the
greater of:

 

(a)           7.80%
per annum; and

 

(b)           as
of the Funding Date the per annum rate of interest (based on a year of 360 days)
equal to the sum of (i) Treasury Rate 3 Business Days prior to the Funding
Date, plus (ii) the Loan Margin.

 

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

 

“Books” are all of a
Person’s books and records including ledgers, records regarding assets or
liabilities, (including, with respect to Borrower and Guarantor, the
Collateral), business operations or financial condition and all computer
programs or discs or any equipment containing the information.

 

“Business Day” is any day that is not a
Saturday, Sunday,
or other days on which commercial banks in New York, New York are required or
authorized to be closed.

 

“Cash Equivalents” are (a) marketable
direct obligations issued or unconditionally guaranteed by the United States or
any agency or any State thereof having maturities of not more than one (1) year
from the date of acquisition; (b) commercial paper maturing no more than
one (1) year after its creation and having the highest rating from either
Standard & Poor’s Ratings Group (“S&P”) or
Moody’s Investors Service, Inc. (“Moody’s”); (c) any United States dollar-denominated time
deposit, insured certificate of deposit, overnight bank deposit or bankers’
acceptance issued or accepted by (i) Agent, (ii) Silicon Valley Bank
or (iii) any commercial bank that is (A) organized under the laws of
the United States, any state thereof or the District of Columbia, (B) ”adequately
capitalized” (as defined in the regulations of its primary federal banking
regulators) (C) has Tier 1 capital (as defined in such regulations) in
excess of $250,000,000 and (C) has maturities of not more than one (1) year
from the date of acquisition; and (d) shares
of any United States money market fund that (i) has substantially all of
its assets invested continuously in the types of investments referred to in clause
(a), (b), or (c) above with maturities of not
more than one (1) year from the date of acquisition, (ii) has net assets in excess

 

35

 

of $500,000,000 and (iii) has obtained from a rating of A- or
higher from S&P or a rating of A3 or higher from Moody’s. For the avoidance
of doubt, “Cash Equivalents” does not include (and Borrower is prohibited from
purchasing or purchasing participations in) any auction rate securities or
other corporate or municipal bonds with a long-term nominal maturity for which
the interest rate is reset through a Dutch auction.

 

“Closing Date” is
the date of this Agreement.

 

“Closing Date Term Loan Advance”
is defined in Section 2.1.1(a).

 

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

 

“Collateral” is the
property described on Exhibit A.

 

“Collection Account” is defined in Section 2.3(f).

 

“Commitment Percentage” means
with respect to (a) SVB, 50%, and (b) GEBFS, 50%.

 

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

 

“Control Agreement” is any control
agreement entered into among the depository institution at which Borrower or a
Guarantor maintains a Deposit Account or the securities intermediary or
commodity intermediary at which Borrower or a Guarantor maintains a Securities
Account or a Commodity Account, and Agent pursuant to which Agent obtains
control (within the meaning of the Code) for the benefit of itself and Lenders
over such Deposit Account, Securities Account, or Commodity Account, in form and substance satisfactory to Agent
and the applicable depository institution, securities intermediary or
commodity intermediary (which agreement
shall provide, among other things, that (i) such depository institution or
securities intermediary has no rights of setoff or recoupment or any other
claim against such deposit or securities account (except as agreed to by
Agent), other than for payment of its service fees and other charges directly
related to the administration of such account and for returned checks or other
items of payment, and (ii) such depository institution or securities
intermediary shall comply with all instructions of Agent without further consent
of Borrower or such Guarantor, including, without limitation, an instruction by
Agent to comply exclusively with instructions of the Agent with respect to such
account (such notice, a “Notice of Exclusive 

 

36

 

Control”));
provided that Agent may only give a Notice of Exclusive Control with
respect to any Deposit Account, Securities Account or Commodity Account at any
time at which an Event of Default or a Default has occurred and is continuing.

 

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

 

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

 

“Default” means any other event, which with the giving of
notice or the passage of time, or both, would constitute an Event of Default.

 

“Disbursement Letter” is a disbursement
instruction letter, in form and substance satisfactory to the Lenders, executed
by Borrower, Agent and each Lender.

 

“EPS Setup Form” is that certain form
regarding Borrower’s accounts attached hereto as Exhibit D.

 

“Equipment” is all present
and future machinery, equipment, tenant improvements, furniture, fixtures,
vehicles, tools, parts and attachments in which a Person has any interest
(including “equipment” as defined in the Code, as such definition may be
amended from time to time).

 

“Final Payment” is a
payment (in addition to and not a substitution for the regular monthly payments
of principal plus accrued interest) equal to (a) $1,070,000 with respect
to the Closing Date Term Loan Advance and (b) if Lenders advance the Post
Closing Term Loan Advance, $900,000 with respect to the Post Closing Term Loan
Advance.

 

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

 

“GAAP” is generally
accepted accounting principles in the United States of America, as in effect
from time to time.

 

“GEBFS/Merrill” is defined in the
preamble.

 

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

 

“Guarantor” is NeoRx
and each future guarantor of the Obligations.

 

37

 

“Guaranty Agreement” is any guaranty, in form and substance satisfactory
to the Lenders, guaranteeing the payment and performance of the Obligations and
granting a lien in the collateral described therein.

 

“Indebtedness” is with respect to any Person, at any date,
without duplication, (i) all obligations of such Person for borrowed
money, (ii) all obligations of such Person evidenced by bonds, debentures,
notes or other similar instruments, or upon which interest payments are
customarily made, (iii) all obligations of such Person to pay the deferred
purchase price of property or services, but excluding obligations to trade
creditors incurred in the ordinary course of business and not past due by more
than 90 days,  (iv) all capital
lease obligations of such Person, (v) the principal balance outstanding
under any synthetic lease, tax retention operating lease, off-balance sheet
loan or similar off-balance sheet financing product, (vi) all obligations
of such Person to purchase securities (or other property) which arise out of or
in connection with the issuance or sale of the same or substantially similar
securities (or property), (vii) all contingent or non-contingent
obligations of such Person to reimburse any bank or other Person in respect of
amounts paid under a letter of credit or similar instrument, (viii) all
equity securities of such Person subject to repurchase or redemption otherwise
than at the sole option of such Person, (ix) all “earnouts” and similar
payment obligations of such Person, (x) all indebtedness secured by a lien
on any asset of such Person, whether or not such indebtedness is otherwise an
obligation of such Person, (xi) all obligations of such Person under any
foreign exchange contract, currency swap agreement, interest rate swap, cap or
collar agreement or other similar agreement or arrangement designed to alter
the risks of that Person arising from fluctuations in currency values or
interest rates, in each case whether contingent or matured, (xii) all
obligations or liabilities of others guaranteed by such Person and (xiii)
without duplication, all Contingent Obligations.

 

“Insolvency Proceeding”
is any proceeding seeking to adjudicate
a Person bankrupt or insolvent or seeking liquidation, winding up,
reorganization, arrangement, adjustment, protection, relief, composition of it
or its debts or any similar order, in each case under any law relating to
bankruptcy, insolvency or reorganization or relief of debtors or the seeking
the entry of an order for relief or the appointment of a custodian, receiver,
trustee, conservator, liquidating agent, liquidator, other similar official or
other official with similar powers, in each case for it or for any substantial
part of its property (including, without limitation, any proceeding by
or against any Person under the United States Bankruptcy Code, or any other
bankruptcy or insolvency law, including assignments for the benefit of creditors,
compositions, extensions generally with its creditors, or proceedings seeking
reorganization, arrangement, or other relief).

 

“Intellectual Property”
is:

 

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

 

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

 

38

 

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

 

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

 

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

 

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

 

“Lenders’ Expenses”
are fees and expenses owing to Lenders pursuant to Section 12.3.

 

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

 

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

 

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

 

“Loan Documents”
are, collectively, this Agreement, the Warrants, the Notes, the Guaranty
Agreements, the Original Loan Agreement Amendment Letter, the Disbursement
Letters, the EPS Setup Form, pledges executed by Borrower or any Guarantor, and
any other present or future document, instruments or agreement between Borrower
or any Guarantor and/or for the benefit of Lenders and Agent in connection with
this Agreement, all as amended, restated, supplemented or otherwise modified
from time to time.

 

“Loan Margin” is
4.83%.

 

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

 

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

 

39

 

“Material Agreement” is (i) any agreement or contract to
which Borrower is a party and involving the receipt or payment of amounts in
the aggregate exceeding $750,000  per year
commencing with the fiscal year ending December 31, 2007 and (ii) any
agreement or contract to which Borrower is a party the termination of which
could reasonably be expected to result in a Material Adverse Change.

 

“Material Real Property Lease” means any
lease for real property where Borrower maintains (a) its chief executive
office or Books or (b) Collateral with a value of $100,000 or more.

 

“NeoRx” means NeoRx Manufacturing Group, Inc.

 

“Non-Core Technologies” are
those products, product lines, and technologies that Borrower’s board of
directors, in its good faith business judgment, determines are not appropriate
for future development by Borrower, including STR (including holmium and
samarium technologies), Annexin, TGFb, and humanized antibodies.

 

“Notes” is defined in Section 2.1.2.

 

“Obligations” are
debts, principal, interest, the Final Payment, the Unused Line Fee, the
Original Loan Agreement Fees, the Agent Expenses, the Lenders’ Expenses, and
other amounts Borrower owes Lenders and/or Agent now or later under this
Agreement and the other Loan Documents (whether
for principal, interest, fees, expenses, prepayment premiums, indemnities,
reimbursements or other sums, and whether or not such amounts accrue after the
filing of any Insolvency Proceeding, and whether or not allowed in such
Insolvency Proceeding).

 

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

 

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

 

“Original Agent” is defined in the
preamble.

 

“Original Closing Date” is defined in
the preamble.

 

“Original Term Loan Advance” is defined
in the preamble.

 

“Original Lenders” is defined in the
preamble.

 

“Original Loan Agreement” is defined in
the preamble.

 

“Original Loan Agreement Amendment Letter”
is that certain amendment letter to the Original Loan Agreement executed,
delivered and effective on the Closing Date immediately prior to the
effectiveness of this Agreement by and among Borrower, Original Agent, in its
capacity as agent for the Original Lenders, and Original Lenders, as amended,
extended or restated.

 

40

 

“Original Loan Agreement Fees” is
defined in Section 2.4(c).

 

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

 

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

 

“Permitted Indebtedness”
is:

 

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

 

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

 

(c)           Subordinated Debt;

 

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

 

(e)           Indebtedness secured by Permitted Liens described in
clause (c) of the definition thereof in an aggregate amount outstanding at
any time not to exceed $500,000;

 

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

 

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

 

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

 

(i)            Indebtedness under a standby letter credit facility with
Silicon Valley Bank in a principal amount not to exceed $300,000;

 

(j)            unsecured cash management services provided by Silicon
Valley Bank in an aggregate principal amount not to exceed $175,000; and

 

(k)           unsecured foreign exchange services provided by Silicon
Valley Bank the aggregate exposure of which not to exceed a principal amount of
$200,000.

 

“Permitted Investments”
are:

 

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

 

41

 

(b)           Cash Equivalents;

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(j)            Investments permitted by Section 7.3; and

 

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

 

“Permitted Liens”
are:

 

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

 

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

 

42

 

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

 

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

 

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

 

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

 

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

 

(h)           Liens on cash collateral to secure the obligations
described in clauses (i) and (j) of the definition of Permitted
Indebtedness.

 

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

 

“Post Closing Term Loan Advance” is
defined in Section 2.1.1(a).

 

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

 

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

 

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

 

“Schedule” is any
attached schedule of exceptions.

 

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

 

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

 

43

 

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

 

“Subsequent Funding Termination Date”
means December 15, 2008.

 

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

 

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

 

“SVB Accounts” is defined in Section 6.8(b).

 

“Term Loan” is a Term Loan
Advance or Term Loan Advances in an aggregate amount of up to $27,600,000.

 

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

 

“Term Loan Commitment”
means with respect to each Lender, the total amount of the Credit Extensions
which may be made hereunder. With respect to SVB this means an amount of up to
$13,800,000, with respect to GEBFS this means an amount of up to $13,800,000.

 

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

 

“Treasury Rate” means a per annum rate of interest equal to
the rate published by the Board of Governors of the Federal Reserve System in
Federal Reserve Statistical Release H.15 entitled “Selected Interest Rates”
under the heading “U.S. Government Securities/Treasury Constant Maturities” as
the three year treasuries constant maturities rate. In the event Release H.15
is no longer published, Agent shall select a comparable publication to
determine the U.S. Treasury note yield to maturity.

 

“Unused Line Fee” is defined in Section 2.4(b).

 

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

 

“Warrants to Purchase Stock” is defined
in Section 2.5.

 

(Signatures are on the following page)

 

44

 

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

 

 

	
  BORROWER:

  	
  PONIARD PHARMACEUTICALS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Caroline
  Loewy

  
	
   

  	
  Name:

  	
  Caroline Loewy

  
	
   

  	
  Title:

  	
    Chief
  Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
  AGENT:

  	
  GE BUSINESS FINANCIAL SERVICES INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jason
  DuFour

  
	
   

  	
  Name:

  	
  Jason DuFour

  
	
   

  	
  Title:

  	
    Its
  Duly Authorized Signatory

  
	
   

  	
   

  
	
   

  	
   

  
	
  LENDERS:

  	
  GE BUSINESS FINANCIAL SERVICES INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jason
  DuFour

  
	
   

  	
  Name:

  	
  Jason DuFour

  
	
   

  	
  Title:

  	
    Its
  Duly Authorized Signatory

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SILICON VALLEY BANK

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Benjamin
  Colombo

  
	
   

  	
  Name:

  	
  Benjamin
  Colombo

  
	
   

  	
  Title:

  	
    Senior
  Relationship Manager

  
							

 

45

 

EXHIBIT
A TO AMENDED AND RESTATED

LOAN
AND SECURITY AGREEMENT (THE “AGREEMENT”)

 

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

 

All Goods, Equipment, Inventory, Contract Rights or rights to payment
of money, license agreements, franchise agreements, General Intangibles
(including Payment Intangibles), Accounts (including Health-Care Receivables),
Documents, Instruments (including any promissory notes), Chattel Paper (whether
tangible or electronic), cash, Deposit Accounts, Fixtures, Letters of Credit
Rights (whether or not the letter of credit is evidenced by a writing),
Commercial Tort Claims, Securities, and all other Investment Property,
Financial Assets, whether now owned or hereafter acquired, wherever located;
all Supporting Obligations and all of the Books relating to the foregoing and
any and all claims, rights and interests in any of the above.

 

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

 

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

 

Notwithstanding the foregoing, the Collateral shall include all
Accounts, General Intangibles, license and royalty fees and other revenues,
proceeds, or income arising out of or relating to any of the foregoing
Intellectual Property. To the extent a court of competent jurisdiction holds
that a security interest in any Intellectual Property is necessary to have a
security interest in any accounts, license and royalty fees and other revenues,
proceeds, or income arising out of or relating to any of the foregoing
Intellectual Property, then the Collateral shall, effective as of the Closing
Date, include the Intellectual Property, to the extent (and only to the extent)
necessary to permit perfection of the Lenders’ security interest in such
accounts, license and royalty fees and other revenues, proceeds, or income
arising out of or relating to any of the Intellectual Property.

 

Pursuant to the terms of Section 7.5 of the Agreement, Borrower
has agreed not to encumber any of its Intellectual Property.

 

All other terms used in the Exhibit A but not defined
herein or in the Agreement shall have the meaning given to such terms in the
Code.

 

 

EXHIBIT B

 

Compliance
Certificate

 

	
  TO:

  	
  GE Business
  Financial Services Inc., as Agent

  
	
   

  	
   

  
	
  FROM:

  	
  PONIARD
  PHARMACEUTICALS, INC.

  

 

The undersigned authorized officer of Poniard Pharmaceuticals, Inc.
certifies that under the terms and conditions of the Amended and Restated Loan
and Security Agreement among Borrower, Lenders and Agent dated as of September 2,
2008 (as amended, restated, supplemented or otherwise modified from time to
time, the “Agreement”), (i) Borrower is in compliance for the period
ending                               
with all required covenants except as noted below and (ii) all
representations and warranties in the Agreement are true and correct in all
material respects on this date (except for those representations and warranties
expressly referring to a specific date, which were true and correct in all
respects as of that date). Attached are the required documents supporting the
certification. In addition, the undersigned certifies that (1) Borrower
has timely filed all required tax returns and paid, or made adequate provision
to pay, all material taxes, except those being contested in good faith with
adequate reserves under GAAP and (ii) no liens has been levied or claims
made against Borrower relating to unpaid employee payroll or benefits which
Borrower has not previously notified in writing to Agent. The Officer certifies
that these are prepared in accordance with Generally Accepted Accounting
Principles (GAAP) consistently applied from one period to the next except as
explained in an accompanying letter or footnotes. The Officer acknowledges that
no borrowings may be requested at any time or date of determination that
Borrower is not in compliance with any of the terms of the Agreement, and that
compliance is determined not just at the date this certificate is delivered. Unless
defined herein, capitalized terms used herein shall have their respective
meanings set forth in the Agreement.

 

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

 

	
  Reporting
  Covenant

  	
   

  	
  Required

  	
   

  	
  Complies

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Monthly
  financial statements with Compliance Certificate

  	
   

  	
  Monthly
  within 30 days

  	
   

  	
  Yes

  	
   

  	
  No

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Annual (CPA
  Audited)

  	
   

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

  	
   

  	
  Yes

  	
   

  	
  No

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Financial
  Projections approved by Board

  	
   

  	
  Annually at
  least 30 days prior to fiscal year end

  	
   

  	
  Yes

  	
   

  	
  No

  

 

 

	
  Financial
  Covenant

  	
   

  	
  Required

  	
   

  	
  Complies

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Minimum
  unrestricted cash and Cash Equivalents, at all times

  	
   

  	
  (i) at
  all times prior to the date of the Post Closing Term Loan Advance, the lesser
  of (A) $11,440,000 and (B) the outstanding principal balance of the
  Term Loan Advances plus $4,000,000 and (ii) on the date of the Post
  Closing Term Loan Advance and at all times thereafter, the lesser of
  (A) $17,940,000 and (B) the outstanding principal balance of the
  Term Loan Advances plus $4,000,000

  	
   

  	
  Yes

  	
   

  	
  No

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Minimum cash
  and Cash Equivalents maintain in the SVB Accounts, at all times

  	
   

  	
  85% of the
  dollar value of the Borrower’s cash and Cash Equivalents at all financial
  institutions

  	
   

  	
  Yes

  	
   

  	
  No

  

 

Comments Regarding
Exceptions:  See Attached.

 

 

Sincerely,

 

	
   

  	
   

  
	
  Signature

  	
   

  
	
   

  	
   

  
	
  Title

  	
   

  
	
   

  	
   

  
	
  Date

  	
   

  

 

 

EXHIBIT
C

 

Note

 

SECURED
TERM PROMISSORY NOTE

 

	
  $                              

  	
  September 2,
  2008

  

 

FOR VALUE RECEIVED, PONIARD PHARMACEUTICALS,
INC., a Washington corporation, (“Borrower”),
promises to pay to the order of
                                    ,
or any subsequent holder hereof (each, a “Lender”), the principal sum of
$                                      
or, if less, the aggregate unpaid principal amount of all Term Loans made by
Lender to or on behalf of Borrower pursuant to the Agreement (as hereinafter
defined). All capitalized terms, unless otherwise defined herein, shall have
the respective meanings assigned to such terms in the Agreement.

 

This Secured Term Promissory Note is issued
pursuant to that certain Amended and Restated Loan and Security Agreement,
dated as of September 2, 2008, among Borrower, GE Business Financial
Services Inc., as agent, the other lenders signatory thereto, and Lender (as
amended, restated, supplemented or otherwise modified from time to time, the “Agreement”),
is one of the Notes referred to therein, and is entitled to the benefit and
security of the Agreement and the other Loan Documents referred to therein, to
which Agreement reference is hereby made for a statement of all of the terms
and conditions under which the loans evidenced hereby were made.

 

The principal amount of the indebtedness
evidenced hereby shall be payable in the amounts and on the dates specified in
the Agreement. Interest thereon shall be paid until such principal amount is
paid in full at such interest rates and at such times as are specified in the
Agreement. The terms of the Agreement are hereby incorporated herein by reference.

 

All payments shall be applied in accordance
with the Agreement. The acceptance by Lender of any payment which is less than
payment in full of all amounts due and owing at such time shall not constitute
a waiver of Lender’s right to receive payment in full at such time or at any
prior or subsequent time.

 

All amounts due hereunder, the Agreement and
under the other Loan Documents are payable in the lawful currency of the United
States of America. Borrower hereby expressly authorizes Lender to insert the
date value as is actually given in the blank space on the face hereof and on
all related documents pertaining hereto.

 

This Note is secured as provided in the
Agreement and the other Loan Documents. Reference is hereby made to the
Agreement and the other Loan Documents for a description of the properties and
assets in which a security interest has been granted, the nature and extent of
the security interest, the terms and conditions upon which the security
interest was granted and the rights of the holder of the Note in respect
thereof.

 

Time is of the essence hereof.

 

 

This Note may be voluntarily prepaid only as
permitted under Section 2.3 of the Agreement. After an Event of Default,
this Note shall bear interest at a rate per annum equal to the Default Rate
pursuant to Section 2.3(b)(ii) of the Agreement.

 

Borrower and all parties now or hereafter
liable with respect to this Note, hereby waive presentment, demand for payment,
notice of nonpayment, protest, notice of protest, notice of dishonor, and all other
notices in connection herewith, as well as filing of suit (if permitted by law)
and diligence in collecting this Note or enforcing any of the security hereof,
and agree to pay (if permitted by law) all expenses incurred in collection,
including reasonable attorneys’ fees and expenses, including without
limitation, the allocated costs of in-house counsel.

 

THIS NOTE SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.

 

No variation or modification of this Note, or
any waiver of any of its provisions or conditions, shall be valid unless such
variation or modification is made in accordance with Section 12.7 of the
Agreement. Any such waiver, consent, modification or change shall be effective
only in the specific instance and for the specific purpose given.

 

IN WITNESS WHEREOF, Borrower has duly executed this Note
as of the date first above written.

 

	
   

  	
  PONIARD
  PHARMACEUTICALS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

 

EXHIBIT D

 

EPS Setup Form

 

	
  EPS Setup Form

  	
  Submit Via
  Fax:

  	
  GE Healthcare Financial Services

  
	
   

  	
  ATTN: EPS
  Facilitator

  	
  Phone: (800) 426-6346

  
	
   

  	
  (203) 205-2193

  	
  Fax: Fax: (203) 205-2193

  

 

	
  1. Sender Information:

  	
  Instructions To Enroll In EPS Plan:

  
	
  Sender
  Name:

  	
   

  	
  A.

  	
  Complete sections 1 - 7 (signature and all other information is
  required)

  
	
  Sender
  Phone Number:

  	
   

  	
  B.

  	
  Include a copy of a voided check, on which is noted your bank, branch
  and account number

  
	
   

  	
   

  	
  C.

  	
  Please submit via Fax to: (203) 205-2193

  

 

2. Authorization Agreement for
Pre-Arranged Payment Plan:

 

(a)                      Poniard Pharmaceuticals, Inc.
(the “Borrower”) authorizes GE Business Financial Services Inc.
(“Agent”) to initiate
debit entries for payment becoming due pursuant to the terms and conditions set
forth in the Amended and Restated Loan and Security Agreement, dated as of September 2, 2008 (as amended,
restated, supplemented or otherwise modified from time to time, the “Agreement”), among Borrower,
Agent and the lenders signatory thereto.

 

(b)                     Borrower understands that the payments made
pursuant to the Agreement and all applicable taxes are solely its
responsibility. If payment is not satisfied due to account closure,
insufficient funds, or cancellation of any required automated payment services,
Borrower agrees to remit payment plus any applicable late charges, as set forth
in the Agreement.

 

(c)                      It is incumbent upon Borrower to give written
notice to Agent of any changes to this authorization or the below referenced
bank account information 10 days prior to payment date; Borrower may revoke
this authorization by giving 10 days written notice to Agent unless otherwise
stipulated in the Agreement.

 

(d)                     If a deduction is made in error, Borrower has
the right to be paid within three business days by Agent the amount of the
erroneous deduction, provided Agent is notified in writing of such error.

 

(e)                      Cosigner must also sign if the account is a
joint account.

 

 

3. Agent Account Number(s): (Invoice Billing
ID, 10-digit number formatted: 1234567-001)

	 
	
  Account:

  	
  Account:

  	
  Account:

  	
  Account:

  	 

	 
	
  Account:

  	
  Account:

  	
  Account:

  	
  Account:

  	 

	 
	
   

  	
   

  	
   

  	
   

  	 

	
  4. First Payment Debit Date (mm/dd/yy)

  	
  First Payment:

  
							

 

5. Complete
ALL Bank and
Borrower Information:

 

	
  BANK

  	
   

  	
  Name of Bank or Financial

  Institution:

  	
   

  	
  Bank Account Number:

  	
   

  	
  ABA Routing Number

  (9-digit number)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  INFO

  	
   

  	
  Address of Bank or Financial

  Institution:

  	
   

  	
  City:

  	
   

  	
  State:              Zip
  Code:

  

 

	
   

  	
   

  	
  Signatures

  	
   

  	
  Company

  	
   

  	
  Contact

  
	
   

  	
   

  	
  Signature of Authorized Signer:  Date:

  	
   

  	
  Company Name:

  	
   

  	
  Contact Name:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  BORROWER

  	
   

  	
  Name of Joint Account Holder:  (Please Print)

  	
   

  	
  Company Address:

  	
   

  	
  Contact Phone Number:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  INFO

  	
   

  	
  Signature of Joint Account Holder: Date:

  	
   

  	
  City:

  	
   

  	
  Contact Fax Number:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name of Authorized Signer: (Please Print)

  	
   

  	
  State: 
              Zip
  Code:

  	
   

  	
  Contact email address:

  

 

6. Would you like to have property taxes paid
via EPS on above accounts?  

Check
x:  YES: o                                     NO: o

 

7. Would you like to receive a complementary
invoice?

Check
x:  YES: o                                     NO: oExhibit 10.1

 

[Letterhead
of Acusphere, Inc.]

 

September 2,
2008

 

Cephalon, Inc.

41 Moores Road

Frazer,
PA  19355

Attention:  General Counsel

 

	
   

  	
  Re: License
  Agreement dated March 28, 2008 between Cephalon, Inc. and
  Acusphere, Inc., as amended on August 13, 2008 (the “License
  Agreement”)

  

 

Dear Sir or
Madame:

 

Reference is
made to the License Agreement described above. 
Pursuant to our discussions, for good and valuable consideration, you
agree that the License Agreement, as amended, is hereby further amended to
provide that the amount of assistance that Acusphere will be obligated to
provide to Cephalon under Sections 2.2 and 2.3 of the License Agreement from
and after the date hereof will be limited to four person-hours of assistance
during any month during the term of the License Agreement.

 

Of course, in
all other respects the License Agreement remains in effect as written.

 

Please
indicate your agreement with these changes by signing this letter in the space
provided below and returning it to me.

 

	
   

  	
   

  	
  Very truly
  yours,

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ACUSPHERE,
  INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By: 

  	
  /s/ Sherri
  C. Oberg

  
	
   

  	
   

  	
   

  	
   

  
	
  Accepted and
  agreed:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  CEPHALON,
  INC.

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By: 

  	
  /s/ John M.
  Limongelli

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