Document:

exv10w10

Exhibit 10.10

LOAN AND SECURITY AGREEMENT

     THIS LOAN AND SECURITY AGREEMENT, dated as of December 31, 2007 (as amended, restated,
supplemented or otherwise modified from time to time (this “Agreement”)) is among GENERAL
ELECTRIC CAPITAL CORPORATION (“GECC”), in its capacity as agent for Lenders (as defined
below) (together with its successors and assigns in such capacity, “Agent”), OXFORD FINANCE
CORPORATION (“Oxford”), the other financial institutions who are or hereafter become
parties to this Agreement as lenders (together with GECC and Oxford, collectively the
“Lenders”, and each individually, a “Lender”), ENDOCYTE, INC., a Delaware
corporation (“Borrower”), and the other entities or persons, if any, who are or hereafter
become parties to this Agreement as guarantors (each a “Guarantor” and collectively, the
“Guarantors”, and together with Borrower, each a “Loan Party” and collectively,
“Loan Parties”).

RECITALS

     Borrower wishes to borrow funds from time to time from Lenders, and Lenders desire to make
loans, advances and other extensions of credit, severally and not jointly, to Borrower from time to
time pursuant to the terms and conditions of this Agreement.

AGREEMENT

Loan Parties, Agent and Lenders agree as follows:

1. DEFINITIONS.

     As used in this Agreement, all capitalized terms shall have the definitions as provided
herein. Any accounting term used but not defined herein shall be construed in accordance with
generally accepted accounting principles in the United States of America, as in effect from time to
time (“GAAP”) and all calculations shall be made in accordance with GAAP. The term
“financial statements” shall include the accompanying notes and schedules. The term “person” shall
be deemed to include any entity, including, without limitation, any corporation, partnership,
limited partnership, limited liability company, unless the context otherwise requires. All other
terms used but not defined herein shall have the meaning given to such terms in the Uniform
Commercial Code as adopted in the State of New York, as amended and supplemented from time to time
(the “UCC”).

2. LOANS AND TERMS OF PAYMENT.

     2.1. Promise to Pay. Borrower promises to pay Agent, for the ratable accounts of Lenders,
when due pursuant to the terms hereof, the aggregate unpaid principal amount of all loans, advances
and other extensions of credit made severally by the Lenders to Borrower, together with interest on
the unpaid principal amount of such loans, advances and other extensions of credit at the interest
rates set forth herein.

     2.2. Term Loans.

     (a) Commitment. Subject to the terms and conditions hereof, each Lender,
severally, but not jointly, agrees to make term loans (each a “Term Loan” and
collectively, the “Term Loans”) to Borrower from time to time on any Business Day
(as defined below) during the period from the Closing Date (as defined below) until June 1,
2008 (the “Commitment Termination Date”) in an aggregate principal amount not to
exceed such Lender’s commitment as identified on

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Schedule A hereto (such commitment of each Lender as it may be amended to reflect
assignments made in accordance with this Agreement or terminated or reduced in accordance
with this Agreement, its “Commitment”, and the aggregate of all such commitments,
the “Commitments”). Notwithstanding the foregoing, the aggregate principal amount
of the Term Loans made hereunder shall not exceed $15,000,000 (the “Total
Commitment”). Each Lender’s obligation to fund a Term Loan shall be limited to such
Lender’s Pro Rata Share (as defined below) of such Term Loan. Subject to the terms and
conditions hereof, the initial Term Loan shall be made on the Closing Date in an aggregate
principal amount equal to $10,000,000 (the “Initial Term Loan”). After the Initial
Term Loan, subject to the terms and conditions hereof, Borrower may request no more than one
(1) additional Term Loan (the “Subsequent Term Loan”) and such Subsequent Term Loan
must be in an amount equal to $5,000,000.

     (b) Method of Borrowing. When Borrower desires a Term Loan, 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) on the date that is ten (10) Business Days prior to the
day the Term Loan 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.

     (c) Funding of Term Loans. Promptly after receiving a request for a Term Loan,
Agent shall notify each Lender of the contents of such request and such Lender’s Pro Rata
Share of the requested Term Loan. Upon the terms and subject to the conditions set forth
herein, each Lender, severally and not jointly, shall make available to Agent its Pro Rata
Share of the requested Term Loan, in lawful money of the United States of America in
immediately available funds, to the Collection Account (as defined below) 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 4.1 or 4.2, 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
(as defined below), 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) (the
“Designated Deposit Account”):

	 	 	 

	Bank Name:

	 	First Merchants Bank
	Bank Address:

	 	200 East Jackson Street
	 

	 	Muncie, Indiana 47305
	ABA Code:

	 	074900657 
	Account Number:

	 	90009108 
	Account Name:

	 	Lafayette Bank and Trust
	Ref:

	 	further credit to Endocyte account #135380
	 

	 	(GE Term Loan)

     (d) Notes. The Term Loans of each Lender shall be evidenced by a promissory
note substantially in the form of Exhibit A hereto (each a “Note” and,
collectively, the “Notes”), and Borrower shall execute and deliver a Note to each
Lender. Each Note shall represent the obligation of Borrower to pay to such Lender the
lesser of (a) the aggregate unpaid principal amount of all Term Loans 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).

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     (e) Agent May Assume Funding. Unless Agent shall have received notice from a
Lender prior to the date of any particular Term Loan that such Lender will not make
available to Agent such Lender’s Pro Rata Share of such Term Loan, Agent may assume that
such Lender has made such amount available to it on the date of such Term Loan in accordance
with subsection (c) of this Section 2.2, 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(a), 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 (the “Federal Funds Rate”) for the first
Business Day and thereafter, at the interest rate applicable to such Term Loan. If such
Lender shall repay such corresponding amount to Agent, the amount so repaid shall constitute
such Lender’s loan included in such Term Loan for purposes of this Agreement.

     2.3. Interest and Repayment.

     (a) Interest. The Term Loan shall accrue interest in arrears from the date
made until such Term Loan is fully repaid at a fixed per annum rate of interest equal to
(i) the sum of the Treasury Rate (as defined below) in effect on the day that is three (3)
Business Days prior to the making of such Term Loan as determined by Agent plus the
Index Basis (as defined below); (ii) 10.28%, if the Treasury Rate, as of any date of
determination, is at or below 3.04%; or (iii) 10.57%, if the Treasury Rate, as of any date
of determination, is at or above 3.34%, but not exceeding 3.81%. All computations of
interest and fees calculated on a per annum basis shall be made by Agent on the basis of a
360-day year consisting of twelve 30-day months. Each determination of an interest rate or
the amount of a fee hereunder shall be made by Agent and shall be conclusive, binding and
final for all purposes, absent manifest error. As used herein, the term “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. Index Basis means (i) 7.24%, if the Treasury Rate, as
of any date of determination, is at or above 3.05%, but not exceeding 3.33%; or (ii) 6.75%,
if the Treasury Rate, as of any date of determination, is at or above 3.82%.

     (b) Payments of Principal and Interest.

          (i) For the Initial Term Loan, Borrower shall pay to the Agent, for the ratable benefit
of the Lenders, (i) nine (9) consecutive payments of interest only (payable in arrears) at
the rate of interest determined in accordance with Section 2.3(a) on the first day of each
calendar month (a “Scheduled Payment Date”) commencing on the first day of the
second calendar month occurring after the month during which such Initial Term Loan was made
and (ii) thirty (30) equal consecutive payments of principal and interest (payable in
arrears) at the rate of interest determined in accordance with Section 2.3(a) (an
“Initial Loan Scheduled Payment”) on each Scheduled Payment Date commencing on the
first day of the eleventh calendar month occurring after the month during which such initial
Term Loan was made. The amount of each such

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payment of principal and interest in respect of the Initial Term Loan shall be
calculated by the Agent and shall be sufficient to fully amortize the principal and interest
due with respect to the Initial Term Loan over such repayment period. Notwithstanding the
foregoing, all unpaid principal and accrued interest with respect to the Initial Term Loan
is due and payable in full to Agent, for the ratable benefit of Lenders, on the earlier of
(A) the first day of the fortieth month following the date such Initial Term Loan was made
or (B) the date that the Initial Term Loan otherwise becomes due and payable hereunder,
whether by acceleration of the Obligations pursuant to Section 8.2 or otherwise (the earlier
of (A) or (B), the “Initial Term Loan Maturity Date”). Each Initial Loan
Scheduled Payment, when paid, shall be applied first to the payment of accrued and unpaid
interest on the Initial Term Loan and then to unpaid principal balance of the Initial Term
Loan. Without limiting the foregoing or the provisions of Section 2.3(b)(ii), all
outstanding Obligations in respect of the Initial Term Loan shall be due and payable on the
Initial Term Loan Maturity Date.

          (ii) For the Subsequent Term Loan, Borrower shall pay to the Agent, for the ratable
benefit of the Lenders, (i) six (6) consecutive payments of interest only (payable in
arrears) at the rate of interest determined in accordance with Section 2.3(a) on the
Scheduled Payment Date commencing on the first day of the second calendar month occurring
after the month during which such Subsequent Term Loan was made and (ii) thirty (30) equal
consecutive payments of principal and interest (payable in arrears) at the rate of interest
determined in accordance with Section 2.3(a) (a “Subsequent Loan Scheduled Payment”;
each Initial Loan Scheduled Payment and each Subsequent Loan Scheduled Payment are referred
to herein individually as a “Scheduled Payment” and collectively, as the
“Scheduled Payments”) on each Scheduled Payment Date commencing on the first day of
the eighth calendar month occurring after the month during which such Subsequent Term Loan
was made. The amount of each such payment of principal and interest shall be calculated by
the Agent and shall be sufficient to fully amortize the principal and interest due with
respect to the Subsequent Term Loan over such repayment period. Notwithstanding the
foregoing, all unpaid principal and accrued interest with respect to the Subsequent Term
Loan is due and payable in full to Agent, for the ratable benefit of Lenders, on the earlier
of (A) the first day of the thirty-seventh month following the date the Subsequent Term Loan
was made or (B) the date that such Subsequent Term Loan otherwise becomes due and payable
hereunder, whether by acceleration of the Obligations pursuant to Section 8.2 or otherwise
(the earlier of (A) or (B), the “Subsequent Term Loan Maturity Date”; together with
the Initial Term Loan Maturity Date referred to herein as the “Applicable Term Loan
Maturity Date”). Each Subsequent Loan Scheduled Payment, when paid, shall be applied
first to the payment of accrued and unpaid interest on the Subsequent Loan Term Loan and
then to unpaid principal balance of the Subsequent Loan Term Loan. Without limiting the
foregoing, all Obligations in respect of the Subsequent Term Loan shall be due and payable
on the Subsequent Term Loan Maturity Date.

     (c) Interim Interest Payment. For each Term Loan, Borrower shall make an
advance payment of interest on the date of funding such Term Loan for the period from such
date to and including the last day of the month in which such Term Loan was so made.

     (d) No Reborrowing. Once a Term Loan is repaid or prepaid, it cannot be
reborrowed.

     (e) Payments. All payments (including prepayments) to be made by any Loan
Party under any Debt Document shall be made in immediately available funds in U.S. dollars,
without setoff or counterclaim to the Collection Account (as defined below) before 1:00 p.m.
New York time on the date when due. All payments received by Agent after 1:00 p.m. New York
time on any Business Day or at any time on a day that is not a Business Day shall be deemed
to be

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received on the next Business Day. Whenever any payment required under this Agreement
would otherwise be due on a date that is not a Business Day, such payment shall instead be
due on the next Business Day, and additional fees or interest, as the case may be, shall
accrue and be payable for the period of such extension. The payment of any Scheduled
Payment prior to its due date shall be deemed to have been received on such due date for
purposes of calculating interest hereunder. All regularly scheduled payments due to Agent
and Lenders under Section 2.3(b) shall be effected by automatic debit of the appropriate
funds from Borrower’s operating account specified on the EPS Setup Form (as defined below).
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
	Bank Address:
	 	New York, NY
	ABA Number:
	 	021 001 033 
	Account Number:
	 	50271079 
	Account Name:
	 	GECC HH Cash Flow Collections
	Ref:
	 	Endocyte, Inc./CFN # HFS2702

     (f) 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 (as defined below), 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, then Borrower
shall from time to time upon written 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(f) 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. This provision shall survive the
termination of this Agreement.

     (g) Loan Records. Each Lender shall maintain in accordance with its usual
practice accounts evidencing the Obligations of Borrower to such Lender resulting from such
Lender’s Pro Rata Share of each Term Loan, including the amounts of principal and interest
payable and paid to such Lender from time to time under this Agreement. Agent shall
maintain in accordance with its usual practice a loan account on its books to record the
Term Loans and any other extensions of credit made by Lenders hereunder, and all payments
thereon made by Borrower. The entries made in the such accounts shall, to the extent
permitted by applicable law, be prima facie evidence of the existence and amounts of the
Obligations recorded therein; provided, however, that no error in such
account and no failure of any Lender or Agent to maintain any such account shall affect the
obligations of Borrower to repay the Obligations in accordance with their terms.

     2.4. Prepayments. Borrower can voluntarily prepay, upon 5 Business Days’ prior written
notice to Agent, the Initial Term Loan and the Subsequent Term Loan in full, but not in
part. Upon the date of

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(a) any voluntary prepayment of a Term Loan in accordance with the immediately preceding sentence
or (b) any mandatory prepayment of a Term Loan required under this Agreement (whether by
acceleration of the Obligations pursuant to Section 8.2 or otherwise), Borrower shall pay to Agent,
for the ratable benefit of the Lenders, a sum equal to (i) all outstanding principal plus accrued
interest with respect to such Term Loan, and (ii) a prepayment premium (as yield maintenance for
the loss of a bargain and not as a penalty) equal to: (i) 6% of the of the outstanding principal
amount of such Term Loan as of the date of such prepayment (without giving effect to such proposed
prepayment), if such prepayment is made at any time on or before the first anniversary of the
funding of such Term Loan, (ii) 4% of the outstanding principal amount of such Term Loan as of the
date of as of such prepayment (without giving effect to such proposed prepayment), if such
prepayment is made at any time after the first anniversary of the funding of such Term Loan but on
or before the second anniversary of the funding of such Term Loan and (iii) 2% of the outstanding
principal amount of such Term Loan as of the date of such prepayment (without giving effect to such
proposed prepayment), if such prepayment is made at any time after the second anniversary of the
funding of such Term Loan but before the Applicable Term Loan Maturity Date.

     2.5. Late Fees. If Agent does not receive any Scheduled Payment or other payment under any
Debt Document from any Loan Party within 3 days after its due date, then, at Agent’s election, such
Loan Party agrees to pay to Agent for the ratable benefit of all Lenders, a late fee equal to
(a) 5% of the amount of such unpaid payment or (b) such lesser amount that, if paid, would not
cause the interest and fees paid by such Loan Party under this Agreement to exceed the Maximum
Lawful Rate (as defined below) (the “Late Fee”).

     2.6. Default Rate. All Term Loans and other Obligations shall bear interest, at the option of
Agent or upon the request of the Requisite Lenders (as defined below), from and after the
occurrence and during the continuation of an Event of Default (as defined below), at a rate equal
to the lesser of (a) 5% above the rate of interest applicable to such Obligations as set forth in
Section 2.3(a) immediately prior to the occurrence of the Event of Default and (b) the Maximum
Lawful Rate (the “Default Rate”). The application of the Default Rate shall not be
interpreted or deemed to extend any cure period or waive any Default or Event of Default or
otherwise limit the Agent’s or any Lender’s right or remedies hereunder. All interest payable at
the Default Rate shall be payable on demand.

     2.7. Lender Fees.

     (a) Upfront Payment. Prior to the advance of the Initial Term Loan, in
consideration for Lenders’ agreement to underwrite the transaction contemplated by this
Agreement, Borrower has paid to Agent, for the ratable benefit of Lenders, and Agent hereby
acknowledges receipt of, a payment in the amount of $75,000 (the “Upfront Payment”).
The Upfront Payment has been fully earned by Lenders, in accordance with their Pro Rata
Shares as a non-refundable underwriting fee.

     2.8. Maximum Lawful Rate. Anything herein, any Note or any other Debt Document (as defined
below) to the contrary notwithstanding, the obligations of Loan Parties hereunder and thereunder
shall be subject to the limitation that payments of interest shall not be required, for any period
for which interest is computed hereunder, to the extent (but only to the extent) that contracting
for or receiving such payment by Agent and Lenders would be contrary to the provisions of any law
applicable to Agent and Lenders limiting the highest rate of interest which may be lawfully
contracted for, charged or received by Agent and Lenders, and in such event Loan Parties shall pay
Agent and Lenders interest at the highest rate permitted by applicable law (“Maximum Lawful
Rate”); provided, however, that if at any time thereafter the rate of interest
payable hereunder or thereunder is less than the Maximum Lawful Rate,
Loan Parties shall continue to pay interest hereunder at the Maximum Lawful Rate until such
time as the

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total interest received by Agent and Lenders is equal to the total interest that would
have been received had the interest payable hereunder been (but for the operation of this
paragraph) the interest rate payable since the making of the Initial Term Loan as otherwise
provided in this Agreement, any Note or any other Debt Document.

     2.9. Authorization and Issuance of the Warrants. Borrower has duly authorized the issuance to
Lenders (or their respective affiliates or designees) of stock purchase warrants substantially in
the form of the warrant attached hereto as Exhibit F (collectively, the
“Warrants”).

3. CREATION OF SECURITY INTEREST.

     3.1. Grant of Security Interest. As security for the prompt payment and performance, whether
at the stated maturity, by acceleration or otherwise, of all Term Loans and other debt, obligations
and liabilities of any kind whatsoever of Borrower to Agent and Lenders under the Debt 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 petition in
bankruptcy or after the commencement of any insolvency, reorganization or similar proceeding, and
whether or not allowed in such case or proceeding), absolute or contingent, now existing or arising
in the future, including but not limited to the payment and performance of any outstanding Notes,
and any renewals, extensions and modifications of such Term Loans (such indebtedness under the
Notes, Term Loans and other debt, obligations and liabilities in connection with the Debt Documents
are collectively called the “Obligations”), and as security for the prompt payment and
performance by each Guarantor of the Guaranteed Obligations as defined in the Guaranty (as defined
below), each Loan Party does hereby grant to Agent, on behalf of itself and Lenders, a security
interest in the property listed below (all hereinafter collectively called the
“Collateral”):

All of such Loan Party’s personal property of every kind and nature (except for
Intellectual Property, as defined in, and to the extent excluded pursuant to,
Section 3.3) whether now owned or hereafter acquired by, or arising in favor of,
such Loan Party, and regardless of where located, including, without limitation, all
accounts, chattel paper (whether tangible or electronic), commercial tort claims,
deposit accounts, documents, equipment, financial assets, fixtures, goods,
instruments, investment property (including, without limitation, all securities
accounts), inventory, letter-of-credit rights, letters of credit, securities,
supporting obligations, cash, cash equivalents, any other contract rights
(including, without limitation, rights under any license agreements), or rights to
the payment of money, and general intangibles, and all books and records of such
Loan Party relating thereto, and in and against all additions, attachments,
accessories and accessions to such property, all substitutions, replacements or
exchanges therefor, all proceeds, insurance claims, products, profits and other
rights to payments not otherwise included in the foregoing (with each of the
foregoing terms that are defined in the UCC having the meaning set forth in the
UCC).

Notwithstanding the foregoing, the grant of security interest herein shall not
extend to and the term “Collateral” shall not include: (i) any purchase money or
leased equipment subject to a lien permitted in clauses (c) and (d) of the
definition of Permitted Liens to the extent and only to the extent that the granting
of such security interest in such equipment is expressly prohibited by or would
constitute a default under the applicable purchase money debt document or capital
lease agreement relating to such purchase money or leased equipment as in effect on
the date hereof, provided that upon the termination or expiration of any
such prohibition, such purchase money or leased equipment, as applicable, shall
automatically be subject to the security interest granted in favor of the Agent
hereunder and
become part of the “Collateral”; provided, further that the
foregoing prohibition on such

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equipment being part of the “Collateral” shall not
apply in any case where such restriction on security interest, or the occurrence of
a default as a result of the grant of a security interest in such equipment in favor
of the Agent, under the applicable purchase money debt document or the capital lease
agreement would not be enforceable against the Borrower under applicable law, and
(ii) more than 65% of the issued and outstanding voting capital stock of any
subsidiary that is incorporated or organized in a jurisdiction other than the United
States or any state or territory thereof.

     Each Loan Party hereby represents and covenants that such security interest constitutes a
valid, first priority security interest in the presently existing Collateral (other than Excluded
Collateral as defined below), and will constitute a valid, first priority security interest in
Collateral (other than Excluded Collateral as defined below) acquired after the date hereof Each
Loan Party hereby covenants that it shall give written notice to Agent promptly upon the
acquisition by such Loan Party or creation in favor of such Loan Party of any commercial tort claim
with a value in excess of $250,000 after the Closing Date. As used herein, the term “Excluded
Collateral” means (i) any motor vehicles owned or leased by any Loan Party to extent perfection
of a lien on such motor vehicles may not be accomplished by the filing of a financing statement
under applicable state law, (ii) the Excluded Accounts (as defined below in Section 7.10),
(iii) Intellectual Property to extent and only to the extent provided in Section 3.3 hereof, and
(iv) the Cash Collateral to the extent and only to the extent the Cash Collateral is then subject
to a lien in favor of a lender providing financing permitted under Section 7.2(b) and the grant of
a lien on the Cash Collateral in favor of the Agent would violate the financing documents of such
other lender.

     3.2. Financing Statements. Each Loan Party hereby authorizes Agent to file UCC financing
statements with all appropriate jurisdictions to perfect Agent’s security interest (for the benefit
of itself and the Lenders) granted hereby.

     3.3. Grant of Security Interest in Proceeds of Intellectual Property. The Collateral shall
not include any of intellectual property of any Loan Party, which shall include, without
limitation, any and all copyrights, trademarks, servicemarks, patents, design rights, software,
trade secrets and intangible rights of a Loan Party and any applications, registrations, claims,
products, awards, judgments, amendments, renewals, extensions, improvements and insurance claims
related thereto (collectively, “Intellectual Property”) now owned or hereafter acquired, or
any claims for damages by way of any past, present or future infringement of any of the foregoing;
provided however, that the Collateral shall include all cash, royalty fees, other
proceeds, accounts and general intangibles that consist of rights of payment to or on behalf of a
Loan Party or proceeds from the sale, licensing or other disposition of all or any part of, or
rights in, the Intellectual Property by or on behalf of a Loan Party (“Rights to Payment”).
Notwithstanding the foregoing, to the extent it is necessary under applicable law in any
bankruptcy or insolvency proceeding involving a Loan Party for Agent (on behalf of itself and
Lenders) to have a security interest in the underlying Intellectual Property in order for Agent to
have (i) a security interest in the Rights to Payment and (ii) a security interest in any payments
with respect to Rights to Payment that are received after the commencement of such bankruptcy or
insolvency proceeding, then the Collateral shall automatically, and effective as of the date
hereof, include the Intellectual Property to the extent necessary to permit attachment and
perfection of Agent’s security interest (on behalf of itself and Lenders) in the Rights to Payment
and any payments in respect thereof that are received after the commencement of any bankruptcy or
insolvency proceeding. Agent hereby agrees on behalf of itself and the Lenders that, if Agent
obtains a security interest in the Intellectual Property pursuant to the immediately preceding
sentence, Agent will not exercise any remedies (under the UCC or otherwise) with respect to the
Intellectual Property (other than remedies with respect to Rights to Payment or any other proceeds
of the Intellectual Property).

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     3.4. Termination of Security Interest. Subject to Section 10.8, Agent’s lien on the
Collateral (on behalf of itself and Lenders) shall continue until all of the Obligations (other
than contingent unliquidated indemnity obligations) are indefeasibly repaid in full in cash, all of
the Commitments hereunder are terminated or fulfilled, and this Agreement shall have been
terminated (the “Termination Date”). Upon the Termination Date, Agent shall, at Loan
Parties’ sole cost and expense and without any recourse, representation or warranty, release its
liens in the Collateral, and all rights remaining therein, if any, shall revert to Loan Parties.

4. CONDITIONS OF CREDIT EXTENSIONS

     4.1. Conditions Precedent to Initial Term Loan. No Lender shall be obligated to make the
Initial Term Loan, or to take, fulfill, or perform any other action hereunder, until the following
have been delivered to the Agent (the date on which the Lenders make the Initial Term Loan after
all such conditions shall have been satisfied in a manner satisfactory to Agent or waived in
accordance with this Agreement, the “Closing Date”):

     (a) a counterpart of this Agreement duly executed by Borrower;

     (b) a certificate executed by the Secretary of Borrower, the form of which is attached
hereto as Exhibit B (the “Secretary’s Certificate”), providing verification
of incumbency and attaching (i) Borrower’s board resolutions approving the transactions
contemplated by this Agreement and the other Debt Documents and (ii) Borrower’s governing
documents;

     (c) Notes duly executed by Borrower in favor of each applicable Lender;

     (d) filed copies of UCC financing statements, collateral assignments, and terminations
statements, with respect to the Collateral, as Agent shall request;

     (e) certificates of insurance evidencing the insurance coverage, and satisfactory
additional insured and lender loss payable endorsements, in each case as required pursuant
to Section 6.4 herein;

     (f) current UCC lien, judgment, bankruptcy and tax lien search results demonstrating
that there are no other security interests or liens on the Collateral, other than Permitted
Liens (as defined below);

     (g) a Warrant in favor of each Lender, or its affiliate, duly executed by Borrower,
substantially in the form provided by Agent;

     (h) a certificate of good standing of Borrower from the jurisdiction of such Borrower’s
organization and a certificate of foreign qualification from each jurisdiction where
Borrower’s failure to be so qualified could reasonably be expected to have a Material
Adverse Effect (as defined below), in each case as of a recent date acceptable to Agent;

     (i) Subject to the Post-Closing Letter (defined below), a landlord consent in favor of
Agent executed by the landlord for any third party location where (a) any Loan Party’s
principal place of business, (b) any Loan Party’s books or records or (c) Collateral with an
aggregate value in excess of $25,000 is located, a form of which is attached hereto as
Exhibit C (“Access Agreement”);

9

 

     (j) a legal opinion of Loan Parties’ counsel, in form and substance satisfactory to
Agent;

     (k) a completed EPS set-up form, a form of which is attached hereto as
Exhibit E (the “EPS Setup Form”);

     (l) a completed perfection certificate, duly executed by each Loan Party, a form of
which Agent previously delivered to Borrower (the “Perfection Certificate”);

     (m) subject to the provisions of the Post-Closing Letter (as defined below), one or
more Account Control Agreements (as defined below), in form and substance reasonably
acceptable to Agent, duly executed by the applicable Loan Parties and the applicable
depository or financial institution, for each deposit and securities account (other than
accounts used exclusively for payroll and withholding tax purposes) listed on the Perfection
Certificate;

     (n) a disbursement instruction letter, in form and substance satisfactory to Agent,
executed by each Loan Party, Agent and each Lender (the “Disbursement Letter”);

     (o) a Post-Closing Letter in form and substance reasonably satisfactory to Agent (the
“Post-Closing Letter”);

     (p) all other documents and instruments as Agent may reasonably deem necessary or
appropriate to effectuate the intent and purpose of this Agreement (together with the
Agreement, Note, Warrant, the Perfection Certificate, the Secretary’s Certificate, the
Disbursement Letter, the Post-Closing Letter and all other agreements, instruments,
documents and certificates executed and/or delivered to or in favor of Agent from time to
time in connection with this Agreement or the transactions contemplated hereby, the
“Debt Documents”);

     (q) Agent and Lenders shall have received the fees required to be paid by Borrower, if
any, in the respective amounts specified in Section 2.7, and Borrower shall have reimbursed
Agent and Lenders for all fees (including, without limitation, fees and expenses of counsel
to the Agent), costs and expenses of closing presented as of the date of this Agreement; and

     (r) Agent shall have received such other documents, agreements, instruments or
information as Agent shall reasonably request.

     4.2. Conditions Precedent to All Term Loans. No Lender shall be obligated to make any Term
Loan, including the Initial Term Loan, unless the following additional conditions have been
satisfied:

     (a) (i) all representations and warranties in Section 5 below shall be true as of the
date of such Term Loan; (ii) no Event of Default or any other event, which with the giving
of notice or the passage of time, or both, would constitute an Event of Default (such event,
a “Default”) has occurred and is continuing or will result from the making of any
Term Loan, and (iii) Agent shall have received a certificate from an authorized officer of
Borrower confirming each of the foregoing;

     (b) Agent shall have received a Disbursement Letter with respect to the proceeds to be
made available under the Subsequent Term Loan; and

     (c) with respect to the Subsequent Term Loan, Agent shall have received from Borrower:
(i) evidence, satisfactory in form and substance to Agent, that demonstrates positive

10

 

interim clinical data on either Borrower’s (A) phase II clinical trials for its EC17
folate-targeted hapten therapy drug, or (B) phase II clinical trials for its EC145
folate-targeted chemotherapeutic conjugate (such positive clinical data for the clinical
trials described in the immediately preceding clauses (A) and (B) is referred to herein as
the “Performance Milestone Achievements”). Without limiting the foregoing
conditions in Section 4.1 and this Section 4.2, the Lenders shall not have any obligation to
fund the Subsequent Term Loan unless the Borrower has provided to Agent the evidence
required pursuant to the immediately preceding sentence of Borrower’s having met the
Performance Milestone Achievements by no later than the earlier of (1) thirty (30) days
after the Borrower has first met the Performance Milestone Achievements and (2) June 1,
2008. Satisfactory evidence of the Borrower having met the Performance Milestone
Achievements may include, but not be limited to, review and consent of Oxford’s Scientific
Advisory Board or written confirmation from Borrower’s Board of Directors as to such date,
provided that in all cases such evidence must be acceptable to Agent; and (ii) a Solvency
Certificate, in form and substance reasonably satisfactory to the Agent, demonstrating that
Borrower is Solvent, as defined below, immediately prior to and after giving effect to the
funding of such Term Loan.

5. REPRESENTATIONS AND WARRANTIES OF LOAN PARTIES.

     Each Loan Party, jointly and severally, represents, warrants and covenants to Agent and each
Lender that:

     5.1. Due Organization and Authorization. Each Loan Party’s exact legal name is as set forth
in the Perfection Certificate and each Loan Party is, and will remain, duly organized, existing and
in good standing under the laws of the State of its organization as specified in the Perfection
Certificate, has its chief executive office at the location specified in the Perfection
Certificate, and is, and will remain, duly qualified and licensed in every jurisdiction wherever
necessary to carry on its business and operations, except where the failure to be so qualified and
licensed could not reasonably be expected to have a Material Adverse Effect. This Agreement and
the other Debt Documents have been duly authorized, executed and delivered by each Loan Party and
constitute legal, valid and binding agreements enforceable in accordance with their terms. The
execution, delivery and performance by each Loan Party of each Debt Document executed or to be
executed by it is in each case within such Loan Party’s powers.

     5.2. Required Consents. No filing, registration, qualification with, or approval, consent or
withholding of objections from, any governmental authority or instrumentality or any other entity
or person is required with respect to the entry into, or performance by any Loan Party of, any of
the Debt Documents, except any already obtained.

     5.3. No Conflicts. The entry into, and performance by each Loan Party of, the Debt Documents
will not (a) violate any of the organizational documents of such Loan Party, (b) violate any law,
rule, regulation, order, award or judgment applicable to such Loan Party, or (c) result in any
breach of or constitute a default under, or result in the creation of any lien, claim or
encumbrance on any of such Loan Party’s property (except for liens in favor of Agent, on behalf of
itself and Lenders) pursuant to, any indenture, mortgage, deed of trust, bank loan, credit
agreement, or other Material Agreement (as defined below) to which such Loan Party is a party. As
used herein, “Material Agreement” shall mean (i) any agreement or contract to which such
Loan Party is a party and involving the receipt or payment of amounts in the aggregate exceeding
$250,000 per year and (ii) any agreement or contract to which such Loan Party is a party the
termination of which could reasonably be expected to have a Material Adverse Effect. Subject to
the provisions of the Post-Closing Letter, a description of all Material Agreements as of the
Closing Date is set forth on Schedule B hereto.

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     5.4. Litigation. There are no actions, suits, proceedings or investigations pending against
or affecting any Loan Party before any court, federal, state, provincial, municipal or other
governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign,
or any basis thereof, which involves the possibility of any judgment or liability that could
reasonably be expected to have a Material Adverse Effect, or which questions the validity of the
Debt Documents, or the other documents required thereby or any action to be taken pursuant to any
of the foregoing, nor does any Loan Party have reason to believe that any such actions, suits,
proceedings or investigations are threatened. As used in this Agreement, the term “Material
Adverse Effect” shall mean a material adverse effect on any of (a) the operations, business,
assets, properties, or condition (financial or otherwise) of Borrower and the Loan Parties, taken
as a whole, (b) the ability of a Loan Party to perform any of its obligations under any Debt
Document to which it is a party, (c) the legality, validity or enforceability of any Debt Document,
(d) the rights and remedies of Agent or Lenders under any Debt Document or (e) the validity,
perfection or priority of any lien in favor of Agent, on behalf of itself and Lenders, on any of
the Collateral.

     5.5. Financial Statements. All financial statements delivered to Agent and Lenders pursuant
to Section 6.3 have been prepared in accordance with GAAP (subject, in the case of unaudited
financial statements, to the absence of footnotes and normal year-end and audit adjustments), and
since the date of the most recent audited financial statement, no event has occurred which has had
or could reasonably be expected to have a Material Adverse Effect. There has been no material
adverse deviation from the most recent annual operating plan of Borrower delivered to Agent and
Lenders in accordance with Section 6.3.

     5.6. Use of Proceeds. The proceeds of the Term Loans shall be used for working capital and
general corporate purposes.

     5.7. Collateral. Each Loan Party is, and will remain, the sole and lawful owner, and in
possession of, the Collateral (except to the extent otherwise expressly permitted under Section 6
or 7 of this Agreement), and has the sole right and lawful authority to grant the security interest
described in this Agreement. The Collateral is, and will remain, free and clear of all liens,
claims and encumbrances of any kind whatsoever, except for (a) liens in favor of Agent, on behalf
of itself and Lenders, to secure the Obligations, (b) liens (i) with respect to the payment of
taxes, assessments or other governmental charges or (ii) of suppliers, carriers, materialmen,
warehousemen, workmen or mechanics and other similar liens, in each case imposed by law and arising
in the ordinary course of business, and securing amounts that are not more than 30 days past due or
that are being contested in good faith by appropriate proceedings diligently conducted and with
respect to which adequate reserves or other appropriate provisions are maintained on the books of
the applicable Loan Party in accordance with GAAP and which do not involve, in the judgment of
Agent, any risk of the sale, forfeiture or loss of any of the Collateral (a “Permitted
Contest”), (c) liens (i) existing on the date hereof on certain financed equipment as described
on Schedule B hereto, together with any liens on such equipment granted after the Closing
Date in connection with any refinancing or renewal of the Indebtedness subject to such liens
(provided that such lien secures only the property which was subject to the original lien and the
amount of such Indebtedness secured thereby is permitted under Section 7.2(b), and (ii) on cash
collateral of the Borrower in the amount not to exceed $500,000 (the “Cash Collateral”) as
described in Schedule B, together with any replacement lien or new lien granted on or after the
Closing Date on the Cash Collateral at any time and securing only the Indebtedness permitted under
Section 7.2(b) hereof, which Cash Collateral may be held at a deposit account of the
Borrower or such other lender to provide security for financing permitted under Section 7.2(b)
hereof, in either case, which deposit account is not subject to a deposit account control agreement
in favor of Agent, (d) liens securing Indebtedness (as defined below) permitted under
Section 7.2(c) below, provided that (i) such liens exist prior to the acquisition of, or attach
substantially simultaneous with, or within 90 days after the, acquisition, repair, improvement or
construction of, such property financed by such Indebtedness and (ii) such liens do not extend to
any property of a Loan Party

12

 

other than the property (and proceeds thereof) acquired or built, or the improvements or
repairs, accessions or replacements, financed by such Indebtedness, (e) licenses described in
Section 7.3(d) and (e) below, (f) liens in favor of other financial institutions arising in
connection with deposit or securities accounts maintained by Borrower with such financial
institutions, provided that (i) such liens only secure fees and service charges associated
with such accounts, and (ii) except in the case of any account maintained by Borrower on behalf of
its employees solely for the purpose of paying for qualified healthcare or dependent care expenses
(such account referred to herein as a “Flexible Spending Account”), subject to the
Post-Closing Letter, such liens are at all times subject to a triparty account control agreement
among such financial institution, Agent and Borrower, in form and substance reasonably satisfactory
to Agent, (g) liens in favor of customs and revenue authorities arising as a matter of law, in the
ordinary course of business, to secure payment of any customs duties in connection with the
importation of goods by any of the Loan Parties in the ordinary course of business, (h) liens on
insurance proceeds to the extent and only to the extent such liens secure the payment of financed
insurance premiums, (i) deposits in the ordinary course of business under worker’s compensation,
unemployment insurance, social security and other similar laws, or to secure the performance of
bids, tenders or contracts (other than for the repayment of borrowed money) obtained in the
ordinary course of business of Borrower or to secure indemnity, performance or other similar bonds,
in each case to the extent and only to the extent obtained in the ordinary course of business of
Borrower for the performance of bids, tenders or contracts (other than the repayment of borrowed
money), or to secure statutory obligations (other than tax liens or liens arising under ERISA or
environmental liens), or to secure indemnity, performance or other similar bonds, in each case to
the extent and only to the extent obtained in the ordinary course of business of the Borrower, (j)
liens arising from judgments, decrees or attachments in circumstances not constituting an Event of
Default, and (k) cash collateral in an amount not to exceed $500,000 securing purchase money
Indebtedness permitted under clause (b) of Section 7.2 (all of such liens described in the
foregoing clauses (a) through (k) are called “Permitted Liens”)

     5.8. Compliance with Laws. Each Loan Party is and will remain in compliance in all material
respects with all laws, statutes, ordinances, rules and regulations applicable to it including,
without limitation, (a) U.S. economic sanctions laws, Executive Orders and implementing regulations
as promulgated by the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”),
and all applicable anti-money laundering and counter-terrorism financing provisions of the Bank
Secrecy Act and the USA Patriot Act, and all regulations issued pursuant to it. No Loan Party nor
any of its subsidiaries, affiliates or joint ventures (i) is a person or entity designated by the
U.S. Government on the list of the Specially Designated Nationals and Blocked Persons (the “SDN
List”) with which a U.S. person or entity cannot deal with or otherwise engage in business
transactions, (ii) is a person or entity who is otherwise the target of U.S. economic sanctions
laws such that a U.S. person or entity cannot deal or otherwise engage in business transactions
with such person or entity; or (iii) is controlled by (including without limitation by virtue of
such person being a director or owning voting shares or interests), or acts, directly or
indirectly, for or on behalf of, any person or entity on the SDN List or a foreign government that
is the target of U.S. economic sanctions prohibitions such that the entry into, or performance
under, this Agreement or any other Debt Document would be prohibited under U.S. law. The SDN List
is maintained by OFAC and is available at: http://vvww.ustreas.gov/offices/enforcement/ofac/sdn/,
and (b) meeting the minimum funding requirements of the United States Employee Retirement Income
Security Act of 1974 (as amended, “ERISA”) with respect to any employee benefit plans
subject to ERISA. No Loan Party is an “investment company” or a company “controlled” by an
“investment company” within the meaning of the Investment Company Act of 1940 and (e) no Loan Party
is engaged principally, or as one of the important activities, in the business of extending credit
for the purpose of purchasing or carrying margin stock (within the meaning of Regulations T, U and
X of the Board of Governors of the Federal Reserve System (the “Federal Reserve Board”).

13

 

     5.9. Intellectual Property. The Intellectual Property is and will remain free and clear of
all liens, claims and encumbrances of any kind whatsoever, except for Permitted Liens described in
clauses (b)(i) and (e) of Section 5.7. No Loan Party has nor will it enter into any other
agreement or financing arrangement in which a negative pledge in such Loan Party’s Intellectual
Property is granted to any other party. As of the Closing Date and each date a Term Loan is
advanced to Borrower, no Loan Party has any interest in, or title to any Intellectual Property
except as disclosed in the Perfection Certificate. Each Loan Party owns or has rights to use all
Intellectual Property material to the conduct of its business as now or heretofore conducted by it
or proposed to be conducted by it, without any actual or claimed infringement upon the rights of
third parties to the extent that such infringement would materially and adversely impact the rights
of any of the Loan Parties with respect to ownership, use or licensing of such Intellectual
Property in its business.

     5.10. Solvency. Both before and after giving effect to each Term Loan, the transactions
contemplated herein, and the payment and accrual of all transaction costs in connection with the
foregoing, each Loan Party is and will be Solvent. As used herein, “Solvent” means, with
respect to a Loan Party on a particular date, that on such date (a) the fair value of the property
of such Loan Party is greater than the total amount of liabilities, including contingent
liabilities, of such Loan Party; (b) the present fair salable value of the assets of such Loan
Party is not less than the amount that will be required to pay the probable liability of such Loan
Party on its debts as they become absolute and matured; and (c) such Loan Party does not intend to,
and does not believe that it will, incur debts or liabilities beyond such Loan Party’s ability to
pay as such debts and liabilities mature. The amount of contingent liabilities (such as
litigation, guaranties and pension plan liabilities) at any time shall be computed as the amount
that, in light of all the facts and circumstances existing at the time, represents the amount that
can be reasonably be expected to become an actual or matured liability.

     5.11. Taxes; Pension. All tax returns, reports and statements, including information returns,
required by any governmental authority to be filed by each Loan Party and its Subsidiaries have
been filed with the appropriate governmental authority 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), excluding taxes, levies, assessments and similar charges or other amounts which are the
subject of a Permitted Contest. Proper and accurate amounts have been withheld by each Loan Party
from its respective employees for all periods in compliance with applicable laws and such
withholdings have been timely paid to the respective governmental authorities. Each Loan Party has
paid all amounts necessary to fund all present pension, profit sharing and deferred compensation
plans in accordance with their terms, and no Loan Party 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 a Loan
Party, including any liability to the Pension Benefit Guaranty Corporation or its successors or any
other governmental authority.

     5.12. Full Disclosure. Loan Parties hereby confirm that all of the information disclosed on
the Perfection Certificate is true, correct and complete as of the date of this Agreement and as of
the date of each Term Loan. No representation, warranty or other statement made by or on behalf of
a Loan Party contains any untrue statement of a material fact or omits to state a material fact
necessary to make the statements contained therein not misleading, it being recognized by Agent and
Lenders that the projections and forecasts provided by Loan Parties in good faith and based upon
reasonable and stated assumptions are not to be viewed as facts and that actual results during the
period or periods covered by any such projections and forecasts may differ from the projected or
forecasted results.

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6. AFFIRMATIVE COVENANTS.

     6.1. Good Standing. Borrower shall maintain its existence and good standing in its
jurisdiction of organization and maintain qualification in each jurisdiction in which the failure
to so qualify could reasonably be expected to have a Material Adverse Effect. Except as otherwise
expressly permitted pursuant to Section 7.2, each Loan Party (other than Borrower) shall maintain
its and each of its Subsidiaries’ existence and good standing in its jurisdiction of organization
and maintain qualification in each jurisdiction in which the failure to so qualify could reasonably
be expected to have a Material Adverse Effect. Each Loan Party shall maintain, and shall cause
each of its Subsidiaries to maintain, in full force all licenses, approvals and agreements, the
loss of which could reasonably be expected to have a Material Adverse Effect. “Subsidiary”
means, with respect to a Loan Party, any entity the management of which is, directly or indirectly
controlled by, or of which an aggregate of more than 50% of the outstanding voting capital stock
(or other voting equity interest) is, at the time, owned or controlled, directly or indirectly by,
such Loan Party or one or more Subsidiaries of such Loan Party, and, unless the contest otherwise
requires each reference to a Subsidiary herein shall be a reference to a Subsidiary of Borrower.

     6.2. Notice to Agent. Loan Parties shall provide Agent with (a) notice of any change in the
accuracy of the Perfection Certificate or any of the representations and warranties provided in
Section 5 above, immediately upon the occurrence of any such change, (b) notice of the occurrence
of any Default or Event of Default, promptly (but in any event within 3 Business Days) after the
date on which any officer of a Loan Party obtains knowledge of the occurrence of any such event,
(c) copies of all statements, reports and notices made available generally by Borrower to its
security holders and all documents filed with the Securities and Exchange Commission
(“SEC”) or any securities exchange or governmental authority exercising a similar function,
promptly, but in any event within 3 Business Days of delivering or receiving such information to or
from such persons, (d) a report of any legal actions pending or threatened in writing against
Borrower or any Subsidiary that could result in damages or costs to Borrower or any Subsidiary of
$200,000 or more promptly, but in any event within 3 Business Days, upon receipt of notice thereof,
(e) any new applications or registrations that Borrower has made or filed in respect of any
Intellectual Property or a change in status of any outstanding application or registrations, on a
quarterly basis or as otherwise reasonably requested by Agent, such application, filing or change
in status, and (0 copies of all statements, reports and notices delivered to or by a Loan Party in
connection with any Material Contract promptly (but in any event within 3 Business Days) upon
Agent’s request thereof.

     6.3. Financial Statements. If Borrower is a private company, it shall deliver to Agent and
Lenders (a) unaudited consolidated and, if available, consolidating balance sheets, statements of
operations and cash flow statements within 45 days of each month end, in a form acceptable to Agent
and certified by Borrower’s president, chief executive officer or chief financial officer, and
(b) its complete annual audited consolidated and, if available, consolidating financial statements
prepared under GAAP and certified by an independent certified public accountant selected by
Borrower and satisfactory to Agent within 150 days of the fiscal year end or, if sooner, at such
time as Borrower’s Board of Directors receives the certified audit. If Borrower is a publicly held
company, it shall deliver to Agent and Lenders quarterly unaudited consolidated and, if available,
consolidating balance sheets, statements of operations and cash flow statements and annual audited
consolidated and, if available, consolidating balance sheets, statements of operations and cash
flow statements, certified by a recognized firm of certified public accountants, within 5 days
after the statements are required to be provided to the SEC, and if Agent requests, Borrower shall
deliver to Agent and Lenders monthly unaudited consolidated and, if available, consolidating
balance sheets, statements of operations and cash flow statements within 60 days after the end of
each fiscal quarter. All such statements are to be prepared using GAAP (subject, in the case of
unaudited financial statements, to the absence of footnotes and normal year end audit adjustments)
and, if

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Borrower is a publicly held company, are to be in compliance with applicable SEC requirements.
All financial statements delivered pursuant to this Section 6.3 shall be accompanied by a
compliance certificate, signed by the chief financial officer of Borrower, in the form attached
hereto as Exhibit D. Borrower shall deliver to Agent and Lenders (i) as soon as available
and in any event not later than 45 days after the end of each fiscal year of Borrower, an annual
operating plan for Borrower, on a consolidated and, if available, consolidating basis, approved by
the Board of Directors of Borrower, for the current fiscal year, in form and substance satisfactory
to Agent and (ii) such budgets, sales projections, or other financial information as Agent or any
Lender may reasonably request from time to time generally prepared by Borrower in the ordinary
course of business.

     6.4. Insurance. Borrower, at its expense, shall maintain, and shall cause each Subsidiary to
maintain, insurance (including, without limitation, comprehensive general liability, hazard, and
business interruption insurance) with respect to all of its properties and businesses (including,
the Collateral), in such amounts and covering such risks as is carried generally in accordance with
sound business practice by companies in similar businesses similarly situated and in any event with
deductible amounts, insurers and policies that shall be reasonably acceptable to Agent. Borrower
shall deliver to Agent certificates of insurance evidencing such coverage, together with
endorsements to such policies naming Agent as a lender loss payee or additional insured, as
appropriate, in form and substance satisfactory to Agent. Each policy shall provide that coverage
may not be canceled or altered by the insurer except upon 30 days prior written notice to Agent and
shall not be subject to co-insurance (except for retentions and deductibles that are customarily
set forth in such policies). Borrower appoints Agent as its attorney-in-fact to make, settle and
adjust all claims under and decisions with respect to Borrower’s policies of casualty insurance,
and to receive payment of and execute or endorse all documents, checks or drafts in connection with
insurance payments. Agent shall not act as Borrower’s attorney-in-fact unless an Event of Default
has occurred and is continuing. The appointment of Agent as Borrower’s attorney in fact is a power
coupled with an interest and is irrevocable until all of the Obligations (other than contingent
unliquidated indemnity obligations) are indefeasibly paid in full. So long as no Event of Default
has occurred and is continuing, proceeds of insurance shall be applied, at the option of Borrower,
to repair or replace the Collateral or to reduce any of the Obligations. During the existence of
an Event of Default, proceeds of insurance shall be applied, at the option of Agent, to repair or
replace the Collateral or to reduce any of the Obligations.

     6.5. Taxes. Borrower shall, and shall cause each Subsidiary to, timely file all tax reports
and pay and discharge all taxes, assessments and governmental charges or levies imposed upon it, or
its income or profits or upon its properties or any part thereof, before the same shall be in
default and before the date on which penalties attach thereto, except to the extent such taxes,
assessments and governmental charges or levies are the subject of a Permitted Contest.

     6.6. Agreement with Landlord/Bailee. Each Loan Party shall obtain and maintain such Access
Agreement(s) with respect to any real property on which (a) a Loan Party’s principal place of
business, (b) a Loan Party’s books or records or (c) Collateral (other than Collateral used solely
in connection with the conducting of clinical trials) with an aggregate value in excess of $100,000
is located (other than real property owned by such Loan Party) as Agent may require.

     6.7. Protection of Intellectual Property. Each Loan Party shall take all necessary actions
to: (a) protect, defend and maintain the validity and enforceability of its Intellectual Property
to the extent material to the conduct of its business now or heretofore conducted by it or proposed
to be conducted by it, (b) promptly advise Agent in writing of material infringements of its
Intellectual Property of which the chief executive officer, chief financial officer, chief
scientific officer, director of business development or vice president of research of Borrower have
knowledge, and, (i) should the Intellectual Property be material to such Loan Party’s business and
(ii) should such Loan Party’s Board of Directors determine

16

 

that it is in the best interests of such Loan Party, promptly sue for infringement,
misappropriation or dilution and to recover any and all damages for such infringement,
misappropriation or dilution, (c) not allow any Intellectual Property material to such Loan Party’s
business to be abandoned, forfeited or dedicated to the public without Agent’s written consent, and
(d) notify Agent promptly, but in any event within 3 Business Days, if it knows or has reason to
know that any application or registration relating to any patent, trademark or copyright (now or
hereafter existing) material to its business may become abandoned or dedicated, or if any adverse
determination or development (including the institution of, or any such determination or
development in, any proceeding in the United States Patent and Trademark Office, the United States
Copyright Office or any court) regarding such Loan Party’s ownership of any Intellectual Property
material to its business, its right to register the same, or to keep and maintain the same. Each
Loan Party shall remain liable under each of its material Intellectual Property licenses pursuant
to which it is a licensee (“Licenses”) to observe and perform all of the conditions and
obligations to be observed and performed by it thereunder. None of Agent or any Lender shall have
any obligation or liability under any such License by reason of or arising out of this Agreement,
the granting of a lien, if any, in such License or the receipt by Agent (on behalf of itself and
Lenders) of any payment relating to any such License. None of Agent or any Lender shall be
required or obligated in any manner to perform or fulfill any of the obligations of any Loan Party
under or pursuant to any License, or to make any payment, or to make any inquiry as to the nature
or the sufficiency of any payment received by it or the sufficiency of any performance by any party
under any License, or to present or file any claims, or to take any action to collect or enforce
any performance or the payment of any amounts which may have been assigned to it or which it may be
entitled at any time or times.

     6.8. Special Collateral Covenants.

     (a) Each Loan Party shall remain in possession of its respective Collateral solely at
the location(s) specified on the Perfection Certificate; except that Agent, on behalf of
itself and Lenders, shall have the right to possess (i) any chattel paper or instrument that
constitutes a part of the Collateral (other than Collateral being used solely in connection
with the conducting of clinical trials), (ii) any other Collateral (excluding Collateral
being used solely in connection with the conducting of clinical trials) in which Agent’s
security interest (on behalf of itself and Lenders) may be perfected only by possession and
(iii) any Collateral after the occurrence of an Event of Default in connection with the
exercise of its remedies hereunder and in accordance with this Agreement and the other Debt
Documents. Agent may inspect (and representatives of any Lender may accompany Agent on any
such inspection) any of the Collateral during normal business hours, and in the absence of a
Default or an Event of Default, after giving Borrower reasonable prior notice. If Agent
asks, each Loan Party will promptly notify Agent in writing of the location of any
Collateral.

     (b) Each Loan Party shall (i) use the Collateral only in its trade or business,
(ii) maintain all of the Collateral in good operating order and repair, normal wear and tear
excepted, and (iii) use and maintain the Collateral only in compliance with manufacturers’
recommendations and all applicable laws.

     (c) Agent and Lenders do not authorize and each Loan Party agrees it shall not (i) part
with possession of any of the Collateral, except (x) to Agent (on behalf of itself and
Lenders), (y) for maintenance and repair or for a Permitted Disposition, and (z) Collateral
being used solely in connection with the conducting of clinical trials, or (ii) remove any
of the Collateral from the continental United States, except for Collateral being used
solely in connection with the conducting of clinical trials.

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     (d) Each Loan Party shall pay promptly when due all taxes, license fees, assessments
and public and private charges levied or assessed on any of the Collateral, on its use, or
on this Agreement or any of the other Debt Documents. At its option, Agent may discharge
taxes, liens, security interests or other encumbrances at any time levied or placed on the
Collateral and may pay for the maintenance, insurance and preservation of the Collateral and
effect compliance with the terms of this Agreement or any of the other Debt Documents. Each
Loan Party agrees to reimburse Agent, on demand, all reasonable costs and expenses incurred
by Agent in connection with such payment or performance and agrees that such reimbursement
obligation shall constitute Obligations.

     (e) Each Loan Party shall, at all times, keep accurate and complete records of the
Collateral, and Agent shall have the right to inspect and make copies of all of Loan
Parties’ books and records relating to the Collateral during normal business hours and upon
reasonably prior notice, and in the absence of a Default or an Event of Default, after
giving the applicable Loan Parties reasonable prior notice.

     (f) Each Loan Party agrees and acknowledges that any third person or entity who may at
any time possess all or any portion of the Collateral (excluding Collateral being used
solely in connection with the conducting of clinical trials) shall be deemed to hold, and
shall hold, the Collateral as the agent of, and as pledge holder for, Agent (on behalf of
itself and Lenders). Agent may at any time give notice to any third person or entity
described in the preceding sentence that such third person or entity is holding the
Collateral as the agent of, and as pledge holder for, Agent (on behalf of itself and
Lenders).

     6.9. Future Equity Investments. Borrower hereby grants to each Lender (or its Affiliates) the
right (but not the obligation) to participate in all of the Borrower’s Subsequent Financings
commenced after the Closing Date but prior to the termination of this Agreement; provided that
(a) the Lenders shall only have the right to invest up to $800,000 in total for all Lenders (such
investment right, as between the Lenders, to be divided based upon each Lender’s Pro Rata Share) in
each Subsequent Financing, (b) the right to participate granted by Borrower to Lenders shall be on
the same pricing, terms and conditions offered to other investors in any applicable Subsequent
Financing and each Lender shall be bound by the documentation negotiated by the lead investor in
such Subsequent Financing, and (c) no Lender shall have any obligation to participate in any such
Subsequent Financing. Borrower shall give each Lender prior written notice, as soon as
commercially possible, and the opportunity to participate in the first closing of each Subsequent
Financing containing the terms, conditions and pricing of such Subsequent Financing delivered to
Lender’s address pursuant to Section 10.2 hereof. Should any Lender not participate in the first
closing of any Subsequent Financing (except as a result of Lender confirming in writing to Borrower
that it does not wish to participate in such Subsequent Financing and except if at least fifteen
(15) Business Day’s notice of the first closing of the Subsequent Financing is actually given a
Lender), Borrower shall (i) conduct a second closing of the Subsequent Financing not later than 60
days after the first closing of the Subsequent Financing on the same terms as the first closing of
the Subsequent Financing, and (ii) shall provide at least fifteen (15) Business Days prior written
notice to Lenders and the opportunity of Lenders to invest in such second closing of the Subsequent
Financing in the amounts as specified in clause (a) above of this Section 6.9. “Subsequent
Financing” means any future round of private equity financing.

     6.10. Additional Subsidiaries.

          (a) Promptly (and in any event within fifteen (15) days) after the formation or acquisition of
any domestic Subsidiary by Borrower or any other Loan Party, Borrower or such other Loan Party, as
applicable, shall cause to be executed and delivered, by such new domestic Subsidiary, (i)

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a guaranty agreement, in form and substance reasonably satisfactory to Agent (the
“Guaranty”), pursuant to which such Subsidiary shall guarantee the payment and performance
of all of the Obligations, (ii) a joinder agreement, in form and substance satisfactory to Agent,
pursuant to which such new domestic Subsidiary shall agree to become a party to this agreement as a
Guarantor and Loan Party and becomes liable for the Obligations as set forth herein and in the
other Debt Documents, and to grant liens in its Collateral to secure the Obligations hereunder, and
(iii) by the applicable Loan Parties, such other related documents (including closing certificates,
legal opinions and other similar documents) as the Agent may reasonably request, all in form and
substance reasonably satisfactory to the Agent.

          (b) Promptly (and in any event within ten (10) days) after the formation or acquisition of any
foreign Subsidiary the ownership interests of which are owned by any Loan Party, the Loan Parties
shall cause to be executed and delivered (i) by the Loan Party that is such Foreign Subsidiary’s
direct parent company (or companies), a Pledge Agreement in form and substance reasonably
satisfactory to Agent, pursuant to which 65% of the voting Stock of such new foreign Subsidiary
owned by each such parent company shall be pledged to Agent (for the benefit of itself and the
Lenders) on a first priority and perfected basis to secure the Obligations, together with, to the
extent the stock is certificated, pledged stock certificates with endorsements in blank in respect
of such pledged Stock, and (ii) by the applicable Loan Parties, such other related documents
(including closing certificates, legal opinions and other similar documents) as Agent may
reasonably request, all in form and substance reasonably satisfactory to Agent.

     6.11. Use of Proceeds. The proceeds of the Term Loans shall be used for working capital and
general corporate purposes.

     6.12. Further Assurances. Each Loan Party shall, upon request of Agent, furnish to Agent such
further information, execute and deliver to Agent such documents and instruments (including,
without limitation, UCC financing statements) and shall do such other acts and things as Agent may
at any time reasonably request relating to the perfection or protection of the security interest
created by this Agreement or for the purpose of carrying out the intent of this Agreement and the
other Debt Documents.

7. NEGATIVE COVENANTS

     7.1. Liens. No Loan Party shall, and no Loan Party shall permit any of its Subsidiaries to
(a) create, incur, assume or permit to exist any lien, security interest, claim or encumbrance,
except for Permitted Liens, (b) grant any negative pledges on any Collateral, except for (i) any
negative pledges in respect of Collateral of the type described in clauses (c) (to the extent such
Collateral is subject to a purchase money security interest or a capital lease), (d), (e), (h),
(i) and (k) of Section 5.7, in each case so long as such negative pledge clause is limited to the
specific Collateral (and proceeds thereof) or Intellectual Property described in said clauses (c),
(d), (h), (i) and (k) of Section 5.7, and (ii) negative pledge clauses contained in leased
equipment under an operating lease so long as such negative pledge clause is limited to such leased
equipment and proceeds thereof, or (c) grant any negative pledges on any Intellectual Property.

     7.2. Indebtedness. No Loan Party shall, and no Loan Party shall permit any of its
Subsidiaries to, directly or indirectly create, incur, assume, permit to exist, guarantee or
otherwise become or remain directly or indirectly liable with respect to, any Indebtedness (as
hereinafter defined), except for (a) the Obligations, (b) Indebtedness existing on the date hereof
and set forth on Schedule B to this Agreement, together with any and all renewals, replacements or
refinancings thereof (whether with the existing lender in respect of such Indebtedness as specified
under Schedule B to this Agreement, or any replacement lender), under the same or similar terms and
to be used for either equipment financing or working capital purposes of the Borrower and its
Subsidiaries, provided that the aggregate principal amount of such Indebtedness is not
increased as a result thereof from the total principal amount of Indebtedness

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outstanding on the Closing Date as set forth on Schedule B to this Agreement, (c) Indebtedness
consisting of capitalized lease obligations and purchase money Indebtedness, in each case incurred
by Borrower or any of its Subsidiaries to finance the acquisition, repair, improvement or
construction of fixed or capital assets of such person or entity, provided that (i) the
aggregate principal amount of all such Indebtedness incurred (A) during the period commencing on
the Closing Date through and including December 31, 2008, does not exceed $1,000,000, (B) during
the period commencing on January 1, 2009 through and including December 31, 2009, does not exceed
an amount equal to the sum of $1,000,000 plus the amount, if any, of any Indebtedness under the
immediately preceding clause (A) that was not incurred during the period referred to in said
clause, and (C) on and at all times after January 1, 2010, does not exceed an amount equal to the
sum of $1,000,000 plus the amount, if any, of any Indebtedness under the immediately preceding
clauses (A) and (B) that was not incurred during the periods specified in said clauses, (ii) the
Lenders shall have been given by Borrower a right of first refusal to finance any capital
expenditures or capital lease obligations in respect of equipment to be acquired by Borrower for
use in its business prior to the financing thereof by any person or entity who is not a Lender
(such right of first refusal to apply to each Lender based on its Pro Rata Share, provided that if
any Lender declines to provide all or a portion of its Pro Rata share of such financing, the other
Lenders may, but shall be under no obligation, to provide the balance of such financing), and
(iii) the principal amount of such Indebtedness does not exceed the lower of the cost or fair
market value of the property so acquired or built or of such repairs or improvements financed with
such Indebtedness (each measured at the time of such acquisition, repair, improvement or
construction is made), (d) Indebtedness owing by any Loan Party to another Loan Party,
provided that (i) each Loan Party shall have executed and delivered to each other Loan
Party a demand note (each, an “Intercompany Note”) to evidence such intercompany loans or
advances owing at any time by each Loan Party to the other Loan Parties, which Intercompany Note
shall be in form and substance reasonably satisfactory to Agent and shall be pledged and delivered
to Agent as additional Collateral for the Obligations, (ii) any and all Indebtedness of any Loan
Party to another Loan Party shall be subordinated to the Obligations pursuant to the subordination
terms set forth in each Intercompany Note, and (iii) no Default or Event of Default would occur
both before and after giving effect to any such Indebtedness, (e) Indebtedness arising from the
endorsement of instruments in the ordinary course of business, and (f) other unsecured Indebtedness
incurred on or after the Closing Date in a principal amount outstanding at any time not to exceed
$250,000. The term “Indebtedness” shall mean, with respect to any person or entity, 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 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, (vii) all
indebtedness secured by a lien on any asset of such person, whether or not such indebtedness is
otherwise an obligation of such person, (viii) 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, and
(ix) all obligations or liabilities of others of the types specified in clauses (i) through (viii)
guaranteed by such person.

     7.3. Dispositions. No Loan Party shall, and no Loan Party shall permit any of its
Subsidiaries to, convey, sell, rent, lease, sublease, mortgage, license, transfer or otherwise
dispose of (collectively, “Transfer”) any of the Collateral or any Intellectual Property,
except for the following (collectively, “Permitted Dispositions”): (a) sales of Inventory
in the ordinary course of business, (b) Transfers of
obsolete equipment in the ordinary course of business or equipment no longer used or useful in
the

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business of the Loan Parties having a fair market value not to exceed $50,000 in the aggregate
per fiscal year for all such Transfers, (c) dispositions by a Loan Party or any of its Subsidiaries
of tangible assets for cash and fair value that are no longer used or useful in the business of
such Loan Party or such Subsidiary so long as (i) no Default or Event of Default exists at the time
of such disposition or would be caused after giving effect thereto and (ii) the fair market value
of all such assets disposed of does not exceed $50,000 in any fiscal year, (d) non-exclusive
licenses for the use of such Loan Party’s Intellectual Property in the ordinary course of business,
(e) exclusive licenses for the use of such Loan Party’s Intellectual Property in the ordinary
course of business, so long as, with respect to each such exclusive license, (i) no Default or
Event of Default exists at the time of such Transfer, (ii) the license constitutes an arms-length
transaction made in the ordinary course of business and the terms of which, on their face, do not
provide for a sale or assignment of any Intellectual Property, (iii) Borrower delivers 5 Business
Days prior written notice and a brief summary of the terms of the license to Agent, (iv) Borrower
delivers to Agent copies of the final executed licensing documents in connection with the license
promptly upon consummation of the license, and (v) any and all royalties, milestone payments or
other proceeds arising from the licensing agreement are paid to a deposit account that is governed
by an Account Control Agreement, and (f) any other Transfers to the extent and only to the extent
such Transfers are otherwise expressly permitted under Section 7 of this Agreement.

     7.4. Change in Name, Location or Executive Office; Change in Business; Change in Fiscal Year.
No Loan Party shall, and no Loan Party shall permit any of its Subsidiaries to, (a) change its name
or its state of organization without Agent’s written consent (which consent shall not be
unreasonably withheld, conditioned or delayed), (b) relocate its chief executive office without 30
days prior written notification to Agent, (c) engage in any business other than or reasonably
related or incidental to the businesses currently engaged in by such Loan Party or Subsidiary,
(d) engage in a business substantially different from the business (including any businesses
reasonably related thereto or extensions thereof) engaged in by such Loan Party or Subsidiary as of
the date of this Agreement, or (e) change its fiscal year end (except in the case of any Subsidiary
of the Borrower, to conform to the fiscal year end of Borrower).

     7.5. Mergers or Acquisitions. No Loan Party shall (a) merge or consolidate, and no Loan Party
shall permit any of its Subsidiaries to merge or consolidate, with or into any other person or
entity (other than mergers or consolidations of (i) a Subsidiary into Borrower in which Borrower is
the surviving entity, (ii) a Subsidiary into any other Loan Party in which such Loan Party is the
surviving entity, and (iii) a foreign Subsidiary which is not a Loan Party into any other foreign
Subsidiary which is not a Loan Party), or (b) acquire, or permit any of its Subsidiaries to
acquire, all or substantially all of the capital stock or property of another person or entity.

     7.6. Restricted Payments. No Loan Party shall, and no Loan Party shall permit any of its
Subsidiaries to, (a) declare or pay any dividends or make any other distribution or payment on
account of or redeem, retire, defease, purchase or repurchase any Stock (as defined below) of any
Person (other than the payment of dividends to Borrower and Borrower may repurchase its capital
stock pursuant to the terms of the employee stock purchase plans, employee restricted stock
agreements or similar arrangements in an aggregate amount not to exceed One Hundred Thousand
Dollars ($100,000) in any fiscal year or by the cancellation of Indebtedness), (b) make any payment
in respect of management fees or consulting fees (or similar fees) to any equityholder or other
affiliate of Borrower (other than customary fees paid to board members), (c) be a party to or bound
by an agreement that restricts a Subsidiary from paying dividends or otherwise distributing
property to Borrower, or (d) make any payments on account of intercompany Indebtedness permitted
under Section 7.2 (except in accordance with the terms of the applicable Intercompany Note then in
effect with respect to such intercompany Indebtedness). The term “Stock” as used herein means all
shares of capital stock (whether denominated as common stock or preferred stock), equity interests,
beneficial, partnership or membership interests,

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joint venture interests, participations or other ownership or profit interests in or
equivalents (regardless of how designated) of or in a Person (other than an individual), whether
voting or non-voting.

     7.7. Investments. No Loan Party shall, and no Loan Party shall permit any of its Subsidiaries
to, directly or indirectly (a) acquire or own, or make any loan, advance, capital contribution,
“earnout” payment or similar payment in respect to any acquisition of assets or stock of any person
(an “Investment”) in or to any person or entity (other than to another Loan Party to the
extent permitted under the terms and conditions set forth in Section 7.2(e), (b) acquire or create
any Subsidiary, or (c) engage in any joint venture or partnership with any other person or entity,
other than: (i) Investments existing on the date hereof and set forth on Schedule B to this
Agreement, (ii) Investments in cash and Cash Equivalents (as defined below), and other Investments
permitted by Borrower’s investment policy that has been approved in writing by Agent from time to
time, (iii) loans or advances to employees of Borrower or any of its Subsidiaries to finance
travel, entertainment and relocation expenses and other ordinary business purposes in the ordinary
course of business and loans in the nature of signing bonuses, provided that the aggregate
outstanding principal amount of all loans and advances permitted pursuant to this clause (iii)
shall not exceed $150,000 at any time (collectively, the “Permitted Investments”),
(iv) 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, (v) 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, (vi) Investments
consisting of loans to employees, officers or directors relating to the purchase of equity
securities of Borrower pursuant to employee stock purchase plan agreements approved by Borrower’s
Board of Directors that do not result in disbursements of cash by the Borrower and the other Loan
Parties, and (vii) other Investments in an aggregate amount not to exceed $250,000 (collectively,
the “Permitted Investments”). The term “Cash Equivalents” means (v) any
readily-marketable securities (i) issued by, or directly, unconditionally and fully guaranteed or
insured by the United States federal government or (ii) issued by any agency of the United States
federal government the obligations of which are fully backed by the full faith and credit of the
United States federal government, (w) any readily-marketable direct obligations issued by any other
agency of the United States federal government, any state of the United States or any political
subdivision of any such state or any public instrumentality thereof, in each case having a rating
of at least “A-1” from S&P or at least “P-1” from Moody’s, (x) any commercial paper rated at least
“A-1” by S&P or “P-1” by Moody’s and issued by any entity organized under the laws
of any state of the United States, (y) any U.S. dollar-denominated time deposit, insured
certificate of deposit, overnight bank deposit or bankers’ acceptance issued or accepted by
(i) Agent or (ii) 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) and (C) has Tier 1 capital (as defined in
such regulations) in excess of $250,000,000 or (z) 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 (v), (w), (x) or (y) above with maturities as
set forth in the proviso below, (ii) has net assets in excess of $500,000,000 and (iii) has
obtained from either S&P or Moody’s the highest rating obtainable for money market funds in the
United States; provided, however, that the maturities of all obligations specified
in any of clauses (v), (w), (x) and (y) above shall not exceed 365
days.

     7.8. Transactions with Affiliates. No Loan Party shall, and no Loan Party shall permit any of
its Subsidiaries to, directly or indirectly enter into or permit to exist any transaction with any
Affiliate (as defined below) of a Loan Party or any Subsidiary of a Loan Party except for
transactions (i) that are in the ordinary course of such Loan Party’s or such Subsidiary’s
business, upon fair and reasonable terms that are no more favorable to such Affiliate than would be
obtained in an arm’s length transaction, (ii) by or among Borrower and any Guarantor, (iii) with
respect to customary compensation and indemnification of employees and directors; and
(iv) involving funding of research at Purdue University and its affiliates. As

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used herein, “Affiliate” shall mean, with respect to a Loan Party or any Subsidiary of
a Loan Party, (a) each person that, directly or indirectly, owns or controls 5% or more of the
stock or membership interests having ordinary voting power in the election of directors or managers
of such Loan Party or such Subsidiary, and (b) each person that controls, is controlled by or is
under common control with such Loan Party or such Subsidiary.

     7.9. Compliance. No Loan Party shall, and no Loan Party shall permit any of its Subsidiaries
to, (a) fail to comply with the laws and regulations described in clauses (a) through and including
(d) of Section 5.8 herein, (b) use any portion of the Term Loans to purchase or carry margin stock
(within the meaning of Regulation U of the Federal Reserve Board) or (c) fail to comply in any
material respect with, or violate in any material respect any other law or regulation applicable to
it.

     7.10. Deposit Accounts and Securities Accounts. Other than with respect to the Flexible
Spending Account and other deposit accounts established and in fact used solely to fund current
payroll and current withholding taxes (“Excluded Accounts”), no Loan Party shall directly
or indirectly maintain or establish any deposit account or securities account, unless Agent, the
applicable Loan Party or Loan Parties and the depository institution or securities intermediary at
which the account is or will be maintained enter into a deposit account control agreement or
securities account control agreement, as the case may be, in form and substance satisfactory to
Agent (an “Account Control Agreement”) (which agreement shall provide that such depository
institution or securities intermediary shall comply with all instructions of Agent without further
consent of such Loan Party or Loan Parties, as applicable, including, without limitation, an
instruction by Agent to follow a notice of exclusive control or similar notice (such notice, a
“Notice of Exclusive Control”)), prior to or concurrently with the establishment of such
deposit account or securities account (or in the case of any such deposit account or securities
account maintained as of the date hereof, prior to the date that is forty-five (45) days after the
Closing Date). Agent may give a Notice of Exclusive Control with respect to any deposit account or
securities account at any time at which an Event of Default has occurred and is continuing.

     7.11. Amendments to Other Agreements. No Loan Party shall amend, modify or waive any
provision of any Material Contract (unless the net effect of such amendment, modification of waiver
is not materially adverse to any Loan Party, Agent or Lenders).

8. DEFAULT AND REMEDIES.

     8.1. Events of Default. Loan Parties shall be in default under this Agreement and each of the
other Debt Documents if (each of the following, an “Event of Default”):

     (a) Borrower shall fail to pay (i) any principal amount in respect of any of the Term
Loans when due, or (ii) any interest, fees or other Obligations (other than Obligations of
the type specified in clause (i) hererof) within a period of 3 days after the due date
thereof;

     (b) any Loan Party breaches any of its obligations under Section 6.1 (solely as it
relates to maintaining its existence), Section 6.2, Section 6.3, Section 6.4 or Article 7;

     (c) any Loan Party breaches any of its other obligations under any of the Debt
Documents and fails to cure such breach within 30 days after the earlier of (i) the date on
which an officer of such Loan Party becomes aware, or through the exercise of reasonable
diligence should have become aware, of such failure and (ii) the date on which notice shall
have been given to Borrower from Agent;

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     (d) any warranty, representation or statement made or deemed made by or on behalf of
any Loan Party in any of the Debt Documents or otherwise in connection with any of the
Obligations shall be false or misleading in any material respect at the time such warranty,
representations or statement was made or deemed to be made;

     (e) any of the Collateral is subjected to attachment, execution, levy, seizure or
confiscation in any legal proceeding or otherwise, or if any legal or administrative
proceeding is commenced against any Loan Party or any of the Collateral, which in the good
faith judgment of Agent subjects any of the Collateral to a material risk of attachment,
execution, levy, seizure or confiscation and no bond is posted or protective order obtained
to negate such risk within thirty (30) days; provided, in each case, such Collateral is of
value in excess of $25,000;

     (f) one or more judgments, orders or decrees shall be rendered against any Loan Party
or any Subsidiary of a Loan Party that exceeds by more than $100,000 any insurance coverage
applicable thereto (to the extent the relevant insurer has been notified of such claim and
has not denied coverage therefor) and either (i) enforcement proceedings shall have been
commenced by any creditor upon any such judgment, order or decree or (ii) such judgment,
order or decree shall not have been satisfied, vacated or discharged for a period of 30
consecutive days and there shall not be in effect (by reason of a pending appeal or
otherwise) any stay of enforcement thereof;

     (g) (i) any Loan Party or any Subsidiary of a Loan Party shall generally not pay its
debts as such debts become due, shall admit in writing its inability to pay its debts
generally, shall make a general assignment for the benefit of creditors, or shall cease
doing business as a going concern, (ii) any proceeding shall be instituted by or against any
Loan Party or any Subsidiary of a Loan Party seeking to adjudicate it a 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 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 and, in the
case of any such proceedings instituted against (but not by or with the consent of) such
Loan Party or such Subsidiary, either such proceedings shall remain undismissed or unstayed
for a period of 45 days or more or any action sought in such proceedings shall occur or
(iii) any Loan Party or any Subsidiary of a Loan Party shall take any corporate or similar
action or any other action to authorize any action described in clause (i) or
(ii) above;

     (h) an event or development occurs which has a Material Adverse Effect, provided that
for the purpose of this Section 8.1(h), any failure of a clinical trial or study in and of
itself will not be considered to have a Material Adverse Effect;

     (i) (i) any provision of any Debt Document shall fail to be valid and binding on, or
enforceable against, a Loan Party party thereto or (ii) any Debt Document purporting to
grant a security interest to secure any Obligation shall fail to create a valid and
enforceable security interest on any Collateral purported to be covered thereby or such
security interest shall fail or cease to be a perfected lien with the priority required in
the relevant Debt Document, or any Loan Party shall state in writing that any of the events
described in clause (i) or (ii) above shall have occurred;

     (j) any Loan Party or any Subsidiary of a Loan Party defaults under any Material
Agreement (after any applicable grace period contained therein), (ii) (A) any Loan Party or
any Subsidiary of a Loan Party fails to make (after any applicable grace period) any payment
when

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due (whether due because of scheduled maturity, required prepayment provisions,
acceleration, demand or otherwise) on any Indebtedness (other than the Obligations) of such
Loan Party or such Subsidiary having an aggregate principal amount (including undrawn
committed or available amounts and including amounts owing to all creditors under any
combined or syndicated credit arrangement) of more than $250,000 (“Material
Indebtedness”), (B) any other event shall occur or condition shall exist under any
contractual obligation relating to any such Material Indebtedness, if the effect of such
event or condition is to accelerate, or to permit the acceleration of (without regard to any
subordination terms with respect thereto), the maturity of such Material Indebtedness or
(C) any such Material Indebtedness shall become or be declared to be due and payable, or be
required to be prepaid, redeemed, defeased or repurchased (other than by a regularly
scheduled required prepayment), prior to the stated maturity thereof, or (iii) Borrower or
any Subsidiary defaults under any obligation for payments due under any lease agreement in
excess of $250,000; or

     (k) prior to an initial public offering by Borrower, any of the chief executive
officer, the chief financial officer or the chief scientific officer of Borrower as of the
date hereof shall cease to be involved in the day to day operations (including research
development) or management of the business of Borrower, and a successor of such officer
reasonably acceptable to Agent is not appointed and approved by the board of directors of
Borrower within 180 days of such cessation or involvement, (ii) during any period of twelve
consecutive calendar months, individuals who at the beginning of such period constituted the
board of directors of Borrower (together with any new directors whose election by the board
of directors of Borrower or whose nomination for election by the stockholders of Borrower
was approved by a vote of at least a majority of the directors then still in office who
either were directors at the beginning of such period or whose election or nomination for
election was previously so approved) cease for any reason other than death or disability to
constitute a majority of the directors then in office, or (iii) Borrower ceases to own and
control, directly or indirectly, all of the economic and voting rights associated with the
outstanding voting capital stock (or other voting equity interest) of each of its
Subsidiaries.

     8.2. Lender Remedies. Upon the occurrence and during the continuance of any Event of Default,
Agent may, and at the written request of the Requisite Lenders shall, terminate the Commitments
with respect to further Term Loans and declare any or all of the Obligations to be immediately due
and payable, without demand or notice to any Loan Party and the accelerated Obligations shall bear
interest at the Default Rate pursuant to Section 2.6, provided that, upon the occurrence of any
Event of Default specified in Section 8.1(g) above, the Obligations shall be automatically
accelerated. After the occurrence of an Event of Default, Agent shall have (on behalf of itself
and Lenders) all of the rights and remedies of a secured party under the UCC, and under any other
applicable law. Without limiting the foregoing, Agent shall have the right to, and at the written
request of the Requisite Lenders shall, (a) notify any account debtor of any Loan Party or any
obligor on any instrument which constitutes part of the Collateral to make payments to Agent (for
the benefit of itself and Lenders), (b) with or without legal process, enter any premises where the
Collateral may be and take possession of and remove the Collateral from the premises or store it on
the premises, (c) sell the Collateral at public or private sale, in whole or in part, and have the
right to bid and purchase at such sale, or (d) lease or otherwise dispose of all or part of the
Collateral, applying proceeds from such disposition to the Obligations in accordance with
Section 8.4. If requested by Agent, Loan Parties shall promptly assemble the Collateral and make
it available to Agent at a place to be designated by Agent. Agent may also render any or all of
the Collateral unusable at a Loan Party’s premises and may dispose of such Collateral on such
premises without liability for rent or costs. Any notice that Agent is required to give to a Loan
Party under the UCC of the time and place of any public sale or the time after which any private
sale or other intended disposition of the Collateral is to be made shall be deemed to constitute
reasonable notice if such notice is given in accordance with this

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Agreement at least 5 days prior to such action. Effective only upon the occurrence and during
the continuance of an Event of Default, each Loan Party hereby irrevocably appoints Agent (and any
of Agent’s designated officers or employees) as such Loan Party’s true and lawful attorney to:
(i) take any of the actions specified above in this paragraph; (ii) endorse such Loan Party’s name
on any checks or other forms of payment or security that may come into Agent’s possession;
(iii) settle and adjust disputes and claims respecting the accounts directly with account debtors,
for amounts and upon terms which Agent determines to be reasonable; and (iv) do such other and
further acts and deeds in the name of such Loan Party that Agent may deem necessary or desirable to
enforce its rights in or to any of the Collateral or to perfect or better perfect Agent’s security
interest (on behalf of itself and Lenders) in any of the Collateral. The appointment of Agent as
each Loan Party’s attorney in fact is a power coupled with an interest and is irrevocable until the
Termination Date.

     8.3. Additional Remedies. In addition to the remedies provided in Section 8.2 above, each
Loan Party hereby grants to Agent (on behalf of itself and Lenders) and any transferee of
Collateral, for purposes of exercising its remedies as provided herein, an irrevocable,
nonexclusive license (exercisable without payment of royalty or other compensation to any Loan
Party and subject to any exclusive licenses granted pursuant to Section 7.3(e)) to use, license or
sublicense any Intellectual Property now owned or hereafter acquired by such Loan Party, and
wherever the same may be located, and including in such license access to all media in which any of
the licensed items may be recorded or stored and to all computer software and programs used for the
compilation or printout thereof.

     8.4. Application of Proceeds. Proceeds from any Transfer of the Collateral or the
Intellectual Property (other than Permitted Dispositions) and all payments made to or proceeds of
Collateral received by Agent, in each case, during the continuance of an Event of Default shall be
applied as follows: (a) first, to pay all fees, costs, indemnities, reimbursements and expenses
then due to Agent under the Debt Documents in its capacity as Agent under the Debt Documents,
(b) second, to pay all fees, costs, indemnities, reimbursements and expenses then due to Lenders
under the Debt Documents in accordance with their respective Pro Rata Shares, until paid in full,
(c) third, to pay all interest on the Term Loans then due to Lenders in accordance with their
respective Pro Rata Shares, until paid in full (other than interest accrued after the commencement
of any proceeding referred to in Section 8.1(g) if a claim for such interest is not allowable in
such proceeding), (d) fourth, to pay all principal on the Term Loans then due to Lenders in
accordance with their respective Pro Rata Shares, until paid in full, (e) fifth, to pay all other
Obligations then due to Lenders in accordance with their respective Pro Rata Shares, until paid in
full (including, without limitation, all interest accrued after the commencement of any proceeding
referred to in Section 8.1(g) whether or not a claim for such interest is allowable in such
proceeding), and (f) sixth, to Borrower or as otherwise required by law. Borrower shall remain
fully liable for any deficiency.

9. THE AGENT.

     9.1. Appointment of Agent.

     (a) Each Lender hereby appoints GECC (together with any successor Agent pursuant to
Section 9.9) as Agent under the Debt Documents and authorizes the Agent to
(a) execute and deliver the Debt Documents and accept delivery thereof on its behalf from
Loan Parties, (b) take such action on its behalf and to exercise all rights, powers and
remedies and perform the duties as are expressly delegated to the Agent under such Debt
Documents and (c) exercise such powers as are reasonably incidental thereto. The provisions
of this Article 9 are solely for the benefit of Agent and Lenders and none of Loan Parties
nor any other person shall have any rights as a third party beneficiary of any of the
provisions hereof In performing its functions and duties under this Agreement and the other
Debt Documents, Agent shall act solely as an agent of Lenders and does not assume and shall
not be deemed to have assumed any obligation toward or relationship

26

 

of agency or trust with or for any Loan Party or any other person. Agent shall have no
duties or responsibilities except for those expressly set forth in this Agreement and the
other Debt Documents. The duties of Agent shall be mechanical and administrative in nature
and Agent shall not have, or be deemed to have, by reason of this Agreement, any other Debt
Document or otherwise a fiduciary or trustee relationship in respect of any Lender. Except
as expressly set forth in this Agreement and the other Debt Documents, Agent shall not have
any duty to disclose, and shall not be liable for failure to disclose, any information
relating to Borrower or any of its Subsidiaries that is communicated to or obtained by GECC
or any of its affiliates in any capacity.

     (b) Without limiting the generality of clause (a) above, Agent shall have the sole and
exclusive right and authority (to the exclusion of the Lenders), and is hereby authorized,
to (i) act as the disbursing and collecting agent for the Lenders with respect to all
payments and collections arising in connection with the Debt Documents (including in any
other bankruptcy, insolvency or similar proceeding), and each person making any payment in
connection with any Debt Document to any Lender is hereby authorized to make such payment to
Agent, (ii) file and prove claims and file other documents necessary or desirable to allow
the claims of Agent and Lenders with respect to any Obligation in any proceeding described
in any bankruptcy, insolvency or similar proceeding (but not to vote, consent or otherwise
act on behalf of such Lender), (iii) act as collateral agent for Agent and each Lender for
purposes of the perfection of all liens created by the Debt Documents and all other purposes
stated therein, (iv) manage, supervise and otherwise deal with the Collateral, (v) take such
other action as is necessary or desirable to maintain the perfection and priority of the
liens created or purported to be created by the Debt Documents, (vi) except as may be
otherwise specified in any Debt Document, exercise all remedies given to Agent and the other
Lenders with respect to the Collateral, whether under the Debt Documents, applicable law or
otherwise and (vii) execute any amendment, consent or waiver under the Debt Documents on
behalf of any Lender that has consented in writing to such amendment, consent or waiver;
provided, however, that Agent hereby appoints, authorizes and directs each
Lender to act as collateral sub-agent for Agent and the Lenders for purposes of the
perfection of all liens with respect to the Collateral, including any deposit account
maintained by a Loan Party with, and cash and cash equivalents held by, such Lender, and may
further authorize and direct the Lenders to take further actions as collateral sub-agents
for purposes of enforcing such liens or otherwise to transfer the Collateral subject thereto
to Agent, and each Lender hereby agrees to take such further actions to the extent, and only
to the extent, so authorized and directed. Agent may, upon any term or condition it
specifies, delegate or exercise any of its rights, powers and remedies under, and delegate
or perform any of its duties or any other action with respect to, any Debt Document by or
through any trustee, co-agent, employee, attorney-in-fact and any other person (including
any Lender). Any such person shall benefit from this Article 9 to the extent provided by
Agent.

     (c) If Agent shall request instructions from Requisite Lenders or all affected Lenders
with respect to any act or action (including failure to act) in connection with this
Agreement or any other Debt Document, then Agent shall be entitled to refrain from such act
or taking such action unless and until Agent shall have received instructions from Requisite
Lenders or all affected Lenders, as the case may be, and Agent shall not incur liability to
any person by reason of so refraining. Agent shall be fully justified in failing or
refusing to take any action hereunder or under any other Debt Document (a) if such action
would, in the opinion of Agent, be contrary to law or any Debt Document, (b) if such action
would, in the opinion of Agent, expose Agent to any potential liability under any law,
statute or regulation or (c) if Agent shall not first be indemnified to its satisfaction
against any and all liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. Without limiting the foregoing, no Lender shall have
any right of action whatsoever against Agent as a result of Agent acting or

27

 

refraining from acting hereunder or under any other Debt Document in accordance with
the instructions of Requisite Lenders or all affected Lenders, as applicable.

     9.2. Agent’s Reliance, Etc. Neither Agent nor any of its affiliates nor any of their
respective directors, officers, agents, employees or representatives shall be liable for any action
taken or omitted to be taken by it or them hereunder or under any other Debt Documents, or in
connection herewith or therewith, except for damages caused by its or their own gross negligence or
willful misconduct as finally determined by a court of competent jurisdiction. Without limiting
the generality of the foregoing, Agent: (a) may treat the payee of any Note as the holder thereof
until such Note has been assigned in accordance with Section 10.1; (b) may consult with legal
counsel, independent public accountants and other experts, whether or not 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; (c) shall not be responsible or otherwise incur
liability for any action or omission taken in reliance upon the instructions of the Requisite
Lenders, (d) makes no warranty or representation to any Lender and shall not be responsible to any
Lender for any statements, warranties or representations made in or in connection with this
Agreement or the other Debt Documents; (e) shall not have any duty to inspect the Collateral
(including the books and records) or to ascertain or to inquire as to the performance or observance
of any provision of any Debt Document, whether any condition set forth in any Debt Document is
satisfied or waived, as to the financial condition of any Loan Party or as to the existence or
continuation or possible occurrence or continuation of any Default or Event of Default and shall
not be deemed to have notice or knowledge of such occurrence or continuation unless it has received
a notice from Borrower or any Lender describing such Default or Event of Default clearly labeled
“notice of default”; (f) shall not be responsible to any Lender for the due execution, legality,
validity, enforceability, effectiveness, genuineness, sufficiency or value of, or the attachment,
perfection or priority of any lien created or purported to be created under or in connection with,
any Debt Document or any other instrument or document furnished pursuant hereto or thereto; and (g)
shall incur no liability under or in respect of this Agreement or the other Debt Documents by
acting upon any notice, consent, certificate or other instrument or writing (which may be by
telecopy, telegram, cable or telex) believed by it to be genuine and signed or sent or otherwise
authenticated by the proper party or parties.

     9.3. GECC and Affiliates. GECC shall have the same rights and powers under this Agreement and
the other Debt Documents as any other Lender and may exercise the same as though it were not Agent;
and the term “Lender” or “Lenders” shall, unless otherwise expressly indicated, include GECC in its
individual capacity. GECC and its affiliates may lend money to, invest in, and generally engage in
any kind of business with, Borrower, any of Borrower’s Subsidiaries, any of their Affiliates and
any person who may do business with or own securities of Borrower, any of Borrower’s Subsidiaries
or any such Affiliate, all as if GECC were not Agent and without any duty to account therefor to
Lenders. GECC and its affiliates may accept fees and other consideration from Borrower for
services in connection with this Agreement or otherwise without having to account for the same to
Lenders. Each Lender acknowledges the potential conflict of interest between GECC as a Lender
holding disproportionate interests in the Term Loans and GECC as Agent, and expressly consents to,
and waives, any claim based upon, such conflict of interest.

     9.4. Lender Credit Decision. Each Lender acknowledges that it has, independently and without
reliance upon Agent or any other Lender and based on the financial statements referred to in
Section 6.3 and such other documents and information as it has deemed appropriate, made its own
credit and financial analysis of each Loan Party and its own 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 action under this Agreement.
Each Lender acknowledges the

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potential conflict of interest of each other Lender as a result of Lenders holding
disproportionate interests in the Term Loans, and expressly consents to, and waives, any claim
based upon, such conflict of interest.

     9.5. Indemnification. Lenders shall and do hereby indemnify Agent (to the extent not
reimbursed by Loan Parties and without limiting the obligations of Loan Parties hereunder), ratably
according to their respective Pro Rata Shares from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever that may be imposed on, incurred by, or asserted
against Agent in any way relating to or arising out of this Agreement or any other Debt Document or
any action taken or omitted to be taken by Agent in connection therewith; provided that no
Lender shall be liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements resulting from Agent’s gross
negligence or willful misconduct as finally determined by a court of competent jurisdiction.
Without limiting the foregoing, each Lender agrees to reimburse Agent promptly upon demand for its
Pro Rata Share of any out-of-pocket expenses (including reasonable counsel fees) incurred by Agent
in connection with the preparation, execution, delivery, administration, modification, amendment or
enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in
respect of rights or responsibilities under, this Agreement and each other Debt Document, to the
extent that Agent is not reimbursed for such expenses by Loan Parties. The provisions of this
Section 9.5 shall survive the termination of this Agreement.

     9.6. Successor Agent. 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 Requisite Lenders
shall have the right to appoint a successor Agent. If no successor Agent shall have been so
appointed by the Requisite Lenders 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 Lender, if a Lender is willing to accept such
appointment, or otherwise 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 Requisite Lenders shall thereafter perform
all the duties of Agent hereunder until such time, if any, as the Requisite Lenders appoint a
successor Agent 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 Debt Documents, except that any indemnity rights or other rights in favor
of such resigning Agent shall continue. After any resigning Agent’s resignation hereunder, the
provisions of this Section 9 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 Debt Documents.

     9.7. Setoff and Sharing of Payments. In addition to any rights now or hereafter granted
under applicable law and not by way of limitation of any such rights, upon the occurrence and
during the continuance of any Event of Default and subject to Section 9.8(e), each Lender is
hereby authorized at any time or from time to time upon the direction of Agent, without notice to
Borrower or any other person, any such notice being hereby expressly waived, to offset and to
appropriate and to apply any and all balances held by it at any of its offices for the account of
Borrower (regardless of whether such balances are then due to Borrower) and any other properties
or assets at any time held or owing by that Lender or that holder to or for the credit or for the
account of Borrower against and on account of any of the Obligations that are not paid when due.
Any Lender exercising a right of setoff or otherwise receiving

29

 

any payment on account of the Obligations in excess of its Pro Rata Share thereof shall
purchase for cash (and the other Lenders or holders shall sell) such participations in each such
other Lender’s or holder’s Pro Rata Share of the Obligations as would be necessary to cause such
Lender to share the amount so offset or otherwise received with each other Lender or holder in
accordance with their respective Pro Rata Shares of the Obligations. Borrower agrees, to the
fullest extent permitted by law, that (a) any Lender may exercise its right to offset with respect
to amounts in excess of its Pro Rata Share of the Obligations and may sell participations in such
amounts so offset to other Lenders and holders and (b) any Lender so purchasing a participation in
the Term Loans made or other Obligations held by other Lenders or holders may exercise all rights
of offset, bankers’ lien, counterclaim or similar rights with respect to such participation as
fully as if such Lender or holder were a direct holder of the Term Loans and the other Obligations
in the amount of such participation. Notwithstanding the foregoing, if all or any portion of the
offset amount or payment otherwise received is thereafter recovered from the Lender that has
exercised the right of offset, the purchase of participations by that Lender shall be rescinded
and the purchase price restored without interest. The term “Pro Rata Share” means, with
respect to any Lender at any time, the percentage obtained by dividing (x) the Commitment of such
Lender then in effect (or, if such Commitment is terminated, the aggregate outstanding principal
amount of the Term Loans owing to such Lender) by (y) the Total Commitment then in effect (or, if
the Total Commitment is terminated, the outstanding principal amount of the Term Loans owing to
all Lenders).

     9.8. Advances; Payments; Non-Funding Lenders; Information; Actions in Concert.

     (a) Advances; Payments. If Agent receives any payment for the account of
Lenders on or prior to 11:00 a.m. (New York time) on any Business Day, Agent shall pay to
each applicable Lender such Lender’s Pro Rata Share of such payment on such Business Day.
If Agent receives any payment for the account of Lenders after 11:00 a.m. (New York time) on
any Business Day, Agent shall pay to each applicable Lender such Lender’s Pro Rata Share of
such payment on the next Business Day. To the extent that any Lender has failed to fund any
such payments and Term Loans (a “Non-Funding Lender”), Agent shall be entitled to
set off the funding short-fall against that Non-Funding Lender’s Pro Rata Share of all
payments received from Borrower.

     (b) Return of Payments.

(i) If Agent pays an amount to a Lender under this Agreement in the belief or
expectation that a related payment has been or will be received by Agent from a
Loan Party and such related payment is not received by Agent, then Agent will be
entitled to recover such amount (including interest accruing on such amount at the
Federal Funds Rate for the first Business Day and thereafter, at the rate
otherwise applicable to such Obligation) from such Lender on demand without
setoff, counterclaim or deduction of any kind.

(ii) If Agent determines at any time that any amount received by Agent under
this Agreement must be returned to a Loan Party or paid to any other person
pursuant to any insolvency law or otherwise, then, notwithstanding any other term
or condition of this Agreement or any other Debt Document, Agent will not be
required to distribute any portion thereof to any Lender. In addition, each
Lender will repay to Agent on demand any portion of such amount that Agent has
distributed to such Lender, together with interest at such rate, if any, as Agent
is required to pay to a Loan Party or such other person, without setoff,
counterclaim or deduction of any kind.

     (c) Non-Funding Lenders. The failure of any Non-Funding Lender to make any
Term Loan or any payment required by it hereunder shall not relieve any other Lender (each
such other

30

 

Lender, an “Other Lender”) of its obligations to make such Term Loan, but
neither any Other Lender nor Agent shall be responsible for the failure of any Non-Funding
Lender to make a Term Loan or make any other payment required hereunder. Notwithstanding
anything set forth herein to the contrary, a Non-Funding Lender shall not have any voting or
consent rights under or with respect to any Debt Document or constitute a “Lender” (or be
included in the calculation of “Requisite Lender” hereunder) for any voting or consent
rights under or with respect to any Debt Document. At Borrower’s request, Agent or a person
reasonably acceptable to Agent shall have the right with Agent’s consent and in Agent’s sole
discretion (but shall have no obligation) to purchase from any Non-Funding Lender, and each
Non-Funding Lender agrees that it shall, at Agent’s request, sell and assign to Agent or
such person, all of the Commitments and all of the outstanding Term Loans of that
Non-Funding Lender for an amount equal to the principal balance of all Term Loans held by
such Non-Funding Lender and all accrued interest and fees with respect thereto through the
date of sale, such purchase and sale to be consummated pursuant to an executed Assignment
Agreement (as defined below).

     (d) Dissemination of Information. Agent shall use reasonable efforts to
provide Lenders with any notice of Default or Event of Default received by Agent from, or
delivered by Agent to Borrower, with notice of any Event of Default of which Agent has
actually become aware and with notice of any action taken by Agent following any Event of
Default; provided that Agent shall not be liable to any Lender for any failure to do
so, except to the extent that such failure is attributable to Agent’s gross negligence or
willful misconduct as finally determined by a court of competent jurisdiction. Lenders
acknowledge that Borrower is required to provide financial statements to Lenders in
accordance with Section 6.3 hereto and agree that Agent shall have no duty to provide the
same to Lenders.

     (e) Actions in Concert. Anything in this Agreement to the contrary
notwithstanding, each Lender hereby agrees with each other Lender that no Lender shall take
any action to protect or enforce its rights arising out of this Agreement, the Notes or any
other Debt Documents (including exercising any rights of setoff) without first obtaining the
prior written consent of Agent and Requisite Lenders, it being the intent of Lenders that
any such action to protect or enforce rights under this Agreement and the Notes shall be
taken in concert and at the direction or with the consent of Agent and Requisite Lenders.

10. MISCELLANEOUS.

     10.1. Assignment. Subject to the terms of this Section 10.1, any Lender may make an
assignment to an assignee of, or sell participations in, at any time or times, the Debt Documents,
its Commitment, Term Loans or any portion thereof or interest therein, including any Lender’s
rights, title, interests, remedies, powers or duties thereunder. Any assignment by a Lender shall:
(i) except in the case of an assignment to a Qualified Assignee (as defined below), require the
consent of each Lender (which consent shall not be unreasonably withheld, conditioned or delayed),
(ii) require the execution of an assignment agreement in form and substance reasonably satisfactory
to, and acknowledged by, Agent (an “Assignment Agreement”); (iii) be conditioned on such
assignee Lender representing to the assigning Lender and Agent that it is purchasing the applicable
Commitment and/or Term Loans to be assigned to it for its own account, for investment purposes and
not with a view to the distribution thereof; (iv) be in an aggregate amount of not less than
$1,000,000, unless such assignment is made to an existing Lender or an affiliate of an existing
Lender or is of the assignor’s (together with its affiliates’) entire interest of the Term Loans or
is made with the prior written consent of Agent; and (v) include a payment to Agent of an
assignment fee of $3,500. In the case of an assignment by a Lender under this Section 10.1, the
assignee shall have, to the extent of such assignment, the same rights, benefits and obligations as
all other Lenders hereunder. The assigning Lender shall be relieved of its obligations hereunder
with respect to its

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Commitment and Term Loans, as applicable, or assigned portion thereof from and after the
date of such assignment. Borrower hereby acknowledges and agrees that any assignment shall give
rise to a direct obligation of Borrower to the assignee and that the assignee shall be considered
to be a “Lender”. In the event any Lender assigns or otherwise transfers all or any part of the
Commitments and Obligations, Agent shall so notify Borrower and Borrower shall, upon the request of
Agent, execute new Notes in exchange for the Notes, if any, being assigned. Agent may amend
Schedule A to this Agreement to reflect assignments made in accordance with this Section.

     As used herein, “Qualified Assignee” means (a) any Lender and any affiliate of any
Lender and (b) any commercial bank, savings and loan association or savings bank or any other
entity which is an “accredited investor” (as defined in Regulation D under the Securities Act)
which extends credit or buys loans as one of its businesses, including insurance companies, mutual
funds, lease financing companies and commercial finance companies, in each case, which has a rating
of BBB or higher from S&P and a rating of Baa2 or higher from Moody’s at the date that it becomes a
Lender and in each case of clauses (a) and (b), which, through its applicable lending office, is
capable of lending to Borrower without the imposition of any withholding or similar taxes;
provided that no person proposed to become a Lender after the Closing Date and determined
by Agent to be acting in the capacity of a vulture fund or distressed debt purchaser shall be a
Qualified Assignee, and no person or Affiliate of such person proposed to become a Lender after the
Closing Date and that holds any subordinated debt or stock issued by Borrower shall be a Qualified
Assignee.

     10.2. Notices. All notices, requests or other communications given in connection with this
Agreement shall be in writing, shall be addressed to the parties at their respective addresses set
forth on the signature pages hereto below such parties’ name or in the most recent Assignment
Agreement executed by any Lender (unless and until a different address may be specified in a
written notice to the other party delivered in accordance with this Section), and shall be deemed
given (a) on the date of receipt if delivered by hand, (b) on the date of sender’s receipt of
confirmation of proper transmission if sent by facsimile transmission, (c) on the next Business Day
after being sent by a nationally-recognized overnight courier, and (d) on the fourth Business Day
after being sent by registered or certified mail, postage prepaid. As used herein, the term
“Business Day” shall mean and include any day other than Saturdays, Sundays, or other days
on which commercial banks in New York, New York are required or authorized to be closed.

     10.3. Performance. Time is of the essence of this Agreement. This Agreement shall be
binding, jointly and severally, upon all parties described as the “Borrower” and their respective
successors and assigns, and shall inure to the benefit of Agent, Lenders, and their respective
successors and assigns.

     10.4. Payment of Fees and Expenses. Loan Parties agree, jointly and severally, to pay or
reimburse upon demand for all reasonable fees, costs and expenses incurred by Agent and Lenders in
connection with (a) the investigation, preparation, negotiation, execution, administration of, or
any amendment, modification, waiver or termination of, this Agreement or any other Debt Document,
(b) the administration of any transaction contemplated hereby or thereby and (c) the enforcement,
assertion, defense or preservation of Agent’s and Lenders’ rights and remedies under this Agreement
or any other Debt Document, in each case of clauses (a) through (c), including, without limitation,
reasonable attorney’s fees and expenses, the allocated cost of in-house legal counsel, reasonable
fees and expenses of consultants, auditors and appraisers and UCC and other corporate search and
filing fees and wire transfer fees. Borrower further agrees that such fees, costs and expenses
shall constitute Obligations. This provision shall survive the termination of this Agreement.

     10.5. Indemnity. Each Loan Party shall and does hereby jointly and severally indemnify and
defend Agent, Lenders, and their respective successors and assigns, and their respective directors,

32

 

officers, employees, consultants, attorneys, agents and affiliates (each an
“Indemnitee”) from and against all liabilities, losses, damages, expenses, penalties,
claims, actions and suits (including, without limitation, related reasonable attorneys’ fees and
the allocated costs of in-house legal counsel) of any kind whatsoever arising, directly or
indirectly, which may be imposed on, incurred by or asserted against such Indemnitee as a result of
or in connection with this Agreement, the other Debt Documents or any of the transactions
contemplated hereby or thereby (the “Indemnified Liabilities”); provided that, no Loan
Party shall have any obligation to any Indemnitee with respect to any Indemnified Liabilities to
the extent such Indemnified Liabilities arise from the gross negligence or willful misconduct of
such Indemnitee as determined by a final non-appealable judgment of a court of competent
jurisdiction. This provision shall survive the termination of this Agreement.

     10.6. Rights Cumulative. Agent’s and Lenders’ rights and remedies under this Agreement or
otherwise arising are cumulative and may be exercised singularly or concurrently. Neither the
failure nor any delay on the part of Agent or any Lender to exercise any right, power or privilege
under this Agreement shall operate as a waiver, nor shall any single or partial exercise of any
right, power or privilege preclude any other or further exercise of that or any other right, power
or privilege. NONE OF AGENT OR ANY LENDER SHALL BE DEEMED TO HAVE WAIVED ANY OF ITS RESPECTIVE
RIGHTS UNDER THIS AGREEMENT OR UNDER ANY OTHER AGREEMENT, INSTRUMENT OR PAPER SIGNED BY BORROWER
UNLESS SUCH WAIVER IS EXPRESSED IN WRITING AND SIGNED BY AGENT, REQUISITE LENDERS OR ALL LENDERS,
AS APPLICABLE. A waiver on any one occasion shall not be construed as a bar to or waiver of any
right or remedy on any future occasion.

     10.7. Entire Agreement; Amendments, Waivers.

     (a) This Agreement and the other Debt Documents constitute the entire agreement between
the parties with respect to the subject matter hereof and thereof and supersede all prior
understandings (whether written, verbal or implied) with respect to such subject matter.
Section headings contained in this Agreement have been included for convenience only, and
shall not affect the construction or interpretation of this Agreement.

     (b) Except for actions expressly permitted to be taken by Agent, no amendment,
modification, termination or waiver of any provision of this Agreement or any other Debt
Document, or any consent to any departure by Borrower therefrom, shall in any event be
effective unless the same shall be in writing and signed by Agent, Borrower and Lenders
having more than (x) 60% of the aggregate Commitments of all Lenders or (y) if such
Commitments have expired or been terminated, 60% of the aggregate outstanding principal
amount of the Term Loans (the “Requisite Lenders”); provided, however, that so long
as a party that is a Lender hereunder on the Closing Date does not assign any portion of its
Commitment or Term Loan, the “Requisite Lenders” shall include such Lender. Except as set
forth in clause (c) below, all such amendments, modifications, terminations or waivers
requiring the consent of any Lenders shall require the written consent of Requisite Lenders.

     (c) No amendment, modification, termination or waiver of any provision of this
Agreement or any other Debt Document shall, unless in writing and signed by Agent and each
Lender directly affected thereby: (i) increase or decrease any Commitment of any Lender or
increase or decrease the Total Commitment (which shall be deemed to affect all Lenders),
(ii) reduce the principal of or rate of interest on any Obligation or the amount of any fees
payable hereunder, (iii) postpone the date fixed for or waive any payment of principal of or
interest on any Term Loan, or any fees hereunder, (iv) release all or substantially all of
the Collateral, or consent to a transfer of all or substantially all of the Intellectual
Property, in each case, except as

33

 

otherwise expressly permitted in the Debt Documents, (v) subordinate the lien granted
in favor of the Agent securing the Obligations, (vi) release a Loan Party from, or consent
to a Loan Party’s assignment or delegation of, such Loan Party’s obligations hereunder and
under the other Debt Documents or any Guarantor from its guaranty of the Obligations or (vi)
amend, modify, terminate or waive Section 8.4 or 10.8(b) or (c).

     (d) Notwithstanding any provision in this Section 10.7 to the contrary, no amendment,
modification, termination or waiver affecting or modifying the rights or obligations of
Agent hereunder shall be effective unless signed by Borrower, Agent and Requisite Lenders.

     10.8. Binding Effect. This Agreement shall continue in full force and effect until the
Termination Date; provided, however, that the provisions of Sections 2.3(f), 9.5, 10.5 and
10.6 and the other indemnities contained in the Debt Documents shall survive the Termination Date.
The surrender, upon payment or otherwise, of any Note or any of the other Debt Documents evidencing
any of the Obligations shall not affect the right of Agent to retain the Collateral for such other
Obligations as may then exist or as it may be reasonably contemplated will exist in the future.
This Agreement and the grant of the security interest in the Collateral pursuant to Section 3.1
shall automatically be reinstated if Agent or any Lender is ever required to return or restore the
payment of all or any portion of the Obligations (all as though such payment had never been made).

     10.9. Use of Logo. Each Loan Party authorizes Agent to use its name, logo and/or trademark
without notice to or consent by such Loan Party, in connection with certain promotional materials
that Agent may disseminate to the public. The promotional materials may include, but are not
limited to, brochures, video tape, internet website, press releases, advertising in newspaper
and/or other periodicals, lucites, and any other materials relating the fact that Agent has a
financing relationship with Borrower and such materials may be developed, disseminated and used
without Loan Parties’ review. Nothing herein obligates Agent to use a Loan Party’s name, logo
and/or trademark, in any promotional materials of Agent. Loan Parties shall not, and shall not
permit any of its respective Affiliates to, issue any press release or other public disclosure
(other than any document filed with any governmental authority relating to a public offering of the
securities of Borrower) using the name, logo or otherwise referring to General Electric Capital
Corporation, GE Healthcare Financial Services, Inc. or of any of their affiliates, the Debt
Documents or any transaction contemplated herein or therein without at least two (2) Business Days
prior written notice to and the prior written consent of Agent unless, and only to the extent that,
Loan Parties or such Affiliate is required to do so under applicable law and then, only after
consulting with Agent prior thereto. None of the Lenders shall issue any press release or other
public disclosure using the name, logo or otherwise referring to Borrower, the Debt Documents or
any transaction contemplated herein or therein without at least two (2) Business Days prior written
notice to and the prior written consent of Borrower unless, and only to the extent that, such
Lender is required to do so under applicable law and then, only after consulting with Borrower
prior thereto.

     10.10. Waiver of Jury Trial. EACH OF LOAN PARTIES, AGENT AND LENDERS UNCONDITIONALLY WAIVE
ANY AND ALL RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT, ANY OF THE OTHER DEBT DOCUMENTS, ANY OF THE INDEBTEDNESS SECURED HEREBY, ANY DEALINGS
AMONG LOAN PARTIES, AGENT AND/OR LENDERS RELATING TO THE SUBJECT MATTER OF THIS TRANSACTION OR ANY
RELATED TRANSACTIONS, AND/OR THE RELATIONSHIP THAT IS BEING ESTABLISHED AMONG LOAN PARTIES, AGENT
AND/OR LENDERS. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY AND ALL
DISPUTES THAT MAY BE FILED IN ANY COURT. THIS WAIVER IS IRREVOCABLE. THIS WAIVER MAY NOT BE
MODIFIED EITHER ORALLY OR IN WRITING. THE WAIVER ALSO SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,

34

 

RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT, ANY OTHER DEBT DOCUMENTS, OR TO ANY
OTHER DOCUMENTS OR AGREEMENTS RELATING TO THIS TRANSACTION OR ANY RELATED TRANSACTION. THIS
AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

     10.11. Governing Law. THIS AGREEMENT, THE OTHER DEBT DOCUMENTS AND THE RIGHTS AND OBLIGATIONS
OF THE PARTIES HEREUNDER AND THEREUNDER SHALL IN ALL RESPECTS BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO THE CONFLICT OF LAWS
PRINCIPLES OF SUCH STATE), INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE,
REGARDLESS OF THE LOCATION OF THE COLLATERAL. IF ANY ACTION ARISING OUT OF THIS AGREEMENT OR ANY
OTHER DEBT DOCUMENT IS COMMENCED BY AGENT IN THE STATE COURTS OF THE STATE OF NEW YORK IN THE
COUNTY OF NEW YORK OR IN THE U.S. DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, EACH LOAN
PARTY HEREBY CONSENTS TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUCH ACTION AND TO THE LAYING OF
VENUE IN THE STATE OF NEW YORK. ANY PROCESS IN ANY SUCH ACTION SHALL BE DULY SERVED IF MAILED BY
REGISTERED MAIL, POSTAGE PREPAID, TO LOAN PARTIES AT THEIR ADDRESS DESCRIBED IN SECTION 10.2, OR IF
SERVED BY ANY OTHER MEANS PERMITTED BY APPLICABLE LAW.

     10.12. Confidentiality. Agent and each Lender agrees, as to itself, to use commercially
reasonable efforts (equivalent to the efforts Agent or such Lender, as the case may be, applies to
maintaining the confidentiality of its own confidential information) to maintain as confidential
all confidential information provided to it by Borrower for a period of two (2) years following the
termination of this Agreement, except that Agent and Lenders may disclose such information (a) to
persons employed or engaged by Agent or a Lender; (b) to any bona fide assignee or participant or
potential assignee or participant that has agreed to comply with the covenant contained in this
Section 10.12 (and any such bona fide assignee or participant or potential assignee or participant
may disclose such information to Persons employed or engaged by them as described in
clause (a) above); (c) as required or requested by any governmental authority or reasonably
believed by Agent or any Lender to be compelled by any court decree, subpoena or legal or
administrative order or process; (d) as, on the advice of Agent’s or such Lender’s counsel,
required by law; (e) in connection with the exercise of any right or remedy under the Debt
Documents or in connection with any litigation to which Agent or such Lender is a party or bound;
(f) that ceases to be confidential through no fault of Agent or such Lender; or (g) persons
employed by Agent’s strategic marketing partners, provided such person agree to comply with the
covenant contained in this Section 10.12.

     10.13. Counterparts. This Agreement may be executed in any number of counterparts and by
different parties in separate counterparts, each of which when so executed shall be deemed to be an
original and all of which when taken together shall constitute one and the same agreement.
Delivery of an executed signature page of this Agreement by facsimile transmission or electronic
transmission shall be as effective as delivery of a manually executed counterpart hereof.

[Signature Pages Follow]

35

 

          IN WITNESS WHEREOF, each Loan Party, Agent and Lenders, intending to be legally bound hereby,
have duly executed this Loan and Security Agreement in one or more counterparts, each of which
shall be deemed to be an original, as of the day and year first aforesaid.

BORROWER:

ENDOCYTE, INC.

	 	 	 

	By:

	 	/s/ Mike Sherman
	 

	 	 
	 

	 	Name: Mike Sherman
	 

	 	Title: Chief Financial Officer

Address For Notices:

Endocyte, Inc.

3000 Kent Avenue

Suite A1-100

West Lafayette, IN 47906

Attention: Mike Sherman

Phone: 765-463-7175

Facsimile: 765-463-9271

Endocyte, inc.

Loan Agreement

Signature Page 1

 

 

AGENT AND LENDER:

GENERAL ELECTRIC CAPITAL CORPORATION

	 	 	 

	By:

	 	/s/ Scott Towers
	 

	 	 
	 

	 	Name: Scott Towers
	 

	 	Title: Duly Authorized Signatory

Address For Notices:

General Electric Capital Corporation

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

83 Wooster Heights Road, Fifth Floor

Danbury, Connecticut 06810

Attention: Senior Vice President of Risk

Phone: (203) 205-5200

Facsimile: (203) 205-2192

With a copy to:

General Electric Capital Corporation

c/o GE Healthcare Financial Services, Inc.

Two Bethesda Metro Center, Suite 600

Bethesda, Maryland 20814

Attention: General Counsel

Phone: (301) 961-1640

Facsimile: (301) 664-9866

Endocyte, inc.

Loan Agreement

Signature Page 2

 

 

LENDER:

OXFORD FINANCE CORPORATION

	 	 	 

	By:

	 	/s/ Timothy A. Lex
	 

	 	 
	 

	 	Name: Timothy A. Lex
	 

	 	Title: Chief Operating Officer & Executive Vice President

Address For Notices:

Oxford Finance Corporation

133 North Fairfax Street

Alexandria, VA 22314

Attention: Chief Operating Officer & Executive Vice President

Phone: 703-519-6017

Facsimile: 703-519-5225

Endocyte, inc.

Loan Agreement

Signature Page 3

 

 

EXHIBIT A

FORM OF PROMISSORY NOTE

[                    ,      ]

FOR VALUE RECEIVED, ENDOCYTE, INC., a Delaware corporation, located at the address stated below
(“Borrower”), promises to pay to the order of [Lender] or any subsequent holder hereof
(each, a “Lender”), the principal sum of                      and ___/100 Dollars ($                    ) 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 Promissory Note is issued pursuant to that certain Loan and Security Agreement, dated as of
December 31, 2007, among Borrower, the guarantors from time to time party thereto, General Electric
Capital Corporation, as agent and lender, 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 Debt 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 and under the other Debt 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 Debt Documents. Reference is
hereby made to the Agreement and the other Debt 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. If Lender does not receive from Borrower payment in full of any
Scheduled Payment or any other sum due under this Note or any other Debt Document within 3 days
after its due date, Borrower agrees to pay the Late Fee in accordance with the Agreement. Such
Late Fee will be immediately due and payable, and is in addition to any other costs, fees and
expenses that Borrower may owe as a result of such late payment.

This Note may be voluntarily prepaid only as permitted under Section 2.4 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 2.6 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 10.7 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.

	 	 	 

	 

	 	ENDOCYTE, INC.
	 
	 	 
	 

	 	By:  

	 

	 	Name:  

	 

	 	Title:  

	 

	 	Federal Tax ID #:  

	 

	 	Address:  

 

 

EXHIBIT B

FORM OF SECRETARY’S CERTIFICATE OF AUTHORITY

          Reference is made to the Loan and Security Agreement, dated as of December 31, 2007 (as
amended, restated, supplemented or otherwise modified from time to time, the “Agreement”),
among ENDOCYTE, INC., a Delaware corporation (the “Borrower”), the guarantors from time to
time party thereto, General Electric Capital Corporation, a Delaware corporation (“GECC”),
as a lender and as agent (in such capacity, together with its successors and assigns in such
capacity, “Agent”), and the other lenders signatory thereto from time to time (GECC and
such other lenders, the “Lenders”). Capitalized terms used but not defined herein are used
with the meanings assigned to such terms in the Agreement.

I, David B. Millard, do hereby certify that:

(i) I am the duly elected, qualified and acting Secretary of Endocyte, Inc. (the “Company”);

(ii) attached hereto as Exhibit A are true, complete and correct copies of the Company’s
Certificate of Incorporation and the Bylaws, each of which is in full force and effect on and as of
the date hereof;

(iii) each of the following named individuals is a duly elected or appointed, qualified and acting
officer of the Company who holds the offices set opposite such individual’s name, and such
individual is authorized to sign the Debt Documents to which the Company is a party and all other
notices, documents, instruments and certificates to be delivered pursuant thereto, and the
signature written opposite the name and title of such officer is such officer’s genuine signature:

	 	 	 	 	 
	Name	 	Title	 	Signature
	 	 	 	 	 
	 
	 	 
	 	 
	 	 	 	 	 
	 
	 	 
	 	 
	 	 	 	 	 
	 
	 	 
	 	 

(iv) attached hereto as Exhibit B are true, complete and correct copies of resolutions
adopted by the Board of Directors of the Company (the “Board”) authorizing the execution,
delivery and performance of the Debt Documents to which the Company is a party, which resolutions
were duly adopted by the Board on December 28, 2007 and all such resolutions are in full force and
effect on the date hereof in the form in which adopted without amendment, modification, rescission
or revocation; and

(v) the foregoing authority shall remain in full force and effect, and Agent and each Lender shall
be entitled to rely upon same, until written notice of the modification, rescission or revocation
of same, in whole or in part, has been delivered to Agent and each Lender, but no such
modification, rescission or revocation shall, in any event, be effective with respect to any
documents executed or actions taken in reliance upon the foregoing authority before said written
notice is delivered to Agent and each Lender.

[Signature Page Follows]

 

 

IN WITNESS WHEREOF, I have hereunto set my hand as of the first date written above

	 	 	 	 	 	 	 

	 

	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	Title:
	 	 

Secretary
	 	 

     The undersigned does hereby certify on behalf of the Company that he/she is the duly elected
or appointed, qualified and acting Chief Financial Officer (“CFO”) of the Company and that David B.
Millard is the duly elected or appointed, qualified and acting Secretary of the Company, and that
the signature set forth immediately above is his/her genuine signature.

	 	 	 	 	 	 	 

	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	Title:
	 	 

	 	 
	 

	 	 	 	 	 	 

 

 

EXHIBIT C

FORM OF LANDLORD CONSENT

[Landlord]

[Address]

[                    ,      ]

Ladies and Gentlemen:

     General Electric Capital Corporation (together with its successors and assigns, if any,
“Agent”) and certain other lenders (the “Lenders”) have entered into, or is about
to enter into, a Loan and Security Agreement, dated as of December 31, 2007 (as amended, restated,
supplemented or otherwise modified from time to time, the “Agreement”) with ENDOCYTE, INC.,
a Delaware corporation (“Borrower”) [and                      (“Company”)], pursuant to which
[Borrower] [Company] has granted, or will grant, to Agent, on behalf of itself and the Lenders, a
security interest in certain assets of [Borrower] [Company], including, without limitation, all of
[Borrower’s] [Company’s] cash, cash equivalents, accounts, books and records, goods, inventory,
machinery, equipment, furniture and trade fixtures (such as equipment bolted to floors), together
with all addition, substitutions, replacements and improvements to, and proceeds, including,
insurance proceeds, of the foregoing, but excluding building fixtures (such as plumbing, lighting
and HVAC systems (collectively, the “Collateral”). Some or all of the Collateral is, or
will be, located at certain premises known as [                    ] in the City or Town of
[                    , County of                      and State of                     ] (“Premises”), and
[Borrower] [Company] occupies the Premises pursuant to a lease, dated as of [DATE], between
[Borrower] [Company], as tenant, and you, [NAME], as [owner/landlord/mortgagee/realty manager] (as
amended, restated, supplemented or otherwise modified from time to time, the “Lease”).

     By your signature below, you hereby agree (and we shall rely on your agreement) that: (i) the
Lease is in full force and effect and you are not aware of any existing defaults thereunder,
(ii) the Collateral is, and shall remain, personal property regardless of the method by which it
may be, or become, affixed to the Premises; (iii) you agree to use your best efforts to provide
Agent with written notice of any default by [Borrower] [Company] under the Lease resulting in a
termination of the Lease (“Default Notice”) and Agent shall have the right, but not the
obligation to cure such default within 15 days following Agent’s receipt of such Default Notice,
(iv) your interest in the Collateral and any proceeds thereof (including, without limitation,
proceeds of any insurance therefor) shall be, and remain, subject and subordinate to the interests
of Agent and you agree not to levy upon any Collateral or to assert any landlord lien, right of
distraint or other claim against the Collateral for any reason; (v) Agent, and its employees and
agents, shall have the right, from time to time, to enter into the Premises for the purpose of
inspecting the Collateral; and (vi) Agent, and its employees and agents, shall have the right, upon
any default by [Borrower] [Company] under the Agreement, to enter into the Premises and to remove
or otherwise deal with the Collateral, including, without limitation, by way of public auction or
private sale (provided that, if Agent conducts a public auction or private sale of the Collateral
at the Premises, Agent shall use reasonable efforts to notify Landlord first and to hold such
auction or sale in a manner that would not unduly disrupt Landlord’s or any other tenant’s use of
the Premises). Agent agrees to repair or reimburse you for any physical damage actually caused to
the Premises by Agent, or its employees or agents, during any such removal or inspection (other
than ordinary wear and tear), provided that it is understood by the parties hereto that Agent shall
not be liable for any diminution in value of the Premises caused by the removal or absence of the
Collateral therefrom. You hereby acknowledge that Agent shall have no obligation to remove or
dispose of the Collateral from the Premises and no action by Agent pursuant to this Consent shall
be deemed to be an assumption by Agent of any obligation under the Lease and, except as provided in
the immediately preceding sentence, Agent shall not have any obligation to you.

 

 

     You hereby acknowledge and agree that [Borrower’s] [Company’s] granting of a security interest
in the Collateral in favor of Agent, on behalf of itself and the Lenders, shall not constitute a
default under the Lease nor permit you to terminate the Lease or re-enter or repossess the Premises
or otherwise be the basis for the exercise of any remedy available to you.

     This Consent and the agreements contained herein shall be binding upon, and shall inure to the
benefit of, any successors and assigns of the parties hereto (including any transferees of the
Premises). This Consent shall terminate upon the indefeasible payment of Borrower’s indebtedness
in full in immediately available funds and the satisfaction in full of Borrower’s [and Company’s]
performance of its obligations under the Agreement and the related documents.

     This Consent and any amendments, waivers, consents or supplements hereto or in connection
herewith may be executed in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed an original, but all
such counterparts together shall constitute but one and the same instrument; signature pages may be
detached from multiple separate counterparts and attached to a single counterpart so that all
signature pages are physically attached to the same document. Delivery of an executed signature
page of this Consent or any delivery contemplated hereby by facsimile or electronic transmission
shall be as effective as delivery of a manually executed counterpart thereof.

 

 

We appreciate your cooperation in this matter of mutual interest.

	 	 	 	 	 	 	 

	 	 	GENERAL ELECTRIC CAPITAL CORPORATION, as Agent	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	General Electric Capital Corporation	 	 
	 	 	c/o GE Healthcare Financial Services, Inc., LSF	 	 
	 	 	83 Wooster Heights Road, Fifth Floor

Danbury, Connecticut 06810

Attention: Senior Vice President of Risk

Phone: (203) 205-5200

Facsimile: (203) 205-2192	 	 
	 
	 	 	 	 	 	 
	 	 	With a copy to:

General Electric Capital Corporation

c/o GE Healthcare Financial Services, Inc.

Two Bethesda Metro Center, Suite 600

Bethesda, Maryland 20814

Attention: General Counsel

Phone: (301) 961-1640

Facsimile: (301) 664-9866	 	 

AGREED TO AND ACCEPTED BY:

[NAME], as [owner/landlord/mortgagee/realty manager]

	 	 	 

	By:
	 	 
	 

	 	 
	Name:
	 	 
	 

	 	 
	Title:
	 	 
	 

	 	 

Address:

AGREED TO AND ACCEPTED BY:

[NAME OF LOAN PARTY]

	 	 	 

	By:
	 	 
	 

	 	 
	Name:
	 	 
	 

	 	 
	Title:
	 	 
	 

	 	 

Interest in the Premises (check applicable box)

	 	o	 	Owner
	 
	 	o	 	Mortgagee
	 
	 	o	 	Landlord
	 
	 	o	 	Realty Manager

Address:

 

 

EXHIBIT D

COMPLIANCE CERTIFICATE

[DATE]

     Reference is made to the Loan and Security Agreement, dated as of [                    , ___] (as
amended, restated, supplemented or otherwise modified from time to time, the “Agreement”),
among ENDOCYTE, INC., a Delaware corporation (the “Borrower”), the guarantors from time to
time party thereto, General Electric Capital Corporation, a Delaware corporation (“GECC”),
in its capacity as agent (in such capacity, together with its successors and assigns, in such
capacity, the “Agent”) and lender, and the other lenders signatory thereto (GECC and such
other lenders, the “Lenders”). Capitalized terms used but not defined herein are used with
the meanings assigned to such terms in the Agreement.

I, [                                        ], do hereby certify that:

(i) I am the duly elected, qualified and acting [TITLE] of Endocyte, Inc. (the “Company”); and

(ii) no Default or Event of Default exists under the Agreement, and all representations and
warranties of the Company in the Debt Documents are true and correct in all respects on and as of
the date hereof, except to the extent such representations and warranties expressly relate to an
earlier date, in which case such representations and warranties were true and correct in all
respects on and as of such earlier date.

[Signature Page Follows]

 

 

IN WITNESS WHEREOF, I have hereunto set my hand as of the first date written above.

	 	 	 	 	 	 	 

	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	Title:
	 	 

	 	 
	 

	 	 	 	 	 	 

 

 

EXHIBIT E

o

	 	 	 	 	 	 	 	 	 

	EPS Setup Form

	 	Submit Via Fax:
	 	 	 	 	 	GE Healthcare Financial Services
	 

	 	ATTN: EPS Facilitator
	 	 	 	 	 	Phone: (262) 798-4494
	 

	 	(262) 798-4530
	 	 	 	 	 	Fax: (262) 798-4530
	 
	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 voided check, on
which is noted your bank, branch and
account number
	 
	 

	 	 	 	 	 	C.
	 	Please submit via Fax to: (262) 798-4530

	2.	 	Authorization Agreement for Pre-Arranged Payment Plan:

	 	(a)	 	ENDOCYTE, INC., a Delaware corporation (“Borrower”) authorizes General Electric
Capital Corporation (“Agent”) to initiate debit entries for payment becoming due
pursuant to the terms and conditions set forth in the Loan and Security Agreement, dated as
of December 31, 2007 (as amended, restated, supplemented or otherwise modified from time to
time, the “Agreement”), among Borrower, the guarantors form time to time party
thereto, Agent and the lenders signatory thereto.
	 
	 	(b)	 	Borrower understands that the basic term loan payment 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 five 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.

2

 

	3.	 	Agent Account Numbers : (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:

	 	 	 	 	 	 	 	 	 

	 

	 	Name of Bank or Financial

Institution:
	 	Bank Account Number:
	 	ABA Routing Number

(9-digit number)	 	 
	 
	 	 	 	 	 	 	 	 
	BANK

INFO

	 	Address of Bank or Financial
	 	City:
	 	State:
	 	Zip Code:
	 

	 	Institution:	 	 	 	 	 	 

	 	 	 	 	 	 	 
	 	 	Signature	 	Company	 	Contact
	 

	 	Signature of Authorized Signer: Date
	 	Company Name:
	 	Contact Name:
	 
	 	 	 	 	 	 
	 

	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 
	 

	 	Name of Joint Account Holder:

	 	Company Address:
	 	Contact Phone Number:
	 

	 	(Please Print)	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 
	BORROWER

INFO

	 	Signature of Joint Account Holder: Date
	 	City:
	 	Contact Fax Number:
	 
	 	 	 	 	 	 
	 

	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 
	 

	 	Name of Authorized Signer:

	 	State: Zip         Code:
	 	Contact email address:
	 

	 	(Please Print)	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 
	 	 
           	 	 

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

Check (X): YES: o NO: o

	6.	 	Would you like to receive a complementary invoice?

Check (X): YES: o NO: o

 

 

EXHIBIT F

FORM OF WARRANT

1

 

EXHIBIT G

PERFECTION CERTIFICATE

     The undersigned, the                                                              of
ENDOCYTE, INC. (the “Company”),
hereby represents and warrants to you on behalf of Company as follows:

1. NAMES OF COMPANY

     a. The name of Company as it appears in its current [Articles/Certificate of
Incorporation/ as in effect on this date is:                                   .

     b. The federal employer identification number of Company is:                                         .

     c. Company is formed under the laws of the State of                                         .

     d. The organizational identification number of Company issued by its jurisdiction of formation
is:                                                       .

     e. Company transacts business in the following jurisdictions (list jurisdictions other than
jurisdiction of formation):                          
         .

     f. Company is duly qualified to transact business as a foreign entity in the following
jurisdictions (list jurisdictions other than jurisdiction of formation):                             .

     g. The following is a list of all other names (including fictitious names, d/b/a’s, trade
names or similar names and including former legal names) currently used by Company or used within
the past five years:

	 	 	 
	Name	 	Period of Use
	 
	 	 
	 

	 	 
	 
	 	 
	 

	 	 
	 
	 	 
	 

	 	 

     h. The following are the names of all entities which have been merged into Company during the
past five years:

	 	 	 
	Name of Merged Entity	 	Year of Merger
	 
	 	 
	 

	 	 
	 
	 	 
	 

	 	 
	 
	 	 
	 

	 	 

     i. The following are the names and addresses of all entities from whom Company has acquired
any personal property in a transaction not in the ordinary course of business during the past five
years, together with the date of such acquisition and the type of personal property acquired (e.g.,
equipment, inventory, etc.):

	 	 	 	 	 	 	 
	Name	 	Address	 	Date of Acquisition	 	Type of Property
	 
	 	 	 	 	 	 
	 

	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 
	 

	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 
	 

	 	 
	 	 
	 	 

 

 

2. PARENT/SUBSIDIARIES OF COMPANY.

     a. The legal name of each subsidiary and parent of Company is as follows. (A “parent” is an
entity owning more than 50% of the outstanding capital stock of Company. A “subsidiary” is an
entity, 50% or more of the outstanding capital stock of which is owned by Company.

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Subsidiary	 	Fed.
	Name	 	Jurisdiction	 	Date of Formation	 	/Parent	 	Employer ID No.
	 
	 	 	 	 	 	 	 	 
	 

	 	 
	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 
	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 
	 	 
	 	 
	 	 

     b. The following is a list of all other names (including fictitious names, d/b/a’s, trade
names or similar names and including former legal names) currently used by each subsidiary of
Company or used during the past five years:

	 	 	 
	Name	 	Subsidiary
	 
	 	 
	 

	 	 
	 
	 	 
	 

	 	 
	 
	 	 
	 

	 	 

     c. The following are the names of all corporations which have been merged into a subsidiary of
Company during the past five years:

	 	 	 
	Name	 	Subsidiary
	 
	 	 
	 

	 	 
	 
	 	 
	 

	 	 
	 
	 	 
	 

	 	 

     d. the following are the names and addresses of all entities from whom each subsidiary of
Company has acquired any personal property in a transaction not in the ordinary course of business
during the past five years, together with the date of such acquisition and the type of personal
property acquired (e.g., equipment, inventory, etc.):

	 	 	 	 	 	 	 	 	 
	 	 	 	 	Date of	 	Type of	 	 
	Name	 	Address	 	Acquisition	 	Property	 	Subsidiary
	 
	 	 	 	 	 	 	 	 
	 

	 	 
	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 
	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 
	 	 
	 	 
	 	 

3. LOCATIONS OF COMPANY AND ITS SUBSIDIARIES

 

 

     a. The chief executive offices of Company and its subsidiaries are presently located at the
following addresses:

	 	 	 
	Complete Street and Mailing Address, including County and Zip Code	 	Company/Subsidiary
	 
	 	 
	 

	 	 
	 
	 	 
	 

	 	 
	 
	 	 
	 

	 	 
	 
	 	 
	 

	 	 

     b. Company’s books and records and those of its subsidiaries are located at the following
additional addresses (if different from the above):

	 	 	 
	Complete Street and Mailing Address, including County and Zip Code	 	Company/Subsidiary
	 
	 	 
	 

	 	 
	 
	 	 
	 

	 	 

     c. The following are all the locations where Company and its subsidiaries own, lease, or
occupy any real property:

	 	 	 	 	 
	Complete Mailing Address, including County and Zip Code	 	Lease/Owned	 	Company/Subsidiary
	 
	 	 	 	 
	 

	 	 
	 	 
	 
	 	 	 	 
	 

	 	 
	 	 
	 
	 	 	 	 
	 

	 	 
	 	 
	 
	 	 	 	 
	 

	 	 
	 	 

     d. The following are all of the locations where Company and its subsidiaries maintain any
inventory, equipment, or other property:

	 	 	 
	Complete Address	 	Company/Subsidiary
	 
	 	 
	 

	 	 
	 
	 	 
	 

	 	 
	 
	 	 
	 

	 	 
	 
	 	 
	 

	 	 

     e. The following are the names and addresses of all warehousemen, bailees, or other third
parties who have possession of any of Company’s inventory or equipment or any of the inventory or
equipment of its subsidiaries:

	 	 	 	 	 
	 	 	Complete Street and Mailing Address, including County	 	 
	Name	 	and Zip Code	 	Company/Subsidiary
	 
	 	 	 	 
	 

	 	 
	 	 
	 
	 	 	 	 
	 

	 	 
	 	 
	 
	 	 	 	 
	 

	 	 
	 	 
	 
	 	 	 	 
	 

	 	 
	 	 

     f. The following is a complete list of all other offices or other facilities (other than those
described above) where the Company or its subsidiaries have done business within the United States
and Canada in the past 5 years.

 

 

	 	 	 
	Complete Address	 	Company/Subsidiary
	 
	 	 
	 

	 	 
	 
	 	 
	 

	 	 
	 
	 	 
	 

	 	 
	 
	 	 
	 

	 	 

4. INTELLECTUAL PROPERTY

     Please attach a list of all patents, copyrights, trademarks, trade names and
service marks registered for or which applications are pending in the name of Company
or any of its subsidiaries. Please include the name of such intellectual property, the
grant date or application date, as applicable, the registration or application number,
as applicable, and the country of such registration or application. Set forth below is
a list of all licenses, franchise or other agreements relating to trademarks, patents,
copyrights and other know-how to which Company or any subsidiary is a party and that
require annual payments in excess of $25,000 individually.

	 	 	 	 	 

	 

	 	 
	 	 
	 

	 	 
	 	 
	 
	 	 	 	 
	 

	 	 
	 	 

5. INVESTMENT PROPERTY; INSTRUMENTS; ACCOUNTS

     a. The following is a complete list of all stocks, bonds, debentures, notes,
commodity contracts and other securities owned by Company and any subsidiary:

	 	 	 	 	 
	Name of Issuer	 	Description and Value of Security	 	Company/Subsidiary
	 
	 	 	 	 
	 

	 	 
	 	 
	 
	 	 	 	 
	 

	 	 
	 	 
	 
	 	 	 	 
	 

	 	 
	 	 
	 
	 	 	 	 
	 

	 	 
	 	 

     b. The following are all financial institutions at which Company and its
subsidiaries maintain deposit accounts:

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Company/	 	 
	Bank Name	 	Account Number	 	Branch Address	 	Subsidiary	 	Purpose of Account
	 
	 	 	 	 	 	 	 	 
	 

	 	 
	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 
	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 
	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 
	 	 
	 	 
	 	 

     c. The following are all financial institutions at which Company and its
subsidiaries maintain securities accounts:

	 	 	 	 	 	 	 	 	 
	Bank or Brokerage	 	 	 	 	 	Company/	 	 
	Name	 	Account Number	 	Branch Address	 	Subsidiary	 	Purpose of Account
	 
	 	 	 	 	 	 	 	 
	 

	 	 
	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 
	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 
	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 
	 	 
	 	 
	 	 

 

 

     d. Does or is it contemplated that Company will regularly receive letters of
credit from customers or other third parties to secure payments of sums owed to
Company? The following is a list of letters of credit naming Company as “beneficiary”
thereunder:

	 	 	 	 	 
	LC Number	 	Name of LC Issuer	 	LC Applicant
	 
	 	 	 	 
	 

	 	 
	 	 
	 
	 	 	 	 
	 

	 	 
	 	 
	 
	 	 	 	 
	 

	 	 
	 	 

6. INDEBTEDNESS

Set forth below is a list and attached hereto are copies of, all agreements,
promissory notes, indentures and other documents relating to any indebtedness of
Company and its subsidiaries, including without limitation loan agreements, note
indentures, letters of credit, reimbursement agreements, mortgages and guaranties of
the indebtedness of others.

	 	 	 	 	 

	 
	 	 
	 	 
	 
	 	 
	 	 
	 	 	 	 	 
	 
	 	 
	 	 
	 	 	 	 	 
	 
	 	 
	 	 
	 	 	 	 	 
	 
	 	 
	 	 

7. ENCUMBRANCES

     Company’s and its subsidiaries’ property are subject to the following liens
or encumbrances:

	 	 	 	 	 
	Name of Holder of	 	 	 	 
	Lien/Encumbrance	 	Description of Property Encumbered	 	Company/Subsidiary
	 
	 	 	 	 
	 

	 	 
	 	 
	 
	 	 	 	 
	 

	 	 
	 	 
	 
	 	 	 	 
	 

	 	 
	 	 

8. MATERIAL AGREEMENTS

     Set forth below is a list of, and attached hereto, are copies of, all agreements the
breach or termination of which would materially restrict the ability of Company to conduct
its business.

9. LITIGATION; COMMERCIAL TORT CLAIMS

 

 

          a. The following is a complete list of pending and threatened litigation or
claims involving amounts claimed against Company in an indefinite amount or in
excess of $50,000 in each case:

          b. The following are the only claims (including, without limitation, commercial
tort claims) which Company has against others (other than claims on accounts
receivable), which Company is asserting or intends to assert, and in which the
potential recovery exceeds $50,000:

10. TAXES

     The following tax assessments are currently outstanding and unpaid:

	 	 	 
	Assessing Authority	 	Amount and Description
	 
	 	 
	 

	 	 
	 
	 	 
	 

	 	 
	 
	 	 
	 

	 	 

11. INSURANCE BROKER

     The following broker handles Company’s property insurance:

	 	 	 	 	 	 	 	 	 
	Broker	 	Contact	 	Telephone	 	Fax	 	Email
	 
	 	 	 	 	 	 	 	 
	 

	 	 
	 	 
	 	 
	 	 

 

 

     Company agrees to advise you of any change or modification to any of the foregoing
information or any supplemental information provided on any continuation pages attached hereto,
and, until such notice is received by you, you shall be entitled to rely upon such information
and presume it is correct. Company acknowledges that your acceptance of this Perfection
Certificate and any continuation pages does not imply any commitment on your part to enter into
a loan transaction with Company, and that any such commitment may only be made by an express
written loan commitment, signed by one of your authorized officers.

Date: December __, 2007

	 	 	 	 	 	 	 

	 	 	ENDOCYTE, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	 	 	 

	 	 

Title:           

 

 

SCHEDULE A

COMMITMENTS

	 	 	 	 	 	 	 	 	 
	Name of Lender	 	Commitment of such Lender	 	Pro Rata Share
	General Electric Capital
Corporation
	 	$	7,500,000	 	 	 	50	%
	Oxford Finance Corporation
	 	$	7,500,000	 	 	 	50	%
	TOTAL
	 	$	15,000,000	 	 	 	100	%

 

 

SCHEDULE B

DISCLOSURES

Existing Liens:

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Filing Date
	 	 	 	 	 	 	 	 	and Number
	 	 	 	 	 	 	 	 	(include
	 	 	 	 	 	 	 	 	original file
	 	 	 	 	 	 	 	 	date and
	 	 	 	 	 	 	 	 	continuations,
	 	 	Secured	 	 	 	State and	 	amendments,
	Debtor	 	Party	 	Collateral	 	Jurisdiction	 	etc.)
	Endocyte, Inc.

	 	Lafayette Bank & Trust
	 	(a) Up to $500,000
cash collateral on
deposit at
Borrower’s deposit
account maintained
with Lafayette Bank
& Trust, and (b)
specified equipment
of Debtor financed
by Secured Party,
together with the
proceeds thereof
(as identified in
the commercial
security agreements
and promissory
notes described
below), pursuant to
(i) that certain
promissory note
dated December 9,
2003 between Debtor
and Secured Party,
together with
related commercial
security agreement
dated December 9,
2003 between Debtor
and Secured Party,
(ii) that certain
promissory note
dated April 30,
2004 between Debtor
and Secured Party,
together with
related commercial
security agreement
dated April 30,
2004 between Debtor
and Secured Party,
and (iii) that
certain promissory
note dated October
6, 2005 between
Debtor and Secured
Party, together
with related
commercial security
agreement dated
October 6, 2005
between Debtor and
Secured Party.
	 	N/A
	 	None

 

 

Existing Indebtedness:

	 	 	 	 	 	 	 
	 	 	 	 	Total amount of	 	 
	Debtor	 	Creditor	 	Indebtedness Outstanding	 	Maturity Date
	Endocyte, Inc.

	 	Lafayette Bank & Trust
	 	$280,908.00 (as of
October 31, 2007),
pursuant to the loans
made by Secured Party
to Debtor as evidenced
the promissory notes
described above in this
Schedule B under
“Existing Liens”.
	 	Promissory notes
evidencing this
indebtedness have
following
respective maturity
dates: December 9,
2008; April 30,
2009; and
October 6, 2010.

Existing Investments:

None.

Material Contracts:

1. Bristol Myers Squibb Exclusive License Agreement

o Effective Date: 12/22/05

o Description: Exclusive license to BMS to use Endocyte folate targeting method with epothilone

o Annual maintenance fees paid to Endocyte (12/22/06 to 12/22/10): $500,000

o Milestones paid to Endocyte:

	 	 	 	 	 	 	 

	Up-front payment
	 	$	3.0m	 	(received)
	 
	Start of phase 1
	 	$	1.0m	 	(earned in December, 2007 - not yet received)
	 
	Start of phase 2
	 	$	3.0m	 	 	 
	 
	Start of phase 3
	 	$	5.0m	 	 	 
	 
	NDA filing
	 	$	4.0m	 	 	 
	 
	MAA filing
	 	$	2.0m	 	 	 
	 
	JNDA filing
	 	$	1.0m	 	 	 
	 
	NDA approval
	 	$	7.0m	 	 	 

-2-

 

	 	 	 	 	 	 	 

	MAA approval
	 	$	4.0m	 	 	 
	 
	JNDA approval
	 	$	1.0m	 	 	 

o Royalties paid to Endocyte on commercial sales (until later of 10 yrs after commercial sale or
last patent expiration):

	 	 	 	 	 

	<$500m sales
	 	 	4	%
	 
	$500m-$1,000m
	 	 	5	%
	 
	>$1,000m
	 	 	6	%

o Royalty reduced by 50% upon patent expiration

2. Purdue Research Foundation Exclusive License Agreement

o Effective Date: 10/21/98

o Description: Exclusive license to Endocyte for vitamin targeted therapeutics and diagnostics

o 1% royalty paid to Purdue Research Foundation on commercial sales (until last expiring patent
covering products sold)

	o	 	Annual minimum royalty: $12,500

3. Sangstat Medical Corporation License Agreement

o Effective Date: 10/1/01

o Description: License to Endocyte for technology related to compound EC17

o Annual maintenance fee paid to Sangstat: $25,000

o 1.5% royalty paid to Sangstat on commercial sales (until last expiring patent covering products
sold)

o Payment to Sangstat upon issuance of patents (each):

	 	 	 	 	 

	US patent
	 	$	50,000	 
	Europe patent
	 	$	25,000	 
	Japan patent
	 	$	25,000	 

4. Galencia Pharmaceuticals License Agreement

o Effective Date: 5/1/02

-3-

 

 

o Description: License to Endocyte for GPIO100 (component of compound EC17)

o License fee paid to Galencia:

	 	 	 	 	 

	Execution of agreement
	 	$50,000 (paid)
	 
	Galencia submission of drug master file
	 	$50,000 (paid)

o 1.5% royalty paid to Galencia on commercial sales (until last expiring patent covering products
sold)

o Milestones paid to Galencia:

	 	 	 	 	 

	Phase 3 initiation
	 	$	200,000	 
	 
	FDA approval
	 	$	500,000	 
	 
	European approval
	 	$	250,000	 
	 
	Japan approval
	 	$	250,000	 

-4-

 

 

FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT

     THIS FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT (this “Amendment”) is dated as of
April 16, 2008 (the “Amendment Date”), by and among ENDOCYTE, INC., a Delaware corporation
(“Borrower”), GENERAL ELECTRIC CAPITAL CORPORATION, a Delaware corporation acting in its capacity
as agent (the “Agent”) for the lenders under the Credit Agreement (as defined below) (the
“Lenders”), and the Lenders.

W I T N E S S E T H:

     WHEREAS, Borrower, the Lenders and Agent are parties to that certain Loan and Security
Agreement, dated as of December 31, 2007 (as the same may be amended, supplemented and modified
from time to time, the “Credit Agreement”; capitalized terms used herein have the meanings given to
them in the Credit Agreement except as otherwise expressly defined herein), pursuant to which
Lenders have agreed to provide to Borrower certain loans and other extensions of credit in
accordance with the terms and conditions thereof;

     WHEREAS, Borrower has requested that Agent and Lenders amend certain provisions of the Credit
Agreement, in each case in accordance with and subject to the terms and conditions set forth
herein.

     NOW, THEREFORE, in consideration of the premises, the covenants and agreements contained
herein, and other good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Borrower, the Lenders and Agent hereby agree as follows:

     1. Acknowledgment of Obligations. Borrower hereby acknowledges, confirms and agrees
that as of the close of business on the Amendment Date, Borrower is indebted to the Lenders in
respect of the Term Loans in the aggregate principal amount of $10,000,000. All such Term Loans,
together with interest accrued and accruing thereon, and fees, costs, expenses and other charges
owing by Borrower to Agent and Lenders under the Credit Agreement and the other Debt Documents, are
unconditionally owing by Borrower to Agent and Lenders, without offset, defense or counterclaim of
any kind, nature or description whatsoever except as may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to or affecting creditor’s
rights generally.

     2. Amendment to Credit Agreement. Subject to the terms and conditions of this
Amendment (including, without limitation, the conditions to effectiveness set forth in
Section 5 below), and effective as of the Effective Date (as such term is defined in
Section 5 below), the Credit Agreement is hereby amended by deleting
Section 7.7(c)(ii) in its entirety and substituting in lieu thereof the following:

	 	“(ii)	 	 Investments in cash and Cash Equivalents (as defined below),
money market funds offered by Vanguard or such other money market funds as
Agent and Lenders may approve in writing, and other Investments

 

 

	 	 	 	permitted by Borrower’s investment policy that have been approved in writing
by Agent from time to time.”

     3. No Other Amendments. Except for the amendment set forth and referred to in
Section 2 above, the Credit Agreement shall remain unchanged and in full force and effect.
Nothing in this Amendment is intended, or shall be construed, to constitute a novation or an accord
and satisfaction of any of Borrower’s Obligations or to modify, affect or impair the perfection or
continuity of Agent’s security interests in, security titles to or other liens, for the benefit of
itself and the Lenders, on any Collateral for the Obligations.

     4. Representations and Warranties. To induce Agent and Lenders to enter into this
Amendment, Borrower does hereby warrant, represent and covenant to Agent and Lenders that after
giving effect to this Amendment (i) each representation or warranty of the Borrower set forth in
the Credit Agreement is hereby restated and reaffirmed as true and correct in all material respects
on and as of the Amendment Date as if such representation or warranty were made on and as of the
date hereof (except to the extent that any such representation or warranty expressly relates to a
prior specific date or period), (ii) no Default or Event of Default has occurred and is continuing
as of the date hereof and (iii) Borrower has the power and is duly authorized to enter into,
deliver and perform this Amendment and this Amendment is the legal, valid and binding obligation of
the Borrower enforceable against the Borrower in accordance with its terms.

     5. Condition Precedent to Effectiveness of this Amendment. This Amendment shall
become effective as of the Amendment Date, upon the receipt by Agent of each of the following, in
each case in form and substance satisfactory to Agent and Lenders:

     (a) one or more counterparts of this Amendment duly executed and delivered by the Borrower,
Agent and Lenders; and

     (b) an amendment fee in the amount of $250, received upon or prior to the execution of this
Amendment, which fee shall be solely for the account of Agent and shall be non-refundable and
fully-earned when paid.

     6. Release.

     (a) In consideration of the agreements of Agent and Lenders contained herein and for other
good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged,
Borrower, on behalf of itself and its successors, assigns, and other legal representatives, hereby
absolutely, unconditionally and irrevocably releases, remises and forever discharges Agent and
Lenders and their respective successors and assigns, and their respective present and former
shareholders, affiliates, subsidiaries, divisions, predecessors, directors, officers, attorneys,
employees, the agents and other representatives (Agent and Lenders, and all such other Persons
being hereinafter referred to collectively as the “Releasees” and individually as a “Releasee”), of
and from all demands, actions, causes of action, suits, covenants, contracts, controversies,
agreements, promises, sums of money, accounts, bills, reckonings, damages and any and all other
claims, counterclaims, defenses, rights of set-off, demands and liabilities whatsoever
(individually, a “Claim” and collectively, “Claims”) of every name and nature,

-2-

 

known or unknown, suspected or unsuspected, both at law and in equity, which Borrower or any of its
successors, assigns, or other legal representatives may now or hereafter own, hold, have or claim
to have against the Releasees or any of them for, upon, or by reason of any circumstance, action,
cause or thing whatsoever which arises at any time on or prior to the day and date of this
Amendment, for or on account of, or in relation to, or in any way in connection with this Amendment
or transactions thereunder or related thereto.

     (b) Borrower understands, acknowledges and agrees that its release set forth above may be
pleaded as a full and complete defense and may be used as a basis for an injunction against any
action, suit or other proceeding which may be instituted, prosecuted or attempted in breach of the
provisions of such release.

     (c) Borrower agrees that no fact, event, circumstance, evidence or transaction which could now
be asserted or which may hereafter be discovered shall affect in any manner the final, absolute and
unconditional nature of the release set forth above.

     7. Covenant Not To Sue. Borrower, on behalf of itself and its successors, assigns,
and other legal representatives, hereby absolutely, unconditionally and irrevocably, covenant and
agree with and in favor of each Releasee that it will not sue (at law, in equity, in any regulatory
proceeding or otherwise) any Releasee on the basis of any Claim released, remised and discharged by
Borrower pursuant to Section 6 above. If Borrower or any of its successors, assigns or
other legal representatives violates the foregoing covenant, Borrower for itself and its
successors, assigns and legal representatives, agrees to pay, in addition to such other damages as
any Releasee may sustain as a result of such violation, all attorneys’ fees and costs incurred by
any Releasee as a result of such violation.

     8. Advice of Counsel. Each of the parties represents to each other party hereto that
it has discussed this Amendment with its counsel.

     9. Severability of Provisions. In case any provision of or obligation under this
Amendment shall be invalid, illegal or unenforceable in any applicable jurisdiction, the validity,
legality and enforceability of the remaining provisions or obligations, or of such provision or
obligation in any other jurisdiction, shall not in any way be affected or impaired thereby.

     10. Counterparts. This Amendment may be executed in multiple counterparts, each of
which shall be deemed to be an original and all of which when taken together shall constitute one
and the same instrument.

     11. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH
STATE WITHOUT REGARD TO THE PRINCIPLES THEREOF REGARDING CONFLICTS OF LAWS.

     12. Entire Agreement. The Credit Agreement as and when amended through this Amendment
embodies the entire agreement between the parties hereto relating to the subject

-3-

 

matter thereof and supersedes all prior agreements, representations and understandings, if
any, relating to the subject matter thereof.

     13. No Strict Construction, Etc. The parties hereto have participated jointly in the
negotiation and drafting of this Amendment. In the event an ambiguity or question of intent or
interpretation arises, this Amendment 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 Amendment. Time is of the essence for this
Amendment.

     14. Costs and Expenses. Borrower absolutely and unconditionally agree to reimburse
Agent for all reasonable and documented out-of-pocket fees, costs and expenses, including all
reasonable fees and expenses of one counsel or the allocated cost of internal legal staff, incurred
in the preparation, negotiation, execution and delivery of this Amendment and any other Debt
Documents or other agreements prepared, negotiated, executed or delivered in connection with this
Amendment or transactions contemplated hereby.

[Signature Page to Follow]

-4-

 

     IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to Loan and Security
Agreement to be duly executed and delivered as of the day and year specified at the beginning
hereof.

	 	 	 	 	 	 	 

	 	 	BORROWER:	 	 
	 
	 	 	 	 	 	 
	 	 	ENDOCYTE, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Mike Sherman	 	 
	 

	 	Name:
	 	 

Mike Sherman
	 	 
	 

	 	Title:
	 	CFO	 	 

[Additional signature pages to follow]

Signature Page

Endocyte First Amendment

 

 

	 	 	 	 	 	 	 

	 	 	AGENT AND LENDER:	 	 
	 
	 	 	 	 	 	 
	 	 	GENERAL ELECTRIC CAPITAL CORPORATION	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Scott B. Towers	 	 
	 

	 	Name:
	 	 

Scott B. Towers
	 	 
	 

	 	Title:
	 	Duly Authorized Signatory	 	 

Signature Page

Endocyte First Amendment

 

 

	 	 	 	 	 	 	 

	 	 	AGENT AND LENDER:	 	 
	 
	 	 	 	 	 	 
	 	 	GENERAL ELECTRIC CAPITAL CORPORATION	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:
	 	Duly Authorized Signatory	 	 
	 
	 	 	 	 	 	 
	 	 	LENDER:	 	 
	 
	 	 	 	 	 	 
	 	 	OXFORD FINANCE CORPORATION	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ T. A. Lex	 	 
	 

	 	Name:
	 	 

T. A. Lex
	 	 
	 

	 	Title:
	 	COO	 	 

Signature Page

Endocyte First Amendmentex101form8k_081710.htm

  
Exhibit 10.1

 

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this “Agreement”) is entered into as of the 11th day of August, 2010, by and between Spectrum Brands, Inc., a Delaware corporation (the “Company”), Spectrum Brands Holdings, Inc., a Delaware corporation (“Parent”) and David R. Lumley (the “Executive”).

 

WHEREAS, on June 16, 2010, the Company and Parent consummated that certain Agreement and Plan of Merger dated February 9, 2010 with Russell Hobbs, Inc., a Delaware corporation, Battery Merger Corp., a Delaware corporation, and Grill Merger Corp., a Delaware corporation (the “Merger Agreement”) whereby the Company became a subsidiary of the Parent;

 

WHEREAS, the Company and the Executive wish to amend and restate in its entirety the terms of Executive’s December 22, 2005 Employment Agreement with the Company, as amended by the Amendment to the Amended and Restated Employment Agreement dated November 10, 2008, as further amended by the Second Amendment to the Amended and Restated Employment Agreement dated February 24, 2009, as further amended by the Third Amendment to the Amended and Restated Employment Agreement dated February 8, 2010 (collectively, the “Prior Agreement”), and employ the Executive upon the terms and conditions set forth herein;

 

WHEREAS, the Executive is willing and able to accept such employment on such terms and conditions;

 

WHEREAS, following the execution of this Agreement, the Prior Agreement will be of no further force and effect and neither the Company nor Executive will have any further rights or obligations thereunder; and

 

WHEREAS, Executive’s continued employment with the Company is expressly conditioned upon the agreement by the Executive to the terms and conditions of such employment as contained in this Agreement.

 

NOW, THEREFORE, in consideration of the promises and mutual agreements contained herein (promises that include benefits to which Executive would not otherwise be entitled or receive), and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Executive hereby agree as follows:

 

1.   Employment Duties and Acceptance.  During the Term (as defined below), the Company hereby employs the Executive, and the Executive agrees to serve and accept employment with the  (i) Company as President and Chief Executive Officer and (ii) Parent as Chief Executive Officer, in both cases reporting directly to the Board of Directors of Parent (the “Board”).  Executive shall be fully responsible for the day to day management of the Company and Parent and shall have the authority consistent with his 

 

 

  

  

  

 

positions as Chief Executive Officer and President of similarly sized companies.  Executive shall devote substantially all of his working time and efforts to such employment.  During the Term, Parent will nominate the Executive for election to the Board.

 

2.    Term of Employment.  Subject to earlier termination of employment under Section 4 hereof, the Executive’s employment and appointment hereunder shall be for a term of three (3) years (the “Term”) commencing on April 15, 2010 (the “Commencement Date”).  On each anniversary date of the Commencement Date (each, a “Renewal Date”), the Term shall automatically be extended for an additional one (1) year, unless either party provides written notice at least ninety (90) days prior to a Renewal Date of its intention not to extend the Term.

 

3.    Compensation.  During the Term, the Company shall pay or provide to the Executive the following compensation and such other compensation as the Board may determine which the Executive agrees to accept in full satisfaction for his services, subject to necessary withholding for payroll and income taxes:

 

(a)    Base Salary.  During the Term, the Executive shall receive a base salary of Nine Hundred Thousand Dollars ($900,000) per annum effective as of the Commencement Date (“Base Salary”), payable in equal semi-monthly installments in arrears.  The Board will review annually the Base Salary payable to the Executive hereunder and, in its discretion, may increase, but shall not decrease, the Executive’s Base Salary.  Any increased Base Salary shall become the “Base Salary” for purposes of this Agreement.

 

(b)    Bonus.  The Executive shall receive a bonus for each fiscal year ending during the Term, payable annually in arrears (the “Bonus”), calculated based upon the achievement of performance targets established by the Board after consultation with the Executive and such  performance targets will be communicated within (sixty) 60 days following the start of each fiscal year (the “Performance  Target”).  If the Executive achieves the Performance Target, the Executive shall receive a Bonus in an amount that is at least 115% of his Base Salary.  If the Executive exceeds the Performance Target, the Bonus shall be increased in linear fashion; provided, however, the Bonus shall not exceed 250% of Executive’s Base Salary.  For 2010, Executive shall receive a Bonus calculated in accordance with Exhibit A attached hereto.  The Company shall pay the Bonus as soon as practicable following the end of the applicable fiscal year but no later than March 15th of the year following the year in which the Bonus is earned. Except as specifically set forth in this Agreement, as a condition precedent to the payment of the Bonus, the Executive must remain employed with the Company on the date the Bonus is paid.  Notwithstanding the foregoing, commencing with fiscal year 2011, to the extent that Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), may be applicable, such Bonus shall be subject to, and contingent upon, such shareholder approval as is necessary to cause the Bonus to qualify as “performance-based compensation” under Section 162(m) of the Code and the regulations promulgated thereunder as well as approval of this Section 3(b) by the compensation committee of the Parent and any other required committees.

 

 

  

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(c)    Insurance Coverages.  The fringe benefits, perquisites and other benefits of employment to be made available to the Executive shall be similar to such benefits and perquisites as are generally made available to other senior executives of the Company, as such plans are amended, modified or terminated from time to time.

 

(d)    Existing Stock-Based Awards.  All restricted stock awards previously granted to the Executive shall remain in full force and effect in accordance with their terms.

 

(e)    New Stock-Based Award.  Subject to the Executive’s continued employment with the Company: (i) in fiscal year 2011, the Executive shall receive a grant of stock awards for fiscal year 2011 consisting of 151,900 restricted stock units covering common shares of Parent (the “RSUs”) and options to purchase 65,100 shares of common stock of Parent (the “Options”) and (ii) in fiscal year 2012, the Executive shall receive a grant for fiscal year 2012 of 151,900 RSUs and 65,100 Options. The vesting of the RSUs and the Options will be subject to time and performance based vesting and shall be subject to the terms and conditions as more fully set forth on Exhibit B, attached hereto. For the avoidance of doubt, the Executive will not be entitled to the grant of RSUs or Options following the termination of his employment with the Company.

 

(f)    Vacation.  The Executive shall be entitled to four (4) weeks of vacation each year.

 

(g)    Other Expenses.  The Executive shall be entitled to reimbursement of all reasonable and documented expenses actually incurred or paid by the Executive in the performance of the Executive’s duties under this Agreement, upon presentation of expense statements, vouchers or other supporting information in accordance with Company policy.  All expense reimbursements and other perquisites of the Executive are reviewable periodically by the Compensation Committee of the Board.

 

(h)    Vehicle.  Pursuant to the Company’s policy for use of vehicles by executives, Executive shall be provided the use of a leased vehicle.  Unless the Executive’s employment is terminated by the Company for Cause pursuant to Section 4(a) or by the Executive voluntarily pursuant to Section 4(d), Executive shall be permitted to drive his Company vehicle for the duration of the 12-month period following termination; at the end of such 12-month period, Executive will be permitted to purchase his Company vehicle at the Company’s book value of the vehicle as of such date.

 

(i)     D&O Insurance.  The Executive shall be entitled to indemnification from the Company and Parent to the maximum extent provided by law, but not for any action, suit, arbitration or other proceeding (or portion thereof) initiated by the Executive, unless authorized or ratified by the Board.  Such indemnification shall be covered by the terms of the Company’s policy of insurance for directors and officers in effect from time to time (the “D&O Insurance”). After the Commencement Date, neither the Company nor Parent will amend its articles of incorporation or its by-laws in a manner that would adversely affect Executive’s indemnification rights as they existed on 

 

 

  

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the Commencement Date.  Copies of the Company’s and the Parent’s charter, by-laws and D&O Insurance will be made available to the Executive upon request.

 

(j)    Legal Fees.  The Company shall pay the Executive’s actual and reasonable legal fees incurred in connection with the preparation and negotiation of this Agreement.

 

4.    Termination.

 

(a)    Termination by the Company with Cause.  The Company shall have the right at any time to terminate the Executive’s employment hereunder upon written notice upon the occurrence of any of the following (any such termination being referred to as termination for “Cause”):

 

(i)    the commission by the Executive of any deliberate and premeditated act taken by the Executive in bad faith against the interests of the Company which causes, or is reasonably anticipated to cause, material harm to the Company or its reputation;

 

(ii)    the Executive has been convicted of, or pleads nolo contendere with respect to any felony, or of any lesser crime or offense having as its predicate element fraud, dishonesty or misappropriation of the property of the Company that causes, or is reasonably anticipated to cause, material harm to the Company;

 

(iii)    the habitual drug addiction of the Executive, or habitual intoxication of the Executive, which negatively impacts his job performance, or the Executive’s failure of a company-required drug test;

 

(iv)    the willful failure or refusal of the Executive to (A) perform his duties as set forth herein or (B) follow the direction of the Board, provided the failure or refusal continues after fifteen (15) days of the receipt of notice in writing from the Board of the failure or refusal, which notice refers to this Section 4(a) and states the Company’s intent to terminate the Executive’s employment hereunder if such failure or refusal is not remedied within such fifteen (15) day period; or

 

(v)    the Executive materially breaches any of the terms of this Agreement or any other material written agreement between the Executive and the Company which breach is not cured within thirty (30) days subsequent to notice from the company to the Executive of such breach, which notice refers to this Section 4(a) and states the Company’s intent to terminate the Executive’s employment hereunder if such breach is not cured within such thirty (30) day period.

 

If a definition of termination for “Cause” set forth above conflicts with such definition in the Executive’s time based or performance based stock option or restricted stock agreements (collectively, the 

 

 

  

4

  

 

 

“Stock Agreements”), or any agreements referred to therein, the definition set forth herein shall control.

 

(b)    Termination by Company for Death or Disability.  The Company shall have the right at any time to terminate the Executive’s employment hereunder upon thirty (30) days prior written notice upon the Executive’s inability to perform his duties hereunder by reason of any mental, physical or other Disability for a period of at least six (6) consecutive months (for purposes hereof, “Disability” has the same meaning as in the Company’s disability policy), if within 30 days after such notice of termination is given, the Executive shall not have returned to the full-time performance of his duties.  The Company’s obligations hereunder shall, subject to the provisions of Section 5(b), also terminate upon the death of the Executive.

 

(c)    Termination by Company without Cause.  The Company shall have the right at any time to terminate the Executive’s employment for any other reason without Cause upon sixty (60) days prior written notice to the Executive. provided, however, that the Company may, in its discretion, pay the Executive 60 days’ Base Salary in lieu of such notice and; provided, further, that any unvested RSUs and Options continue to vest in accordance with their terms through the end of such 60-day period, Executive shall be deemed to be employed for such period for all benefit purposes including the Bonus, and coverage under the Company welfare benefit plans shall continue for such period. The termination of the Executive’s employment at any time following the failure of the Company to renew the Term of this Agreement shall be deemed a termination by the Company without Cause as of the expiration of the Term for all purposes of this Agreement.

 

(d)    Voluntary Termination by Executive.  The Executive shall be entitled to voluntarily terminate his employment (without Good Reason) upon sixty (60) days prior written notice to the Company.  Any such termination shall be treated as a termination by the Company for “Cause” under Section 5(a).

 

(e)    Termination by the Executive for Good Reason.  The Executive shall be entitled to terminate his employment and appointment hereunder, upon the occurrence of a Good Reason.  Any such termination shall be treated as a termination by the Company without Cause.  For this purpose, a “Good Reason” shall mean:

 

(i)    any reduction, not consented to by Executive in a signed writing, in Executive’s Base Salary or target annual bonus opportunity then in effect;

 

(ii)    the relocation, not consented to by Executive, of the Company’s office at which Executive is principally employed as of the date hereof to a location more than seventy-five (75) miles from such office, or the requirement by the Company that Executive be based at an office other than the Company’s office on an extended basis, except for required travel on the Company’s business to an extent substantially consistent with Executive’s business travel obligations;

 

 

  

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(iii)    a substantial diminution or other substantive adverse change, not consented to by Executive in a signed writing, in the nature or scope of Executive’s responsibilities, authorities, powers, functions or duties; or

 

(iv)    a breach by the Company of any of its other material obligations under this Agreement;

 

provided, however, that in each case, Executive may not terminate his employment for Good Reason unless Executive (A) provides the Company with 30 days advance written notice of his intent to resign for Good Reason, (B) such notice is given within 60 days of the events or circumstances claimed to give rise to Good Reason, (C) the Company fails to cure such alleged violation during such 30 day period and (D) if the Company fails to cure such alleged violation, Executive must terminate his employment within six months of the initial occurrence of the facts or circumstances giving rise to Good Reason.

 

For purposes of any stock option agreements or restricted stock award agreements, termination for Good Reason shall be treated as a termination of employment by the Company without “Cause.”

 

(f)    Notice of Termination.  Any termination (except due to death of the Executive) shall be communicated by Notice of Termination to the other party hereto given in accordance with Section 8.  For purposes of this Agreement, a “Notice of Termination” means a written notice given prior to the termination which (i) indicates the specific termination provision in this Agreement relied upon, (ii) sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive’s employment under the provision so indicated and (iii) if the termination date is other than the date of receipt of such notice, specifies the termination date of this Agreement (which date shall be not more than fifteen (15) days after the giving of such notice, unless a longer notice is required pursuant to another section of this Agreement).  The failure by the Company to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Cause shall not waive any right of the Company hereunder or preclude the Company from asserting such fact or circumstance in enforcing its rights under this Agreement.

 

(g)    Upon termination of the Executive’s employment with the Company, unless the Company requests otherwise, the Executive shall be deemed to have resigned, effective immediately, from all directorships and other positions he held with the Company and its affiliates (including, without limitation, Parent) and the Executive shall execute any documents reasonably required to effectuate the foregoing.

 

5.    Effect of Termination of Employment.

 

(a)    Termination by the Company with Cause or Voluntarily by the Executive.  If the Executive’s employment hereunder is terminated by the Company 

 

 

  

6

  

 

with Cause or if the Executive voluntarily terminates his employment hereunder (except for Good Reason), the Executive’s salary and other benefits specified in Section 3 shall cease at the time of such termination, and the Executive shall not be entitled to any compensation specified in Section 3 which was not required to be paid prior to such termination.  The Company shall promptly pay to the Executive accrued salary and vacation pay, reimbursement for expenses incurred through the date of termination in accordance with Company policy, and accrued benefits through the Company’s benefit plans, programs and arrangements (the “Accrued Obligations”).  The Executive shall be entitled to continue to participate in the Company’s medical benefit plans to the extent required by law.

 

(b)    Without Cause or for Good Reason, Death or Disability.  If the Executive’s employment hereunder is (a) terminated by the Company without Cause, (b) by Executive for Good Reason or (c) by reason of death or by the Company for Disability, the Company shall pay or provide the Accrued Obligations and, if the Executive executes without revocation a separation agreement with a release of claims agreeable to the Company (to the extent that the Executive is physically and mentally capable to execute such an agreement) (the “Release”), and the Release is effective and irrevocable on or before the date that is sixty (60) days following the effective date of the termination of his employment (the “Termination Date”):

 

(i)    The Company shall pay to the Executive as severance, an amount in cash equal to double the sum of (i) the Executive’s Base Salary at the rate then in effect, and (ii) the target annual Bonus established pursuant to any annual bonus or annual incentive plan maintained by the Company in respect of the fiscal year ending immediately prior to the fiscal year in which the Termination Date occurs, such cash amount to be paid to the Executive ratably monthly in arrears over the 24-month period commencing on the sixtieth (60th) day following the Termination Date. In addition, the Company shall pay the Executive $25,000 on the first anniversary of the Termination Date. Additionally, the Company shall pay to the Executive in cash following a termination under this Section 5(b) a pro rata portion of the Bonus applicable to the fiscal year in which termination occurs based on the amount the Executive actually would have earned for the fiscal year in which termination occurs if the Executive’s employment had not ceased.  Such pro-ration shall be based on the number of weeks the Executive worked during such fiscal year prior to such termination divided by 52.  Payment of this pro-rated Bonus amount, if any, will be made in cash at the same time which a Bonus would have been paid to the Executive for the fiscal year in which termination occurs if the Executive had not terminated employment with the Company.  Payments otherwise receivable by the Executive pursuant to this Section 5(b)(i) shall cease immediately upon the discovery by the Company of the Executive’s breach of the covenants contained in Section 6 or 7 hereof.

 

(ii)    For the 24-month period immediately following the Termination Date, the Company shall arrange to provide the Executive and his dependents the additional benefits specified in Section 3(c) substantially similar to 

 

 

  

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those provided to the Executive and his dependents by the Company immediately prior to the Termination Date, at no greater cost to the Executive or the Company than the cost to the Executive and the Company immediately prior to such date.   Benefits otherwise receivable by the Executive pursuant to this Section 5(b)(ii) shall be reduced to the extent benefits of the same type are received by or made available to the Executive during the 24-month period following the Executive’s termination of employment (and any such benefits received by or made available to the Executive shall be reported to the Company by the Executive); provided, however, that the Company shall reimburse the Executive for the excess, if any, of the cost of such benefits to the Executive over such cost immediately prior to the date of termination.  Benefits receivable by the Executive pursuant to this Section 5(b) shall cease immediately upon the discovery by the Company of the Executive’s breach of the covenants contained in Section 6 or 7 hereof.

 

(iii)    If the Executive’s employment with the Company terminates during the Term, the Executive shall not be required to seek other employment or to attempt in any way to reduce any amounts payable to the Executive by the Company pursuant to this Section 5, and there shall be no reduction or offset of such payments following Executive’s obtaining other employment.

 

(c)    The Executive’s salary and other benefits specified in Section 3 shall cease at the time of termination, and the Executive shall not be entitled to any compensation specified in Section 3 which was not required to be paid prior to the termination.

 

6.    Agreement Not to Compete.

 

(a)    The Executive agrees that during his employment and for the two-year period immediately following the termination of his employment for any reason (hereafter, the “Non-Competition Period”), he will not, directly or indirectly, either separately, jointly or in association with others, as an officer, director, consultant, agent, employee, owner, principal, partner or stockholder of any business, provide services of the same or similar kind or nature that he provides to the Company to, or have a financial interest in (excepting only the ownership of not more than 5% of the outstanding securities of any class listed on a national securities exchange or the NASDAQ Stock Market), any competitor of the Company (which means any person or organization that is in the business of or makes money from designing, developing, or selling products or services similar to those products and services developed, designed or sold by the Company); provided, however, that the Executive may provide services to or have a financial interest in a business that competes with the Company if his employment or financial interest is with a separately managed or operated division or affiliate of such business that does not compete with the Company.  The Executive recognizes, acknowledges and agrees that his duties and responsibilities hereunder will be performed throughout the United States and Canada and will result in Executive’s having material contact with the Company’s customers, suppliers, vendors, and employees throughout the 

 

 

  

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United States and Canada.  Accordingly, the Parties acknowledge and agree that the restrictions set forth in this Section 6(a) shall extend to the United States and Canada (hereafter, the “Restricted Territory”) and that this geographic scope is reasonable based on the geographic scope of Executive’s duties and responsibilities.

 

(b)    Without limiting the generality of clause (a) above, the Executive further agrees that, during the Non-Competition Period, he will not, within the Restricted Territory, directly or indirectly, either separately, jointly or in association with others, solicit, divert, take away, or attempt to solicit, divert, or take away, any customer or person with whom the Company has a written sales or servicing contract in connection with the business of the Company (a “Current Customer”), or any customer or person to whom the Company has sent a written sales or servicing proposal or contract in connection with the business of the Company within the immediately preceding two-year period (a “Prospective Customer”), for the purpose of or with the intention of selling or providing to such Current Customer or Prospective Customer any product or service similar to any product or service sold, provided, offered, or under development by the Company during the two-year period immediately preceding the termination of Executive’s employment for any reason (or during the preceding two years if during Executive’s employment); provided, however, that this restriction shall only apply to Current Customers or Prospective Customers of the Company with whom Executive had contact or about whom the Executive acquired confidential information by virtue of his employment with the Company at any time during such two-year period.

 

(c)    The Executive agrees that during the Non-Competition Period, he shall not (i) contact in order to induce, solicit or encourage any person to leave the Company’s employ; and (ii) hire any person who is an employee or consultant under contract with the Company or who was an employee or consultant within the six month period preceding such activity, without the Company’s written consent.  Nothing in this paragraph is meant to prohibit an employee of the Company that is not a party to this Agreement from becoming employed by another organization or person.

 

(d)    The Non-Competition Period shall be tolled by and automatically extended by the length of a breach by the Executive.

 

(e)    If a court determines that the foregoing restrictions are too broad or otherwise unreasonable under applicable law, including with respect to time or space, the court is hereby requested and authorized by the parties hereto to revise the foregoing restrictions to include the maximum restrictions allowed under the applicable law.  Sections 6(a), 6(b), and 6(c) each are intended to be considered and construed as separate and independent covenants; any ruling that any one or more of these sections is overbroad or otherwise invalid shall not affect the validity of any of the other sections or any other section of this Agreement.

 

(f)    For purposes of this Section 6 and Section 7, the “Company” refers to the Company and any incorporated or unincorporated affiliates of the Company (including, without limitation, Parent).

 

 

  

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7.    Secret Processes and Confidential Information.

 

(a)    The Executive agrees to hold in strict confidence and, except as the Company may authorize or direct, not disclose to any person or use (except in the performance of his services hereunder) any confidential information or materials received by the Executive from the Company and any confidential information or materials of other parties received by the Executive in connection with the performance of his duties hereunder.  For purposes of this Section 7(a), confidential information or materials shall include, but are not limited to, existing and potential customer information, existing and potential supplier information, product information, design and construction information, pricing and profitability information, financial information, sales and marketing strategies and techniques and business ideas or practices (hereafter “Confidential Information”).  The restriction on the Executive’s use or disclosure of Confidential Information shall remain in force during the Executive’s employment hereunder and until the earlier of (x) the expiration of a period of seven (7) years thereafter or (y) such time as the Confidential Information is of general knowledge in the industry through no fault of the Executive or any agent of the Executive.  The Executive also agrees to return to the Company promptly upon its request any Company information or materials in the Executive’s possession or under the Executive’s control.  This Section 7(a) is not intended to preclude Executive from being gainfully employed by another.  Rather, it is intended to prohibit Executive from using the Company’s confidential information or materials in any subsequent employment or employment undertaken that is not for the benefit of the Company during the identified period.

 

(b)    The Executive will promptly disclose to the Company and to no other person, firm or entity all inventions, discoveries, improvements, trade secrets, formulas, techniques, processes, know-how and similar matters, whether or not patentable and whether or not reduced to practice, which are conceived or learned by the Executive during the period of the Executive’s employment with the Company, either alone or with others, which relate to or result from the actual or anticipated business or research of the Company or which result, to any extent, from the Executive’s use of the Company’s premises or property (collectively called the “Inventions”).  The Executive acknowledges and agrees that all the Inventions shall be the sole property of the Company, and the Executive hereby assigns to the Company all of the Executive’s rights and interests in and to all of the Inventions, it being acknowledged and agreed by the Executive that all the Inventions are “works for hire” as that term is defined in the U.S. Copyright Law.  The Company shall be the sole owner of all domestic and foreign rights and interests in the Inventions.  The Executive agrees to assist the Company at the Company’s expense to obtain and from time to time enforce patents and copyrights on the Inventions.

 

(c)    Upon the request of, and, in any event, upon termination of the Executive’s employment with the Company for any reason, the Executive shall promptly deliver to the Company all documents, data, records, notes, drawings, manuals and all other tangible information in whatever form which pertains to the Company, and the Executive will not retain any such information or any reproduction or excerpt thereof.  Subject only to the Executive’s duty to hold in strict confidence all Confidential 

 

 

  

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Information of the Company and its affiliates and his other obligations under this Agreement, nothing in this Agreement or elsewhere shall prevent the Executive from retaining copies of his desk calendars, address book and rolodex.

 

(d)    Nothing in this Section 7 diminishes or limits any protection granted by law to trade secrets or relieves the Executive of any duty not to disclose, use or misappropriate any information that is a trade secret for as long as such information remains a trade secret.

 

8.    Nondisparagement. The Executive hereby agrees not to defame or disparage the Company, its affiliates (including, without limitation, Parent) and their respective officers, directors, members or employees.  The Executive hereby agrees to cooperate with the Company and its affiliates, upon reasonable request, in refuting any defamatory or disparaging remarks by any third party made in respect of the Company or its affiliates or their directors, members, officers or employees.

 

9.    Notices.  All notices or other communications hereunder shall be in writing and shall be deemed to have been duly given (a) when delivered personally, (b) upon confirmation of receipt when such notice or other communication is sent by facsimile or telex, (c) one day after delivery to an overnight delivery courier, or (d) on the fifth day following the date of deposit in the United States mail if sent first class, postage prepaid, by registered or certified mail.  The addresses for such notices shall be as follows:

 

(a)     For notices and communications to the Company and Parent:

 

Spectrum Brands, Inc.

601 Rayovac Drive

Madison, WI 53711

Facsimile: (608) 278-6363

Attention: General Counsel

 

With a copy to:

 

Lawrence I. Witdorchic, Esq.

Paul, Weiss, Rifkind, Wharton & Garrison LLP

1285 Avenue of the Americas

New York, NY  10019-6064

Facsimile: (212) 492-0237

(b)    For notices and communications to the Executive: at the address below as updated at the request of the Executive from time to time:

 

David R. Lumley

4830 Morris Court

Waunakee, Wisconsin  53597

 

 

  

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With a copy to:

Andrew J. Bernstein, Esq.

Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.

The Chrysler Center

666 Third Avenue

New York, New York  10017

Facsimile: (212) 983-3115

Any party hereto may, by notice to the other, change its address for receipt of notices hereunder.

 

10.    Governing Law; Consent to Jurisdiction; Waiver of Jury Trial; Service of Process.

 

(a)    Any controversy or claim arising out of or relating to this Agreement or the breach thereof or otherwise arising out of the Executive’s employment or the termination of that employment (including, without limitation, any claims of unlawful employment discrimination whether based on age or otherwise) other than Section 6 or 7 shall, to the fullest extent permitted by law, be settled by binding confidential arbitration by a panel of three arbitrators (the “Panel”) under the auspices of the American Arbitration Association (“AAA”) in New York City, New York in accordance with the Employment Dispute Resolution Rules of the AAA, including, but not limited to, the rules and procedures applicable to the selection of arbitrators. The Executive and the Company (the “Parties”) hereby agree that the Panel (i) shall construe, interpret and enforce this Agreement in accordance with its express terms, and otherwise in accordance with the governing law as set forth in Section 12 and (ii) shall have no authority to award any punitive or exemplary damages and waive, to the full extent permitted by law any right to recover such damages in arbitration  Judgment may be entered on the arbitration award in any court having jurisdiction.    Within 20 days of the conclusion of the arbitration hearing, the Panel shall prepare written findings of fact and conclusions of law.  Any arbitration costs and expenses that are unique to arbitration or are in excess of the costs of filing the same claim in a court of competent jurisdiction shall be borne by the Company.  Each party shall bear its own attorneys’ fees and costs.  THE PARTIES EXPRESSLY WAIVE THEIR RIGHT TO A JURY TRIAL.

 

(b)    With respect to any controversy, claim or dispute under Section 6 or 7 of this Agreement, the Parties each hereby irrevocably submits to the exclusive jurisdiction of any court of the United States located in the State of Delaware or in a State Court in Delaware  Except as otherwise specifically provided in this Agreement, the Parties undertake not to commence any suit, action or proceeding based on any dispute between them that arises out of or relates to Section 6 or 7 of Agreement in a forum other than a forum described in this Section 10 provided, however, that nothing herein shall preclude either Party from bringing any suit, action or proceeding in any other court for the purposes of enforcing the provisions of this Section 10 or enforcing any judgment obtained by the Company.  The agreement of the Parties to the forum described in this Section 10 is independent of the law that may be applied in any suit, action, or proceeding, and the Parties agree to such forum even if such forum may 

 

 

  

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under applicable law choose to apply non-forum law.  The Parties waive, to the fullest extent permitted by applicable law, any objection which they now or hereafter have to personal jurisdiction or to the laying of venue of any such suit, action or proceeding brought in an applicable court described in Section 10, and the Parties agree that they shall not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such court.  The Parties agree that, to the fullest extent permitted by applicable law, a final and non-appealable judgment in any suit, action or proceeding brought in any applicable court described in Section 10 shall be conclusive and binding upon the Parties and may be enforced in any other jurisdiction.

 

(c)    THE PARTIES EXPRESSLY AND KNOWINGLY WAIVE ANY RIGHT TO A JURY TRIAL. Each of the Parties hereto agrees that this Agreement involves at least $100,000 and that this Agreement has been entered into in express reliance on Section 2708 of Title 6 of the Delaware Code.  Each of the Parties hereto irrevocably and unconditionally agrees (i) that service of process may be made on such Party by mailing copies of such process to such Party at such Party’s address as specified in Section 10 that service made pursuant to clause (i) above shall, to the fullest extent permitted by applicable law, have the same legal force and effect as if served upon such Party personally within the State of Delaware.

 

11.    Section 409A.

 

(a)    This Agreement is intended to satisfy the requirements of Section 409A of the Code (“Section 409A”) with respect to amounts, if any, subject thereto and shall be interpreted and construed and shall be performed by the parties consistent with such intent.  This Agreement may be amended at any time, without the consent of the Executive, to avoid the application of Section 409A in a particular circumstance or to satisfy any of the requirements under Section 409A.  Notwithstanding the foregoing, the Executive shall be solely responsible and liable for the satisfaction of all taxes and penalties that may be imposed on or for the account of the Executive in connection with payments and benefits provided in accordance with the terms of this Agreement (including any taxes and penalties under Section 409A of the Code), and neither the Company nor any of its affiliates shall have any obligation to indemnify or otherwise hold the Executive (or any beneficiary) harmless from any or all of such taxes or penalties.

 

(b)    Notwithstanding anything in this Agreement to the contrary, the following special rule shall apply, if and to the extent required by Section 409A, in the event that (i) the Executive is deemed to be a “specified employee” within the meaning of Section 409A(a)(2)(B)(i), (ii) amounts or benefits under this Agreement or any other program, plan or arrangement of the Company or a controlled group affiliate thereof are due or payable on account of “separation from service” within the meaning of Treasury Regulations Section 1.409A-1(h) and (iii) the Executive is employed by a public company or a controlled group affiliate thereof:  no payments hereunder that are “deferred compensation” subject to Section 409A shall be made to the Executive prior to the date that is six (6) months after the date of the Executive’s 

 

 

  

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separation from service or, if earlier, the Executive’s date of death; following any applicable six (6) month delay, all such delayed payments will be paid in a single lump sum on the earliest permissible payment date.

 

(c)     Any payment or benefit due upon a termination of the Executive’s employment that represents a “deferral of compensation” within the meaning of Section 409A shall be paid or provided to the Executive only upon a “separation from service” as defined in Treas.  Reg.  § 1.409A-1(h).  Each payment made under this Agreement shall be deemed to be a separate payment for purposes of Section 409A.  Amounts payable under this Agreement shall be deemed not to be a “deferral of compensation” subject to Section 409A to the extent provided in the exceptions in Treasury Regulation §§ 1.409A-1(b)(4) (“short-term deferrals”) and (b)(9) (“separation pay plans,” including the exception under subparagraph (iii)) and other applicable provisions of Treasury Regulation § 1.409A-1 through A-6.  For the avoidance of doubt, to the extent that the termination of the Executive’s employment does not constitute a separation of service under Section 409A(a)(2)(A)(i) of the Code and Treas. Reg. §1.409A-1(h) (as the result of further services that are reasonably anticipated to be provided by the Executive to the Company at the time the Executive’s employment terminates under Section 4), any benefits payable under Sections 5(b) or (c) that constitute deferred compensation under Section 409A of the Code shall be delayed until after the date of a subsequent event constituting a separation of service under Section 409A(a)(2)(A)(i) of the Code and Treas. Reg. §1.409A-1(h).  For purposes of clarification, this shall not cause any forfeiture of benefits on the Executive’s part, but shall only act as a delay until such time as a “separation from service” occurs.

 

(d)    Notwithstanding anything to the contrary in Agreement, any payment or benefit under this Agreement or otherwise that is exempt from Section 409A pursuant to Treasury Regulation § 1.409A-1(b)(9)(v)(A) or (C) (relating to certain reimbursements and in-kind benefits) shall be paid or provided to the Executive only to the extent that the expenses are not incurred, or the benefits are not provided, beyond the last day of the second calendar year following  the calendar year in which the Executive’s “separation from service” occurs; and provided further that such expenses are reimbursed no later than the last day of the third calendar year following the calendar year in which the Executive’s “separation from service” occurs.  To the extent any indemnification payment, expense reimbursement, or the provision of any in-kind benefit is determined to be subject to Section 409A (and not exempt pursuant to the prior sentence or otherwise), the amount of any such indemnification payment or expenses eligible for reimbursement, or the provision of any in-kind benefit, in one calendar year shall not affect the indemnification payment or provision of in-kind benefits or expenses eligible for reimbursement in any other calendar year (except for any life-time or other aggregate limitation applicable to medical expenses), and in no event shall any indemnification payment or expenses be reimbursed after the last day of the calendar year following the calendar year in which the Executive incurred such indemnification payment or expenses, and in no event shall any right to indemnification payment or reimbursement or the provision of any in-kind benefit be subject to liquidation or exchange for another benefit.

 

 

  

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12.    General.

 

(a)    Governing Law.  This Agreement shall be construed under and governed by the laws of the State of Delaware, without reference to its conflicts of law principles.

 

(b)    Amendment; Waiver.  This Agreement may be amended, modified, superseded, canceled, renewed or extended, and the terms hereof may be waived, only by a written instrument executed by all of the parties hereto or, in the case of a waiver, by the party waiving compliance.  The failure of any party at any time or times to require performance of any provision hereof shall in no manner affect the right at a later time to enforce the same.  No waiver by any party of the breach of any term or covenant contained in this Agreement, whether by conduct or otherwise, in any one or more instances, shall be deemed to be, or construed as, a further or continuing waiver of any such breach, or a waiver of the breach of any other term or covenant contained in this Agreement.

 

(c)    Successors and Assigns.  This Agreement shall be binding upon the Executive, without regard to the duration of his employment by the Company or reasons for the cessation of such employment, and inure to the benefit of his administrators, executors, heirs and assigns, although the obligations of the Executive are personal and may be performed only by him.  This Agreement shall also be binding upon and inure to the benefit of the Company and its subsidiaries, successors and assigns, including any corporation with which or into which the Company or its successors may be merged or which may succeed to their assets or business.

 

(d)    Counterparts.  This Agreement may be executed in several counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same instrument.  Signatures delivered by facsimile (including by “pdf”) shall be deemed effective for all purposes.

 

(e)    Non-exclusivity of Rights.  Nothing in this Agreement shall prevent or limit the Executive’s continuing or future participation during his employment hereunder in any benefit, bonus, incentive or other plan or program provided by the Company or any of its affiliates and for which the Executive may qualify (except for any severance plan, program, or policy).  Amounts which are vested benefits or which the Executive is otherwise entitled to receive under any plan or program of the Company or any affiliated company at or subsequent to the date of the Executive’s termination of employment with the Company shall, subject to the terms hereof or any other agreement entered into by the Company and the Executive on or subsequent to the date hereof, be payable in accordance with such plan or program.

 

(f)    Mitigation.  In no event shall the Executive be obligated to seek other employment by way of mitigation of the amounts payable to the Executive under any of the provisions of this Agreement.

 

 

  

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(g)    Equitable Relief.  The Executive expressly agrees that breach of any provision of Sections 6 or 7 of this Agreement would result in irreparable injuries to the Company, that the remedy at law for any such breach will be inadequate and that upon breach of such provisions, the Company, in addition to all other available remedies, shall be entitled as a matter of right to injunctive relief in any court of competent jurisdiction without the necessity of proving the actual damage to the Company.

 

(h)    Severability.  Sections 6(a), 6(b), 6(c), 7(a), 7(b) and 9(f) and (g) of this Agreement shall be considered separate and independent from each other and from the other sections of this Agreement and no invalidity of any one of those sections shall affect any other section or provision of this Agreement.  However, because it is expressly acknowledged that the pay and benefits provided under this Agreement are provided, at least in part, as consideration for the obligations imposed upon Executive under Sections 6(a), 6(b), 6(c), 7(a) and 7(b), should Executive challenge those obligations or any court determine that any of the provisions under these Sections is unlawful or unenforceable, such that Executive need not honor those provisions, then Executive shall not receive the pay and benefits, provided for in this Agreement following termination, (or if he has already received severance pay or benefits, Executive shall be required to repay such severance pay and benefits to the Company within 10 days of written demand by the Company)  if otherwise available to Executive, irrespective of the reason for the end of Executive’s employment. Except as set forth in the preceding two sentences, if any provision of this Agreement or the application thereof is held invalid, the invalidity shall not affect other provisions or applications of this Agreement which can be given effect without the invalid provisions or applications and to this end the provisions of this Agreement are declared to be severable.

 

(i)    Entire Agreement.  This Agreement and the schedule hereto constitute the entire understanding of the parties hereto with respect to the subject matter hereof and supersede all prior negotiations, discussions, writings and agreements between them with respect to the subject matter hereof, including without limitation, the Prior Agreement.

 

(j)     No Construction Against Drafter.  The Parties acknowledge and agree that each Party has reviewed and negotiated the terms and provisions of this Agreement and has had the opportunity to contribute to its revision.  Accordingly, the rule of construction to the effect that ambiguities are resolved against the drafting party shall not be employed in the interpretation of this Agreement.  Rather, the terms of this Agreement shall be construed fairly as to both Parties and not in favor or against either Party.

 

(k)    Assignment.  This Agreement is binding on and is for the benefit of the Parties hereto and their respective successors, assigns, heirs, executors, administrators and other legal representatives.  This Agreement is personal to the Executive.  Neither this Agreement nor any right or obligation hereunder may be assigned by the Executive, without the prior written consent of the Company or except by 

 

 

  

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will or the laws of descent and distribution, and any purported assignment in violation of this Section 12(k) shall be void.

 

(l)    Tax Withholding.  The Company or its affiliates may withhold from any amounts payable to the Executive hereunder all federal, state, city, foreign or other taxes that the Company may reasonably determine are required to be withheld pursuant to any applicable law or regulation (it being understood that the Executive shall be responsible for payment of all taxes in respect of the payments and benefits provided herein).

 

(m)   Headings.  The headings in this Agreement are inserted for convenience of reference only and shall not be a part of or control or affect the meaning of any provision hereof.

 

[signature page follows]

 

 

  

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

 

 

	 	
Spectrum Brands, Inc.

 

	 
	 	 	 	 
	
 

	
By: 

	/s/ John T. Wilson	 
	 	 	Name:  John T. Wilson	 
	 	 	Title:    Senior Vice President, Secretary and General Counsel 
	 	 	 	 

 

	 	
Spectrum Brands Holdings, Inc.

 

	 
	 	 	 	 
	
 

	
By: 

	/s/ John T. Wilson	 
	 	 	Name:  John T. Wilson	 
	 	 	Title:    Senior Vice President, Secretary and General Counsel 
	 	 	 	 

 

	 	
 

	 
	 	 	 	 
	
EXECUTIVE

 

	
 

	 	 
	 	 	 	 
	 /s/ David R. Lumley         	 	 
	 Name:  David R. Lumley	 	 	 

 

 

  

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Exhibit A

The Bonus, if any, for Fiscal Year 2010 is based upon the achievement of EBITDA and Free Cash Flow targets. 70% is based on EBITDA and 30% is based on Free Cash Flow, in each case as of September 30, 2010.   If 100% of the targets are achieved, then the payout will be 100% of the applicable base salary, as set forth below. If less than 86% of the targets are achieved, then no Bonus shall be payable. If 115% or more of the targets are achieved, then the payout will be 200% of  the applicable base salary. If the amounts achieved are between 86% and 115% of target, then the Bonus shall be adjusted based on linear interpolation as set forth in the chart below.

For the period commencing October 1, 2009 until April 15, 2010 (197 days), the Bonus will be based upon a base salary of $600,000 and shall be weighted based on the results of three divisions as of September 30, 2010 as follows: 20% SPB Corporate, 50% GBPC and 30% H&G.  For the period commencing on April 16, 2010 until September 30, 2010 (168 days), the Bonus will be based on a base salary of $900,000 and shall be 100% based on SPB Corporate results.

Example for illustration purposes only: If 100% of targets were achieved, the Bonus payout would be $738,082 [(197/365 *$600,000)+ (168/365* $900,000)].  If 115% of targets were achieved, the Bonus payout would be $1,476,164  [(197/365 *$600,000 *2)+ (168/365* $900,000*2)].

 

  

 

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