Ex-10.46 Modification Agreement, dated June 25, 2008

Exhibit 10.46

MODIFICATION AGREEMENT

Loan #2340		Return To:		Paragon Commercial Bank
				3535 Glenwood Avenue
STATE OF NORTH CAROLINA				Raleigh, NC 27612
COUNTY OF Wake

     THIS MODIFICATION AGREEMENT is made as of this 25th day of June, 2008, between PARAGON COMMERCIAL BANK, a banking corporation organized under the laws of the State of North Carolina (hereinafter “Bank”), Cornerstone Biopharma Holdings, Inc. (the “Borrower”, whether one or more in number), and, if a deed of trust is modified, John S. Towles of Wake County, North Carolina (the “Trustee”).

W I T N E S S E T H:

     WHEREAS, the Borrower has made and issued its promissory note dated the 21st day of April, 2005, evidencing an original indebtedness of Four Million and 00/100 Dollars ($4,000,000.00) (the “Note”) and the Note is

	þ		secured as described in security agreement(s) dated April 21, 2005 (“Security Agreement”).
	þ		secured by an incidental second lien Deed of Trust dated May 8, 2006 recorded in Book 011959 Page 00209-00220, Wake County Registry (“Deed of Trust”) and hypothecated by Craig A. Collard and Susan K. Collard; further modified by Modification Agreement dated July 14, 2006 recorded in Book 012074, Page 01678-01682, Wake County Registry to a Future Advance Deed of Trust.
	þ		Assignment of Deposit dated July 31, 2007 for Paragon Commercial Bank account # 0270298, hypothecated by Craig A. and Susan K. Collard in the amount of One Million and 00/100 Dollars ($1,000,000.00)

The Note, Security Agreement and/or Deed of Trust are hereinafter collectively referred to as the “Contract” and the Contract is hereby incorporated herein as a part of this Modification Agreement.

     AND, WHEREAS, Bank (as holder and owner of the Note, Secured Party under the Security Agreement(s) and the Beneficiary under the Deed of Trust), and the Borrower mutually desire to modify the provisions of the Contract in the manner hereinafter set out, it being specifically understood that, except as herein modified, the terms and provisions of the Contract, and the individual instruments thereof, shall remain unchanged and continue in full force as therein written;

     NOW, THEREFORE, the Bank, the Borrower and the Trustee, if applicable, in consideration of the premises and the sum of One Dollar ($1.00) to each in hand paid by the other, receipt of which is hereby acknowledged by each, do hereby agree that the Contract shall be, and the same hereby is, amended to provide as follows:

þ

The maturity date of the Note is changed to June 15, 2009. In addition, the stated maturity date in any Deed of Trust and/or Security Agreement is changed to the date stated herein. The effective date of this modification is June 15, 2008.

þ

CHANGE IN PRINCIPAL PAYMENT TERMS. Principal balance (and interest if indicated under Interest Payment Terms below) shall be changed to be payable as follows:

þ

Payable in one single payment on June 15, 2009 (herein referred to as “Maturity”).

þ

CHANGE IN INTEREST PAYMENT TERMS. Interest shall be changed to be payable as follows:

þ

Payable monthly beginning July 15, 2008 and consecutively on the same calendar day of each such calendar period thereafter.

	þ		CHANGE OF COLLATERAL. The following collateral described in the þ Assignment of Deposit dated July 31, 2007 shall be released therefrom by appropriate release instrument to be executed by the parties hereto (this statement does NOT of itself constitute a release of such collateral): One Million and 00/100 Dollars ($1,000,000.00) held in Paragon Commercial Bank account #0270298 as collateral for the loan.
			The following collateral shall be taken in substitution for the above-described collateral being released (or in addition to the original collateral if none is released):

	1.		A Security Agreement covering a blanket first priority lien on all furnishings, equipment, inventory and other items and types of personal property now owned or hereafter acquired, all the company’s general intangibles and accounts receivable, whether presently existing or arising in the future, and all the proceeds and products from the foregoing (including insurance proceeds) for Aristos Pharmaceuticals, Inc. hypothecated to Cornerstone Biopharma Holdings, Inc.
	2.		A Security Agreement covering a blanket first priority lien on all furnishings, equipment, inventory and other items and types of personal property now owned or hereafter acquired, all the company’s general intangibles and accounts receivable, whether presently existing or arising in the future, and all the proceeds and products from the foregoing (including insurance proceeds) for Cornerstone Biopharma, Inc. hypothecated to Cornerstone Biopharma Holdings, Inc.
	3.		Assignment of Deposit and Collateral Pledge and Security Agreement dated June 25, 2008 for Paragon Commercial Bank account #0270298, hypothecated by Craig A. and Susan K. Collard, in the amount of Five Hundred Thousand and 00/100 Dollars ($500,000.00)

RESTATED COLLATERAL.

þ secured as described in security agreement(s) dated April 21, 2005 (“Security Agreement”).

þ secured by an incidental second lien Deed of Trust dated May 8, 2006 recorded in Book 011959 Page 00209-00220, Wake County Registry (“Deed of Trust”) and hypothecated by Craig A. Collard and Susan K. Collard; further modified by Modification Agreement dated July 14, 2006 recorded in Book 012074, Page 01678-01682, Wake County Registry to a Future Advance Deed of Trust.

þ Assignment of Deposit dated June 25, 2008 for Paragon Commercial Bank account # 0270298, hypothecated by Craig A. and Susan K. Collard in the amount of Five Hundred Thousand and 00/100 Dollars ($500,000.00).

þ Security Agreement dated June 25, 2008 covering a blanket first priority lien on all furnishings, equipment, inventory and other items and types of personal property now owned or hereafter acquired, all the company’s general intangibles and accounts receivable, whether presently existing or arising in the future, and all the proceeds and products from the foregoing (including insurance proceeds) for Aristos Pharmaceuticals, Inc. hypothecated to Cornerstone Biopharma Holdings, Inc.

þ Security Agreement dated June 25, 2008 covering a blanket first priority lien on all furnishings, equipment, inventory and other items and types of personal property now owned or hereafter acquired, all the company’s general intangibles and accounts receivable, whether presently existing or arising in the future, and all the proceeds and products from the foregoing (including insurance proceeds) for Cornerstone Biopharma, Inc. hypothecated to Cornerstone Biopharma Holdings, Inc.

þ

OTHER: Cornerstone Biopharma, Inc., and Aristos Pharmaceuticals, Inc. shall be added as guarantors for the full loan amount.

     IT IS MUTUALLY AGREED between and among the parties hereto that nothing herein contained shall in any way impair the security now held for the indebtedness evidenced by the Contract, nor waive, annul, vary or affect any provision, condition, covenant or agreement contained in the Contract, except as herein amended, nor affect or impair any rights, powers or remedies under the Contract. This Modification Agreement does not extend the expiration date(s) or enlarge the term(s) of any property, physical damage, credit and/or any other insurance written in connection with and/or financed by said Contract. Except as herein and hereby expressly modified, said Contract contains the entire agreement of the parties and the undersigned do hereby ratify and confirm the terms of said Contract, all of which shall remain in full force and effect, as modified herein.

     FURTHERMORE, Bank does hereby reserve all rights and remedies it may have against all parties secondarily liable for repayment of the indebtedness evidenced by the Note. Borrower hereby expressly waives, to the full extent it may lawfully do so, any rights which it may now or at any time hereafter have by virtue of North Carolina General Statutes Sections 26-7 and 45-45.1.

     If applicable, the Trustee joins in the execution of this Modification Agreement as evidence of his knowledge of the provisions hereof. This Modification Agreement shall be binding upon any assignee or successor in interest of the parties hereto.

     IN WITNESS WHEREOF, this Modification Agreement is executed (i) if by individuals, by hereunto setting their hands under seal by adoption of the word “SEAL” appearing next to the individuals’ names, (ii) if by a corporation, by the duly authorized officers of the corporation on its behalf under seal by adoption of the facsimile seal printed hereon for such purpose or, if an impression seal appears hereon, by affixing such impression seal, (iii) if by a partnership, by the duly authorized partners of the partnership on its behalf under seal by adoption of the word “SEAL” appearing next to the name of the partnership and/or the signatures of the partners, or (iv) if by a limited liability company by the duly authorized member(s) or manager(s) of the limited liability company on its behalf under seal by adoption of the word “SEAL” appearing next to the name of the limited liability company and/or the signatures of the member(s) or manager(s), as of the day and year first above written.

		PARAGON COMMERCIAL BANK
		By:		/s/ Brian K. Reid		(SEAL)
				Brian K. Reid, Senior Vice President
		BORROWER
		Cornerstone Biopharma Holdings, Inc. (SEAL)
		By:		/s/ Craig A. Collard		(SEAL)
				Craig A. Collard, President
		CONSENTED TO
		By:		/s/ Craig A. Collard		(SEAL)
				Craig A. Collard, An Individual, Guarantor
		Carolina Pharmaceutical, Inc., Guarantor
		By:		/s/ Craig A. Collard		(SEAL)
				Craig A. Collard, President
		Cornerstone Biopharma, Inc., Guarantor
		By:		/s/ Craig A. Collard		(SEAL)
				Craig A. Collard, President & CEO
		Aristos Pharmaceuticals, Inc., Guarantor
		By:		/s/ Craig A. Collard		(SEAL)
				Craig A. Collard, CEO
		Trustee
		/s/ John S. Towles				(SEAL)
		John S. Towles, Senior Vice President