Amendment of Venture Loan and Security Agreement dated February 2, 2018

Exhibit 10.1

AMENDMENT OF VENTURE LOAN AND SECURITY AGREEMENT

This AMENDMENT OF VENTURE LOAN AND SECURITY AGREEMENT (this “Agreement”), dated as of February 2, 2018, is entered into by and among TITAN PHARMACEUTICALS, INC. (“Borrower”), HORIZON CREDIT II LLC (“Lender”), as assignee of HORIZON TECHNOLOGY FINANCE CORPORATION (“Horizon”), and Horizon as Collateral Agent.

RECITALS

A.                  Borrower and Lender are parties to a certain Venture Loan and Security Agreement dated as of July 27, 2017 (as amended, restated, supplemented or otherwise modified from time to time, the “Loan Agreement”) pursuant to which, among other things, Horizon (i) provided a loan to Borrower as evidenced by a certain Secured Promissory Note (Loan A) executed by Borrower in favor of Horizon, dated July 27, 2017, in the original principal amount of Three Million Five Hundred Thousand and 00/100 Dollars ($3,500,000.00) (“Loan A Note”), (ii) provided a loan to Borrower as evidenced by a certain Secured Promissory Note (Loan B) executed by Borrower in favor of Horizon, dated July 27, 2017, in the original principal amount of Three Million Five Hundred Thousand and 00/100 Dollars ($3,500,000.00) (“Loan B Note” and collectively with the Loan A Note, the “Notes”) and (v) has been granted a security interest in all assets of Borrower, except, prior to the date hereof, with respect to Borrower’s Intellectual Property (as defined in the Loan Agreement).

B.                  Horizon has assigned all of its right, title and interest in and to the Notes to Lender pursuant to that certain Assignment of Notes Receivable dated as of July 27, 2017.

C.                  Borrower and Lender desire to amend the Loan Agreement to, among other things, grant Lender a security interest in Borrower’s Intellectual Property, and provide for the prepayment of a portion of the Notes, but only to the extent, and in accordance with the terms, and subject to the conditions, set forth herein.

AGREEMENT

NOW, THEREFORE, in consideration of the above recitals and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, Borrower, Lender and Collateral Agent hereby agree as follows:

1.                  Definitions; Interpretation. Unless otherwise defined herein, all capitalized terms used herein and defined in the Loan Agreement shall have the respective meanings given to those terms in the Loan Agreement. Other rules of construction set forth in the Loan Agreement, to the extent not inconsistent with this Agreement, apply to this Agreement and are hereby incorporated by reference.

2.                  Confirmation. Borrower hereby acknowledges and agrees that: (i) the Loan Agreement sets forth the legal, valid, binding and continuing obligations of Borrower to Lender, (ii) the Obligations to Lender under the Loan Agreement are secured by validly perfected security interests in all assets of Borrower (except, prior to the date of this Agreement, with respect to Borrower’s Intellectual Property), the effectiveness and validity of which are hereby confirmed and (iii) Borrower has no cause of action, claim, defense or set-off against Lender or any of its affiliates and subsidiaries, officers, directors, employees, shareholders, agents and representatives (“Related Parties”), arising on or prior to the date of this Agreement, in any way regarding or relating to the Loan Agreement or Lender’s or its Related Parties’ actions thereunder and to the extent any such cause of action, claim, defense or set-off ever existed, whether foreseen or unforeseen, it is waived and Lender and its Related Parties are released from any such causes of action, claims, defenses or rights of set-off of Borrower.

“4.1 Grant of Security Interests. Borrower grants to Collateral Agent and Lender a valid, continuing security interest in all presently existing and hereafter acquired or arising Collateral in order to secure prompt, full and complete payment of any and all Obligations and in order to secure prompt, full and complete performance by Borrower of each of its covenants and duties under each of the Loan Documents (other than the Warrants). The “Collateral” shall mean and include all right, title, interest, claims and demands of Borrower in the following:

(a)   All goods (and embedded computer programs and supporting information included within the definition of “goods” under the Code) and equipment now owned or hereafter acquired, including all laboratory equipment, computer equipment, office equipment, machinery, fixtures, vehicles (including motor vehicles and trailers), and any interest in any of the foregoing, and all attachments, accessories, accessions, replacements, substitutions, additions, and improvements to any of the foregoing, wherever located;

(b)   All inventory now owned or hereafter acquired, including all merchandise, raw materials, parts, supplies, packing and shipping materials, work in process and finished products including such inventory as is temporarily out of Borrower’s custody or possession or in transit and including any returns upon any accounts or other proceeds, including insurance proceeds, resulting from the sale or disposition of any of the foregoing and any documents of title representing any of the above, and Borrower’s books relating to any of the foregoing;

(c)   All contract rights and general intangibles (including Intellectual Property), now owned or hereafter acquired, including goodwill, license agreements (subject to the terms thereof), franchise agreements, blueprints, drawings, purchase orders, customer lists, route lists, infringements, claims, software, computer programs, computer disks, computer tapes, literature, reports, catalogs, design rights, income tax refunds, payment intangibles, commercial tort claims, payments of insurance and rights to payment of any kind;

(d)   All now existing and hereafter arising accounts, contract rights, royalties, license rights, license fees and all other forms of obligations owing to Borrower arising out of the sale or lease of goods, the licensing of technology or the rendering of services by Borrower (subject, in each case, to the contractual rights of third parties to require funds received by Borrower to be expended in a particular manner), whether or not earned by performance, and any and all credit insurance, guaranties, and other security therefor, as well as all merchandise returned to or reclaimed by Borrower and Borrower’s books relating to any of the foregoing;

(e)   All documents, cash, deposit accounts, letters of credit and letters of credit rights (whether or not the letter of credit is evidenced by a writing) and other supporting obligations, certificates of deposit, instruments, promissory notes, chattel paper (whether tangible or electronic) and investment property, including all securities, whether certificated or uncertificated, security entitlements, securities accounts, commodity contracts and commodity accounts, and all financial assets held in any securities account or otherwise, wherever located, now owned or hereafter acquired and Borrower’s books relating to the foregoing; and

(f)    To the extent not covered by clauses (a) through (e), all other personal property of the Borrower, whether tangible or intangible, and any and all rights and interests in any of the above and the foregoing and, any and all claims, rights and interests in any of the above and all substitutions for, additions and accessions to and proceeds thereof, including insurance, condemnation, requisition or similar payments and proceeds of the sale or licensing of Intellectual Property.”

“4.3 Duration of Security Interest. Collateral Agent’s and Lender’s security interest in the Collateral shall continue until the indefeasible payment in full and the satisfaction of all Obligations, and termination of Lender’s commitment to fund the Loans, whereupon such security interest shall terminate. Collateral Agent and Lender shall, at Borrower’s sole cost and expense, execute such further documents and take such further actions as may be reasonably necessary to make effective the releases contemplated by this Section 4.3 (including with respect to Collateral Agent’s and Lender’s security interest in Borrower’s Intellectual Property as contemplated by the immediately succeeding sentence), including duly authorizing and delivering termination statements for filing in all relevant jurisdictions under the Code and Intellectual Property security interest releases for filing with the United States Patent and Trademark Office. Notwithstanding the foregoing, Collateral Agent’s and Lender’s security interest in Borrower’s Intellectual Property shall automatically terminate if Borrower provides Lender with evidence reasonably satisfactory to Lender that Borrower has, during any twelve (12) consecutive month period commencing on January 1, 2018 and continuing through December 31, 2019, received cash royalties and/or sales milestone payments in an aggregate amount of not less than Five Hundred Thousand Dollars ($500,000) as the result of sales of Probuphine in the United States and Canada pursuant to a license agreement with a third party.”

“4.9 Intellectual Property. Borrower shall promptly notify Lender within five (5) Business Days after the federal registration or filing by Borrower of any patent or patent application, or trademark or trademark application, or copyright or copyright application and shall promptly execute and deliver to Lender any grants of security interests in same, in form reasonably acceptable to Lender, to file with the United States Patent and Trademark Office or the United States Copyright Office, as applicable.”

“6.12 Equity Financing.

“8.2 Certain Covenant Defaults. If Borrower fails to perform any obligation arising under Sections 6.5, 6.8 or 6.12, or violates any of the covenants contained in Section 7 of this Agreement.”

“Commencing on January 1, 2019, and continuing on the first day of each month thereafter (each, a “Principal and Interest Payment Date” and, collectively with each Interest Payment Date, each, a Payment Date”), Borrower shall make to Lender thirty (30) equal payments of principal in the amount of Sixty-Six Thousand Six Hundred Sixty-Six Dollars and Sixty-Six Cents ($66,666.66) (each, a “Principal Amortization Amount”) plus accrued interest on the then outstanding principal amount due hereunder. On the first day of the first month following Lender’s receipt of the Second Prepayment (as defined in the Amendment of Venture Loan and Security Agreement dated as of January , 2018 by and among Borrower, Lender and Collateral Agent), each Principal Amortization Amount shall be decreased to Fifty Thousand Dollars ($50,000.00).”

“Commencing on January 1, 2019, and continuing on the first day of each month thereafter (each, a “Principal and Interest Payment Date” and, collectively with each Interest Payment Date, each, a Payment Date”), Borrower shall make to Lender thirty (30) equal payments of principal in the amount of Sixty-Six Thousand Six Hundred Sixty-Six Dollars and Sixty-Six Cents ($66,666.66) (each, a “Principal Amortization Amount”) plus accrued interest on the then outstanding principal amount due hereunder. On the first day of the first month following Lender’s receipt of the Second Prepayment (as defined in the Amendment of Venture Loan and Security Agreement dated as of January , 2018 by and among Borrower, Lender and Collateral Agent), each Principal Amortization Amount shall be decreased to Fifty Thousand Dollars ($50,000.00).”

6.              Lend er’s and Collateral Agent’s Acknowledgments . Lender and Collateral Agent hereby acknowledge that (a) Borrower’s grant to Collateral Agent and Lender of a security interest in Borrower’s Intellectual Property shall not constitute a breach of Section 7.14 of the Loan Agreement and (b) during the Specified Period (as hereafter defined), none of the following shall constitute or form the basis upon which Lender may at any time declare a Default or an Event of Default under the Loan Agreement (including, without limitation, under Section 8.4 thereof) or under any other Loan Document: (i) the level of Probuphine sales or royalties related thereto, (ii) the valuation of Probuphine, or (iii) the termination or amendment of the existing Probuphine license agreement. For purposes hereof, the term “Specified Period” means the period commencing as of the date of the Loan Agreement and ending on the date that is twelve (12) months after the date of this Agreement.

8.             Covenants of Borrower. Borrower agrees that, in connection with its execution and delivery of this Agreement, Borrower shall deliver to Lender each of the following items, and the failure by Borrower to deliver any of these items shall be a Default under the Loan Agreement:

9.             Effect of Agreement. On and after the date hereof, each reference to the Loan Agreement in the Loan Agreement or in any other document shall mean the Loan Agreement as amended by this Agreement. Except as expressly provided hereunder, the execution, delivery and effectiveness of this Agreement shall not operate as a waiver of any right, power, or remedy of Lender, nor constitute a waiver of any provision of the Loan Agreement. Except to the limited extent expressly provided herein, nothing contained herein shall, or shall be construed to (nor shall the Borrower ever argue to the contrary) (i) modify the Loan Agreement, any Note or any other Loan Document (ii) modify, waive, impair, or affect any of the covenants, agreements, terms, and conditions thereof, or (iii) waive the due keeping, observance and/or performance thereof, each of which is hereby ratified and confirmed by the Borrower. Except as amended above, the Loan Agreement remains in full force and effect. Borrower acknowledges and agrees that the failure to make any payment required under this Agreement shall constitute an Event of Default under the Loan Agreement.

10.             Headings. Headings in this Agreement are for convenience of reference only and are not part of the substance hereof.

11.             Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Connecticut without reference to conflicts of law rules.

12.             Counterparts. This Agreement may be executed in any number of counterparts, including by electronic or facsimile transmission, each of which when so delivered shall be deemed an original, but all such counterparts taken together shall constitute but one and the same instrument.

13.             Integration. This Agreement and the Loan Documents constitute and contain the entire agreement of Borrower, Collateral Agent and Lender with respect to their respective subject matters, and supersede any and all prior agreements, correspondence and communications.

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IN WITNESS WHEREOF, Borrower, Lender and Collateral Agent have caused this AMENDMENT OF VENTURE LOAN AND SECURITY AGREEMENT to be executed as of the day and year first above written.

(Signature page to Amendment to Venture Loan and Security Agreement)

GRANT OF SECURITY INTEREST PATENTS

THIS GRANT OF SECURITY INTEREST, dated as of February 2, 2018, is executed by TITAN PHARMACEUTICALS, INC., a Delaware corporation with an address of 400 Oyster Point Blvd., Suite 505, South San Francisco, CA 94080 (“Debtor”), in favor of HORIZON CREDIT II LLC, as assignee of HORIZON TECHNOLOGY FINANCE CORPORATION, a Delaware corporation with an address of 312 Farmington Avenue, Farmington, Connecticut 06032 (“Secured Party”).

A.                 Pursuant to a certain Venture Loan and Security Agreement, dated as of July 27, 2017 (as amended, restated, supplemented or otherwise modified from time to time, (the “Agreement”) by and between Debtor and the Secured Party, the Secured Party has agreed to extend credit to Debtor upon the terms and subject to the conditions set forth therein;

B.                 Debtor owns the patents and/or applications for patents, more particularly described on Schedules 1-A and 1-B annexed hereto as part hereof (collectively, the “Patents”);

C.                 Pursuant to the Agreement, Debtor has granted to Secured Party a security interest in all right, title and interest of Debtor in and to the Patents, together with any reissue, continuation, continuation-in-part or extension thereof, and all proceeds thereof, including any and all causes of action which may exist by reason of infringement thereof for the full term of the Patents (the “Collateral”), to secure the prompt payment, performance and observance of the Obligations (as defined in the Agreement);

NOW, THEREFORE, for good and valuable consideration, receipt of which is hereby acknowledged, Debtor does hereby further grant to Secured Party a security interest in the Collateral to secure the prompt payment, performance and observance of the Obligations.

Debtor does hereby further acknowledge and affirm that the rights and remedies of Secured Party with respect to the security interest in the Collateral granted hereby are more fully set forth in the Agreement, the terms and provisions of which are hereby incorporated herein by reference as if fully set forth herein.

IN WITNESS WHEREOF, Debtor has caused this instrument to be executed as of the day and year first written above.

SCHEDULE 1-A TO GRANT OF SECURITY INTEREST

PATENTS

SCHEDULE 1-B TO GRANT OF SECURITY INTEREST

PATENT APPLICATIONS

GRANT OF SECURITY INTEREST TRADEMARKS

THIS GRANT OF SECURITY INTEREST, dated as February 2, 2018, is executed by TITAN PHARMACEUTICALS, INC., a Delaware corporation with an address of 400 Oyster Point Blvd., Suite 505, South San Francisco, CA 94080 (“Debtor”), in favor of HORIZON CREDIT II LLC, as assignee of HORIZON TECHNOLOGY FINANCE CORPORATION, a Delaware corporation with an address of 312 Farmington Avenue, Farmington, Connecticut 06032 (“Secured Party”).

A.                 Pursuant to a certain Venture Loan and Security Agreement, dated as of July 27, 2017 (as amended, restated, supplemented or otherwise modified from time to time, (the “Agreement”) by and between Debtor and the Secured Party, the Secured Party has agreed to extend certain credit facilities to Debtor upon the terms and subject to the conditions set forth therein;

B.                 Debtor owns the registered trademarks, service marks (and applications and registrations therefor), of the United States, more particularly described on Schedules 1-A and 1-B annexed hereto as part hereof (collectively, the “Trademarks”);

C.                 Pursuant to the Agreement, Debtor has granted to Secured Party a security interest in all right, title and interest of Debtor in and to the Trademarks, together with associated goodwill, and all proceeds thereof, including any and all causes of action which may exist by reason of infringement thereof for the full term of the Trademarks (the “Collateral”), to secure the prompt payment, performance and observance of the Obligations (as defined in the Agreement);

NOW, THEREFORE, for good and valuable consideration, receipt of which is hereby acknowledged, Debtor does hereby further grant to Secured Party a security interest in the Collateral to secure the prompt payment, performance and observance of the Obligations.

Debtor does hereby further acknowledge and affirm that the rights and remedies of Secured Party with respect to the security interest in the Collateral granted hereby are more fully set forth in the Agreement, the terms and provisions of which are hereby incorporated herein by reference as if fully set forth herein.

IN WITNESS WHEREOF, Debtor has caused this instrument to be executed as of the day and year first written above.

SCHEDULE 1-A TO GRANT OF SECURITY INTEREST

TRADEMARKS

SCHEDULE 1-B TO GRANT OF SECURITY INTEREST

TRADEMARK APPLICATIONS