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Financing Agreements - Watson Notes
9 Months Ended
Sep. 30, 2011
FINANCING AGREEMENTS-WATSON NOTES [Abstract] 
Financing Agreement [Text Block]
FINANCING AGREEMENTS-WATSON NOTE:
On June 1, 2010, the Company borrowed $15,000,000 from Watson pursuant to the Watson Note. Amounts due under the Watson Note accrued interest at the rate of 4% per annum. If the Watson Transactions closed prior to December 31, 2011, all amounts otherwise due and payable under the Watson Note would be forgiven in full; however, if the Company engaged in a Fundamental Transaction (as defined in the Watson Note) with any party other than as contemplated pursuant to the Watson Transactions, the Watson Note would accelerate, and the Company would be required to repay all amounts due under the Watson Note, plus accrued interest, on the earlier of (i) the date upon which all of the obligations in respect of the Company's Notes were paid in full or (ii) 21 Trading Days (as defined in the Watson Note) after the occurrence of such Fundamental Transaction. If neither the Watson Transactions nor another Fundamental Transaction closed, the Watson Note would become due and payable on December 31, 2011. If the Company were required to repay the Watson Note by reason of the occurrence of a Fundamental Transaction prior to August 31, 2011, then the Company would be required to pay to Watson on the date the Watson Note is to be repaid, in addition to all other amounts due and payable thereunder, a $2 million prepayment fee.
The proceeds of the Watson Note were intended to be used by the Company for purposes of financing product development activities as described in the Watson Note and for general corporate purposes.
The Watson Note was unsecured and subordinate in right of payment to the Company's obligations to PharmaBio under the STRIANT Financing Agreement. As required by the STRIANT Financing Agreement, pursuant to a Letter Agreement dated June 1, 2010 between the Company and PharmaBio, PharmaBio consented to the Company entering into, and incurring the debt under, the Watson Note. The Watson Note was also subordinate in right of payment to the Notes. The Watson Note contained certain covenants and representations and warranties, including a covenant which prohibited the Company from incurring any additional indebtedness that would rank senior or pari passu to the Watson Note, subject to certain exceptions specified in the Watson Note.