Exhibit 10.3

INTELLECTUAL PROPERTY SECURITY AGREEMENT

INTELLECTUAL PROPERTY SECURITY AGREEMENT (this “Agreement”), dated as of January
11, 2007, by and among Alteon Inc., a Delaware corporation (“Alteon”),
HaptoGuard, Inc., a Delaware corporation (“HaptoGuard”) (Alteon and HaptoGuard
sometimes referred to as “Debtor”), and Baker Bros Advisors, LLC, as Collateral
Agent for the Secured Parties (together with its successors and assigns in such
capacity, the “Collateral Agent”).
 
W I T N E S S E T H:
 
WHEREAS, pursuant to a Convertible Note and Warrant Purchase Agreement, dated
the date hereof, between Alteon and the Collateral Agent (the “Purchase
Agreement”), Alteon has agreed to issue to the Collateral Agent and the
Collateral Agent has agreed to purchase from Alteon certain of Alteon’s
Convertible Secured Notes (the “Notes”), and warrants to purchase shares of
Alteon’s Common Stock, $0.01 par value per share as described in the Purchase
Agreement.
 
WHEREAS, in order to induce the Lenders (as defined in the Purchase Agreement)
to purchase the Notes, each Debtor has agreed to execute and deliver to the
Collateral Agent for the benefit of the Secured Parties (as defined in the
Security Agreement) that certain Security Agreement dated the date hereof for
the benefit of the Collateral Agent and the Secured Parties in which each Debtor
has, among other things, granted to the Collateral Agent a security interest in
the Collateral (as defined in the Security Agreement) including a security
interest in the all United States and foreign patents and certificates of
invention, or similar industrial property rights, and applications for any of
the foregoing, including, without limitation: (i) each patent and patent
application referred to in Schedule I hereto, (ii) all reissues, divisions,
continuations, continuations-in-part, extensions, renewals, and reexaminations
thereof, (iii) all rights corresponding thereto throughout the world, (iv) all
inventions and improvements described therein, (v) all rights to sue for past,
present and future infringements thereof, (vi) all licenses, claims, damages,
and proceeds of suit arising therefrom, and (vii) all Proceeds of the foregoing,
including, without limitation, licenses, royalties, income, payments, claims,
damages, and proceeds of suit (collectively the “Patent Collateral”) and all
United States, and foreign trademarks, trade names, corporate names, company
names, business names, fictitious business names, Internet domain names, service
marks, certification marks, collective marks, logos, other source or business
identifiers, designs and general intangibles of a like nature, all registrations
and applications for any of the foregoing including, without limitation: (i) the
registrations and applications referred to in Schedule II, (ii) all extensions
or renewals of any of the foregoing, (iii) all of the goodwill of the business
connected with the use of and symbolized by the foregoing, (iv) the right to sue
for past, present and future infringement or dilution of any of the foregoing or
for any injury to goodwill, and (v) all Proceeds of the foregoing, including,
without limitation, licenses, royalties, income, payments, claims, damages, and
proceeds of suit (collectively, the “Trademark Collateral” and together with the
Patent Collateral the “IP Collateral.”to secure the payment and performance of
all of the Obligations (as defined in the Security Agreement);
 
 
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NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Borrower and the Collateral Agent agree as
follows:

1. Each Debtor hereby grants to the Collateral Agent, for the benefit of the
Collateral Agent, a continuing security interest in (i) all of such Debtor’s
right, title and interest in and to the IP Collateral, (ii) the right (but not
the obligation) to sue or bring like proceedings in the name of such Debtor or
in the name of the Collateral Agent for past, present and future infringements
of the IP Collateral and (iii) all rights (but not obligations) corresponding
thereto in the United States and any foreign country. Each Debtor hereby further
acknowledges and affirms that the rights and remedies of the Collateral Agent
with respect to the security interest in the IP Collateral are more fully set
forth in the Security Agreement, the terms and provisions of which are
incorporated by reference herein as if fully set forth herein.

2. All notices, demands, consents, statements, requests, approvals or other
communications which are permitted or required to be given by either party to
the other hereunder shall be in writing and shall be given as provided in
Section 11 of the Purchase Agreement.

3. This Agreement cannot be modified, changed or discharged except by an
agreement in writing signed by each Debtor and the Collateral Agent.

4. This Agreement shall be construed and enforced in accordance with the laws of
the State of New York.

5. This Agreement is subject in all respects to the Security Agreement, the
terms of which are incorporated herein by this reference.

6. The security interests created hereunder and under the Security Agreement in
the IP Collateral shall cease and be released in accordance with the terms of
the Security Agreement and the Purchase Agreement.

7. If any provision hereof conflicts with any provision of the Security
Agreement, the terms of the Security Agreement shall control to the extent of
such inconsistency.

8. Each Debtor and the Collateral Agent hereby request that the Commissioner of
Patents and Trademarks record this Agreement with respect to the applicable IP
Collateral.

 
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9. Authorization to Supplement. If any Debtor shall obtain rights to any
additional patent application, patent, trademark or trademark application or for
any reissue, division, or continuation, of any patent or trademark, the
provisions of this Agreement shall automatically apply thereto. Each Debtor
shall give prompt notice in writing to Collateral Agent with respect to any such
new patent rights. Without limiting the Debtors’ obligations under this Section
9, Debtor authorizes Collateral Agent unilaterally to modify this Agreement by
amending Schedules I and II respectively to include any such new patent rights
or trademark rights. Notwithstanding the foregoing, no failure to so modify this
Agreement or amend Schedule I or II shall in any way affect, invalidate or
detract from Collateral Agent's continuing security interest in all Collateral,
whether or not listed on Schedule I or II.

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IN WITNESS WHEREOF, each Debtor and Collateral Agent have caused this
Intellectual Property Security Agreement to be duly executed and delivered as of
the day and year first above written.

DEBTORS:
 

 
ALTEON INC.
 

 
By: _/s/ Noah Berkowitz____________________
Name: Noah Berkowitz
Title: President and Chief Executive Officer

HAPTOGUARD, INC.

By: _/s/ Noah Berkowitz____________________
Name: Noah Berkowitz
Title: President

COLLATERAL AGENT:

BAKER BROS. ADVISORS, LLC

By: _/s/ Felix Baker___________________
Name: Felix Baker, Ph.D.
Title: Managing Member 

 

 
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SCHEDULE I

PATENTS AND PATENT APPLICATIONS

See Attached.
 
 
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SCHEDULE II

TRADEMARKS AND TRADEMARK APPLICATIONS

See Attached.

 
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