Filed by Inhibitex, Inc. Pursuant to Rule 425
Under the Securities Act of 1933
and Deemed Filed Pursuant to Rule 14a-12
Under the Securities Exchange Act of 1934
Subject Company: Fermavir Pharmaceuticals Inc.
Exchange Act File No. 333-116480

SECURITY AGREEMENT

This SECURITY AGREEMENT (this “Agreement”), dated as of April 9, 2007, by
FERMAVIR PHARMACEUTICALS, INC., a Florida corporation (“FPI”) and FERMAVIR
RESEARCH, INC., a Delaware corporation (“FRI”, each of FPI and FRI is referred
to herein individually as a “Grantor” and collectively as the “Grantors”), and
INHIBITEX, INC., a Delaware corporation (the “Purchaser” or the “Collateral
Agent”), as Collateral Agent on behalf of the Holders (as defined herein).

W I T N E S S E T H:

WHEREAS, pursuant to that certain Note Purchase Agreement dated as of the date
hereof (the “Note Purchase Agreement”) by and between FPI and the Collateral
Agent, as Purchaser, the Purchaser has agreed to acquire senior secured
promissory notes from FPI; and

WHEREAS, FRI is a wholly-owned subsidiary of FPI and the funds obtained from the
issuance of the Notes will be used in connection with its business activities;

WHEREAS, pursuant to the Note Purchase Agreement, any transferee of the Notes
has agreed to appoint the Purchaser as collateral agent with respect to the
indebtedness thereunder, and the Collateral Agent has agreed to act in such
capacity; and

WHEREAS, in order to induce the Holders to enter into the Note Purchase
Agreement and the other Investment Documents (as defined in the Note Purchase
Agreement), Grantors have agreed to grant a continuing Lien on the Collateral
(as hereinafter defined) to secure the Obligations.

NOW, THEREFORE, in consideration of the premises and mutual covenants herein
contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:

1. Definitions. Terms defined in the Note Purchase Agreement and not otherwise
defined in this Agreement shall have the meanings defined for those terms in the
Note Purchase Agreement. Terms defined in the Uniform Commercial Code as enacted
in the State of New York (as amended from time to time, the “New York Commercial
Code”) and not otherwise defined in this Agreement or in the Credit Agreement
shall have the meanings defined for those terms in the New York Commercial Code.
In addition, as used in this Agreement, the following terms shall have the
meanings respectively set forth after each:

“Agreement” means this Security Agreement, and any extensions, modifications,
renewals, restatements, supplements or amendments hereof.

“Collateral” means and includes all present and future right, title and interest
of Grantors in or to any property or assets whatsoever, and all rights and
powers of Grantors to transfer any interest in or to any personal property or
assets whatsoever, including, without limitation, any and all of the following
personal property:

  (1)   accounts;

  (2)   chattel paper (including, without limitation, tangible chattel paper and
electronic chattel paper);

  (3)   goods (including, without limitation, equipment, inventory and
fixtures);

  (4)   instruments (including, without limitation, promissory notes);

  (5)   investment property;

  (6)   documents;

  (7)   deposit accounts;

  (8)   general intangibles (including, without limitation, payment
intangibles);

  (9)   supporting obligations;

  (10)   other assets (including, without limitation, all books and records,
inventions, discoveries, trade secrets, intellectual property rights, patents,
trademarks, trade names, service marks and copyrights, registrations of and
applications relating to any of the foregoing, and all associated goodwill); and

  (11)   to the extent not listed above as original collateral, proceeds and
products of, and accessions to, the foregoing.

“Debtor Relief Laws” means the Bankruptcy Code of the United States, and all
other liquidation, conservatorship, bankruptcy, assignment for the benefit of
creditors, moratorium, rearrangement, receivership, insolvency, reorganization,
or similar debtor relief laws of the United States or other applicable
jurisdictions from time to time in effect and affecting the rights of creditors
generally.

“Secured Obligations” means any and all present and future Obligations of every
kind or nature of Grantors at any time and from time to time owed to the Secured
Parties or any one or more of them, whether due or to become due, matured or
unmatured, liquidated or unliquidated, or contingent or noncontingent, including
Obligations of performance as well as Obligations of payment, and including
interest that accrues after the commencement of any proceeding under any Debtor
Relief Law by or against Grantors, whether or not allowed as a claim in such
proceeding.

“Secured Parties” means the Collateral Agent, acting as the Collateral Agent or
on behalf of the Holders, and each of them, and any one or more of them. Subject
to the terms of the Note Purchase Agreement and the Notes, any right, remedy,
privilege or power of the Secured Parties shall be exercised by the Collateral
Agent.

2. Further Assurances. At any time and from time to time at the request of the
Secured Parties, Grantors shall execute and deliver, or cause to be executed and
delivered, to the Secured Parties all such instruments and documents in form and
substance satisfactory to the Secured Parties as shall be reasonably necessary
fully perfect, when filed and/or recorded, the Secured Parties’ security
interests granted pursuant to Section 3 of this Agreement. At any time and from
time to time, the Secured Parties shall be entitled to file and/or record any or
all such financing statements, instruments and documents held by it, and any or
all such further financing statements, documents and instruments, and to take
all such other actions, as the Secured Parties may deem appropriate to perfect
and to maintain perfected the security interests granted in Section 3 of this
Agreement. With respect to any Collateral consisting of certificated securities,
instruments, documents, certificates of title or the like, as to which the
Secured Parties’ security interest need be perfected by, or the priority thereof
need be assured by, possession of such Collateral, Grantors will upon demand of
the Secured Parties deliver possession of same in pledge to the Secured Parties.
With respect to any Collateral consisting of securities, instruments,
partnership, limited liability company or joint venture interests or the like,
Grantors hereby consent and agree that the issuers of, or obligors on, any such
Collateral, or any registrar or transfer agent or trustee for any such
Collateral, shall be entitled to accept the provisions of this Agreement as
conclusive evidence of the right of the Secured Parties to effect any transfer
or exercise any right hereunder or with respect to any such Collateral,
notwithstanding any other notice or direction to the contrary heretofore or
hereafter given by Grantors or any other Person to such issuers or such obligors
or to any such registrar or transfer agent or trustee.

3. Security Agreement. For valuable consideration, Grantors hereby assign and
pledge to the Secured Parties, and grant to the Secured Parties a security
interest in, all presently existing and hereafter acquired Collateral, as
security for the timely payment and performance of the Secured Obligations, and
each of them. This Agreement is a continuing and irrevocable agreement and all
the rights, powers, privileges and remedies hereunder shall apply to any and all
of the Secured Obligations, including, without limitation, those arising under
successive transactions which shall either continue the Secured Obligations,
increase or decrease them, or from time to time create new Secured Obligations
after all or any prior Secured Obligations have been satisfied, and
notwithstanding the bankruptcy of Company or any other Person or any other event
or proceeding affecting any Person.

4. Grantors’ Representations, Warranties and Agreements. Each Grantor
represents, warrants and agrees that: (a) it will pay, prior to delinquency, all
taxes, charges, Liens and assessments against the Collateral, except such as are
expressly permitted by the Note Purchase Agreement or are timely contested in
good faith, and upon its failure to pay or so contest such taxes, charges, Liens
and assessments, the Secured Parties at their option may pay any of them, and
the Secured Parties shall be the sole judge of the legality or validity thereof
and the amount necessary to discharge the same; (b) the Collateral will not be
used for any unlawful purpose or in violation of any law, regulation or
ordinance; (c) it will take all steps to preserve and protect the Collateral;
(d) it will maintain, with responsible insurance companies, insurance covering
the Collateral against such insurable losses as is required by the Note Purchase
Agreement and as is consistent with sound business practice; and (e) it will
promptly notify the Secured Parties in writing in the event of any substantial
or material damage to the Collateral from any source whatsoever.

5. Secured Parties’ Rights Re Collateral. At any time (whether or not an Event
of Default has occurred), without notice or demand and at the expense of
Grantors, the Secured Parties may, to the extent it may be necessary or
desirable to protect the security hereunder, but the Secured Parties shall not
be obligated to: (a) enter upon any premises on which Collateral is situated
upon reasonable notice and examine the same or (b) upon the occurrence of and
during the continuation of an Event of Default, perform any obligation under
this Agreement or any obligation of any other Person under the Note Purchase
Agreement. Each Grantor shall maintain books and records pertaining to the
Collateral in such detail, form and scope as is consistent with industry
practices. The Secured Parties shall at all times on reasonable notice have full
access to and the right to audit any and all of Grantors’ books and records
pertaining to the Collateral, and to confirm and verify the value of the
Collateral and to do whatever else the Secured Parties reasonably may deem
necessary or desirable to protect their interests. The Secured Parties shall be
under no duty or obligation whatsoever to take any action to preserve any rights
of or against any prior or other parties in connection with the Collateral, to
exercise any voting rights or managerial rights with respect to any Collateral,
whether or not an Event of Default shall have occurred, or to make or give any
presentments, demands for performance, notices of non performance, protests,
notices of protests, notices of dishonor or notices of any other nature
whatsoever in connection with the Collateral or the Secured Obligations. The
Secured Parties shall be under no duty or obligation whatsoever to take any
action to protect or preserve the Collateral or any rights of a Grantor therein,
or to make collections or enforce payment thereon, or to participate in any
foreclosure or other proceeding in connection therewith.

6. Possession of Collateral by the Secured Parties. All the Collateral now,
heretofore or hereafter delivered to the Secured Parties shall be held by the
Secured Parties in their possession, custody and control. Nothing herein shall
obligate the Secured Parties to invest any Collateral or obtain any particular
return thereon. Upon the occurrence and during the continuance of an Event of
Default, whenever any of the Collateral is in the Secured Parties’ possession,
custody or control, the Secured Parties may use, operate and consume the
Collateral, whether for the purpose of preserving and/or protecting the
Collateral, or for the purpose of performing any of a Grantor’s obligations with
respect thereto, or otherwise. The Secured Parties may at any time deliver or
redeliver the Collateral or any part thereof to a Grantor, and the receipt of
any of the same by such Grantor shall be complete and full acquittance for the
Collateral so delivered, and the Secured Parties thereafter shall be discharged
from any liability or responsibility therefor. So long as the Secured Parties
exercise reasonable care with respect to any Collateral in its possession,
custody or control, the Secured Parties shall have no liability for any loss of
or damage to such Collateral, and in no event shall the Secured Parties have
liability for any diminution in value of Collateral occasioned by economic or
market conditions or events. The Secured Parties shall be deemed to have
exercised reasonable care within the meaning of the preceding sentence if the
Collateral in the possession, custody or control of the Secured Parties is
accorded treatment substantially equal to that which the Secured Parties accords
their own property, it being understood that the Secured Parties shall not have
any responsibility for (a) ascertaining or taking action with respect to calls,
conversions, exchanges, maturities, tenders or other matters relating to any
Collateral, whether or not the Secured Parties have or are deemed to have
knowledge of such matters, or (b) taking any necessary steps to preserve rights
against any Person with respect to any Collateral.

7. Rights Upon Event of Default. Upon the occurrence and during the continuance
of an Event of Default, the Secured Parties shall have, in any jurisdiction
where enforcement hereof is sought, in addition to all other rights and remedies
that the Secured Parties may have under applicable law or in equity or under
this Agreement or under the Note Purchase Agreement, all rights and remedies of
a secured party under the New York Commercial Code as enacted in any
jurisdiction, and, in addition, the following rights and remedies, all of which
may be exercised with or without notice to the Grantors (except as expressly
provided herein) and without affecting the Obligations of FPI hereunder or under
the Note Purchase Agreement, or the enforceability of the Liens and security
interests created hereby: (a) to foreclose the Liens and security interests
created hereunder or under any other agreement relating to any Collateral by any
available judicial procedure or without judicial process; (b) to enter any
premises where any Collateral may be located for the purpose of securing,
protecting, inventorying, appraising, inspecting, repairing, preserving,
storing, preparing, processing, taking possession of or removing the same;
(c) to sell, assign, lease or otherwise dispose of any Collateral or any part
thereof, either at public or private sale or at any broker’s board, in lot or in
bulk, for cash, on credit or otherwise, with or without representations or
warranties and upon such terms as shall be acceptable to the Secured Parties;
(d) to notify obligors on the Collateral that the Collateral has been assigned
to the Secured Parties and that all payments thereon are to be made directly and
exclusively to the Secured Parties; (e) to enter into any extension,
reorganization, deposit, merger or consolidation agreement, or any other
agreement relating to or affecting the Collateral, and in connection therewith
the Secured Parties may deposit or surrender control of the Collateral and/or
accept other property in exchange for the Collateral; (f) to settle, compromise
or release, on terms acceptable to the Secured Parties, in whole or in part, any
amounts owing on the Collateral and/or any disputes with respect thereto; (g) to
extend the time of payment, make allowances and adjustments and issue credits in
connection with the Collateral in the name of the Secured Parties or in the name
of Grantors; (h) to enforce payment and prosecute any action or proceeding with
respect to any or all of the Collateral and take or bring, in the name of the
Secured Parties or in the name of a Grantor, any and all steps, actions, suits
or proceedings deemed by the Secured Parties necessary or desirable to effect
collection of or to realize upon the Collateral, including, without limitation,
any judicial or nonjudicial foreclosure thereof or thereon, and each Grantor
specifically consents to any nonjudicial foreclosure of any or all of the
Collateral or any other action taken by the Secured Parties which may release
any obligor from personal liability on any of the Collateral, and to the extent
permitted by applicable law, each Grantor waives any right not expressly
provided for in this Agreement to receive notice of any public or private
judicial or nonjudicial sale or foreclosure of any security or any of the
Collateral; and any money or other property received by the Secured Parties in
exchange for or on account of the Collateral, whether representing collections
or proceeds of Collateral, and whether resulting from voluntary payments or
foreclosure proceedings or other legal action taken by the Secured Parties or a
Grantor may be applied by the Secured Parties without notice to Grantors to the
Secured Obligations in such order and manner as the Secured Parties in their
sole discretion shall determine; (i) to insure, process and preserve the
Collateral; (j) to exercise all rights, remedies, powers or privileges provided
under the Note Purchase Agreement; (k) to receive, open and dispose of all mail
addressed to Company and notify postal authorities to change the address for
delivery thereof to such address as the Secured Parties may designate; provided
that the Secured Parties agree that they will promptly deliver over to Grantors
such mail as does not relate to the Collateral; and (l) to exercise all other
rights, powers, privileges and remedies of an owner of the Collateral; all at
the Secured Parties’ sole option and as the Secured Parties in their sole
discretion may deem advisable. Grantors will, at the Secured Parties’ request,
assemble the Collateral and make it available to the Secured Parties at places
which the Secured Parties may designate, whether at the premises of Company or
elsewhere, and will make available to the Secured Parties, free of cost, all
premises, equipment and facilities of Grantors for the purpose of the Secured
Parties’ taking possession of the Collateral or storing same or removing or
putting the Collateral in salable form or selling or disposing of same.

Upon the occurrence and during the continuance of an Event of Default, the
Secured Parties also shall have the right, without notice or demand, either in
person, by agent or by a receiver to be appointed by a court, and without regard
to the adequacy of any security for the Secured Obligations, to take possession
of the Collateral or any part thereof and to collect and receive the rents,
issues, profits, income and proceeds thereof. Taking possession of the
Collateral shall not cure or waive any Event of Default or notice thereof or
invalidate any act done pursuant to such notice. The rights, remedies and powers
of any receiver appointed by a court shall be as ordered by said court.

Any public or private sale or other disposition of the Collateral may be held at
any office of the Secured Parties, or at Grantors’ place of business, or at any
other place permitted by applicable law, and without the necessity of the
Collateral’s being within the view of prospective purchasers. The Secured
Parties may direct the order and manner of sale of the Collateral, or portions
thereof, as it in its sole and absolute discretion may determine, and Company
expressly waives any right to direct the order and manner of sale of any
Collateral. To the extent permitted by applicable law, the Secured Parties or
any Person on the Secured Parties’ behalf may bid and purchase at any such sale
or other disposition. The net cash proceeds resulting from the collection,
liquidation, sale, lease or other disposition of the Collateral shall be
applied, first, to the expenses (including, without limitation, attorneys’ fees
and disbursements) of retaking, holding, storing, processing and preparing for
sale or lease, selling, leasing, collecting, liquidating and the like, and then
to the satisfaction of the Secured Obligations in such order as shall be
determined by the Secured Parties in their sole and absolute discretion.
Grantors and any other Person then obligated therefor shall pay to the Secured
Parties on demand any deficiency with regard thereto which may remain after such
sale, disposition, collection or liquidation of the Collateral.

Unless the Collateral is perishable or threatens to decline speedily in value or
is of a type customarily sold on a recognized market, the Secured Parties shall
send or otherwise make available to Grantors notice of the time and place of any
public sale thereof or of the time on or after which any private sale thereof is
to be made. The requirement of sending notice conclusively shall be met if such
notice is given in the manner contemplated by the Note Purchase Agreement at
least ten days before the date of the sale. Each Grantor expressly waives any
right to receive notice of any public or private sale of any Collateral or other
security for the Secured Obligations except as expressly provided for in this
paragraph.

With respect to any Collateral consisting of securities, partnership or limited
liability company interests, joint venture interests, Investments or the like,
and whether or not any of such Collateral has been effectively registered under
the Securities Act of 1933, as amended, or other applicable laws, the Secured
Parties may, in their sole and absolute discretion, sell all or any part of such
Collateral at private sale in such manner and under such circumstances as the
Secured Parties may deem necessary or advisable in order that the sale may be
lawfully conducted. Without limiting the foregoing, the Secured Parties may
(i) approach and negotiate with a limited number of potential purchasers, and
(ii) restrict the prospective bidders or purchasers to persons who will
represent and agree that they are purchasing such Collateral for their own
account for investment and not with a view to the distribution or resale
thereof. In the event that any such Collateral is sold at private sale, Grantors
agree that if such Collateral is sold for a price which the Secured Parties in
good faith believe to be reasonable under the circumstances then existing, then
(a) the sale shall be deemed to be commercially reasonable in all respects,
(b) Grantors shall not be entitled to a credit against the Secured Obligations
in an amount in excess of the purchase price, and (c) the Secured Parties shall
not incur any liability or responsibility to Grantors in connection therewith,
notwithstanding the possibility that a substantially higher price might have
been realized at a public sale. Grantors recognize that a ready market may not
exist for such Collateral if it is not regularly traded on a recognized
securities exchange, and that a sale by the Secured Parties of any such
Collateral for an amount substantially less than a pro rata share of the fair
market value of the issuer’s assets minus liabilities may be commercially
reasonable in view of the difficulties that may be encountered in attempting to
sell a large amount of such Collateral or Collateral that is privately traded.

Upon consummation of any sale of Collateral hereunder, the Secured Parties shall
have the right to assign, transfer and deliver to the purchaser or purchasers
thereof the Collateral so sold. Each such purchaser at any such sale shall hold
the Collateral so sold absolutely free from any claim or right upon the part of
Grantors or any other Person, and each Grantor hereby waives (to the extent
permitted by applicable laws) all rights of redemption, stay and appraisal which
it now has or may at any time in the future have under any rule of law or
statute now existing or hereafter enacted. If the sale of all or any part of the
Collateral is made on credit or for future delivery, the Secured Parties shall
not be required to apply any portion of the sale price to the Secured
Obligations until such amount actually is received by the Secured Parties, and
any Collateral so sold may be retained by the Secured Parties until the sale
price is paid in full by the purchaser or purchasers thereof. The Secured
Parties shall not incur any liability in case any such purchaser or purchasers
shall fail to pay for the Collateral so sold, and, in case of any such failure,
the Collateral may be sold again.

8. Voting Rights; Dividends; etc. With respect to any Collateral consisting of
securities, partnership or limited liability company interests, joint venture
interests, Investments or the like (referred to collectively and individually in
this Section 8 and in Section 9 as the “Investment Collateral”), so long as no
Event of Default occurs and remains continuing:

(a) Voting Rights. Company shall be entitled to exercise any and all voting and
other consensual rights pertaining to the Investment Collateral, or any part
thereof, for any purpose not inconsistent with the terms of this Agreement, the
Note Purchase Agreement; provided, however, that Company shall not exercise, or
shall refrain from exercising, any such right if it would result in an Event of
Default.

(b) Dividend and Distribution Rights. Except as otherwise provided in the Note
Purchase Agreement, Grantors shall be entitled to receive and to retain and use
any and all dividends or distributions paid in respect of the Investment
Collateral; provided, however, that any and all such dividends or distributions
received in the form of capital stock, certificated securities, warrants,
options or rights to acquire capital stock or certificated securities forthwith
shall be, and the certificates representing such capital stock or certificated
securities, if any, forthwith shall be delivered to the Secured Parties to hold
as pledged Collateral and shall, if received by a Grantor, be received in trust
for the benefit of the Secured Parties, be segregated from the other property of
Grantors, and forthwith be delivered to the Secured Parties as pledged
Collateral in the same form as so received (with any necessary endorsements).

9. Rights During Event of Default. With respect to any Investment Collateral, so
long as an Event of Default has occurred and is continuing:

(a) Voting, Dividend, and Distribution Rights. At the option of the Secured
Parties, all rights of a Grantor to exercise the voting and other consensual
rights which it would otherwise be entitled to exercise pursuant to Section 8(a)
above, and to receive the dividends and distributions which it would otherwise
be authorized to receive and retain pursuant to Section 8(b) above, shall cease,
and all such rights thereupon shall become vested in the Secured Parties which
thereupon shall have the sole right to exercise such voting and other consensual
rights and to receive and to hold as pledged Collateral such dividends and
distributions.

(b) Dividends and Distributions Held in Trust. All dividends and other
distributions which are received by a Grantor contrary to the provisions of this
Agreement shall be received in trust for the benefit of the Secured Parties,
shall be segregated from other funds of such Grantor, and forthwith shall be
paid over to the Secured Parties as pledged Collateral in the same form as so
received (with any necessary endorsements).

(c) Irrevocable Proxy. Each Grantor does hereby revoke all previous proxies with
regard to the Investment Collateral and appoint the Secured Parties as its
proxyholder to attend and vote at any and all meetings of the shareholders or
other equity holders of the Persons that issued the Investment Collateral and
any adjournments thereof, held on or after the date of the giving of this proxy
and prior to the termination of this proxy, and to execute any and all written
consents of shareholders or other equity holders of such Persons executed on or
after the date of the giving of this proxy and prior to the termination of this
proxy, with the same effect as if such Grantor had personally attended the
meetings or had personally voted its shares or other interests or had personally
signed the written consents; provided, however, that the proxyholder shall have
rights hereunder only upon the occurrence and during the continuance of an Event
of Default. Each Grantor hereby authorizes the Secured Parties to substitute
another Person as the proxyholder and, upon the occurrence and during the
continuance of any Event of Default, hereby authorizes the proxyholder to file
this proxy and any substitution instrument with the secretary or other
appropriate official of the appropriate Person. This proxy is coupled with an
interest and is irrevocable until such time as all Secured Obligations have been
indefeasibly paid and performed in full.

10. Attorney in Fact. Each Grantor hereby irrevocably nominates and appoints the
Secured Parties as its attorney-in fact for the following purposes: (a) to do
all acts and things which the Secured Parties may deem necessary or advisable to
perfect and continue perfected the security interests created by this Agreement
and, upon the occurrence and during the continuance of an Event of Default, to
preserve, process, develop, maintain and protect the Collateral; (b) upon the
occurrence and during the continuance of an Event of Default, to do any and
every act which Company is obligated to do under this Agreement, at the expense
of Company and without any obligation to do so; (c) to prepare, sign, file
and/or record, for Company, in the name of Company, any financing statement,
application for registration, or like paper, and to take any other action deemed
by the Secured Parties necessary or desirable in order to perfect or maintain
perfected the security interests granted hereby; and (d) upon the occurrence and
during the continuance of an Event of Default, to execute any and all papers and
instruments and do all other things necessary or desirable to preserve and
protect the Collateral and to protect the Secured Parties’ security interests
therein; provided, however, that the Secured Parties shall be under no
obligation whatsoever to take any of the foregoing actions, and, absent gross
negligence or actual malice on the part of the Secured Parties, the Secured
Parties shall have no liability or responsibility for any act taken or omission
with respect thereto.

11. Costs and Expenses. Each Grantor agrees to pay to the Secured Parties all
costs and expenses (including, without limitation, attorneys’ fees and
disbursements) incurred by the Secured Parties in the enforcement or attempted
enforcement of this Agreement, whether or not an action is filed in connection
therewith, and in connection with any waiver or amendment of any term or
provision hereof. All advances, charges, costs and expenses, including, without
limitation, attorneys’ fees and disbursements, incurred or paid by the Secured
Parties in exercising any right, privilege, power or remedy conferred by this
Agreement (including, without limitation, the right to perform any Secured
Obligation of a Grantor under the Note Purchase Agreement), or in the
enforcement or attempted enforcement thereof, shall be secured hereby and shall
become a part of the Secured Obligations and shall be paid to the Secured
Parties by Grantors, immediately upon demand, together with interest thereon at
the Default Rate.

12. Statute of Limitations and Other Laws. Until the Secured Obligations shall
have been indefeasibly paid and performed in full, to the extent permitted by
applicable law, the power of sale and all other rights, privileges, powers and
remedies granted to the Secured Parties hereunder shall continue to exist and
may be exercised by the Secured Parties at any time and from time to time
irrespective of the fact that any of the Secured Obligations may have become
barred by any statute of limitations. Each Grantor expressly waives the benefit
of any and all statutes of limitation, and any and all laws providing for
exemption of property from execution or for valuation and appraisal upon
foreclosure, to the maximum extent permitted by applicable law.

13. Other Agreements. Nothing herein shall in any way modify or limit the effect
of terms or conditions set forth in any other security or other agreement
executed by Grantors or in connection with the Secured Obligations, but each and
every term and condition hereof shall be in addition thereto. All provisions
contained in the Note Purchase Agreement are fully applicable to this Agreement
and are incorporated herein by this reference.

14. Understandings With Respect to Waivers and Consents. Each Grantor warrants
and agrees that each of the waivers and consents set forth herein are made after
consultation with legal counsel and with full knowledge of their significance
and consequences, with the understanding that events giving rise to any defense
or right waived may diminish, destroy or otherwise adversely affect rights which
Grantors otherwise may have against the Secured Parties or others, or against
Collateral, and that, under the circumstances, the waivers and consents herein
given are reasonable and not contrary to public policy or law. If any of the
waivers or consents herein are determined to be contrary to any applicable law
or public policy, such waivers and consents shall be effective to the maximum
extent permitted by law.

15. Release of Grantors. This Agreement shall be released when all Secured
Obligations of Grantors hereunder have been paid in full in cash or otherwise
performed in full and when no portion of the Commitments remains outstanding.
Upon such release of Grantors’ Secured Obligations hereunder, Secured Parties
shall return any Collateral to Grantors, or to the Person or Persons legally
entitled thereto, and shall endorse, execute, deliver, record and file all
instruments and documents, and do all other acts and things, reasonably required
for the return of the Collateral to Grantors, or to the Person or Persons
legally entitled thereto, and to evidence or document the release of Secured
Parties’ interests arising under this Agreement, all as reasonably requested by,
and at the sole expense of, Grantors.

16. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF
LAWS PRINCIPLES (OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL
OBLIGATIONS LAW) THEREOF.

[signature pages follow]

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IN WITNESS WHEREOF, each Grantor has executed this Agreement by its duly
authorized officers as of the date first written above.

FERMAVIR PHARMACEUTICALS, INC.
a Florida corporation

By:
Name:
Title:

FERMAVIR RESEARCH, INC.

a Delaware corporation

By:
Name:
Title:

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