Exhibit 10.4

 

EXECUTION COPY

 

U.S. $50,000,000

LOAN AGREEMENT

 

Dated as of August 5, 2008

 

between

 

COWEN HEALTHCARE ROYALTY PARTNERS, L.P.,

 

as Lender,

 

and

 

DYAX CORP.,

 

as Borrower

 

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TABLE OF CONTENTS

 

 

 

 

 

Page

 

 

 

 

 

ARTICLE I

CERTAIN DEFINITIONS

 

 

 

 

 

SECTION 1.01.

 

Definitions

 

 

SECTION 1.02.

 

Interpretation; Headings

 

15

 

 

 

 

 

ARTICLE II

COMMITMENT; DISBURSEMENT; FEES

 

 

 

 

 

SECTION 2.01.

 

Commitment to Lend

 

15

SECTION 2.02.

 

Notice of Borrowing

 

16

SECTION 2.03.

 

Disbursement

 

16

SECTION 2.04.

 

Commitment Not Revolving

 

16

 

 

 

 

 

ARTICLE III

REPAYMENT

 

 

 

 

 

SECTION 3.01.

 

Amortization

 

16

SECTION 3.02.

 

Optional Prepayment; Mandatory Prepayment

 

16

SECTION 3.03.

 

Illegality

 

17

 

 

 

 

 

ARTICLE IV

INTEREST; EXPENSES

 

 

 

 

 

SECTION 4.01.

 

Interest Rate

 

17

SECTION 4.02.

 

Lockbox Account

 

18

SECTION 4.03.

 

Interest on Late Payments

 

21

SECTION 4.04.

 

Initial Expenses

 

21

SECTION 4.05.

 

Administration and Enforcement Expenses

 

22

 

 

 

 

 

ARTICLE V

TAXES

 

 

 

 

 

SECTION 5.01.

 

Taxes

 

22

SECTION 5.02.

 

Receipt of Payment

 

23

SECTION 5.03.

 

Other Taxes

 

23

SECTION 5.04.

 

Indemnification

 

23

SECTION 5.05.

 

Loans Treated As Indebtedness

 

24

SECTION 5.06.

 

Allocation of Issue Price

 

24

SECTION 5.07.

 

Registered Obligation

 

24

 

i

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Page

 

ARTICLE VI

PAYMENTS; COMPUTATIONS

 

 

 

 

 

SECTION 6.01.

 

Making of Payments

 

25

SECTION 6.02.

 

Setoff or Counterclaim

 

25

 

 

 

 

 

ARTICLE VII

CONDITIONS PRECEDENT

 

 

 

 

 

SECTION 7.01.

 

Conditions Precedent to the Loan

 

25

 

 

 

 

 

ARTICLE VIII

REPRESENTATIONS AND WARRANTIES

 

 

 

 

 

SECTION 8.01.

 

Representations and Warranties of Borrower

 

28

SECTION 8.02.

 

Survival of Representations and Warranties

 

36

 

 

 

 

 

ARTICLE IX

AFFIRMATIVE COVENANTS

 

 

 

 

 

SECTION 9.01.

 

Maintenance of Existence

 

36

SECTION 9.02.

 

Use of Proceeds

 

36

SECTION 9.03.

 

Financial Statements and Information

 

36

SECTION 9.04.

 

Books and Records

 

37

SECTION 9.05.

 

Inspection Rights; Access

 

37

SECTION 9.06.

 

Maintenance of Insurance and Properties

 

38

SECTION 9.07.

 

Governmental Authorizations

 

38

SECTION 9.08.

 

Compliance with Laws and Contracts

 

38

SECTION 9.09.

 

Plan Assets

 

38

SECTION 9.10.

 

Notices

 

38

SECTION 9.11.

 

Payment of Taxes

 

39

SECTION 9.12.

 

Waiver of Stay, Extension or Usury Laws

 

39

SECTION 9.13.

 

Additional Covenants of Borrower

 

39

SECTION 9.14.

 

Existing Licenses

 

40

SECTION 9.15.

 

Further Assurances

 

40

 

 

 

 

 

ARTICLE X

NEGATIVE COVENANTS

 

 

 

 

 

SECTION 10.01.

 

Activities of Borrower

 

40

SECTION 10.02.

 

Merger; Sale of Assets

 

40

SECTION 10.03.

 

Liens

 

41

SECTION 10.04.

 

Investment Company Act

 

42

SECTION 10.05.

 

Limitation on Additional Indebtedness

 

43

SECTION 10.06.

 

Limitation on Transactions with Controlled Affiliates

 

43

 

ii

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Page

 

 

 

 

 

SECTION 10.07.

 

ERISA

 

43

SECTION 10.08.

 

Restricted Payments

 

44

 

 

 

 

 

ARTICLE XI

EVENTS OF DEFAULT

 

 

 

 

 

SECTION 11.01.

 

Events of Default

 

44

SECTION 11.02.

 

Default Remedies

 

47

SECTION 11.03.

 

Right of Set-off; Sharing of Set-off

 

47

SECTION 11.04.

 

Rights Not Exclusive

 

48

 

 

 

 

 

ARTICLE XII

INDEMNIFICATION

 

 

 

 

 

SECTION 12.01.

 

Funding Losses

 

48

SECTION 12.02.

 

Increased Costs

 

48

SECTION 12.03.

 

Other Losses

 

49

SECTION 12.04.

 

Assumption of Defense; Settlements

 

49

 

 

 

 

 

ARTICLE XIII

MISCELLANEOUS

 

 

 

 

 

SECTION 13.01.

 

Assignments

 

50

SECTION 13.02.

 

Participations

 

51

SECTION 13.03.

 

Successors and Assigns

 

51

SECTION 13.04.

 

Notices

 

51

SECTION 13.05.

 

Entire Agreement

 

53

SECTION 13.06.

 

Modification

 

53

SECTION 13.07.

 

No Delay; Waivers; etc.

 

53

SECTION 13.08.

 

Severability

 

53

SECTION 13.09.

 

Determinations

 

54

SECTION 13.10.

 

Replacement of Note

 

54

SECTION 13.11.

 

Governing Law

 

54

SECTION 13.12.

 

Jurisdiction

 

54

SECTION 13.13.

 

Waiver of Jury Trial

 

54

SECTION 13.14.

 

Waiver of Immunity

 

54

SECTION 13.15.

 

Counterparts

 

54

SECTION 13.16.

 

Limitation on Rights of Others

 

55

SECTION 13.17.

 

No Partnership

 

55

SECTION 13.18.

 

Survival

 

55

SECTION 13.19.

 

Patriot Act Notification

 

55

 

iii

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Exhibits

 

 

 

 

 

Exhibit A

 

Business Report Format

Exhibit B

 

Co-Development Agreements

Exhibit C

 

Excluded Agreements and Excluded Products

Exhibit D

 

LFRP Know-How

Exhibit E

 

LFRP Libraries

Exhibit F

 

Form of Lockbox Agreement

Exhibit G

 

Form of Promissory Note

Exhibit H

 

Quarterly Report Format

Exhibit I

 

Form of Security Agreement

Exhibit J

 

Form of Notice of Borrowing

Exhibit K

 

Lockbox Instructions

Exhibit L

 

Form of Certificate of Borrower

Exhibit M

 

Form of Edwards Angell Palmer & Dodge LLP Opinion

Exhibit N

 

Form of Wolf Greenfield Opinion

Exhibit O

 

Form of Lowrie, Lando & Anastasi, LLP Opinion

Exhibit P

 

Warrant Agreement

Exhibit Q

 

Existing Liens and Related Indebtedness

Exhibit R

 

Form of Assignment and Acceptance

 

Schedules

 

 

 

 

 

Schedule 8.01(l)

 

Indebtedness

Schedule 8.01(n)

 

Subsidiaries

Schedule 8.01(s)(i)

 

[*****]

Schedule 8.01(s)(ii)

 

[*****]

Schedule 8.01(u)

 

Borrower’s Principal Place of Business

Schedule 8.01(v)(ii)

 

[*****]

Schedule 8.01(v)(iii)

 

[*****]

Schedule 8.01(v)(iv)

 

[*****]

Schedule 8.01(v)(vii)

 

[*****]

Schedule 8.01(v)(viii)

 

[*****]

Schedule 8.01(v)(ix)

 

[*****]

Schedule 8.01(v)(x)

 

[*****]

Schedule 8.01(w)(i)

 

[*****]

Schedule 8.01(w)(iii)

 

[*****]

Schedule 8.01(w)(v)

 

[*****]

Schedule 8.01(w)(vi)

 

[*****]

Schedule 8.01(w)(vii)

 

[*****]

Schedule 8.01(w)(viii)

 

[*****]

Schedule 8.01(w)(x)

 

[*****]

Schedule 8.01(x)

 

[*****]

 

Confidential materials omitted and filed separately with the Securities and
Exchange Commission.  Asterisks denote such omission.

 

iv

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This LOAN AGREEMENT is dated as of August 5, 2008, by and between COWEN
HEALTHCARE ROYALTY PARTNERS, L.P., a Delaware limited partnership (the
“Lender”), as Lender and DYAX CORP., a Delaware corporation, as Borrower.  The
Lender and Borrower are hereinafter referred to collectively as the “Parties” or
individually as a “Party.”

 

W I T N E S S E T H:

 

WHEREAS, Borrower is the owner of the LFRP Intellectual Property (as hereinafter
defined) with respect to the LFRP (as hereinafter defined);

 

WHEREAS, Borrower has the right to payments under the License Agreements (as
hereinafter defined);

 

WHEREAS, Borrower proposes to borrow from the Lender, and the Lender proposes to
lend to Borrower, an aggregate principal amount of $50,000,000;

 

WHEREAS, in order to induce the Lender to enter into this Agreement and to
extend credit hereunder, Borrower has agreed to grant Lender a security interest
in the LFRP Intellectual Property (as hereinafter defined);

 

NOW, THEREFORE, in consideration of the mutual promises of the Parties, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, it is mutually agreed by the Parties as follows:

 

ARTICLE I
CERTAIN DEFINITIONS

 

SECTION 1.01.                                              DEFINITIONS.  AS USED
HEREIN:

 

“Affiliate” shall mean any Person that controls, is controlled by, or is under
common control with another Person.  For purposes of this definition, “control”
shall mean (i) in the case of corporate entities, direct or indirect ownership
of at least fifty percent (50%) of the stock or shares having the right to vote
for the election of directors, and (ii) in the case of non-corporate entities,
direct or indirect ownership of at least fifty percent (50%) of the equity
interest with the power to direct the management and policies of such
non-corporate entities.

 

“Agent” means, (i) if only one Lender is party to this Agreement, such Lender or
(ii) otherwise, Cowen Healthcare Royalty Partners, L.P. or another Lender
reasonably acceptable to Borrower.

 

“Agreement” means this Loan Agreement.

 

“Applicable Included Receipts” means (i) prior to June 30, 2013, the sum of
(a) 75.0% of the first $10.0 million in annual Included Receipts, (b) 50.0% of
annual Included Receipts greater than $10.0 million and up to and including
$15.0 million, and (c) 0.0% of annual Included Receipts greater than $15.0
million and (ii) after June 30, 2013, 75.0% of all Included Receipts until the
earlier of the Maturity Date or the complete amortization of the Loan under
Section 3.01(b).  “Applicable Included Receipts” shall exclude FTE Payments so
long as the

 

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principal amount of the Loan prepaid pursuant to Section 3.01(a) exceeds any
principal amount added to the Loans pursuant to Section 4.01(a)(ii) (as
calculated on an annual basis for each calendar year) which shall be determined
at the end of any applicable calendar year and shall be applied to amortization
in accordance with Section 3.01(a); provided that Borrower may, at its option,
include such costs in Applicable Included Receipts on a quarterly basis to pay
scheduled amortization in accordance with Section 3.01(a).

 

“Assignment and Acceptance” has the meaning specified in Section 13.01(c).

 

“Borrower” means Dyax Corp.

 

“Borrower Documents” means the certificate of incorporation of Borrower
certified by the Delaware Secretary of State and the by-laws of Borrower (and
any similar documentation of any Subsidiary of Borrower which becomes party to
the Loan Documents).

 

“Business Day” means any day, except a Saturday, Sunday or other day on which
commercial banks in New York are required or authorized by law to close.

 

“Business Report” shall mean a report in a form agreed upon between the parties
and based on Exhibit A, providing information on current activities relating to
the licensing of the LFRP Intellectual Property as part of the LFRP.

 

“Capital Stock” of any Person means any and all shares, interests, ownership
interest units, rights to purchase, warrants, options, participations or other
equivalents of or interests in (however designated) equity of such Person,
including any preferred stock, but excluding any debt securities convertible
into such equity.

 

[*****]

 

[*****]

 

[*****]

 

“Change of Control” means:

 

(i)                                     the acquisition by any Person or group
(within the meaning of Sections 13(d)(3) or 14(d)(2) of the Exchange Act) (other
than any trustee or other fiduciary holding securities under an employee benefit
plan of Borrower or any entity controlled, directly or indirectly, by Borrower)
of beneficial ownership of any capital stock of Borrower, if after such
acquisition, such Person or group would be the “beneficial owner” (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of
Borrower representing more than fifty percent (50%) of the combined voting power
of Borrower then outstanding securities entitled to vote generally in the
election of directors; or

 

(ii)                                  any transaction permitted under
Section 10.02(a); or

 

Confidential materials omitted and filed separately with the Securities and
Exchange Commission.  Asterisks denote such omission.

 

2

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(iii)                               during any period of two consecutive years,
individuals who at the beginning of such period constitute the Board of
Directors of Borrower (together with any new directors (other than a director
designated by a Person who has entered into an agreement with Borrower to effect
a transaction described in clause (i) or (ii) of this definition of “Change of
Control”), whose election by such Board of Directors or nomination for election
by Borrower’s shareholders, as applicable, was approved by a vote of a majority
of the directors then still in office who either were directors at the beginning
of such period or whose election or nomination for election was previously so
approved) cease for any reason to constitute at least a majority of the Board of
Directors of Borrower then in office.

 

“Closing Date” means the date upon which the conditions precedent under
Article VII have been satisfied to the satisfaction of the Lender.

 

“Code” means the Internal Revenue Code of 1986, as amended.

 

“Co-Development Agreement” shall mean any agreement between Borrower and/or any
of its Subsidiaries and one or more third parties relating to the discovery,
research, development, manufacturing or commercialization of a product or
compound (whether or not derived from phage display) (i) which would be commonly
viewed in the industry as being a co-development agreement, (ii) under which
Borrower and/or any of its Subsidiaries takes a substantially different
commercial role than under an agreement forming part of the LFRP and (iii) which
has two or more of the following aspects:  (A) shared ownership of
product-related intellectual property or sole ownership of product-related
intellectual property by one party with an exclusive license to the
product-related intellectual property to the other party, (B) shared management
control over product development, (C) shared financial obligations, and/or
(D) shared commercialization rights to the product.  Exhibit B sets forth a
complete list of Co-Development Agreements in existence as of the date hereof.

 

 “Co-Developed Product” shall mean any product or compound (whether or not
derived from phage display) which is the subject of a Co-Development Agreement
and in relation to which Borrower has committed on a contingent or
non-contingent basis its own financial resources and/or has committed
non-reimbursed human resources to discover, research, develop, manufacture or
commercialize such product or compound.

 

“Collateral” has the meaning specified in the Security Agreement.

 

“Commitment” means $50,000,000.

 

“Company Concentration Account” means a segregated account established and
maintained at the Lockbox Bank pursuant to the terms of the Lockbox Agreement
and this Agreement.  The Company Concentration Account shall be the account into
which funds in the Lockbox Account which are payable to Borrower pursuant to
this Agreement are swept in accordance with the terms of this Agreement.

 

Confidential materials omitted and filed separately with the Securities and
Exchange Commission.  Asterisks denote such omission.

 

3

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“Company LFRP Methods and Libraries” shall have the meaning set forth in
Section 8.01(v)(iii).

 

“Contract” has the meaning specified in Section 8.01(e).

 

“Contract Party” means any party to a License Agreement or In License.

 

“Controlled Affiliate” with respect to any Person means any Person directly or
indirectly controlling, controlled by or under common control with, such
Person.  For the purposes of this Agreement, “control” (including, with
correlative meaning, the terms “controlling” and “controlled”) means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise.

 

 “Default” means any condition or event which constitutes an Event of Default or
which, with the giving of notice or the lapse of time or both would, unless
cured or waived, become an Event of Default.

 

“Default Rate” means, for any period for which an amount is overdue, a rate per
annum equal for each day in such period to the lesser of (i) 2% plus the rate
otherwise applicable to the Loans as provided the Section 4.01 and (ii) the
maximum rate of interest permitted under applicable Law.

 

“Dispute” has the meaning specified in Section 8.01(v)(viii).

 

“Disqualified Capital Stock” of any Person means any class of Capital Stock of
such Person that, by its terms, or by the terms of any related agreement or of
any security into which it is convertible, puttable or exchangeable, is, or upon
the happening of any event or the passage of time would be, required to be
redeemed by such Person, whether or not at the option of the holder thereof, or
matures or is mandatorily redeemable, pursuant to a sinking fund obligation or
otherwise, in whole or in part, on or prior to the date which is 91 days after
the final maturity date of the Loan; provided, however, that any class of
Capital Stock of such Person that, by its terms, authorizes such Person to
satisfy in full its obligations with respect to the payment of dividends or upon
maturity, redemption (pursuant to a sinking fund or otherwise) or repurchase
thereof or otherwise by the delivery of Capital Stock that are not Disqualified
Capital Stock, and that is not convertible, puttable or exchangeable for
Disqualified Capital Stock or Indebtedness, will not be deemed to be
Disqualified Capital Stock so long as such Person satisfies its obligations with
respect thereto solely by the delivery of Capital Stock that are not
Disqualified Capital Stock.

 

“Dollars” or “$” means lawful money of the United States of America.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended,
and the regulations promulgated thereunder.

 

Confidential materials omitted and filed separately with the Securities and
Exchange Commission.  Asterisks denote such omission.

 

4

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“ERISA Affiliate” at any time means each trade or business (whether or not
incorporated) that would, at any time, be treated, together with Borrower or any
of their respective Subsidiaries, as a single employer under Title IV or
Section 302 of ERISA or Section 412 of the Code.

 

“Event of Default” has the meaning specified in Section 11.01.

 

“Exchange Act” means the Securities Exchange Act of 1934 and the regulations
promulgated thereunder.

 

“Excluded Agreements” means Co-Development Agreements, Internally Developed
Product Agreements and Licensed Product Agreements.  Exhibit C sets forth a
complete list of all Excluded Agreements as of the date hereof.

 

“Excluded Payments” means (i) payments under any Excluded Agreement or
(ii) payments relating to or arising out of any activities relating to the
research, development, manufacturing or commercialization of any Excluded
Product.

 

“Excluded Product” shall mean any product or compound (whether or not derived
from phage display) which, at any point, was, is or becomes included in
Borrower’s “pipeline” as an internal product candidate.  An Excluded Product is
either an Internally Developed Product, an In-Licensed Product or a Co-Developed
Product.  Exhibit C sets forth a complete list of all Excluded Products
identified as of the date hereof.  Notwithstanding the foregoing, Borrower
acknowledges and agrees that under the terms of certain License Agreements,
Contract Parties and their sublicensees may develop products that are the same
as or similar to Excluded Products and that such same or similar products shall
be not be considered Excluded Products under this Agreement.

 

“Excluded Taxes” means (i) any Taxes imposed on (or measured by) net income
(including branch profits Taxes) of the Lender, or any franchise or similar
Taxes imposed in lieu thereof, by any Governmental Authority or taxing authority
by the jurisdiction under the laws of which the Lender is organized or any
jurisdiction in which the Lender is a resident, has an office, conducts business
or has another connection and (ii) in the case of a Foreign Lender, any
withholding tax that is imposed on amounts payable to such Foreign Lender
(a) under law in effect at the time such Foreign Lender becomes a party to this
Agreement (or designates a new Lending Office), except to the extent that such
Foreign Lender (or its assignor, if any) was entitled, at the time of
designation of a new Lending Office (or assignment), to receive additional
amounts from Borrower with respect to such withholding tax pursuant to
Section 5.01(a) or (b) that is attributable to such Foreign Lender’s failure to
comply with Section 5.01(b).

 

“FDA” means the United States Food and Drug Administration.

 

“Financial Statements” means the consolidated balance sheets of Borrower and its
Subsidiaries, audited at December 31, 2005, December 31, 2006 and December 31,
2007 and the related consolidated statements of operations and comprehensive
loss, cash flows and changes in

 

Confidential materials omitted and filed separately with the Securities and
Exchange Commission.  Asterisks denote such omission.

 

5

--------------------------------------------------------------------------------

 

stockholders’ equity of Borrower and its Subsidiaries audited for the years
ended December 31, 2005, December 31, 2006 and December 31, 2007, and the
accompanying footnotes thereto, as filed with the SEC, including the
Management’s Discussion and Analysis of Financial Condition and Results of
Operations contained therein.

 

“Foreign Lender” has the meaning specified in Section 5.01(c).

 

“FTE” means a full-time equivalent included in FTE Payment costs.

 

“FTE Payments” means all amounts received from a Contract Party under any
License Agreement in payment for services relating specifically to Borrower’s
and/or any of its Subsidiaries’ costs (or estimated costs) for the discovery,
research and/or development of peptides, proteins and antibodies as reasonably
calculated based on the subsidization of the full cost of personnel measured in
full time equivalents, other comparable cost-based measures or any combination
of the foregoing.  For the avoidance of doubt, FTE Payments shall not include
any technical milestones that relate specifically to the completion of services,
or other related events.

 

“Funded Research Agreements” has the meaning specified in the definition of
License Agreement.

 

“Future Licenses” means any License Agreement entered into by Borrower and/or
any of its Subsidiaries after the date hereof with any other Person, as the same
may be amended, supplemented or otherwise modified from time to time.

 

“GAAP” means the generally accepted accounting principles in the United States
of America in effect from time to time.

 

“Governmental Authority” means any nation or government, any state or other
political subdivision thereof, and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of, or pertaining to,
government.

 

“Gross Payments” means all Royalties arising under or payable with respect to
any License Agreement or In License and any collections, recoveries, payments or
other compensation made in lieu thereof and any amounts paid or payable to
Borrower and/or any of its Subsidiaries in respect of any License Agreement or
In License pursuant to Section 365(n) of the United States Bankruptcy Code.  For
the avoidance of doubt, the parties acknowledge and agree that Gross Payments
shall specifically exclude all Excluded Payments.

 

“Guarantee” means, as to any Person:  (a) any obligation, contingent or
otherwise, of such Person guaranteeing or having the economic effect of
guaranteeing any Indebtedness or other obligation payable or performable by
another Person (the “primary obligor”) in any manner, whether directly or
indirectly, and including any obligation of such Person, direct or indirect
(i) to purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness or other obligation, (ii) to purchase or lease property,
securities or services for the purpose of assuring the obligee in respect of
such Indebtedness or other obligation of the payment or

 

Confidential materials omitted and filed separately with the Securities and
Exchange Commission.  Asterisks denote such omission.

 

6

--------------------------------------------------------------------------------

 

performance of such Indebtedness or other obligation, (iii) to maintain working
capital, equity capital or any other financial statement condition or liquidity
or level of income or cash flow of the primary obligor so as to enable the
primary obligor to pay such Indebtedness or other obligation, or (iv) entered
into for the purpose of assuring in any other manner the obligee in respect of
such Indebtedness or other obligation of the payment or performance thereof or
to protect such obligee against loss in respect thereof (in whole or in part);
or (b) any Lien on any assets of such Person securing any Indebtedness or other
obligation of any other Person, whether or not such Indebtedness or other
obligation is assumed by such Person.

 

“In-Licensed Product” shall mean any product or compound (whether or not derived
from phage display) in relation to which Borrower expends a substantial amount
of the financial resources to used to discover, research, and develop or
commercialize such product or compound, and to which Borrower acquired rights to
discover, research, develop, manufacture or commercialize such product or
compound (i) under a Licensed Product Agreement or (ii) under an option or
similar provision expressly included within any License Agreement where the
economic terms applicable to such provision are consistent with Borrower’s past
practices and would be recognized in the industry as being a bona fide payment
for rights.

 

“In Licenses” means any existing or future agreement pursuant to which Borrower
and/or any of its Subsidiaries obtains rights to LFRP Intellectual Property or
other rights used in the LFRP.

 

“Included Receipts” means (a) the Gross Payments less (b) [*****] Payments and
Reimbursement Payments, from the first day of the fiscal quarter of Borrower in
which the Closing Date occurs; provided that for the first fiscal quarter after
the Closing Date the “Included Receipts” shall be prorated by dividing such
Included Receipts by 90 and multiplying by the number of days from and including
the Closing Date through the end of such quarter.

 

“Indebtedness” with respect to any Person means any amount (absolute or
contingent) payable by such Person as debtor, borrower, issuer, guarantor or
otherwise (i) pursuant to an agreement or instrument involving or evidencing
money borrowed, the advance of credit, a conditional sale or a transfer with
recourse or with an obligation to repurchase, (ii) pursuant to a lease with
substantially the same economic effect as any such agreement or instrument,
(iii) pursuant to any equity interest with a mandatory obligation to repurchase,
(iv) pursuant to indebtedness of a third party secured by (or for which the
holder of such indebtedness has an existing right, contingent or otherwise, to
be secured by) any Lien on assets owned or acquired by such Person, whether or
not the indebtedness secured thereby has been assumed, (v) pursuant to an
interest rate protection agreement, foreign currency exchange agreement or other
hedging arrangement, (vi) pursuant to a letter of credit issued for the account
of such Person, or (vii) all Guarantees with respect to Indebtedness of the
types specified in clauses (i) through (vi) above of another Person.  For the
avoidance of doubt, the Indebtedness of any Person shall include the
Indebtedness of any other entity to the extent such Person is directly liable
therefor as a result of such Person’s ownership interest in or other
relationship with such entity, except to the extent the terms of such
Indebtedness provide that such Person is not liable therefor.

 

Confidential materials omitted and filed separately with the Securities and
Exchange Commission.  Asterisks denote such omission.

 

7

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“Indemnified Liabilities” means, collectively, any and all liabilities,
obligations, losses, damages, penalties, claims, costs, expenses and
disbursements of any kind or nature whatsoever (including the reasonable fees
and disbursements of counsel for Indemnitees in connection with any
investigative, administrative or judicial proceeding commenced or threatened by
any Person, whether or not any such Indemnitee shall be designated as a party or
a potential party thereto, and any fees or expenses actually incurred by
Indemnitees in enforcing the indemnity provided herein), whether direct,
indirect or consequential and whether based on any federal, state or foreign
laws, statutes, rules or regulations (including securities and commercial laws,
statutes, rules or regulations), on common law or equitable cause or on contract
or otherwise, imposed on, incurred by, or asserted against any such Indemnitee,
in any manner relating to or arising out of this Agreement or the other Loan
Documents or the transactions contemplated hereby or thereby (including any
enforcement of any of the Loan Documents (including any sale of, collection
from, or other realization upon any of the Collateral (as defined in the
Security Agreement)).

 

“Indemnified Taxes” has the meaning specified in Section 5.01(a).

 

“Indemnitee” has the meaning specified in Section 12.03.

 

“Interest Payment Date” means quarterly on [*****], or if any such day is not a
Business Day, on the next succeeding Business Day, beginning on [*****].

 

“Interest Rate” means 16.00% per annum.

 

“Internally Developed Product” shall mean any product or compound or molecule
which was independently identified by Borrower using its own financial and/or
human resources, the intellectual property to which product or compound is owned
by Borrower and/or any of its Subsidiaries.

 

“Internally Developed Product Agreement” shall mean any agreement between
Borrower and/or any of its Subsidiaries and one or more third parties pursuant
to which Borrower and/or any of its Subsidiaries grants a third party(ies) a
license, or an option to obtain a license, to research, develop and/or
commercialize one or more Internally Developed Products, with or without its
phage display technology and/or library.

 

“Knowledge” means, with respect to Borrower, as applicable, the knowledge of an
officer or senior manager or other person with similar responsibility,
regardless of title, of Borrower and/or any of its Subsidiaries relating to a
particular matter; provided, however, that a person charged with responsibility
for the aspect of the business relevant or related to the matter at issue shall
be deemed to have knowledge of a particular matter if, in the prudent exercise
of his or her duties and responsibilities in the ordinary course of business,
such person should have known of such matter.

 

“Law” means any federal, state, local or foreign law, including common law, and
any regulation, rule, requirement, policy, judgment, order, writ, decree,
ruling, award, approval,

 

Confidential materials omitted and filed separately with the Securities and
Exchange Commission.  Asterisks denote such omission.

 

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authorization, consent, license, waiver, variance, guideline or permit of, or
any agreement with, any Governmental Authority.

 

“Lender” means the Lender (as defined in the first paragraph hereof) and any
assignee under Section 13.01(b).

 

“Lender Bank Account” means Cowen Healthcare Royalty Partners, L.P.’s account at
JP Morgan Chase Bank, N.A.

 

“Lender Concentration Account” shall mean a segregated account established for
the benefit of the Lender and maintained at the Lockbox Bank pursuant to the
terms of the Lockbox Agreement and this Agreement.  The Lender Concentration
Account shall be the account into which the funds held in the Lockbox Account
which are payable to the Lender pursuant to this Agreement are swept in
accordance with the terms of this Agreement and the Lockbox Agreement.

 

“Lending Office” means, with respect to the Lender, its Stamford, Connecticut
office, and with respect to any other Lender, the office of such Lender
designated as its “Lending Office” in an Assignment and Acceptance, or such
other office as may be otherwise designated in writing from time to time by such
Lender to Borrower.

 

“LFRP” means the program under which Borrower and any of its Subsidiaries enters
into License Agreements pursuant to which third parties are granted rights to
the LFRP Patents, alone or in combination with LFRP Technology where the purpose
is to generate revenue for Borrower and/or any of its Subsidiaries by
(i) licensing to a third party rights to use the LFRP Patents and/or the LFRP
Technology to identify, isolate, research and/or develop antibodies, peptides
and/or proteins, or (ii) performing research on behalf of third parties to
identify, isolate, research and/or develop antibodies, peptides and/or proteins.

 

“LFRP Intellectual Property” means:

 

(i)                                     the LFRP Patents and LFRP Technology;
and

 

(ii)                                  all know-how, materials, trademarks,
service marks, trade names and goodwill associated therewith, trade secrets,
data, formulations, processes, franchises, inventions, software, copyrights, and
all other technology and intellectual property (including biological materials),
and all registrations of any of the foregoing, or applications therefor, that
are (a) owned by, controlled by, issued to, licensed to, licensed by Borrower
and any of its Subsidiaries and (b) necessary to the performance of the LFRP as
presently conducted by Borrower and any of its Subsidiaries or as conducted by
Borrower and any of its Subsidiaries as of the Closing Date or during the term
of the Loan.

 

“LFRP Know-How” means any biological material, know-how, data, technical or
other information related to the LFRP Patents and/or LFRP Libraries that is
owned or controlled by Borrower and any of its Subsidiaries as described in
Exhibit D hereto, together with all updates

 

Confidential materials omitted and filed separately with the Securities and
Exchange Commission.  Asterisks denote such omission.

 

9

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and improvements provided under any Library License Agreements as of the Closing
Date or during the term of the Loan.

 

“LFRP Libraries” means Borrower’s and/or any of its Subsidiaries’ [*****]
libraries, Borrower’s and/or any of its Subsidiaries’ [*****] and Borrower’s and
any of its Subsidiaries’ [*****] libraries, all of which are described in
Exhibit E hereto, together with all updates and improvements thereto and any
other [*****] that are developed or obtained by Borrower and any of its
Subsidiaries and are transferred under any Library License Agreement as of the
Closing Date or during the term of the Loan.

 

“LFRP Patents” means the patents and patent applications identified on Schedule
8.01(v)(ii) and any other patent application and patent that is:  (i) owned by,
controlled by, issued to, licensed to or licensed by Borrower and any of its
Subsidiaries, or for which Borrower and any of its Subsidiaries has obtained the
benefit of a covenant not to sue, as of the Closing Date or during the term of
the Loan necessary to the practice of antibody or peptide phage display; or
(ii) licensed under the LFRP; and any patents issuing from such applications,
together with any reissues, reexaminations, renewals, and extensions thereof,
and all continuations, continuations-in-part and divisionals of the
applications, in each case throughout the world.

 

“LFRP Product” means any product owned by one or more third parties that
incorporates an antibody, protein or peptide that was identified through the use
of LFRP Technology and with respect to which Borrower or any of its Subsidiaries
is entitled, under the terms of a License Agreement or In License, to receive
Royalties.

 

“LFRP Technology” means the LFRP Know-How and LFRP Libraries.

 

“Library License Agreements” has the meaning specified in the definition of
License Agreement.

 

“License Agreement” means any existing or future agreement under which: 
(i) Borrower and/or any of its Subsidiaries licenses to a third party rights to
use the technology claimed in the LFRP Patents to identify, isolate, research
and develop antibodies, peptides and/or proteins (“Patent License Agreements”);
(ii) Borrower and/or any of its Subsidiaries licenses to a third party rights to
use the LFRP Patents and the LFRP Technology to identify, isolate, research and
develop antibodies, peptides and/or proteins (“Library License Agreements”);
and/or (iii) Borrower and/or any of its Subsidiaries performs funded research
services for third parties using the LFRP Patents and the LFRP Technology to
identify, isolate, research and develop antibodies, peptides and/or proteins on
behalf of such third parties (“Funded Research Agreements”); in each case as
they may be amended, supplemented or otherwise modified from time to time. 
License Agreements shall specifically exclude Excluded Agreements and In
Licenses.

 

“Licensed Product Agreements” means any product agreement (but excluding phage
or phagemid or protein display technology and/or library licenses) between
Borrower and/or any of its Subsidiaries and one or more third parties in which
Borrower and/or any of its

 

Confidential materials omitted and filed separately with the Securities and
Exchange Commission.  Asterisks denote such omission.

 

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Subsidiaries acquires the right to develop and commercialize a product or
compound (whether or not derived from phage display).

 

“Lien” means any mortgage or deed of trust, pledge, hypothecation, lien, charge,
attachment, set-off, encumbrance or other security interest in the nature
thereof (including any conditional sale agreement, equipment trust agreement or
other title retention agreement, a lease with substantially the same economic
effect as any such agreement or a transfer or other restriction) or other
encumbrance of any nature whatsoever.

 

“Loan” at any time means the aggregate principal amount advanced to Borrower
hereunder then outstanding.

 

“Loan Documents” means this Agreement, the Note, the Security Agreement and,
from and after the date upon which it is executed, the Lockbox Agreement.

 

“Lockbox Account” shall mean, collectively, any lockbox and segregated lockbox
account established and maintained at the Lockbox Bank pursuant to a Lockbox
Agreement and this Agreement.  The Lockbox Account shall be the account into
which all payments made in respect of the sale of the LFRP Products are to be
remitted and shall be an escrow account.

 

“Lockbox Agreement” shall mean any agreement entered into by a Lockbox Bank,
Borrower and Lender substantially in the form attached hereto as Exhibit F,
pursuant to which, among other things, the Lockbox Account, the Lender
Concentration Account and the Company Concentration Account shall be established
and maintained.

 

“Lockbox Bank” shall mean JP Morgan Chase Bank or such other bank or financial
institution approved by each of Lender and Borrower.

 

“Material Adverse Effect” means (i) a material adverse effect on the business,
results of operations, assets or financial condition of Borrower and its
Subsidiaries, taken as a whole, (ii) a material reduction or other material
impairment of the value of the [*****] or (iv) an impairment of the ability of
Borrower and/or any of its Subsidiaries to perform its obligations under, or
affecting the validity or enforceability of, any Loan Document, Borrower
Document or the Warrant Agreement.

 

“Material Licenses” shall mean those License Agreements set forth on Schedule
8.01(w)(x).

 

“Maturity Date” means the earlier of (i) the eighth anniversary of the Closing
Date and (ii) the date of any prepayment in full of the Loan.

 

“Note” means a promissory note, substantially in the form set forth in
Exhibit G, in the amount of the Loan, evidencing such Loan.

 

“Notice of Borrowing” has the meaning specified in Section 2.02.

 

Confidential materials omitted and filed separately with the Securities and
Exchange Commission.  Asterisks denote such omission.

 

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“Notices” has the meaning specified in Section 13.04.

 

“Obligations” means, without duplication, the Loan and all present and future
Indebtedness, taxes, liabilities, obligations, covenants, duties, and debts,
owing by Borrower to the Lender, arising under or pursuant to the Loan
Documents, including all principal, interest, charges, expenses, fees and any
other sums chargeable to Borrower hereunder and under the other Loan Documents
(and including any interest, fees and other charges that would accrue but for
the filing of a bankruptcy action with respect to Borrower, whether or not such
claim is allowed in such bankruptcy action).

 

“Participant” has the meaning specified in Section 13.02.

 

“Party” and “Parties” have the meanings specified in the first paragraph hereof.

 

“Patent License Agreements” has the meaning specified in the definition of
License Agreement.

 

“Patent Office” means the respective patent office (foreign or domestic) for any
patent.

 

“Permitted Collateralization” means any asset securitization, sale, transfer or
other disposition by Borrower or any of its Subsidiaries, individually or when
taken together with other Permitted Collateralizations, generating cash proceeds
of $25.0 million or less which involves in whole or in part Collateral to the
extent simultaneously with the release of the Collateral in accordance with the
Security Agreement Borrower or any of its Subsidiaries receives cash proceeds no
less than the fair market value thereof which determination shall be made in
good faith by Borrower’s board of directors.  Proceeds of “Permitted
Collateralizations” (whether received on the release thereof or subsequent
thereto) shall be applied in accordance with Section 3.02(c).

 

“Permitted Liens” has the meaning specified in Section 10.03.

 

“Person” means an individual, corporation, association, limited liability
company, limited liability partnership, partnership, estate, trust,
unincorporated organization or a government or any agency or political
subdivision thereof.

 

“Plan” has the meaning specified in Section 10.07(a).

 

“Plan Assets” means assets of any (i) employee benefit plan (as defined in
Section 3(3) of ERISA) subject to Title I of ERISA, (ii) plan (as defined in
Section 4975(e)(1) of the Code) subject to Section 4975 of the Code or
(iii) entity whose underlying assets include assets of any such employee benefit
plan or plan by reason of the investment by an employee benefit plan or other
plan in such entity.

 

“Prepayment Premium” means with respect to any Loan on any date the Loan (or any
portion thereof) is required to be prepaid pursuant to the proviso at the end of
Section

 

Confidential materials omitted and filed separately with the Securities and
Exchange Commission.  Asterisks denote such omission.

 

12

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3.02(b) or any payment made to amortization within three years of the Closing
Date pursuant to Section 3.02(c), the aggregate amount of all required interest
payments due on the Loan (or the applicable portion) through the three year
anniversary of the Closing Date less all interest payments paid in cash through
the date of prepayment.

 

“Proceeding” has the meaning specified in Section 13.12.

 

“Product” means the products that are the subject of the License Agreements.

 

“Qualified Capital Stock” of any Person means Capital Stock of such Person other
than Disqualified Capital Stock; provided that such Capital Stock shall not be
deemed Qualified Capital Stock to the extent sold or owed to a Subsidiary of
such Person or financed, directly or indirectly, using funds (i) borrowed from
such Person or any Subsidiary of such Person until and to the extent such
borrowing is repaid or (ii) contributed, extended, guaranteed or advanced by
such Person or any Subsidiary of such Person (including, without limitation, in
respect of any employee stock ownership or benefit plan).  Unless otherwise
specified, Qualified Capital Stock refer to Qualified Capital Stock of Borrower.

 

“Quarterly Report” means, with respect to the relevant calendar quarter of
Borrower:  (i) a report in a form agreed by the parties and based on Exhibit H
showing all payments made by Borrower and/or any of its Subsidiaries and any
Contract Party to the Lender under this Agreement during such quarter, such
report showing in detail the basis for the calculation of such payments and
exclusions; (ii) a reconciliation of such report referred to in clause (i) above
to all information and data deliverable to Borrower and/or any of its
Subsidiaries by the Contract Parties to any License Agreements, together with
relevant supporting documentation, as well as a reconciliation with the
consolidated total revenues of Borrower prepared in accordance with GAAP; and,
(iii) such additional information as the Lender may reasonably request.

 

“Regulatory Agency” means a Governmental Authority with responsibility for the
regulation of the research, development, marketing or sale of drugs or
pharmaceuticals in any jurisdiction, including the FDA, the U.S. National
Institutes of Health and the EMEA.

 

“Reimbursement Payments” means all amounts received from a Contract Party under
any Funded Research Agreements in reimbursement on a pure pass-through basis for
out-of-pocket costs incurred and invoiced by Borrower and/or any of its
Subsidiaries (other than FTE Payments) in connection with the provision of
services relating to the identifying, isolating, and researching antibodies,
peptides and or proteins.

 

 “Restricted Payment” means any of the following:

 

(i)                                     the declaration or payment of any
dividend or any other distribution on Capital Stock of Borrower or any
Subsidiary or any payment made to the direct or indirect holders (in their
capacities as such) of Capital Stock of Borrower or any Subsidiary, including,
without limitation, any payment in connection with any merger or consolidation
involving Borrower but excluding (a) dividends or distributions payable solely
in

 

Confidential materials omitted and filed separately with the Securities and
Exchange Commission.  Asterisks denote such omission.

 

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Qualified Capital Stock or through accretion or accumulation of such dividends
on such Capital Stock and (b) in the case of Subsidiaries, dividends or
distributions payable to Borrower or to a Subsidiary and pro rata dividends or
distributions payable to minority stockholders of any Subsidiary; or

 

(ii)                                  the redemption of any Capital Stock of
Borrower or any Subsidiary, including, without limitation, any payment in
connection with any merger or consolidation involving Borrower but excluding any
such Capital Stock held by Borrower or any Subsidiary.

 

“Royalties” means the gross amount of all royalties, minimum royalty payments,
profit payments, license fees, settlement payments, judgments, payments,
securities, consideration or any other remuneration of any kind payable or
received under any License Agreement or any In License (but in the case of an In
License only to the extent such royalties, payments and fees relate to the LFRP)
and all accounts (as such term is defined in the New York Uniform Commercial
Code) evidencing or giving rise to any of the foregoing.

 

“SEC” has the meaning set forth in Section 8.01(d).

 

“Security Agreement” means the Security Agreement, dated the Closing Date,
substantially in the form of Exhibit I hereto, between the Lender and Borrower
securing the Obligations of Borrower hereunder as supplemented by any amendments
or joinders thereto.

 

“Significant Subsidiary” means any Subsidiary of Borrower which would constitute
a “significant subsidiary” as defined in Rule 1.02 of Regulation S-X under the
Securities Act of 1933, as amended and the Securities Exchange Act of 1934, as
amended.

 

“Subsidiary” means, with respect to any Person, at any time, any entity of which
more than fifty percent (50%) of the outstanding Voting Stock or other equity
interest entitled ordinarily to vote in the election of the directors or other
governing body (however designated) is at the time beneficially owned or
controlled directly or indirectly by such Person, by one or more such entities
or by such Person and one or more such entities.

 

“Surviving Person” means, with respect to any Person involved in or that makes
any disposition, the Person formed by or surviving such disposition or the
Person to which such disposition is made.

 

“Taxes” has the meaning specified in Section 5.01(a).

 

“Transaction Documents” means the Loan Documents, the Warrant Agreement, the
License Agreements and the Borrower Documents.

 

“U.S.” means the United States of America.

 

“Voting Stock” means Capital Stock issued by a company, or equivalent interests
in any other Person, the holders of which are ordinarily, in the absence of
contingencies, entitled

 

Confidential materials omitted and filed separately with the Securities and
Exchange Commission.  Asterisks denote such omission.

 

14

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to vote for the election of directors (or persons performing similar functions)
of such Person, even if the right so to vote has been suspended by the happening
of such contingency.

 

“Warrant” has the meaning specified in the Warrant Agreement.

 

“Warrant Agreement” means the Warrant Agreement between Borrower and Lender
substantially in the form attached hereto as Exhibit P,

 

“Webphage® Software” means Borrower’s analysis and data storage software for
[*****] library screening as embodied in the United States copyright
registration No. TX 5989121 issued May 14, 2004, and any updates, improvements
or modifications thereto (in human readable, source code and object code forms).

 

“Wholly Owned Subsidiary” means, as to any person, (a) any corporation 100% of
whose capital stock (other than directors’ qualifying shares) is at the time
owned by such person and/or one or more Wholly Owned Subsidiaries of such person
and (b) any partnership, association, joint venture, limited liability company
or other entity in which such person and/or one or more Wholly Owned
Subsidiaries of such person have a 100% equity interest at such time.

 

SECTION 1.02.                                              INTERPRETATION;
HEADINGS.  EACH TERM USED IN ANY EXHIBIT TO THIS AGREEMENT AND DEFINED IN THIS
AGREEMENT BUT NOT DEFINED THEREIN SHALL HAVE THE MEANING SET FORTH IN THIS
AGREEMENT.  UNLESS THE CONTEXT OTHERWISE REQUIRES, (A) “INCLUDING” MEANS
“INCLUDING, WITHOUT LIMITATION” AND (B) WORDS IN THE SINGULAR INCLUDE THE PLURAL
AND WORDS IN THE PLURAL INCLUDE THE SINGULAR.  A REFERENCE TO ANY PARTY TO THIS
AGREEMENT, ANY OTHER TRANSACTION DOCUMENT OR ANY OTHER AGREEMENT OR DOCUMENT
SHALL INCLUDE SUCH PARTY’S SUCCESSORS AND PERMITTED ASSIGNS.  A REFERENCE TO ANY
AGREEMENT OR ORDER SHALL INCLUDE ANY AMENDMENT OF SUCH AGREEMENT OR ORDER FROM
TIME TO TIME IN ACCORDANCE WITH THE TERMS HEREWITH AND THEREWITH.  A REFERENCE
TO ANY LEGISLATION, TO ANY PROVISION OF ANY LEGISLATION OR TO ANY REGULATION
ISSUED THEREUNDER SHALL INCLUDE ANY AMENDMENT THERETO, ANY MODIFICATION OR
RE-ENACTMENT THEREOF, ANY LEGISLATIVE PROVISION OR REGULATION SUBSTITUTED
THEREFORE AND ALL REGULATIONS AND STATUTORY INSTRUMENTS ISSUED THEREUNDER OR
PURSUANT THERETO.  THE HEADINGS CONTAINED IN THIS AGREEMENT ARE FOR CONVENIENCE
AND REFERENCE ONLY AND DO NOT FORM A PART OF THIS AGREEMENT.  SECTION,
ARTICLE AND EXHIBIT REFERENCES IN THIS AGREEMENT REFER TO SECTIONS OR ARTICLES
OF, OR EXHIBITS TO, THIS AGREEMENT UNLESS OTHERWISE SPECIFIED.  BORROWER
ACKNOWLEDGES AND AGREES THAT IT WAS REPRESENTED BY COUNSEL IN CONNECTION WITH
THE EXECUTION AND DELIVERY OF THE LOAN DOCUMENTS TO WHICH IT IS A PARTY, THAT IT
AND ITS COUNSEL REVIEWED AND PARTICIPATED IN THE PREPARATION AND NEGOTIATION
HEREOF AND THEREOF AND THAT ANY RULE OF CONSTRUCTION TO THE EFFECT THAT
AMBIGUITIES ARE TO BE RESOLVED AGAINST THE DRAFTING PARTY SHALL NOT BE EMPLOYED
IN THE INTERPRETATION HEREOF OR THEREOF.

 

ARTICLE II
COMMITMENT; DISBURSEMENT; FEES

 

SECTION 2.01.                                              COMMITMENT TO LEND. 
ON THE TERMS AND SUBJECT TO THE CONDITIONS SET FORTH HEREIN, THE LENDER SHALL,
ON THE CLOSING DATE, MAKE A LOAN HEREUNDER TO BORROWER IN A PRINCIPAL AMOUNT
EQUAL TO THE COMMITMENT.

 

Confidential materials omitted and filed separately with the Securities and
Exchange Commission.  Asterisks denote such omission.

 

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SECTION 2.02.                                              NOTICE OF BORROWING. 
SUBJECT TO SECTION 2.01, BORROWER SHALL, ON OR BEFORE THE BUSINESS DAY PRIOR TO
THE CLOSING DATE, GIVE THE LENDER NOTICE, SUBSTANTIALLY IN THE FORM SET FORTH IN
EXHIBIT J (THE “NOTICE OF BORROWING”) OF THE DATE BORROWER WISHES TO BORROW
HEREUNDER.  THE COMMITMENT SHALL AUTOMATICALLY TERMINATE UPON FUNDING OF THE
LOAN ON THE CLOSING DATE.

 

SECTION 2.03.                                              DISBURSEMENT. 
SUBJECT TO THE CONDITIONS SET FORTH HEREIN, THE LENDER SHALL, ON THE CLOSING
DATE, CREDIT, IN SAME DAY FUNDS, AN AMOUNT EQUAL TO THE AMOUNT SPECIFIED IN THE
NOTICE OF BORROWING TO THE ACCOUNT OF BORROWER WHICH BORROWER SHALL HAVE
DESIGNATED FOR SUCH PURPOSE IN THE NOTICE OF BORROWING LESS THE INITIAL EXPENSES
REFERRED TO IN SECTION 4.05 FOR WHICH INVOICES HAVE BEEN RECEIVED BY BORROWER.

 

SECTION 2.04.                                              COMMITMENT NOT
REVOLVING.  THE LENDER’S COMMITMENT TO LEND HEREUNDER IS NOT REVOLVING IN
NATURE, AND ANY AMOUNT OF THE LOAN REPAID OR PREPAID MAY NOT BE REBORROWED.

 

ARTICLE III
REPAYMENT

 

SECTION 3.01.                                              AMORTIZATION.

 

(A)                                  ON EACH INTEREST PAYMENT DATE (EXCEPT AS
OTHERWISE EXPRESSLY PROVIDED HEREIN), BORROWER SHALL REPAY THE PORTION OF THE
OUTSTANDING PRINCIPAL AMOUNT OF THE LOAN AT PAR WHICH IS EQUAL TO THE
(A) APPLICABLE INCLUDED RECEIPTS FOR THE PRIOR FISCAL QUARTER LESS (B) ANY
PORTION OF SUCH APPLICABLE INCLUDED RECEIPTS USED TO PAY CASH INTEREST ON THE
LOAN PURSUANT TO SECTION 4.01(A).

 

(B)                                 THE BALANCE OF THE OUTSTANDING PRINCIPAL
AMOUNT OF THE LOAN, TOGETHER WITH ANY ACCRUED AND UNPAID INTEREST, SHALL BE DUE
AND PAYABLE IN CASH ON THE MATURITY DATE.

 

SECTION 3.02.                                              OPTIONAL PREPAYMENT;
MANDATORY PREPAYMENT.

 

(A)                                  BORROWER MAY, SUBJECT TO SECTION 12.01,
PREPAY THE LOAN IN WHOLE OR IN PART, TOGETHER WITH ACCRUED AND UNPAID INTEREST
ON THE AMOUNT PREPAID AT ANY TIME AFTER THE THREE YEAR ANNIVERSARY OF CLOSING
DATE; PROVIDED THAT THE OUTSTANDING PRINCIPAL BALANCE OF THE LOAN AFTER GIVING
EFFECT TO A VOLUNTARY PARTIAL PREPAYMENT SHALL BE NOT LESS THAN [*****]; AND
PROVIDED, FURTHER, THAT EACH PREPAYMENT SHALL BE IN AN AMOUNT THAT IS AN
INTEGRAL MULTIPLE OF [*****] AND NOT LESS THAN [*****] OR, IF LESS, THE
OUTSTANDING PRINCIPAL AMOUNT OF THE LOAN.  IF BORROWER WISHES TO MAKE SUCH A
PREPAYMENT, IT SHALL GIVE THE LENDER NOTICE TO THAT EFFECT NOT LATER THAN THE
30TH DAY BEFORE THE DATE OF THE PREPAYMENT, SPECIFYING THE DATE ON WHICH THE
PREPAYMENT IS TO BE MADE AND THE AMOUNT TO BE PREPAID.  SUCH NOTICE SHALL
CONSTITUTE BORROWER’S IRREVOCABLE COMMITMENT TO PREPAY THAT AMOUNT ON THAT DATE,
TOGETHER WITH INTEREST ACCRUED ON THE AMOUNT PREPAID TO BUT EXCLUDING THE
PREPAYMENT DATE.

 

Confidential materials omitted and filed separately with the Securities and
Exchange Commission.  Asterisks denote such omission.

 

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(B)                                 IF A CHANGE OF CONTROL OR ANY TRANSACTION
PERMITTED BY SECTION 10.02(A) HEREOF OCCURS THEN, AT THE OPTION OF THE LENDER,
ANY OR ALL OF THE LOAN AS REQUESTED BY THE LENDER TO BE PREPAID (INCLUDING ALL
ACCRUED AND UNPAID INTEREST) SHALL BE DUE AND PAYABLE HEREUNDER, TO THE EXTENT
PERMITTED BY LAW, AND SHALL BE DEEMED PART OF THE AMOUNTS DUE AND PAYABLE
HEREUNDER SUBJECT TO ACCELERATION (EITHER DECLARED OR IMMEDIATE AS PROVIDED IN
SECTION 11.02); PROVIDED THAT IF THE CHANGE OF CONTROL OR ANY TRANSACTION
PERMITTED BY SECTION 10.02(A) HEREOF OCCURS PRIOR TO [*****], THEN SUCH
PREPAYMENT SHALL BE ACCOMPANIED BY THE PREPAYMENT PREMIUM WITH RESPECT TO THAT
PORTION OF THE LOAN REQUESTED BY THE LENDER TO BE SO PREPAID.

 

(C)                                  WITH RESPECT TO PERMITTED
COLLATERALIZATIONS, BORROWER SHALL APPLY (OR CAUSE TO BE APPLIED): (A) [*****]
OF ALL PROCEEDS OF PERMITTED COLLATERALIZATIONS TO AMORTIZE PRINCIPAL ON THE
LOAN BY MAKING A CASH PAYMENT TO THE LENDER WHICH CASH PAYMENT SHALL ALSO
INCLUDE AN ADDITIONAL PREPAYMENT PREMIUM IN RESPECT OF SUCH AMORTIZED AMOUNT IF
SUCH PERMITTED COLLATERALIZATION IS CONSUMMATED WITHIN THREE YEARS OF THE
CLOSING DATE (WHICH PREPAYMENT PREMIUM SHALL NOT AFFECT THE PRINCIPAL OR
INTEREST ON THE LOAN) AND (B) [*****] OF THE CASH PROCEEDS SHALL BE PAID TO THE
LENDERS (WITHOUT AFFECTING THE PRINCIPAL OR INTEREST PAYABLE ON THE LOAN).

 

SECTION 3.03.                                              ILLEGALITY.  IF THE
LENDER DETERMINES AT ANY TIME THAT ANY LAW OR TREATY OR ANY CHANGE THEREIN OR IN
THE INTERPRETATION OR APPLICATION THEREOF MAKES OR WILL MAKE IT UNLAWFUL FOR THE
LENDER TO FULFILL ITS COMMITMENT IN ACCORDANCE WITH SECTION 2.01, TO MAINTAIN
THE LOAN (INCLUDING ADDITIONAL AMOUNTS PURSUANT TO SECTION 4.01(A)) OR TO CLAIM
OR RECEIVE ANY AMOUNT PAYABLE TO IT HEREUNDER, THE LENDER SHALL GIVE NOTICE OF
THAT DETERMINATION TO BORROWER, WHEREUPON THE OBLIGATIONS OF THE LENDER
HEREUNDER SHALL TERMINATE.  IF ANY SUCH NOTICE IS GIVEN AFTER THE DISBURSEMENT
OF THE LOAN, BORROWER SHALL PREPAY THE LOAN IN FULL ON THE INTEREST PAYMENT DATE
FOLLOWING THE DATE THE NOTICE IS GIVEN; PROVIDED, HOWEVER, THAT IF THE LENDER
CERTIFIES TO BORROWER THAT EARLIER PREPAYMENT IS NECESSARY IN ORDER TO ENABLE
THE LENDER TO COMPLY WITH THE RELEVANT LAW, TREATY OR CHANGE AND SPECIFIES AN
EARLIER DATE FOR THE PREPAYMENT, BORROWER SHALL MAKE THE PREPAYMENT ON THE DATE
SO SPECIFIED.  PREPAYMENT PURSUANT TO THIS SECTION 3.03 SHALL BE MADE TOGETHER
WITH INTEREST ACCRUED AND UNPAID ON THE LOAN TO THE DATE OF PREPAYMENT AND ALL
OTHER AMOUNTS THEN PAYABLE TO THE LENDER HEREUNDER.  EACH NOTICE DELIVERED
PURSUANT TO THIS SECTION 3.03 SHALL BE EFFECTIVE WHEN SENT.

 

ARTICLE IV
INTEREST; EXPENSES

 

SECTION 4.01.                                              INTEREST RATE.

 

(A)                                  EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN
SECTION 4.04(I) THE LOANS SHALL BEAR INTEREST AT A RATE PER ANNUM EQUAL TO
16.00% AND SHALL BE PAID IN CASH AS PROVIDED IN SECTION 4.01(C); PROVIDED THAT
BORROWER SHALL BE REQUIRED TO PAY INTEREST IN CASH ONLY TO THE EXTENT OF THE
APPLICABLE INCLUDED RECEIPTS FOR THE IMMEDIATELY PRECEDING FISCAL QUARTER;
FURTHER PROVIDED THAT IF BORROWER IS UNABLE TO PAY THE CASH INTEREST PAYMENT
REQUIRED UNDER THIS CLAUSE (I) OUT OF APPLICABLE INCLUDED RECEIPTS OR OTHERWISE

 

Confidential materials omitted and filed separately with the Securities and
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PURSUANT TO THE LAST SENTENCE OF THIS SECTION 4.01(A) BECAUSE THE THEN
APPLICABLE INCLUDED RECEIPTS ARE LESS THAN 16.00% PER ANNUM, PAID QUARTERLY, OF
THE PRINCIPAL AMOUNT OF THE LOANS (SUCH DEFICIENCY, THE “DEFICIENCY AMOUNT”),
THEN (II) ANY DEFICIENCY AMOUNT SHALL BE PAID IN KIND, ON A QUARTERLY BASIS, AND
ON EACH SUCH DATE, THE LENDER SHALL BE DEEMED TO HAVE MADE AN ADDITIONAL TERM
LOAN IN A PRINCIPAL AMOUNT EQUAL TO THE AGGREGATE AMOUNT OF INTEREST SO PAID ON
ITS OUTSTANDING LOAN.  EACH SUCH LOAN SHALL (A) BE DEEMED TO BE A LOAN FOR ALL
PURPOSES UNDER THIS AGREEMENT AND (B) ACCRUE INTEREST IN ACCORDANCE WITH THIS
SECTION 4.01.  BORROWER SHALL DELIVER TO EACH LENDER ALL ORIGINAL ISSUE DISCOUNT
INFORMATION RELATING TO THE LOANS AS MAY BE REQUIRED BY APPLICABLE LAW. 
NOTWITHSTANDING ANY OTHER PROVISION HEREIN, BORROWER MAY, AT ITS OPTION, PAY ALL
OR ANY PORTION OF ANY DEFICIENCY AMOUNT WHEN DUE OUT OF OTHER FUNDS HELD BY
BORROWER.

 

(B)                                 ALL INTEREST HEREUNDER SHALL BE COMPUTED ON
THE BASIS OF A 360-DAY YEAR OF TWELVE 30-DAY MONTHS.

 

(C)                                  ACCRUED INTEREST ON EACH LOAN SHALL BE
PAYABLE TO THE LENDER AT THE LOCKBOX ACCOUNT OR AS OTHERWISE NOTIFIED TO
BORROWER IN ARREARS ON EACH INTEREST PAYMENT DATE FOR SUCH LOAN; PROVIDED THAT
(I) INTEREST ACCRUED PURSUANT TO SECTION 4.04 SHALL BE PAYABLE ON DEMAND, IN THE
SAME FORM AS INTEREST PAYABLE ON THE NEXT INTEREST PAYMENT DATE, AND (II) IN THE
EVENT OF ANY REPAYMENT OR PREPAYMENT OF ANY LOAN, ACCRUED INTEREST ON THE
PRINCIPAL AMOUNT REPAID OR PREPAID SHALL BE PAYABLE ON THE DATE OF SUCH
REPAYMENT OR PREPAYMENT.

 

(D)                                 ON EACH INTEREST PAYMENT DATE COMMENCING
WITH THE FIRST INTEREST PAYMENT DATE FOLLOWING THE FIFTH (5TH) ANNIVERSARY OF
THE CLOSING DATE, IF THE AGGREGATE AMOUNT THAT WOULD BE INCLUDIBLE IN INCOME
WITH RESPECT TO THE NOTE FOR PERIODS ENDING ON OR BEFORE SUCH INTEREST PAYMENT
DATE (WITHIN THE MEANING OF SECTION 163(I) OF THE CODE) (THE “AGGREGATE
ACCRUAL”) WOULD EXCEED AN AMOUNT EQUAL TO THE SUM OF (I) THE AGGREGATE AMOUNT OF
INTEREST TO BE PAID (WITHIN THE MEANING OF SECTION 163(I) OF THE CODE) UNDER THE
NOTE ON OR BEFORE SUCH INTEREST PAYMENT DATE (DETERMINED WITHOUT REGARD TO THE
AMOUNTS PAYABLE ON SUCH INTEREST PAYMENT DATE UNDER THIS SECTION 4.01(D)), AND
(II) THE PRODUCT OF (A) THE ISSUE PRICE (AS DEFINED IN SECTIONS 1273(B) AND
1274(A) OF THE CODE) OF THE NOTE AND (B) THE YIELD TO MATURITY (INTERPRETED IN
ACCORDANCE WITH SECTION 163(I) OF THE CODE) OF THE NOTE (SUCH SUM, THE “MAXIMUM
ACCRUAL”), THEN BORROWER SHALL PAY TO THE LENDER IN CASH AN AMOUNT EQUAL TO THE
EXCESS, IF ANY, OF THE AGGREGATE ACCRUAL OVER THE MAXIMUM ACCRUAL, AND THE
AMOUNT OF SUCH PAYMENT SHALL BE TREATED FOR ANY PERIOD ENDING AFTER SUCH
INTEREST PAYMENT DATE AS AN AMOUNT OF INTEREST TO BE PAID (WITHIN THE MEANING OF
SECTION 163(I) OF THE CODE) UNDER THE NOTE.

 

SECTION 4.02.                                              LOCKBOX ACCOUNT.

 

(A)                                  ON THE CLOSING DATE, THE PARTIES HERETO
SHALL ENTER INTO A LOCKBOX AGREEMENT SUBSTANTIALLY IN THE FORM ATTACHED HERETO
AS EXHIBIT F, WHICH LOCKBOX AGREEMENT WILL PROVIDE FOR, AMONG OTHER THINGS, THE
ESTABLISHMENT AND MAINTENANCE OF A

 

Confidential materials omitted and filed separately with the Securities and
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LOCKBOX ACCOUNT, A COMPANY CONCENTRATION ACCOUNT AND A LENDER CONCENTRATION
ACCOUNT IN ACCORDANCE WITH THE TERMS HEREIN AND THEREIN.

 

(B)                                 THE LENDER CONCENTRATION ACCOUNT SHALL BE
HELD SOLELY FOR THE BENEFIT OF THE LENDER, SUBJECT TO THE TERMS AND CONDITIONS
OF THIS AGREEMENT.  THE LENDER SHALL HAVE IMMEDIATE AND FULL ACCESS TO ANY FUNDS
HELD IN THE LENDER CONCENTRATION ACCOUNT AND SUCH FUNDS SHALL NOT BE SUBJECT TO
ANY CONDITIONS OR RESTRICTIONS WHATSOEVER.  THE COMPANY CONCENTRATION ACCOUNT
SHALL BE HELD SOLELY FOR THE BENEFIT OF BORROWER, SUBJECT TO THE TERMS AND
CONDITIONS OF THIS AGREEMENT, THE SECURITY AGREEMENT AND THE OTHER TRANSACTION
DOCUMENTS.  SUBJECT TO THE TERMS AND CONDITIONS OF THIS AGREEMENT, THE SECURITY
AGREEMENT AND THE OTHER TRANSACTION DOCUMENTS, BORROWER SHALL HAVE IMMEDIATE AND
FULL ACCESS TO ANY FUNDS HELD IN THE COMPANY CONCENTRATION ACCOUNT AND SUCH
FUNDS SHALL NOT BE SUBJECT TO ANY CONDITIONS OR RESTRICTIONS WHATSOEVER OTHER
THAN THOSE OF THE LOCKBOX BANK; PROVIDED, HOWEVER, THAT NOTHING HEREIN SHALL
(I) AFFECT OR REDUCE BORROWER’S OBLIGATIONS TO PAY IN FULL ALL AMOUNTS DUE TO
THE LENDER UNDER THIS AGREEMENT, OR (II) IN ANY MANNER LIMIT THE RECOURSE OF THE
LENDER TO THE ASSETS OF BORROWER TO SATISFY BORROWER’S OBLIGATIONS.

 

(C)                                  SWEEPS FROM THE LOCKBOX ACCOUNT SHALL BE
MADE PURSUANT TO EXHIBIT K.

 

(D)                                 BORROWER SHALL PAY FOR ALL FEES, EXPENSES
AND CHARGES OF THE LOCKBOX BANK BY DEBITING THE COMPANY CONCENTRATION ACCOUNT.

 

(E)                                  WITH RESPECT TO ANY LICENSE AGREEMENT, IN
LICENSE OR INVOICE ENTERED INTO OR ISSUED BY BORROWER IN RELATION THERETO,
BORROWER SHALL IMMEDIATELY UPON THE EXECUTION OF THE LOCKBOX AGREEMENT
(A) NOTIFY THE APPLICABLE CONTRACT PARTY TO REMIT TO THE LOCKBOX ACCOUNT WHEN
DUE ALL ROYALTIES THAT ARE DUE AND PAYABLE TO BORROWER IN RESPECT OF OR DERIVED
FROM SUCH LICENSE AGREEMENT, IN LICENSE OR INVOICE AND (B) IN EACH CASE, PROVIDE
TO THE LENDER A COPY OF EACH SUCH NOTIFICATION.

 

(F)                                    BORROWER SHALL HAVE NO RIGHT TO TERMINATE
THE LOCKBOX ACCOUNT WITHOUT BORROWER’S PRIOR WRITTEN CONSENT.  ANY SUCH CONSENT,
WHICH THE LENDER MAY GRANT OR WITHHOLD IN ITS DISCRETION, SHALL BE SUBJECT TO
THE SATISFACTION OF EACH OF THE FOLLOWING CONDITIONS TO THE SATISFACTION OF THE
LENDER:

 

(I)                  THE SUCCESSOR LOCKBOX BANK SHALL BE ACCEPTABLE TO THE
LENDER;

 

(II)               LENDER, BORROWER AND THE SUCCESSOR LOCKBOX BANK SHALL HAVE
ENTERED INTO A LOCKBOX AGREEMENT SUBSTANTIALLY IN THE FORM OF THE LOCKBOX
AGREEMENT INITIALLY ENTERED INTO;

 

(III)            ALL FUNDS AND ITEMS IN THE ACCOUNTS SUBJECT TO THE LOCKBOX
AGREEMENT TO BE TERMINATED SHALL BE TRANSFERRED TO THE NEW ACCOUNTS HELD AT THE
SUCCESSOR LOCKBOX BANK PRIOR TO THE TERMINATION OF THE THEN EXISTING LOCKBOX
BANK; AND

 

Confidential materials omitted and filed separately with the Securities and
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(IV)           BORROWER SHALL HAVE RECEIVED EVIDENCE THAT ALL OF THE APPLICABLE
PARTIES PAYING ROYALTIES HAVE BEEN INSTRUCTED TO REMIT ALL FUTURE PAYMENTS TO
THE NEW ACCOUNTS HELD AT THE SUCCESSOR LOCKBOX BANK.

 

(G)                                 PRIOR TO THE DATE ON WHICH THE LOCKBOX
AGREEMENT IS EXECUTED BY ALL PARTIES THERETO, BORROWER SHALL CAUSE ANY PAYMENTS
THAT WOULD BE SWEPT INTO THE LENDER CONCENTRATION ACCOUNT PURSUANT TO EXHIBIT K
BUT ARE RECEIVED BY BORROWER AND/OR ANY OF ITS SUBSIDIARIES TO BE PAID DIRECTLY
TO THE LENDER, BY WIRE TRANSFER TO LENDER BANK ACCOUNT, ON WEDNESDAY OF EVERY
OTHER WEEK FOR THE PERIOD ENDING ON THE FRIDAY OF THE IMMEDIATELY PRIOR TWO
WEEKS.

 

(H)                                 FOLLOWING THE DATE ON WHICH THE LOCKBOX
AGREEMENT IS EXECUTED, ALL GROSS PAYMENTS SHALL BE PAID INTO THE LOCKBOX ACCOUNT
OR TO ANY OTHER ACCOUNT(S) DESIGNATED IN WRITING BY THE LENDER(S) TO BORROWER,
AND AMOUNTS DEPOSITED THEREIN SHALL BE TREATED AS DESCRIBED IN EXHIBIT K.

 

(I)                                     BORROWER SHALL PAY VOLUNTARY PREPAYMENTS
MADE AT THE ELECTION OF BORROWER IN ACCORDANCE WITH SECTION 3.02(A) OR ANY
PAYMENT MADE IN ACCORDANCE WITH THE LAST SENTENCE OF SECTION 4.01(A) TO THE
LOCKBOX ACCOUNT.

 

(J)                                     IN THE EVENT AT ANY TIME FOLLOWING THE
EXECUTION OF THE LOCKBOX AGREEMENT BY ALL PARTIES THERETO, ANY PARTY TO A
LICENSE AGREEMENT INCLUDING ANY PARTY TO A FUTURE LICENSE REMITS ANY ROYALTIES
DIRECTLY TO BORROWER OR OTHERWISE EXCEPT TO THE LOCKBOX ACCOUNT, BORROWER SHALL
IMMEDIATELY (I) REMIT ANY SUCH ROYALTIES TO THE LOCKBOX ACCOUNT (OR, IF FOR SOME
REASON SUCH ACCOUNT IS NO LONGER IN EFFECT OR PAYMENT CANNOT BE MADE INTO SUCH
ACCOUNT, BORROWER SHALL REMIT SUCH ROYALTIES BY WIRE TRANSFER OF IMMEDIATELY
AVAILABLE FUNDS DIRECTLY TO LENDER BANK ACCOUNT), (II) NOTIFY SUCH PARTY TO
REMIT ANY FUTURE ROYALTIES TO THE LOCKBOX ACCOUNT AND (III) PROVIDE TO LENDER A
COPY OF SUCH NOTICE.

 

(K)                                  AMOUNTS PAYABLE PURSUANT TO THIS
SECTION 4.02 SHALL BE IN ADDITION TO ANY AMOUNTS PAYABLE UNDER
SECTION 4.02(D) OF THIS AGREEMENT.

 

(L)                                     ANY PAYMENTS, OTHER THAN FROM FUNDS PAID
TO LENDER FROM THE LENDER CONCENTRATION ACCOUNT, TO BE MADE BY BORROWER TO
LENDER HEREUNDER OR UNDER ANY OTHER TRANSACTION DOCUMENT SHALL BE MADE BY WIRE
TRANSFER OF IMMEDIATELY AVAILABLE FUNDS TO LENDER BANK ACCOUNT.

 

(M)                               WITHIN [*****] FOLLOWING DELIVERY TO LENDER BY
BORROWER OF THE QUARTERLY REPORT FOR THE FOURTH FISCAL QUARTER OF EACH CALENDAR
YEAR DURING THE TERM OF THE LOAN, TO THE EXTENT THAT EITHER LENDER OR BORROWER
HAS DETERMINED THAT THERE IS A DISCREPANCY AS TO THE AMOUNTS PAID TO LENDER
HEREUNDER FOR SUCH CALENDAR YEAR, THEN THE PERSON WHO HAS MADE SUCH
DETERMINATION MAY NOTIFY THE OTHER IN WRITING OF SUCH DISCREPANCY INDICATING IN
REASONABLE DETAIL ITS REASONS FOR SUCH DETERMINATION (THE “DISCREPANCY
NOTICE”).  IN THE EVENT THAT EITHER AGENT OR BORROWER DELIVERS TO THE OTHER
PARTY A DISCREPANCY

 

Confidential materials omitted and filed separately with the Securities and
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NOTICE, LENDERS AND BORROWER SHALL MEET IN PERSON OR BY TELEPHONE CONFERENCE AS
SPECIFIED BY LENDER WITHIN [*****] DAYS (OR SUCH OTHER TIME AS MUTUALLY AGREED
BY THE PARTIES) AFTER THE RECEIVING PARTY HAS RECEIVED A DISCREPANCY NOTICE TO
RESOLVE IN GOOD FAITH SUCH DISCREPANCY.

 

IF THE DISCREPANCY HAS BEEN RESOLVED AND, AS A RESULT THEREOF, IT IS DETERMINED
THAT A PAYMENT IS OWING BY LENDER TO BORROWER OR BY BORROWER TO LENDER, THEN THE
PARTY OWING SUCH PAYMENT SHALL PROMPTLY PAY SUCH PAYMENT TO THE OTHER PARTY. 
IF, WITHIN [*****] DAYS AFTER RECEIPT OF THE DISCREPANCY NOTICE, BORROWER AND
LENDER CANNOT RESOLVE ANY SUCH DISCREPANCIES, THEN LENDER AND BORROWER SHALL
PROMPTLY INSTRUCT THEIR RESPECTIVE FIRMS OF INDEPENDENT CERTIFIED PUBLIC
ACCOUNTANTS TO SELECT, WITHIN [*****] DAYS THEREAFTER, A THIRD INTERNATIONALLY
RECOGNIZED ACCOUNTING FIRM (THE “INDEPENDENT ACCOUNTANTS”).  AFTER OFFERING
BORROWER AND ITS REPRESENTATIVES AND LENDER AND THEIR REPRESENTATIVES THE
OPPORTUNITY TO PRESENT THEIR POSITIONS AS TO THE DISPUTED ITEMS, WHICH
OPPORTUNITY SHALL NOT EXTEND FOR MORE THAN [*****] DAYS AFTER THE INDEPENDENT
ACCOUNTANTS HAVE BEEN SELECTED, THE INDEPENDENT ACCOUNTANTS SHALL REVIEW THE
DISPUTED MATTERS AND THE MATERIALS SUBMITTED BY BORROWER AND LENDER AND, AS
PROMPTLY AS PRACTICABLE, DELIVER TO BORROWER AND LENDER A STATEMENT IN WRITING
SETTING FORTH ITS DETERMINATION OF THE PROPER TREATMENT OF THE DISCREPANCIES AS
TO WHICH THERE WAS DISAGREEMENT, AND THAT DETERMINATION WILL BE FINAL AND
BINDING UPON THE PARTIES HERETO WITHOUT ANY FURTHER RIGHT OF APPEAL.  IF
BORROWER HAS DELIVERED THE DISCREPANCY NOTICE THAT HAS RESULTED IN THE SELECTION
OF THE INDEPENDENT ACCOUNTANTS, BORROWER WILL BEAR ALL THE CHARGES OF THE
INDEPENDENT ACCOUNTANTS.  IF AGENT HAS DELIVERED THE DISCREPANCY NOTICE THAT HAS
RESULTED IN THE SELECTION OF THE INDEPENDENT ACCOUNTANTS, LENDERS WILL BEAR ALL
THE CHARGES OF THE INDEPENDENT ACCOUNTANTS UNLESS THE INDEPENDENT ACCOUNTANTS
DETERMINE THAT THE AMOUNTS PAID TO LENDER FOR THE APPLICABLE CALENDAR YEAR
UNDERPAID LENDER BY AN AMOUNT EQUAL OR IN EXCESS OF [*****] OF THE AMOUNTS
DETERMINED TO BE DUE TO LENDER FOR SUCH CALENDAR YEAR, IN WHICH EVENT BORROWER
SHALL BEAR ALL OF THE CHARGES OF THE INDEPENDENT ACCOUNTANTS.

 

SECTION 4.03.                                              INTEREST ON LATE
PAYMENTS.  IF ANY AMOUNT PAYABLE BY BORROWER TO THE LENDER HEREUNDER IS NOT PAID
WHEN DUE (WHETHER AT STATED MATURITY, BY ACCELERATION OR OTHERWISE), INTEREST
SHALL ACCRUE ON ANY SUCH UNPAID AMOUNTS, BOTH BEFORE AND AFTER JUDGMENT DURING
THE PERIOD FROM AND INCLUDING THE APPLICABLE DUE DATE, TO BUT EXCLUDING THE DAY
THE OVERDUE AMOUNT IS PAID IN FULL, AT A RATE PER ANNUM EQUAL TO THE DEFAULT
RATE.  INTEREST ACCRUING UNDER THIS SECTION 4.04 SHALL BE PAYABLE FROM TIME TO
TIME ON DEMAND OF THE LENDER.

 

SECTION 4.04.                                              INITIAL EXPENSES. 
BORROWER SHALL REIMBURSE THE LENDER, ON THE CLOSING DATE AS PROVIDED IN
SECTION 2.03, FOR ALL (A) ACTUAL, DOCUMENTED OUT-OF-POCKET FEES AND EXPENSES
INCURRED BY THE LENDER (INCLUDING ALL FEES AND EXPENSES OF OUTSIDE COUNSEL TO
THE LENDER), SUPPORTED BY REASONABLE DOCUMENTATION, IN CONNECTION WITH THE
NEGOTIATION, PREPARATION, EXECUTION AND DELIVERY OF THIS AGREEMENT AND THE OTHER
TRANSACTION DOCUMENTS INCLUDING ANY AMENDMENT OR WAIVER WITH RESPECT THERETO AND
(B) REASONABLE FEES AND EXPENSES, SUPPORTED BY REASONABLE DOCUMENTATION, OF DUE
DILIGENCE CONDUCTED BY THE LENDER OR OTHER PARTIES (INCLUDING OUTSIDE COUNSEL TO
THE LENDER) AT THE REQUEST OF THE LENDER; PROVIDED THAT BORROWER SHALL NOT

 

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BE REQUIRED TO REIMBURSE ANY AMOUNTS PURSUANT TO THIS SECTION 4.04 IN EXCESS OF
[*****] IN THE AGGREGATE.

 

SECTION 4.05.                                              ADMINISTRATION AND
ENFORCEMENT EXPENSES.  BORROWER SHALL PROMPTLY REIMBURSE THE LENDER ON DEMAND
FOR ALL REASONABLE COSTS AND EXPENSES INCURRED BY THE LENDER (INCLUDING THE
REASONABLE FEES AND EXPENSES OF ONE OUTSIDE COUNSEL TO THE LENDERS) AS A
CONSEQUENCE OF OR IN CONNECTION WITH ANY DEFAULT OR EVENT OF DEFAULT.

 

ARTICLE V
TAXES

 

SECTION 5.01.                                              TAXES.

 

(A)                                  EXCEPT AS OTHERWISE REQUIRED BY LAW, ANY
AND ALL PAYMENTS BY BORROWER UNDER THIS AGREEMENT OR THE NOTE (INCLUDING
PAYMENTS WITH RESPECT TO THE LOAN) SHALL BE MADE FREE AND CLEAR OF AND WITHOUT
DEDUCTION FOR ANY AND ALL PRESENT AND FUTURE TAXES, LEVIES, DUTIES, IMPOSTS,
DEDUCTIONS, CHARGES, FEES OR WITHHOLDINGS, AND ALL INTEREST, PENALTIES AND OTHER
LIABILITIES WITH RESPECT THERETO (COLLECTIVELY, “TAXES”) IMPOSED BY ANY
GOVERNMENTAL AUTHORITY OR TAXING AUTHORITY IN ANY JURISDICTION.  IF ANY TAXES
OTHER THAN EXCLUDED TAXES (“INDEMNIFIED TAXES”) SHALL BE REQUIRED BY LAW TO BE
DEDUCTED FROM OR IN RESPECT OF ANY SUM PAYABLE UNDER THIS AGREEMENT OR THE NOTE
TO A LENDER, (I) THE SUM PAYABLE BY BORROWER SHALL BE INCREASED AS MAY BE
NECESSARY SO THAT AFTER MAKING ALL REQUIRED DEDUCTIONS OF INDEMNIFIED TAXES THE
LENDER SHALL RECEIVE AN AMOUNT EQUAL TO THE SUM IT WOULD HAVE RECEIVED HAD NO
SUCH DEDUCTIONS BEEN MADE AND (II) BORROWER SHALL MAKE SUCH DEDUCTIONS AND PAY
THE FULL AMOUNT DEDUCTED TO THE RELEVANT GOVERNMENTAL AUTHORITY OR TAXING
AUTHORITY IN ACCORDANCE WITH APPLICABLE LAW.

 

(B)                                 ANY LENDER CLAIMING ADDITIONAL AMOUNTS
PAYABLE PURSUANT TO SECTION 5.01(A) SHALL USE ITS REASONABLE EFFORTS (CONSISTENT
WITH ITS INTERNAL POLICIES AND APPLICABLE LAW) TO CHANGE THE JURISDICTION OF ITS
LENDING OFFICE IF SUCH A CHANGE WOULD REDUCE ANY SUCH ADDITIONAL AMOUNTS (OR ANY
SIMILAR AMOUNT THAT MAY THEREAFTER ACCRUE) AND WOULD NOT, IN THE SOLE DISCRETION
OF SUCH LENDER, BE OTHERWISE DISADVANTAGEOUS TO SUCH LENDER.

 

(C)                                  IF A LENDER IS NOT A “UNITED STATES PERSON”
WITHIN THE MEANING OF SECTION 7701(A)(30) OF THE CODE (A “FOREIGN LENDER”), THEN
SUCH FOREIGN LENDER SHALL PROVIDE TO BORROWER (I) IN THE CASE OF A FOREIGN
LENDER CLAIMING EXEMPTION FROM U.S. FEDERAL WITHHOLDING TAX UNDER
SECTION 871(H) OR 881(C) OF THE CODE WITH RESPECT TO PAYMENTS OF “PORTFOLIO
INTEREST,” (X) TWO ACCURATE AND COMPLETE ORIGINAL SIGNED COPIES OF IRS
FORM W-8BEN (OR A SUCCESSOR FORM) PROPERLY COMPLETED AND DULY EXECUTED BY SUCH
FOREIGN LENDER AND (Y) A CERTIFICATE TO THE EFFECT THAT SUCH FOREIGN LENDER IS
NOT (A) A “BANK” WITHIN THE MEANING OF SECTION 881(C)(3)(A) OF THE CODE, (B) A
“10 PERCENT SHAREHOLDER” OF BORROWER WITHIN THE MEANING OF
SECTION 881(C)(3)(B) OF THE CODE OR (C) A “CONTROLLED FOREIGN CORPORATION”
DESCRIBED IN SECTION 881(C)(3)(C) OF THE CODE, (II) IF THE PAYMENTS RECEIVABLE
BY THE FOREIGN LENDER ARE EFFECTIVELY CONNECTED WITH THE CONDUCT

 

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OF A TRADE OR BUSINESS IN THE UNITED STATES, TWO ACCURATE AND COMPLETE ORIGINAL
SIGNED COPIES OF IRS FORM W-8ECI (OR A SUCCESSOR FORM), (III) IN THE CASE OF A
FOREIGN LENDER THAT IS ENTITLED TO BENEFITS UNDER AN INCOME TAX TREATY TO WHICH
THE UNITED STATES IS A PARTY THAT REDUCES THE RATE OF WITHHOLDING TAX ON
PAYMENTS OF INTEREST, TWO ACCURATE AND COMPLETE ORIGINAL SIGNED COPIES OF IRS
FORM W-8BEN (OR A SUCCESSOR FORM) INDICATING THAT SUCH FOREIGN LENDER IS
ENTITLED TO RECEIVE PAYMENTS UNDER THIS AGREEMENT AND THE NOTE WITH REDUCED OR
NO DEDUCTION OF ANY UNITED STATES FEDERAL INCOME WITHHOLDING TAX OR (IV) IN THE
CASE OF A FOREIGN LENDER ACTING AS AN INTERMEDIARY, TWO ACCURATE AND COMPLETE
ORIGINAL SIGNED COPIES OF IRS FORM W-8IMY (OR A SUCCESSOR FORM).  SUCH FORMS
SHALL BE DELIVERED BY SUCH FOREIGN LENDER ON OR PRIOR TO THE DATE THAT IT
BECOMES A LENDER UNDER THIS AGREEMENT, AT ANY TIME THEREAFTER WHEN A CHANGE IN
THE FOREIGN LENDER’S CIRCUMSTANCES RENDERS AN EXISTING FORM OBSOLETE OR INVALID
OR REQUIRES A NEW FORM TO BE PROVIDED, AND WITHIN FIFTEEN BUSINESS DAYS AFTER A
REASONABLE WRITTEN REQUEST OF BORROWER FROM TIME TO TIME THEREAFTER. 
NOTWITHSTANDING ANY OTHER PROVISION OF THIS SECTION 5.01(C), NO FOREIGN LENDER
SHALL BE REQUIRED TO DELIVER ANY FORM PURSUANT TO THIS SECTION 5.01(C) THAT SUCH
FOREIGN LENDER IS NOT LEGALLY ABLE TO DELIVER.

 

(D)                                 EACH LENDER THAT IS NOT A FOREIGN LENDER
SHALL PROVIDE TWO PROPERLY COMPLETED AND DULY EXECUTED COPIES OF FORM W-9 (OR
SUCCESSOR FORM) AT THE TIMES SPECIFIED FOR DELIVERY OF FORMS UNDER
SECTION 5.01(C).

 

(E)                                  EACH LENDER HAVING ASSIGNED ITS RIGHTS AND
OBLIGATIONS HEREUNDER IN WHOLE OR IN PART OR HAVING GRANTED A PARTICIPATING
INTEREST IN ITS LOAN SHALL COLLECT FROM SUCH ASSIGNEE OR PARTICIPANT THE
DOCUMENTS DESCRIBED IN SECTIONS 5.01(C) AND (D) AS APPLICABLE.

 

SECTION 5.02.                                              RECEIPT OF PAYMENT. 
WITHIN THIRTY DAYS AFTER THE DATE OF ANY PAYMENT OF TAXES WITHHELD BY BORROWER
IN RESPECT OF ANY PAYMENT TO THE LENDER, BORROWER SHALL FURNISH TO THE LENDER
THE ORIGINAL OR A CERTIFIED COPY OF A RECEIPT EVIDENCING PAYMENT THEREOF OR
OTHER EVIDENCE REASONABLY SATISFACTORY TO THE LENDER.

 

SECTION 5.03.                                              OTHER TAXES. 
BORROWER SHALL PROMPTLY PAY ANY REGISTRATION OR TRANSFER TAXES, STAMP DUTIES OR
SIMILAR LEVIES, AND ANY PENALTIES OR INTEREST THAT MAY BE DUE WITH RESPECT
THERETO, THAT MAY BE IMPOSED IN CONNECTION WITH THE EXECUTION, DELIVERY,
REGISTRATION OR ENFORCEMENT OF THIS AGREEMENT, THE NOTE ISSUED HEREUNDER OR ANY
OTHER TRANSACTION DOCUMENT OR THE FILING, REGISTRATION, RECORDING OR PERFECTING
OF ANY SECURITY INTEREST CONTEMPLATED BY THIS AGREEMENT.

 

SECTION 5.04.                                              INDEMNIFICATION.  IF
THE LENDER PAYS ANY TAXES THAT BORROWER IS REQUIRED TO PAY PURSUANT TO THIS
ARTICLE V, BORROWER SHALL INDEMNIFY THE LENDER ON DEMAND IN FULL IN THE CURRENCY
IN WHICH SUCH TAXES ARE PAID, WHETHER OR NOT SUCH TAXES WERE CORRECTLY OR
LEGALLY ASSERTED, TOGETHER WITH INTEREST THEREON FROM AND INCLUDING THE DATE OF
PAYMENT TO, BUT EXCLUDING, THE DATE OF REIMBURSEMENT AT THE DEFAULT RATE.  THE
LENDER SHALL PROMPTLY NOTIFY BORROWER IF ANY CLAIM IS MADE AGAINST THE LENDER
FOR ANY TAXES FOR WHICH BORROWER WOULD BE RESPONSIBLE TO INDEMNIFY THE LENDER
PURSUANT TO THIS SECTION 5.04.

 

Confidential materials omitted and filed separately with the Securities and
Exchange Commission.  Asterisks denote such omission.

 

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SECTION 5.05.                                              LOANS TREATED AS
INDEBTEDNESS.  THE PARTIES AGREE TO TREAT THE LOAN AS INDEBTEDNESS FOR BORROWED
MONEY OF BORROWER FOR ALL TAX PURPOSES.  THE PARTIES AGREE NOT TO TAKE ANY
POSITION THAT IS INCONSISTENT WITH THE PROVISIONS OF THIS SECTION 5.05 ON ANY
TAX RETURN OR IN ANY AUDIT OR OTHER ADMINISTRATIVE OR JUDICIAL PROCEEDING UNLESS
(I) THE OTHER PARTY HAS CONSENTED TO SUCH ACTIONS, OR (II) THE PARTY THAT
CONTEMPLATES TAKING SUCH AN INCONSISTENT POSITION HAS BEEN ADVISED BY NATIONALLY
RECOGNIZED TAX COUNSEL IN WRITING THAT IT IS MORE LIKELY THAN NOT THAT (X) THERE
IS NO “REASONABLE BASIS” (WITHIN THE MEANING OF TREASURY REGULATION
SECTION 1.6662-3(B)(3)) FOR THE POSITION SPECIFIED IN THIS SECTION 5.05 OR
(Y) TAKING SUCH A POSITION WOULD OTHERWISE SUBJECT THE PARTY TO PENALTIES UNDER
THE CODE.

 

SECTION 5.06.                                              ALLOCATION OF ISSUE
PRICE.  THE NOTE AND THE WARRANT, TAKEN TOGETHER, CONSTITUTE AN “INVESTMENT
UNIT” FOR PURPOSES OF SECTION 1273(C)(2) OF THE CODE.  IN ACCORDANCE WITH
SECTIONS 1273(C)(2)(A) AND 1273(B)(2) OF THE CODE, THE ISSUE PRICE OF THE
INVESTMENT UNIT IS THE PURCHASE PRICE OF THE NOTE, WITH $431,761 THEREOF
REPRESENTING THE FAIR MARKET VALUE OF THE WARRANT.  UNLESS OTHERWISE REQUIRED BY
LAW, THE PARTIES SHALL NOT TAKE ANY POSITION INCONSISTENT WITH THAT ALLOCATION
ON ANY TAX RETURN OR FOR ANY OTHER TAX PURPOSE.

 

SECTION 5.07.                                              REGISTERED
OBLIGATION.

 

(A)                                  BORROWER SHALL ESTABLISH AND MAINTAIN AT
ITS ADDRESS REFERRED TO IN SECTION 13.04 (A) A RECORD OF OWNERSHIP (THE
“REGISTER”) IN WHICH BORROWER AGREES TO REGISTER BY BOOK ENTRY THE INTERESTS
(INCLUDING ANY RIGHTS TO RECEIVE PAYMENT HEREUNDER) OF EACH LENDER IN THE LOAN,
EACH OF THEIR OBLIGATIONS UNDER THIS AGREEMENT TO PARTICIPATE IN THE LOAN, AND
ANY ASSIGNMENT OF ANY SUCH INTEREST, OBLIGATION OR RIGHT, AND (B) ACCOUNTS IN
THE REGISTER IN ACCORDANCE WITH ITS USUAL PRACTICE IN WHICH IT SHALL RECORD
(1) THE NAMES AND ADDRESSES OF THE LENDER(S) (AND EACH CHANGE THERETO PURSUANT
TO SECTION 13.02), (2) THE COMMITMENT OF EACH LENDER, (3) THE AMOUNT OF THE LOAN
AND EACH FUNDING OF ANY PARTICIPATION DESCRIBED IN CLAUSE (A) ABOVE, (4) THE
AMOUNT OF ANY PRINCIPAL OR INTEREST DUE AND PAYABLE OR PAID, AND (5) ANY OTHER
PAYMENT RECEIVED AND ITS APPLICATION TO THE LOAN.

 

(B)                                 NOTWITHSTANDING ANYTHING TO THE CONTRARY
CONTAINED IN THIS AGREEMENT, THE LOAN (INCLUDING ANY NOTE EVIDENCING SUCH LOAN)
IS A REGISTERED OBLIGATION, THE RIGHT, TITLE AND INTEREST OF THE LENDER AND ITS
ASSIGNEES IN AND TO SUCH LOAN SHALL BE TRANSFERABLE ONLY UPON NOTATION OF SUCH
TRANSFER IN THE REGISTER AND NO ASSIGNMENT THEREOF SHALL BE EFFECTIVE UNTIL
RECORDED THEREIN.  THIS SECTION 5.07 AND SECTION 13.02 SHALL BE CONSTRUED SO
THAT THE LOAN IS AT ALL TIMES MAINTAINED IN “REGISTERED FORM” WITHIN THE MEANING
OF SECTIONS 163(F), 871(H)(2) AND 881(C)(2) OF THE CODE AND ANY RELATED
REGULATIONS (AND ANY SUCCESSOR PROVISIONS).

 

Confidential materials omitted and filed separately with the Securities and
Exchange Commission.  Asterisks denote such omission.

 

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ARTICLE VI
PAYMENTS; COMPUTATIONS

 

SECTION 6.01.                                              MAKING OF PAYMENTS.

 

(A)                                  TO THE EXTENT (I) THAT APPLICABLE INCLUDED
RECEIPTS RECEIVED INTO THE LOCKBOX ACCOUNT DURING ANY FISCAL QUARTER ARE LESS
THAN THE TOTAL AMOUNT OF APPLICABLE INCLUDED RECEIPTS REQUIRED FOR PURPOSES OF
CALCULATING THE INTEREST THAT BORROWER IS REQUIRED TO PAY TO LENDER UNDER
SECTION 4.01(A) ON ANY INTEREST PAYMENT DATE OR (II) BORROWER EXERCISES ITS
OPTION TO PAY ANY DEFICIENCY AMOUNT OUT OF OTHER FUNDS OF BORROWER AND/OR ANY OF
ITS SUBSIDIARIES AS DESCRIBED IN THE LAST SENTENCE OF SECTION 4.01(A), THEN SUCH
DEFICIENCY SHALL BE MADE IN DOLLARS, BY DEPOSIT IN SAME DAY FUNDS BY 3:00 P.M.
NEW YORK TIME ON THE DATE THE INTEREST PAYMENT IS DUE, TO THE LOCKBOX ACCOUNT,
FOR THE ACCOUNT OF THE APPLICABLE LENDING OFFICE(S), OR TO ANY OTHER ACCOUNT
DESIGNATED BY THE LENDERS BY NOTICE TO BORROWER.

 

(B)                                 NOTWITHSTANDING ANYTHING TO THE CONTRARY
CONTAINED HEREIN, ANY PAYMENT STATED TO BE DUE HEREUNDER OR UNDER THE NOTE ON A
GIVEN DAY IN A SPECIFIED MONTH SHALL BE MADE OR SHALL END (AS THE CASE MAY BE),
(I) IF THERE IS NO SUCH GIVEN DAY OR CORRESPONDING DAY, ON THE LAST BUSINESS DAY
OF SUCH MONTH OR (II) IF SUCH GIVEN DAY OR CORRESPONDING DAY IS NOT A BUSINESS
DAY, ON THE NEXT SUCCEEDING BUSINESS DAY, UNLESS SUCH NEXT SUCCEEDING BUSINESS
DAY FALLS IN A DIFFERENT CALENDAR MONTH, IN WHICH CASE SUCH PAYMENT SHALL BE
MADE ON THE NEXT PRECEDING BUSINESS DAY.

 

SECTION 6.02.                                              SETOFF OR
COUNTERCLAIM.  EACH PAYMENT BY BORROWER UNDER THIS AGREEMENT OR UNDER THE NOTE
SHALL BE MADE WITHOUT SETOFF OR COUNTERCLAIM.  LENDERS SHALL HAVE THE RIGHT TO
SETOFF ANY AND ALL AMOUNTS OWED BY BORROWER AND/OR ANY OF ITS SUBSIDIARIES UNDER
THIS AGREEMENT AS PROVIDED IN SECTION 11.03.

 

ARTICLE VII
CONDITIONS PRECEDENT

 

SECTION 7.01.                                              CONDITIONS PRECEDENT
TO THE LOAN.  THE OBLIGATION OF THE LENDER TO MAKE THE LOAN ON THE CLOSING DATE
IS SUBJECT TO THE FULFILLMENT, TO THE SATISFACTION OF THE LENDER, OF ALL OF THE
FOLLOWING CONDITIONS PRECEDENT IN ADDITION TO THE CONDITIONS SPECIFIED IN
ARTICLE II:

 

(a)                                                                                       
Borrower shall have executed and delivered to the Lender the Note, dated the
Closing Date.

 

(b)                                                                                      
Lender shall have received on or before the Closing Date an executed copy of:

 

Confidential materials omitted and filed separately with the Securities and
Exchange Commission.  Asterisks denote such omission.

 

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(i)                  a certificate of Borrower, dated the Closing Date,
substantially in the form set forth in Exhibit L hereto together with the
attachments specified therein;

 

(ii)               an opinion of Edwards Angell Palmer & Dodge LLP, counsel to
Borrower, dated the Closing Date, substantially in the form of Exhibit M hereto
and otherwise in form and substance satisfactory to the Lender;

 

(iii)            an opinion of Wolf Greenfield, counsel of Borrower , dated the
Closing Date, substantially in the form of Exhibit N hereto and otherwise in
form and substance satisfactory to the Lender.

 

(iv)           an opinion of Lowrie, Lando & Anasasi, LLP, counsel of Borrower,
dated the Closing Date, substantially in the form of Exhibit O hereto and in
form and substance satisfactory to the Lender.

 

(c)                                                                                       
Borrower shall have delivered to the Lender a certificate, dated the Closing
Date, of a Senior Officer of Borrower (the statements made in which shall be
true and correct on and as of the Closing Date):  (i) attaching copies,
certified by such officer as true and complete, of Borrower’s certificate of
incorporation or other organizational documents (together with any and all
amendments thereto) certified by the appropriate Governmental Authority as being
true, correct and complete copies; (ii) attaching copies, certified by such
officer as true and complete, of resolutions of the Board of Directors of
Borrower authorizing and approving the execution, delivery and performance by
Borrower of this Agreement, the other Transaction Documents and the transactions
contemplated herein and therein; (iii) setting forth the incumbency of the
officer or officers of Borrower who have executed and delivered this Agreement
and the other Transaction Documents including therein a signature specimen of
each such officer or officers; and (iv) attaching copies, certified by such
officer as true and complete, of certificates of the appropriate Governmental
Authority of the jurisdiction of formation, stating that Borrower is in good
standing under the laws of such jurisdiction.

 

(d)                                                                                      
Borrower shall have executed and delivered to the Lender the Loan Documents and
such other documents as the Lender may reasonably request, in each case, in form
and substance satisfactory to the Lender.

 

(e)                                                                                       
Borrower shall have executed and delivered to the Lender the Warrant Agreement.

 

(f)                                                                                         
The Transaction Documents shall be in full force and effect.

 

(g)                                                                                      
The Lender shall have received all fees and expenses due and payable to the
Lender on the Closing Date under this Agreement and the other Transaction
Documents.

 

Confidential materials omitted and filed separately with the Securities and
Exchange Commission.  Asterisks denote such omission.

 

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(h)                                                                                      
No event shall have occurred and be continuing that constitutes a Default or an
Event of Default under this Agreement or a similar event under the other
Transaction Documents and no such event will occur or will have occurred by
reason of the Loan.

 

(i)                                                                                          
The representations and warranties made by Borrower in Article VIII hereof and
in the other Transaction Documents shall be true and correct as of the Closing
Date, before and after giving effect to the Loan.

 

(j)                                                                                          
Borrower shall have delivered to the Lender true copies of the License
Agreements certified by an officer of Borrower, including all amendments,
supplements or other modifications thereto, and each License Agreement and
amendment, supplement or other modification thereto shall be in full force and
effect.

 

(k)                                                                                       
All filings, recordings and other actions that are necessary or reasonably
requested by the Lender in order to establish, protect, preserve and perfect the
security interest in the assets of Borrower as provided in the Security
Agreement as a valid and perfected first priority security interest with respect
to such assets shall have been duly effected.

 

(l)                                                                                          
All necessary governmental and third-party approvals, consents and filings,
including in connection with the Loan, the Security Agreement and the Warrant
Agreement shall have been obtained or made and be in full force and effect.

 

(m)                                                                                    
The Lender shall have conducted a background check of the officers of Borrower
and the results shall be to the satisfaction of the Lender.  The Lender shall
have received all documentation and other information required by bank
regulatory authorities under applicable “know your customer” and anti-money
laundering rules and regulations, including without limitation, the Patriot Act,
including, without limitation, the information described in Section 13.19.

 

(n)                                                                                      
The Lender shall have received from Borrower (i) an executed copy of the Release
of Security Agreement between Borrower and Paul Royalty Funds Holdings II,
(ii) evidence to the satisfaction of the Lender that such release(s) in form and
substance satisfactory to the Lender will be filed with the U.S. Patent and
Trademark Office and the U.S. Copyright Office on the Closing Date,
(iii) evidence to the satisfaction of the Lender that a UCC-3 termination
statement will be filed with the office of the Secretary of State of the State
of Delaware on the Closing Date, and (iv) evidence to the satisfaction of the
Lender of agreements to terminate (A) the lockbox agreement among Paul Royalty
Funds Holdings II, Borrower and JP Morgan Chase Bank, and (B) the escrow
arrangement with respect to duplicate libraries for the benefit of Paul Royalty
Funds Holdings II.

 

Confidential materials omitted and filed separately with the Securities and
Exchange Commission.  Asterisks denote such omission.

 

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ARTICLE VIII
REPRESENTATIONS AND WARRANTIES

 

SECTION 8.01.               REPRESENTATIONS AND WARRANTIES OF BORROWER. 
BORROWER MAKES THE REPRESENTATIONS AND WARRANTIES SET FORTH BELOW TO THE
LENDER.  EXCEPT AS OTHERWISE NOTED, BORROWER MAKES THE REPRESENTATIONS AND
WARRANTIES SET FORTH BELOW AS OF THE CLOSING DATE:

 

(a)                             Borrower is a corporation duly organized,
validly existing and in good standing under the laws of Delaware and is duly
qualified as a foreign corporation and, where legally applicable, is in good
standing in each jurisdiction in which such qualification is required by law,
other than those jurisdictions as to which the failure to be so qualified or in
good standing could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect, and has the power and authority
(including any required license, permit or other approval from any Governmental
Authority) to own its assets, to carry on its business as currently conducted
and to consummate the transactions contemplated in, and to perform its
obligations under, this Agreement and the other Transaction Documents to which
it is party or by which it is bound.

 

(b)                             Borrower has taken all necessary action to
authorize its execution and delivery of this Agreement and the other Transaction
Documents to which it is party, the performance of its obligations under this
Agreement and the other Transaction Documents to which it is party or by which
it is bound and the consummation of the transactions contemplated hereby and
thereby.

 

(c)                             This Agreement and each other Transaction
Document to which Borrower is party has been duly executed and delivered by
Borrower, and each constitutes a valid and binding obligation of Borrower,
enforceable against Borrower in accordance with its terms, subject to applicable
bankruptcy, insolvency, moratorium and similar laws affecting creditors’ rights
generally, and subject to general principles of equity (regardless of whether
enforcement is sought in a proceeding in equity or at law).

 

(d)                             No authorization or action of any kind by any
Governmental Authority is necessary to authorize the transactions contemplated
by this Agreement and each other Transaction Document or required for the
validity or enforceability against Borrower of this Agreement and each other
Transaction Document, except any filings with a Governmental Authority required
to perfect the Lender’s security interest under the Security Agreement and any
filings with the United States Securities and Exchange Commission (“SEC”).

 

(e)                             No consent or approval of, or notice to, any
Person is required by the terms of any agreement, contract, lease, commitment,
license and other arrangement (each a “Contract”) for the execution or delivery
of, or the performance of the obligations of Borrower under, this Agreement and
the other Transaction Documents to which Borrower is party or the consummation
of the transactions contemplated hereby or thereby, and such execution,
delivery, performance and consummation will not result in any

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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breach or violation of, or constitute a default under Borrower Documents or any
material Contract, instrument or Law applicable to Borrower, any of its
Subsidiaries or any of its assets.

 

(f)                              There are no actions, proceedings or claims
pending or, to the actual knowledge of Borrower, threatened the adverse
determination of which could reasonably be expected to have a Material Adverse
Effect.

 

(g)                             No Default or Event of Default has occurred and
is continuing, and no such event will occur upon the making of the Loan.

 

(h)                             [Intentionally Omitted]

 

(i)                              With respect to each Contract that is material
to the conduct of the LFRP, (i) each such Contract is a valid and binding
agreement and each such Contract is in full force and effect, and (ii) Borrower
and/or any of its Subsidiaries is in compliance with each such Contract and has
no actual knowledge of any default under any such Contract which default has not
been cured or waived.

 

(j)                              All written information heretofore, herein or
hereafter supplied to the Lender by or on behalf of Borrower in connection with
the Loan and the other transactions contemplated hereby has been, is and will be
accurate and complete in all material respects.  All representations and
warranties made by Borrower in any of the other Transaction Documents to which
it is party are true and correct in all material respects.

 

(k)                             The Financial Statements are complete and
accurate in all material respects, were prepared in conformity with GAAP applied
on a consistent basis during the periods involved (except as may be indicated in
the notes thereto) and present fairly in all material respects, in accordance
with applicable requirements of GAAP, the consolidated financial position and
the consolidated financial results of the operations of Borrower and its
Subsidiaries as of the dates and for the periods covered thereby and the
consolidated statements of cash flows of Borrower and its Subsidiaries for the
periods presented therein.  Except as disclosed in Borrower’s SEC filings, there
have been no Material Adverse Effects since December 31, 2007.

 

(l)                              Borrower and its Subsidiaries have no
Indebtedness other than (i) identified in the Financial Statements or
(ii) incurred by Borrower or its Subsidiaries in the ordinary course of business
since December 31, 2007 or (c) otherwise listed and described on Schedule
8.01(l).

 

(m)                            As of the date hereof and after giving effect to
the Loan:

 

(i)      The aggregate value of the assets of Borrower, at fair value and
present fair salable value, exceeds (i) its total liabilities and (ii) the
amount required

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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to pay such liabilities as they become absolute and matured in the normal course
of business;

 

(ii)     Borrower has the ability to pay its debts and liabilities as they
become absolute and matured in the normal course of business; and

 

(iii)    Borrower does not have an unreasonably small amount of capital with
which to conduct its business.

 

(n)                             Borrower’s Subsidiaries are set forth on
Schedule 8.01(n).

 

(o)                             (i)  Borrower and its Subsidiaries are in
compliance with all applicable Laws except where the failure to be in compliance
could not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.  No prospective change in any applicable laws, rules,
ordinances or regulations has been proposed or adopted which, when made
effective, could individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect.

 

(ii)           Borrower possesses all material certificates, authorizations and
permits issued or required by the appropriate federal, state, local or foreign
regulatory authorities, including any effective investigational new drug
application or its equivalent, necessary to conduct the LFRP, including all such
certificates, authorizations and permits required by the FDA or any other
federal, state, local or foreign agencies or bodies engaged in the regulation of
pharmaceuticals or biohazardous substances or materials except where the failure
to possess such certificates, authorizations and permits, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect.  Borrower has not received any notice of proceedings relating to, and to
the Knowledge of Borrower there are no facts or circumstances that could
reasonably be expected to lead to, the revocation, suspension, termination or
modification of any such certificate, authorization or permit.

 

(iii)          To the actual knowledge of Borrower, there has been no indication
that the FDA or any other Regulatory Agency has any material concerns with any
Product or may not approve any Product, nor has any Product, to the actual
knowledge of Borrower, suffered any material adverse events in any clinical
trial.

 

(p)                             Borrower is not an investment company subject to
regulation under the Investment Company Act of 1940.

 

(q)                             Borrower has timely filed all tax returns
required to be filed by it and has paid all taxes due reported on such returns
or pursuant to any assessment received by Borrower, except for failures to file
tax returns or pay taxes that, individually, and in the aggregate, are not
reasonably expected to result in a Material Adverse Effect.  Any charges,
accruals or reserves on the books of Borrower in respect of taxes are adequate
except for inadequacies that, individually, and in the aggregate, are not
reasonably

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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expected to result in a Material Adverse Effect.  Borrower has had no material
liability for any taxes imposed on or with respect to its net income (except for
state or local income or franchise taxes).  Borrower has fulfilled all its
obligations with respect to withholding taxes except for failures that,
individually, and in the aggregate, are not reasonably expected to result in a
Material Adverse Effect.  No deduction or withholding for or on account of any
tax has been made, or was required under applicable Law to be made, from any
payment to Borrower under the License Agreements in effect on the date hereof.

 

(r)                              Neither Borrower nor any ERISA Affiliate has
ever incurred any unsatisfied liability or expects to incur any liability under
Title IV or Section 302 of ERISA or Section 412 of the Code or any similar
non-U.S. law or maintains or contributes to, or is or has been required to
maintain or contribute to, any employee benefit plan (as defined in
Section 3(3) of ERISA) subject to Title IV or Section 302 of ERISA or
Section 412 of the Code or any non-U.S. law.  The consummation of the
transactions contemplated by this Agreement will not constitute or result in any
non-exempt prohibited transaction under Section 406 of ERISA, Section 4975 of
the Code or substantially similar provisions under any foreign or U.S. federal,
state or local laws, rules or regulations.  Neither Borrower nor any of its
Subsidiaries has incurred any material liability with respect to any obligation
to provide benefits, including death or medical benefits, with respect to any
person beyond their retirement or the termination of service other than coverage
mandated by law.

 

(s)                             (i)  Except as set forth on Schedule 8.01(s)(i),
all of the LFRP Intellectual Property owned by Borrower is solely (and not
jointly) owned by Borrower and is free and clear of any and all Liens, except
those Liens created in favor of Lender pursuant to the Transaction Documents.
The Included Receipts and all of the rights of Borrower under the In Licenses
and License Agreements and all other rights in and to the LFRP are free and
clear of any and all Liens, except those Liens created in favor of Lender
pursuant to the Transaction Documents.

 

(ii)           Borrower owns, and is the sole holder of, all the Included
Receipts.  Borrower owns, and is the sole holder of, and/or has and holds a
valid, enforceable and subsisting license to, all assets (including LFRP
Intellectual Property) that are required to produce or receive any payments from
any Contract Party or payor under and pursuant to, and subject to the terms of
any License Agreements.  Borrower has not transferred, sold, or otherwise
disposed of, or agreed to transfer, sell, or otherwise dispose of any portion of
its respective rights to receive payment of Royalties.  Except as set forth on
Schedule 8.01(s)(ii), no Person other than Borrower has any right to receive the
payments payable under any License Agreement in existence on the date hereof
from and after the Closing Date, other than, in respect of the Included
Receipts, Lender.

 

(t)                              The claims and rights of the Lender created by
this Agreement and any other Transaction Document in and to the Collateral is
senior to any Indebtedness or other obligation of Borrower, with respect to such
Collateral.

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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(u)                             Borrower’s principal place of business and chief
executive office are set forth on Schedule 8.01(u).

 

(v)                             (i)  Borrower has provided Lender all material
information in its possession, or otherwise known to it with respect to the LFRP
Patents.

 

(ii)           Schedule 8.01(v)(ii) sets forth an accurate and complete list of
all LFRP Patents (including all LFRP Patents not owned by Borrower).  For each
item of the LFRP Patents listed on Schedule 8.01(v)(ii), Borrower has indicated
(A) the countries in each case in which such item is patented, registered or in
which an application for patent or registration is pending, (B) the application
numbers, (C) the registration or patent numbers, (D) the scheduled expiration
date of the issued patents, and (E) the owner of such item of LFRP Patents.

 

(iii)          The issued LFRP Patents owned by Borrower are valid, enforceable
and subsisting.  To the Knowledge of Borrower, each individual associated with
the filing and prosecution of the LFRP Patents owned by Borrower, including the
named inventors of such LFRP Patents, has complied in all material respects with
all applicable duties of candor and good faith in dealing with any Patent
Office, including any duty to disclose to any Patent Office all information
known to be material to the patentability of each of such LFRP Patents, in those
jurisdictions where such duties exist.  [*****].

 

(iv)          Schedule 8.01(v)(iv) sets forth an accurate and complete list of
all LFRP Patents owned by Borrower that have issued with at least one claim
covering the Company LFRP Methods and Libraries.

 

(v)           Borrower has not sold or otherwise transferred any patents or
patent applications that have issued or may issue with at least one claim
covering the Company LFRP Methods and Libraries or falling within the scope of
the patents licensed under the Patent License Agreements.

 

(vi)          There are no unpaid maintenance or renewal fees payable by
Borrower to any third party that are currently overdue for any of the LFRP
Patents or other LFRP Intellectual Property owned by Borrower.  To the Knowledge
of Borrower no material applications for LFRP Patents owned by Borrower in whole
or in part have lapsed or been abandoned, cancelled or expired.

 

(vii)         Borrower has not undertaken and, to the Knowledge of Borrower, no
licensee has undertaken or omitted to undertake any acts, and no conduct,
circumstances or grounds exist that would void, invalidate or eliminate, in
whole or in part, the enforceability of any of the LFRP Intellectual Property.
[*****]  Except as set forth on Schedule 8.01(v)(vii) and Schedule
8.01(v)(viii), Borrower has not received or otherwise been the beneficiary of
any written opinions of counsel with respect to infringement, non-infringement
or invalidity of third party intellectual property with respect to the Company
LFRP Methods and Libraries that are not the subject of an In License.

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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(viii)        Except as set forth on Schedule 8.01(v)(viii), to the Knowledge of
Borrower there is, and has been, no pending, decided or settled opposition,
interference, reexamination, injunction, claim, lawsuit, proceeding, hearing,
investigation, complaint, arbitration, mediation, demand, International Trade
Commission investigation, decree, or any other dispute, disagreement, or claim
(collectively referred to hereinafter as “Disputes”), nor, to the Knowledge of
Borrower, has any such Dispute been threatened, challenging the scope, legality,
validity, enforceability or ownership of any LFRP Intellectual Property or which
would give rise to a credit against the payments due to Borrower from the
applicable License Agreements for the use of the related licensed LFRP
Intellectual Property, and no such scheduled Dispute is (or would be if
adversely determined) material to the LFRP.

 

(ix)           To the Knowledge of Borrower, there are no Disputes by any third
party against Borrower, any licensor under an In License or any licensee under a
License Agreement relating to the LFRP.  Borrower has not received or given, and
to the Knowledge of Borrower, no such licensee or licensor has received or given
any notice of any such Dispute and, to the Knowledge of Borrower, there exist no
circumstances or grounds upon which any such claim could be asserted.  Except as
set forth on Schedule 8.01(v)(ix), the LFRP Intellectual Property owned by
Borrower is not subject to any outstanding injunction, judgment or other decree,
ruling, charge, settlement or other disposition of any Dispute.

 

(x)            There is no pending or, to the Knowledge of Borrower, threatened
action, suit, or proceeding, or any investigation or claim by any Governmental
Authority to which Borrower or, to the Knowledge of Borrower, to which any
licensee under any License Agreement or any party to a In License is a party
(i) that would be the subject of a claim for indemnification, if any, by or
against Borrower or (ii) that the Company LFRP Methods and Libraries do or will
infringe on any patent or other intellectual property rights of any other
Person.  Except as set forth on Schedule 8.01(v)(x), to the Knowledge of
Borrower, there are no pending published U.S., international or foreign patent
applications owned by any other Person, which, if issued, would limit or
prohibit, in any material respect the practice of the Company LFRP Methods and
Libraries.

 

(w)                            (i)  Schedule 8.01(w)(i) sets forth an accurate
and complete list of all agreements relating to LFRP in the following categories
whether oral or written (provided such oral agreements are to the Knowledge of
Borrower):  manufacturing and supply agreements, In Licenses and License
Agreements, options (not part of License Agreements or In Licenses), agreements
not to enforce (not part of License Agreements or In Licenses), consents,
settlements, assignments, security interests, liens and other encumbrances or
mortgages, and any amendment(s), renewal(s), novation(s) and
termination(s) pertaining thereto, true and correct copies of which have been
provided to Lender.  For each agreement specified on Schedule 8.01(w)(i),
Borrower has indicated (A) whether such agreement relates to inbound licenses of
LFRP Intellectual Property to Borrower or outbound licenses of LFRP Intellectual
Property by Borrower and (B) the specific

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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LFRP Intellectual Property relating to such agreement.  Each agreement specified
on Schedule 8.01(w)(i), whether or not terminated prior to the date hereof,
constitutes a valid and binding obligation, enforceable in accordance with its
terms, subject, as to enforcement of remedies, to bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors’ rights generally
or general equitable principles.  Borrower is not in breach of such agreements
and, to the Knowledge of Borrower, no circumstances or grounds exist that would
give rise to a claim of breach or right of rescission, termination (other than
existing rights under any License Agreement for a party to terminate for
convenience), revision, or amendment of any of the agreements specified on
Schedule 8.01(w)(i), including the signing of this Agreement.  None of the
Excluded Agreements fall within the scope of an In License or License Agreement
as each is defined; provided that the intellectual property or technology which
is the subject of an In License may be assigned in connection with an Excluded
Agreement.  None of the Excluded Agreements was used in the calculation of the
revenue forecasts provided by Borrower to Lender on June 13, 2008

 

(ii)           With respect to the License Agreements and In Licenses, there has
been no correspondence or other written or, to the Knowledge of Borrower, oral
communication sent by or on behalf of Borrower to, or received by or on behalf
of Borrower from, any Contract Party, the subject matter of which could,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.

 

(iii)          Except as set forth on Schedule 8.01(w)(iii), each such License
Agreement or In License is in full force and effect and has not been impaired,
waived, altered or modified in any respect, whether by consent or otherwise, and
no scheduled item could, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.

 

(iv)          The Contract Party under each such License Agreement or In License
has not been released, in whole or in part, from any of its obligations under
such License Agreement.

 

(v)           Borrower has not received (A) any notice or other written or, to
the Knowledge of Borrower, oral communication of any Contract Party’s intention
to terminate such License Agreement or In License in whole or in part, or
consideration of any such termination, or (B) except as set forth on Schedule
8.01(w)(v), any notice or other written or, to the Knowledge of Borrower, oral
communication requesting any amendment, alteration or modification of such
License Agreement or In License or any sublicense or assignment thereunder, and
no scheduled item could, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.

 

(vi)          To the Knowledge of Borrower, nothing has occurred and no
condition exists that would adversely impact the right of Borrower to receive
any payments payable under any License Agreement except where such occurrence or
condition could not reasonably be expected to result in a Material Adverse
Effect.  Other than as set forth on

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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Schedule 8.01(w)(vi), Borrower, or, to the Knowledge of Borrower, any Contract
Party has not taken any action or omitted to take any action, that would
adversely impact the right of Lender to take a security interest in the LFRP
Technology, and no scheduled item could, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.

 

(vii)         [*****]

 

(viii)        Except as set forth on Schedule 8.01(w)(viii), no License
Agreement has been satisfied in full, discharged, canceled, terminated,
subordinated or rescinded, in whole or in part.  Each License Agreement is the
entire agreement between the parties thereto relating to the subject matter
thereof, and no scheduled item could, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.

 

(ix)           The execution, delivery and performance of each License Agreement
and In License was and is within the corporate powers or other organizational
power of Borrower and, to the Knowledge of Borrower, the Contract Party
thereto.  Each License Agreement and In License was duly authorized by all
necessary action on the part of, and validly executed and delivered by, Borrower
and, to the Knowledge of Borrower, the Contract Party thereto.  There is no
breach or default, or event which upon notice or the passage of time, or both,
could give rise to any breach or default, in the performance of such License
Agreement or In License by Borrower or, to the Knowledge of Borrower, the
Contract Party thereto.

 

(x)            The representations and warranties made in each existing Material
License and In License by Borrower were as of the date made true and correct in
all material respects except where the failure to be true and correct could not
reasonably be expected to have a Material Adverse Effect.

 

(xi)           The royalty rates and the duration of such royalty rates in each
country under each existing License Agreement are as set forth on Schedule
8.01(w)(xi).  There are no royalties due to Contract Parties under In Licenses
with respect to Royalties under the License Agreements except to [*****].

 

(xii)          [*****]

 

(xiii)         No software is necessary for use in the LFRP other than
commercially available software.

 

(xiv)        Exhibit D sets forth all the biological material, know-how, data,
technical and other information other than the LFRP Libraries described in
Exhibit E, that is provided to Contract Parties under Library License
Agreements, other than in oral form.

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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(xv)         The LFRP Libraries described in Exhibit E are all the libraries
used in the LFRP within the past twelve (12) months with the exception of
affinity maturation libraries.

 

(x)                              Borrower and Borrower’s Subsidiaries have the
insurance policies with the coverages and limits set forth on Schedule 8.01(x),
carried with the insurance companies also set forth therein.

 

SECTION 8.02.               SURVIVAL OF REPRESENTATIONS AND WARRANTIES.  ALL
REPRESENTATIONS AND WARRANTIES OF BORROWER CONTAINED IN THIS AGREEMENT SHALL
SURVIVE THE EXECUTION, DELIVERY AND ACCEPTANCE THEREOF BY THE PARTIES AND THE
CLOSING OF THE TRANSACTIONS DESCRIBED IN THIS AGREEMENT.

 

ARTICLE IX
AFFIRMATIVE COVENANTS

 

SECTION 9.01.               MAINTENANCE OF EXISTENCE.  BORROWER AND/OR ANY OF
ITS SUBSIDIARIES PARTY TO THE LOAN DOCUMENTS SHALL AT ALL TIMES (A) PRESERVE,
RENEW AND MAINTAIN IN FULL FORCE AND EFFECT ITS LEGAL EXISTENCE AND GOOD
STANDING AS A CORPORATION UNDER THE LAWS OF THE JURISDICTION OF ITS
ORGANIZATION; (B) NOT CHANGE ITS NAME OR ITS CHIEF EXECUTIVE OFFICE AS SET FORTH
HEREIN WITHOUT HAVING GIVEN THE LENDER SIMULTANEOUS NOTICE THEREOF; (C) TAKE ALL
REASONABLE ACTION TO MAINTAIN ALL RIGHTS, PRIVILEGES, PERMITS, LICENSES AND
FRANCHISES NECESSARY OR DESIRABLE IN THE NORMAL CONDUCT OF ITS BUSINESS, EXCEPT
TO THE EXTENT THAT FAILURE TO DO SO COULD NOT REASONABLY BE EXPECTED TO HAVE A
MATERIAL ADVERSE EFFECT; AND (D) PRESERVE OR RENEW ALL LFRP INTELLECTUAL
PROPERTY, THE NON-PRESERVATION OF WHICH COULD REASONABLY BE EXPECTED TO HAVE A
MATERIAL ADVERSE EFFECT.

 

SECTION 9.02.               USE OF PROCEEDS.  BORROWER SHALL USE THE NET
PROCEEDS OF THE LOAN RECEIVED BY IT (I) FOR GENERAL CORPORATE PURPOSES, (II) TO
REPAY EXISTING INDEBTEDNESS AND/OR (III) TO PAY ALL FEES AND EXPENSES PAYABLE BY
BORROWER PURSUANT TO THE TRANSACTION DOCUMENTS.

 

SECTION 9.03.               FINANCIAL STATEMENTS AND INFORMATION.

 

(A)           IN THE EVENT THAT ANY SUCH INFORMATION NEED NOT TO BE FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO SECTION 13 OR 15(D) OF THE
EXCHANGE ACT, BORROWER SHALL FURNISH TO THE LENDER, ON OR BEFORE THE FORTY-FIFTH
DAY AFTER THE CLOSE OF EACH QUARTER OF EACH FISCAL YEAR, THE UNAUDITED
CONSOLIDATED BALANCE SHEET OF BORROWER AS AT THE CLOSE OF SUCH QUARTER AND
UNAUDITED CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE LOSS AND CASH
FLOWS OF BORROWER FOR SUCH QUARTER, DULY CERTIFIED BY THE CHIEF FINANCIAL
OFFICER OF BORROWER AS HAVING BEEN PREPARED IN ACCORDANCE WITH GAAP. 
CONCURRENTLY WITH THE DELIVERY OR FILING OF THE DOCUMENTS DESCRIBED IN THE
PRECEDING SENTENCE, BORROWER SHALL FURNISH TO THE LENDER A CERTIFICATE OF THE
CHIEF FINANCIAL OFFICER, CHIEF ACCOUNTING OFFICER OR TREASURER OF BORROWER,
WHICH CERTIFICATE SHALL INCLUDE A STATEMENT THAT SUCH OFFICER HAS NO KNOWLEDGE,
EXCEPT AS SPECIFICALLY STATED, OF ANY CONDITION, EVENT OR ACT WHICH CONSTITUTES
A DEFAULT OR EVENT OF DEFAULT.

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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(B)           IN THE EVENT THAT ANY SUCH INFORMATION NEED NOT BE FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO SECTION 13 OR 15(D) OF THE
EXCHANGE ACT, BORROWER SHALL FURNISH TO THE LENDER, ON OR BEFORE THE SIXTIETH
DAY AFTER THE CLOSE OF EACH FISCAL YEAR, BORROWER’S AUDITED FINANCIAL STATEMENTS
AS AT THE CLOSE OF SUCH FISCAL YEAR, INCLUDING THE CONSOLIDATED BALANCE SHEET AS
AT THE END OF SUCH FISCAL YEAR AND CONSOLIDATED STATEMENT OF OPERATIONS AND CASH
FLOWS OF BORROWER FOR SUCH FISCAL YEAR, IN EACH CASE ACCOMPANIED BY THE REPORT
THEREON OF INDEPENDENT REGISTERED PUBLIC ACCOUNTANT OF NATIONALLY RECOGNIZED
STANDING.  CONCURRENTLY WITH THE DELIVERY OR FILING OF THE DOCUMENTS DESCRIBED
IN THE PRECEDING SENTENCE, BORROWER SHALL FURNISH TO THE LENDER A CERTIFICATE OF
THE CHIEF FINANCIAL OFFICER, CHIEF ACCOUNTING OFFICER OR TREASURER OF BORROWER,
WHICH CERTIFICATE SHALL INCLUDE A STATEMENT THAT SUCH OFFICER HAS NO KNOWLEDGE,
EXCEPT AS SPECIFICALLY STATED, OF ANY CONDITION, EVENT OR ACT WHICH CONSTITUTES
A DEFAULT OR EVENT OF DEFAULT.

 

(C)           BORROWER SHALL, PROMPTLY UPON RECEIPT THEREOF, FORWARD OR CAUSE TO
BE FORWARDED TO THE LENDER COPIES OF ALL NOTICES, REPORTS, UPDATES AND OTHER
INFORMATION REGARDING THE LICENSE AGREEMENTS AND INCLUDED RECEIPTS RECEIVED FROM
THE CONTRACT PARTIES WHICH COULD REASONABLY BE EXPECTED TO HAVE A MATERIAL
ADVERSE EFFECT.

 

(D)           BORROWER SHALL FURNISH OR CAUSE TO BE FURNISHED TO THE LENDER FROM
TIME TO TIME SUCH OTHER INFORMATION REGARDING THE FINANCIAL POSITION, ASSETS OR
BUSINESS OF BORROWER OR ANY OTHER SUBSIDIARY OR ITS COMPLIANCE WITH ANY
TRANSACTION DOCUMENT TO WHICH IT IS A PARTY OR THE LFRP AS THE LENDER MAY FROM
TIME TO TIME REASONABLY REQUEST.

 

(E)           BORROWER SHALL, PROMPTLY AFTER THE END OF EACH FISCAL QUARTER OF
BORROWER (BUT IN NO EVENT LATER THAN [****] DAYS FOLLOWING THE END OF SUCH
QUARTER), PRODUCE AND DELIVER TO THE LENDER A QUARTERLY REPORT AND BUSINESS
REPORT FOR SUCH QUARTER, TOGETHER WITH A CERTIFICATE OF A SENIOR OFFICER OF
BORROWER, CERTIFYING THAT TO THE KNOWLEDGE OF BORROWER THAT SUCH QUARTERLY
REPORT AND BUSINESS REPORT ARE TRUE, CORRECT AND ACCURATE IN ALL MATERIAL
RESPECTS.  FOLLOWING RECEIPT OF ANY BUSINESS REPORT, THE LENDERS SHALL HAVE THE
RIGHT TO REQUIRE A MEETING IN PERSON OR BY PHONE WITH MANAGEMENT OF BORROWER TO
DISCUSS MATTERS RELATED TO THE LFRP.  WITH EACH QUARTERLY REPORT, BORROWER SHALL
PROVIDE A COPY TO THE LENDERS OF EACH NEW EXECUTED LICENSE AGREEMENT, IN LICENSE
AND A COPY OF ANY AMENDMENT OR OTHER ACTION (AND NOTIFICATION OF ANY ACTION NOT
IN WRITING) AS DESCRIBED IN SECTION 9.16.

 

SECTION 9.04.               BOOKS AND RECORDS.  BORROWER SHALL KEEP PROPER
BOOKS, RECORDS AND ACCOUNTS IN WHICH ENTRIES IN CONFORMITY WITH SOUND BUSINESS
PRACTICES AND ALL REQUIREMENTS OF LAW APPLICABLE TO IT SHALL BE MADE OF ALL
DEALINGS AND TRANSACTIONS IN RELATION TO ITS BUSINESS, ASSETS AND ACTIVITIES AND
AS SHALL PERMIT THE PREPARATION OF THE CONSOLIDATED FINANCIAL STATEMENTS OF
BORROWER IN ACCORDANCE WITH GAAP.

 

SECTION 9.05.               INSPECTION RIGHTS; ACCESS.  BORROWER SHALL, ON
[*****], OR, AT ANY TIME DURING WHICH A DEFAULT OR EVENT OF DEFAULT SHALL HAVE
OCCURRED AND BE CONTINUING, PERMIT REPRESENTATIVES OF THE LENDER TO EXAMINE ITS
OR ITS SUBSIDIARIES’ ASSETS, BOOKS AND RECORDS

 

CONFIDENTIAL MATERIALS OMITTED AND FILED SEPARATELY WITH THE SECUTITIES AND
EXCHANGE COMMISSION.  ASTERISKS DENOTE SUCH OMISSION.

 

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UPON REASONABLE NOTICE DURING NORMAL BUSINESS HOURS.  BORROWER SHALL ALLOW THE
LENDER REASONABLE ACCESS TO ITS MANAGERS AND/OR OFFICERS.  TO THE EXTENT ANY
LICENSE AGREEMENT CONTAINS PROVISIONS REQUIRING CONFIDENTIAL TREATMENT OF ANY
INFORMATION, INCLUDING FINANCIAL INFORMATION, THAT WOULD PROHIBIT BORROWER FROM
PROVIDING SUCH INFORMATION TO THE LENDER, IN CONNECTION WITH ANY AUDIT PERMITTED
HEREUNDER, BORROWER SHALL HAVE ITS INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
PROVIDE A SUMMARY OF THE RELEVANT INFORMATION AND CERTIFY THAT SUCH INFORMATION
IS TRUE AND CORRECT IN ALL RESPECTS.

 

SECTION 9.06.               MAINTENANCE OF INSURANCE AND PROPERTIES.  BORROWER
AND ITS SUBSIDIARIES SHALL MAINTAIN AND PRESERVE ALL OF ITS PROPERTIES THAT ARE
USED AND USEFUL IN THE CONDUCT OF THE LFRP IN GOOD WORKING ORDER AND CONDITION,
ORDINARY WEAR AND TEAR EXCEPTED.  BORROWER SHALL MAINTAIN INSURANCE POLICIES
WITH THE SAME OR BETTER COVERAGES AND LIMITS AS THOSE SET FORTH ON SCHEDULE
8.01(X) WITH THE INSURANCE COMPANIES SET FORTH THEREIN (THE “INSURANCE
PROVIDERS”) OR WITH INSURANCE COMPANIES RATED AT LEAST AS HIGH AS THE INSURANCE
PROVIDERS AS OF THE DATE HEREOF (ACCORDING TO A.M. BEST COMPANY, INC.). 
BORROWER SHALL FURNISH TO THE LENDER FROM TIME TO TIME UPON WRITTEN REQUEST FULL
INFORMATION AS TO THE INSURANCE CARRIED.

 

SECTION 9.07.               GOVERNMENTAL AUTHORIZATIONS.  BORROWER SHALL OBTAIN,
MAKE AND KEEP IN FULL FORCE AND EFFECT ALL AUTHORIZATIONS FROM AND REGISTRATIONS
WITH GOVERNMENTAL AUTHORITIES THAT MAY BE REQUIRED FOR THE VALIDITY OR
ENFORCEABILITY AGAINST BORROWER OF THIS AGREEMENT AND THE OTHER TRANSACTION
DOCUMENTS TO WHICH IT IS A PARTY.

 

SECTION 9.08.               COMPLIANCE WITH LAWS AND CONTRACTS.

 

(A)           BORROWER AND ANY ITS SUBSIDIARIES SHALL COMPLY WITH ALL APPLICABLE
LAWS AND PERFORM ITS OBLIGATIONS UNDER ALL CONTRACTS RELATIVE TO THE CONDUCT OF
ITS BUSINESS, INCLUDING THE TRANSACTION DOCUMENTS TO WHICH IT IS PARTY IN ALL
MATERIAL RESPECTS.

 

(B)           BORROWER SHALL AT ALL TIMES COMPLY WITH THE MARGIN REQUIREMENTS
SET FORTH IN SECTION 7 OF THE EXCHANGE ACT AND ANY REGULATIONS ISSUED PURSUANT
THERETO, INCLUDING, WITHOUT LIMITATION, REGULATIONS T, U AND X OF THE BOARD OF
GOVERNORS OF THE FEDERAL RESERVE SYSTEM, 12 C.F.R., CHAPTER II.

 

SECTION 9.09.               PLAN ASSETS.  BORROWER SHALL NOT TAKE ANY ACTION
THAT CAUSES ITS ASSETS TO BE DEEMED TO BE PLAN ASSETS AT ANY TIME.

 

SECTION 9.10.               NOTICES.

 

(A)           BORROWER SHALL PROMPTLY GIVE WRITTEN NOTICE TO THE LENDER OF EACH
DEFAULT OR EVENT OF DEFAULT AND EACH OTHER EVENT THAT HAS OR COULD REASONABLY BE
EXPECTED TO HAVE A MATERIAL ADVERSE EFFECT; PROVIDED THAT IN ANY SITUATION WHERE
BORROWER KNOWS A PRESS RELEASE OR OTHER PUBLIC DISCLOSURE IS TO BE MADE,
BORROWER SHALL USE ALL COMMERCIALLY REASONABLE EFFORTS TO PROVIDE SUCH
INFORMATION TO THE LENDER AS EARLY AS POSSIBLE BUT IN NO EVENT LATER THAN
SIMULTANEOUSLY WITH SUCH RELEASE OR OTHER PUBLIC DISCLOSURE.

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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(B)           BORROWER SHALL PROMPTLY GIVE WRITTEN NOTICE TO THE LENDER UPON
RECEIVING NOTICE, OR OTHERWISE BECOMING AWARE, OF ANY DEFAULT OR EVENT OF
DEFAULT UNDER THE LICENSE AGREEMENTS.

 

(C)           BORROWER SHALL, PROMPTLY AFTER BECOMING AWARE THEREOF, GIVE
WRITTEN NOTICE TO THE LENDER OF ANY LITIGATION OR PROCEEDINGS TO WHICH BORROWER
OR ANY OF ITS SUBSIDIARIES IS A PARTY OR WHICH COULD REASONABLY BE EXPECTED TO
HAVE A MATERIAL ADVERSE EFFECT.

 

(D)           BORROWER SHALL, PROMPTLY AFTER BECOMING AWARE THEREOF, GIVE
WRITTEN NOTICE TO THE LENDER OF ANY LITIGATION OR PROCEEDINGS CHALLENGING THE
VALIDITY OF THE LICENSE AGREEMENTS, THE LFRP INTELLECTUAL PROPERTY OR ANY OF THE
TRANSACTIONS CONTEMPLATED THEREIN.

 

(E)           BORROWER SHALL, PROMPTLY AFTER BECOMING AWARE THEREOF, GIVE
WRITTEN NOTICE TO THE LENDER OF ANY REPRESENTATION OR WARRANTY MADE OR DEEMED
MADE BY BORROWER IN ANY OF THE TRANSACTION DOCUMENTS OR IN ANY CERTIFICATE
DELIVERED TO THE LENDER PURSUANT HERETO SHALL PROVE TO BE UNTRUE, INACCURATE OR
INCOMPLETE IN ANY MATERIAL RESPECT ON THE DATE AS OF WHICH MADE OR DEEMED MADE.

 

SECTION 9.11.               PAYMENT OF TAXES.  BORROWER SHALL PAY ALL MATERIAL
TAXES OF ANY KIND IMPOSED ON OR IN RESPECT OF ITS INCOME OR ASSETS BEFORE ANY
PENALTY OR INTEREST ACCRUES ON THE AMOUNT PAYABLE AND BEFORE ANY LIEN ON ANY OF
ITS ASSETS EXISTS AS A RESULT OF NONPAYMENT EXCEPT AS PROVIDED IN SECTION 10.03
HEREOF AND EXCEPT FOR TAXES CONTESTED IN GOOD FAITH BY APPROPRIATE PROCEEDINGS
AND FOR WHICH ADEQUATE RESERVES ARE MAINTAINED IN ACCORDANCE WITH GAAP.

 

SECTION 9.12.               WAIVER OF STAY, EXTENSION OR USURY LAWS.  BORROWER
WILL NOT AT ANY TIME, TO THE EXTENT THAT IT MAY LAWFULLY NOT DO SO, INSIST UPON,
OR PLEAD, OR IN ANY MANNER WHATSOEVER CLAIM OR TAKE THE BENEFIT OR ADVANTAGE OF,
ANY STAY OR EXTENSION LAW OR ANY USURY LAW OR OTHER LAW THAT WOULD PROHIBIT OR
FORGIVE BORROWER FROM PAYING ALL OR ANY PORTION OF THE PRINCIPAL OF OR PREMIUM,
IF ANY, OR INTEREST ON THE LOAN AS CONTEMPLATED HEREIN, WHEREVER ENACTED, NOW OR
AT ANY TIME HEREAFTER IN FORCE, OR THAT MAY AFFECT THE COVENANTS OR THE
PERFORMANCE OF THIS AGREEMENT; AND, TO THE EXTENT THAT IT MAY LAWFULLY DO SO,
BORROWER HEREBY EXPRESSLY WAIVES ALL BENEFIT OR ADVANTAGE OF ANY SUCH LAW AND
EXPRESSLY AGREES THAT IT WILL NOT HINDER, DELAY OR IMPEDE THE EXECUTION OF ANY
POWER HEREIN GRANTED TO THE LENDER, BUT WILL SUFFER AND PERMIT THE EXECUTION OF
EVERY SUCH POWER AS THOUGH NO SUCH LAW HAD BEEN ENACTED.

 

SECTION 9.13.               ADDITIONAL COVENANTS OF BORROWER.

 

(A)           [*****]

 

(B)           [*****]

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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SECTION 9.14.               [*****].

 

SECTION 9.15.               FURTHER ASSURANCES.  BORROWER SHALL PROMPTLY, AT ITS
SOLE COST AND EXPENSE, EXECUTE AND DELIVER TO THE LENDER SUCH FURTHER
INSTRUMENTS AND DOCUMENTS, AND TAKE SUCH FURTHER ACTION, AS THE LENDER MAY, AT
ANY TIME AND FROM TIME TO TIME, REASONABLY REQUEST IN ORDER TO CARRY OUT THE
INTENT AND PURPOSE OF THIS AGREEMENT AND THE OTHER TRANSACTION DOCUMENTS TO
WHICH IT IS A PARTY AND TO ESTABLISH AND PROTECT THE RIGHTS, INTERESTS AND
REMEDIES CREATED, OR INTENDED TO BE CREATED, IN FAVOR OF THE LENDER HEREBY AND
THEREBY.    [*****]  IN THE EVENT THAT ANY OF THE COLLATERAL IS, DIRECTLY OR
INDIRECTLY, SOLD, LEASED, LICENSED, TRANSFERRED OR OTHERWISE DISPOSED OF TO A
SUBSIDIARY OF BORROWER (OTHER THAN IN CONNECTION WITH A PERMITTED
COLLATERALIZATION), BORROWER SHALL CAUSE SUCH SUBSIDIARY TO EXECUTE A JOINDER TO
THE SECURITY AGREEMENT CONFIRMING THAT THE COLLATERAL CONTINUES TO BE SUBJECT TO
THE LIEN GRANTED TO THE LENDER THEREUNDER AND SUCH OTHER DOCUMENTATION THAT THE
AGENT SHALL REASONABLY REQUEST.  WITHIN [*****] OF THE CLOSING DATE, BORROWER
SHALL CAUSE THE LOCKBOX AGREEMENT TO HAVE BEEN DULY EXECUTED AND DELIVERED BY
ALL THE PARTIES THERETO AND SHALL BE IN THE FORM OF EXHIBIT F HERETO (IT BEING
UNDERSTOOD THAT ANY OPINIONS SET FORTH IN EXHIBIT M RELATING TO SUCH LOCKBOX
AGREEMENT SHALL BE DELIVERED TO LENDER CONCURRENTLY WITH THE EXECUTION OF THE
UNDERLYING LOCKBOX AGREEMENT AND NOTWITHSTANDING ANY OTHER PROVISION HEREOF OR
IN ANY OTHER LOAN DOCUMENT, ALL ACTIONS AND REPRESENTATIONS RELATING TO THE
LOCKBOX AGREEMENT SHALL BECOME EFFECTIVE UPON EXECUTION OF THE LOCKBOX
AGREEMENT).

 

ARTICLE X
NEGATIVE COVENANTS

 

SECTION 10.01.             ACTIVITIES OF BORROWER.

 

(A)           NEITHER BORROWER NOR ANY OF ITS SUBSIDIARIES SHALL AMEND, MODIFY
OR WAIVE OR TERMINATE ANY PROVISION OF, OR PERMIT OR AGREE TO THE AMENDMENT,
MODIFICATION, WAIVER OR TERMINATION OF ANY PROVISION OF, ANY OF THE LOAN
DOCUMENTS, LICENSE AGREEMENTS OR ANY MATERIAL CONTRACT RELATED TO THE LFRP THAT
COULD REASONABLY BE EXPECTED TO HAVE A MATERIAL ADVERSE EFFECT WITHOUT THE PRIOR
WRITTEN CONSENT OF THE AGENT.

 

(B)           NEITHER BORROWER NOR ANY OF ITS SUBSIDIARIES SHALL USE ANY CURRENT
OR FUTURE PROTEIN, PEPTIDE OR ANTIBODY SELECTION TECHNOLOGY TO ESTABLISH A
BUSINESS OR BUSINESS UNIT COMPETING WITH THE LFRP OR ENABLE A THIRD PARTY TO USE
FOR FUNDED RESEARCH OR LICENSE OUT ANY SUCH TECHNOLOGY IN A WAY THAT WOULD
COMPETE WITH THE LFRP.

 

SECTION 10.02.             MERGER; SALE OF ASSETS.

 

(A)           BORROWER SHALL NOT MERGE OR CONSOLIDATE WITH OR INTO (WHETHER OR
NOT BORROWER IS THE SURVIVING PERSON) ANY OTHER PERSON AND BORROWER WILL NOT,
AND WILL NOT CAUSE OR PERMIT ANY SUBSIDIARY TO, SELL, CONVEY, ASSIGN, TRANSFER,
LEASE OR OTHERWISE

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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DISPOSE OF ALL OR SUBSTANTIALLY ALL OF BORROWER’S AND ITS SUBSIDIARIES ASSETS
(DETERMINED ON A CONSOLIDATED BASIS FOR BORROWER AND ITS SUBSIDIARIES) TO ANY
PERSON IN A SINGLE TRANSACTION OR SERIES OF RELATED TRANSACTIONS, UNLESS
(1) EITHER (A) BORROWER WILL BE THE SURVIVING PERSON OR (B) THE SURVIVING PERSON
(IF OTHER THAN BORROWER) WILL BE AN ENTITY ORGANIZED AND VALIDLY EXISTING UNDER
THE LAWS OF DELAWARE, AND WILL, IN ANY SUCH CASE, EXPRESSLY ASSUME THE DUE AND
PUNCTUAL PAYMENT OF THE PRINCIPAL OF, PREMIUM, IF ANY, AND INTEREST ON THE LOAN
AND THE PERFORMANCE AND OBSERVANCE OF EVERY COVENANT OF THE LOAN DOCUMENTS TO BE
PERFORMED OR OBSERVED ON THE PART OF BORROWER AND SHALL USE ITS COMMERCIALLY
REASONABLE EFFORTS TO ACTIVELY MARKET AND PROMOTE THE LFRP AND TO SEEK OUT AND
EXPLOIT OPPORTUNITIES FOR ENTERING INTO FUTURE LICENSES; AND (2) IMMEDIATELY
THEREAFTER, ON A PRO FORMA BASIS AFTER GIVING EFFECT TO SUCH TRANSACTION (AND
TREATING ANY INDEBTEDNESS NOT PREVIOUSLY AN OBLIGATION OF BORROWER OR ANY
SUBSIDIARY OF BORROWER IN CONNECTION WITH OR AS A RESULT OF SUCH TRANSACTION AS
HAVING BEEN INCURRED AT THE TIME OF SUCH TRANSACTION), NO DEFAULT OR EVENT OF
DEFAULT WILL HAVE OCCURRED AND BE CONTINUING.

 

(B)           NEITHER BORROWER NOR ANY OF ITS SUBSIDIARIES SHALL DIRECTLY OR
INDIRECTLY SELL, LEASE, LICENSE, TRANSFER OR OTHERWISE DISPOSE OF ALL OR ANY
PART OF ITS ASSETS CONSISTING OF OR USED IN THE LFRP TECHNOLOGY OR THE LFRP,
EXCEPT (I) LICENSES OF INTELLECTUAL PROPERTY RIGHTS OF BORROWER OR ANY OF ITS
SUBSIDIARIES IN CONNECTION WITH SERVICES PROVIDED BY BORROWER OR SUCH SUBSIDIARY
FOR FAIR VALUE IN AN ARM’S-LENGTH TRANSACTION IN THE ORDINARY COURSE OF ITS
BUSINESS; (II) SALES OF EQUIPMENT NOT NEEDED FOR BORROWER’S BUSINESS TO ONE OR
MORE THIRD PARTIES FOR FAIR VALUE IN AN ARM’S-LENGTH TRANSACTION; PROVIDED ANY
ASSETS RECEIVED IN RETURN FROM SUCH TRANSACTION ARE SUBJECT TO THE LIEN CREATED
BY THE SECURITY AGREEMENT; (III) SALES OF EQUIPMENT TO ONE OR MORE THIRD PARTIES
FOR FAIR VALUE IN AN ARM’S-LENGTH TRANSACTION, THE PROCEEDS OF WHICH ARE USED TO
PURCHASE REPLACEMENT OR OTHER ASSETS USEFUL IN BORROWER’S LFRP BUSINESS WITHIN
[*****] OF SUCH SALE; (IV) OTHER SALES, LEASES, LICENSES, TRANSFERS OR OTHER
DISPOSITIONS IN AN AGGREGATE AMOUNT NOT TO EXCEED [*****] DURING THE TERM OF
THIS AGREEMENT AND (V) PERMITTED COLLATERALIZATIONS; PROVIDED THE PROCEEDS
RESULTING THEREFROM ARE APPLIED IN ACCORDANCE WITH SECTION 3.02(C) AND THAT ANY
ASSETS RECEIVED IN RETURN FROM SUCH TRANSACTION ARE SUBJECT TO THE LIEN CREATED
BY THE SECURITY AGREEMENT.

 

SECTION 10.03.             LIENS.  NEITHER BORROWER NOR ANY OF ITS SUBSIDIARIES
SHALL CREATE OR SUFFER TO EXIST ANY LIEN ON OR WITH RESPECT TO THE COLLATERAL
OTHER THAN PURSUANT TO THIS AGREEMENT OR THE SECURITY AGREEMENT OR TO THE EXTENT
PERMITTED UNDER THE SECURITY AGREEMENT.  BORROWER SHALL NOT CREATE OR SUFFER TO
EXIST ANY LIEN ON OR WITH RESPECT TO ANY OF ITS ASSETS THAT ARE NOT COLLATERAL,
WHETHER NOW OWNED OR HEREAFTER ACQUIRED, OTHER THAN THE FOLLOWING (COLLECTIVELY,
“PERMITTED LIENS”):

 

(a)                             Liens existing on the date hereof set forth in
Exhibit Q to the extent and in the manner such Liens are in effect on the date
hereof;

 

(b)                             any Lien granted to collaboration or development
partners of Borrower or its Affiliates in connection with funded research,
development and commercialization activities (other than on or with respect to
the LFRP Intellectual Property or the

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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Included Receipts); provided that any such Lien is limited to Borrower’s and/or
any applicable Subsidiaries’ interest in products developed in such
collaboration;

 

(c)                             any Lien on any asset securing Indebtedness
incurred or assumed for the purpose of financing all or any part of the cost of
acquiring such asset; provided that such Lien attaches to such asset
concurrently with or within [*****] after the acquisition thereof;

 

(d)                             any Lien existing on any asset prior to the
acquisition thereof by Borrower or any Subsidiary of Borrower and not created in
contemplation of such acquisition;

 

(e)                             any Lien created after the Closing Date in
connection with capitalized lease obligations, but only to the extent that such
Lien encumbers property financed by such capital lease obligation and the
principal component of such capitalized lease obligation is not increased;

 

(f)                              Liens arising in the ordinary course of its
business (other than on or with respect to the LFRP Intellectual Property or the
Included Receipts) which (i) do not secure Indebtedness and (ii) do not in the
aggregate materially impair the operation of the business of Borrower or impair
the value of the Included Receipts;

 

(g)                             easements, rights-of-way, zoning restrictions
and other similar charges or encumbrances in respect of real property not
interfering with the ordinary conduct of the business of Borrower;

 

(h)                             any Lien arising out of the refinancing,
extension, renewal or refunding of any Indebtedness secured by any Lien
permitted by any of the foregoing clauses of this Section 10.03; provided that
such Indebtedness is not increased and is not secured by any additional assets;
and

 

(i)                              Liens securing taxes, assessments, fees or
other governmental charges or levies, Liens securing the claims of materialmen,
mechanics, carriers’ landlords, warehousemen and similar Persons, Liens in the
ordinary course of business in connection with workmen’s compensation,
unemployment insurance and other similar Laws, Liens to secure surety, appeal
and performance bonds and other similar obligations not incurred in connection
with the borrowing of money, and attachment, judgment and other similar Liens
arising in connection with court proceedings so long as the enforcement of such
Liens is effectively stayed and the claims secured thereby are being contested
in good faith by appropriate proceedings.

 

SECTION 10.04.             INVESTMENT COMPANY ACT.  NEITHER BORROWER NOR ANY OF
ITS SUBSIDIARIES SHALL BE OR BECOME AN INVESTMENT COMPANY SUBJECT TO
REGISTRATION UNDER THE INVESTMENT COMPANY ACT OF 1940.

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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SECTION 10.05.             LIMITATION ON ADDITIONAL INDEBTEDNESS.  NEITHER
BORROWER NOR ANY OF ITS SUBSIDIARIES SHALL, DIRECTLY OR INDIRECTLY, INCUR OR
SUFFER TO EXIST ANY INDEBTEDNESS; PROVIDED THAT BORROWER AND IT SUBSIDIARIES MAY
INCUR:

 

(a)                             Indebtedness under this Agreement;

 

(b)                             Indebtedness secured by Liens permitted under
Section 10.03 other than Section 10.03(b) (but, in the case of Liens permitted
under Section 10.03(a), only to the extent of the Indebtedness related thereto);

 

(c)                             any other Indebtedness of Borrower, which by its
terms (or by the terms of any agreement governing such Indebtedness) is fully
subordinated in right of payment to the Loans;

 

(d)                             capital leases and leasehold improvements
consistent with past practices; or

 

(e)                             other unsecured Indebtedness of Borrower not to
exceed [*****].

 

SECTION 10.06.             LIMITATION ON TRANSACTIONS WITH CONTROLLED
AFFILIATES.  NEITHER BORROWER NOR ANY OF ITS SUBSIDIARIES SHALL, DIRECTLY OR
INDIRECTLY, ENTER INTO ANY TRANSACTION OR SERIES OF RELATED TRANSACTIONS OR
PARTICIPATE IN ANY ARRANGEMENT (INCLUDING ANY PURCHASE, SALE, LEASE OR EXCHANGE
OF ASSETS OR THE RENDERING OF ANY SERVICE) WITH, OR FOR THE BENEFIT OF, ANY
CONTROLLED AFFILIATE OTHER THAN THE TRANSACTION DOCUMENTS OR IN THE ORDINARY
COURSE OF BUSINESS OF BORROWER UPON FAIR AND REASONABLE TERMS NO LESS FAVORABLE
TO BORROWER THAN IT WOULD OBTAIN IN A COMPARABLE ARM’S-LENGTH TRANSACTION WITH A
NON-CONTROLLED AFFILIATE; PROVIDED THAT BORROWER AND ITS SUBSIDIARIES MAY ENGAGE
IN THE FOLLOWING TRANSACTIONS:

 

(a)                             reasonable and customary director, officer and
employee compensation (including bonuses) and other benefits (including
retirement, health, stock option and other benefit plans) and indemnification
arrangements, in each case approved in good faith by the Board of Directors of
Borrower;

 

(b)                             transactions with customers, clients, suppliers,
joint venture partners or purchasers or sellers of goods and services, in each
case in the ordinary course of business and otherwise not prohibited by the Loan
Documents;

 

(c)                             dividends permitted by Section 10.08;

 

(d)                             transactions among Borrower and its Wholly Owned
Subsidiaries.

 

SECTION 10.07.             ERISA.

 

(A)           NEITHER BORROWER NOR ANY OF ITS SUBSIDIARIES SHALL MAINTAIN OR
CONTRIBUTE TO, OR AGREE TO MAINTAIN OR CONTRIBUTE TO OR OTHERWISE INCUR ANY
LIABILITY WITH RESPECT TO, ANY EMPLOYEE BENEFIT PLAN (AS DEFINED IN
SECTION 3(3) OF ERISA) SUBJECT TO

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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TITLE IV OR SECTION 302 OF ERISA OR SECTION 412 OF THE CODE OR ANY SIMILAR PLAN
UNDER NON-U.S. LAW (A “PLAN”) THAT COULD REASONABLY BE EXPECTED TO HAVE A
MATERIAL ADVERSE EFFECT.

 

(B)           NEITHER BORROWER NOR ANY OF ITS SUBSIDIARIES SHALL ENGAGE IN A
NON-EXEMPT PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA, SECTION 4975 OF
THE CODE, OR SUBSTANTIALLY SIMILAR PROVISIONS UNDER FOREIGN OR U.S. FEDERAL,
STATE OR LOCAL LAWS, RULES OR REGULATIONS OR IN ANY TRANSACTION THAT WOULD CAUSE
ANY OBLIGATION OR ACTION TAKEN OR TO BE TAKEN HEREUNDER (OR THE EXERCISE BY THE
LENDER OF ANY OF ITS RIGHTS UNDER THE NOTE, THIS AGREEMENT OR THE SECURITY
AGREEMENT) TO BE A NON-EXEMPT PROHIBITED TRANSACTION UNDER SUCH PROVISIONS.

 

(C)           NEITHER BORROWER NOR ANY OF ITS SUBSIDIARIES WILL INCUR ANY
MATERIAL LIABILITY WITH RESPECT TO ANY OBLIGATION TO PROVIDE MEDICAL BENEFITS
WITH RESPECT TO ANY PERSON BEYOND THEIR RETIREMENT OR OTHER TERMINATION OF
SERVICE OTHER THAN COVERAGE MANDATED BY LAW.

 

SECTION 10.08.             RESTRICTED PAYMENTS.  BORROWER WILL NOT, AND WILL NOT
PERMIT ANY SUBSIDIARY TO, DIRECTLY OR INDIRECTLY, MAKE ANY RESTRICTED PAYMENT
OTHER THAN PURSUANT TO CLAUSES (A) THROUGH (B) BELOW; PROVIDED THAT BORROWER AND
ITS SUBSIDIARIES MAY NOT MAKE ANY RESTRICTED PAYMENTS WHILE AN EVENT OF DEFAULT
HAS NOT OCCURRED AND IS CONTINUING:

 

(a)                             Restricted Payments not to exceed [*****] in the
aggregate while the Loan is outstanding; and

 

(b)                             the redemption of any Capital Stock of Borrower
or any Subsidiary in exchange for, or out of the proceeds of the substantially
concurrent issuance and sale of, Qualified Capital Stock.

 

ARTICLE XI
EVENTS OF DEFAULT

 

SECTION 11.01.             EVENTS OF DEFAULT.  IF ONE OR MORE OF THE FOLLOWING
EVENTS OF DEFAULT (EACH, AN “EVENT OF DEFAULT”) OCCURS AND IS CONTINUING, THE
LENDER SHALL BE ENTITLED TO THE REMEDIES SET FORTH IN SECTION 11.02:

 

(a)                             Borrower fails to pay any principal of the Loan
when due, whether at the Maturity Date or otherwise.

 

(b)                             Except as permitted by Section 4.01, Borrower
fails to pay any interest on the Loan or make payment of any other amounts
payable under this Agreement within three Business Days after the same becomes
due and payable.

 

(c)                             Any representation or warranty of Borrower or
any of its Subsidiaries in any Loan Document to which it is party or in any
certificate, financial statement

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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or other document delivered by Borrower or such Subsidiary in connection with
this Agreement proves to have not been true and correct at the time it was made
or repeated and the failure of such statement to be true and correct,
individually or in the aggregate, results in a Material Adverse Effect or could
reasonably be expected to have a Material Adverse Effect (except that any
representation or warranty that is qualified as to “materiality” or “Material
Adverse Effect” shall be true and correct in all respects).

 

(d)                             Borrower fails to perform or observe any
covenant or agreement contained in Sections 9.01 (a), (c) or (d) or Section 9.10
of this Agreement.

 

(e)                             Borrower or any of its Subsidiaries party to the
Loan Documents fails to perform or observe any other covenant or agreement
contained in this Agreement, the Note or the Security Agreement (other than
those referred to in the preceding clauses of this Section 11.01) if (i) such
failure is not remedied on or before the thirtieth day after Notice thereof from
the Lender and (ii) the failure to perform or observe any such covenant or
agreement, individually or in the aggregate, results in a Material Adverse
Effect or could reasonably be expected to have a Material Adverse Effect.

 

(f)                              Borrower or any of its Subsidiaries (i) fails
to pay when due (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise) any Indebtedness (other than the Obligations
hereunder) having an aggregate principal amount in excess of [*****] or
(ii) fails to perform or observe any covenant or agreement to be performed or
observed by it contained in any agreement or in any instrument evidencing any of
its Indebtedness having an aggregate principal amount in excess of [*****] and,
as a result of such failure, any other party to that agreement or instrument is
entitled to exercise the right to accelerate the maturity of any Indebtedness
thereunder and such Indebtedness is accelerated; provided, however, that a
failure under items (i) or (ii) shall not constitute an Event of Default under
this clause (f) if (x) the obligation to pay the overdue amounts has not
resulted from acceleration and (z) the failure is remedied on or before the
greater of (I) the thirtieth day after it occurs, or (II) any grace period
applicable to such overdue amounts.

 

(g)                             Borrower and/or any of its Subsidiaries shall
sell, assign, lease, license, transfer or otherwise dispose of the LFRP
Intellectual Property, any Included Receipts, or Borrower and/or any of its
Subsidiaries takes any action which could reasonably be expected to impair
Lender’s security interest in any of the foregoing, except to the extent
permitted under Section 10.02(b).

 

(h)                             Any uninsured judgment, decree or order in
excess of [*****] shall be rendered against Borrower and any of its Subsidiaries
and either (i) enforcement proceedings shall have been commenced upon such
judgment, decree or order or (ii) such judgment, decree or order shall not have
been vacated or discharged within thirty days from entry.

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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(i)                              Borrower or any Significant Subsidiary (i) is
dissolved or commences proceedings for dissolution, (ii) fails or is unable to
pay its debts generally as they become due, (iii) commences a voluntary case in
bankruptcy or any other action or proceeding for any other relief under any law
affecting creditors’ rights that is similar to a bankruptcy law or (iv) consents
by answer or otherwise to the commencement against it of an involuntary case in
bankruptcy or any other such action or proceeding; or a court enters an order
for relief or a decree in an involuntary case in bankruptcy or any other such
action or proceeding in respect of any such Person or any of the assets of any
such Person if such order or decree is not dismissed or withdrawn on or before
the sixtieth day after the entry thereof or if any such dismissal or withdrawal
ceases to remain in effect.

 

(j)                              Any of the Transaction Documents (other than
any License Agreement) shall cease to be in full force and effect or its
validity or enforceability is disaffirmed or challenged in writing by any Person
other than the Lender, or the Security Agreement shall cease to give the Lender
the rights purported to be created thereby (including a first priority perfected
Lien on the assets of Borrower or any of its Subsidiaries party to the Loan
Documents) other than as a direct result of any action by a Lender or failure of
a Lender to perform an obligation.

 

(k)                             Borrower and/or any of its Subsidiaries fails to
perform or observe any covenant or agreement contained in any License Agreement
or Borrower Documents, as applicable, and such failure is not cured or waived
within any applicable grace period except where such failure could not
reasonably be expected to have a Material Adverse Effect.

 

(l)                              In connection with a challenge to the validity
of the Included Receipts or any LFRP Intellectual Property or any transaction
contemplated under the License Agreements, any judgment, decree or order is
issued that (i) halts or suspends the payment by any Contract Party of any
amount payable in respect of the Included Receipts, or (ii) otherwise determines
that the Included Receipts have not been duly authorized or validly issued or
that the Included Receipts are not enforceable in accordance with the terms of
the applicable License Agreement, and such judgment, decree or order shall not
have been vacated or discharged within 10 days from entry.

 

(m)                            Any security interest purported to be created by
the Security Agreement shall cease to be in full force and effect, or shall
cease to give the rights, powers and privileges purported to be created and
granted under such Security Agreement (including a perfected first priority
security interest in and Lien on all of the Collateral thereunder (except as
otherwise expressly provided in such Security Agreement)) in favor of the party
secured on behalf of the Lenders pursuant to the Security Agreement, or shall be
asserted by Borrower and/or any of its Subsidiaries not to be a valid,
perfected, first priority (except as otherwise expressly provided in this
Agreement or such Security Agreement) security interest in the Collateral
covered thereby.

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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SECTION 11.02.             DEFAULT REMEDIES.  IF ANY EVENT OF DEFAULT SHALL
OCCUR, THE LENDER MAY, BY NOTICE TO BORROWER, (A) EXERCISE ALL RIGHTS AND
REMEDIES AVAILABLE TO THE LENDER HEREUNDER AND UNDER THE SECURITY AGREEMENT,
INCLUDING ENFORCEMENT OF THE SECURITY INTERESTS CREATED THEREBY, (B) DECLARE THE
LOAN, ALL INTEREST THEREON AND ALL OTHER AMOUNTS PAYABLE HEREUNDER AND UNDER THE
NOTE BY BORROWER TO BE IMMEDIATELY DUE AND PAYABLE, WHEREUPON ALL SUCH AMOUNTS
SHALL BECOME IMMEDIATELY DUE AND PAYABLE, ALL WITHOUT DILIGENCE, PRESENTMENT,
DEMAND OF PAYMENT, PROTEST OR FURTHER NOTICE OF ANY KIND, WHICH ARE EXPRESSLY
WAIVED BY BORROWER AND (C) DECLARE THE OBLIGATIONS OF THE LENDER HEREUNDER TO BE
TERMINATED, WHEREUPON SUCH OBLIGATIONS SHALL TERMINATE; PROVIDED, HOWEVER, THAT
IF ANY EVENT OF ANY KIND REFERRED TO IN SECTION 11.01(I) OCCURS, THE OBLIGATIONS
OF THE LENDER HEREUNDER SHALL IMMEDIATELY TERMINATE, ALL AMOUNTS PAYABLE
HEREUNDER BY BORROWER SHALL BECOME IMMEDIATELY DUE AND PAYABLE AND THE LENDER
SHALL BE ENTITLED TO EXERCISE RIGHTS AND REMEDIES UNDER THE SECURITY AGREEMENT
WITHOUT DILIGENCE, PRESENTMENT, DEMAND OF PAYMENT, PROTEST OR NOTICE OF ANY
KIND, ALL OF WHICH ARE HEREBY EXPRESSLY WAIVED BY BORROWER.  EACH NOTICE
DELIVERED PURSUANT TO THIS SECTION 11.02 SHALL BE EFFECTIVE WHEN SENT.

 

SECTION 11.03.             RIGHT OF SET-OFF; SHARING OF SET-OFF.

 

(A)           IF ANY AMOUNT PAYABLE HEREUNDER IS NOT PAID AS AND WHEN DUE,
BORROWER IRREVOCABLY AUTHORIZES THE LENDER AND EACH AFFILIATE OF THE LENDER
(I) TO PROCEED, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, WITHOUT PRIOR
NOTICE, BY RIGHT OF SET-OFF, BANKERS’ LIEN, COUNTERCLAIM OR OTHERWISE, AGAINST
ANY ASSETS OF BORROWER IN ANY CURRENCY THAT MAY AT ANY TIME BE IN THE POSSESSION
OF THE LENDER OR SUCH AFFILIATE, TO THE FULL EXTENT OF ALL AMOUNTS PAYABLE TO
THE LENDER HEREUNDER OR (II) TO CHARGE TO BORROWER’S ACCOUNT WITH LENDER THE
FULL EXTENT OF ALL AMOUNTS PAYABLE BY BORROWER TO THE LENDER HEREUNDER;
PROVIDED, HOWEVER, THAT THE LENDER SHALL NOTIFY BORROWER OF THE EXERCISE OF SUCH
RIGHT PROMPTLY FOLLOWING SUCH EXERCISE.

 

(B)           IF ANY LENDER SHALL, BY EXERCISING ANY RIGHT OF SETOFF OR
COUNTERCLAIM OR OTHERWISE, OBTAIN PAYMENT IN RESPECT OF ANY PRINCIPAL OF OR
INTEREST ON ANY OF ITS LOANS OR OTHER OBLIGATIONS OWED TO SUCH LENDER RESULTING
IN SUCH LENDER’S RECEIVING PAYMENT OF A PROPORTION OF THE AGGREGATE AMOUNT OF
ITS LOANS AND ACCRUED INTEREST THEREON OR OTHER OBLIGATIONS OWED TO SUCH LENDER
GREATER THAN ITS PRO RATA SHARE THEREOF AS PROVIDED HEREIN, THEN THE LENDER
RECEIVING SUCH GREATER PROPORTION SHALL (A) NOTIFY THE OTHER LENDERS OF SUCH
FACT, AND (B) PURCHASE (FOR CASH AT FACE VALUE) PARTICIPATIONS IN THE LOANS AND
SUCH OTHER OBLIGATIONS OF THE OTHER LENDERS, OR MAKE SUCH OTHER ADJUSTMENTS AS
SHALL BE EQUITABLE, SO THAT THE BENEFIT OF ALL SUCH PAYMENTS SHALL BE SHARED BY
THE LENDERS RATABLY IN ACCORDANCE WITH THE AGGREGATE AMOUNT OF PRINCIPAL OF AND
ACCRUED INTEREST ON THEIR RESPECTIVE LOANS AND OTHER AMOUNTS OWING THEM;
PROVIDED THAT:

 

(I)      IF ANY SUCH PARTICIPATIONS ARE PURCHASED AND ALL OR ANY PORTION OF THE
PAYMENT GIVING RISE THERETO IS RECOVERED, SUCH PARTICIPATIONS SHALL BE RESCINDED
AND THE PURCHASE PRICE RESTORED TO THE EXTENT OF SUCH RECOVERY, WITHOUT
INTEREST; AND

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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(II)     THE PROVISIONS OF THIS PARAGRAPH SHALL NOT BE CONSTRUED TO APPLY
TO (X) ANY PAYMENT MADE BY BORROWER PURSUANT TO AND IN ACCORDANCE WITH THE
EXPRESS TERMS OF THIS AGREEMENT OR (Y) ANY PAYMENT OBTAINED BY A LENDER AS
CONSIDERATION FOR THE ASSIGNMENT OF OR SALE OF A PARTICIPATION IN ANY OF ITS
LOANS TO ANY ASSIGNEE OR PARTICIPANT.

 

Borrower consents to the foregoing and agrees, to the extent it may effectively
do so under applicable Law, that any Lender acquiring a participation pursuant
to the foregoing arrangements may exercise against Borrower rights of setoff and
counterclaim with respect to such participation as fully as if such Lender were
a direct creditor of Borrower in the amount of such participation.  If under
applicable bankruptcy, insolvency or any similar law any Lender receives a
secured claim in lieu of a setoff or counterclaim to which this Section 11.03
applies, such Lender shall to the extent practicable, exercise its rights in
respect of such secured claim in a manner consistent with the rights to which
the Lender is entitled under this Section 11.03 to share in the benefits of the
recovery of such secured claim.

 

SECTION 11.04.             RIGHTS NOT EXCLUSIVE.  THE RIGHTS PROVIDED FOR HEREIN
ARE CUMULATIVE AND ARE NOT EXCLUSIVE OF ANY OTHER RIGHTS, POWERS, PRIVILEGES OR
REMEDIES PROVIDED BY LAW.

 

ARTICLE XII
INDEMNIFICATION

 

SECTION 12.01.             FUNDING LOSSES.  IF BORROWER FAILS TO BORROW ANY
AMOUNT ON THE CLOSING DATE AFTER NOTICE OF BORROWING HAS BEEN GIVEN TO THE
LENDER IN ACCORDANCE WITH SECTION 2.02, BORROWER SHALL REIMBURSE THE LENDER
WITHIN THREE BUSINESS DAYS AFTER DEMAND FOR ANY RESULTING LOSS OR EXPENSE
INCURRED BY THE LENDER INCLUDING ANY LOSS INCURRED IN OBTAINING, LIQUIDATING OR
REDEPLOYING DEPOSITS FROM THIRD PARTIES; PROVIDED THAT THE LENDER SHALL HAVE
DELIVERED TO BORROWER A CERTIFICATE AS TO THE AMOUNT OF SUCH LOSS OR EXPENSE.

 

SECTION 12.02.             INCREASED COSTS.  EXCEPT AS TO TAXES (IT BEING
UNDERSTOOD THAT BORROWER’S LIABILITY FOR TAXES WILL BE EXCLUSIVELY DETERMINED
UNDER ARTICLE V), BORROWER SHALL REIMBURSE THE LENDER ON DEMAND FOR ALL
INCREASES IN COSTS INCURRED BY THE LENDER AND ALL REDUCTIONS IN AMOUNTS RECEIVED
OR RECEIVABLE BY THE LENDER OR IN THE RATE OF RETURN ON THE LENDER’S CAPITAL, AS
REASONABLY DETERMINED BY THE LENDER, THAT ARE ATTRIBUTABLE TO THE LOAN OR THE
PERFORMANCE BY THE LENDER OF ITS OBLIGATIONS UNDER THIS AGREEMENT AND THAT OCCUR
BY REASON OF THE PROMULGATION AFTER THE DATE HEREOF OF ANY LAW OR TREATY OR ANY
CHANGE AFTER THE DATE HEREOF IN ANY LAW OR TREATY OR IN THE INTERPRETATION
THEREOF OR BY REASON OF COMPLIANCE BY THE LENDER WITH ANY DIRECTION, REQUIREMENT
OR REQUEST (WHETHER OR NOT HAVING THE FORCE OF LAW) OF ANY GOVERNMENTAL
AUTHORITY, INCLUDING ANY SUCH COST OR REDUCTION RESULTING FROM THE IMPOSITION OR
AMENDMENT OF ANY CAPITAL ADEQUACY REQUIREMENT OR ANY RESERVE, SPECIAL DEPOSIT OR
SIMILAR REQUIREMENT AGAINST ASSETS OF, LIABILITIES OF, DEPOSITS WITH OR FOR THE
ACCOUNT OF, OR LOANS BY, THE LENDER; PROVIDED THAT THE LENDER SHALL NOT BE
ENTITLED TO BE REIMBURSED FOR SUCH INCREASED COSTS OR REDUCTIONS IN AMOUNT
RECEIVABLE OR THE RATE OF RETURN INCURRED MORE THAN 180 DAYS PRIOR TO THE DATE
ON WHICH IT GIVES NOTICE TO BORROWER OF SUCH INCREASED COSTS OR REDUCTION IN
AMOUNT RECEIVABLE OR RATE OF RETURN.

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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SECTION 12.03.             OTHER LOSSES.

 

(A)           BORROWER AGREES TO DEFEND (SUBJECT TO INDEMNITEES’ SELECTION OF
COUNSEL), INDEMNIFY, PAY AND HOLD HARMLESS, THE LENDER AND ITS AFFILIATES AND
THEIR RESPECTIVE OFFICERS, PARTNERS, DIRECTORS, TRUSTEES, EMPLOYEES AND AGENTS
(EACH, AN “INDEMNITEE”), FROM AND AGAINST ANY AND ALL INDEMNIFIED LIABILITIES,
IN ALL CASES, WHETHER OR NOT CAUSED BY OR ARISING, IN WHOLE OR IN PART, OUT OF
THE COMPARATIVE, CONTRIBUTORY OR SOLE NEGLIGENCE OF SUCH INDEMNITEE; PROVIDED
BORROWER SHALL NOT HAVE ANY OBLIGATION TO ANY INDEMNITEE HEREUNDER WITH RESPECT
TO ANY INDEMNIFIED LIABILITIES TO THE EXTENT SUCH INDEMNIFIED LIABILITIES ARISE
FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH INDEMNITEE.  TO THE
EXTENT THAT THE UNDERTAKINGS TO DEFEND, INDEMNIFY, PAY AND HOLD HARMLESS SET
FORTH IN THIS SECTION 12.03 MAY BE UNENFORCEABLE IN WHOLE OR IN PART BECAUSE
THEY ARE VIOLATIVE OF ANY LAW OR PUBLIC POLICY, BORROWER SHALL CONTRIBUTE THE
MAXIMUM PORTION THAT IT IS PERMITTED TO PAY AND SATISFY UNDER APPLICABLE LAW TO
THE PAYMENT AND SATISFACTION OF ALL INDEMNIFIED LIABILITIES INCURRED BY
INDEMNITEES OR ANY OF THEM.

 

(B)           TO THE EXTENT PERMITTED BY APPLICABLE LAW, NO PARTY SHALL ASSERT,
AND EACH PARTY HEREBY WAIVES, ANY CLAIM AGAINST EACH OTHER PARTY AND SUCH
PARTY’S AFFILIATES, DIRECTORS, EMPLOYEES, ATTORNEYS OR AGENTS, ON ANY THEORY OF
LIABILITY, FOR SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES (AS OPPOSED
TO DIRECT OR ACTUAL DAMAGES) (WHETHER OR NOT THE CLAIM THEREFOR IS BASED ON
CONTRACT, TORT OR DUTY IMPOSED BY ANY APPLICABLE LEGAL REQUIREMENT) ARISING OUT
OF, IN CONNECTION WITH, AS A RESULT OF, OR IN ANY WAY RELATED TO, THIS AGREEMENT
OR ANY LOAN DOCUMENT OR ANY AGREEMENT OR INSTRUMENT CONTEMPLATED HEREBY OR
THEREBY OR REFERRED TO HEREIN OR THEREIN, THE TRANSACTIONS CONTEMPLATED HEREBY
OR THEREBY, THE LOAN OR THE USE OF THE PROCEEDS THEREOF OR ANY ACT OR OMISSION
OR EVENT OCCURRING IN CONNECTION THEREWITH, AND EACH PARTY HEREBY WAIVES,
RELEASES AND AGREES NOT TO SUE UPON ANY SUCH CLAIM OR ANY SUCH DAMAGES, WHETHER
OR NOT ACCRUED AND WHETHER OR NOT KNOWN OR SUSPECTED TO EXIST IN ITS FAVOR.

 

SECTION 12.04.             ASSUMPTION OF DEFENSE; SETTLEMENTS.  IF THE LENDER IS
ENTITLED TO INDEMNIFICATION UNDER THIS ARTICLE XII WITH RESPECT TO ANY ACTION OR
PROCEEDING BROUGHT BY A THIRD PARTY THAT IS ALSO BROUGHT AGAINST BORROWER,
BORROWER SHALL BE ENTITLED TO ASSUME THE DEFENSE OF ANY SUCH ACTION OR
PROCEEDING WITH COUNSEL REASONABLY SATISFACTORY TO THE LENDER.  UPON ASSUMPTION
BY BORROWER OF THE DEFENSE OF ANY SUCH ACTION OR PROCEEDING, BORROWER SHALL HAVE
THE RIGHT TO PARTICIPATE IN SUCH ACTION OR PROCEEDING AND TO RETAIN ITS OWN
COUNSEL BUT BORROWER SHALL NOT BE LIABLE FOR ANY LEGAL EXPENSES OF OTHER COUNSEL
SUBSEQUENTLY INCURRED BY THE LENDER IN CONNECTION WITH THE DEFENSE THEREOF
UNLESS (I) BORROWER HAS OTHERWISE AGREED TO PAY SUCH FEES AND EXPENSES,
(II) BORROWER SHALL HAVE FAILED TO EMPLOY COUNSEL REASONABLY SATISFACTORY TO THE
LENDER IN A TIMELY MANNER OR (III) THE LENDER SHALL HAVE BEEN ADVISED BY COUNSEL
THAT THERE ARE ACTUAL OR POTENTIAL CONFLICTING INTERESTS BETWEEN BORROWER AND
THE LENDER, INCLUDING SITUATIONS IN WHICH THERE ARE ONE OR MORE LEGAL DEFENSES
AVAILABLE TO THE LENDER THAT ARE DIFFERENT FROM OR ADDITIONAL TO THOSE AVAILABLE
TO BORROWER; PROVIDED, HOWEVER, THAT BORROWER SHALL NOT, IN CONNECTION WITH ANY
ONE SUCH ACTION OR PROCEEDING OR SEPARATE BUT SUBSTANTIALLY SIMILAR ACTIONS OR
PROCEEDINGS ARISING OUT OF THE SAME GENERAL ALLEGATIONS, BE LIABLE FOR THE FEES
AND EXPENSES OF MORE

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

49

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THAN ONE SEPARATE FIRM OF ATTORNEYS AT ANY TIME FOR THE LENDER, EXCEPT TO THE
EXTENT THAT LOCAL COUNSEL, IN ADDITION TO ITS REGULAR COUNSEL, IS REQUIRED IN
ORDER TO EFFECTIVELY DEFEND AGAINST SUCH ACTION OR PROCEEDING.  BORROWER SHALL
NOT CONSENT TO THE TERMS OF ANY COMPROMISE OR SETTLEMENT OF ANY ACTION DEFENDED
BY BORROWER IN ACCORDANCE WITH THE FOREGOING WITHOUT THE PRIOR WRITTEN CONSENT
OF THE LENDER UNLESS SUCH COMPROMISE OR SETTLEMENT (X) INCLUDES AN UNCONDITIONAL
RELEASE OF THE LENDER FROM ALL LIABILITY ARISING OUT OF SUCH ACTION AND (Y) DOES
NOT INCLUDE A STATEMENT AS TO OR AN ADMISSION OF FAULT, CULPABILITY OR A FAILURE
TO ACT, BY OR ON BEHALF OF THE LENDER.  BORROWER SHALL NOT BE REQUIRED TO
INDEMNIFY THE LENDER FOR ANY AMOUNT PAID OR PAYABLE BY THE LENDER IN THE
SETTLEMENT OF ANY ACTION, PROCEEDING OR INVESTIGATION WITHOUT THE WRITTEN
CONSENT OF BORROWER, WHICH CONSENT SHALL NOT BE UNREASONABLY WITHHELD.

 

ARTICLE XIII
MISCELLANEOUS

 

SECTION 13.01.             ASSIGNMENTS.

 

(A)           BORROWER SHALL NOT BE PERMITTED TO ASSIGN THIS AGREEMENT WITHOUT
THE PRIOR WRITTEN CONSENT OF THE LENDER AND ANY PURPORTED ASSIGNMENT IN
VIOLATION OF THIS SECTION 13.01(A) SHALL BE NULL AND VOID.

 

(B)           LENDER MAY AT ANY TIME ASSIGN ALL ITS RIGHTS AND OBLIGATIONS
HEREUNDER IN WHOLE OR IN PART (EACH AN “ASSIGNEE”); PROVIDED, HOWEVER, THAT TO
THE EXTENT RIGHTS AND OBLIGATIONS HEREUNDER ARE ASSIGNED TO MORE THAN ONE
ASSIGNEE, AGENT SHALL BE DESIGNATED AS THE AGENT OF ALL ASSIGNEES AND ANY AND
ALL OBLIGATIONS OF BORROWER UNDER THIS AGREEMENT SHALL THEREAFTER BE COORDINATED
THROUGH SUCH AGENT SO THAT BORROWER SHALL NOT BE REQUIRED TO PERFORM ITS
OBLIGATIONS HEREUNDER FOR, OR ON BEHALF OF, MULTIPLE ASSIGNEES.

 

(C)           THE PARTIES TO EACH ASSIGNMENT SHALL EXECUTE AND DELIVER TO
BORROWER A WRITTEN INSTRUMENT OF ASSIGNMENT IN THE FORM SET FORTH IN EXHIBIT R,
CONTAINING THE AGREEMENT OF THE ASSIGNEE TO BE BOUND BY THE TERMS OF THIS
AGREEMENT (AN “ASSIGNMENT AND ACCEPTANCE”).  UPON THE EFFECTIVENESS OF A
PERMITTED ASSIGNMENT HEREUNDER, (I) EACH REFERENCE IN THIS AGREEMENT TO “LENDER”
SHALL BE DEEMED TO BE A REFERENCE TO THE ASSIGNOR AND THE ASSIGNEE TO THE EXTENT
OF THEIR RESPECTIVE INTERESTS, (II) SUCH ASSIGNEE SHALL BE A LENDER PARTY TO
THIS AGREEMENT AND SHALL HAVE ALL THE RIGHTS AND OBLIGATIONS OF A LENDER AND
(III) THE ASSIGNOR SHALL BE RELEASED FROM ITS OBLIGATIONS HEREUNDER TO A
CORRESPONDING EXTENT OF THE ASSIGNMENT, AND NO FURTHER CONSENT OR ACTION BY ANY
PARTY SHALL BE REQUIRED.

 

(D)           IN THE EVENT THERE ARE MULTIPLE LENDERS, ALL PAYMENTS OF
PRINCIPAL, INTEREST, FEES AND ANY OTHER AMOUNTS PAYABLE PURSUANT TO THE LOAN
DOCUMENTS SHALL BE ALLOCATED ON A PRO RATA BASIS AMONG THE LENDERS ACCORDING TO
THEIR PROPORTIONATE INTERESTS IN THE LOAN.

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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(E)           BORROWER SHALL, FROM TIME TO TIME AT THE REQUEST OF THE LENDER,
EXECUTE AND DELIVER ANY DOCUMENTS THAT ARE NECESSARY TO GIVE FULL FORCE AND
EFFECT TO AN ASSIGNMENT PERMITTED HEREUNDER, INCLUDING A NEW NOTE IN EXCHANGE
FOR THE NOTE HELD BY THE LENDER.

 

(F)            EXCEPT IN THE CASE OF AN ASSIGNMENT TO A LENDER OR AN AFFILIATE
OF A LENDER OR AN ASSIGNMENT OF THE ENTIRE REMAINING AMOUNT OF THE ASSIGNING
LENDER’S LOAN, THE AMOUNT OF THE LOAN OF THE ASSIGNING LENDER SUBJECT TO EACH
SUCH ASSIGNMENT (DETERMINED AS OF THE DATE THE ASSIGNMENT AND ACCEPTANCE WITH
RESPECT TO SUCH ASSIGNMENT IS DELIVERED TO BORROWER) SHALL NOT BE LESS THAN
[*****] UNLESS BORROWER OTHERWISE CONSENTS, PROVIDED THAT NO SUCH CONSENT OF
BORROWER SHALL BE REQUIRED IF A DEFAULT HAS OCCURRED AND IS CONTINUING.

 

SECTION 13.02.             PARTICIPATIONS.  LENDER MAY AT ANY TIME GRANT (EACH A
“PARTICIPANT”) PARTICIPATING INTERESTS IN ITS LOAN.  IN THE EVENT OF ANY SUCH
GRANT BY THE LENDER OF A PARTICIPATING INTEREST TO A PARTICIPANT, WHETHER OR NOT
UPON NOTICE TO BORROWER, SUCH LENDER SHALL REMAIN RESPONSIBLE FOR THE
PERFORMANCE OF ITS OBLIGATIONS HEREUNDER, AND BORROWER SHALL CONTINUE TO DEAL
SOLELY AND DIRECTLY WITH THE LENDER IN CONNECTION WITH THE LENDER’S RIGHTS AND
OBLIGATIONS UNDER THIS AGREEMENT.  ANY AGREEMENT PURSUANT TO WHICH THE LENDER
MAY GRANT SUCH A PARTICIPATING INTEREST SHALL PROVIDE THAT THE LENDER SHALL
RETAIN THE SOLE RIGHT AND RESPONSIBILITY TO ENFORCE THE OBLIGATIONS OF BORROWER
HEREUNDER INCLUDING THE RIGHT TO APPROVE ANY AMENDMENT, MODIFICATION OR WAIVER
OF ANY PROVISION OF THIS AGREEMENT.  BORROWER AGREES THAT EACH PARTICIPANT
SHALL, TO THE EXTENT PROVIDED IN ITS PARTICIPATION AGREEMENT, BE ENTITLED TO THE
BENEFITS OF ARTICLE V AND ARTICLE XII WITH RESPECT TO ITS PARTICIPATING
INTEREST, AS THOUGH IT WERE A LENDER.  NO PARTICIPANT SHALL HAVE ANY RIGHTS AS A
LENDER HEREUNDER, INCLUDING ANY RIGHT TO MAKE ANY DEMAND HEREUNDER OR RIGHT TO
APPROVE ANY AMENDMENT OR WAIVER OF ANY PROVISION OF THIS AGREEMENT, OR ANY
CONSENT TO ANY DEPARTURE BY BORROWER THEREFROM, EXCEPT TO THE EXTENT THAT SUCH
AMENDMENT, WAIVER OR CONSENT WOULD REDUCE THE PRINCIPAL OF, OR INTEREST ON, THE
LOAN OR ANY FEES OR OTHER AMOUNTS PAYABLE HEREUNDER, IN EACH CASE TO THE EXTENT
SUBJECT TO SUCH PARTICIPATION, OR POSTPONE ANY DATE FIXED FOR ANY PAYMENT OF
PRINCIPAL OF, OR INTEREST ON, THE LOAN OR ANY FEES OR OTHER AMOUNTS PAYABLE
HEREUNDER OR RELEASE, REDUCE OR AMEND THIS SECTION 13.02 IN ANY MANNER ADVERSE
TO SUCH PARTICIPANT, IN EACH CASE, TO THE EXTENT SUBJECT TO SUCH PARTICIPATION. 
BORROWER AGREES THAT EACH PARTICIPANT SHALL, TO THE EXTENT PROVIDED IN ITS
PARTICIPATION AGREEMENT, BE ENTITLED TO THE BENEFITS OF ARTICLES V AND XII WITH
RESPECT TO ITS PARTICIPATING INTEREST, AS THOUGH IT WERE A LENDER; PROVIDED,
HOWEVER, A PARTICIPANT SHALL NOT BE ENTITLED TO RECEIVE ANY GREATER PAYMENT
UNDER ARTICLES V AND XII THAN THE APPLICABLE LENDER WOULD HAVE BEEN ENTITLED TO
RECEIVE WITH RESPECT TO THE PARTICIPATION SOLD TO SUCH PARTICIPANT, UNLESS THE
SALE OF THE PARTICIPATION TO SUCH PARTICIPANT IS MADE WITH BORROWER’S WRITTEN
CONSENT (NOT TO BE UNREASONABLY WITHHELD).

 

SECTION 13.03.             SUCCESSORS AND ASSIGNS.  THIS AGREEMENT SHALL BE
BINDING UPON AND INURE TO THE BENEFIT OF THE PARTIES AND THEIR RESPECTIVE
SUCCESSORS AND PERMITTED ASSIGNS.

 

SECTION 13.04.             NOTICES.  ALL NOTICES, CONSENTS, APPROVALS, REPORTS,
DESIGNATIONS, REQUESTS, WAIVERS, ELECTIONS AND OTHER COMMUNICATIONS
(COLLECTIVELY, “NOTICES”) AUTHORIZED OR REQUIRED TO BE GIVEN PURSUANT TO THIS
AGREEMENT SHALL BE GIVEN IN WRITING AND EITHER PERSONALLY

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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DELIVERED TO THE PARTY TO WHOM IT IS GIVEN OR DELIVERED BY AN ESTABLISHED
DELIVERY SERVICE BY WHICH RECEIPTS ARE GIVEN OR MAILED BY REGISTERED OR
CERTIFIED MAIL, POSTAGE PREPAID, OR SENT BY FACSIMILE OR ELECTRONIC MAIL WITH A
COPY SENT ON THE FOLLOWING BUSINESS DAY BY ONE OF THE OTHER METHODS OF GIVING
NOTICE DESCRIBED HEREIN, ADDRESSED TO THE PARTY AT ITS ADDRESS LISTED BELOW:

 

(a)                             If to Borrower:

 

Dyax Corp.
300 Technology Square
Cambridge, MA  02139
Attention:  Chief Financial Officer
Facsimile:  (617) 225-7708
E-mail:  gmigauski@dyax.com

 

with a copy (which shall not constitute notice) to:

 

Dyax Corp.
300 Technology Square
Cambridge, MA  02139
Attention:  General Counsel
Facsimile:  (617) 225-7708
E-mail:  imagovcevic@dyax.com

 

with a copy (which shall not constitute notice) to:

Dyax Corp.
300 Technology Square
Cambridge, MA  02139
Attention:  Associate General Counsel
Facsimile:  (617) 225-7708
E-mail:  aashe@dyax.com

 

with a copy (which shall not constitute notice) to:

Edwards Angell Palmer & Dodge LLP
111 Huntington Avenue
Boston, MA  02199
Attention:  Stacie S. Aarestad
Facsimile:  (617) 227-4420
E-mail:  saarestad@eapdlaw.com

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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(b)                             If to a Lender:

 

Cowen Healthcare Royalty Partners, L.P.
177 Broad Street, Suite 1101
Stamford, CT  06901
Attention:  Gregory B. Brown, M.D.
Facsimile:  (646) 562-1293
Email:  greg.brown@cowen.com

 

with a copy (which shall not constitute notice) to:

Cahill Gordon & Reindel LLP
80 Pine Street
New York, NY  10005
Attn:  Christopher T. Cox
Facsimile:  (212) 396-0136
E-mail:  ccox@cahill.com

 

Any Party may change its address for the receipt of Notices at any time by
giving Notice thereof to the other Parties.  Except as otherwise provided
herein, any Notice authorized or required to be given by this Agreement shall be
effective when received.

 

SECTION 13.05.             ENTIRE AGREEMENT.  THIS AGREEMENT AND THE OTHER
TRANSACTION DOCUMENTS CONTAIN THE ENTIRE AGREEMENT BETWEEN THE PARTIES RELATING
TO THE SUBJECT MATTER HEREOF AND SUPERSEDE ALL ORAL STATEMENTS AND PRIOR
WRITINGS WITH RESPECT THERETO.

 

SECTION 13.06.             MODIFICATION.  NO LOAN DOCUMENT OR PROVISION THEREOF
MAY BE WAIVED, AMENDED OR MODIFIED EXCEPT, IN THE CASE OF THIS AGREEMENT, BY AN
AGREEMENT OR AGREEMENTS IN WRITING EXECUTED BY BORROWER AND THE AGENT OR, IN THE
CASE OF ANY OTHER LOAN DOCUMENT, BY AN AGREEMENT OR AGREEMENTS IN WRITING
ENTERED INTO BY THE PARTIES THERETO WITH THE CONSENT OF THE AGENT.

 

SECTION 13.07.             NO DELAY; WAIVERS; ETC.  NO DELAY ON THE PART OF THE
LENDER IN EXERCISING ANY POWER OR RIGHT HEREUNDER SHALL OPERATE AS A WAIVER
THEREOF NOR SHALL ANY SINGLE OR PARTIAL EXERCISE OF ANY POWER OR RIGHT HEREUNDER
PRECLUDE OTHER OR FURTHER EXERCISE THEREOF OR THE EXERCISE OF ANY OTHER POWER OR
RIGHT.  THE LENDER SHALL NOT BE DEEMED TO HAVE WAIVED ANY RIGHTS HEREUNDER
UNLESS SUCH WAIVER SHALL BE IN WRITING AND SIGNED BY THE LENDER.

 

SECTION 13.08.             SEVERABILITY.  IF ANY PROVISION OF THIS AGREEMENT
SHALL BE HELD TO BE INVALID, ILLEGAL OR UNENFORCEABLE, THEN, TO THE FULLEST
EXTENT PERMITTED BY LAW, THE VALIDITY, LEGALITY AND ENFORCEABILITY OF THE
REMAINING PROVISIONS SHALL NOT IN ANY WAY BE AFFECTED OR IMPAIRED THEREBY.

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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SECTION 13.09.             DETERMINATIONS.  EACH DETERMINATION OR CALCULATION BY
THE LENDER HEREUNDER SHALL, IN THE ABSENCE OF MANIFEST ERROR, BE CONCLUSIVE AND
BINDING ON THE PARTIES.

 

SECTION 13.10.             REPLACEMENT OF NOTE.  UPON THE LOSS, THEFT,
DESTRUCTION, OR MUTILATION OF THE NOTE AND (A) IN THE CASE OF LOSS, THEFT OR
DESTRUCTION, UPON RECEIPT BY BORROWER OF INDEMNITY OR SECURITY REASONABLY
SATISFACTORY TO IT (EXCEPT THAT IF THE HOLDER OF THE NOTE IS THE LENDER OR ANY
OTHER FINANCIAL INSTITUTION OF RECOGNIZED RESPONSIBILITY, THE HOLDER’S OWN
AGREEMENT OF INDEMNITY SHALL BE DEEMED TO BE SATISFACTORY) OR (B) IN THE CASE OF
MUTILATION, UPON SURRENDER TO BORROWER OF THE MUTILATED NOTE, BORROWER SHALL
EXECUTE AND DELIVER IN LIEU THEREOF A NEW NOTE, DATED THE CLOSING DATE, IN THE
SAME PRINCIPAL AMOUNT.

 

SECTION 13.11.             GOVERNING LAW.  THIS AGREEMENT AND THE NOTE SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
(WITHOUT GIVING EFFECT TO ANY CONFLICT OF LAWS PRINCIPLES THAT WOULD REQUIRE
APPLICATION OF THE LAWS OF ANOTHER JURISDICTION).

 

SECTION 13.12.             JURISDICTION.  BORROWER IRREVOCABLY SUBMITS TO THE
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND OF THE UNITED STATES
SITTING IN THE STATE OF NEW YORK, AND OF THE COURTS OF ITS OWN CORPORATE
DOMICILE WITH RESPECT TO ACTIONS OR PROCEEDINGS BROUGHT AGAINST IT AS A
DEFENDANT, FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (A “PROCEEDING”). 
BORROWER IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY
PROCEEDING AND ANY CLAIM THAT ANY PROCEEDING HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM.  ANY PROCESS OR SUMMONS FOR PURPOSES OF ANY PROCEEDING MAY BE SERVED ON
BORROWER BY MAILING A COPY THEREOF BY REGISTERED MAIL, OR A FORM OF MAIL
SUBSTANTIALLY EQUIVALENT THERETO, ADDRESSED TO IT AT ITS ADDRESS AS PROVIDED FOR
NOTICES HEREUNDER.

 

SECTION 13.13.             WAIVER OF JURY TRIAL.  BORROWER HEREBY IRREVOCABLY
WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

 

SECTION 13.14.             WAIVER OF IMMUNITY.  TO THE EXTENT THAT BORROWER HAS
OR HEREAFTER MAY BE ENTITLED TO CLAIM OR MAY ACQUIRE, FOR ITSELF OR ANY OF ITS
ASSETS, ANY IMMUNITY FROM SUIT, JURISDICTION OF ANY COURT OR FROM ANY LEGAL
PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT,
ATTACHMENT IN AID OF EXECUTION, OR OTHERWISE) WITH RESPECT TO ITSELF OR ANY OF
ITS PROPERTY, BORROWER HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS
OBLIGATIONS HEREUNDER AND UNDER THE NOTE TO THE FULLEST EXTENT PERMITTED BY LAW.

 

SECTION 13.15.             COUNTERPARTS.  THIS AGREEMENT MAY BE EXECUTED IN ANY
NUMBER OF COUNTERPARTS, EACH OF WHICH SHALL BE DEEMED AN ORIGINAL, BUT ALL OF
WHICH SHALL CONSTITUTE ONE AND THE SAME INSTRUMENT.

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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SECTION 13.16.             LIMITATION ON RIGHTS OF OTHERS.  EXCEPT FOR THE
INDEMNITEES REFERRED TO IN SECTION 12.03 OR AS PROVIDED IN SECTION 13.02, NO
PERSON OTHER THAN A PARTY SHALL HAVE ANY LEGAL OR EQUITABLE RIGHT, REMEDY OR
CLAIM UNDER OR IN RESPECT OF THIS AGREEMENT.

 

SECTION 13.17.             NO PARTNERSHIP.  NOTHING IN THIS AGREEMENT OR ANY
OTHER TRANSACTION DOCUMENT SHALL BE READ TO CREATE ANY AGENCY, PARTNERSHIP OR
JOINT VENTURE OF THE LENDER (OR ANY OF ITS AFFILIATES) AND BORROWER (OR ANY OF
ITS AFFILIATES).

 

SECTION 13.18.             SURVIVAL.  THE OBLIGATIONS OF BORROWER CONTAINED IN
SECTIONS 4.04, 4.05, ARTICLE V AND ARTICLE XII SHALL SURVIVE THE REPAYMENT OF
THE LOAN AND THE CANCELLATION OF THE NOTE AND THE TERMINATION OF THE OTHER
OBLIGATIONS OF BORROWER HEREUNDER.

 

SECTION 13.19.             PATRIOT ACT NOTIFICATION.  LENDER HEREBY NOTIFIES
BORROWER THAT, CONSISTENT WITH THE USA PATRIOT ACT, PUBLIC LAW NO. 107-56 (THE
“PATRIOT ACT”), REGULATIONS PROMULGATED THEREUNDER AND UNDER OTHER APPLICABLE
LAW, THE LENDER’S PROCEDURES AND CUSTOMER DUE DILIGENCE STANDARDS REQUIRE IT TO
OBTAIN, VERIFY AND RECORD INFORMATION THAT IDENTIFIES BORROWER, INCLUDING AMONG
OTHER THINGS NAME, ADDRESS, INFORMATION REGARDING PERSONS WITH AUTHORITY OR
CONTROL OVER BORROWER, AND OTHER INFORMATION REGARDING BORROWER, ITS OPERATIONS
AND TRANSACTIONS WITH THE LENDER.  BORROWER AGREES TO PROVIDE SUCH INFORMATION
AND TAKE SUCH ACTIONS AS ARE REASONABLY REQUESTED BY THE LENDER IN ORDER TO
ASSIST THE LENDER IN MAINTAINING COMPLIANCE WITH ITS PROCEDURES, THE PATRIOT ACT
AND ANY OTHER APPLICABLE LAWS.

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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IN WITNESS WHEREOF, the Parties have duly executed this Agreement as of the day
and year first above written.

 

 

COWEN HEALTHCARE ROYALTY PARTNERS, L.P.,

 

      as Lender

 

 

 

 

By:

Cowen Healthcare Royalty GP, LLC,

 

 

its General Partner

 

 

 

 

By:

/s/ George B. Brown

 

 

Name:

George B. Brown, M.D.

 

 

Title:

Managing Director

 

 

 

 

 

 

 

DYAX CORP.,

 

as Borrower

 

 

 

 

By:

/s/ Ivana Magovcevic-Liebisch

 

 

Name:

Ivana Magovcevic-Liebisch, PhD, JD

 

 

Title:

Executive Vice President, Admin.

 

 

 

and General Counsel

 

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Exhibit A

 

Business Report Format

 

[*****]

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

--------------------------------------------------------------------------------

 

Exhibit B

 

Co-Development Agreements

 

[*****]

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

--------------------------------------------------------------------------------

 

Exhibit C

 

Excluded Agreements and Excluded Products

 

[*****]

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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Exhibit D

 

LFRP Know-How

 

[*****]

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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Exhibit E

 

LFRP Libraries

 

[*****]

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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Exhibit F

 

FORM OF LOCKBOX AGREEMENT

 

This LOCKBOX AGREEMENT (as amended, supplemented or otherwise modified from time
to time, this “Agreement”) is dated as of August 5, 2008 and entered into by and
among Dyax Corp., a Delaware corporation, both in its individual capacity (as
such, “Company”) and as initial calculation agent hereunder (as such, the
“Lockbox Calculation Agent”), Cowen Healthcare Royalty Partners, L.P., a
Delaware limited partnership (“Lender”) and JPMorgan Chase Bank, N.A., both in
its capacity as a depositary bank and in its capacity as a “bank” (as defined in
Section 9-102(a)(8) of the UCC) (in such capacities, the “Financial
Institution”), and in its capacity as escrow agent hereunder (the “Lockbox
Escrow Agent”).

 

RECITALS

 

WHEREAS, Company and Lender are parties to that certain Loan Agreement, dated as
of August 5, 2008 (as amended, supplemented or otherwise modified from time to
time, the “Loan Agreement”), pursuant to which Company has agreed, inter alia,
to make certain payments to Lender, and to provide Lender with certain
collateral to secure Company’s payment and performance obligations under the
Loan Agreement and related documents;

 

WHEREAS, the Loan Agreement provides that Lender shall receive a certain amount
of cash in respect of the Included Receipts, the calculation of which is set
forth in the Loan Agreement;

 

WHEREAS, Company and Lender wish to (i) appoint the Lockbox Escrow Agent to
serve as escrow agent hereunder and, in such capacity, to administer the Lockbox
Account in accordance with the terms hereof; (ii) authorize the Lockbox Escrow
Agent to appoint Company to serve as the initial calculation agent hereunder
and, in such capacity, to calculate the portions of amounts deposited in the
Lockbox Account to be paid into the Company Concentration Account and the Lender
Concentration Account in accordance with the terms of this Agreement, and to
provide the Lockbox Escrow Agent with the information necessary for the Lockbox
Escrow Agent to make such transfers in accordance with the terms of this
Agreement; and (iii) provide for the establishment with the Financial
Institution of each of the Lockbox Account, the Company Concentration Account
and the Lender Concentration Account;

 

WHEREAS, all Gross Payments are to be distributed from the Lockbox Account by
the Lockbox Escrow Agent to the Company Concentration Account and the Lender
Concentration Account in accordance with the terms hereof;

 

WHEREAS, Company and Lender are parties to the Security Agreement, dated as of
August 5, 2008 (as amended, supplemented or otherwise modified from time to
time, the “Security Agreement”), pursuant to which, inter alia, Company granted
in favor of Lender a security interest in an undivided interest in the Company
Concentration Account and all Deposit Funds

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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held therein or credited thereto from time to time, and Company’s interest in
the Lockbox Account;

 

WHEREAS, each of the Financial Institution and the Lockbox Escrow Agent
acknowledges the grant by Company in favor of Lender of the above described
security interests; and

 

WHEREAS, since Lender is a secured party and holds a security interest in
certain property of Company pursuant to the Security Agreement, the Company and
Lender intend to enter into this Agreement in order (i) to perfect Lender’s
security interest in the Company Concentration Account by “control” pursuant to
Section 9-104 and Section 8-106 of the UCC, and (ii) to set forth their
respective rights and obligations with respect to the Deposit Accounts;

 

NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants
hereinafter set forth and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto hereby
agree as follows:

 

Section 1.  Certain Terms.  Capitalized terms when used in this Agreement,
including its preamble, recitals and schedules, shall have the meanings set
forth in Annex A attached hereto.  Other capitalized terms have the meanings set
forth in the Loan Agreement.

 

Section 2.  Appointment of Agents; Establishment of Accounts.

 

(a)           Each of Company and Lender hereby appoints the Lockbox Escrow
Agent to act as escrow agent hereunder in accordance with the terms hereof, to
establish the Lockbox Account in the name of the Lockbox Escrow Agent, as escrow
agent for Lender and Company, and under the sole dominion and control of the
Lockbox Escrow Agent, to receive, hold, invest and disburse funds on deposit
therein from time to time pursuant to the terms hereof and to otherwise perform
the duties assumed by the Lockbox Escrow Agent hereunder.  The Lockbox Escrow
Agent hereby accepts such appointment and agrees to be bound by the terms and
conditions of this Agreement.

 

(b)           Each of Company and Lender hereby authorizes the Lockbox Escrow
Agent to appoint, and the Lockbox Escrow Agent hereby appoints, the Lockbox
Calculation Agent as the sub-agent of the Lockbox Escrow Agent, to provide
calculations in relation to amounts on deposit in the Lockbox Account from time
to time pursuant to the terms hereof and to otherwise perform the duties assumed
by the Lockbox Calculation Agent hereunder.  The Lockbox Calculation Agent
hereby accepts such appointment and agrees to be bound by the terms and
conditions of this Agreement.

 

(c)           The Lockbox Escrow Agent hereby confirms that it will establish by
the Effective Date a special escrow account in its name as Escrow Agent,
designated as the “Lockbox Account”, and bearing account number 777133448 (the
“Lockbox Account”), which account shall be non interest-bearing.  The Lockbox
Escrow Agent shall keep the Lockbox Account separate and apart from all other
funds and moneys held by it, and shall hold all funds on deposit therein from
time to time for the benefit of Company and Lender, in accordance with their
respective

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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interests.  The Lockbox Escrow Agent shall administer the Lockbox Account in
accordance with the terms hereof.

 

(d)           Company and Lender will cause the Financial Institution to
establish, and the Financial Institution hereby confirms that the Financial
Institution will establish by the Effective Date, the following deposit accounts
at the Financial Institution (collectively, the “Concentration Accounts”; each a
“Concentration Account”; and together with the Lockbox Account, the “Deposit
Accounts” and each, a “Deposit Account”) designated as indicated below:

 

(i)            the account in the name of Company, bearing account number
777133455 (the “Company Concentration Account”), which account shall be
interest-bearing; and

 

(ii)           the account in the name of Lender, bearing account number
777133463 (the “Lender Concentration Account”), which account shall be
interest-bearing.

 

(e)           Neither the Financial Institution nor the Lockbox Escrow Agent
shall change the name or account number of any Deposit Account without the prior
written consent of (x) Company and Lender, in the case of the Lockbox Account,
(y) Company and Lender, in the case of the Company Concentration Account, and
(z) Lender, in the case of the Lender Concentration Account.

 

(f)            The parties hereto acknowledge and agree that each Deposit
Account is a “deposit account” within the meaning of Section 9-102(a)(29) of the
UCC and that the Financial Institution’s jurisdiction for purposes of the
Deposit Accounts under the UCC shall be New York.

 

(g)           Lockbox Escrow Agent shall furnish to Company and Lender periodic
reports, which account for all such investments and interest and income earned
thereon.  Such reports shall be furnished monthly or, more frequently, upon the
request of Company and Lender.

 

(h)           Each of Company and Lender acknowledges and agrees that (i) the
Lockbox Account is being established for the benefit of Company and Lender,
(ii) the Lockbox Account and all Deposit Funds relating thereto are the property
of the Lockbox Escrow Agent, for the benefit of the Company and Lender in
accordance with their respective interests and (iii) it shall, at its own cost
and expense, defend the Lockbox Account (and all Deposit Funds relating thereto)
against any and all claims of its creditors, whether threatened or actual.

 

(i)            The Deposit Funds in each Concentration Account shall be invested
by Financial Institution in Permitted Investments.  All Permitted Investments
shall be registered in the name of Financial Institution for the benefit of
Lender or Company, as applicable, and held by Financial Institution as part of
such Concentration Account.  Financial Institution may make investments through
its investment division or short-term investment department.  Financial
Institution shall sell and reduce to cash a sufficient amount of Permitted
Investments whenever the cash balance of the Concentration Accounts is
insufficient to pay the amounts required to be paid therefrom.  Financial
Institution shall, without further direction from any person, sell such
investments as and when required to make any payments from the Concentration
Accounts. 

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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Financial Institution shall not be responsible or liable for any loss suffered
in connection with any investment of moneys made by Financial Institution in
accordance with this Section 2(i).

 

Section 3.  Operation of and Disbursements from the Lockbox Account.

 

(a)           The parties acknowledge and agree that the Gross Payments (as
defined in the Loan Agreement) shall be paid into the Lockbox Account.

 

(b)           The Lockbox Escrow Agent will provide the Lockbox Calculation
Agent with a daily report showing each payment received in the Lockbox Account
on the previous Business Day via online access.  From time to time, at a period
to be defined by Company but in any event no less frequently than once per
month, the Lockbox Calculation Agent shall submit a report to the Lockbox Escrow
Agent and the Financial Institution (with a copy to Company) in respect of the
amounts on deposit in the Lockbox Account as of the end of the relevant
calculation period (each, a “Lockbox Calculation Report”), which Lockbox
Calculation Report shall specify the portion thereof which is allocable to
Lender and Company, respectively, by way of allocations between the Lender
Concentration Account and the Company Concentration Account.  Such allocations
shall be calculated by the Lockbox Calculation Agent as set forth on Schedule
5.  Company shall provide immediately to Lockbox Calculation Agent, on request,
any data or information requested by Lockbox Calculation Agent to prepare the
Lockbox Calculation Report.  The Lockbox Calculation Agent shall be responsible
for preparing the Lockbox Calculation Report in good faith and in a consistent
and reasonable manner in accordance with the terms of the Loan Agreement.

 

(c)           At the time the Lockbox Calculation Agent submits any Lockbox
Calculation Report in relation to the Lockbox Account, the Lockbox Calculation
Agent shall also provide the Lockbox Escrow Agent with supporting calculations
and other back-up information in reasonable detail, certified by a senior
financial officer of the Lockbox Calculation Agent.

 

(d)           Following receipt of a Lockbox Calculation Report, the Lockbox
Escrow Agent shall, within one (1) Business Day thereof, (i) allocate among the
applicable Concentration Accounts the amounts received in the Lockbox Account
that are covered by such Lockbox Calculation Report and (ii) make corresponding
wire transfers of such amounts from the Lockbox Account in accordance with the
terms hereof.  Only the Lockbox Escrow Agent will have the authority to make
transfers from the Lockbox Account and only in accordance with the terms of this
Agreement.  Within five (5) days of the close of any calendar quarter, the
Lockbox Escrow Agent will provide Lender copies of each Lockbox Calculation
Report and any other information or certificates received from the Lockbox
Calculation Agent during the preceding quarter.

 

(e)           In the event the Lockbox Calculation Agent determines that a
Lockbox Calculation Report contains any incorrect calculations, the Lockbox
Calculation Agent shall promptly notify the Lockbox Escrow Agent, and provide a
revised Lockbox Calculation Report to the Lockbox Escrow Agent together with
information of the type specified in Section 3(c) above.  If the revised Lockbox
Calculation Report is received by the Lockbox Escrow Agent prior to its
distribution of the sums covered thereby, then the Lockbox

 

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Exchange Commission.  Asterisks denote such omission.

 

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Escrow Agent shall distribute such sums in accordance with the revised Lockbox
Calculation Report; if not, then the Lockbox Escrow Agent will make appropriate
offsets/credits with respect to future distributions from the Lockbox Account,
based on information provided to it by the Lockbox Calculation Agent (which the
Lockbox Calculation Agent undertakes to do on a prompt basis).

 

(f)            The Lockbox Escrow Agent shall rely on the information contained
in any Lockbox Calculation Report provided to it from time to time by the
Lockbox Calculation Agent, and shall, on the next Business Day after receipt
thereof, transfer amounts on deposit in the Lockbox Account in accordance with
the information contained in any such Lockbox Calculation Report, without any
duty to investigate.  The Lockbox Escrow Agent shall have no liability to any
party hereto on account of disbursing funds in the Lockbox Account on the basis
of information contained in any such Lockbox Calculation Report.

 

Section 4.  Control of the Concentration Accounts.

 

(a)           In order to perfect Lender’s security interest in the Company
Concentration Account (and any and all Deposit Funds held therein or credited
thereto from time to time) by “control” pursuant to Section 9-104 of the UCC,
Company, Lender and the Financial Institution agree as follows: So long as no
Event of Default or Termination Event shall have occurred and be continuing,
Company shall be entitled to give Account Instructions to the Financial
Institution directing the disposition, transfer, withdrawal, disbursement,
investment or redemption of any Deposit Funds in or credited to the Company
Concentration Account, and the Financial Institution shall comply with such
Account Instructions from Company (without any consent being required from
Lender).  Upon receiving notice from Lender, however (which, for the avoidance
of doubt, may be given by Lender upon the occurrence and during the continuance
of an Event of Default or a Termination Event), the Financial Institution shall
cease complying with any and all Account Instructions from Company pertaining to
or concerning the Company Concentration Account or any Deposit Funds therein or
credited thereto.  At such time, only Lender shall be entitled to give Account
Instructions to the Financial Institution directing the disposition, transfer,
withdrawal, disbursement, investment or redemption of any Deposit Funds in or
credited to the Company Concentration Account until such time as Lender
otherwise advises in writing (which, for the avoidance of doubt, shall be given
promptly following the cure or waiver of such Event of Default or Termination
Event).

 

(b)           (1) Only Lender shall be entitled to give Account Instructions
directing the disposition, transfer, withdrawal, disbursement, investment or
redemption of any Deposit Funds in or credited to the Lender Concentration
Account, and the Financial Institution shall comply with such Account
Instructions from Lender from time to time.  The parties acknowledge that the
Lender Concentration Account is the unencumbered property of the Lender.

 

(2)           Only Company shall be entitled to give Account Instructions
directing the disposition, transfer, withdrawal, disbursement, investment or
redemption of any Deposit Funds in or credited to the Company Concentration
Account prior to an Event of Default and the Financial Institution shall comply
with such Account Instructions from Company from time to time.

 

(c)           The Financial Institution shall not, and shall not agree with any
Third Party to, comply with any Account Instructions or other instructions,
orders or directions from a Third Party pertaining to or concerning any
Concentration Account or any Deposit Funds therein or

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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credited thereto, without the prior written consent of Lender and Company (in
the case of the Company Concentration Account, prior to the earlier of an Event
of Default or a Termination Event) and Lender (in the case of the Lender
Concentration Account and, from and after the earlier of an Event of Default or
a Termination Event that has not been cured or waived, the Company Concentration
Account).

 

Section 5.  Financial Institution’s Obligations with respect to the Deposit
Accounts.

 

(a)           The Financial Institution agrees to maintain each Deposit Account
separately, in accordance with the terms of this Agreement and agrees not to
commingle the Deposit Funds in or credited to, or designated for deposit in, any
Deposit Account with any other Deposit Funds held on behalf of Company, Lender
or any other person or entity.  The Financial Institution shall not apply any
Deposit Funds received in the Deposit Accounts and not to make disbursements
from or debits to the Deposit Accounts other than in accordance with this
Agreement.  In the event there are multiple Lenders, Cowen Healthcare Royalty
Partners, L.P. shall be designated as the agent of all such Lenders (the “Lender
Agent”), and the Financial Institution shall distribute Deposit Funds in the
Lender Concentration Account in accordance with the written instructions of the
Lender Agent (the intent being that such distributions shall be made on a pro
rata basis to the Lenders according to their proportionate interests in the Loan
as required by Section 13.01(d) of the Loan Agreement).  Prior to making any
distributions to a new Lender, the Financial Institution will require such
Lender to deliver to the Lockbox Escrow Agent and Financial Institution a W-8 or
W-9 Internal Revenue Service form or any other similar form issued by the
relevant taxing authority duly executed by it.

 

(b)           The Financial Institution acknowledges that the Company
Concentration Account and the Company’s interest in the Lockbox Account, and any
Deposit Funds therein or credited thereto, are subject to the security interest
of Lender therein.  Each of the Lockbox Escrow Agent and the Financial
Institution acknowledges that the Company has granted Lender a security interest
over the Company Concentration Account and Company’s interest in the Lockbox
Account.

 

(c)           The parties hereto acknowledge and agree that items deposited in
any Deposit Account shall be deemed to bear the valid and legally binding
endorsement of the payee and to comply with all of the Financial Institution’s
requirements for the supplying of missing endorsements, now or hereafter in
effect.  Any deposit made into any Deposit Account shall be deemed deposited
therein when the funds in respect of such deposit shall become cleared funds.

 

(d)           The Financial Institution shall redeposit with advice any item
returned for any reason.  If any item is returned a second time, the Financial
Institution will charge the amount of such item against the Lockbox Account if
the same contains sufficient funds to pay the amount of the returned item.  If
the balance in the Lockbox Account is not sufficient to pay the amount of the
returned item, the Financial Institution shall notify Company and Lender. 
Company agrees to reimburse the Financial Institution for the same promptly
after such notification.  The Financial Institution shall also notify Company
and Lender of its current standard charges for returned items and Company agrees
to pay the Financial Institution such charges promptly after such notification. 
The Financial Institution shall return the item along with the debit advice to

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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Company, with a copy to Lender.  The Financial Institution is granted the
further right to debit from any Deposit Account any amounts deposited therein in
error or as necessary to correct processing errors.

 

(e)           Each week that the Financial Institution receives any Deposit
Funds in any Deposit Account, the Financial Institution shall notify Company and
Lender in writing that it has received such Deposit Funds into such account or
accounts, and the Financial Institution shall set forth in such writing (i) the
names of the accounts into which such Deposit Funds were received, if such
payments have been received, (ii) the date of receipt of such Deposit Funds,
(iii) the amount of such receipt and (iv) the name of the payor.

 

(f)            The Financial Institution shall at all times provide the parties
hereto with online computer access, in a format or formats reasonably acceptable
to Company and Lender, to account balances, collection and remittance
information relative to the Deposit Accounts and within five (5) Business Days
following the end of each month, shall cause to be made available to Company and
Lender by means of online computer access, and within ten (10) Business Days
following the end of each month shall send or cause to be sent a statement for
such month to Company and Lender in each case outlining a list of (i) the
amounts, if any, transferred into or from any Deposit Account during the
preceding month, the dates of each such transfer and the accounts into which
such transfers were made, (ii) the balance, if any, in each Deposit Account as
of the end of such month, and (iii) any other debits or credits made during the
month to each Deposit Account together with a description thereof.

 

(g)           Any transfer of funds from the Lockbox Account to the Company
Concentration Account shall be made by wire transfer or similar method of
transfer of immediately available funds, unless otherwise agreed to in writing
by Company.  Any transfer of funds from the Lockbox Account to the Lender
Concentration Account shall be made by wire transfer or similar method of
transfer of immediately available funds, unless otherwise agreed to in writing
by Lender.

 

Section 6.  Resignation and Replacement of Lockbox Escrow Agent.

 

(a)           The Lockbox Escrow Agent shall have the right at any time, by
giving written notice to the Financial Institution, Company and Lender, to
resign and be discharged of the responsibilities hereby created, such
resignation to become effective upon (i) the appointment of a successor Lockbox
Escrow Agent by Company and Lender and (ii) the acceptance of such appointment
by such successor Lockbox Escrow Agent.  If no successor Lockbox Escrow Agent
shall be appointed and shall have accepted such appointment within ninety (90)
days after the date the Lockbox Escrow Agent gives the aforesaid notice of
resignation, the Lockbox Escrow Agent may apply to any court of competent
jurisdiction to appoint a successor Lockbox Escrow Agent to act until such time,
if any, as a successor Lockbox Escrow Agent shall have been appointed as
provided in this Section.  Any successor so appointed by such court shall
immediately and without further act be superseded by any successor Lockbox
Escrow Agent appointed by Company and Lender.

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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(b)           The Company and Lender shall have the right, upon mutual
agreement, at any time, to remove the Lockbox Escrow Agent and appoint a
successor Lockbox Escrow Agent, such removal to be effective upon the acceptance
of such appointment by the successor Lockbox Escrow Agent.

 

(c)           Any resigning or removed Lockbox Escrow Agent shall be entitled to
the fees and indemnities set forth herein to the extent incurred or arising, or
relating to events occurring, before such resignation or removal.

 

Section 7.  Resignation and Replacement of Lockbox Calculation Agent.

 

(a)           The Lockbox Calculation Agent shall have the right, at any time,
by giving written notice to the Financial Institution, Company and Lender, to
resign and be discharged of the responsibilities hereby created, such
resignation to become effective upon (i) the appointment of a successor Lockbox
Calculation Agent by Lender and Company, and (ii) the acceptance of such
appointment by such successor Lockbox Calculation Agent.  If no successor
Lockbox Calculation Agent shall be appointed and shall have accepted such
appointment within ninety (90) days after the date the Lockbox Calculation Agent
gives the aforesaid notice of resignation, the Lockbox Calculation Agent or
Lender may apply to any court of competent jurisdiction to appoint a successor
Lockbox Calculation Agent to act until such time, if any, as a successor Lockbox
Calculation Agent shall have been appointed as provided in this Section.  Any
successor so appointed by such court shall immediately and without further act
be superseded by any successor Lockbox Calculation Agent appointed by Lender and
Company.

 

(b)           Upon the determination by Lender or, if the Lockbox Calculation
Agent at such time is not Company or an Affiliate thereof, Company (in each
case, whether Lender or Company, acting reasonably and in good faith), that a
Termination Event has occurred (or, where Company is acting as Lockbox
Calculation Agent, an Event of Default has occurred), Lender or Company, as the
case may be, shall have the right to remove the Lockbox Calculation Agent by
providing written notice of such determination to the other parties hereto;
provided that, at Lender’s option, the Lockbox Calculation Agent may immediately
be suspended pending the resolution of any dispute regarding the provision of
such a notice as described in this Section 7(b).  In the event such a
determination is made, Lender or Company, as the case may be, may dispute such
determination by providing written notice to the other party within ten
(10) Business Days of receipt of the removal notice.  If no such dispute notice
is so provided, the Lockbox Calculation Agent shall be removed and a successor
Lockbox Calculation Agent shall be selected in accordance with Section 7(c).  If
such a dispute notice is timely provided, then the relevant parties shall first
attempt to reach an amicable settlement through mutual consultations and
negotiations.  If the parties are unable to reach an amicable settlement within
ten (10) Business Days from the date on which the dispute was first notified in
writing, then any party shall be entitled to submit the dispute to litigation
proceedings in accordance with the terms hereof.  Pending the resolution of any
such dispute, (unless the Lockbox Calculation Agent has been suspended as
described above) the party then serving as Lockbox Calculation Agent may
continue to serve in such role, provided that, during the pendency of any such
dispute, it delivers Lockbox Calculation Reports no less frequently than once
per week to each of the Lockbox Escrow Agent, Company and Lender.  If, following
the commencement of any dispute regarding the existence

 

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Exchange Commission.  Asterisks denote such omission.

 

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of a Termination Event, Company and Lender agree to remove the Lockbox
Calculation Agent or it is finally determined by a court of competent
jurisdiction that a Termination Event has in fact occurred, then the Lockbox
Calculation Agent shall be removed and a replacement selected in accordance with
Section 7(c).  In all events, removal of the Lockbox Calculation Agent shall
only become effective upon the acceptance by the successor Lockbox Calculation
Agent of its appointment.  Any resigning or removed Lockbox Calculation Agent
shall be entitled to the fees and indemnities set forth herein to the extent
incurred or arising, or relating to events occurring, before such resignation or
removal.

 

(c)           In connection with removal of the Lockbox Calculation Agent
pursuant to Section 7(b), a successor Lockbox Calculation Agent shall be
selected by Lender and Company, unless the removed Lockbox Calculation Agent
shall be Company or an Affiliate thereof, in which event such Agent shall be
chosen by Lender; provided, however, that such successor shall be chosen from
the list on Schedule 6 to this Agreement or be a similar entity with a national
reputation in the United States.  When required to mutually agree, in the event
that Company and Lender do not agree upon a successor within thirty (30) days of
the date on which a party notified the others of its decision to remove the
Lockbox Calculation Agent (or, if such removal is disputed in accordance with
Section 7(b) hereof, within thirty (30) days of the resolution of such dispute),
Company, using its reasonable discretion, shall promptly appoint a successor
Lockbox Calculation Agent from among those persons listed on Schedule 6 or a
similar entity with a national reputation in the United States (excluding, for
those purposes, any Person previously removed as Lockbox Calculation Agent or
any Person that is the subject of a pending dispute).

 

Section 8.  Subordination of Lien; Waiver of Set-Off.  In the event that the
Financial Institution has obtained or subsequently obtains by agreement, by
operation of law or otherwise a security interest in, lien on, or encumbrance,
claim or (except as provided in the next sentence) right of set-off against, any
Deposit Account or any security entitlement or any Deposit Funds therein or
credited thereto, the Financial Institution hereby agrees that such security
interest, lien, encumbrance, claim, and right of set-off shall be subordinate to
any security interest or other interest of Lender therein and the security
entitlement or any Deposit Funds therein or credited thereto.  The Financial
Institution agrees not to exercise any present or future right of recoupment or
set-off against any Deposit Account or to assert against any Deposit Account any
present or future security interest, banker’s lien or any other lien or claim
(including claim for penalties) that the Financial Institution may at any time
have against or in any Deposit Account or any security entitlement or any
Deposit Funds therein or credited thereto; provided, however, that, the
Financial Institution may set-off against the Lockbox Account the face amount of
any checks which have been credited to any Deposit Account but are subsequently
returned unpaid because of uncollected or insufficient funds in accordance with
Section 5(d).

 

Section 9.  Certain Matters Affecting the Financial Institution, Lockbox Escrow
Agent and Lockbox Calculation Agent.

 

(a)           Each of the Financial Institution, the Lockbox Escrow Agent and
the Lockbox Calculation Agent (in its capacity as such) shall perform only such
duties and obligations as are expressly set forth herein with respect to it and
no implied duties or obligations shall be read into this Agreement (it being
understood that the foregoing shall not otherwise limit any duty or obligation

 

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Exchange Commission.  Asterisks denote such omission.

 

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of Company in its individual capacity).  None of the Financial Institution, the
Lockbox Escrow Agent or the Lockbox Calculation Agent (in its capacity as such)
shall have any liability under any agreement other than this Agreement, nor
shall the Financial Institution or the Lockbox Calculation Agent have any duty
to inquire as to the provisions of any agreement other than this Agreement.

 

(b)           Each of the Financial Institution and the Lockbox Escrow Agent may
rely upon, and shall not be liable for acting in accordance with this Agreement
upon, any written notice, instruction or request furnished to it hereunder and
reasonably believed by it to be genuine and to have been signed or presented by
the proper party or parties, or for refraining from acting if and to the extent
that such written notice, instruction or request requires it to refrain from
acting.  Neither the Financial Institution nor the Lockbox Escrow Agent shall be
under a duty to inquire into or investigate the validity, accuracy or content of
any such document.

 

(c)           In the event any Account Instruction, Lockbox Calculation Report
or other notice is given to the Lockbox Escrow Agent or Financial Institution by
Company or Lender, whether in writing, by facsimile or telecopier, or otherwise,
each of the Lockbox Escrow Agent and Financial Institution is authorized to seek
confirmation thereof by telephone call-back to, as applicable, from one or more
of such Person’s Authorized Representatives, and each of the Financial
Institution and Lockbox Escrow Agent may rely upon the confirmation of anyone
purporting to be the Authorized Representative so designated.  The Authorized
Representatives and telephone numbers for call-backs may be changed only in a
writing actually received and acknowledged by the Financial Institution and the
Lockbox Escrow Agent.  The parties to this Agreement acknowledge and agree that
such security procedures are commercially reasonable.

 

(d)           Company and Lender acknowledge that repetitive funds transfer
instructions may be given to the Lockbox Escrow Agent or Financial Institution
for one or more beneficiaries where only the date of the requested transfer, the
amount of funds to be transferred, and/or the description of the payment shall
change within the repetitive instructions (“Standing Settlement Instructions”). 
According, Company and Lender shall deliver to Lockbox Escrow Agent or Financial
Institution such specific Standing Settlement Instructions only for each
respective beneficiary as set forth in Exhibit A to this Escrow Agreement, by
facsimile or other written instructions.  Lockbox Escrow Agent or Financial
Institution may rely solely upon such Standing Settlement Instructions and all
identifying information set forth therein for each beneficiary.  Lockbox Escrow
Agent or Financial Institution and Company or Lender agree that such Standing
Settlement Instructions shall be effective as the funds transfer instructions of
Company or Lender, without requiring a verifying callback, whether or not
authorized, if such Standing Settlement Instructions are consistent with
previously authenticated Standing Settlement Instructions for that beneficiary. 
The parties acknowledge that such Standing Settlement Instructions are a
security procedure and are commercially reasonable.

 

(e)           Neither the Financial Institution nor the Lockbox Escrow Agent
shall be liable for any action taken or omitted by it except to the extent that
a court of competent jurisdiction determines that the Financial Institution’s or
the Lockbox Escrow Agent’s (as applicable) gross negligence or willful
misconduct was the cause of any loss, expense, cost, damage or liability to
either or both of Company or Lender.

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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(f)            Each of the Financial Institution and the Lockbox Escrow Agent
(i) shall have the right to execute any of its powers and perform any of its
duties hereunder directly or through agents or attorneys (which, in the case of
the Lockbox Escrow Agent, may be in addition to the Lockbox Calculation Agent),
the appointment of which will be approved in writing by Company and Lender (and
the Financial Institution or Lockbox Escrow Agent (as applicable) shall be
liable only for its gross negligence or willful misconduct (as finally
adjudicated in a court of competent jurisdiction) in the selection of any such
agent or attorney) and (ii) shall have the right to consult with counsel,
accountants and other skilled persons to be selected and retained by it.

 

(g)           Any legal entity into which the Financial Institution or the
Lockbox Escrow Agent, in each case in its individual capacity, may be merged or
converted or with which it may be consolidated, or any legal entity resulting
from any merger, conversion or consolidation to which the Financial Institution
or the Lockbox Escrow Agent, in each case in its individual capacity, shall be a
party, or any legal entity to which substantially all the corporate trust
business of the Financial Institution or the Lockbox Escrow Agent may be
transferred, shall be the Financial Institution or Lockbox Escrow Agent, as
applicable, under this Agreement without further act or notice, other than that
the Financial Institution or Lockbox Escrow Agent, as applicable, shall endeavor
to give prompt notice thereof to the other parties hereto (it being understood
that it shall not have any liability for failure to do so).

 

(h)           In the event that the Financial Institution or the Lockbox Escrow
Agent is unable to perform its obligations under the terms of this Agreement
(x) because of acts of God, strikes, electrical outages, equipment or
transmission failure or damage reasonably beyond its control, or any other cause
reasonably beyond its control, or (y) because, upon advice of its counsel,
performance would violate any applicable guideline, rule or regulation of any
governmental authority having jurisdiction over it, then, in each case with
respect to the foregoing clauses (x) and (y) in this subsection (g), the
Financial Institution or the Lockbox Escrow Agent, as applicable, shall promptly
notify Company and Lender thereof in writing and shall not be liable for damages
to the other parties for any unforeseeable damages resulting from such failure
to perform or otherwise from such causes.  Performance under this Agreement by
the Financial Institution shall resume when it is able to perform substantially
its duties hereunder.

 

(i)            Anything in this Agreement to the contrary notwithstanding, in no
event shall any of the Financial Institution, Lockbox Escrow Agent or Lockbox
Calculation Agent (other than the Company or its Affiliates) (in its capacity as
such) be liable for any special, indirect, exemplary or consequential loss or
damage of any kind whatsoever (including, but not limited to, lost profits),
even if it has been advised of the likelihood of such loss or damage and
regardless of the form of action (it being understood that the foregoing shall
not otherwise limit any duty or obligation of Company in its individual
capacity).

 

(j)            If Company and Lender shall be in a disagreement about the
interpretation of this Agreement, or about the rights and obligations, or the
propriety of any action contemplated by the Lockbox Escrow Agent hereunder, the
Lockbox Escrow Agent may, but shall not be required to, file an appropriate
civil action to resolve the disagreement.  The Lockbox Escrow Agent shall be
indemnified, jointly and severally, by Company and Lender for all costs,
including, reasonable attorneys’ fees, in connection with such civil action, and
shall continue, and be fully protected

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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in continuing, to perform its responsibilities under this Agreement until a
final judgment, without any further right of appeal, is received or the Lockbox
Escrow Agent is replaced pursuant to Section 6 of this Agreement; provided, that
Lender’s liability under this Section 9(j) shall be limited to costs and/or fees
incurred solely as a result of Lockbox Escrow Agent’s action or inaction taken
pursuant to Lender’s instructions.  If there is any disagreement as to the
propriety of any action of the Lockbox Escrow Agent, the Company and Lender
shall meet promptly to discuss and, if so agreed, to initiate the procedure to
replace the Lockbox Escrow Agent in accordance with Section 6 of this Agreement.

 

Section 10.  Conflict with Other Agreements; Adverse Claims.

 

(a)           In the event of any conflict between this Agreement (or any
portion hereof) and any other agreement now existing or hereafter entered into,
the terms of this Agreement shall prevail; provided, that Company and Lender
confirm to each other that nothing herein is intended to expand, modify or limit
the rights and/or obligations of Company and Lender under the Loan Agreement
and/or the Security Agreement; and provided, further, that in the event of any
inconsistency between this Agreement and the terms of the Loan Agreement and/or
the Security Agreement, the terms and provisions of the Loan Agreement and/or
the Security Agreement, as applicable, shall control as between Company and
Lender, with the Loan Agreement taking priority over the Security Agreement.

 

(b)           The Financial Institution hereby confirms that:

 

(i)            there are no agreements entered into between the Financial
Institution and any other person or entity with respect to any Deposit Account
except for this Agreement;

 

(ii)           it has not entered into, and until the termination of this
Agreement will not enter into, any agreement with any person or entity (other
than Lockbox Escrow Agent, Company and Lender) relating to the Deposit Accounts
and/or any Deposit Funds therein or credited thereto pursuant to which it has
agreed to comply with any “entitlement orders” (as defined in
Section 8-102(a)(8) of the UCC), orders, directions or any instructions of such
person or entity concerning any of the Deposit Accounts or the disposition,
withdrawal or disbursement of any Deposit Funds therein or credited thereto; and

 

(iii)          except for the claims and interests of Lockbox Escrow Agent,
Company and Lender in the Deposit Accounts and the Deposit Funds therein or
credited thereto, the Financial Institution does not know of any security
interest in, lien on, claim to, or interest in any Deposit Account or in any
“financial asset” (as defined in Section 8-102(a)(9) of the UCC), funds, monies,
checks or other items in or credited to the Deposit Accounts.  If any person or
entity asserts any security interest, lien, encumbrance or adverse claim
(including any writ, garnishment, judgment, warrant of attachment, execution or
similar process) against any of the Deposit Accounts or any Deposit Funds
therein or credited thereto, other than the security interest of Lender therein,
the Financial Institution will promptly notify Lockbox Escrow Agent, Company and
Lender thereof in writing.

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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Section 11.  Authorized Representatives.  Each individual designated as an
authorized representative of Company or of Lender, respectively (an “Authorized
Representative”), is authorized to give and receive notices, requests and
instructions and to deliver certificates and documents in connection with this
Agreement on behalf of Company or Lender, as the case may be.  The specimen
signature for each Authorized Representative of Company initially authorized
hereunder is set forth on Schedule 2.  The specimen signature for each
Authorized Representative of Lender initially authorized hereunder is set forth
on Schedule 3.  The specimen signature for each Authorized Representative of the
Lockbox Calculation Agent initially authorized hereunder is set forth on
Schedule 4.  From time to time, Company, Lender or the Lockbox Calculation Agent
may, by delivering to each other, the Lockbox Escrow Agent and the Financial
Institution a revised Schedule 2 or 3 or 4 (as applicable), change the
information previously given pursuant to this Section 11, but each of the
parties hereto shall be entitled to rely conclusively on the then current
Schedule until receipt of a superseding Schedule.

 

Section 12.  Representations, Warranties and Covenants.

 

(a)           Representations, Warranties and Covenants of the Financial
Institution.  The Financial Institution hereby represents, warrants and
covenants to Company and Lender that:

 

(i)            the Deposit Accounts have each been established as set forth in
Section 2, and the Financial Institution covenants that the Deposit Accounts
will be maintained in the manner set forth herein until termination of this
Agreement;

 

(ii)           it has not assigned, pledged or granted a security interest in
any of the Deposit Accounts or any Deposit Funds in or credited in such Deposit
Accounts; and

 

(iii)          this Agreement constitutes the legal, valid and binding
obligation of the Financial Institution, enforceable against the Financial
Institution in accordance with its terms, except as enforcement may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance or other similar laws affecting the enforcement of creditors’ rights
generally or by general equitable principles (regardless of whether enforcement
is sought in a proceeding in equity or at law).

 

(b)           Representations, Warranties and Covenants of the Lockbox Escrow
Agent.  The Lockbox Escrow Agent hereby represents, warrants and covenants to
Company and Lender that:

 

(i)            the Lockbox Account has been established as set forth in
Section 2, and the Lockbox Escrow Agent covenants that the Lockbox Account will
be maintained in the manner set forth herein until termination of this
Agreement;

 

(ii)           it has not assigned, pledged or granted a security interest in
the Lockbox Account or any Deposit Funds therein or credited thereto; and

 

(iii)          this Agreement constitutes the legal, valid and binding
obligation of the Lockbox Escrow Agent, enforceable against the Lockbox Escrow
Agent in accordance with its terms, except as enforcement may be limited by
applicable bankruptcy, insolvency,

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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reorganization, moratorium, fraudulent conveyance or other similar laws
affecting the enforcement of creditors’ rights generally or by general equitable
principles (regardless of whether enforcement is sought in a proceeding in
equity or at law).

 

(c)           Representations, Warranties and Covenants of the Lockbox
Calculation Agent.  The Lockbox Calculation Agent hereby represents, warrants
and covenants to Lockbox Escrow Agent, Company and Lender that:

 

(i)            solely in its capacity as Lockbox Calculation Agent hereunder, it
does not have, hereby waives, and shall not assert, any ownership interest or
other right or interest in and to the Lockbox Account or Deposit Amounts
relating thereto;

 

(ii)           this Agreement constitutes the legal, valid and binding
obligation of the Lockbox Calculation Agent, enforceable against the Lockbox
Calculation Agent in accordance with its terms, except as enforcement may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance or other similar laws affecting the enforcement of
creditors’ rights generally or by general equitable principles (regardless of
whether enforcement is sought in a proceeding in equity or at law).

 

(iii)          the execution, delivery and performance by Lockbox Calculation
Agent of its obligations under this Agreement do not and will not constitute or
result in a breach of (A) Lockbox Calculation Agent’s organizational documents,
or (B) the provisions of any material contract to which Lockbox Calculation
Agent is a party or by which Lockbox Calculation Agent is bound; and

 

(iv)          all approvals and authorizations required to permit the execution,
delivery and performance by Lockbox Calculation Agent of this Agreement have
been obtained.

 

(d)           Representations, Warranties and Covenants of Company.  Company
hereby represents, warrants and covenants to the Financial Institution, Lockbox
Escrow Agent, Lockbox Calculation Agent and Lender that:

 

(i)            the execution, delivery and performance by Company of this
Agreement have been duly authorized by all necessary action;

 

(ii)           this Agreement has been duly executed and delivered by Company;

 

(iii)          this Agreement constitutes the legal, valid and binding
obligation of Company, enforceable against Company in accordance with its terms,
except as enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or other similar laws
affecting the enforcement of creditors’ rights generally or by general equitable
principles (regardless of whether enforcement is sought in a proceeding in
equity or at law);

 

(iv)          the execution, delivery and performance by Company of its
obligations under this Agreement do not and will not constitute or result in a
breach of (A) Company’s organizational documents, or (B) the provisions of any
material contract to which

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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Company is a party or by which Company is bound (other than any such provisions
that have been waived by the other parties thereto); and

 

(v)           all approvals and authorizations required to permit the execution,
delivery and performance by Company of this Agreement have been obtained.

 

(e)           Representations, Warranties and Covenants of Lender.  Lender
hereby represents, warrants and covenants to the Financial Institution, Lockbox
Escrow Agent, Lockbox Calculation Agent and Company that:

 

(i)            the execution, delivery and performance by Lender of this
Agreement have been duly authorized by all necessary action;

 

(ii)           this Agreement has been duly executed and delivered by Lender;

 

(iii)          this Agreement constitutes the legal, valid and binding
obligation of Lender, enforceable against Lender in accordance with its terms,
except as enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or other similar laws
affecting the enforcement of creditors’ rights generally or by general equitable
principles (regardless of whether enforcement is sought in a proceeding in
equity or at law);

 

(iv)          the execution, delivery and performance by Lender of its
obligations under this Agreement do not and will not constitute or result in a
breach of (A) Lender’s partnership agreement or other organizational documents,
or (B) the provisions of any material contract to which Lender is a party or by
which Lender is bound; and

 

(v)           all approvals and authorizations required to permit the execution,
delivery and performance by Lender of this Agreement have been obtained.

 

Section 13.  Termination of this Agreement.

 

(a)           Except as otherwise provided in this Section 13, this Agreement
shall continue in effect until Lender confirms in writing that all amounts
payable under the Loan Agreement and all of the other Transaction Documents (as
defined in the Loan Agreement) have been indefeasibly paid in full (other than
indemnification obligations and other contingent obligations that, by their
terms, survive the termination of this Agreement).

 

(b)           Lender may terminate this Agreement at any time upon its delivery
of written notice of such termination to the Financial Institution, the Lockbox
Escrow Agent and Company.

 

(c)           Company may not terminate this Agreement for any reason without
the prior written consent of Lender.

 

(d)           Prior to any termination of this Agreement, the Financial
Institution hereby agrees that it shall promptly take, at the expense of
Company, all reasonable actions necessary to facilitate the transfer of any
Deposit Funds in or credited to the Deposit Accounts as follows: (i) in the

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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case of a termination of this Agreement under Section 13(a), to the depository
institution designated in writing by Company; and (ii) in all other cases, to
the depository institution designated in writing by Lender, which depository
institution will (in all cases) be so designated prior to termination hereof.

 

(e)           No termination of this Agreement shall impair the rights of any
party hereto with respect to checks processed prior to the effective date of
termination.

 

Section 14.  Fees and Expenses.  Any Lockbox Calculation Agent, other than
Company or its Affiliate, will receive a monthly fee for its services hereunder,
which shall be paid by Company and charged, on a pro rata basis, against amounts
on deposit in the Lockbox Account which would otherwise be transferred to the
Company Concentration Account.  Each of the Lockbox Escrow Agent, Lockbox
Calculation Agent and Financial Institution agrees to look solely to Company
Concentration Account (or to Company or amounts which are otherwise payable to
or for the benefit of Company or to Company Concentration Account) for payment
of its applicable fee referred to below and any other fees in connection with
its services hereunder, and Company agrees to pay such fees on demand therefor;
provided, however, that the fees which such parties may charge Company shall not
exceed the fees and charges customarily charged by them for comparable services,
and will be adjusted upon replacement of any such party hereunder.  Company
acknowledges and agrees that it solely shall be, and at all times remain, liable
to the Lockbox Escrow Agent, Lockbox Calculation Agent and Financial Institution
in connection with its payment of such amounts.  The fees of the Lockbox Escrow
Agent are five thousand dollars ($5,000) per annum without pro-ration for
partial years.

 

Section 15.  Indemnity.

 

(a)           Each of Company and Lender agrees that it shall be jointly and
severally liable to indemnify and hold harmless each of the Lockbox Escrow Agent
and the Financial Institution and its respective successors, assigns, directors,
officers, managers, attorneys, accountants, experts, agents and employees
(collectively, the “Indemnitees”) from and against any and all Liabilities
incurred by any Indemnitee arising out of or in connection with (i) this
Agreement or (ii) the Financial Institution or Lockbox Escrow Agent’s
performance of its obligations and services under this Agreement, including,
without limitation, the compliance with any Account Instruction, Lockbox
Calculation Report or other instructions, orders, directions or notices given
hereunder, other than those Liabilities that are due to or caused by the gross
negligence or willful misconduct of any Indemnitee;  provided, that Lender’s
liability under this Section 15(a) shall be limited to Liabilities incurred
solely as a result of any Indemnitee’s action or inaction taken pursuant to
Lender’s instructions.

 

(b)           Company and Lender each agrees that it shall be jointly and
severally liable to indemnify and hold harmless any Lockbox Calculation Agent
from and against any and all Liabilities incurred by the Lockbox Calculation
Agent arising out of or in connection with (i) this Agreement or (ii) the
Lockbox Calculation Agent’s performance of its obligations and services under
this Agreement, other than those Liabilities that are due to or caused by the
Lockbox Calculation Agent’s gross negligence or willful misconduct; provided,
however, that Lender shall not have any obligation under this subsection with
respect to any Lockbox Calculation Agent

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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which is the same Person as, or which is an Affiliate of, Company; and,
provided, further, that Lender’s liability under this Section 15(b) shall be
limited to Liabilities incurred solely as a result of Lockbox Calculation
Agent’s action or inaction taken pursuant to Lender’s instructions.

 

(c)           The parties hereto acknowledge and agree that the foregoing
indemnities shall survive the resignation, replacement or removal of the
Financial Institution or any agent hereunder and the termination of this
Agreement until the expiration of the applicable statute of limitations.

 

Section 16.  TINs and Patriot Act Disclosure.

 

(a)           Company and Lender each represent to the Lockbox Escrow Agent and
Financial Institution and to each other that its respective correct taxpayer
identification number (“TIN”) assigned by the Internal Revenue Service or any
other taxing authority is set forth in Schedule 1.  Upon execution of this
Agreement, each of Company and Lender shall deliver to the Lockbox Escrow Agent
and Financial Institution a W-8 or W-9 Internal Revenue Service form or any
other similar form issued by the relevant taxing authority duly executed by it.

 

(b)           All interest or other income earned in the Lockbox Account
(i) shall be allocated and/or paid in accordance with the allocations made in
accordance with this Agreement and (ii) shall be reported to the Internal
Revenue Service or any other applicable taxing authority by Lockbox Escrow
Agent.  Notwithstanding such written directions, the Financial Institution shall
report and, if required, withhold any taxes as it reasonably determines may be
required by any law or regulation in effect at the time of the distribution.  In
the event that any earnings in the Lockbox Account remain undistributed at the
end of any calendar year, the Financial Institution shall report to the Internal
Revenue Service or such other taxing authority such earnings as it deems
appropriate or as required by any applicable law or regulation or, to the extent
consistent therewith, as directed in writing by Lender.  In addition, the
Financial Institution shall withhold from the Lockbox Account any taxes required
by law to be withheld and shall remit such taxes to the appropriate
authorities.  Any taxes withheld by the Financial Institution shall be included
in the statement required by Section 5(f).

 

(c)           All items of income, gain, expense and loss recognized in the
Company Concentration Account shall be reported to the Internal Revenue Service
and all state and local taxing authorities under the name and TIN of Company. 
All items of income, gain, expense and loss recognized in the Lender
Concentration Account allocable to each Lender shall be reported to the Internal
Revenue Service and all state and local taxing authorities under the name and
TIN of such Lender.

 

(d)           Section 326 of the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (“USA
PATRIOT Act”) requires the Lockbox Escrow Agent and Financial Institution to
implement reasonable procedures to verify the identity of any person that opens
a new account with it.  Accordingly, the parties acknowledge that Section 326 of
the USA PATRIOT Act and the Lockbox Escrow Agent’s and Financial Institution’s
identity verification procedures require the Lockbox Escrow Agent and Financial
Institution to obtain information which may be used to confirm the parties
identity including

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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without limitation name, address and organizational documents (“identifying
information”). The parties agree to provide the Lockbox Escrow Agent and
Financial Institution with and consent to the Lockbox Escrow Agent and Financial
Institution obtaining from third parties any such identifying information
required as a condition of opening an account with or using any service provided
by the Lockbox Escrow Agent and Financial Institution.

 

Section 17.  Specific Performance.  Each of the parties hereto acknowledges that
the other party will have no adequate remedy at law if it fails to perform any
of its obligations under this Agreement or any of the other Transaction
Documents.  In such event, each of the parties agrees that the other party shall
have the right, in addition to any other rights it may have (whether at law or
in equity), to specific performance of this Agreement.

 

Section 18.  Notices.  All notices, consents, waivers and communications
hereunder given by any party to any other party shall be in writing (including
facsimile transmission) and delivered personally, by telegraph, telecopy, telex
or facsimile, by a recognized overnight courier, or by dispatching the same by
certified or registered mail, return receipt requested, with postage prepaid, in
each case addressed to the appropriate notice address set forth on Schedule 1 or
to such other address or addresses as the parties may from time to time
designate by notice as provided herein, except that notices of changes of
address shall be effective only upon receipt.  All such notices, consents,
waivers and communications shall: (a) when posted by certified or registered
mail, postage prepaid, return receipt requested, be effective three (3) Business
Days after dispatch, (b) when telegraphed, telecopied, telexed or facsimiled, be
effective upon receipt by the transmitting party of confirmation of complete
transmission, (c) when delivered by a recognized overnight courier or in person,
be effective upon receipt when hand delivered or when delivery is confirmed by
such courier’s tracking system or (d) when sent by e-mail, upon receipt of a
confirmatory return e-mail from the recipient.

 

Section 19.  Entire Agreement.  This Agreement, together with the other
Transaction Documents and the Annexes and Schedules hereto and thereto (which
are incorporated herein by reference), constitutes the entire agreement among
the parties with respect to the subject matter hereof and supersedes all prior
agreements, understandings and negotiations, both written and oral, among the
parties with respect to the subject matter of this Agreement.  No
representation, inducement, promise, understanding, condition or warranty not
set forth herein (or in the Annexes or Schedules hereto) has been made or relied
upon by any party hereto.  None of this Agreement, nor any provision hereof, is
intended to confer upon any Person other than the parties hereto any rights or
remedies hereunder.

 

Section 20.  Amendments; No Waivers.

 

(a)           This Agreement or any term or provision hereof may not be amended,
changed or modified except with the written consent of the parties hereto;
provided, that the parties hereto agree that they will cooperate with Cowen
Healthcare Royalty Partners, L.P. to amend this agreement in order to add
mechanics related to syndication of the Loan to one or more additional Lenders
under the Loan Agreement.  Lender may take any action that is permitted under
the Loan Agreement at the direction of Required Lenders.  No waiver of any right
hereunder shall be

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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effective unless such waiver is signed in writing by the party against whom such
waiver is sought to be enforced.

 

(b)           No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege.  The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.

 

Section 21.  Successors and Assigns.  The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns, and any reference herein to a party shall be deemed a
reference to such party’s successors and assigns, if any.  Company, Financial
Institution and Lockbox Escrow Agent shall not be entitled to assign any of
their obligations and rights hereunder or any other Transaction Documents
without the prior written consent of Lender.  Lender may assign this Agreement
and any of its rights hereunder without restriction.

 

Section 22.  Severability.  If any provision of this Agreement is held to be
invalid or unenforceable, the remaining provisions shall nevertheless be given
full force and effect.

 

Section 23.  Recharacterization.  The parties intend that this Agreement (in so
far as it relates to the Lockbox Account) constitute an escrow agreement for all
purposes, including, without limitation, for purposes of Sections 541 and 544 of
the United States Bankruptcy Code, Title 11, United States Code (the “Bankruptcy
Code”).  To the extent that a court shall, notwithstanding such intent, construe
this Agreement (insofar as it relates to the Lockbox Account) as constituting a
security arrangement, the following provisions shall be deemed to apply:

 

(a)           The Company hereby grants to Lender a security interest in the
Lockbox Account and all funds, monies, checks and other items from time to time
credited thereto or on deposit therein, to secure the Secured Obligations as
defined in the Security Agreement;

 

(b)           The Lockbox Escrow Agent shall hold funds in the Lockbox Account
as bailee for Lender for purposes of perfecting such security interest by
control of such accounts.

 

(c)           Financial Institution shall comply with all Account Instructions
originated by the Lender with respect to the Lockbox Account without further
consent by the Company.

 

Section 24.  Interpretation.  When a reference is made in this Agreement to
Sections, subsections, Annexes or Schedules, such reference shall be to a
Section, subsection, Annex or Schedule to this Agreement unless otherwise
indicated.  The terms “Agreement”, “herein”, “hereto”, “hereof” and words of
similar import shall, unless the context otherwise requires, mean this
Agreement, as amended, supplemented or otherwise modified from time to time. 
The words “include”, “includes” and “including” when used herein shall be deemed
in each case to be followed by the words “without limitation”.  No party hereto
shall be or be deemed to be the drafter of this Agreement for the purposes of
construing this Agreement against any other party.

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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Section 25.  Headings and Captions.  The headings and captions in this Agreement
are for convenience and reference purposes only and shall not be considered a
part of or affect the construction or interpretation of any provision of this
Agreement.

 

Section 26.  Governing Law; Jurisdiction.

 

(a)           THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED, INTERPRETED
AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT
GIVING EFFECT TO THE PRINCIPLES OF CONFLICTS OF LAW THEREOF THAT WOULD REQUIRE
THE APPLICATION OF LAWS OTHER THAN THOSE OF THE STATE OF NEW YORK.

 

(b)           ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR
ANY OTHER TRANSACTION DOCUMENT MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF
COMPETENT JURISDICTION IN THE STATE, COUNTY AND CITY OF NEW YORK.  BY EXECUTION
AND DELIVERY OF THIS AGREEMENT, EACH PARTY HERETO HEREBY IRREVOCABLY CONSENTS TO
AND ACCEPTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY THE NON-EXCLUSIVE JURISDICTION OF SUCH COURTS.  EACH PARTY
HERETO HEREBY FURTHER IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION
TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT
MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH
JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT.

 

(c)           EACH PARTY HERETO HEREBY IRREVOCABLY CONSENTS TO THE SERVICE OF
PROCESS OUT OF ANY OF THE COURTS REFERRED TO IN SUBSECTION (b) ABOVE OF THIS
SECTION 26 IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY
REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO IT AT ITS ADDRESS SET FORTH IN
THIS AGREEMENT.  EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ANY OBJECTION TO
SUCH SERVICE OF PROCESS AND FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD
OR CLAIM IN ANY ACTION OR PROCEEDING COMMENCED HEREUNDER THAT SERVICE OF PROCESS
WAS IN ANY WAY INVALID OR INEFFECTIVE.  NOTHING HEREIN SHALL AFFECT THE RIGHT OF
A PARTY TO SERVE PROCESS ON THE OTHER PARTY IN ANY OTHER MANNER PERMITTED BY
LAW.

 

Section 27.  Waiver of Jury Trial; Exclusion of Punitive Damages.  EACH PARTY
HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.  THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT.  IN ADDITION, WITHOUT
LIMITING COMPANY’S OBLIGATION TO INDEMNIFY LENDER FOR ANY THIRD PARTY CLAIM

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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FOR PUNITIVE DAMAGES, IN ANY LITIGATION OR ARBITRATION BETWEEN THE PARTIES
HEREUNDER NEITHER PARTY SHALL BE ENTITLED TO SEEK PUNITIVE DAMAGES FROM THE
OTHER PARTY.

 

Section 28.  Waiver of Immunity.  To the extent that the Company has or
hereafter may be entitled to claim or may acquire, for itself or any of its
assets, any immunity from suit, jurisdiction of any court or from any legal
process (whether through service or notice, attachment prior to judgment,
attachment in aid of execution, or otherwise) with respect to itself or any of
its property, the Company hereby irrevocably waives such immunity in respect of
its obligations hereunder to the fullest extent permitted by law.

 

Section 29.  Counterparts; Effectiveness.  This Agreement may be executed in two
or more counterparts, each of which shall be an original, but all of which
together shall constitute one and the same instrument.  This Agreement shall
become effective when each party hereto shall have received a counterpart hereof
signed by the other parties hereto.

 

[REMAINDER OF PAGE INTENTIONALLY BLANK; SIGNATURE PAGE FOLLOWS]

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the date first above
written.

 

 

FINANCIAL INSTITUTION:

JPMORGAN CHASE BANK, N.A.

 

 

 

 

 

 

By:

 

 

 

Name: Rola Tseng

 

 

Title: Vice President

 

 

 

 

 

 

COMPANY:

DYAX CORP.

 

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

 

 

LENDER:

COWEN HEALTHCARE ROYALTY PART-
NERS, L.P.,

 

 

 

 

By:

Cowen Healthcare Royalty GP, LLC,

 

 

its General Partner

 

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

 

 

LOCKBOX ESCROW AGENT:

JPMORGAN CHASE BANK, N.A.

 

 

 

 

 

 

 

By:

 

 

 

Name: Rola Tseng

 

 

Title: Vice President

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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INITIAL LOCKBOX

DYAX CORP.

CALCULATION AGENT:

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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ANNEX A

to Agreement

 

DEFINITIONS

 

“Account Instruction” shall mean, with respect to any Deposit Account, any
entitlement order, order, direction or instruction concerning or directing the
disposition, transfer, withdrawal, disbursement or redemption of any Deposit
Funds in or credited to such Deposit Account, or otherwise relating to any
matters pertaining to or concerning such Deposit Account, and/or any Deposit
Funds therein or credited thereto.

 

“Agreement” shall have the meaning set forth in the preamble (first paragraph)
of this Agreement.

 

“Authorized Representative” shall have the meaning set forth in Section 11.

 

“Business Day” shall mean any day other than (a) a Saturday (b) a Sunday or
(c) any other day on which the Financial Institution located at the address set
forth on Schedule 1 is authorized or required by law or executive order to
remain closed.

 

“Company Concentration Account” shall have the meaning set forth in
Section 2(d).

 

“Concentration Accounts” shall have the meaning set forth in Section 2(d).

 

“Deposit Account” and “Deposit Accounts” shall have the meaning set forth in
Section 2.

 

“Deposit Funds” shall mean any and all financial assets, funds, monies, checks
or other items, including all Permitted Investments.

 

“Effective Date” shall mean August 8, 2008.

 

“Event of Default” shall have the meaning set forth in the Loan Agreement.

 

“Financial Institution” shall have the meaning set forth in the preamble (first
paragraph) of this Agreement.

 

“Fiscal Year” shall mean the calendar year.

 

“Indemnitees” shall have the meaning set forth in Section 15.

 

“Lender Concentration Account” shall have the meaning set forth in Section 2(d).

 

“Liabilities” shall mean any and all losses, liabilities, damages, claims,
penalties, judgments, settlements, litigation, investigations, suits, actions,
costs or expenses (including the reasonable fees and expenses of in-house
counsel and of outside counsel and their staff and all expense of document
location, duplication and shipment) (each a “Liability”).

 

 “Loan Agreement” shall have the meaning set forth in the Recitals to this
Agreement.

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

--------------------------------------------------------------------------------

 

“Lockbox Calculation Agent” shall have the meaning set forth in the preamble to
this Agreement.

 

“Lockbox Calculation Report” shall have the meaning set forth in Section 3(b).

 

“Lockbox Escrow Agent” shall have the meaning set forth in the preamble to this
Agreement.

 

“Lockbox Account” shall have the meaning set forth in Section 2(c).

 

“Permitted Investments” shall mean either (i) the investments in the Cash
Compensation Account with the JPMorgan Chase Bank, N.A. or (ii) subject to
Section 2 of this Agreement, such other investments as Company or Lender, as
applicable, may select from time to time, in each case together with all
interest and other earnings thereon.  Cash Compensation Accounts have rates of
compensation that may vary from time to time based upon market conditions.

 

 “Person” shall have the meaning set forth in the Loan Agreement.

 

“Security Agreement” shall have the meaning set forth in the Recitals to this
Agreement.

 

“Termination Event” shall mean the occurrence or existence of any of the
following events: (a) the Lockbox Calculation Agent’s material failure to comply
with its agreements and duties under this Agreement in accordance with the terms
hereof and such failure continues for more than thirty (30) Business Days after
written notice from Lender to the Lockbox Calculation Agent or (b) such a
material failure occurs in any four (4) calendar quarters regardless of the
duration for which such failure continues.

 

“Third Party” shall mean any person or entity other than Company or Lender.

 

“TIN” shall have the meaning set forth in Section 16.

 

“UCC” shall mean the Uniform Commercial Code as in effect from time to time in
the State of New York.

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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SCHEDULE 1

to Agreement

 

TAXPAYER IDENTIFICATION NUMBERS

 

Company’s TIN is:          04-3053198

 

Lender’s  TIN is:                   26-1484093

 

The following contact information can be used to contact all representatives on
schedules that list representatives:

 

Dyax Corporation
300 Technology Square
Cambridge, MA  02139
Main:      (617) 225-2500

 

Cowen Healthcare Royalty Partners
177 Broad Street, Suite 1101
Stamford, CT  06901
Main:      (646) 562-1100

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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SCHEDULE 2

to Agreement

 

SPECIMEN SIGNATURE
FOR EACH AUTHORIZED REPRESENTATIVE
OF COMPANY

 

Henry E. Blair

 

 

 

 

 

 

 

Name:

Henry E. Blair

 

Title:

Chairman and Chief Executive Officer

 

 

Dyax Corp.

 

 

 

 

 

 

 

Gustav Christensen

 

 

 

 

 

 

 

Name:

Gustav Christensen

 

Title:

Executive Vice President, Chief Business Officer

 

 

Dyax Corp.

 

 

 

 

 

 

 

Ivana Magovcevic-Liebisch, PhD, JD

 

 

 

 

 

 

 

Name:

Ivana Magovcevic-Liebisch, PhD, JD

 

Title:

Executive Vice President, Admin.

 

 

and General Counsel

 

 

Dyax Corp.

 

 

 

 

 

 

 

Amy Dellorco

 

 

 

 

 

 

 

Name:

Amy Dellorco

 

Title:

Vice President, Finance and Controller

 

 

Dyax Corp.

 

 

 

 

 

 

 

Andrew D. Ashe, Esq.

 

 

 

 

 

 

 

Name:

Andrew D. Ashe, Esq.

 

Title:

Vice President and Associate General Counsel

 

 

Dyax Corp.

 

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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SCHEDULE 3
to Agreement

SPECIMEN SIGNATURE
FOR EACH AUTHORIZED REPRESENTATIVE
OF LENDER

 

Gregory B. Brown

 

 

 

 

 

 

 

Name:

Gregory B. Brown, M.D.

 

Title:

Managing Director

 

 

Cowen Healthcare Royalty Partners, L.P.

 

 

 

 

 

 

 

Clarke B. Futch

 

 

 

 

 

 

 

Name:

Clarke B. Futch

 

Title:

Managing Director

 

 

Cowen Healthcare Royalty Partners, L.P.

 

 

 

 

 

 

 

Alyson Goldfarb

 

 

 

 

 

 

 

Name:

Alyson Goldfarb

 

Title:

CFO

 

 

Cowen Healthcare Royalty Partners, L.P.

 

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

--------------------------------------------------------------------------------

 

SCHEDULE 4

to Agreement

 

SPECIMEN SIGNATURE
FOR EACH AUTHORIZED REPRESENTATIVE
OF LOCKBOX CALCULATION AGENT

 

 

Henry E. Blair

 

 

 

 

 

 

 

Name:

Henry E. Blair

 

Title:

Chairman and Chief Executive Officer

 

 

Dyax Corp.

 

 

 

 

 

 

 

Gustav Christensen

 

 

 

 

 

 

 

Name:

Gustav Christensen

 

Title:

Executive Vice President, Chief Business Officer

 

 

Dyax Corp.

 

 

 

 

 

 

 

Ivana Magovcevic-Liebisch, PhD, JD

 

 

 

 

 

 

 

Name:

Ivana Magovcevic-Liebisch, PhD, JD   

 

Title:

Executive Vice President, Admin.

 

 

and General Counsel

 

 

Dyax Corp.

 

 

 

 

 

 

 

Amy Dellorco

 

 

 

 

 

 

 

Name:

Amy Dellorco

 

Title:

Vice President, Finance and Controller

 

 

Dyax Corp.

 

 

 

 

 

 

 

Andrew D. Ashe, Esq.

 

 

 

 

 

 

 

Name:

Andrew D. Ashe, Esq.

 

Title:

Vice President and Associate General Counsel

 

 

Dyax Corp.

 

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

--------------------------------------------------------------------------------

 

SCHEDULE 5

to Agreement

CALCULATION OF ALLOCATIONS

 

Lockbox Account Payment Procedures

 

During each calendar quarter, all Gross Payments deposited into the Lockbox
Account shall be treated in the following priority with sweeps to occur not less
frequently than monthly:

 

I.                                         Any amounts shall be swept into the
Company Concentration Account until Company shall have received an amount equal
to any [*****] Payments due to MedImmune Limited as a result of, or in
connection with, such Gross Payments.

 

II.                                     Any remaining amounts shall be swept
into the Company Concentration Account for the payment of any Reimbursement
Payments in the amounts received from Contract Parties.

 

III.                                 Any remaining amounts shall be swept as
follows:

 

A.                                    The remaining amounts shall be swept into
the Assignee Concentration Account until Assignee shall have received an amount
equal to Applicable Included Receipts(1); and

 

B.                                      The remainder of the remaining amounts
shall be swept into the Company Concentration Account.

 

For the avoidance of doubt, on the first day of any calendar quarter, that
process above shall be reset and repeated.

 

--------------------------------------------------------------------------------

(1)         As provided in the Loan Agreement, “Applicable Included Receipts”
shall exclude FTE Payments so long as the principal amount of the Loan prepaid
pursuant to Section 3.01(a) of the Loan Agreement exceeds any principal amount
added to the Loans pursuant to Section 4.01(a)(ii) of the Loan Agreement (as
calculated on an annual basis for each calendar year) which shall be determined
at the end of any applicable calendar year and shall be applied to amortization
in accordance with Section 3.01(a); provided that Borrower may, at its option,
include such costs in Applicable Included Receipts on a quarterly basis to pay
scheduled amortization in accordance with Section 3.01(a).

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

--------------------------------------------------------------------------------

 

SCHEDULE 6
to Agreement

 

ELIGIBLE LOCKBOX  CALCULATION AGENTS

 

Any accounting firm with a national reputation in the United States.

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

--------------------------------------------------------------------------------

 

Exhibit G

 

Form of Promissory Note

 

THIS NOTE WAS ISSUED WITH ORIGINAL ISSUE DISCOUNT FOR PURPOSES OF SECTIONS 1272,
1273, AND 1275 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED.  FOR EACH
$1,000 PRINCIPAL AMOUNT OF THIS NOTE, THE ISSUE PRICE IS $991.365, THE AMOUNT OF
ORIGINAL ISSUE DISCOUNT IS $1,288.635, THE ISSUE DATE IS AUGUST 5, 2008, AND THE
YIELD TO MATURITY IS 16.194% PER ANNUM.

 

US $50,000,000

 

New York, New York

 

 

August 5, 2008

 

FOR VALUE RECEIVED, DYAX CORP., a Delaware corporation (the “Borrower”), hereby
promises to pay to the order of Cowen Healthcare Royalty Partners, L.P. or its
registered assigns (the “Lender”), in lawful money of the United States of
America, in same day funds on the Maturity Date the principal sum of (x) fifty
million dollars (US $50,000,000) and (y) any principal added to the Loan
pursuant to Section 4.01 of the Loan Agreement, less any payments of principal
made prior to the Maturity Date as provided in the Loan Agreement.

 

The Borrower also promises to pay interest on the unpaid principal amount hereof
in like money, from the date hereof until such unpaid principal is paid in full,
at the rates, at the times and in the manner provided in the Loan Agreement
referred to below.

 

This Note is the Note referred to in the Loan Agreement, dated as of August 5,
2008, between the Borrower and the Lender (as amended from time to time, the
“Loan Agreement”) and is entitled to the benefits thereof and of the other Loan
Documents.  This Note is secured as provided in the Loan Documents.  This Note
is subject to optional prepayment, in whole or in part, prior to the Maturity
Date as provided in the Loan Agreement.

 

This Note is secured as provided in the Security Agreement and other Loan
Documents.  Reference is hereby made to the Security Agreement for a description
of the properties and assets in which a security interest has been granted, the
nature and extent of the security, the terms and conditions upon which the
security interest was granted and the rights of the holder of this Note in
respect thereof.

 

If an Event of Default shall occur and be continuing, the principal of and
accrued interest on this Note may become or be declared to be due and payable in
the manner and with the effect provided in the Loan Agreement.

 

The Borrower hereby waives presentment, demand, protest or notice of any kind in
connection with this Note.

 

Capitalized terms used but not defined herein shall have the meanings given to
them in the Loan Agreement.

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

--------------------------------------------------------------------------------

 

THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF
THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO ANY CONFLICT OF LAWS PRINCIPLES
THAT WOULD REQUIRE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION).

 

 

 

DYAX CORP.

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

--------------------------------------------------------------------------------

 

Exhibit H

 

Quarterly Report Format

 

 

[*****]

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

--------------------------------------------------------------------------------

 

Exhibit I

 

 

FORM OF SECURITY AGREEMENT

Dated as of August 5, 2008

between

COWEN HEALTHCARE ROYALTY PARTNERS, L.P.

and

DYAX CORP.

(in favor of Cowen Healthcare Royalty Partners, L.P.)

 

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

--------------------------------------------------------------------------------

 

TABLE OF CONTENTS

 

 

 

Page

 

 

 

ARTICLE 1.

DEFINED TERMS

1

 

 

 

SECTION 1.1.

Definitions

1

SECTION 1.2.

Other Definitions

3

SECTION 1.3.

Terms Generally

3

 

 

 

ARTICLE 2.

WARRANT CERTIFICATES

3

 

 

 

SECTION 2.1.

Issuance and Dating

3

SECTION 2.2.

Execution and Countersignature

4

SECTION 2.3.

Certificate Register

4

SECTION 2.4.

Transfer and Exchange

4

SECTION 2.5.

Legends

5

SECTION 2.6.

Replacement Certificates

6

SECTION 2.7.

Cancellation

6

 

 

 

ARTICLE 3.

INITIAL ISSUANCE AND EXERCISE TERMS

7

 

 

 

SECTION 3.1.

Initial Issuance of Warrants

7

SECTION 3.2.

Exercise Price

7

SECTION 3.3.

Exercise Period

7

SECTION 3.4.

Expiration

7

SECTION 3.5.

Manner of Exercise

7

SECTION 3.6.

Issuance of Warrant Shares

8

SECTION 3.7.

Fractional Warrant Shares

8

SECTION 3.8.

Reservation of Warrant Shares

8

SECTION 3.9.

Listing on Securities Exchange

9

 

 

 

ARTICLE 4.

ANTIDILUTION PROVISIONS

9

 

 

 

SECTION 4.1.

Changes in Common Stock

9

SECTION 4.2.

Dividends and Other Distributions

9

SECTION 4.3.

Combination

10

SECTION 4.4.

Current Market Value

10

SECTION 4.5.

Certain Actions

11

SECTION 4.6.

Notice of Adjustment

11

SECTION 4.7.

Common Stock

12

SECTION 4.8.

Notice of Certain Transactions

12

SECTION 4.9.

Adjustment to Warrant Certificate

12

SECTION 4.10.

Adjustments or Issuances Deferred/Adjustments Not Required

13

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

--------------------------------------------------------------------------------

 

ARTICLE 5.

REPRESENTATIONS AND AGREEMENT OF THE COMPANY

13

 

 

 

ARTICLE 6.

MISCELLANEOUS

14

 

 

 

SECTION 6.1.

Persons Benefiting

14

SECTION 6.2.

Rights of Holders

14

SECTION 6.3.

Amendment

15

SECTION 6.4.

Notices

15

SECTION 6.5.

GOVERNING LAW

17

SECTION 6.6.

JURISDICTION; WAIVER OF TRIAL BY JURY

17

SECTION 6.7.

Successors

18

SECTION 6.8.

Counterparts

18

SECTION 6.9.

Table of Contents

18

SECTION 6.10.

Severability

18

SECTION 6.11.

Remedies

18

 

 

Schedules

 

 

Schedule 1

Definitions

 

Schedule 2(b)(i)

LFRP Patents

 

Schedule 2(b)(ii)

LFRP Know-How

 

Schedule 2(c)

License Agreements

 

Schedule 2(e)

In Licenses

 

Schedule 2(j)(i) and (ii)

Pledged Deposit Accounts

 

Schedule 11(b)

Filing Jurisdictions

 

Schedule 11(c)(i)

Excluded Agreements

 

Schedule 11(c)(ii)

Perfection Certificate

 

 

 

Exhibits

 

 

Exhibit A

Special Power of Attorney

 

Exhibit B

Copyright Security Agreement

 

Exhibit C

Patent Security Agreement

 

Exhibit D

Letter Agreement with Fisher Clinical Services

 

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

--------------------------------------------------------------------------------

 

SECURITY AGREEMENT

 

This SECURITY AGREEMENT (the “Agreement”) is made and entered into as of
August 5, 2008 (the “Effective Date”) by and between Dyax Corp., a Delaware
corporation (including its permitted successors and assigns, “Borrower”), and
Cowen Healthcare Royalty Partners, L.P., a Delaware limited partnership
(including its successors and assigns, “Investor”).

 

W I T N E S S E T H:

 

WHEREAS, Borrower and Investor are parties to that certain Loan Agreement dated
of even date herewith (as amended, supplemented and otherwise modified from time
to time, the “Loan Agreement”);

 

WHEREAS, Borrower has agreed pursuant to the terms of the Loan Agreement to
enter into this Agreement, under which Borrower grants to Investor a security
interest in and to the Collateral as general and continuing security for the due
performance and payment of all of Borrower’s obligations to Investor under the
Transaction Documents;

 

NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants
hereinafter set forth and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto hereby
agree as follows:

 

Section 1.  Definitions.   For purposes of this Agreement, capitalized terms and
certain other terms used herein shall have the meanings set forth in Schedule 1
hereto.  Capitalized terms used herein and not otherwise defined herein or in
Schedule 1 shall have the meanings given such terms in the Loan Agreement. 
Terms used herein and defined in the UCC shall have the meaning ascribed to such
terms in the UCC unless the context clearly requires otherwise.

 

Section 2.  Grant of Security.  Borrower hereby grants Investor, for the benefit
of the Lenders, a security interest in all of the Borrower’s right, title and
interest in and to the following personal property, whether now or hereafter
existing, and wherever the same may be located (all such property, collectively,
the “Collateral”):

 

(a)           the Gross Payments and Included Receipts;

 

(b)           the LFRP Patents, including those set forth on Schedule
2(b)(i) and LFRP Know-How, including that described in Schedule 2(b)(ii), and
all other know-how, materials, trademarks, service marks, trade names and
goodwill associated therewith, trade secrets, data, formulations, processes,
franchises, inventions, software, copyrights, and all intellectual property
(including biological materials), and all registrations of any of the foregoing,
or applications therefor, that are (i) owned by, controlled by, issued to,
licensed to, or licensed by Borrower and (ii) used in the performance of the
LFRP as presently conducted by Borrower or as conducted by Borrower as of the
Closing Date or during the term of the Loan (but specifically excluding the
biological material comprising the Company Physical Libraries, it being the
intent of the parties that while intellectual property covering or embodied in
the LFRP Libraries be within the scope

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

--------------------------------------------------------------------------------

 

of the Collateral, all biological material comprising the LFRP Libraries except
for the Duplicate Libraries is excluded from the Collateral);

 

(c)           the License Agreements, including those set forth on Schedule
2(c);

 

(d)           [Reserved];

 

(e)           the In Licenses including those set forth on Schedule 2(e);

 

(f)            books, records, data bases, and information related to the LFRP;

 

(g)           all general intangibles, including all payment intangibles and all
documents (notwithstanding any other provisions herein, as that term is defined
in the UCC), instruments (including promissory notes), accounts,
letter-of-credit rights (whether or not the letter of credit is evidenced by a
writing), commercial tort claims, securities and all other investment property,
supporting obligations, any other contract rights or rights to the payment of
money, insurance claims and proceeds, in each case related to the Gross Payments
and Included Receipts;

 

(h)           any other general intangibles necessary to the performance of or
forming part of the LFRP;

 

(i)            [Reserved];

 

(j)            (i) the Borrower’s interests in the Lockbox Account, details of
which are provided on Schedule 2(j)(i), and any successor account, (ii) the
Company Concentration Account, details of which are provided on Schedule
2(j)(ii), and any successor account, and (iii) any other deposit account or
securities account containing proceeds of Collateral and into which a party to a
License Agreement has remitted Royalties (the accounts referred to in clauses
(i), (ii) and (iii) collectively, the “Pledged Deposit Accounts”), all funds on
deposit in each such account, all investments arising out of such funds, all
claims thereunder or in connection therewith and special purpose subaccounts
maintained therein, and all monies and credit balances from time to time held in
the Pledged Deposit Accounts or such subaccounts; all notes, certificates of
deposit, deposit accounts, checks and other instruments from time to time
hereafter delivered to or otherwise possessed by Borrower in substitution for or
in addition to any or all of the then existing items described in this
subsection (j); and all interest, dividends, cash, securities, rights,
instruments and other property at any time and from time to time received,
receivable or otherwise distributed in respect of such accounts, such funds, or
such investments or received in exchange for any or all of the items described
in this subsection;

 

(k)           all money now or at any time in the possession or under the
control of, or in transit to, the Lockbox Bank, or the Borrower relating to any
of the foregoing in this Section 2;

 

(l)            quantities of biological material comprising a complete copy of
each of the LFRP Libraries that are sufficient to be used to create a
reproducible supply of the LFRP Libraries (the “Duplicate Libraries”); and

 

(m)          all Proceeds.

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

--------------------------------------------------------------------------------

 

Section 3.  Security for Obligations.  This Agreement secures, and the
Collateral pledged by Borrower is collateral security for, the due and punctual
payment or performance in full (including the payment of amounts that would
become due but for the operation of the automatic stay under Subsection
362(a) of the United States Bankruptcy Code) of all Secured Obligations of
Borrower.

 

Section 4.  Borrower to Remain Liable.  Notwithstanding anything to the contrary
contained herein, (a) Borrower shall remain liable to perform all of its duties
and other obligations under the Loan Agreement to the same extent as if this
Agreement had not been executed, and (b) the exercise by Investor of any of its
rights hereunder shall not release Borrower from any of its duties or other
obligations under the Loan Agreement.

 

Section 5.  Promissory Notes and Tangible Chattel Paper.  If Borrower at any
time shall hold or acquire any promissory notes or tangible chattel paper
constituting Collateral having a face value greater than twenty-five thousand
dollars ($25,000), Borrower shall forthwith endorse, assign and deliver the same
to Investor, accompanied by such instruments of transfer or assignment duly
executed in blank as Investor may from time to time specify.

 

Section 6.  Pledged Deposit Accounts.  Borrower shall follow the procedures and
payment mechanisms relating to the Pledged Deposit Accounts set forth in
Section 4.02 of the Loan Agreement.

 

Section 7.  Investment Property.  If Borrower shall at any time hold or acquire
any certificated securities constituting Collateral, Borrower shall forthwith
endorse, assign and deliver the same to Investor, accompanied by such
instruments of transfer or assignment duly executed in blank as Investor may
from time to time specify.  If any securities constituting Collateral now or
hereafter acquired by Borrower are uncertificated and are issued to Borrower or
its nominee directly by the issuer thereof, Borrower shall promptly notify
Investor thereof and, at Investor’s request, pursuant to an agreement in form
and substance satisfactory to Investor in its discretion reasonably exercised,
cause the issuer of such securities to agree to comply with instructions from
Investor as to such securities, without further consent of Borrower or such
nominee.  If any securities constituting Collateral, whether certificated or
uncertificated, or other investment property now or hereafter acquired by
Borrower are held by Borrower or its nominee through a securities intermediary
or commodity intermediary, Borrower shall promptly notify Investor thereof and,
at Investor’s request, pursuant to an agreement in form and substance
satisfactory to Investor in its discretion reasonably exercised, cause such
securities intermediary or (as the case may be) commodity intermediary to agree
to comply with entitlement orders or other instructions from Investor to such
securities intermediary as to such securities or other investment property, or
(as the case may be) to apply any value distributed on account of any commodity
contract as directed by Investor to such commodity intermediary, in each case
without further consent of Borrower or such nominee.

 

Section 8.  Collateral in the Possession of a Bailee.  If any property
constituting Collateral is at any time in the possession of a bailee, Borrower
shall promptly notify Investor thereof and, if requested by Investor, shall
promptly obtain an acknowledgement from the bailee, in form and substance
satisfactory to Investor in its discretion reasonably exercised, that the bailee
holds

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

--------------------------------------------------------------------------------

 

such Collateral for the benefit of Investor and shall act upon the instructions
of Investor, without the further consent of Borrower.

 

Section 9.  Electronic Chattel Paper and Transferable Records.  If Borrower at
any time holds or acquires an interest in any electronic chattel paper or any
“transferable record,” as that term is defined in Section 201 of the federal
Electronic Signatures in Global and National Commerce Act, or in § 16 of the
Uniform Electronic Transactions Act as in effect in any relevant jurisdiction,
constituting Collateral, Borrower shall promptly notify Investor thereof and, at
the request of Investor, shall take such action as Investor may reasonably
request to vest in Investor control under UCC § 9-105 of such electronic chattel
paper or control under Section 201 of the federal Electronic Signatures in
Global and National Commerce Act or, as the case may be, § 16 of the Uniform
Electronic Transactions Act, as so in effect in such jurisdiction, of such
transferable record.

 

Section 10.  Letter-of-credit Rights.  If Borrower is at any time a beneficiary
under a letter of credit now or hereafter issued in favor of Borrower
constituting Collateral, Borrower shall promptly notify Investor thereof and, at
the request of Investor, Borrower shall, pursuant to an agreement in form and
substance satisfactory to Investor in its discretion reasonably exercised,
arrange for the issuer and any confirmer of such letter of credit to consent to
an assignment to Investor of the proceeds of any drawing under the letter of
credit.

 

Section 11.  Representations and Warranties.

 

(a)                                  Borrower represents and warrants to
Investor as of the date hereof, Borrower (or any predecessor by merger or
otherwise) has not, within the five (5) year period preceding the date hereof,
had a different name from the name listed on the signature pages hereof.

 

(b)                                 Borrower represents and warrants to Investor
as of the date hereof, and represents and warrants to Investor in all material
respects on each date it acquires rights in Collateral in which a security
interest is purported to be granted hereunder, as follows:

 

(i)            Ownership of Collateral.  Borrower has the power to grant a lien
and security interest in each item of Collateral upon which it purports to grant
a lien or security interest hereunder and the grant of such security interest
shall not constitute or result in (A) the abandonment, invalidation or
unenforceability of any right, title or interest of Borrower under any lease,
license or contract to which it is a party or (B) a breach or termination
pursuant to the terms of, or a default under, any such lease, license, contract
or agreement (other than to the extent that any such term would be rendered
ineffective pursuant to Sections 9-406, 9-407, 9-408 or 9-409 of the UCC). 
Other than such as may have been filed in favor of Investor relating to this
Agreement or as contemplated by the Loan Agreement, no effective UCC financing
statement or other instrument similar in effect covering all or any part of the
Collateral or the LFRP Patents is on file in any filing or recording office.

 

(ii)           Validity.  This Agreement creates a valid security interest in
the Collateral, and upon the filing of the appropriate UCC financing statements
naming Investor as secured party and describing the Collateral in the applicable
filing office(s) in the

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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jurisdiction(s) listed in Schedule 11(b), such security interest will be
perfected in all Collateral in which a security interest can be perfected by the
filing of a UCC-1 Uniform Commercial Code financing statement.  Other than
Permitted Liens which have priority under law, the security interest in the
Collateral granted herein is prior to any and all other Liens.  As of the date
hereof there are no Liens other than Permitted Liens on or with respect to the
Collateral.

 

(iii)          Authorization, Approval.  No authorization, approval, or other
action by, and no notice to or filing with, any government or agency of any
government or other Person is required either (A) for the assignment, pledge and
grant by Borrower of the security interest granted hereby or for the execution,
delivery and performance of this Agreement by Borrower; or (B) for the
perfection of, the pledge, assignment and grant of the security interest created
hereby or the exercise by Investor of its rights and remedies hereunder
(provided, however, that the exercise by Investor of certain rights and remedies
relating to certain licenses or leases of the Borrower may require the consent
of the other parties to such licenses or leases), other than (X) the filing of
financing statements in the appropriate office(s) located in the
jurisdiction(s) listed on Schedule 11(b) and (Y) the filing of the Patent
Security Agreement with the United States Patent and Trademark Office and the
filing of the Copyright Security Agreement in the United States Copyright Office
and any supplements or amendments thereto.

 

(iv)          Enforceability.  This Agreement is the legally valid and binding
obligation of Borrower, enforceable against Borrower in accordance with its
terms, subject, as to enforcement of remedies, to bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors’ rights generally
or general equitable principles.

 

(c)                                  Other Representations and Warranties.  As
of the Closing Date and as of the earlier of the date on which the Business
Report is delivered or the date on which such Business Report is due in each
fiscal year:

 

(i)            Schedules.  (i) (A) Schedule 2(b)(i) shall set forth all of the
LFRP Patents, (B) Schedule 2(b)(ii) shall set forth a description of the LFRP
Know-How; (C) Schedule 11(c)(i) shall set forth all of the Excluded Agreements;
(D) Schedule 2(c) shall set forth all of the License Agreements; (E) [Reserved];
(F) Schedule 2(e) shall set forth all of the In Licenses; (G) [Reserved]; and
(H) Schedule 2(j)(i) and (ii) shall set forth details of the Pledged Deposit
Accounts; and

 

(ii)           Perfection Certificate.  (A) Borrower’s exact legal name is that
indicated on the Perfection Certificate and on the signature page thereof;
(B) Borrower is an organization of the type and organized in the jurisdiction
set forth in the Perfection Certificate; (C) the Perfection Certificate
accurately sets forth Borrower’s organizational identification number or
accurately states that Borrower has none; (D) the Perfection Certificate
accurately sets forth each place of Borrower’s business or, if more than one,
its chief executive office as well as its mailing address (if different) and
where Collateral is located; (E) Borrower’s FEIN is accurately set forth in the
Perfection Certificate; and, (F) all other information set forth on the
Perfection Certificate is accurate and complete in all material respects.

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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Section 12.  Further Assurances.  Borrower agrees that, from time to time, at
its cost and expense, Borrower will promptly execute and deliver all further
instruments and documents, and take all further action that may be necessary or
desirable, or that Investor may reasonably request, in order to perfect and
protect any security interest granted or purported to be granted hereby or to
enable Investor to exercise and enforce its rights and remedies hereunder with
respect to any Collateral.  Without limiting the generality of the foregoing,
Borrower will:  (a) (i) execute and file such financing or continuation
statements, or amendments thereto, as well as documents for filing in the Unites
States Patent Office and United States Copyright Office (ii) execute and
deliver, and cause to be executed and delivered, agreements establishing that
Investor has control of specified items of Collateral, including the Lockbox
Agreement, and (iii) deliver such other instruments or notices, in each case, as
may be necessary or desirable, or as Investor may reasonably request, in order
to perfect and preserve the security interests granted or purported to be
granted hereby; (b) furnish to Investor from time to time statements and
schedules further identifying and describing the Collateral and such other
reports in connection with the Collateral as Investor may reasonably request,
all in reasonable detail; (c) at Investor’s reasonable request, appear in and
defend any action or proceeding that may affect Borrower’s title to or
Investor’s security interest in all or any part of the Collateral, including any
proceeding in which the issue is whether any property in which Borrower has
rights constitutes Collateral; and (d) use commercially reasonable efforts to
obtain any necessary consents of third parties to the assignment and perfection
of a security interest to Investor with respect to any Collateral.  Borrower
hereby authorizes Investor to file one or more financing or continuation
statements, and amendments thereto, relative to all or any part of the
Collateral without the signature of Borrower.  Borrower agrees that a carbon,
photographic or other reproduction of this Agreement or of a financing statement
signed by Borrower shall be sufficient as a financing statement and may be filed
as a financing statement in any and all jurisdictions.  Notwithstanding the
foregoing, so long as there exists no Event of Default, the Borrower shall not
be required to obtain the consent of the other parties to the existing License
Agreements and In Licenses.

 

Section 13.  Certain Covenants of Borrower.  Borrower shall:

 

(a)           not use or permit any Collateral to be used unlawfully or in
violation of any applicable statute, regulation or ordinance or any policy of
insurance covering the Collateral to the extent the same could reasonably be
expected to have a Material Adverse Effect;

 

(b)           at its own cost and expense, with respect to each property that it
leases on which any Collateral is located, obtain, at Investor’s request, an
agreement satisfactory to Investor with the landlord of such leased property,
(i) subordinating such landlord’s lien in any Collateral to the security
interest purported to be granted hereunder and (ii) granting access to such
leased property;

 

(c)           maintain insurance as provided in Section 9.06 the Loan Agreement;

 

(d)           notify Investor of any change in its name, identity or corporate
structure at least fifteen (15) days prior to such change;

 

(e)           give Investor thirty (30) days’ prior written notice of any change
in its chief place of business, chief executive office or residence or the
office where Borrower keeps its records

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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regarding the Collateral or a reincorporation, reorganization or other action
that results in a change of the jurisdiction of organization of Borrower;

 

(f)            pay promptly when due all taxes, assessments and governmental
charges or levies imposed upon, and all claims against, the Collateral, except
to the extent the validity thereof is being contested in good faith; provided,
however, that Borrower shall in any event pay such taxes, assessments, charges,
levies or claims not later than five (5) days prior to the date of any proposed
sale under any judgment, writ or warrant of attachment entered or filed against
Borrower or any of the Collateral as a result of the failure to make such
payment;

 

(g)           except for licenses of LFRP Intellectual Property and In Licenses
in effect on the date hereof, not suffer to exist any license, lease, contract
or agreement to which it is a party forming part of or used in the LFRP that
contains any provision that purports to prohibit Borrower from granting to
Investor a security interest in any item of Collateral including any such
license, lease, contract or agreement itself;

 

(h)           comply with all of its obligations with respect to any personal
property owned or leased by it and used in the LFRP, including capital leases,
operating leases and purchase money indebtedness except to the extent
non-compliance could not reasonably be expected to have a Material Adverse
Effect;

 

(i)            from and after the date that the Duplicate Libraries are
delivered to the location specified in Section 14(f), in the event that there
are any updates or improvements to the LFRP Libraries, or other libraries as set
forth in the definition of LFRP Libraries, promptly deliver sufficient
quantities of such updated, improved or other LFRP Libraries as necessary to
maintain the Duplicate Libraries as a duplicate reproducible supply of the LFRP
Libraries at such location; and

 

(j)            not transfer, sell, convey, assign, dispose of or license the
Company Physical Libraries, except (x) in the ordinary course of business of the
LFRP consistent with past practices, or (y) outside the scope of the LFRP the
non-exclusive licensing of the Company Physical Libraries but limited to a scope
or for a use so as to not compete with the LFRP, provided, that non-exclusive
licensing of the Company Physical Libraries under Internally Developed Product
Agreements or under Co-Development Agreements shall not be considered in breach
hereof, so long as in no event shall any third party or Affiliate be granted a
license or other rights under the Company Physical Libraries in a way that would
allow such third party or Affiliate to operate a funded research or licensing
program that would compete with the LFRP.

 

(k)           concurrently with Borrower’s delivery of a Business Report
pursuant to Section 9.03(e) of the Loan Agreement, confirm the attachment of the
security interest in the registered intellectual property of Borrower created by
this Agreement by execution of Copyright Security Agreement or a Patent Security
Agreement, as applicable, with respect to any such registered intellectual
property not subject at such time to a Patent Security Agreement or a Copyright
Security Agreement, as applicable, and the filing of such agreement with the
patent office or any other Governmental Authority as shall be necessary to
create, preserve, protect or perfect Investor’s security interest in such
intellectual property as may be reasonably requested by Investor.

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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Section 14.  Special Covenants With Respect to the Collateral.

 

(a)                                  Borrower shall:

 

(i)            diligently keep records in reasonable detail respecting the
Collateral at its chief executive office or principal place of business;

 

(ii)           not locate any Collateral in any location other than (1) those
owned by Borrower or for which it has delivered an agreement described in
Section 13(b) hereof, (2) the deposit accounts as contemplated by the Lockbox
Agreement, or (3) in the locations as contemplated in Section 14(f), and shall
not relocate any collateral from its location as of the Effective Date to
another such location without first notifying Investor in writing of such
relocation;

 

(iii)          give thirty (30) days’ prior written notice to Investor of its
intent to establish any additional place of business;

 

(iv)          other than items deposited for collection in the Lockbox Account,
forthwith turn over (with any required endorsement and assignment requested by
Investor), any instrument or cash constituting Collateral;

 

(v)           not create, incur, assume or suffer to exist any Lien with respect
to Collateral, other than Permitted Liens;

 

(vi)          not Transfer the Collateral, other than the Proceeds the Borrower
is permitted to receive in accordance with the Lockbox Agreement, except
(x) with respect to the LFRP, licensing out in the ordinary course of business
of the LFRP consistent with past practices, or (y) outside the scope of the
LFRP, non-exclusive licensing out of LFRP Intellectual Property (including the
provision of LFRP Libraries or other biological material) but limited to a scope
or for a use so as not to compete with the LFRP; provided, that non-exclusive
licensing of LFRP Intellectual Property under Internally Developed Product
Agreements or under Co-Development Agreements shall not be considered in breach
hereof, so long as in no event shall any third party or Affiliate be granted a
license or other rights under the LFRP Intellectual Property (including the
provision of LFRP Libraries or other biological material) in a way that would
allow such third party or Affiliate to operate a funded research or licensing
program that would compete with the LFRP.

 

(vii)         in the event that Borrower has rights to a commercial tort claim
constituting Collateral, notify Investor and provide a detailed description of
the claim and shall grant Investor a security interest therein in a manner
specified by Investor; and

 

(viii)        in the event that Borrower shall have a security interest in any
property securing any Collateral, promptly execute an assignment of such
security interest to Investor.

 

(b)                                 Borrower shall, at Borrower’s sole cost and
expense, (A) take any and all actions and make all payments, which are necessary
and desirable to diligently maintain the LFRP Patents owned by it; (B) defend
such LFRP Patents against any claims of invalidity or unenforceability;

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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and (C) take commercially reasonable measures to protect the proprietary nature
of each item of LFRP Intellectual Property and to maintain in confidence all
confidential information compromising a part thereof; provided, that in no event
shall Borrower be required to take any action under subsection (B) or (C) if:
(i) the failure to take action could not reasonably be expected to result in a
Material Adverse Effect, (ii) the reasonably estimated cost to Borrower
associated with pursuing such action would outweigh the reasonably estimated
extent by which the Included Receipts and the interest in the Royalties retained
by the Borrower would benefit as a result of successfully pursuing such action,
or (iii) Borrower obtains the Required Lender’s written consent, which shall not
be unreasonably withheld (as in the case, for example, where pursuing such
action would jeopardize the LFRP Intellectual Property or adversely effect the
LFRP as a whole). Consent hereunder shall be provided or denied within ten
(10) Business Days after notice and provision of such information as may be
reasonably requested by the Lender from the Borrower. Borrower shall immediately
notify Lender of such claim. The parties shall consult as to strategy regarding
any response to such claim. Borrower shall not abandon, or fail to take any
action necessary or desirable to prevent the disclaimer or abandonment of
material LFRP Patents owned by it.

 

(c)           Unless there shall occur and be continuing any Event of Default
and the Investor has accelerated the Obligations under the Loan Agreement,
Borrower shall have the right to commence and prosecute in its own name, as the
party in interest, for its own benefit and at the sole cost and expense of the
Borrower, such applications for protection of the LFRP Intellectual Property and
suits, proceedings or other actions to prevent the infringement, counterfeiting,
unfair competition, dilution, diminution in value or other damage as are
necessary to protect the LFRP Intellectual Property.  Upon the occurrence and
during the continuance of any Event of Default, the Investor shall have the
right but shall in no way be obligated to file applications for protection of
the LFRP Intellectual Property and/or bring suit in the name of the Borrower or
Investor to enforce the LFRP Intellectual Property and any license thereunder. 
In the event of such suit, the Borrower shall, at the reasonable request of the
Investor, do any and all lawful acts and execute any and all documents requested
by the Investor in aid of such enforcement and the Borrower shall promptly
reimburse and indemnify the Investor for all costs and expenses incurred by the
Investor in the exercise of its rights under this Section 14(c) in accordance
with the Loan Agreement.  In the event that the Investor shall elect not to
bring suit to enforce the LFRP Intellectual Property, the Borrower agrees, at
the reasonable request of the Investor, to take all commercially reasonable
actions necessary, whether by suit, proceeding or other action, to prevent the
infringement, counterfeiting, unfair competition, dilution, diminution in value
of or other damage to any of the LFRP Intellectual Property by any person.

 

(d)           Borrower shall, concurrently with the execution and delivery of
this Agreement, execute and deliver to Investor five (5) originals of a Special
Power of Attorney in the form of Exhibit A annexed hereto for execution of an
assignment of the Collateral to Investor, or the implementation of the sale or
other disposition of the Collateral pursuant to Investor’s good faith exercise
of the rights and remedies granted hereunder; provided, however, Investor agrees
that it will not exercise its rights under such Special Power of Attorney unless
an Event of Default has occurred and is continuing.

 

(e)           Borrower shall, concurrently with the execution and delivery of
this Agreement, execute and deliver to Investor the Patent Security Agreement,
the Copyright Security Agreement

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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and all other documents, instruments and other items as may be necessary for
Investor to file such agreements with the United States Patent and Trademark
Office and United States Copyright Office and any similar domestic or foreign
office, department or agency.  Borrower shall upon and after the occurrence of
an Event of Default, use its commercially reasonable efforts to obtain any
consents, waivers and agreements requested by Investor that are necessary to
enable Investor to exercise its remedies with respect to the Collateral.

 

(f)                                    Certain Rights upon an Event of Default
before and following a Foreclosure.

 

(i)                                     Upon the occurrence and during the
continuance of an Event of Default and upon notice by Investor (the “Notice
Event”):

 

(1)           Borrower hereby agrees to grant and hereby grants to Investor
effective upon the Notice Event an exclusive worldwide royalty-free license,
with the right to sublicense, under the Shared Intellectual Property (the
“Marks”)) to the extent permitted under the In Licenses solely to carry out the
LFRP program (including through a designee other than a phage-display company
that competes with Borrower) in the same general manner as carried out by
Borrower immediately prior to any such Event of Default; provided that such
license shall be subject to any licenses granted by Borrower to third parties
(not in violation of the Loan Agreement) prior to the date of the grant to
Investor hereunder;

 

(2)           Borrower hereby agrees to grant and hereby grants to Investor
effective upon the Notice Event an exclusive royalty-free limited license to use
and display the Marks, solely in association with any product or service used or
provided in connection with the LFRP in the same general manner and at least as
high a level of quality as carried out by Borrower immediately prior to any such
Event of Default; provided, that (I) Borrower shall have the right to monitor
any such product or service for the purpose of protecting and maintaining the
level of quality established by Borrower prior to any such Event of Default;
(II) Investor acknowledges that the goodwill and other benefits associated with
such Marks shall inure to the benefit of Borrower; and (III) Investor shall not
use or omit use of the Marks in any manner which would injure or destroy their
value or diminish Borrower’s property rights; and provided, further, that, in
the event Borrower advises Investor of any discrepancy in the level of quality
of such products or services, Borrower shall have the right to terminate the use
and display of the Marks by Investor (but not the other rights licensed
hereunder) until such time as the discrepancy is corrected; and

 

(3)           For the avoidance of doubt, the Parties agree and acknowledge that
(A) Investor shall not practice the licenses set forth in this
Section 14(e)(i) unless and until the occurrence of an Event of Default and only
for so long as such Event of Default continues; provided that such licenses
shall immediately terminate on the date that the security interest granted under
this Agreement is terminated in accordance with Section 20 hereof, and
(B) subject to the grant of the security interest under and the other provisions
of this Agreement and the Loan Agreement, Borrower shall retain ownership of its
rights under the Shared Intellectual Property

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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(including the Marks) and shall be free to practice, exploit and license the
Shared Intellectual Property on a non-exclusive basis outside the scope of the
LFRP but limited to a scope or for a use so as to not compete with the LFRP;
provided that non-exclusive licensing of Shared Intellectual Property under
Internally Developed Product Agreements or under Co-Development Agreements shall
not be considered in breach hereof, so long as in no event shall any third party
or Affiliate be granted a license or other rights under the Shared Intellectual
Property in a way that would allow such third party or Affiliate to operate a
funded research or licensing program that would compete with the LFRP.

 

(ii)                                  Upon the occurrence and during the
continuance of an Event of Default, following or in connection with Investor’s
exercise of the foreclosure remedies hereunder:

 

(1)           Investor hereby agrees to grant and hereby grants to Borrower a
non-exclusive, perpetual, royalty-free worldwide license, with the right to
sublicense, under the Shared Intellectual Property (other than the Marks) to the
extent permitted under the In Licenses, for any purpose outside the LFRP on a
non-exclusive basis, but limited to a scope or for a use so as to not compete
with the LFRP; provided that non-exclusive licensing of Shared Intellectual
Property under Internally Developed Product Agreements or under Co-Development
Agreements shall not be considered in breach hereof, so long as in no event
shall any third party or Affiliate be granted a license or other rights under
the Shared Intellectual Property in a way that would allow such third party or
Affiliate to operate a funded research or licensing program that would compete
with the LFRP.

 

(2)           Investor hereby agrees to grant and hereby grants to Borrower a
non-exclusive, perpetual, royalty-free limited license to use and display the
Marks in association with any product or service used or provided in connection
with the Borrower’s business outside of the LFRP, within the scope permitted
under Section 14(e)(ii)(1), above, in the same general manner and at least as
high a level of quality as carried out by Borrower immediately prior to any such
foreclosure; provided, that (I) Investor shall have the right to monitor any
such product or service for the purpose of protecting and maintaining the level
of quality established by Borrower prior to any such foreclosure; (II) Borrower
acknowledges that the goodwill and other benefits associated with such Marks
shall inure to the benefit of Investor; and (III) Borrower shall not use or omit
use of the Marks in any manner which would injure or destroy their value or
diminish Investor’s property rights; and provided, further, that, in the event
Investor advises Borrower of any discrepancy in the level of quality of such
products or services, Investor shall have the right to terminate the use and
display of the Marks (but not the other rights licensed hereunder) by Borrower
until such time as the discrepancy is corrected; and

 

(3)           Investor hereby agrees, at Borrower’s sole cost and expense, to
make, or to permit Borrower to make, copies of all books, records, data bases,
and information (including the handbooks, manuals and sequence information)
related

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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to the LFRP and to use all Shared Intellectual Property solely for the purpose
of the conduct of the business of Borrower outside the LFRP within the scope
permitted under Section 14(e)(ii)(1), above.  For avoidance of doubt, the
licenses granted to the Borrower in Section 14(e)(ii) shall survive the
termination of this Agreement.  The parties acknowledge that such licenses are
licenses of “intellectual property” for the purposes of Section 365 (n) of the
Bankruptcy Code.

 

(g)                                 Borrower shall, within thirty (30) days
after the date hereof, prepare the Duplicate Libraries and shall thereafter
promptly deliver the Duplicate Libraries to Fisher Clinical Services, 631
Lofstrand Lane, Rockville, MD 20850 (phone:  (301) 315-2238) or such other
secure location or locations as are reasonably acceptable to Borrower and
Investor, clearly identified as the Duplicate Libraries prepared for the benefit
of Investor, and segregated from property of Borrower.  The Duplicate Libraries
shall be subject to storage and access on conditions substantially similar to
those set forth in Exhibit E.

 

(h)                                 Borrower shall:  (i) maintain copies of all
source and object codes for all Software at one or more safe and secure
locations reasonably acceptable to Investor, (ii) keep Investor fully informed
of each such location, and (iii) maintain the currency of all such Software
stored thereat.

 

(i)                                     Borrower shall, concurrently with the
execution and delivery of this Agreement, execute and deliver to Investor the
Perfection Certificate.

 

(j)                                     Borrower agrees that a breach of any of
the covenants contained in this Agreement will cause irreparable injury to
Investor, that Investor has no adequate remedy at law in respect of such breach
and, as a consequence, that each and every covenant contained herein shall be
specifically enforceable against Borrower, and Borrower hereby waives and agrees
not to assert any defenses against an action for specific performance of such
covenants.

 

(k)                                  The Borrower shall:  (a) notify in
reasonable detail Investor promptly, but in no event later than quarterly (on
the earlier of the date on which the Business Report is delivered by the
Borrower or the date on which such Business Report is due in each fiscal
quarter) after the acquisition, execution or filing thereof, of any (i) License
Agreements, LFRP Patents, Co-Development Agreements, payments under which form
part of the Collateral, and In Licenses, and (b) on the last day of each quarter
provide, in reasonable detail, updates to Schedules 2(b)(i), 2(b)(ii) 2(c),
2(e), 2(j)(i) and 2(j)(ii), which would make the representations and warranties
contained in Section 11(c)(i) true, correct and complete as of such date of the
delivery of such Business Report.  Upon the delivery and acceptance of such
updated schedules by Investor, such schedules will be automatically deemed to
amend and restate Schedules 2(b)(i), 2(b)(ii), 2(c), 2(e), 2(j)(i) and
2(j)(ii) hereto.

 

Section 15.  Investor Appointed Attorney-in-Fact.  Borrower hereby irrevocably
appoints Investor, or any person or agent as Investor may designate as such,
Borrower’s attorney-in-fact, with full authority in the place and stead of
Borrower and in the name of Borrower, Investor or otherwise, from time to time
in Investor’s discretion to take any action and to execute any instrument that
Investor may in its good faith sole discretion deem necessary or advisable to
accomplish the following:

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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(a)           upon the occurrence and during the continuance of an Event of
Default, to ask for, demand, collect, sue for, recover, compound, receive and
give acquittance and receipts for monies due and to become due under or in
respect of any of the Collateral, and to manage the LFRP, including taking
actions under the License Agreements and In Licenses;

 

(b)           upon the occurrence and during the continuance of an Event of
Default, to receive, direct payment of, endorse and collect any drafts or other
instruments, documents and chattel paper in connection with clause (a) above;

 

(c)           upon the occurrence and during the continuance of an Event of
Default, to file any claims or take any action or institute any proceedings that
Investor may in its good faith sole discretion deem necessary or desirable for
the collection of any of the Collateral or otherwise to enforce the rights of
Investor with respect to any of the Collateral;

 

(d)           upon the occurrence and during the continuance of an Event of
Default, to pay or discharge taxes or liens levied or placed upon or threatened
against the Collateral, the legality or validity thereof and the amounts
necessary to discharge the same to be determined by Investor in its sole
discretion, any such payments made by Investor to become obligations of Borrower
to Investor, due and payable immediately without demand;

 

(e)           upon the occurrence and during the continuance of an Event of
Default, to sign and endorse any invoices, drafts against debtors, assignments,
verifications, notices and other documents relating to the Collateral; and

 

(f)            upon the occurrence and during the continuance of an Event of
Default, to perform any obligations of the Borrower under the Transaction
Documents with the Borrower which the Borrower has not performed.

 

(g)           upon and at any time after the occurrence and during the
continuance of an Event of Default, to prepare, file and sign Borrower’s name on
an assignment document in such form as Investor may in its sole discretion deem
necessary or desirable to transfer ownership of the Collateral to Investor or an
assignee or transferee of Investor, which transfer expressly shall be subject to
the rights of the Borrower in such Collateral set forth in Section 14(e) hereof.

 

Section 16.  Standard of Care.  The powers conferred on Investor hereunder are
solely to protect its interest in the Collateral and shall not impose any duty
upon it to exercise any such powers.  Except for the exercise of good faith and
of reasonable care in the accounting for monies actually received by Investor
hereunder, Investor shall have no duty as to any Collateral or as to the taking
of any necessary steps to preserve rights against prior parties or any other
rights pertaining to any Collateral.  Investor shall be deemed to have exercised
reasonable care in the custody and preservation of Collateral in its possession
if such Collateral is accorded treatment substantially equal to that which
Investor accords its own property.  The Investor shall act as agent hereunder
for any other Lenders that become a party to the Loan Agreement after the date
hereof and the security interest granted hereunder to the Investor is also
granted to the Investor for the benefit of other Lenders.  Except as provided in
the Loan Agreement, the Investor shall have no duty to any Lender hereunder and
its sole responsibility shall be limited to (i) being named as a secured party
hereunder and in any UCC financing statement, intellectual property

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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filing, Lockbox Agreement, any escrow agreement or other documents, instrument
or agreement entered into or filed pursuant hereto and (ii) holding any
possessory Collateral delivered to it by the Company pursuant hereto, in each
case for the benefit of all Lenders.  The Investor is entitled to, but has no
obligation to exercise any rights or remedies hereunder or under applicable law.

 

Section 17.  Remedies Upon Event of Default.

 

(a)                                  If, and only if, any Event of Default shall
have occurred and be continuing, Investor may exercise in respect of the
Collateral (i) all rights and remedies provided for herein, under the Loan
Agreement or otherwise available to it, (ii) all the rights and remedies of a
secured party on default under the UCC (whether or not the UCC applies to the
Collateral), in all relevant jurisdictions, and (iii) the rights to:

 

(i)            require Borrower to, and Borrower hereby agrees that it will at
its cost and expense and upon request of Investor forthwith, assemble all or
part of the Collateral as directed by Investor and make it available to Investor
at a place to be designated by Investor that is reasonably convenient to both
parties;

 

(ii)           personally or by agents or attorneys, immediately take possession
of the Collateral or any part thereof, from Borrower or any other person who has
possession of any part thereof, with or without notice or process of law, and
for that purpose may enter upon Borrower’s premises where any of the Collateral
is located and remove same;

 

(iii)          foreclose or otherwise enforce Investor’s security interest in
any manner permitted by law or provided for in this Agreement;

 

(iv)          without notice except as may be required by applicable law and
that cannot be waived, sell the Collateral or any part thereof in one or more
parcels at public or private sale, at any place or places for cash, on credit,
or for future delivery, and upon such other terms as Investor may deem
commercially reasonable; and

 

(v)           without notice, exercise any right to set-off or offset provided
by law.

 

(b)                                 Until an Event of Default has occurred and
is continuing, Borrower shall, subject to the provisions of the Loan Agreement
and the Lockbox Agreement, continue to collect, at its own cost and expense, all
amounts due or to become due Borrower in respect of the Collateral; it being
understood and agreed that any and all such collections shall be held in trust
for, and be for the benefit of, Investor.  In connection with such collections;
provided, no Event of Default shall have occurred and be continuing, Borrower
may, subject to the provisions of the Loan Agreement, take such action as
Borrower reasonably may deem necessary or advisable to enforce collection of the
Collateral.  At any time after an Event of Default has occurred and is
continuing, Investor shall have the right to notify the account debtors or
obligors under any Collateral of the security interest of Investor in such
Collateral and to direct such account debtors or obligors to make payment to
Investor (or its designee) of any amounts due or to become due thereunder and
enforce collection of any of the Collateral by suit or otherwise and surrender,
release or exchange all or any part thereof, or adjust, settle or compromise or
extend or renew for any period (whether or not longer than the original period)
any indebtedness thereunder or evidence thereby.  If an Event of Default has
occurred and is continuing, upon the request of Investor, Borrower

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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shall, at its own cost and expense, notify any parties obligated on any of the
Collateral to make payment to Investor (or its designee) of any amounts due or
to become due thereunder, and in such event, Investor is authorized to endorse,
in the name of Borrower, any item representing any payment on or other proceeds
of any of the Collateral.  Borrower irrevocably directs and requires all
licensees and account debtors to honor Investor’s request for direct payment and
comply with any such request, notwithstanding any directions or instructions to
the contrary that may be given by Borrower and agrees that the compliance by
such licensee or account debtor with the provisions of this Section shall not be
deemed a violation of such party’s contractual agreements with Borrower.

 

(c)           After delivery to Borrower by Investor of a notice that an Event
of Default has occurred and so long as such Event of Default is continuing:
(i) all amounts and proceeds (including instruments) received by Borrower in
respect of any Collateral shall be received in trust for the benefit of Investor
hereunder, shall be segregated from other funds of Borrower, and shall be
forthwith paid over to Investor in the same form as so received (with any
necessary endorsements) to be held as cash collateral and applied as provided by
this Security Agreement; and (ii) Borrower shall not adjust, settle, or
compromise the amount or payment of any Collateral, or release wholly or partly
any account debtor or obligor thereof, or allow any credit or discount thereon.

 

(d)           After the occurrence and during the continuation of an Event of
Default, (i) Investor may in its own name or in the name of others communicate
with account debtors (including Contract Parties to License Agreements and In
License Agreements) in order to verify with them to Investor’s reasonable
satisfaction the existence, amount and terms of any Collateral and (ii) Investor
shall have the right, at Borrower’s cost and expense, to make test verifications
of the Collateral in any reasonable manner and through any medium that it
considers advisable, and Borrower agrees to furnish all such assistance as
Investor may reasonably require in connection therewith.

 

(e)           Anything contained herein to the contrary notwithstanding, upon
the occurrence and during the continuation of an Event of Default, Investor
shall have the right (but not the obligation) to bring suit, in the name of
Borrower, Investor or otherwise, to enforce any Collateral, in which event
Borrower shall, at the request of Investor, do any and all lawful acts and
execute any and all documents required by Investor in aid of such enforcement
and Borrower shall promptly, upon demand, reimburse and indemnify Investor as
provided in the Loan Agreement and Section 19 hereof, as applicable, in
connection with the exercise of its rights under this Section 17.

 

Section 18.  Application of Proceeds.  Except as expressly provided elsewhere in
this Agreement, all proceeds received by Investor in respect of any sale of,
collection from, or other realization upon all or any part of the Collateral
shall be applied in good faith to satisfy (to the extent of the net cash
proceeds received by Investor) such item or part of the Secured Obligations as
Investor may designate (with the right to reapply such proceeds to such other
items or part of the Secured Obligations as Investor may see fit).

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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Section 19.  Expenses.

 

(a)           Borrower agrees to pay to Investor upon demand the amount of any
and all costs and expenses, including the reasonable fees and expenses of its
counsel and of any experts and agents, that Investor may incur in connection
with (i) the custody, preservation, management, enforcement, use or operation
of, or the sale of, collection from, or other realization upon, any of the
Collateral, (ii) the exercise or enforcement of any of the rights of Investor
hereunder, or (iii) the failure by Borrower to perform or observe any of the
provisions hereof.  Any costs and expenses payable hereunder shall be deemed to
be Secured Obligations and entitled to the security interest hereunder.

 

(b)           The obligations of Borrower in this Section 19 shall survive the
termination of this Agreement and the discharge of Borrower’s other obligations
under this Agreement and the Loan Agreement.

 

Section 20.  Continuing Security Interest; Termination and Release.

 

(a)           This Agreement shall (i) create a continuing security interest in
the Collateral, (ii) remain in full force and effect until the later of the
indefeasible payment and performance in full of the Secured Obligations and the
expiration or termination of the Loan Agreement (other than indemnification
obligations that are unasserted at the time of expiration or termination of Loan
Agreement and other contingent obligations that, by their terms, survive the
termination hereof and thereof), (iii) be binding upon Borrower and its
respective successors and assigns, and (iv) inure, together with the rights and
remedies of Investor hereunder, to the benefit of Investor and its successors,
transferees and assigns.  The Borrower agrees that its obligations hereunder and
the security interest created hereunder shall continue to be effective or be
reinstated, as applicable, if at any time payment, or any part thereof, of all
or any part of the Secured Obligations is rescinded or must otherwise be
restored by the Investor upon the bankruptcy or reorganization of the Borrower
or otherwise.

 

(b)           Upon the payment and performance in full of all Secured
Obligations (other than indemnification obligations that are unasserted as of
the expiration or termination of the Loan Agreement and other contingent
obligations not then due and payable that, by their terms, survive the
termination hereof), the security interest granted hereby shall terminate and
all rights to the Collateral shall revert to Borrower.  Upon such termination or
any release of Collateral or any part thereof in accordance with the provisions
of Section 10.02(b) of the Loan Agreement, the Investor shall, upon the request
and at the sole cost and expense of the Borrower, assign, transfer and deliver
to Borrower, against receipt and without recourse to or warranty by the Investor
except as to the fact that the Investor has not encumbered the released assets,
such of the Collateral or any part thereof to be released (in the case of a
release) as may be in possession of the Investor and as shall not have been sold
or otherwise applied pursuant to the terms hereof, and, with respect to any
other Collateral, proper documents and instruments (including UCC 3 termination
financing statements or releases) acknowledging the termination hereof and the
security interest granted hereby or the release of such Collateral, as the case
may be.

 

Section 21.  Miscellaneous.

 

(a)           Notices.  All notices, consents, waivers and communications
hereunder given by any party to any other party shall be given pursuant to
Section 13.04 of the Loan Agreement.

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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(b)                                 Entire Agreement.  This Agreement, together
with the other Transaction Documents and the Annexes and Schedules hereto and
thereto (which are incorporated herein by reference), constitutes the entire
agreement among the parties with respect to the subject matter hereof and
supersedes all prior agreements, understandings and negotiations, both written
and oral, among the parties with respect to the subject matter of this
Agreement.  No representation, inducement, promise, understanding, condition or
warranty not set forth herein (or in the Annexes or Schedules hereto) has been
made or relied upon by any party hereto.  None of this Agreement, nor any
provision hereof, is intended to confer upon any Person other than the parties
hereto any rights or remedies hereunder.

 

(c)                                  Amendments; No Waivers.

 

(i)            This Agreement or any term or provision hereof may not be
amended, changed or modified except with the written consent of the parties
hereto and subject to any consent required under the Loan Agreement; provided,
that Investor may amend this agreement without the consent of the Borrower in
order to add mechanics related to syndication of the Loan to one or more
additional Lenders so long as such amendments do not in any way alter Borrower’s
rights or obligations hereunder. Investor may take any action that is permitted
under the Loan Agreement or hereunder.  No waiver of any right hereunder shall
be effective unless such waiver is signed in writing by the party against whom
such waiver is sought to be enforced.  To the extent Borrower transfers any of
the Collateral to any of its Subsidiaries, then such Subsidiaries shall execute
a joinder to this Agreement or a new agreement substantially similar to this
Agreement and any other applicable Loan Documents, in each case in form and
substance reasonably satisfactory to the Investor, to confirm the continued
security interest of the Investor in such Collateral.

 

(ii)           No failure or delay by any party in exercising any right, power
or privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege.  The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.

 

(d)                                 Successors and Assigns.  The provisions of
this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns, and any reference herein to
a party shall be deemed a reference to such party’s successors and assigns, if
any.  Borrower shall not be entitled to assign any of its obligations and rights
hereunder or any other Transaction Documents without the prior written consent
of Investor.  Investor may assign this Agreement and any of its rights hereunder
without restriction.

 

(e)                                  Severability.  If any provision of this
Agreement is held to be invalid or unenforceable, the remaining provisions shall
nevertheless be given full force and effect.

 

(f)                                    Interpretation.  When a reference is made
in this Agreement to Sections, subsections, Annexes or Schedules, such reference
shall be to a Section, subsection, Annex or Schedule to this Agreement unless
otherwise indicated.  The terms “Agreement”, “herein”, “hereto”, “hereof” and
words of similar import shall, unless the context otherwise requires, mean this
Agreement, as amended, supplemented or otherwise modified from time to time. 
The words

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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“include”, “includes” and “including” when used herein shall be deemed in each
case to be followed by the words “without limitation”.  No party hereto shall be
or be deemed to be the drafter of this Agreement for the purposes of construing
this Agreement against any other party.

 

(g)                                 Headings and Captions.  The headings and
captions in this Agreement are for convenience and reference purposes only and
shall not be considered a part of or affect the construction or interpretation
of any provision of this Agreement.

 

(h)                                 Governing Law; Jurisdiction.

 

(i)            THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED, INTERPRETED
AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT
GIVING EFFECT TO THE PRINCIPLES OF CONFLICTS OF LAW THEREOF THAT WOULD REQUIRE
THE APPLICATION OF LAWS OTHER THAN THOSE OF THE STATE OF NEW YORK.

 

(ii)           ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR
ANY OTHER TRANSACTION DOCUMENT MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF
COMPETENT JURISDICTION IN THE STATE, COUNTY AND CITY OF NEW YORK.  BY EXECUTION
AND DELIVERY OF THIS AGREEMENT, EACH PARTY HERETO HEREBY IRREVOCABLY CONSENTS TO
AND ACCEPTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY THE NON-EXCLUSIVE JURISDICTION OF SUCH COURTS.  EACH PARTY
HERETO HEREBY FURTHER IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION
TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT
MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH
JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT.

 

(iii)          EACH PARTY HERETO HEREBY IRREVOCABLY CONSENTS TO THE SERVICE OF
PROCESS OUT OF ANY OF THE COURTS REFERRED TO IN SUBSECTION (ii) ABOVE OF THIS
SECTION 21(h) IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF
BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO IT AT ITS ADDRESS SET FORTH
IN THIS AGREEMENT.  EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ANY OBJECTION TO
SUCH SERVICE OF PROCESS AND FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD
OR CLAIM IN ANY ACTION OR PROCEEDING COMMENCED HEREUNDER THAT SERVICE OF PROCESS
WAS IN ANY WAY INVALID OR INEFFECTIVE.  NOTHING HEREIN SHALL AFFECT THE RIGHT OF
A PARTY TO SERVE PROCESS ON THE OTHER PARTY IN ANY OTHER MANNER PERMITTED BY
LAW.

 

(i)                                     Waiver of Jury Trial; Exclusion of
Punitive Damages.  EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY
ACTION,

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.  THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT.  IN
ADDITION, WITHOUT LIMITING BORROWER’S OBLIGATION TO INDEMNIFY INVESTOR FOR ANY
THIRD PARTY CLAIM FOR PUNITIVE DAMAGES, IN ANY LITIGATION OR ARBITRATION BETWEEN
THE PARTIES HEREUNDER NEITHER PARTY SHALL BE ENTITLED TO SEEK PUNITIVE DAMAGES
FROM THE OTHER PARTY.

 

(j)            Counterparts; Effectiveness.  This Agreement may be executed in
two or more counterparts, each of which shall be an original, but all of which
together shall constitute one and the same instrument.  This Agreement shall
become effective when each party hereto shall have received a counterpart hereof
signed by the other parties hereto.

 

[REMAINDER OF PAGE INTENTIONALLY BLANK; SIGNATURE PAGE FOLLOWS]

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the date first above
written.

 

 

BORROWER:

DYAX CORP.

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

INVESTOR:

COWEN HEALTHCARE ROYALTY PARTNERS, L.P.,

 

as Lender

 

 

 

 

By:

Cowen Healthcare Royalty GP, LLC,

 

 

its General Partner

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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SCHEDULE 1
TO
SECURITY AGREEMENT

 

Definitions

 

Unless otherwise defined herein or the context otherwise requires, terms for
which meanings are provided in the UCC are used in this Security Agreement,
including its preamble and recitals, with such meanings; provided, however, that
the term “instrument” shall be such term as defined in Article 9 of the UCC
rather than Article 3 of the UCC.

 

“Collateral” has the meaning set forth in Section 2 of this Agreement.

 

“Company Physical Libraries” shall mean the biological material, individually or
collectively, comprising each of the LFRP Libraries in the possession of the
Borrower.

 

“Copyright Security Agreement” means an agreement substantially in the form set
forth in Exhibit B and suitable for filing with the United States Copyright
Office.

 

“Patent Security Agreement” means an agreement substantially in the form set
forth in Exhibit C and suitable for filing with the United States Patent and
Trademark Office.

 

“Perfection Certificate” means a document in the form set forth on
Exhibit 11(c)(ii) hereto.

 

“Permitted Liens” means tax liens or assessments and other governmental levies
that are not yet due and payable or similar non-consensual liens for amounts not
yet due and payable, which also qualify as “Permitted Liens” as defined in the
Loan Agreement.

 

“Proceeds” or “proceeds” includes whatever is receivable or received when
Collateral is sold, exchanged, collected or otherwise disposed of, whether such
disposition is voluntary or involuntary.

 

“Secured Obligations” means any and all Obligations of Borrower under the
Transaction Documents including all amounts owing under the Loan Agreement,
including the payment to Investor of the amounts of the Included Receipts with
respect to any Royalties or other payments received by the Borrower, damages,
interest (including interest that, but for the filing of a petition in
bankruptcy with respect to Borrower, would accrue on such obligations, whether
or not a claim is allowed against Borrower for such interest in the related
bankruptcy proceeding), reimbursement of fees, costs, expenses, indemnities or
otherwise, whether voluntary or involuntary, direct or indirect, absolute or
contingent, liquidated or unliquidated, whether or not jointly owed with others,
and whether or not from time to time decreased or extinguished and later
increased, created or incurred, and all or any portion of such liabilities and
other obligations that are paid, to the extent all or any part of such payment
is avoided or recovered directly or indirectly from Investor as a preference,
fraudulent transfer or otherwise, and all obligations of every nature of
Borrower now or hereafter existing under this Agreement.

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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“Shared Intellectual Property” means, collectively, those items identified in
Sections 2(b), 2(e), 2(f) and 2(h) hereof.

 

“Transfer” means any sale, conveyance, assignment, disposition or license either
to a third party or to an Affiliate.

 

“UCC” means the Uniform Commercial Code as in effect from time to time in the
State of New York or Delaware, as applicable.

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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SCHEDULE 2(b)(i)
TO
SECURITY AGREEMENT

 

LFRP Patents

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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SCHEDULE 2(b)(ii)
TO
SECURITY AGREEMENT

 

LFRP Know-How

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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SCHEDULE 2(c)
TO
SECURITY AGREEMENT

 

License Agreements

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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SCHEDULE 2(e)
TO
SECURITY AGREEMENT

 

In Licenses

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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SCHEDULE 2(j)(i) and (ii)
TO
SECURITY AGREEMENT

 

Pledged Deposit Accounts

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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SCHEDULE 11(b)
TO
SECURITY AGREEMENT

 

Filing Jurisdictions

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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SCHEDULE 11(c)(i)
TO
SECURITY AGREEMENT

 

Excluded Agreements

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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SCHEDULE 11(c)(ii)
TO
SECURITY AGREEMENT

 

Perfection Certificate

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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Exhibit A

 

Special Power of Attorney

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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Exhibit B

 

Copyright Security Agreement

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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Exhibit C

 

Patent Security Agreement

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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Exhibit D

 

Letter Agreement with Fisher Clinical Services

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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Exhibit J

 

Form of Notice of Borrowing

 

Dyax Corp.
300 Technology Square
Cambridge, MA 02139

 

August 5, 2008

 

Cowen Healthcare Royalty Partners, L.P.
177 Broad Street, Suite 1101
Stamford, CT  06901
Attention:  Gregory B. Brown, M.D.

 

Ladies and Gentlemen:

 

The undersigned (the “Borrower”) refers to the Loan Agreement, dated as of
August 5, 2008 (as amended from time to time, the “Loan Agreement”), between the
Borrower and Cowen Healthcare Royalty Partners, L.P. (the “Lender”). 
Capitalized terms used but not defined herein shall have the meanings given to
them in the Loan Agreement.

 

The Borrower hereby gives you irrevocable notice, pursuant to Section 2.02 of
the Loan Agreement, that it hereby requests to borrow an amount equal to
$50,000,000 (the “Borrowing”), on August 5, 2008 (the “Closing Date”), in
accordance with the terms of the Loan Agreement.

 

The bank and account to which the proceeds payable to the Borrower pursuant to
Section 2.03 of the Loan Agreement should be sent are:

 

Beneficiary Bank ABA #

 

[                 ]

Beneficiary Bank Name

 

[                 ]

 

 

[                 ]

 

 

[                 ]

Contact Name

 

[                 ]

 

 

[                 ]

Beneficiary Name

 

[                 ]

Beneficiary Account #

 

[                 ]

 

 

Very truly yours,

 

 

 

 

 

DYAX CORP.

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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Exhibit K

 

Lockbox Account Payment Procedures

 

During each calendar quarter, all Gross Payments deposited into the Lockbox
Account shall be treated in the following priority with sweeps to occur not less
frequently than monthly:

 

Any amounts shall be swept into the Company Concentration Account until Company
shall have received an amount equal to any [*****] Payments due to MedImmune
Limited as a result of, or in connection with, such Gross Payments.

 

Any remaining amounts shall be swept into the Company Concentration Account for
the payment of any Reimbursement Payments in the amounts received from Contract
Parties;

 

Any remaining amounts shall be swept as follows:

 

A.                                    The remaining amounts shall be swept into
the Assignee Concentration Account until Assignee shall have received an amount
equal to Applicable Included Receipts(2); and

 

B.                                      The remainder of the remaining amounts
shall be swept into the Company Concentration Account.

 

For the avoidance of doubt, on the first day of any calendar quarter, that
process above shall be reset and repeated.

 

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(2)         As provided in the Loan Agreement, “Applicable Included Receipts”
shall exclude FTE Payments so long as the principal amount of the Loan prepaid
pursuant to Section 3.01(a) of the Loan Agreement exceeds any principal amount
added to the Loans pursuant to Section 4.01(a)(ii) of the Loan Agreement (as
calculated on an annual basis for each calendar year)which shall be determined
at the end of any applicable calendar year and shall be applied to amortization
in accordance with Section 3.01(a); provided that Borrower may, at its option,
include such costs in Applicable Included Receipts on a quarterly basis to pay
scheduled amortization in accordance with Section 3.01(a).

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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Exhibit L

 

Form of Certificate of the Borrower

 

The undersigned authorized officer of DYAX CORP., a corporation organized and
existing under the laws of the State of Delaware (the “Borrower”), does hereby
certify on behalf of the Borrower that:

 

1.             This certificate is furnished pursuant to Section 7.01(b)(i) of
the Loan Agreement, dated as of August 5, 2008, between the Borrower and Cowen
Healthcare Royalty Partners, L.P. (such Loan Agreement as in effect on the date
of this Certificate, the “Loan Agreement”).  Capitalized terms used but not
defined in this certificate shall have the meanings given in the Loan Agreement.

 

2.             No event has occurred and is continuing that constitutes a
Default or an Event of Default and no such event will occur or will have
occurred by reason of the Loan.

 

3.             The representations and warranties made by the Borrower in
Article VIII of the Loan Agreement and in the other Transaction Documents are
true and correct and will be true after giving effect to the Loan.

 

4.             All of the conditions set forth in Section 7.01(a), (c),
(e) through (l),  and (o) of the Loan Agreement have been satisfied.  All
documents specified in Section 7.01(b) and all documents and information 
requested by the Lender pursuant to Section 7.01(d), (m) and (n) have been
delivered to Lender.

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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IN WITNESS WHEREOF, I have hereunto set my hand this fifth day of August, 2008.

 

 

DYAX CORP.

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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Exhibit M

 

Form of Edwards Angell Palmer & Dodge LLP Opinion

 

[*****]

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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Exhibit N

 

Form of  Wolf Greenfield Opinion

 

[*****]

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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Exhibit O

 

Form of Lowrie, Lando & Anastasi, LLP Opinion

 

[*****]

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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Exhibit P

 

 

FORM OF WARRANT AGREEMENT

Dated as of

August 5, 2008

between

DYAX CORP.

and

COWEN HEALTHCARE ROYALTY PARTNERS, L.P.

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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TABLE OF CONTENTS

 

 

 

Page

 

 

 

ARTICLE I

CERTAIN DEFINITIONS

 

 

 

SECTION 1.01.

DEFINITIONS

6

SECTION 1.02.

INTERPRETATION; HEADINGS

19

 

 

 

ARTICLE II

COMMITMENT; DISBURSEMENT; FEES

 

 

 

SECTION 2.01.

COMMITMENT TO LEND

20

SECTION 2.02.

NOTICE OF BORROWING

20

SECTION 2.03.

DISBURSEMENT

20

SECTION 2.04.

COMMITMENT NOT REVOLVING

20

 

 

 

ARTICLE III

REPAYMENT

 

 

 

SECTION 3.01.

AMORTIZATION

20

SECTION 3.02.

OPTIONAL PREPAYMENT; MANDATORY PREPAYMENT

21

SECTION 3.03.

ILLEGALITY

21

 

 

 

ARTICLE IV

INTEREST; EXPENSES

 

 

 

SECTION 4.01.

INTEREST RATE

22

SECTION 4.02.

LOCKBOX ACCOUNT

23

SECTION 4.03.

INTEREST ON LATE PAYMENTS

25

SECTION 4.04.

INITIAL EXPENSES

25

SECTION 4.05.

ADMINISTRATION AND ENFORCEMENT EXPENSES

26

 

 

 

ARTICLE V

TAXES

 

 

 

SECTION 5.01.

TAXES

26

SECTION 5.02.

RECEIPT OF PAYMENT

27

SECTION 5.03.

OTHER TAXES

27

SECTION 5.04.

INDEMNIFICATION

27

SECTION 5.05.

LOANS TREATED AS INDEBTEDNESS

28

SECTION 5.06.

ALLOCATION OF ISSUE PRICE

28

SECTION 5.07.

REGISTERED OBLIGATION

28

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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ARTICLE VI

PAYMENTS; COMPUTATIONS

 

 

 

SECTION 6.01.

MAKING OF PAYMENTS

28

SECTION 6.02.

SETOFF OR COUNTERCLAIM

29

 

 

 

ARTICLE VII

CONDITIONS PRECEDENT

 

 

 

SECTION 7.01.

CONDITIONS PRECEDENT TO THE LOAN

29

 

 

 

ARTICLE VIII

REPRESENTATIONS AND WARRANTIES

 

 

 

SECTION 8.01.

REPRESENTATIONS AND WARRANTIES OF BORROWER

31

SECTION 8.02.

SURVIVAL OF REPRESENTATIONS AND WARRANTIES

39

 

 

 

ARTICLE IX

AFFIRMATIVE COVENANTS

 

 

 

SECTION 9.01.

MAINTENANCE OF EXISTENCE

39

SECTION 9.02.

USE OF PROCEEDS

39

SECTION 9.03.

FINANCIAL STATEMENTS AND INFORMATION

40

SECTION 9.04.

BOOKS AND RECORDS

41

SECTION 9.05.

INSPECTION RIGHTS; ACCESS

41

SECTION 9.06.

MAINTENANCE OF INSURANCE AND PROPERTIES

41

SECTION 9.07.

GOVERNMENTAL AUTHORIZATIONS

41

SECTION 9.08.

COMPLIANCE WITH LAWS AND CONTRACTS

41

SECTION 9.09.

PLAN ASSETS

41

SECTION 9.10.

NOTICES

42

SECTION 9.11.

PAYMENT OF TAXES

42

SECTION 9.12.

WAIVER OF STAY, EXTENSION OR USURY LAWS

42

SECTION 9.13.

ADDITIONAL COVENANTS OF BORROWER

43

SECTION 9.14.

[*****]

43

SECTION 9.15.

FURTHER ASSURANCES

43

 

 

 

ARTICLE X

NEGATIVE COVENANTS

 

 

 

SECTION 10.01.

ACTIVITIES OF BORROWER

43

SECTION 10.02.

MERGER; SALE OF ASSETS

44

SECTION 10.03.

LIENS

44

SECTION 10.04.

INVESTMENT COMPANY ACT

45

SECTION 10.05.

LIMITATION ON ADDITIONAL INDEBTEDNESS

46

SECTION 10.06.

LIMITATION ON TRANSACTIONS WITH CONTROLLED AFFILIATES

46

SECTION 10.07.

ERISA

46

SECTION 10.08.

RESTRICTED PAYMENTS

47

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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ARTICLE XI

EVENTS OF DEFAULT

 

 

 

SECTION 11.01.

EVENTS OF DEFAULT

47

SECTION 11.02.

DEFAULT REMEDIES

49

SECTION 11.03.

RIGHT OF SET-OFF; SHARING OF SET-OFF

50

SECTION 11.04.

RIGHTS NOT EXCLUSIVE

51

 

 

 

ARTICLE XII

INDEMNIFICATION

 

 

 

SECTION 12.01.

FUNDING LOSSES

51

SECTION 12.02.

INCREASED COSTS

51

SECTION 12.03.

OTHER LOSSES

51

SECTION 12.04.

ASSUMPTION OF DEFENSE; SETTLEMENTS

52

 

 

 

ARTICLE XIII

MISCELLANEOUS

 

 

 

SECTION 13.01.

ASSIGNMENTS

53

SECTION 13.02.

PARTICIPATIONS

53

SECTION 13.03.

SUCCESSORS AND ASSIGNS

54

SECTION 13.04.

NOTICES

54

SECTION 13.05.

ENTIRE AGREEMENT

56

SECTION 13.06.

MODIFICATION

56

SECTION 13.07.

NO DELAY; WAIVERS; ETC.

56

SECTION 13.08.

SEVERABILITY

56

SECTION 13.09.

DETERMINATIONS

56

SECTION 13.10.

REPLACEMENT OF NOTE

56

SECTION 13.11.

GOVERNING LAW

56

SECTION 13.12.

JURISDICTION

56

SECTION 13.13.

WAIVER OF JURY TRIAL

57

SECTION 13.14.

WAIVER OF IMMUNITY

57

SECTION 13.15.

COUNTERPARTS

57

SECTION 13.16.

LIMITATION ON RIGHTS OF OTHERS

57

SECTION 13.17.

NO PARTNERSHIP

57

SECTION 13.18.

SURVIVAL

57

SECTION 13.19.

PATRIOT ACT NOTIFICATION

57

 

SECTION 1. CERTAIN TERMS. CAPITALIZED TERMS WHEN USED IN THIS AGREEMENT,
INCLUDING ITS PREAMBLE, RECITALS AND SCHEDULES, SHALL HAVE THE MEANINGS SET
FORTH IN ANNEX A ATTACHED HERETO. OTHER CAPITALIZED TERMS HAVE THE MEANINGS SET
FORTH IN THE LOAN AGREEMENT.

 

SECTION 2. APPOINTMENT OF AGENTS; ESTABLISHMENT OF ACCOUNTS.

 

(A)                                                                             
EACH OF COMPANY AND LENDER HEREBY APPOINTS THE LOCKBOX ESCROW AGENT TO ACT AS
ESCROW AGENT HEREUNDER IN ACCORDANCE WITH THE TERMS HEREOF, TO ESTABLISH THE
LOCKBOX

 

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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ACCOUNT IN THE NAME OF THE LOCKBOX ESCROW AGENT, AS ESCROW AGENT FOR LENDER AND
COMPANY, AND UNDER THE SOLE DOMINION AND CONTROL OF THE LOCKBOX ESCROW AGENT, TO
RECEIVE, HOLD, INVEST AND DISBURSE FUNDS ON DEPOSIT THEREIN FROM TIME TO TIME
PURSUANT TO THE TERMS HEREOF AND TO OTHERWISE PERFORM THE DUTIES ASSUMED BY THE
LOCKBOX ESCROW AGENT HEREUNDER.  THE LOCKBOX ESCROW AGENT HEREBY ACCEPTS SUCH
APPOINTMENT AND AGREES TO BE BOUND BY THE TERMS AND CONDITIONS OF THIS AGREEMENT

65

 

 

(B)                                                                               
EACH OF COMPANY AND LENDER HEREBY AUTHORIZES THE LOCKBOX ESCROW AGENT TO
APPOINT, AND THE LOCKBOX ESCROW AGENT HEREBY APPOINTS, THE LOCKBOX CALCULATION
AGENT AS THE SUB-AGENT OF THE LOCKBOX ESCROW AGENT, TO PROVIDE CALCULATIONS IN
RELATION TO AMOUNTS ON DEPOSIT IN THE LOCKBOX ACCOUNT FROM TIME TO TIME PURSUANT
TO THE TERMS HEREOF AND TO OTHERWISE PERFORM THE DUTIES ASSUMED BY THE LOCKBOX
CALCULATION AGENT HEREUNDER.  THE LOCKBOX CALCULATION AGENT HEREBY ACCEPTS SUCH
APPOINTMENT AND AGREES TO BE BOUND BY THE TERMS AND CONDITIONS OF THIS AGREEMENT

65

 

 

(C)                                                                               
THE LOCKBOX ESCROW AGENT HEREBY CONFIRMS THAT IT WILL ESTABLISH BY THE EFFECTIVE
DATE A SPECIAL ESCROW ACCOUNT IN ITS NAME AS ESCROW AGENT, DESIGNATED AS THE
“LOCKBOX ACCOUNT”, AND BEARING ACCOUNT NUMBER 777133448 (THE “LOCKBOX ACCOUNT”),
WHICH ACCOUNT SHALL BE NON INTEREST-BEARING.  THE LOCKBOX ESCROW AGENT SHALL
KEEP THE LOCKBOX ACCOUNT SEPARATE AND APART FROM ALL OTHER FUNDS AND MONEYS HELD
BY IT, AND SHALL HOLD ALL FUNDS ON DEPOSIT THEREIN FROM TIME TO TIME FOR THE
BENEFIT OF COMPANY AND LENDER, IN ACCORDANCE WITH THEIR RESPECTIVE INTERESTS. 
THE LOCKBOX ESCROW AGENT SHALL ADMINISTER THE LOCKBOX ACCOUNT IN ACCORDANCE WITH
THE TERMS HEREOF

65

 

 

(D)                                                                              
COMPANY AND LENDER WILL CAUSE THE FINANCIAL INSTITUTION TO ESTABLISH, AND THE
FINANCIAL INSTITUTION HEREBY CONFIRMS THAT THE FINANCIAL INSTITUTION WILL
ESTABLISH BY THE EFFECTIVE DATE, THE FOLLOWING DEPOSIT ACCOUNTS AT THE FINANCIAL
INSTITUTION (COLLECTIVELY, THE “CONCENTRATION ACCOUNTS”; EACH A “CONCENTRATION
ACCOUNT”; AND TOGETHER WITH THE LOCKBOX ACCOUNT, THE “DEPOSIT ACCOUNTS” AND
EACH, A “DEPOSIT ACCOUNT”) DESIGNATED AS INDICATED BELOW:

66

 

 

(E)                                                                                
NEITHER THE FINANCIAL INSTITUTION NOR THE LOCKBOX ESCROW AGENT SHALL CHANGE THE
NAME OR ACCOUNT NUMBER OF ANY DEPOSIT ACCOUNT WITHOUT THE PRIOR WRITTEN CONSENT
OF (X) COMPANY AND LENDER, IN THE CASE OF THE LOCKBOX ACCOUNT, (Y) COMPANY AND
LENDER, IN THE CASE OF THE COMPANY CONCENTRATION ACCOUNT, AND (Z) LENDER, IN THE
CASE OF THE LENDER CONCENTRATION ACCOUNT

66

 

 

(F)                                                                                
THE PARTIES HERETO ACKNOWLEDGE AND AGREE THAT EACH DEPOSIT ACCOUNT IS A “DEPOSIT
ACCOUNT” WITHIN THE MEANING OF SECTION 9-102(A)(29) OF THE UCC AND THAT THE
FINANCIAL INSTITUTION’S

 

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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JURISDICTION FOR PURPOSES OF THE DEPOSIT ACCOUNTS UNDER THE UCC SHALL BE NEW
YORK

66

 

 

(G)                                                                               
LOCKBOX ESCROW AGENT SHALL FURNISH TO COMPANY AND LENDER PERIODIC REPORTS, WHICH
ACCOUNT FOR ALL SUCH INVESTMENTS AND INTEREST AND INCOME EARNED THEREON.  SUCH
REPORTS SHALL BE FURNISHED MONTHLY OR, MORE FREQUENTLY, UPON THE REQUEST OF
COMPANY AND LENDER

66

 

 

(H)                                                                              
EACH OF COMPANY AND LENDER ACKNOWLEDGES AND AGREES THAT (I) THE LOCKBOX ACCOUNT
IS BEING ESTABLISHED FOR THE BENEFIT OF COMPANY AND LENDER, (II) THE LOCKBOX
ACCOUNT AND ALL DEPOSIT FUNDS RELATING THERETO ARE THE PROPERTY OF THE LOCKBOX
ESCROW AGENT, FOR THE BENEFIT OF THE COMPANY AND LENDER IN ACCORDANCE WITH THEIR
RESPECTIVE INTERESTS AND (III) IT SHALL, AT ITS OWN COST AND EXPENSE, DEFEND THE
LOCKBOX ACCOUNT (AND ALL DEPOSIT FUNDS RELATING THERETO) AGAINST ANY AND ALL
CLAIMS OF ITS CREDITORS, WHETHER THREATENED OR ACTUAL

66

 

 

(I)                                                                                   
THE DEPOSIT FUNDS IN EACH CONCENTRATION ACCOUNT SHALL BE INVESTED BY FINANCIAL
INSTITUTION IN PERMITTED INVESTMENTS.  ALL PERMITTED INVESTMENTS SHALL BE
REGISTERED IN THE NAME OF FINANCIAL INSTITUTION FOR THE BENEFIT OF LENDER OR
COMPANY, AS APPLICABLE, AND HELD BY FINANCIAL INSTITUTION AS PART OF SUCH
CONCENTRATION ACCOUNT.  FINANCIAL INSTITUTION MAY MAKE INVESTMENTS THROUGH ITS
INVESTMENT DIVISION OR SHORT-TERM INVESTMENT DEPARTMENT.  FINANCIAL INSTITUTION
SHALL SELL AND REDUCE TO CASH A SUFFICIENT AMOUNT OF PERMITTED INVESTMENTS
WHENEVER THE CASH BALANCE OF THE CONCENTRATION ACCOUNTS IS INSUFFICIENT TO PAY
THE AMOUNTS REQUIRED TO BE PAID THEREFROM.  FINANCIAL INSTITUTION SHALL, WITHOUT
FURTHER DIRECTION FROM ANY PERSON, SELL SUCH INVESTMENTS AS AND WHEN REQUIRED TO
MAKE ANY PAYMENTS FROM THE CONCENTRATION ACCOUNTS.  FINANCIAL INSTITUTION SHALL
NOT BE RESPONSIBLE OR LIABLE FOR ANY LOSS SUFFERED IN CONNECTION WITH ANY
INVESTMENT OF MONEYS MADE BY FINANCIAL INSTITUTION IN ACCORDANCE WITH THIS
SECTION 2(I)

66

 

 

SECTION 3. OPERATION OF AND DISBURSEMENTS FROM THE LOCKBOX ACCOUNT.

 

 

(A)                                                                             
THE PARTIES ACKNOWLEDGE AND AGREE THAT THE GROSS PAYMENTS (AS DEFINED IN THE
LOAN AGREEMENT) SHALL BE PAID INTO THE LOCKBOX ACCOUNT

67

 

 

(B)                                                                               
THE LOCKBOX ESCROW AGENT WILL PROVIDE THE LOCKBOX CALCULATION AGENT WITH A DAILY
REPORT SHOWING EACH PAYMENT RECEIVED IN THE LOCKBOX ACCOUNT ON THE PREVIOUS
BUSINESS DAY VIA ONLINE ACCESS.  FROM TIME TO TIME, AT A PERIOD TO BE DEFINED BY
COMPANY BUT IN ANY EVENT NO LESS FREQUENTLY THAN ONCE PER MONTH, THE LOCKBOX
CALCULATION AGENT SHALL SUBMIT A REPORT TO THE LOCKBOX ESCROW AGENT AND THE
FINANCIAL INSTITUTION (WITH A COPY

 

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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TO COMPANY) IN RESPECT OF THE AMOUNTS ON DEPOSIT IN THE LOCKBOX ACCOUNT AS OF
THE END OF THE RELEVANT CALCULATION PERIOD (EACH, A “LOCKBOX CALCULATION
REPORT”), WHICH LOCKBOX CALCULATION REPORT SHALL SPECIFY THE PORTION THEREOF
WHICH IS ALLOCABLE TO LENDER AND COMPANY, RESPECTIVELY, BY WAY OF ALLOCATIONS
BETWEEN THE LENDER CONCENTRATION ACCOUNT AND THE COMPANY CONCENTRATION ACCOUNT. 
SUCH ALLOCATIONS SHALL BE CALCULATED BY THE LOCKBOX CALCULATION AGENT AS SET
FORTH ON SCHEDULE 5.  COMPANY SHALL PROVIDE IMMEDIATELY TO LOCKBOX CALCULATION
AGENT, ON REQUEST, ANY DATA OR INFORMATION REQUESTED BY LOCKBOX CALCULATION
AGENT TO PREPARE THE LOCKBOX CALCULATION REPORT.  THE LOCKBOX CALCULATION AGENT
SHALL BE RESPONSIBLE FOR PREPARING THE LOCKBOX CALCULATION REPORT IN GOOD FAITH
AND IN A CONSISTENT AND REASONABLE MANNER IN ACCORDANCE WITH THE TERMS OF THE
LOAN AGREEMENT

67

 

 

(C)                                                                               
AT THE TIME THE LOCKBOX CALCULATION AGENT SUBMITS ANY LOCKBOX CALCULATION REPORT
IN RELATION TO THE LOCKBOX ACCOUNT, THE LOCKBOX CALCULATION AGENT SHALL ALSO
PROVIDE THE LOCKBOX ESCROW AGENT WITH SUPPORTING CALCULATIONS AND OTHER BACK-UP
INFORMATION IN REASONABLE DETAIL, CERTIFIED BY A SENIOR FINANCIAL OFFICER OF THE
LOCKBOX CALCULATION AGENT

67

 

 

(D)                                                                              
FOLLOWING RECEIPT OF A LOCKBOX CALCULATION REPORT, THE LOCKBOX ESCROW AGENT
SHALL, WITHIN ONE (1) BUSINESS DAY THEREOF, (I) ALLOCATE AMONG THE APPLICABLE
CONCENTRATION ACCOUNTS THE AMOUNTS RECEIVED IN THE LOCKBOX ACCOUNT THAT ARE
COVERED BY SUCH LOCKBOX CALCULATION REPORT AND (II) MAKE CORRESPONDING WIRE
TRANSFERS OF SUCH AMOUNTS FROM THE LOCKBOX ACCOUNT IN ACCORDANCE WITH THE TERMS
HEREOF.  ONLY THE LOCKBOX ESCROW AGENT WILL HAVE THE AUTHORITY TO MAKE TRANSFERS
FROM THE LOCKBOX ACCOUNT AND ONLY IN ACCORDANCE WITH THE TERMS OF THIS
AGREEMENT.  WITHIN FIVE (5) DAYS OF THE CLOSE OF ANY CALENDAR QUARTER, THE
LOCKBOX ESCROW AGENT WILL PROVIDE LENDER COPIES OF EACH LOCKBOX CALCULATION
REPORT AND ANY OTHER INFORMATION OR CERTIFICATES RECEIVED FROM THE LOCKBOX
CALCULATION AGENT DURING THE PRECEDING QUARTER

67

 

 

(E)                                                                                
IN THE EVENT THE LOCKBOX CALCULATION AGENT DETERMINES THAT A LOCKBOX CALCULATION
REPORT CONTAINS ANY INCORRECT CALCULATIONS, THE LOCKBOX CALCULATION AGENT SHALL
PROMPTLY NOTIFY THE LOCKBOX ESCROW AGENT, AND PROVIDE A REVISED LOCKBOX
CALCULATION REPORT TO THE LOCKBOX ESCROW AGENT TOGETHER WITH INFORMATION OF THE
TYPE SPECIFIED IN SECTION 3(C) ABOVE.  IF THE REVISED LOCKBOX CALCULATION REPORT
IS RECEIVED BY THE LOCKBOX ESCROW AGENT PRIOR TO ITS DISTRIBUTION OF THE SUMS
COVERED THEREBY, THEN THE LOCKBOX ESCROW AGENT SHALL DISTRIBUTE SUCH SUMS IN
ACCORDANCE WITH THE REVISED LOCKBOX CALCULATION REPORT; IF NOT, THEN THE LOCKBOX
ESCROW AGENT WILL MAKE

 

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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APPROPRIATE OFFSETS/CREDITS WITH RESPECT TO FUTURE DISTRIBUTIONS FROM THE
LOCKBOX ACCOUNT, BASED ON INFORMATION PROVIDED TO IT BY THE LOCKBOX CALCULATION
AGENT (WHICH THE LOCKBOX CALCULATION AGENT UNDERTAKES TO DO ON A PROMPT BASIS)

67

 

 

(F)                                                                                
THE LOCKBOX ESCROW AGENT SHALL RELY ON THE INFORMATION CONTAINED IN ANY LOCKBOX
CALCULATION REPORT PROVIDED TO IT FROM TIME TO TIME BY THE LOCKBOX CALCULATION
AGENT, AND SHALL, ON THE NEXT BUSINESS DAY AFTER RECEIPT THEREOF, TRANSFER
AMOUNTS ON DEPOSIT IN THE LOCKBOX ACCOUNT IN ACCORDANCE WITH THE INFORMATION
CONTAINED IN ANY SUCH LOCKBOX CALCULATION REPORT, WITHOUT ANY DUTY TO
INVESTIGATE.  THE LOCKBOX ESCROW AGENT SHALL HAVE NO LIABILITY TO ANY PARTY
HERETO ON ACCOUNT OF DISBURSING FUNDS IN THE LOCKBOX ACCOUNT ON THE BASIS OF
INFORMATION CONTAINED IN ANY SUCH LOCKBOX CALCULATION REPORT

67

 

 

SECTION 4. CONTROL OF THE CONCENTRATION ACCOUNTS.

 

 

(A)                                                                             
IN ORDER TO PERFECT LENDER’S SECURITY INTEREST IN THE COMPANY CONCENTRATION
ACCOUNT (AND ANY AND ALL DEPOSIT FUNDS HELD THEREIN OR CREDITED THERETO FROM
TIME TO TIME) BY “CONTROL” PURSUANT TO SECTION 9-104 OF THE UCC, COMPANY, LENDER
AND THE FINANCIAL INSTITUTION AGREE AS FOLLOWS: SO LONG AS NO EVENT OF DEFAULT
OR TERMINATION EVENT SHALL HAVE OCCURRED AND BE CONTINUING, COMPANY SHALL BE
ENTITLED TO GIVE ACCOUNT INSTRUCTIONS TO THE FINANCIAL INSTITUTION DIRECTING THE
DISPOSITION, TRANSFER, WITHDRAWAL, DISBURSEMENT, INVESTMENT OR REDEMPTION OF ANY
DEPOSIT FUNDS IN OR CREDITED TO THE COMPANY CONCENTRATION ACCOUNT, AND THE
FINANCIAL INSTITUTION SHALL COMPLY WITH SUCH ACCOUNT INSTRUCTIONS FROM COMPANY
(WITHOUT ANY CONSENT BEING REQUIRED FROM LENDER).  UPON RECEIVING NOTICE FROM
LENDER, HOWEVER (WHICH, FOR THE AVOIDANCE OF DOUBT, MAY BE GIVEN BY LENDER UPON
THE OCCURRENCE AND DURING THE CONTINUANCE OF AN EVENT OF DEFAULT OR A
TERMINATION EVENT), THE FINANCIAL INSTITUTION SHALL CEASE COMPLYING WITH ANY AND
ALL ACCOUNT INSTRUCTIONS FROM COMPANY PERTAINING TO OR CONCERNING THE COMPANY
CONCENTRATION ACCOUNT OR ANY DEPOSIT FUNDS THEREIN OR CREDITED THERETO.  AT SUCH
TIME, ONLY LENDER SHALL BE ENTITLED TO GIVE ACCOUNT INSTRUCTIONS TO THE
FINANCIAL INSTITUTION DIRECTING THE DISPOSITION, TRANSFER, WITHDRAWAL,
DISBURSEMENT, INVESTMENT OR REDEMPTION OF ANY DEPOSIT FUNDS IN OR CREDITED TO
THE COMPANY CONCENTRATION ACCOUNT UNTIL SUCH TIME AS LENDER OTHERWISE ADVISES IN
WRITING (WHICH, FOR THE AVOIDANCE OF DOUBT, SHALL BE GIVEN PROMPTLY FOLLOWING
THE CURE OR WAIVER OF SUCH EVENT OF DEFAULT OR TERMINATION EVENT)

68

 

 

(B)                                                                               
(1) ONLY LENDER SHALL BE ENTITLED TO GIVE ACCOUNT INSTRUCTIONS DIRECTING THE
DISPOSITION, TRANSFER, WITHDRAWAL,

 

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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DISBURSEMENT, INVESTMENT OR REDEMPTION OF ANY DEPOSIT FUNDS IN OR CREDITED TO
THE LENDER CONCENTRATION ACCOUNT, AND THE FINANCIAL INSTITUTION SHALL COMPLY
WITH SUCH ACCOUNT INSTRUCTIONS FROM LENDER FROM TIME TO TIME.  THE PARTIES
ACKNOWLEDGE THAT THE LENDER CONCENTRATION ACCOUNT IS THE UNENCUMBERED PROPERTY
OF THE LENDER

68

 

 

(C)                                                                               
THE FINANCIAL INSTITUTION SHALL NOT, AND SHALL NOT AGREE WITH ANY THIRD PARTY
TO, COMPLY WITH ANY ACCOUNT INSTRUCTIONS OR OTHER INSTRUCTIONS, ORDERS OR
DIRECTIONS FROM A THIRD PARTY PERTAINING TO OR CONCERNING ANY CONCENTRATION
ACCOUNT OR ANY DEPOSIT FUNDS THEREIN OR CREDITED THERETO, WITHOUT THE PRIOR
WRITTEN CONSENT OF LENDER AND COMPANY (IN THE CASE OF THE COMPANY CONCENTRATION
ACCOUNT, PRIOR TO THE EARLIER OF AN EVENT OF DEFAULT OR A TERMINATION EVENT) AND
LENDER (IN THE CASE OF THE LENDER CONCENTRATION ACCOUNT AND, FROM AND AFTER THE
EARLIER OF AN EVENT OF DEFAULT OR A TERMINATION EVENT THAT HAS NOT BEEN CURED OR
WAIVED, THE COMPANY CONCENTRATION ACCOUNT)

68

 

 

SECTION 5. FINANCIAL INSTITUTION’S OBLIGATIONS WITH RESPECT TO THE DEPOSIT
ACCOUNTS.

 

 

(A)                                                                             
THE FINANCIAL INSTITUTION AGREES TO MAINTAIN EACH DEPOSIT ACCOUNT SEPARATELY, IN
ACCORDANCE WITH THE TERMS OF THIS AGREEMENT AND AGREES NOT TO COMMINGLE THE
DEPOSIT FUNDS IN OR CREDITED TO, OR DESIGNATED FOR DEPOSIT IN, ANY DEPOSIT
ACCOUNT WITH ANY OTHER DEPOSIT FUNDS HELD ON BEHALF OF COMPANY, LENDER OR ANY
OTHER PERSON OR ENTITY.  THE FINANCIAL INSTITUTION SHALL NOT APPLY ANY DEPOSIT
FUNDS RECEIVED IN THE DEPOSIT ACCOUNTS AND NOT TO MAKE DISBURSEMENTS FROM OR
DEBITS TO THE DEPOSIT ACCOUNTS OTHER THAN IN ACCORDANCE WITH THIS AGREEMENT.  IN
THE EVENT THERE ARE MULTIPLE LENDERS, COWEN HEALTHCARE ROYALTY PARTNERS, L.P.
SHALL BE DESIGNATED AS THE AGENT OF ALL SUCH LENDERS (THE “LENDER AGENT”), AND
THE FINANCIAL INSTITUTION SHALL DISTRIBUTE DEPOSIT FUNDS IN THE LENDER
CONCENTRATION ACCOUNT IN ACCORDANCE WITH THE WRITTEN INSTRUCTIONS OF THE LENDER
AGENT (THE INTENT BEING THAT SUCH DISTRIBUTIONS SHALL BE MADE ON A PRO RATA
BASIS TO THE LENDERS ACCORDING TO THEIR PROPORTIONATE INTERESTS IN THE LOAN AS
REQUIRED BY SECTION 13.01(D) OF THE LOAN AGREEMENT).  PRIOR TO MAKING ANY
DISTRIBUTIONS TO A NEW LENDER, THE FINANCIAL INSTITUTION WILL REQUIRE SUCH
LENDER TO DELIVER TO THE LOCKBOX ESCROW AGENT AND FINANCIAL INSTITUTION A W-8 OR
W-9 INTERNAL REVENUE SERVICE FORM OR ANY OTHER SIMILAR FORM ISSUED BY THE
RELEVANT TAXING AUTHORITY DULY EXECUTED BY IT

69

 

 

(B)                                                                               
THE FINANCIAL INSTITUTION ACKNOWLEDGES THAT THE COMPANY CONCENTRATION ACCOUNT
AND THE COMPANY’S INTEREST IN THE LOCKBOX ACCOUNT, AND ANY DEPOSIT FUNDS THEREIN
OR CREDITED THERETO, ARE SUBJECT TO THE SECURITY INTEREST OF LENDER THEREIN

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EACH OF THE LOCKBOX ESCROW AGENT AND THE FINANCIAL INSTITUTION ACKNOWLEDGES THAT
THE COMPANY HAS GRANTED LENDER A SECURITY INTEREST OVER THE COMPANY
CONCENTRATION ACCOUNT AND COMPANY’S INTEREST IN THE LOCKBOX ACCOUNT

 

 

 

(C)                                                                               
THE PARTIES HERETO ACKNOWLEDGE AND AGREE THAT ITEMS DEPOSITED IN ANY DEPOSIT
ACCOUNT SHALL BE DEEMED TO BEAR THE VALID AND LEGALLY BINDING ENDORSEMENT OF THE
PAYEE AND TO COMPLY WITH ALL OF THE FINANCIAL INSTITUTION’S REQUIREMENTS FOR THE
SUPPLYING OF MISSING ENDORSEMENTS, NOW OR HEREAFTER IN EFFECT.  ANY DEPOSIT MADE
INTO ANY DEPOSIT ACCOUNT SHALL BE DEEMED DEPOSITED THEREIN WHEN THE FUNDS IN
RESPECT OF SUCH DEPOSIT SHALL BECOME CLEARED FUNDS

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(D)                                                                              
THE FINANCIAL INSTITUTION SHALL REDEPOSIT WITH ADVICE ANY ITEM RETURNED FOR ANY
REASON.  IF ANY ITEM IS RETURNED A SECOND TIME, THE FINANCIAL INSTITUTION WILL
CHARGE THE AMOUNT OF SUCH ITEM AGAINST THE LOCKBOX ACCOUNT IF THE SAME CONTAINS
SUFFICIENT FUNDS TO PAY THE AMOUNT OF THE RETURNED ITEM.  IF THE BALANCE IN THE
LOCKBOX ACCOUNT IS NOT SUFFICIENT TO PAY THE AMOUNT OF THE RETURNED ITEM, THE
FINANCIAL INSTITUTION SHALL NOTIFY COMPANY AND LENDER.  COMPANY AGREES TO
REIMBURSE THE FINANCIAL INSTITUTION FOR THE SAME PROMPTLY AFTER SUCH
NOTIFICATION.  THE FINANCIAL INSTITUTION SHALL ALSO NOTIFY COMPANY AND LENDER OF
ITS CURRENT STANDARD CHARGES FOR RETURNED ITEMS AND COMPANY AGREES TO PAY THE
FINANCIAL INSTITUTION SUCH CHARGES PROMPTLY AFTER SUCH NOTIFICATION.  THE
FINANCIAL INSTITUTION SHALL RETURN THE ITEM ALONG WITH THE DEBIT ADVICE TO
COMPANY, WITH A COPY TO LENDER.  THE FINANCIAL INSTITUTION IS GRANTED THE
FURTHER RIGHT TO DEBIT FROM ANY DEPOSIT ACCOUNT ANY AMOUNTS DEPOSITED THEREIN IN
ERROR OR AS NECESSARY TO CORRECT PROCESSING ERRORS

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(E)                                                                                
EACH WEEK THAT THE FINANCIAL INSTITUTION RECEIVES ANY DEPOSIT FUNDS IN ANY
DEPOSIT ACCOUNT, THE FINANCIAL INSTITUTION SHALL NOTIFY COMPANY AND LENDER IN
WRITING THAT IT HAS RECEIVED SUCH DEPOSIT FUNDS INTO SUCH ACCOUNT OR ACCOUNTS,
AND THE FINANCIAL INSTITUTION SHALL SET FORTH IN SUCH WRITING (I) THE NAMES OF
THE ACCOUNTS INTO WHICH SUCH DEPOSIT FUNDS WERE RECEIVED, IF SUCH PAYMENTS HAVE
BEEN RECEIVED, (II) THE DATE OF RECEIPT OF SUCH DEPOSIT FUNDS, (III) THE AMOUNT
OF SUCH RECEIPT AND (IV) THE NAME OF THE PAYOR.

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(F)                                                                                
THE FINANCIAL INSTITUTION SHALL AT ALL TIMES PROVIDE THE PARTIES HERETO WITH
ONLINE COMPUTER ACCESS, IN A FORMAT OR FORMATS REASONABLY ACCEPTABLE TO COMPANY
AND LENDER, TO ACCOUNT BALANCES, COLLECTION AND REMITTANCE INFORMATION RELATIVE
TO THE DEPOSIT ACCOUNTS AND WITHIN FIVE (5) BUSINESS DAYS FOLLOWING THE END OF
EACH MONTH, SHALL CAUSE TO BE MADE AVAILABLE TO COMPANY AND LENDER BY MEANS OF
ONLINE COMPUTER ACCESS, AND WITHIN TEN (10) BUSINESS DAYS FOLLOWING THE END OF
EACH

 

 

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MONTH SHALL SEND OR CAUSE TO BE SENT A STATEMENT FOR SUCH MONTH TO COMPANY AND
LENDER IN EACH CASE OUTLINING A LIST OF (I) THE AMOUNTS, IF ANY, TRANSFERRED
INTO OR FROM ANY DEPOSIT ACCOUNT DURING THE PRECEDING MONTH, THE DATES OF EACH
SUCH TRANSFER AND THE ACCOUNTS INTO WHICH SUCH TRANSFERS WERE MADE, (II) THE
BALANCE, IF ANY, IN EACH DEPOSIT ACCOUNT AS OF THE END OF SUCH MONTH, AND
(III) ANY OTHER DEBITS OR CREDITS MADE DURING THE MONTH TO EACH DEPOSIT ACCOUNT
TOGETHER WITH A DESCRIPTION THEREOF

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(G)                                                                               
ANY TRANSFER OF FUNDS FROM THE LOCKBOX ACCOUNT TO THE COMPANY CONCENTRATION
ACCOUNT SHALL BE MADE BY WIRE TRANSFER OR SIMILAR METHOD OF TRANSFER OF
IMMEDIATELY AVAILABLE FUNDS, UNLESS OTHERWISE AGREED TO IN WRITING BY COMPANY. 
ANY TRANSFER OF FUNDS FROM THE LOCKBOX ACCOUNT TO THE LENDER CONCENTRATION
ACCOUNT SHALL BE MADE BY WIRE TRANSFER OR SIMILAR METHOD OF TRANSFER OF
IMMEDIATELY AVAILABLE FUNDS, UNLESS OTHERWISE AGREED TO IN WRITING BY LENDER

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SECTION 6. RESIGNATION AND REPLACEMENT OF LOCKBOX ESCROW AGENT.

 

 

(A)                                                                             
THE LOCKBOX ESCROW AGENT SHALL HAVE THE RIGHT AT ANY TIME, BY GIVING WRITTEN
NOTICE TO THE FINANCIAL INSTITUTION, COMPANY AND LENDER, TO RESIGN AND BE
DISCHARGED OF THE RESPONSIBILITIES HEREBY CREATED, SUCH RESIGNATION TO BECOME
EFFECTIVE UPON (I) THE APPOINTMENT OF A SUCCESSOR LOCKBOX ESCROW AGENT BY
COMPANY AND LENDER AND (II) THE ACCEPTANCE OF SUCH APPOINTMENT BY SUCH SUCCESSOR
LOCKBOX ESCROW AGENT.  IF NO SUCCESSOR LOCKBOX ESCROW AGENT SHALL BE APPOINTED
AND SHALL HAVE ACCEPTED SUCH APPOINTMENT WITHIN NINETY (90) DAYS AFTER THE DATE
THE LOCKBOX ESCROW AGENT GIVES THE AFORESAID NOTICE OF RESIGNATION, THE LOCKBOX
ESCROW AGENT MAY APPLY TO ANY COURT OF COMPETENT JURISDICTION TO APPOINT A
SUCCESSOR LOCKBOX ESCROW AGENT TO ACT UNTIL SUCH TIME, IF ANY, AS A SUCCESSOR
LOCKBOX ESCROW AGENT SHALL HAVE BEEN APPOINTED AS PROVIDED IN THIS SECTION.  ANY
SUCCESSOR SO APPOINTED BY SUCH COURT SHALL IMMEDIATELY AND WITHOUT FURTHER ACT
BE SUPERSEDED BY ANY SUCCESSOR LOCKBOX ESCROW AGENT APPOINTED BY COMPANY AND
LENDER

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(B)                                                                               
THE COMPANY AND LENDER SHALL HAVE THE RIGHT, UPON MUTUAL AGREEMENT, AT ANY TIME,
TO REMOVE THE LOCKBOX ESCROW AGENT AND APPOINT A SUCCESSOR LOCKBOX ESCROW AGENT,
SUCH REMOVAL TO BE EFFECTIVE UPON THE ACCEPTANCE OF SUCH APPOINTMENT BY THE
SUCCESSOR LOCKBOX ESCROW AGENT

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(C)                                                                               
ANY RESIGNING OR REMOVED LOCKBOX ESCROW AGENT SHALL BE ENTITLED TO THE FEES AND
INDEMNITIES SET FORTH HEREIN TO THE EXTENT INCURRED OR ARISING, OR RELATING TO
EVENTS OCCURRING, BEFORE SUCH RESIGNATION OR REMOVAL

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SECTION 7. RESIGNATION AND REPLACEMENT OF LOCKBOX CALCULATION AGENT.

 

 

(A)                                                                             
THE LOCKBOX CALCULATION AGENT SHALL HAVE THE RIGHT, AT ANY TIME, BY GIVING
WRITTEN NOTICE TO THE FINANCIAL INSTITUTION, COMPANY AND LENDER, TO RESIGN AND
BE DISCHARGED OF THE RESPONSIBILITIES HEREBY CREATED, SUCH RESIGNATION TO BECOME
EFFECTIVE UPON (I) THE APPOINTMENT OF A SUCCESSOR LOCKBOX CALCULATION AGENT BY
LENDER AND COMPANY, AND (II) THE ACCEPTANCE OF SUCH APPOINTMENT BY SUCH
SUCCESSOR LOCKBOX CALCULATION AGENT.  IF NO SUCCESSOR LOCKBOX CALCULATION AGENT
SHALL BE APPOINTED AND SHALL HAVE ACCEPTED SUCH APPOINTMENT WITHIN NINETY (90)
DAYS AFTER THE DATE THE LOCKBOX CALCULATION AGENT GIVES THE AFORESAID NOTICE OF
RESIGNATION, THE LOCKBOX CALCULATION AGENT OR LENDER MAY APPLY TO ANY COURT OF
COMPETENT JURISDICTION TO APPOINT A SUCCESSOR LOCKBOX CALCULATION AGENT TO ACT
UNTIL SUCH TIME, IF ANY, AS A SUCCESSOR LOCKBOX CALCULATION AGENT SHALL HAVE
BEEN APPOINTED AS PROVIDED IN THIS SECTION.  ANY SUCCESSOR SO APPOINTED BY SUCH
COURT SHALL IMMEDIATELY AND WITHOUT FURTHER ACT BE SUPERSEDED BY ANY SUCCESSOR
LOCKBOX CALCULATION AGENT APPOINTED BY LENDER AND COMPANY

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(B)                                                                               
UPON THE DETERMINATION BY LENDER OR, IF THE LOCKBOX CALCULATION AGENT AT SUCH
TIME IS NOT COMPANY OR AN AFFILIATE THEREOF, COMPANY (IN EACH CASE, WHETHER
LENDER OR COMPANY, ACTING REASONABLY AND IN GOOD FAITH), THAT A TERMINATION
EVENT HAS OCCURRED (OR, WHERE COMPANY IS ACTING AS LOCKBOX CALCULATION AGENT, AN
EVENT OF DEFAULT HAS OCCURRED), LENDER OR COMPANY, AS THE CASE MAY BE, SHALL
HAVE THE RIGHT TO REMOVE THE LOCKBOX CALCULATION AGENT BY PROVIDING WRITTEN
NOTICE OF SUCH DETERMINATION TO THE OTHER PARTIES HERETO; PROVIDED THAT, AT
LENDER’S OPTION, THE LOCKBOX CALCULATION AGENT MAY IMMEDIATELY BE SUSPENDED
PENDING THE RESOLUTION OF ANY DISPUTE REGARDING THE PROVISION OF SUCH A NOTICE
AS DESCRIBED IN THIS SECTION 7(B).  IN THE EVENT SUCH A DETERMINATION IS MADE,
LENDER OR COMPANY, AS THE CASE MAY BE, MAY DISPUTE SUCH DETERMINATION BY
PROVIDING WRITTEN NOTICE TO THE OTHER PARTY WITHIN TEN (10) BUSINESS DAYS OF
RECEIPT OF THE REMOVAL NOTICE.  IF NO SUCH DISPUTE NOTICE IS SO PROVIDED, THE
LOCKBOX CALCULATION AGENT SHALL BE REMOVED AND A SUCCESSOR LOCKBOX CALCULATION
AGENT SHALL BE SELECTED IN ACCORDANCE WITH SECTION 7(C).  IF SUCH A DISPUTE
NOTICE IS TIMELY PROVIDED, THEN THE RELEVANT PARTIES SHALL FIRST ATTEMPT TO
REACH AN AMICABLE SETTLEMENT THROUGH MUTUAL CONSULTATIONS AND NEGOTIATIONS.  IF
THE PARTIES ARE UNABLE TO REACH AN AMICABLE SETTLEMENT WITHIN TEN (10) BUSINESS
DAYS FROM THE DATE ON WHICH THE DISPUTE WAS FIRST NOTIFIED IN WRITING, THEN ANY
PARTY SHALL BE ENTITLED TO SUBMIT THE DISPUTE TO LITIGATION PROCEEDINGS IN
ACCORDANCE WITH THE TERMS HEREOF.  PENDING THE RESOLUTION OF ANY SUCH DISPUTE,
(UNLESS THE

 

 

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Exchange Commission.  Asterisks denote such omission.

 

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LOCKBOX CALCULATION AGENT HAS BEEN SUSPENDED AS DESCRIBED ABOVE) THE PARTY THEN
SERVING AS LOCKBOX CALCULATION AGENT MAY CONTINUE TO SERVE IN SUCH ROLE,
PROVIDED THAT, DURING THE PENDENCY OF ANY SUCH DISPUTE, IT DELIVERS LOCKBOX
CALCULATION REPORTS NO LESS FREQUENTLY THAN ONCE PER WEEK TO EACH OF THE LOCKBOX
ESCROW AGENT, COMPANY AND LENDER.  IF, FOLLOWING THE COMMENCEMENT OF ANY DISPUTE
REGARDING THE EXISTENCE OF A TERMINATION EVENT, COMPANY AND LENDER AGREE TO
REMOVE THE LOCKBOX CALCULATION AGENT OR IT IS FINALLY DETERMINED BY A COURT OF
COMPETENT JURISDICTION THAT A TERMINATION EVENT HAS IN FACT OCCURRED, THEN THE
LOCKBOX CALCULATION AGENT SHALL BE REMOVED AND A REPLACEMENT SELECTED IN
ACCORDANCE WITH SECTION 7(C).  IN ALL EVENTS, REMOVAL OF THE LOCKBOX CALCULATION
AGENT SHALL ONLY BECOME EFFECTIVE UPON THE ACCEPTANCE BY THE SUCCESSOR LOCKBOX
CALCULATION AGENT OF ITS APPOINTMENT.  ANY RESIGNING OR REMOVED LOCKBOX
CALCULATION AGENT SHALL BE ENTITLED TO THE FEES AND INDEMNITIES SET FORTH HEREIN
TO THE EXTENT INCURRED OR ARISING, OR RELATING TO EVENTS OCCURRING, BEFORE SUCH
RESIGNATION OR REMOVAL

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(C)                                                                               
IN CONNECTION WITH REMOVAL OF THE LOCKBOX CALCULATION AGENT PURSUANT TO
SECTION 7(B), A SUCCESSOR LOCKBOX CALCULATION AGENT SHALL BE SELECTED BY LENDER
AND COMPANY, UNLESS THE REMOVED LOCKBOX CALCULATION AGENT SHALL BE COMPANY OR AN
AFFILIATE THEREOF, IN WHICH EVENT SUCH AGENT SHALL BE CHOSEN BY LENDER;
PROVIDED, HOWEVER, THAT SUCH SUCCESSOR SHALL BE CHOSEN FROM THE LIST ON SCHEDULE
6 TO THIS AGREEMENT OR BE A SIMILAR ENTITY WITH A NATIONAL REPUTATION IN THE
UNITED STATES.  WHEN REQUIRED TO MUTUALLY AGREE, IN THE EVENT THAT COMPANY AND
LENDER DO NOT AGREE UPON A SUCCESSOR WITHIN THIRTY (30) DAYS OF THE DATE ON
WHICH A PARTY NOTIFIED THE OTHERS OF ITS DECISION TO REMOVE THE LOCKBOX
CALCULATION AGENT (OR, IF SUCH REMOVAL IS DISPUTED IN ACCORDANCE WITH
SECTION 7(B) HEREOF, WITHIN THIRTY (30) DAYS OF THE RESOLUTION OF SUCH DISPUTE),
COMPANY, USING ITS REASONABLE DISCRETION, SHALL PROMPTLY APPOINT A SUCCESSOR
LOCKBOX CALCULATION AGENT FROM AMONG THOSE PERSONS LISTED ON SCHEDULE 6 OR A
SIMILAR ENTITY WITH A NATIONAL REPUTATION IN THE UNITED STATES (EXCLUDING, FOR
THOSE PURPOSES, ANY PERSON PREVIOUSLY REMOVED AS LOCKBOX CALCULATION AGENT OR
ANY PERSON THAT IS THE SUBJECT OF A PENDING DISPUTE)

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SECTION 8. SUBORDINATION OF LIEN; WAIVER OF SET-OFF.  IN THE EVENT THAT THE
FINANCIAL INSTITUTION HAS OBTAINED OR SUBSEQUENTLY OBTAINS BY AGREEMENT, BY
OPERATION OF LAW OR OTHERWISE A SECURITY INTEREST IN, LIEN ON, OR ENCUMBRANCE,
CLAIM OR (EXCEPT AS PROVIDED IN THE NEXT SENTENCE) RIGHT OF SET-OFF AGAINST, ANY
DEPOSIT ACCOUNT OR ANY SECURITY ENTITLEMENT OR ANY DEPOSIT FUNDS THEREIN OR
CREDITED THERETO, THE FINANCIAL INSTITUTION HEREBY AGREES THAT SUCH SECURITY

 

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INTEREST, LIEN, ENCUMBRANCE, CLAIM, AND RIGHT OF SET-OFF SHALL BE SUBORDINATE TO
ANY SECURITY INTEREST OR OTHER INTEREST OF LENDER THEREIN AND THE SECURITY
ENTITLEMENT OR ANY DEPOSIT FUNDS THEREIN OR CREDITED THERETO.  THE FINANCIAL
INSTITUTION AGREES NOT TO EXERCISE ANY PRESENT OR FUTURE RIGHT OF RECOUPMENT OR
SET-OFF AGAINST ANY DEPOSIT ACCOUNT OR TO ASSERT AGAINST ANY DEPOSIT ACCOUNT ANY
PRESENT OR FUTURE SECURITY INTEREST, BANKER’S LIEN OR ANY OTHER LIEN OR CLAIM
(INCLUDING CLAIM FOR PENALTIES) THAT THE FINANCIAL INSTITUTION MAY AT ANY TIME
HAVE AGAINST OR IN ANY DEPOSIT ACCOUNT OR ANY SECURITY ENTITLEMENT OR ANY
DEPOSIT FUNDS THEREIN OR CREDITED THERETO; PROVIDED, HOWEVER, THAT, THE
FINANCIAL INSTITUTION MAY SET-OFF AGAINST THE LOCKBOX ACCOUNT THE FACE AMOUNT OF
ANY CHECKS WHICH HAVE BEEN CREDITED TO ANY DEPOSIT ACCOUNT BUT ARE SUBSEQUENTLY
RETURNED UNPAID BECAUSE OF UNCOLLECTED OR INSUFFICIENT FUNDS IN ACCORDANCE WITH
SECTION 5(D).

 

 

SECTION 9. CERTAIN MATTERS AFFECTING THE FINANCIAL INSTITUTION, LOCKBOX ESCROW
AGENT AND LOCKBOX CALCULATION AGENT.

 

 

(A)                                                                             
EACH OF THE FINANCIAL INSTITUTION, THE LOCKBOX ESCROW AGENT AND THE LOCKBOX
CALCULATION AGENT (IN ITS CAPACITY AS SUCH) SHALL PERFORM ONLY SUCH DUTIES AND
OBLIGATIONS AS ARE EXPRESSLY SET FORTH HEREIN WITH RESPECT TO IT AND NO IMPLIED
DUTIES OR OBLIGATIONS SHALL BE READ INTO THIS AGREEMENT (IT BEING UNDERSTOOD
THAT THE FOREGOING SHALL NOT OTHERWISE LIMIT ANY DUTY OR OBLIGATION OF COMPANY
IN ITS INDIVIDUAL CAPACITY).  NONE OF THE FINANCIAL INSTITUTION, THE LOCKBOX
ESCROW AGENT OR THE LOCKBOX CALCULATION AGENT (IN ITS CAPACITY AS SUCH) SHALL
HAVE ANY LIABILITY UNDER ANY AGREEMENT OTHER THAN THIS AGREEMENT, NOR SHALL THE
FINANCIAL INSTITUTION OR THE LOCKBOX CALCULATION AGENT HAVE ANY DUTY TO INQUIRE
AS TO THE PROVISIONS OF ANY AGREEMENT OTHER THAN THIS AGREEMENT

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(B)                                                                               
EACH OF THE FINANCIAL INSTITUTION AND THE LOCKBOX ESCROW AGENT MAY RELY UPON,
AND SHALL NOT BE LIABLE FOR ACTING IN ACCORDANCE WITH THIS AGREEMENT UPON, ANY
WRITTEN NOTICE, INSTRUCTION OR REQUEST FURNISHED TO IT HEREUNDER AND REASONABLY
BELIEVED BY IT TO BE GENUINE AND TO HAVE BEEN SIGNED OR PRESENTED BY THE PROPER
PARTY OR PARTIES, OR FOR REFRAINING FROM ACTING IF AND TO THE EXTENT THAT SUCH
WRITTEN NOTICE, INSTRUCTION OR REQUEST REQUIRES IT TO REFRAIN FROM ACTING. 
NEITHER THE FINANCIAL INSTITUTION NOR THE LOCKBOX ESCROW AGENT SHALL BE UNDER A
DUTY TO INQUIRE INTO OR INVESTIGATE THE VALIDITY, ACCURACY OR CONTENT OF ANY
SUCH DOCUMENT

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(C)                                                                               
IN THE EVENT ANY ACCOUNT INSTRUCTION, LOCKBOX CALCULATION REPORT OR OTHER NOTICE
IS GIVEN TO THE LOCKBOX ESCROW AGENT OR FINANCIAL INSTITUTION BY COMPANY OR
LENDER, WHETHER IN WRITING, BY FACSIMILE OR TELECOPIER, OR OTHERWISE, EACH

 

 

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OF THE LOCKBOX ESCROW AGENT AND FINANCIAL INSTITUTION IS AUTHORIZED TO SEEK
CONFIRMATION THEREOF BY TELEPHONE CALL-BACK TO, AS APPLICABLE, FROM ONE OR MORE
OF SUCH PERSON’S AUTHORIZED REPRESENTATIVES, AND EACH OF THE FINANCIAL
INSTITUTION AND LOCKBOX ESCROW AGENT MAY RELY UPON THE CONFIRMATION OF ANYONE
PURPORTING TO BE THE AUTHORIZED REPRESENTATIVE SO DESIGNATED.  THE AUTHORIZED
REPRESENTATIVES AND TELEPHONE NUMBERS FOR CALL-BACKS MAY BE CHANGED ONLY IN A
WRITING ACTUALLY RECEIVED AND ACKNOWLEDGED BY THE FINANCIAL INSTITUTION AND THE
LOCKBOX ESCROW AGENT.  THE PARTIES TO THIS AGREEMENT ACKNOWLEDGE AND AGREE THAT
SUCH SECURITY PROCEDURES ARE COMMERCIALLY REASONABLE

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(D)                                                                              
COMPANY AND LENDER ACKNOWLEDGE THAT REPETITIVE FUNDS TRANSFER INSTRUCTIONS
MAY BE GIVEN TO THE LOCKBOX ESCROW AGENT OR FINANCIAL INSTITUTION FOR ONE OR
MORE BENEFICIARIES WHERE ONLY THE DATE OF THE REQUESTED TRANSFER, THE AMOUNT OF
FUNDS TO BE TRANSFERRED, AND/OR THE DESCRIPTION OF THE PAYMENT SHALL CHANGE
WITHIN THE REPETITIVE INSTRUCTIONS (“STANDING SETTLEMENT INSTRUCTIONS”). 
ACCORDING, COMPANY AND LENDER SHALL DELIVER TO LOCKBOX ESCROW AGENT OR FINANCIAL
INSTITUTION SUCH SPECIFIC STANDING SETTLEMENT INSTRUCTIONS ONLY FOR EACH
RESPECTIVE BENEFICIARY AS SET FORTH IN EXHIBIT A TO THIS ESCROW AGREEMENT, BY
FACSIMILE OR OTHER WRITTEN INSTRUCTIONS.  LOCKBOX ESCROW AGENT OR FINANCIAL
INSTITUTION MAY RELY SOLELY UPON SUCH STANDING SETTLEMENT INSTRUCTIONS AND ALL
IDENTIFYING INFORMATION SET FORTH THEREIN FOR EACH BENEFICIARY.  LOCKBOX ESCROW
AGENT OR FINANCIAL INSTITUTION AND COMPANY OR LENDER AGREE THAT SUCH STANDING
SETTLEMENT INSTRUCTIONS SHALL BE EFFECTIVE AS THE FUNDS TRANSFER INSTRUCTIONS OF
COMPANY OR LENDER, WITHOUT REQUIRING A VERIFYING CALLBACK, WHETHER OR NOT
AUTHORIZED, IF SUCH STANDING SETTLEMENT INSTRUCTIONS ARE CONSISTENT WITH
PREVIOUSLY AUTHENTICATED STANDING SETTLEMENT INSTRUCTIONS FOR THAT BENEFICIARY. 
THE PARTIES ACKNOWLEDGE THAT SUCH STANDING SETTLEMENT INSTRUCTIONS ARE A
SECURITY PROCEDURE AND ARE COMMERCIALLY REASONABLE

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(E)                                                                                
NEITHER THE FINANCIAL INSTITUTION NOR THE LOCKBOX ESCROW AGENT SHALL BE LIABLE
FOR ANY ACTION TAKEN OR OMITTED BY IT EXCEPT TO THE EXTENT THAT A COURT OF
COMPETENT JURISDICTION DETERMINES THAT THE FINANCIAL INSTITUTION’S OR THE
LOCKBOX ESCROW AGENT’S (AS APPLICABLE) GROSS NEGLIGENCE OR WILLFUL MISCONDUCT
WAS THE CAUSE OF ANY LOSS, EXPENSE, COST, DAMAGE OR LIABILITY TO EITHER OR BOTH
OF COMPANY OR LENDER

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(F)                                                                                
EACH OF THE FINANCIAL INSTITUTION AND THE LOCKBOX ESCROW AGENT (I) SHALL HAVE
THE RIGHT TO EXECUTE ANY OF ITS POWERS AND PERFORM ANY OF ITS DUTIES HEREUNDER
DIRECTLY OR THROUGH AGENTS OR ATTORNEYS (WHICH, IN THE CASE OF THE LOCKBOX
ESCROW AGENT, MAY BE IN ADDITION TO THE LOCKBOX CALCULATION AGENT), THE

 

 

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Exchange Commission.  Asterisks denote such omission.

 

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APPOINTMENT OF WHICH WILL BE APPROVED IN WRITING BY COMPANY AND LENDER (AND THE
FINANCIAL INSTITUTION OR LOCKBOX ESCROW AGENT (AS APPLICABLE) SHALL BE LIABLE
ONLY FOR ITS GROSS NEGLIGENCE OR WILLFUL MISCONDUCT (AS FINALLY ADJUDICATED IN A
COURT OF COMPETENT JURISDICTION) IN THE SELECTION OF ANY SUCH AGENT OR ATTORNEY)
AND (II) SHALL HAVE THE RIGHT TO CONSULT WITH COUNSEL, ACCOUNTANTS AND OTHER
SKILLED PERSONS TO BE SELECTED AND RETAINED BY IT

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(G)                                                                               
ANY LEGAL ENTITY INTO WHICH THE FINANCIAL INSTITUTION OR THE LOCKBOX ESCROW
AGENT, IN EACH CASE IN ITS INDIVIDUAL CAPACITY, MAY BE MERGED OR CONVERTED OR
WITH WHICH IT MAY BE CONSOLIDATED, OR ANY LEGAL ENTITY RESULTING FROM ANY
MERGER, CONVERSION OR CONSOLIDATION TO WHICH THE FINANCIAL INSTITUTION OR THE
LOCKBOX ESCROW AGENT, IN EACH CASE IN ITS INDIVIDUAL CAPACITY, SHALL BE A PARTY,
OR ANY LEGAL ENTITY TO WHICH SUBSTANTIALLY ALL THE CORPORATE TRUST BUSINESS OF
THE FINANCIAL INSTITUTION OR THE LOCKBOX ESCROW AGENT MAY BE TRANSFERRED, SHALL
BE THE FINANCIAL INSTITUTION OR LOCKBOX ESCROW AGENT, AS APPLICABLE, UNDER THIS
AGREEMENT WITHOUT FURTHER ACT OR NOTICE, OTHER THAN THAT THE FINANCIAL
INSTITUTION OR LOCKBOX ESCROW AGENT, AS APPLICABLE, SHALL ENDEAVOR TO GIVE
PROMPT NOTICE THEREOF TO THE OTHER PARTIES HERETO (IT BEING UNDERSTOOD THAT IT
SHALL NOT HAVE ANY LIABILITY FOR FAILURE TO DO SO)

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(H)                                                                              
IN THE EVENT THAT THE FINANCIAL INSTITUTION OR THE LOCKBOX ESCROW AGENT IS
UNABLE TO PERFORM ITS OBLIGATIONS UNDER THE TERMS OF THIS AGREEMENT (X) BECAUSE
OF ACTS OF GOD, STRIKES, ELECTRICAL OUTAGES, EQUIPMENT OR TRANSMISSION FAILURE
OR DAMAGE REASONABLY BEYOND ITS CONTROL, OR ANY OTHER CAUSE REASONABLY BEYOND
ITS CONTROL, OR (Y) BECAUSE, UPON ADVICE OF ITS COUNSEL, PERFORMANCE WOULD
VIOLATE ANY APPLICABLE GUIDELINE, RULE OR REGULATION OF ANY GOVERNMENTAL
AUTHORITY HAVING JURISDICTION OVER IT, THEN, IN EACH CASE WITH RESPECT TO THE
FOREGOING CLAUSES (X) AND (Y) IN THIS SUBSECTION (G), THE FINANCIAL INSTITUTION
OR THE LOCKBOX ESCROW AGENT, AS APPLICABLE, SHALL PROMPTLY NOTIFY COMPANY AND
LENDER THEREOF IN WRITING AND SHALL NOT BE LIABLE FOR DAMAGES TO THE OTHER
PARTIES FOR ANY UNFORESEEABLE DAMAGES RESULTING FROM SUCH FAILURE TO PERFORM OR
OTHERWISE FROM SUCH CAUSES.  PERFORMANCE UNDER THIS AGREEMENT BY THE FINANCIAL
INSTITUTION SHALL RESUME WHEN IT IS ABLE TO PERFORM SUBSTANTIALLY ITS DUTIES
HEREUNDER

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(I)                                                                                   
ANYTHING IN THIS AGREEMENT TO THE CONTRARY NOTWITHSTANDING, IN NO EVENT SHALL
ANY OF THE FINANCIAL INSTITUTION, LOCKBOX ESCROW AGENT OR LOCKBOX CALCULATION
AGENT (OTHER THAN THE COMPANY OR ITS AFFILIATES) (IN ITS CAPACITY AS SUCH) BE
LIABLE FOR ANY SPECIAL, INDIRECT, EXEMPLARY OR CONSEQUENTIAL LOSS OR DAMAGE OF
ANY KIND WHATSOEVER (INCLUDING, BUT NOT LIMITED

 

 

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Exchange Commission.  Asterisks denote such omission.

 

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TO, LOST PROFITS), EVEN IF IT HAS BEEN ADVISED OF THE LIKELIHOOD OF SUCH LOSS OR
DAMAGE AND REGARDLESS OF THE FORM OF ACTION (IT BEING UNDERSTOOD THAT THE
FOREGOING SHALL NOT OTHERWISE LIMIT ANY DUTY OR OBLIGATION OF COMPANY IN ITS
INDIVIDUAL CAPACITY)

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(J)                                                                                  
IF COMPANY AND LENDER SHALL BE IN A DISAGREEMENT ABOUT THE INTERPRETATION OF
THIS AGREEMENT, OR ABOUT THE RIGHTS AND OBLIGATIONS, OR THE PROPRIETY OF ANY
ACTION CONTEMPLATED BY THE LOCKBOX ESCROW AGENT HEREUNDER, THE LOCKBOX ESCROW
AGENT MAY, BUT SHALL NOT BE REQUIRED TO, FILE AN APPROPRIATE CIVIL ACTION TO
RESOLVE THE DISAGREEMENT.  THE LOCKBOX ESCROW AGENT SHALL BE INDEMNIFIED,
JOINTLY AND SEVERALLY, BY COMPANY AND LENDER FOR ALL COSTS, INCLUDING,
REASONABLE ATTORNEYS’ FEES, IN CONNECTION WITH SUCH CIVIL ACTION, AND SHALL
CONTINUE, AND BE FULLY PROTECTED IN CONTINUING, TO PERFORM ITS RESPONSIBILITIES
UNDER THIS AGREEMENT UNTIL A FINAL JUDGMENT, WITHOUT ANY FURTHER RIGHT OF
APPEAL, IS RECEIVED OR THE LOCKBOX ESCROW AGENT IS REPLACED PURSUANT TO
SECTION 6 OF THIS AGREEMENT; PROVIDED, THAT LENDER’S LIABILITY UNDER THIS
SECTION 9(J) SHALL BE LIMITED TO COSTS AND/OR FEES INCURRED SOLELY AS A RESULT
OF LOCKBOX ESCROW AGENT’S ACTION OR INACTION TAKEN PURSUANT TO LENDER’S
INSTRUCTIONS.  IF THERE IS ANY DISAGREEMENT AS TO THE PROPRIETY OF ANY ACTION OF
THE LOCKBOX ESCROW AGENT, THE COMPANY AND LENDER SHALL MEET PROMPTLY TO DISCUSS
AND, IF SO AGREED, TO INITIATE THE PROCEDURE TO REPLACE THE LOCKBOX ESCROW AGENT
IN ACCORDANCE WITH SECTION 6 OF THIS AGREEMENT

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SECTION 10. CONFLICT WITH OTHER AGREEMENTS; ADVERSE CLAIMS.

 

 

(A)                                                                             
IN THE EVENT OF ANY CONFLICT BETWEEN THIS AGREEMENT (OR ANY PORTION HEREOF) AND
ANY OTHER AGREEMENT NOW EXISTING OR HEREAFTER ENTERED INTO, THE TERMS OF THIS
AGREEMENT SHALL PREVAIL; PROVIDED, THAT COMPANY AND LENDER CONFIRM TO EACH OTHER
THAT NOTHING HEREIN IS INTENDED TO EXPAND, MODIFY OR LIMIT THE RIGHTS AND/OR
OBLIGATIONS OF COMPANY AND LENDER UNDER THE LOAN AGREEMENT AND/OR THE SECURITY
AGREEMENT; AND PROVIDED, FURTHER, THAT IN THE EVENT OF ANY INCONSISTENCY BETWEEN
THIS AGREEMENT AND THE TERMS OF THE LOAN AGREEMENT AND/OR THE SECURITY
AGREEMENT, THE TERMS AND PROVISIONS OF THE LOAN AGREEMENT AND/OR THE SECURITY
AGREEMENT, AS APPLICABLE, SHALL CONTROL AS BETWEEN COMPANY AND LENDER, WITH THE
LOAN AGREEMENT TAKING PRIORITY OVER THE SECURITY AGREEMENT

74

 

 

(B)                                                                               
THE FINANCIAL INSTITUTION HEREBY CONFIRMS THAT:

75

 

 

SECTION 11. AUTHORIZED REPRESENTATIVES.  EACH INDIVIDUAL DESIGNATED AS AN
AUTHORIZED REPRESENTATIVE OF COMPANY OR OF LENDER, RESPECTIVELY (AN “AUTHORIZED
REPRESENTATIVE”), IS AUTHORIZED TO GIVE AND RECEIVE NOTICES, REQUESTS AND
INSTRUCTIONS AND TO DELIVER

 

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CERTIFICATES AND DOCUMENTS IN CONNECTION WITH THIS AGREEMENT ON BEHALF OF
COMPANY OR LENDER, AS THE CASE MAY BE.  THE SPECIMEN SIGNATURE FOR EACH
AUTHORIZED REPRESENTATIVE OF COMPANY INITIALLY AUTHORIZED HEREUNDER IS SET FORTH
ON SCHEDULE 2.  THE SPECIMEN SIGNATURE FOR EACH AUTHORIZED REPRESENTATIVE OF
LENDER INITIALLY AUTHORIZED HEREUNDER IS SET FORTH ON SCHEDULE 3.  THE SPECIMEN
SIGNATURE FOR EACH AUTHORIZED REPRESENTATIVE OF THE LOCKBOX CALCULATION AGENT
INITIALLY AUTHORIZED HEREUNDER IS SET FORTH ON SCHEDULE 4.  FROM TIME TO TIME,
COMPANY, LENDER OR THE LOCKBOX CALCULATION AGENT MAY, BY DELIVERING TO EACH
OTHER, THE LOCKBOX ESCROW AGENT AND THE FINANCIAL INSTITUTION A REVISED SCHEDULE
2 OR 3 OR 4 (AS APPLICABLE), CHANGE THE INFORMATION PREVIOUSLY GIVEN PURSUANT TO
THIS SECTION 11, BUT EACH OF THE PARTIES HERETO SHALL BE ENTITLED TO RELY
CONCLUSIVELY ON THE THEN CURRENT SCHEDULE UNTIL RECEIPT OF A SUPERSEDING
SCHEDULE.

 

 

SECTION 12. REPRESENTATIONS, WARRANTIES AND COVENANTS.

 

 

(A)                                                                             
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE FINANCIAL INSTITUTION.  THE
FINANCIAL INSTITUTION HEREBY REPRESENTS, WARRANTS AND COVENANTS TO COMPANY AND
LENDER THAT:

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(B)                                                                               
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE LOCKBOX ESCROW AGENT.  THE
LOCKBOX ESCROW AGENT HEREBY REPRESENTS, WARRANTS AND COVENANTS TO COMPANY AND
LENDER THAT:

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(C)                                                                               
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE LOCKBOX CALCULATION AGENT.  THE
LOCKBOX CALCULATION AGENT HEREBY REPRESENTS, WARRANTS AND COVENANTS TO LOCKBOX
ESCROW AGENT, COMPANY AND LENDER THAT:

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(D)                                                                              
REPRESENTATIONS, WARRANTIES AND COVENANTS OF COMPANY.  COMPANY HEREBY
REPRESENTS, WARRANTS AND COVENANTS TO THE FINANCIAL INSTITUTION, LOCKBOX ESCROW
AGENT, LOCKBOX CALCULATION AGENT AND LENDER THAT:

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(E)                                                                                
REPRESENTATIONS, WARRANTIES AND COVENANTS OF LENDER.  LENDER HEREBY REPRESENTS,
WARRANTS AND COVENANTS TO THE FINANCIAL INSTITUTION, LOCKBOX ESCROW AGENT,
LOCKBOX CALCULATION AGENT AND COMPANY THAT:

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SECTION 13. TERMINATION OF THIS AGREEMENT.

 

 

(A)                                                                             
EXCEPT AS OTHERWISE PROVIDED IN THIS SECTION 13, THIS AGREEMENT SHALL CONTINUE
IN EFFECT UNTIL LENDER CONFIRMS IN WRITING THAT ALL AMOUNTS PAYABLE UNDER THE
LOAN AGREEMENT AND ALL OF THE OTHER TRANSACTION DOCUMENTS (AS DEFINED IN THE
LOAN AGREEMENT) HAVE BEEN INDEFEASIBLY PAID IN FULL (OTHER THAN INDEMNIFICATION
OBLIGATIONS AND OTHER CONTINGENT OBLIGATIONS THAT, BY THEIR TERMS, SURVIVE THE
TERMINATION OF THIS AGREEMENT)

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(B)                                                                               
LENDER MAY TERMINATE THIS AGREEMENT AT ANY TIME UPON ITS DELIVERY OF WRITTEN
NOTICE OF SUCH TERMINATION TO THE FINANCIAL INSTITUTION, THE LOCKBOX ESCROW
AGENT AND COMPANY

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(C)                                                                               
COMPANY MAY NOT TERMINATE THIS AGREEMENT FOR ANY REASON WITHOUT THE PRIOR
WRITTEN CONSENT OF LENDER

78

 

 

(D)                                                                              
PRIOR TO ANY TERMINATION OF THIS AGREEMENT, THE FINANCIAL INSTITUTION HEREBY
AGREES THAT IT SHALL PROMPTLY TAKE, AT THE EXPENSE OF COMPANY, ALL REASONABLE
ACTIONS NECESSARY TO FACILITATE THE TRANSFER OF ANY DEPOSIT FUNDS IN OR CREDITED
TO THE DEPOSIT ACCOUNTS AS FOLLOWS: (I) IN THE CASE OF A TERMINATION OF THIS
AGREEMENT UNDER SECTION 13(A), TO THE DEPOSITORY INSTITUTION DESIGNATED IN
WRITING BY COMPANY; AND (II) IN ALL OTHER CASES, TO THE DEPOSITORY INSTITUTION
DESIGNATED IN WRITING BY LENDER, WHICH DEPOSITORY INSTITUTION WILL (IN ALL
CASES) BE SO DESIGNATED PRIOR TO TERMINATION HEREOF

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(E)                                                                                
NO TERMINATION OF THIS AGREEMENT SHALL IMPAIR THE RIGHTS OF ANY PARTY HERETO
WITH RESPECT TO CHECKS PROCESSED PRIOR TO THE EFFECTIVE DATE OF TERMINATION

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SECTION 14. FEES AND EXPENSES.  ANY LOCKBOX CALCULATION AGENT, OTHER THAN
COMPANY OR ITS AFFILIATE, WILL RECEIVE A MONTHLY FEE FOR ITS SERVICES HEREUNDER,
WHICH SHALL BE PAID BY COMPANY AND CHARGED, ON A PRO RATA BASIS, AGAINST AMOUNTS
ON DEPOSIT IN THE LOCKBOX ACCOUNT WHICH WOULD OTHERWISE BE TRANSFERRED TO THE
COMPANY CONCENTRATION ACCOUNT.  EACH OF THE LOCKBOX ESCROW AGENT, LOCKBOX
CALCULATION AGENT AND FINANCIAL INSTITUTION AGREES TO LOOK SOLELY TO COMPANY
CONCENTRATION ACCOUNT (OR TO COMPANY OR AMOUNTS WHICH ARE OTHERWISE PAYABLE TO
OR FOR THE BENEFIT OF COMPANY OR TO COMPANY CONCENTRATION ACCOUNT) FOR PAYMENT
OF ITS APPLICABLE FEE REFERRED TO BELOW AND ANY OTHER FEES IN CONNECTION WITH
ITS SERVICES HEREUNDER, AND COMPANY AGREES TO PAY SUCH FEES ON DEMAND THEREFOR;
PROVIDED, HOWEVER, THAT THE FEES WHICH SUCH PARTIES MAY CHARGE COMPANY SHALL NOT
EXCEED THE FEES AND CHARGES CUSTOMARILY CHARGED BY THEM FOR COMPARABLE SERVICES,
AND WILL BE ADJUSTED UPON REPLACEMENT OF ANY SUCH PARTY HEREUNDER.  COMPANY
ACKNOWLEDGES AND AGREES THAT IT SOLELY SHALL BE, AND AT ALL TIMES REMAIN, LIABLE
TO THE LOCKBOX ESCROW AGENT, LOCKBOX CALCULATION AGENT AND FINANCIAL INSTITUTION
IN CONNECTION WITH ITS PAYMENT OF SUCH AMOUNTS.  THE FEES OF THE LOCKBOX ESCROW
AGENT ARE FIVE THOUSAND DOLLARS ($5,000) PER ANNUM WITHOUT PRO-RATION FOR
PARTIAL YEARS.

 

(A)                                                                             
EACH OF COMPANY AND LENDER AGREES THAT IT SHALL BE JOINTLY AND SEVERALLY LIABLE
TO INDEMNIFY AND HOLD HARMLESS EACH OF THE LOCKBOX ESCROW AGENT AND THE
FINANCIAL INSTITUTION AND ITS

 

Confidential materials omitted and filed separately with the Secutities and
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SECTION 15. INDEMNITY.

 

 

 

RESPECTIVE SUCCESSORS, ASSIGNS, DIRECTORS, OFFICERS, MANAGERS, ATTORNEYS,
ACCOUNTANTS, EXPERTS, AGENTS AND EMPLOYEES (COLLECTIVELY, THE “INDEMNITEES”)
FROM AND AGAINST ANY AND ALL LIABILITIES INCURRED BY ANY INDEMNITEE ARISING OUT
OF OR IN CONNECTION WITH (I) THIS AGREEMENT OR (II) THE FINANCIAL INSTITUTION OR
LOCKBOX ESCROW AGENT’S PERFORMANCE OF ITS OBLIGATIONS AND SERVICES UNDER THIS
AGREEMENT, INCLUDING, WITHOUT LIMITATION, THE COMPLIANCE WITH ANY ACCOUNT
INSTRUCTION, LOCKBOX CALCULATION REPORT OR OTHER INSTRUCTIONS, ORDERS,
DIRECTIONS OR NOTICES GIVEN HEREUNDER, OTHER THAN THOSE LIABILITIES THAT ARE DUE
TO OR CAUSED BY THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF ANY INDEMNITEE;
PROVIDED, THAT LENDER’S LIABILITY UNDER THIS SECTION 15(A) SHALL BE LIMITED TO
LIABILITIES INCURRED SOLELY AS A RESULT OF ANY INDEMNITEE’S ACTION OR INACTION
TAKEN PURSUANT TO LENDER’S INSTRUCTIONS

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(B)                                                                               
COMPANY AND LENDER EACH AGREES THAT IT SHALL BE JOINTLY AND SEVERALLY LIABLE TO
INDEMNIFY AND HOLD HARMLESS ANY LOCKBOX CALCULATION AGENT FROM AND AGAINST ANY
AND ALL LIABILITIES INCURRED BY THE LOCKBOX CALCULATION AGENT ARISING OUT OF OR
IN CONNECTION WITH (I) THIS AGREEMENT OR (II) THE LOCKBOX CALCULATION AGENT’S
PERFORMANCE OF ITS OBLIGATIONS AND SERVICES UNDER THIS AGREEMENT, OTHER THAN
THOSE LIABILITIES THAT ARE DUE TO OR CAUSED BY THE LOCKBOX CALCULATION AGENT’S
GROSS NEGLIGENCE OR WILLFUL MISCONDUCT; PROVIDED, HOWEVER, THAT LENDER SHALL NOT
HAVE ANY OBLIGATION UNDER THIS SUBSECTION WITH RESPECT TO ANY LOCKBOX
CALCULATION AGENT WHICH IS THE SAME PERSON AS, OR WHICH IS AN AFFILIATE OF,
COMPANY; AND, PROVIDED, FURTHER, THAT LENDER’S LIABILITY UNDER THIS
SECTION 15(B) SHALL BE LIMITED TO LIABILITIES INCURRED SOLELY AS A RESULT OF
LOCKBOX CALCULATION AGENT’S ACTION OR INACTION TAKEN PURSUANT TO LENDER’S
INSTRUCTIONS

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(C)                                                                               
THE PARTIES HERETO ACKNOWLEDGE AND AGREE THAT THE FOREGOING INDEMNITIES SHALL
SURVIVE THE RESIGNATION, REPLACEMENT OR REMOVAL OF THE FINANCIAL INSTITUTION OR
ANY AGENT HEREUNDER AND THE TERMINATION OF THIS AGREEMENT UNTIL THE EXPIRATION
OF THE APPLICABLE STATUTE OF LIMITATIONS

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SECTION 16. TINS AND PATRIOT ACT DISCLOSURE.

 

 

 

(A)                                                                             
COMPANY AND LENDER EACH REPRESENT TO THE LOCKBOX ESCROW AGENT AND FINANCIAL
INSTITUTION AND TO EACH OTHER THAT ITS RESPECTIVE CORRECT TAXPAYER
IDENTIFICATION NUMBER (“TIN”) ASSIGNED BY THE INTERNAL REVENUE SERVICE OR ANY
OTHER TAXING AUTHORITY IS SET FORTH IN SCHEDULE 1. UPON EXECUTION OF THIS
AGREEMENT, EACH OF COMPANY AND LENDER SHALL DELIVER TO THE LOCKBOX ESCROW AGENT
AND FINANCIAL INSTITUTION A W-8 OR W-9 INTERNAL REVENUE SERVICE FORM OR ANY
OTHER SIMILAR FORM ISSUED BY THE RELEVANT TAXING AUTHORITY DULY EXECUTED BY IT

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(B)                                                                               
ALL INTEREST OR OTHER INCOME EARNED IN THE LOCKBOX ACCOUNT (I) SHALL BE
ALLOCATED AND/OR PAID IN ACCORDANCE WITH THE ALLOCATIONS MADE IN ACCORDANCE WITH
THIS AGREEMENT AND (II) SHALL BE REPORTED TO THE INTERNAL REVENUE SERVICE OR ANY
OTHER APPLICABLE TAXING AUTHORITY BY LOCKBOX ESCROW AGENT. NOTWITHSTANDING SUCH
WRITTEN DIRECTIONS, THE FINANCIAL INSTITUTION SHALL REPORT AND, IF REQUIRED,
WITHHOLD ANY TAXES AS IT REASONABLY DETERMINES MAY BE REQUIRED BY ANY LAW OR
REGULATION IN EFFECT AT THE TIME OF THE DISTRIBUTION. IN THE EVENT THAT ANY
EARNINGS IN THE LOCKBOX ACCOUNT REMAIN UNDISTRIBUTED AT THE END OF ANY CALENDAR
YEAR, THE FINANCIAL INSTITUTION SHALL REPORT TO THE INTERNAL REVENUE SERVICE OR
SUCH OTHER TAXING AUTHORITY SUCH EARNINGS AS IT DEEMS APPROPRIATE OR AS REQUIRED
BY ANY APPLICABLE LAW OR REGULATION OR, TO THE EXTENT CONSISTENT THEREWITH, AS
DIRECTED IN WRITING BY LENDER. IN ADDITION, THE FINANCIAL INSTITUTION SHALL
WITHHOLD FROM THE LOCKBOX ACCOUNT ANY TAXES REQUIRED BY LAW TO BE WITHHELD AND
SHALL REMIT SUCH TAXES TO THE APPROPRIATE AUTHORITIES. ANY TAXES WITHHELD BY THE
FINANCIAL INSTITUTION SHALL BE INCLUDED IN THE STATEMENT REQUIRED BY
SECTION 5(F)

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(C)                                                                               
ALL ITEMS OF INCOME, GAIN, EXPENSE AND LOSS RECOGNIZED IN THE COMPANY
CONCENTRATION ACCOUNT SHALL BE REPORTED TO THE INTERNAL REVENUE SERVICE AND ALL
STATE AND LOCAL TAXING AUTHORITIES UNDER THE NAME AND TIN OF COMPANY. ALL ITEMS
OF INCOME, GAIN, EXPENSE AND LOSS RECOGNIZED IN THE LENDER CONCENTRATION ACCOUNT
ALLOCABLE TO EACH LENDER SHALL BE REPORTED TO THE INTERNAL REVENUE SERVICE AND
ALL STATE AND LOCAL TAXING AUTHORITIES UNDER THE NAME AND TIN OF SUCH LENDER

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(D)                                                                              
SECTION 326 OF THE UNITING AND STRENGTHENING AMERICA BY PROVIDING APPROPRIATE
TOOLS REQUIRED TO INTERCEPT AND OBSTRUCT TERRORISM ACT OF 2001 (“USA PATRIOT
ACT”) REQUIRES THE LOCKBOX ESCROW AGENT AND FINANCIAL INSTITUTION TO IMPLEMENT
REASONABLE PROCEDURES TO VERIFY THE IDENTITY OF ANY PERSON THAT OPENS A NEW
ACCOUNT WITH IT. ACCORDINGLY, THE PARTIES ACKNOWLEDGE THAT SECTION 326 OF THE
USA PATRIOT ACT AND THE LOCKBOX ESCROW AGENT’S AND FINANCIAL INSTITUTION’S
IDENTITY VERIFICATION PROCEDURES REQUIRE THE LOCKBOX ESCROW AGENT AND FINANCIAL
INSTITUTION TO OBTAIN INFORMATION WHICH MAY BE USED TO CONFIRM THE PARTIES
IDENTITY INCLUDING WITHOUT LIMITATION NAME, ADDRESS AND ORGANIZATIONAL DOCUMENTS
(“IDENTIFYING INFORMATION”). THE PARTIES AGREE TO PROVIDE THE LOCKBOX ESCROW
AGENT AND FINANCIAL INSTITUTION WITH AND CONSENT TO THE LOCKBOX ESCROW AGENT AND
FINANCIAL INSTITUTION OBTAINING FROM THIRD PARTIES ANY SUCH IDENTIFYING
INFORMATION REQUIRED AS A CONDITION OF OPENING AN ACCOUNT WITH OR USING ANY
SERVICE PROVIDED BY THE LOCKBOX ESCROW AGENT AND FINANCIAL INSTITUTION

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SECTION 17. SPECIFIC PERFORMANCE. EACH OF THE PARTIES HERETO ACKNOWLEDGES THAT
THE OTHER PARTY WILL HAVE NO ADEQUATE REMEDY AT LAW IF IT FAILS TO PERFORM ANY
OF ITS OBLIGATIONS UNDER THIS AGREEMENT OR ANY OF THE OTHER TRANSACTION
DOCUMENTS. IN SUCH EVENT, EACH OF THE PARTIES AGREES THAT THE OTHER PARTY SHALL
HAVE THE RIGHT, IN ADDITION TO ANY OTHER RIGHTS IT MAY HAVE (WHETHER AT LAW OR
IN EQUITY), TO SPECIFIC PERFORMANCE OF THIS AGREEMENT.

 

 

 

SECTION 18. NOTICES. ALL NOTICES, CONSENTS, WAIVERS AND COMMUNICATIONS HEREUNDER
GIVEN BY ANY PARTY TO ANY OTHER PARTY SHALL BE IN WRITING (INCLUDING FACSIMILE
TRANSMISSION) AND DELIVERED PERSONALLY, BY TELEGRAPH, TELECOPY, TELEX OR
FACSIMILE, BY A RECOGNIZED OVERNIGHT COURIER, OR BY DISPATCHING THE SAME BY
CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, WITH POSTAGE PREPAID, IN
EACH CASE ADDRESSED TO THE APPROPRIATE NOTICE ADDRESS SET FORTH ON SCHEDULE 1 OR
TO SUCH OTHER ADDRESS OR ADDRESSES AS THE PARTIES MAY FROM TIME TO TIME
DESIGNATE BY NOTICE AS PROVIDED HEREIN, EXCEPT THAT NOTICES OF CHANGES OF
ADDRESS SHALL BE EFFECTIVE ONLY UPON RECEIPT. ALL SUCH NOTICES, CONSENTS,
WAIVERS AND COMMUNICATIONS SHALL: (A) WHEN POSTED BY CERTIFIED OR REGISTERED
MAIL, POSTAGE PREPAID, RETURN RECEIPT REQUESTED, BE EFFECTIVE THREE (3) BUSINESS
DAYS AFTER DISPATCH, (B) WHEN TELEGRAPHED, TELECOPIED, TELEXED OR FACSIMILED, BE
EFFECTIVE UPON RECEIPT BY THE TRANSMITTING PARTY OF CONFIRMATION OF COMPLETE
TRANSMISSION, (C) WHEN DELIVERED BY A RECOGNIZED OVERNIGHT COURIER OR IN PERSON,
BE EFFECTIVE UPON RECEIPT WHEN HAND DELIVERED OR WHEN DELIVERY IS CONFIRMED BY
SUCH COURIER’S TRACKING SYSTEM OR (D) WHEN SENT BY E-MAIL, UPON RECEIPT OF A
CONFIRMATORY RETURN E-MAIL FROM THE RECIPIENT.

 

 

 

SECTION 19. ENTIRE AGREEMENT. THIS AGREEMENT, TOGETHER WITH THE OTHER
TRANSACTION DOCUMENTS AND THE ANNEXES AND SCHEDULES HERETO AND THERETO (WHICH
ARE INCORPORATED HEREIN BY REFERENCE), CONSTITUTES THE ENTIRE AGREEMENT AMONG
THE PARTIES WITH RESPECT TO THE SUBJECT MATTER HEREOF AND SUPERSEDES ALL PRIOR
AGREEMENTS, UNDERSTANDINGS AND NEGOTIATIONS, BOTH WRITTEN AND ORAL, AMONG THE
PARTIES WITH RESPECT TO THE SUBJECT MATTER OF THIS AGREEMENT. NO REPRESENTATION,
INDUCEMENT, PROMISE, UNDERSTANDING, CONDITION OR WARRANTY NOT SET FORTH HEREIN
(OR IN THE ANNEXES OR SCHEDULES HERETO) HAS BEEN MADE OR RELIED UPON BY ANY
PARTY HERETO. NONE OF THIS AGREEMENT, NOR ANY PROVISION HEREOF, IS INTENDED TO
CONFER UPON ANY PERSON OTHER THAN THE PARTIES HERETO ANY RIGHTS OR REMEDIES
HEREUNDER.

 

 

 

SECTION 20. AMENDMENTS; NO WAIVERS.

 

 

 

(A)                                                                             
THIS AGREEMENT OR ANY TERM OR PROVISION HEREOF MAY NOT BE AMENDED, CHANGED OR
MODIFIED EXCEPT WITH THE WRITTEN

 

 

Confidential materials omitted and filed separately with the Secutities and
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CONSENT OF THE PARTIES HERETO; PROVIDED, THAT THE PARTIES HERETO AGREE THAT THEY
WILL COOPERATE WITH COWEN HEALTHCARE ROYALTY PARTNERS, L.P. TO AMEND THIS
AGREEMENT IN ORDER TO ADD MECHANICS RELATED TO SYNDICATION OF THE LOAN TO ONE OR
MORE ADDITIONAL LENDERS UNDER THE LOAN AGREEMENT. LENDER MAY TAKE ANY ACTION
THAT IS PERMITTED UNDER THE LOAN AGREEMENT AT THE DIRECTION OF REQUIRED LENDERS.
NO WAIVER OF ANY RIGHT HEREUNDER SHALL BE EFFECTIVE UNLESS SUCH WAIVER IS SIGNED
IN WRITING BY THE PARTY AGAINST WHOM SUCH WAIVER IS SOUGHT TO BE ENFORCED

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(B)                                                                               
NO FAILURE OR DELAY BY ANY PARTY IN EXERCISING ANY RIGHT, POWER OR PRIVILEGE
HEREUNDER SHALL OPERATE AS A WAIVER THEREOF NOR SHALL ANY SINGLE OR PARTIAL
EXERCISE THEREOF PRECLUDE ANY OTHER OR FURTHER EXERCISE THEREOF OR THE EXERCISE
OF ANY OTHER RIGHT, POWER OR PRIVILEGE. THE RIGHTS AND REMEDIES HEREIN PROVIDED
SHALL BE CUMULATIVE AND NOT EXCLUSIVE OF ANY RIGHTS OR REMEDIES PROVIDED BY LAW

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SECTION 21. SUCCESSORS AND ASSIGNS. THE PROVISIONS OF THIS AGREEMENT SHALL BE
BINDING UPON AND INURE TO THE BENEFIT OF THE PARTIES HERETO AND THEIR RESPECTIVE
SUCCESSORS AND ASSIGNS, AND ANY REFERENCE HEREIN TO A PARTY SHALL BE DEEMED A
REFERENCE TO SUCH PARTY’S SUCCESSORS AND ASSIGNS, IF ANY. COMPANY, FINANCIAL
INSTITUTION AND LOCKBOX ESCROW AGENT SHALL NOT BE ENTITLED TO ASSIGN ANY OF
THEIR OBLIGATIONS AND RIGHTS HEREUNDER OR ANY OTHER TRANSACTION DOCUMENTS
WITHOUT THE PRIOR WRITTEN CONSENT OF LENDER. LENDER MAY ASSIGN THIS AGREEMENT
AND ANY OF ITS RIGHTS HEREUNDER WITHOUT RESTRICTION.

 

 

 

SECTION 22. SEVERABILITY. IF ANY PROVISION OF THIS AGREEMENT IS HELD TO BE
INVALID OR UNENFORCEABLE, THE REMAINING PROVISIONS SHALL NEVERTHELESS BE GIVEN
FULL FORCE AND EFFECT.

 

 

 

SECTION 23. RECHARACTERIZATION. THE PARTIES INTEND THAT THIS AGREEMENT (IN SO
FAR AS IT RELATES TO THE LOCKBOX ACCOUNT) CONSTITUTE AN ESCROW AGREEMENT FOR ALL
PURPOSES, INCLUDING, WITHOUT LIMITATION, FOR PURPOSES OF SECTIONS 541 AND 544 OF
THE UNITED STATES BANKRUPTCY CODE, TITLE 11, UNITED STATES CODE (THE “BANKRUPTCY
CODE”). TO THE EXTENT THAT A COURT SHALL, NOTWITHSTANDING SUCH INTENT, CONSTRUE
THIS AGREEMENT (INSOFAR AS IT RELATES TO THE LOCKBOX ACCOUNT) AS CONSTITUTING A
SECURITY ARRANGEMENT, THE FOLLOWING PROVISIONS SHALL BE DEEMED TO APPLY:

 

 

 

(A)                                                                             
THE COMPANY HEREBY GRANTS TO LENDER A SECURITY INTEREST IN THE LOCKBOX ACCOUNT
AND ALL FUNDS, MONIES, CHECKS AND OTHER ITEMS FROM TIME TO TIME CREDITED THERETO
OR ON DEPOSIT THEREIN, TO SECURE THE SECURED OBLIGATIONS AS DEFINED IN THE
SECURITY AGREEMENT;

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(B)                                                                               
THE LOCKBOX ESCROW AGENT SHALL HOLD FUNDS IN THE LOCKBOX ACCOUNT AS BAILEE FOR
LENDER FOR PURPOSES OF PERFECTING SUCH SECURITY INTEREST BY CONTROL OF SUCH
ACCOUNTS.

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(C)                                                                               
FINANCIAL INSTITUTION SHALL COMPLY WITH ALL ACCOUNT INSTRUCTIONS ORIGINATED BY
THE LENDER WITH RESPECT TO THE LOCKBOX ACCOUNT WITHOUT FURTHER CONSENT BY THE
COMPANY.

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SECTION 24. INTERPRETATION. WHEN A REFERENCE IS MADE IN THIS AGREEMENT TO
SECTIONS, SUBSECTIONS, ANNEXES OR SCHEDULES, SUCH REFERENCE SHALL BE TO A
SECTION, SUBSECTION, ANNEX OR SCHEDULE TO THIS AGREEMENT UNLESS OTHERWISE
INDICATED. THE TERMS “AGREEMENT”, “HEREIN”, “HERETO”, “HEREOF” AND WORDS OF
SIMILAR IMPORT SHALL, UNLESS THE CONTEXT OTHERWISE REQUIRES, MEAN THIS
AGREEMENT, AS AMENDED, SUPPLEMENTED OR OTHERWISE MODIFIED FROM TIME TO TIME. THE
WORDS “INCLUDE”, “INCLUDES” AND “INCLUDING” WHEN USED HEREIN SHALL BE DEEMED IN
EACH CASE TO BE FOLLOWED BY THE WORDS “WITHOUT LIMITATION”. NO PARTY HERETO
SHALL BE OR BE DEEMED TO BE THE DRAFTER OF THIS AGREEMENT FOR THE PURPOSES OF
CONSTRUING THIS AGREEMENT AGAINST ANY OTHER PARTY.

 

 

 

SECTION 25. HEADINGS AND CAPTIONS. THE HEADINGS AND CAPTIONS IN THIS AGREEMENT
ARE FOR CONVENIENCE AND REFERENCE PURPOSES ONLY AND SHALL NOT BE CONSIDERED A
PART OF OR AFFECT THE CONSTRUCTION OR INTERPRETATION OF ANY PROVISION OF THIS
AGREEMENT.

 

 

 

SECTION 26. GOVERNING LAW; JURISDICTION.

 

 

 

(A)                                                                             
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED, INTERPRETED AND ENFORCED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE
PRINCIPLES OF CONFLICTS OF LAW THEREOF THAT WOULD REQUIRE THE APPLICATION OF
LAWS OTHER THAN THOSE OF THE STATE OF NEW YORK.

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(B)                                                                               
ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER
TRANSACTION DOCUMENT MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT
JURISDICTION IN THE STATE, COUNTY AND CITY OF NEW YORK. BY EXECUTION AND
DELIVERY OF THIS AGREEMENT, EACH PARTY HERETO HEREBY IRREVOCABLY CONSENTS TO AND
ACCEPTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY THE NON-EXCLUSIVE JURISDICTION OF SUCH COURTS. EACH PARTY HERETO
HEREBY FURTHER IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE
LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT
MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH
JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT.

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(C)                                                                               
EACH PARTY HERETO HEREBY IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF
ANY OF THE COURTS REFERRED TO IN

 

 

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SUBSECTION (B) ABOVE OF THIS SECTION 26 IN ANY SUCH ACTION OR PROCEEDING BY THE
MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO
IT AT ITS ADDRESS SET FORTH IN THIS AGREEMENT. EACH PARTY HERETO HEREBY
IRREVOCABLY WAIVES ANY OBJECTION TO SUCH SERVICE OF PROCESS AND FURTHER
IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY ACTION OR PROCEEDING
COMMENCED HEREUNDER THAT SERVICE OF PROCESS WAS IN ANY WAY INVALID OR
INEFFECTIVE. NOTHING HEREIN SHALL AFFECT THE RIGHT OF A PARTY TO SERVE PROCESS
ON THE OTHER PARTY IN ANY OTHER MANNER PERMITTED BY LAW.

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SECTION 27. WAIVER OF JURY TRIAL; EXCLUSION OF PUNITIVE DAMAGES. EACH PARTY
HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT. IN ADDITION, WITHOUT
LIMITING COMPANY’S OBLIGATION TO INDEMNIFY LENDER FOR ANY THIRD PARTY CLAIM FOR
PUNITIVE DAMAGES, IN ANY LITIGATION OR ARBITRATION BETWEEN THE PARTIES HEREUNDER
NEITHER PARTY SHALL BE ENTITLED TO SEEK PUNITIVE DAMAGES FROM THE OTHER PARTY.

 

 

 

SECTION 28. WAIVER OF IMMUNITY. TO THE EXTENT THAT THE COMPANY HAS OR HEREAFTER
MAY BE ENTITLED TO CLAIM OR MAY ACQUIRE, FOR ITSELF OR ANY OF ITS ASSETS, ANY
IMMUNITY FROM SUIT, JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER
THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF
EXECUTION, OR OTHERWISE) WITH RESPECT TO ITSELF OR ANY OF ITS PROPERTY, THE
COMPANY HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS
HEREUNDER TO THE FULLEST EXTENT PERMITTED BY LAW.

 

 

 

SECTION 29. COUNTERPARTS; EFFECTIVENESS. THIS AGREEMENT MAY BE EXECUTED IN TWO
OR MORE COUNTERPARTS, EACH OF WHICH SHALL BE AN ORIGINAL, BUT ALL OF WHICH
TOGETHER SHALL CONSTITUTE ONE AND THE SAME INSTRUMENT. THIS AGREEMENT SHALL
BECOME EFFECTIVE WHEN EACH PARTY HERETO SHALL HAVE RECEIVED A COUNTERPART HEREOF
SIGNED BY THE OTHER PARTIES HERETO.

 

 

 

SECTION 1. DEFINITIONS. FOR PURPOSES OF THIS AGREEMENT, CAPITALIZED TERMS AND
CERTAIN OTHER TERMS USED HEREIN SHALL HAVE THE MEANINGS SET FORTH IN SCHEDULE 1
HERETO. CAPITALIZED TERMS USED HEREIN AND NOT OTHERWISE DEFINED HEREIN OR IN
SCHEDULE 1 SHALL HAVE THE MEANINGS GIVEN SUCH TERMS IN THE LOAN AGREEMENT. TERMS
USED HEREIN AND DEFINED IN THE UCC SHALL HAVE THE MEANING ASCRIBED TO SUCH TERMS
IN THE UCC UNLESS THE CONTEXT CLEARLY REQUIRES OTHERWISE.

 

 

 

SECTION 2. GRANT OF SECURITY. BORROWER HEREBY GRANTS INVESTOR, FOR THE BENEFIT
OF THE LENDERS, A SECURITY INTEREST IN ALL OF THE BORROWER’S RIGHT, TITLE AND
INTEREST IN AND TO THE FOLLOWING PERSONAL PROPERTY, WHETHER NOW OR HEREAFTER
EXISTING, AND WHEREVER THE SAME MAY BE LOCATED (ALL SUCH PROPERTY, COLLECTIVELY,
THE “COLLATERAL”):

 

 

 

(A)                                                                             
THE GROSS PAYMENTS AND INCLUDED RECEIPTS;

100

 

 

 

(B)                                                                               
THE LFRP PATENTS, INCLUDING THOSE SET FORTH ON SCHEDULE 2(B)(I) AND LFRP
KNOW-HOW, INCLUDING THAT DESCRIBED IN SCHEDULE 2(B)(II), AND ALL OTHER KNOW-HOW,
MATERIALS, TRADEMARKS, SERVICE MARKS, TRADE NAMES AND GOODWILL ASSOCIATED
THEREWITH, TRADE SECRETS, DATA, FORMULATIONS, PROCESSES, FRANCHISES, INVENTIONS,
SOFTWARE, COPYRIGHTS, AND ALL INTELLECTUAL PROPERTY (INCLUDING BIOLOGICAL
MATERIALS), AND ALL REGISTRATIONS OF ANY OF THE FOREGOING, OR APPLICATIONS
THEREFOR, THAT ARE (I) OWNED BY, CONTROLLED BY, ISSUED TO, LICENSED TO, OR
LICENSED BY BORROWER AND (II) USED IN THE PERFORMANCE OF THE LFRP AS PRESENTLY
CONDUCTED BY BORROWER OR AS CONDUCTED BY BORROWER AS OF THE CLOSING DATE OR
DURING THE TERM OF THE LOAN (BUT SPECIFICALLY EXCLUDING THE BIOLOGICAL MATERIAL
COMPRISING THE COMPANY PHYSICAL LIBRARIES, IT BEING THE INTENT OF THE PARTIES
THAT WHILE INTELLECTUAL PROPERTY COVERING OR EMBODIED IN THE LFRP LIBRARIES BE
WITHIN THE SCOPE OF THE COLLATERAL, ALL BIOLOGICAL MATERIAL COMPRISING THE LFRP
LIBRARIES EXCEPT FOR THE DUPLICATE LIBRARIES IS EXCLUDED FROM THE COLLATERAL);

100

 

 

 

(C)                                                                               
THE LICENSE AGREEMENTS, INCLUDING THOSE SET FORTH ON SCHEDULE 2(C);

101

 

 

 

(D)                                                                              
[RESERVED];

101

 

 

 

(E)                                                                                
THE IN LICENSES INCLUDING THOSE SET FORTH ON SCHEDULE 2(E);

101

 

 

 

(F)                                                                                
BOOKS, RECORDS, DATA BASES, AND INFORMATION RELATED TO THE LFRP;

101

 

 

 

(G)                                                                               
ALL GENERAL INTANGIBLES, INCLUDING ALL PAYMENT INTANGIBLES AND ALL DOCUMENTS
(NOTWITHSTANDING ANY OTHER PROVISIONS HEREIN, AS THAT TERM IS DEFINED IN THE
UCC), INSTRUMENTS (INCLUDING PROMISSORY NOTES), ACCOUNTS, LETTER-OF-CREDIT
RIGHTS (WHETHER OR NOT THE LETTER OF CREDIT IS EVIDENCED BY A WRITING),
COMMERCIAL TORT CLAIMS, SECURITIES AND ALL OTHER INVESTMENT PROPERTY, SUPPORTING
OBLIGATIONS, ANY OTHER CONTRACT RIGHTS OR RIGHTS TO THE PAYMENT OF MONEY,
INSURANCE CLAIMS AND PROCEEDS, IN EACH CASE RELATED TO THE GROSS PAYMENTS AND
INCLUDED RECEIPTS;

101

 

 

 

(H)                                                                              
ANY OTHER GENERAL INTANGIBLES NECESSARY TO THE PERFORMANCE OF OR FORMING PART OF
THE LFRP;

101

 

 

 

(I)                                                                                   
[RESERVED];

101

 

 

 

(J)                                                                                  
(I) THE BORROWER’S INTERESTS IN THE LOCKBOX ACCOUNT, DETAILS OF WHICH ARE
PROVIDED ON SCHEDULE 2(J)(I), AND ANY SUCCESSOR

 

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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ACCOUNT, (II) THE COMPANY CONCENTRATION ACCOUNT, DETAILS OF WHICH ARE PROVIDED
ON SCHEDULE 2(J)(II), AND ANY SUCCESSOR ACCOUNT, AND (III) ANY OTHER DEPOSIT
ACCOUNT OR SECURITIES ACCOUNT CONTAINING PROCEEDS OF COLLATERAL AND INTO WHICH A
PARTY TO A LICENSE AGREEMENT HAS REMITTED ROYALTIES (THE ACCOUNTS REFERRED TO IN
CLAUSES (I), (II) AND (III) COLLECTIVELY, THE “PLEDGED DEPOSIT ACCOUNTS”), ALL
FUNDS ON DEPOSIT IN EACH SUCH ACCOUNT, ALL INVESTMENTS ARISING OUT OF SUCH
FUNDS, ALL CLAIMS THEREUNDER OR IN CONNECTION THEREWITH AND SPECIAL PURPOSE
SUBACCOUNTS MAINTAINED THEREIN, AND ALL MONIES AND CREDIT BALANCES FROM TIME TO
TIME HELD IN THE PLEDGED DEPOSIT ACCOUNTS OR SUCH SUBACCOUNTS; ALL NOTES,
CERTIFICATES OF DEPOSIT, DEPOSIT ACCOUNTS, CHECKS AND OTHER INSTRUMENTS FROM
TIME TO TIME HEREAFTER DELIVERED TO OR OTHERWISE POSSESSED BY BORROWER IN
SUBSTITUTION FOR OR IN ADDITION TO ANY OR ALL OF THE THEN EXISTING ITEMS
DESCRIBED IN THIS SUBSECTION (J); AND ALL INTEREST, DIVIDENDS, CASH, SECURITIES,
RIGHTS, INSTRUMENTS AND OTHER PROPERTY AT ANY TIME AND FROM TIME TO TIME
RECEIVED, RECEIVABLE OR OTHERWISE DISTRIBUTED IN RESPECT OF SUCH ACCOUNTS, SUCH
FUNDS, OR SUCH INVESTMENTS OR RECEIVED IN EXCHANGE FOR ANY OR ALL OF THE ITEMS
DESCRIBED IN THIS SUBSECTION;

101

 

 

 

(K)                                                                              
ALL MONEY NOW OR AT ANY TIME IN THE POSSESSION OR UNDER THE CONTROL OF, OR IN
TRANSIT TO, THE LOCKBOX BANK, OR THE BORROWER RELATING TO ANY OF THE FOREGOING
IN THIS SECTION 2;

101

 

 

 

(L)                                                                                
QUANTITIES OF BIOLOGICAL MATERIAL COMPRISING A COMPLETE COPY OF EACH OF THE LFRP
LIBRARIES THAT ARE SUFFICIENT TO BE USED TO CREATE A REPRODUCIBLE SUPPLY OF THE
LFRP LIBRARIES (THE “DUPLICATE LIBRARIES”); AND

101

 

 

 

(M)                                                                           
ALL PROCEEDS

101

 

 

 

SECTION 3. SECURITY FOR OBLIGATIONS. THIS AGREEMENT SECURES, AND THE COLLATERAL
PLEDGED BY BORROWER IS COLLATERAL SECURITY FOR, THE DUE AND PUNCTUAL PAYMENT OR
PERFORMANCE IN FULL (INCLUDING THE PAYMENT OF AMOUNTS THAT WOULD BECOME DUE BUT
FOR THE OPERATION OF THE AUTOMATIC STAY UNDER SUBSECTION 362(A) OF THE UNITED
STATES BANKRUPTCY CODE) OF ALL SECURED OBLIGATIONS OF BORROWER.

 

 

 

SECTION 4. BORROWER TO REMAIN LIABLE. NOTWITHSTANDING ANYTHING TO THE CONTRARY
CONTAINED HEREIN, (A) BORROWER SHALL REMAIN LIABLE TO PERFORM ALL OF ITS DUTIES
AND OTHER OBLIGATIONS UNDER THE LOAN AGREEMENT TO THE SAME EXTENT AS IF THIS
AGREEMENT HAD NOT BEEN EXECUTED, AND (B) THE EXERCISE BY INVESTOR OF ANY OF ITS
RIGHTS HEREUNDER SHALL NOT RELEASE BORROWER FROM ANY OF ITS DUTIES OR OTHER
OBLIGATIONS UNDER THE LOAN AGREEMENT.

 

 

 

SECTION 5. PROMISSORY NOTES AND TANGIBLE CHATTEL PAPER. IF BORROWER AT ANY TIME
SHALL HOLD OR ACQUIRE ANY PROMISSORY NOTES OR TANGIBLE CHATTEL PAPER
CONSTITUTING COLLATERAL HAVING A FACE VALUE GREATER

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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THAN TWENTY-FIVE THOUSAND DOLLARS ($25,000), BORROWER SHALL FORTHWITH ENDORSE,
ASSIGN AND DELIVER THE SAME TO INVESTOR, ACCOMPANIED BY SUCH INSTRUMENTS OF
TRANSFER OR ASSIGNMENT DULY EXECUTED IN BLANK AS INVESTOR MAY FROM TIME TO TIME
SPECIFY.

 

 

 

SECTION 6. PLEDGED DEPOSIT ACCOUNTS. BORROWER SHALL FOLLOW THE PROCEDURES AND
PAYMENT MECHANISMS RELATING TO THE PLEDGED DEPOSIT ACCOUNTS SET FORTH IN
SECTION 4.02 OF THE LOAN AGREEMENT.

 

 

 

SECTION 7. INVESTMENT PROPERTY. IF BORROWER SHALL AT ANY TIME HOLD OR ACQUIRE
ANY CERTIFICATED SECURITIES CONSTITUTING COLLATERAL, BORROWER SHALL FORTHWITH
ENDORSE, ASSIGN AND DELIVER THE SAME TO INVESTOR, ACCOMPANIED BY SUCH
INSTRUMENTS OF TRANSFER OR ASSIGNMENT DULY EXECUTED IN BLANK AS INVESTOR
MAY FROM TIME TO TIME SPECIFY. IF ANY SECURITIES CONSTITUTING COLLATERAL NOW OR
HEREAFTER ACQUIRED BY BORROWER ARE UNCERTIFICATED AND ARE ISSUED TO BORROWER OR
ITS NOMINEE DIRECTLY BY THE ISSUER THEREOF, BORROWER SHALL PROMPTLY NOTIFY
INVESTOR THEREOF AND, AT INVESTOR’S REQUEST, PURSUANT TO AN AGREEMENT IN
FORM AND SUBSTANCE SATISFACTORY TO INVESTOR IN ITS DISCRETION REASONABLY
EXERCISED, CAUSE THE ISSUER OF SUCH SECURITIES TO AGREE TO COMPLY WITH
INSTRUCTIONS FROM INVESTOR AS TO SUCH SECURITIES, WITHOUT FURTHER CONSENT OF
BORROWER OR SUCH NOMINEE. IF ANY SECURITIES CONSTITUTING COLLATERAL, WHETHER
CERTIFICATED OR UNCERTIFICATED, OR OTHER INVESTMENT PROPERTY NOW OR HEREAFTER
ACQUIRED BY BORROWER ARE HELD BY BORROWER OR ITS NOMINEE THROUGH A SECURITIES
INTERMEDIARY OR COMMODITY INTERMEDIARY, BORROWER SHALL PROMPTLY NOTIFY INVESTOR
THEREOF AND, AT INVESTOR’S REQUEST, PURSUANT TO AN AGREEMENT IN FORM AND
SUBSTANCE SATISFACTORY TO INVESTOR IN ITS DISCRETION REASONABLY EXERCISED, CAUSE
SUCH SECURITIES INTERMEDIARY OR (AS THE CASE MAY BE) COMMODITY INTERMEDIARY TO
AGREE TO COMPLY WITH ENTITLEMENT ORDERS OR OTHER INSTRUCTIONS FROM INVESTOR TO
SUCH SECURITIES INTERMEDIARY AS TO SUCH SECURITIES OR OTHER INVESTMENT PROPERTY,
OR (AS THE CASE MAY BE) TO APPLY ANY VALUE DISTRIBUTED ON ACCOUNT OF ANY
COMMODITY CONTRACT AS DIRECTED BY INVESTOR TO SUCH COMMODITY INTERMEDIARY, IN
EACH CASE WITHOUT FURTHER CONSENT OF BORROWER OR SUCH NOMINEE.

 

 

 

SECTION 8. COLLATERAL IN THE POSSESSION OF A BAILEE. IF ANY PROPERTY
CONSTITUTING COLLATERAL IS AT ANY TIME IN THE POSSESSION OF A BAILEE, BORROWER
SHALL PROMPTLY NOTIFY INVESTOR THEREOF AND, IF REQUESTED BY INVESTOR, SHALL
PROMPTLY OBTAIN AN ACKNOWLEDGEMENT FROM THE BAILEE, IN FORM AND SUBSTANCE
SATISFACTORY TO INVESTOR IN ITS DISCRETION REASONABLY EXERCISED, THAT THE BAILEE
HOLDS SUCH COLLATERAL FOR THE BENEFIT OF INVESTOR AND SHALL ACT UPON THE
INSTRUCTIONS OF INVESTOR, WITHOUT THE FURTHER CONSENT OF BORROWER.

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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SECTION 9. ELECTRONIC CHATTEL PAPER AND TRANSFERABLE RECORDS. IF BORROWER AT ANY
TIME HOLDS OR ACQUIRES AN INTEREST IN ANY ELECTRONIC CHATTEL PAPER OR ANY
“TRANSFERABLE RECORD,” AS THAT TERM IS DEFINED IN SECTION 201 OF THE FEDERAL
ELECTRONIC SIGNATURES IN GLOBAL AND NATIONAL COMMERCE ACT, OR IN § 16 OF THE
UNIFORM ELECTRONIC TRANSACTIONS ACT AS IN EFFECT IN ANY RELEVANT JURISDICTION,
CONSTITUTING COLLATERAL, BORROWER SHALL PROMPTLY NOTIFY INVESTOR THEREOF AND, AT
THE REQUEST OF INVESTOR, SHALL TAKE SUCH ACTION AS INVESTOR MAY REASONABLY
REQUEST TO VEST IN INVESTOR CONTROL UNDER UCC § 9-105 OF SUCH ELECTRONIC CHATTEL
PAPER OR CONTROL UNDER SECTION 201 OF THE FEDERAL ELECTRONIC SIGNATURES IN
GLOBAL AND NATIONAL COMMERCE ACT OR, AS THE CASE MAY BE, § 16 OF THE
UNIFORM ELECTRONIC TRANSACTIONS ACT, AS SO IN EFFECT IN SUCH JURISDICTION, OF
SUCH TRANSFERABLE RECORD.

 

 

 

SECTION 10. LETTER-OF-CREDIT RIGHTS. IF BORROWER IS AT ANY TIME A BENEFICIARY
UNDER A LETTER OF CREDIT NOW OR HEREAFTER ISSUED IN FAVOR OF BORROWER
CONSTITUTING COLLATERAL, BORROWER SHALL PROMPTLY NOTIFY INVESTOR THEREOF AND, AT
THE REQUEST OF INVESTOR, BORROWER SHALL, PURSUANT TO AN AGREEMENT IN FORM AND
SUBSTANCE SATISFACTORY TO INVESTOR IN ITS DISCRETION REASONABLY EXERCISED,
ARRANGE FOR THE ISSUER AND ANY CONFIRMER OF SUCH LETTER OF CREDIT TO CONSENT TO
AN ASSIGNMENT TO INVESTOR OF THE PROCEEDS OF ANY DRAWING UNDER THE LETTER OF
CREDIT.

 

 

 

SECTION 11. REPRESENTATIONS AND WARRANTIES.

 

 

 

(A)                                                                             
BORROWER REPRESENTS AND WARRANTS TO INVESTOR AS OF THE DATE HEREOF, BORROWER (OR
ANY PREDECESSOR BY MERGER OR OTHERWISE) HAS NOT, WITHIN THE FIVE (5) YEAR PERIOD
PRECEDING THE DATE HEREOF, HAD A DIFFERENT NAME FROM THE NAME LISTED ON THE
SIGNATURE PAGES HEREOF

103

 

 

 

(B)                                                                               
BORROWER REPRESENTS AND WARRANTS TO INVESTOR AS OF THE DATE HEREOF, AND
REPRESENTS AND WARRANTS TO INVESTOR IN ALL MATERIAL RESPECTS ON EACH DATE IT
ACQUIRES RIGHTS IN COLLATERAL IN WHICH A SECURITY INTEREST IS PURPORTED TO BE
GRANTED HEREUNDER, AS FOLLOWS:

103

 

 

 

(C)                                                                               
OTHER REPRESENTATIONS AND WARRANTIES. AS OF THE CLOSING DATE AND AS OF THE
EARLIER OF THE DATE ON WHICH THE BUSINESS REPORT IS DELIVERED OR THE DATE ON
WHICH SUCH BUSINESS REPORT IS DUE IN EACH FISCAL YEAR:

104

 

 

 

SECTION 12. FURTHER ASSURANCES. BORROWER AGREES THAT, FROM TIME TO TIME, AT ITS
COST AND EXPENSE, BORROWER WILL PROMPTLY EXECUTE AND DELIVER ALL FURTHER
INSTRUMENTS AND DOCUMENTS, AND TAKE ALL FURTHER ACTION THAT MAY BE NECESSARY OR
DESIRABLE, OR THAT INVESTOR MAY REASONABLY REQUEST, IN ORDER TO PERFECT AND
PROTECT

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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ANY SECURITY INTEREST GRANTED OR PURPORTED TO BE GRANTED HEREBY OR TO ENABLE
INVESTOR TO EXERCISE AND ENFORCE ITS RIGHTS AND REMEDIES HEREUNDER WITH RESPECT
TO ANY COLLATERAL. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, BORROWER
WILL: (A) (I) EXECUTE AND FILE SUCH FINANCING OR CONTINUATION STATEMENTS, OR
AMENDMENTS THERETO, AS WELL AS DOCUMENTS FOR FILING IN THE UNITES STATES PATENT
OFFICE AND UNITED STATES COPYRIGHT OFFICE (II) EXECUTE AND DELIVER, AND CAUSE TO
BE EXECUTED AND DELIVERED, AGREEMENTS ESTABLISHING THAT INVESTOR HAS CONTROL OF
SPECIFIED ITEMS OF COLLATERAL, INCLUDING THE LOCKBOX AGREEMENT, AND
(III) DELIVER SUCH OTHER INSTRUMENTS OR NOTICES, IN EACH CASE, AS MAY BE
NECESSARY OR DESIRABLE, OR AS INVESTOR MAY REASONABLY REQUEST, IN ORDER TO
PERFECT AND PRESERVE THE SECURITY INTERESTS GRANTED OR PURPORTED TO BE GRANTED
HEREBY; (B) FURNISH TO INVESTOR FROM TIME TO TIME STATEMENTS AND SCHEDULES
FURTHER IDENTIFYING AND DESCRIBING THE COLLATERAL AND SUCH OTHER REPORTS IN
CONNECTION WITH THE COLLATERAL AS INVESTOR MAY REASONABLY REQUEST, ALL IN
REASONABLE DETAIL; (C) AT INVESTOR’S REASONABLE REQUEST, APPEAR IN AND DEFEND
ANY ACTION OR PROCEEDING THAT MAY AFFECT BORROWER’S TITLE TO OR INVESTOR’S
SECURITY INTEREST IN ALL OR ANY PART OF THE COLLATERAL, INCLUDING ANY PROCEEDING
IN WHICH THE ISSUE IS WHETHER ANY PROPERTY IN WHICH BORROWER HAS RIGHTS
CONSTITUTES COLLATERAL; AND (D) USE COMMERCIALLY REASONABLE EFFORTS TO OBTAIN
ANY NECESSARY CONSENTS OF THIRD PARTIES TO THE ASSIGNMENT AND PERFECTION OF A
SECURITY INTEREST TO INVESTOR WITH RESPECT TO ANY COLLATERAL. BORROWER HEREBY
AUTHORIZES INVESTOR TO FILE ONE OR MORE FINANCING OR CONTINUATION STATEMENTS,
AND AMENDMENTS THERETO, RELATIVE TO ALL OR ANY PART OF THE COLLATERAL WITHOUT
THE SIGNATURE OF BORROWER. BORROWER AGREES THAT A CARBON, PHOTOGRAPHIC OR OTHER
REPRODUCTION OF THIS AGREEMENT OR OF A FINANCING STATEMENT SIGNED BY BORROWER
SHALL BE SUFFICIENT AS A FINANCING STATEMENT AND MAY BE FILED AS A FINANCING
STATEMENT IN ANY AND ALL JURISDICTIONS. NOTWITHSTANDING THE FOREGOING, SO LONG
AS THERE EXISTS NO EVENT OF DEFAULT, THE BORROWER SHALL NOT BE REQUIRED TO
OBTAIN THE CONSENT OF THE OTHER PARTIES TO THE EXISTING LICENSE AGREEMENTS AND
IN LICENSES.

 

 

 

SECTION 13. CERTAIN COVENANTS OF BORROWER. BORROWER SHALL:

 

 

 

(A)                                                                             
NOT USE OR PERMIT ANY COLLATERAL TO BE USED UNLAWFULLY OR IN VIOLATION OF ANY
APPLICABLE STATUTE, REGULATION OR ORDINANCE OR ANY POLICY OF INSURANCE COVERING
THE COLLATERAL TO THE EXTENT THE SAME COULD REASONABLY BE EXPECTED TO HAVE A
MATERIAL ADVERSE EFFECT;

105

 

 

 

(B)                                                                               
AT ITS OWN COST AND EXPENSE, WITH RESPECT TO EACH PROPERTY THAT IT LEASES ON
WHICH ANY COLLATERAL IS LOCATED, OBTAIN, AT INVESTOR’S REQUEST, AN AGREEMENT
SATISFACTORY TO

 

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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INVESTOR WITH THE LANDLORD OF SUCH LEASED PROPERTY, (I) SUBORDINATING SUCH
LANDLORD’S LIEN IN ANY COLLATERAL TO THE SECURITY INTEREST PURPORTED TO BE
GRANTED HEREUNDER AND (II) GRANTING ACCESS TO SUCH LEASED PROPERTY;

105

 

 

 

(C)                                                                               
MAINTAIN INSURANCE AS PROVIDED IN SECTION 9.06 THE LOAN AGREEMENT;

105

 

 

 

(D)                                                                              
NOTIFY INVESTOR OF ANY CHANGE IN ITS NAME, IDENTITY OR CORPORATE STRUCTURE AT
LEAST FIFTEEN (15) DAYS PRIOR TO SUCH CHANGE;

105

 

 

 

(E)                                                                                
GIVE INVESTOR THIRTY (30) DAYS’ PRIOR WRITTEN NOTICE OF ANY CHANGE IN ITS CHIEF
PLACE OF BUSINESS, CHIEF EXECUTIVE OFFICE OR RESIDENCE OR THE OFFICE WHERE
BORROWER KEEPS ITS RECORDS REGARDING THE COLLATERAL OR A REINCORPORATION,
REORGANIZATION OR OTHER ACTION THAT RESULTS IN A CHANGE OF THE JURISDICTION OF
ORGANIZATION OF BORROWER;

105

 

 

 

(F)                                                                                
PAY PROMPTLY WHEN DUE ALL TAXES, ASSESSMENTS AND GOVERNMENTAL CHARGES OR LEVIES
IMPOSED UPON, AND ALL CLAIMS AGAINST, THE COLLATERAL, EXCEPT TO THE EXTENT THE
VALIDITY THEREOF IS BEING CONTESTED IN GOOD FAITH; PROVIDED, HOWEVER, THAT
BORROWER SHALL IN ANY EVENT PAY SUCH TAXES, ASSESSMENTS, CHARGES, LEVIES OR
CLAIMS NOT LATER THAN FIVE (5) DAYS PRIOR TO THE DATE OF ANY PROPOSED SALE UNDER
ANY JUDGMENT, WRIT OR WARRANT OF ATTACHMENT ENTERED OR FILED AGAINST BORROWER OR
ANY OF THE COLLATERAL AS A RESULT OF THE FAILURE TO MAKE SUCH PAYMENT;

106

 

 

 

(G)                                                                               
EXCEPT FOR LICENSES OF LFRP INTELLECTUAL PROPERTY AND IN LICENSES IN EFFECT ON
THE DATE HEREOF, NOT SUFFER TO EXIST ANY LICENSE, LEASE, CONTRACT OR AGREEMENT
TO WHICH IT IS A PARTY FORMING PART OF OR USED IN THE LFRP THAT CONTAINS ANY
PROVISION THAT PURPORTS TO PROHIBIT BORROWER FROM GRANTING TO INVESTOR A
SECURITY INTEREST IN ANY ITEM OF COLLATERAL INCLUDING ANY SUCH LICENSE, LEASE,
CONTRACT OR AGREEMENT ITSELF;

106

 

 

 

(H)                                                                              
COMPLY WITH ALL OF ITS OBLIGATIONS WITH RESPECT TO ANY PERSONAL PROPERTY OWNED
OR LEASED BY IT AND USED IN THE LFRP, INCLUDING CAPITAL LEASES, OPERATING LEASES
AND PURCHASE MONEY INDEBTEDNESS EXCEPT TO THE EXTENT NON-COMPLIANCE COULD NOT
REASONABLY BE EXPECTED TO HAVE A MATERIAL ADVERSE EFFECT;

106

 

 

 

(I)                                                                                   
FROM AND AFTER THE DATE THAT THE DUPLICATE LIBRARIES ARE DELIVERED TO THE
LOCATION SPECIFIED IN SECTION 14(F), IN THE EVENT THAT THERE ARE ANY UPDATES OR
IMPROVEMENTS TO THE LFRP LIBRARIES, OR OTHER LIBRARIES AS SET FORTH IN THE
DEFINITION OF LFRP LIBRARIES, PROMPTLY DELIVER SUFFICIENT QUANTITIES OF SUCH
UPDATED, IMPROVED OR OTHER LFRP LIBRARIES AS NECESSARY TO MAINTAIN THE DUPLICATE
LIBRARIES AS A DUPLICATE REPRODUCIBLE SUPPLY OF THE LFRP LIBRARIES AT SUCH
LOCATION; AND

106

 

 

 

(J)                                                                                  
NOT TRANSFER, SELL, CONVEY, ASSIGN, DISPOSE OF OR LICENSE THE COMPANY PHYSICAL
LIBRARIES, EXCEPT (X) IN THE ORDINARY

 

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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COURSE OF BUSINESS OF THE LFRP CONSISTENT WITH PAST PRACTICES, OR (Y) OUTSIDE
THE SCOPE OF THE LFRP THE NON-EXCLUSIVE LICENSING OF THE COMPANY PHYSICAL
LIBRARIES BUT LIMITED TO A SCOPE OR FOR A USE SO AS TO NOT COMPETE WITH THE
LFRP, PROVIDED, THAT NON-EXCLUSIVE LICENSING OF THE COMPANY PHYSICAL LIBRARIES
UNDER INTERNALLY DEVELOPED PRODUCT AGREEMENTS OR UNDER CO-DEVELOPMENT AGREEMENTS
SHALL NOT BE CONSIDERED IN BREACH HEREOF, SO LONG AS IN NO EVENT SHALL ANY THIRD
PARTY OR AFFILIATE BE GRANTED A LICENSE OR OTHER RIGHTS UNDER THE COMPANY
PHYSICAL LIBRARIES IN A WAY THAT WOULD ALLOW SUCH THIRD PARTY OR AFFILIATE TO
OPERATE A FUNDED RESEARCH OR LICENSING PROGRAM THAT WOULD COMPETE WITH THE LFRP

106

 

 

 

(K)                                                                              
CONCURRENTLY WITH BORROWER’S DELIVERY OF A BUSINESS REPORT PURSUANT TO
SECTION 9.03(E) OF THE LOAN AGREEMENT, CONFIRM THE ATTACHMENT OF THE SECURITY
INTEREST IN THE REGISTERED INTELLECTUAL PROPERTY OF BORROWER CREATED BY THIS
AGREEMENT BY EXECUTION OF COPYRIGHT SECURITY AGREEMENT OR A PATENT SECURITY
AGREEMENT, AS APPLICABLE, WITH RESPECT TO ANY SUCH REGISTERED INTELLECTUAL
PROPERTY NOT SUBJECT AT SUCH TIME TO A PATENT SECURITY AGREEMENT OR A COPYRIGHT
SECURITY AGREEMENT, AS APPLICABLE, AND THE FILING OF SUCH AGREEMENT WITH THE
PATENT OFFICE OR ANY OTHER GOVERNMENTAL AUTHORITY AS SHALL BE NECESSARY TO
CREATE, PRESERVE, PROTECT OR PERFECT INVESTOR’S SECURITY INTEREST IN SUCH
INTELLECTUAL PROPERTY AS MAY BE REASONABLY REQUESTED BY INVESTOR

106

 

 

 

SECTION 14. SPECIAL COVENANTS WITH RESPECT TO THE COLLATERAL.

 

 

 

(A)                                                                             
BORROWER SHALL:

107

 

 

 

(B)                                                                               
BORROWER SHALL, AT BORROWER’S SOLE COST AND EXPENSE, (A) TAKE ANY AND ALL
ACTIONS AND MAKE ALL PAYMENTS, WHICH ARE NECESSARY AND DESIRABLE TO DILIGENTLY
MAINTAIN THE LFRP PATENTS OWNED BY IT; (B) DEFEND SUCH LFRP PATENTS AGAINST ANY
CLAIMS OF INVALIDITY OR UNENFORCEABILITY; AND (C) TAKE COMMERCIALLY REASONABLE
MEASURES TO PROTECT THE PROPRIETARY NATURE OF EACH ITEM OF LFRP INTELLECTUAL
PROPERTY AND TO MAINTAIN IN CONFIDENCE ALL CONFIDENTIAL INFORMATION COMPROMISING
A PART THEREOF; PROVIDED, THAT IN NO EVENT SHALL BORROWER BE REQUIRED TO TAKE
ANY ACTION UNDER SUBSECTION (B) OR (C) IF: (I) THE FAILURE TO TAKE ACTION COULD
NOT REASONABLY BE EXPECTED TO RESULT IN A MATERIAL ADVERSE EFFECT, (II) THE
REASONABLY ESTIMATED COST TO BORROWER ASSOCIATED WITH PURSUING SUCH ACTION WOULD
OUTWEIGH THE REASONABLY ESTIMATED EXTENT BY WHICH THE INCLUDED RECEIPTS AND THE
INTEREST IN THE ROYALTIES RETAINED BY THE BORROWER WOULD BENEFIT AS A RESULT OF
SUCCESSFULLY PURSUING SUCH ACTION, OR (III) BORROWER OBTAINS THE REQUIRED
LENDER’S WRITTEN CONSENT, WHICH SHALL NOT BE UNREASONABLY WITHHELD (AS IN THE
CASE, FOR EXAMPLE, WHERE

 

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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PURSUING SUCH ACTION WOULD JEOPARDIZE THE LFRP INTELLECTUAL PROPERTY OR
ADVERSELY EFFECT THE LFRP AS A WHOLE). CONSENT HEREUNDER SHALL BE PROVIDED OR
DENIED WITHIN TEN (10) BUSINESS DAYS AFTER NOTICE AND PROVISION OF SUCH
INFORMATION AS MAY BE REASONABLY REQUESTED BY THE LENDER FROM THE BORROWER.
BORROWER SHALL IMMEDIATELY NOTIFY LENDER OF SUCH CLAIM. THE PARTIES SHALL
CONSULT AS TO STRATEGY REGARDING ANY RESPONSE TO SUCH CLAIM. BORROWER SHALL NOT
ABANDON, OR FAIL TO TAKE ANY ACTION NECESSARY OR DESIRABLE TO PREVENT THE
DISCLAIMER OR ABANDONMENT OF MATERIAL LFRP PATENTS OWNED BY IT

107

 

 

 

(C)                                                                               
UNLESS THERE SHALL OCCUR AND BE CONTINUING ANY EVENT OF DEFAULT AND THE INVESTOR
HAS ACCELERATED THE OBLIGATIONS UNDER THE LOAN AGREEMENT, BORROWER SHALL HAVE
THE RIGHT TO COMMENCE AND PROSECUTE IN ITS OWN NAME, AS THE PARTY IN INTEREST,
FOR ITS OWN BENEFIT AND AT THE SOLE COST AND EXPENSE OF THE BORROWER, SUCH
APPLICATIONS FOR PROTECTION OF THE LFRP INTELLECTUAL PROPERTY AND SUITS,
PROCEEDINGS OR OTHER ACTIONS TO PREVENT THE INFRINGEMENT, COUNTERFEITING, UNFAIR
COMPETITION, DILUTION, DIMINUTION IN VALUE OR OTHER DAMAGE AS ARE NECESSARY TO
PROTECT THE LFRP INTELLECTUAL PROPERTY. UPON THE OCCURRENCE AND DURING THE
CONTINUANCE OF ANY EVENT OF DEFAULT, THE INVESTOR SHALL HAVE THE RIGHT BUT SHALL
IN NO WAY BE OBLIGATED TO FILE APPLICATIONS FOR PROTECTION OF THE LFRP
INTELLECTUAL PROPERTY AND/OR BRING SUIT IN THE NAME OF THE BORROWER OR INVESTOR
TO ENFORCE THE LFRP INTELLECTUAL PROPERTY AND ANY LICENSE THEREUNDER. IN THE
EVENT OF SUCH SUIT, THE BORROWER SHALL, AT THE REASONABLE REQUEST OF THE
INVESTOR, DO ANY AND ALL LAWFUL ACTS AND EXECUTE ANY AND ALL DOCUMENTS REQUESTED
BY THE INVESTOR IN AID OF SUCH ENFORCEMENT AND THE BORROWER SHALL PROMPTLY
REIMBURSE AND INDEMNIFY THE INVESTOR FOR ALL COSTS AND EXPENSES INCURRED BY THE
INVESTOR IN THE EXERCISE OF ITS RIGHTS UNDER THIS SECTION 14(C) IN ACCORDANCE
WITH THE LOAN AGREEMENT. IN THE EVENT THAT THE INVESTOR SHALL ELECT NOT TO BRING
SUIT TO ENFORCE THE LFRP INTELLECTUAL PROPERTY, THE BORROWER AGREES, AT THE
REASONABLE REQUEST OF THE INVESTOR, TO TAKE ALL COMMERCIALLY REASONABLE ACTIONS
NECESSARY, WHETHER BY SUIT, PROCEEDING OR OTHER ACTION, TO PREVENT THE
INFRINGEMENT, COUNTERFEITING, UNFAIR COMPETITION, DILUTION, DIMINUTION IN VALUE
OF OR OTHER DAMAGE TO ANY OF THE LFRP INTELLECTUAL PROPERTY BY ANY PERSON

108

 

 

 

(D)                                                                              
BORROWER SHALL, CONCURRENTLY WITH THE EXECUTION AND DELIVERY OF THIS AGREEMENT,
EXECUTE AND DELIVER TO INVESTOR FIVE (5) ORIGINALS OF A SPECIAL POWER OF
ATTORNEY IN THE FORM OF EXHIBIT A ANNEXED HERETO FOR EXECUTION OF AN ASSIGNMENT
OF THE COLLATERAL TO INVESTOR, OR THE IMPLEMENTATION OF THE SALE OR OTHER
DISPOSITION OF THE COLLATERAL PURSUANT TO INVESTOR’S GOOD FAITH EXERCISE OF THE
RIGHTS AND REMEDIES GRANTED HEREUNDER;

 

 

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PROVIDED, HOWEVER, INVESTOR AGREES THAT IT WILL NOT EXERCISE ITS RIGHTS UNDER
SUCH SPECIAL POWER OF ATTORNEY UNLESS AN EVENT OF DEFAULT HAS OCCURRED AND IS
CONTINUING

108

 

 

 

(E)                                                                                
BORROWER SHALL, CONCURRENTLY WITH THE EXECUTION AND DELIVERY OF THIS AGREEMENT,
EXECUTE AND DELIVER TO INVESTOR THE PATENT SECURITY AGREEMENT, THE COPYRIGHT
SECURITY AGREEMENT AND ALL OTHER DOCUMENTS, INSTRUMENTS AND OTHER ITEMS AS
MAY BE NECESSARY FOR INVESTOR TO FILE SUCH AGREEMENTS WITH THE UNITED STATES
PATENT AND TRADEMARK OFFICE AND UNITED STATES COPYRIGHT OFFICE AND ANY SIMILAR
DOMESTIC OR FOREIGN OFFICE, DEPARTMENT OR AGENCY. BORROWER SHALL UPON AND AFTER
THE OCCURRENCE OF AN EVENT OF DEFAULT, USE ITS COMMERCIALLY REASONABLE EFFORTS
TO OBTAIN ANY CONSENTS, WAIVERS AND AGREEMENTS REQUESTED BY INVESTOR THAT ARE
NECESSARY TO ENABLE INVESTOR TO EXERCISE ITS REMEDIES WITH RESPECT TO THE
COLLATERAL

108

 

 

 

(F)                                                                                
CERTAIN RIGHTS UPON AN EVENT OF DEFAULT BEFORE AND FOLLOWING A FORECLOSURE

109

 

 

 

(G)                                                                               
BORROWER SHALL, WITHIN THIRTY (30) DAYS AFTER THE DATE HEREOF, PREPARE THE
DUPLICATE LIBRARIES AND SHALL THEREAFTER PROMPTLY DELIVER THE DUPLICATE
LIBRARIES TO FISHER CLINICAL SERVICES, 631 LOFSTRAND LANE, ROCKVILLE, MD 20850
(PHONE: (301) 315-2238) OR SUCH OTHER SECURE LOCATION OR LOCATIONS AS ARE
REASONABLY ACCEPTABLE TO BORROWER AND INVESTOR, CLEARLY IDENTIFIED AS THE
DUPLICATE LIBRARIES PREPARED FOR THE BENEFIT OF INVESTOR, AND SEGREGATED FROM
PROPERTY OF BORROWER. THE DUPLICATE LIBRARIES SHALL BE SUBJECT TO STORAGE AND
ACCESS ON CONDITIONS SUBSTANTIALLY SIMILAR TO THOSE SET FORTH IN EXHIBIT E

111

 

 

 

(H)                                                                              
SHALL: (I) MAINTAIN COPIES OF ALL SOURCE AND OBJECT CODES FOR ALL SOFTWARE AT
ONE OR MORE SAFE AND SECURE LOCATIONS REASONABLY ACCEPTABLE TO INVESTOR,
(II) KEEP INVESTOR FULLY INFORMED OF EACH SUCH LOCATION, AND (III) MAINTAIN THE
CURRENCY OF ALL SUCH SOFTWARE STORED THEREAT

111

 

 

 

(I)                                                                                   
BORROWER SHALL, CONCURRENTLY WITH THE EXECUTION AND DELIVERY OF THIS AGREEMENT,
EXECUTE AND DELIVER TO INVESTOR THE PERFECTION CERTIFICATE

111

 

 

 

(J)                                                                                  
BORROWER AGREES THAT A BREACH OF ANY OF THE COVENANTS CONTAINED IN THIS
AGREEMENT WILL CAUSE IRREPARABLE INJURY TO INVESTOR, THAT INVESTOR HAS NO
ADEQUATE REMEDY AT LAW IN RESPECT OF SUCH BREACH AND, AS A CONSEQUENCE, THAT
EACH AND EVERY COVENANT CONTAINED HEREIN SHALL BE SPECIFICALLY ENFORCEABLE
AGAINST BORROWER, AND BORROWER HEREBY WAIVES AND AGREES NOT TO ASSERT ANY
DEFENSES AGAINST AN ACTION FOR SPECIFIC PERFORMANCE OF SUCH COVENANTS

111

 

 

 

(K)                                                                              
THE BORROWER SHALL: (A) NOTIFY IN REASONABLE DETAIL INVESTOR PROMPTLY, BUT IN NO
EVENT LATER THAN QUARTERLY (ON THE EARLIER OF THE DATE ON WHICH THE BUSINESS
REPORT IS DELIVERED BY

 

 

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THE BORROWER OR THE DATE ON WHICH SUCH BUSINESS REPORT IS DUE IN EACH FISCAL
QUARTER) AFTER THE ACQUISITION, EXECUTION OR FILING THEREOF, OF ANY (I) LICENSE
AGREEMENTS, LFRP PATENTS, CO-DEVELOPMENT AGREEMENTS, PAYMENTS UNDER WHICH
FORM PART OF THE COLLATERAL, AND IN LICENSES, AND (B) ON THE LAST DAY OF EACH
QUARTER PROVIDE, IN REASONABLE DETAIL, UPDATES TO SCHEDULES 2(B)(I),
2(B)(II) 2(C), 2(E), 2(J)(I) AND 2(J)(II), WHICH WOULD MAKE THE REPRESENTATIONS
AND WARRANTIES CONTAINED IN SECTION 11(C)(I) TRUE, CORRECT AND COMPLETE AS OF
SUCH DATE OF THE DELIVERY OF SUCH BUSINESS REPORT. UPON THE DELIVERY AND
ACCEPTANCE OF SUCH UPDATED SCHEDULES BY INVESTOR, SUCH SCHEDULES WILL BE
AUTOMATICALLY DEEMED TO AMEND AND RESTATE SCHEDULES 2(B)(I), 2(B)(II), 2(C),
2(E), 2(J)(I) AND 2(J)(II) HERETO

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SECTION 15. INVESTOR APPOINTED ATTORNEY-IN-FACT. BORROWER HEREBY IRREVOCABLY
APPOINTS INVESTOR, OR ANY PERSON OR AGENT AS INVESTOR MAY DESIGNATE AS SUCH,
BORROWER’S ATTORNEY-IN-FACT, WITH FULL AUTHORITY IN THE PLACE AND STEAD OF
BORROWER AND IN THE NAME OF BORROWER, INVESTOR OR OTHERWISE, FROM TIME TO TIME
IN INVESTOR’S DISCRETION TO TAKE ANY ACTION AND TO EXECUTE ANY INSTRUMENT THAT
INVESTOR MAY IN ITS GOOD FAITH SOLE DISCRETION DEEM NECESSARY OR ADVISABLE TO
ACCOMPLISH THE FOLLOWING:

 

 

 

(A)                                                                             
UPON THE OCCURRENCE AND DURING THE CONTINUANCE OF AN EVENT OF DEFAULT, TO ASK
FOR, DEMAND, COLLECT, SUE FOR, RECOVER, COMPOUND, RECEIVE AND GIVE ACQUITTANCE
AND RECEIPTS FOR MONIES DUE AND TO BECOME DUE UNDER OR IN RESPECT OF ANY OF THE
COLLATERAL, AND TO MANAGE THE LFRP, INCLUDING TAKING ACTIONS UNDER THE LICENSE
AGREEMENTS AND IN LICENSES;

112

 

 

 

(B)                                                                               
UPON THE OCCURRENCE AND DURING THE CONTINUANCE OF AN EVENT OF DEFAULT, TO
RECEIVE, DIRECT PAYMENT OF, ENDORSE AND COLLECT ANY DRAFTS OR OTHER INSTRUMENTS,
DOCUMENTS AND CHATTEL PAPER IN CONNECTION WITH CLAUSE (A) ABOVE;

112

 

 

 

(C)                                                                               
UPON THE OCCURRENCE AND DURING THE CONTINUANCE OF AN EVENT OF DEFAULT, TO FILE
ANY CLAIMS OR TAKE ANY ACTION OR INSTITUTE ANY PROCEEDINGS THAT INVESTOR MAY IN
ITS GOOD FAITH SOLE DISCRETION DEEM NECESSARY OR DESIRABLE FOR THE COLLECTION OF
ANY OF THE COLLATERAL OR OTHERWISE TO ENFORCE THE RIGHTS OF INVESTOR WITH
RESPECT TO ANY OF THE COLLATERAL;

112

 

 

 

(D)                                                                              
UPON THE OCCURRENCE AND DURING THE CONTINUANCE OF AN EVENT OF DEFAULT, TO PAY OR
DISCHARGE TAXES OR LIENS LEVIED OR PLACED UPON OR THREATENED AGAINST THE
COLLATERAL, THE LEGALITY OR VALIDITY THEREOF AND THE AMOUNTS NECESSARY TO
DISCHARGE THE SAME TO BE DETERMINED BY INVESTOR IN ITS SOLE DISCRETION, ANY SUCH
PAYMENTS MADE BY INVESTOR TO BECOME OBLIGATIONS OF BORROWER TO INVESTOR, DUE AND
PAYABLE IMMEDIATELY WITHOUT DEMAND;

112

 

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(E)                               UPON THE OCCURRENCE AND DURING THE CONTINUANCE
OF AN EVENT OF DEFAULT, TO SIGN AND ENDORSE ANY INVOICES, DRAFTS AGAINST
DEBTORS, ASSIGNMENTS, VERIFICATIONS, NOTICES AND OTHER DOCUMENTS RELATING TO THE
COLLATERAL; AND

112

 

 

(F)                               UPON THE OCCURRENCE AND DURING THE CONTINUANCE
OF AN EVENT OF DEFAULT, TO PERFORM ANY OBLIGATIONS OF THE BORROWER UNDER THE
TRANSACTION DOCUMENTS WITH THE BORROWER WHICH THE BORROWER HAS NOT PERFORMED.

112

 

 

(G)                               UPON AND AT ANY TIME AFTER THE OCCURRENCE AND
DURING THE CONTINUANCE OF AN EVENT OF DEFAULT, TO PREPARE, FILE AND SIGN
BORROWER’S NAME ON AN ASSIGNMENT DOCUMENT IN SUCH FORM AS INVESTOR MAY IN ITS
SOLE DISCRETION DEEM NECESSARY OR DESIRABLE TO TRANSFER OWNERSHIP OF THE
COLLATERAL TO INVESTOR OR AN ASSIGNEE OR TRANSFEREE OF INVESTOR, WHICH TRANSFER
EXPRESSLY SHALL BE SUBJECT TO THE RIGHTS OF THE BORROWER IN SUCH COLLATERAL SET
FORTH IN SECTION 14(E) HEREOF.

112

 

SECTION 16. STANDARD OF CARE.  THE POWERS CONFERRED ON INVESTOR HEREUNDER ARE
SOLELY TO PROTECT ITS INTEREST IN THE COLLATERAL AND SHALL NOT IMPOSE ANY DUTY
UPON IT TO EXERCISE ANY SUCH POWERS.  EXCEPT FOR THE EXERCISE OF GOOD FAITH AND
OF REASONABLE CARE IN THE ACCOUNTING FOR MONIES ACTUALLY RECEIVED BY INVESTOR
HEREUNDER, INVESTOR SHALL HAVE NO DUTY AS TO ANY COLLATERAL OR AS TO THE TAKING
OF ANY NECESSARY STEPS TO PRESERVE RIGHTS AGAINST PRIOR PARTIES OR ANY OTHER
RIGHTS PERTAINING TO ANY COLLATERAL.  INVESTOR SHALL BE DEEMED TO HAVE EXERCISED
REASONABLE CARE IN THE CUSTODY AND PRESERVATION OF COLLATERAL IN ITS POSSESSION
IF SUCH COLLATERAL IS ACCORDED TREATMENT SUBSTANTIALLY EQUAL TO THAT WHICH
INVESTOR ACCORDS ITS OWN PROPERTY.  THE INVESTOR SHALL ACT AS AGENT HEREUNDER
FOR ANY OTHER LENDERS THAT BECOME A PARTY TO THE LOAN AGREEMENT AFTER THE DATE
HEREOF AND THE SECURITY INTEREST GRANTED HEREUNDER TO THE INVESTOR IS ALSO
GRANTED TO THE INVESTOR FOR THE BENEFIT OF OTHER LENDERS.  EXCEPT AS PROVIDED IN
THE LOAN AGREEMENT, THE INVESTOR SHALL HAVE NO DUTY TO ANY LENDER HEREUNDER AND
ITS SOLE RESPONSIBILITY SHALL BE LIMITED TO (I) BEING NAMED AS A SECURED PARTY
HEREUNDER AND IN ANY UCC FINANCING STATEMENT, INTELLECTUAL PROPERTY FILING,
LOCKBOX AGREEMENT, ANY ESCROW AGREEMENT OR OTHER DOCUMENTS, INSTRUMENT OR
AGREEMENT ENTERED INTO OR FILED PURSUANT HERETO AND (II) HOLDING ANY POSSESSORY
COLLATERAL DELIVERED TO IT BY THE COMPANY PURSUANT HERETO, IN EACH CASE FOR THE
BENEFIT OF ALL LENDERS.  THE INVESTOR IS ENTITLED TO, BUT HAS NO OBLIGATION TO
EXERCISE ANY RIGHTS OR REMEDIES HEREUNDER OR UNDER APPLICABLE LAW.

 

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SECTION 17. REMEDIES UPON EVENT OF DEFAULT.

 

(A)                              IF, AND ONLY IF, ANY EVENT OF DEFAULT SHALL
HAVE OCCURRED AND BE CONTINUING,  INVESTOR MAY EXERCISE IN RESPECT OF THE
COLLATERAL (I) ALL RIGHTS AND REMEDIES PROVIDED FOR HEREIN, UNDER THE LOAN
AGREEMENT OR OTHERWISE AVAILABLE TO IT, (II) ALL THE RIGHTS AND REMEDIES OF A
SECURED PARTY ON DEFAULT UNDER THE UCC (WHETHER OR NOT THE UCC APPLIES TO THE
COLLATERAL), IN ALL RELEVANT JURISDICTIONS, AND (III) THE RIGHTS TO:

113

 

 

(B)                               UNTIL AN EVENT OF DEFAULT HAS OCCURRED AND IS
CONTINUING, BORROWER SHALL, SUBJECT  TO THE PROVISIONS OF THE LOAN AGREEMENT AND
THE LOCKBOX AGREEMENT, CONTINUE TO COLLECT, AT ITS OWN COST AND EXPENSE, ALL
AMOUNTS DUE OR TO BECOME DUE BORROWER IN RESPECT OF THE COLLATERAL; IT BEING
UNDERSTOOD AND AGREED THAT ANY AND ALL SUCH COLLECTIONS SHALL BE HELD IN TRUST
FOR, AND BE FOR THE BENEFIT OF, INVESTOR. IN CONNECTION WITH SUCH COLLECTIONS;
PROVIDED, NO EVENT OF DEFAULT SHALL HAVE OCCURRED AND BE CONTINUING, BORROWER
MAY, SUBJECT TO THE PROVISIONS OF THE LOAN AGREEMENT, TAKE SUCH ACTION AS
BORROWER REASONABLY MAY DEEM NECESSARY OR ADVISABLE TO ENFORCE COLLECTION OF THE
COLLATERAL. AT ANY TIME AFTER AN EVENT OF DEFAULT HAS OCCURRED AND IS
CONTINUING, INVESTOR SHALL HAVE THE RIGHT TO NOTIFY THE ACCOUNT DEBTORS OR
OBLIGORS UNDER ANY COLLATERAL OF THE SECURITY INTEREST OF INVESTOR IN SUCH
COLLATERAL AND TO DIRECT SUCH ACCOUNT DEBTORS OR OBLIGORS TO MAKE PAYMENT TO
INVESTOR (OR ITS DESIGNEE) OF ANY AMOUNTS DUE OR TO BECOME DUE THEREUNDER AND
ENFORCE COLLECTION OF ANY OF THE COLLATERAL BY SUIT OR OTHERWISE AND SURRENDER,
RELEASE OR EXCHANGE ALL OR ANY PART THEREOF, OR ADJUST, SETTLE OR COMPROMISE OR
EXTEND OR RENEW FOR ANY PERIOD (WHETHER OR NOT LONGER THAN THE ORIGINAL PERIOD)
ANY INDEBTEDNESS THEREUNDER OR EVIDENCE THEREBY. IF AN EVENT OF DEFAULT HAS
OCCURRED AND IS CONTINUING, UPON THE REQUEST OF INVESTOR, BORROWER SHALL, AT ITS
OWN COST AND EXPENSE, NOTIFY ANY PARTIES OBLIGATED ON ANY OF THE COLLATERAL TO
MAKE PAYMENT TO INVESTOR (OR ITS DESIGNEE) OF ANY AMOUNTS DUE OR TO BECOME DUE
THEREUNDER, AND IN SUCH EVENT, INVESTOR IS AUTHORIZED TO ENDORSE, IN THE NAME OF
BORROWER, ANY ITEM REPRESENTING ANY PAYMENT ON OR OTHER PROCEEDS OF ANY OF THE
COLLATERAL. BORROWER IRREVOCABLY DIRECTS AND REQUIRES ALL LICENSEES AND ACCOUNT
DEBTORS TO HONOR INVESTOR’S REQUEST FOR DIRECT PAYMENT AND COMPLY WITH ANY SUCH
REQUEST, NOTWITHSTANDING ANY DIRECTIONS OR INSTRUCTIONS TO THE CONTRARY THAT
MAY BE GIVEN BY BORROWER AND AGREES THAT THE COMPLIANCE BY SUCH LICENSEE OR
ACCOUNT DEBTOR WITH THE PROVISIONS OF THIS SECTION SHALL NOT BE DEEMED A
VIOLATION OF SUCH PARTY’S CONTRACTUAL AGREEMENTS WITH BORROWER.

113

 

 

(C)                               AFTER DELIVERY TO BORROWER BY INVESTOR OF A
NOTICE THAT AN EVENT OF DEFAULT HAS OCCURRED AND SO LONG AS SUCH EVENT OF
DEFAULT IS CONTINUING: (I) ALL AMOUNTS AND PROCEEDS (INCLUDING

 

 

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INSTRUMENTS) RECEIVED BY BORROWER IN RESPECT OF ANY COLLATERAL SHALL BE RECEIVED
IN TRUST FOR THE BENEFIT OF INVESTOR HEREUNDER, SHALL BE SEGREGATED FROM OTHER
FUNDS OF BORROWER, AND SHALL BE FORTHWITH PAID OVER TO INVESTOR IN THE SAME
FORM AS SO RECEIVED (WITH ANY NECESSARY ENDORSEMENTS) TO BE HELD AS CASH
COLLATERAL AND APPLIED AS PROVIDED BY THIS SECURITY AGREEMENT; AND (II) BORROWER
SHALL NOT ADJUST, SETTLE, OR COMPROMISE THE AMOUNT OR PAYMENT OF ANY COLLATERAL,
OR RELEASE WHOLLY OR PARTLY ANY ACCOUNT DEBTOR OR OBLIGOR THEREOF, OR ALLOW ANY
CREDIT OR DISCOUNT THEREON.

114

 

 

(D)                               AFTER THE OCCURRENCE AND DURING THE
CONTINUATION OF AN EVENT OF DEFAULT, (I) INVESTOR MAY IN ITS OWN NAME OR IN THE
NAME OF OTHERS COMMUNICATE WITH ACCOUNT DEBTORS (INCLUDING CONTRACT PARTIES TO
LICENSE AGREEMENTS AND IN LICENSE AGREEMENTS) IN ORDER TO VERIFY WITH THEM TO
INVESTOR’S REASONABLE SATISFACTION THE EXISTENCE, AMOUNT AND TERMS OF ANY
COLLATERAL AND (II) INVESTOR SHALL HAVE THE RIGHT, AT BORROWER’S COST AND
EXPENSE, TO MAKE TEST VERIFICATIONS OF THE COLLATERAL IN ANY REASONABLE MANNER
AND THROUGH ANY MEDIUM THAT IT CONSIDERS ADVISABLE, AND BORROWER AGREES TO
FURNISH ALL SUCH ASSISTANCE AS INVESTOR MAY REASONABLY REQUIRE IN CONNECTION
THEREWITH.

114

 

 

(E)                               ANYTHING CONTAINED HEREIN TO THE CONTRARY
NOTWITHSTANDING, UPON THE OCCURRENCE AND DURING THE CONTINUATION OF AN EVENT OF
DEFAULT, INVESTOR SHALL HAVE THE RIGHT (BUT NOT THE OBLIGATION) TO BRING SUIT,
IN THE NAME OF BORROWER, INVESTOR OR OTHERWISE, TO ENFORCE ANY COLLATERAL, IN
WHICH EVENT BORROWER SHALL, AT THE REQUEST OF INVESTOR, DO ANY AND ALL LAWFUL
ACTS AND EXECUTE ANY AND ALL DOCUMENTS REQUIRED BY INVESTOR IN AID OF SUCH
ENFORCEMENT AND BORROWER SHALL PROMPTLY, UPON DEMAND, REIMBURSE AND INDEMNIFY
INVESTOR AS PROVIDED IN THE LOAN AGREEMENT AND SECTION 19 HEREOF, AS APPLICABLE,
IN CONNECTION WITH THE EXERCISE OF ITS RIGHTS UNDER THIS SECTION 17.

114

 

SECTION 18. APPLICATION OF PROCEEDS.  EXCEPT AS EXPRESSLY PROVIDED ELSEWHERE IN
THIS AGREEMENT, ALL PROCEEDS RECEIVED BY INVESTOR IN RESPECT OF ANY SALE OF,
COLLECTION FROM, OR OTHER REALIZATION UPON ALL OR ANY PART OF THE COLLATERAL
SHALL BE APPLIED IN GOOD FAITH TO SATISFY (TO THE EXTENT OF THE NET CASH
PROCEEDS RECEIVED BY INVESTOR) SUCH ITEM OR PART OF THE SECURED OBLIGATIONS AS
INVESTOR MAY DESIGNATE (WITH THE RIGHT TO REAPPLY SUCH PROCEEDS TO SUCH OTHER
ITEMS OR PART OF THE SECURED OBLIGATIONS AS INVESTOR MAY SEE FIT).

 

SECTION 19. EXPENSES.

 

(A)                              BORROWER AGREES TO PAY TO INVESTOR UPON DEMAND
THE AMOUNT OF ANY AND ALL COSTS AND EXPENSES, INCLUDING THE

 

 

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REASONABLE FEES AND EXPENSES OF ITS COUNSEL AND OF ANY EXPERTS AND AGENTS, THAT
INVESTOR MAY INCUR IN CONNECTION WITH (I) THE CUSTODY, PRESERVATION, MANAGEMENT,
ENFORCEMENT, USE OR OPERATION OF, OR THE SALE OF, COLLECTION FROM, OR OTHER
REALIZATION UPON, ANY OF THE COLLATERAL, (II) THE EXERCISE OR ENFORCEMENT OF ANY
OF THE RIGHTS OF INVESTOR HEREUNDER, OR (III) THE FAILURE BY BORROWER TO
PERFORM OR OBSERVE ANY OF THE PROVISIONS HEREOF. ANY COSTS AND EXPENSES PAYABLE
HEREUNDER SHALL BE DEEMED TO BE SECURED OBLIGATIONS AND ENTITLED TO THE SECURITY
INTEREST HEREUNDER.

115

 

 

(B)                               THE OBLIGATIONS OF BORROWER IN THIS SECTION 19
SHALL SURVIVE THE TERMINATION OF THIS AGREEMENT AND THE DISCHARGE OF BORROWER’S
OTHER OBLIGATIONS UNDER THIS AGREEMENT AND THE LOAN AGREEMENT.

115

 

SECTION 20. CONTINUING SECURITY INTEREST; TERMINATION AND RELEASE.

 

(A)                              THIS AGREEMENT SHALL (I) CREATE A CONTINUING
SECURITY INTEREST IN THE COLLATERAL, (II) REMAIN IN FULL FORCE AND EFFECT UNTIL
THE LATER OF THE INDEFEASIBLE PAYMENT AND PERFORMANCE IN FULL OF THE SECURED
OBLIGATIONS AND THE EXPIRATION OR TERMINATION OF THE LOAN AGREEMENT (OTHER THAN
INDEMNIFICATION OBLIGATIONS THAT ARE UNASSERTED AT THE TIME OF EXPIRATION OR
TERMINATION OF LOAN AGREEMENT AND OTHER CONTINGENT OBLIGATIONS THAT, BY THEIR
TERMS, SURVIVE THE TERMINATION HEREOF AND THEREOF), (III) BE BINDING UPON
BORROWER AND ITS RESPECTIVE SUCCESSORS AND ASSIGNS, AND (IV) INURE, TOGETHER
WITH THE RIGHTS AND REMEDIES OF INVESTOR HEREUNDER, TO THE BENEFIT OF INVESTOR
AND ITS SUCCESSORS, TRANSFEREES AND ASSIGNS. THE BORROWER AGREES THAT ITS
OBLIGATIONS HEREUNDER AND THE SECURITY INTEREST CREATED HEREUNDER SHALL CONTINUE
TO BE EFFECTIVE OR BE REINSTATED, AS APPLICABLE, IF AT ANY TIME PAYMENT, OR ANY
PART THEREOF, OF ALL OR ANY PART OF THE SECURED OBLIGATIONS IS RESCINDED OR MUST
OTHERWISE BE RESTORED BY THE INVESTOR UPON THE BANKRUPTCY OR REORGANIZATION OF
THE BORROWER OR OTHERWISE.

115

 

 

(B)                               UPON THE PAYMENT AND PERFORMANCE IN FULL OF
ALL SECURED OBLIGATIONS (OTHER THAN INDEMNIFICATION OBLIGATIONS THAT ARE
UNASSERTED AS OF THE EXPIRATION OR TERMINATION OF THE LOAN AGREEMENT AND OTHER
CONTINGENT OBLIGATIONS NOT THEN DUE AND PAYABLE THAT, BY THEIR TERMS, SURVIVE
THE TERMINATION HEREOF), THE SECURITY INTEREST GRANTED HEREBY SHALL TERMINATE
AND ALL RIGHTS TO THE COLLATERAL SHALL REVERT TO BORROWER. UPON SUCH TERMINATION
OR ANY RELEASE OF COLLATERAL OR ANY PART THEREOF IN ACCORDANCE WITH THE
PROVISIONS OF SECTION 10.02(B) OF THE LOAN AGREEMENT, THE INVESTOR SHALL, UPON
THE REQUEST AND AT THE SOLE COST AND EXPENSE OF THE BORROWER, ASSIGN, TRANSFER
AND DELIVER TO BORROWER, AGAINST RECEIPT AND WITHOUT RECOURSE TO OR WARRANTY

 

 

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BY THE INVESTOR EXCEPT AS TO THE FACT THAT THE INVESTOR HAS NOT ENCUMBERED THE
RELEASED ASSETS, SUCH OF THE COLLATERAL OR ANY PART THEREOF TO BE RELEASED (IN
THE CASE OF A RELEASE) AS MAY BE IN POSSESSION OF THE INVESTOR AND AS SHALL NOT
HAVE BEEN SOLD OR OTHERWISE APPLIED PURSUANT TO THE TERMS HEREOF, AND, WITH
RESPECT TO ANY OTHER COLLATERAL, PROPER DOCUMENTS AND INSTRUMENTS (INCLUDING UCC
3 TERMINATION FINANCING STATEMENTS OR RELEASES) ACKNOWLEDGING THE TERMINATION
HEREOF AND THE SECURITY INTEREST GRANTED HEREBY OR THE RELEASE OF SUCH
COLLATERAL, AS THE CASE MAY BE.

115

 

SECTION 21. MISCELLANEOUS.

 

(A)                              NOTICES. ALL NOTICES, CONSENTS, WAIVERS AND
COMMUNICATIONS HEREUNDER GIVEN BY ANY PARTY TO ANY OTHER PARTY SHALL BE GIVEN
PURSUANT TO SECTION 13.04 OF THE LOAN AGREEMENT.

115

 

 

(B)                               ENTIRE AGREEMENT. THIS AGREEMENT, TOGETHER
WITH THE OTHER TRANSACTION DOCUMENTS AND THE ANNEXES AND SCHEDULES HERETO AND
THERETO (WHICH ARE INCORPORATED HEREIN BY REFERENCE), CONSTITUTES THE ENTIRE
AGREEMENT AMONG THE PARTIES WITH RESPECT TO THE SUBJECT MATTER HEREOF AND
SUPERSEDES ALL PRIOR AGREEMENTS, UNDERSTANDINGS AND NEGOTIATIONS, BOTH WRITTEN
AND ORAL, AMONG THE PARTIES WITH RESPECT TO THE SUBJECT MATTER OF THIS
AGREEMENT. NO REPRESENTATION, INDUCEMENT, PROMISE, UNDERSTANDING, CONDITION OR
WARRANTY NOT SET FORTH HEREIN (OR IN THE ANNEXES OR SCHEDULES HERETO) HAS BEEN
MADE OR RELIED UPON BY ANY PARTY HERETO. NONE OF THIS AGREEMENT, NOR ANY
PROVISION HEREOF, IS INTENDED TO CONFER UPON ANY PERSON OTHER THAN THE PARTIES
HERETO ANY RIGHTS OR REMEDIES HEREUNDER.

116

 

 

(C)                               AMENDMENTS; NO WAIVERS.

116

 

 

(D)                               SUCCESSORS AND ASSIGNS. THE PROVISIONS OF THIS
AGREEMENT SHALL BE BINDING UPON AND INURE TO THE BENEFIT OF THE PARTIES HERETO
AND THEIR RESPECTIVE SUCCESSORS AND ASSIGNS, AND ANY REFERENCE HEREIN TO A PARTY
SHALL BE DEEMED A REFERENCE TO SUCH PARTY’S SUCCESSORS AND ASSIGNS, IF ANY.
BORROWER SHALL NOT BE ENTITLED TO ASSIGN ANY OF ITS OBLIGATIONS AND RIGHTS
HEREUNDER OR ANY OTHER TRANSACTION DOCUMENTS WITHOUT THE PRIOR WRITTEN CONSENT
OF INVESTOR. INVESTOR MAY ASSIGN THIS AGREEMENT AND ANY OF ITS RIGHTS HEREUNDER
WITHOUT RESTRICTION.

116

 

 

(E)                               SEVERABILITY. IF ANY PROVISION OF THIS
AGREEMENT IS HELD TO BE INVALID OR UNENFORCEABLE, THE REMAINING PROVISIONS SHALL
NEVERTHELESS BE GIVEN FULL FORCE AND EFFECT.

116

 

 

(F)                               INTERPRETATION. WHEN A REFERENCE IS MADE IN
THIS AGREEMENT TO SECTIONS, SUBSECTIONS, ANNEXES OR SCHEDULES, SUCH REFERENCE
SHALL BE TO A SECTION, SUBSECTION, ANNEX OR SCHEDULE TO THIS AGREEMENT UNLESS
OTHERWISE INDICATED. THE TERMS “AGREEMENT”, “HEREIN”, “HERETO”, “HEREOF” AND
WORDS OF SIMILAR

 

 

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IMPORT SHALL, UNLESS THE CONTEXT OTHERWISE REQUIRES, MEAN THIS AGREEMENT, AS
AMENDED, SUPPLEMENTED OR OTHERWISE MODIFIED FROM TIME TO TIME. THE WORDS
“INCLUDE”, “INCLUDES” AND “INCLUDING” WHEN USED HEREIN SHALL BE DEEMED IN EACH
CASE TO BE FOLLOWED BY THE WORDS “WITHOUT LIMITATION”. NO PARTY HERETO SHALL BE
OR BE DEEMED TO BE THE DRAFTER OF THIS AGREEMENT FOR THE PURPOSES OF CONSTRUING
THIS AGREEMENT AGAINST ANY OTHER PARTY.

116

 

 

(G)                               HEADINGS AND CAPTIONS. THE HEADINGS AND
CAPTIONS IN THIS AGREEMENT ARE FOR CONVENIENCE AND REFERENCE PURPOSES ONLY AND
SHALL NOT BE CONSIDERED A PART OF OR AFFECT THE CONSTRUCTION OR INTERPRETATION
OF ANY PROVISION OF THIS AGREEMENT.

117

 

 

(H)                               GOVERNING LAW; JURISDICTION.

117

 

 

(I)                                WAIVER OF JURY TRIAL; EXCLUSION OF PUNITIVE
DAMAGES. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT. IN
ADDITION, WITHOUT LIMITING BORROWER’S OBLIGATION TO INDEMNIFY INVESTOR FOR ANY
THIRD PARTY CLAIM FOR PUNITIVE DAMAGES, IN ANY LITIGATION OR ARBITRATION BETWEEN
THE PARTIES HEREUNDER NEITHER PARTY SHALL BE ENTITLED TO SEEK PUNITIVE DAMAGES
FROM THE OTHER PARTY.

117

 

 

(J)                                COUNTERPARTS; EFFECTIVENESS. THIS AGREEMENT
MAY BE EXECUTED IN TWO OR MORE COUNTERPARTS, EACH OF WHICH SHALL BE AN ORIGINAL,
BUT ALL OF WHICH TOGETHER SHALL CONSTITUTE ONE AND THE SAME INSTRUMENT. THIS
AGREEMENT SHALL BECOME EFFECTIVE WHEN EACH PARTY HERETO SHALL HAVE RECEIVED A
COUNTERPART HEREOF SIGNED BY THE OTHER PARTIES HERETO.

118

 

 

ARTICLE 1.

 

DEFINED TERMS

 

 

SECTION 1.1. DEFINITIONS.

194

 

 

SECTION 1.2. OTHER DEFINITIONS.

196

 

 

SECTION 1.3. TERMS GENERALLY. THE DEFINITIONS OF TERMS HEREIN SHALL APPLY
EQUALLY TO THE SINGULAR AND PLURAL FORMS OF THE TERMS DEFINED. WHENEVER THE
CONTEXT MAY REQUIRE, ANY PRONOUN SHALL INCLUDE THE CORRESPONDING MASCULINE,
FEMININE AND NEUTER FORMS. THE WORDS “INCLUDE,” “INCLUDES” AND “INCLUDING” SHALL
BE DEEMED TO BE FOLLOWED BY THE PHRASE “WITHOUT LIMITATION.” THE WORD “WILL”
SHALL BE CONSTRUED TO HAVE THE SAME MEANING AND EFFECT AS THE WORD “SHALL.”
UNLESS THE CONTEXT REQUIRES OTHERWISE, (A) ANY DEFINITION OF OR REFERENCE TO THE
LOAN AGREEMENT OR ANY OTHER AGREEMENT, INSTRUMENT OR OTHER DOCUMENT HEREIN SHALL
BE

 

 

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CONSTRUED AS REFERRING TO SUCH AGREEMENT, INSTRUMENT OR OTHER DOCUMENT AS FROM
TIME TO TIME AMENDED, SUPPLEMENTED OR OTHERWISE MODIFIED (SUBJECT TO ANY
RESTRICTIONS ON SUCH AMENDMENTS, SUPPLEMENTS OR MODIFICATIONS SET FORTH HEREIN),
(B) ANY REFERENCE HEREIN TO ANY PERSON SHALL BE CONSTRUED TO INCLUDE SUCH
PERSON’S SUCCESSORS AND ASSIGNS, (C) THE WORDS “HEREIN,” “HEREOF” AND
“HEREUNDER,” AND WORDS OF SIMILAR IMPORT, SHALL BE CONSTRUED TO REFER TO THIS
AGREEMENT IN ITS ENTIRETY AND NOT TO ANY PARTICULAR PROVISION HEREOF, (D) ALL
REFERENCES HEREIN TO ARTICLES, SECTIONS AND EXHIBITS SHALL BE CONSTRUED TO REFER
TO ARTICLES AND SECTIONS OF, AND EXHIBITS TO, THIS AGREEMENT, (E) ANY REFERENCE
TO ANY LAW OR REGULATION HEREIN SHALL REFER TO SUCH LAW OR REGULATION AS
AMENDED, MODIFIED OR SUPPLEMENTED FROM TIME TO TIME AND (F) THE WORDS “ASSET”
AND “PROPERTY” SHALL BE CONSTRUED TO HAVE THE SAME MEANING AND EFFECT AND TO
REFER TO ANY AND ALL TANGIBLE AND INTANGIBLE ASSETS AND PROPERTIES, INCLUDING
CASH, SECURITIES, ACCOUNTS AND CONTRACT RIGHTS.

196

 

 

ARTICLE 2.

 

WARRANT CERTIFICATES

 

 

SECTION 2.1. ISSUANCE AND DATING. THE WARRANT CERTIFICATES WILL BE ISSUED IN
REGISTERED FORM AS DEFINITIVE WARRANT CERTIFICATES, SUBSTANTIALLY IN THE FORM OF
EXHIBIT A HERETO (SUBJECT TO SECTION 4.9 HEREOF), WHICH IS HEREBY INCORPORATED
IN AND EXPRESSLY MADE A PART OF THIS AGREEMENT. EXCEPT FOR WARRANT CERTIFICATES
DELIVERED PURSUANT TO SECTION 2.4(B)(IV) HEREOF, THE WARRANT CERTIFICATES SHALL
BEAR THE LEGEND REQUIRED BY SECTION 2.5 HEREOF. EACH WARRANT SHALL BE DATED THE
DATE OF ITS EXECUTION BY THE COMPANY. THE TERMS OF THE WARRANTS SET FORTH IN
EXHIBIT A ARE PART OF THE TERMS OF THIS AGREEMENT.

196

 

 

SECTION 2.2. EXECUTION AND COUNTERSIGNATURE. THE WARRANTS TO BE ISSUED PURSUANT
TO THIS AGREEMENT SHALL BE EXECUTED ON BEHALF OF THE COMPANY BY MANUAL SIGNATURE
BY ONE OFFICER. THE WARRANT CERTIFICATES SHALL BE DELIVERED IN ACCORDANCE WITH
SECTION 2.1 HEREOF.

197

 

 

SECTION 2.3. CERTIFICATE REGISTER. THE COMPANY SHALL KEEP A REGISTER (THE
“CERTIFICATE REGISTER”) OF THE WARRANT CERTIFICATES AND OF THEIR TRANSFER AND
EXCHANGE. THE CERTIFICATE REGISTER SHALL SHOW THE NAMES AND ADDRESSES OF THE
RESPECTIVE HOLDERS AND THE DATE AND NUMBER OF WARRANTS EVIDENCED ON THE FACE OF
EACH OF THE WARRANT CERTIFICATES. THE COMPANY MAY DEEM AND TREAT THE PERSON IN
WHOSE NAME A WARRANT CERTIFICATE IS REGISTERED AS THE ABSOLUTE OWNER OF SUCH
WARRANT CERTIFICATE FOR ALL PURPOSES WHATSOEVER AND THE COMPANY SHALL NOT BE
AFFECTED BY NOTICE TO THE CONTRARY.

197

 

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SECTION 2.4. TRANSFER AND EXCHANGE.

197

 

 

SECTION 2.5. LEGENDS.

198

 

 

SECTION 2.6. REPLACEMENT CERTIFICATES. IF A MUTILATED WARRANT CERTIFICATE IS
SURRENDERED TO THE WARRANT AGENT OR IF THE HOLDER OF A WARRANT CERTIFICATE
CLAIMS THAT THE WARRANT CERTIFICATE HAS BEEN LOST, DESTROYED OR WRONGFULLY
TAKEN, THE COMPANY SHALL ISSUE A REPLACEMENT WARRANT CERTIFICATE. IF REQUIRED BY
THE COMPANY, SUCH HOLDER SHALL FURNISH AN INDEMNITY BOND (OR, IN THE CASE OF THE
INITIAL HOLDER, AN UNSECURED INDEMNITY) SUFFICIENT IN THE REASONABLE JUDGMENT OF
THE COMPANY TO PROTECT THE COMPANY FROM ANY LOSS WHICH IT MAY SUFFER IF A
WARRANT CERTIFICATE IS REPLACED. THE COMPANY MAY CHARGE THE HOLDER FOR ITS
REASONABLE EXPENSES IN REPLACING A WARRANT CERTIFICATE. EVERY REPLACEMENT
WARRANT CERTIFICATE IS AN ADDITIONAL OBLIGATION OF THE COMPANY.

199

 

 

SECTION 2.7. CANCELLATION.

199

 

 

ARTICLE 3.

 

 

INITIAL ISSUANCE AND EXERCISE TERMS

 

 

SECTION 3.1. INITIAL ISSUANCE OF WARRANTS. ON THE CLOSING DATE,
(I) CONTEMPORANEOUS WITH, AND AS A CONDITION TO, THE FUNDING BY THE INITIAL
HOLDER OF THE LOAN AND (II) SUBJECT TO RECEIPT BY THE COMPANY OF A CERTIFICATE
FROM THE INITIAL HOLDER, SUBSTANTIALLY IN THE FORM OF EXHIBIT C HERETO, THE
COMPANY SHALL EXECUTE AND DELIVER TO THE INITIAL HOLDER A WARRANT CERTIFICATE
REPRESENTING 250,000 WARRANTS REGISTERED IN THE NAME OF THE INITIAL HOLDER.

200

 

 

SECTION 3.2. EXERCISE PRICE. EACH WARRANT SHALL ENTITLE THE HOLDER THEREOF TO
PURCHASE ONE SHARE OF COMMON STOCK (AS THE SAME MAY BE ADJUSTED PURSUANT TO
ARTICLE 4) FOR A PER SHARE EXERCISE PRICE OF $5.50 (AS THE SAME MAY BE ADJUSTED
PURSUANT TO ARTICLE 4, THE “EXERCISE PRICE”).

200

 

 

SECTION 3.3. EXERCISE PERIOD.

200

 

 

SECTION 3.4. EXPIRATION. A WARRANT SHALL TERMINATE AND BECOME VOID AS OF THE
EARLIER OF (A) 6:00 P.M., NEW YORK TIME, ON THE EXPIRATION DATE AND (B) THE TIME
AND DATE SUCH WARRANT IS EXERCISED. THE WARRANTS SHALL TERMINATE AND BECOME VOID
AFTER THE EXPIRATION DATE.

200

 

 

SECTION 3.5. MANNER OF EXERCISE. SUBJECT TO SECTION 3.3 HEREOF, WARRANTS MAY BE
EXERCISED UPON (A) SURRENDER TO THE COMPANY OF THE WARRANT
CERTIFICATE(S) REPRESENTING SUCH WARRANTS, TOGETHER WITH THE FORM OF ELECTION TO
PURCHASE WARRANT SHARES ON THE REVERSE THEREOF DULY COMPLETED AND EXECUTED BY
THE HOLDER THEREOF AND (B) PAYMENT TO THE COMPANY OF THE EXERCISE PRICE FOR THE
NUMBER OF WARRANT SHARES IN RESPECT OF WHICH SUCH WARRANT IS THEN EXERCISED
(EACH DATE ON WHICH SUCH EXERCISE OCCURS, AN “EXERCISE DATE”). SUCH PAYMENT OF
THE EXERCISE PRICE SHALL BE MADE

 

 

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(I) IN CASH OR BY CERTIFIED OR OFFICIAL BANK CHECK PAYABLE TO THE ORDER OF THE
COMPANY OR BY WIRE TRANSFER OF FUNDS TO AN ACCOUNT DESIGNATED BY THE COMPANY FOR
SUCH PURPOSE OR (II) BY THE SURRENDER (WHICH SURRENDER SHALL BE EVIDENCED BY
CANCELLATION OF THE NUMBER OF WARRANTS REPRESENTED BY ANY WARRANT CERTIFICATE
PRESENTED IN CONNECTION WITH A CASHLESS EXERCISE) OF A WARRANT OR WARRANTS
(REPRESENTED BY ONE OR MORE RELEVANT WARRANT CERTIFICATES), AND WITHOUT THE
PAYMENT OF THE EXERCISE PRICE IN CASH, IN EXCHANGE FOR THE ISSUANCE OF SUCH
NUMBER OF SHARES OF COMMON STOCK EQUAL TO THE PRODUCT OF (1) THE NUMBER OF
SHARES OF COMMON STOCK FOR WHICH SUCH WARRANT WOULD OTHERWISE BE NOMINALLY
EXERCISABLE IMMEDIATELY PRIOR TO SUCH EXERCISE IF PAYMENT OF THE EXERCISE PRICE
WERE BEING MADE IN CASH PURSUANT TO CLAUSE (I) OF THIS SECTION 3.5 AND (2) THE
CASHLESS EXERCISE RATIO. AN EXERCISE OF A WARRANT IN ACCORDANCE WITH THE
IMMEDIATELY PRECEDING SENTENCE IS HEREIN CALLED A “CASHLESS EXERCISE”. FOR U.S.
TAX PURPOSES, THE COMPANY AND THE INITIAL HOLDER AGREE TO TREAT AN EXERCISE OF
WARRANTS PURSUANT TO A CASHLESS EXERCISE AS A “RECAPITALIZATION” WITHIN THE
MEANING OF SECTION 368(A)(1)(E) OF THE INTERNAL REVENUE CODE OF 1986, AS
AMENDED. ALL PROVISIONS OF THIS AGREEMENT SHALL BE APPLICABLE WITH RESPECT TO AN
EXERCISE OF WARRANTS PURSUANT TO A CASHLESS EXERCISE FOR LESS THAN THE FULL
NUMBER OF WARRANTS REPRESENTED THEREBY. THE RIGHTS REPRESENTED BY THE WARRANTS
SHALL BE EXERCISABLE AT THE ELECTION OF THE HOLDERS THEREOF EITHER IN FULL AT
ANY TIME OR IN PART FROM TIME TO TIME DURING THE PERIOD COMMENCING ON THE
EXERCISE COMMENCEMENT DATE AND ENDING AT 6:00 P.M., NEW YORK TIME, ON THE
EXPIRATION DATE AND IN THE EVENT THAT A WARRANT CERTIFICATE IS SURRENDERED FOR
EXERCISE IN RESPECT OF LESS THAN ALL THE WARRANTS REPRESENTED BY SUCH WARRANT
CERTIFICATE AT ANY TIME PRIOR TO THE EXPIRATION DATE A NEW WARRANT CERTIFICATE
EXERCISABLE FOR THE REMAINING WARRANTS WILL BE DULY EXECUTED AND PROMPTLY ISSUED
BY THE COMPANY IN ACCORDANCE WITH THIS AGREEMENT.

200

 

 

SECTION 3.6. ISSUANCE OF WARRANT SHARES. UPON THE SURRENDER OF WARRANT
CERTIFICATES AND PAYMENT OF THE PER SHARE EXERCISE PRICE (EITHER IN CASH OR BY
CASHLESS EXERCISE), AS SET FORTH IN SECTION 3.5 HEREOF, THE COMPANY SHALL WITHIN
THREE BUSINESS DAYS ISSUE AND CAUSE THE TRANSFER AGENT FOR THE COMMON STOCK
(“TRANSFER AGENT”) TO COUNTERSIGN AND DELIVER TO OR UPON THE WRITTEN ORDER OF
THE HOLDER AND IN SUCH NAME OR NAMES AS THE HOLDER MAY DESIGNATE, A CERTIFICATE
OR CERTIFICATES FOR THE NUMBER OF FULL WARRANT SHARES SO PURCHASED UPON THE
EXERCISE OF SUCH WARRANTS OR OTHER SECURITIES OR PROPERTY TO WHICH IT IS
ENTITLED, REGISTERED OR OTHERWISE TO THE PERSON OR PERSONS ENTITLED TO RECEIVE
THE SAME, TOGETHER WITH CASH AS PROVIDED IN SECTION 3.7 HEREOF IN RESPECT OF ANY
FRACTIONAL WARRANT SHARES OTHERWISE ISSUABLE UPON SUCH

 

 

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EXERCISE. SUCH CERTIFICATE OR CERTIFICATES SHALL BE DEEMED TO HAVE BEEN ISSUED
AND ANY PERSON SO DESIGNATED TO BE NAMED THEREIN SHALL BE DEEMED TO HAVE BECOME
A HOLDER OF RECORD OF SUCH WARRANT SHARES AS OF THE DATE OF THE SURRENDER OF
SUCH WARRANT CERTIFICATES AND PAYMENT OF THE PER SHARE EXERCISE PRICE (EITHER IN
CASH OR BY CASHLESS EXERCISE).

201

 

 

SECTION 3.7. FRACTIONAL WARRANT SHARES. NO FRACTIONAL WARRANT SHARES SHALL BE
ISSUED ON EXERCISE OF WARRANTS. IF MORE THAN ONE WARRANT SHALL BE EXERCISED AT
THE SAME TIME BY THE SAME HOLDER, THE NUMBER OF FULL WARRANT SHARES WHICH SHALL
BE ISSUABLE UPON SUCH EXERCISE SHALL BE COMPUTED ON THE BASIS OF THE AGGREGATE
NUMBER OF WARRANT SHARES PURCHASABLE ON EXERCISE OF THE WARRANTS SO EXERCISED.
IF ANY FRACTION OF A WARRANT SHARE WOULD, EXCEPT FOR THE PROVISIONS OF THIS
SECTION 3.7, BE ISSUABLE ON THE EXERCISE OF ANY WARRANT (OR SPECIFIED PORTION
THEREOF), THE COMPANY SHALL NOTIFY THE HOLDER EXERCISING THE WARRANT IN WRITING
OF THE AMOUNT TO BE PAID IN LIEU OF THE FRACTION OF A WARRANT SHARE AND
CONCURRENTLY SHALL PAY TO SUCH HOLDER AN AMOUNT IN CASH EQUAL TO THE CURRENT
MARKET VALUE FOR ONE WARRANT SHARE ON THE DATE THE WARRANT IS EXERCISED,
MULTIPLIED BY SUCH FRACTION, ROUNDED UP TO THE NEAREST WHOLE CENT.

201

 

 

SECTION 3.8. RESERVATION OF WARRANT SHARES. THE COMPANY SHALL AT ALL TIMES KEEP
RESERVED OUT OF ITS AUTHORIZED SHARES OF COMMON STOCK A NUMBER OF SHARES OF
COMMON STOCK SUFFICIENT TO PROVIDE FOR THE EXERCISE OF ALL OUTSTANDING WARRANTS
AT ALL TIMES UNTIL THE EXPIRATION DATE, OR THE TIME AT WHICH ALL WARRANTS HAVE
BEEN EXERCISED OR CANCELLED. ALL WARRANT SHARES THAT MAY BE ISSUED UPON EXERCISE
OF WARRANTS SHALL, UPON ISSUE, BE FULLY PAID, NONASSESSABLE, FREE OF PREEMPTIVE
RIGHTS AND FREE FROM ALL TAXES, LIENS, CHARGES AND SECURITY INTERESTS WITH
RESPECT TO THE ISSUE THEREOF. THE COMPANY WILL PROVIDE OR OTHERWISE MAKE
AVAILABLE TO THE TRANSFER AGENT ANY CASH WHICH MAY BE PAYABLE AS PROVIDED IN
SECTION 3.6 HEREOF. THE COMPANY WILL FURNISH TO THE TRANSFER AGENT A COPY OF ALL
NOTICES OF ADJUSTMENTS AND CERTIFICATES RELATED THERETO TRANSMITTED TO EACH
HOLDER.

201

 

 

SECTION 3.9. LISTING ON SECURITIES EXCHANGE. THE COMPANY WILL USE COMMERCIALLY
REASONABLE EFFORTS TO PROCURE, AT ITS SOLE COST AND EXPENSE, THE LISTING OF ALL
WARRANT SHARES (SUBJECT TO ISSUANCE OR NOTICE OF ISSUANCE) ON ALL STOCK
EXCHANGES ON WHICH THE COMMON STOCK THEN LISTED AND TO MAINTAIN SUCH LISTING OF
ALL WARRANT SHARES AFTER ISSUANCE.

202

 

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ARTICLE 4.

ANTIDILUTION PROVISIONS

 

SECTION 4.1. CHANGES IN COMMON STOCK. IN THE EVENT THAT, AT ANY TIME OR FROM
TIME TO TIME AFTER THE DATE OF THIS AGREEMENT, THE COMPANY SHALL (A) PAY A
DIVIDEND OR MAKE A DISTRIBUTION ON ITS COMMON STOCK EXCLUSIVELY IN SHARES OF ITS
COMMON STOCK, (B) SUBDIVIDE ITS OUTSTANDING SHARES OF COMMON STOCK INTO A
GREATER NUMBER OF SHARES OF COMMON STOCK OR (C) COMBINE ITS OUTSTANDING SHARES
OF COMMON STOCK INTO A SMALLER NUMBER OF SHARES OF COMMON STOCK, THEN, IN EACH
CASE THE NUMBER OF SHARES OF COMMON STOCK PURCHASABLE UPON EXERCISE OF EACH
WARRANT (THE “EXERCISE RATE”) AND THE EXERCISE PRICE IN EFFECT IMMEDIATELY PRIOR
TO SUCH ACTION WILL BE PROPORTIONATELY ADJUSTED UPON THE HAPPENING OF SUCH EVENT
SO THAT, AFTER GIVING EFFECT TO SUCH ADJUSTMENT, THE HOLDER OF EACH WARRANT
SHALL BE ENTITLED TO RECEIVE, UPON PAYMENT OF THE SAME AGGREGATE EXERCISE PRICE,
THE NUMBER OF SHARES OF COMMON STOCK UPON EXERCISE THAT SUCH HOLDER WOULD HAVE
OWNED OR HAVE BEEN ENTITLED TO RECEIVE HAD SUCH WARRANT BEEN EXERCISED
IMMEDIATELY PRIOR TO THE HAPPENING OF ANY OF THE EVENTS DESCRIBED IN CLAUSES
(A), (B) OR (C) OF THIS SECTION 4.1 (OR, IN THE CASE OF A DIVIDEND OR
DISTRIBUTION OF COMMON STOCK, IMMEDIATELY PRIOR TO THE RECORD DATE THEREFOR). AN
ADJUSTMENT MADE PURSUANT TO THIS SECTION 4.1 SHALL BECOME EFFECTIVE AT THE
OPENING OF BUSINESS ON THE DAY IMMEDIATELY FOLLOWING THE RECORD DATE FIXED FOR
DETERMINING THE STOCKHOLDERS ENTITLED TO RECEIVE SUCH DIVIDEND OR DISTRIBUTION,
IN THE CASE OF A DIVIDEND OR DISTRIBUTION IN SHARES OF COMMON STOCK, AND SHALL
BECOME EFFECTIVE AT THE OPENING OF BUSINESS ON THE DAY IMMEDIATELY FOLLOWING THE
EFFECTIVE DATE OF SUCH SUBDIVISION OR COMBINATION.

202

 

 

SECTION 4.2. DIVIDENDS AND OTHER DISTRIBUTIONS. IN THE EVENT THAT, AT ANY TIME
OR FROM TIME TO TIME AFTER THE DATE OF THIS AGREEMENT, THE COMPANY SHALL MAKE OR
ISSUE, OR FIX A RECORD DATE FOR THE DETERMINATION OF STOCKHOLDERS ENTITLED TO
RECEIVE, A DIVIDEND OR OTHER DISTRIBUTION PAYABLE IN SECURITIES (OTHER THAN
SHARES OF COMMON STOCK) OR IN CASH OR OTHER PROPERTY (OTHER THAN REGULAR CASH
DIVIDENDS PAID OUT OF EARNINGS OR EARNED SURPLUS, DETERMINED IN ACCORDANCE WITH
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES), THEN AND IN EACH SUCH EVENT, LAWFUL
AND ADEQUATE PROVISION SHALL BE MADE SO THAT, AFTER GIVING EFFECT TO THE MAKING
OF SUCH PROVISION, THE HOLDER OF EACH WARRANT, UPON EXERCISE OF SUCH WARRANT,
SHALL BE ENTITLED TO RECEIVE, AND SUCH WARRANT SHALL REPRESENT THE RIGHT TO
RECEIVE, IN ADDITION TO THE NUMBER OF WARRANT SHARES ISSUABLE THEREUNDER, THE
KIND AND AMOUNT OF SECURITIES, CASH OR OTHER PROPERTY TO WHICH SUCH HOLDER WOULD
HAVE BEEN ENTITLED IF SUCH HOLDER HAD EXERCISED SUCH WARRANT IMMEDIATELY PRIOR
TO THE HAPPENING OF SUCH EVENT (OR, IN THE CASE OF A DIVIDEND OR OTHER
DISTRIBUTION IN RESPECT OF WHICH A RECORD DATE IS FIXED, IMMEDIATELY PRIOR TO
THE RECORD DATE THEREFOR) AND SUCH

 

 

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HOLDER HAD, DURING THE PERIOD FROM AND INCLUDING THE EFFECTIVE DATE OF SUCH
PROVISION TO AND INCLUDING THE EXERCISE DATE, RETAINED ANY SUCH SECURITIES
RECEIVABLE DURING SUCH PERIOD, GIVING APPLICATION TO ALL ADJUSTMENTS PROVIDED
FOR IN THIS ARTICLE 4 DURING SUCH PERIOD. A PROVISION MADE PURSUANT TO THIS
SECTION 4.2 SHALL BECOME EFFECTIVE AT THE OPENING OF BUSINESS ON THE DAY
IMMEDIATELY FOLLOWING THE HAPPENING OF SUCH EVENT OR, IN THE CASE OF A DIVIDEND
OR OTHER DISTRIBUTION IN RESPECT OF WHICH A RECORD DATE IS FIXED, AT THE OPENING
OF BUSINESS ON THE DAY IMMEDIATELY FOLLOWING SUCH RECORD DATE THEREFOR. THE
FOREGOING PROVISIONS OF THIS SECTION 4.2 SHALL SIMILARLY APPLY TO SUCCESSIVE
DIVIDENDS OR OTHER DISTRIBUTIONS.

202

 

 

SECTION 4.3. COMBINATION. IN CASE, AT ANY TIME, THE COMPANY SHALL (I) MERGE OR
CONSOLIDATE WITH OR INTO ANY OTHER PERSON (OTHER THAN A MERGER OR CONSOLIDATION
IN WHICH THE STOCKHOLDERS OF THE COMPANY AS OF IMMEDIATELY PRIOR TO THE
CONSUMMATION OF THE MERGER OR CONSOLIDATION OWN, IMMEDIATELY AFTER SUCH MERGER
OR CONSOLIDATION, LESS THAN A MAJORITY OF THE OUTSTANDING CAPITAL STOCK ENTITLED
TO VOTE UNDER ORDINARY CIRCUMSTANCES IN THE ELECTION OF MEMBERS OF THE BOARD OF
THE SURVIVING ENTITY, (II) SELL ALL OR SUBSTANTIALLY ALL OF THE COMPANY’S
ASSETS, (III) COMPLETE ANY TENDER OFFER OR EXCHANGE OFFER (WHETHER BY THE
COMPANY OR ANOTHER PERSON) PURSUANT TO WHICH HOLDERS OF COMMON STOCK ARE
PERMITTED TO TENDER OR EXCHANGE THEIR SHARES OF COMMON STOCK FOR OTHER
SECURITIES, CASH OR OTHER PROPERTY OR (IV) THE COMPANY EFFECTS ANY
RECLASSIFICATION OF THE COMMON STOCK OR ANY COMPULSORY SHARE EXCHANGE PURSUANT
TO WHICH THE COMMON STOCK IS EFFECTIVELY CONVERTED INTO OR EXCHANGED FOR OTHER
SECURITIES, CASH OR OTHER PROPERTY (OTHER THAN AS A RESULT OF A SUBDIVISION OR
COMBINATION OF SHARES OF COMMON STOCK COVERED BY SECTION 4.1 HEREOF) AND, IN
EACH CASE THE PREVIOUSLY OUTSTANDING COMMON STOCK SHALL BE CONVERTED OR CHANGED
INTO OR EXCHANGED FOR DIFFERENT SECURITIES, INTERESTS, OR OTHER PROPERTY OR
ASSETS (INCLUDING CASH), OR ANY COMBINATION OF THE FOREGOING (EACH SUCH
TRANSACTION BEING HEREIN CALLED A “COMBINATION”), THEN, AS A CONDITION TO THE
CONSUMMATION OF SUCH COMBINATION, LAWFUL AND ADEQUATE PROVISION SHALL BE MADE SO
THAT EACH HOLDER OF A WARRANT, UPON THE EXERCISE OF SUCH WARRANT AT ANY TIME AT
OR AFTER THE CONSUMMATION OF SUCH COMBINATION, SHALL BE ENTITLED TO RECEIVE, AND
SUCH WARRANT SHALL THEREAFTER REPRESENT THE RIGHT TO RECEIVE, IN LIEU OF THE
COMMON STOCK ISSUABLE UPON SUCH EXERCISE PRIOR TO SUCH CONSUMMATION, THE
SECURITIES, CASH OR OTHER PROPERTY TO WHICH SUCH HOLDER WOULD HAVE BEEN ENTITLED
UPON CONSUMMATION OF THE COMBINATION IF SUCH HOLDER HAD EXERCISED SUCH WARRANT
IMMEDIATELY PRIOR THERETO (SUBJECT TO ADJUSTMENTS FROM AND AFTER THE
CONSUMMATION DATE AS NEARLY EQUIVALENT AS

 

 

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POSSIBLE TO THE ADJUSTMENTS PROVIDED FOR IN THIS ARTICLE 4 AND ASSUMING SUCH
HOLDER FAILED TO EXERCISE ANY RIGHTS OF ELECTION AND RECEIVED PER SHARE THE KIND
AND AMOUNT OF CONSIDERATION RECEIVABLE PER SHARE BY A PLURALITY OF NON-ELECTING
SHARES).  THE FOREGOING PROVISIONS OF THIS SECTION 4.3 SHALL SIMILARLY APPLY TO
SUCCESSIVE COMBINATIONS.

203

 

 

SECTION 4.4. CURRENT MARKET VALUE. FOR PURPOSES OF ANY COMPUTATION UNDER
SECTIONS 3.5 AND 3.7 HEREOF OR THIS ARTICLE 4, THE CURRENT MARKET VALUE PER
SHARE OF COMMON STOCK (THE “CURRENT MARKET VALUE”) AT ANY DATE SHALL BE (A) FOR
PURPOSES OF SECTIONS 3.5 AND 3.7 HEREOF, THE CLOSING PRICE OF THE COMMON STOCK
ON THE TRADING DAY IMMEDIATELY PRECEDING THE DATE OF EXERCISE OF THE APPLICABLE
WARRANT PURSUANT TO SECTION 3 AND (B) FOR PURPOSES OF THIS ARTICLE 4, THE
ARITHMETIC AVERAGE OF THE DAILY CLOSING PRICES OF SUCH COMMON STOCK FOR THE
SHORTER OF (I) THE TWENTY (20) CONSECUTIVE TRADING DAYS ENDING ON THE LAST FULL
TRADING DAY PRIOR TO THE TIME OF DETERMINATION (AS DEFINED BELOW) AND (II) THE
CONSECUTIVE TRADING DAYS COMMENCING ON THE DATE NEXT SUCCEEDING THE FIRST PUBLIC
ANNOUNCEMENT OF THE EVENT GIVING RISE TO THE ADJUSTMENT REQUIRED BY THIS ARTICLE
4 AND ENDING ON THE TRADING DAY IMMEDIATELY PRIOR TO THE TIME OF DETERMINATION.
THE TERM “TIME OF DETERMINATION” AS USED HEREIN SHALL BE THE EARLIER TO OCCUR OF
(A) THE DATE AS OF WHICH THE CURRENT MARKET VALUE IS TO BE COMPUTED AND (B) IF
APPLICABLE, THE DATE OF COMMENCEMENT OF “EX-DIVIDEND” TRADING IN THE COMMON
STOCK RELATING TO THE EVENT GIVING RISE TO THE ADJUSTMENT REQUIRED BY THIS
ARTICLE 4. THE “CLOSING PRICE” OF THE COMMON STOCK FOR ANY TRADING DAY SHALL BE
THE LAST REPORTED SALE PRICE, REGULAR WAY, OF THE COMMON STOCK ON SUCH TRADING
DAY OR, IN CASE NO SUCH REPORTED SALE TAKES PLACE ON SUCH TRADING DAY, THE
ARITHMETIC AVERAGE OF THE CLOSING BID AND CLOSING ASKED PRICES OF THE COMMON
STOCK FOR SUCH TRADING DAY, IN EACH CASE ON THE PRINCIPAL TRADING MARKET ON
WHICH THE COMMON STOCK IS THEN LISTED OR INCLUDED. NOTWITHSTANDING THE
FOREGOING, IN THE EVENT THAT THE COMMON STOCK IS NOT THEN LISTED OR INCLUDED ON
A TRADING MARKET OR IF, FOR ANY OTHER REASON, THE CURRENT MARKET VALUE PER SHARE
CANNOT BE DETERMINED PURSUANT TO THE FOREGOING PROVISIONS OF THIS SECTION 4.4,
THE CURRENT MARKET VALUE PER SHARE OF COMMON STOCK SHALL BE THE FAIR MARKET
VALUE THEREOF AND SHALL BE DETERMINED IN GOOD FAITH BY THE BOARD, WITH THE
UNANIMOUS APPROVAL OF THE INDEPENDENT DIRECTORS OF THE BOARD, NOT LATER THAN
FIVE (5) BUSINESS DAYS FOLLOWING THE TIME OF DETERMINATION. THE COMPANY SHALL,
PROMPTLY AFTER SUCH DETERMINATION BY THE BOARD, DELIVER TO EACH HOLDER WRITTEN
NOTICE OF THE CURRENT MARKET VALUE PER SHARE OF COMMON STOCK, AS SO DETERMINED
BY THE BOARD, TOGETHER WITH A RESOLUTION OF THE BOARD EVIDENCING SUCH
DETERMINATION.

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SECTION 4.5. CERTAIN ACTIONS.

 

204

 

 

 

SECTION 4.6. NOTICE OF ADJUSTMENT.  UPON ANY ADJUSTMENT OF THE EXERCISE RATE
AND/OR THE EXERCISE PRICE PURSUANT TO THIS ARTICLE 4, THE COMPANY SHALL PROMPTLY
DELIVER TO EACH HOLDER A CERTIFICATE SIGNED BY AN OFFICER OF THE COMPANY SETTING
FORTH, IN REASONABLE DETAIL, THE EVENT REQUIRING SUCH ADJUSTMENT AND THE METHOD
BY WHICH SUCH ADJUSTMENT WAS CALCULATED (INCLUDING, IF APPLICABLE, A DESCRIPTION
OF THE BASIS ON WHICH THE BOARD DETERMINED THE FAIR MARKET VALUE OF ANY
EVIDENCES OF INDEBTEDNESS, SECURITIES OR OTHER PROPERTY OR ASSETS, AND ATTACHING
A BOARD RESOLUTION EVIDENCING SUCH DETERMINATION), AND SPECIFYING THE NUMBER OF
SHARES OF COMMON STOCK PURCHASABLE UPON EXERCISE OF WARRANTS AFTER GIVING EFFECT
TO SUCH ADJUSTMENT.

 

204

 

 

 

SECTION 4.7. COMMON STOCK.  FOR PURPOSES OF THIS ARTICLE 4, THE TERM “COMMON
STOCK” INCLUDES ANY STOCK OF ANY CLASS OF THE COMPANY WHICH HAS NO PREFERENCE IN
RESPECT OF DIVIDENDS OR OF AMOUNTS PAYABLE IN THE EVENT OF ANY VOLUNTARY OR
INVOLUNTARY LIQUIDATION, DISSOLUTION OR WINDING-UP OF THE COMPANY AND WHICH IS
NOT SUBJECT TO REDEMPTION BY THE COMPANY.  HOWEVER, SUBJECT TO SECTION 4.9
HEREOF, SHARES ISSUABLE UPON EXERCISE OF THE WARRANTS SHALL INCLUDE ONLY SHARES
OF THE CLASS DESIGNATED AS COMMON STOCK ON THE DATE OF THIS AGREEMENT OR SHARES
OF ANY OTHER CLASS OR CLASSES RESULTING FROM ANY RECLASSIFICATION OR CHANGE OF
SUCH COMMON STOCK AND WHICH HAVE NO PREFERENCE IN RESPECT OF DIVIDENDS OR OF
AMOUNTS PAYABLE IN THE EVENT OF ANY VOLUNTARY OR INVOLUNTARY LIQUIDATION,
DISSOLUTION OR WINDING-UP OF THE COMPANY AND WHICH ARE NOT SUBJECT TO REDEMPTION
BY THE COMPANY; PROVIDED THAT, IF AT ANY TIME THERE SHALL BE MORE THAN ONE SUCH
RESULTING CLASS, THE SHARES OF EACH SUCH CLASS THEN SO ISSUABLE UPON EXERCISE OF
THE WARRANTS SHALL BE SUBSTANTIALLY IN THE PROPORTION WHICH THE TOTAL NUMBER OF
SHARES OF SUCH CLASS RESULTING FROM SUCH RECLASSIFICATION OR CHANGE BEARS TO THE
TOTAL NUMBER OF SHARES OF ALL SUCH CLASSES RESULTING FROM SUCH RECLASSIFICATIONS
OR CHANGES.

 

205

 

 

 

SECTION 4.8. NOTICE OF CERTAIN TRANSACTIONS.  IN THE EVENT THAT THE COMPANY
SHALL PROPOSE TO (A) PAY ANY DIVIDEND OR MAKE ANY OTHER DISTRIBUTION ON THE
COMMON STOCK, WHETHER IN CASH, COMMON STOCK, OTHER CAPITAL STOCK OR SECURITIES,
INCLUDING, WITHOUT LIMITATION, RIGHTS, OPTIONS, WARRANTS OR CONVERTIBLE OR
EXCHANGEABLE SECURITIES, EVIDENCES OF INDEBTEDNESS OR OTHER PROPERTY OR ASSETS,
(B) EFFECT ANY SUBDIVISION, COMBINATION, RECLASSIFICATION OR OTHER CHANGE OF ITS
COMMON STOCK, (C) EFFECT ANY TENDER OFFER, EXCHANGE OFFER OR OPEN MARKET
REPURCHASE PROGRAM, IN ANY CASE INVOLVING MORE THAN TWO PERCENT (2%) OF ITS
OUTSTANDING COMMON STOCK, (D) EFFECT ANY COMBINATION OR (E) EFFECT THE VOLUNTARY
OR INVOLUNTARY DISSOLUTION, LIQUIDATION OR WINDING-UP OF THE

 

 

 

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COMPANY, THE COMPANY SHALL DELIVER WRITTEN NOTICE THEREOF TO EACH HOLDER, AT
LEAST TEN (10) BUSINESS DAYS PRIOR TO THE APPLICABLE RECORD DATE HEREINAFTER
SPECIFIED, OR, IN THE CASE OF EVENTS FOR WHICH THERE IS NO RECORD DATE, AT LEAST
TEN (10) BUSINESS DAYS PRIOR TO THE EFFECTIVE DATE OF SUCH EVENT OR THE
COMMENCEMENT OF SUCH TENDER OFFER, EXCHANGE OFFER, OR REPURCHASE PROGRAM.  ANY
WRITTEN NOTICE PROVIDED PURSUANT TO THIS SECTION 4.8 SHALL STATE (I) THE DATE AS
OF WHICH THE HOLDERS OF RECORD OF THE COMMON STOCK ARE ENTITLED TO RECEIVE ANY
SUCH COMMON STOCK, OTHER CAPITAL STOCK OR SECURITIES, RIGHTS, OPTIONS, WARRANTS
OR CONVERTIBLE OR EXCHANGEABLE SECURITIES, EVIDENCES OF INDEBTEDNESS OR OTHER
PROPERTY OR ASSETS, (II) THE COMMENCEMENT DATE OF ANY TENDER OFFER, EXCHANGE
OFFER OR REPURCHASE PROGRAM FOR THE COMMON STOCK OR (III) THE DATE ON WHICH ANY
SUCH COMBINATION, DISSOLUTION, LIQUIDATION OR WINDING-UP IS EXPECTED TO BECOME
EFFECTIVE OR CONSUMMATED, AND THE DATE AS OF WHICH IT IS EXPECTED THAT HOLDERS
OF RECORD OF COMMON STOCK SHALL BE ENTITLED TO EXCHANGE SUCH SHARES FOR
SECURITIES OR OTHER PROPERTY, IF ANY, DELIVERABLE UPON SUCH COMBINATION,
DISSOLUTION, LIQUIDATION OR WINDING-UP.  THE FAILURE TO GIVE THE NOTICE REQUIRED
BY THIS SECTION 4.8 OR ANY DEFECT THEREIN SHALL NOT AFFECT THE LEGALITY OR
VALIDITY OF ANY DIVIDEND, DISTRIBUTION, ISSUANCE, RIGHT, OPTION, WARRANT,
SECURITY, TENDER OFFER, EXCHANGE OFFER, REPURCHASE PROGRAM, COMBINATION,
RECLASSIFICATION, DISSOLUTION, LIQUIDATION OR WINDING-UP, OR THE VOTE UPON ANY
ACTION.

 

205

 

 

 

SECTION 4.9. ADJUSTMENT TO WARRANT CERTIFICATE. THE FORM OF WARRANT CERTIFICATE
NEED NOT BE CHANGED BECAUSE OF ANY ADJUSTMENT MADE PURSUANT TO THIS ARTICLE 4,
AND WARRANT CERTIFICATES ISSUED AFTER SUCH ADJUSTMENT MAY STATE THE SAME NUMBER
OF SHARES OF COMMON STOCK AS ARE STATED IN ANY WARRANT CERTIFICATES ISSUED PRIOR
TO THE ADJUSTMENT. THE COMPANY, HOWEVER, MAY AT ANY TIME IN ITS SOLE DISCRETION
MAKE ANY CHANGE IN THE FORM OF WARRANT CERTIFICATE THAT IT MAY DEEM APPROPRIATE
TO GIVE EFFECT TO SUCH ADJUSTMENTS AND THAT DOES NOT OTHERWISE AFFECT THE
SUBSTANCE OF THE WARRANT CERTIFICATE, AND ANY WARRANT CERTIFICATE THEREAFTER
ISSUED, WHETHER IN EXCHANGE OR SUBSTITUTION FOR AN OUTSTANDING WARRANT
CERTIFICATE OR OTHERWISE, MAY BE IN THE FORM AS SO CHANGED.

 

205

 

 

 

SECTION 4.10. ADJUSTMENTS OR ISSUANCES DEFERRED/ADJUSTMENTS NOT REQUIRED.

 

206

 

Confidential materials omitted and filed separately with the Secutities and
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ARTICLE 5.

 

REPRESENTATIONS AND AGREEMENT OF THE COMPANY

 

ARTICLE 6.

 

MISCELLANEOUS

 

 

 

SECTION 6.1. PERSONS BENEFITING. NOTHING IN THIS AGREEMENT IS INTENDED OR SHALL
BE CONSTRUED TO CONFER UPON ANY PERSON OTHER THAN THE COMPANY AND THE HOLDERS
ANY LEGAL OR EQUITABLE RIGHT, REMEDY OR CLAIM UNDER OR BY REASON OF THIS
AGREEMENT OR ANY PART HEREOF, AND THIS AGREEMENT SHALL BE FOR THE SOLE AND
EXCLUSIVE BENEFIT OF THE COMPANY AND THE HOLDERS.

 

207

 

 

 

SECTION 6.2. RIGHTS OF HOLDERS.  EXCEPT AS OTHERWISE SPECIFICALLY REQUIRED
HEREIN, HOLDERS OF UNEXERCISED WARRANTS ARE NOT ENTITLED TO (A) RECEIVE
DIVIDENDS OR OTHER DISTRIBUTIONS FROM THE COMPANY, (B) RECEIVE NOTICE OF OR VOTE
AT ANY MEETING OF THE STOCKHOLDERS OF THE COMPANY, (C) CONSENT TO ANY ACTION OF
THE STOCKHOLDERS OF THE COMPANY, (D) RECEIVE NOTICE OF ANY OTHER PROCEEDINGS OF
THE COMPANY OR (E) EXERCISE ANY OTHER RIGHTS AS STOCKHOLDERS OF THE COMPANY.

 

207

 

 

 

SECTION 6.3. AMENDMENT.  THIS AGREEMENT MAY BE AMENDED BY THE COMPANY AND THE
INITIAL HOLDER WITHOUT THE CONSENT OF ANY OTHER HOLDER FOR THE PURPOSE OF CURING
ANY AMBIGUITY, OR CURING, CORRECTING OR SUPPLEMENTING ANY DEFECTIVE PROVISION
CONTAINED HEREIN OR MAKING ANY OTHER PROVISIONS WITH RESPECT TO MATTERS OR
QUESTIONS ARISING UNDER THIS AGREEMENT AS THE COMPANY AND THE INITIAL HOLDER
MAY DEEM NECESSARY OR DESIRABLE; PROVIDED, HOWEVER, THAT SUCH ACTION SHALL NOT
AFFECT ADVERSELY THE RIGHTS OF ANY OTHER HOLDER.  ANY AMENDMENT OR SUPPLEMENT TO
THIS AGREEMENT (INCLUDING ANY EXHIBIT HERETO) THAT HAS OR WOULD HAVE AN ADVERSE
EFFECT ON THE INTERESTS OF THE HOLDERS SHALL REQUIRE THE WRITTEN CONSENT OF THE
REQUISITE HOLDERS.  THE CONSENT OF EACH HOLDER AFFECTED SHALL BE REQUIRED FOR
ANY AMENDMENT PURSUANT TO WHICH THE EXERCISE PRICE WOULD BE INCREASED OR THE
EXERCISE RATE WOULD BE DECREASED (OTHER THAN PURSUANT TO ADJUSTMENTS PROVIDED
HEREIN).  IN DETERMINING WHETHER THE HOLDERS OF THE REQUIRED NUMBER OF WARRANTS
HAVE CONCURRED IN ANY DIRECTION, WAIVER OR CONSENT, WARRANTS OWNED BY THE
COMPANY OR ANY OF ITS AFFILIATES SHALL BE DISREGARDED AND DEEMED NOT TO BE
OUTSTANDING.

 

208

 

 

 

SECTION 6.4. NOTICES.  ALL NOTICES, CONSENTS, APPROVALS, REPORTS, DESIGNATIONS,
REQUESTS, WAIVERS, ELECTIONS AND OTHER COMMUNICATIONS AUTHORIZED OR REQUIRED TO
BE GIVEN PURSUANT TO THIS AGREEMENT SHALL BE GIVEN IN WRITING AND EITHER
PERSONALLY DELIVERED TO THE PARTY TO WHOM IT IS GIVEN OR DELIVERED BY AN
ESTABLISHED DELIVERY SERVICE BY WHICH RECEIPTS ARE GIVEN OR MAILED BY REGISTERED
OR CERTIFIED MAIL, POSTAGE PREPAID, OR SENT BY FACSIMILE OR ELECTRONIC MAIL WITH
A COPY SENT ON THE FOLLOWING BUSINESS DAY BY ONE OF THE OTHER METHODS OF GIVING
NOTICE

 

 

 

Confidential materials omitted and filed separately with the Secutities and
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DESCRIBED HEREIN, ADDRESSED TO THE PARTY AT ITS ADDRESS LISTED BELOW:

 

208

 

 

 

SECTION 6.5. GOVERNING LAW.  THIS AGREEMENT AND THE WARRANT CERTIFICATES SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK (WITHOUT GIVING EFFECT TO ANY CONFLICT OF LAW PRINCIPLES THAT WOULD REQUIRE
THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION).

 

210

 

 

 

SECTION 6.6. JURISDICTION; WAIVER OF TRIAL BY JURY.  IN CONNECTION WITH THE
ADJUDICATION OF ANY DISPUTES RELATING TO THIS AGREEMENT OR THE WARRANTS, EACH
PARTY HEREBY IRREVOCABLY (A) SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE
SUPREME COURT OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY AND OF THE
UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK; PROVIDED THAT
EACH PARTY SUBMITS TO THE JURISDICTION OF ANY OTHER COURT IN WHICH A CLAIM
RELATING TO THIS AGREEMENT OR THE WARRANTS IS BROUGHT BY ANY THIRD PARTY AGAINST
THE OTHER PARTY; (B) WAIVES, AND AGREES NOT TO ASSERT, (1) ANY CLAIM THAT IT IS
NOT SUBJECT TO THE JURISDICTION OF ANY SUCH COURT OR THAT SUCH PROCEEDING HAS
BEEN COMMENCED IN AN IMPROPER OR INCONVENIENT FORUM AND (2) ANY RIGHT IT
MAY HAVE TO TRIAL BY JURY; AND (C) AGREES THAT SERVICE OF ANY PROCESS, SUMMONS,
NOTICE OR DOCUMENT BY U.S. REGISTERED MAIL TO SUCH PARTY’S ADDRESS AS PROVIDED
HEREIN SHALL BE EFFECTIVE FOR ANY ACTION, SUIT OR PROCEEDING WITH RESPECT TO ANY
MATTER FOR WHICH IT HAS SUBMITTED TO JURISDICTION HEREBY.  A JUDGMENT IN ANY
SUCH PROCEEDING MAY BE ENFORCED IN ANY OTHER COURTS TO WHOSE JURISDICTION THE
APPLICABLE PARTY MAY BE SUBJECT.  EACH PARTY (X) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY PARTY HAS REPRESENTED, EXPRESSLY OR
OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO
ENFORCE THE FOREGOING WAIVER OF A RIGHT TO A JURY TRIAL AND (Y) ACKNOWLEDGES
THAT IT AND THE OTHER PARTY HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS, AGREEMENTS AND CERTIFICATIONS IN THIS
SECTION.

 

210

 

 

 

SECTION 6.7. SUCCESSORS.  ALL REPRESENTATIONS, WARRANTIES, COVENANTS AND
AGREEMENTS CONTAINED IN THIS AGREEMENT AND THE WARRANT CERTIFICATE BY OR FOR THE
BENEFIT OF THE COMPANY AND THE HOLDERS SHALL INURE TO THE BENEFIT OF, AND SHALL
BIND, THEIR RESPECTIVE SUCCESSORS AND ASSIGNS.

 

211

 

 

 

SECTION 6.8. COUNTERPARTS .  THIS AGREEMENT MAY BE EXECUTED IN ANY NUMBER OF
COUNTERPARTS AND EACH OF SUCH COUNTERPARTS SHALL FOR ALL PURPOSES BE DEEMED TO
BE AN ORIGINAL, AND ALL SUCH COUNTERPARTS SHALL TOGETHER CONSTITUTE BUT ONE AND
THE SAME INSTRUMENT.

 

211

 

 

 

SECTION 6.9. TABLE OF CONTENTS.  THE TABLE OF CONTENTS AND HEADINGS OF THE
ARTICLES AND SECTIONS OF THIS AGREEMENT HAVE BEEN INSERTED FOR CONVENIENCE OF
REFERENCE ONLY, ARE NOT INTENDED TO BE

 

 

 

Confidential materials omitted and filed separately with the Secutities and
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CONSIDERED A PART HEREOF AND SHALL NOT MODIFY OR RESTRICT ANY OF THE TERMS OR
PROVISIONS HEREOF.

 

211

 

 

 

SECTION 6.10. SEVERABILITY.  THE PROVISIONS OF THIS AGREEMENT ARE SEVERABLE, AND
IF ANY CLAUSE OR PROVISION SHALL BE HELD INVALID, ILLEGAL OR UNENFORCEABLE IN
WHOLE OR IN PART IN ANY JURISDICTION, THEN SUCH INVALIDITY OR UNENFORCEABILITY
SHALL AFFECT IN THAT JURISDICTION ONLY SUCH CLAUSE OR PROVISION, OR
PART THEREOF, AND SHALL NOT IN ANY MANNER AFFECT SUCH CLAUSE OR PROVISION IN ANY
OTHER JURISDICTION OR ANY OTHER CLAUSE OR PROVISION OF THIS AGREEMENT IN ANY
JURISDICTION.

 

211

 

 

 

SECTION 6.11. REMEDIES.  THE RIGHTS AND REMEDIES PROVIDED HEREIN SHALL BE
CUMULATIVE AND NOT EXCLUSIVE OF ANY OTHER RIGHTS OR REMEDIES AVAILABLE.  THE
COMPANY AND THE INITIAL HOLDER ACKNOWLEDGE AND AGREE THAT THE REMEDY AT LAW FOR
ANY BREACH OR THREATENED BREACH BY THE OTHER PARTY IN THE PERFORMANCE OR
COMPLIANCE WITH ANY OF THE TERMS OF THIS AGREEMENT OR THE WARRANTS IS NOT AND
WOULD NOT BE ADEQUATE AND THAT, TO THE FULLEST EXTENT PERMITTED BY LAW, SUCH
TERMS MAY BE SPECIFICALLY ENFORCED BY A DECREE FOR SPECIFIC PERFORMANCE,
INJUNCTIVE RELIEF OR OTHER EQUITABLE REMEDIES OR BY AN INJUNCTION AGAINST
VIOLATION OF ANY SUCH TERMS OR OTHERWISE AND EACH OF THE COMPANY AND THE INITIAL
HOLDER AGREES NOT TO ALLEGE, AND HEREBY WAIVES THE DEFENSE, THAT AN ADEQUATE
REMEDY EXISTS AT LAW.

 

211

 

 

EXHIBIT A

-

Form of Warrant Certificate

EXHIBIT B

-

Form of Transfer Certificate

EXHIBIT C

-

Form of Certification

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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WARRANT AGREEMENT, dated as of August 5, 2008 (this “Agreement”), between DYAX
CORP., a Delaware corporation (the “Company”), and COWEN HEALTHCARE ROYALTY
PARTNERS, L.P., a Delaware limited partnership (the “Initial Holder”).

 

RECITALS

 

WHEREAS, it is a condition to the obligations of the Initial Holder under the
Loan Agreement, dated as of August 5, 2008, between the Company and the Initial
Holder (the “Loan Agreement”), that the Company execute and deliver this Warrant
Agreement and issue to the Initial Holder the Warrants (as defined below); and

 

WHEREAS, the Company and the Initial Holder desire to enter into this Agreement
in order to set forth the terms and conditions of the Warrants.

 

NOW, THEREFORE, in consideration of the premises and mutual covenants contained
herein, the parties hereto hereby agree as follows:

 

ARTICLE 1.

DEFINED TERMS

 

SECTION 1.1.  Definitions.

 

All terms defined in the Loan Agreement shall have such defined meanings when
used herein or in any Exhibit hereto unless otherwise defined herein or
therein.  As used in this Agreement, the following terms shall have the
following meanings:

 

“Board” means the Board of Directors of the Company or any committee thereof
duly authorized to act on behalf of such Board of Directors.

 

“Cashless Exercise Ratio” means a fraction, (a) the numerator of which is the
excess of (i) the Current Market Value per share of Common Stock on the date of
exercise over (ii) the Exercise Price per share on the date of exercise and
(b) the denominator of which is the Current Market Value per share of the Common
Stock on the date of exercise.

 

“Common Stock” means the common stock, $.01 par value per share, of the Company.

 

“Expiration Date” means August 5, 2016.

 

“Fair Market Value” means, as of any date of determination, the price that a
willing buyer would pay to a willing seller for the Common Stock, in an
arm’s-length transaction, with neither party being under any immediate
obligation or need to consummate the transaction, it being understood that the
buyer and seller, in arriving at such price, would each consider, among other
factors customarily considered by valuation professionals, the past and
prospective earnings of the Company, comparable stock market valuations, and the
absence or existence of liquidity for the Common Stock.

 

Confidential materials omitted and filed separately with the Secutities and
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“Holder” means the duly registered holder of a Warrant under the terms of this
Warrant Agreement.

 

“Issuance Date” means, as to any Warrant, the date on which such Warrant is
issued in accordance with Section 3.1 hereof.

 

“Officer” means the Chief Executive Officer, the Chief Financial Officer, any
Executive Vice President or the Treasurer of the Company.

 

“Rule 144” means Rule 144 promulgated under the Securities Act, as such Rule may
be amended from time to time, or any successor rule or regulation hereinafter
adopted by the SEC.

 

“SEC” means the Securities and Exchange Commission (or any successor thereto).

 

“Securities Act” means the Securities Act of 1933, as amended.

 

“Trading Day” means any day on which trading in equity securities is generally
conducted on the principal Trading Market on which the Common Stock is then
listed or included.

 

“Trading Market” means the American Stock Exchange, the Nasdaq Global Market,
the Nasdaq Global Select Market, The New York Stock Exchange, Inc. and the OTC
Bulletin Board.

 

“Transfer Restricted Securities” means the Warrants and the Warrant Shares which
may be issued to Holders upon exercise of the Warrants, whether or not such
exercise has been effected.  Each such security shall cease to be a Transfer
Restricted Security when the legend set forth in Section 2.5 hereof is, or may
be, removed pursuant to Section 2.4(b)(iv) hereof.

 

“Warrant” means a warrant to purchase one share of Common Stock.  The Warrants
to be issued on each Issuance Date shall be evidenced by Warrant Certificates.

 

“Warrant Certificates” means the certificates evidencing the Warrants to be
delivered pursuant to this Agreement, substantially in the form of Exhibit A
hereto.

 

“Warrant Shares” means the shares of Common Stock to be issued and received, or
issued and received, as the case may be, upon exercise of the Warrants.

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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SECTION 1.2.  Other Definitions.

 

Term

 

Defined in
Section

“Agreement”

 

Preamble

“Cashless Exercise”

 

3.5

“Certificate Register”

 

2.3

“Combination”

 

4.3

“Company”

 

Preamble

“Current Market Value”

 

4.4

“Exercise Commencement Date”

 

3.3(a)

“Exercise Date”

 

3.5

“Exercise Price”

 

3.2

“Exercise Rate”

 

4.1

“Independent Financial Expert

 

5.1(a)

“Initial Holder”

 

Preamble

“Loan Agreement”

 

Recitals

“Time of Determination”

 

4.4

“Transfer Agent”

 

3.6

 

SECTION 1.3.  Terms Generally.  The definitions of terms herein shall apply
equally to the singular and plural forms of the terms defined.  Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms.  The words “include,” “includes” and “including”
shall be deemed to be followed by the phrase “without limitation.”  The word
“will” shall be construed to have the same meaning and effect as the word
“shall.”  Unless the context requires otherwise, (a) any definition of or
reference to the Loan Agreement or any other agreement, instrument or other
document herein shall be construed as referring to such agreement, instrument or
other document as from time to time amended, supplemented or otherwise modified
(subject to any restrictions on such amendments, supplements or modifications
set forth herein), (b) any reference herein to any Person shall be construed to
include such Person’s successors and assigns, (c) the words “herein,” “hereof”
and “hereunder,” and words of similar import, shall be construed to refer to
this Agreement in its entirety and not to any particular provision hereof,
(d) all references herein to Articles, Sections and Exhibits shall be construed
to refer to Articles and Sections of, and Exhibits to, this Agreement, (e) any
reference to any law or regulation herein shall refer to such law or regulation
as amended, modified or supplemented from time to time and (f) the words “asset”
and “property” shall be construed to have the same meaning and effect and to
refer to any and all tangible and intangible assets and properties, including
cash, securities, accounts and contract rights.

 

ARTICLE 2.

WARRANT CERTIFICATES

 

SECTION 2.1.  Issuance and Dating.  The Warrant Certificates will be issued in
registered form as definitive Warrant Certificates, substantially in the form of
Exhibit A hereto (subject to Section 4.9 hereof), which is hereby incorporated
in and expressly made a part of this

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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Agreement.  Except for Warrant Certificates delivered pursuant to
Section 2.4(b)(iv) hereof, the Warrant Certificates shall bear the legend
required by Section 2.5 hereof.  Each Warrant shall be dated the date of its
execution by the Company.  The terms of the Warrants set forth in Exhibit A are
part of the terms of this Agreement.

 

SECTION 2.2.  Execution and Countersignature.  The Warrants to be issued
pursuant to this Agreement shall be executed on behalf of the Company by manual
signature by one Officer.  The Warrant Certificates shall be delivered in
accordance with Section 2.1 hereof.

 

SECTION 2.3.  Certificate Register.  The Company shall keep a register (the
“Certificate Register”) of the Warrant Certificates and of their transfer and
exchange.  The Certificate Register shall show the names and addresses of the
respective Holders and the date and number of Warrants evidenced on the face of
each of the Warrant Certificates.  The Company may deem and treat the Person in
whose name a Warrant Certificate is registered as the absolute owner of such
Warrant Certificate for all purposes whatsoever and the Company shall not be
affected by notice to the contrary.

 

SECTION 2.4.  Transfer and Exchange.

 

(a)           When Warrants are presented to the Company with a request to
register the transfer of such Warrants or to exchange such Warrants for an equal
number of Warrants of other authorized denominations, the Company shall register
the transfer or make the exchange; provided, however, that the Warrant
Certificates representing such Warrants surrendered for transfer or exchange:

 

(i)            shall be duly endorsed or accompanied by a written instrument of
transfer in form reasonably satisfactory to the Company, duly executed by the
Holder thereof; and

 

(ii)           in the case of Warrants that are Transfer Restricted Securities,
shall be accompanied by the following additional information and documents:

 

(A)          a certificate from such Holder in substantially the form of
Exhibit B hereto certifying that:

 

(1)           such securities are being delivered for registration in the name
of such Holder without transfer;

 

(2)           such securities are being transferred to the Company;

 

(3)           such securities are being transferred pursuant to an effective
registration statement under the Securities Act; or

 

(4)           such securities are being transferred (w) to a “qualified
institutional buyer”, as defined in Rule 144A under the Securities Act pursuant
to such Rule 144A, (x) in an offshore transaction in accordance with Rule 904
under the Securities Act, (y) in a transaction meeting the requirements of
Rule 144 under the Securities Act or (z) pursuant to another

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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available exemption from the registration requirements of the Securities Act;
and

 

(B)           provided, however, that in the case of any transfer described
under clause (a)(ii)(A)(4) of this Section 2.4, the certificate will be
accompanied by an opinion of counsel reasonably acceptable to the Company that
the transfer is exempt from the registration requirements of the Securities Act.

 

(b)           (i)            To permit registrations of transfers and exchanges,
the Company shall execute Warrant Certificates as required pursuant to the
provisions of this Section 2.4.

 

(ii)           All Warrant Certificates issued upon any registration of transfer
or exchange of Warrants shall be the valid obligations of the Company, entitled
to the same benefits under this Agreement as the Warrant Certificates
surrendered upon such registration of transfer or exchange.

 

(iii)          No service charge shall be made by the Company to any Holder for
any registration of transfer or exchange upon surrender of any Warrant
Certificate at the principal office of the Company.  The Company will pay all
documentary stamp taxes attributable to the issuance of the Warrants and the
Warrant Shares upon the exercise of Warrants; provided, however, that the
Company shall not be required to pay any tax or taxes which may be payable in
respect of any transfer involved in the issuance of any Warrant Certificates or
any certificates for Warrant Shares in a name other than the Holder of such
Warrant Certificate.

 

(iv)          Upon any sale or transfer of Warrants pursuant to an effective
registration statement under the Securities Act, in accordance with Rule 144
under the Securities Act or pursuant to an opinion of counsel reasonably
satisfactory to the Company that no legend is required, the Company shall permit
the Holder thereof to exchange such Warrants for Warrants represented by Warrant
Certificates that do not bear the legend set forth in Section 2.5(a) hereof and
rescind any restriction on the transfer of such Warrants; provided, however,
that the Warrant Certificate shall continue to bear a legend with respect to
restrictions on the transfer of the Warrant Shares.

 

SECTION 2.5.  Legends.

 

(a)           Except for Warrant Certificates delivered pursuant to
Section 2.4(b)(iv) hereof, each Warrant Certificate evidencing the Warrants (and
all Warrant Certificates issued in exchange therefor or substitution thereof)
shall bear a legend in substantially the following form:

 

“THE WARRANTS AND THE WARRANT SHARES (THE “SECURITIES”) HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY
STATE SECURITIES LAWS.  NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION
HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR
OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH
TRANSACTION IS EXEMPT FROM,

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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OR NOT SUBJECT TO, REGISTRATION AND SUBJECT TO COMPLIANCE WITH OTHER APPLICABLE
LAWS.  THE HOLDER HEREOF, BY ITS ACCEPTANCE HEREOF, AGREES TO OFFER, SELL OR
OTHERWISE TRANSFER SUCH SECURITY, UNLESS PREVIOUSLY REGISTERED UNDER THE
SECURITIES ACT, ONLY (A) TO THE COMPANY; (B) PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF
AVAILABLE); (C) TO A PERSON IT REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL
BUYER” AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS
OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE
IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A; (D) PURSUANT
TO AN OFFSHORE TRANSACTION COMPLYING WITH RULE 904 OF REGULATION S UNDER THE
SECURITIES ACT; OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.”

 

(b)           Each certificate representing the Warrant Shares (unless such
Warrant Shares are not Transfer Restricted Securities) shall bear a legend in
substantially the following form:

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL SUCH SECURITIES
ARE REGISTERED UNDER SUCH ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY IS OBTAINED TO THE EFFECT THAT SUCH REGISTRATION IS NOT REQUIRED.

 

SECTION 2.6.  Replacement Certificates.  If a mutilated Warrant Certificate is
surrendered to the Warrant Agent or if the Holder of a Warrant Certificate
claims that the Warrant Certificate has been lost, destroyed or wrongfully
taken, the Company shall issue a replacement Warrant Certificate.  If required
by the Company, such Holder shall furnish an indemnity bond (or, in the case of
the Initial Holder, an unsecured indemnity) sufficient in the reasonable
judgment of the Company to protect the Company from any loss which it may suffer
if a Warrant Certificate is replaced.  The Company may charge the Holder for its
reasonable expenses in replacing a Warrant Certificate.  Every replacement
Warrant Certificate is an additional obligation of the Company.

 

SECTION 2.7.  Cancellation.

 

(a)           In the event the Company shall purchase or otherwise acquire
Warrants, the Warrant Certificates representing such Warrants shall thereupon be
cancelled.

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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(b)           The Company shall cancel and destroy all Warrant Certificates
surrendered for transfer, exchange, replacement, exercise or cancellation.  The
Company may not issue new Warrant Certificates to replace Warrant Certificates
to the extent they evidence Warrants which have been exercised or Warrants which
the Company has purchased or otherwise acquired.

 

ARTICLE 3.

INITIAL ISSUANCE AND EXERCISE TERMS

 

SECTION 3.1.  Initial Issuance of Warrants.  On the Closing Date,
(i) contemporaneous with, and as a condition to, the funding by the Initial
Holder of the Loan and (ii) subject to receipt by the Company of a Certificate
from the Initial Holder, substantially in the form of Exhibit C hereto, the
Company shall execute and deliver to the Initial Holder a Warrant Certificate
representing 250,000 Warrants registered in the name of the Initial Holder.

 

SECTION 3.2.  Exercise Price.  Each Warrant shall entitle the Holder thereof to
purchase one share of Common Stock (as the same may be adjusted pursuant to
Article 4) for a per share exercise price of $5.50 (as the same may be adjusted
pursuant to Article 4, the “Exercise Price”).

 

SECTION 3.3.  Exercise Period.

 

(a)           Subject to the terms and conditions set forth herein, each Warrant
shall be exercisable at any time or from time to time on or after the earlier to
occur of (i) August 5, 2009 and (ii) the date on which the Company delivers or
is required to deliver to the Holders written notice of a Combination pursuant
to clause (d) of Section 4.8 hereof (such date, the “Exercise Commencement
Date”).

 

(b)           No Warrant shall be exercisable after 6:00 p.m., New York time, on
the Expiration Date.

 

SECTION 3.4.  Expiration.  A Warrant shall terminate and become void as of the
earlier of (a) 6:00 p.m., New York time, on the Expiration Date and (b) the time
and date such Warrant is exercised.  The Warrants shall terminate and become
void after the Expiration Date.

 

SECTION 3.5.  Manner of Exercise.  Subject to Section 3.3 hereof, Warrants may
be exercised upon (a) surrender to the Company of the Warrant
Certificate(s) representing such Warrants, together with the form of election to
purchase Warrant Shares on the reverse thereof duly completed and executed by
the Holder thereof and (b) payment to the Company of the Exercise Price for the
number of Warrant Shares in respect of which such Warrant is then exercised
(each date on which such exercise occurs, an “Exercise Date”).  Such payment of
the Exercise Price shall be made (i) in cash or by certified or official bank
check payable to the order of the Company or by wire transfer of funds to an
account designated by the Company for such purpose or (ii) by the surrender
(which surrender shall be evidenced by cancellation of the number of Warrants
represented by any Warrant Certificate presented in connection with a Cashless
Exercise) of a Warrant or Warrants (represented by one or more relevant Warrant
Certificates), and without the payment of the Exercise Price in cash, in
exchange for the issuance of such number of shares of Common Stock equal to the
product of (1) the number of shares of Common Stock for which such Warrant would
otherwise be nominally exercisable immediately prior to such exercise

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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if payment of the Exercise Price were being made in cash pursuant to clause
(i) of this Section 3.5 and (2) the Cashless Exercise Ratio.  An exercise of a
Warrant in accordance with the immediately preceding sentence is herein called a
“Cashless Exercise”.  For U.S. tax purposes, the Company and the Initial Holder
agree to treat an exercise of Warrants pursuant to a Cashless Exercise as a
“recapitalization” within the meaning of Section 368(a)(1)(E) of the Internal
Revenue Code of 1986, as amended.  All provisions of this Agreement shall be
applicable with respect to an exercise of Warrants pursuant to a Cashless
Exercise for less than the full number of Warrants represented thereby.  The
rights represented by the Warrants shall be exercisable at the election of the
Holders thereof either in full at any time or in part from time to time during
the period commencing on the Exercise Commencement Date and ending at 6:00 p.m.,
New York time, on the Expiration Date and in the event that a Warrant
Certificate is surrendered for exercise in respect of less than all the Warrants
represented by such Warrant Certificate at any time prior to the Expiration Date
a new Warrant Certificate exercisable for the remaining Warrants will be duly
executed and promptly issued by the Company in accordance with this Agreement.

 

SECTION 3.6.  Issuance of Warrant Shares.  Upon the surrender of Warrant
Certificates and payment of the per share Exercise Price (either in cash or by
Cashless Exercise), as set forth in Section 3.5 hereof, the Company shall within
three Business Days issue and cause the transfer agent for the Common Stock
(“Transfer Agent”) to countersign and deliver to or upon the written order of
the Holder and in such name or names as the Holder may designate, a certificate
or certificates for the number of full Warrant Shares so purchased upon the
exercise of such Warrants or other securities or property to which it is
entitled, registered or otherwise to the Person or Persons entitled to receive
the same, together with cash as provided in Section 3.7 hereof in respect of any
fractional Warrant Shares otherwise issuable upon such exercise.  Such
certificate or certificates shall be deemed to have been issued and any Person
so designated to be named therein shall be deemed to have become a holder of
record of such Warrant Shares as of the date of the surrender of such Warrant
Certificates and payment of the per share Exercise Price (either in cash or by
Cashless Exercise).

 

SECTION 3.7.  Fractional Warrant Shares.  No fractional Warrant Shares shall be
issued on exercise of Warrants.  If more than one Warrant shall be exercised at
the same time by the same Holder, the number of full Warrant Shares which shall
be issuable upon such exercise shall be computed on the basis of the aggregate
number of Warrant Shares purchasable on exercise of the Warrants so exercised. 
If any fraction of a Warrant Share would, except for the provisions of this
Section 3.7, be issuable on the exercise of any Warrant (or specified portion
thereof), the Company shall notify the Holder exercising the Warrant in writing
of the amount to be paid in lieu of the fraction of a Warrant Share and
concurrently shall pay to such Holder an amount in cash equal to the Current
Market Value for one Warrant Share on the date the Warrant is exercised,
multiplied by such fraction, rounded up to the nearest whole cent.

 

SECTION 3.8.  Reservation of Warrant Shares.  The Company shall at all times
keep reserved out of its authorized shares of Common Stock a number of shares of
Common Stock sufficient to provide for the exercise of all outstanding Warrants
at all times until the Expiration Date, or the time at which all Warrants have
been exercised or cancelled.  All Warrant Shares that may be issued upon
exercise of Warrants shall, upon issue, be fully paid, nonassessable, free of
preemptive rights and free from all taxes, liens, charges and security interests
with respect to the issue thereof.  The Company will provide or otherwise make
available to the Transfer Agent

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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any cash which may be payable as provided in Section 3.6 hereof.  The Company
will furnish to the Transfer Agent a copy of all notices of adjustments and
certificates related thereto transmitted to each Holder.

 

SECTION 3.9.  Listing on Securities Exchange.  The Company will use commercially
reasonable efforts to procure, at its sole cost and expense, the listing of all
Warrant Shares (subject to issuance or notice of issuance) on all stock
exchanges on which the Common Stock then listed and to maintain such listing of
all Warrant Shares after issuance.

 

ARTICLE 4.

 

ANTIDILUTION PROVISIONS

 

SECTION 4.1.  Changes in Common Stock.  In the event that, at any time or from
time to time after the date of this Agreement, the Company shall (a) pay a
dividend or make a distribution on its Common Stock exclusively in shares of its
Common Stock, (b) subdivide its outstanding shares of Common Stock into a
greater number of shares of Common Stock or (c) combine its outstanding shares
of Common Stock into a smaller number of shares of Common Stock, then, in each
case the number of shares of Common Stock purchasable upon exercise of each
Warrant (the “Exercise Rate”) and the Exercise Price in effect immediately prior
to such action will be proportionately adjusted upon the happening of such event
so that, after giving effect to such adjustment, the Holder of each Warrant
shall be entitled to receive, upon payment of the same aggregate Exercise Price,
the number of shares of Common Stock upon exercise that such Holder would have
owned or have been entitled to receive had such Warrant been exercised
immediately prior to the happening of any of the events described in clauses
(a), (b) or (c) of this Section 4.1 (or, in the case of a dividend or
distribution of Common Stock, immediately prior to the record date therefor). 
An adjustment made pursuant to this Section 4.1 shall become effective at the
opening of business on the day immediately following the record date fixed for
determining the stockholders entitled to receive such dividend or distribution,
in the case of a dividend or distribution in shares of Common Stock, and shall
become effective at the opening of business on the day immediately following the
effective date of such subdivision or combination.

 

SECTION 4.2.  Dividends and Other Distributions.  In the event that, at any time
or from time to time after the date of this Agreement, the Company shall make or
issue, or fix a record date for the determination of stockholders entitled to
receive, a dividend or other distribution payable in securities (other than
shares of Common Stock) or in cash or other property (other than regular cash
dividends paid out of earnings or earned surplus, determined in accordance with
generally accepted accounting principles), then and in each such event, lawful
and adequate provision shall be made so that, after giving effect to the making
of such provision, the Holder of each Warrant, upon exercise of such Warrant,
shall be entitled to receive, and such Warrant shall represent the right to
receive, in addition to the number of Warrant Shares issuable thereunder, the
kind and amount of securities, cash or other property to which such Holder would
have been entitled if such Holder had exercised such Warrant immediately prior
to the happening of such event (or, in the case of a dividend or other
distribution in respect of which a record date is fixed, immediately prior to
the record date therefor) and such Holder had, during the period from and
including the effective date of such provision to and including the Exercise
Date, retained any such securities receivable during such period, giving
application to all adjustments provided for

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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in this Article 4 during such period.  A provision made pursuant to this
Section 4.2 shall become effective at the opening of business on the day
immediately following the happening of such event or, in the case of a dividend
or other distribution in respect of which a record date is fixed, at the opening
of business on the day immediately following such record date therefor.  The
foregoing provisions of this Section 4.2 shall similarly apply to successive
dividends or other distributions.

 

SECTION 4.3.  Combination.  In case, at any time, the Company shall (i) merge or
consolidate with or into any other Person (other than a merger or consolidation
in which the stockholders of the Company as of immediately prior to the
consummation of the merger or consolidation own, immediately after such merger
or consolidation, less than a majority of the outstanding Capital Stock entitled
to vote under ordinary circumstances in the election of members of the Board of
the surviving entity, (ii) sell all or substantially all of the Company’s
assets, (iii) complete any tender offer or exchange offer (whether by the
Company or another Person) pursuant to which holders of Common Stock are
permitted to tender or exchange their shares of Common Stock for other
securities, cash or other property or (iv) the Company effects any
reclassification of the Common Stock or any compulsory share exchange pursuant
to which the Common Stock is effectively converted into or exchanged for other
securities, cash or other property (other than as a result of a subdivision or
combination of shares of Common Stock covered by Section 4.1 hereof) and, in
each case the previously outstanding Common Stock shall be converted or changed
into or exchanged for different securities, interests, or other property or
assets (including cash), or any combination of the foregoing (each such
transaction being herein called a “Combination”), then, as a condition to the
consummation of such Combination, lawful and adequate provision shall be made so
that each Holder of a Warrant, upon the exercise of such Warrant at any time at
or after the consummation of such Combination, shall be entitled to receive, and
such Warrant shall thereafter represent the right to receive, in lieu of the
Common Stock issuable upon such exercise prior to such consummation, the
securities, cash or other property to which such Holder would have been entitled
upon consummation of the Combination if such Holder had exercised such Warrant
immediately prior thereto (subject to adjustments from and after the
consummation date as nearly equivalent as possible to the adjustments provided
for in this Article 4 and assuming such Holder failed to exercise any rights of
election and received per share the kind and amount of consideration receivable
per share by a plurality of non-electing shares).  The foregoing provisions of
this Section 4.3 shall similarly apply to successive Combinations.

 

SECTION 4.4.  Current Market Value.  For purposes of any computation under
Sections 3.5 and 3.7 hereof or this Article 4, the Current Market Value per
share of Common Stock (the “Current Market Value”) at any date shall be (a) for
purposes of Sections 3.5 and 3.7 hereof, the closing price of the Common Stock
on the Trading Day immediately preceding the date of exercise of the applicable
Warrant pursuant to Section 3 and (b) for purposes of this Article 4, the
arithmetic average of the daily closing prices of such Common Stock for the
shorter of (i) the twenty (20) consecutive Trading Days ending on the last full
Trading Day prior to the Time of Determination (as defined below) and (ii) the
consecutive Trading Days commencing on the date next succeeding the first public
announcement of the event giving rise to the adjustment required by this
Article 4 and ending on the Trading Day immediately prior to the Time of
Determination.  The term “Time of Determination” as used herein shall be the
earlier to occur of (A) the date as of which the Current Market Value is to be
computed and (B) if applicable, the date of commencement

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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of “ex-dividend” trading in the Common Stock relating to the event giving rise
to the adjustment required by this Article 4.  The “closing price” of the Common
Stock for any Trading Day shall be the last reported sale price, regular way, of
the Common Stock on such Trading Day or, in case no such reported sale takes
place on such Trading Day, the arithmetic average of the closing bid and closing
asked prices of the Common Stock for such Trading Day, in each case on the
principal Trading Market on which the Common Stock is then listed or included. 
Notwithstanding the foregoing, in the event that the Common Stock is not then
listed or included on a Trading Market or if, for any other reason, the Current
Market Value per share cannot be determined pursuant to the foregoing provisions
of this Section 4.4, the Current Market Value per share of Common Stock shall be
the Fair Market Value thereof and shall be determined in good faith by the
Board, with the unanimous approval of the independent directors of the Board,
not later than five (5) Business Days following the Time of Determination.  The
Company shall, promptly after such determination by the Board, deliver to each
Holder written notice of the Current Market Value per share of Common Stock, as
so determined by the Board, together with a resolution of the Board evidencing
such determination.

 

SECTION 4.5.  Certain Actions.

 

(a)           The Company shall not, directly or indirectly, by any action,
including, without limitation, reincorporation in a jurisdiction other than
Delaware, amending its certificate of incorporation or through any
consolidation, merger, reorganization, reclassification, transfer of assets,
dissolution, issue or sale of securities or any other voluntary action, avoid or
seek to avoid the observance or performance of any of the terms of this
Agreement or the Warrants, but will at all times in good faith assist in the
carrying out of all such terms and in the taking of all such action as may be
necessary or appropriate in order to protect the rights of the Holders against
dilution or other impairment.  Without limiting the generality of the foregoing,
the Company shall (i) take, at its sole cost and expense, all such action as may
be necessary or appropriate in order that the Company may validly and legally
issue Common Stock on the exercise of the Warrants from time to time outstanding
and (ii) not take any action which results in any adjustment of the number of
Warrant Shares if the total number of shares of Common Stock issuable after the
action upon the exercise of all of the Warrants would exceed the total number of
shares of Common Stock then authorized by the Company’s certificate of
incorporation and available for the purposes of issuance upon such exercise.

 

(b)           The Company shall not, directly or indirectly, (i) make any
adjustment pursuant to this Article 4 to the extent that it would result in
reducing the Exercise Price below the then par value of the Common Stock or
(ii) increase the par value of the Common Stock above its current $.01 per
share.

 

SECTION 4.6.  Notice of Adjustment.  Upon any adjustment of the Exercise Rate
and/or the Exercise Price pursuant to this Article 4, the Company shall promptly
deliver to each Holder a certificate signed by an Officer of the Company setting
forth, in reasonable detail, the event requiring such adjustment and the method
by which such adjustment was calculated (including, if applicable, a description
of the basis on which the Board determined the Fair Market Value of any
evidences of indebtedness, securities or other property or assets, and attaching
a Board resolution evidencing such determination), and specifying the number of
shares of Common Stock purchasable upon exercise of Warrants after giving effect
to such adjustment.

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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SECTION 4.7.  Common Stock.  For purposes of this Article 4, the term “Common
Stock” includes any stock of any class of the Company which has no preference in
respect of dividends or of amounts payable in the event of any voluntary or
involuntary liquidation, dissolution or winding-up of the Company and which is
not subject to redemption by the Company.  However, subject to Section 4.9
hereof, shares issuable upon exercise of the Warrants shall include only shares
of the class designated as Common Stock on the date of this Agreement or shares
of any other class or classes resulting from any reclassification or change of
such Common Stock and which have no preference in respect of dividends or of
amounts payable in the event of any voluntary or involuntary liquidation,
dissolution or winding-up of the Company and which are not subject to redemption
by the Company; provided that, if at any time there shall be more than one such
resulting class, the shares of each such class then so issuable upon exercise of
the Warrants shall be substantially in the proportion which the total number of
shares of such class resulting from such reclassification or change bears to the
total number of shares of all such classes resulting from such reclassifications
or changes.

 

SECTION 4.8.  Notice of Certain Transactions.  In the event that the Company
shall propose to (a) pay any dividend or make any other distribution on the
Common Stock, whether in cash, Common Stock, other Capital Stock or securities,
including, without limitation, rights, options, warrants or convertible or
exchangeable securities, evidences of indebtedness or other property or assets,
(b) effect any subdivision, combination, reclassification or other change of its
Common Stock, (c) effect any tender offer, exchange offer or open market
repurchase program, in any case involving more than two percent (2%) of its
outstanding Common Stock, (d) effect any Combination or (e) effect the voluntary
or involuntary dissolution, liquidation or winding-up of the Company, the
Company shall deliver written notice thereof to each Holder, at least ten
(10) Business Days prior to the applicable record date hereinafter specified,
or, in the case of events for which there is no record date, at least ten
(10) Business Days prior to the effective date of such event or the commencement
of such tender offer, exchange offer, or repurchase program.  Any written notice
provided pursuant to this Section 4.8 shall state (i) the date as of which the
holders of record of the Common Stock are entitled to receive any such Common
Stock, other Capital Stock or securities, rights, options, warrants or
convertible or exchangeable securities, evidences of indebtedness or other
property or assets, (ii) the commencement date of any tender offer, exchange
offer or repurchase program for the Common Stock or (iii) the date on which any
such Combination, dissolution, liquidation or winding-up is expected to become
effective or consummated, and the date as of which it is expected that holders
of record of Common Stock shall be entitled to exchange such shares for
securities or other property, if any, deliverable upon such Combination,
dissolution, liquidation or winding-up.  The failure to give the notice required
by this Section 4.8 or any defect therein shall not affect the legality or
validity of any dividend, distribution, issuance, right, option, warrant,
security, tender offer, exchange offer, repurchase program, Combination,
reclassification, dissolution, liquidation or winding-up, or the vote upon any
action.

 

SECTION 4.9.  Adjustment to Warrant Certificate.  The form of Warrant
Certificate need not be changed because of any adjustment made pursuant to this
Article 4, and Warrant Certificates issued after such adjustment may state the
same number of shares of Common Stock as are stated in any Warrant Certificates
issued prior to the adjustment.  The Company, however, may at any time in its
sole discretion make any change in the form of Warrant Certificate that it may
deem appropriate to give effect to such adjustments and that does not otherwise
affect the substance

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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of the Warrant Certificate, and any Warrant Certificate thereafter issued,
whether in exchange or substitution for an outstanding Warrant Certificate or
otherwise, may be in the form as so changed.

 

SECTION 4.10.  Adjustments or Issuances Deferred/Adjustments Not Required.

 

(a)           All calculations under this Article 4 shall be made to the nearest
1/1,000th of one cent or to the nearest 1/1,000th of one share, as the case may
be.

 

(b)           In any case in which this Article 4 shall require an adjustment in
the Exercise Rate or the making of a provision effective as of a record date for
a specified event, the Company may elect to defer until the occurrence of such
event (i) issuing to the Holder of any Warrant exercised after such record date
the Warrant Shares and other equity of the Company, if any, issuable upon such
exercise over and above the Warrant Shares and other equity of the Company, if
any, issuable upon such exercise on the basis of the Exercise Rate and
(ii) paying to such Holder any amount in cash in lieu of a fractional share
pursuant to Section 3.7 hereof; provided, however, that the Company shall
deliver to such Holder, upon request, a due bill or other appropriate instrument
evidencing such Holder’s right to receive such additional Warrant Shares, other
equity and cash upon the occurrence of the event requiring such adjustment.

 

(c)           Notwithstanding anything to the contrary contained in this
Article 4, no adjustment in the Exercise Rate and the Exercise Price shall be
required under clause (a) of Section 4.1 hereof if the Company issues or
distributes to each Holder, at or before the time such issuance or distribution
is made to the stockholders of the Company, the Common Stock referred to therein
which would have been distributed to such Holders had the Warrants held by such
Holder been exercised immediately prior to happening of such event or the record
date with respect thereto, as applicable.

 

ARTICLE 5.

REPRESENTATIONS AND AGREEMENT OF THE COMPANY

 

The Company represents and warrants to and agrees with the Initial Holder, as of
the date hereof, as follows:

 

(a)           The Warrants and the Warrant Shares are duly authorized and, when
issued and paid for in accordance with the terms of this Agreement, will be duly
and validly issued, fully paid and nonassessable, free and clear of all liens,
charges, security interests, encumbrances, rights of first refusal, preemptive
rights or other restrictions (except for restrictions imposed generally by
applicable securities laws).  The Company has reserved from its authorized but
unissued Common Stock a number of shares of Common Stock that is at least equal
to the maximum number of shares of Common Stock issuable pursuant to this
Agreement and the Warrants (at the Exercise Rate in effect on the Closing Date).

 

(b)           Assuming the accuracy of the Initial Holder’s representations and
warranties set forth in the certificate attached as Exhibit C hereto and
delivered by the Initial Holder pursuant to Section 3.1 hereof, no registration
under the Securities Act is required for the offer, sale, issuance and delivery
of the Warrants and the Warrant Shares by the Company to the Initial Holder

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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as contemplated hereby.  The issuance and sale of the Warrants and the Warrant
Shares do not contravene the rules and regulations of the Nasdaq Global Market.

 

(c)           Assuming that the closing price of the Company’s Common Stock on
the date hereof is equal to or less than $5.00 per share, the Warrants are
eligible for resale pursuant to Rule 144A of the Securities Act and will not, as
of the initial Issuance Date to the Initial Holder, be of the same class as
securities listed on a national securities exchange registered under Section 6
of the Exchange Act or quoted on a U.S. automated inter-dealer quotation system.

 

(d)           The Company hereby agrees that, for so long as any Warrants or
Warrant Shares remain outstanding and during any period in which the Company is
not subject to Section 13 or 15(d) of the Exchange Act, to make available, upon
request of any Holder, to any Holder or beneficial owner of Warrants or Warrant
Shares in connection with any sale thereof and any prospective purchaser thereof
from such Holder or beneficial owner, the information required by
Rule 144A(d)(4) under the Securities Act in order to permit resales pursuant to
Rule 144A.

 

(e)           None of the Company, its Affiliates or any Person acting on any of
their behalf (other than the Holders and their Affiliates, as to whom the
Company makes no representation or warranty) has, directly or indirectly,
offered, issued, sold or solicited any offer to buy any security of a type which
would be integrated with the sale of the Warrants in any manner that would
require the Warrants to be registered under the Securities Act.  None of the
Company, its Affiliates or any Person acting on any of their behalf (other than
the Holders and their Affiliates, as to whom the Company makes no representation
or warranty) has engaged in any form of general solicitation or general
advertising within the meaning of Rule 502 in connection with the offering of
the Warrants.

 

(f)            The Holders will have no obligation with respect to any brokerage
or finder’s fees or commissions payable by the Company or any of its Affiliates
to any broker, financial advisor or consultant, finder, placement agent,
investment banker, bank or other Person with respect to the transactions
contemplated by this Agreement.

 

ARTICLE 6.

MISCELLANEOUS

 

SECTION 6.1.  Persons Benefiting.  Nothing in this Agreement is intended or
shall be construed to confer upon any Person other than the Company and the
Holders any legal or equitable right, remedy or claim under or by reason of this
Agreement or any part hereof, and this Agreement shall be for the sole and
exclusive benefit of the Company and the Holders.

 

SECTION 6.2.  Rights of Holders.  Except as otherwise specifically required
herein, holders of unexercised Warrants are not entitled to (a) receive
dividends or other distributions from the Company, (b) receive notice of or vote
at any meeting of the stockholders of the Company, (c) consent to any action of
the stockholders of the Company, (d) receive notice of any other proceedings of
the Company or (e) exercise any other rights as stockholders of the Company.

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

--------------------------------------------------------------------------------

 

SECTION 6.3.  Amendment.  This Agreement may be amended by the Company and the
Initial Holder without the consent of any other Holder for the purpose of curing
any ambiguity, or curing, correcting or supplementing any defective provision
contained herein or making any other provisions with respect to matters or
questions arising under this Agreement as the Company and the Initial Holder may
deem necessary or desirable; provided, however, that such action shall not
affect adversely the rights of any other Holder.  Any amendment or supplement to
this Agreement (including any Exhibit hereto) that has or would have an adverse
effect on the interests of the Holders shall require the written consent of the
Requisite Holders.  The consent of each Holder affected shall be required for
any amendment pursuant to which the Exercise Price would be increased or the
Exercise Rate would be decreased (other than pursuant to adjustments provided
herein).  In determining whether the Holders of the required number of Warrants
have concurred in any direction, waiver or consent, Warrants owned by the
Company or any of its Affiliates shall be disregarded and deemed not to be
outstanding.

 

SECTION 6.4.  Notices.  All notices, consents, approvals, reports, designations,
requests, waivers, elections and other communications authorized or required to
be given pursuant to this Agreement shall be given in writing and either
personally delivered to the party to whom it is given or delivered by an
established delivery service by which receipts are given or mailed by registered
or certified mail, postage prepaid, or sent by facsimile or electronic mail with
a copy sent on the following Business Day by one of the other methods of giving
notice described herein, addressed to the party at its address listed below:

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

--------------------------------------------------------------------------------

 

(a)           If to the Company:

 

Dyax Corp.
300 Technology Square
Cambridge, MA  02139
Attention:  Chief Financial Officer
Facsimile:  (617) 225-7708
E-mail:  imagovcevic@dyax.com

with a copy (which shall not constitute notice) to:

Dyax Corp.
300 Technology Square
Cambridge, MA  02139
Attention:  General Counsel
Facsimile:  (617) 225-7708
E-mail:  imagovcevic@dyax.com

with a copy (which shall not constitute notice) to:

Dyax Corp.
300 Technology Square
Cambridge, MA  02139
Attention:  Associate General Counsel
Facsimile:  (617) 225-7708
E-mail:  aashe@dyax.com

with a copy (which shall not constitute notice) to:

Edwards Angell Palmer & Dodge LLP
111 Huntington Avenue
Boston, MA  02199
Attention: Stacie S. Aarestad
Facsimile:  (617) 227-4420
E-mail:  saarestad@eapdlaw.com

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

--------------------------------------------------------------------------------

 

(b)           If to the Initial Holder:

 

Cowen Healthcare Royalty Partners, L.P.
177 Broad Street, Suite 1101
Stamford, CT  06901
Attention:  Gregory B. Brown, M.D.
Facsimile:  (646) 562-1293
Email:  greg.brown@cowen.com

with a copy (which shall not constitute notice) to:

Cahill Gordon & Reindel LLP
80 Pine Street
New York, NY  10005
Attn:  Christopher T. Cox
Facsimile:  (212) 396-0136
E-mail:  ccox@cahill.com

 

(c)           If to any other Holder, to the address set forth on the
Certificate Register.

 

The Company and the Initial Holder, by written notice to the other, may
designate additional or different addresses for subsequent notices or
communications.

 

Failure to mail a notice or communication to a Holder or any defect in it shall
not affect its sufficiency with respect to other Holders.

 

SECTION 6.5.  GOVERNING LAW.  THIS AGREEMENT AND THE WARRANT CERTIFICATES SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK (WITHOUT GIVING EFFECT TO ANY CONFLICT OF LAW PRINCIPLES THAT WOULD REQUIRE
THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION).

 

SECTION 6.6.  JURISDICTION; WAIVER OF TRIAL BY JURY.  IN CONNECTION WITH THE
ADJUDICATION OF ANY DISPUTES RELATING TO THIS AGREEMENT OR THE WARRANTS, EACH
PARTY HEREBY IRREVOCABLY (A) SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE
SUPREME COURT OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY AND OF THE
UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK; PROVIDED THAT
EACH PARTY SUBMITS TO THE JURISDICTION OF ANY OTHER COURT IN WHICH A CLAIM
RELATING TO THIS AGREEMENT OR THE WARRANTS IS BROUGHT BY ANY THIRD PARTY AGAINST
THE OTHER PARTY; (B) WAIVES, AND AGREES NOT TO ASSERT, (1) ANY CLAIM THAT IT IS
NOT SUBJECT TO THE JURISDICTION OF ANY SUCH COURT OR THAT SUCH PROCEEDING HAS
BEEN COMMENCED IN AN IMPROPER OR INCONVENIENT FORUM AND (2) ANY RIGHT IT
MAY HAVE TO TRIAL BY JURY; AND (C) AGREES THAT SERVICE OF ANY PROCESS, SUMMONS,
NOTICE OR DOCUMENT BY U.S. REGISTERED MAIL TO SUCH PARTY’S ADDRESS AS PROVIDED
HEREIN SHALL BE EFFECTIVE FOR ANY ACTION, SUIT OR PROCEEDING

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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WITH RESPECT TO ANY MATTER FOR WHICH IT HAS SUBMITTED TO JURISDICTION HEREBY.  A
JUDGMENT IN ANY SUCH PROCEEDING MAY BE ENFORCED IN ANY OTHER COURTS TO WHOSE
JURISDICTION THE APPLICABLE PARTY MAY BE SUBJECT.  EACH PARTY (X) CERTIFIES THAT
NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY PARTY HAS REPRESENTED, EXPRESSLY OR
OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO
ENFORCE THE FOREGOING WAIVER OF A RIGHT TO A JURY TRIAL AND (Y) ACKNOWLEDGES
THAT IT AND THE OTHER PARTY HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS, AGREEMENTS AND CERTIFICATIONS IN THIS
SECTION.

 

SECTION 6.7.  Successors.  All representations, warranties, covenants and
agreements contained in this Agreement and the Warrant Certificate by or for the
benefit of the Company and the Holders shall inure to the benefit of, and shall
bind, their respective successors and assigns.

 

SECTION 6.8.  Counterparts .  This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.

 

SECTION 6.9.  Table of Contents.  The table of contents and headings of the
Articles and Sections of this Agreement have been inserted for convenience of
reference only, are not intended to be considered a part hereof and shall not
modify or restrict any of the terms or provisions hereof.

 

SECTION 6.10.  Severability.  The provisions of this Agreement are severable,
and if any clause or provision shall be held invalid, illegal or unenforceable
in whole or in part in any jurisdiction, then such invalidity or
unenforceability shall affect in that jurisdiction only such clause or
provision, or part thereof, and shall not in any manner affect such clause or
provision in any other jurisdiction or any other clause or provision of this
Agreement in any jurisdiction.

 

SECTION 6.11.  Remedies.  The rights and remedies provided herein shall be
cumulative and not exclusive of any other rights or remedies available.  The
Company and the Initial Holder acknowledge and agree that the remedy at law for
any breach or threatened breach by the other party in the performance or
compliance with any of the terms of this Agreement or the Warrants is not and
would not be adequate and that, to the fullest extent permitted by law, such
terms may be specifically enforced by a decree for specific performance,
injunctive relief or other equitable remedies or by an injunction against
violation of any such terms or otherwise and each of the Company and the Initial
Holder agrees not to allege, and hereby waives the defense, that an adequate
remedy exists at law.

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed
as of the date first written above.

 

 

DYAX CORP.

 

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

 

 

 

COWEN HEALTHCARE ROYALTY PARTNERS, L.P.

 

 

 

 

By:

Cowen Healthcare Royalty GP, LLC,

 

 

its General Partner

 

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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EXHIBIT A

TO WARRANT AGREEMENT

 

[FORM WARRANT CERTIFICATE]

 

[Face]

 

THE WARRANTS AND THE WARRANT SHARES (THE “SECURITIES”) HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY
STATE SECURITIES LAWS.  NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION
HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR
OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH
TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION AND SUBJECT TO
COMPLIANCE WITH OTHER APPLICABLE LAWS.  THE HOLDER HEREOF, BY ITS ACCEPTANCE
HEREOF, AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, UNLESS
PREVIOUSLY REGISTERED UNDER THE SECURITIES ACT, ONLY (A) TO THE COMPANY;
(B) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED
BY RULE 144 THEREUNDER (IF AVAILABLE); (C) TO A PERSON IT REASONABLY BELIEVES IS
A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A UNDER THE SECURITIES
ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN
RELIANCE ON RULE 144A; (D) PURSUANT TO AN OFFSHORE TRANSACTION COMPLYING WITH
RULE 904 OF REGULATION S UNDER THE SECURITIES ACT; OR (E) PURSUANT TO ANOTHER
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.

 

No.  1

 

Number of Warrants: 250,000

 

WARRANTS TO PURCHASE COMMON STOCK OF

 

DYAX CORP.

 

THIS CERTIFIES THAT COWEN HEALTHCARE ROYALTY PARTNERS, L.P., a Delaware limited
partnership, or its registered assigns, is the registered holder of the number
of Warrants set forth above (the “Warrants”).  Each Warrant entitles the holder
thereof (the “Holder”), at its option and subject to the provisions contained
herein and in the Warrant Agreement referred to below, to purchase from DYAX
CORP., a Delaware corporation (the “Company”), one share of Common Stock, $.01
par value per share, of the Company (the “Common Stock”) at the exercise price
of $5.50 (the “Exercise Price”) or by Cashless Exercise, as referred to below.

 

This Warrant Certificate is issued under and in accordance with the Warrant
Agreement, dated as of August 5, 2008, between the Company and the Initial
Holder

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

--------------------------------------------------------------------------------

 

thereunder (the “Warrant Agreement”), and is subject to the terms and provisions
contained in the Warrant Agreement, to all of which terms and provisions the
Holder of this Warrant Certificate consents by acceptance hereof.  The Warrant
Agreement is hereby incorporated herein by reference and made a part hereof. 
Reference is hereby made to the Warrant Agreement for a full statement of the
respective rights, limitations of rights, duties and obligations of the Company
and the Holders of the Warrants.  Capitalized terms used but not defined herein
shall have the meanings ascribed thereto in the Warrant Agreement.  A copy of
the Warrant Agreement may be obtained for inspection by the Holder hereof upon
written request to the Company at Dyax Corp., 300 Technology Square, Cambridge,
MA 02139, Attention:  Ivana Magovcevic-Liebisch.

 

Subject to the terms and conditions set forth in this Warrant Certificate and
the Warrant Agreement, each Warrant represented hereby shall be exercisable at
any time or from time to time on or after the earlier of (i) August 5, 2009 and
(ii) the date on which the Company delivers or is required to deliver to the
Holders written notice of a Combination pursuant to clause (d) of Section 4.8 of
the Warrant Agreement (the “Exercise Commencement Date”).  This Warrant
Certificate shall terminate and become void as of 6:00 p.m., New York time, on
August 5, 2016 (the “Expiration Date”) or upon the exercise hereof as to all
Warrants represented thereby.  The number of Warrant Shares and the kind of
securities, cash and other property purchasable upon exercise of the Warrants
and the Exercise Price shall be subject to adjustment from time to time as set
forth in the Warrant Agreement.

 

Reference is hereby made to the further provisions of this Warrant Certificate
set forth on the reverse hereof, which provisions shall for all purposes have
the same effect as though fully set forth at this place.

 

THIS WARRANT CERTIFICATES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO ANY CONFLICT OF LAW
PRINCIPLES THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF ANOTHER
JURISDICTION).

 

IN WITNESS WHEREOF, Dyax Corp. has caused this Warrant Certificate to be
executed by its duly authorized officer as of the date first written above.

 

 

DYAX CORP.

 

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

--------------------------------------------------------------------------------

 

[FORM OF REVERSE OF WARRANT CERTIFICATE]

 

[Reverse]

 

Subject to the terms of this Warrant Certificate and the Warrant Agreement, the
Warrants represented by this Warrant Certificate may be exercised in whole or in
part upon (a) surrender to the Company of this Warrant Certificate, together
with the form of election to purchase Warrant Shares below duly completed and
executed by the Holder hereof and (b) payment to the Company of the Exercise
Price for the number of Warrant Shares in respect of which the Warrants are
exercised.  Such payment of the Exercise Price shall be made (i) in cash or by
certified or official bank check payable to the order of the Company or by wire
transfer of funds to an account designated by the Company for such purpose or
(ii) by Cashless Exercise by the surrender (which surrender shall be evidenced
by cancellation of the number of Warrants represented by this Warrant
Certificate presented in connection with a Cashless Exercise) of the Warrants
represented by this Warrant Certificates, and without the payment of the
Exercise Price in cash, in exchange for the issuance of such number of shares of
Common Stock equal to the product of (1) the number of shares of Common Stock
for which the Warrants would otherwise be nominally exercisable immediately
prior to such exercise if payment of the Exercise Price were being made in cash
and (2) the Cashless Exercise Ratio (as defined in the Warrant Agreement).  All
Warrant Shares issued upon exercise of Warrants will be fully paid,
nonassessable, free of preemptive rights and free from all taxes, liens, charges
and security interests with respect to the issue thereof.

 

The Warrants represented by this Warrant Certificate shall be exercisable at the
election of the Holders hereof either in full at any time or in part from time
to time during the period commencing on the Exercise Commencement Date and
ending at 6:00 p.m., New York time, on the Expiration Date and in the event that
this Warrant Certificate is surrendered for exercise in respect of less than all
the Warrants represented hereby at any time prior to the Expiration Date a new
Warrant Certificate representing the remaining Warrants will be duly executed
and promptly issued by the Company in accordance with the Warrant Agreement.

 

No fractional Warrant Shares will be issued on exercise of Warrants.  If more
than one Warrant shall be exercised at the same time by the same Holder, the
number of full Warrant Shares which shall be issuable upon such exercise shall
be computed on the basis of the aggregate number of Warrant Shares purchasable
on exercise of the Warrants so exercised.  If any fraction of a Warrant Share
would be issuable on the exercise of any Warrant (or specified portion thereof),
the Company will notify the Holder exercising the Warrant in writing of the
amount to be paid in lieu of the fraction of a Warrant Share and concurrently
will pay to such Holder an amount in cash equal to the Current Market Value for
one Warrant Share on the date the Warrant is exercised, multiplied by such
fraction, rounded up to the nearest whole cent.

 

When Warrants are presented to the Company with a request to register the
transfer of such Warrants or to exchange such Warrants for an equal number of
Warrants of other authorized denominations, the Company will register the
transfer or make the exchange in the manner and subject to the limitations set
forth in the Warrant Agreement.

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

--------------------------------------------------------------------------------

 

No service charge will be made by the Company to any Holder for any registration
of transfer or exchange upon surrender of this Warrant Certificate at the
principal office of the Company.  The Company will pay all documentary stamp
taxes attributable to the issuance of the Warrants and the Warrant Shares upon
the exercise of Warrants; provided, however, that the Company will not be
required to pay any tax or taxes which may be payable in respect of any transfer
involved in the issuance of any Warrant Certificates or any certificates for
Warrant Shares in a name other than the Holder of such Warrant Certificate.

 

Except as otherwise specifically required in the Warrant Agreement, Holders of
unexercised Warrants are not entitled to (a) receive dividends or other
distributions from the Company, (b) receive notice of or vote at any meeting of
the stockholders of the Company, (c) consent to any action of the stockholders
of the Company, (d) receive notice of any other proceedings of the Company or
(e) exercise any other rights as stockholders of the Company.  All shares of
Common Stock issuable by the Company upon the exercise of the Warrants shall,
upon such issue, be duly and validly issued and fully paid and non-assessable.

 

The holder in whose name this Warrant Certificate is registered may be deemed
and treated by the Company as the absolute owner of the Warrant Certificate for
all purposes whatsoever and the Company shall not be affected by notice to the
contrary.

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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FORM OF ELECTION TO PURCHASE WARRANT SHARES
(to be executed only upon exercise of Warrants)

 

DYAX CORP.

 

The undersigned hereby irrevocably elects to exercise                     
Warrants to purchase Warrant Shares, on the terms and conditions specified in
the within Warrant Certificate and the Warrant Agreement therein referred to and
herewith (choose one by marking “X” in the space provided):

 

o            Tenders payment of the aggregate Exercise Price for such Warrant
Shares to the order of Dyax Corp. in the amount $             in accordance with
the terms of the Warrant Agreement.

 

o            Directs that such exercise be a Cashless Exercise in accordance
with the terms of the Warrant Agreement.

 

The undersigned directs that the Warrant Shares and the other securities, if
any, deliverable upon the exercise of such Warrants be registered in the name
and at the address specified below and delivered thereto.

 

Date:                              , 20       

 

                                                              

(3)

 

(Signature of Holder)

 

 

 

 

 

 

 

(Street Address)

 

 

 

 

 

 

 

 

 

(City)      (State)      (Zip Code)

 

 

 

 

 

 

 

 

 

(Social Security or Tax Identification No.)

 

--------------------------------------------------------------------------------

(3)        The signature must correspond with the name as written upon the face
of the within Warrant Certificate in every particular, without alteration or
enlargement or any change whatever.

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

--------------------------------------------------------------------------------

 

Warrant Shares and any other securities, cash and other property, and/or payment
in lieu of fractional Warrant Shares to be issued and delivered to:

 

 

 

 

(Name)

 

 

 

 

 

 

 

(Street Address)

 

 

 

 

 

 

 

(City)      (State)      (Zip Code)

 

 

 

 

 

 

 

(Social Security or Tax Identification No.)

 

 

 

 

A Warrant Certificate representing any unexercised Warrants evidenced by the
within Warrant Certificate to be issued to:

 

 

 

 

 

(Name)

 

 

 

 

 

 

 

(Street Address)

 

 

 

 

 

 

 

(City)      (State)      (Zip Code)

 

 

 

 

 

 

 

(Social Security or Tax Identification No.)

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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EXHIBIT B

TO WARRANT AGREEMENT

 

CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR
REGISTRATION OF TRANSFER OF WARRANTS

 

Re:          Warrants to Purchase Common Stock (the “Warrants”) of DYAX CORP.
(the “Company”)

 

This Certificate relates to                      Warrants held in definitive
form by                                (the “Transferor”).

 

The Transferor has requested the Company to exchange or register the transfer of
a Warrant or Warrants.  In connection with such request and in respect of each
such Warrant, the Transferor does hereby certify that the Transferor is familiar
with the Warrant Agreement relating to the above captioned Warrants and that the
transfer of this Warrant does not require registration under the Securities Act
of 1933, as amended (the “Securities Act”), because(4):

 

o            Such Warrant is being acquired for the Transferor’s own account
without transfer.

 

o            Such Warrant is being transferred to the Company.

 

o            Such Warrant is being transferred in a transaction meeting the
requirements of Rule 144 under the Securities Act.

 

o            Such Warrant is being transferred to a qualified institutional
buyer (as defined in Rule 144A under the Securities Act) in reliance on
Rule 144A.

 

o            Such Warrant is being transferred pursuant to an offshore
transaction in accordance with Rule 904 under the Securities Act.

 

o            Such warrant is being transferred pursuant to another available
exemption from the registration requirements under the Securities Act.

 

The Company is entitled to rely upon this Certificate.

 

 

[INSERT NAME OF TRANSFEROR]

 

 

 

 

 

By:

 

 

 

Date:

 

 

 

 

 

--------------------------------------------------------------------------------

(4)           Please check applicable box.

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

--------------------------------------------------------------------------------

 

EXHIBIT C

TO

WARRANT AGREEMENT

 

FORM OF CERTIFICATION

 

The undersigned hereby acknowledges receipt of 250,000 Warrants at an exercise
price per Warrant (subject to adjustment) of $5.50 to acquire shares of Common
Stock of DYAX CORP., on the terms and conditions specified in the Warrant
Certificate and the Warrant Agreement therein referred (a “Holder”).

 

Each Holder, severally and not jointly, represents and warrants to DYAX CORP.
(the “Company”) as of the date hereof as follows:

 

(a)         Such Holder is acquiring the Warrants and (if and when it exercises
the Warrants) will acquire the Warrant Shares for its own account, for
investment purposes only and not with a view to any distribution thereof within
the meaning of the Securities Act.

 

(b)        Such Holder has received such information as it deems necessary in
order to make an investment decision with respect to the Warrants and has had
the opportunity to ask questions of and receive answers from the Company and its
officers and directors and to obtain such additional information which the
Company possesses or could acquire without unreasonable effort or expense as
such Holder deems necessary to verify the accuracy of the information furnished
to such Holder and has asked questions, received such answers and obtained such
information as it deems necessary to verify the such accuracy of the information
furnished to such Holder.

 

(c)         Such Holder is an “accredited investor” within the meaning of
Rule 501 of the Securities Act.

 

(d)        Such Holder understands that the Warrants have not been and will not
be registered under the Securities Act or any state or other securities law,
that the Warrants are being issued by the Company in transactions exempt from
the registration requirements of the Securities Act and that the Warrants may be
resold only if registered pursuant to the provisions of the Securities Act or if
an exemption from registration under the Securities Act is available.

 

(e)         Such Holder further understands that the exemption from registration
afforded by Rule 144 of the Securities Act depends on the satisfaction of
various conditions, and that, if applicable, Rule 144 of the Securities Act may
afford the basis for sales only in limited amounts.

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

--------------------------------------------------------------------------------

 

(f)         Such Holder did not employ any broker or finder in connection with
the transaction contemplated the Warrant Agreement and no fees or commissions
are payable to the Holders except as otherwise provided for in the Warrant
Agreement.

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

--------------------------------------------------------------------------------

 

 

 

COWEN HEALTHCARE ROYALTY PARTNERS,
L.P.

 

 

 

 

 

 

By:

Cowen Healthcare Royalty GP, LLC,

 

 

 

its General Partner

 

 

 

 

By:

 

 

 

 

 

Name:

Gregory B. Brown, M.D.

 

 

 

Title:

Managing Director

 

 

 

 

 

 

 

 

DATED: August 5, 2008

 

 

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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Exhibit Q

 

Existing Liens and Related Indebtedness

 

[*****]

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

--------------------------------------------------------------------------------

 

Exhibit R

 

Form of Assignment and Acceptance

 

[date]

 

[Lender]
[              ]

[              ]

Attention:

[          ]

 

Facsimile:

[          ]

 

 

Dyax Corp.

300 Technology Square

Cambridge, MA 02139

Attention:

[          ]

 

Facsimile:

[          ]

 

 

Ladies and Gentlemen:

 

Re: Assignment Pursuant to the Loan Agreement

 

We refer to the Loan Agreement dated as of August 5, 2008 (as amended from time
to time, the “Agreement”), providing for a loan to DYAX CORP. in an aggregate
principal amount of up to $50,000,000.                  (the “Seller”) and
               (the “Buyer”) are delivering this instrument to you in connection
with an assignment by the Seller of its rights and obligations under the
Agreement pursuant to Section 13.01 thereof. Capitalized terms used and not
otherwise defined herein have the meanings given to them in the Agreement.

 

1.        The Seller and the Buyer hereby advise you (a) that the Seller will
assign to the Buyer the Seller’s right, title and interest in respect of the
Agreement described below as the “Assigned Rights” and the Buyer will accept
that assignment and assume the Seller’s related obligations described below as
the “Assumed Obligations,” and (b) that as between the Seller and the Buyer that
assignment and assumption will be effective as of the date identified below as
the “Effective Date.”

 

2.        In connection with the assignment referred to herein, the Buyer hereby
confirms to you that (a) the Buyer is a financial institution, institutional
investor or commercial paper conduit and (b) the Buyer agrees to be bound as a
Lender by the terms of the Agreement to the extent of the assignment and
assumption referred to herein.

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

--------------------------------------------------------------------------------

 

3.        The Buyer (a) represents and warrants that (i) it is sophisticated
with respect to decisions to acquire assets of the type represented by the
Assigned Rights and Assumed Obligations and either it, or the Person exercising
discretion in making its decision to acquire the Assigned Rights and Assumed
Obligations, is experienced in acquiring assets of such type, (ii) it has
received a copy of the Loan Agreement, together with copies of the most recent
financial statements delivered pursuant to Sections 9.03 thereof, as applicable,
and such other documents and information as it has deemed appropriate to make
its own credit analysis and decision to enter into this Assignment and
Acceptance and to purchase the Assigned Rights and Assumed Obligations on the
basis of which it has made such analysis and decision independently and without
reliance on the Seller or any other Lender; and (b) agrees that (i) it will,
independently and without reliance on the Seller or any other Lender, and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
the Loan Documents, and (ii) it will perform in accordance with their terms all
of the obligations that by the terms of the Loan Documents are required to be
performed by it as a Lender.

 

4.        Buyer hereby appoints Cowen Healthcare Royalty Partners, L.P. to act
as its agent under the Security Agreement which grant a security interest on
terms specified in Section 16 of the Security Agreement, including for the
purpose of filings related to the security interest granted under the Security
Agreement and other Loan Documents which grant a security interest.

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

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Terms Relating to the Assignment and Acceptance

 

Effective Date:

 

Assigned Rights:

 

A       % undivided interest in (i) the Loan of the Seller outstanding on the
Effective Date, (ii) all related rights of the Seller to interest accruing on
such portion of the Loan from and after the Effective Date, and (iii) all
related rights of the Seller under the Agreement and the Note delivered to the
Seller thereunder from and after the Effective Date.

 

Assumed Obligations:

 

All obligations of the Seller relating to the Assigned Rights that arise under
the Agreement on or after the Effective Date

 

Loan of the Seller:

 

Before the Effective Date: $           

 

After giving effect to the assignment referred to herein: $           

 

Loan of the Buyer:

 

Before the Effective Date:  $           

 

After giving effect to the assignment referred to herein: $           

 

For these purposes, the Buyer hereby informs you that the address for notices
and account for payments in connection with the Agreement are as set forth
below.

 

 

[LENDER]

 

 

 

 

 

 

 

 

 

By:

 

 

By:

 

 

 

 

 

 

Name:

 

 

Name:

 

 

 

 

 

 

Title:

 

 

Title:

 

 

 

 

 

 

 

 

[Include Notice and account information for Buyer.]

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

--------------------------------------------------------------------------------

 

By:

 

 

 

 

 

 

 

Name:

 

 

 

 

 

 

 

Title:

 

 

 

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

--------------------------------------------------------------------------------

 

Schedule 8.01(1)
Indebtedness

 

Dyax Corp.
Indebtedness
as of June 30, 2008

 

 

 

 

 

Balance

 

YTD Activity

 

Balance

 

G/L #

 

Description

 

 Per G/L @
12/31/2007

 

Additions

 

Principal
Payments

 

Per G/L @
6/30/2008

 

2705

 

MIT Loan - Tenant Improvements

 

1,601,197.02

 

—

 

(149,317.19

)

1,451,879.83

 

2725

 

GE Capital Leases

 

1,922,941.89

 

1,103,437.56

 

(454,092.36

)

2,572,287.09

 

2730

 

De Lage Landen Capital Lease

 

103,769.02

 

—

 

(56,601.30

)

47,167.72

 

2735

 

Paul Capital

 

28,076,748.68

 

3,470,836.66

 

(4,236,671.46

)

27,310,913.88

 

 

 

 

 

$

31,704,656.61

 

4,574,274.22

 

(4,896,682.31

)

31,382,248.52

 

 

--------------------------------------------------------------------------------

1) GE Capital addition is 1 new capital lease (schedule 22) signed in June

2) Paul additions are the amount of non-cash interest recorded in the period

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

--------------------------------------------------------------------------------

 

Schedule 8.01(n)
Subsidiaries

 

 

 

 

Dyax Holding B.V.

 

100% owned directly by Dyax Corp.

 

 

 

Dyax B.V.

 

100% owned directly by Dyax Holding B.V.

 

 

 

Dyax S.A. (B)

 

99.6% owned directly by Dyax Holding B.V.; 0.4% owned directly by Dyax Corp.

 

Dyax SA
Building 22
Boulevard du Rectorat 27B
Sart Tilman
B-4000 Liege 1
Belgium

 

Dyax B.V. and Dyax Holding B.V.
Voorstaat 4
3633 BA VREELAND

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

--------------------------------------------------------------------------------

 

Schedule 8.01(s)(i)

 

[******]

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

--------------------------------------------------------------------------------

 

Schedule 8.01(s)(ii)

 

[******]

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

--------------------------------------------------------------------------------

 

Schedule 8.01(u)
Borrower’s Principal Place of Business

 

Borrower’s principal place of business and chief executive office are located
at:

 

300 Technology Square, Cambridge, MA 02139, USA

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

--------------------------------------------------------------------------------

 

Schedule 8.01(v)(ii)

 

[******]

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

--------------------------------------------------------------------------------

 

Schedule 8.01(v)(iii)

 

[*****]

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

--------------------------------------------------------------------------------

 

Schedule 8.01(v)(iv)

 

[*****]

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

--------------------------------------------------------------------------------

 

Schedule 8.01(v)(vii)

 

[*****]

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

--------------------------------------------------------------------------------

 

Schedule 8.01(v) (viii)

 

[*****]

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

--------------------------------------------------------------------------------

 

Schedule 8.01(v)(ix)

 

[*****]

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

--------------------------------------------------------------------------------

 

Schedule 8.01(v)(x)

 

[*****]

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

--------------------------------------------------------------------------------

 

Schedule 8.01(w)(i)

 

[*****]

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

--------------------------------------------------------------------------------

 

Schedule 8.01(w)(iii)

 

[*****]

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

--------------------------------------------------------------------------------

 

Schedule 8.01(w)(v)

 

[*****]

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

--------------------------------------------------------------------------------

 

Schedule 8.01(w)(vi)

 

[*****]

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

--------------------------------------------------------------------------------

 

Schedule 8.01(w)(vii)

 

[*****]

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

--------------------------------------------------------------------------------

 

Schedule 8.01(w)(viii)

 

[*****]

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

--------------------------------------------------------------------------------

 

Schedule 8.01(w)(x)

 

[*****]

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

--------------------------------------------------------------------------------

 

Schedule 8.01(x)

 

[*****]

 

Confidential materials omitted and filed separately with the Secutities and
Exchange Commission.  Asterisks denote such omission.

 

--------------------------------------------------------------------------------