Exhibit
      10.2

     

    SECURITY
      & GUARANTY AGREEMENT

     

    SECURITY
      & GUARANTY AGREEMENT (this “Agreement”), dated as of January 11, 2007, by
      and between Alteon Inc., a Delaware corporation (“Company”), HaptoGuard, Inc., a
      Delaware corporation and wholly owned subsidiary of the Company (“HaptoGuard”
and together with the Company, each a “Debtor” and collectively the “Debtors”)
      and Baker Bros Advisors LLC as collateral agent for the Secured Parties
      (together with its successors and assigns in such capacity, the “Collateral
      Agent”). 

     

    W
      I T N E
      S S E T H:

     

    WHEREAS,
      pursuant to a Convertible Note and Warrant Purchase Agreement, dated the date
      hereof, between Company and the Collateral Agent (the “Purchase Agreement”),
      Company has agreed to issue to the Lenders (as defined in the Purchase
      Agreement) and the Lenders have each agreed to purchase from Company certain
      of
      Company’s Convertible Secured Notes (the “Notes”), which are convertible into
      shares of Company’s Common Stock, $0.01 par value per share (the “Common
      Stock”). In connection therewith, Company shall also issue the Lenders certain
      warrants to purchase shares of Common Stock (the “Warrants”); and

     

    WHEREAS,
      in order to induce the Lenders to purchase the Notes, the Debtors have agreed
      to
      execute and deliver to the Collateral Agent this Agreement for the benefit
      of
      the Collateral Agent and the Lenders and to grant to it a first priority
      security interest in certain property of the Debtors to secure the prompt
      payment and performance of all of the Obligations (as hereinafter
      defined).

     

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

     

    1. Certain
      Definitions.
      As used
      in this Agreement, the following terms shall have the meanings set forth in
      this
      Section 1. Terms used but not otherwise defined in this Agreement that are
      defined in Article 9 of the UCC shall have the respective meanings given such
      terms in Article 9 of the UCC.

     

    (a) “Collateral”
      means all right, title and interest in and to, whether now owned or hereafter
      acquired and wherever located:

     

    (i) all
      Receivables;

     

    (ii) all
      Equipment;

     

    (iii) all
      General Intangibles;

     

    (iv) all
      Inventory;

     

    (v) all
      Investment Property;

     

    
      
        
        

      

      
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    (vi) all
      Intellectual Property

     

    (vii) (a)
      without limiting the generality of the foregoing, all contract rights, rights
      of
      payment which have been earned under a contract right, instruments (including,
      without limitation, promissory notes), documents, chattel paper (including,
      without limitation, electronic chattel paper), warehouse receipts, deposit
      accounts, letters of credit and money; (b) all commercial tort claims (whether
      now existing or hereafter arising); (c) all letter of credit rights (whether
      or
      not the respective letter of credit is evidenced by a writing); (d) all
      supporting obligations; (e) all clinical, preclinical and non-clinical data;
      (f)
      all regulatory filings, applications, approvals and permits whether with or
      from
      the U.S. Food and Drug Administration or other government agency; (g) clinical
      and preclinical trial quantities or commercial inventories of finished product,
      active pharmaceutical ingredient and bulk drug supply and (h) to the extent
      assignable, as rights to tax credits and tax refunds;

     

    (viii) ledger
      sheets, ledger cards, files, correspondence, records, books of account, business
      papers, computers, computer software (owned by each Debtor or in which it has
      an
      interest), computer programs, tapes, disks and documents relating to (i), (ii),
      (iii), (iv), (v), (vi) or (vii) of this Section; and

     

    (ix) all
      Proceeds and products of (i), (ii), (iii), (iv), (v), (vi) and (vii) in whatever
      form, including, without limitation: cash, deposit accounts (whether or not
      comprised solely of proceeds), certificates of deposit, insurance proceeds
      (including, without limitation, hazard, flood and credit insurance), negotiable
      instruments and other instruments for the payment of money, chattel paper,
      security agreements, documents, eminent domain proceeds, condemnation proceeds
      and tort claim proceeds.

     

    (b) “Copyright
      Licenses” means any and all agreements, licenses and covenants providing for the
      granting of any right in or to Copyrights or otherwise providing for a covenant
      not to sue (whether the Debtor is licensee or licensor thereunder) including,
      without limitation, each agreement referred to in Schedule
      C
      hereto.

     

    (c) “Copyrights”
      mean all United States and foreign copyrights (including, without limitation,
      Community designs), including but not limited to copyrights in software and
      all
      rights in and to databases, and all Mask Works (as defined under 17 U.S.C.
      901
      of the U.S. Copyright Act), whether registered or unregistered, moral rights,
      reversionary interests, termination rights, and, with respect to any and all
      of
      the foregoing: (i) all registrations and applications therefor including,
      without limitation, the registrations and applications required to be listed
      in
Schedule
      C
      hereto,
      (ii) all extensions and renewals thereof, (iii) all rights corresponding thereto
      throughout the world, (iv) all rights to sue for past, present and future
      infringements thereof, and (v) all Proceeds of the foregoing, including, without
      limitation, licenses, royalties, income, payments, claims, damages and proceeds
      of suit.

     

    (d) “Equipment”
      means goods (other than Inventory) whether now owned or hereafter acquired
      and
      wherever located including, without limitation, all equipment, machinery,
      apparatus, motor vehicles, fittings, furniture, furnishings, fixtures, parts,
      accessories and all replacements and substitutions therefor or accessions
      thereto.

     

    
      
        
        

      

      
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    (e) “General
      Intangibles” means all general intangibles as defined in the UCC, whether now
      owned or hereafter acquired, including, without limitation, all payment
      intangibles, and without limiting the generality of the foregoing all of the
      following whether or not constituting general intangibles as defined in the
      UCC:
      all choses in action, causes of action, corporate or other business records,
      inventions, designs, equipment formulations, manufacturing procedures, quality
      control procedures, service marks, trade secrets, goodwill, design rights,
      software, computer information, source codes, codes, records and updates,
      registrations, licenses, franchises, customer lists, tax refunds, tax refund
      claims, computer programs, all claims under guaranties, security interests
      or
      other security held or granted to secure payment of any of the Receivables
      by a
      Customer (other than to the extent covered by Receivables), all rights of
      indemnification and all other intangible property of every kind and nature
      (other than Receivables).

     

    (f) “Inventory”
      means all now owned or hereafter acquired goods, merchandise and other personal
      property, wherever located, to be furnished under any consignment arrangement,
      contract of service or held for sale or lease, all raw materials, work in
      process, finished goods and materials and supplies of any kind, nature or
      description which are or might be used or consumed in such party’s business or
      used in selling or furnishing such goods, merchandise and other personal
      property, and all documents of title or other documents representing
      them.

     

    (g) “Intellectual
      Property” means all Copyrights, Copyright Licenses, Patents, Patent Licenses,
      Trademarks and Trademark Licenses.

     

    (h) “Investment
      Property” means all now owned or hereafter acquired securities (whether
      certificated or uncertificated), securities entitlements, securities accounts,
      commodities contracts and commodities accounts.

     

    (i) “Obligations”
      means all of the Company’s obligations under this Agreement, the Warrants and
      the Notes, in each case, whether now or hereafter existing, voluntary or
      involuntary, direct or indirect, absolute or contingent, liquidated or
      unliquidated, as such obligations may be amended, supplemented, converted,
      extended or modified from time to time and all obligations of HaptoGuard
      hereunder.

     

    (j) “Patent
      Licenses” shall mean all agreements, licenses and covenants providing for the
      granting of any right in or to Patents or otherwise providing for a covenant
      not
      to sue (whether the Debtor is licensee or licensor thereunder) including,
      without limitation, each agreement referred to in Schedule
      C.

     

    (k) “Patents”
      shall mean all United States and foreign patents and certificates of invention,
      or similar industrial property rights, and applications for any of the
      foregoing, including, without limitation: (i) each patent and patent application
      referred to in Schedule
      C
      hereto,
      (ii) all reissues, divisions, continuations, continuations-in-part, extensions,
      renewals, and reexaminations thereof, (iii) all rights corresponding thereto
      throughout the world, (iv) all inventions and improvements described therein,
      (v) all rights to sue for past, present and future infringements thereof, (vi)
      all licenses, claims, damages, and proceeds of suit arising therefrom, and
      (vii)
      all Proceeds of the foregoing, including, without limitation, licenses,
      royalties, income, payments, claims, damages, and proceeds of suit.

     

    
      
        
        

      

      
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    (l) “Permitted
      Liens” means any and all of the following: (i) liens existing as of the date of
      this Agreement and listed on Schedule
      B;
      (ii)
      liens for taxes, fees, assessments or other governmental charges or levies,
      either not delinquent or being contested in good faith by appropriate
      proceedings; provided, that the Company maintains adequate reserves therefor
      in
      accordance with GAAP; (iii) liens securing claims or demands of materialmen,
      artisans, mechanics, carriers, warehousemen, landlords and other like persons
      arising in the ordinary course of the Company’s business and imposed without
      action of such parties; provided, that the payment thereof is not yet required;
      (iv) liens arising from judgments, decrees or attachments that do not exceed
      $250,000 and to the extent applicable are not covered by a policy of insurance;
      (v) the following deposits, to the extent made in the ordinary course of
      business: deposits under worker’s compensation, unemployment insurance, social
      security and other similar laws, or to secure the performance of bids, tenders
      or contracts or to secure indemnity, performance or other similar bonds for
      the
      performance of bids, tenders or contracts (other than for the repayment of
      borrowed money) or to secure statutory obligations (other than liens arising
      under ERISA or environmental liens) or surety or appeal bonds, or to secure
      indemnity, performance or other similar bonds; (vi) purchase money security
      interests and liens in connection with financing leases on equipment, and (vii)
      liens incurred in connection with the extension, renewal or refinancing of
      the
      indebtedness secured by liens of the type described in clause (vi)
      above.

     

    (m) “Receivables”
      means (i) all Accounts (as defined in the UCC), (ii) such contract rights,
      instruments, documents, chattel paper (including,
      without
      limitation, electronic
      chattel paper), general intangibles relating to accounts, drafts and
      acceptances, credit card receivables and all other forms of obligations owing
      arising out of or in connection with the sale or lease of Inventory or the
      rendition of services, and (iii) all supporting obligations, guarantees and
      other security for any of the foregoing, whether secured or unsecured, now
      existing or hereafter created.

     

    (n) “Secured
      Parties” means from time to time each person or entity who is at any such time a
      Lender (as defined in the Purchase Agreement) or a holder of a Note or a
      Warrant.

     

    (o) “Trademark
      Licenses” shall mean any and all agreements, licenses and covenants providing
      for the granting of any right in or to Trademarks or otherwise providing for
      a
      covenant not to sue or permitting co-existence (whether the Debtor is licensee
      or licensor thereunder) including, without limitation, each agreement referred
      to in Schedule
      C.

     

    (p) “Trademarks”
      shall mean all United States, and foreign trademarks, trade names, corporate
      names, company names, business names, fictitious business names, Internet domain
      names, service marks, certification marks, collective marks, logos, other source
      or business identifiers, designs and general intangibles of a like nature,
      all
      registrations and applications for any of the foregoing including, without
      limitation: (i) the registrations and applications referred to in Schedule
      C,
      (ii)
      all extensions or renewals of any of the foregoing, (iii) all of the goodwill
      of
      the business connected with the use of and symbolized by the foregoing, (iv)
      the
      right to sue for past, present and future infringement or dilution of any of
      the
      foregoing or for any injury to goodwill, and (v) all Proceeds of the foregoing,
      including, without limitation, licenses, royalties, income, payments, claims,
      damages, and proceeds of suit.

     

    
      
        
        

      

      
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    (q) “UCC”
      means the Uniform Commercial Code, as currently in effect in the State of New
      York.

     

    2. Grant
      of Security Interest.
      To
      secure the payment and performance of all of the Obligations, the Debtors hereby
      grants to the Collateral Agent, a continuing security interest in all of the
      Debtor’s right, title and interest of whatsoever kind and nature in and to the
      Collateral (the “Security Interest”). Notwithstanding any provision of this
      Agreement to the contrary, Collateral shall not include (i) any property that
      is
      subject to a Permitted Lien pursuant to subsection (vi) of such definition
      to
      the extent that such Permitted Lien prohibits the security interest hereunder
      or
      (ii) any agreement with a third party existing on the date hereof that prohibits
      the grant of a lien on (but not merely the assignment of or of any interest
      in)
      such agreement or any of the Debtor’s rights thereunder without the consent of
      such party or under which a consent to such grant is otherwise required, which
      consent has not been obtained, except to the extent any such prohibition is
      made
      ineffective as a result of Section 9-406(d), 9-407, 9-408, or 9-409 of the
      UCC.

     

    3. Representations,
      Warranties, Covenants and Agreements of the Debtors.
      Each
      Debtor represents and warrants to, and covenants and agrees with, the Collateral
      Agent as follows:

     

    (a) Each
      Debtor
      has
      the
      requisite corporate power and authority to enter into this Agreement and
      otherwise to carry out its obligations hereunder. The execution, delivery and
      performance by the Debtor of this Agreement and the filings contemplated herein
      have been duly authorized by all necessary action on the part of the Debtor
      and
      no further action is required by the Debtor . This Agreement constitutes a
      legal, valid and binding obligation of the Debtor enforceable in accordance
      with
      its terms, except as enforceability may be limited by bankruptcy, insolvency,
      reorganization, moratorium or similar laws affecting the enforcement of
      creditor’s rights generally, and provided that (1) the conversion of all of the
      Notes may require approval of the Company’s stockholders under applicable rules
      of the American Stock Exchange, which approval has not been obtained, and (2)
      insofar as any foreclosure on the Collateral under this Agreement would
      constitute a sale of all or substantially all of the Debtor’s assets requiring
      stockholder approval, such approval has not been obtained.

     

    (b) Each
      Debtor represents and warrants that it has no place of business or offices
      where
      its respective books of account and records are kept (other than temporarily
      at
      the offices of its attorneys or accountants) or places where Collateral is
      stored or located, except as set forth on Schedule
      A
      attached
      hereto.

     

    (c) The
      full
      legal name of each Debtor is as set forth on the signature pages hereof. Each
      Debtor has not done in the last five (5) years, and does not do, business under
      any other name (including, without limitation, any trade name or fictitious
      business name).

     

    
      
        
        

      

      
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    (d) Without
      limiting any prohibitions or restrictions in the Note, a Debtor shall not change
      its name, identity, corporate structure (e.g.,
      by
      merger, consolidation, change in corporate form or otherwise), sole place of
      business, chief executive office, type of organization or jurisdiction of
      organization or establish any trade names unless it shall have (a) notified
      the
      Collateral Agent in writing at least ten (10) days prior to any such change
      or
      establishment, identifying such new proposed name, identity, corporate
      structure, sole place of business, chief executive office, jurisdiction of
      organization or trade name and providing such other information in connection
      therewith as the Collateral Agent may reasonably request and (b) taken all
      actions reasonably necessary or advisable to maintain the continuous validity,
      perfection and the same priority of the Collateral Agent’s security interest in
      the Collateral intended to be granted and agreed to hereby.

     

    (e) Except
      for Permitted Liens, each Debtor is the sole owner of the Collateral (except
      for
      exclusive, semi-exclusive and non-exclusive licenses granted by a Debtor in
      the
      ordinary course of business which licenses existing as of the date hereof are
      identified on Schedule D hereto), free and clear of any liens, security
      interests, encumbrances, rights or claims, and is fully authorized to grant
      the
      Security Interest in and to pledge the Collateral.

     

    (f) This
      Agreement creates in favor of the Collateral Agent a valid security interest
      in
      the Collateral securing the payment and performance of the Obligations and,
      upon
      making the filings described in the immediately following sentence, a perfected
      first priority security interest in such Collateral. Except for the filing
      of
      financing statements on Form-1 under the UCC with the Secretary of State of
      the
      State of Delaware, no authorization or approval of or filing with or notice
      to
      any governmental authority or regulatory body is required either (i) for the
      grant by a Debtor of, or the effectiveness of, the Security Interest granted
      hereby or for the execution, delivery and performance of this Agreement by
      each
      Debtor or (ii) for the perfection of or exercise by the Collateral Agent of
      its
      rights and remedies hereunder. 

     

    (g) Other
      than Permitted Liens and Permitted Transfers, the Debtors will not transfer,
      pledge, hypothecate, encumber, license, sell or otherwise dispose of any of
      the
      Collateral without the prior written consent of the Collateral Agent. “Permitted
      Transfers” means (i) sales of inventory in the normal course of business, (ii)
      licenses of technology in the ordinary course of business on commercially
      reasonable terms and consistent with the Company's past practices, or (iii)
      dispositions of worn-out or obsolete equipment and dispositions of equipment
      not
      exceeding $250,000 per year.

     

    (h) Each
      Debtor shall promptly execute (as applicable) and deliver to the Collateral
      Agent such further assignments, security agreements, financing statements or
      other instruments, documents, certificates and assurances and take such further
      action as the Collateral Agent may from time to time reasonably request and
      may
      reasonably deem necessary to perfect, protect or enforce its security interest
      in the Collateral.

     

    (i) With
      respect to any deposit accounts or securities accounts holding cash or
      securities in excess of $50,000 individually or $100,000 in the aggregate,
      the
      Company shall use its commercially reasonable efforts to cause the depositary
      bank or securities intermediary holding such account to enter into a control
      agreement in form and substance reasonably satisfactory to the Collateral Agent
      and establishing the Collateral Agent’s control (within the meaning of Section
      9-104 or 8-106 of the UCC, as applicable) over such deposit accounts and
      securities accounts. At the request of the Collateral Agent, the Debtors will
      move any deposit account or securities account for which they are unable to
      obtain such a control agreement to a financial institution that enters into
      such
      a control agreement.

     

    
      
        
        

      

      
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    (j) Schedule
      C
      sets
      forth a true and complete list of (i) all United States, state and foreign
      registrations of and applications for Patents, Trademarks, and Copyrights owned
      by or, in the case of Copyrights, exclusively licensed to, each Debtor and
      (ii)
      all Patent Licenses, Trademark Licenses, Trade Secret Licenses and Copyright
      Licenses material to the business of each Debtor or otherwise of material
      value.

     

    (k) Each
      Debtor shall promptly report to the Collateral Agent (i) the filing of any
      application to register any Intellectual Property with the United States Patent
      and Trademark Office, the United States Copyright Office, or any state registry
      or foreign counterpart of the foregoing (whether such application is filed
      by
      the Company or through any agent, employee, licensee, or designee thereof)
      and
      (ii) the registration of any Intellectual Property by any such office. Each
      Debtor shall take such step as may be reasonably requested by the Collateral
      Agent to ensure that the security interest of the Collateral Agent is registered
      with each such recording office. 

     

    (l) With
      respect to any Collateral that is evidenced by, or constitutes, a Certificated
      Security, Chattel Paper or Instrument (other than any Chattel Paper or
      Instruments having a value less than $10,000 individually or $50,000 in the
      aggregate), each Debtor shall cause each originally executed copy thereof to
      be
      delivered to the Collateral Agent (or its agent or designee) appropriately
      indorsed to the Collateral Agent or indorsed in blank: (i) with respect to
      any
      such Collateral in existence on the date hereof, on or prior to the date hereof
      and (ii) with respect to any such Collateral hereafter arising, within ten
      (10)
      days of such Debtor acquiring rights therein. 

     

    4. Event
      of Default.
      The
      occurrence of an Event of Default (as defined in the Notes) under the Notes
      shall constitute an Event of Default hereunder.

     

    5. Duty
      To Hold In Trust.
      Upon
      the occurrence of any Event of Default that remains continuing and at any time
      thereafter, following written notice from Collateral Agent the Company shall,
      upon receipt by it of any revenue, income or other sums subject to the Security
      Interest, whether payable pursuant to the Notes or otherwise, or of any check,
      draft, note, trade acceptance or other instrument evidencing an obligation
      to
      pay any such sum, hold the same in trust for the Collateral Agent and shall
      forthwith endorse and transfer any such sums or instruments, or both, to the
      Collateral Agent for application to the satisfaction of the
      Obligations.

     

    6. Rights
      and Remedies Upon Default.
      Upon
      occurrence of any Event of Default that remains continuing and at any time
      thereafter, the Collateral Agent shall have the right to exercise all of the
      remedies conferred hereunder, and the Collateral Agent shall have all the rights
      and remedies of a Collateral Agent under the UCC and/or any other applicable
      law
      or in equity (including, without limitation, the Uniform Commercial Code of
      any
      jurisdiction in which any Collateral is then located). Without limitation,
      the
      Collateral Agent shall have the following rights and powers:

     

    
      
        
        

      

      
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    (a) The
      Collateral Agent shall have the right to take possession of the Collateral
      and,
      for that purpose, enter, with the aid and assistance of any person, any premises
      where the Collateral, or any part thereof, is or may be placed and remove the
      same, and the Debtor shall assemble the Collateral and make it available to
      the
      Collateral Agent at places which the Collateral Agent shall reasonably select,
      whether at the Company’s premises or elsewhere, and make available to the
      Collateral Agent, without rent, all of the Company’s respective premises and
      facilities for the purpose of the Collateral Agent taking possession of,
      removing or putting the Collateral in saleable or disposable form.

     

    (b) The
      Collateral Agent shall have the right to operate the business of the each Debtor
      using the Collateral and shall have the right to assign, sell, lease or
      otherwise dispose of and deliver all or any part of the Collateral, at public
      or
      private sale or otherwise, either with or without special conditions or
      stipulations, for cash or on credit or for future delivery, in such parcel
      or
      parcels and at such time or times and at such place or places, and upon such
      terms and conditions as the Collateral Agent may deem commercially reasonable,
      all without (except as shall be required by applicable statute and cannot be
      waived) advertisement or demand upon or notice to the Company or right of
      redemption of the Company, which are hereby expressly waived. Upon each such
      sale, lease, assignment or other transfer of Collateral, the Collateral Agent
      may, unless prohibited by applicable law which cannot be waived, purchase all
      or
      any part of the Collateral being sold, free from and discharged of all trusts,
      claims, right of redemption and equities of the Company, which are hereby waived
      and released.

     

    7. Applications
      of Proceeds.
      The
      proceeds of any such sale, lease or other disposition of the Collateral
      hereunder shall be applied first, to the expenses of retaking, holding, storing,
      processing and preparing for sale, selling, and the like (including, without
      limitation, any taxes, fees and other costs incurred in connection therewith)
      of
      the Collateral, to the reasonable attorneys’ fees and expenses incurred by the
      Collateral Agent in enforcing its rights hereunder and in connection with
      collecting, storing and disposing of the Collateral, and then to satisfaction
      of
      the Obligations, and to the payment of any other amounts required by applicable
      law, after which the Collateral Agent shall pay to the Company any surplus
      proceeds.

     

    8. Costs
      and Expenses.
      The
      Company agrees to pay all reasonable out-of-pocket fees, costs and expenses
      incurred in connection with any filing required hereunder, including without
      limitation, any financing statements, continuation statements, partial releases
      and/or termination statements related thereto. The Company will also, upon
      demand, pay to the Collateral Agent the amount of any and all reasonable
      expenses, including the reasonable fees and expenses of its counsel, which
      the
      Collateral Agent may incur in connection with (i) the enforcement of this
      Agreement or (ii) the custody or preservation of, or the sale of, collection
      from, or other realization upon, any of the Collateral.

     

    9. Security
      Interest Absolute.
      All
      rights of the Collateral Agent and all Obligations of each Debtor hereunder,
      shall be absolute and unconditional, irrespective of: (a) any lack of validity
      or enforceability of this Agreement, the Notes or any agreement entered into
      in
      connection with the foregoing, or any portion hereof or thereof; (b) any change
      in the time, manner or place of payment or performance of, or in any other
      term
      of, all or any of the Obligations, or any other amendment or waiver of or any
      consent to any departure from the Notes or any other agreement entered into
      in
      connection with the foregoing; (c) any exchange, release or nonperfection of
      any
      of the Collateral, or any release or amendment or waiver of or consent to
      departure from any other collateral for, or any guaranty, or any other security,
      for all or any of the Obligations; (d) any action by the Collateral Agent to
      obtain, adjust, settle and cancel in its sole discretion any insurance claims
      or
      matters made or arising in connection with the Collateral; or (e) any other
      circumstance which might otherwise constitute any legal or equitable defense
      available to a Debtor, or a discharge of all or any part of the Security
      Interest granted hereby. Each Debtor expressly waives presentment, protest,
      notice of protest, demand, notice of nonpayment and demand for performance.
      In
      the event that at any time any transfer of any Collateral or any payment
      received by the Collateral Agent hereunder shall be deemed by final order of
      a
      court of competent jurisdiction to have been a voidable preference or fraudulent
      conveyance under the bankruptcy or insolvency laws of the United States, or
      shall be deemed to be otherwise due to any party other than the Collateral
      Agent, then, in any such event, each Debtor’s obligations hereunder shall
      survive cancellation of this Agreement, and shall not be discharged or satisfied
      by any prior payment thereof and/or cancellation of this Agreement, but shall
      remain a valid and binding obligation enforceable in accordance with the terms
      and provisions hereof. Each Debtor waives all right to require the Collateral
      Agent to proceed against any other person or to apply any Collateral which
      the
      Collateral Agent may hold at any time, or to marshal assets, or to pursue any
      other remedy. Each Debtor waives any defense arising by reason of the
      application of the statute of limitations to any obligation secured
      hereby.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    10. Power
      of Attorney.
      Each
      Debtor hereby irrevocably appoints the Collateral Agent (such appointment being
      coupled with an interest) as each Debtor’s attorney-in-fact, with full authority
      in the place and stead of such Debtor and in the name of such Debtor, the
      Collateral Agent or otherwise, from time to time upon the occurrence and during
      the continuance of any Event of Default in the Collateral Agent’s discretion to
      take any action and to execute any instrument that the Collateral Agent may
      deem
      reasonably necessary or advisable to accomplish the purposes of this Agreement.
      

     

    11. Guarantee. 

     

    (a)
      HaptoGuard hereby unconditionally and irrevocably, guarantees to the Collateral
      Agent, for the ratable benefit of the Secured Parties and their respective
      successors, indorsees, transferees and assigns, the prompt and complete payment
      and performance by the Company when due (whether at the stated maturity, by
      acceleration or otherwise) of the Obligations of the Company. HaptoGuard hereby
      agrees that this Guaranty is an absolute guaranty of payment and performance
      and
      is not a guaranty of collection

     

    If
      and to
      the extent required in order for the Obligations of HaptoGuard to be enforceable
      under applicable federal, state and other laws relating to the insolvency of
      debtors, the maximum liability of HaptoGuard hereunder shall be limited to
      the
      greatest amount which can lawfully be guaranteed by HaptoGuard under such laws.
      HaptoGuard agrees that Obligations may at any time and from time to time be
      incurred or permitted in an amount exceeding the maximum liability of HaptoGuard
      under the preceding sentence without impairing the guarantee contained in this
      Section 11 or affecting the rights and remedies of any Secured Party
      hereunder.

     

    The
      guarantee contained in this Section 11 shall remain in full force and effect
      until payment in full of the Obligations.

     

    No
      payment made by the Company, HaptoGuard or any other Person or received or
      collected by any Secured Party from the Company, HaptoGuard or any other Person
      by virtue of any action or proceeding or any set-off or appropriation or
      application at any time or from time to time in reduction of or in payment
      of
      the Company Obligations shall be deemed to modify, reduce, release or otherwise
      affect the liability of any HaptoGuard hereunder which shall, notwithstanding
      any such payment (other than any payment made by HaptoGuard in respect of the
      Obligations), remain liable for the Obligations up to the maximum liability
      of
      such HaptoGuard hereunder until the Obligations are paid in full.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    (b)
      Rights of Reimbursement, Contribution and Subrogation.

     

    All
      rights and claims of HaptoGuard based upon or relating to any right of
      reimbursement, indemnification, contribution or subrogation that may at any
      time
      arise or exist in favor of HaptoGuard as to any payment on account of the
      Obligations made by it or received or collected from its property shall be
      fully
      subordinated in all respects to the prior payment in full of all of the
      Obligations. Until payment in full of the Obligations, HaptoGuard shall not
      demand or receive any collateral security, payment or distribution whatsoever
      (whether in cash, property or securities or otherwise) on account of any such
      right or claim. If any such payment or distribution is made or becomes available
      to HaptoGuard in any bankruptcy case or receivership, insolvency or liquidation
      proceeding, such payment or distribution shall be delivered by the person making
      such payment or distribution directly to the Collateral Agent, for application
      to the payment of the Obligations. If any such payment or distribution is
      received by any Debtor, it shall be held by such Debtor in trust, as trustee
      of
      an express trust for the benefit of the Secured Parties, and shall forthwith
      be
      transferred and delivered by such Debtor to the Administrative Agent, in the
      exact form received and, if necessary, duly endorsed.


     

    HaptoGuard
      shall remain obligated hereunder notwithstanding that, without any reservation
      of rights against HaptoGuard and without notice to or further assent by any
      HaptoGuard, any demand for payment of any of the Obligations made by any Secured
      Party may be rescinded by such Secured Party and any of the Obligations
      continued, and the Obligations, or the liability of any other Person upon or
      for
      any part thereof, or any collateral security or guarantee therefor or right
      of
      offset with respect thereto, may, from time to time, in whole or in part, be
      renewed, increased, extended, amended, modified, accelerated, compromised,
      waived, surrendered or released by any Secured Party, and the Note, Warrant
      and/or Purchase Agreement and any other documents executed and delivered in
      connection therewith may be amended, modified, supplemented or terminated,
      in
      whole or in part, as the Collateral Agent (or the requisite Lenders) may deem
      advisable from time to time, and any collateral security, guarantee or right
      of
      offset at any time held by any Secured Party for the payment of the Obligations
      may be sold, exchanged, waived, surrendered or released. No Secured Party shall
      have any obligation to protect, secure, perfect or insure any Lien at any time
      held by it as security for the Company Obligations or for the guarantee
      contained in this Section 11 or any property subject thereto.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    (c)
      Guarantee Absolute and Unconditional. HaptoGuard
      waives any and all notice of the creation, renewal, extension or accrual of
      any
      of the Obligations and notice of or proof of reliance by any Secured Party
      upon
      the guarantee contained in this Section 11 or acceptance of the guarantee
      contained in this Section 11; the Obligations, and any of them, shall
      conclusively be deemed to have been created, contracted or incurred, or renewed,
      extended, amended or waived, in reliance upon the guarantee contained in this
      Section 11; and all dealings between the Company and HaptoGuard, on the one
      hand, and the Secured Parties, on the other hand, likewise shall be conclusively
      presumed to have been had or consummated in reliance upon the guarantee
      contained in this Section 11. HaptoGuard waives diligence, presentment, protest,
      demand for payment and notice of default or nonpayment to or upon the Company
      or
      HaptoGuard with respect to the Obligations. HaptoGuard understands and agrees
      that the guarantee contained in this Section 11 shall be construed as a
      continuing, absolute and unconditional guarantee of payment and performance
      without regard to (a) the validity or enforceability of the Note, Warrant and/or
      Purchase Agreement and any other documents executed and delivered in connection
      therewith, any of the Obligations or any other collateral security therefor
      or
      guarantee or right of offset with respect thereto at any time or from time
      to
      time held by any Secured Party, (b) any defense, set-off or counterclaim (other
      than a defense of payment or performance hereunder) which may at any time be
      available to or be asserted by the Company or any other Person against any
      Secured Party, or (c) any other circumstance whatsoever (with or without notice
      to or knowledge of the Company or HaptoGuard) which constitutes, or might be
      construed to constitute, an equitable or legal discharge of the Company for
      the
      Obligations, or of HaptoGuard under the guarantee contained in this Section
      11,
      in bankruptcy or in any other instance. When making any demand hereunder or
      otherwise pursuing its rights and remedies hereunder against HaptoGuard, any
      Secured Party may, but shall be under no obligation to, make a similar demand
      on
      or otherwise pursue such rights and remedies as it may have against the Company
      or any other Person or against any collateral security or guarantee for the
      Obligations or any right of offset with respect thereto, and any failure by
      any
      Secured Party to make any such demand, to pursue such other rights or remedies
      or to collect any payments from the Company or any other Person or to realize
      upon any such collateral security or guarantee or to exercise any such right
      of
      offset, or any release of the Company or any other Person or any such collateral
      security, guarantee or right of offset, shall not relieve any HaptoGuard of
      any
      obligation or liability hereunder, and shall not impair or affect the rights
      and
      remedies, whether express, implied or available as a matter of law, of any
      Secured Party against any HaptoGuard. For the purposes hereof “demand” shall
      include the commencement and continuance of any legal proceedings.

     

    (d)
      Reinstatement. The
      guarantee contained in this Section 11 shall continue to be effective, or be
      reinstated, as the case may be, if at any time payment, or any part thereof,
      of
      any of the Obligations is rescinded or must otherwise be restored or returned
      by
      any Secured Party upon the insolvency, bankruptcy, dissolution, liquidation
      or
      reorganization of the Company or HaptoGuard, or upon or as a result of the
      appointment of a receiver, intervenor or conservator of, or trustee or similar
      officer for, the Company or HaptoGuard or any substantial part of its property,
      or otherwise, all as though such payments had not been made.

     

    12. Access;
      Right of Inspection.
      The
      Collateral Agent shall at all times have full and free access during normal
      business hours following reasonable advance notice to all the books,
      correspondence and records of each Debtor, and the Collateral Agent and its
      representatives may examine the same, take extracts therefrom and make
      photocopies thereof, and each Debtor agrees to render to the Collateral Agent,
      at such Debtor's cost and expense, such clerical and other assistance as may
      be
      reasonably requested with regard thereto. The Collateral Agent and its
      representatives shall at all times also have the right to enter any premises
      of
      each Debtor and inspect any property of each Debtor where any of the Collateral
      of such Debtor granted pursuant to this Agreement is located for the purpose
      of
      inspecting the same, observing its use or otherwise protecting its interests
      therein.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    13. Further
      Assurances

     

    .
      Each
      Debtor agrees that from time to time, at the expense of such Debtor, that it
      shall promptly execute and deliver all further instruments and documents, and
      take all further action, that may be necessary or desirable, or that the
      Collateral Agent may reasonably request, in order to create and/or maintain
      the
      validity, perfection or priority of and protect any security interest granted
      hereby or to enable the Collateral Agent to exercise and enforce its rights
      and
      remedies hereunder with respect to any Collateral

     

    14. Term
      of Agreement.
      This
      Agreement and the Security Interest shall terminate on the date on which all
      payments under the Notes have been made in full. Upon such termination, the
      Collateral Agent will promptly file all termination statements with respect
      to
      any financing statement executed and filed pursuant to this Agreement.


     

    15. Notices.
      All
      notices, requests, demands and other communications hereunder shall be in
      writing and shall be sent in accordance with the provision of Section 11 of
      the
      Purchase Agreement.

     

    16. Miscellaneous.

     

    (a) No
      course
      of dealing between the Debtors and the Collateral Agent, nor any failure to
      exercise, nor any delay in exercising, on the part of the Collateral Agent,
      any
      right, power or privilege hereunder or under the Notes shall operate as a waiver
      thereof; nor shall any single or partial exercise of any right, power or
      privilege hereunder or thereunder preclude any other or further exercise thereof
      or the exercise of any other right, power or privilege.

     

    (b) All
      of
      the rights and remedies of the Collateral Agent with respect to the Collateral,
      whether established hereby or by the Notes or by any other agreements,
      instruments or documents or by law shall be cumulative and may be exercised
      singly or concurrently.

     

    (c) This
      Agreement constitutes the entire agreement of the parties with respect to the
      subject matter hereof and is intended to supersede all prior negotiations,
      understandings and agreements with respect thereto. Except as specifically
      set
      forth in this Agreement, no provision of this Agreement may be modified or
      amended except by a written agreement specifically referring to this Agreement
      and signed by the parties hereto.

     

    (d) In
      the
      event that any provision of this Agreement is held to be invalid, prohibited
      or
      unenforceable in any jurisdiction for any reason, unless such provision is
      narrowed by judicial construction, this Agreement shall, as to such
      jurisdiction, be construed as if such invalid, prohibited or unenforceable
      provision had been more narrowly drawn so as not to be invalid, prohibited
      or
      unenforceable. If, notwithstanding the foregoing, any provision of this
      Agreement is held to be invalid, prohibited or unenforceable in any
      jurisdiction, such provision, as to such jurisdiction, shall be ineffective
      to
      the extent of such invalidity, prohibition or unenforceability without
      invalidating the remaining portion of such provision or the other provisions
      of
      this Agreement and without affecting the validity or enforceability of such
      provision or the other provisions of this Agreement in any other
      jurisdiction.

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    (e) No
      waiver
      of any breach or default or any right under this Agreement shall be considered
      valid unless in writing and signed by the party giving such waiver, and no
      such
      waiver shall be deemed a waiver of any subsequent breach or default or right,
      whether of the same or similar nature or otherwise.

     

    (f) This
      Agreement shall be binding upon and inure to the benefit of each party hereto
      and its successors and assigns.

     

    (g) This
      Agreement shall be construed in accordance with the laws of the State of New
      York, except to the extent the validity, perfection or enforcement of a security
      interest hereunder in respect of any particular Collateral which are pursuant
      to
      mandatory choice of law rules governed by a jurisdiction other than the State
      of
      New York in which case such law shall govern. 

     

    (h) This
      Agreement may be executed in any number of counterparts, each of which when
      so
      executed shall be deemed to be an original, and all of which taken together
      shall constitute one and the same Agreement. In the event that any signature
      is
      delivered by facsimile transmission, such signature shall create a valid binding
      obligation of the party executing (or on whose behalf such signature is
      executed) the same with the same force and effect as if such facsimile signature
      were the original thereof.

     

    (i) To
      the
      fullest extent permitted by applicable law, each Debtor shall remain obligated
      hereunder notwithstanding that, any demand for payment of any of the Obligations
      made by any Secured Party may be rescinded by such Secured Party and any of
      the
      Obligations continued, and the Obligations or any collateral security or
      guarantee therefor or right of offset with respect thereto, may, from time
      to
      time, in whole or in part, be renewed, extended, amended, modified, accelerated,
      compromised, waived, surrendered or released by the Collateral Agent or any
      Secured Party, and the Note, Warrant and/or Purchase Agreement and any other
      documents executed and delivered in connection therewith may be amended,
      modified, supplemented or terminated, in whole or in part, as the Collateral
      Agent (or the requisite Lenders) may deem advisable from time to time, and
      any
      collateral security, guarantee or right of offset at any time held by any
      Secured Party for the payment of the Obligations may be sold, exchanged, waived,
      surrendered or released. 

     

    [REMAINDER
      OF PAGE INTENTIONALLY LEFT BLANK]

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, the parties hereto have caused this Security & Guaranty
      Agreement to be duly executed on the day and year first above
      written.

     

    


     

    DEBTORS:

    


     

    ALTEON
      INC.

     

    


    By:
      _/s/
      Noah Berkowitz___________

    Name:
      Noah Berkowitz

    Title:
      President

    


    


    HAPTOGUARD,
      INC.

    


    


    By:
      _/s/
      Noah Berkowitz_______________

    Name:
      Noah Berkowitz

    Title:
      President

    


    


    COLLATERAL
      AGENT:

    


    


    BAKER
      BROS. ADVISORS, LLC

    


    


    By: /s/
      Felix Baker__________

    Name:
      Felix Baker, Ph.D.

    Title:
      Managing Member

    


    


    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

    SCHEDULE
      A

     

    Places
      of Business of the Company:

     

    6
      Campus
      Drive

    Parsippany,
      New Jersey 07054

    


     

    Locations
      Where Collateral is Located or Stored:

     

    6
      Campus
      Drive

    Parsippany,
      New Jersey 07054

    


     

    The
      Company is currently in negotiations to move its principal place of business
      from the Parsippany address to office space located at 221 West Grand Avenue,
      Montvale, NJ.

    


     

    


    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

    SCHEDULE
      B

     

    Existing
      Liens

     

    None.

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

    SCHEDULE
      C

     

    


     

    List
      of
      Intellectual Property

     

    Copyrights

     

    None.

     

    Copyright
      Licenses

     

    None.

     

    


     

    Patents

     

    See
      attached for list of issued patents and patent applications of Alteon and
      HaptoGuard

     

    


     

    Patent
      Licenses

     

    
      	 	
              1.

            	
              Exclusive
                License Agreement dated as of September 28, 2004 by and between Oxis
                International, a Delaware corporation (“Oxis”) and HaptoGuard, as amended
                on March 22, 2005 and further amended on July 19, 2006.
                

            


    

     

    
      	 	
              2.

            	
              License
                and Research Agreement dated as of July 12, 2004 by and between BIO-RAP
                Technologies, Ltd., an Israeli corporation on its own behalf and
                on behalf
                of the Rappaport Family Institute for Research in the Medical Sciences
                and
                HaptoGaurd. 

            


    

     

    


     

    Trademarks

     

    See
      attached for list of registered trademarks of Alteon.

     

    HaptoGuard
      has no trademarks.

     

    


     

    Trademark
      Licenses

     

    None.

    


     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

    


     

    SCHEDULE
      D

    


    EXISTING
      LICENSES WHERE DEBTORS ARE LICENSORS

    


    


    License
      Agreement dated as of June 15, 2005 by and between Alteon and Avon Products,
      Inc., a New York Corporation. 

     

    
      
        
        

      

      
        18