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


 

















 


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

















 


	
   

  	
   

  	
   

  	
   

  	
  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

















 


	
   

  	
   

  	
   

  	
   

  	
  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

















 


	
  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

















 


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 


 

















 


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

















 


(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

















 


“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
















 


“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

















 


“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.


 


8

















 


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

















 


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.


 


10

















 


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.


 


11
















 


“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

















 


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.


 


13

















 


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

















 


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
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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
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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
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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 Exchange Commission. 
Asterisks denote such omission.


 


18

















 


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
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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
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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 


 


Confidential materials omitted and filed
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21

















 


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 


 


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


 


22

















 


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
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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
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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.


 


25

















 


(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.


 


26

















 


(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.


 


27
















 


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.


 


28

















 


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.


 


29

















 


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.


 


30

















 


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.


 


31

















 


(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.


 


32

















 


(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.


 


33

















 


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.


 


34

















 


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.


 


35

















 


(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.


 


36
















 


(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.


 


37





















 


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.


 


38

















 


(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.


 


39

















 


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.


 


40

















 


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.


 


41

















 


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.


 


43

















 


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.


 


44

















 


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
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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


 


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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.


 


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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
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49

















 


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
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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 


 


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51

















 


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


 


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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.


 


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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.


 


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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.


 


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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

  



 
















 


Exhibit A


 


Business Report Format


 


[*****]


 


Confidential materials omitted and filed
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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.


 

















 


Exhibit D


 


LFRP Know-How


 


[*****]


 


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


 

















 


Exhibit E


 


LFRP Libraries


 


[*****]


 


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


 
















 


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 


 


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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 


 


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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.  


 


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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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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 


 


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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 


 


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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.


 


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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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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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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.


 


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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 


 


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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.


 


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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,



 


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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 


 


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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 


 


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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 


 


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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 


 


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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 


 


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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.


 


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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.


 

















 


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.


 

















 


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.


 

















 


	
  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.


 

















 


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.


 

















 


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.


 

















 


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.


 

















 


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
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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
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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
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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
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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.


 

















 


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.


 

















 


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
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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.


 
















 


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
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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


 


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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


 


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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 


 


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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:


 


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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 


 


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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 


 


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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).


 


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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.


 


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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 


 


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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.


 

















 


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.


 

















 


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.


 

















 


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.


 

















 


“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.


 

















 


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.


 

















 


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.


 

















 


SCHEDULE
2(c)

TO

SECURITY AGREEMENT


 


License Agreements


 


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


 

















 


SCHEDULE
2(e)

TO

SECURITY AGREEMENT


 


In Licenses


 


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


 
















 


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.


 

















 


SCHEDULE
11(b)

TO

SECURITY AGREEMENT


 


Filing Jurisdictions


 


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


 

















 


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.


 

















 


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.


 

















 


Exhibit A


 


Special Power of
Attorney


 


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


 

















 


Exhibit B


 


Copyright Security
Agreement


 


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


 

















 


Exhibit C


 


Patent Security
Agreement


 


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


 

















 


Exhibit D


 


Letter
Agreement with Fisher Clinical Services


 


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


 

















 


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.


 

















 


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.


 






(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.


 
















 


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.


 

















 


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.


 

















 


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.


 

















 


Exhibit N


 


Form of  Wolf Greenfield Opinion


 


[*****]


 


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


 

















 


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.


 
















 


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.


 

















 


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.


 

















 


	
  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.


 

















 


	
  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.


 

















 


	
  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 

  	
   

  



 


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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 

  	
   

  



 


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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

  	
   

  



 


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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, 

  	
   

  



 


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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

  	
  69

  



 


Confidential materials omitted and filed
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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

  	
  69

  
	
   

  	
   

  
	
  (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

  	
  69

  
	
   

  	
   

  
	
  (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.

  	
  69

  
	
   

  	
   

  
	
  (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

  	
  70

  
	
   

  	
   

  
	
  (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

  	
  70

  
	
   

  	
   

  
	
  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

  	
  70

  
	
   

  	
   

  
	
  (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

  	
  70

  
	
   

  	
   

  
	
  (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

  	
  70

  



 


Confidential materials omitted and filed
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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

  	
  71

  
	
   

  	
   

  
	
  (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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  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

  	
  71

  
	
   

  	
   

  
	
  (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)

  	
  71

  
	
   

  	
   

  
	
  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

  	
  72

  
	
   

  	
   

  
	
  (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

  	
  72

  
	
   

  	
   

  
	
  (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

  	
  73

  
	
   

  	
   

  
	
  (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

  	
  73

  
	
   

  	
   

  
	
  (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

  	
  73

  
	
   

  	
   

  
	
  (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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  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

  	
  73

  
	
   

  	
   

  
	
  (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)

  	
  73

  
	
   

  	
   

  
	
  (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

  	
  74

  
	
   

  	
   

  
	
  (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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  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)

  	
  74

  
	
   

  	
   

  
	
  (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

  	
  74

  
	
   

  	
   

  
	
  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:

  	
  76

  
	
   

  	
   

  
	
  (B)                                                                                REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
  LOCKBOX ESCROW AGENT.  THE LOCKBOX
  ESCROW AGENT HEREBY REPRESENTS, WARRANTS AND COVENANTS TO COMPANY AND LENDER
  THAT:

  	
  76

  
	
   

  	
   

  
	
  (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:

  	
  76

  
	
   

  	
   

  
	
  (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:

  	
  77

  
	
   

  	
   

  
	
  (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:

  	
  77

  
	
   

  	
   

  
	
  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)

  	
  78

  



 


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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

  	
  78

  
	
   

  	
   

  
	
  (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

  	
  78

  
	
   

  	
   

  
	
  (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

  	
  78

  
	
   

  	
   

  
	
  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 

  



 


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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

  	
  79

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  (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

  	
  79

  
	
   

  	
   

  	
   

  
	
  (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

  	
  79

  
	
   

  	
   

  	
   

  
	
  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)

  	
  80

  
	
   

  	
   

  	
   

  
	
  (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

  	
  80

  
	
   

  	
   

  	
   

  
	
  (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

  	
  80

  



 


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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

  	
   

  



 


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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

  	
  81

  
	
   

  	
   

  	
   

  
	
  (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

  	
  81

  
	
   

  	
   

  	
   

  
	
  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;

  	
  82

  



 


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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.

  	
  82

  
	
   

  	
   

  	
   

  
	
  (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.

  	
  82

  
	
   

  	
   

  	
   

  
	
  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.

  	
  82

  
	
   

  	
   

  	
   

  
	
  (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.

  	
  82

  
	
   

  	
   

  	
   

  
	
  (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.

  	
  83

  
	
   

  	
   

  	
   

  
	
  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

  	
   

  



 


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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

  



 


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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.

  



 


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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

  



 


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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

  	
   

  



 


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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

  	
   

  



 


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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

  	
   

  



 


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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

  	
  111

  
	
   

  	
   

  	
   

  
	
  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.

  	
  203

  



 


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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

  	
   

  	
   

  



 

















 


	
  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
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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 

  	
   

  	
   

  



 


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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 

  	
   

  	
   

  



 


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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.


 

















 


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
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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
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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 


 


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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 


 


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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, 


 


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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.


 


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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 


 


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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 


 


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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 


 


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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


 


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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.


 


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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


 


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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 


 


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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.


 

















 


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.


 
















 


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.


 

















 


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.


 

















 


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.


 

















 


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.


 

















 


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.