Exhibit 10.5


 


SECURITY
AGREEMENT


 


This SECURITY
AGREEMENT, dated as of the 18th day of June, 2003, made by Photogen
Technologies, Inc., a Nevada corporation (the “Grantor”), in favor of Oxford
BioScience Partners IV L.P., a Delaware limited partnership, MRNA Fund II L.P.,
a Delaware limited partnership,  and Mi3
L.P., a Delaware limited partnership (the “Secured Parties”).


 


WITNESSETH


 


WHEREAS, the
Grantor has agreed to grant to the Secured Parties a security interest in
certain of its property and assets relating to the Product (as defined below)
to secure the performance of the obligations of the Grantor under certain
Revolving Convertible Senior Secured Promissory Notes in favor of each of the
Secured Parties in the aggregate original principal amount of up to $4,160,000
(collectively, the “Convertible Notes”); and


 


NOW,
THEREFORE, in consideration of the premises set forth above the Grantor hereby
agrees with the Secured Parties as follows:


 


TERMS


 


1.                                       Defined
Terms.  The terms set forth below
have the following meanings:


 


“Accounts”
shall have the meaning assigned to such term under the Code.


 


“Chattel
Paper” shall have the meaning assigned to such term under the Code.


 


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


 


“Documents”
shall have the meaning assigned to such term under the Code.


 


“Event of
Default” means:


 


1.                                       the
failure by the Grantor to perform in any material respect any obligation of the
Grantor under this Security Agreement as and when required by this Security
Agreement; or


 


2.                                       any
representation or warranty made by the Grantor pursuant to this Security
Agreement is untrue in any material respect when made; or


 


3.                                       the
failure by the Grantor to perform in any material respect any obligation of the
Grantor under the Patent and Trademark Security Agreement as and when required
by the Patent and Trademark Security Agreement; or


 


4.                                       any
representation or warranty made by the Grantor pursuant to the Patent and
Trademark Security Agreement is untrue in any material respect when made; or


 


5.                                       the
security interests granted herein and pursuant to the Patent and Trademark
Security Agreement do not constitute for any reason a second priority perfected
security interest


 

















 


in the Collateral covered
thereby (other than as a result of a failure to make the filings specified in
Schedule II of this Security Agreement and Exhibits C, D and E of the Patent
and Trademark Security Agreement); or


 


6.                                       the
Grantor shall file a petition under bankruptcy, insolvency or debtor’s relief
law or make an assignment for the benefit of its creditors; or


 


7.                                       a
court of competent jurisdiction enters an order or decree under any federal or
state bankruptcy law that (X) is for relief against the Grantor in an
involuntary case brought with respect to the Grantor in such court, (Y)
appoints a custodian, receiver or other similar official for all or
substantially all the Grantor’s property or (Z) orders the liquidation of the
Grantor, and the order or decree remains unstayed and in effect for 60 days; or


 


8.                                       any
representation or warranty made by the Grantor pursuant to the Going Forward
Agreement is untrue in any material respect when made;


 


9.                                       failure
of the Grantor to pay any Obligation when due or to perform in any material
respect any other obligation of the Grantor under the Going Forward Agreement
as and when required by the Going Forward Agreement; or


 


10.                                 the
loss or suspension of the Food and Drug Administration approval relating to the
Product;


 


11.                                 the
Grantor shall fail to pay when due (after the expiration of any cure period
provided by agreements governing the obligation) any principal of, premium or
interest on or any amount payable in respect of any borrowed money indebtedness
or


 


12.                                 the
failure by the Grantor to perform in any material respect any obligation of the
Grantor under those certain secured promissory notes made by the Grantor in
favor of the Secured Parties of even date herewith (the “Notes”).


 


“General
Intangibles” shall have the meaning assigned to such term under the Code.


 


“Instrument”
shall have the meaning assigned to such term under the Code.


 


“Inventory”
shall have the meaning assigned to such term under the Code, and in any event,
including all inventory, merchandise, goods and other personal property that
are held by or on behalf of a person for sale or lease or to be furnished under
a contract of service or which give rise to any Account, including returned
goods.


 


“Investment
Property” shall have the meaning assigned to such term under the Code.


 


“Lease”
shall mean the lease, between Equity Office Properties Trust, as successor in
interest to WHAMC Real Estate Limited Partnership, and Alliance, dated November
7, 1997, for the property located at 6175 Lusk Boulevard, San Diego, California
92121, as assigned to, and assumed by, the Grantor as of the Closing Date.


 


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“License
Agreement” shall mean the amended and restated License Agreement, dated
February 22, 2002, between Schering Aktiengesellschaft (“Schering”) and
Alliance, as amended and assigned to, and assumed by, the Grantor pursuant to
the terms and conditions of the Amendment and Assumption Agreement, dated of
June 2003 by and among  Schering,
Grantor, Alliance and Bracco International B.V.


 


“Lien”
shall mean any lien, mortgage, security interest, chattel mortgage, pledge or
other encumbrance (statutory or otherwise) of any kind securing satisfaction or
performance of an obligation, including any agreement to give any of the
foregoing, any conditional sales or other title retention agreement, any lease
in the nature thereof, and the filing of or the agreement to give any financing
statement under the Code of any jurisdiction or similar evidence of any
encumbrance, whether within or outside the United States.


 


“Marketing
Agreement” shall mean the Marketing Services Agreement, dated March 7, 2003
between Alliance and Gerbig, Snell/Weisheimer Advertising, LLC (“GSW”), as
amended and assigned to and assumed by, the Grantor pursuant to the terms and
conditions of the Amendment and Assumption Agreement, dated of June 2003 (the
“GSW Agreement”) by and among GSW, Grantor and Alliance.  The capitalized terms “Advertising Plans”,
“Financing Transaction” and “Payment Shares” used herein shall have the respective
meanings given such terms in the GSW Agreement.


 


“Obligations”
shall mean:


 


1.                                       all obligations
and liabilities to the Secured Parties, whether now existing or hereafter
arising, under the Going Forward Agreement (including, without limitation, the
payment obligations under Section 2(b)(i) of the Going Forward Agreement and
pursuant to the Put Right (as defined in the Going Forward Agreement)), this
Security Agreement, the Patent and Trademark Security Agreement, the Notes
and/or any document or agreement related to any of the foregoing and the due
performance and compliance with the terms of the Going Forward Agreement, this
Security Agreement, the Patent and Trademark Security Agreement, the Notes
and/or any document or agreement related to any of the foregoing;


 


2.                                       any and all sums
advanced by the Secured Parties in order to preserve the Collateral or to
preserve the Secured Parties’ security interest in the Collateral; and


 


3.                                       in the event of
any proceeding for the collection or enforcement of any obligations or
liabilities of the Grantor referred to in the immediately preceding clauses (1)
through (2) in accordance with the terms of the Going Forward Agreement, this
Security Agreement, the Patent and Trademark Security Agreement, the Notes
and/or any document or agreement related to the foregoing, the expenses of
re-taking, holding, preparing for sale, selling or otherwise disposing of or
realizing on the Collateral, or of any other exercise by the Secured Parties of
their rights hereunder, together with reasonable attorneys’ fees and court
costs.


 


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“Patent and
Trademark Security Agreement” shall mean that certain Patent and Trademark
Security Agreement dated as of the date hereof between the Grantor and the
Secured Parties.


 


“Proceeds”
shall have the meaning assigned to such term under the Code.


 


“Product”
means Imagent®
a sterile, non-pyrogenic white powder with a diluted perflexane headspace that,
after reconstitution into a suspension of microspheres, is used for contrast
enhancement during the indicated ultrasound imaging procedures and is indicated
for use in patients with suboptimal echocardiograms to opacify the left
ventricular chamber and to improve the delineation of the left ventricular
endocardial border.


 


“Proprietary
Information” means information generally unavailable to the public that has
been created, discovered, developed or otherwise become known to the Grantor or
in which property rights have been assigned or otherwise conveyed to the Grantor,
which information has economic value or potential economic value to the
marketing, sale and distribution of the Product.  Proprietary Information shall include, but not be limited to,
trade secrets, processes, formulas, writings data, know-how, negative know-how,
improvements, discoveries, developments, designs, inventions, techniques,
technical data, customer and supplier lists, financial information, business
plans or projections and modifications or enhancements to any of the above.  Proprietary Information shall include all
information existing on the date hereof and all information developed or
acquired hereafter.


 


“Security
Agreement” means this Security Agreement, as amended, supplemented or
otherwise modified from time to time.


 


“Territory”
shall mean the United States of America, its territories and possessions.


 


“Vendor
Agreement” means the Vendor Agreement, dated February 28, 2002, between
RedKey, Inc., an Ohio corporation doing business as Cardinal Health Sales and
Marketing Services, and the Grantor, as amended in accordance with the terms of
this Security Agreement.


 


2.                                       Grant
of Security Interest.  As collateral
security for the prompt and complete payment and performance when due of the
Obligations, the Grantor hereby grants to the Secured Parties a continuing
second priority security interest in all of the Grantor’s right, title and
interest in and to the following property now owned or at any time hereafter
acquired by the Grantor or in which the Grantor now has or at any time in the future
may acquire right, title or interest (collectively, the “Collateral”):


 


(i)                                     the
Vendor Agreement, to the extent and only to the extent that the Vendor
Agreement authorizes the marketing and sale of the Product in the Territory;


 


(ii)                                  the
License Agreement;


 


(iii)                               the
Lease;


 


(iv)                              the
Marketing Agreement, subject to the provisions of Section 6 of the GSW
Agreement which provide for the continuing ownership of GSW in the Advertising


 


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Plans unless and until the
Financing Transaction has been successfully completed and the Payment Shares
have been issued (the “GSW Ownership Rights”);


 


(v)                                 all
Proprietary Information, whether existing on the date hereof or developed or
acquired hereafter;


 


(vi)                              contracts,
Documents and General Intangibles developed or acquired by the Grantor, whether
now existing or hereafter arising, to the extent and only to the extent related
to the use, sale, manufacture, marketing or distribution of the Product and all
amendments, modifications and supplements thereto;


 


(vii)                           the
manufacturing facility described on Schedule I hereto and all of the equipment
located therein used in connection with the manufacture and distribution of the
Product;  provided
that in the event that Grantor, in the ordinary course of its business, leases
or obtains purchase money financing from non-affiliated third parties for any
new equipment that constitutes Collateral, the Secured Parties agree that the
lessor or equipment financier shall have a second priority security interest in
such new equipment and the Secured Parties shall have a second priority
security interest in such equipment (and shall execute such documents necessary
to effect such subordination, including UCC-3 filings) on the condition that the
lessor or equipment financier collaterally assigns any such equipment or
equipment lease to the Secured Parties on terms and conditions reasonably
satisfactory to the Secured Parties;


 


(viii)                        the
approved new drug application NDA #21-191 for the Product, and all amendments,
modifications and supplements thereto;


 


(ix)                                all
books, records, ledgercards, files, correspondence, computer programs, tapes,
disks and related data processing software (owned by the Grantor or in which it
has an interest) which at any time evidence or contain information relating to
any or all of (i), (ii), (iii), (iv), (v), (vi), (vii) and (viii) above or are
otherwise necessary or helpful in the collection thereof or realization
thereupon;


 


(x)                                   documents
of title, policies and certificates of insurance, securities, Chattel Paper,
other documents or instruments evidencing or pertaining to any or all of (i),
(ii), (iii), (iv), (v), (vi), (vii) and (viii) above;


 


(xi)                                all
Supporting Obligations (as defined in the Code) and guaranties, including
letters of credit and guarantees issued in support of Accounts and Chattel
Paper, General Intangibles and Investment Property (as defined in the Code),
Liens on real or personal property, leases, and other agreements and property
which in any way secure or relate to any or all of (i), (ii), (iii), (iv), (v),
(vi), (vii), (viii), (ix)  and (x)
above, or are acquired for the purpose of securing and enforcing any item
thereof;


 


(xii)                             (A)
all cash held as cash collateral to the extent not otherwise constituting
Collateral, all other cash or property at any time on deposit with or held by
the Secured Parties for the account of the Grantor (whether for safekeeping,
custody, pledge, transmission or otherwise), (B) all Payment Intangibles (as
defined in the Code), (C) all letter of credit obligations, (D) all investments
and reinvestments (however evidenced) of amounts from time to time credited to
such accounts, and (E) all interest, dividends, distributions and other


 


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proceeds payable on or with
respect to (1) such investments and reinvestments and (2) such accounts, and
(3) all Investment Property; and


 


(xiii)                          all
products and proceeds of (i), (ii), (iii), (iv), (v), (vi), (vii), (viii),
(ix), (x), (xi) and (xii) above (including, but not limited to, all claims to
items referred to in  (i), (ii), (iii),
(iv), (v), (vi), (vii), (viii), (ix), (x), (xi) and (xii) above) and all claims
of the Grantor against third parties for (a) loss of, damage to, or destruction
of, and payments due or to become due under leases, rentals and hires of any or
all of, (i), (ii), (iii), (iv), (v), (vi), (vii), (viii), (ix), (x), (xi) and
(xii) above and (b) proceeds payable under, or unearned premiums with respect
to policies of insurance in whatever form; and


 


(xiv)                         all
inventory, equipment (including without limitation equipment located at the
manufacturing facility described on Schedule I), accounts, Chattel Paper,
letter of credit rights, Instruments, commercial tort claims, and investment
property  to the extent it is related to
the Product or necessary for the manufacture and sale of the Product; provided
that in the event that Grantor, in the ordinary course of its business, leases
or obtains purchase money financing from non-affiliated third parties for any
new equipment that constitutes Collateral, the Secured Parties agree that the
lessor or equipment financier shall have a second priority security interest in
such new equipment and the Secured Parties shall have a second priority
security interest in such equipment (and shall execute such documents necessary
to effect such subordination, including UCC-3 filings) on the condition that
the lessor or equipment financier collaterally assigns any such equipment or
equipment lease to the Secured Parties on terms and conditions reasonably
satisfactory to the Secured Parties;.


 


3.                                       Rights
of the Secured Parties; Limitations on the Secured Parties’ Obligations.


 


(a)                                  Grantor
Remains Liable under Accounts and Contracts.  Anything herein to the contrary notwithstanding, the Grantor
shall remain liable under each of the Accounts and contracts that constitute
part of the Collateral to observe and perform all the conditions and
obligations to be observed and performed by it thereunder, all in accordance
with the terms of any agreement giving rise to each such Account and in
accordance with and pursuant to the terms and provisions of each such
contract.  The Secured Parties shall not
have any obligation or liability under any Account that constitutes part of the
Collateral (or any agreement giving rise thereto) or under any contract that
constitutes part of the Collateral by reason of or arising out of this Security
Agreement or the receipt by the Secured Parties of any payment relating to such
Account or contract pursuant hereto, nor shall the Secured Parties be obligated
in any manner to perform any of the obligations of the Grantor under or
pursuant to any such Account (or any agreement giving rise thereto) or under or
pursuant to any such contract, to make any payment, to make any inquiry as to
the nature or the sufficiency of any payment received by it or as to the
sufficiency of any performance by any party under any such Account (or any
agreement giving rise thereto) or under any such contract, to present or file
any claim, to take any action to enforce any performance or to collect the
payment of any amounts which may have been assigned to it or to which it may be
entitled at any time or times.


 


(b)                                 Verification
and Analysis of Accounts.  If an
Event of Default has occurred and is continuing, the Secured Parties shall have
the right to communicate with account debtors on the Accounts that constitute
part of the Collateral and parties to the contracts that


 


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constitute part of the
Collateral to verify with them to its satisfaction the existence, amount and
terms of any such Accounts or contracts and to make test verifications of such
Accounts in any manner and through any medium that it reasonably considers
advisable, and the Grantor shall furnish all such assistance and information as
the Secured Parties may require in connection therewith.  At any time and from time to time, but not
more than twice within any 180-day period, upon the Secured Parties’ reasonable
request and at the expense of the Grantor, the Grantor shall cause independent
public accountants or others satisfactory to the Secured Parties to furnish to
the Secured Parties reports showing reconciliations, aging and test verifications
of, and trial balances for, such Accounts.


 


4.                                       Representations
and Warranties.  The Grantor hereby
represents and warrants that:


 


(a)                                  Title;
No Other Liens.  Except for the Lien
granted to the Secured Parties pursuant to this Security Agreement, the Lien
granted to the Secured Parties pursuant to the terms of the Patent and
Trademark Security Agreement and the GSW Ownership Rights, the Grantor owns
each item of the Collateral free and clear of any and all Liens or claims of
others.  No security agreement,
financing statement or other public notice with respect to all or any part of
the Collateral is on file or of record in any public office, except such as may
have been filed in favor of the Secured Parties pursuant to this Security
Agreement and the Patent and Trademark Security Agreement.


 


(b)                                 Perfected
Second Priority Liens.  The Liens
granted pursuant to this Security Agreement will constitute upon the completion
of all the filings or notices listed in Schedule II hereto, perfected Liens on all
Collateral, which are prior to all other Liens on such Collateral and which are
enforceable as such against all creditors of the Grantor.


 


(c)                                  Accounts.  To the Grantor’s knowledge, no amount
payable to the Grantor under or in connection with any Account that constitutes
part of the Collateral is evidenced by any Instrument (other than checks in the
ordinary course of business) or Chattel Paper which has not been delivered to
the Secured Parties.  The place where
the Grantor keeps its records concerning the Accounts that constitute part of
the Collateral is set forth on Schedule III hereto.


 


(d)                                 Consents.  No consent (other than the consent of Equity
Office Properties Trust, to be obtained after the consummation of the
transaction contemplated by the Asset Purchase Agreement) of any party (other
than the Grantor) to any contract that constitutes part of the Collateral is
required, or purports to be required, in connection with the execution,
delivery and performance of this Security Agreement.


 


(e)                                  Inventory.  The Inventory that constitutes part of the
Collateral is, as of the date hereof, kept at the locations listed on Schedule IV
hereto.


 


(f)                                    Chief
Executive Office.  The Grantor’s
chief executive office and chief place of business is located at 140 Union
Square Drive, New Hope, PA 18938.


 


(g)                                 Power
and Authority.  The Grantor has full
power, authority and legal right to enter into this Security Agreement and to
grant the Secured Parties the Lien on the Collateral pursuant to this Security
Agreement.


 


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(h)                                 Binding
Obligation.  This Security Agreement
has been duly executed and delivered by the Grantor and constitutes a legal,
valid and binding obligation of the Grantor enforceable in accordance with its
terms, subject to bankruptcy, insolvency and other similar laws generally
affecting or relating to the enforceability of creditors’ rights.


 


(i)                                     Non
Violation.  The execution, delivery
and performance of this Security Agreement will not violate any provision of
any applicable law or regulation or of any order, judgment, writ, award or
decree of any court, arbitrator or governmental authority, domestic or foreign,
or of any securities issued by the Grantor, or of any mortgage, indenture,
lease, contract or other agreement (upon receipt of the consent set forth in
Section 4(d) above), instrument or undertaking to which the Grantor is a party
or which purports to be binding upon the Grantor or upon any of its assets and
will not result in the creation or imposition of any Lien on any of the assets
of the Grantor except as contemplated by this Security Agreement and the Patent
and Trademark Security Agreement.


 


(j)                                     Consents.  To Grantor’s knowledge, no consent, filing,
approval, registration, recording, or other action is required (x) for the
grant by the Grantor of the Lien on the Collateral pursuant to this Security
Agreement or for the execution, delivery or performance of this Security
Agreement by the Grantor, or (y) to perfect the Lien purported to be created by
this Security Agreement, in each case except as set forth in Section 4(d)
above.


 


(k)                                  Validity
of Collateral.  To the knowledge of
the Grantor, all of the Collateral is subsisting and is valid, with the
exception of the Vendor Agreement which has not yet been assigned to the
Grantor.  Promptly upon assignment of
the Vendor Agreement to the Grantor, but in any event within five (5) days
thereafter, Grantor will provide a collateral assignment, in substantially the
form previously provided by Vendor to the Secured Parties, of such Vendor
Agreement to the Secured Parties.


 


(l)                                     Organization.  The Grantor is a corporation duly organized,
validly existing and in good standing under the laws of the State of Nevada and
duly qualified and in good standing in every other state or jurisdiction in
which the nature of the Grantor’s business or the ownership of its assets
requires such qualification except where the failure to so qualify would not
have a material adverse effect on the Grantor or the Collateral.


 


5.                                       FDA
Representations, Warranties and Covenants.


 


(a)                                  Compliance with FDC Act.  The Grantor represents and warrants that,
with respect to the Product, Grantor has, and to Grantor’s knowledge based on
its due diligence investigation in connection with the Asset Purchase
Agreement, Alliance has at all times prior to the date hereof complied with
and, so long as any Obligations are outstanding, will continue to comply with
all provisions of the Federal Food, Drug, and Cosmetic Act and its implementing
regulations, and all other federal and state regulatory requirements, governing
the manufacturing, holding, processing, sale, and marketing of the Product,
including, but not limited to:


 


(i)                                     the
terms and specifications set forth in the approved new drug application NDA
#21-191 (the “NDA”) for the Product, and any supplements and amendments
relating thereto;


 


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(ii)                                  postapproval
commitments and/or requirements outlined in the Food and Drug Administration’s
(the “FDA”) NDA approval letters for the Product, copies of which are attached
hereto as Exhibit
A;


 


(iii)                               FDA’s
good manufacturing practices regulations that apply to drugs;


 


(iv)                              adverse
event reporting;


 


(v)                                 establishment
registration and drug listing;


 


(vi)                              submission
of all required NDA supplements for changes to the terms and specifications set
forth in the NDA;


 


(vii)                           promotional
requirements and restrictions, including but not limited to applicable
advertising laws and requirements;


 


(viii)                        label and
labeling requirements; and


 


(ix)                                not
making any misrepresentation of fact to the FDA with regard to the NDA and/or
the Product.


 


(b)                                 Transfer
of Documentation.  Within
5 days following written notice by the Secured Parties, the Grantor shall
provide the Secured Parties with a copy of all documentation necessary for the
Grantor and/or the Secured Parties to be in and remain in full compliance with
the NDA, pursuant to section 314.72 of Title 21 of the Code of Federal
Regulations, including, but not limited to: the NDA and any amendments and
supplements thereto; all correspondence concerning the NDA between the FDA and
Grantor whether written before or after the NDA was approved; all contracts
with suppliers of ingredients and raw materials for the  Product; all batch records regarding the
Product; all validation studies; all stability reports; all standard operating
procedures; all postmarket surveillance files, including adverse event reports;
and postmarket studies.  At that same
time, Grantor shall also provide the Secured Parties with a copy of the
following additional documentation:


 


(i)                                     a
list of the names, addresses, and job descriptions of all employees involved in
the manufacturing, sale and distribution of the Product;


 


(ii)                                  a
list of the names, addresses and job descriptions of all employees involved in
purchasing ingredients or raw materials for the Product;


 


(iii)                               a
list of the names, addresses and job descriptions of all employees involved in
quality control and quality assurance for the Product;


 


(iv)                              all
employment and consulting agreements for any person or entity involved in the
manufacturing, sale and/or distribution of the Product;


 


(v)                                 all
audit and consulting reports done by any person or entity concerning Grantor’s
compliance with, or potential failure to comply with, obligations relating to


 


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the Federal Food, Drug, and
Cosmetic Act and/or all other applicable federal and state regulatory
requirements; and


 


(vi)                              a
list of the names and addresses of all customers for, and suppliers of, the
Product or any of its ingredients.


 


(c)                                  Recalls
etc.  The Grantor agrees to handle
the administration of, and be responsible for all costs and expenses relating
to, all court actions, claims, governmental investigations or inquiries,
recalls, stock recoveries or market withdrawals of the Product, including but
not limited  to, making all necessary
and appropriate contacts with federal and state authorities, notifications to
third parties, and Product disposition. 
The Grantor shall indemnify and hold the Secured Parties harmless from
all claims, actions, losses, liabilities, damages and expenses arising from
such matters, regardless of whether such claims, actions, losses, liabilities,
damages and expenses relate to the period prior to or after the occurrence of
an Event of Default.


 


(d)                                 Withdrawal
of Product.  Grantor represents that
there exists no set of facts which could furnish a basis for the withdrawal,
suspension or termination of the NDA or any threatened or potential request for
the recall or cessation of sales of the Product covered by that NDA by the FDA
or any other governmental authority.


 


6.                                       Covenants.


 


(a)                                  The
Grantor covenants and agrees with the Secured Parties that from and after the
date of this Security Agreement until the payment or performance in full by the
Grantor of all of its Obligations:


 


(i)                                     Further
Documentation; Pledge of Instruments and Chattel Paper.  At any time and from time to time, upon the
written request of the Secured Parties, and at the sole expense of the Grantor,
the Grantor will promptly and duly execute and deliver such further instruments
and documents and take such further action as the Secured Parties may
reasonably request for the purpose of obtaining or preserving the full benefits
of this Security Agreement and of the rights and powers herein granted,
including, without limitation, (i) the filing of any financing or continuation
statements under the Code in effect in any such jurisdiction with respect to
the Liens created hereby.  The Grantor
also hereby authorizes the Secured Parties to file any such financing or
continuation statement without the signature of the Grantor to the extent
permitted by applicable law.  A carbon,
photographic or other reproduction of this Security Agreement shall be
sufficient as a financing statement for filing in any jurisdiction.  If any amount payable under or in connection
with any of the Collateral shall be or become evidenced by any Instrument or
Chattel Paper, such Instrument or Chattel Paper shall be immediately delivered
to the Secured Parties, duly endorsed in a manner satisfactory to the Secured
Parties, to be held as Collateral pursuant to this Security Agreement.


 


(ii)                                  Indemnification.  The Grantor agrees to pay, and to save the
Secured Parties harmless from, any and all liabilities, costs and expenses
(including, without limitation, legal fees and expenses) (i) with respect to,
or resulting from, any delay in paying, any and all excise, sales or other
taxes which may be payable or determined to be payable with respect to any of
the Collateral, (ii) with respect to, or resulting from, any delay by the
Grantor in


 


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complying with any law or
regulation applicable to any of the Collateral, (iii) in connection with any
action taken by the Secured Parties in exercising its rights under this
Security Agreement, other than actions involving any Secured Party’s gross
negligence, bad faith or violation of law, and (iv) in connection with the
preparation and enforcement of this Security Agreement and the related
documents.  In any suit, proceeding or
action brought by the Secured Parties under any Account or contract that
constitutes part of the Collateral for any sum owing thereunder, or to enforce
any provisions of any such Account or contract, the Grantor will save,
indemnify and keep the Secured Parties harmless from and against all expense,
loss or damage suffered by reason of any defense, setoff, counterclaim,
recoupment or reduction or liability whatsoever of the account debtor or
obligor thereunder, arising out of a breach by the Grantor of any obligation
thereunder or arising out of any other agreement, indebtedness or liability at
any time owing to or in favor of such account debtor or obligor or its
successors from the Grantor.


 


(iii)                               Maintenance
of Records.  The Grantor will keep
and maintain at its own cost and expense satisfactory and complete records of
the Collateral, including, without limitation, a record of all payments
received and all credits granted with respect to the Accounts that constitute
part of the Collateral.  The Grantor
hereby grants to the Secured Parties access to all of the Grantor’s books and
records pertaining to the Collateral, and the Grantor shall turn over any such
books and records for inspection at the office of the Grantor to the Secured
Parties or to their representatives during normal business hours at the request
of the Secured Parties.


 


(iv)                              Limitation
on Liens on Collateral.  The Grantor
(x) will not create, incur or permit to exist, will defend, at its own expense,
the Collateral against, and will take such other action as is necessary to
remove, any Lien or claim on or to the Collateral, and (y) will defend the
right, title and interest of the Secured Parties in and to any of the
Collateral against the claims and demands of all persons whomsoever.


 


(v)                                 Limitations
on Dispositions of Collateral.  The
Grantor will not sell, transfer, lease or otherwise dispose of any of the
Collateral, or attempt, offer or contract to do so except for sales of
Inventory and the collection and use of cash proceeds in the ordinary course of
its business without express, written agreement by the Secured Parties.


 


(vi)                              Limitations
on Performance of Contracts and Agreements Giving Rise to Accounts.  The Grantor will not (i) fail to exercise
promptly and diligently each and every material right or fail to perform each
material obligation which it may have under each contract that constitutes part
of the Collateral and each agreement giving rise to an Account that constitutes
part of the Collateral (other than any right of termination) except where the
Grantor determines in its reasonable business judgment that the failure to
exercise such right or perform such obligation is in the best interest of the
Grantor and consistent with the protection and preservation of the rights and
interests of the Secured Parties in the Collateral or (ii) fail to deliver to
the Secured Parties, upon request, a copy of each material demand, notice or
document received by it relating in any way to any contract that constitutes
part of the Collateral or any agreement giving rise to an Account that
constitutes part of the Collateral.  The
Grantor will not amend or modify the terms of, or waive any rights under, any
contracts, including the Vendor Agreement, without the express written consent
of Secured Parties.


 


11

















 


(vii)                           Further
Identification of Collateral.  The
Grantor will furnish to the Secured Parties from time to time, upon the request
of the Secured Parties, statements and schedules further identifying and
describing the Collateral and such other reports in connection with the
Collateral as the Secured Parties may reasonably request, all in reasonable
detail.


 


(viii)                        Notices.  The Grantor will advise the Secured Parties
promptly, in reasonable detail, at its address in accordance with Section 14,
(i) of any Lien (other than Liens permitted hereunder) on, or claim asserted
against, any of the Collateral and (ii) of the occurrence of any other event
which could reasonably be expected to have a material adverse effect on the
value of any material portion of the Collateral or on the Liens created
hereunder.


 


(ix)                                Change
of Name; Location of Collateral; Records; Place of Business.  The Grantor shall not make any change (a) in
its name, (b) in the location of its chief executive office, its principal
place of business, any office in which it maintains books or records relating
to Collateral owned by it or any office facility at which Collateral owned by
it is located (including the establishment of any such new office or facility)
from the locations set forth on Schedule I attached hereto, (c) in its
identity or type of organization or corporate structure (d) in its Federal
Taxpayer Identification Number or organizational identification number or (e)
in its jurisdiction or organization unless (i) the Guarantor provides the
Secured Parties at least 30 days prior written notice of such change and (ii)
all filings have been made under the Code or otherwise that are required in
order for the Secured Parties to continue at all times following such change to
have a valid, legal and perfected second priority security interest in all the
Collateral.


 


(x)                                   Subsidiaries.  This Security Agreement is entered into on
behalf of and for the benefit of the Grantor and its subsidiaries and other
entities controlled by the Grantor which have rights in the Collateral.  The security interest granted by the Grantor
hereunder is intended to include all rights of the Grantor in and to the
Collateral, including any rights of its subsidiaries and such other entities in
and to such Collateral, and the Grantor will not permit such subsidiaries and
entities to exercise any of their rights with respect to the Collateral.


 


(xi)                                Payment
of Taxes and Other Claims.  The
Grantor shall pay or discharge when due all taxes, assessments and governmental
charges or levies imposed upon it unless same are not delinquent, provided,
however, that the Grantor shall have the right to challenge in good faith by
appropriate proceedings any disputed taxes, assessments or governmental charges
or levies provided that the Grantor establishes appropriate reserves therefor
in accordance with generally accepted accounting principles; and, provided,
further, that notwithstanding any such contest, the Grantor shall pay such
disputed taxes, assessments and governmental charges or levies if nonpayment
would result in the imposition of any Lien on the Grantor’s assets or
properties.


 


(xii)                             Indebtedness;
Distributions; Investments; Consolidation and Merger; Subsidiaries; Nature of
Business; Affiliate Transactions; Invoices.  The Grantor shall not (i) create, incur, assume or suffer to
exist any indebtedness (exclusive of trade debt) whether secured or unsecured
other than the Grantor’s indebtedness to the Secured Parties and any
indebtedness now or hereafter existing to Oxford Bioscience Partners IV, L.P.
and MRNA Fund II, L.P. or their respective affiliates; provided, that, any
security interest in such existing or hereafter existing indebtedness to Oxford
Bioscience Partners IV, L.P. and MRNA Fund II, L.P.


 


12

















 


or their respective affiliates
is expressly made junior in priority to the Secured Parties’ interest in the
Collateral; (ii) declare, pay or make any dividend or distribution on any
shares of the common stock or preferred stock of the Grantor or apply any of
its funds, property or assets to the purchase, redemption or other retirement
of any common or preferred stock of the Grantor; (iii) directly or indirectly,
prepay any indebtedness (other than to the Secured Parties), or repurchase,
redeem, retire or otherwise acquire any indebtedness of the Grantor; (iv) make
advances, loans or extensions of credit to any person; (v) become either
directly or contingently liable upon the obligations of any person by
assumption, endorsement or guaranty thereof or otherwise; (vi) enter into any
merger, consolidation or other reorganization with or into any other person or
acquire all or a portion of the assets or stock of any person or permit any
other person to consolidate with or merge with it; (vii) form any Subsidiary or
enter into any partnership, joint venture or similar arrangement; (viii) materially
change the nature of the business in which it is presently engaged; (ix) enter
into any transaction with any affiliate, except in ordinary course on
arms-length terms; or (xi) bill accounts under any name except the present name
of the Grantor.


 


(xiii)                          Maintain
Operations and Manufacturing. 
Following an Event of Default, the Grantor shall use commercially
reasonable efforts to continue to maintain and operate the manufacturing
facility described on Schedule I hereto and to manufacture and
distribute the Product.  In the event
that the Grantor for any reason is unable or unwilling to maintain and operate
such manufacturing facility and manufacture and distribute the Product, the
Secured Parties or their designee shall have the right to maintain and operate
such manufacturing facility and use the Collateral in order to manufacture and
distribute the Product, subject to the terms of the lease of the manufacturing
facility and any applicable Food and Drug Administration requirements and the
Grantor shall take all actions reasonably requested by the Secured Parties
(including obtaining any required consents) in connection therewith.


 


(xiv)        Use and Disposition of Collateral.  The Grantor shall (i) not dispose of any of
the Collateral whether by sale, lease or otherwise except for (A) the sale of
Inventory in the ordinary course of business, and (B) the disposition or
transfer of obsolete and worn-out Equipment in the ordinary course of business
and (ii) keep and maintain the Equipment in good operating condition, except
for ordinary wear and tear, and shall make all necessary repairs and
replacements thereof so that the value and operating efficiency shall at all
times be maintained and preserved.


 


(xv)         Risk of Loss; Insurance.  The Grantor shall bear the full risk of loss
from any loss of any nature whatsoever with respect to the Collateral.  At it’s own cost and expense in amounts and
with carriers acceptable to the Secured Parties, it shall (a) keep all its
insurable properties and properties in which it has an interest insured against
the hazards of fire, flood, sprinkler leakage, those hazards covered by
extended coverage insurance and such other hazards, and for such amounts, as is
customary in the case of companies engaged in businesses similar to the Grantor’s
including, without limitation, public and product liability insurance, worker’s
compensation, insurance against larceny, embezzlement or other criminal
misappropriation of insured’s officers and employees and business interruption
insurance; (b) furnish the Secured Parties with (i) copies of all policies and
evidence of the maintenance of such policies at least 30 days before any
expiration date, and (ii) appropriate loss payable endorsements in form and
substance satisfactory to the Secured Parties, naming the Secured Parties as
loss payees and providing that as to the Secured Parties the insurance coverage
shall


 


13

















 


not be impaired or invalidated
by any act or neglect of the Grantor and the insurer will provide the Secured
Parties with at least 30 days notice prior to cancellation.  Upon the occurrence and continuation of any
Event of Default:  the Grantor shall
instruct the insurance carriers that in the event of any loss thereunder, the
carriers shall make payment for such loss to the Secured Parties and not to the
Grantor and the Secured Parties jointly; if any insurance losses are paid by
check, draft or other instrument payable to the Grantor and the Secured Parties
jointly, the Secured Parties may endorse the Grantor’s name thereon and do such
other things as the Secured Parties may deem advisable to reduce the same to
cash; the Secured Parties are hereby authorized to adjust and compromise
claims; all loss recoveries received by the Secured Parties upon any such
insurance shall be applied to the Obligations, in such order as the Secured
Parties in their sole discretion shall determine.  In that event, any surplus shall be paid by the Secured Parties
to the Grantor or applied as may be otherwise required by law, and any
deficiency thereon shall be paid by the Grantor to the Secured Parties, on
demand.


 


(xvi)        Notice of Certain Events.  The Grantor shall promptly inform the
Secured Parties in writing of: (a) the commencement of all proceedings and
investigations by or before and/or the receipt of any notices from, any
governmental or nongovernmental body and all actions and proceedings in any
court or before any arbitrator against or in any way concerning any of the
Grantor’s properties, assets or business, which might singly or in the
aggregate, have a materially adverse effect on the Grantor; (b) any amendment
of the Grantor’s certificate of incorporation or by-laws; (c) any change in the
Grantor’s business, assets, liabilities, condition (financial or otherwise),
results of operations or business prospects which has had or might have a
materially adverse effect on the Grantor; (d) any Event of Default or Default;
(e) any default or any event which with the passage of time or giving of notice
or both would constitute a default under any agreement for the payment of money
to which the Grantor is a party or by which the Grantor or any of the Grantor’s
properties may be bound which would have a material adverse effect on the
Grantor’s business, operations, property or condition (financial or otherwise)
or the Collateral; (f) any change in the location of the Grantor’s executive
offices; (g) any change in the location of the Grantor’s Inventory or Equipment
from the locations listed on Schedule I attached hereto, (h) any
material delay in the Grantor’s performance of any of its obligations to any
Customer and of any assertion of any material claims, offsets or counterclaims
by any Customer and of any allowances, credits and/or other monies granted by it
to any Customer; (i) and furnish to the Secured Parties all material adverse
information relating to the financial condition of any Customer; and (k) any
material return of goods.


 


(xvii)       Attorney-in-fact.  The Grantor hereby irrevocably appoints the
Secured Parties or any other person whom the Secured Parties may designate as
the Grantor’s attorney-in-fact, with full power and authority in place and
stead of the Grantor and in the name of the Grantor or in its own name to take
any of the following actions upon the occurrence and continuation of an Event
of Default:  (i) endorse the Grantor’s
name on any checks, notes, acceptances, money orders, drafts or other forms of
payment or security that may come into the Secured Parties’ possession; (ii)
sign the Grantor’s name on any invoice or bill of lading relating to any
Accounts, drafts against customers, schedules and assignments of Accounts,
notices of assignment, financing statements and other public records,
verifications of account and notices to or from Customers; (iii) verify the
validity, amount or any other matter relating to any Receivable by mail,
telephone, telegraph or otherwise with Customers; (iv) execute customs
declarations and such other documents as may be required to clear Inventory
through United 


 


14

















 


States Customs; (v) do all
things necessary to carry out this Agreement and all other Loan Documents; (vi)
continue any insurance existing pursuant to the terms of this Agreement and pay
all or any part of the premium therefor and the cost thereof; and (vii) notify
the post office authorities to change the address for delivery of the Grantor’s
mail to an address designated by the Secured Parties, and to receive, open and
dispose of all mail addressed to the Grantor. 
The Grantor hereby ratifies and approves all acts of the attorney.  The powers conferred on the Secured Parties
hereunder are solely to protect their interests in the Collateral and shall not
impose any duty upon them to exercise any such powers.  Neither the Secured Parties nor the attorney
will be liable for any acts or omissions. 
This power, being coupled with an interest, is irrevocable so long as an
account which is assigned to the Secured Parties or in which the Secured
Parties have a security interest remains unpaid and until the Obligations have
been fully satisfied.


 


(b)           Consent to License Agreement.  The Secured Parties covenant and agree with
the Grantor that in the event that the Secured Parties exercise their rights
hereunder and the Collateral is sold to a third party, the Secured Parties
shall use commercially reasonable efforts to (i) ensure that such third party
purchaser of any of the Collateral licensed under the License Agreement agrees
to be bound by the terms and conditions thereof, until the expiration or
termination thereof, and (ii) ensure that such third-party purchaser shall
agree to use commercially reasonable efforts to ensure that all subsequent
transferees of any of the Collateral licensed under the License Agreement shall
agree to be bound by the terms and conditions of the License Agreement, until
the expiration or termination thereof.


 


(c)           Food and Drug Administration.  The Grantor shall comply in all material
respects with all Food and Drug Administration requirements necessary for the
Secured Parties to exercise their rights hereunder and to realize on the
Collateral.


 


(d)           Collateral Assignment of the Lease.  Within five (5) business days following the
Closing Date, the Grantor shall deliver to the Secured Parties the consent of
the Equity Office Properties Trust to the grant of the Security Interest and a
valid collateral assignment of the Lease in favor of the Secured Parties, which
collateral assignment of the Lease shall be in recordable form, to the Secured
Parties’ satisfaction, necessary to give the Secured Parties a duly perfected
second priority assignment of the Lease.


 


(e)           Exclusive Licenses.  The Grantor shall not grant an exclusive
license to a third party to manufacture, use, sell or develop the Product or
enter into any exclusive license arrangement with a third party providing for
the manufacture, use, sale or development of the Product without the consent of
the Secured Parties, which consent shall not be unreasonably withheld.


 


7.             Performance by Secured Parties
of Grantor’s Obligations.  If the
Grantor fails to perform or comply with any of its agreements contained herein
and the Secured Parties, as provided for by the terms of this Security
Agreement and following reasonable written notice to the Grantor, shall itself
perform or comply, or otherwise cause performance or compliance, with such
agreements, the expenses of the Secured Parties incurred in connection with
such performance or compliance shall be payable by the Grantor to the Secured
Parties on demand and shall constitute Obligations secured hereby.


 


15

















 


8.             Remedies.  If an Event of Default (i) has occurred and
has continued for a period of 30 consecutive days without cure by the Grantor
with respect to items 1, 2, 3, and 4 set forth in the definition of Event of
Default (expect, with respect to paragraph 4(k) and 6(d) above, such period
shall be reduced to five (5) consecutive days), or (ii) has occurred and is
continuing with respect to all other items in the definition of Event of
Default, the Secured Parties may exercise, in addition to all other rights and
remedies granted to it in this Security Agreement and in any other instrument
or agreement securing, evidencing or relating to the Obligations, all rights
and remedies of a secured party under the Code.  Without limiting the generality of the foregoing, the Secured
Parties, without demand of performance or other demand, presentment, protest, advertisement
or notice of any kind (except any notice required by law referred to below or
expressly provided for) to or upon the Grantor or any other person (all and
each of which demands, defenses, advertisements and notices are, to the extent
permitted by applicable law, hereby waived), may in such circumstances
forthwith collect, receive, appropriate and realize upon the Collateral, or any
part thereof, and/or may forthwith sell, license, assign, give option or
options to purchase, or otherwise dispose of and deliver the Collateral or any
part thereof (or contract to do any of the foregoing), at public or private
sale or sales, at any exchange, broker’s board or office of the Secured Parties
or elsewhere upon such terms and conditions as they may deem advisable and at
such prices as they may deem best, for cash or on credit or for future delivery
without assumption of any credit risk. 
The Secured Parties shall have the right upon any such public sale or
sales, and, to the extent permitted by law, upon any such private sale or
sales, to purchase the whole or any part of the Collateral so sold, free of any
right or equity of redemption in the Grantor, which right or equity is hereby
waived, to the extent permitted by applicable law, or released.


 


The Grantor further agrees that, if an Event of Default has occurred
and is continuing, at the Secured Parties’ request, to assemble the Collateral
and make it available to the Secured Parties at places which the Secured
Parties shall reasonably select, whether at the Grantor’s premises or
elsewhere.  The Secured Parties shall
apply the net proceeds of any such collection, recovery, receipt,
appropriation, realization or sale, after deducting all reasonable costs and
expenses of every kind incurred therein or incidental to the care or
safekeeping of any of the Collateral or in any way relating to the Collateral
or the rights of the Secured Parties hereunder, including, without limitation,
reasonable attorneys’ fees and disbursements, to the payment in whole or in
part of the Obligations, in such order as the Secured Parties may elect, and
only after such application and after the payment by the Secured Parties of any
other amount required by any provision of law, must the Secured Parties account
for the surplus, if any, to the Grantor. 
To the extent permitted by applicable law, the Grantor waives all
claims, damages and demands it may acquire against the Secured Parties arising
out of the exercise by it of any rights hereunder, provided, that nothing
contained in this Section shall relieve the Secured Parties from liability
arising solely from its gross negligence or willful misconduct.  If any notice of a proposed sale or other
disposition of Collateral shall be required by law, such notice shall be deemed
reasonable and proper if given at least 10 days before such sale or other
disposition.  The Grantor shall remain
liable for any deficiency if the proceeds of any sale or other disposition of
the Collateral are insufficient to pay the Obligations and the fees and disbursements
of any attorneys employed by the Secured Parties to collect such deficiency.


 


For the purpose of enabling the Secured Parties to exercise rights and
remedies under this Section 8 at such time as the Secured Parties shall be
lawfully entitled to exercise such rights and 


 


16

















 


remedies, the Grantor hereby grants to the Secured Parties an
irrevocable, non-exclusive license (exercisable without payment of royalty or
other compensation to the Grantor) to use, license or sublicense any of the Collateral
consisting of Intellectual Property now owned or hereafter acquired by the
Grantor or as to which the Grantor has the right to use, and wherever the same
may be located, and including in such license reasonable access to all media in
which any of the licensed items may be recorded or stored and to all computer
software and programs used for the compilation or printout thereof.  The use of such license by the Secured
Parties shall be exercised, at the option of the Secured Parties, upon the
occurrence and during the continuation of an Event of Default; provided that
any license, sublicense or other transaction entered into by the Secured
Parties in accordance herewith shall be binding upon the Grantor
notwithstanding any subsequent cure of an Event of Default.


 


9.             Severability.  Any provision of this Security Agreement
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction.


 


10.           Paragraph Headings.  The paragraph headings used in this Security
Agreement are for convenience of reference only and are not to affect the
construction hereof or be taken into consideration in the interpretation
hereof.


 


11.           Cumulative Remedies.  The rights and remedies provided herein and
in the Going Forward Agreement may be exercised singly or concurrently and are
not exclusive of any rights or remedies provided by law or in equity or by
statute.


 


12.           Waivers and Amendments; Successors
and Assigns.  None of the terms or
provisions of this Security Agreement may be waived, amended, supplemented or
otherwise modified except by a written instrument executed by the party to be
charged with enforcement.  This Security
Agreement shall be binding upon the successors and permitted assigns of the
Grantor and shall inure to the benefit of the Secured Parties and their
successors and assigns.  The Grantor may
not assign its rights or obligations under this Security Agreement without the
prior written consent of the Secured Parties.


 


13.           Termination of Security Interest;
Release of Collateral.


 


(a)           Upon the payment and performance in
full by the Grantor of its Obligations, the security interest granted in the
Collateral pursuant to this Agreement (the “Security Interest”) shall terminate
and all rights to the Collateral shall revert to the Grantor.


 


(b)           Upon any such termination of the
Security Interest, the Secured Parties will, at the expense of the Grantor,
execute and deliver to the Grantor such documents and take such other actions
as the Grantor shall reasonably request to evidence the termination of the
Security Interest and deliver to the Grantor all Collateral so released then in
its possession.


 


14.           Notices.  Any notices required or permitted to be
given under the terms of this Security Agreement shall be in writing and shall
be sent by mail, personal delivery, telephone line facsimile transmission or
courier and shall be effective 5 days after being placed in the mail, 


 


17

















 


if mailed, or upon receipt, if
delivered personally, by telephone line facsimile transmission or by courier,
in each case addressed to a party at such party’s address (or telephone line
facsimile transmission number) shown below or such other address (or telephone
line facsimile transmission number) as a party shall have provided by notice to
the other party in accordance with this provision.  In the case of any notice to the Grantor, such notice shall be
addressed to the Grantor 140 Union Square Drive, New Hope, PA 18938, Attention:
Chief Financial Officer (telephone line facsimile number (215) 862-7139), and a
copy shall also be given to: Epstein, Becker and Green, P.C., 111 Huntington
Avenue, Boston, MA 02199 Attention: Susan E. Pravda, Esq. (telephone line
facsimile transmission number (617) 342-4001), and in the case of any notice to
the Secured Parties, such notice shall be addressed to the Secured Parties at
Oxford BioScience Partners IV L.P., 222 Berkley Street, Suite 1650, Boston, MA
02116, Attention: Jonathan Fleming (telephone line facsimile transmission number
(212) 247-1329), and a copy shall be given to: Epstein, Becker & Green,
P.C., 111 Huntington Avenue, Boston, MA 02199, Attention: Susan E. Pravda, Esq.
(telephone line facsimile transmission number (617) 342-4001).


 


15.           Integration.  This Security Agreement represents the
agreement of the Grantor and the Secured Parties with respect to the subject
matter hereof, and there are no promises, undertakings, representations or
warranties by the Secured Parties relative to subject matter hereof not expressly
set forth or referred to herein.


 


16.           Governing Law.  This Security Agreement and the rights and
obligations of the Grantor hereunder shall be governed by, and construed and
interpreted in accordance with, the law of the State of New York, except to the
extent that under the New York Uniform Commercial Code the laws of another
jurisdiction govern matters of perfection and the effect of perfection or
non-perfection of any security interest granted hereunder.


 


17.           Counterparts.  This Security Agreement may be executed in
counterparts and by the parties hereto on separate counterparts, each of which
shall be deemed to be an original and all of which together shall constitute
one and the same instrument.  A
telephone line facsimile transmission of this Security Agreement bearing a
signature on behalf of a party hereto shall be legal and binding on such party.


 


18.           Waiver of Jury Trial.  To the extent permitted by applicable law,
each of the Grantor and the Secured Parties waives any right to have a jury
participate in resolving any dispute, whether sounding in contract, tort, or
otherwise between the parties hereto arising out of, connected with, related
to, or incidental to the relationship between any of them in connection with
this Security Agreement or the transactions contemplated hereby.  Instead, any such dispute resolved in court
will be resolved in a bench trial without a jury, submitted to jurisdiction in
the Southern District of New York and New York State Courts located in the
County of New York.


 


18

















 


IN WITNESS WHEREOF, the Grantor has caused this Security Agreement to
be duly executed and delivered as of the date first above written.


 


	
   

  	
  PHOTOGEN TECHNOLOGIES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/Brooks Boveroux

  	
   

  
	
   

  	
   

  	
  Name: Brooks Boveroux

  
	
   

  	
   

  	
  Title: Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
  ACKNOWLEDGED AND AGREED:

  
	
   

  
	
  OXFORD BIOSCIENCE PARTNERS IV L.P.

  
	
  By  OBP Management IV L.P. ,
  its General Partner

  
	
   

  
	
   

  
	
  By:

  	
   /s/ Jonathan Fleming

  	
   

  
	
  Name: Jonathan Fleming

  
	
  Title: General Partner

  
	
   

  
	
   

  
	
  MRNA FUND II L.P., its General Partner

  
	
  By  OBP Management IV L.P.

  
	
   

  
	
   

  
	
  By:

  	
   /s/ Jonathan Fleming

  	
   

  
	
  Name: Jonathan Fleming

  
	
  Title: General Partner

  
	
   

  
	
  MI3 L.P.

  
	
  By  Mi3 Services L.L.C., its
  General Partner

  
	
   

  
	
   

  
	
  By:

  	
   /s/William D. McPhee

  	
   

  
	
  Name:  William D. McPhee

  
	
  Title:  Managing General
  Partner

  
							



 


19