Document:

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                                                                  Exhibit 10.32
M&T BANK
Manufacturers and Traders Trust Company

                                CREDIT AGREEMENT
                                    Maryland

July 31, 2003

BORROWER: ADVANCIS PHARMACEUTICAL CORPORATION

a(n) [ ] individual [x] corporation [ ] general partnership [ ] limited
liability company [ ] ___________________________ organized under the laws of
the State of Delaware, having its chief executive office at 20425 Seneca Meadows
Parkway, Germantown, Maryland 20876.

BANK: MANUFACTURERS AND TRADERS TRUST COMPANY, a New York banking corporation
with its chief executive office at One M&T Plaza, Buffalo, NY 14240. Attention:
Office of General Counsel.
The Bank and the Borrower agree as follows:

1.    DEFINITIONS.

      a.    "Credit" means any and all credit facilities and any other financial
            accommodations made by the Bank in favor of the Borrower whether now
            or hereafter in existence.

      b.    "Obligations" means any and all indebtedness or other obligations of
            the Borrower to the Bank under this Agreement and the Transaction
            Documents, together with all extensions, renewals and replacements
            thereof, and all interest, fees, charges, costs or expenses which
            accrue on or in connection with the foregoing, including; (i) any
            indebtedness or obligations arising prior to, during or after any
            pendency of any bankruptcy, insolvency, receivership or other
            similar proceeding, regardless of whether allowed or allowable in
            such proceeding; and (ii) under the Equipment Line (as such term is
            defined herein).

      c.    "Subsidiary" means any corporation or other business entity of which
            at least fifty percent (50%) of the voting stock or other ownership
            interest is owned by the Borrower directly or indirectly through one
            or more Subsidiaries. If the Borrower has no Subsidiaries, the
            provisions of this Agreement relating to the Subsidiaries shall be
            disregarded, without affecting the applicability of such provisions
            to the Borrower alone.

      d.    "Transaction Documents" means this Agreement and all documents,
            instruments or other agreements by the Borrower in favor of the Bank
            and/or the Maryland Industrial Development Financing Authority
            ("MIDFA") in connection (directly or indirectly) with the
            Obligations, whether now or hereafter in existence, including
            promissory notes, security agreements, guaranties and letter of
            credit reimbursement agreements.

2.    REPRESENTATIONS AND WARRANTIES. The Borrower makes the following
      representations and warranties and any "Additional Representations and
      Warranties" on the schedule attached hereto and made part hereof (the
      "Schedule"), all of which shall be deemed to be continuing representations
      and warranties as long as this Agreement is in effect:
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      a.    COMMERCIAL LOAN. The Credit evidences a commercial loan and an
            extension of credit for a commercial purpose within the meaning of
            Md. Code, Commercial Law Art.

      b.    GOOD STANDING; AUTHORITY. The Borrower and each Subsidiary (if
            either is not an individual) is duly organized, validly existing and
            in good standing under the laws of the jurisdiction in which it was
            formed. The Borrower and each Subsidiary is duly authorized to do
            business in each jurisdiction in which failure to be so qualified
            might have a material adverse effect on its business or assets and
            has the power and authority to own each of its assets and to use
            them in the ordinary course of business now and in the future.

      c.    COMPLIANCE. The Borrower and each Subsidiary conducts its business
            and operations and the ownership of its assets in compliance with
            each applicable statute, regulation and other law, including
            environmental laws, the Employee Retirement Income Security Act of
            1974, as amended, and laws prohibiting discrimination in employment.
            All approvals, including authorizations, permits, consents,
            franchises, licenses, registrations, filings, declarations, reports
            and notices (the "Approvals") necessary for the conduct of the
            Borrower's and each Subsidiary's business and for the Credit have
            been duly obtained and are in full force and effect. The Borrower
            and each Subsidiary is in compliance with the Approvals. The
            Borrower and each Subsidiary (if either is not an individual) is in
            compliance with its certificate of incorporation, by-laws,
            partnership agreement, articles of organization, operating agreement
            or other applicable organizational or governing document as may be
            applicable to the Borrower or a Subsidiary depending on its
            organizational structure ("Governing Documents"). The Borrower and
            each Subsidiary is in compliance with each agreement to which it is
            a party or by which it or any of its assets is bound.

      d.    LEGALITY. The execution, delivery and performance by the Borrower of
            this Agreement and all related documents, including the Transaction
            Documents, (i) are in furtherance of the Borrower's purposes and
            within its power and authority; (ii) do not (A) violate any statute,
            regulation or other law or any judgment, order or award of any
            court, agency or other governmental authority or of any arbitrator
            with respect to the Borrower or any Subsidiary or (B) violate the
            Borrower's or any Subsidiary's Governing Documents (if either is not
            an individual), constitute a default under any agreement binding on
            the Borrower or any Subsidiary or result in a lien or encumbrance on
            any assets of the Borrower or any Subsidiary; and (iii) if the
            Borrower or any Subsidiary is not an individual, have been duly
            authorized by all necessary organizational actions.

      e.    FISCAL YEAR. The fiscal year of the Borrower is the calendar year
            unless the following blank states otherwise: year ending
            __________________, 20___.

      f.    TITLE TO ASSETS. The Borrower and each Subsidiary has good and
            marketable title to each of its assets free of security interests,
            mortgages or other liens or encumbrances, except as set forth on the
            Schedule titled "Permitted Liens" or pursuant to the Bank's prior
            written consent.

      g.    JUDGMENTS AND LITIGATION. There is no pending or threatened claim,
            audit, investigation, action or other legal proceeding or judgment,
            order or award of any court, agency or other governmental authority
            or arbitrator (any, an "Action") which involves the Borrower, its
            Subsidiaries or their respective assets and might have a material
            adverse effect upon the Borrower or any Subsidiary or threaten the
            validity of the Credit, any Transaction Document or any related
            document or action.

      h.    FULL DISCLOSURE. Neither this Agreement nor any certificate,
            financial statement or other writing provided to the Bank by or on
            behalf of the Borrower or any Subsidiary contains any statement of
            fact that is incorrect or misleading in any material respect or
            omits to state any fact necessary to make any such statement not
            incorrect or misleading. The Borrower has not failed to disclose to
            the Bank any fact that might have a material adverse effect on the
            Borrower or any Subsidiary.

3.    AFFIRMATIVE COVENANTS. So long as this Agreement is in effect, the
      Borrower will comply with any "Additional Affirmative Covenant" contained
      in the Schedule and shall:

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      a.    FINANCIAL STATEMENTS AND OTHER INFORMATION. Promptly deliver to the
            Bank and the Maryland Industrial Development Financing Authority
            ("MIDFA") (i) within forty-five (45) days after the end of each of
            its first three fiscal quarters, an unaudited consolidating and
            consolidated financial statement of the Borrower and each Subsidiary
            as of the end of such quarter, which financial statement shall
            consist of income and cash flows for the quarter, for the
            corresponding quarter in the previous fiscal year and for the period
            from the end of the previous fiscal year, with a consolidating and
            consolidated balance sheet as of the quarter end all in such detail
            as the Bank and MIDFA may request, quarterly statements to MIDFA
            only on MIDFA's request, (ii) within ninety (90) days after the end
            of each fiscal year, consolidating and consolidated statements of
            the Borrower's and each Subsidiary's income and cash flows and its
            consolidating and consolidated balance sheet as of the end of such
            fiscal year, setting forth comparative figures for the preceding
            fiscal year and to be (check applicable box, if no box is checked
            the financial statements shall be audited):

                      [x] AUDITED [ ] REVIEWED [ ] COMPILED

            by an independent certified public accountant acceptable to the Bank
            and MIDFA; all such statements shall be certified by the Borrower's
            chief financial officer to be correct and in accordance with the
            Borrower's and each Subsidiary's records and to present fairly the
            results of the Borrower's and each Subsidiary's operations and cash
            flows and its financial position at year end; and (iii) with each
            statement of income, a certificate executed by the Borrower's chief
            executive and chief financial officers or other such person
            responsible for the financial management of the Borrower (A) setting
            forth the computations required to establish the Borrower's
            compliance with each financial covenant, if any, during the
            statement period, (B) stating that the signers of the certificate
            have reviewed this Agreement and the operations and condition
            (financial or other) of the Borrower and each of its Subsidiaries
            during the relevant period and (C) stating that no Event of Default
            occurred during the period, or if an Event of Default did occur,
            describing its nature, the date(s) of its occurrence or period of
            existence and what action the Borrower has taken with respect
            thereto. The Borrower shall also promptly provide the Bank and MIDFA
            with copies of all annual reports, proxy statements and similar
            information distributed to shareholders, partners or members, and
            copies of all filings with the Securities and Exchange Commission
            and the Pension Benefit Guaranty Corporation, and shall provide, in
            form satisfactory to the Bank and MIDFA, such additional
            information, reports or other information as the Bank and MIDFA may
            from time to time reasonably request regarding the financial and
            business affairs of the Borrower or any Subsidiary.

      b.    ACCOUNTING; TAX RETURNS AND PAYMENT OF CLAIMS. The Borrower and each
            Subsidiary will maintain a system of accounting and reserves in
            accordance with generally accepted accounting principles, has filed
            and will file each tax return required of it and, except as
            disclosed in the Schedule, has paid and will pay when due each tax,
            assessment, fee, charge, fine and penalty imposed by any taxing
            authority upon it or any of its assets, income or franchises, as
            well as all amounts owed to mechanics, materialmen, landlords,
            suppliers and the like in the normal course of business.

      c.    INSPECTIONS. Promptly upon the Bank's or MIDFA's request, the
            Borrower will permit, and cause its Subsidiaries to permit, the
            Bank's and MIDFA's officers, attorneys or other agents to inspect
            its and its Subsidiary's premises, examine and copy its records and
            discuss its and its Subsidiary's business, operations and financial
            or other condition with its and its Subsidiary's responsible
            officers and independent accountants.

      d.    OPERATING ACCOUNTS. Maintain, and cause its Subsidiaries to
            maintain, at least one of its primary operating accounts with the
            Bank.

      e.    CASH MANAGEMENT AND INVESTMENT SERVICES. Maintain, and cause its
            Subsidiaries to maintain, the Bank as a cash management service
            provider and use its best efforts to utilize other investment
            services of the Bank.

      f.    CHANGES in MANAGEMENT AND CONTROL. If the Borrower is not an
            individual, immediately upon any change in the identity of the
            Borrower's chief executive officers or in its beneficial ownership,
            the Borrower will provide to the

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            Bank and MIDFA a certificate executed by its senior individual
            authorized to transact business on behalf of the Borrower,
            specifying such change.

      g.    NOTICE OF DEFAULTS AND MATERIAL ADVERSE CHANGES. Immediately upon
            acquiring reason to know of (i) any Event of Default, (ii) any event
            or condition that might have a material adverse effect upon the
            Borrower or any Subsidiary or (iii) any Action, the Borrower will
            provide to the Bank and MIDFA a certificate executed by the
            Borrower's senior individual authorized to transact business on
            behalf of the Borrower, specifying the date(s) and nature of the
            event or the Action and what action the Borrower or its Subsidiary
            has taken or proposes to take with respect to it.

      h.    INSURANCE. Maintain its, and cause its Subsidiaries to maintain,
            property in good repair and will on request provide the Bank and
            MIDFA with evidence of insurance coverage satisfactory to the Bank
            and MIDFA, including fire and hazard, liability, workers'
            compensation and business interruption insurance and flood hazard
            insurance as required.

      i.    FURTHER ASSURANCES. Promptly upon the request of the Bank and MIDFA,
            the Borrower will execute, and cause its Subsidiaries to execute,
            and deliver each writing and take each other action that the Bank
            and MIDFA deems necessary or desirable in connection with any
            transaction contemplated by this Agreement.

      j.    EMPLOYMENT COUNT. Upon request, but not more frequently than twice
            annually, provide to MIDFA the employment count at the Borrowers
            premises.

      k.    CORPORATE EXISTENCE. Maintain its existence in good standing under
            the laws of the jurisdiction in which it was formed and maintain its
            qualification to do business in the State of Maryland and in each
            jurisdiction in which failure to be so qualified might have a
            material adverse effect on its business or assets.

      1.    MIDFA'S INSURANCE PREMIUM. Pay directly to the Bank, for remittance
            to MIDFA, MIDFA's insurance premium payable in advance on the
            effective date of the insurance and on each anniversary of the
            effective date in the amount of the greater of (a) 1/2% of the
            outstanding insured balance of the Equipment Line, or (b) $500.00
            per annum.

      m.    DRUG AND ALCOHOL FREE WORKPLACE. The Borrower shall comply with the
            State of Maryland's policy concerning drug and alcohol free
            workplaces, as set forth in Code of Maryland Regulations
            01.01.1989.18 and 21.11.08 as adopted by the Department of Business
            and Economic Development and remain in compliance so long as MIDFA's
            insurance remains in effect.

      n.    APPRAISALS. Permit the Bank and MIDFA from time to time, at the
            Borrower's expense, to order an appraisal of the Collateral (as such
            term is defined in the Specific Security Agreement by and between
            the Borrower and the Bank of even date herewith) to be performed by
            an appraiser or appraisers selected by the Bank and/or MIDFA, in
            their sole discretion; provided, however, that the Borrower shall
            only be obligated to pay for one appraisal of the Collateral unless
            an Event of Default has occurred and is continuing under the
            Transaction Documents. The Borrower further agrees (a) to fully
            cooperate with such appraisers, (b) to provide such appraisers with
            access to the Collateral and with any information regarding the
            Collateral as is reasonably requested, and (c) to permit the Bank
            and MIDFA, their agents and representatives, to disclose to such
            appraisers any and all information they may have with regard to the
            Collateral, the Borrower and the Obligations as the Bank and MIDFA,
            in their reasonable discretion, determine is necessary to provide
            for an accurate appraisal of the Collateral.

4.    NEGATIVE COVENANTS. As long as this Agreement is in effect, the Borrower
      shall not violate, and shall not suffer or permit any of its Subsidiaries
      to violate, any of the following covenants and any `Additional Negative
      Covenant" on the Schedule. The Borrower shall not without the written
      consent of the Bank and MIDFA which consent shall not be unreasonably
      withheld:

      a.    INDEBTEDNESS. Permit any indebtedness (including direct and
            contingent liabilities) not described on the Schedule titled
            "Permitted Indebtedness" except for trade indebtedness or current
            liabilities for salary and wages incurred in the ordinary course of
            business and not substantially overdue.

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      b.    GUARANTIES. Become a guarantor, a surety, or otherwise liable for
            the debts or other obligations of another, whether by guaranty or
            suretyship agreement, agreement to purchase indebtedness, agreement
            for furnishing funds through the purchase of goods, supplies or
            services (or by way of stock purchase, capital contribution, advance
            or loan) for the purpose of paying or discharging indebtedness, or
            otherwise, except as an endorser of instruments for the payment of
            money deposited to its bank account for collection in the ordinary
            course of business and except as may be specified in the Schedule
            titled "Permitted Guaranties".

      c.    LIENS. Permit any of its assets to be subject to any security
            interest, mortgage or other lien or encumbrance, except as set forth
            on the Schedule titled "Permitted Liens' and except for liens for
            property taxes not yet due; pledges and deposits to secure
            obligations or performance for workers' compensation, bids, tenders,
            contracts other than notes, appeal bonds or public or statutory
            obligations; and materialmen's, mechanics', carriers' and similar
            liens arising in the normal course of business.

      d.    LOANS. Make any loan, advance or other extension of credit except as
            disclosed on the Schedule titled "Permitted Loans", except for
            endorsements of negotiable instruments deposited to the Borrower's
            deposit account for collection, trade credit in the normal course of
            business and intercompany loans approved in writing by the Bank and
            MIDFA.

      e.    DISTRIBUTIONS. If the Borrower is not an individual, declare or pay
            any distribution, except for (i) dividends payable solely in stock
            and (ii) cash dividends paid to the Borrower by its Subsidiary.

      f.    CHANGES IN FORM; FISCAL YEAR; ACCOUNTING METHOD. (i) Transfer or
            dispose of substantially all of its assets, (ii) enter into any
            merger, consolidation, or dissolution unless the Borrower is the
            surviving entity; (iii) acquire all or substantially all of the
            assets of any person unless the purchase price paid for such assets
            is less than $3,000,000; (iv) do business under or otherwise use any
            name other than its true name (v) make any material change in its
            business, structure, executive management, purposes or operations
            that might have a material adverse effect on the Borrower or any of
            its Subsidiaries, (vi) make a change in its fiscal year or (vii)
            make any change in its method of accounting.

      g.    SALE AND LEASEBACK. Enter into any arrangement whereby the Borrower
            shall sell or transfer all or any substantial part of its fixed
            assets then owned by it and shall thereupon, or within one year
            thereafter, rent or lease the assets so sold or transferred.

      h.    INVESTMENTS. Purchase or invest in non-operating assets, except
            direct obligations of the United States and federally insured
            certificates of deposit and except for investments consistent with
            guidelines approved by the Board of Directors of the Borrower.

5.    EQUIPMENT LINE

      a.    EQUIPMENT LINE. Subject to the terms and conditions set forth
            herein, the Bank agrees to lend to the Borrower an amount equal to
            100% of the purchase price of the Collateral, but in no event
            greater than an aggregate amount of $5,500,000.00 (the "Equipment
            Line").

      b.    TERM NOTES. The Borrower's indebtedness to the Bank under each
            advance made by the Bank to the Borrower under the Equipment Line,
            together with interest accrued thereon, shall be evidenced by
            promissory notes (collectively, the "Promissory Note") in the form
            as set forth on Exhibit A or Exhibit B attached hereto as selected
            by the Borrower.

      c.    REPAYMENT OF THE EQUIPMENT LINE. The Borrower shall repay the
            principal of each advance made under the Equipment Line beginning
            thirty (30) days after each advance pursuant to the terms set forth
            in the Promissory Note. Except as provided below, each advance shall
            be repaid in forty-eight (48) equal payments of principal plus

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            interest for advances secured by equipment other than computer
            equipment. Advances secured by computer equipment shall be repaid in
            thirty-six (36) equal payments of principal plus interest. The
            number of monthly payments set forth above shall be reduced by the
            number of months between the date of the first advance hereunder and
            the date of the subsequent advance, e.g., an advance made during the
            last month before the Termination Date shall be repaid in thirty-six
            (36) monthly payments for advances secured by equipment other than
            computer equipment and twenty-four (24) monthly payments for
            advances secured by computer equipment.

      d.    CONDITIONS PRECEDENT TO ADVANCES. The Bank's obligation under this
            Agreement to make each advance under the Equipment Line and the
            obligation of MIDFA to issue its financial assistance for the
            benefit of the Borrower is subject to the accuracy, as of the date
            hereof and as of the date of each advance, of the representations
            and warranties contained herein and in each of the other Transaction
            Documents and to the satisfaction, in the sole discretion of the
            Bank and MIDFA on or before such date, of the following conditions
            precedent:

                  1.    The Bank and MIDFA (unless otherwise provided) shall
                        have received the following, all of which must be
                        satisfactory in form and content to the Bank and MIDFA,
                        in their sole discretion:

                        (i)   certified copies of such resolutions, statements,
                              invoices, cancelled checks and other documents as
                              the Bank, MIDFA or their respective counsel may
                              request;

                        (ii)  such lien searches and executed financing
                              statements or other documents with respect to the
                              security interests created by the Transaction
                              Documents as the Bank and MIDFA may request, and
                              such evidence as the Bank may request that all
                              recordings and filings that the Bank, MIDFA or
                              their respective counsel deem necessary or
                              desirable to perfect the security interests
                              created by the Transaction Documents have been
                              effected;

                        (iii) payment by the Borrower to the Bank and MIDFA of
                              the balance of any commitment fee, loan
                              origination fee, appraisal fee, underwriting fee,
                              MIDFA insurance premium, or other fees or charges
                              of the Bank or MIDFA required under the
                              Transaction Documents;

                        (iv)  the grant to the Bank by such documents as the
                              Bank may require of a first lien security interest
                              on a certificate of deposit or money market
                              account issued by or established with the Bank in
                              an amount of $500,000.00 which shall increase by
                              the amount of interest earned;

                        (v)   a written appraisal of the Collateral by an
                              appraiser acceptable to the Bank which concludes
                              that the orderly liquidation value of the
                              Collateral will be no less than forty percent
                              (40%) of the original purchase price;

                        (vi)  a written certification signed by the Borrower
                              that the Collateral is acceptable to the Borrower;

                        (vii) a landlord's waiver agreement signed by the
                              Borrower's landlord; and

                        (viii) an opinion letter from Borrower's counsel
                              addressed to the Bank and MIDFA.

                  2.    MIDFA INSURANCE AGREEMENT. The Bank shall have received
                        a fully-executed deficiency insurance agreement under
                        the Conventional Program of MIDFA, Department of
                        Business and Economic Development which provides to the
                        Bank insurance of 40% of the outstanding principal
                        balance of the Equipment Line plus 40% of the accrued
                        and unpaid pre-default interest of the Equipment Line
                        but in no event more than Two Million Two Hundred
                        Thousand and No/100 Dollars ($2,200,000.00) at any time
                        for the first forty-two (42) months of the Equipment
                        Line.

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      e.    AVAILABILITY OF ADVANCES UNDER THE EQUIPMENT LINE. Any advances
            under the Equipment Line are subject to the following conditions and
            requirements:

                  1.    No more than an aggregate of $1,500,000.00 will be
                        advanced under the Equipment Line until the Bank's
                        determination that the Borrower has obtained on or after
                        June 30, 2003, no less than $5,600,000.00 in cash,
                        equity contributions, cash derived from revenues or
                        payments received under collaborative agreements.

                  2.    No more than an aggregate of $4,000,000.00 will be
                        advanced under the Equipment Line until the Bank's
                        determination that the Borrower has obtained on or after
                        June 30, 2003, no less than an additional $13,400,000 in
                        cash, equity contributions, cash derived from revenues
                        or payments received under collaborative agreements.

                  3.    No more than an aggregate of $5,500,000.00 will be
                        advanced under the Equipment Line until the Bank's
                        determination that the Borrower has obtained no less
                        than an additional $8,000,000 in cash, equity
                        contributions, cash derived from revenues or payments
                        received under collaborative agreements.

                  4.    If the Bank determines that the Borrower has failed to
                        obtain $27,000,000 in the aggregate in cash or equity
                        contributions by July 31, 2004, all amounts under the
                        Equipment Line shall become immediately due and payable
                        upon demand by the Bank.

            The Bank shall not unreasonably withhold or delay its determination
            under el-4 above.

      f.    TERMINATION OF THE EQUIPMENT LINE. The Bank shall make no advance
            under the Equipment Line after July 31, 2004 (the "Termination
            Date").

      g.    CONDITIONS PRECEDENT FOR THE BENEFIT OF THE BANK AND MIDFA. All
            conditions precedent to the obligations of the Bank to make any
            advance are imposed hereby solely for the benefit of the Bank and
            MIDFA, and no other party may require satisfaction of any such
            condition precedent or be entitled to assume that the Bank will
            refuse to make any advance in the absence of strict compliance with
            such conditions precedent. All requirements of this Agreement may be
            waived by the Bank and MIDFA in whole or in part, at any time.

6.    DEFAULT.

      a.    EVENTS OF DEFAULT. Any of the following events or conditions shall
            constitute an "Event of Default": (i) failure by the Borrower to pay
            when due (whether at the stated maturity, by acceleration, upon
            demand or otherwise) the Obligations, or any part thereof, or there
            occurs any event or condition which after notice, lapse of time or
            after both notice and lapse of time will permit acceleration of any
            Obligation; (ii) the Borrower shall default in the performance or
            observance of any term, covenant, condition or agreement contained
            in this Agreement or any other Transaction Document and such default
            shall continue for a period of thirty (30) days after written notice
            thereof has been given to the Borrower by the Bank; (iii) any
            representation or warranty made by the Borrower under this
            Agreement, or any other Transaction Document, shall at any time
            prove to have been incorrect or misleading in any material respect
            when made or deemed made; (iv) the Borrower shall (A) default in
            making any payment when due under any Debt and fail to cure such
            default during the period of grace, if any, provided for such
            default, or (B) default in the observance or performance of any
            other covenant or agreement contained in any document relating to
            any Debt, and fail to cure such default during the period of grace,
            if any, provided for such cure, the effect of which default is to
            cause, or to permit the holder of such Debt (or a trustee or agent
            on behalf of such holder or holders) to cause, with the giving of
            notice as required, any such Debt to become due prior to its stated
            maturity. The term `Debt' means any obligation of the Borrower for
            borrowed money, or for the deferred purchase price of property, in
            which the outstanding amount of the obligation exceeds $100,000; (v)
            the Borrower makes a general assignment, arrangement or composition
            agreement with or for the benefit of its creditors or makes, or
            sends notice of any intended, bulk sale; the sale, assignment,
            transfer or delivery of all or

                                      -7-
<PAGE>
            substantially all of the assets of the Borrower to a third party; or
            the cessation by the Borrower as a going business concern; (vi) the
            Borrower files a petition in bankruptcy or institutes any action
            under federal or state law for the relief of debtors or seeks or
            consents to the appointment of an administrator, receiver, custodian
            or similar official for the wind up of its business (or has such a
            petition or action filed against it and such petition action or
            appointment is not dismissed or stayed within forty-five (45) days;
            (vii) the entry of any judgment in excess of $250,000 or order of
            any court, other governmental authority or arbitrator against the
            Borrower and such judgment or order is not paid, dismissed or a bond
            posted therefor within thirty (30) days after the entry thereof;
            (viii) intentional omission or intentional inaccuracy of facts
            submitted to the Bank or any Affiliate (whether in a financial
            statement or otherwise); (ix) an adverse change in the Borrower, its
            business, operations, affairs or condition (financial or otherwise)
            which change the Bank determines will have a material adverse effect
            on the ability of the Borrower to pay or perform the Obligations;
            (x) any pension plan of the Borrower fails to comply with applicable
            law or has vested unfunded liabilities that, in the opinion of the
            Bank, might have a material adverse effect on the Borrower's ability
            to repay its debts; (xi) any indication or evidence received by the
            Bank that the Borrower may have directly or indirectly been engaged
            in any type of activity which, in the Bank's discretion, might
            result in the forfeiture or any property of the Borrower to any
            governmental authority; (xii) the occurrence of any event described
            in Section 6(a)(i) through and including 6(a)(xi) with respect to
            any Subsidiary or to any endorser, guarantor or any other party
            liable for, or whose assets or any interest therein secures, payment
            of any of the Obligations; or (xiii) MIDFA notifies the Bank without
            the Bank's prior written consent, that its insurance of the Bank for
            repayment of the Equipment Line is no longer effective or is
            terminated, as a result of any act or omission of the Borrower.

      b.    RIGHTS AND REMEDIES UPON DEFAULT. Upon the occurrence of any Event
            of Default, the Bank and MIDFA without demand of performance or
            other demand, presentment, protest, advertisement or notice of any
            kind (except any notice required by law) to or upon the Borrower,
            any Subsidiary or any other person (all and each of which demands,
            presentments, protests, advertisements and notices are hereby
            waived), may exercise all rights and remedies under the Borrower's
            or its Subsidiaries' agreements with the Bank and MIDFA or its
            Affiliates, applicable law, in equity or otherwise and may declare
            all or any part of any Obligations not payable on demand to be
            immediately due and payable without demand or notice of any kind and
            terminate any obligation it may have to grant any additional loan,
            credit or other financial accommodation to the Borrower or any
            Subsidiary. All or any part of any Obligations whether or not
            payable on demand, shall be immediately due and payable
            automatically upon the occurrence of an Event of Default in Section
            6(a)(vi) above. The provisions hereof are not intended in any way to
            affect any rights of the Bank and MIDFA with respect to any
            Obligations which may now or hereafter be payable on demand.

7.    EXPENSES. The Borrower shall pay to the Bank and MIDFA on demand all costs
      and expenses (including all fees and disbursements of counsel retained for
      advice, suit, appeal or other proceedings or purpose and of any experts or
      agents it may retain), which the Bank and MIDFA may incur in connection
      with (i) the administration of the Obligations, including any
      administrative fees the Bank and MIDFA may impose for the preparation of
      discharges, releases or assignments to third-parties; (ii) the enforcement
      and collection of any Obligations or any guaranty thereof, (iii) the
      exercise, performance, enforcement or protection of any of the rights of
      the Bank and MIDFA hereunder; or (iv) the failure of the Borrower or any
      Subsidiary to perform or observe any provisions hereof. After such demand
      for payment of any cost, expense or fee under this Section or elsewhere
      under this Agreement, the Borrower shall pay interest at the highest
      default rate specified in any instrument evidencing any of the Obligations
      from the date payment is demanded by the Bank and MIDFA to the date
      reimbursed by the Borrower. All such costs, expenses or fees under this
      Agreement shall be added to the Obligations.

8.    TERMINATION. This Agreement shall remain in full force and effect until
      (i) all Obligations outstanding, or contracted or committed for (whether
      or not outstanding), shall be finally and irrevocably paid in full and
      (ii) all Transaction Documents have been terminated by the Bank.

9.    RIGHT OF SETOFF. If an Event of Default occurs, the Bank shall have the
      right to set off against the amounts owing under this Agreement and the
      other Transaction Documents any property held in a deposit or other
      account or otherwise

                                      -8-
<PAGE>
      with the Bank or its Affiliates or otherwise owing by the Bank or its
      Affiliates in any capacity to the Borrower, its Subsidiary or any
      guarantor of, or endorser of any of the Transaction Documents evidencing,
      the Obligations. Such setoff shall be deemed to have been exercised
      immediately at the time the Bank or such Affiliate elect to do so.

10.   MISCELLANEOUS.

      a.    NOTICES. Any demand or notice hereunder or under any applicable law
            pertaining hereto shall be in writing and duly given if delivered to
            Borrower (at its address on the Bank and MIDFA's records), to the
            Bank (at the address on page one and separately to the Bank officer
            responsible for Borrower's relationship with the Bank) or to MIDFA
            at the Department of Business & Economic Development at 217 East
            Redwood Street, 22nd Floor, Baltimore, Maryland 21202, Attention:
            Executive Director. Such notice or demand shall be deemed
            sufficiently given for all purposes when delivered (i) by personal
            delivery and shall be deemed effective when delivered, or (ii) by
            mail or courier and shall be deemed effective three (3) business
            days after deposit in an official depository maintained by the
            United States Post Office for the collection of mail or one (1)
            business day after delivery to a nationally recognized overnight
            courier service (e.g., Federal Express). Notice by e-mail is not
            valid notice under this or any other agreement between the Borrower
            and the Bank and MIDFA.

      b.    GENERALLY ACCEPTED ACCOUNTING PRINCIPLES. Any financial calculation
            to be made, all financial statements and other financial information
            to be provided, and all books and records, system of accounting and
            reserves to be kept in connection with the provisions of this
            Agreement, shall be in accordance with generally accepted accounting
            principles consistently applied during each interval and from
            interval to interval; provided, however, that in the event changes
            in generally accepted accounting principles shall be mandated by the
            Financial Accounting Standards Board or any similar accounting body
            of comparable standing, or should be recommended by the Borrower's
            certified public accountants, to the extent such changes would
            affect any financial calculations to be made in connection herewith,
            such changes shall be implemented in making such calculations only
            from and after such date as the Borrower and the Bank shall have
            amended this Agreement to the extent necessary to reflect such
            changes in the financial and other covenants to which such
            calculations relate.

      c.    INDEMNIFICATION. If after receipt of any payment of all, or any part
            of, the Obligations, the Bank and MIDFA are, for any reason,
            compelled to surrender such payment to any person or entity because
            such payment is determined to be void or voidable as a preference,
            an impermissible setoff, or a diversion of trust funds, or for any
            other reason, the Transaction Documents shall continue in full force
            and the Borrower shall be liable, and shall indemnify and hold the
            Bank and MIDFA harmless for, the amount of such payment surrendered.
            The provisions of this Section shall be and remain effective
            notwithstanding any contrary action which may have been taken by the
            Bank and MIDFA in reliance upon such payment, and any such contrary
            action so taken shall be without prejudice to the Bank and MIDFA's
            rights under the Transaction Documents and shall be deemed to have
            been conditioned upon such payment having become final and
            irrevocable. The provisions of this Section shall survive the
            termination of this Agreement and the Transaction Documents.

      d.    FURTHER ASSURANCES. From time to time, the Borrower shall take, and
            cause its Subsidiaries to take, such action and execute and deliver
            to the Bank and MIDFA such additional documents, instruments,
            certificates, and agreements as the Bank and MIDFA may reasonably
            request to effectuate the purposes of the Transaction Documents.

      e.    CUMULATIVE NATURE AND NON-EXCLUSIVE EXERCISE OF RIGHTS AND REMEDIES.
            All rights and remedies of the Bank pursuant to this Agreement and
            the Transaction Documents shall be cumulative, and no such right or
            remedy shall be exclusive of any other such right or remedy. In the
            event of any unreconcilable inconsistencies, this Agreement shall
            control. No single or partial exercise by the Bank of any right or
            remedy pursuant to this Agreement or otherwise shall preclude any
            other or further exercise thereof, or any exercise of any other such
            right or remedy, by the Bank.

                                      -9-
<PAGE>
      f.    GOVERNING LAW; JURISDICTION. This Agreement has been delivered to
            and accepted by the Bank and will be deemed to be made in the State
            of Maryland. Except as otherwise provided under federal law, this
            Agreement will be interpreted in accordance with the laws of the
            State of Maryland excluding its conflict of laws rules. THE BORROWER
            HEREBY IRREVOCABLY CONSENTS TO THE EXCLUSIVE JURISDICTION OF ANY
            STATE OR FEDERAL COURT IN THE STATE OF MARYLAND WHERE THE BANK
            MAINTAINS A BRANCH, AND CONSENTS THAT THE BANK MAY EFFECT ANY
            SERVICE OF PROCESS IN THE MANNER AND AT THE BORROWER'S ADDRESS SET
            FORTH ABOVE FOR PROVIDING NOTICE OR DEMAND; PROVIDED THAT NOTHING
            CONTAINED IN THIS AGREEMENT WILL PREVENT THE BANK FROM BRINGING ANY
            ACTION, ENFORCING ANY AWARD OR JUDGMENT OR EXERCISING ANY RIGHTS
            AGAINST THE BORROWER INDIVIDUALLY, AGAINST ANY SECURITY OR AGAINST
            ANY PROPERTY OF THE BORROWER WITHIN ANY OTHER COUNTY, STATE OR OTHER
            FOREIGN OR DOMESTIC JURISDICTION. The Borrower acknowledges and
            agrees that the venue provided above is the most convenient forum
            for both the Bank and the Borrower. The Borrower waives any
            objection to venue and any objection based on a more convenient
            forum in any action instituted under this Agreement.

      g.    JOINT AND SEVERAL; SUCCESSORS AND ASSIGNS. If there is more than one
            Borrower, each of them shall be jointly and severally liable for all
            amounts, which become due, and the performance of all obligations
            under this Agreement, and the term "the Borrower" shall include each
            as well as all of them. This Agreement shall be binding upon the
            Borrower and upon its heirs and legal representatives, its
            successors and assignees, and shall inure to the benefit of, and be
            enforceable by, the Bank and MIDFA, their successors and assignees
            and each direct or indirect assignee or other transferee of any of
            the Obligations; provided, however, that this Agreement may not be
            assigned by the Borrower without the prior written consent of the
            Bank and MIDFA.

      h.    WAIVERS; CHANGES IN WRITING. No failure or delay of the Bank and
            MIDFA in exercising any power or right hereunder shall operate as a
            waiver thereof, nor shall any single or partial exercise of any such
            right or power, or any abandonment or discontinuance of steps to
            enforce such a right or power, preclude any other or further
            exercise thereof or the exercise of any other right or power. The
            Borrower expressly disclaims any reliance on any course of dealing
            or usage of trade or oral representation of the Bank and MIDFA
            (including representations to make loans to the Borrower) and agrees
            that none of the foregoing shall operate as a waiver of any right or
            remedy of the Bank and MIDFA. No notice to or demand on the Borrower
            in any case shall entitle the Borrower to any other or further
            notice or demand in similar or other circumstances. No waiver of any
            provision of this Agreement or consent to any departure by the
            Borrower therefrom shall in any event be effective unless made
            specifically in writing by the Bank and MIDFA and then such waiver
            or consent shall be effective only in the specific instance and for
            the purpose for which given. No modification to any provision of
            this Agreement shall be effective unless made in writing in an
            agreement signed by the Borrower and the Bank and with the consent
            of MIDFA.

      i.    INTERPRETATION. Unless the context otherwise clearly requires,
            references to plural includes the singular and references to the
            singular include the plural; references to "individual" shall mean a
            natural person and shall include a natural person doing business
            under an assumed name (e.g., a "DBA"); the word "or" has the
            inclusive meaning represented by the phrase "and/or"; the word
            "including", "includes" and "include" shall be deemed to be followed
            by the words "without limitation"; and captions or section headings
            are solely for convenience and not part of the substance of this
            Agreement. Any representation, warranty, covenant or agreement
            herein shall survive execution and delivery of this Agreement and
            shall be deemed continuous. Each provision of this Agreement shall
            be interpreted as consistent with existing law and shall be deemed
            amended to the extent necessary to comply with any conflicting law.
            If any provision nevertheless is held invalid, the other provisions
            shall remain in effect. The Borrower agrees that in any legal
            proceeding, a photocopy of this Agreement kept in the Bank's course
            of business may be admitted into evidence as an original.

      j.    WAIVER OF JURY TRIAL. THE BORROWER AND THE BANK AND MIDFA HEREBY
            KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVE ANY RIGHT TO TRIAL
            BY JURY THE BORROWER AND THE BANK AND MIDFA MAY HAVE IN ANY ACTION
            OR PROCEEDING, IN LAW OR IN EQUITY, IN CONNECTION WITH THIS
            AGREEMENT OR ANY TRANSACTIONS RELATED

                                      -10-
<PAGE>
            HERETO. THE BORROWER REPRESENTS AND WARRANTS THAT NO REPRESENTATIVE
            OR AGENT OF THE BANK AND MIDFA HAVE REPRESENTED, EXPRESSLY OR
            OTHERWISE, THAT THE BANK AND MIDFA WILL NOT, IN THE EVENT OF
            LITIGATION, SEEK TO ENFORCE THIS JURY TRIAL WAIVER. THE BORROWER
            ACKNOWLEDGES THAT THE BANK AND MIDFA HAVE BEEN INDUCED TO ENTER INTO
            THIS AGREEMENT BY, AMONG OTHER THINGS, THE PROVISIONS OF THIS
            SECTION.

ACKNOWLEDGMENT. Borrower acknowledges that it has read and understands all the
provisions of this Agreement, including the GOVERNING LAW, JURISDICTION AND
WAIVER OF JURY TRIAL, and has been advised by counsel as necessary or
appropriate.

WITNESS the due execution hereof as a SEALED INSTRUMENT the day and year first
above written.

                                         MANUFACTURERS AND TRADERS TRUST COMPANY

                                         By /s/ Paul Deerin               (L.S.)
                                            ------------------------------

                                         Name:  Paul Deerin
                                              ----------------------------------

                                         Title: Vice President
                                               ---------------------------------

                                         ADVANCIS PHARMACEUTICAL CORPORATION

                                         By /s/ Steven A. Shallcross      (L.S.)
                                           -------------------------------

                                         Name:  Steven A. Shallcross
                                              ----------------------------------

                                         Title: Senior VP/CFO
                                               ---------------------------------

                                 ACKNOWLEDGMENT

STATE OF ____________________)

                             :SS.

COUNTY OF ___________________)

      On the_____________________ day of July, in the year 2003, before me, the
undersigned, a Notary Public in and for said State, personally
appeared_____________________________________, personally known to me or proved
to me on the basis of satisfactory evidence to be the Individual(s) whose
name(s) is (are) subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their capacity(ies), and that by
his/her/their signature(s) on the instrument, the individual(s), or the person
upon behalf of which the individual(s) acted, executed the Instrument.

                                                 /s/
                                            ------------------------------------
                                                       Notary Public

                                      -11-

<PAGE>
                                    SCHEDULE

Additional Representations and Warranties (Section 2)

      None

Additional Affirmative Covenants (Section 3)

      None

Permitted Indebtedness (Section 4(a)): Indebtedness (i) owed to General Electric
Capital Corporation ("GECC") as of the date hereof and (ii) additional
indebtedness, in an amount such that the aggregate principal balance of all such
additional indebtedness is less than an amount equal to 10% of Borrower's net
worth when the indebtedness is incurred (such net worth to be determined as of
the end of the most recent fiscal quarter for which Borrower has provided a
financial statement to Bank).

Permitted Guaranties (Section 4(b)): Indebtedness (i) owed to GECC as of the
date hereof and (ii) additional indebtedness, in an amount such that the
aggregate principal balance of all such additional indebtedness is less than an
amount equal to 10% of Borrower's net worth when the indebtedness is incurred
(such net worth to be determined as of the end of the most recent fiscal quarter
for which Borrower has provided a financial statement to Bank).

Permitted Liens (Section 4(c)): Security interest held by GECC on certain
assets; liens on property of the Borrower in the nature of capital leases or
purchase money security interests securing indebtedness incurred to acquire such
property.

Permitted Loans (Section 4(e))

      None

Additional Financial Covenants (Section 5)

      None

                                      -13-
<PAGE>
                                                   EXHIBIT A TO CREDIT AGREEMENT

M&T Bank
Manufacturers and Traders Trust Company

                                    TERM NOTE
                                    MARYLAND

____________, 200_                                                $_____________

BORROWER: ADVANCIS PHARMACEUTICAL CORPORATION

a(n) [ ] individual(s) [ ] partnership [x] corporation [ ] trust [ ] __________
organized under the laws of Delaware. Address of residence/chief executive
office: 20425 Seneca Meadows Parkway, Germantown, Maryland 20876.

BANK: MANUFACTURERS AND TRADERS TRUST COMPANY, a New York banking corporation
      with banking offices at One M&T Plaza, Buffalo, NY 14240. Attention:
      Office of General Counsel.

PROMISE TO PAY. For value received, intending to be legally bound, Borrower
promises to pay to the order of the Bank, on the dates set forth below, the
principal sum of ____________________ Dollars ($_______________________) (the
"Principal") plus interest as agreed below and all fees and costs (including
without limitation attorneys' fees and disbursements whether for internal or
outside counsel) the Bank incurs in order to collect any amount due under this
Note, to negotiate or document a workout or restructuring, or to preserve its
rights or realize upon any guaranty or other security for the payment of this
Note ("Expenses").

INTEREST. The unpaid Principal of this Note shall earn interest calculated on
the basis of a 360-day year for the actual number of days of each year (365 or
366) from and including the date the proceeds of this Note were disbursed to,
but not including, the date all amounts hereunder are paid in full, at a rate
per year which shall be Two Hundred Eighty (280) basis points over the Bank's
Cost of Funds. "Cost of Funds" shall mean the most recent yield on United States
Treasury Obligations adjusted to a Constant maturity of _____________(_) years
in effect two (2) business days prior to the date of the advance as published by
the Board of Governors of the Federal Reserve System in the Federal Reserve
Statistical Release H.15 (519), or by such other quoting service, index or
commonly available source utilized by the Bank, plus the "ask" side of the
_________ (_) year swap spread in effect two (2) business days prior to each
advance as set forth in Bloomberg, L.P. or by such other quoting service, index
or commonly available source utilized by Manufacturers and Traders Trust
Company.

MAXIMUM LEGAL RATE. It is the intent of the Bank and Borrower that in no event
shall interest be payable at a rate in excess of the maximum rate permitted by
applicable law (the "Maximum Legal Rate"). Solely to the extent necessary to
prevent interest under this Note from exceeding the Maximum Legal Rate, any
amount that would be treated as excessive under a final judicial interpretation
of applicable law shall be deemed to have been a mistake and automatically
canceled, and, if received by the Bank, shall be refunded to Borrower.

DEFAULT RATE. If an Event of Default (defined below) occurs, the interest rate
on the unpaid Principal shall immediately be automatically increased to 2
percentage points per year above the otherwise applicable rate per year, and any
judgment entered hereon or otherwise in connection with any suit to collect
amounts due hereunder shall bear interest at such default rate.

REPAYMENT OF PRINCIPAL AND INTEREST; LATE CHARGE. Payments shall be made in
immediately available United States funds at any banking office of the Bank.
Interest will continue to accrue until payment is actually received. If payment
is not received within five days of its due date, Borrower shall pay a late
charge equal to the greatest of (a) $50.00, (b) 5% of the delinquent amount or
(c) the Bank's then current late charge as announced from time to time.

The Maturity Date of this Note is ___________________, 200_.
<PAGE>
[ ]   Borrower shall pay the entire Principal on the Maturity Date. In
      addition, until the outstanding Principal is paid in full, payments of all
      accrued and unpaid interest in amounts which will vary will become due and
      payable on the ________ day of each: [ ] month [ ] quarter [ ] year [ ]
      commencing on _______________________, 20__.

[x]   Borrower shall pay the Principal in __________ consecutive [x] monthly [ ]
      quarterly [ ] annual installments commencing on ________________________,
      200_ and on the first day of each [x] month [ ] quarter [ ] year
      thereafter consisting of ________ equal installments each in the amount of
      $____________________ and ONE (1) FINAL INSTALLMENT on the Maturity Date
      in an amount equal to the outstanding Principal together with all other
      amounts outstanding hereunder including, without limitation, accrued
      interest, costs and expenses. In addition, until the outstanding Principal
      is paid in full, payments of all accrued and unpaid interest in amounts
      which will vary will become due and payable on the _______ day of each:
      [x] month [ ] quarter [ ] year commencing on ___________________________,
      200_.

[ ]   Borrower shall pay Principal and interest in _____________ consecutive
      level [ ] monthly [ ] quarterly [ ] annual installments consisting of both
      Principal and interest, amortized over a period of _______ years,
      commencing on __________________ 20__ and on the first day of each [x]
      month [ ] quarter [ ] year thereafter consisting of ________ equal
      installments of Principal and interest each in the amount of $____________
      and ONE (1) FINAL INSTALLMENT on the Maturity Date in an amount equal to
      the outstanding Principal together will all other amounts outstanding
      hereunder including, without limitation, accrued interest, costs and
      expenses. PLEASE NOTE THAT THE FINAL INSTALLMENT OF PRINCIPAL SHALL BE
      HIGHER THAN EXPECTED IF (1) A PAYMENT IS RECEIVED AFTER THE DUE DATE OR
      (2) THE INTEREST RATE UNDER THE NOTE IS A VARIABLE RATE AND THERE IS AN
      INCREASE IN THE INTEREST RATE DURING THE TERM OF THE NOTE IN THOSE
      SITUATIONS, MORE INTEREST WILL BE DUE THAN PLANNED AND LESS OF THE
      INSTALLMENT WILL BE APPLIED TO PRINCIPAL.

PREPAYMENT PREMIUM. During the term of this Note, Borrower shall have the option
of paying the Principal to the Bank in advance of the Maturity Date, in whole or
in part, at any time and from time to time upon written notice received by the
Bank at least three (3) business days prior to making such payment; provided,
however, as consideration of the privilege of making such prepayment, Borrower
shall pay to the Bank a premium equal to the present value of the difference
between (i) the amount of interest that would have accrued on the Principal
during the remaining term of the Note, at the interest rate set forth herein in
effect on the date of prepayment and (ii) the amount of interest that would have
accrued on the Principal during the remaining term of this Note at the Current
Market Rate. "Current Market Rate" shall mean the most recent yield on United
States Treasury Obligations plus 200 basis points adjusted to a constant
maturity having a term most nearly corresponding to the term remaining from the
date of prepayment to the Maturity Date, in effect two (2) business days prior
to the prepayment date as published by the Board of Governors of the Federal
Reserve System in the Federal Reserve Statistical Release H.15 (519), or by such
other quoting service, index or commonly available source utilized by the Bank.
The present value calculation used here in shall use the Current Market Rate as
the discount rate and shall be calculated as if each installment of the
Principal had been made during the remaining term of this Note. Each partial
prepayment of the Principal shall be applied in inverse order of maturity. Upon
making any prepayment of the Principal in whole, Borrower shall pay to the Bank
all interest and Expenses owing pursuant to this Note and remaining unpaid. This
will not apply if the Note is a variable rate.

In the event the Maturity Date of this Note is accelerated following an Event of
Default by Borrower, any tender of payment of the amount necessary to satisfy
the entire indebtedness made after such Event of Default shall be expressly
deemed a voluntary prepayment. In such a case, to the extent permitted by law,
the Bank shall be entitled to the amount necessary to satisfy the entire
indebtedness, plus the appropriate prepayment premium calculated in accordance
with the preceding paragraph.

EVENTS OF DEFAULT; ACCELERATION. Any of the following events or conditions shall
constitute an "Event of Default': (i) failure by the Borrower to pay when due
(whether at the stated maturity, by acceleration, upon demand or otherwise) the
Obligations, or any part thereof, or there occurs any event or condition which
after notice, lapse of time or after both notice and lapse of time will permit
acceleration of any Obligation; (ii) the Borrower shall default in the
performance or observance of any term, covenant, condition or agreement
contained in this Agreement or any other Transaction Document and such default
shall continue for a period of thirty (30) days after written notice thereof has
been given to the Borrower by the Bank; (iii) any representation or warranty
made by the Borrower under this Agreement, or any other Transaction Document,
shall at any time prove to have been incorrect or misleading in any material
respect when made or deemed made; (iv) the Borrower shall (A) default in making
any payment when due under any Debt and fail to cure such default during the
period of grace, if any, provided for such default, or (B) default in the

                                       -2-
<PAGE>
observance or performance of any other covenant or agreement contained in any
document relating to any Debt, and fail to cure such default during the period
of grace, if any, provided for such cure, the effect of which default is to
cause, or to permit the holder of such Debt (or a trustee or agent on behalf of
such holder or holders) to cause, with the giving of notice as required, any
such Debt to become due prior to its stated maturity. The term "Debt" means any
obligation of the Borrower for borrowed money, or for the deferred purchase
price of property, in which the outstanding amount of the obligation exceeds
$100,000; (v) the Borrower makes a general assignment, arrangement or
composition agreement with or for the benefit of its creditors or makes, or
sends notice of any intended, bulk sale; the sale, assignment, transfer or
delivery of all or substantially all of the assets of the Borrower to a third
party; or the cessation by the Borrower as a going business concern; (vi) the
Borrower files a petition in bankruptcy or institutes any action under federal
or state law for the relief of debtors or seeks or consents to the appointment
of an administrator, receiver, custodian or similar official for the wind up of
its business (or has such a petition or action filed against it and such
petition action or appointment is not dismissed or stayed within forty-five (45)
days; (vii) the entry of any judgment in excess of $250,000 or order of any
court, other governmental authority or arbitrator against the Borrower and such
judgment or order is not paid, dismissed or a bond posted therefor within thirty
(30) days after the entry thereof; (viii) intentional omission or intentional
inaccuracy of facts submitted to the Bank or any Affiliate (whether in a
financial statement or otherwise); (ix) an adverse change in the Borrower, its
business, operations, affairs or condition (financial or otherwise) which change
the Bank determines will have a material adverse effect on the ability of the
Borrower to pay or perform the Obligations; (x) any pension plan of the Borrower
fails to comply with applicable law or has vested unfunded liabilities that, in
the opinion of the Bank, might have a material adverse effect on the Borrower's
ability to repay its debts; (xi) any indication or evidence received by the Bank
that the Borrower may have directly or indirectly been engaged in any type of
activity which, in the Bank's discretion, might result in the forfeiture or any
property of the Borrower to any governmental authority; (xii) the occurrence of
any event described in Section 6(a)(i) through and including 6(a)(xi) with
respect to any Subsidiary or to any endorser, guarantor or any other party
liable for, or whose assets or any interest therein secures, payment of any of
the Obligations; or (xiii) MIDFA notifies the Bank without the Bank's prior
written consent, that its insurance of the Bank for repayment of the Equipment
Line is no longer effective or is terminated, as a result of any act or omission
of the Borrower.

RIGHT OF SETOFF. The Bank shall have the right to set off against the amounts
owing under this Note any property held in a deposit or other account with the
Bank or any Affiliates or otherwise owing by the Bank or any Affiliate in any
capacity to Borrower or any Guarantor or endorser of this Note. Such setoff
shall be deemed to have been exercised immediately at the time the Bank or such
Affiliate elect to do so.

MISCELLANEOUS. This Note, together with any related loan and security agreements
and guaranties, contains the entire agreement between the Bank and Borrower with
respect to the Note, and supersedes every course of dealing, other conduct, oral
agreement and representation previously made by the Bank. All rights and
remedies of the Bank under applicable law and this Note or amendment of any
provision of this Note are cumulative and not exclusive. No single, partial or
delayed exercise by the Bank of any right or remedy shall preclude the
subsequent exercise by the Bank at any time of any right or remedy of the Bank
without notice. No waiver or amendment of any provision of this Note shall be
effective unless made specifically in writing by the Bank. No course of dealing
or other conduct, no oral agreement or representation made by the Bank, and no
usage of trade, shall operate as a waiver of any right or remedy of the Bank. No
waiver of any right or remedy of the Bank shall be effective unless made
specifically in writing by the Bank. Borrower agrees that in any legal
proceeding, a copy of this Note kept in the Bank's course of business may be
admitted into evidence as an original. This Note is a binding obligation
enforceable against Borrower and its successors and assigns and shall inure to
the benefit of the Bank and its successors and assigns. If a court deems any
provision of this Note invalid, the remainder of the Note shall remain in
effect. Section headings are for convenience only. Singular number includes
plural and neuter gender includes masculine and feminine as appropriate.

NOTICES. Any demand or notice hereunder or under any applicable law pertaining
hereto shall be in writing and duly given if delivered to Borrower (at its
address on the Bank's records) or to the Bank (at the address on page one and
separately to the Bank officer responsible for Borrowers relationship with the
Bank). Such notice or demand shall be deemed sufficiently given for all purposes
when delivered (i) by personal delivery and shall be deemed effective when
delivered, or (ii) by mail or courier and shall be deemed effective three (3)
business days after deposit in an official depository maintained by the United
States Post Office for the collection of mail or one (1) business day after
delivery to a nationally recognized overnight courier service (e.g., Federal
Express). Notice by e-mail is not valid notice under this or any other agreement
between Borrower and the Bank.

                                      -3-
<PAGE>
JOINT AND SEVERAL. If there is more than one Borrower, each of them shall be
jointly and severally liable for all amounts and obligations which become due
under this Note and the term "Borrower' shall include each as well as all of
them.

GOVERNING LAW; JURISDICTION. This Note has been delivered to and accepted by the
Bank and will be deemed to be made in the State of Maryland. Except as otherwise
provided under federal law, this Note will be interpreted in accordance with the
laws of the State of Maryland excluding its conflict of laws rules. BORROWER
HEREBY IRREVOCABLY CONSENTS TO THE EXCLUSIVE JURISDICTION OF ANY STATE OR
FEDERAL COURT IN THE STATE OF MARYLAND WHERE THE BANK MAINTAINS A BRANCH AND
CONSENTS THAT THE BANK MAY EFFECT ANY SERVICE OF PROCESS IN THE MANNER AND AT
BORROWER'S ADDRESS SET FORTH ABOVE FOR PROVIDING NOTICE OR DEMAND; PROVIDED THAT
NOTHING CONTAINED IN THIS NOTE WILL PREVENT THE BANK FROM BRINGING ANY ACTION,
ENFORCING ANY AWARD OR JUDGMENT OR EXERCISING ANY RIGHTS AGAINST BORROWER
INDIVIDUALLY, AGAINST ANY SECURITY OR AGAINST ANY PROPERTY OF BORROWER WITHIN
ANY OTHER COUNTY, STATE OR OTHER FOREIGN OR DOMESTIC JURISDICTION. Borrower
acknowledges and agrees that the venue provided above is the most convenient
forum for both the Bank and Borrower. Borrower waives any objection to venue and
any objection based on a more convenient forum in any action instituted under
this Note.

WAIVER OF JURY TRIAL. BORROWER AND THE BANK HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE ANY RIGHT TO TRIAL BY JURY BORROWER AND THE BANK MAY HAVE IN
ANY ACTION OR PROCEEDING, IN LAW OR IN EQUITY, IN CONNECTION WITH THIS NOTE OR
THE TRANSACTIONS RELATED HERETO. BORROWER REPRESENTS AND WARRANTS THAT NO
REPRESENTATIVE OR AGENT OF THE BANK HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
THAT THE BANK WILL NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THIS JURY
TRIAL WAIVER. BORROWER ACKNOWLEDGES THAT THE BANK HAS BEEN INDUCED TO ENTER INTO
THIS NOTE BY, AMONG OTHER THINGS, THE PROVISIONS OF THIS SECTION.

POWER TO CONFESS JUDGMENT. BORROWER HEREBY EMPOWERS ANY ATTORNEY OF ANY COURT OF
RECORD, AFTER THE OCCURRENCE OF ANY EVENT OF DEFAULT HEREUNDER, TO APPEAR FOR
BORROWER AND, WITH OR WITHOUT COMPLAINT FILED, CONFESS JUDGMENT, OR A SERIES OF
JUDGMENTS, AGAINST BORROWER IN FAVOR OF THE BANK OR ANY HOLDER HEREOF FOR THE
ENTIRE PRINCIPAL BALANCE OF THIS NOTE, ALL ACCRUED INTEREST AND ALL OTHER
AMOUNTS DUE HEREUNDER, TOGETHER WITH COSTS OF SUIT AND AN ATTORNEY'S COMMISSION
OF ONE AND ONE-HALF PERCENT (1.50%) OF SUCH PRINCIPAL AND INTEREST AND FOR DOING
SO THIS NOTE OR A COPY VERIFIED BY AFFIDAVIT SHALL BE A SUFFICIENT WARRANT.
BORROWER HEREBY FOREVER WAIVES AND RELEASES ALL ERRORS IN SAID PROCEEDINGS AND
ALL RIGHTS OF APPEAL AND ALL RELIEF FROM ANY AND ALL APPRAISEMENT, STAY OR
EXEMPTION LAWS OF ANY STATE NOW IN FORCE OR HEREAFTER ENACTED. INTEREST ON ANY
SUCH JUDGMENT SHALL ACCRUE AT THE DEFAULT RATE. NO SINGLE EXERCISE OF THE
FOREGOING POWER TO CONFESS JUDGMENT, OR A SERIES OF JUDGMENTS, SHALL BE DEEMED
TO EXHAUST THE POWER, WHETHER OR NOT ANY SUCH EXERCISE SHALL BE HELD BY ANY
COURT TO BE INVALID, VOIDABLE, OR VOID, BUT THE POWER SHALL CONTINUE
UNDIMINISHED AND IT MAY BE EXERCISED FROM TIME TO TIME AS OFTEN AS THE BANK
SHALL ELECT UNTIL SUCH TIME AS THE BANK SHALL HAVE RECEIVED PAYMENT IN FULL OF
THE DEBT, INTEREST AND COSTS. THE PROVISIONS OF THIS SECTION DO NOT APPLY TO ANY
LOAN EVIDENCED BY THIS NOTE THAT IS WITHIN THE SCOPE OF THE SECTION ENTITLED
"SPECIAL PROVISIONS - LOANS OF $75,000 OR LESS" AND MADE TO AN INDIVIDUAL OR
SOLE PROPRIETOR BORROWER.

[ ]   REPLACEMENT NOTE. This Note is given in replacement of and in substitution
      for, but not in payment of, a note dated _______________________,
      19__/20__, in the original principal amount of
      $______________________________ issued by Borrower (or
      _______________________) to the Bank (or its predecessor in interest), as
      the same may have been amended from time to time.

                                      -4-
<PAGE>
PREAUTHORIZED TRANSFERS FROM DEPOSIT ACCOUNT. If a deposit account number is
provided in the following blank Borrower hereby authorizes the Bank to debit
Borrower's deposit account #______________________________with the Bank
automatically for any amount which becomes due under this Note.

ACKNOWLEDGMENT. Borrower acknowledges that it has read and understands all the
provisions of this Note, including the CONFESSION OF JUDGMENT, GOVERNING LAW,
JURISDICTION and WAIVER OF JURY TRIAL, and has been advised by counsel as
necessary or appropriate.

WITNESS the due execution hereof as a SEALED INSTRUMENT the day and year first
above written.

TAX ID/SS #                                  ADVANCIS PHARMACEUTICAL CORPORATION
           ------------------------------

                                             By                           (L.S.)
                                               ---------------------------

                                             Name:
                                                  ------------------------------

                                             Title:
                                                   -----------------------------

                                   (L.S.)                                 (L.S.)
-----------------------------------          -----------------------------
Signature of Witness

                                   (L.S.)                                 (L.S.)
-----------------------------------          -----------------------------
Typed Name of Witness

                                 ACKNOWLEDGMENT

STATE OF ____________)

                     :SS.

COUNTY OF ___________)

      On the _________ day of ___________________ in the year 20__ before me,
the undersigned, a Notary Public in and for said State, personally appeared
_____________________________________________, personally known to me or proved
to me on the basis of satisfactory evidence to be the individual(s) whose
name(s) is (are) subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their capacity(ies), and that by
his/her/their signature(s) on the instrument, the individual(s), or the person
upon behalf of which the individual(s), acted, executed the instrument.

                              --------------------------------------------------
                                                   Notary Public

--------------------------------------------------------------------------------
FOR BANK USE ONLY

Authorization Confirmed:
                        --------------------------------------------------------
Disbursement of Funds:

Credit A/C #                Off Ck #              Payoff Obligation #
            -----------             -----------                      -----------
           $                       $                                $
            -----------             -----------                      -----------

                                      -5-
<PAGE>
M&T Bank
Manufacturers and Traders Trust Company

                          EXHIBIT B TO CREDIT AGREEMENT

                                 LIBOR TERM NOTE
                                    MARYLAND

      August 8              , 2003             $    1,036,654.88
____________________________      ___           ________________________________

BORROWER: ADVANCIS PHARMACEUTICAL CORPORATION

a(n) [ ] individual(s) [ ] partnership [x]corporation [ ] trust
____________________ organized under the laws of Delaware.

Address of residence/chief executive office: 20425 Seneca Meadows Parkway,
Germantown, Maryland 20876.

BANK: MANUFACTURERS AND TRADERS TRUST COMPANY, a New York banking corporation
with banking offices at One M & T Plaza, Buffalo, New York 14240. Attention:
Office of General Counsel

1.    DEFINITIONS. As used in this Note, each capitalized term shall have the
meaning specified in the Note or as it appears in initial capitalization.
Additionally, the following terms shall have the indicated meanings:

      A.    "APPLICABLE RATE" shall mean either the LIBOR Rate or the Base Rate,
            as the case may be.

      B.    "ADJUSTMENT DATE" shall mean two (2) Business Days before the last
            day of the Interest Period selected below (see LIBOR Rate
            definition).

      C.    "BASE RATE" shall mean one (1) percentage point above the highest
            prime rate published in The Wall Street Journal in its table
            entitled "Money Rates" or such similar publication, quoting service
            or commonly available source used by the Bank for determining prime
            rate ("Prime").

      D.    "BUSINESS DAY" shall mean any day of the year on which banking
            institutions in New York, New York are not authorized or required by
            law or other governmental action to close and, in connection with
            the LIBOR Rate, on which dealings are carried on in the London
            interbank market.

      E.    "CONTINUATION DATE" shall mean the last day of each Interest Period.

      F.    "INTEREST PERIOD" shall mean, as to the LIBOR Rate, the period
            commencing on the date of this Note or Continuation Date (as the
            case may be) and ending on, with respect thereto, the numerically
            corresponding day (or, if there is no numerically corresponding day,
            on the last day) of the calendar month that is one (1), two (2) or
            three (3) months thereafter (as selected by Borrower below);
            provided, however, that if an Interest Period would end on a day
            that is not a Business Day, such Interest Period shall be extended
            to the next succeeding Business Day unless such next succeeding
            Business Day would fall in the next calendar month, in which case
            such Interest Period shall end on the immediately preceding Business
            Day.

      G.    "LIBOR" shall mean the rate obtained by dividing (i) the one, two or
            three month interest period London Interbank Offered Rate (as
            selected by Borrower), fixed by the British Bankers Association for
            United States dollar deposits in the London Interbank Eurodollar
            Market at approximately 11:00 a.m. London, England time (or as soon
            thereafter as practicable) as determined by the Bank from any
            broker, quoting service or commonly available source utilized by the
            Bank by (ii) a percentage equal to 100% minus the stated maximum
            rate of all reserves required to be maintained against "Eurocurrency
            Liabilities" as specified in Regulation D (or against any other
            category of liabilities which includes deposits by reference to
            which the interest rate on LIBOR Rate loans is determined or any
            category of extensions of credit or other assets which includes
            loans by a non-United States' office of a bank to United States
            residents) on such date to any member bank of the Federal Reserve
            System.

      H.    "LIBOR RATE" shall mean 280 percentage points above LIBOR with an
            Interest Period duration of [x] one month, [ ] two months
            [ ] three months (select applicable Interest Period. If no
            interest period is selected, the one month interest period shall
            apply).

      I.    "MATURITY DATE" is the Payment Due Day in
            ______________________________, 2007.
                                              __

      J.    "PAYMENT DUE DAY" shall mean the same day of the calendar month as
            the date of this Note (or if there is no numerically corresponding
            day in a month, on the last day of such month); provided, however,
            if that day is not a Business Day, the Payment Due Day shall be
            extended to the next succeeding Business Day unless such next
            succeeding Business Day would fall in the next calendar month, in
            which case such Payment Due Day shall end on the immediately
            preceding Business Day.

      K.    "PRINCIPAL AMOUNT" shall mean
            one million thirty six thousand six hundred fifty four and 88/100
            ___________________________________________________________________
            Dollars ($1,036,654.88).
                      ____________

                                       1
<PAGE>
2.    PAYMENT OF PRINCIPAL, INTEREST AND EXPENSES.

      A. PROMISE TO PAY. For value received and intending to be legally bound,
Borrower promises to pay to the order of the Bank on the dates set forth below,
the Principal Amount, plus interest as agreed below and all fees and costs
(including without limitation attorneys' fees and disbursements whether for
internal or outside counsel) the Bank incurs in order to collect any amount due
under this Note, to negotiate or document a workout or restructuring, or to
preserve its rights or realize upon any guaranty or other security for the
payment of this Note ("Expenses").

      B. INITIAL APPLICABLE RATE. The initial Applicable Rate shall be the LIBOR
Rate based on the Interest Period (with the duration selected by Borrower) in
effect two (2) Business Days before the date of this Note. The initial Interest
Period shall start on the date of this Note.

      C. INTEREST. Interest shall accrue on the outstanding Principal Amount
calculated on the basis of a 360-day year for the actual number of days of each
year (365 or 366) at the Applicable Rate that on each day shall be:

            i.    IF THE LIBOR RATE IS THE APPLICABLE RATE. Interest shall
                  accrue on the Principal Amount from and including the first
                  day of the Interest Period (with the duration selected by
                  Borrower) until, but not including, the last day of such
                  Interest Period or the day the Principal Amount is paid in
                  full (if sooner) at a rate per annum equal to the LIBOR Rate
                  in effect on the each Adjustment Date.

            ii.   IF THE BASE RATE IS THE APPLICABLE RATE. Interest shall accrue
                  on the Principal Amount from and including the first date the
                  Base Rate is the Applicable Rate to but not including, the day
                  such Principal Amount is paid in full or the Applicable Rate
                  is converted to the LIBOR Rate, at the rate per annum equal to
                  the Base Rate. Any change in the Base Rate resulting from a
                  change in Prime shall be effective on the date of such change.

      D.    PAYMENT SCHEDULE. (Check applicable box):

            [ ]   Borrower shall pay the entire outstanding Principal Amount on
                  the Maturity Date. In addition, until the outstanding
                  Principal Amount is paid in full, Borrower shall pay all
                  accrued and unpaid interest, in amounts which may vary, as
                  follows: (i) if the LIBOR Rate is the Applicable Rate, on the
                  last day of each Interest Period, (ii) if the Base Rate is the
                  Applicable Rate, on the Payment Due Date for each month and
                  (iii) at maturity (whether by acceleration or otherwise) and,
                  after such maturity, on demand.

            [x]   Borrower shall pay the outstanding Principal Amount in
                  $1,036,654.88 consecutive monthly, bi-monthly or quarterly
                  installments (depending on the duration of the Interest Period
                  selected by Borrower on page one) starting on the last day of
                  the Interest Period that commences on the date of this Note
                  and on last day of each Interest Period thereafter consisting
                  of 47 equal installments of principal each in the amount of
                  $22,056.49 and ONE (1) FINAL INSTALLMENT on the Maturity Date
                  in an amount equal to the outstanding Principal Amount at that
                  time together with all other amounts outstanding hereunder
                  including, without limitation, accrued interest, costs and
                  Expense (the "'Final Installment"); provided, however, if the
                  Applicable Rate is converted to the Base Rate, Borrower shall
                  pay the outstanding Principal Amount in consecutive monthly
                  installments commencing on the first Payment Due Day after the
                  date of such conversion and on the same Payment Due Day
                  thereafter until conversion back to the LIBOR Rate (at which
                  time Borrower shall resume the monthly, bi-monthly or
                  quarterly installments in the amount set forth above or as
                  otherwise agreed to by the Bank and Borrower in writing) or
                  the Maturity Date (at which time Borrower shall pay the Final
                  Installment) with each such installment being equal in an
                  amount to fully amortize the outstanding Principal Amount of
                  the Note in full by the Maturity Date or such other date
                  agreed to by the Bank and Borrower in writing. The
                  determination by the Bank of the foregoing amount shall, in
                  the absence of manifest error, be conclusive and binding upon
                  Borrower. In addition, until the outstanding Principal Amount
                  is paid in full, Borrower shall pay all accrued and unpaid
                  interest, in amounts which may vary, as follows: (i) if the
                  LIBOR Rate is the Applicable Rate, on the last day of each
                  Interest Period, (ii) if the Base Rate is the Applicable Rate,
                  on the Payment Due Date for each month and (iii) at maturity
                  (whether by acceleration or otherwise) and, after such
                  maturity, on demand.

      E. MAXIMUM LEGAL RATE. It is the intent of the Bank and Borrower that in
no event shall interest be payable at a rate in excess of the maximum rate
permitted by applicable law (the "Maximum Legal Rate"). Solely to the extent
necessary to prevent interest under this Note from exceeding the Maximum Legal
Rate, any amount that would be treated as excessive under a final judicial
interpretation of applicable law shall be deemed to have been a mistake and
automatically canceled, and, if received by the Bank, shall be refunded to
Borrower.

                                       2
<PAGE>
      F. DEFAULT RATE. If an Event of Default (defined below) occurs, the
interest rate on the unpaid Principal Amount shall immediately be automatically
increased to 2 percentage points per year above the higher of the LIBOR Rate or
the Base Rate, and any judgment entered hereon or otherwise in connection with
any suit to collect amounts due hereunder shall bear interest at such default
rate.

      G. REPAYMENT OF PRINCIPAL AND INTEREST; LATE CHARGE. Payments shall be
made in immediately available United States funds at any banking office of the
Bank. Interest will continue to accrue until payment is actually received. If
payment is not received within five days of its due date, Borrower shall pay a
late charge equal to the greatest of (a) $50.00, (b) 5% of the delinquent amount
or (c) the Bank's then current late charge as announced from time to time. If
this Note is secured by a one- to six-family owner-occupied residence, the late
charge shall equal 2% of the delinquent amount and shall be payable if payment
is not received within fifteen days of its due date. Payments may be applied in
any order in the sole discretion of the Bank but, prior to default, shall be
applied first to past due interest, Expenses, late charges and principal, then
to current interest, Expenses, late charges and principal, and last to remaining
principal.

3.    CONTINUATIONS AND CONVERSIONS.

      A. EXPIRATION OF INTEREST PERIOD. Subject to Section 3(b), upon the
expiration of the first Interest Period and each Interest Period thereafter, on
the Continuation Date the LIBOR Rate will be automatically continued with an
Interest Period of the same duration as the Interest Period duration initially
selected by Borrower.

      B. CONVERSION UPON DEFAULT. Unless the Bank shall otherwise consent in
writing, if (i) Borrower has failed to pay when due, in whole or in part, the
indebtedness under the Note (whether upon maturity, acceleration or otherwise),
or (ii) there exists a condition or event which with the passage of time, the
giving of notice or both shall constitute an Event of Default, the Bank, in its
sole discretion, may (i) permit the LIBOR Rate to continue until the last day of
the applicable Interest Period at which time such the Applicable Rate shall
automatically be converted to the Base Rate or (ii) convert the LIBOR Rate to
the Base Rate before the end of the applicable Interest Period. Notwithstanding
the foregoing, upon the occurrence of an Event of Default in Section 5(ix), the
Applicable Rate shall be automatically converted to the Base Rate without
further action by the Bank and Borrower shall have no right to have the
Applicable Rate converted from the Base Rate to the LIBOR Rate. Nothing herein
shall be construed to be a waiver by the Bank to have the Principal Amount
accrue interest at the Default Rate or the right of the Bank to the amounts set
forth in Section 2(h) of this Note.

4.    EVENTS OF DEFAULT; ACCELERATION. Any of the following events or conditions
shall constitute an "Event of Default": (i) failure by the Borrower to pay when
due (whether at the stated maturity, by acceleration, upon demand or otherwise)
the Obligations, or any part thereof, or there occurs any event or condition
which after notice, lapse of time or after both notice and lapse of time will
permit acceleration of any Obligation; (ii) the Borrower shall default in the
performance or observance of any term, covenant, condition or agreement
contained in this Agreement or any other Transaction Document and such default
shall continue for a period of thirty (30) days after written notice thereof has
been given to the Borrower by the Bank; (iii) any representation or warranty
made by the Borrower under this Agreement, or any other Transaction Document,
shall at any time prove to have been incorrect or misleading in any material
respect when made or deemed made; (iv) the Borrower shall (A) default in making
any payment when due under any Debt and fail to cure such default during the
period of grace, if any, provided for such default, or (B) default in the
observance or performance of any other covenant or agreement contained in any
document relating to any Debt, and fail to cure such default during the period
of grace, if any, provided for such cure, the effect of which default is to
cause, or to permit the holder of such Debt (or a trustee or agent on behalf of
such holder or holders) to cause, with the giving of notice as required, any
such Debt to become due prior to its stated maturity. The term "Debt" means any
obligation of the Borrower for borrowed money, or for the deferred purchase
price of property, in which the outstanding amount of the obligation exceeds
$100,000; (v) the Borrower makes a general assignment, arrangement or
composition agreement with or for the benefit of its creditors or makes, or
sends notice of any intended, bulk sale; the sale, assignment, transfer or
delivery of all or substantially all of the assets of the Borrower to a third
party; or the cessation by the Borrower as a going business concern; (vi) the
Borrower files a petition in bankruptcy or institutes any action under federal
or state law for the relief of debtors or seeks or consents to the appointment
of an administrator, receiver, custodian or similar official for the wind up of
its business (or has such a petition or action filed against it and such
petition action or appointment is not dismissed or stayed within forty-five (45)
days; (vii) the entry of any judgment in excess of $250,000 or order of any
court, other governmental authority or arbitrator against the Borrower and such
judgment or order is not paid, dismissed or a bond posted therefor within thirty
(30) days after the entry thereof; (viii) intentional omission or intentional
inaccuracy of facts submitted to the Bank or any Affiliate (whether in a
financial statement or otherwise); (ix) an adverse change in the Borrower, its
business, operations, affairs or condition (financial or otherwise) which change
the Bank determines will have a material adverse effect on the ability of the
Borrower to pay or perform the Obligations; (x) any pension plan of the Borrower
fails to comply with applicable law or has vested unfunded liabilities that, in
the opinion of the Bank, might have a material adverse effect on the Borrower's
ability to repay its debts; (xi) any

                                       3
<PAGE>
indication or evidence received by the Bank that the Borrower may have directly
or indirectly been engaged in any type of activity which, in the Bank's
discretion, might result in the forfeiture or any property of the Borrower to
any governmental authority; (xii) the occurrence of any event described in
Section 6(a)(i) through and including 6(a)(xi) with respect to any Subsidiary or
to any endorser, guarantor or any other party liable for, or whose assets or any
interest therein secures, payment of any of the Obligations; or (xiii) MIDFA
notifies the Bank without the Bank's prior written consent, that its insurance
of the Bank for repayment of the Equipment Line is no longer effective or is
terminated, as a result of any act or omission of the Borrower.

5.    RIGHT OF SETOFF. The Bank shall have the right to set off against the
amounts owing under this Note any property held in a deposit or other account
with the Bank or any Affiliate or otherwise owing by the Bank or any Affiliate
in any capacity to Borrower or any guarantor or endorser of this Note. Such
set-off shall be deemed to have been exercised immediately at the time the Bank
or such Affiliate elect to do so.

6.    INABILITY TO DETERMINE LIBOR RATES, INCREASED COSTS, ILLEGALITY.

      A. INCREASED COSTS. If the Bank shall determine that, due to either (a)
the introduction of any change (other than any change by way of imposition of or
increase in reserve requirements included in the calculation of the LIBOR) in or
in the interpretation of any requirement of law or (b) the compliance with any
guideline or request from any central bank or other governmental authority
(whether or not having the force of law), there shall be any increase in the
cost to the Bank of agreeing to make or making, funding or maintaining any loans
based on LIBOR, then Borrower shall be liable for, and shall from time to time,
upon demand therefor by the Bank and pay to the Bank such additional amounts as
are sufficient to compensate the Bank for such increased costs.

      B. INABILITY TO DETERMINE RATES. If the Bank shall determine that for any
reason adequate and reasonable means do not exist for ascertaining LIBOR for the
Interest Period specified above, the Bank will give notice of such determination
to Borrower. Thereafter, the Bank may not maintain the loan hereunder at the
LIBOR Rate until the Bank revokes such notice in writing and, until such
revocation, the Bank may convert the Applicable Rate from the LIBOR Rate to the
Base Rate.

      C. ILLEGALITY. If the Bank shall determine that the introduction of any
law (statutory or common), treaty, rule, regulation, guideline or determination
of an arbitrator or of a governmental authority or in the interpretation or
administration thereof, has made it unlawful, or that any central bank or other
governmental authority has asserted that it is unlawful for the Bank to make
loans at based on LIBOR then, on notice thereof by the Bank to Borrower, the
Bank may suspend the maintaining of the loan hereunder at the LIBOR Rate until
the Bank shall have notified Borrower that the circumstances giving rise to such
determination shall no longer exist. If the Bank shall determine that it is
unlawful to maintain the loan hereunder based on LIBOR, the Bank may convert the
Applicable Rate from the LIBOR Rate to the Base Rate.

7.    MISCELLANEOUS. This Note, together with any related loan and security
agreements and guaranties, contains the entire agreement between the Bank and
Borrower with respect to the Note, and supersedes every course of dealing, other
conduct, oral agreement and representation previously made by the Bank. All
rights and remedies of the Bank under applicable law and this Note or amendment
of any provision of this Note are cumulative and not exclusive. No single,
partial or delayed exercise by the Bank of any right or remedy shall preclude
the subsequent exercise by the Bank at any time of any right or remedy of the
Bank without notice. No waiver or amendment of any provision of this Note shall
be effective unless made specifically in writing by the Bank. No course of
dealing or other conduct, no oral agreement or representation made by the Bank,
and no usage of trade, shall operate as a waiver of any right or remedy of the
Bank. No waiver of any right or remedy of the Bank shall be effective unless
made specifically in writing by the Bank. Borrower agrees that in any legal
proceeding, a copy of this Note kept in the Bank's course of business may be
admitted into evidence as an original. This Note is a binding obligation
enforceable against Borrower and its successors and assigns and shall inure to
the benefit of the Bank and its successors and assigns. If a court deems any
provision of this Note invalid, the remainder of the Note shall remain in
effect. Section headings are for convenience only. Borrower hereby waives
protest, presentment and notice of any kind in connection with this Note.
Singular number includes plural and neuter gender includes masculine and
feminine as appropriate.

8.    NOTICES. Any demand or notice hereunder or under any applicable law
pertaining hereto shall be in writing and duly given if delivered to Borrower
(at its address on the Bank's records) or to the Bank (at the address on page
one and separately to the Bank officer responsible for Borrower's relationship
with the Bank). Such notice or demand shall be deemed sufficiently given for all
purposes when delivered (i) by personal delivery and shall be deemed effective
when delivered, or (ii) by mail or courier and shall be deemed effective three
(3) business days after deposit in an official depository maintained by the
United States Post Office for the collection of mail or one (1) business day
after delivery to a nationally recognized overnight courier service (e.g.,
Federal Express). Notice by e-mail is not valid notice under this or any other
agreement between Borrower and the Bank.

9.    JOINT AND SEVERAL. If there is more than one Borrower, each of them shall
be jointly and severally liable for all amounts which become due under this Note
and the term "Borrower" shall include each as well as all of them.

                                       4
<PAGE>
10.   GOVERNING LAW; JURISDICTION. This Note has been delivered to and accepted
by the Bank and will be deemed to be made in the State of Maryland. Except as
otherwise provided under federal law, this Note will be interpreted in
accordance with the laws of the State of Maryland excluding its conflict of laws
rules. BORROWER HEREBY IRREVOCABLY CONSENTS TO THE EXCLUSIVE JURISDICTION OF ANY
STATE OR FEDERAL COURT IN THE STATE OF MARYLAND WHERE THE BANK MAINTAINS A
BRANCH AND CONSENTS THAT THE BANK MAY EFFECT ANY SERVICE OF PROCESS IN THE
MANNER AND AT BORROWER'S ADDRESS SET FORTH ABOVE FOR PROVIDING NOTICE OR DEMAND;
PROVIDED THAT NOTHING CONTAINED IN THIS NOTE WILL PREVENT THE BANK FROM BRINGING
ANY ACTION, ENFORCING ANY AWARD OR JUDGMENT OR EXERCISING ANY RIGHTS AGAINST
BORROWER INDIVIDUALLY, AGAINST ANY SECURITY OR AGAINST ANY PROPERTY OF BORROWER
WITHIN ANY OTHER COUNTY, STATE OR OTHER FOREIGN OR DOMESTIC JURISDICTION.
Borrower acknowledges and agrees that the venue provided above is the most
convenient forum for both the Bank and Borrower. Borrower waives any objection
to venue and any objection based on a more convenient forum in any action
instituted under this Note.

11.   WAIVER OF JURY TRIAL. BORROWER AND THE BANK HEREBY KNOWINGLY, VOLUNTARILY,
AND INTENTIONALLY WAIVE ANY RIGHT TO TRIAL BY JURY BORROWER AND THE BANK MAY
HAVE IN ANY ACTION OR PROCEEDING, IN LAW OR IN EQUITY, IN CONNECTION WITH THIS
NOTE OR THE TRANSACTIONS RELATED HERETO. BORROWER REPRESENTS AND WARRANTS THAT
NO REPRESENTATIVE OR AGENT OF THE BANK HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
THAT THE BANK WILL NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THIS JURY
TRIAL WAIVER. BORROWER ACKNOWLEDGES THAT THE BANK HAS BEEN INDUCED TO ENTER INTO
THIS NOTE BY, AMONG OTHER THINGS, THE PROVISIONS OF THIS SECTION.

12.   POWER TO CONFESS JUDGMENT. BORROWER HEREBY EMPOWERS ANY ATTORNEY OF ANY
COURT OF RECORD, AFTER THE OCCURRENCE OF ANY EVENT OF DEFAULT HEREUNDER, TO
APPEAR FOR BORROWER AND, WITH OR WITHOUT COMPLAINT FILED, CONFESS JUDGMENT, OR A
SERIES OF JUDGMENTS, AGAINST BORROWER IN FAVOR OF THE BANK OR ANY HOLDER HEREOF
FOR THE ENTIRE PRINCIPAL BALANCE OF THIS NOTE, ALL ACCRUED INTEREST AND ALL
OTHER AMOUNTS DUE HEREUNDER, TOGETHER WITH COSTS OF SUIT AND AN ATTORNEY'S
COMMISSION OF ONE AND ONE HALF PERCENT (1.50%) OF SUCH PRINCIPAL AND INTEREST
AND FOR DOING SO THIS NOTE OR A COPY VERIFIED BY AFFIDAVIT SHALL BE A SUFFICIENT
WARRANT. BORROWER HEREBY FOREVER WAIVES AND RELEASES ALL ERRORS IN SAID
PROCEEDINGS AND ALL RIGHTS OF APPEAL AND ALL RELIEF FROM ANY AND ALL
APPRAISEMENT, STAY OR EXEMPTION LAWS OF ANY STATE NOW IN FORCE OR HEREAFTER
ENACTED. INTEREST ON ANY SUCH JUDGMENT SHALL ACCRUE AT THE DEFAULT RATE. NO
SINGLE EXERCISE OF THE FOREGOING POWER TO CONFESS JUDGMENT, OR A SERIES OF
JUDGMENTS, SHALL BE DEEMED TO EXHAUST THE POWER, WHETHER OR NOT ANY SUCH
EXERCISE SHALL BE HELD BY ANY COURT TO BE INVALID, VOIDABLE, OR VOID, BUT THE
POWER SHALL CONTINUE UNDIMINISHED AND IT MAY BE EXERCISED FROM TIME TO TIME AS
OFTEN AS THE BANK SHALL ELECT UNTIL SUCH TIME AS THE BANK SHALL HAVE RECEIVED
PAYMENT IN FULL OF THE DEBT, INTEREST AND COSTS. THE PROVISIONS OF THIS SECTION
DO NOT APPLY TO ANY LOAN EVIDENCED BY THIS NOTE THAT IS WITHIN THE SCOPE OF THE
SECTION ENTITLED "SPECIAL PROVISIONS - LOANS OF $75,000 OR LESS" AND MADE TO AN
INDIVIDUAL OR SOLE PROPRIETOR BORROWER.

      REPLACEMENT NOTE. This Note is given in replacement of and in substitution
      for, but not in payment of, a note dated ________________________,
      19_____/20_____ in the original principal amount of
      $___________________________ issued by Borrower (or
      ______________________) to the Bank (or its predecessor in interest), as
      the same may have been amended from time to time.

PREAUTHORIZED TRANSFERS FROM DEPOSIT ACCOUNT. If a deposit account number is
provided in the following blank Borrower hereby authorizes the Bank to debit
Borrower's deposit account #___________________________ with the Bank
automatically for any amount which becomes due under this Note.

ACKNOWLEDGMENT. Borrower acknowledges that it has read and understands all the
provisions of this Note, including the CONFESSION OF JUDGMENT, GOVERNING LAW,
JURISDICTION and WAIVER OF JURY TRIAL, and has been advised by counsel as
necessary or appropriate.

                                       5
<PAGE>
WITNESS the due execution hereof as a SEALED INSTRUMENT the day and year first
above written.

TAX ID/SS#                              ADVANCIS PHARMACEUTICAL CORPORATION
           ------------------------
                                        By:    /s/ Steven A. Shallcross   (L.S.)
                                           -------------------------------
                                        Name:  Steven A. Shallcross
                                             -----------------------------------
                                        Title: Senior VP/CFO
                                              ----------------------------------

    /s/ Julie M. Clifford    (L.S.)                                       (L.S.)
-----------------------------           ----------------------------------
Signature of Witness

     Julie M. Clifford                                                    (L.S.)
-----------------------------           ----------------------------------
Typed Name of Witness

                                 ACKNOWLEDGMENT

STATE OF_______________)

                        :SS.

COUNTY OF______________)

      On the _____day of _____________________ in the year 20___, before me, the
undersigned, a Notary Public in and for said State, personally appeared
_______________________________________, personally known to me or proved to me
on the basis of satisfactory evidence to be the Individual(s) whose name(s) is
(are) subscribed to the within instrument and acknowledged to me that
he/she/they executed the same In his/her/their capacity(ies), and that by
his/her/their signature(s) on the instrument, the individual(s), or the person
upon behalf of which the individual(s) acted, executed the Instrument.

                                                    /s/
                                              ----------------------------------
                                                         Notary Public

--------------------------------------------------------------------------------
                                FOR BANK USE ONLY

Authorization Confirmed:
Product Code: 22660
Disbursement of Funds:

Credit A/C #              Off Ck #              Payoff Obligation #
            -------------         -------------                    -------------
            $                    $                                $
            -------------         -------------                    -------------

                                       6<PAGE>
                                                                  Exhibit 10.33

                           SPECIFIC SECURITY AGREEMENT

                                    MARYLAND

DEBTOR: ADVANCIS PHARMACEUTICAL CORPORATION A(n) [ ] individual(s) [ X]
corporation [ ] limited liability company [ ] partnership [ ] _______ organized
and registered under the laws of the State of Delaware. Organizational
Identification Number (if any): 3143577 (Note: this number is not the same as
the Taxpayer Identification Number.) Chief executive office/residence: 20425
Seneca Meadows Parkway, Germantown, Maryland 20876.

SECURED PARTY: Manufacturers and Traders Trust Company, a New York banking
corporation with banking offices at One M&T Plaza, Buffalo, New York 14240,
Attn: General Counsel's Office.

For good and valuable consideration, the receipt and sufficiency of which is
acknowledged, and intending to be legally bound, Debtor agrees with Secured
Party as follows:

1. SECURITY INTERESTS.

         Grant. As security for the prompt and complete payment and performance
         when due of all of the Obligations, Debtor does hereby grant to Secured
         Party a continuing security interest ("Security Interest") in all of
         Debtors property INDICATED ON EXHIBIT A whether or not subject to the
         Uniform Commercial Code as the same may be in effect in the State of
         Maryland, as amended from time to time (the "UCC"), and whether or not
         affixed to any realty including (i) all additions, accessions to,
         substitutions for, or replacements of the foregoing; (ii) all proceeds
         and products of the foregoing including insurance proceeds; and (iii)
         all business records and information relating to any of the foregoing
         and any software or other programs for accessing and manipulating such
         information (collectively, the "Collateral").

         1.1 Obligations. The term "Obligations" means any and all indebtedness
or other obligations of Debtor to Secured Party under the Credit Agreement by
and between the Bank and the Borrower of even date herewith.

2. COVENANTS. Debtor covenants and agrees as follows:

         2.1 Perfection of Security Interest. Debtor shall execute and deliver
to Secured Party such financing statements, control agreements or other
documents, in form and content satisfactory to Secured Party, as Secured Party
may from time to time request to perfect and continue the Security Interest.
Upon the request of Secured Party, Debtor shall deliver to Secured Party any and
all instruments, chattel paper, negotiable documents or other documents
evidencing or constituting any part of the Collateral properly endorsed or
assigned, in a manner satisfactory to Secured Party. Until such delivery, Debtor
shall hold such portion of the Collateral in trust for Secured Party. Debtor
shall pay all expenses for the preparation, filing, searches and related costs
in connection with the grant and perfection of the Security Interest.
<PAGE>
Debtor authorizes (both prospectively and retroactively) Secured Party to file
financing statements, and any continuations and amendments thereof, with respect
to the Collateral without Debtor's signature. A photocopy or other reproduction
of any financing statement or this Agreement shall be sufficient as a financing
statement for filing in any jurisdiction.

         2.2 Negative Pledge; Disposition of Collateral. Debtor shall not grant
or allow the imposition of any lien, security interest or encumbrance on, or
assignment of, the Collateral unless consented to in writing by Secured Party
and the Maryland Industrial Development Financing Authority ("MIDFA"). Debtor
shall not make or permit to be made any sale, transfer or other disposition of
the Collateral; provided, however, prior to the occurrence of an Event of
Default, Debtor may in the ordinary course of business consistent with its past
practices and with prudent and standard practices used in the industry that is
the same or similar to that in which Debtor is engaged: (i) dispose of any
Collateral consisting of equipment that is obsolete or worn-out; (ii) sell or
exchange any Collateral consisting of equipment in connection with the
acquisition of other equipment that is at least as valuable as such equipment,
that Debtor intends to use for substantially the same purposes as such equipment
and that is not subject to any security interest or other lien or encumbrance;
(iii) collect Collateral consisting of accounts or assign such Collateral for
purposes of collection; or (iv) sell or lease Collateral consisting of
inventory. A sale, lease or other transfer of such Collateral consisting of
inventory in the ordinary course of Debtor's business does not include a
transfer in partial or complete satisfaction of any liability or obligation or
any bulk sale.

         2.3 Condition of Collateral; Impermissible Use. Debtor shall keep the
Collateral consisting of goods in good condition (other than ordinary wear and
tear) and shall not commit or permit damage or destruction to such Collateral.
Debtor shall not permit (i) the Collateral consisting of goods to be used in
such a manner that would violate any insurance policy or warranty covering the
Collateral or that would violate any applicable law of any governmental
authority (including any environmental law) now or hereafter in effect; (iii)
the Collateral consisting of goods to become fixtures on any real property on
which Secured Party does not have a first priority mortgage lien (unless Secured
Party has been provided with an acceptable landlord/mortgagee waiver) or become
an accession to any goods not included in the Collateral; or (iii) any goods
included in the Collateral to be placed in any warehouse that may issue a
negotiable document with regard to such goods.

         2.4 Modification to Collateral. Debtor shall not, without Secured
Party's prior written consent, grant any extension, compound, settlement for
less than full amount, release (in whole or in part), modification or
cancellation of, or substitution for, or credits or adjustments on Collateral
consisting of accounts, chattel paper, general intangibles, instruments,
documents, investment property, except that so long as no Event of Default is
then in existence, Debtor may grant to account debtors, or other persons
obligated with the Collateral, extensions, credits, discounts, compromises or
settlements in the ordinary course of business consistent with its past
practices and consistent with prudent and standard practices used in the
industries that are the same or similar to those in which Debtor is engaged.

                                       2
<PAGE>
         2.5 Titled Goods. Debtor shall cause all goods included in the
Collateral to be properly titled and registered to the extent required by
applicable law. Upon the request of Secured Party, Debtor shall cause the
interest of Secured Party to be properly indicated on any certificate of title
relating to such goods and deliver to Secured Party each such certificate, and
any additional evidence of ownership, certificates of origin or other documents
evidencing any interest in such goods.

         2.6 Insurance. Debtor shall at its own expense, keep in force at all
times insurance covering damage to persons and against fire, flood, theft and
all other risks which the Collateral may be subject, all in such amounts, with
such deductibles and issued by such insurance company as shall be satisfactory
to Secured Party. Such insurance shall have all endorsements that Secured Party
may require and shall further (i) name Secured Party as an additional insured on
the casualty insurance and a lenders loss payable or mortgagee on the hazard
insurance; (ii) provide Secured Party with a minimum of 30 days prior written
notice of any amendment or cancellation; and (iii) insure Secured Party
notwithstanding any act or neglect of Debtor or other owner of the property
described in such insurance. If Debtor fails to obtain the insurance as provided
herein, Secured Party may, but is not obligated, to obtain such insurance as
Secured Party may deem appropriate including, if it so chooses, "single interest
insurance" which will cover only Secured Party's interest in the Collateral.
Debtor shall pay to Secured Party for the cost of such insurance. Secured Party
shall have the option to hold insurance proceeds as part of the Collateral,
apply any insurance proceeds toward the Obligations or apply the insurance
proceeds towards repair or replacement of the item of Collateral in respect of
which such proceeds were received. Upon the request of Secured Party, Debtor
shall from time to time deliver to Secured Party such insurance policies, or
other evidence of such policies satisfactory to Secured Party and such other
related information Secured Party may request.

         2.7 Collateral Information. Debtor shall provide all information, in
form and substance satisfactory to Secured Party, that Secured Party shall from
time to time request to (i) identify the nature, extent, value, age and location
of any of the Collateral, or (ii) identify any account debtor or other party
obligated with respect to any chattel paper, general intangible, instrument,
investment property, document or deposit account included in the Collateral.

         2.8 Financial Information. Debtor shall furnish to Secured Party
financial statements in such form (e.g., audited, reviewed, compiled) and at
such intervals as Secured Party shall request from time to time plus any
additional financial information that Secured Party may request. All such
financial statements shall be in conformity with generally accepted accounting
principles consistently applied.

         2.9 Taxes; Licenses Compliance with Laws. Before the end of any
applicable grace period, Debtor shall pay each tax, assessment, fee and charge
imposed by any governmental authority upon the Collateral, the ownership,
disposition or use of any of the Collateral, this Agreement or any instrument
evidencing any of the Obligations. Debtor shall maintain in full force and
effect each license, franchise or other authorization needed for any ownership,
disposition or use of the Collateral and the conduct of its business, operations
or affairs. Debtor shall comply with all applicable law of any governmental
authority (including any environmental

                                       3
<PAGE>
law), now or hereafter in effect, applicable to the ownership, disposition or
use of the Collateral or the conduct of its business, operations or affairs.

         2.10 Records; Legend. Debtor shall maintain accurate and complete books
and records relating to the Collateral in conformity with generally accepted
accounting principles consistently applied. At Secured Party's request, Debtor
will legend, in form and manner satisfactory to Secured Party, its books and
records to indicate the Security Interest.

         2.11 Notifications of Change. Immediately upon acquiring knowledge or
reason to know of any of the following, Debtor shall notify Secured Party of the
occurrence or existence of (i) any Event of Default; (ii) any event or condition
that, after notice, lapse of time or after both notice and lapse of time, would
constitute an Event of Default; (iii) any account or general intangible that
arises out of a contract with any governmental authority (including the United
States); (iv) any event or condition that has or (so far as can be foreseen)
will or might have any material adverse effect on the Collateral (including a
material loss destruction or theft of, or of any damage to, the Collateral,
material decline in value of the Collateral or a material default by an account
debtor or other party's performance of obligations with respect to the
Collateral), on Debtor or its business, operations, affairs or condition
(financial or otherwise).

         2.12 Protection of Collateral; Further Assurances. Debtor shall, at its
own cost, faithfully preserve, defend and protect the Security Interest as a
prior perfected security interest in the Collateral under the UCC and other
applicable law, superior and prior to the rights of all third parties (other
than those permitted pursuant to Section 3.1) and shall defend the Collateral
against all setoffs, claims, counterclaims, demands and defenses. At the request
of Secured Party, Debtor shall do, obtain, make, execute and deliver all such
additional and further acts, things, deeds, assurances and instruments as
Secured Party may deem necessary or advisable from time to time in order to
attach, continue, preserve, perfect or protect the Security Interest and Secured
Party's rights hereunder including obtaining waivers (in form and content
acceptable to Secured Party) from landlords, warehousemen and mortgagees. Debtor
hereby irrevocably appoints Secured Party, its officers, employees and agents,
or any of them, as attorneys-in-fact for Debtor with full power and authority in
the place and stead of Debtor and in the name of Debtor or its own name from
time to time in Secured Party's discretion, to perform all acts which Secured
Party deems appropriate to attach, continue, preserve or perfect and continue
the Security Interest, including signing for Debtor (to the extent such
signature may be required by applicable law) UCC-1 financing statements and
UCC-3 Statements of Change or to accomplish the purposes of this Agreement. This
power of attorney, being coupled with an interest, is irrevocable and shall not
be affected by the subsequent disability or incompetence of Debtor.

3. REPRESENTATIONS AND WARRANTIES. Debtor represents, warrants and agrees as
follows:

         3.1 Title. Debtor holds good and marketable title to the Collateral
free and clear from any security interest or other lien or encumbrance of any
party and MIDFA, other than the Security Interest or such liens, security
interests or other liens or encumbrances specifically permitted by Secured Party
and set forth on Exhibit A hereto ("Permitted Liens"). Debtor has

                                       4
<PAGE>
not made any prior sale, pledge, encumbrance, assignment or other disposition of
any of the Collateral except for the Permitted Liens.

         3.2 Authority. If Debtor is a business entity, it is duly organized,
validly existing and in good standing under the laws of the above-named state of
organization. Debtor has the full power and authority to grant the Security
Interest and to execute, deliver and perform its obligations in accordance with
this Agreement. The execution and delivery of this Agreement will not (i)
violate any applicable law of any governmental authority or any judgment or
order of any court, other governmental authority or arbitrator; (ii) violate any
agreement governing Debtor or to which Debtor is a party; or (iii) result in a
security interest or other lien or encumbrance on any of its assets. Debtors
certificate of incorporation, by-laws or other organizational documents do not
prohibit any term or condition of this Agreement. Each authorization, approval
or consent from, each registration and filing with, each declaration and notice
to, and each other act by or relating to, any party required as a condition of
Debtor's execution, delivery or performance of this Agreement (including any
shareholder or board of directors or similar approvals) has been duly obtained
and is in full force and effect. Debtor has the power and authority to transact
the business in which it is engaged and is duly licensed or qualified and in
good standing in each jurisdiction in which the conduct of its business or
ownership of property requires such licensing or such qualification.

         3.3 Judgments and Litigation. There is no pending or threatened claim,
audit, investigation, action or other legal proceeding or judgment or order of
any court, agency or other governmental authority or arbitrator which involves
Debtor or the Collateral and which might have a material adverse effect upon the
Collateral, the Debtor, its business, operations, affairs or condition
(financial or otherwise), or threaten the validity of this Agreement or any
related document or action. Debtor will immediately notify Secured Party upon
acquiring knowledge of the foregoing.

         3.4 Enforceability of Collateral. Instruments, chattel paper, accounts
or documents which constitute any part of the Collateral are genuine and
enforceable in accordance with their terms, comply with the applicable law of
any governmental authority concerning form, content, manner of preparation and
execution, and all persons appearing to be obligated on such Collateral have
authority and capacity to contract and are in fact obligated as they appear to
be on such Collateral. There are no restrictions on any assignment or other
transfer or grant of the Security Interest by Debtor. Each sum represented by
Debtor from time to time as owing on accounts, instruments, deposit accounts,
chattel paper and general intangibles constituting any part of the Collateral by
account debtors and other parties with respect to such Collateral is the sum
actually and unconditionally owing by account debtors and other parties with
respect thereto at such time, except for applicable normal cash discounts. None
of the Collateral is subject to any defense, set-off, claim or counterclaim of a
material nature against Debtor except as to which Debtor has notified Secured
Party and MIDFA in writing.

         3.5 Location of Chief Executive Office, Records, Collateral. The
locations of the following are listed on page one of this Agreement or, if
different or additional, on Exhibit A hereto: (i) Debtor's residence, principal
place of business and chief executive office; (ii) the

                                       5
<PAGE>
office in which Debtor maintains its books or records relating to the
Collateral; (iii) the facility (including any storage facility) at which now
owned or subsequently acquired inventory, equipment and fixtures constituting
any part of the Collateral shall be kept; and (iv) the real property on which
any crop included in the Collateral is growing or is to be grown, or on which
any timber constituting any part of the Collateral is or is to be standing.
Debtor will not effect or permit any change in any of the foregoing locations
(or remove or permit the removal of the records or Collateral therefrom, except
for mobile equipment included in the Collateral which may be moved to another
location for not more than 30 days) without 30 days prior written notice to
Secured Party and all actions deemed necessary by Secured Party to maintain the
Security Interest intended to be granted hereby at all times fully perfected and
in full force and effect have been taken. All of the locations listed on page
one of Exhibit A are owned by Debtor, or if not, by the party(ies) identified on
Exhibit A.

         3.6 Structure; Name. Debtor's organizational structure, state of
registration and organizational identification number (if any) are stated
accurately on page one of this Agreement, and its full legal name and any trade
name used to identify it are stated accurately on page one of this Agreement, or
if different or additional are listed on Exhibit A hereto. Debtor will not
change its name, any trade names or its identity, its organizational structure,
state of registration or organizational identification number, without 30 days
prior written notice to Secured Party and MIDFA. All actions deemed necessary by
Secured Party to maintain the Security Interest intended to be granted hereby at
all times fully perfected and in full force and effect have been taken.

4. PERFORMANCE AND EXPENDITURES BY SECURED PARTY. If Debtor fails to perform or
comply with any of the terms hereof, Secured Party, at its option, but without
any obligation so to do, may perform or comply, or otherwise cause performance
or compliance, with such terms including the payment or discharge of all taxes,
fees, security interest or other liens, encumbrances or claims, at any time
levied or placed on the Collateral. An election to make expenditures or to take
action or perform an obligation of Debtor under this Agreement, after Debtor's
failure to perform, shall not affect Secured Party's right to declare an Event
of Default and to exercise its remedies. Nor shall the provisions of this
Section relieve Debtor of any of its obligations hereunder with respect to the
Collateral or impose any obligation on Secured Party to proceed in any
particular manner with respect to the Collateral.

5. DUTY OF SECURED PARTY. Secured Party's sole duty with respect to the custody,
safekeeping and physical preservation of the Collateral in its possession shall
be to deal with it in the same manner as Secured Party deals with similar
property for its own account. Neither Secured Party nor its directors, officers,
employees or agents shall be liable for failure to demand, collect or realize
upon the Collateral or for any delay in doing so or shall be under any
obligation to sell or otherwise dispose of the Collateral upon the request of
Debtor or any other person or to take any other action whatsoever with regard to
the Collateral. The powers conferred on Secured Party hereunder are solely to
protect Secured Party's interests in the Collateral and shall not impose any
duty upon any Secured Party to exercise any such powers. Secured Party shall be
accountable only for amounts that it actually receives as a result of the
exercise of its powers under this Agreement, and neither it nor its officers,
directors, employees

                                       6
<PAGE>
or agents shall be responsible to Debtor for any act or failure to act
hereunder, except for its own gross negligence or willful misconduct.

6. CERTAIN RIGHTS AND REMEDIES.

         6.1 Inspection; Verification. Secured Party, and such persons as it may
designate, shall have the right from time to time to (i) audit and inspect (a)
the Collateral, (b) all books and records related thereto (and make extracts and
copies from such records), and (c) the premises upon which any of the Collateral
or books and records may be located; (ii) discuss Debtors business, operations,
affairs or condition (financial or otherwise) with its officers, accountants;
and (iii) verify the validity, amount, quality, quantity, value, condition and
status of, or any other matter relating to the Collateral in any manner and
through any medium Secured Party may consider appropriate (including contacting
account debtors or third party possessing the Collateral for purpose of making
such verification). Debtor shall furnish all assistance and information and
perform any acts Secured Party may require regarding thereto. Debtor shall bear
the cost and expense of any such inspection and verification.

         6.2 Application of Proceeds. Secured Party may apply the proceeds from
the sale, lease or other disposition or realization upon the Collateral to the
Obligations in such order and manner and at such time as Secured Party shall, in
its sole discretion, determine. Debtor waives and agrees not to assert any
rights it may have or acquire under current Section 9-112 of the UCC (or any
subsequent amendment thereto). Debtor shall remain liable for any deficiency if
the proceeds of any sale, lease or other disposition or realization upon the
Collateral are insufficient to pay the Obligations. Any proceeds received by
Debtor from the Collateral after an Event of Default shall (i) be held by Debtor
in trust for Secured Party in the same medium in which received; (ii) not be
commingled with any assets of Debtor; and (iii) be delivered to Secured Party in
the form received, properly indorsed to permit collection. After an Event of
Default, Debtor shall promptly notify Secured Party of the return to or
repossession by Debtor of goods constituting part of the Collateral, and Debtor
shall hold the same in trust for Secured Party and shall dispose of the same as
Secured Party directs.

7. DEFAULT.

Events of Default.

Any of the following events or conditions shall constitute an "Event of
Default": (i) failure by the Debtor to pay when due (whether at the stated
maturity, by acceleration, upon demand or otherwise) the Obligations, or any
part thereof, or there occurs any event or condition which after notice, lapse
of time or after both notice and lapse of time will permit acceleration of any
Obligation; (ii) the Debtor shall default in the performance or observance of
any term, covenant, condition or agreement contained in this Agreement or any
other Transaction Document and such default shall continue for a period of
thirty (30) days after written notice thereof has been given to the Debtor by
the Bank; (iii) any representation or warranty made by the Debtor under this
Agreement, or any other Transaction Document, shall at any time prove to have
been incorrect or misleading in any material respect when made or deemed made;
(iv) the Debtor shall

                                       7
<PAGE>
(A) default in making any payment when due under any Debt and fail to cure such
default during the period of grace, if any, provided for such default, or (B)
default in the observance or performance of any other covenant or agreement
contained in any document relating to any Debt, and fail to cure such default
during the period of grace, if any, provided for such cure, the effect of which
default is to cause, or to permit the holder of such Debt (or a trustee or agent
on behalf of such holder or holders) to cause, with the giving of notice as
required, any such Debt to become due prior to its stated maturity. The term
"Debt" means any obligation of the Debtor for borrowed money, or for the
deferred purchase price of property, in which the outstanding amount of the
obligation exceeds $100,000; (v) the Debtor makes a general assignment,
arrangement or composition agreement with or for the benefit of its creditors or
makes, or sends notice of any intended, bulk sale; the sale, assignment,
transfer or delivery of all or substantially all of the assets of the Debtor to
a third party; or the cessation by the Debtor as a going business concern; (vi)
the Debtor files a petition in bankruptcy or institutes any action under federal
or state law for the relief of debtors or seeks or consents to the appointment
of an administrator, receiver, custodian or similar official for the wind up of
its business (or has such a petition or action filed against it and such
petition action or appointment is not dismissed or stayed within forty-five (45)
days; (vii) the entry of any judgment in excess of $250,000 or order of any
court, other governmental authority or arbitrator against the Debtor and such
judgment or order is not paid, dismissed or a bond posted therefor within thirty
(30) days after the entry thereof; (viii) intentional omission or intentional
inaccuracy of facts submitted to the Bank or any Affiliate (whether in a
financial statement or otherwise); (ix) an adverse change in the Debtor, its
business, operations, affairs or condition (financial or otherwise) which change
the Bank determines will have a material adverse effect on Debtor the ability of
the Debtor to pay or perform the Obligations; (x) any pension plan of the Debtor
fails to comply with applicable law or has vested unfunded liabilities that, in
the opinion of the Bank, might have a material adverse effect on the Debtors
ability to repay its debts; (xi) any indication or evidence received by the Bank
that the Debtor may have directly or indirectly been engaged in any type of
activity which, in the Bank's discretion, might result in the forfeiture or any
property of the Debtor to any governmental authority; (xii) the occurrence of
any event described in Section 7(a)(i) through and including 7(a)(xi) with
respect to any Subsidiary or to any endorser, guarantor or any other party
liable for, or whose assets or any interest therein secures, payment of any of
the Obligations; or (xiii) MIDFA notifies the Bank without the Bank's prior
written consent, that its insurance of the Bank for repayment of the Equipment
Line is no longer effective or is terminated, as a result of any act or omission
of the Debtor.

      7.1 Rights and Remedies Upon Default. Upon the occurrence of any Event of
Default, Secured Party without demand of performance or other demand,
presentment, protest, advertisement or notice of any kind (except any notice
required by law) to or upon Debtor or any other person (all and each of which
demands, presentments, protests, advertisements and notices are hereby waived),
may exercise all rights and remedies of a secured party under the UCC, under
other applicable law, in equity or otherwise or available under in this
Agreement including:

      7.1.1 Obligations Immediately Due; Termination of Lending. Secured Party
      may declare all or any part of any Obligations not payable on demand to be
      immediately due

                                       8
<PAGE>
      and payable without demand or notice of any kind. All or any part of any
      Obligations whether or not payable on demand, shall be immediately due and
      payable automatically upon the occurrence of an Event of Default in
      Section 7.1 (vi) above. The provisions hereof are not intended in any way
      to affect any rights of Secured Party with respect to any Obligations
      which may now or hereafter be payable on demand. Secured Party may
      terminate any obligation it may have to grant any additional loan, credit
      or other financial accommodation to Debtor.

      7.1.2 Access to Collateral. Secured Party, or its agents, may peaceably
      retake possession of the Collateral with or without notice or process of
      law, and for that purpose may enter upon any premises where the Collateral
      is located and remove the same. At Secured Party's request, Debtor shall
      assemble the Collateral and deliver it to Secured Party or any place
      designated by Secured Party, at Debtor's expense.

      7.1.3 Sell Collateral. Secured Party shall have the right to sell, lease
      or otherwise dispose of the Collateral in one or more parcels at public or
      private sale or sales upon such terms and conditions as it may deem
      advisable and at such prices as it may deem best, for cash or on credit or
      for future delivery without assumption of any credit risk. Each purchaser
      at any such sale shall hold the property sold absolutely, free from any
      claim or right on the part of Debtor. Debtor hereby waives (to the extent
      permitted by law) all rights of redemption, stay and appraisal which
      Debtor now has or may at any time in the future have under any applicable
      law now existing or hereafter enacted. Secured Party shall have the right
      to use Debtor's premises and any materials or rights of Debtor (including
      any intellectual property rights) without charge for such sales or
      disposition of the Collateral or the completion of any work in progress
      for such times as Secured Party may see fit. Without in any way requiring
      notice to be given in the following time and manner, Debtor agrees that
      with respect to any notice by Secured Party of any sale, lease or other
      disposition or realization or other intended action hereunder or in
      connection herewith, whether required by the UCC or otherwise, such notice
      shall be deemed reasonable and proper if given at least five (5) days
      before such action in the manner described below in the Section entitled
      "Notices".

      7.1.4 Collect Revenues. Secured Party may either directly or through a
      receiver (i) demand, collect and sue on any Collateral consisting of
      accounts or any other Collateral including notifying account debtors or
      any other persons obligated on the Collateral to make payment on the
      Collateral directly to Secured Party; (ii) file any claim or to take any
      other action or proceeding in any court of law or equity or otherwise
      deemed appropriate by Secured Party with respect to the Collateral or to
      enforce any other right in respect of the Collateral; (iii) take control,
      in any manner, of any payment or proceeds from the Collateral; (iv)
      prosecute or defend any suit, action or proceeding brought against Debtor
      with respect to the Collateral; (v) settle, compromise or adjust any and
      all claims arising under the Collateral or, to give such discharges or
      releases as Secured Party may deem appropriate; (vi) receive and collect
      all mail addressed to Debtor, direct the place of delivery thereof to any
      location designated by Secured Party; to open such mail; to remove all
      contents therefrom; to retain all contents thereof constituting or

                                       9
<PAGE>
      relating to the Collateral; (vii) execute, sign or endorse any and all
      claims, endorsements, assignments, checks or other instruments with
      respect to the Collateral; or (viii) generally, use, sell, transfer,
      pledge and make any agreement with respect to or otherwise deal with any
      of the Collateral; and Debtor hereby irrevocably appoints Secured Party,
      its officers, employees and agents, or any of them, as attorneys-in-fact
      for Debtor with full power and authority in the place and stead of Debtor
      and in the name of Debtor or in its own name from time to time in Secured
      Party's discretion, to take any and all appropriate action Secured Party
      deems necessary or desirable to accomplish any of the foregoing or
      otherwise to protect, preserve, collect or realize upon the Collateral or
      to accomplish the purposes of this Agreement. Debtor revokes each power of
      attorney (including any proxy) heretofore granted by Debtor with regard to
      the Collateral. This power of attorney, being coupled with an interest, is
      irrevocable and shall not be affected by the subsequent disability or
      incompetence of Debtor.

      7.1.5 Setoff. Secured Party may place an administrative hold on and set
      off against the Obligations any property held in a deposit or other
      account with Secured Party or any of its Affiliates or otherwise owing by
      Secured Party or any of its Affiliates in any capacity to Debtor. Such
      set-off shall be deemed to have been exercised immediately at the time
      Secured Party or such Affiliate elects to do so.

8. EXPENSES. Debtor shall pay to Secured Party on demand all costs and expenses
(including all reasonable fees and disbursements of all counsel retained for
advice, suit, appeal or other proceedings or purpose and of any experts or
agents it may retain), which Secured Party may incur in connection with (i) the
administration of this Agreement, including any administrative fees Secured
Party may impose for the preparation of discharges, releases or assignments to
third-parties; (ii) the custody or preservation of, or the sale, lease or other
disposition or realization on the Collateral; (iii) the enforcement and
collection of any Obligations or any guaranty thereof; (iv) the exercise,
performance enforcement or protection of any of the rights of Secured Party
hereunder; or (v) the failure of Debtor to perform or observe any provisions
hereof. After such demand for payment of any cost, expense or fee under this
Section or elsewhere under this Agreement, Debtor shall pay interest at the
highest default rate specified in any instrument evidencing any of the
Obligations from the date payment is demanded by Secured Party to the date
reimbursed by Debtor. All such costs, expenses or fees under this Agreement
shall be added to the Obligations.

9. INDEMNIFICATION. Debtor shall indemnify Secured Party and its Affiliates and
each officer, employee, accountant, attorney and other agent thereof (each such
person being an "Indemnified Party") on demand, without any limitation as to
amount, against each liability, cost and expense (including all reasonable fees
and disbursements of all counsel retained for advice, suit, appeal or other
proceedings or purpose, and of any expert or agents an Indemnified Party may
retain) heretofore or hereafter imposed on, incurred by or asserted against any
Indemnified Party (including any claim involving any allegation of any violation
of applicable law of any governmental authority (including any environmental law
or criminal law)), however asserted and whether now existing or hereafter
arising, arising out of any ownership, disposition or use of any of the
Collateral; provided, however, the foregoing indemnity shall not apply to
liability,

                                       10
<PAGE>
cost or expense solely attributable to an Indemnified Party's gross negligence
or willful misconduct. This indemnity agreement shall survive the termination of
this Agreement. Any amounts payable under this or any other section of this
Agreement shall be additional Obligations secured hereby.

10. MISCELLANEOUS.

      10.1 Notices. Any demand or notice hereunder or under any applicable law
pertaining hereto shall be in writing and duly given if delivered to Debtor (at
its address on Secured Party's records) or to Secured Party (at the address on
page one and separately to Secured Party's officer responsible for Debtor's
relationship with Secured Party). Such notice or demand shall be deemed
sufficiently given for all purposes when delivered (i) by personal delivery and
shall be deemed effective when delivered, or (ii) by mail or courier and shall
be deemed effective three (3) business days after deposit in an official
depository maintained by the United States Post Office for the collection of
mail or one (1) business day after delivery to a nationally recognized overnight
courier service (e.g., Federal Express). Notice by e-mail is not valid notice
under this or any other agreement between Debtor and Secured Party.

      10.2 Governing Law; Jurisdiction. This Agreement has been delivered to and
accepted by Secured Party and will be deemed to be made in the State of
Maryland. Except as otherwise provided under federal law, this Agreement will be
interpreted in accordance with the laws of the State of Maryland excluding its
conflict of laws rules. DEBTOR HEREBY IRREVOCABLY CONSENTS TO THE EXCLUSIVE
JURISDICTION OF ANY STATE OR FEDERAL COURT IN THE STATE OF MARYLAND WHERE
SECURED PARTY MAINTAINS A BRANCH AND CONSENTS THAT SECURED PARTY MAY EFFECT ANY
SERVICE OF PROCESS IN THE MANNER AND AT DEBTOR'S ADDRESS SET FORTH ABOVE FOR
PROVIDING NOTICE OR DEMAND; PROVIDED THAT NOTHING CONTAINED IN THIS AGREEMENT
WILL PREVENT SECURED PARTY FROM BRINGING ANY ACTION, ENFORCING ANY AWARD OR
JUDGMENT OR EXERCISING ANY RIGHTS AGAINST DEBTOR INDIVIDUALLY, AGAINST ANY
SECURITY OR AGAINST ANY PROPERTY OF DEBTOR WITHIN ANY OTHER COUNTY, STATE OR
OTHER FOREIGN OR DOMESTIC JURISDICTION. Debtor acknowledges and agrees that the
venue provided above is the most convenient forum for both Secured Party and
Debtor. Debtor waives any objection to venue and any objection based on a more
convenient forum in any action instituted under this Agreement.

      10.3 Security Interest Absolute. All rights of Secured Party hereunder,
the Security Interest and all obligations of Debtor hereunder shall be absolute
and unconditional irrespective of (i) any filing by or against Debtor of any
petition in bankruptcy or any action under federal or state law for the relief
of debtors or the seeking or consenting to of the appointment of an
administrator, receiver, custodian or similar officer for the wind up of its
business; (ii) any lack of validity or enforceability of any agreement with
respect to any of the Obligations, (iii) any change in the time, manner or place
of payment of, or in any other term of, all or any of the Obligations, or any
other amendment or waiver of or any consent to any departure from any agreement
or instrument with respect to the Obligations, (iv) any exchange, release or
non-

                                       11
<PAGE>
perfection of any lien or any release or amendment or waiver of or consent under
or departure from any guarantee, securing or guaranteeing all or any of the
Obligations, or (v) any other circumstance that might otherwise constitute a
defense available to, or a discharge of, Debtor in respect of the Obligations or
this Agreement. If, after receipt of any payment of all or any part of the
Obligations, Secured Party is for any reason compelled to surrender such payment
to any person or entity, because such payment is determined to be void or
avoidable as a preference, impermissible setoff, or a diversion of trust funds,
or for any other reason, such payment shall be reinstated as part of the
Obligations and this Agreement shall continue in full force notwithstanding any
contrary action which may have been taken by Secured Party in reliance upon such
payment, and any such contrary action so taken shall be without prejudice to
Secured Party's rights under this Agreement and shall be deemed to have been
conditioned upon such payment having become final and irrevocable.

      10.4 Remedies Cumulative; Preservation of Rights. The rights and remedies
herein are cumulative, may be exercised singly or concurrently and are not
exclusive of any other rights or remedies which Secured Party may have under
other agreements now or hereafter in effect between Debtor and Secured Party, at
law (including under the UCC) or in equity. No failure or delay of Secured Party
in exercising any power or right hereunder shall operate as a waiver thereof,
nor shall any single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. Debtor expressly disclaims any reliance on any course of dealing
or usage of trade or oral representation of Secured Party including
representations to make loans to Debtor. No notice to or demand on Debtor in any
case shall entitle Debtor to any other or further notice or demand in similar or
other circumstances.

      10.5 Joint and Several; Successors and Assigns. If there is more than one
Debtor, each of them shall be jointly and severally liable for all amounts,
which become due, and the performance of all obligations under this Agreement
and the term "Debtor" shall include each as well as all of them. This Agreement
shall be binding upon Debtor and upon its heirs and legal representatives, its
successors and assignees, and shall inure to the benefit of, and be enforceable
by, Secured Party, its successors and assignees and each direct or indirect
assignee or other transferee of any of the Obligations; provided, however, that
this Agreement may not be assigned by Debtor without the prior written consent
of Secured Party and MIDFA.

      10.6 Waivers; Changes in Writing. No course of dealing or other conduct,
no oral agreement or representation made by Secured Party or usage of trade
shall operate as a waiver of any right or remedy of Secured Party. No waiver of
any provision of this Agreement or consent to any departure by Debtor therefrom
shall in any event be effective unless made specifically in writing by Secured
Party and then such waiver or consent shall be effective only in the specific
instance and for the purpose for which given. No modification to any provision
of this Agreement shall be effective unless made in writing in an agreement
signed by Debtor and Secured Party with the consent of MIDFA.

      10.7 Interpretation. Unless the context otherwise clearly requires,
references to plural includes the singular and references to the singular
include the plural; the word "or" has the

                                       12
<PAGE>
inclusive meaning represented by the phrase "and/or"; the word "including",
"includes" and "include" shall be deemed to be followed by the words "without
limitation"; and captions or section headings are solely for convenience and not
part of the substance of this Agreement. Any representation, warranty, covenant
or agreement herein, shall survive execution and delivery of this Agreement and
shall be deemed continuous. Each provision of this Agreement shall be
interpreted as consistent with existing law and shall be deemed amended to the
extent necessary to comply with any conflicting law. If any provision
nevertheless is held invalid, the other provisions shall remain in effect.
Debtor agrees that in any legal proceeding, a photocopy of this Agreement kept
in Secured Party's course of business may be admitted into evidence as an
original. Terms not otherwise defined in this Agreement shall have the meanings
attributed to such terms in the UCC.

      10.8 Waiver of Jury Trial. DEBTOR AND SECURED PARTY HEREBY KNOWINGLY,
VOLUNTARILY, AND INTENTIONALLY WAIVE ANY RIGHT TO TRIAL BY JURY DEBTOR AND
SECURED PARTY MAY HAVE IN ANY ACTION OR PROCEEDING, IN LAW OR IN EQUITY, IN
CONNECTION WITH THIS AGREEMENT OR ANY TRANSACTIONS RELATED HERETO. DEBTOR
REPRESENTS AND WARRANTS THAT NO REPRESENTATIVE OR AGENT OF SECURED PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SECURED PARTY WILL NOT, IN THE EVENT
OF LITIGATION, SEEK TO ENFORCE THIS JURY TRIAL WAIVER. DEBTOR ACKNOWLEDGES THAT
SECURED PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER
THINGS, THE PROVISIONS OF THIS SECTION.

WITNESS the due execution hereof as a SEALED INSTRUMENT this   31st        day
                                                             _____________
of July, 2003.

                                      ADVANCIS PHARMACEUTICAL CORPORATION

                                      By: /s/ Steven A. Shallcross        (L.S.)
                                         ---------------------------------
                                      Its: Senior VP/CFO
                                          --------------------------------

                                       13
<PAGE>
                                 ACKNOWLEDGMENT

STATE OF___________________)

                            :SS.

COUNTY OF__________________)

      On the ________day of July, in the year 2003, before me, the undersigned,
a Notary Public in and for said State, personally appeared
_____________________________, personally known to me or proved to me on the
basis of satisfactory evidence to be the individual(s) whose name(s) is (are)
subscribed to the within instrument and acknowledged to me that he/she/they
executed the same in his/her/their capacity(ies), and that by his/her/their
signature(s) on the instrument, the individuals(s), or the person upon behalf of
which the individual(s) acted, executed the instrument.

                                                     /s/
                                          --------------------------------------
                                          Notary Public

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

FOR SECURED PARTY USE ONLY:

Authorization confirmed:______________________________________________________
If Debtor's Obligations arise under a guaranty in favor of Secured Party, list
the name of each party whose indebtedness is being guaranteed under such
guaranty:

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

                                       14
<PAGE>
                                    Exhibit A

1.    Grant (Section 1.1): Debtor grants the Security Interest in its property
      described below (mark applicable box):

[x]   SPECIFIC EQUIPMENT. If marked here, in the following described equipment,
      including equipment which is or becomes fixtures: The equipment listed on
      Exhibit A-1 attached hereto together with all present and future documents
      of title and trust receipts relating to any of the foregoing; all present
      and future rights, claims and causes of action of Debtor in connection
      with purchases of (or contracts for the purchase of), or warranties
      relating to, or damages to, the foregoing; all present and future
      warranties, manuals and other written materials (and packaging thereof or
      relating thereto) relating to any of the foregoing; and all present and
      future general intangibles of Debtor in any way relating to any of the
      foregoing.

2.    Permitted Liens (Section 3.1)

      Permit any of its assets to be subject to any security interest, mortgage
      or other lien or encumbrance, except as set forth on the Schedule titled
      "Permitted Liens" and except for liens for property taxes not yet due;
      pledges and deposits to secure obligations or performance for workers'
      compensation, bids, tenders, contracts other than notes, appeal bonds or
      public or statutory obligations; and materialmen's, mechanics', carriers'
      and similar liens arising in the normal course of business.

3.    Residence, principal place of business or chief executive office
      (Section 3.5(i))

      20425 Seneca Meadows Parkway, Germantown, Maryland 20876 owned by Seneca
      Meadows Corporate Center II, L.L.C.

4.    Location of Books and Records (Section 3.5(ii))

      20425 Seneca Meadows Parkway, Germantown, Maryland 20876 owned by Seneca
      Meadows Corporate Center II, L.L.C.

5.    Location of Inventory, Equipment, Fixtures, Crops, or Timber
      (Section 3.5(iii) and Section 3.5(iv))

      20425 Seneca Meadows Parkway, Germantown, Maryland 20876 owned by Seneca
      Meadows Corporate Center II, L.L.C.

6.    Locations Not Owned by Debtor and Name of Record Owner (Section 3.5)
<PAGE>
      20425 Seneca Meadows Parkway, Germantown, Maryland 20876 owned by Seneca
      Meadows Corporate Center II L.L.C.

7.    Trade Name, "Doing Business As" Name or Assumed Name (Section 3.6)

                                       2

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