Document:

Exhibit
10.7

 

SECURITY
AGREEMENT

 

THIS SECURITY
AGREEMENT (this “Agreement”) is made as of April 21, 2005, by and
among LARK TECHNOLOGIES, INC., a Delaware corporation (the “Company”), and the Investors set forth
on the signatures page affixed hereto (each an “Investor” and collectively, the “Investors”).

 

RECITALS:

 

Pursuant to
the terms of a certain Note and Warrant Purchase Agreement, of even date
herewith (the “Purchase Agreement”), by and among the Company,
Genaissance Pharmaceuticals, Inc. (the “Parent”) and the Investors, the
Investors have agreed to purchase from the Company and the Parent an aggregate
of $4,500,000 in principal amount of the 5.0% Senior Secured Notes of the
Company and the Parent due April 2007 (the “Notes”).  The Investors are willing to enter into the
Purchase Agreement only upon the condition, among others, that the Company
secure its obligations under the Purchase Agreement and certain of the other
Transaction Documents by executing and delivering this Agreement to the
Investors.

 

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

 

SECTION 1. 
DEFINITIONS.

 

1.1.                              General
Definitions.  As used in this
Agreement, except as otherwise expressly provided or unless the context
otherwise requires, the following terms shall have the meanings set forth
below:

 

“Chattel Paper” means all chattel paper as such term is defined
in the UCC, now owned or hereafter acquired, including, without limitation,
electronic chattel paper, as such term is defined in the UCC.

 

“Collateral” means and includes all now and hereafter acquired
assets of the Company including, without limitation:

 

(A)                              all
Inventory;

 

(B)                                all
Equipment;

 

(C)                                all
General Intangibles;

 

(D)                               all
Receivables;

 

(E)                                 all
Chattel Paper;

 

(F)                                 all
Deposit Accounts and all Letter-of-Credit Rights;

 

(G)                                all
Instruments;

 

(H)                               the
commercial tort claims set forth on Schedule V;

 

(I)                                    all
books, records, ledgercards, files, correspondence, computer programs, tapes,
disks and related data processing software (owned by the Company or in which it
has an interest) which at any time evidence or contain information relating to
any or all of (A), (B), (C),

 

 

(D), (E), (F),
(G) and (H) above or are otherwise necessary or helpful in the collection
thereof or realization thereupon;

 

(J)                                   documents
of title, policies and certificates of insurance, securities, Chattel Paper,
other documents or instruments evidencing or pertaining to any or all of (A),
(B), (C), (D) (E), (F), (G), (H) and (I) above;

 

(K)                               all
Supporting Obligations and guaranties, including letters of credit and
guarantees issued in support of Receivables, Chattel Paper, General Intangibles
and Investment Property, Liens on real or personal property, leases, and other
agreements and property which in any way secure or relate to any or all of (A),
(B), (C), (D), (E), (F), (G), (H), (I) and (J) above, or are acquired for the
purpose of securing and enforcing any item thereof;

 

(L)                                 (i)  all
cash held as cash collateral to the extent not otherwise constituting
Collateral, (ii) all Payment Intangibles, (iii) all letter of credit
obligations, and (iv) all Investment Property; and

 

(M)                            all
products and proceeds of (A), (B), (C), (D), (E), (F), (G), (H), (I), (J), (K)
and (L) above (including, but not limited to, all claims to items referred to
in (A), (B), (C), (D), (E), (F), (G), (H), (I), (J), (K) and (L) above) and all
claims of the Company against third parties for (x)(i) loss of, damage to, or
destruction of, and (ii) payments due or to become due under leases, rentals
and hires of any or all of, (A), (B), (C), (D), (E), (F), (G), (H), (I), (J),
(K) and (L) above and (y) proceeds payable under, or unearned premiums with
respect to policies of insurance in whatever form.

 

Notwithstanding
the foregoing, that certain lease from Mr. and Mrs. D V Waterman to Lark
Technologies, Inc. dated as of July 14, 2004, as amended from time to
time, shall not constitute Collateral.

 

“Copyright License” means any written agreement, now or
hereafter in effect, granting any right to any third party under any Copyright
now or hereafter owned by the Company or which the Company otherwise has the
right to license, or granting any right to the Company under any Copyright now
or hereafter owned by any third party, and all rights of the Company under any
such agreement.

 

“Copyrights” means all of the following now owned or hereafter
acquired by the Company: (a) all copyright rights in any work subject to the
copyright laws of the United States or any other country, whether as author,
assignee, transferee or otherwise, and (b) all registrations and applications
for registration of any such copyright in the United States or any other
country, including registrations, recordings, supplemental registrations and
pending applications for registration in the United States Copyright Office,
including those listed on Schedule II attached hereto.

 

“Customer” means and includes the account debtor with respect to
any Receivable and/or the prospective purchaser of goods, services or both with
respect to any contract or contract right, and/or any party who enters into or
proposes to enter into any contract or other arrangement with the Company,
pursuant to which the Company is to deliver any personal property or perform
any services.

 

“Default” means any act or event which, with the giving of
notice or passage of time or both, would constitute an Event of Default.

 

2

 

“Deposit Accounts” means all deposit accounts as such term is defined in the
UCC.

 

“Equipment” means all equipment as such term is defined in the UCC, now
owned or hereafter acquired, including, without limitation, equipment,
machinery and goods (excluding Inventory), whether or not constituting
fixtures, including, without limitation: 
plant and office equipment, tools, dies, parts, data processing
equipment, computer equipment with embedded software and peripheral equipment,
furniture and trade fixtures, trucks, trailers, loaders and other vehicles and
all replacements and substitutions therefore and all accessions thereto.

 

“Event of Default” means the occurrence of any of the events set
forth in Section 6.1.

 

“General Intangibles” means all general intangibles as such term is defined in
the UCC, now owned or hereafter acquired.

 

“Guaranty” shall have the meaning set forth in the Recitals
paragraph hereof.

 

“Instruments” means all
instruments as such term is defined in the UCC, now owned or hereafter
acquired, including, without limitation, a negotiable instrument or a
certificated security or any other writing which evidences a right to the
payment of money.

 

“Intellectual Property” means all intellectual and similar
property of the Company of every kind and nature now owned or hereafter
acquired by the Company, including inventions, designs, Trademarks, Patents,
Copyrights, Licenses, trade secrets, confidential or proprietary technical and
business information, know-how, show-how or other data or information, software
and databases and all embodiments or fixations thereof and related
documentation, registrations and franchises, and all additions, improvements
and accessions to, and books and records describing or used in the connection
with, any of the foregoing.

 

“Inventory” means all inventory as such term is defined in the UCC, now
owned or hereafter acquired, including, without limitation, goods, merchandise
and other personal property, wherever located, to be furnished under any
contract of service or held for sale or lease, all raw materials, work in
process, finished goods and materials and supplies of any kind, nature or
description which are or might be used or consumed in business or used in
selling or furnishing such goods, merchandise and other personal property, and
all documents of title or other documents representing them.

 

“Investment Property” means all
investment property as such term is defined in the UCC.

 

“Investors” shall have the meaning set forth in the introductory
paragraph hereof.

 

“Letter-of-Credit Rights” means all letter-of-credit rights as
such term is defined in the UCC, now owned or hereafter acquired, including,
without limitation, rights to payment or performance under a letter of credit,
whether or not the beneficiary has demanded or is entitled to demand payment or
performance.

 

“License” means any Patent License, Trademark License, Copyright
License or other license or sublicense to which the Company is now or hereafter
a party.

 

3

 

“Liens” means any pledge, hypothecation, assignment, deposit
arrangement, lien, charge, claim, security interest, security title, mortgage,
security deed or deed of trust, easement or encumbrance, or preference,
priority or other security agreement or preferential arrangement of any kind or
nature whatsoever (including any lease or title retention agreement, any
financing lease having substantially the same economic effect as any of the
foregoing, and the filing of, or agreement to give, any financing statement
perfecting a security interest under the UCC or comparable law of any
jurisdiction).

 

“Notes” shall have the meaning set forth in the Recitals
paragraph hereof.

 

“Obligations” means all obligations now existing and hereafter
arising of the Company to the Investors under this Agreement, the Notes, the
Purchase Agreement and the other Transaction Documents, and specifically
excluding any and all obligations arising under or in connection with the
Warrant (or any shares of Common Stock issuable thereunder) and the
Registration Rights Agreement, including, without limitation, all expenses
(including reasonable attorneys’ fees and expenses incurred by one (1) counsel
to the Investors) chargeable from time to time to the Company’s account or
incurred from time to time by any of the Investors in connection with the
Company’s account whether provided for herein or in any other agreement,
instrument or document executed by or on behalf of the Company in connection
with this Agreement or the Collateral.

 

“Parent” shall have the meaning set forth in the Recitals
paragraph hereof.

 

“Patent License” means any written agreement, now or hereafter
in effect, granting to any third party any right to make, use or sell any
invention on which a Patent, now or hereafter owned by the Company or which the
Company otherwise has the right to license, is in existence, or granting to the
Company any right to make, use or sell any invention on which a Patent, now or
hereafter owned by any third party, is in existence, and all rights of the
Company under any such agreement.

 

“Patents” means all of the following now owned or hereafter
acquired by the Company (a) all letters patent of the United States or any
other country, all registrations and recordings thereof, and all applications
for letters patent of the United States or any other country, including
registrations, recordings and pending applications in the United States Patent
and Trademark Office or any similar offices in any other country, including
those listed on Schedule III attached hereto, and (b) all reissues,
continuations, divisions, continuations-in-part, renewals or extensions
thereof, and the inventions disclosed or claimed therein, including the right
to make, use and/or sell the inventions disclosed or claimed therein.

 

“Payment Intangibles” means all payment intangibles means all
accounts as such term is defined in the UCC, now owned or hereafter acquired,
including, without limitation a General Intangible under which the account
debtor’s principle obligation is a monetary obligation.

 

“Permitted Liens” means: (a) Liens of carriers, warehousemen,
artisans, bailees, mechanics and materialmen and other like Liens incurred in
the ordinary course of business securing sums not more than ninety (90) days
overdue or being contested in good faith; (b) Liens incurred in the ordinary
course of business in connection with worker’s compensation, unemployment
insurance or other forms of governmental insurance or benefits, relating to
employees, securing sums (i) not overdue or (ii) being diligently contested in
good faith,

 

4

 

provided,
that, adequate reserves with respect thereto are maintained on the books
of the Company in conformity with GAAP; (c) Liens in favor of any of the
Investors; (d) Liens imposed by law for taxes, fees, assessments, or other
government charges or levies (i) not yet due or (ii) being diligently contested
in good faith by appropriate proceedings, provided, that,
adequate reserves with respect thereto are maintained on the books of the
Company in conformity with GAAP provided,
further, that, all Liens under this clause (d) in the aggregate
outstanding at any time do not exceed $20,000; (e) zoning restrictions,
easements, licenses, or other restrictions on the use of real property or other
minor irregularities in title thereto, so long as the same does not materially
impair the use, value or marketability of such real estate, (f) Liens to secure
the performance of bids, trade contracts, leases (real property or otherwise),
statutory obligations, surety and appeal bonds, performance bonds and other
obligations of a like nature of the Company, in each case incurred in the
ordinary course of the Company’s business, (g) Liens representing the owner’s
retained interest in any property leased by the Company, (h) Liens on the
Company’s assets set forth on the Disclosure Schedule, (i) Liens in favor of
banks where the Company or any of its Subsidiaries has accounts for customary
fees or charges, (j) Liens securing Permitted Indebtedness of the type set
forth in clause (d) of the definition of “Permitted Indebtedness” in the
Purchase Agreement so long as such Lien is limited to the property acquired
with the proceeds of such Permitted Indebtedness, and (k) Liens incurred in the
extension, renewal or refinancing of the indebtedness secured by Liens
described in (j) above, provided that
any extension, renewal or replacement Lien must be limited to the property
encumbered by the existing Lien and provided that the principal amount thereof
is not increased or the terms thereof are not modified to impose more
burdensome terms upon the Company or any Subsidiary incurring such
Indebtedness.

 

“Premises” means all premises where the Company conducts its
business and has any rights of possession, including, without limitation, the
premises described in Schedule I attached hereto.

 

“Purchase Agreement” shall have the meaning set forth in the
Recitals paragraph hereof.

 

“Receivables” means all accounts as such term is defined in the UCC,
including, without limitation each and every right to the payment of money,
whether such right to payment now exists or hereafter arises, whether such
right to payment arises out of a sale, lease or other disposition of goods or
other property, out of a rendering of services, out of a loan, out of the
overpayment of taxes or other liabilities, or otherwise arises under any
contract or agreement, whether such right to payment is created, generated or
earned by the Company or by some other Person who subsequently transfers such
Person’s interest to the Company, whether such right to payment is or is not
already earned by performance, and howsoever such right to payment may be evidenced,
together with all other rights and interests (including all Liens) which the
Company may at any time have by law or agreement against any account debtor or
other obligor obligated to make any such payment or against any property of
such account debtor or other obligor; all including but not limited to all
present and future accounts, contract rights, loans and obligations receivable,
Chattel Paper, bonds, notes and other debt instruments, tax refunds and rights
to payment in the nature of General Intangibles.

 

“Security Interest” shall have the meaning assigned to such term
in Section 2.1 hereof.

 

5

 

“Subsidiary” of any entity means, at any date, any Person (a)
the accounts of which would be consolidated with those of the applicable entity
in such entity’s consolidated financial statements if such financial statements
were prepared in accordance with GAAP as of such date; or (b) the securities or
other ownership interests representing more than 50% of the equity or more than
50% of the ordinary voting power or, in the case of a partnership, more than
50% of the general partnership interests or more than 50% of the profits or
losses of which are, as of such date, owned, controlled or held by the applicable
entity or one or more Subsidiaries of such entity.

 

“Supporting Obligations” means all supporting obligations as
such term is defined in the UCC.

 

“Trademark License” means any written agreement, now or
hereafter in effect, granting to any third party any right to use any
Trademark, now or hereafter owned by the Company or which the Company otherwise
has the right to license, or granting to the Company any right to use any
Trademark now or hereafter owned by any third party and all rights of the
Company under any such agreement.

 

“Trademarks” means all of the following now owned or hereafter
acquired by the Company: (a) all trademarks, service marks, trade names,
corporate names, company names, business names, fictitious business names,
trade styles, trade dress, logos, other source or business identifiers, designs
and general intangibles of like nature, now existing or hereafter adopted or
acquired, all registrations and recordings thereof, and all registrations and
recording applications filed in connection therewith, including registrations
and registration applications in the United States Patent and Trademark Office,
any State of the United States or any similar offices in any other country or
any political subdivision thereof, and all extensions or renewals thereof,
including those listed on Schedule IV attached hereto; (b) all
goodwill associated therewith or symbolized thereby; and (c) all other assets,
rights and interests that uniquely reflect or embody such goodwill.

 

“UCC” means the Uniform Commercial Code as in effect from time
to time in the state designated in Section 7.12 as the state whose
laws govern this Agreement or in any other state whose laws are held to govern
this Agreement or any portion hereof.

 

1.2.                              Other
Terms.

 

(a)                                  All
capitalized terms not otherwise defined herein shall have the meanings assigned
to them in the Purchase Agreement.

 

(b)                                 All
terms defined in the UCC and not defined in this Agreement or the Purchase
Agreement shall have the meanings specified in the UCC.

 

(c)                                  All
accounting terms not otherwise defined in this Agreement or the Purchase
Agreement shall have the meanings assigned to them in accordance with GAAP.

 

1.3.                              Cross
References.

 

(a)                                  All
references in this Agreement to Articles, Sections, subsections, Exhibits and
Schedules, shall be to Articles, Sections, subsections, Exhibits and Schedules
of this Agreement unless otherwise explicitly specified.

 

6

 

(b)                                 All
references to statutes and related regulations shall include any amendments of
same and any successor statutes and regulations.

 

SECTION 2. 
SECURITY INTEREST.

 

2.1.                              Security
Interest.

 

(a)                                  To
secure the prompt and complete payment and performance to the Investors of the
Obligations, the Company hereby assigns, pledges and grants to the Investors a
continuing first priority security interest in and to the Collateral, whether
now owned or existing or hereafter acquired or arising and wheresoever located,
whether or not the same is subject to Article 9 of the UCC (the “Security
Interest”).  All of the Company’s
ledger sheets, files, records, books of account, business papers and documents
relating to the Collateral shall, until delivered to or removed by the
Investors, be kept by the Company in trust for the Investors until all
Obligations have been paid in full in cash.

 

(b)                                 The
Company hereby authorizes each of the Investors to file one or more financing
statements (including fixture filings), amendments, filings with the United
States Patent and Trademark Office or United States Copyright Office (or any
successor office or any similar office in any other country) or other documents
for the purpose of perfecting, confirming, continuing, enforcing or protecting
the Security Interest granted by the Company, without the Company’s signature
appearing thereon.  The Company agrees to
furnish to each of the Investors promptly upon request any information
necessary for the purpose of perfecting, confirming, continuing, enforcing or
protecting the Security Interest granted by the Company.  The Company also ratifies its authorization
for each of the Investors to file any initial financing statements or
amendments thereto filed prior to the date hereof.  If any Receivable becomes evidenced by a
promissory note or any other instrument for the payment of money, the Company
will immediately deliver such instrument to the Investors appropriately
endorsed.

 

(c)                                  The
Company agrees that promptly after execution of this Agreement, it shall take
at its sole cost and expense all steps necessary to perfect each of the
Investor’s security interest (subject only to Permitted Liens) in Collateral
held for sale or transshipment in any jurisdiction outside of the United
States.

 

SECTION 3. 
REPRESENTATIONS AND WARRANTIES.

 

The Company
represents and warrants to the Investors as follows:

 

3.1.                              Title
and Liens.  The Collateral: (a) is
owned solely by the Company free and clear of all Liens except (i) those in the
Investors’ favor, and (ii) Permitted Liens; and (b) as of the date hereof, is
not subject to any agreement prohibiting the granting of a Lien or requiring
notice of or consent to the granting of a Lien.

 

3.2.                              Validity
of Security Interest.  The Security
Interest constitutes: (a) a legal and valid Lien in all the Collateral; (b)
subject to the filing of the financing statements described in Section 2.1(b),
a perfected first priority Lien in all Collateral in which a Lien may be
perfected by the filing of a financing statement under United States law; and
(c) a perfected first priority Lien in all Collateral in which a Lien may be
perfected upon the receipt and recording of this

 

7

 

Agreement with the United States Patent and Trademark Office and the
United States Copyright Office, as applicable, subject in the case of clauses
(b) and (c), to Permitted Liens.

 

SECTION 4. 
COVENANTS.

 

4.1.                              Change
of Name; Location of Collateral; Records; Place of Business.  The Company shall not make any change: (a) in
its name; (b) in the location of its chief executive office, its principal
place of business, any office in which it maintains books or records relating
to Collateral owned by it or any office facility at which Collateral owned by
it is located (including the establishment of any such new office or facility)
from the locations set forth on Schedule I attached hereto; (c) in
its identity or type of organization or corporate structure; (d) in its Federal
Taxpayer Identification Number or state-issued organizational identification
number; or (e) in its jurisdiction of organization; unless in each such case,
(i) the Company provides the Investors at least thirty (30) days prior written
notice of such change, and (ii) all filings have been made under the UCC or
otherwise (including with the United States Patent and Trademark Office and the
United States Copyright Office, as applicable) that are required in order for
the Investors to continue at all times following such change to have a valid,
legal and perfected first priority Lien in all the Collateral, which may be
perfected under United States law by filing of a financing statement or any
notice or other instrument with the United States Patent and Trademark Office
and the United States Copyright Office, as applicable, subject to Permitted
Liens, and (iii) such change is not otherwise prohibited under the Purchase
Agreement.

 

4.2.                              Records.  The Company shall keep and maintain at its
own cost and expense, satisfactory and complete records of the Collateral
including, without limitation, a record of any and all payments received and
any and all credits granted with respect to the Collateral and all other
dealings with the Collateral.  Following
the occurrence of an Event of Default, the Majority Purchasers may at any time
verify the Company’s Receivables utilizing an audit control company or any
other agent designated by the Majority Purchasers.  The Majority Purchasers or their designee
may, following the occurrence of an Event of Default, notify Customers at any
time, at the Majority Purchasers’ reasonable discretion, of the Investors’ Lien
in Receivables (contracts, instruments, or chattel paper, as the case may be),
collect them directly from the Customers or parties to contracts, instruments
and chattel paper and charge the collection costs and expenses to the Company’s
account; provided, however, unless and until the Majority
Purchasers do so or give the Company other instructions, the Company shall
collect all Receivables for the Investors, receive all payments thereon for the
Investors’ benefit in trust as Investors’ trustee and immediately deliver them
to the Investors in their original form with all necessary endorsements or, as
directed by the Majority Purchasers, deposit such payments as reasonably
directed by the Majority Purchasers.  The
Company shall place notations upon the Company’s books of account and any
financial statement prepared by the Company to disclose the Investors’ Lien in
the Collateral and shall provide the Investors, as requested by any of them,
such schedules, documents and/or information regarding the Collateral as an
Investor may require.

 

4.3.                              Protection
of Collateral and Security Interest. 
The Company shall, at its own cost and expense, take any and all actions
necessary to defend the Collateral against the claims and demands of all parties
and to defend the Lien of the Investors in the Collateral and the priority
thereof against any Lien, except Permitted Liens.

 

8

 

4.4.                              Further
Assurances.

 

(a)                                  Any
time and from time to time, upon the written request of an Investor and at the
sole expense of the Company, the Company shall promptly and duly execute and
deliver any and all such further instruments and documents and take such
further actions as such Investor may reasonably request to preserve, protect
and perfect the Security Interest and the rights and remedies created hereby.

 

(b)                                 Without limiting the
generality of the foregoing, the Company hereby authorizes the Investors to
supplement this Agreement by supplementing Schedule II, III
or IV hereto or adding additional schedules hereto to specifically
identify any asset or item that may constitute Copyrights, Patents or
Trademarks.

 

4.5.                              Inspection
and Examination.  At such reasonable
times and intervals on reasonable advance notice to the Company, the Majority
Purchasers shall have the right to: (a) visit and inspect the Company’s
properties and the Collateral; and (b) inspect, audit and make extracts from
the Company’s relevant books and records relating to the Collateral; provided
that such inspections shall not occur more than once per calendar year unless
an Event of Default shall have occurred and be continuing.  The Company will execute and deliver to the
Investors any instrument necessary for the Investors to obtain records from any
service bureau maintaining records for the Company.  Notwithstanding the foregoing, the Company
shall not disclose material nonpublic information or provide access to material
nonpublic information to the Majority Purchasers, unless prior to disclosing or
providing access to such information the Company identifies such information as
being material nonpublic information and provides the Majority Purchasers with
the opportunity to accept or refuse to accept such material nonpublic
information and the Majority Purchasers electing to receive such material
nonpublic information shall enter into an appropriate confidentiality agreement
with the Company with respect thereto.

 

4.6.                              Liens.  The Company shall not encumber, mortgage,
pledge, assign or grant any Lien in any Collateral to any Person other than the
Investors, except for Permitted Liens.

 

4.7.                              Use
and Disposition of Collateral.  The
Company shall: (a) not dispose of any of the Collateral whether by sale, lease
or otherwise except for (i) the sale of Inventory in the ordinary course of
business, (ii) the disposition or transfer of obsolete, excess or worn-out
Equipment in the ordinary course of business, (iii) the sale, transfer,
assignment, dissolution or other disposition of all or substantially all of the
assets of Lark in strict accordance with, and only to the extent permitted by,
the Purchase Agreement, including without limitation the mandatory prepayment
provisions pertaining to the Notes (in other words, so long as the Notes are
being repaid in full in cash in connection therewith), (iv) any cash advance or
capital contribution to the Parent; provided, that, the Investors have a first
priority, security interest in (x) any note, instrument or security evidencing
the advance or capital contribution to the Parent and (y) except as otherwise
permitted under Section 5.6(p) of the Purchase Agreement, any cash advance
or capital contribution made to the Parent, and (v) any License of its
Intellectual Property; provided, that, (x) the Company complies with the
mandatory prepayment provisions of the Notes to the extent triggered by the
execution of, or entering into, any such License and (y) unless the Notes are
being repaid in full in cash upon execution of, or entering into, such

 

9

 

License, the Investors shall have a first priority security interest in
such License and the proceeds thereof; and (b) keep and maintain the Equipment
in good operating condition, except for ordinary wear and tear, and shall make
all necessary repairs and replacements thereof so that the value and operating
efficiency shall at all times be maintained and preserved.

 

4.8.                              Risk
of Loss; Insurance.  The Company
shall bear the full risk of loss from any loss of any nature whatsoever with respect
to the Collateral.  The Company shall
keep the Collateral insured as follows:

 

(a)                                  Casualty Insurance.  Maintain extended coverage casualty insurance
written in the name of the Company in the broadest “all risks” form available
on a full replacement cost basis covering all Collateral.  Such insurance shall be in amounts and with
deductible amounts that are customary for companies in the same industry as the
Company in the same geographic market as the Company, but in no event shall the
coverage be less than the full insurable value of the covered Collateral.

 

(b)                                 Liability Insurance.  Maintain commercial general liability
insurance in the name of each of the Investors, including a contractual
liability endorsement and a completed operations and personal injury coverage,
with a combined single limit for any one occurrence of at least $3,000,000.

 

(c)                                  Policy Terms.  All policies shall meet the following
requirements:

 

(i)                                     overall
blanket or excess coverage policies may be supplied provided, however,
that all insurance shall be in amounts sufficient to prevent any insured from
being a co-insurer and that the amount of the casualty insurance coverage
attributable to the Collateral is clearly set forth; and

 

(ii)                                  all
policies shall (A) name each of the Investors “and its successors and assigns
as their interests may appear” as “additional insured” and “loss payee” on all
casualty insurance and as “additional insured” as to all other insurance, and
(B) contain a provision stating that such policy “shall not be canceled or
modified except after ten (10) days prior written notice delivered to each of
the Investors at its address for notices herein or as subsequently directed in
writing by the Investors”; and

 

(iii)                               all policies shall be in
a form reasonably acceptable to the Investors and shall be issued by
financially sound insurers duly licensed and authorized to conduct that type of
insurance business in each state where the Collateral is located; and

 

(iv)                              all
policies of insurance and endorsements thereof, together with a paid receipt,
shall be deposited with the Investors prior to the date hereof.  Upon request, prior to the expiration of any
such policies, the Company shall furnish paid receipts and other evidence satisfactory
to the Investors that all such policies have been renewed or replaced.

 

(d)                                 Insurance
Proceeds.  Unless an Event of Default
shall have occurred and be continuing, the Company shall receive directly all
awards and proceeds with respect to any loss. 
After the occurrence and during the continuance of an Event of Default,
the Investors shall have the exclusive authority to do each of the following in
its reasonable

 

10

 

discretion:

 

(i)                                     Receive
directly all awards and proceeds;

 

(ii)                                  Settle
or compromise all claims relating to all awards and proceeds; and

 

(iii)                               Determine whether to
apply any awards and proceeds to reduce the Notes or any other Obligations.

 

(e)                                  Further
Actions.  Upon the occurrence of an
Event of Default, each of the Investors shall have the authority on behalf of
the Company to execute and deliver any such instruments, agreements and
documents as may be necessary to effect the provisions of this Section 4.8.  Any deficiency remaining in the amounts owing
by the Company to the Investors after application of any awards and proceeds
shall be paid by the Company to the Investors, on demand, and shall be deemed
Obligations and additional principal under the Note bearing interest at the
rate specified therein until paid in full in cash.

 

4.9.                              Covenants
Regarding Patent, Trademark and Copyright Collateral.

 

(a)                                  Subject
to its reasonable judgment, the Company agrees that it will not do any act, or
omit to do any act, whereby any Patent would reasonably be likely to become
invalidated or dedicated to the public, and agrees that it shall continue to
mark any products covered by a Patent with the relevant patent number as
necessary and sufficient to establish and preserve its maximum rights under
applicable patent laws.

 

(b)                                 Subject
to its reasonable judgment, the Company will, for each Trademark, (i) maintain
such Trademark in full force free from any claim of abandonment or invalidity
for non-use, (ii) maintain the quality of products and services offered under
such Trademark, (iii) display such Trademark with notice of federal or foreign
registration to the extent necessary and sufficient to establish and preserve
its maximum rights under applicable law, and (iv) not knowingly use or
knowingly permit the use of such Trademark in violation of any third party
rights unless it would be reasonably expected to have a Material Adverse Effect
on the Company (as defined in the Purchase Agreement).

 

(c)                                  Subject
to its reasonable judgment, the Company will, for each work covered by a
Copyright, continue to publish, reproduce, display, adopt and distribute the
work with appropriate copyright notice as necessary and sufficient to establish
and preserve its maximum rights under applicable copyright laws.

 

(d)                                 The
Company shall notify the Investors promptly if it knows or has reason to know
that any Patent, Trademark or Copyright may become abandoned, lost or dedicated
to the public, or of any adverse determination or development (including the
institution of, or any such determination or development in, any proceeding in
the United States Patent and Trademark Office, United States Copyright Office
or any court or similar office of any country) regarding the Company’s
ownership of any Patent, Trademark or Copyright, its right to register

 

11

 

the same, or to keep and maintain the same if, in any case, such event
would be reasonably expected to have a Material Adverse Effect on the Company.

 

(e)                                  In
no event shall the Company file an application for any Copyright (or for the
registration of any Copyright) with the United States Copyright Office (or any
successor thereof), unless it promptly informs the Investors, and, upon request
of an Investor, executes and delivers any and all agreements, instruments,
documents and papers as the Investor may request to evidence the Investor’s
Security Interest in such Copyright, and the Company hereby appoints each of
the Investors as its attorney-in-fact to execute and file such writings for the
foregoing purposes, all acts of such attorney being hereby ratified and
confirmed; such power, being coupled with an interest, is irrevocable.  In the event that the Company shall file an
application for any Patent or Trademark (or for the registration of any Patent
or Trademark) with the United States Patent and Trademark Office, the Company
shall promptly notify the Investors of such filing.

 

(f)                                    Subject
to its reasonable judgment, the Company will take all necessary steps that are
consistent with the practice in any proceeding before the United States Patent
and Trademark Office, United States Copyright Office (or any successor thereof)
to maintain and pursue each application relating to the United States Patents,
Trademarks and/or Copyrights (and to obtain the relevant grant or registration)
and to maintain each issued United States Patent and each United States
registration of the Trademarks and Copyrights, including timely filings of
applications for renewal, affidavits of use, affidavits of incontestability and
payment of maintenance fees, and, if consistent with good business judgment, to
initiate opposition, interference and cancellation proceedings against third
parties.

 

(g)                                 Subject
to its reasonable judgment, in the event that the Company has reason to believe
that any Collateral consisting of a Patent, Trademark or Copyright has been or
is about to be infringed, misappropriated, or diluted by a third party, which
would be reasonably expected to have a Material Adverse Effect on the Company,
the Company promptly shall notify the Investors and shall promptly sue for
infringement, misappropriation or dilution, and take such other actions as are
appropriate under the circumstances to protect such Collateral.

 

4.10.                        Other Actions.  In order to further insure the attachment,
perfection and priority of, and the ability of the Investors to enforce, the
Security Interest, the Company agrees, in each case at the Company’s own
expense, to take the following actions with respect to the following
Collateral:

 

(a)                                  Deposit
Accounts.  For each deposit account
that the Company at any time opens or maintains and that is included in the
Collateral, the Company shall, at an Investor’s request and option, pursuant to
an agreement in form and substance reasonably satisfactory to the Investors,
either: (i) cause the depositary bank to agree to comply at any time with
instructions from the Investors to such depositary bank directing the
disposition of funds from time to time credited to such deposit account,
without further consent of the Company; or (ii) arrange for the Investors to
become the customer of the depositary bank with respect to the deposit account,
with the Company being permitted, only with the consent of the Investors, to
exercise rights to withdraw funds from such deposit account.  Each of the Investors agrees with the Company
that it shall not give any such instructions or withhold any withdrawal rights
from

 

12

 

the Company, unless an Event of Default has occurred and is continuing,
or, after giving effect to any withdrawal would occur.  The provisions of this Section 4.10(a)
shall not apply to any deposit account: (i) for which the Company, the
depositary bank and an Investor have entered into a cash collateral agreement
specifically negotiated among the Company, the depositary bank and an Investor
for the specific purpose set forth therein; or (ii) as provided in Section 5.6(p)
of the Purchase Agreement.

 

(b)                                 Investment
Property.  If the Company shall at
any time hold or acquire any certificated securities (including without
limitation any securities received as consideration for sales of assets
permitted by Section 5.6(h) of the Purchase Agreement), the Company shall
forthwith endorse, assign and deliver the same to the Lenders, accompanied by
such instruments of transfer or assignment duly executed in blank as the
Investors may from time to time specify. 
If any securities now or hereafter acquired by the Company are
uncertificated and are issued to the Company or its nominee directly by the issuer
thereof, the Company shall immediately notify the Investors thereof and, at the
Investors’ request and option, pursuant to an agreement in form and substance
satisfactory to the Investors, either: (i) cause the issuer to agree to comply
with instructions from the Investors as to such securities, without further
consent of the Company or such nominee; or (ii) arrange for the Investors to
become the registered owner of the securities. 
If any securities, whether certificated or uncertificated, or other Investment
Property now or hereafter acquired by the Company are held by the Company or
its nominees through a securities intermediary or commodity intermediary, the
Company shall immediately notify the Investors thereof and, at the Investors’
request and option, pursuant to an agreement in form and substance reasonably
satisfactory to the Investors, either: (i) cause such securities intermediary
or (as the case may be) commodity intermediary to agree to comply with
entitlement orders or other instructions from the Investors to such securities
intermediary as to such securities or other Investment Property, or (as the
case may be) to apply any value distributed on account of any commodity
contract as directed by the Investors to such commodity intermediary, in each
case without further consent of the Company or such nominee; or (ii) in the
case of financial assets or other Investment Property held through a securities
intermediary, arrange for the Investors to become the entitlement holder with
respect to such Investment Property, with the Company being permitted, only
with the consent of the Investors, to exercise rights to withdraw or otherwise
deal with such Investment Property.  Each
of the Investors agrees with the Company that it shall not give any such entitlement
orders, instructions or directions to any such issuer, securities intermediary
or commodity intermediary, and shall not withhold its consent to the exercise
of any withdrawal or dealing rights by the Company, unless an Event of Default
has occurred, or, after giving effect to any such investment and withdrawal
rights would occur.  The provisions of
this Section 4.10(b) shall not apply to any financial assets
credited to a securities account for which an Investor is the securities
intermediary.

 

(c)                                  Letter
of Credit Rights.  If the Company is
at any time a beneficiary under a letter of credit (other than any letter
credit constituting a Supporting Obligation) now or hereafter issued in favor
of the Company, the Company shall promptly notify the Investors thereof and, at
the request and option of the Investors, the Company shall, pursuant to an
agreement in form and substance reasonably satisfactory to the Investors,
either (i) arrange for the issuer and any confirmer to such letter of credit to
consent to an assignment to the Investors of the proceeds of any drawing under
the letter of credit or (ii) arrange for the Investors to become the transferee
beneficiary of the letter of credit, with the Investors agreeing, in each

 

13

 

case, that the proceeds of any drawing under the letter of credit are
to be applied to satisfy the Obligations.

 

(d)                                 Commercial
Tort Claims.  If the Company shall at
any time hold or acquire a material commercial tort claim, the Company shall
immediately notify the Investors in a writing signed by the Company of the
brief details thereof and upon request of the Investors grant to the Investors
in writing a security interest therein and in the proceeds thereof, all upon
the terms of this Agreement, with such writing to be in form and substance
reasonably satisfactory to the Investors.

 

4.11.                        Information.  The Company shall inform the Investors in
writing within fifteen (15) days, in the case of clauses (a), (b) and (e) of
this Section 4.11, or within thirty (30) days, in the case of clauses (c),
(d) and (f) of this Section 4.11, of becoming aware of:: (a) the
commencement of all material proceedings and, to the Company’s knowledge,
investigations by or before and/or the receipt of any notices from, any
Governmental Authority or nongovernmental body and all actions and proceedings
in any court or before any arbitrator against or in any way concerning any of
the Collateral, in any case that would reasonably be likely to have a Material Adverse
Effect; (b) any Event of Default or Default; (c) any change in the location of
the Company’s executive offices; (d) any change in the location of a material
portion of the Company’s Inventory or Equipment from the locations listed on Schedule I
attached hereto, (e) any additional Patents, Copyrights, or Trademarks not
listed on Schedule II, III, or IV; and (f) any
additional tradenames, corporate names or company names not provided to the
Investors.

 

SECTION 5. 
POWER OF ATTORNEY.

 

The Company hereby irrevocably appoints one
representative designated by the Majority Purchasers (which such designated
Person the Majority Purchasers may change upon written notice to the Company)
as the Company’s attorney-in-fact, with full power and authority in place and
stead of the Company and in the name of the Company or in the name of any
Investor to, after the occurrence of an Event of Default:  (a) endorse the Company’s name on any checks,
notes, acceptances, money orders, drafts or other forms of payment or security
that may come into an Investor’s possession; (b) sign the Company’s name on any
invoice or bill of lading relating to any Receivables, drafts against
customers, schedules and assignments of Receivables, notices of assignment,
financing statements and other public records, verifications of account and
notices to or from Customers; (c) verify the validity, amount or any other
matter relating to any Receivable by mail, telephone, telegraph or otherwise
with Customers; (d) execute customs declarations and such other documents as
may be required to clear Inventory through United States Customs; (e) do all
things necessary to carry out this Agreement; (f) continue any insurance
existing pursuant to the terms of this Agreement and pay all or any part of the
premium therefor and the cost thereof, and any such payment shall be added to
the Obligations and bear interest at the rate then in effect under the Notes;
and (g) notify the post office authorities to change the address for delivery
of the Company’s mail to an address designated by the Majority Purchasers, and
to receive, open and dispose of all mail addressed to the Company.  The Company hereby ratifies and approves all
acts of the said attorney.  The powers
conferred on the Investors hereunder are solely to protect its interests in the
Collateral and shall not impose

 

14

 

any duty upon it to exercise any such powers.  Neither the Investors nor the said attorney
will be liable for any acts or omissions or for any error of judgment or
mistake of fact or law absent gross negligence or intentional misconduct.  This power, being coupled with an interest,
is irrevocable so long as any Receivable which is assigned to an Investor or in
which an Investor has a Security Interest remains unpaid and until the
Obligations have been fully satisfied.

 

SECTION 6. 
EVENTS OF DEFAULT; RIGHTS AND REMEDIES.

 

6.1.                              Events
of Default.  The occurrence of any
one or more of the following events shall constitute an “Event of Default”:

 

(a)                                  the
occurrence of a Default (which continues for a period of ten (10) days) or an
Event of Default under this Agreement, the Purchase Agreement, the Notes or any
other Transaction Document; or

 

(b)                                 the
Security Interest for any reason ceases to be or is not a valid and perfected
Lien having a first priority security interest, subject to Permitted Liens.

 

6.2.                              Rights
and Remedies.  Upon the occurrence of
any Event of Default, the Majority Purchasers shall have the right to demand
repayment in full of all Obligations, whether or not otherwise due (in such
case the Investors may deposit any and all such amounts realized in a cash
collateral deposit account to be maintained as security for the
Obligations).  The Investors agree that
no notice of exclusive control, order or similar notice of control will be
given under any Control Agreement unless the Majority Purchasers so instruct
any Investor entitled to act under any such Control Agreement.  Until all Obligations have been fully and
satisfied, the Investors shall retain the Security Interest.  The Investors shall have, in addition to all
other rights provided herein, the rights and remedies of a secured party under
the UCC, and under other applicable law, all other legal and equitable rights
to which the Investors may be entitled, including without limitation, the right
to take immediate possession of the Collateral, to require the Company to
assemble the Collateral, at the Company’s expense, and to make it available to
the Investors at a place designated by the Investors which is reasonably
convenient to both parties and, subject to the rights of third parties, to
enter any of the Premises of the Company or wherever the Collateral shall be
located, with or without force or process of law, and to keep and store the
same at any such premises until sold (and in the case of any of the Premises or
any other property of the Company, the Company agrees not to charge the
Investors for storage thereof).  Further,
the Investors may, at any time or times after the occurrence of an Event of
Default, sell and deliver all Collateral held by or for the Investors in one or
more parcels at public or private sale for cash, upon credit or otherwise, at
such prices and upon such terms as the Investors, in their reasonable discretion,
deem advisable or the Investors may otherwise recover upon the Collateral in
any commercially reasonable manner as the Investors, in their reasonable
discretion, deems advisable.  Except as
to that part of the Collateral which is perishable or threatens to decline
speedily in nature or is of a type customarily sold on a recognized market, the
requirement of reasonable notice shall be met if such notice is mailed postage
prepaid to the Company at the Company’s address as shown in the Investors’
records, at least ten (10) days before the time of the event of which notice is
being given.  The Investors may be the
purchaser at any sale, if it is public. 
Until the Investors are able to effect a sale, lease, or other
disposition of Collateral, the Investors shall have the right to use or operate
Collateral, or

 

15

 

any part thereof, to the extent reasonably appropriate for the purpose
of preserving Collateral or its value or for any other purpose deemed appropriate
by the Investors.  The Investors shall
have no obligation to the Company to maintain or preserve the rights of the
Company as against third parties with respect to Collateral while Collateral is
in the possession of the Investors.  Each
of the Investors may, if it so elects, seek the appointment of a receiver or
keeper to take possession of Collateral and to enforce any of the Investors’
remedies with respect to such appointment without prior notice or hearing.  In connection with the exercise of the foregoing
remedies, the Investors are granted permission to use: (a) all of the Company’s
Intellectual Property which are used in connection with Inventory for the
purpose of disposing of such Inventory; and (b) any Equipment for the purpose
of completing the manufacture of unfinished goods and have access to the
Premises for the same purpose.  The
proceeds of sale shall be applied first to all costs and expenses of sale,
including reasonable attorneys’ fees and expenses incurred by one (1) counsel
to the Investors, and second to the payment (in whatever order the Investors
elect) of all Obligations.  The Investors
will return any excess to the Company and the Company shall remain liable to
the Investors for any deficiency.

 

6.3.                              Grant
of License to Use Intellectual Property. 
For the purpose of enabling the Investors to exercise rights and
remedies under this Article at such time as the Investors shall be
lawfully entitled to exercise such rights and remedies, the Company hereby
grants to the Investors an irrevocable, non-exclusive license (exercisable
without payment of royalty or other compensation to the Company) to use,
license or sublicense any of the Collateral consisting of Intellectual Property
now owned or hereafter acquired by the Company, and wherever the same may be
located, and including in such license reasonable access to all media in which
any of the licensed items may be recorded or stored and to all computer
software and programs used for the compilation or printout thereof.  The use of such license by the Investors
shall be exercised, at the option of the Investors, upon the occurrence and
during the continuation of an Event of Default; provided that any license,
sublicense or other transaction entered into by the Investors in accordance
herewith shall be binding upon the Company notwithstanding any subsequent cure
of an Event of Default.

 

SECTION 7. 
MISCELLANEOUS.

 

7.1.                              No
Waiver; Cumulative Remedies.  No
failure or delay by the Investors in exercising any right, power or remedy
under this Agreement shall operate as a waiver thereof; nor shall any single or
partial exercise of any such right, power or remedy preclude any other or
further exercise thereof or the exercise of any other right, power or remedy
under this Agreement.  The remedies provided
in this Agreement are cumulative and not exclusive of any remedies provided by
law.

 

7.2.                              Waivers.  The Company waives presentment and protest of
any instrument and notice thereof, notice of default and all other notices to
which the Company might otherwise be entitled (other than such notices required
by the Purchase Agreement).

 

7.3.                              Security
Interest Absolute.  All rights of the
Investors hereunder, the Security Interest and all the Obligations shall be
absolute and unconditional irrespective of: (a) any lack of validity or
enforceability of the Purchase Agreement, any other Transaction Document, any
agreement with respect to any of the Obligations or any other agreement or

 

16

 

instrument relating to any of the foregoing; (b) 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 the Purchase Agreement, the Notes, any other Transaction
Document or any other agreement or instrument; (c) any exchange, release or
non-perfection of any Lien on other collateral, 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 (d) any other circumstance that
might otherwise constitute a defense available to, or a discharge of, the
Company in respect of the Obligations.

 

7.4.                              Amendments,
Etc.  No amendment, modification,
termination or waiver of any provision of this Agreement or consent to any
departure by the Company therefrom or any release of a Lien shall be effective
unless the same shall be in writing and signed by the Company and the Majority
Purchasers, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.  No notice to or demand on the Company in any
case shall entitle the Company to any other or further notice or demand in
similar or other circumstances.

 

7.5.                              Notices.  Except as otherwise expressly provided
herein, any notice or request hereunder shall be given in accordance with the
terms of the Purchase Agreement.

 

7.6.                              Collateral.  This Agreement does not contemplate a sale of
accounts, contract rights or chattel paper, and, as provided by law, the
Company is entitled to any surplus and shall remain liable for any
deficiency.  The Investors’ duty of care
with respect to Collateral in their possession (as imposed by law) shall be
deemed fulfilled if it exercises reasonable care in physically keeping such
Collateral, or in the case of Collateral in the custody or possession of a
bailee or other third Person, exercises reasonable care in the selection of the
bailee or other third Person, and the Investors need not otherwise preserve,
protect, insure or care for any Collateral. 
The Investors shall not be obligated to preserve any rights the Company
may have against prior parties, to realize on the Collateral at all or in any
particular manner or order or to apply any cash proceeds of the Collateral in
any particular order of application.

 

7.7.                              Costs
and Expenses; Indemnification.

 

(a)                                  The
Company shall pay all of the Investors’ reasonable and documented out-of-pocket
costs and expenses including, without limitation, reasonable and documented
fees and disbursements of one (1) counsel to the Investors and appraisers, in
connection with the prosecution or defense of any action, contest, dispute,
suit or proceeding concerning any matter in any way arising out of, related to
or connected with this Agreement.  The
Company shall also pay all of the Investors’ reasonable and documented
out-of-pocket costs and expenses, including, without limitation, reasonable and
documented fees and disbursements of one (1) counsel to the Investors in connection
with: (i) the preparation, execution and/or delivery of any waiver, amendment
or consent proposed by, or at the request of, the Company or the Parent or
executed in connection with the transactions contemplated by this Agreement,
whether or not it becomes effective; (ii) the Investors’ obtaining performance
of the Company’s obligations under this Agreement, including, but not limited
to, the enforcement or defense of the Security Interest, assignments of rights
and Liens hereunder as valid perfected security interests;

 

17

 

and(iii) subject to the terms hereof, any attempt to inspect, verify,
protect, collect, sell, liquidate or otherwise dispose of any Collateral.

 

(b)                                 Any
such amounts payable as provided hereunder shall be additional Obligations
secured hereby.  The provisions of this Section 7.7
shall remain operative and in full force and effect regardless of the
termination of this Agreement or any other Transaction Document, the
consummation of the transactions contemplated hereby, the repayment of any of
the Obligations, the invalidity or unenforceability of any term or provision of
this Agreement or any other Transaction Document, or any investigation made by
or on behalf of the Investors.  All amounts
due under this Section 7.7 shall be payable on written demand
therefor.

 

7.8.                              Counterparts;
Faxes.  This Agreement may be
executed in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.  This Agreement may also be
executed via facsimile, which shall be deemed an original.

 

7.9.                              Binding
Effect; Assignment; Complete Agreement. 
This Agreement shall be binding upon and inure to the benefit of the
Company and the Investors and their respective successors and assigns, except
that the Company shall not have the right to assign this Agreement or any of
their rights, interests, or obligations hereunder; unless simultaneously
therewith, the Notes, together with all accrued and unpaid interest thereon and
all other Obligations then due and owing hereunder, are repaid in cash in
full.  Each of the Investors may assign
its rights under this Agreement, except that an Investor shall not assign any
of their rights under this Agreement to a for-profit company engaged in the
business of researching (including without limitation, contract research
organizations), developing and/or commercializing pharmaceutical or
biotechnology products or services that are then competitive with products or
services of the Company or the Parent; provided, however, that such transfer
complies with the requirements of applicable securities laws and the transferee
agrees to be bound by, and entitled to the benefits of, this Agreement as an
original party thereto.

 

7.10.                        Severability of Provisions.  Any provision of this Agreement which is
prohibited or unenforceable shall be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions
hereof.

 

7.11.                        Titles and Subtitles;
Cross-References.  The titles and
subtitles used in this Agreement are used for convenience only and are not to
be considered in construing or interpreting this Agreement.  All references in this Agreement to Articles,
Sections, subsections, Exhibits and Schedules, shall be to Articles, Sections,
subsections, Exhibits and Schedules of this Agreement unless otherwise
explicitly specified.  All references to
statutes and related regulations shall include any amendments of same and any
successor statutes and regulations.

 

7.12.                        Governing Law; Consent to Jurisdiction.  This Agreement shall be governed by, and
construed in accordance with, the internal laws of the State of New York,
without reference to the choice of law principles thereof.  The Company and the Investors hereby (a)
irrevocably consent and submit to the non-exclusive jurisdiction of the state
and federal courts located in New York in connection with any suit, action or
other proceeding directly or

 

18

 

indirectly arising out of or relating to this Agreement, and (b)
irrevocably waive, to the fullest extent permitted by law, any objection that
any of them may now or hereafter have to the laying of the venue of any such
suit, action or proceeding in any such court or that any such suit, action or
proceeding which is brought in any such court has been brought in an
inconvenient forum.  Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.

 

7.13.                        No Jury Trial.  Each party acknowledges and agrees that any
controversy that may arise under this Agreement is likely to involve
complicated and difficult issues.  ACCORDINGLY, EACH SUCH PARTY HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY
HAVE TO A TRIAL BY JURY IN RESPECT TO ANY LITIGATION DIRECTLY OR INDIRECTLY
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
BY THIS AGREEMENT.  Each party
certifies and acknowledges that (i) no other party has represented, expressly
or otherwise, that such other party would not, in the event of litigation, seek
to enforce the foregoing waiver, (ii) each such party understands and has
considered the implications of this waiver, and (iii) each such party has been
induced to enter into this Agreement by, among other things, the waivers and
certifications in this Section 7.13.

 

7.14.                        Recapture.  Anything in this Agreement to the contrary
notwithstanding, if an Investor receives any payment or payments on account of
the Obligations, which payment or payments or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside and/or
required to be repaid to a trustee, receiver, or any other party under the
United States Bankruptcy Code, as amended, or any other federal or state
bankruptcy, reorganization, moratorium or insolvency law relating to or
affecting the enforcement of creditors’ rights generally, common law or
equitable doctrine, then to the extent of any sum not finally retained by any
such Investor, the Company’s obligations to such Investor shall be reinstated
and this Agreement shall remain in full force and effect (or be reinstated)
until payment shall have been indefeasibly made to such Investor, which payment
shall be due on demand.

 

7.15.                        Construction.  The parties acknowledge that each party and
its counsel have reviewed this Agreement and that the normal rule of
construction to the effect that any ambiguities are to be resolved against the
drafting party shall not be employed in the interpretation of this Agreement or
any amendments, schedules or exhibits hereto. 
For the avoidance of doubt, any rights, benefits or obligations
specified in this Agreement shall be in addition to and not lieu or limitation
of any rights, benefits or obligations specified in the Purchase Agreement.

 

[Signatures
on Next Page]

 

19

 

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

 

	
   

  	
  COMPANY:

  
	
   

  	
   

  
	
   

  	
  LARK
  TECHNOLOGIES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Ben D.
  Kaplan

  	
   

  
	
   

  	
  Name:

  	
  Ben D.
  Kaplan

  
	
   

  	
  Title:

  	
  Secretary

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  INVESTORS:

  
	
   

  	
   

  
	
   

  	
  XMARK
  OPPORTUNITY FUND, LTD.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mitchell
  D. Kaye

  	
   

  
	
   

  	
  Name:

  	
  Mitchell D.
  Kaye

  
	
   

  	
  Title:

  	
  C.I.O.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  XMARK
  OPPORTUNITY FUND, L.P.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mitchell
  D. Kaye

  	
   

  
	
   

  	
  Name:

  	
  Mitchell D.
  Kaye

  
	
   

  	
  Title:

  	
  C.I.O.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  XMARK JV
  INVESTMENT PARTNERS,

  LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mitchell
  D. Kaye

  	
   

  
	
   

  	
  Name:

  	
  Mitchell D.
  Kaye

  
	
   

  	
  Title:

  	
  C.I.O.

  
					

 

20

 

	
  STATE OF CONNECTICUT)

  
	
   

  	
  : ss.: New Haven

  
	
  COUNTY OF NEW HAVEN)

  

 

On the 21st day of April, 2005, before me
personally came Ben D. Kaplan to me known, who, being by me duly sworn did
depose and say that s/he is the Secretary of LARK TECHNOLOGIES, INC., a
Delaware corporation, the corporation described in and which executed the above
instrument; and that s/he signed her/his name thereto by order of the board of
directors of said corporation.

 

	
   

  	
  /s/ Marcia I. Passavant

  	
   

  
	
   

  	
  Notary Public

  
	
   

  	
  My comm. Expires 12/31/06

  

 

	
  STATE OF CONNECTICUT)

  
	
   

  	
  : ss.:

  
	
  COUNTY OF FAIRFIELD)

  

 

On the 20th day of April, 2005, before me
personally came Mitchell D. Kaye to me known, who, being by me duly sworn did
depose and say that s/he is the C.I.O. of XMARK OPPORTUNITY FUND, LTD., a
Cayman Islands company, which executed the above instrument; and that s/he
signed her/his name thereto by order of said company.

 

	
   

  	
  /s/ Patti L. Vaughn

  	
   

  
	
   

  	
  Notary Public

  
	
   

  	
  My commission expires Mar 31, 2010

  

 

	
  STATE OF CONNECTICUT)

  
	
   

  	
  : ss.:

  
	
  COUNTY OF FAIRFIELD)

  

 

On the 20th day of April, 2005, before me
personally came Mitchell D. Kaye to me known, who, being by me duly sworn did
depose and say that s/he is the C.I.O. of XMARK OPPORTUNITY FUND, L.P., a Delaware
limited partnership, which executed the above instrument; and that s/he signed
her/his name thereto by order of said limited partnership.

 

	
   

  	
  /s/ Patti L. Vaughn

  	
   

  
	
   

  	
  Notary Public

  
	
   

  	
  My commission expires Mar 31, 2010

  

 

	
  STATE OF CONNECTICUT)

  
	
   

  	
  : ss.:

  
	
  COUNTY OF FAIRFIELD)

  

 

On the 20th day of April, 2005, before me
personally came Mitchell D. Kaye to me known, who, being by me duly sworn did
depose and say that s/he is the C.I.O. of XMARK JV INVESTMENT PARTNERS, LLC, a
Delaware limited liability company, which executed the

 

21

 

above instrument; and that s/he signed her/his name thereto by order of
said limited liability company.

 

	
   

  	
  /s/ Patti L. Vaughn

  	
   

  
	
   

  	
  Notary Public

  
	
   

  	
  My commission expires Mar 31, 2010

  

 

22

 

SCHEDULE II

 

Copyrights

 

	
  Title

  	
   

  	
  Registration or

  Application Number

  	
   

  	
  Registration or

  Application Date

  	
   

  	
  Country

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

23

 

SCHEDULE III

 

Patents

 

	
  Patent

  	
   

  	
  Registration or

  Application Number

  	
   

  	
  Registration or

  Application Date

  	
   

  	
  Country

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

24

 

SCHEDULE IV

 

Trademarks

 

	
  Trademark

  	
   

  	
  Registration or

  Application Number

  	
   

  	
  Registration or

  Application Date

  	
   

  	
  Country

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

25

 

SCHEDULE V

 

Commercial
Tort Claims

 

26EXHIBIT 10.1

                              CONSULTING AGREEMENT

     THIS AGREEMENT is entered into by and between Raven Moon Entertainment,
Inc., a Florida corporation with principal offices at 120 International Parkway,
Suite 220, Heathrow, FL 32746, ("Raven Moon"), and Big Apple Consulting U.S.A.,
Inc., a Delaware corporation with principal offices at 280 Wekiva Springs Road,
Suite 201, Longwood, FL 32779, ("Big Apple") (collectively "Parties").

     WHEREAS, Big Apple represents various financial websites that individuals
can access to learn more about companies they may not otherwise be exposed to;

     WHEREAS, In addition, Big Apple maintains an extensive database of brokers
representing investors interested in owning stock in companies such as Raven
Moon and employs a stock profiler team which regularly communicates with such
brokers; and

     WHEREAS, Raven Moon wishes to promote itself through Big Apple's efforts in
the brokerage community in order to gain as much exposure as possible for Raven
Moon.

NOW THEREFORE, in consideration of the mutual promises and covenants contained
herein and other good and valuable considerations, the receipt, sufficiency and
adequacy of which is hereby acknowledged, the Parties agree as follows:

     1. Services to be Performed by Big Apple.

          A.   Big Apple shall access its database of brokers and shall utilize
               a profiler team (comparable in size and capability to that
               currently employed by Big Apple) in order to contact brokers
               interested in recommending Company to their investor clients.

          B.   Big Apple shall diligently market and promote Raven Moon to
               brokers and other investors, advisors, counselors, trustees,
               agents and other individuals and entities whom Big Apple is
               legally permitted to contact (including with the proper
               disclosures and disclaimers) and shall introduce Raven Moon and
               its principals to Big Apples' current and future network of
               brokerage firms and market makers.

          C.   Big Apple shall provide investor lead management services normal
               and customary in the industry.

<PAGE>

          D.   Big Apple shall organize, initiate, manage and facilitate
               broker/investor conference telephone calls and other
               presentations mutually agreeable to Raven Moon and Big Apple.
               Expenses for broker/investor conference calls and other
               presentations are to be paid by Big Apple, and must be
               pre-approved by the Company.

          E.   Big Apple shall have the right to obtain and review Raven Moon's
               DTC reports provided it obtains such reports at its own expense.

     2. Term, Contingency and Effective Date.

          A.   The Term of this Agreement is One (1) year and is subject to the
               termination provisions of this Agreement.

          B.   The Effective Date of this Agreement shall be the 1st day of the
               first full month following SEC approval of the Company's S3 plan
               and the mutual termination of any other Consulting Agreements
               between the Parties.

     3. Compensation.

               3.1 The Company agrees to register Nine Hundred Million
               (900,000,000) shares of restricted stock of Raven Moon
               Entertainment, Inc., ("RVNM"), in the name of Big Apple
               Consulting USA, Inc. in an S3 Registration within Thirty (30)
               days of the acceptance of the S3 by the SEC. The Company shall
               hold the restricted shares in an escrow account until such time
               as they are due the Big Apple under the terms of this Agreement.

               3.2 As compensation for the Big Apple's services enumerated
               herein, Big Apple shall be entitled to receive Twenty Five
               Thousand Dollars ($25,000) per month worth of restricted shares
               of RVNM delivered from the escrow account. Monthly payments are
               due on or before the first business day of each month. If payment
               is made in RVNM stock, the Big Apple shall be entitled to receive
               the RVNM stock based on a Twenty Five Percent (25%) discount from
               the closing per share "bid" price on the last trading day prior
               to the day the Company issues the shares. Any shares issued to
               Big Apple for services shall have piggyback registration rights.

               3.3 Options. Big Apple shall have the right to purchase Fifty
               Thousand Dollars ($50,000) per month worth of RVNM restricted
               stock at a Fifty Percent (50%) discount from the closing per
               share "bid" price on the last trading day prior to the day the
               Big Apple exercises its Option. Should Big Apple exercise the
               Option described herein, the Company shall deliver the shares to
               the Big Apple from the escrow account upon receipt of a check
               from the Big Apple. The Option shall expire after twelve (12)
               months. All options will be registered in the S3 registration.

     4.   Non-Compete, Non-Conflict of Interest. During the Term of this
          Agreement and any extensions thereof and for two (2) years following
          any termination of this Agreement or any extensions thereof, Big
          Apple, its officers and directors shall not directly or indirectly
          engage in the entertainment business or in any business similar to,
          without regard to genre, or in any way competitive with Raven Moon's
          businesses in the entertainment industry. This includes, but is not
          limited to television production; animation; live theatrical events;
          television syndication; music production; music recording; music
          distribution; talent promotion or representation; publishing;
          distribution; fan clubs; toy manufacturing, development and licensing;
          and merchandising of characters, music, videos and DVD's from

                                        2

<PAGE>

          television programs. Further, Big Apple shall not directly solicit or
          accept any investor relations business from individuals or businesses
          in the entertainment industry during the Term of this Agreement, any
          extension thereof and for two (2) years following any termination of
          this Agreement. Raven Moon hereby recognizes that Big Apple conducts
          business or is associated with business in the following areas;
          investor relations, travel company, website design, real estate, comic
          books and cards and the wall covering business. Raven Moon agrees that
          these businesses as conducted as of the date of this Agreement, do not
          conflict or compete with Raven Moon's business as enumerated herein.
          In the event a conflict of interest does arise, the Parties hereto
          agree that they will endeavor to use their best efforts to resolve the
          conflict as expeditiously and to the mutual satisfaction of each
          Party.

     5.   Termination. Raven Moon shall have the right to terminate this
          Agreement at any time with five (5) days written notice to Big Apple
          for a breach of any term of this Agreement. If Raven Moon exercises
          its termination right, Big Apple shall not be entitled to any further
          compensation. Big Apple shall have the right to terminate this
          Agreement on the grounds of Raven Moon's failure to remit to Big Apple
          the required monthly payments or in the event of any breach of the
          Agreement by Raven Moon.

     6.   Representations. Raven Moon represents and warrants that it is in
          compliance with all required filings and regulations of NASD, the SEC
          and/or any other governmental agencies, and that Raven Moon's stock is
          not suspended from trading for any reason whatsoever. Raven Moon
          further represents and warrants that during the term of this
          agreement, it will continue to file all required reports with the SEC,
          NASD and/or any other governmental agencies and will continue to
          adhere to SEC, NASD, and/or any other governmental agency's
          requirements, and that it will take whatever steps are deemed
          necessary to keep its shares listed and "fully reporting." Raven
          Moon's failure to comply with the provisions of this paragraph shall
          constitute a material breach of the Parties' Agreement. Further, in
          the event of a breach of this paragraph by Raven Moon, Raven Moon
          agrees to continue to make any payments due for services rendered by
          Big Apple which are due at the time of the Breach.

     7.   Warranties. Big Apple warrants to Raven Moon that the services it
          provides to Raven Moon are legal and ethical and that as of the
          Effective Date Big Apple does not have any judgments against them from
          the SEC, any attorney general offices, including but not limited to
          the State of Florida.

     8.   Entire Agreement. This Agreement contains the entire agreement between
          the Parties and may not be waived, amended, modified or supplemented
          except by agreement in writing signed by the Party against whom
          enforcement of any waiver, amendment, modification or supplement
          sought. Waiver of or failure to exercise any rights provided by this
          Agreement in any respect shall not be deemed a waiver of any further
          or future rights.

     9.   Governing Law/Jurisdiction. This Agreement shall be construed under
          the laws of the State of Florida or the federal district court having
          venue in Seminole County, Florida, and the Parties agree that
          exclusive jurisdiction for any litigation arising from this Agreement
          shall be in Seminole County, Florida.

     10.  Integration. This Agreement, after full execution, acknowledgment and
          delivery, memorializes and constitutes the entire agreement and
          understanding between the parties and supersedes and replaces all
          prior negotiations and agreements of the parties, whether written or
          unwritten. Each of the parties to this Agreement acknowledges that no
          other party, nor any agent or attorney of any other party has made any
          promises, representations, or warranty whatsoever, express or implied,
          which is not expressly contained in this Agreement; and each party
          further acknowledges that he or it has not executed this Agreement in
          reliance upon any belief as to any fact not expressly recited herein
          above.

                                        3

<PAGE>

     11.  Attorneys Fees. In the event of a dispute between the parties
          concerning the enforcement or interpretation of this Agreement, the
          prevailing party in such dispute, whether by legal proceedings or
          otherwise, shall be reimbursed in a reasonable time for the reasonably
          incurred attorneys' fees and other costs and expenses by the other
          parties to the dispute.

     12.  Context. Wherever the context so requires, the singular number shall
          include the plural and the plural shall include the singular.

     13.  Captions. The captions by which the sections and subsections of this
          Agreement are identified are for convenience only, and shall have no
          effect whatsoever upon its interpretation.

     14.  Severance. If any provision of this Agreement is held to be illegal or
          invalid by a court of competent jurisdiction, such provision shall be
          deemed to be severed and deleted and neither such provision, nor its
          severance and deletion, shall affect the validity of the remaining
          provisions.

     15.  Successors and Assigns. This Agreement shall be binding upon the
          Parties, their successors and assigns, provided, however, that Big
          Apple shall not permit any other person or entity to assume these
          obligations hereunder without the prior written approval of Raven
          Moon.

     16.  Counterparts. This Agreement may be executed in two or more
          counterparts, each of which shall be deemed an original, but which
          taken together shall constitute on agreement.

     17.  Notices. All notices must be in writing and sent to the appropriate
          address listed above, or to such other address as either party may
          designate in writing, by first class mail and either certified mail
          return receipt requested or overnight courier service. In the case of
          certified mail notice shall be deemed given as of the date of deposit
          with the United States Postal Service, and in case of overnight
          courier service notice shall be deemed given as of the date of deposit
          with such overnight courier service.

     18.  Confidentiality. Raven Moon and Big Apple agree that it will not at
          any time, or in any fashion or manner divulge, disclose or otherwise
          communicate to any person or corporation, in any manner whatsoever,
          any information of any kind, nature, or description concerning any
          matters affecting or relating to the business of each others company.
          This includes its method of operation, or its plans, its processes, or
          other data of any kind or nature that they know, or should have known,
          is confidential and not already information that resides in the public
          domain. Both Raven Moon and Big Apple expressly agree that
          confidentiality of these matters is extremely important and gravely
          affect the successful conduct of business of each company, and its
          goodwill, and that any breach of the terms of this section is a
          material breach of this Agreement. The provisions of this section
          shall survive termination of the Agreement.

IN WITNESS WHEREOF, the Parties have executed or caused this Agreement to be
executed as of the date set forth above.

For Raven Moon Entertainment, Inc.         For Big Apple Consulting U.S.A., Inc.

/s/  Joey DiFrancesco                      /s/  Marc Jablon
-----------------------------              ------------------------------------
     Joey DiFrancesco, CEO                      Marc Jablon, President

                                        4

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00083-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00083-of-00352.parquet"}]]