Document:

Exhibit 4.1

WARRANT

THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR WITH THE SECURITIES COMMISSION OF ANY APPLICABLE STATE UNDER SUCH STATE’S SECURITIES OR BLUE SKY LAWS.  THESE SECURITIES MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER SUCH SECURITIES ACT AND THE APPLICABLE STATE SECURITIES OR BLUE SKY LAWS, PURSUANT TO REGISTRATION OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THOSE SECURITIES OR BLUE SKY LAWS.

WARRANT TO PURCHASE STOCK
 OF
 LARGE SCALE BIOLOGY CORPORATION

	
  
Warrant No.:  I-1
  	
  
October   20, 2005
  

                    This Warrant certifies that, as a material inducement for Agility Capital, LLC, the original Holder (as defined below) to enter into that certain Loan Agreement (the “Loan Agreement”), dated October 20, 2005, by and between Holder and Large Scale Biology Corporation, a Delaware corporation (the “Company”), the Holder is entitled, subject to the terms and conditions of this Warrant, to purchase from the Company at any time prior to 5:00 p.m. Pacific time on or before December 31, 2015 (the “Expiration Date”) shares of Warrant Stock (as defined below) equal to the Exercise Quantity (as defined below) at a price per share equal to the Exercise Price (as defined below), upon surrender of this Warrant at the principal offices of the Company, together with a duly executed subscription form substantially in the form attached
hereto as Exhibit 1 and, if applicable, payment of the full Warrant Price for the shares of Warrant Stock so purchased in lawful money of the United States.  The Exercise Price and the number and character of shares of Warrant Stock purchasable under this Warrant are subject to adjustment as provided herein. 

                    1.          Definitions.  The following definitions shall apply for purposes of this Warrant:

                                 1.1        “Common Stock Equivalents” means collectively any rights, options or warrants to subscribe for or to purchase or otherwise acquire common stock or other securities or rights convertible into or exercisable or exchangeable for shares of the Company’s common stock.

                                 1.2        “Company” means the “Company” as defined above and includes any Person (other than an individual) which shall succeed to or assume the obligations of the Company under and in accordance this Warrant.

                                 1.3        “Exercise Price” means the lower of (i) the average closing price for a share of Warrant Stock for the thirty (30) trading day period ending on the date immediately prior to the date the Holder exercises this Warrant with respect to such Warrant Stock and (ii) $0.68.

                                 1.4          “Exercise Quantity” means 500,000 shares of Warrant Stock on the Issue Date plus 50,000 shares of Warrant Stock on the date of the second Advance, 75,000 shares of Warrant Stock on the third Advance, and 125,000 shares of Warrant Stock on the fourth Advance, in each case as provided for in the Loan Agreement.  In addition, Holder may acquire the following:  (i) upon the occurrence an Event of Default under the Loan Agreement or a Registration Breach, shares of Warrant Stock equal to 1% of the Company’s outstanding capital stock on a fully diluted basis, assuming conversion of all convertible securities and exercise of all warrants and options to purchase stock as to which the
exercise price thereof is less than the Fair Market Value of each Share (“Fully Diluted Basis”), (ii) on the thirty-first (31st) day after an Event of Default or Registration Breach until (x) the Obligations (as defined in the Loan Agreement) are paid in full indefeasibly and all Registration Breaches are fully cured or (y) the written waiver by the Lender, if any, and the Holder, as applicable, of all Events of Default and Registration Breaches, by an additional number of Shares equal to 1.0% of the Company’s outstanding capital stock on a Fully Diluted Basis until (x) the Obligations are paid in full indefeasibly and all Registration Breaches are fully cured or (y) the written waiver by the Lender, if any, and the Holder, as applicable, of all Events of Default and Registration Breaches, by an additional number of shares of Warrant Stock equal to 1.0% of the Company’s outstanding capital stock on a Fully Diluted Basis.

                                 1.5        “Fair Market Value” means, on any given date, if the items to be valued are securities traded on a United States public market, the closing price of such securities (or the securities into which such securities are convertible) last reported sales price regular way or, in the case no reported sales take place on such date, the average of the reported closing bid and asked prices regular way on the principal U.S. securities exchange on which such security is listed or, if not so listed, on the Nasdaq Stock Market or, if not so quoted, the average of the closing bid and asked prices on the over-the-counter market.  If the items to be valued are securities not so traded or are other property, assets or
evidences of indebtedness, the “Fair Market Value” means, on any given day, the fair market value of the securities or other property, assets or evidences of indebtedness as reasonably determined in good faith by the Board of Directors of the Company; provided, that if the Holder advises the Company’s Board of Directors in writing that the Holder disagrees with such determination, then the Company and the Holder shall promptly agree upon a nationally recognized investment banking firm to undertake such valuation.  If the valuation of such investment banking firm is greater than that so originally determined by the Company’s Board of Directors, then all fees and expenses of such investment banking firm shall be paid by the Company.  In all other circumstances, such fees and expenses shall be paid by Holder.

                                 1.6        “Holder” means any Person who shall at the time be the registered holder of this Warrant.

                                 1.7        “Person” means a natural person, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization or other entity, or a governmental entity or any department, agency or political subdivision thereof.

                                 1.8        “Registration Breach” means any breach of any obligation under Section 6 hereof.

                                 1.9        “SEC” means the Securities and Exchange Commission and any successor thereto.

                                 1.10       “Securities Act” means the Securities Exchange Act of 1933, as amended, and the rules and regulations promulgated thereunder.

                                 1.11       “Termination Date” has the meaning set forth in Section 4.5.

                                 1.12       “Warrant” means this Warrant and any warrant(s) delivered in substitution or exchange therefor, as provided herein.

                                 1.13       “Warrant Stock” means the Company’s common stock.  The number and character of shares of Warrant Stock are subject to adjustment as provided herein and the term “Warrant Stock” shall include stock and other securities, property and/or assets at any time receivable or issuable upon exercise of this Warrant in accordance with its terms.

                    2.          Exercise.

                                 2.1        Exercise Quantity.  Subject to the terms and conditions set forth below (including, without limitation, the adjustment provided for herein), this Warrant entitles the Holder to purchase from the Company up to that number of shares of Warrant Stock equal to the Exercise Quantity.

                                 2.2        Vesting.  The shares underlying this Warrant shall vest and become exercisable immediately on the date hereof.

                                 2.3        Method of Exercise.  Subject to the terms and conditions of this Warrant, the Holder may exercise this Warrant in whole or in part, at any time or from time to time, on any business day beginning on the date of this Warrant through and including the Expiration Date by surrendering this Warrant at the principal offices of the Company, with the subscription form attached hereto duly executed by the Holder, and payment, as applicable, of an amount equal to the product obtained by multiplying (i) the number of shares of Warrant Stock to be purchased by the Holder by (ii) the Exercise Price as determined in accordance with the terms hereof.

                                 2.4        Form of Payment.  Payment of the aggregate Exercise Price, as required, may be made, as determined in the sole discretion of Holder, by (i) a check payable to the Company’s order, (ii) wire transfer of funds to the Company, (iii) transfer of the Company’s capital stock held by the Holder to the Company (valued at the then Fair Market Value of such stock), (iv) cancellation of undisputed indebtedness of the Company to Holder (if any) or (v) any combination of the foregoing.

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                                 2.5        Partial Exercise.  Upon a partial exercise of this Warrant, this Warrant shall be surrendered by the Holder and replaced with a new Warrant of like tenor in which the maximum number of shares of Warrant Stock purchasable by the Holder shall be the maximum number of shares of Warrant Stock purchasable under the original Warrant minus the amount of shares of Warrant Stock purchased in such partial exercise.

                                 2.6        No Fractional Shares.  No fractional shares may be issued upon any exercise of this Warrant, and any fractions shall be rounded down to the nearest whole number of shares to determine the number of shares to be issued upon such exercise.  If upon any exercise of this Warrant a fraction of a share would otherwise result but for the prior sentence, the Company will pay the cash value of any such fractional share, calculated on the basis of the Fair Market Value of a share.

                                 2.7        Net Exercise Election.   The Holder may elect to convert all or a portion of this Warrant, without the payment by the Holder of the Exercise Price or of any other consideration, by the surrender of this Warrant or such portion to the Company, with the net exercise election selected in the subscription form attached hereto duly executed by the Holder, into up to the number of shares of Warrant Stock that is obtained under the following formula:

	
  X   = Y (A-B)
  
	
  
       A
  

	
  
where
  	
  
X
  	
  
=
  	
  
the number of shares of   Warrant Stock to be issued to the Holder pursuant to this Section 2.7.
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
Y
  	
  
=
  	
  
the number of shares of   Warrant Stock that could be acquired upon a cash exercise of the portion of   this Warrant being surrendered at the time the net exercise election is made   pursuant to this Section 2.7.
  
	
   
  	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
A
  	
  
=
  	
  
the Fair Market Value of   one share of Warrant Stock on the date immediately prior to the date the net   exercise election is made pursuant to this Section 2.7.
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
B
  	
  
=
  	
  
the Exercise Price at the   time the net exercise election is made pursuant to this Section 2.7.
  

                    The Company will promptly respond in writing to an inquiry by the Holder as to the then current Fair Market Value of one share of Warrant Stock.

                    3.          Issuance of Stock.  This Warrant shall be deemed to have been exercised immediately prior to the close of business on the date of its surrender for exercise as provided above, and the Person entitled to receive the shares of Warrant Stock issuable upon such exercise shall be treated for all purposes as the holder of record of such shares as of the close of business on such date.  As soon as practicable on or after such date, but in no event less than three business days thereafter, the Company shall issue and deliver, or cause to be issued and delivered, to the Person or Persons entitled to receive the same a certificate or certificates for the number of whole shares of Warrant Stock issuable upon such exercise.

                    4.          Adjustment Provisions.  The Exercise Quantity, character of the Warrant Stock issuable upon exercise of this Warrant (or any other securities, property or assets at the time receivable or issuable upon exercise of this Warrant or the exercise, exchange or conversion of any security receivable or issuable upon exercise of this Warrant) and the Exercise Price therefor (including the Exercise Price upon the occurrence of an Event of Default), are subject to adjustment upon the occurrence of the following events during the period beginning on the date this Warrant is issued and ending on the date this Warrant is exercised:

                                 4.1          Adjustment for Stock Splits. The Exercise Price, and the Exercise Quantity shall each be proportionally adjusted to reflect any stock split, or other subdivision, reverse stock split, combination of shares, or other similar event affecting the number of outstanding shares of Warrant Stock (or such other securities) immediately prior to such event.

                                 4.2          Adjustment for Dividends and Distributions. 

                                 (a)          If the Company shall make, issue, declare, pay, distribute or set aside, or shall fix a record date for the determination of eligible holders entitled to receive, a dividend or other distribution payable with respect to the common stock or any Common Stock Equivalents that is payable in (i) common stock or Common Stock Equivalents (other than issuances with respect to which adjustment is made under Section 4.1), (ii) property or assets or (iii) evidences of its indebtedness, then, and in each such case; (A) the Exercise Price shall be adjusted so that the same shall equal the price determined by multiplying the Exercise Price in effect immediately prior to the record date mentioned above by (if there is
no such date, then the date immediately prior to the date the Company makes, issues, pays, distributes or sets aside such dividend or distribution)  a fraction, the numerator of which shall be equal to the sum of (x) the total number of shares of common stock then outstanding multiplied 

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by the Fair Market Value per share of the common stock on the record date mentioned below, minus (y) the Fair Market Value as of such record date of said shares of common stock or Common Stock Equivalents, properties, assets or evidences of indebtedness so made, issued, paid, distributed, declared or set aside, plus (z) in the case of the issuance or distribution of Common Stock Equivalents, the minimum aggregate amount of additional consideration, if any, payable to the Company upon the conversion, exercise or exchange of such Common Stock Equivalents, and the denominator of which shall be the total number of shares of common stock then outstanding multiplied by the Fair Market Value per share of common stock on the record date mentioned above (but in no event shall such fraction be greater than 1.0) and (B) the Exercise Quantity shall be adjusted to equal the number obtained by dividing (x) the Exercise Price in effect immediately prior to such
dividend or distribution multiplied by the Exercise Quantity immediately prior to such dividend or distribution by (y) the Exercise Price resulting from the adjustment made pursuant to clause (A) above.  Such adjustments shall be made whenever any such dividend or distribution is (or if there is no such record date, immediately prior to the date the Company makes, issues, pays, distributes or sets aside such dividend or distribution) and shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution (or if there is no such record date, immediately prior to the date the Company makes, issues, pays, distributes or sets aside such dividend or distribution).

                                 (b)          In the event of a distribution by the Company of stock or other securities of a subsidiary or securities convertible or exchangeable into or exercisable for such stock, then in lieu of an adjustment in the Exercise Price, the Holder of this Warrant, upon the exercise thereof at any time after such distribution, shall be entitled to receive from the Company, such subsidiary or both, the stock or other securities to which such Holder would have been entitled if such Holder had exercised such Warrant immediately prior to the record date set for such dividend or distribution, all subject to further adjustment as provided in this Warrant (or if there is no such record date, immediately prior to the date the
Company makes, issues, pays, distributes or sets aside such dividend or distribution).

                                 4.3          Adjustment for Reorganization, Consolidation or Merger.  In case of any reorganization, reclassification, recapitalization or similar transaction involving the stock of the Company (or of any other entity, the stock or other securities of which are at the time receivable upon the exercise of this Warrant), after the date of this Warrant, or in case, after such date, the Company (or any such corporation) shall consolidate with or merge into another corporation, convey all or substantially all of its assets or stock to another entity or undertake a similar transaction (a “Corporate Transaction”), then, and in each such case, the Holder, upon the exercise of this Warrant at any time
after the record date for the holders of stock entitled to participate in such Corporate Transaction (or if there is no such record date, immediately after the consummation of the Corporate Transaction) shall be entitled to receive, in lieu of the stock or other securities, property, assets, evidences of indebtedness, or other rights, warrants or options receivable upon the exercise of this Warrant prior to the consummation of such Corporate Transaction, the stock or other securities, property, assets, evidence of indebtedness, or other rights, warrants or options to which the Holder would have been entitled upon the consummation of such Corporate Transaction if the Holder had exercised this Warrant immediately prior thereto and assuming that any adjustment under this Section 4 that would otherwise be made in connection with the consummation of such Corporate Transaction had been made, all subject to further adjustment as provided in this Warrant, as applicable, and the successor or purchasing entity
in such Corporate Transaction, (if other than the Company) shall duly execute and deliver to the Holder a supplement hereto acknowledging such entity’s obligations under this Warrant; and in each such case, the terms of this Warrant shall be applicable to the shares of stock or other securities, property, assets, evidences of indebtedness, or other rights, warrants or options receivable upon the exercise of this Warrant after the consummation of such Corporate Transaction.

                                 4.4          Price Adjustment.

                                 (a)          In each case where the Company, after the date of this Warrant, sells, issues or grants or becomes obligated to sell, issue or grant (i) additional shares of its common stock at a price per share less than the Exercise Price in effect immediately prior to such sale, issuance, grant or obligation or (ii) any Common Stock Equivalents that are convertible into or exercisable or exchangeable for common stock at a price per share less than the Exercise Price in effect immediately prior to such sale, issuance, grant or obligation, then (A) the Exercise Price shall be reduced to a price determined by multiplying the Exercise Price in effect immediately prior to such sale, issuance, grant or obligation by
a fraction, (1) the numerator of which is an amount equal to the sum of (x) the number of shares of common stock outstanding immediately prior to such sale, issuance, grant or obligation plus (y) (a) the aggregate consideration, if any, received by the Company upon any such sale, issuance, grant or obligation, plus, in the case of Common Stock Equivalents, the minimum aggregate amount of additional consideration payable to the Company upon the conversion, exercise or exchange thereof divided by (b) the then Exercise Price; and (2) the denominator of which is the total number of shares of common stock outstanding (including, in the case of a sale, issuance or grant of or becoming obligated to issue Common Stock Equivalents, the shares of common stock issuable upon conversion, exercise and exchange of such Common Stock Equivalents) immediately after such sale, issuance, grant or obligation; and (B) the Exercise Quantity shall be adjusted to equal the number obtained by dividing (1) the Exercise Price in
effect immediately prior to such sale, issuance, grant or obligation multiplied by the Exercise Quantity in effect immediately prior to such sale, issuance, grant or obligation by (2) the Exercise Price resulting from the adjustment made pursuant to clause (A) above.

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                                 (b)          The provisions of Section 4.4(a) shall not apply to (i) the issuance of shares of the Company’s common stock upon exercise of this Warrant, (ii) the issuance of shares of the Company’s common stock at a seven percent (7%) discount to Brittany Capital Management Limited pursuant to the terms of the Private Equity Credit Agreement dated as of August 5, 2005 and (iii) the issuance by the Company of options to acquire common stock issued to employees, officers, directors, consultants and advisors pursuant to any stock option plan or other restricted stock plan designated and approved by the Company’s board of directors; provided that such options do not represent the right to acquire more than
shares of common stock representing twenty percent (20%) of the Company’s capital stock on a fully diluted basis, subject to adjustment as provided in Section 4.1.

                                 4.5          Exchange of Stock.  In case all the authorized Warrant Stock of the Company is exchanged into other securities or property, assets, evidence of indebtedness or other rights, warrants, or options, or the Warrant Stock otherwise ceases to exist as a result of conversion, exchange, redemption or otherwise, then, in such case, the Holder, upon exercise of this Warrant at any time after the date on which the Warrant Stock is so exchanged or ceases to exist (the “Termination Date”), shall receive, in lieu of the Exercise Quantity immediately prior to the Termination Date (the “Former Number of Shares of Warrant Stock”), the stock and other securities and property to which the Holder
would have been entitled to receive upon the Termination Date if the Holder had exercised this Warrant with respect to the Former Number of Shares of Warrant Stock immediately prior to the Termination Date and assuming that any adjustment under this Section 4 that would otherwise be made in connection with such exchange has been made, all subject to further adjustment as provided in this Warrant.

                                 4.6          Notice of Adjustments.  The Company shall promptly give written notice of each adjustment or readjustment of the Exercise Price, the Exercise Quantity or the Warrant Stock or other securities issuable upon exercise of this Warrant.  The notice shall describe the adjustment or readjustment and show in reasonable detail the facts on which the adjustment or readjustment is based.

                                 4.7          No Change Necessary.  The form of this Warrant need not be changed because of any adjustment in or change to the Exercise Price, the Exercise Quantity or in the Warrant Stock issuable upon its exercise whether pursuant to this Section 4, Section 1.4 or otherwise.

                                 4.8          Reservation of Stock.  The Company shall at all times reserve for issuance that number of shares of Warrant Stock then issuable hereunder.  If at any time the number of shares of Warrant Stock or other securities issuable upon exercise of this Warrant shall not be sufficient to effect the exercise of this Warrant, the Company will take such corporate action as may be necessary to reserve such Warrant Stock, including, without limitation, if necessary increasing its authorized but unissued shares of Warrant Stock or other securities issuable upon exercise of this Warrant as shall be sufficient for such purpose.

                                 4.9          Statement of Shares.  Upon the receipt by the Company of Holder’s request, the Company shall as promptly as reasonably practicable prepare and deliver to the Holder a statement setting forth the Company’s calculation of the number of shares of Warrant Stock issuable upon exercise of this Warrant.

                                 4.10          Reissue of Warrants.  Holder may, at its sole option, surrender this Warrant to the Company and require that the Company execute and deliver new Warrants containing identical terms and provisions to Holder and to its participants in amounts that reflect their respective interests hereunder, as provided to the Company by the Holder.

                                 4.11          Most Favored Rights.  The provisions of this Section 4 shall be modified as necessary so that the Holder shall have the additional benefits, if any, of the most favored provision of any other equity security, on a security by security basis, as determined by the Holder from time to time.

                    5.          Required Notices.  The Company will give the Holder notice at least twenty (20) days prior to the earlier of the effective date of or any applicable record date with respect to any Corporate Transaction, or other record date for any other transaction or action by the Company which could trigger any adjustment under Section 4 herein or that could result in the conversion or exchange of all outstanding shares of Warrant Stock into or for cash, any other security or other property or assets.

                    6.          Registration Rights.  The Holder shall have, with respect to the Warrant Stock, registration rights set forth below and such rights shall be as favorable as those granted to a holder of any of the Company’s equity securities from time to time.  The rights granted to the Holder hereunder (and for the issuance of security into which the Warrant Stock of other securities into which the Warrant Stock or other security may be exercisable, exchangeable or convertible) shall be transferable with this Warrant and/or the Warrant Stock.

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                                 6.1          Definitions.  For purposes of this Section 6:

                                 (a)          Registration.  The terms “register,” “registered,” and “registration” refer to a registration effected by preparing and filing a registration statement in compliance with the Securities Act, and the declaration or ordering of effectiveness of such registration statement.

                                 (b)          Registrable Securities.  The term “Registrable Securities” means:  (x) the Warrant Stock and any securities of the Company issued as a dividend or other distribution with respect to, or in exchange for or in replacement of the Warrant Stock.  The term “Registrable Securities” shall include the securities, if any, that the Holder would be entitled to receive in exchange for Registrable Securities in any merger, consolidation, reorganization or similar transaction.

                                 (c)          Registrable Securities Then Outstanding.  The number of shares of “Registrable Securities then outstanding” shall mean the number of Warrant Stock and other securities that are Registrable Securities and are then issued and outstanding.

                                 (d)          Form S-3.  The term “Form S-3” means such form under the Securities Act as is in effect on the date hereof or any successor registration form under the Securities Act subsequently adopted by the SEC that permits inclusion or incorporation of substantial information by reference to other documents filed by the Company with the SEC after the effective date of such registration;

                                 6.2          Automatic Registration.  The Company agrees to cause the Registrable Securities issuable to the Holder to be registered under the Securities Act on an effective and current shelf registration on Form S-3 (the “Automatic Registration Statement”) by filing a registration statement with the SEC prior to 5:00 p.m. Eastern Time on December 15, 2005 and as soon as reasonably practicable after the date of this Warrant but in no event later than 5:00 p.m. Eastern Time on February 1, 2006, shall cause the Automatic Registration Statement to be declared effective.  The Company shall keep such shelf registration statement effective and current  and shall obtain and maintain in full force
and effect all related qualifications, registrations or other compliances that may be necessary under the laws of any applicable jurisdiction, including, without limitation, state securities or “blue sky” laws, until such time as all of the Registrable Securities have been sold or otherwise disposed of.

                                 (a)          Expenses.  All expenses incurred in connection with a registration pursuant to this Section 6.2 (excluding underwriters’ discounts and commissions relating to shares sold by the Holder, which shall be borne by the Holder), including, without limitation, all federal, state and “blue sky” registration, filing and qualification fees, printers’ and accounting fees, fees and disbursements of one counsel for the Holder, and fees and disbursements of counsel for the Company, shall be borne by the Company. 

                                 (b)          Not Demand Registration.  Registration pursuant to this Section 6.2 shall not be deemed to be a demand registration as described in Section 6.3.

                                 6.3          Demand Registration.

                                 (a)          Request by Holder.  If at any time after the Automatic Registration Statement has been suspended or is otherwise no longer effective, the Company shall receive a written request from the Holder that the Company file a registration statement under the Securities Act on Form S-3, or other available form if Form S-3 shall not be available, covering the registration of the Registrable Securities held by Holder, then the Company shall, as soon as practicable, but in no event more than thirty (30) days after such request, file such a registration statement for the registration under the Securities Act of all Registrable Securities that the Holder requests to be registered and included in such
registration, as soon as reasonably practicable thereafter, but in no event later than sixty (60) days after such filing shall cause such registration statement to be declared effective and to obtain and maintain in full force and effect all related qualifications, registrations or other compliances that may be necessary under the laws of any applicable jurisdiction, including, without limitation, state securities or “blue sky” laws.  

                                 (b)          Expenses.  All expenses incurred in connection with any registration pursuant to this Section 6.3 (excluding underwriters’ discounts and commissions relating to shares sold by the Holder, which shall be borne by the Holder) including, without limitation, all federal, state and “blue sky” registration, filing and qualification fees, printer’s and accounting fees, fees and disbursements of one counsel for the Holder, and fees and disbursements of counsel for the Company, shall be borne by the Company.

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                                 (c)          Maintenance.  The Company shall maintain the effectiveness of any registration statement filed under this Section 6.3 until such time as all of the Registrable Securities held by the Holder have been sold in accordance therewith.

                                 6.4          Piggyback Registrations.  At any time after December 15, 2005 that a registration statement is not in effect under Section 6.2 or 6.3 hereof, and the Holder owns Registrable Securities, the Company shall notify the Holder in writing at least twenty (20) days prior to filing any registration statement under the Securities Act for purposes of effecting a public offering of securities of the Company (including registration statements relating to secondary offerings of securities of the Company, but excluding registration statements on Form S-8 relating to any employee benefit plan or on Form S-4 relating to any merger or other corporate reorganization) and will afford the Holder an opportunity
to include in such registration statement all or any part of the Registrable Securities then held by the Holder.  If the Holder desires to include in any such registration statement all or any part of the Registrable Securities the Holder shall, within ten (10) business days after receipt of the above-described notice from the Company, so notify the Company in writing, and in such notice shall inform the Company of the number of Registrable Securities the Holder wishes to include in such registration statement.  If the Holder decides not to include all of its Registrable Securities in any registration statement thereafter filed by the Company, the Holder shall nevertheless continue to have the right to include any Registrable Securities in any subsequent registration statement or registration statements as may be filed by the Company with respect to offerings of its securities, all upon the terms and conditions set forth herein and, in any event, the Holder shall have all of its rights
under Section 6 hereof.

                                 (a)          Underwriting.  If a registration statement under which the Company gives notice under this Section 6.4 is for an underwritten offering, then the Company shall so advise the Holder. In such event, the right of the Registrable Securities to be included in such a registration shall be conditioned upon such Holder’s participation in such underwriting and the inclusion of the Holder’s Registrable Securities in the underwriting to the extent provided herein. The Holder proposes to distribute the Registrable Securities through such underwriting the Holder shall enter into an underwriting agreement in customary form with the managing underwriter or underwriters selected for such
underwriting; provided, however, that it shall not be considered customary to require any of the Holder to provide representations and warranties regarding the Company or indemnification of the underwriters for material misstatements or omissions regarding the Company.

                                 (b)          Expenses.  All expenses incurred in connection with a registration pursuant to this Section 6.4 (excluding underwriters’ discounts and commissions relating to shares sold by the Holder, which shall be borne by the Holder), including, without limitation, all federal, state and “blue sky” registration, filing and qualification fees, printers’ and accounting fees, fees and disbursements of one counsel for the Holder, and fees and disbursements of counsel for the Company, shall be borne by the Company. 

                                 (c)          Not Demand Registration.  Registration pursuant to this Section 6.4 shall not be deemed to be a demand registration as described in Section 6.3.

                                 6.5          Obligations of the Company.  Whenever required to effect the registration of any Registrable Securities under this Agreement, the Company shall, as expeditiously as reasonably possible:

                                 (a)          Registration Statement.  Prepare and file with the SEC a registration statement with respect to such Registrable Securities and shall cause such registration statement to become effective.

                                 (b)          Amendments and Supplements.  Prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection with such registration statement as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement.

                                 (c)          Prospectuses.  Furnish to the Holder such number of copies of a prospectus, including, without limitation, a preliminary prospectus and any applicable prospectus supplement, in conformity with the requirements of the Securities Act, and such other documents as they may reasonably request in order to facilitate the disposition of the Registrable Securities owned by the Holder that are included in such registration in accordance with the plan of distribution described in the related prospectus or prospectus supplement.

                                 (d)          Effectiveness; Qualification.  The Company shall avoid the issuance of, or if issued, obtain the prompt withdrawal of, (i) any order suspending the effectiveness or use of any registration statement covering Registrable Securities or (ii) any suspension of the qualification or registration for sale (or exemption from qualification or registration for sale) of any of the Registrable Securities as soon as practicable.

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                                  (e)          Blue Sky.  Register and qualify the securities covered by such registration statement as required under such other securities or blue sky laws of such jurisdictions as shall be reasonably requested by the Holder, provided that the Company shall not be required in connection therewith or as a condition thereto to qualify to do business or to file a general consent to service of process in any such states or jurisdictions.

                                 (f)          Underwriting.  In the event of any underwritten public offering, enter into and perform its obligations under an underwriting agreement, which agreement shall be in usual and customary form (including, without limitation, customary indemnification of the underwriters by the Company), with the managing underwriter(s) of such offering.  The Holder shall also enter into and perform its obligations under such an agreement.

                                 (g)          Notification.  Notify the Holder with respect to the Registrable Securities covered by such registration statement at any time when a prospectus relating thereto is required to be delivered under the Securities Act of the happening of any event as a result of which the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing, in which event the Holder shall not use such prospectus in connection with any offer or sale of the Registrable Securities until such prospectus
has been appropriately amended (which the Company shall do promptly under the circumstances and deliver new prospectuses to the Holder promptly thereafter).

                                 (h)          Opinion and Comfort Letter.  If such securities are being sold through underwriters, furnish, at the request of the Holder, on the date that the Registrable Securities are delivered to the underwriters for sale, (1) an opinion, dated as of such date, of the counsel representing the Company for the purposes of such registration, in form and substance as is customarily given to underwriters in an underwritten public offering and in the same form and substance as that provided to the underwriters of such offering, addressed to the underwriters and to the Holder requesting registration of Registrable Securities and (2) a “comfort” letter dated as of such date, from the independent
certified public accountants of the Company, in form and substance as is customarily given by independent certified public accountants to underwriters in an underwritten public offering and in the same form and substance as that provided to the underwriters of such offering, addressed to the underwriters and to the Holder requesting registration of Registrable Securities.

                                 (i)          Company’s Right to Delay  If the Company provides to the Holder a certified resolution duly adopted by the Company’s Board of Directors stating that, in its reasonable business judgment, it would be materially disadvantageous to the Company to disclose certain information because such disclosure would materially interfere with or otherwise adversely affect in any material respect any existing or reasonably likely acquisition, financing, corporate reorganization or other material transaction or development (a “Disadvantageous Condition”), then the Company may refrain from maintaining the current prospectus contained in the applicable registration statement (and suspend sales of
Registrable Securities) until such Disadvantageous Condition no longer exists.  Any notice of a Disadvantageous Condition shall set forth in general terms the reason for such determination.  The Company shall promptly notify the Holder when such Disadvantageous Condition no longer exists.  The Company may use its delay right under this Section 6.5(i) only once in any twelve month period for a period of time not to exceed forty-five (45) days.  Notwithstanding the foregoing, the Company can only delay maintaining current such prospectus (and such suspension of sales of Registrable Securities) only if the Company shall concurrently prohibit sales by other security holders under all other registration statements then outstanding and by all of the members of the Company’s Board of Directors, all of the officers of the Company and all of the stockholders of the Company that own five percent (5%) or more (including options, warrants and other exchangeable, exercisable or convertible
securities ultimately exchangeable or exercisable for or convertible into common stock of the Company) of the Company’s common stock.

                                 6.6          Indemnification.  In the event any Registrable Securities are included in a registration statement under Section 6.2, 6.3 or 6.4:

                                 (a)          By the Company.  To the extent permitted by law, the Company will indemnify and hold harmless the Holder, the partners, officers, shareholders, employees, representatives and directors of the Holder, any underwriter (as determined under the Securities Act) for the Holder and each person, if any, who controls the Holder or such underwriter within the meaning of the Securities Act or the Securities Exchange Act of 1934, as amended (the “Exchange Act”), against any losses, claims, damages, or liabilities (joint or several) to which they may become subject under the Securities Act, the Exchange Act or other federal or state securities or blue sky laws, insofar as such losses, claims,
damages, or liabilities (or actions in respect thereof) arise out of or are based upon any of the following statements, omissions or violations (collectively a “Violation”):

                                                (x)  any untrue statement or alleged untrue statement of a material fact contained in such registration statement, including any preliminary prospectus or final prospectus contained therein, or any amendments or supplements thereto;

8

                                                (y)  the omission or alleged omission to state therein a material fact required to be stated therein, or necessary to make the statements therein not misleading; or

                                                (z)  any violation or alleged violation by the Company of the Securities Act, the Exchange Act, any federal or state securities or blue sky law or any rule or regulation promulgated under the Securities Act, the Exchange Act or any federal or state securities or blue sky law in connection with the offering covered by such registration statement;

and the Company will reimburse the Holder, and each partner, officer, shareholder, employee, representative, director, underwriter and controlling person of the Holder for any legal or other expenses reasonably incurred by them, as incurred, in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the Company shall not be liable in any such case for any such loss, claim, damage, liability or action to the extent (and only to the extent) that it arises out of or is based upon a Violation that occurs in reliance upon and in conformity with written information furnished expressly for use in connection with such registration by the Holder.

                                 (b)          By the Holder.  To the extent permitted by law, the Holder will indemnify and hold harmless the Company, each of its directors, each of its officers who have signed the registration statement, each person, if any, who controls the Company within the meaning of the Securities Act, and any underwriter and each person, if any, who controls such underwriter within the meaning of the Securities Act or the Exchange Act, against any losses, claims, damages or liabilities (joint or several) to which the Company or any such officer, director, controlling person or underwriter may become subject under the Securities Act, the Exchange Act or other federal or state securities or blue sky law, insofar as such
losses, claims, damages or liabilities (or actions in respect thereto) arise out of or are based upon any Violation, in each case to the extent (and only to the extent) that such Violation occurs in reliance upon and in conformity with written information furnished by the Holder expressly for use in connection with such registration; and the Holder will reimburse any legal or other expenses reasonably incurred by the Company or any such officer, director, controlling person or underwriter in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the indemnity agreement contained in this paragraph shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Holder, which consent shall not be unreasonably withheld or delayed; and provided further, that the total amounts payable in indemnity by the Holder under this subsection, subsection (d)
of this Section 6.7 or otherwise in respect of any and all Violations shall not exceed in the aggregate the net proceeds received by the Holder in the registered offering out of which such Violations arise.

                                 (c)          Notice.  Promptly after receipt by an indemnified party of notice of the commencement of any action (including any governmental action), such indemnified party will, if a claim in respect thereof is to be made against any indemnifying party under this section, deliver to the indemnifying party a written notice of the commencement thereof and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume the defense thereof with counsel mutually satisfactory to the parties; provided, however, that an indemnified party shall have the right to retain its own counsel, with
the fees and expenses to be paid by the indemnifying party, to the extent that representation of such indemnified party by the counsel retained by the indemnifying party would be inappropriate due to actual or potential conflict of interests between such indemnified party and any other party represented by such counsel in such proceeding. The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action shall not relieve such indemnifying party of liability except to the extent the indemnifying party is prejudiced as a result thereof.

                                 (d)          Contribution.  In order to provide for just and equitable contribution to joint liability under the Securities Act in any case in which either (1) the Holder exercising rights under this Agreement, or any controlling person of the Holder, makes a claim for indemnification pursuant to this section, but it is judicially determined (by the entry of a final judgment or decree by a court of competent jurisdiction and the expiration of time to appeal or the denial of the last right of appeal) that such indemnification may not be enforced in full in such case notwithstanding the fact that this section provides for indemnification in such case, or (2) contribution under the Securities Act may be required
on the part of the Holder or any such controlling person in circumstances for which indemnification is provided under this section; then, and in each such case, the Company and the Holder will contribute to the aggregate losses, claims, damages or liabilities to which they may be subject (after contribution from others) in such proportion so that the Holder is responsible for the portion represented by the percentage that the public offering price of the Registrable Securities offered by and sold by the Holder under the registration statement bears to the public offering price of all securities offered by and sold under such registration statement, and the Company is responsible for the remaining portion.  If, however, the allocation provided by the immediately preceding sentence is not permitted by applicable law, if the registration statement in question does not register thereon at least a majority of securities other than the Registrable Securities or if the indemnified party failed to give
the notice required under subsection (c) above, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party in such proportion as is appropriate to reflect not only the relative benefits received (as described in the previous sentence of this subsection (d)) but also the relative fault of the Company on the one hand and the Holder on the other in connection with the applicable Violation or action taken or not taken, as well as any other relevant equitable considerations.  The relative benefits received by the Company on the one hand

9

and the Holder on the other shall be deemed to be in the same proportion as the total net proceeds from the offering (before deducting expenses) received by the Company on the one hand and the Holder on the other hand.  The relative fault shall be determined by reference to, among other things, whether the applicable Violation relates to information supplied by or action taken or not taken by the Company on the one hand or the Holder on the other and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such Violation or to take or not to take such action.  The Company and the Holder agree that it would not be just and equitable if contribution pursuant to this subsection (d) were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to above in this subsection (d).  In any such case: (x) the Holder
will not be required to contribute, indemnify or otherwise pay any amount in excess of the net proceeds received by the Holder from the public offering price of all the Registrable Securities offered and sold by the Holder pursuant to such registration statement; and (y) no person or entity guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) will be entitled to contribution from any person or entity who was not guilty of such fraudulent misrepresentation.

                                 6.7          Survival.  The obligations of the Company and the Holder under this Section 6.7 shall survive until the expiration of any statutes of limitation including extensions thereof.

                    7.          Certain Company Representations, Warranties and Covenants.

                                 7.1          The Company represents, warrants and covenants that:

                                 (a)          it will at all times reserve and set apart and have, free from preemptive or stock purchase rights, a sufficient number of shares of authorized but unissued common stock and the Warrant Stock, if applicable, to provide for the issuance of the Warrant Stock upon the exercise of this Warrant (and for the issuance of any security into which the Warrant Stock or other securities into which the Warrant Stock or other security may be exercisable, exchangeable or convertible) and will take any and all actions, including without limitation, amending its Certificate of Incorporation, necessary to comply herewith;

                                 (b)          before taking any action that would cause an adjustment reducing the Exercise Price below the then par value of the shares issuable upon exercise of this Warrant, the Company will take any corporate action that may be necessary in order that the Company may validly and legally issue fully paid and nonassessable shares of such Warrant Stock or common stock at such adjusted Exercise Price;

                                 (c)          the issuance of this Warrant shall constitute full authority to the Company’s officers who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for the shares of Warrant Stock issuable upon exercise of this Warrant;

                                 (d)          the Company has all requisite legal and corporate power to execute and deliver this Warrant, to sell and issue the Warrant Stock issuable upon exercise of this Warrant and to carry out and perform its obligations under the terms of this Warrant;

                                 (e)          all corporate action on the part of the Company, its directors and stockholders necessary for the authorization, execution, delivery and performance of this Warrant by the Company, the authorization, sale, issuance and delivery of the Warrant Stock issuable upon exercise of this Warrant, and the performance of the Company’s obligations hereunder has been taken; and

                                 (f)          the Warrant Stock issuable upon exercise of this Warrant, when issued in compliance with the provisions of this Warrant, will be legally and validly issued, fully paid and nonassessable, and free of any preemptive or stock purchase rights, liens, claims or any other encumbrances whatsoever, and will be issued in compliance with all applicable federal and state securities and blue sky laws;

                                 7.2          So long as the Holder holds this Warrant and/or any of the Warrant Stock, the Company shall deliver to the Holder:  (a) promptly after mailing, copies of all notices or other written communications to the stockholders of the Company, (b) at such time, if any, as the Company is no longer timely making filings with the SEC that are available on the World Wide Web, within that number of days after the end of each fiscal year of the Company as the Company would have had to make such SEC filing if it was still making such filings, full year end financial statement audited by a certified independent accounting firm reasonably acceptable to Holder, (c) at such time, if any, as the Company is no
longer timely making filings with the SEC that are available on the World Wide Web, within that number of days after the end of each fiscal quarter as the Company would have had to make such SEC filing if it was still making such filings, full quarterly financial statements and (d) within thirty (30) days after the end of each month, Company-prepared full monthly financial statements.

10

                                 7.3          No Stockholder Rights.  This Warrant, by itself, as distinguished from any Warrant Stock acquired hereunder, shall not entitle the Holder to any rights of a stockholder of the Company, including, without limitation, the right to vote or consent as a stockholder of the Company; provided that nothing herein shall impair any rights granted to the Holder under the Loan Agreement or in this Agreement (including, without limitation, in Section 7.2 hereof).

                    8.          No Impairment.  The Company will not, by amendment of its Certificate of Incorporation or Bylaws, or through reorganization, recapitalization, reclassification, consolidation, merger, dissolution, issue or sale of securities, conveyance of assets or similar transaction or any other voluntary action, willfully avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all of the terms hereof and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the Holder against impairment.  Without limiting the generality of the foregoing, the Company will take all such action as may be necessary or appropriate in order that the
Company may duly and validly issue fully paid and nonassessable shares of Warrant Stock upon the exercise of this Warrant.  Further, the Company will take all actions to apply the protections provided to Holder under Section 4 to the Warrant Stock which is not common stock of the Company or Common Stock Equivalents to prevent the dilution of Lender’s ownership interest or impairment of the Lender’s rights or interest hereunder.  The Company shall not effect any reorganization, recapitalization, reclassification, consolidation, merger, dissolution, issue or sale of securities, conveyance of assets or similar transactions unless prior to or simultaneously with the consummation thereof the survivor or successor entity (if other than the Company) resulting from such transaction or the entity purchasing such assets or receiving such conveyance or otherwise succeeding to the rights and/or assets of the Company shall assume by written instrument satisfactory to the Holder executed and
sent to such Holder, the obligation to deliver to such Holder such shares of stock, securities, assets (including cash), property, evidences of indebtedness or other rights, warrants or options as such Holder may be entitled to receive hereunder, and containing the express assumption by such successor entity of the due and punctual performance and observance of every provision of this Warrant to be performed and observed by the Company and of all liabilities and obligations of the Company hereunder.

                    9.          Attorneys’ Fees.  In the event any party engages the services of any attorneys for the purpose of enforcing this Warrant, or any provision thereof, the prevailing party shall be entitled to recover its reasonable expenses and costs in enforcing this Warrant, including reasonable attorneys’ fees and expenses.

                    10.          Governing Law.  This Warrant shall be governed by and construed under the internal laws of the State of California, without reference to principles of conflict of laws thereof.

                    11.          Headings.  The headings and captions used in this Warrant are used for convenience only and are not to be considered in construing or interpreting this Warrant.  All references in this Warrant to sections and exhibits shall, unless otherwise provided, refer to sections hereof and exhibits attached hereto, all of which exhibits are incorporated herein by this reference.

                    12.          Notices.  Any notice required or permitted under this Warrant shall be given in accordance with the terms of Section 10 of the Loan Agreement and such terms are herein incorporated by reference.

                    13.          Amendment; Waiver.  Any term of this Warrant may be amended, and the observance of any term of this Warrant may be waived (either generally or in a particular instance and either retroactively or prospectively) only with the written consent of the Company and the Holder.  Any amendment or waiver effected in accordance with this Section 14 shall be binding upon the Holder, each future holder of such securities, the Company and the Company’s successor and permitted assigns.

                    14.          Severability.   In case any provision of this Warrant shall be held to be invalid, illegal or unenforceable, it shall, to the extent possible, be modified in such manner as to be valid, legal and enforceable but so as to most nearly retain the intent of the parties, and if such modification is not possible, such provision shall be severed from this Warrant, and in either case the validity, legality and enforceability of the remaining provisions of this Warrant and the future application of such provision shall not in any way be affected or impaired thereby.

                    15.          Successors and Assigns.  This Warrant may not be assigned or otherwise transferred by the Company without the written consent of the Holder.  The terms and provisions of this Warrant shall inure to the benefit of, and be binding upon, the Company and the Holder hereof and their respective successors and permitted assigns.

11

	
  
LARGE SCALE BIOLOGY CORPORATION
  	
  
 
  
	
  
 
  	
  
 
  	
  
 
  
	
  By:
  	
  
/s/ Ronald J.   Artale          10/27/05
  	
  
 
  
	
  
 
  	
  

  	
  
 
  
	
  
 
  	
  
Name:      Ronald Artale
  	
  
 
  
	
  
 
  	
  
Title:        Chief   Financial Officer
  	
  
 
  
	
  
 
  	
  
 
  	
  
 
  
	
  
Facsimile:
  	
  
                         (707)   446-3917
  	
  
 
  
	
  
 
  	
  

  	
  
 
  
	
  Attention: 
  	
  
                         Ronald   Artale
  	
  
 
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
 
  
	
  
AGILITY CAPITAL, LLC
  	
  
 
  
	
  
 
  	
  
 
  	
  
 
  
	
  
By:
  	
  
/s/ Daniel Corry
  	
  
 
  
	
  
 
  	
  

  	
  
 
  
	
  
 
  	
  
Name:     Daniel Corry
  	
  
 
  
	
   
  	
  
Title:       Chief   Credit Officer
  	
  
 
  
	
  
 
  	
  
 
  	
  
 
  
	
  
Facsimile:
  	
  
                         (805)   568-0427
  	
  
 
  
	
  
Attention:
  	
  
                         Daniel   Corry
  	
  
 
  

12

Exhibit 1

FORM OF SUBSCRIPTION
 (To be signed only upon exercise of Warrant)

To:  Large Scale Biology Corporation

          (1)          
o          The undersigned Holder hereby elects to purchase                  shares of Warrant Stock, pursuant to the terms of the attached Warrant, and tenders herewith payment of the purchase price for such shares in full.

- OR -

                         
o          Net Exercise Election.  The undersigned Holder elects to convert the Warrant into ___________ shares of Warrant Stock by net exercise election pursuant to Section 2.7 of the Warrant.

[CHECK PARAGRAPH ABOVE THAT APPLIES]

          (2)          Please issue a certificate representing _______________ shares of Warrant Stock in the name of specified below:

	
  

  	
  
 
  
	
  
(Name)
  	
  
 
  
	
  
 
  	
  
 
  
	
  
 
  	
  
 
  
	
  

  	
  
 
  
	
  
(Address)
  	
  
 
  
	
   
  	
  
 
  
	
  
 
  	
  
 
  
	
  

  	
  
 
  
	
  
(City, State, Zip Code)
  	
  
 
  
	
  
 
  	
  
 
  
	
  
 
  	
  
 
  
	
  

  	
  
 
  
	
  
(Federal Tax   Identification Number)
  	
  
 
  
	
  
 
  	
  
 
  
	
  
 
  	
  
 
  
	
  

  	
  
 
  
	
  (Date)
  	
   
  
	
   
  	
   
  
	
   
  	
   
  
	
  

  	
   
  
	
  (Signature of Holder)
  	
   
  

13Exhibit 10.1

LOAN AGREEMENT

Dated as of October 20, 2005

by and between

AGILITY CAPITAL, LLC
as Agility

and

LARGE SCALE BIOLOGY CORPORATION
as Borrower

TOTAL CREDIT AMOUNT:  Up to $1,500,000

	
  
Maturity   Date:
  	
  
December 31,   2005
  
	
  
Formula:
  	
  
None
  
	
  
Loan Fee:
  	
  
$30,000
  
	
  
Interest:
  	
  
12% per   annum, fixed
  
	
  
Warrants:
  	
  
 
  
	
  
 
  	
  
Number of   shares:  Initially, 500,000, plus   additional shares under the Warrant
  
	
  Class of   stock:
  	
  
Common
  
	
  
Initial   exercise price:
  	
  
Lower of   30-day average or $0.68, as stated in and subject to adjustment in the   Warrant
  

The information set forth above is subject to the terms and conditions set forth in the balance of this Agreement.  The parties agree as follows:

            1.              Loan and Payments.

                              (a)            Loan.  Borrower may request up to four (4) advances (an “Advance” or the “Advances”).  The initial Advance of up to $500,000 is available on or about the date hereof.  The second Advance of up to $150,000 is available after Agility (i) completes an on site inspection of Borrower’s Owensboro, Kentucky facility (the “Owensboro Property”) at Borrower’s sole cost and expense (which Agility will undertake reasonable steps to complete on or before October 31, 2005) and (ii) approves the Owensboro Property, which approval will be based on Agility’s good faith reasonable business judgment, including Agility’s good faith estimate of the value of the
facility taking into account such factors as Agility reasonably deems appropriate. The third Advance of up to $350,000 is available upon (i) the opening of an escrow (the “Escrow”) to sell the Owensboro Property for a purchase price of at least $5,000,000 under an executed purchase agreement (the “Purchase Agreement”) containing terms acceptable to Agility or (ii) in Agility’s sole discretion, the receipt of a signed term sheet for an agreement between Borrower and Bayer Bioscience, N.V., covering the licensing of certain of Borrower’s technology, provided that as a condition to making an Advance under clause (ii), Borrower shall pay Agility an advance fee of $10,000, and provided further that Borrower shall pay all proceeds received under such agreement to Agility until such third Advance has been paid in full. The fourth Advance will be equal to the lesser of  (i) $500,000 or (ii) the amount of an irrevocable deposit (the “Deposit”) paid into the Escrow
by the acquirer of the Owensboro Property pursuant to the terms of the Purchase Agreement; provided, however such advance is not available to Borrower until Agility has received such documents acceptable to Agility evidencing (A) Agility’s security interest in the Escrow, the Deposit and the Purchase Agreement and (B) Agility’s right to direct the holder of the Escrow to pay all amounts otherwise payable to Borrower in connection with the Escrow to Agility.  Agility’s obligation to make any Advance is subject to (i) Agility’s determination, in its sole discretion, that there has not occurred a material adverse change in Borrower’s business, its financial or other condition and (ii)  the execution, delivery and filing of such instruments and agreements, and completion of such other matters, as Agility reasonably requests.  

                              (b)            Interest.  On the first day of each month, Borrower shall pay interest, in arrears, on all outstanding Advances and other monetary Obligations at a fixed rate equal to Twelve Percent (12.0%) per annum.  Interest shall be calculated on the basis of a 360-day year for the actual number of days elapsed, and shall be payable in arrears on the first day of each month.  Any partial month shall be prorated on the basis of a 30-day month based on the actual number of days outstanding.

                              (c)            Fees.  Borrower shall pay Agility (i) an origination fee of $30,000 on the date of this Agreement, and (ii) a collateral management fee of $3,000, payable quarterly in advance (prorated for the calendar quarter ending December 31, 2005) on the first day of each calendar quarter.  Borrower shall reimburse Agility for with any reasonable and appropriate out-of-pocket administrative and travel expenses incurred during the term of this Agreement.

                              (d)            Warrants.  Borrower is concurrently issuing to Agility a Warrant to Purchase Stock on the terms and conditions set forth therein (the “Warrant”).

                              (e)            Use of Proceeds.  Borrower shall use the proceeds of the Advances to general working capital.

                              (f)            Maturity Date.  All amounts outstanding hereunder are due and payable on December 31, 2005 (the “Maturity Date”), provided the Maturity Date shall be extended to March 31, 2006 if the Escrow has been opened and Agility has approved the terms of the Purchase Agreement, provided Borrower shall make, in addition to the payment of interest as otherwise provided in this Agreement, mandatory principal reduction payments on account of the Obligations of at least $100,000 or 15% of the outstanding Obligations on each of January 1, February 1 and March 1, with the remaining outstanding balance being due and payable on March 31, 2006.    

                              (g)            Late Payment.  Prior to the Maturity Date, if any payment of interest or any other amount owing to Agility is not made within ten (10) days after the due date and notice by Agility to Borrower, Borrower shall pay Agility a late payment fee equal to the greater of $1,500 or 5% of the amount of such late payment.  After the occurrence and during the continuance of an Event of Default, the Obligations shall bear interest at a rate equal to 18% per annum.  If any amount of the principal is outstanding and in default of payment after the occurrence of an uncured Event of Default after notice to Borrower or the Maturity Date (the “Acceleration Date”), Borrower shall pay Agility a fee of
$15,000 on the day after the Acceleration Date, a fee of $25,000 on the thirtieth day thereafter, and a fee of $30,000 on each succeeding thirtieth day after that for so long as any amount remains outstanding under this Agreement.  The terms of this paragraph shall not be construed as Agility’s consent to Borrower’s failure to pay any amounts in strict accordance with this Agreement, and Agility’s charging any such fees and/or acceptance of any such payments shall not restrict Agility’s exercise of any remedies arising out of any such failure.

                 2.          Security Interest.  Except as set forth on Exhibit B, as security for all present and future indebtedness, guarantees, liabilities, and other obligations of Borrower to Agility under this Agreement, including all fees specified in Section 1 (collectively, the “Obligations”), Borrower grants Agility a security interest in all of Borrower’s personal property, whether now owned or hereafter acquired, including without limitation all of the following:  all accounts, cash, patents, copyrights, trademarks, goodwill, general intangibles, chattel paper, documents, letters of credit, instruments, deposit accounts, investment property,

inventory, fixtures and equipment, as such terms are defined in Division 9 of the Uniform Commercial Code in effect on the date hereof, the property described on Exhibit A attached hereto, and all products, proceeds and insurance proceeds of the foregoing (collectively, the “Collateral”).  Borrower shall enter into such deposit account control agreements as Agility may request to perfect the security interest granted hereunder.  Borrower authorizes Agility to execute such documents and take such actions as Agility reasonably deems appropriate from time to time to perfect or continue the security interest granted hereunder.  The Obligations are also secured by a Mortgage, Assignment of Rents and Fixture Filing of even date (the “Mortgage”) on the Owensboro Property.  Upon Full Repayment (as defined herein) the security interest granted herein will automatically terminate, and Agility will promptly execute and
deliver to Borrower at Borrower’s expense such documents as Borrower reasonably requests to evidence such termination. 

               3.            Representations and Warranties.  Except as disclosed on Exhibit B, Borrower represents to Agility as follows (which shall be deemed continuing throughout the term of this Agreement until Full Repayment):

                              (a)            Authorization.  Borrower is and will continue to be, duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation, and Borrower is and will continue to be qualified and licensed to do business in all jurisdictions in which it is required to do so; the execution, delivery and performance by Borrower of this Agreement, and all other documents contemplated hereby have been duly and validly authorized by all necessary corporate action, and do not violate Borrower’s Certificate of Incorporation or by-laws, or any law or any material agreement or instrument which is binding upon Borrower or its property.  Borrower has no wholly owned or partially
owned subsidiaries and is not a partner or joint venturer in any partnership or joint venture.

                              (b)            State of Incorporation; Places of Business; Locations of Collateral.  Borrower is a corporation incorporated and in good standing under the laws of the State of Delaware, as corporation number 3255043.  The address set forth in this Agreement under Borrower’s signature is Borrower’s chief executive office.  

                              (c)            Title to Collateral; Permitted Liens.  Borrower is now, and will at all times in the future be, the sole owner of all the Collateral.  The Collateral now is and will remain free and clear of any and all liens, security interests, encumbrances and adverse claims, except for (i) purchase money security interests in specific items of Equipment; (ii) leases of specific items of Equipment or facilities; (iii) liens for taxes, fees, assessments or other governmental charges or levies, either not delinquent or being contested in good faith by appropriate proceedings, provided the same have no priority over any of Agility’s security interests; (iv) liens of materialmen, mechanics,
warehousemen, carriers, or other similar liens arising in the ordinary course of business and securing obligations that are not delinquent; and (v) the liens described on Exhibit B.

                              (d)            Financial Condition, Statements and Reports.  The financial statements provided to Agility by Borrower have been prepared in accordance with generally accepted accounting principles, consistently applied (“GAAP”).  All financial statements now or in the future delivered to Agility will fairly reflect the financial condition of Borrower, at the times and for the periods therein stated, provided, however, notwithstanding the foregoing or any other statement by Borrower herein, with respect to any financial projections submitted to Agility, Borrower represents and warrants only that such financial projections were prepared in good faith based on reasonable assumptions and that are not
inconsistent with any other projections prepared by or for Borrower or reflected in any internal Borrower plans, budgets or forecasts and that, any such financial projections fairly present Borrower’s management’s good faith estimates; however Borrower does not warrant that it will achieve such financial projections.  Between the last date covered by any such statement provided to Agility and the date hereof, there has been no circumstance that could constitute or give rise to a Material Adverse Effect.

                              (e)            Tax Returns and Payments.  Borrower has timely filed, and will timely file, all tax returns and reports required by applicable law, and Borrower has timely paid, and will timely pay, all applicable taxes, assessments, deposits and contributions now or in the future owed by Borrower.  

                              (f)            Compliance with Law.  Borrower has complied, and will comply, in all material respects, with all provisions of all applicable laws and regulations.

                              (g)            Information.  All information provided to Agility by or on behalf of Borrower on or prior to the date of this Agreement is true and correct in all material respects, and no representation or other statement made by Borrower to Agility contains any untrue statement of a material fact or omits to state a material fact necessary to make any statements made to Agility not misleading at the time made; provided, however, notwithstanding the foregoing or any other statement by Borrower herein, with respect to any financial projections submitted to Agility, Borrower represents and warrants only that such financial projections were prepared in good faith based on reasonable assumptions and that are not
inconsistent with any other projections prepared by or for Borrower or reflected in any internal Borrower plans, budgets or forecasts and that, any such financial projections fairly present Borrower’s management’s good faith estimates; however Borrower does not warrant that it will achieve such financial projections.

                              (h)            Litigation.  Except as disclosed on Exhibit B, there is no claim or litigation pending or (to best of Borrower’s knowledge) threatened against Borrower.  Borrower will promptly inform Agility in writing of any claim or litigation in the future which, either separately or in the aggregate exceeds $100,000.

                              (i)            Subsidiaries.  Exhibit B sets forth all of Borrower’s wholly-owned or partially owned subsidiaries and Exhibit B sets forth all loans by Borrower to, and all investments by Borrower in, any person, entity, corporation partnership or joint venture.

                              (j)            Subordinated Debt.  Exhibit B lists all of Borrower’s outstanding Indebtedness for borrowed money.  The date on which principal becomes due on any indebtedness that is subordinated to amounts owing under this Agreement is no earlier than April 15, 2006.

                              (k)            Deposit and Investment Accounts.  Borrower maintains only the operating, savings, deposit, securities and investment accounts listed on Exhibit B.  

               4.            Covenants.

                              (a)            Reports.  Borrower will provide to Agility in form and substance reasonably acceptable to Agility (i) monthly accounts receivable and payable reports, on the first and fifteenth days of each month; (ii) monthly unaudited financial statements, prepared in accordance with GAAP, consistently applied, within fifteen (15) days of the last day of each month; (iii) within fifteen (15) days after the last day of each month, copies of all reports and statements received by Borrower from any of its banks or other financial institutions (in lieu of such requirement, Borrower may grant Agility on-line “view only” access to all of its accounts on terms acceptable to Agility); (iv) quarterly
financial statements prepared in accordance with GAAP, consistently applied, reviewed by independent certified public accountants reasonably acceptable to Agility, within 45 days of the last day of each fiscal quarter; (v) annual financial statements prepared in accordance with GAAP, consistently applied audited by independent certified public accountants reasonably acceptable to Agility, within ninety (90) days of the last day of each fiscal year, together with copies of Borrower’s tax returns for such year; and (vi) upon request, such other information relating to Borrower’s operations and condition, including information on the status of the sale of the Owensboro Property, as Agility may reasonably request from time to time.  Agility shall have the right to review and copy Borrower’s books and records and audit and inspect the Collateral, from time to time, upon reasonable notice to Borrower.  Agility or its officers, employees, or agents shall have a right to visit
Borrower’s premises once a quarter unless an uncured Event of Default is continuing and interview Borrower’s officers at Borrower’s expense.  Any additional such visits shall be at Agility’s expense.

                              (b)            Insurance.  Borrower will maintain insurance on the Collateral and Borrower’s business, in amounts and of a type that are customary to businesses similar to Borrower’s, and Agility will be named in a Agility’s loss payable endorsement in favor of Agility, in form reasonably acceptable to Agility.

                              (c)            Negative Covenants.  Except as set forth in Section 4(e), without Agility’s prior written consent, Borrower shall not do any of the following:  (i) permit or suffer an acquisition of all or substantially all of Borrower’s assets other than an acquisition unless the terms of which provide for immediate payment of all amounts outstanding under this Agreement; (ii) acquire any assets outside the ordinary course of business; (iii)  sell, lease, license, encumber or transfer any Collateral except for sales or licenses in the ordinary course of business (in which case Agility retains its security interest in the proceeds of such disposition); (iv) pay or declare any
dividends on Borrower’s stock; (v) redeem, purchase or otherwise acquire, any of Borrower’s stock (other than repurchases of stock of former employees of Borrower in accordance with existing employee stock repurchase agreements); (vi) make any investments in, or loans or advances to, any person, including without limitation any investments in, or downstreaming of funds to, any subsidiary or affiliate of Borrower that has not guaranteed payment of Obligations under this Agreement and secured that guaranty on terms reasonably acceptable to Agility; (vii)  incur any indebtedness outside the ordinary course of business or indebtedness in excess of a principal amount of $2,900,000 plus accrued interest currently outstanding under the Loan Agreement between Borrower and Kentucky Technology, Inc. dated December 14, 2004; (viii) make any payment on any of Borrower’s indebtedness that is subordinate to the Obligations, other than in accordance with the subordination agreement, if
any, in favor of Agility relating thereto; or (ix) make any deposits or investments into any investment or depository accounts unless they are subject to an account control agreement acceptable to Agility.

                              (d)            Board Materials.  LSBC will inform Agility of any and all relevant board decisions on a timely basis as reasonably deemed necessary to protect Agility’s interests

                              (e)            Exceptions to Negative Covenants.  Notwithstanding anything to the contrary in this Agreement, upon notice to Agility, Borrower may sell, assign, lease or license all or any part of (i) the Owensboro Property and any interest in the Collateral located therein and/or (ii) its shares or asset value in Predictive Diagnostics, Inc. and the business of Borrower related thereto, for so long as Borrower causes Full Repayment to be made to Agility simultaneously with the closing of any such transaction.  Agility will promptly take such actions are Borrower reasonably requests to facilitate any such transaction, 

consistent with Agility’s retaining its security interest in such property until receipt of Full Repayment.  Completion of any such transaction will not be deemed a Triggering Event under Section 7. Borrower may also grant exclusive licenses of its intellectual property with respect to one or more fields of practice, subject to the security interest granted in this Agreement. 

                              (f)            Advances.  Subject to the terms of this Agreement, Agility will promptly make the Advances as set forth in Section 1(a) of this Agreement.  

               5.            Events of Default.  Any one or more of the following shall constitute an Event of Default under this Agreement:

                              (a)            Borrower shall fail to pay any principal when due, any interest within 5 days of when due, and any other monetary Obligations within 10 days of when due; or

                              (b)            Borrower shall fail to comply with any other provision of this Agreement, which failure is not cured within ten days after the sooner of (i) the date that Borrower has knowledge of that failure or (ii) Borrower’s receipt of notice from Agility; or

                              (c)            Any written warranty, representation, statement, report or certificate made or delivered to Agility by Borrower or on Borrower’s behalf shall be untrue or misleading in a material respect as of the date given or made; or

                              (d)            A default of event or default shall occur under any agreement to which Borrower is a party or by which it is bound (i) resulting in a right by the other party or parties, whether or not exercised, to accelerate the maturity of any indebtedness in excess of $100,000 or (ii) that could have a Material Adverse Effect, as defined below; or

                              (e)            Any portion of Borrower’s assets is attached, seized or levied upon in excess of $100,000, or a judgment for more than $100,000 is awarded against Borrower and is not stayed within ten days; or

                              (f)            Any action that results in the suspension of trading of Borrower’s securities by the Securities Exchange Commission or any other state or federal agency or authority;

                              (g)            An Event of Default occurs under the Mortgage; or

                              (h)            Dissolution, termination of existence of Borrower; the occurrence of a Dissolution Event; or appointment of a receiver, trustee or custodian, for all or any material part of the property of, assignment for the benefit of creditors by, or the commencement of any proceeding by or against Borrower under any reorganization, bankruptcy, insolvency, arrangement, readjustment of debt, dissolution or liquidation law or statute of any jurisdiction, now or in the future in effect (except that, in the case of a proceeding commenced against Borrower, Borrower shall have 60 days after the date such proceeding was commenced to have it dismissed, provided Agility shall have no obligation to make any Loans during such
period); or

                              (i)            The occurrence of a “Material Adverse Effect”, which shall mean (i) a material adverse change in the business, operations, results of operations, assets, liabilities or financial or other condition of Borrower and its subsidiaries taken as a whole, (ii) the material impairment of Borrower’s ability to perform its Obligations or of Agility’s ability to enforce the Obligations or realize upon the Collateral, or (iii) a material adverse change in the value of the Collateral so that such value is less than 110% of Borrower’s outstanding obligations.

               6.            Remedies.

                              (a)            Remedies.  Upon the occurrence and during the continuance of any Event of Default, Agility, at its option, may do any one or more of the following:  (a) Accelerate and declare the Obligations to be immediately due, payable, and performable; (b) Take possession of any or all of the Collateral wherever it may be found, and for that purpose Borrower hereby authorizes Agility to enter Borrower’s premises without interference to search for, take possession of, keep, store, or remove any of the Collateral, and remain on the premises or cause a custodian to remain on the premises in exclusive control thereof, without charge by Borrower for so long as Agility reasonably deems it necessary
in order to complete the enforcement of its rights under this Agreement or any other agreement; provided, however, that should Agility seek to take possession of any of the Collateral by Court process, Borrower hereby waives:  (i) any bond and any surety or security relating thereto; (ii) any demand for possession prior to the commencement of any suit or action to recover possession thereof; and (iii) any requirement that Agility retain possession of, and not dispose of, any such Collateral until after trial or final judgment; (c) Require Borrower to assemble any or all of the Collateral and make it available to Agility at places designated by Agility; (d) Complete the processing of any Collateral prior to a disposition thereof and, for such purpose and for the purpose of removal, Agility shall have the right to use

Borrower’s premises, equipment and all other property without charge by Borrower; (e) Collect and dispose of and realize upon any investment property, including withdrawal of any and all funds from any deposit or securities accounts; (f) Dispose of any of the Collateral, at one or more public or private sales, in lots or in bulk, for cash, exchange or other property, or on credit, and to adjourn any such sale from time to time without notice other than oral announcement at the time scheduled for sale; and (g) Demand payment of, and collect any accounts, general intangibles or other Collateral and, in connection therewith, Borrower irrevocably authorizes Agility to endorse or sign Borrower’s name on all collections, receipts, instruments and other documents, and, in Agility’s good faith business judgment, to grant extensions of time to pay, compromise claims and settle accounts, general intangibles and the like for less than face
value; Borrower grants Agility a license, exercisable from and after an Event of Default has occurred, to use and copy any trademarks, service marks and other intellectual property in which Borrower has an interest to effect any of the foregoing remedies.  All reasonable attorneys’ fees, expenses, costs, liabilities and obligations incurred by Agility with respect to the foregoing shall be added to and become part of the Obligations, and shall be due on demand.

                              (b)            Application of Proceeds.  All proceeds realized as the result of any sale or other disposition of the Collateral pursuant to Section 6(a) above shall be applied by Agility first to the reasonable costs, expenses, liabilities, obligations and attorneys’ fees incurred by Agility in the exercise of its rights under this Agreement, second to any fees and Obligations other than interest and principal, third to the interest due upon any of the Obligations, and fourth to the principal of the Obligations, in such order as Agility shall determine in its sole discretion.  Any surplus shall be paid to Borrower or other persons legally entitled thereto; Borrower shall remain liable to Agility for any
deficiency.

                              (c)            Remedies Cumulative.  In addition to the rights and remedies set forth in this Agreement, Agility shall have all the other rights and remedies accorded a secured party under the California Uniform Commercial Code and under all other applicable laws, and under any other instrument or agreement now or in the future entered into between Agility and Borrower, and all of such rights and remedies are cumulative and none is exclusive.  Exercise or partial exercise by Agility of one or more of its rights or remedies shall not be deemed an election, nor bar Agility from subsequent exercise or partial exercise of any other rights or remedies.  The failure or delay of Agility to exercise any rights or
remedies shall not operate as a waiver thereof, but all rights and remedies shall continue in full force and effect until all of the Obligations have been fully paid and performed.

                              (d)            Power of Attorney.  After the occurrence and during the continuance of an Event of Default, Borrower irrevocably appoints Agility (and any of Agility’s designated employees or agents) as Borrower’s true and lawful attorney in fact to:  endorse Borrower’s name on any checks or other forms of payment; make, settle and adjust all claims under and decisions with respect to Borrower’s policies of insurance; settle and adjust disputes and claims respecting accounts, general intangibles and other Collateral; execute and deliver all notices, instruments and agreements in connection with the perfection of the security interest granted in this Agreement; sell, lease or otherwise dispose
of all or any part of the Collateral; and take any other action or sign any other documents required to be taken or signed by Borrower, or reasonably necessary to enforce Agility’s rights or remedies or otherwise carry out the purposes of this Agreement.  The appointment of Agility as Borrower’s attorney in fact, and each of Agility’s rights and powers, being coupled with an interest, are irrevocable until all Obligations owing to Agility have been paid and performed in full.

               7.            Event of Dissolution; Exit Fee.  Prior to Full Repayment (defined below), the occurrence of any one or more of the following shall constitute a “Triggering Event” for Full Repayment:  (i) the sale, lease, license, exchange or similar transaction involving all or substantially all of the assets of Borrower in one or more transactions, (ii) the closing of a recapitalization, reorganization (for avoidance of doubt, a reorganization excludes a reverse or other stock split), merger, consolidation or other similar transaction or series of related transactions of Borrower, in which the gross proceeds to Borrower are less than $30,000,000 (iii) any action (voluntary or involuntary) to liquidate, dissolve and/or wind down the business of Borrower, (iv) the incurrence
of indebtedness (other than (a) in connection with a stock purchase agreement, provided any tender rights under such agreement are extended equally to all holders of Borrower’s equity securities and (b) indebtedness subordinated to the debt owing to Agility on terms acceptable to Agility, or (v) the sale without Agility’s approval of any division or business unit of Borrower in one or more transactions in which the gross proceeds are at least $500,000 (or to the extent Borrower receives consideration other than cash, any such transaction in which Borrower is deemed to have received value in the form of cash, marketable securities, assets or other consideration or any combination thereof of at least $500,000).

               If a Triggering Event shall occur before all amounts owing Agility under this Agreement have been indefeasibly paid in full (“Full Repayment”), upon the occurrence, and as part of the consummation, of such Triggering Event, Agility shall be entitled to one hundred percent (100%) of the proceeds of the sale of assets in an orderly liquidation of Borrower’s assets  until such time as all amounts owing to Agility have been repaid in full (including, without limitation, all accrued interest due thereon, fees and other costs payable to Agility).  If the consideration payable to Borrower in connection with such transaction(s) is other than cash in an amount sufficient to satisfy the Full Repayment, Agility shall be entitled to receive, in addition to such cash (or, upon mutual agreement, unrestricted, publicly tradable marketable securities, provided
such securities are traded on a major public exchange and in regular daily volume sufficient to allow the immediate liquidated thereof without negatively impacting the value of such securities), the cash proceeds received by Borrower upon the sale of such non-cash consideration until Full

Repayment.  If Agility elects to receive such unrestricted, publicly tradable marketable securities, Agility shall credit the then outstanding balance hereunder with the fair market value of such securities (based upon the average closing price per share for the five (5) trading day period immediately preceding the date Agility receives such unrestricted marketable securities).  If Borrower receives non-cash consideration in connection with such transaction, Borrower shall sell, as soon as reasonably practical, such non-cash consideration in a commercially reasonable manner in order to maximize the proceeds of such sale.

               Prior to Full Repayment, after a Triggering Event or acceleration of the Obligations after the occurrence of an uncured Event of Default, in addition to the repayment described in the preceding paragraph, Borrower shall pay to Agility, a fee (“Exit Fee”) equal to the greatest of (i) $450,000 or (ii) an amount equal to two percent (2%) of the aggregate consideration paid to Borrower and/or its shareholders in lieu of an equity financing, including but not limited to a merger or acquisition of a majority of the stock or assets of Borrower or (iii) the amount Agility would have been entitled to receive in connection with such transactions had Agility exercised its Warrant immediately prior to such transactions.  The Exit Fee shall be paid to Agility, prior to any payment, dividend, loan repayment or distribution of any amounts to any person or
entity out of the proceeds of such Triggering Event. Agility shall retain its security interest on all Collateral disposed of in connection with such Triggering Event until Full Repayment (including, without limitation, the payment in full of the Exit Fee).  Upon Agility’s receipt of the Exit Fee, Agility shall release its security interest in such Collateral and surrender for no additional consideration (a) its warrants delivered in connection with this Agreement and (b) any shares previously issued under such warrant and held by Agility as of the date of such occurrence (the warrant and any equity interest issued or issuable in connection therewith shall be collectively referred to as “Equity Interest”).  Notwithstanding the foregoing, Agility may elect to forego the Exit Fee and retain its Equity Interest in Borrower upon reasonable advance notice to Borrower.  

               8.            Waivers.  The failure of Agility at any time or times to require Borrower to strictly comply with any of the provisions of this Agreement or any other present or future agreement between Borrower and Agility shall not waive or diminish any right of Agility later to demand and receive strict compliance therewith.  Any waiver of any default shall not waive or affect any other default, whether prior or subsequent, and whether or not similar.  None of the provisions of this Agreement or any other agreement shall be deemed to have been waived except by a specific written waiver signed by an authorized officer of Agility.  Borrower waives demand, protest, notice of protest and notice of default or dishonor, notice of payment and nonpayment, release, compromise, settlement,
extension or renewal of any commercial paper, instrument, account, general intangible, document or guaranty at any time held by Agility on which Borrower is or may in any way be liable, and notice of any action taken by Agility, unless expressly required by this Agreement.

               9.            Indemnity.  Borrower shall indemnify Agility for any liabilities, including reasonable attorneys’ fees, incurred by Agility arising from Agility’s status as a creditor of Borrower (as opposed to a shareholder by way of Agility’s interest in the warrant or shares issuable under the warrant) under this Agreement.

               10.            Confidentiality.  Agility acknowledges and agrees that certain confidential non-public information received by Agility from Borrower may constitute material non-public information within the scope of the Securities Exchange Act of 1934, as amended, and other securities laws and regulations, and that Agility is restricted from trading in Borrower’s securities while in the possession of such material non-public information.  Without obligating Borrower to identify and notify Agility of material non-public information, Agility agrees to comply with Borrower’s reasonable requests to refrain from trading in Borrower’s securities while in possession of such material non-public information.  In handling any confidential non-public information provided to Agility by
Borrower, Agility shall exercise the same degree of care that it exercises with respect to its own proprietary information of the same types to maintain the confidentiality of the same, except that disclosure of such information may be made (i) to subsidiaries or affiliates of Agility in connection with their present or prospective business relations with Borrower, (ii) to prospective transferees or purchasers of any interest in the Obligations, provided that they have entered into a comparable confidentiality agreement with respect thereto, (iii) as required by law, regulations, rule or order, subpoena, judicial order or similar order, (iv) as may be required in connection with the examination, audit or similar investigation of Agility, and (v) as Agility may deem appropriate in connection with the exercise of any remedies hereunder.  Confidential information shall not include information that either:  (a) is in the public domain, or becomes part of the public
domain, after disclosure to Agility through no fault of Agility; or (b) is disclosed to Agility by a third party who, to Agility’s knowledge, was not prohibited from disclosing such information.

               11.            Governing Law; Jurisdiction; Venue.  This Agreement and all acts and transactions hereunder and all rights and obligations of Agility and Borrower shall be governed by the internal laws (and not the conflict of laws rules) of the State of California.  As a material part of the consideration to Agility to enter into this Agreement, Borrower (i) agrees that all actions and proceedings relating directly or indirectly to this Agreement shall, at Agility’s option, be litigated in courts located within California, and that the exclusive venue therefor shall be Santa Barbara County; (ii) consents to the jurisdiction and venue of any such court and consents to service of process in any such action or proceeding by personal delivery or any other method permitted by law; and
(iii) waives any and all rights Borrower may have to object to the jurisdiction of any such court, or to transfer or change the venue of any such action or proceeding.

               12.            MUTUAL WAIVER OF JURY TRIAL  BORROWER AND AGILITY EACH WAIVE THE RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, ARISING OUT OF, OR IN ANY WAY RELATING TO, THIS AGREEMENT OR ANY OTHER PRESENT OR FUTURE INSTRUMENT OR AGREEMENT BETWEEN AGILITY AND BORROWER, OR ANY CONDUCT, ACTS OR OMISSIONS OF AGILITY OR BORROWER OR ANY OF THEIR DIRECTORS, OFFICERS, EMPLOYEES, AGENTS, ATTORNEYS OR ANY OTHER PERSONS AFFILIATED WITH AGILITY OR BORROWER, IN ALL OF THE FOREGOING CASES, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE. IF THIS JURY WAIVER IS FOR ANY REASON UNENFORCEABLE, THE PARTIES AGREE TO RESOLVE ALL CLAIMS, CAUSES AND DISPUTES THROUGH FINAL AND BINDING ARBITRATION TO BE HELD IN SANTA BARBARA COUNTY IN ACCORDANCE WITH THEN-CURRENT COMMERCIAL ARBITRATION RULES OF THE AMERICAN
ARBITRATION ASSOCIATION.  JUDGMENT UPON ANY AWARD RESULTING FROM ARBITRATION MAY BE ENTERED INTO AND ENFORCED BY ANY STATE OR FEDERAL COURT HAVING JURISDICTION THEREOF.

               13.            General.  This Agreement and such other written agreements, documents and instruments as may be executed in connection herewith are the final, entire and complete agreement between Borrower and Agility and supersede all prior and contemporaneous negotiations and oral representations and agreements, all of which are merged and integrated in this Agreement.  There are no oral understandings, representations or agreements between the parties which are not set forth in this Agreement or in other written agreements signed by the parties in connection herewith.  The terms and provisions of this Agreement may not be waived or amended, except in a writing executed by Borrower and a duly authorized officer of Agility.  Agility may assign all or any part of its interest in this
Agreement and the Obligations to any person or entity, or grant a participation in, or security interest in, any interest in this Agreement, with notice to, but without consent of, Borrower.  Borrower may not assign any rights under or interest in this Agreement without Agility’s prior written consent.  This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which shall constitute one agreement.

               14.            Publicity.  Borrower authorizes Agility to use Borrower’s tradenames and logos in Agility’s marketing materials in respect of the transactions evidenced by this Agreement.

	
  AGILITY   CAPITAL, LLC
  	
  
 
  	
  
LARGE SCALE   BIOLOGY CORPORATION
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
 
  
	
  
By:
  	
  
/s/Daniel   Corry
  	
  
 
  	
  
By:
  	
  
/s/ Ronald   J. Artale  10/26/05
  
	
  
 
  	
  

  	
  
 
  	
  
 
  	
  

  
	
  
Title:
  	
  
Chief Credit   Officer
  	
  
 
  	
  
Title:
  	
  
Chief   financial Officer
  
	
   
  	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
  
Address for   notices:
  	
  
 
  	
  
Address for   notices:
  
	 
	  
	  
	  
	  

	
  
Agility   Capital, LLC
226 E. Canon Perdido Street, Suite F
Santa Barbara, CA  93101
Attn:  Daniel Corry and Jeff Carmody
Fax:  805-568-0427
  	
  
 
  	
  
LARGE SCALE   BIOLOGY CORPORATION
3333 Vaca Valley Parkway, Suite 1000
Vacaville, CA  95688
Attn:  Ronald Artale, Chief Financial Officer
Fax:  707-446-3917_________________
  

Exhibit A

COLLATERAL DESCRIPTION ATTACHMENT
 TO LOAN AND SECURITY AGREEMENT

          All personal property of Borrower (herein referred to as “Borrower” or “Debtor”) whether presently existing or hereafter created or acquired, and wherever located, including, but not limited to:

          (a)          all accounts, chattel paper (including tangible and electronic chattel paper), deposit accounts, documents (including negotiable documents), equipment (including all accessions and additions thereto), general intangibles (including copyrights, patents, trademarks, goodwill and all intellectual property, payment intangibles and software), goods (including fixtures), instruments (including promissory notes), inventory (including all goods held for sale or lease or to be furnished under a contract of service, and including returns and repossessions), investment property (including securities and securities entitlements), letter of credit rights, money, and all of Debtor’s books and records with respect to any of the foregoing, and the computers and equipment containing said books and records;  and 

          (b)          any and all cash proceeds and/or noncash proceeds of any of the foregoing, including, without limitation, insurance proceeds, and all supporting obligations and the security therefor or for any right to payment.  All terms above have the meanings given to them in the California Uniform Commercial Code, as amended or supplemented from time to time, including revised Division 9 of the Uniform Commercial Code-Secured Transactions, added by Stats. 1999, c.991 (S.B. 45), Section 35, operative July 1, 2001.

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