Document:

<PAGE>

                                                                    EXHIBIT 10.1

(FPFR-LIBOR30)(R032204)4160000001 *LOAN5404*

                                PROMISSORY NOTE

                               DECEMBER 22, 2004
                               -----------------
                                     (DATE)

FOR VALUE RECEIVED, ALKERMES, INC. a corporation located at the address stated
below ("MAKER") promises, jointly and severally if more than one, to pay to the
order of GENERAL ELECTRIC CAPITAL CORPORATION or any subsequent holder hereof
(each, a "PAYEE") at its office located at 83 WOOSTER HEIGHTS ROAD, DANBURY, CT
06810 or at such other place as Payee or the holder hereof may designate
(written notice of which will be provided by Payee to Maker), the principal sum
of THREE MILLION SIX HUNDRED SEVENTY-SIX THOUSAND ONE HUNDRED FORTY AND 94/100
DOLLARS ($3,676,140.94), with interest on the unpaid principal balance, from the
date hereof through and including dates of payment, at a floating per annum
simple interest rate ("Contract Rate") as hereinafter calculated.

The Contract Rate for any given period ("Effective Period") following the first
Effective Period shall be equal to the sum of (i) Five and Forty-Five Hundredths
percent (5.45%) per annum plus (ii) a variable per annum interest rate ("Current
LIBOR"), which shall be equal to the rate listed for one month London Interbank
Offered Rate ("LIBOR") which is published in the "Money Rates" column of the
Wall Street Journal, Eastern Edition (or, in the event such rate is not so
published, in such other nationally recognized publication as Payee may specify)
on the first Business Day of the calendar month in which the applicable
Effective Period ends (notwithstanding any statement in such publication as to
the effective date of any published rate). As used herein, the term "Business
Day" shall mean and include any calendar day other than a day on which all
commercial banks in the City of New York, New York are required or authorized to
be closed.

The first Effective Period shall begin on the date hereof, and shall continue
through the earlier of (w) the date the first Periodic Installment (or part
thereof) is received by Payee and (x) the date on which the first Periodic
Installment is due. Each subsequent Effective Period shall begin on the day
after the last day of the previous Effective Period and shall continue through
the earlier of (y) the date the earliest due and unpaid Periodic Installment (or
part thereof) is received by Payee and (z) the date on which the next Periodic
Installment is due. The Contract Rate for the first Effective Period shall be
equal to the sum of (i) Five and Forty-Five Hundredths percent (5.45%) per annum
plus (ii) a variable per annum interest rate, which shall be equal to the rate
listed for one month London Interbank Offered Rate ("LIBOR"), which is published
in the "Money Rates" column of the Wall Street Journal, Eastern Edition on the
first Business Day of the current month in which the first Effective Period
ends.

Subject to the other provisions hereof, the principal and interest on this Note
is payable in lawful money of the United States in Thirty-Six (36) consecutive
monthly installments as follows:

<TABLE>
<CAPTION>
 Periodic
Installment                 Amount
----------------          -----------
<S>                       <C>
Thirty-Five (35)          $105,834.93
</TABLE>

each ("Periodic Installment") and a final installment which shall be in the
amount of Four Hundred Seventy-Three Thousand Four Hundred Forty-Nine and 03/100
Dollars ($473,449.03) plus any outstanding principal and interest. The first
Periodic Installment shall be due and payable on 2/01/05 and the following
Periodic Installments shall be due and payable on the same day of each
succeeding period (each, a "Payment Date"). All payments shall be applied first
to interest and then to principal. The acceptance by Payee of any payment which
is less than payment in full of all amounts due and owing at such time shall not
constitute a waiver of Payee's right to receive payment in full at such time or
at any prior or subsequent time. Interest shall be calculated on the basis of a
365 day year (366 day leap year) and will be charged at the Contract Rate for
each calendar day on which any principal is outstanding.

The amount and number of the Periodic Installments will not change with
fluctuations in the Contract Rate. Any increase in the Contract Rate shall be
reflected by a corresponding decrease in the portion of the Periodic Installment
credited to the remaining unpaid principal balance. Any decrease in the Contract
Rate shall be reflected as a corresponding increase in the portion of the
Periodic Installment credited to the remaining unpaid principal balance.
Notwithstanding the foregoing, at the end of each three (3) month period
commencing with the first Payment Date hereof, Maker agrees to pay to Payee
forthwith an additional sum ("Quarterly Payment") sufficient to amortize the
unpaid principal over the balance of the original term hereof at the Contract
Rate applicable for the first Periodic Installment.

<PAGE>

If, and for so long as, the amount of interest due exceeds the amount of the
Periodic Installment, Maker agrees to pay forthwith, in addition to (i) any
Periodic Installment then due and (ii) any Quarterly Payment, the amount by
which said interest exceeds the Periodic Installment. In the event interest only
is required to be paid during any period, the interest for such period shall be
due and payable monthly as it accrues and shall be calculated on the unpaid
principal balance existing at the commencement of such period.

The Maker hereby expressly authorizes the Payee to insert the date value is
actually given in the blank space on the face hereof and on all related
documents pertaining hereto.

This Note may be secured by a security agreement, chattel mortgage, pledge
agreement or like instrument (each of which is hereinafter called a "SECURITY
AGREEMENT").

Time is of the essence hereof. If any installment or any other sum due under
this Note or any Security Agreement is not received within ten (10) days after
its due date, the Maker agrees to pay, in addition to the amount of each such
installment or other sum, a late payment charge of five percent (5%) of the
amount of said installment or other sum, but not exceeding any lawful maximum.
If (i) Maker fails to make payment of any amount due hereunder within ten (10)
days after the same becomes due and payable; or (ii) Maker is in default under,
or fails to perform under any term or condition contained in any Security
Agreement, then the entire principal sum remaining unpaid, together with all
accrued interest thereon and any other sum payable under this Note or any
Security Agreement, at the election of Payee (written notice of which will be
provided by Payee to Maker), shall immediately become due and payable, with
interest thereon at the lesser of eighteen percent (18%) per annum or the
highest rate not prohibited by applicable law from the date of such accelerated
maturity until paid (both before and after any judgment).

Maker may not prepay in full or in part at any time any indebtedness hereunder
without the express written consent of Payee in its sole discretion, provided
however that if Maker prepays all indebtedness under this Note in connection
with the closing of additional financing under the Master Lease Agreement dated
as of October 16, 2002 in an amount equal to or greater than the original
principal balance under this Note, then no premium or penalty shall be due.

It is the intention of the parties hereto to comply with the applicable usury
laws; accordingly, it is agreed that, notwithstanding any provision to the
contrary in this Note or any Security Agreement, in no event shall this Note or
any Security Agreement require the payment or permit the collection of interest
in excess of the maximum amount permitted by applicable law. If any such excess
interest is contracted for, charged or received under this Note or any Security
Agreement, or if all of the principal balance shall be prepaid, so that under
any of such circumstances the amount of interest contracted for, charged or
received under this Note or any Security Agreement on the principal balance
shall exceed the maximum amount of interest permitted by applicable law, then in
such event (a) the provisions of this paragraph shall govern and control, (b)
neither Maker nor any other person or entity now or hereafter liable for the
payment hereof shall be obligated to pay the amount of such interest to the
extent that it is in excess of the maximum amount of interest permitted by
applicable law, (c) any such excess which may have been collected shall be
either applied as a credit against the then unpaid principal balance or refunded
to Maker, at the option of the Payee, and (d) the effective rate of interest
shall be automatically reduced to the maximum lawful contract rate allowed under
applicable law as now or hereafter construed by the courts having jurisdiction
thereof. It is further agreed that without limitation of the foregoing, all
calculations of the rate of interest contracted for, charged or received under
this Note or any Security Agreement which are made for the purpose of
determining whether such rate exceeds the maximum lawful contract rate, shall be
made, to the extent permitted by applicable law, by amortizing, prorating,
allocating and spreading in equal parts during the period of the full stated
term of the indebtedness evidenced hereby, all interest at any time contracted
for, charged or received from Maker or otherwise by Payee in connection with
such indebtedness; provided, however, that if any applicable state law is
amended or the law of the United States of America preempts any applicable state
law, so that it becomes lawful for the Payee to receive a greater interest per
annum rate than is presently allowed, the Maker agrees that, on the effective
date of such amendment or preemption, as the case may be, the lawful maximum
hereunder shall be increased to the maximum interest per annum rate allowed by
the amended state law or the law of the United States of America.

The Maker consents hereby to any and all extensions of time, renewals, waivers
or modifications of, and all substitutions or releases of, security or of any
party primarily or secondarily liable on this Note or any Security Agreement or
any term and provision of either, which may be made, granted or consented to by
Payee, and agrees that suit may be brought and maintained against Maker, at the
election of Payee without joinder of any other as a party thereto, and that
Payee shall not be required first to foreclose, proceed against, or exhaust any
security hereof in order to enforce payment of this Note. The Maker hereby
waives presentment, demand for payment, notice of nonpayment, protest, notice of
protest, notice of dishonor, and all other notices in connection herewith, as
well as filing of suit (if permitted by law) and diligence in collecting this
Note or enforcing any of the security hereof, and agrees to pay (if permitted by
law) all expenses reasonably incurred in collection, including Payee's actual
attorneys' fees.

THE MAKER HEREBY UNCONDITIONALLY WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM
OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF, DIRECTLY OR INDIRECTLY, THIS
NOTE, ANY OF THE RELATED DOCUMENTS, ANY DEALINGS BETWEEN MAKER AND PAYEE
RELATING TO THE SUBJECT MATTER OF THIS TRANSACTION OR ANY RELATED TRANSACTIONS,

<PAGE>

AND/OR THE RELATIONSHIP THAT IS BEING ESTABLISHED BETWEEN MAKER AND PAYEE. THE
SCOPE OF THIS WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY AND ALL DISPUTES
THAT MAY BE FILED IN ANY COURT (INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS,
TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY
CLAIMS.) THIS WAIVER IS IRREVOCABLE MEANING THAT IT WAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS NOTE, ANY RELATED DOCUMENTS, OR
TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THIS TRANSACTION OR ANY RELATED
TRANSACTION. IN THE EVENT OF LITIGATION, THIS NOTE MAY BE FILED AS A WRITTEN
CONSENT TO A TRIAL BY THE COURT.

This Note and other Debt Documents (as defined in any Security Agreement)
constitute the entire agreement of the Maker and Payee with respect to the
subject matter hereof and supercedes all prior understandings, agreements and
representations, express or implied.

No variation or modification of this Note, or any waiver of any of its
provisions or conditions, shall be valid unless in writing and signed by an
authorized representative of Maker and Payee. Any such waiver, consent,
modification or change shall be effective only in the specific instance and for
the specific purpose given.

Any provision in this Note or any of the other Debt Documents which is in
conflict with any statute, law or applicable rule shall be deemed omitted,
modified or altered to conform thereto.

                                 ALKERMES, INC.

______________________________   By: /s/ James Frates
(Witness)                            ----------------
______________________________   Name: James Frates
(Print name)
______________________________   Title: VP
(Address)
                                 Federal Tax ID #: 232472830

                                 Address: 88 Sidney Street, Cambridge,
                                          Middlesex County, MA 02139<PAGE>

                                                                    EXHIBIT 10.2

(R011304) *LOAN7000*

                            MASTER SECURITY AGREEMENT
                  dated as of DECEMBER 22, 2004 ("AGREEMENT")

      THIS AGREEMENT is between GENERAL ELECTRIC CAPITAL CORPORATION (together
with its successors and assigns, if any, "SECURED PARTY") and ALKERMES, INC.
("DEBTOR"). Secured Party has an office at 83 Wooster Heights Road, Danbury, CT
06810. Debtor is a corporation organized and existing under the laws of the
state of Pennsylvania ("the State"). Debtor's mailing address and chief place of
business is 88 Sidney Street, Cambridge, MA, 02139.

1.    CREATION OF SECURITY INTEREST.

      Debtor grants to Secured Party, its successors and assigns, a security
interest in and against all property listed on any collateral schedule now or in
the future annexed to or made a part of this Agreement ("COLLATERAL SCHEDULE"),
and in and against all additions, attachments, accessories and accessions to
such property, all substitutions, replacements or exchanges therefor, and all
insurance and/or other proceeds thereof (all such property is individually and
collectively called the "COLLATERAL"). This security interest is given to secure
the payment and performance of all debts, obligations and liabilities of any
kind whatsoever of Debtor to Secured Party, now existing or arising in the
future, including but not limited to the payment and performance of certain
Promissory Notes from time to time identified on any Collateral Schedule
(collectively "NOTES" and each a "NOTE"), and any renewals, extensions and
modifications of such debts, obligations and liabilities (such Notes, debts,
obligations and liabilities are called the "INDEBTEDNESS").

2.    REPRESENTATIONS, WARRANTIES AND COVENANTS OF DEBTOR.

      Debtor represents, warrants and covenants as of the date of this Agreement
and as of the date of each Collateral Schedule that:

      (a) Debtor's exact legal name is as set forth in the preamble of this
Agreement and Debtor is, and will remain, duly organized, existing and in good
standing under the laws of the State set forth in the preamble of this
Agreement, has its chief executive offices at the location specified in the
preamble, and is, and will remain, duly qualified and licensed in every
jurisdiction wherever necessary to carry on its business and operations;

      (b) Debtor has adequate power and capacity to enter into, and to perform
its obligations under this Agreement, each Note and any other documents
evidencing, or given in connection with, any of the Indebtedness (all of the
foregoing are called the "DEBT DOCUMENTS");

      (c) This Agreement and the other Debt Documents have been duly authorized,
executed and delivered by Debtor and constitute legal, valid and binding
agreements enforceable in accordance with their terms, except to the extent that
the enforcement of remedies may be limited under applicable bankruptcy and
insolvency laws or by general equitable principles;

      (d) No approval, consent or withholding of objections is required from any
governmental authority or instrumentality with respect to the entry into, or
performance by Debtor of any of the Debt Documents, except any already obtained;

      (e) The entry into, and performance by, Debtor of the Debt Documents will
not (i) violate any of the organizational documents of Debtor or any judgment,
order, law or regulation applicable to Debtor, or (ii) result in any breach of
or constitute a default under any contract to which Debtor is a party, or result
in the creation of any lien, claim or encumbrance on any of Debtor's property
(except for liens in favor of Secured Party) pursuant to any indenture,
mortgage, deed of trust, bank loan, credit agreement, or other agreement or
instrument to which Debtor is a party;

      (f) There are no suits or proceedings pending in court or before any
commission, board or other administrative agency against or affecting Debtor
which could, in the aggregate, have a material adverse effect on Debtor, its
business or operations, or its ability to perform its obligations under the Debt
Documents, nor does Debtor have reason to believe that any such suits or
proceedings are threatened;

      (g) All financial statements delivered to Secured Party in connection with
the Indebtedness have been prepared in accordance with generally accepted
accounting principles, and since the date of the most recent financial
statement, there has been no material adverse change in Debtors financial
condition which has resulted or could reasonably be expected to result in Debtor
being unable to perform its obligations under this Agreement for the remainder
of the term of this Agreement;

<PAGE>

      (h) The Collateral is not, and will not be, used by Debtor for personal,
family or household purposes;

      (i) The Collateral is, and will remain, in good condition and repair and
Debtor will not be negligent in its care and use;

      (j) Debtor is, and will remain, the sole and lawful owner, and in
possession of, the Collateral, and has the sole right and lawful authority to
grant the security interest described in this Agreement;

      (k) The Collateral is, and will remain, free and clear of all liens,
claims and encumbrances of any kind whatsoever, except for (i) liens in favor of
Secured Party, (ii) liens for taxes not yet due or for taxes being contested in
good faith and which do not involve, in the judgment of Secured Party, any
material risk of the sale, forfeiture or loss of any of the Collateral, and
(iii) inchoate materialmen's, mechanic's, repairmen's and similar liens arising
by operation of law in the normal course of business for amounts which are not
delinquent (all of such liens are called "PERMITTED LIENS"); and

      (l) Debtor is and will remain in compliance in all material respects with
all laws and regulations applicable to it including, without limitation, (i)
ensuring that Debtor is not and shall not be (Y) listed on the Specially
Designated Nationals and Blocked Person List maintained by the Office of Foreign
Assets Control ("OFAC"), Department of the Treasury, and/or any other similar
lists maintained by OFAC pursuant to any authorizing statute, Executive Order
or regulation or (Z) a person designated under Section 1(b), (c) or (d) of
Executive Order No. 13224 (September 23, 2001), any related enabling legislation
or any other similar Executive Orders.

3.    COLLATERAL.

      (a) Until the declaration by Secured Party of any default hereunder,
Debtor shall remain in possession of the Collateral; except that Secured Party
shall have the right to possess (i) any chattel paper or instrument that
constitutes a part of the Collateral, and (ii) any other Collateral in which
Secured Party's security interest may be perfected only by possession. Secured
Party may inspect any of the Collateral during normal business hours after
giving Debtor reasonable prior notice. If Secured Party asks, Debtor will
promptly notify Secured Party in writing of the location of any Collateral.

      (b) Debtor shall (i) use the Collateral only in its trade or business,
(ii) maintain all of the Collateral in good operating order and repair, normal
wear and tear excepted, (iii) use and maintain the Collateral only in compliance
in all material respects with manufacturers recommendations and all applicable
laws, and (iv) keep all of the Collateral free and clear of all liens, claims
and encumbrances (except for Permitted Liens).

      (c) Secured Party does not authorize and Debtor agrees it shall not (i)
part with possession of any of the Collateral (except to Secured Party or for
maintenance and repair), (ii) remove any of the Collateral from the continental
United States, or (iii) sell, rent, lease, mortgage, license, grant a security
interest in or otherwise transfer or encumber (except for Permitted Liens) any
of the Collateral.

      (d) Debtor shall pay promptly when due all taxes, license fees,
assessments and public and private charges levied or assessed on any of the
Collateral, on its use, or on this Agreement or any of the other Debt Documents.
At its option, Secured Party may discharge taxes, liens, security interests or
other encumbrances at any time levied or placed on the Collateral and may pay
for the maintenance, insurance and preservation of the Collateral and effect
compliance with the terms of this Agreement or any of the other Debt Documents.
Debtor agrees to reimburse Secured Party, on demand, all costs and expenses
reasonably incurred by Secured Party in connection with such payment or
performance and agrees that such reimbursement obligation shall constitute
Indebtedness.

      (e) Debtor shall, at all times, keep accurate and complete records of the
Collateral, and Secured Party shall have the right to inspect and make copies of
all of Debtor's books and records relating to the Collateral during normal
business hours, after giving Debtor reasonable prior notice.

      (f) Debtor agrees and acknowledges that any third person who may at any
time possess all or any portion of the Collateral shall be deemed to hold, and
shall hold, the Collateral as the agent of, and as pledge holder for, Secured
Party. Secured Party may at any time give notice to any third person described
in the preceding sentence that such third person is holding the Collateral as
the agent of, and as pledge holder for, the Secured Party.

4.    INSURANCE.

      (a) Debtor shall at all times that the Collateral is not in Secured
Party's possession bear the entire risk of any loss, theft, damage to, or
destruction of, any of the Collateral from any cause whatsoever.

<PAGE>

      (b) Debtor agrees to keep the Collateral insured against loss or damage by
fire and extended coverage perils, theft, burglary, and for any or all
Collateral which are vehicles, for risk of loss by collision, and if requested
by Secured Party, against such other risks as Secured Party may reasonably
require. The insurance coverage shall be in an amount no less than the full
replacement value of the Collateral, and deductible amounts, insurers and
policies shall be acceptable to Secured Party. Debtor shall deliver to Secured
Party policies or certificates of insurance evidencing such coverage. Each
policy shall name Secured Party as a loss payee, shall provide for coverage to
Secured Party regardless of the breach by Debtor of any warranty or
representation made therein, shall not be subject to co-insurance (other than
standard deductibles), and shall provide that coverage may not be canceled or
altered by the insurer except upon thirty (30) days prior written notice to
Secured Party. Debtor appoints Secured Party as its attorney-in-fact to make
proof of loss, claim for insurance and adjustments with insurers, and to receive
payment of and execute or endorse all documents, checks or drafts in connection
with insurance payments. Secured Party shall not act as Debtor's
attorney-in-fact unless Debtor is in default hereunder. Proceeds of insurance in
an amount in excess of $500,000 per claim shall be applied, at the option of
Secured Party, to repair or replace the Collateral or to reduce any of the
Indebtedness.

5.    REPORTS.

      (a) Debtor shall promptly notify Secured Party of (i) any change in the
name of Debtor, (ii) any change in the state of its incorporation, organization
or registration, (iii) any relocation of its chief executive offices, (iv) any
relocation of any of the Collateral, (v) any of the Collateral being lost,
stolen, missing, destroyed, materially damaged or worn out, or (vi) any lien,
claim or encumbrance other than Permitted Liens attaching to or being made
against any of the Collateral.

      (b) Debtor will deliver to Secured Party financial statements as follows.
Debtor agrees to provide quarterly unaudited statements and annual audited
statements, certified by a recognized firm of certified public accountants,
within 10 days after the statements are provided to the Securities and Exchange
Commission ("SEC"). Annually, Debtor will be required to provide a board
approved operating plan for the subsequent year, and a copy of the Debtor's
Report of Independent Auditor. Debtor will also provide, on an as requested
basis, other information, including monthly financial statements, as reasonably
requested by the Secured Party. All quarterly and annual statements shall be
prepared using generally accepted accounting principles ("GAAP") and shall be in
compliance with SEC requirements.

6.    FURTHER ASSURANCES.

      (a) Debtor shall, upon request of Secured Party, furnish to Secured Party
such further information, execute and deliver to Secured Party such documents
and instruments (including, without limitation, Uniform Commercial Code
financing statements) and shall do such other acts and things as Secured Party
may at any time reasonably request relating to the perfection or protection of
the security interest created by this Agreement or for the purpose of carrying
out the intent of this Agreement. Without limiting the foregoing, Debtor shall
cooperate and do all acts reasonably requested by Secured Party to continue in
Secured Party a perfected first security interest in the Collateral, and shall
obtain and furnish to Secured Party any subordinations, releases, landlord
waivers, lessor waivers, mortgagee waivers, or control agreements, and similar
documents as may be from time to time reasonably requested by, and in form and
substance satisfactory to, Secured Party.

      (b) Debtor authorizes Secured Party to file a financing statement and
amendments thereto describing the Collateral and containing any other
information required by the applicable Uniform Commercial Code. Debtor
irrevocably grants to Secured Party the power to sign Debtor's name and
generally to act on behalf of Debtor to execute and file applications for title,
transfers of title, financing statements, notices of lien and other documents
pertaining to any or all of the Collateral; this power is coupled with Secured
Party's interest in the Collateral. Debtor shall, if any certificate of title be
required or permitted by law for any of the Collateral, obtain and promptly
deliver to Secured Party such certificate showing the lien of this Agreement
with respect to the Collateral. Debtor ratifies its prior authorization for
Secured Party to file financing statements and amendments thereto describing the
Collateral and containing any other information required by the Uniform
Commercial Code if filed prior to the date hereof.

      (c) Debtor shall indemnify and defend the Secured Party, its successors
and assigns, and their respective directors, officers and employees, from and
against all claims, actions and suits (including, without limitation, related
attorneys' fees) of any kind whatsoever arising, directly or indirectly, in
connection with any of the Collateral, except for claims, actions or suites
arising from the gross negligence or willful misconduct of the Secured Party.

7.    DEFAULT AND REMEDIES.

      (a) Debtor shall be in default under this Agreement and each of the other
Debt Documents if:

<PAGE>

            (i) Debtor breaches its obligation to pay when due any installment
or other amount due or coming due under any of the Debt Documents and fails to
cure the breach within ten (10) business days;

            (ii) Debtor, without the prior written consent of Secured Party,
attempts to or does sell, rent, lease, license, mortgage, grant a security
interest in, or otherwise transfer or encumber (except for Permitted Liens) any
of the Collateral;

            (iii) Debtor breaches any of its insurance obligations under
Section 4;

            (iv) Debtor breaches any of its other obligations under any of the
Debt Documents and fails to cure that breach within thirty (30) days after
written notice from Secured Party;

            (v) Any warranty, representation or statement made by Debtor in any
of the Debt Documents or otherwise in connection with any of the Indebtedness
shall be false or misleading in any material respect when made;

            (vi) Any of the Collateral is subjected to attachment, execution,
levy, seizure or confiscation in any legal proceeding or otherwise, or if any
legal or administrative proceeding is commenced against Debtor or any of the
Collateral, which in the reasonable commercial judgment of Secured Party
subjects any of the Collateral to a material risk of attachment, execution,
levy, seizure or confiscation and no bond is posted or protective order obtained
to negate such risk;

            (vii) Debtor breaches or is in default under any other agreement
between Debtor and Secured Party;

            (viii) Debtor or any guarantor or other obligor for any of the
Indebtedness (collectively "GUARANTOR") dissolves, terminates its existence,
becomes insolvent or ceases to do business as a going concern;

            (ix) If Debtor or any Guarantor is a natural person, Debtor or any
such Guarantor dies or becomes incompetent;

            (x) A receiver is appointed for all or of any material part of the
property of Debtor or any Guarantor, or Debtor or any Guarantor makes any
assignment for the benefit of creditors;

            (xi) Debtor or any Guarantor files a petition under any bankruptcy,
insolvency or similar law, or any such petition is filed against Debtor or any
Guarantor and is not dismissed within forty-five (45) days;

            (xii) Debtor's improper filing of an amendment or termination
statement relating to a filed financing statement describing the Collateral;

            (xiii) There is a material adverse change in the Debtor's financial
condition which results or could reasonably be expected to result in Debtor
being unable to perform its obligations under this Agreement for the remainder
of the term of this Agreement;

            (xiv) Any Guarantor revokes or attempts to revoke its guaranty of
any of the Indebtedness or fails to observe or perform any covenant, condition
or agreement to be performed under any guaranty or other related document to
which it is a party;

            (xv) Debtor defaults under any other material obligation for (A)
borrowed money, (B) the deferred purchase price of property or (C) payments due
under any lease agreement; or

            (xvi) At any time during the term of this Agreement Debtor sells
more than 50% of its interest in the company to another corporation or business
or all or substantially all of its assets without Secured Party's prior written
consent, which consent will not be unreasonably withheld.

      (b) If Debtor is in default hereunder, the Secured Party, at its option,
may upon written notice to Debtor declare any or all of the Indebtedness to be
immediately due and payable, without demand or notice to Debtor or any
Guarantor. The accelerated obligations and liabilities shall bear interest (both
before and after any judgment) until paid in full at the lower of eighteen
percent (18%) per annum or the maximum rate not prohibited by applicable law.

      (c) During a default hereunder, Secured Party shall have all of the rights
and remedies of a Secured Party under the Uniform Commercial Code, and under any
other applicable law. Without limiting the foregoing, Secured Party shall have
the right to (i) notify any account debtor of Debtor under any account or any
obligor on any instrument which constitutes part of the Collateral to make
payment to the Secured Party, (ii) with or without legal process, peaceably
enter any premises where the Collateral may be and take possession of and remove
the Collateral from the premises or store it on the premises, (iii) sell the
Collateral at public or private sale, in whole or in part, and have the right to
bid and purchase at said sale, or (iv) lease or otherwise dispose of all or part
of the

<PAGE>

Collateral, applying proceeds from such disposition to the obligations then in
default. If requested by Secured Party, Debtor shall promptly assemble the
Collateral and make it available to Secured Party at a place to be designated by
Secured Party which is reasonably convenient to both parties. Secured Party may
also render any or all of the Collateral unusable at the Debtor's premises
(subject to the rights of third parties) and may dispose of such Collateral on
such premises without liability for rent or costs. Any notice that Secured Party
is required to give to Debtor under the Uniform Commercial Code of the time and
place of any public sale or the time after which any private sale or other
intended disposition of the Collateral is to be made shall be deemed to
constitute reasonable notice if such notice is given to the last known address
of Debtor at least ten (10) days prior to such action.

      (d) Proceeds from any sale or lease or other disposition shall be applied:
first, to all costs of repossession, storage, and disposition including without
limitation attorneys', appraisers', and auctioneers' fees; second, to discharge
the obligations then in default; third, to discharge any other Indebtedness of
Debtor to Secured Party, whether as obligor, endorser, guarantor, surety or
indemnitor; fourth, to expenses incurred in paying or settling liens and claims
against the Collateral; and lastly, to Debtor, if there exists any surplus.
Debtor shall remain fully liable for any deficiency.

      (e) Debtor agrees to pay all reasonable attorneys' fees and other costs
incurred by Secured Party in connection with the enforcement, assertion, defense
or preservation of Secured Party's rights and remedies under this Agreement, or
if prohibited by law, such lesser sum as may be permitted. Debtor further agrees
that such fees and costs shall constitute Indebtedness.

      (f) Secured Party's rights and remedies under this Agreement or otherwise
arising are cumulative and may be exercised singularly or concurrently. Neither
the failure nor any delay on the part of the Secured Party to exercise any
right, power or privilege under this Agreement shall operate as a waiver, nor
shall any single or partial exercise of any right, power or privilege preclude
any other or further exercise of that or any other right, power or privilege.
SECURED PARTY SHALL NOT BE DEEMED TO HAVE WAIVED ANY OF ITS RIGHTS UNDER THIS
AGREEMENT OR UNDER ANY OTHER AGREEMENT, INSTRUMENT OR PAPER SIGNED BY DEBTOR
UNLESS SUCH WAIVER IS EXPRESSED IN WRITING AND SIGNED BY SECURED PARTY. A waiver
on any one occasion shall not be construed as a bar to or waiver of any right or
remedy on any future occasion.

      (g) DEBTOR AND SECURED PARTY UNCONDITIONALLY WAIVE THEIR RIGHTS TO A JURY
TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT, ANY OF THE OTHER DEBT DOCUMENTS, ANY OF THE INDEBTEDNESS SECURED
HEREBY, ANY DEALINGS BETWEEN DEBTOR AND SECURED PARTY RELATING TO THE SUBJECT
MATTER OF THIS TRANSACTION OR ANY RELATED TRANSACTIONS, AND/OR THE RELATIONSHIP
THAT IS BEING ESTABLISHED BETWEEN DEBTOR AND SECURED PARTY. THE SCOPE OF THIS
WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE
FILED IN ANY COURT. THIS WAIVER IS IRREVOCABLE. THIS WAIVER MAY NOT BE MODIFIED
EITHER ORALLY OR IN WRITING. THE WAIVER ALSO SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT, ANY OTHER
DEBT DOCUMENTS, OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THIS
TRANSACTION OR ANY RELATED TRANSACTION. THIS AGREEMENT MAY BE FILED AS A WRITTEN
CONSENT TO A TRIAL BY THE COURT.

8.    MISCELLANEOUS.

      (a) This Agreement, any Note and/or any of the other Debt Documents may be
assigned, in whole or in part, by Secured Party without notice to Debtor, and
Debtor agrees not to assert against any such assignee, or assignee's assigns,
any defense, set-off, recoupment claim or counterclaim which Debtor has or may
at any time have against Secured Party for any reason whatsoever. Debtor agrees
that if Debtor receives written notice of an assignment from Secured Party,
Debtor will pay all amounts payable under any assigned Debt Documents to such
assignee or as instructed by Secured Party. Debtor also agrees to confirm in
writing receipt of the notice of assignment as may be reasonably requested by
Secured Party or assignee.

      (b) All notices to be given in connection with this Agreement shall be in
writing, shall be addressed to the parties at their respective addresses set
forth in this Agreement (unless and until a different address may be specified
in a written notice to the other party), and shall be deemed given (i) on the
date of receipt if delivered in hand or by facsimile transmission, (ii) on the
next business day after being sent by express mail, and (iii) on the fourth
business day after being sent by regular, registered or certified mail. As used
herein, the term "business day" shall mean and include any day other than
Saturdays, Sundays, or other days on which commercial banks in New York, New
York are required or authorized to be closed.

      (c) Secured Party may correct patent errors and fill in all blanks in this
Agreement or in any Collateral Schedule consistent with the agreement of the
parties, and will provide notice thereof to Debtor.

      (d) Time is of the essence of this Agreement. This Agreement shall be
binding, jointly and severally, upon all parties described as the "Debtor" and
their respective heirs, executors, representatives, successors and assigns, and
shall inure to the benefit of Secured Party, its successors and assigns.

<PAGE>

      (e) This Agreement and its Collateral Schedules constitute the entire
agreement between the parties with respect to the subject matter of this
Agreement and supersede all prior understandings (whether written, verbal or
implied) with respect to such subject matter. THIS AGREEMENT AND ITS COLLATERAL
SCHEDULES SHALL NOT BE CHANGED OR TERMINATED ORALLY OR BY COURSE OF CONDUCT, BUT
ONLY BY A WRITING SIGNED BY BOTH PARTIES. Section headings contained in this
Agreement have been included for convenience only, and shall not affect the
construction or interpretation of this Agreement.

      (f) This Agreement shall continue in full force and effect until all of
the Indebtedness has been indefeasibly paid in full to Secured Party or its
assignee, and shall thereupon terminate. The surrender, upon payment or
otherwise, of any Note or any of the other documents evidencing any of the
Indebtedness shall not affect the right of Secured Party to retain the
Collateral for such other Indebtedness as may then exist or as it may be
reasonably contemplated will exist in the future. This Agreement shall
automatically be reinstated if Secured Party is ever required to return or
restore the payment of all or any portion of the Indebtedness (all as though
such payment had never been made).

      (g) Upon prior written consent of Debtor, Debtor authorizes Secured Party
to use its name, logo and/or trademark without notice to or consent by Debtor,
in connection with certain promotional materials that Secured Party may
disseminate to the public. The promotional materials may include, but are not
limited to, brochures, video tape, internet website, press releases, advertising
in newspaper and/or other periodicals, lucites, and any other materials relating
the fact that Secured Party has a financing relationship with Debtor and such
materials may be developed, disseminated and used without Debtor's review.
Nothing herein obligates Secured Party to use Debtor's name, logo and/or
trademark, in any promotional materials of Secured Party.

      (h) THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL IN ALL RESPECTS BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH, THE
INTERNAL LAWS OF THE STATE OF CONNECTICUT (WITHOUT REGARD TO THE CONFLICT OF
LAWS PRINCIPLES OF SUCH STATE), INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY
AND PERFORMANCE, REGARDLESS OF THE LOCATION OF THE COLLATERAL.

          IN WITNESS WHEREOF, Debtor and Secured Party, intending to be legally
   bound hereby, have duly executed this Agreement in one or more counterparts,
   each of which shall be deemed to be an original, as of the day and year first
   aforesaid.

   SECURED PARTY:                         DEBTOR:

   GENERAL ELECTRIC CAPITAL CORPORATION   ALKERMES, INC.

   By: /s/ John Edel                      By: /s/ James Frates
       -------------                          ----------------
   Name: John Edel                        Name: James Frates

   Title: SVP                             Title: VP

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