Document:

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                                                                  Exhibit 10.20

                                          Corporate Headquarters
                                          Versicor Inc., 111 Locke Drive, Ste 2
                                          Marlborough, MA 01752
                                          (508) 481-7600
                                          Telefax (508) 481-7683

                         CONSULTING AGREEMENT

     This Consulting Agreement ("AGREEMENT"), effective as of January 1,
1997, is between VERSICOR INC. ("VERSICOR"), a Delaware corporation having
its principal office at 111 Locke Drive, Marlborough, Massachusetts 01752,
and David V. Milligan, Ph.D. ("CONSULTANT").

     WHEREAS, VERSICOR wishes to engage the services of the CONSULTANT in the
area of anti-infective drug discovery ("FIELD"); and,

     WHEREAS, the CONSULTANT wishes to provide consulting services to
VERSICOR on the terms herewith set forth;

     THEREFORE, VERSICOR and CONSULTANT agree that:

1.   TERM

     The term of this AGREEMENT shall be until December 31, 1997, commencing
on January 1, 1997, unless sooner terminated in accordance with the
provisions of Section 9. It may be extended for additional periods of time as
agreed by the mutual consent of VERSICOR and CONSULTANT.

2.   SERVICES

     During the term of this AGREEMENT, CONSULTANT agrees to diligently and
conscientiously use his best efforts to discharge projects in the FIELD as may
be reasonably requested from time to time by VERSICOR. Responsibilities of
CONSULTANT include providing such advice and information relating to the
FIELD as VERSICOR may reasonably request from time to time, and communicating
with various third parties on behalf of VERSICOR on matters related to the
FIELD. During the term of this AGREEMENT, CONSULTANT shall not take part in
any activity in the FIELD which is a conflict of interest with his activities
on behalf of VERSICOR, and he shall not assist any other person or
organization that competes, or intends to compete with VERSICOR in this
FIELD. Notwithstanding the provisions of this Section 2, nothing in this
AGREEMENT shall preclude CONSULTANT from providing consulting services to any
other person or entity for such projects which are not within the FIELD. It
is understood that provision of these services would not preclude
CONSULTANT'S full time employment by another, non-competing, organization
(e.g. as CEO or senior officer).

3.   COMPENSATION

     VERSICOR shall pay CONSULTANT at the rate of US$8,333.33 per month
VERSICOR shall also reimburse CONSULTANT for all travel, office and related
expenses reasonably incurred in connection with the performance of duties as
a consultant to VERSICOR.

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     In a monthly invoice, CONSULTANT shall document the time spent and
expenses incurred in connection with providing consulting service to
VERSICOR. VERSICOR shall pay such invoice within thirty (30) days of its
receipt.

     The CONSULTANT shall not be entitled to any benefits, coverages, or
privileges, including, without limitation, social security, unemployment,
workers' compensation, medical or pension payments, or holiday/vacation pay
or other such benefits made available to employees of VERSICOR.

4.   INDEPENDENT CONTRACTOR

     CONSULTANT shall be considered to be an independent contractor and not
an agent or employee of VERSICOR and has no authority to bind VERSICOR.

5.   RECORDS AND REPORTS

     CONSULTANT agrees to keep records, in such form as the parties may
agree, to make reports in writing to VERSICOR at VERSICOR's reasonable
request and to deliver to VERSICOR upon termination of the AGREEMENT or at
any other time upon request by VERSICOR all records, files, memoranda, notes,
designs, data, reports, drawings, plans, software, software documentation,
sketches, laboratory and research notebooks and other documents (and all
copies or reproductions of such materials) relating to the business of
VERSICOR. Such written records shall be available to and remain the sole
property of VERSICOR.

6.   REPRESENTATIONS AND WARRANTEES

     CONSULTANT represents and warrants that CONSULTANT is free to enter into
this AGREEMENT and perform the consulting services provided for in this
AGREEMENT. CONSULTANT agrees that all information CONSULTANT discloses to
VERSICOR shall be received by VERSICOR without further obligation to
CONSULTANT than as provided herein. CONSULTANT also represents that, except
as he has disclosed in writing to VERSICOR, he is not bound by the terms of
any agreement with any previous employer or other party to refrain from using
or disclosing any trade secret or confidential or proprietary information in
the course of his performance of services under this AGREEMENT or to refrain
from competing, directly or indirectly, with the business of such previous
employer or any other party.

CONSULTANT further represents that his performance of all the terms of this
AGREEMENT does not and will not breach any agreement to keep in confidence
proprietary information, knowledge or data acquired by him in confidence or
in trust prior to the commencement of this AGREEMENT, and he will not
disclose to VERSICOR or induce VERSICOR to use any confidential or
proprietary information or material belonging to any previous employer or
others.

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         If CONSULTANT is aware of circumstances under which VERSICOR may not
be free to use CONSULTANT's  information without liability of any kind, or
the use of which by VERSICOR would result in a possible infringement of one
or more unexpired patents or other proprietary rights known to CONSULTANT,
then CONSULTANT agrees to disclose such circumstances to VERSICOR and, upon
disclosure of such circumstance, CONSULTANT shall be under no obligation to
disclose further related information to VERSICOR.

7.       NON-DISCLOSURE AND OTHER RESTRICTIONS

         While serving as a CONSULTANT to VERSICOR, CONSULTANT may obtain
knowledge or private information belonging to, or possessed or used by,
VERSICOR and its business. This knowledge or information (the "PROPRIETARY
INFORMATION") may include, but is not limited to, knowledge or information in
the form of proprietary, confidential or trade secret processes, plans,
materials, formulas, and the like relating to VERSICOR's business, products
and other activities.

         CONSULTANT agrees to treat such knowledge or information as
confidential.

         CONSULTANT agrees that he will not, without the prior written
consent of VERSICOR, at any time during the term of this AGREEMENT or
extensions thereof as provided in Section 1, and for a period of five (5)
years after termination of this AGREEMENT, directly or indirectly reveal,
furnish or make known to any person or use for CONSULTANT'S benefit or the
benefit of others any PROPRIETARY INFORMATION of VERSICOR, disclosed to,
learned of, developed, or otherwise acquired by CONSULTANT while performing
services for VERSICOR. CONSULTANT is permitted to disclose the information
obtained under the terms of this AGREEMENT to third parties only on a
need-to-know basis related to the performance of work under this AGREEMENT,
provided that VERSICOR has approved the disclosure in advance, and only if
such persons are bound to protect the confidentiality of such information to
the same extent as the CONSULTANT pursuant to this AGREEMENT.

         This obligation is specifically qualified and limited by the
understanding that CONSULTANT will not have any obligation or liability of
any kind with respect to any PROPRIETARY INFORMATION which:

         (a)   is generally known to the public at the time of disclosure or
               becomes generally known through no wrongful act on the part of
               the CONSULTANT;

         (b)   becomes known to the CONSULTANT through disclosure by sources
               other than VERSICOR having the legal right to disclose such
               PROPRIETARY INFORMATION;

         (c)   has been independently developed by the CONSULTANT without
               reference to or use of the PROPRIETARY INFORMATION; or

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         (d)   is required to be disclosed by the CONSULTANT to comply with
               applicable laws or governmental regulations, PROVIDED THAT the
               CONSULTANT provides prior written notice of such disclosure to
               VERSICOR and takes reasonable and lawful actions to avoid
               and/or minimize the extent of such disclosure.

8.       INTELLECTUAL PROPERTY

         CONSULTANT agrees that all inventions, data, works, discoveries,
designs, technology and improvements, (whether or not protectable by a patent
or a copyright) ("INVENTIONS") related to the business of the VERSICOR, which
are conceived of, made, reduced to practice, created, written, designed or
developed, authored or made by CONSULTANT, alone or in combination with
others, in the course of the performance of services under this AGREEMENT,
shall be the sole and exclusive property of VERSICOR. The inventions are to
be promptly reported to VERSICOR but otherwise maintained in confidence by
CONSULTANT. All works authored by the CONSULTANT under this Agreement shall
be deemed "works made for hire" to the extent permitted by the copyright law.

         CONSULTANT hereby assigns to VERSICOR all INVENTIONS and any and all
related patents, copyrights, trademarks, trade names, and other industrial and
intellectual property rights and applications therefor, in the United States
and elsewhere, and appoints any officer of VERSICOR as his duly authorized
agent to execute, file, prosecute and protect the same before any government
agency, court or authority.

         CONSULTANT agrees to cooperate fully with VERSICOR and its nominees
to obtain patents or register copyrights in any and all countries for these
INVENTIONS, and to execute all papers for use in applying for and obtaining
such protection thereon as VERSICOR may desire, together with assignments
thereof to confirm VERSICOR's ownership thereof, all at VERSICOR's expense.

         No rights are hereby given to VERSICOR in any inventions conceived
and evidenced in an invention record or disclosure, or under any patents or
patent applications that CONSULTANT may own prior to the effective date of
this AGREEMENT or may subsequently acquire which do not arise out of the work
performed by CONSULTANT during the term of this AGREEMENT.

9.       TERMINATION

         VERSICOR or CONSULTANT may terminate this AGREEMENT upon fourteen
(14) days written notice to other party. Such termination will be without
prejudice to any right or remedy either VERSICOR or CONSULTANT might have as
a result of this AGREEMENT or due to a failure of the other to perform its
obligations under this AGREEMENT.

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     If this AGREEMENT is terminated by VERSICOR, CONSULTANT shall be entitled
to full payment for all expenses already incurred and for performance of
consulting services prior to the date of termination, for which VERSICOR is
obligated to pay as described in Section 3 of this AGREEMENT, subject to the
limitations on reimbursement of expenses paid or incurred prior to the
effective date of termination. Such payments shall constitute full settlement
of any and all claims of CONSULTANT of every description against VERSICOR.
Notwithstanding the foregoing, VERSICOR may terminate this AGREEMENT, effective
immediately upon receipt of written notice, if CONSULTANT breaches or threatens
to breach any provision of this AGREEMENT.

10.  NOTICES

     Notices, and other communications required to be given hereunder shall be
effective when sent by either party by registered or certified mail to the
other party at the address set forth below or to such other address as one party
may from time-to-time designate by written notice to the other.

     ------------------------              ------------------------
     Versicor Inc.                         David V. Milligan, Ph.D.
     111 Locke Drive                       801 Interlaken Lane
     Marlborough, MA 01752                 Libertyville, IL 60048
     Phone: (508) 481-6700                 Phone: (847) 367-0895
     Fax: (508) 460-9765                   Fax: (847) 367-1342

     Invoices are to be sent directly to:

     ACCOUNTS PAYABLE
     Versicor Inc.
     111 Locke Drive
     Marlborough, MA 01752

Invoices must be submitted with full letterhead information. They must be
signed, and clearly marked as an "INVOICE." If appropriate, invoices should also
reference either a protocol or purchase order number.

11.  IMPOSSIBILITY OF PERFORMANCE

     Neither of the parties hereto shall be liable in damages for any delay or
default which is caused by conditions beyond its control, including but not
limited to Acts of God, governmental restrictions, continuing domestic or
international problems such as war or insurrections, strikes, fires, floods,
work stoppages, embargoes, and/or lack of materials; provided however that any
party hereto shall have the right to terminate this AGREEMENT if the other party
is unable to fulfill its obligations hereunder due to any of the above-mentioned
causes.

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12.  SEPARABILITY AND WAIVER

     If any of the terms, provisions, or conditions of this AGREEMENT or the
application thereof to any circumstances shall be ruled invalid or
unenforceable, the validity or enforceability of the remainder of this AGREEMENT
shall not be affected thereby, and each of the other terms, provisions, and
conditions of this AGREEMENT shall be valid and enforceable to the fullest
extent permitted by law.

     A waiver or consent regarding any term, provision, or condition of this
AGREEMENT given by VERSICOR on any one occasion shall be effective only in that
instance and shall not be construed as a bar or waiver of any right on any
other occasion.

13.  AMENDMENT

     This AGREEMENT may be amended or modified only by a written instrument
executed by both VERSICOR and CONSULTANT.

14.  SUCCESSORS AND ASSIGNS

     This AGREEMENT shall be binding upon, and inure to the benefit of, both
parties and their respective successors and assigns, including any
corporation with which, or into which, VERSICOR may be merged or which may
succeed to its assets or business, provided, however, that the obligations of
CONSULTANT are personal and shall not be assigned by CONSULTANT.

15.  ENTIRE AGREEMENT

     This AGREEMENT constitutes the entire agreement between the parties and
supersedes all prior agreements and understandings, whether written or oral,
relating to the subject matter of this AGREEMENT.

IN WITNESS WHEREOF, the parties hereto have caused this six (6) page
AGREEMENT to be executed in duplicate.

VERSICOR INC.                          CONSULTANT

By: /s/ Timothy J. Barberich           By: /s/ David V. Milligan
    ------------------------               ---------------------
Name:                                  Name: David V. Milligan
     -----------------------                 -------------------
Title: Director                        Title: --
      ----------------------                 -------------------
Date: 1-16-97                          Date: 2-11-97
      ----------------------                  -------------------

                                       6<PAGE>

                            FIRST AMENDMENT AGREEMENT

      This FIRST AMENDMENT AGREEMENT dated as of December 30, 1997, by and
between VERSICOR INC., a Delaware corporation (the "COMPANY"), and FLEET
NATIONAL BANK (the "Bank").

      WHEREAS, the Loan Agreement (as defined below) provides that the Company
may borrow from the Bank with respect to the Revolving Loans and a Term Loan;
and

      WHEREAS, on the date hereof, the outstanding aggregate principal amount of
the Revolving Loans and the Term Loan is zero and the Bank and the Company wish
to terminate the Bank's commitment to make Revolving Credit Loans and modify the
Term Loan provisions of the Loan Agreement as set forth herein;

      WHEREAS, in connection with such modifications the Bank has agreed to
accept a Put Agreement from Sepracor Inc. "SEPRACOR") in substitution for each
of the Guaranty Agreement (Sepracor/Versicor) and the Deposit Pledge Agreement
made by Sepracor in favor of the Bank;

      NOW, THEREFORE, in consideration of the foregoing and the agreements
contained herein, the parties hereby agree as follows:

      1.    REFERENCE TO LOAN AGREEMENT.

      Reference is made to the Revolving Credit, Term Loan and Security
Agreement dated as of December 31, 1996 (as the same may be further amended and
restated from time to time, the "LOAN Agreement"), by and between the Company
and the Bank. Capitalized terms used herein which are defined in the Loan
Agreement have the same meanings herein as therein, except to the extent that
such meanings are amended hereby.

      2.    AMENDMENTS.

      The Company and the Bank agree that the Loan Agreement is hereby amended,
effective as of the date hereof, as follows:

      (a) DELETIONS FROM SECTION 1.1 OF THE LOAN AGREEMENT. The following
definitions are hereby deleted from Section 1.1 of the Loan Agreement:
Applicable Margin, Available Aggregate Revolving Commitment, BioSepra Credit
Agreement, Deposit Pledge Agreement, Guaranty Agreement (BioSepra), Guaranty
Agreement (Versicor), Notice of Borrowing, Qualifying Equipment, Revolving
Commitment Amount, Revolving Credit Period, Revolving Credit Termination Date,
Revolving Loans, Revolving Note, Sepracor Credit Agreement, Technology Transfer
Agreement and Term Loan Advance Period.

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      (b) ADDITIONS TO SECTION 1.1 OF THE LOAN AGREEMENT. The following
definitions are hereby added to Section 1.1 of the Loan Agreement:

            CASH EQUIVALENT AMOUNT. The sum of the following, without
      duplication, none of which may be subject to any Encumbrances except for
      Encumbrances in favor of the Bank or any of its Affiliates: (1) cash held
      by the Company in the United States and at the Bank, PLUS (2) Qualified
      Investments of the Company held in the United States and at the Bank.

            CONTROL AND SECURITY AGREEMENT. The Control and Security Agreement
      dated as of the date of the First Amendment Agreement between the Bank and
      the Company in the form attached hereto as EXHIBIT D.

            COST OF FUNDS. The per annum rate of interest which the Bank is
      required to pay, or is offering to pay, for wholesale liabilities,
      adjusted for reserve requirements and such other requirements as may be
      imposed by federal, state or local government and regulatory agencies, as
      determined by the Fleet Treasury Group.

            FIRST AMENDMENT AGREEMENT. The First Amendment Agreement dated as of
      December 30, 1997 between the Bank and the Company.

            PUT AGREEMENT. The Put Agreement dated as of the date of the First
      Amendment Agreement between the Bank and Sepracor in the form attached
      hereto as EXHIBIT E.

      (c)   MODIFICATIONS TO SECTION 1.1 OF THE LOAN AGREEMENT.

            i. The definition of Corporate Services Agreement is hereby deleted
      and replaced with the following definition:

            ADMINISTRATIVE SERVICES AGREEMENT. The Administrative Services
      Agreement dated as of December 9, 1997 between Sepracor and the Company.
      All references to the Corporate Services Agreement shall be replaced by
      the "Administrative Services Agreement."

            ii. The definition of "Loans" is replaced by the following: "LOANS.
      The Term Loan." All references in the Agreement to the "Revolving Loans"
      are hereby replaced by the "Loans".

            iii. The definition of "Notes" is replaced by the following: "NOTES.
      Collectively, the Term Notes, each individually, a 'Note.'"

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      (d) DELETION OF GUARANTY AGREEMENTS. All references in the Loan Agreement
to the Guaranty Agreement (Sepracor/Versicor) and the Guaranty Agreement
(Sepracor/BioSepra), including the definitions in Section 1.1, are hereby
deleted.

      (e) DELETION OF DEPOSIT PLEDGE AGREEMENT. All references in the Loan
Agreement to the Deposit Pledge Agreement, including the definition in Section
1.1, are hereby deleted.

      (f) AMENDMENT TO SECTION 2. Section 2 of the Loan Agreement is hereby
deleted and replaced by the following:

                                    SECTION 2
                              DESCRIPTION OF LOANS

            2.1   THE TERM LOANS.

            (a) GENERAL PROVISIONS. Upon the terms and subject to the conditions
      of set forth in the First Amendment Agreement, and in reliance upon the
      representations, warranties and covenants of the Company made herein and
      therein, the Bank agrees to make a term loan (the "TERM LOAN") to the
      Company in the original principal amount of $6,034,000 for the purpose of
      refinancing a term loan owed by the Company to Sepracor.

            (b) TERM NOTES. The Term Loan shall be evidenced by two Term Notes,
      each payable to the order of the Bank in the original principal amounts of
      $2,000,000 and $4,034,000. The Term Notes shall be dated the date of the
      First Amendment Agreement and shall have the blanks therein appropriately
      filled in. The Term Notes shall each bear interest at the rate or rates,
      and such interest shall be payable in the dates specified in Section 2.8.

            2.2   LOAN ACCOUNT; NOTATIONS.

            (a) The Bank shall enter the Term Loan as a debit in the Loan
      Account. The Bank shall also record in the Loan Account all payments made
      by the Company on account of the Term Loan, and may also record therein,
      in accordance with customary accounting practices, other debits and
      credits, and all interest, fees, charges and expenses related to the Term
      Loan chargeable to the Company under this Agreement. The debit balance of
      the Loan Account shall reflect the amount of the Company's Obligations to
      the Bank from time to time by reason of the Term Loan and other
      appropriate charges hereunder. Periodically, the Bank shall render a
      statement of account showing as of its date the debit balance of the Loan
      Account with respect to the Term Loan which, unless within thirty (30)
      days of such date notice to the contrary is received by

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      the Bank from the Company, absent manifest error, shall be considered
      correct and accepted by the Company and conclusively binding upon it.

            (b) The Bank shall, and is hereby irrevocably authorized by the
      Company to, enter on the schedule forming a part of the each Term Note or
      otherwise in its records appropriate notations evidencing the date and the
      amount of the Term Loan, the interest rate applicable thereto and the date
      and amount of each payment of principal made by the Company with respect
      thereto; and in the absence of manifest error, such notations shall
      constitute conclusive evidence thereof. The Bank is hereby irrevocably
      authorized by the Company to attach to and make a part of any Term Note a
      continuation of any such schedule as and when required. No failure on the
      part of the Bank to make any notation as provided in this subsection (b)
      shall in any way affect any Term Loan or the rights or obligations of the
      Bank or the Company with respect thereto.

            2.3 ADVANCES. Subject to the terms and conditions of this Agreement,
      the Bank shall make the Term Loan on the disbursement date specified
      therefor by crediting the amount of the Term Loan to the Company's demand
      deposit account with the Bank or as otherwise instructed in writing by the
      Company.

            2.4 PAYMENTS AND PREPAYMENTS OF THE LOANS. (a) The Company shall not
      have any right to prepay the principal amount of any Term Note other than
      as provided in this Section 2.4.

            (b) On at least one (1) Business Day prior written notice to the
      Bank, the Company may, at its option, prepay the Term Notes, PRO RATA, in
      whole at any time or in part from time to time without penalty or premium.
      Any interest accrued on the amounts so prepaid to the date of such payment
      must be paid at the time of any such payment. Any optional prepayment of
      the Term Notes shall be applied to installments of principal payable on
      the Term Notes in the inverse order of maturity.

            (c) The Term Loan shall be payable in fifteen (15) equal quarterly
      installments, each such installment equal to $215,500.00, on the last
      Business Day of each calendar quarter commencing on March 31, 1999 with
      the final payment of the balance (together with any accrued interest and
      all other amounts due hereunder) on December 31, 2002 or such earlier date
      that the balance shall have been reduced to zero.

            2.5 METHOD OF PAYMENT. All payments and prepayments of principal and
      all payments of interest shall be made by the Company to the Bank at 75
      State Street, Boston, Massachusetts 02109 in immediately available funds,
      on or before 11:00 a.m. on the due date thereof, free and clear of, and
      without any deduction or withholding for, any taxes or other payments. The
      Bank may, and

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      the Company hereby authorizes the Bank to, debit the amount of any payment
      not made by such time to the demand deposit account of the Company with
      the Bank.

            2.6 OVERDUE PAYMENTS. (a) Upon the occurrence and during the
      continuance of an Event of Default, interest on the outstanding principal
      amount of the Term Notes and (to the extent permitted by law) on accrued
      but unpaid interest shall thereafter be payable on demand at a rate per
      annum equal to two percent (2%) above the interest rate otherwise in
      effect with respect to the Term Loan. Upon the cure of an Event of Default
      and the payment of interest at the default rate through the date of such
      cure, the interest rate shall revert to that provided for in Section 2.8.

            (b) If a payment of principal or interest hereunder is not made in
      full within 10 days of date when due, the Company will pay to the Bank a
      late fee equal to five percent (5%) of the amount of such payment. Nothing
      in the preceding sentence shall affect the Bank's right to exercise any of
      its rights or remedies, including those provided in Section 8.2, if an
      Event of Default has occurred.

            2.7 HOLIDAYS. If any payment required by this Agreement becomes due
      on a day that is not a Business Day such payment may be made on the next
      succeeding Business Day, and such extension Shall be included in computing
      interest in connection with such payment.

            2.8 INTEREST ON THE LOANS. (a) The Term Notes shall bear interest on
      the unpaid principal amount thereof until paid in full at the rate or
      rates per annum determined (on the basis of the actual number of days
      elapsed over a 360-day year) in this Section 2.8. The rate of interest for
      the Term Loan shall be computed at the Prime Rate plus one-half percent
      (0.5%); provided that upon delivery by the Company to the Bank of a Fixed
      Rate Request (as defined below), the rate of interest for the entire
      outstanding principal amount of the Term Loan shall be computed at the
      Fixed Quoted Rate plus two and one-half percent (2.5 %) as of the date
      three Business Days after the date of the delivery of the Fixed Rate
      Request; provided that with respect to any prepayment of the Term Loan
      while it is subject to a Fixed Quoted Rate, the Company hereby promises to
      pay to the Bank an amount equal to the product of (i) the excess, if any,
      of the rate of interest on the principal amount of the Term Loan so
      prepaid OVER the rate of interest on debt securities issued by the
      Treasury of the United States of America on a date approximating the date
      of payment of such principal amount and having a maturity date
      approximating the last Business Day of the fixed rate period for such
      principal amount, multiplied by (ii) the principal amount so prepaid,
      multiplied by (iii) a fraction, the numerator of which is the number of
      days remaining in the fixed rate period for such principal amount and the
      denominator of which is 360.

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            For purposes of this Section 2.8, (a) "FIXED RATE REQUEST" shall
      mean a notice in writing (or by telephonic communication confirmed by
      telex, telecopy or other facsimile transmission on the same day as the
      telephone request) delivered by the Company to the Bank requesting that
      interest on the entire outstanding principal amount of the Term Loan be
      based on the Fixed Quoted Rate, and (b) "FIXED QUOTED RATE" shall mean an
      interest rate quoted by the Bank as its Cost of Funds for fixed quoted
      rate loans with a four-year maturity, which rate shall not necessarily be
      the rate made available by the Bank for fixed quoted rate loans made to
      other borrowers and shall be quoted to the Company by the Bank upon
      request by the Company.

            (b) Interest on the Term Loan shall be payable monthly in arrears on
      the last Business Day of each month, commencing on January 31, 1998 and at
      maturity (whether by acceleration or otherwise).

            (c) The rate of interest payable on the outstanding principal
      balance of the Term Loan which is not then subject to a Fixed Quoted Rate
      shall take effect simultaneously with the corresponding change in the
      Prime Rate.

            2.9 CONDITIONS FOR BASING INTEREST ON A FIXED QUOTED RATE. Interest
      on the Term Loan may be subject to a Fixed Quoted Rate upon the condition
      that:

            (a) The Bank shall have received a Fixed Rate Request from the
      Company within the time period required by Section 2.8 above;

            (b) As of the date of the Fixed Rate Request and as of the first day
      that the Fixed Quoted Rate shall apply there shall exist no Event of
      Default, nor any Default, which has not been waived by the Bank; and

            (c) The Bank shall not have determined in good faith that it is
      unable to quote a Fixed Quoted Rate.

            2.10 CAPITAL REQUIREMENTS. If after the date hereof, the Bank shall
      have determined that the adoption or implementation of any applicable law,
      rule or regulation regarding capital requirements for banks or bank
      holding companies, or any change therein (including, without limitation,
      any change according to a prescribed schedule of increasing requirements,
      whether or not known on the date hereof), or any change in the
      interpretation or administration thereof by any governmental authority,
      central bank or comparable agency charged with the interpretation or
      administration thereof, or compliance by the Bank with any request or
      directive of such entity regarding capital adequacy (whether or not having
      the force of law) has the effect of reducing the return on the Bank's
      capital to a level below that which the Bank could have achieved (taking
      into consideration the Bank's policies with respect to capital adequacy
      immediately

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<PAGE>

      before such adoption, implementation, change or compliance and assuming
      that the Bank's capital was fully utilized prior to such adoption,
      implementation, change or compliance) but for such adoption,
      implementation, change or compliance as a consequence of its Commitment to
      make Loans hereunder by any amount deemed by the Bank to be material, the
      Company shall pay to the Bank as an additional fee from time to time on
      demand such amount as the Bank shall have determined to be necessary to
      compensate it for such reduction. The determination by the Bank of such
      amount, if done on the basis of any reasonable averaging and attribution
      methods, shall in the absence of manifest error be conclusive, and at the
      Company's request, the Bank shall demonstrate the basis of such
      determination.

      (g)   AMENDMENT  TO SECTION 3.  Section 3.1 is hereby  amended by
deleting subsections (1), (n) and (o).

      (h)   AMENDMENT TO SECTION 4.

            i. Section 4.13 is hereby amended by deleting subsections (b) and
      (c) and replacing them with the following:

            (b) The proceeds of the Term Loan shall be used exclusively for the
      purpose of refinancing an equipment loan from Sepracor.

            ii. The last sentence of Section 4.5 is hereby deleted.

            iii. Section 4.7 is amended by deleting "1996" in the second line
      and replacing it with "1997".

      (i)   AMENDMENT TO SECTION 5.

            i. Section 5.l(a) is amended by deleting "90" in the second line and
      replacing it with "120".

            ii. Section 5.l(b) is amended by adding "and statement of changes in
      cash flows" after the word "income" in the fourth line.

            iii.  The following  Section  5.l(b1) is hereby added after
      Section 5.l(b):

            (b1) as soon as available to the Company, but in any event within 30
      days after the end of each fiscal month, the consolidated and
      consolidating balance sheets of the Company and its Subsidiaries as of the
      end of, and the related consolidated and consolidating statements of
      income and Statement of changes in cash flows for, the period then ended,
      certified by an Authorized Officer but subject, however, to normal,
      recurring year-end adjustments;

                                      -7-
<PAGE>

            iv. Section 5.l(c) is amended by adding the following at the end
      "and financial projections for the current fiscal year approved by the
      Company's Board of Directors."

            v. Section 5.8 is amended by adding the following at the end "and
      the Company will maintain not less than 95% of the aggregate amount of its
      cash not required to fulfill any payment obligation within the succeeding
      thirty days with the Bank or one of the Bank's Affiliates."

            vi.   The  following   subsections   are  hereby  added  to
      Section 5:

                  5.10 MINIMUM CASH EQUIVALENT AMOUNT. The Company shall
            maintain at all times a Cash Equivalent Amount of not less than
            $5,000,000.

                  5.11 INVESTMENTS WITH THE BANK. The Company shall at all times
            maintain a securities account with the Bank with a notional
            principal balance of not less than the lesser of (1) $4,000,000 or
            (2) outstanding principal amount of the Term Loan.

      (j)   AMENDMENT TO SECTION 6.

            i. Section 6.1 is amended by deleting subsections (c), (d) and (f),
      renumbering the existing subsection (e) as subsection (c) and adding the
      following as a new subsection (d):

                  (d) Indebtedness in respect of Capital Leases and purchase
            money financing for tangible property used in the Company's business
            in the aggregate principal amount outstanding at any time not in
            excess of $5,000,000.

            ii. Section 6.8 is hereby amended by adding the following to the end
      of the second paragraph thereof:

      , (d) repurchase or redeem in the ordinary course of the Company's
      business any shares of any class of stock of the Company held by employees
      pursuant to qualified or unqualified employee stock plans, and (e)
      repurchase any shares of any class of stock of the Company pursuant to any
      collaberation arrangements with corporate or institutional strategic
      partners in the ordinary course of business.

            iii. Section 6.9 is amended by deleting the words "Except for
      Sepracor's Subsidiaries on the date hereof so long as they remain
      Subsidiaries of Sepracor, the" and replacing them with "The".

                                      -8-
<PAGE>

            iv. Section 6.10 is amended by deleting the words "and additional"
      in the second line.

      (k)   AMENDMENT TO SECTION 7.

            i. Section 7.1 is hereby deleted and replaced by the following:

      7.1 SECURITY INTEREST. As security for the payment and performance of all
      Obligations related to the Term Loan, the Bank shall have and the Company
      hereby grants to the Bank a continuing security interest in the following
      property of the Company of every kind and description, whether now or
      hereafter existing, whether now owned or hereafter acquired, and wherever
      located (and together with all property in which the Bank may have a
      security interest pursuant to any other security agreements, pledge
      agreements, mortgages and other instruments creating a security interest
      in favor of the Bank and securing the Obligations, collectively, the
      "Collateral"): goods, including without limitation, machinery, tools,
      furniture, fixtures, equipment and all other tangible personal property of
      every kind; leaseholds and leasehold improvements; and proceeds and
      products of all of the foregoing.

            ii. Section 7.2 is hereby amended by deleting the address of the
      Company's chief executive offices in the second sentence and replacing it
      with "34790 Ardentech Court, Freemont, California 94555".

      (1)   AMENDMENT TO SECTION 8.

            i. Section 8.1(e) is amended by deleting the phrase "or by Sepracor
      in the Deposit Pledge Agreement".

            ii. Section 8.1(f) is hereby deleted and replace by the following:

                  (f) at any time prior to the indefeasible payment in full of
            Put Purchase Price pursuant to the Put Agreement or the termination
            by the Bank of the Put Agreement, the occurrence of an Event of
            Default under the Sepracor Credit Agreement or Sepracor shall fail
            to perform any material term, covenant or agreement contained in the
            Put Agreement; or

            iii. Sections 8.1(g) and (h) are amended by adding the following
      immediately prior to the word "Sepracor" in the second and first lines,
      respectively, ", at any time prior the indefeasible payment in full of Put
      Purchase Price pursuant to the Put Agreement or the termination by the
      Bank of the Put Agreement,".

            iv. Section 8. l(m) is hereby deleted and replaced by the following:

                                      -9-
<PAGE>

                  (m) Any Person (except Sepracor) shall acquire or hold,
            directly or indirectly, greater than 50% of the issued and
            outstanding shares of the capital stock of the Company having
            ordinary voting power to elect a majority of the boards of directors
            of the Company; or

            v. Section 8.2(c) is amended by deleting the parenthetical on the
      first and second line and replacing it with "(including, its rights
      against Sepracor in accordance with the provisions of the Put Agreement)".

            vi. Section 8.2(c) is amended by adding the following to clause
      (iii) after "Notes, "the Control and Security Agreement, the Put
      Agreement."

      (m)   AMENDMENT  TO SECTION 9.  Section 9.1 is hereby  amended by
deleting  the  address  for the  Company  and  replacing  it  with  the
following:

                  Versicor Inc.
                  34790 Ardentech Court
                  Freemont, California 94555
                  Attention: George Horner
                  Fax. No.

      (n)   AMENDMENT  TO EXHIBIT C.  Exhibit C is  replaced by Exhibit
C attached hereto.

      3.    NO DEFAULT; REPRESENTATIONS AND WARRANTIES, ETC.

      The Company hereby confirms that: (a) Except as set forth on the
Disclosure Schedule attached hereto, the representations and warranties of the
Company contained in Section 4 of the Loan Agreement are true on and as of the
date hereof as if made on such date (except to the extent that such
representations and warranties expressly relate to an earlier date); (b) the
Company is in compliance in all material respects with all of the terms and
provisions set forth in the Loan Agreement on its part to be observed or
performed thereunder; and (c) after giving effect to this Amendment Agreement,
no Event of Default specified in Section 8 of the Loan Agreement, nor any event
which with the giving of notice or expiration of any applicable grace period or
both would constitute such an Event of Default, shall have occurred and be
continuing.

      4.    CONDITIONS TO THIS AMENDMENT AGREEMENT.

      Concurrently herewith (and as conditions to the Bank's consent to this
Amendment Agreement), the Company will furnish the Bank with the following:

      (a)   This Amendment Agreement duly executed by the Company;

      (b)   Each of the Term Notes duly executed by the Company;

                                      -10-
<PAGE>

      (c) Control and Security Agreement duly executed by the Company;

      (d) Put Agreement in favor of the Bank duly executed by Sepracor;

      (e) a certificate of the Secretary or an Assistant Secretary of the
Company with respect to resolutions of the Board of Directors authorizing the
execution and delivery of this Amendment Agreement, the Term Notes and
identifying the officer(s) authorized to execute, deliver and take all other
actions required under this Amendment Agreement, and providing specimen
signatures of such officers;

      (f) the certificate of incorporation of the Company and all amendments and
supplements thereto, filed in the office of the Secretary of State of the State
of Delaware, each certified by said Secretary of State as being a true and
correct copy thereof;

      (g) the Bylaws of the Company and all amendments and supplements thereto,
certified by the Secretary or an Assistant Secretary as being a true and correct
copy thereof;

      (h) a certificate of the Secretary of State of the State of Delaware, as
to legal existence and good corporate standing of the Company in such state and
listing all documents on file in the office of said Secretary of State;

      (i) Payment of the entire outstanding principal amount of, and
cancellation of, the Secured Promissory Note dated December 9, 1997 made by the
Company to the order of Sepracor and the termination and release of any UCC-1
Financing Statements or other security interests of Sepracor against the
Company;

      (j) The Bank's security interest in the Collateral (as defined in Section
7.1 as amended by this Amendment Agreement) shall continue to be perfected;

      (k) Opinion of Hale & Dorr, acceptable in form and substance to the Bank
and its counsel.

      (1) Opinion of Cooley Godward LLP, reasonably acceptable in form and
substance to the Bank and its counsel.

      (m) Payment of the $30,000 facility fee by the Company to the Bank;

      (n) Such other documents and instruments as the Bank may reasonably
require in order to put this Amendment Agreement into full force and effect.

      Promptly after the date of this Amendment Agreement, the Bank will furnish
the Company with UCC-2 Financing Statement Partial Releases, duly executed by
the Bank and recorded in the appropriate filing offices and the original Term
Note and the original Revolving Credit Note, each marked cancelled.

                                      -11-
<PAGE>

      Promptly after the date of this Amendment Agreement, the Company will
furnish the Bank with (i) lien searches against the Company in all appropriate
state filing offices, (ii) a landlord's consent and estoppel with respect to its
leasehold property located in Freemont, California, in a form satisfactory to
the Bank and its counsel, (iii) an insurance binder demonstrating compliance
with Section 5.3 and pay all reasonable expenses, including legal fees and
disbursements incurred by the Bank in connection with this Amendment Agreement
and the transactions contemplated hereby.

      5.    MISCELLANEOUS.

      (a) Except to the extent specifically amended hereby, the Loan Agreement,
Loan Documents and all related documents shall remain in full force and effect.
Whenever the terms or sections amended hereby shall be referred to in the Loan
Agreement, Loan Documents or such other documents (whether directly or by
incorporation into other defined terms), such defined terms shall be deemed to
refer to those terms or sections as amended by this Amendment Agreement. All
references in the Loan Agreement, Loan Documents or such other documents to the
Notes shall be deemed to refer to the Term Notes.

      (b) This Amendment Agreement may be executed in any number of
counterparts, each of which, when executed and delivered, shall be an original,
but all counterparts shall together constitute one instrument.

      (c) This Amendment Agreement shall be governed by the laws of the
Commonwealth of Massachusetts and shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and assigns.

                                      -12-
<PAGE>

      IN WITNESSWHEREOF, the parties hereto have executed this Amendment.
Agreement which shall be deemed to be a sealed instrument as of the date first
above written.

                                       VERSICOR INC.

                                       By:  /s/ G.F.  HORNER III
                                          ----------------------------
                                          Name: George F. Horner III
                                          Title: Chief Executive Officer

                                       FLEET NATIONAL BANK

                                       By:
                                          ----------------------------
                                          Name: Kimberly A. Martone
                                          Title: Vice President
<PAGE>

      IN WITNESS WHEREOF, the parties hereto have executed this Amendment
Agreement which shall be deemed to be a sealed instrument as of the date first
above written.

                                       VERSICOR INC.

                                       By:
                                          ----------------------------
                                          Name: Robert F. Scumaci
                                          Title: Senior Vice President

                                       FLEET NATIONAL BANK

                                       By: /s/ KIMBERLY MARTONE
                                          ----------------------------
                                          Name: Kimberly A. Martone
                                          Title: Vice President

<PAGE>

                               DISCLOSURE SCHEDULE

      This Disclosure Schedule (the "Schedule") delivered pursuant to the
Revolving Credit, Term Loan and Security Agreement dated as of December 31,
1996, as amended by First Amendment Agreement, dated as of December 30, 1997,
among the Bank and Versicor Inc., (the "Credit Agreement") hereby amends the
original Schedule to the extent set forth herein. Capitalized terms used in this
Schedule and not defined herein have the meaning given such terms in the Credit
Agreement.

      Each matter set forth in this Schedule, regardless of the section number
under which it appears, which reasonably constitutes an exception to another
representation and warranty, shall be deemed to constitute an exception to such
representation and warranty. In certain instances, this Schedule summarizes
certain of the terms and provisions of the documents referenced herein. This
summary is not intended to be a complete summary of the referenced agreements.

<PAGE>

                                  SCHEDULE 4.7

                                     CHANGES

                                 (VERSICOR INC.)

      Since the date of the financial statements for the nine-month period
ending September 30, 1997, the Company has entered into the Series B Preferred
Stock Agreement, the Series C Preferred Stock Agreement and the Bridge Note,
together with the other agreements entered into in connection therewith, each
dated as of December 9, 1997 and more and fully described on Schedule 4.10
hereof.

<PAGE>

                                  SCHEDULE 4.10

                               MATERIAL AGREEMENTS

                                 (VERSICOR INC.)

1.    Industrial   Lease  between   Arcadia-Tavistock,   L.C.  and  the
      Company effective November 18, 1996 (Fremont facility).

2.    Collaboration  Agreement,  dated March 10, 1997,  between  Genome
      Therapeutics Corporation and the Company.

3.    Series B Preferred Stock Purchase Agreement, dated as of December 9, 1997,
      by and between the Company and Sepracor.

4.    Security Agreement, dated as of December 9, 1997, by and between the
      Company and Sepracor, which shall be terminated in connection with the
      funding of the Term Loans.

5.    Bridge Note, dated as of December 9, 1997, issued by the Company to
      Sepracor, which shall be repaid in full in connection with the funding of
      the Term Loans.

6.    Administrative  Services  Agreement,  dated  as  of  December  9,
      1997, by and between the Company and Sepracor.

7.    Series C Preferred Stock Purchase Agreement, dated as of December 9, 1997,
      by and among the Company and each of those persons and entities set forth
      on the Schedule of Purchasers attached thereto.

8.    Investors' Rights Agreement, dated as of December 9, 1997, by and among
      the Company and each of those persons and entities set forth on the
      Schedule of Investors attached thereto.

9.    Stockholders Agreement, dated as of December 9, 1997, by and among the
      Company, Sepracor, NEA Presidents Funds, L.P., NEW Ventures 1997, Limited
      Partnership, New Enterprise Associates VII, Limited Partnership,
      Healthcare Ventures V, Abingworth Bioventures SICAV, H&Q Healthcare
      Investors, H&Q Life Sciences Investors, S.R. One, Limited, Rho Management
      Trust II, George F. Homer III and Eric M. Gordon.

<PAGE>

                                  SCHEDULE 4.11

                                MATERIAL LICENSES
                                 (Versicor Inc.)

None.

<PAGE>

                                  SCHEDULE 4.12

                                   LITIGATION
                                 (Versicor Inc.)

None.

<PAGE>

                                  SCHEDULE 4.15

                                   INVESTMENTS
                                 (Versicor Inc.)

Bank to provide account information maintained with the Bank.

<PAGE>

                                  SCHEDULE 4.16

                                  SUBSIDIARIES
                               (of Versicor Inc.)

None.

<PAGE>

                                  SCHEDULE 6.1

                                  INDEBTEDNESS
                                 (Versicor Inc.)

1.    Bridge Note, dated as of December 9, 1997, issued by the Company to
      Sepracor in the aggregate principal amount of $6,034,000, to be repaid in
      full in connection with the funding of the Term Loans.

<PAGE>

                                  SCHEDULE 6.2

                                   GUARANTEES
                                 (VERSICOR INC.)

None.

<PAGE>

                                  SCHEDULE 6.4

                                  ENCUMBRANCES
                                 (Versicor Inc.)

1.    Security Agreement, dated as of December 9, 1997, by and between the
      Company and Sepracor granting Sepracor a security interest in the
      Company's personal property, equipment and leasehold interest, to be
      terminated in connection with the funding of the Term Loans.

<PAGE>

                                                                       EXHIBIT C

                             COMPLIANCE CERTIFICATE

Fleet National Bank
75 State Street

Boston, Massachusetts 02109

Attention:  Kimberly A. Martone
            Vice President

Ladies and Gentlemen:

      As required by Section 5.1(c) of the Revolving Credit, Term Loan and
Security Agreement dated as of December 31, 1996 as amended by the First
Amendment Agreement dated as of December 30, 1997 (the "LOAN AGREEMENT") by and
between Versicor Inc. (the "COMPANY") and Fleet National Bank (the "Bank"), a
review of the activities of the Company for the fiscal year and/or fiscal
quarter ending ___________, 19___ (the "FISCAL PERIOD") has been made under my
supervision to determine whether the Company has performed and/or maintained all
of its respective obligations under the Loan Agreement. Based upon such review,
I hereby certify to you, as an Authorized Officer of the Company, that the
Company has performed and maintained all such obligations under the Loan
Agreement, the Note and the Loan Documents for the Fiscal Period and, to the
best of my knowledge, no event has occurred that constitutes a Default or an
Even of Default as defined in the Loan Agreement. Other capitalized terms used
herein without definition have the same meanings as in the Loan Agreement.

      As required by Section [5.l(a)][5, l(b)] of the Loan Agreement financial
statements of the Company (the "FINANCIAL STATEMENTS") for the Fiscal Period and
other information required by such sections accompany this certificate. The
Financial Statements present fairly the financial position of the Company as of
the date thereof and the statements of operation of the Company for the Fiscal
Period covered thereby.

      I further certify to you, as an Authorized Officer of the Company, that
the figures set forth below accurately represent amounts required to be
calculated under the various provisions or covenants of the Loan Agreement
indicated, each as of the last day of the Fiscal Period unless otherwise
indicated.

Dated:              , 199
       -------- ----                     -----------------------------
                                         Title:

<PAGE>

SECTION 5.10 - MINIMUM CASH OR EQUIVALENTS

A.    QUALIFIED INVESTMENTS HELD IN THE U.S.
      --------------------------------------

(1) Obligations of the United
      States of America held in the U.S.      $_____________

(2) Certificates of deposit, other
      deposit instruments, bank accounts
       held in the U.S. $

(3) Commercial Paper held in the U.S.
      (see definition
      of Qualified Investments                $_____________

(4) Mutual/closed end funds that invest
      only in investments set forth
      in clauses (1) through (3)              $_____________

(5) Repurchase agreements secured by
      any one or more of the
      foregoing held in the U.S.              $_____________

(6) Qualified Investments:                        $_____________
      (sum of 1 through 5)

B.    CASH EQUIVALENT AMOUNT

(7) Unencumbered Cash held in the United States   $_____________

(8) Qualified Investments (from (6))              $_____________

(9) Actual Cash Equivalent Amount                    $_____________
      (7 + 8)

Required Minimum Cash Equivalent Amount              $5,000,000

SECTION 5.11 - INVESTMENTS WITH THE BANK

Actual Amount of Investments maintained in
Securities Account with the Bank                     $_____________

Required Minimum Investment Amount                   $4,000,000

                                      -2-
<PAGE>

                                                                       EXHIBIT D

                         Control and Security Agreement

<PAGE>

                         CONTROL AND SECURITY AGREEMENT

      This AGREEMENT (this "AGREEMENT") dated as of December 30, 1997 is between
VERSICOR INC., a Delaware corporation (the "COMPANY"), having its chief
executive offices at 34790 Ardentech Court, Freemont, California 94555 and FLEET
NATIONAL BANK ("FLEET"), in its capacity as the lender under the Credit
Agreement described below ("CREDITOR") and FLEET in its capacity as a
"securities intermediary" ("BROKER") under Article 8 of the Uniform Commercial
Code of the Commonwealth of Massachusetts (the "CODE") having its office at 75
State Street, Boston, Massachusetts 02109.

      WHEREAS, the Company and Creditor have entered into an Revolving Credit,
Term Loan and Security Agreement dated as of December 31, 1996 as amended by the
First Amendment Agreement dated as of even date hereof (as further amended from
time to time, the "CREDIT AGREEMENT") pursuant to which Creditor agreed, subject
to the terms and conditions set forth therein, to make a term loan to the
Company on the date hereof (the "TERM LOAN"), such Term Loan to be evidenced by
promissory notes made by the Company to the order of Creditor (the "TERM NOTES,"
collectively with the Credit Agreement, the "LOAN DOCUMENTS"); and

      WHEREAS, the obligation of Creditor to make the Term Loan is subject to
the conditions, among others, that the Company shall execute and deliver this
Agreement and grant, subject to the terms hereof, the security interest
hereinafter described;

      NOW, THEREFORE, in consideration of the willingness of Creditor to enter
into the Credit Agreement and to agree, subject to the terms and conditions set
forth therein, to make the Term Loan to the Company pursuant thereto, and for
other good and valuable consideration, receipt of which is hereby acknowledged,
it is hereby agreed, as follows:

1.    SECURITY INTEREST.

      1.1   FINANCIAL ASSET.

            (a) As security for the prompt and unconditional payment in full of
      the Term Loan and subject to Section 1.1(b), the Company hereby grants to
      Creditor a security interest in the following securities account
      maintained with Fleet (the "Account"):

            ACCOUNT NUMBER AND TITLE

            Versicor Inc.     Account Number 9402221544

as it exists on the date hereof and as it may be constituted in the future and,
in addition, grants to Creditor a security interest in the following:

                  (i)   any free  credit  balance or other  money,  now
            or  hereafter  credited  to,  or owing  from  Broker to the
            Company in respect of, the Account;

                  (ii) any money, securities (certificated or uncertificated),
            commodities contracts, instruments, documents, general intangibles,
            financial assets or other investment property distributed from the
            Account, now or in the future;

<PAGE>

                  (iii) all books and records relating thereto;

                  (iv) all proceeds from the sale, exchange, redemption or
            exercise of any of the foregoing, including, without limitation, any
            dividend, interest payment or other distribution of cash or property
            in respect thereof; and

                  (v) all rights incidental to the ownership of any of the
            foregoing, such as voting, conversion and registration rights and
            rights of recovery for violations of applicable securities laws

      as security for the due and punctual payment and performance of the
      Secured Obligations described in Section 1.3 hereof.

            (b) Notwithstanding the provisions of Sections 1.1(a) and 1.2(b),
      Creditor shall have no security interest in, or control of, the Account at
      any time when the Company's Cash Equivalent Amount (as defined in the
      Credit Agreement) shall equal or exceed $12,000,000. At any time when the
      Company's Cash Equivalent Amount is less than $12,000,000, the security
      interest in, or control of, the Account granted hereunder to Credit
      pursuant to Sections 1.1(a) and 1.2(b) shall automatically become and
      remain effective, without notice or any action on the part of Creditor or
      the Company, until such time that the Company's Cash Equivalent Amount
      shall equal or exceed $12,000,000 for any period of thirty (30)
      consecutive days and no Default or Event of Default under the Credit
      Agreement shall have occurred ("CONTROL TERMINATION EVENT"). Creditor
      shall promptly deliver a written notice to Broker, with a copy to the
      Company, of the occurrence of a Control Termination Event.

            (c) The Company hereby represents and warrants to Creditor that (i)
      the Account has been established in its name as recited above, (ii) the
      Account contains no financial asset which is registered in the name of the
      Company, payable to its order, or specially endorsed to it, which has not
      been endorsed to the Company or in blank, (iii) the security entitlements
      arising out of the financial assets carried in the Account and any free
      credit balance are valid and legally binding obligations of the Company,
      and (iv) except for the claims and interest of Creditor and of Broker in
      the Account, the Company does not know of any claim to or interest in the
      Account or in any financial asset carried therein. The Company agrees to
      the treatment of all property held in the Account as financial assets
      under Article 8 of the Code.

            (d)(i) "CURRENT MARKET VALUE" of the Account means, as of any date,
      the sum of (i) cash in the Account, (ii) the dollar amount, as determined
      by Creditor, equal to the product of the number of units of a security
      credited to the Account multiplied by the per unit closing price thereof
      on the exchange or market on which such security is traded as of the close
      of the business day immediately preceding such day and (iii) the dollar
      amount of certificates of deposit or similar money market instruments in
      the Account but. in each case, excluding any of the foregoing which are
      not normally traded on a nationally-recognized securities exchange or
      market or for which a market value is not readily determinable.

                                      -2-
<PAGE>

            (ii) Pursuant to Section 5.11 of the Credit Agreement, the Current
      Market Value of the Account must equal or exceed the lesser of (1)
      $4,000,000 or (2) amount of the Secured Obligations (as defined below)
      (the "MINIMUM ACCOUNT VALUE"). If at any time the Current Market Value of
      the Account is less than the Minimum Account Value the Company shall
      immediately deposit to the Account additional securities having a Current
      Market Value sufficient to increase the Current Market Value of the
      Account as of the date of such deposit to an amount equal to or greater
      than the Minimum Account Value.

      1.2   PRIORITY OF LIEN; CONTROL.

            (a) The Company shall not authorize and Broker will not agree with
      any third party that Broker will comply with entitlement orders (as
      defined in ss.8-102(8) of the Code) concerning the Account originated by
      such third party without the prior written consent of Creditor unless
      pursuant to a court order or other legal process.

            (b) Subject to the provisions of Section 1.1(b) and only at such
      time when Creditor has a security interest in the Account pursuant to
      Section 1.1(b) and has not delivered a written notice to Broker of the
      occurrence of a Control Termination Event, Broker will comply with
      entitlement orders originated by Creditor concerning the Account without
      further consent by the Company. Subject to the requirements of Section
      1.1(d), Broker shall make trades of financial assets held in the Account
      at the instruction of the Company, or its authorized representatives, and
      comply with entitlement orders concerning the Account from the Company, or
      his authorized representatives, until such time, subject to Section
      1.1(b), as Creditor delivers a written notice to Broker which states that
      an Event of Default (as such term is defined in the Credit Agreement) has
      occurred and is continuing and that Creditor is thereby exercising
      exclusive control over the Account. Such notice may be referred to herein
      as the "Notice of Exclusive Control." After Broker receives the Notice of
      Exclusive Control, it will immediately cease complying with instructions
      or entitlement orders concerning the Account originated by the Company or
      its representatives.

      1.3 SECURED OBLIGATIONS. The security interest hereby granted shall secure
the due and punctual payment and performance of the following liabilities and
obligations of the Company (herein called the "SECURED OBLIGATIONS"):

            (a)   Principal  of and  premium,  if any,  and interest on
      the Term Notes;

            (b) Any and all other obligations of the Company to Creditor under
      the Loan Documents, this Agreement or under any agreement or instrument
      relating thereto, all as amended from time to time; and

            (c) Any and all other indebtedness or obligations of the Company to
      Creditor, whether direct or indirect, absolute or contingent, due or to
      become due or now existing or hereafter arising and extends to any
      renewal, refinancing, refunding, extension or modification of any Secured
      Obligations on one or more occasions and to any interest that accrues on
      any Secured Obligations before or after the bankruptcy of the Company.

                                      -3-
<PAGE>

      1.4 RIGHTS. If no Event of Default (as described in Section 4.1 below) has
occurred or is continuing, the Company may make trades in the Account and
exercise any voting or consensual rights that it may have as to any of the
Collateral for any purpose which is not inconsistent with this Agreement. If an
Event of Default has occurred and is continuing, the Company shall cease making
trades in the Account, Creditor may exercise all voting or consensual rights as
to any of the Collateral and the Company shall deliver to Creditor all notices,
proxy statements, proxies and other information and instruments relating to the
exercise of such rights received by the Company from the issuers of any of the
Collateral promptly upon receipt thereof and shall at the request of Creditor
execute and deliver to Creditor any proxies or other instruments which are, in
the judgment of Creditor, necessary for Creditor to validly exercise such voting
and consensual rights.

      1.5 SUBSEQUENT CHANGES AFFECTING COLLATERAL. The Company acknowledges that
it has made its own arrangements for keeping informed of changes or potential
changes affecting the Collateral (including, but not limited to, conversions,
subscriptions, exchanges, reorganizations, dividends, tender offers, mergers,
consolidations and shareholder meetings) and the Company agrees that Creditor
has no responsibility to inform the Company of such matters or to take any
action with respect thereto even if any of the Collateral has been registered in
the name of Creditor or its agent or nominee.

      1.6 TAX REPORTING. All items of income, gain, expense and loss recognized
in the Account shall be reported to the Internal Revenue Service and all state
and local taxing authorities under the name and taxpayer identification number
of the Company.

2.    REPRESENTATIONS  AND WARRANTS.  The Company hereby represents and
warrants to Creditor as follows:

      2.1 ENFORCEABILITY. This Agreement has been duly executed and delivered by
the Company, constitute its valid and legally binding obligations and are
enforceable in accordance with their respective terms against the Company.

      2.2 NO CONFLICT. The execution, delivery and performance of this
Agreement, the grant of the security interest in the Collateral hereunder and
the consummation of the transactions contemplated hereby and thereby will not,
with or without the giving of notice or the lapse of time, (a) violate any
material law applicable to the Company; (b) violate any judgment, writ,
injunction or order of any court or governmental body or officer applicable to
the Company; (c) violate or result in the breach of any material agreement to
which the Company is a party or by which any of its properties, including the
Collateral, is bound; nor (d) violate any restriction on the transfer of any of
the Collateral.

      2.3 NO CONSENTS. No consent, approval, license, permit or other
authorization of any third party (other than Broker) or any governmental body or
officer is required for the valid and lawful execution and delivery of this
Agreement, the creation and perfection of Creditor's security interest in the
Collateral or the valid and lawful exercise by Creditor of remedies available to
it under this Agreement or applicable law or of the voting and other rights
granted to it in this Agreement except as may be required for the offer or sale
of those items of Collateral which are securities under applicable securities
laws.

                                      -4-
<PAGE>

      2.4 SECURITY INTEREST. The Company is the sole owner of the Collateral
free and clear of all liens, encumbrances and adverse claims (other than those
created by this Agreement), has the unrestricted right to grant the security
interest provided for herein to Creditor and has, subject to Section 1.1(b),
granted to Creditor a valid and perfected first priority security interest in
the Collateral free of all liens, encumbrances, transfer restrictions and
adverse claims.

      2.5 INFORMATION. None of the information, documents, or financial
statements which have been furnished by the Company or its representatives to
Creditor or any of its representatives in connection with the transactions
contemplated by this Agreement or the Loan Documents contains any untrue
statement of material fact or omits to state any material fact required to be
stated hereby or thereby to make such statements not misleading.

3.    COVENANTS.   The  Company   hereby   covenants  and  agrees  with
Creditor that the Company shall:

      3.1 DEFEND TITLE. Defend its title to the Collateral and the security
interest of Creditor therein against the claims of any person claiming rights in
the Collateral against or through the Company and maintain and preserve such
security interest so long as this Agreement shall remain in effect.

      3.2   CUSTOMER   AGREEMENTS.   Neither   attempt  to  modify  nor
attempt to  terminate  the customer  agreement  with Broker under which
the Account was established.

      3.3   FURTHER ASSURANCES.

            (a) At the Company's expense, do such further acts and execute and
      deliver such additional conveyances, certificates, instruments, legal
      opinions and other assurances as Creditor may at any time reasonably
      request or require to protect, assure or enforce its interests, rights and
      remedies under this Agreement. The Company shall execute and deliver to
      Creditor and file with the appropriate governmental offices in the
      Commonwealth of Massachusetts one or more Uniform Commercial Code
      financing statements describing the Collateral, or amendments or
      continuations thereof whenever necessary to continue the perfection of
      Creditor's security interest hereunder and whenever requested by Creditor.

            (b) Deliver any certificate or instrument constituting or
      representing any of the Collateral it may obtain possession of from time
      to time to Broker for credit to the Account, forthwith duly endorsed in
      blank without restriction.

            (c) Deliver to Broker any endorsements or instruments which may be
      necessary or convenient to transfer any financial assets held by Broker,
      which are registered in the name of, payable to the order of, or specially
      endorsed to the Company, to Broker or its securities intermediary or to
      one of their respective nominees.

            (d) Debtor authorizes and appoints Creditor, in case of need, to
      execute such financing statements, certificates and other documents
      pertaining to Creditor's security

                                      -5-
<PAGE>

      interest in the Collateral in its stead, with full power of substitution,
      as the Debtor's attorney in fact, such appointment to be irrevocable and
      coupled with an interest.

      3.4 NAME AND ADDRESS. Notify Creditor at least thirty (30) days before it
changes its name or the address of its principal office location.

      3.5 ADVICE. Advise Creditor promptly, completely, accurately, in writing
and in reasonable detail, (i) of any material encumbrance upon or claim asserted
against any of the Collateral; and (ii) of the occurrence of any event, other
than changes in general market conditions adequately reported in the general
news media, that would reasonably be expected to have a material adverse effect
upon the aggregate value of the Collateral or upon the security interest of
Creditor.

4.    DEFAULT.

      4.1 EVENTS OF DEFAULT. There shall exist a default under this Agreement
upon the happening of any of the following events or conditions (herein called
"Events of Default"):

            (a) Default shall be made in the due and punctual payment of any
      principal of or premium, if any, or interest on any of the Secured
      Obligations as and when the same shall become due and payable (whether at
      maturity or at a date fixed for any prepayment or installment or by
      declaration or acceleration or otherwise) and such default shall continue
      beyond the expiration of the applicable period of grace, if any; or

            (b) Any other Event of Default (as defined or provided in the Credit
      Agreement) shall occur.

      4.2 REMEDIES. Upon the occurrence of any Event of Default, such default
not having previously been remedied or cured, Creditor shall have the following
rights and remedies:

            (a) All rights and remedies provided by law, including, without
      limitation, those provided by the Uniform Commercial Code;

            (b) All rights and remedies provided in this Agreement; and

            (c) All rights and remedies provided in the Credit Agreement, or in
      the Term Notes or in any other agreement, document or instrument
      pertaining to the Secured Obligations.

      4.3 RIGHT TO TRANSFER INTO NAME OF CREDITOR, ETC. In the event of an Event
of Default, but subject to the provisions of the Uniform Commercial Code or
other applicable law, Creditor may, in its discretion: (i) deliver a notice of
exclusive control hereunder to Broker which shall give Creditor exclusive
authority to issue entitlement orders to Broker with respect to the Account;
(ii) cause the Account to be reregistered in its sole name or transfer the
Account to another broker/dealer in its sole name; (iii) remove any Collateral
from the Account and register such Collateral in its name or in the name of its
broker/dealer, agent or nominee or any of their nominees; (iv) exchange
certificates representing any of the Collateral for certificates of larger

                                      -6-
<PAGE>

or smaller denominations, (v) exercise any voting, conversion, registration,
purchase or other rights of a holder of any of the Collateral and any reasonable
expense of such exercise shall be deemed to be an expense of preserving the
value of such Collateral for the purposes of Section 5.1 below; and (vi)
collect, including by legal action, any notes, checks or other instruments for
the payment of money included in the Collateral and compromise or settle with
any obligor of such instruments.

      4.4 RIGHT OF CREDITOR TO EXERCISE RIGHTS OF PAYMENT, ETC. In case of an
Event of Default Creditor shall be entitled to receive and retain, as collateral
security for the Secured Obligations, any and all dividends or other
distributions at any time and from time to time declared or made upon any of the
Collateral, and to exercise any and all rights of payment, conversion, exchange,
subscription or any other rights, privileges or options pertaining to the
Collateral as if it was the absolute owner thereof, including without
limitation, the right to exchange, at its discretion, any and all of the
Collateral upon the merger, consolidation, reorganization, recapitalization or
other readjustment of the Company, unless such merger, consolidation,
reorganization, recapitalization or readjustment is permitted under the Credit
Agreement or, upon the exercise of any such right, privilege or option
pertaining to the Collateral, and in connection therewith, to deposit and
deliver any and all of the Collateral with any committee, depositary, transfer
agent, registrar or other designated agency upon such terms and conditions as
Creditor may determine, all without liability except to account for property
actually received, but Creditor shall have no duty to exercise any of the
aforesaid rights, privileges or options and shall not be responsible for any
failure to do so or delay in so doing.

      4.5 RIGHT OF CREDITOR TO DISPOSE OF COLLATERAL, ETC. Upon the occurrence
of an Event of Default, such default not having previously been remedied or
cured, Creditor shall have the right at any time or times thereafter to sell,
resell, assign and deliver all or any of the Collateral in one or more parcels
at any exchange or broker's board or at public or private sale. Creditor will
give the Company at least ten (10) days' prior written notice at the address of
the Company specified in Section 6.11 hereof, of the time and place of any
public sale thereof or of the time after which any private sale or any other
intended disposition thereof is to be made. Any such notice shall be deemed to
meet any requirement hereunder or under any applicable law (including the
Uniform Commercial Code) that reasonable notification be given of the time and
place of such sale or other disposition. Such notice may be given without any
demand of performance or other demand, all such demands being hereby expressly
waived by the Company. All such sales shall be at such commercially reasonable
price or prices as Creditor shall deem best and either for cash or on credit or
for future delivery (without assuming any responsibility for credit risk). At
any such public sale or sales Creditor may purchase any or all of the Collateral
to be sold thereat upon such terms as Creditor may deem best. Upon any such sale
or sales the Collateral so purchased shall be held by the purchaser absolutely
free from any claims or rights of whatsoever kind or nature, including any
equity of redemption and any similar rights, all such equity of redemption and
any similar rights being hereby expressly waived and released by the Company. In
the event any consent, approval or authorization of any governmental agency will
be necessary to effectuate any such sale or sales, the Company shall execute,
and hereby agrees to cause the Company to execute, all such applications or
other instruments as may be required. The proceeds of any such sale or sales,
together with any other additional collateral security at the time received and
held hereunder, shall be received and applied: first, to the payment of all
costs and expenses of such sale, including reasonable

                                      -7-
<PAGE>

attorneys' fees; second, to the payment of the Secured Obligations in such order
of priority as Creditor shall determine, and any surplus thereafter remaining
shall be paid to the Company or to whomever may be legally entitled thereto
(including, if applicable, any subordinated creditor of the Company).

            The Company recognizes that Creditor may be unable to effect a
public sale of all or a part of the Collateral by reason of certain prohibitions
contained in the Securities Act of 1933, but may be compelled to resort to one
or more private sales to a restricted group of purchasers, each of whom will be
obligated to agree, among other things, to acquire such Collateral for its own
account, for investment and not with a view to the distribution or resale
thereof. The Company acknowledges that private sales so made may be at prices
and upon other terms less favorable to the seller than if such Collateral were
sold at public sales, and that Creditor has no obligation to delay sale of any
such Collateral for the period of time necessary to permit such Collateral to be
registered for public sale under the Securities Act of 1933. The Company agrees
that any such private sales shall not be deemed to have been made in a
commercially unreasonable manner solely because they shall have been made under
the foregoing circumstances.

      4.6 COLLECTION OF AMOUNTS PAYABLE ON ACCOUNT OF COLLATERAL, ETC. Upon the
occurrence of any Event of Default, Creditor may, but without obligation to do
so, demand, sue for and/or collect any money or property at any time due,
payable or receivable, to which it may be entitled hereunder, on account of or
in exchange for any of the Collateral and shall have the right, for and in the
name, place and stead of the Company, to execute endorsements, assignments or
other instruments of conveyance or transfer with respect to all or any of the
Collateral.

      4.7 CARE OF COLLATERAL IN CREDITOR'S POSSESSION. Beyond the exercise of
reasonable care to assure the safe custody of the Collateral while held
hereunder, Creditor shall have no duty or liability to collect any sums due in
respect thereof or to protect or preserve rights pertaining thereto, and shall
be relieved of all responsibility for the Collateral upon surrendering the same
to the Company.

      4.8 APPOINTMENT OF CREDITOR AS AGENT. The Company hereby appoints and
constitutes Creditor, its successors and assigns, as its agent and
attorney-in-fact for the purpose of carrying out the provisions of this
Agreement and taking any action or executing any instrument that Creditor
considers necessary or convenient for such purpose, including the power to
endorse and deliver checks, notes and other instruments for the payment of money
in the name of and on behalf of the Company, to endorse and deliver in the name
of and on behalf of the Company securities certificates and execute and deliver
in the name of and on behalf of the Company instructions to the issuers of
uncertificated securities, and to execute and file in the name of and on behalf
of the Company financing statements (which may be photocopies of this Agreement)
and continuations and amendments to financing statements in the Commonwealth of
Massachusetts or elsewhere and Forms 4, 5, 144 and Schedules 13D and 13G with
the United States Securities and Exchange Commission. This appointment is
coupled with an interest and is irrevocable and will not be affected by the
death or bankruptcy of the Company nor by the lapse of time. If the Company
fails to perform any act required by this Agreement, Creditor may perform such
act in the name of and on behalf of the Company and at its expense which

                                      -8-
<PAGE>

shall be chargeable to the Company under Section 5 below. The Company hereby
consents and agrees that the issuers of or obligors of the Collateral or any
registrar or transfer agent or trustee for any of the Collateral shall be
entitled to accept the provisions hereof as conclusive evidence of the rights of
Creditor to effect any transfer pursuant to this Agreement and the authority
granted to Creditor herein, notwithstanding any other notice or direction to the
contrary heretofore or hereafter given by the Company, or any other person, to
any of such issuers, obligors, registrars, transfer agents, or trustees.

5.    EXPENSES.

      5.1   PAYMENT.  The Company  agrees that it will  forthwith  upon
demand pay to Creditor:

            (a) the amount of any taxes which Creditor may have been required to
      pay by reason of holding the Collateral or to free any of the Collateral
      from any lien encumbrance or adverse claim thereon, and

            (b) The amount of any and all out-of-pocket expenses, including the
      reasonable fees and disbursements of counsel and of any brokers,
      investment brokers, appraisers or other experts, that Creditor may incur
      in connection with (i) the administration or, after the occurrence of an
      Event of Default, enforcement of this Agreement, including such expenses
      as are incurred to preserve the value of the Collateral and the validity,
      perfection, rank and value of Creditor's security interest therein, (ii)
      the collection, sale or other disposition of any of the Collateral, (iii)
      the exercise by Creditor of any of the rights conferred upon it hereunder,
      or (iv) any action or proceeding to enforce its rights under this
      Agreement or in pursuit of any non-judicial remedy hereunder including the
      sale of the Collateral.

Any such amount not paid on demand shall bear interest (computed on the basis of
the number of days elapsed over a year of three hundred sixty (360) days) at the
rate set forth in Section 2.6 of the Credit Agreement.

      5.2 INDEMNITY. The Company shall indemnify Creditor and its directors,
officers, employees, agents and attorneys against, and hold them harmless from,
any liability, cost or expense, including the reasonable fees and disbursements
of their legal counsel, incurred by any of them under the corporate or
securities laws applicable to holding or selling any of the Collateral, except
for liability, cost or expense arising out of the gross negligence or willful
misconduct of the indemnified parties.

      5.3 DISCHARGE OF LIENS. At its option, Creditor may pay and discharge
taxes, liens, security interests or other encumbrances on the Collateral. The
Company agrees to reimburse Creditor under Section 5.1 above for any payment
made or any expense incurred (including reasonable attorneys fees) by Creditor
pursuant to the foregoing authorization.

                                      -9-
<PAGE>

6.    MISCELLANEOUS.

      6.1 TERMINATION; ASSIGNMENT, ETC. This Agreement and the security interest
in the Collateral created hereby shall terminate when all of the Secured
Obligations have been paid and finally discharged in full. No waiver by Creditor
or by any other holder of Secured Obligations of any default shall be effective
unless in writing nor operate as a waiver of any other default or of the same
default on a future occasion. In the event of a sale or assignment by Creditor
of all or any of the Secured Obligations held by it, Creditor may assign or
transfer its rights and interest under this Agreement in whole or in part to the
purchaser or purchasers of such Secured Obligations, whereupon such purchaser or
purchasers shall become vested with all of the powers and rights of Creditor
hereunder, and Creditor shall thereafter be forever released and fully
discharged from any liability or responsibility hereunder with respect to the
rights and interest so assigned.

      6.2 THIS AGREEMENT. This Agreement, the schedules and exhibits hereto and
the agreements and instruments required to be executed and delivered hereunder
set forth the entire agreement of the parties with respect to the subject matter
hereof and supersede and discharge all prior agreements (written or oral) and
negotiations and all contemporaneous oral agreements concerning such subject
matter and negotiations. There are no oral conditions precedent to the
effectiveness of this Agreement. Terms used herein but not defined herein shall
have the meanings assigned to them in the Credit Agreement.

      6.3 NON-WAIVER. Neither the failure of nor any delay by Creditor to
enforce any right hereunder or to demand compliance with its terms is a waiver
of any of Creditor's rights hereunder. No action taken by Creditor pursuant to
this Agreement on one or more occasions is a waiver of any right hereunder or
constitutes a course of dealing that modifies this Agreement.

      6.4 AMENDMENTS. No amendment, modification or termination of this
Agreement shall be binding unless it is in writing and is signed by Creditor and
the Company.

      6.5 SEVERABILITY. If any term or provision set forth in this Agreement
shall be invalid or unenforceable, the remainder of this Agreement, or the
application of such terms or provisions to persons or circumstances, other than
those to which it is held invalid or unenforceable, shall be construed in all
respects as if such invalid or unenforceable term or provision were omitted.

      6.6 SUCCESSORS. The terms of this Agreement shall be binding upon the
Company, and is successors and shall inure to the benefit of Creditor, its
successors and any holder, owner or assignee of any rights in any of the Loan
Documents and will be enforceable by them as their interest may appear.

      6.7 SET-OFF. Regardless of the adequacy of any Collateral or other means
of obtaining repayment of the Secured Obligations, any deposits, balances or
other sums credited by or due from the head office of Creditor or any of its
branch offices to the Company may, at any time and from time to time after the
occurrence of an Event of Default hereunder, without notice to the Company or
compliance with any other condition precedent now or hereafter imposed by

                                      -10-
<PAGE>

statute, rule of law, or otherwise (all of which are hereby expressly waived) be
set off, appropriated, and applied by Creditor against any and all Secured
Obligations of the Company to Creditor or any of its affiliates, in such manner
as the head office of Creditor or any of its branch offices in their sole
discretion may determine, and the Company hereby grants Creditor a continuing
security interest in such deposits, balances or other sums for the payment and
performance of all such obligations.

      6.8 THIRD PARTIES. Nothing herein expressed or implied is intended or
shall be construed to give any person other than the parties hereto any rights
or remedies under this Agreement.

      6.9 COUNTERPARTS. This Agreement may be executed in any number of counter
parts, all of which shall constitute one and the same instrument, and any party
thereto may execute this Agreement by signing and delivering one or more
counterparts.

      6.10 NOTICES. Except as otherwise provided herein, all notices to the
Company or to Creditor shall be in writing and shall be deemed to have been
sufficiently given or served for all purposes hereof if personally delivered or
mailed by first class mail, postage prepaid, or certified mail, return receipt
requested, as follows:

      (a)   If to the Company:

                  Versicor Inc.
                  34790 Ardentech Court
                  Freemont, California 94555
                  Attention: George Horner

            with a copy to:

                  Cooley Godward LLP
                  Five Palo Alto Square
                  Palo Alto, California 94306

                  Attention: Andrei M. Manoliu, Esquire

      (b) If to Creditor, at the address of Creditor set forth in the Credit
Agreement,

            with a copy to:

                  George Ticknor, Esquire
                  Palmer & Dodge
                  One Beacon Street
                  Boston, Massachusetts 02108

or at such other address as the party to whom such notice is directed may have
designated in writing to the other party hereto. A notice shall be deemed to
have been given upon the earlier to occur of (i) three (3) days after the date
on which it is deposited in the U.S. mails or (ii) receipt by the party to whom
such notice is directed.

                                      -11-
<PAGE>

      6.11  LEGAL MATTERS.

            (a)   REASONABLE  RELATION.  The parties  hereto agree that
      certain  material events,  occurrences and transactions  relating
      to  this  Agreement  bear  a  reasonable   relationship   to  the
      Commonwealth of Massachusetts.

            (b) GOVERNING LAW; JURISDICTION; WAIVER OF JURY TRIAL. This
      Agreement, including the validity hereof and the rights and obligations of
      the parties hereunder, shall be construed in accordance with and governed
      by the laws of the Commonwealth of Massachusetts. The Company, to the
      extent that it may lawfully do so, hereby consents to service of process,
      and to be sued, in the Commonwealth of Massachusetts and consents to the
      jurisdiction of the courts of the Massachusetts and the United States
      District Court for the District of Massachusetts, as well as to the
      jurisdiction of all courts to which an appeal may be taken from such
      courts, for the purpose of any suit, action or other proceeding arising
      out of any of its obligations hereunder or with respect to the
      transactions contemplated hereby, and expressly waives any and all
      objections it may have as to venue in any such courts. The Company further
      agrees that a summons and complaint commencing an action or proceeding in
      any of such courts shall be properly served and shall confer personal
      jurisdiction if served personally or by certified mail to it at its
      address provided in Section 6.11 hereof or as otherwise provided under the
      laws of the Commonwealth of Massachusetts. THE COMPANY IRREVOCABLY WAIVES
      ALL RIGHT TO A TRIAL BY JURY IN ANY PROCEEDING HEREAFTER INSTITUTED BY OR
      AGAINST THE COMPANY IN RESPECT OF ITS OBLIGATIONS HEREUNDER OR THE
      TRANSACTIONS CONTEMPLATED HEREBY.

      6.12 WAIVERS, ETC. The Company hereby waives presentment, demand, notice,
protest and, except as is otherwise provided herein, all other demands and
notices in connection with this Agreement or the enforcement of Creditor's
rights hereunder or in connection with any Secured Obligations or any
Collateral; consents to and waives notice of the granting of renewals,
extensions of time for payment or other indulgences to the Company or to any
third Party, or substitution, release or surrender of any collateral security
for any Secured Obligation, the addition or release of persons primarily or
secondarily liable on any Secured Obligation or on any collateral security for
any Secured Obligation, the acceptance of partial payments on any Secured
Obligation or on any collateral security for any Secured Obligation and/or the
settlement or compromise thereof. No delay or omission on the part of Creditor
in exercising any right hereunder shall operate as a waiver of such right or of
any other right hereunder. Any waiver of any such right on any one occasion
shall not be construed as a bar to or waiver of any such right on any future
occasion. THE COMPANY FURTHER WAIVES ANY RIGHT IT MAY HAVE UNDER THE
CONSTITUTION OF THE COMMONWEALTH OF MASSACHUSETTS (OR UNDER THE CONSTITUTION OF
ANY OTHER STATE IN WHICH ANY OF THE COLLATERAL MAY BE LOCATED), OR UNDER THE
CONSTITUTION OF THE UNITED STATES OF AMERICA, TO NOTICE (OTHER THAN ANY
REQUIREMENT OF NOTICE PROVIDED HEREIN) OR TO A JUDICIAL HEARING PRIOR TO THE
EXERCISE OF ANY RIGHT OR REMEDY PROVIDED BY THIS AGREEMENT TO CREDITOR AND
WAIVES ITS RIGHTS, IF ANY, TO SET ASIDE OR INVALIDATE ANY SALE DULY CONSUMMATED
IN ACCORDANCE WITH THE

                                      -12-
<PAGE>

      FOREGOING PROVISIONS HEREOF ON THE GROUNDS (IF SUCH BE THE CASE) THAT THE
SALE WAS CONSUMMATED WITHOUT A PRIOR JUDICIAL HEARING. The Company's waivers
under this section have been made voluntarily, intelligently and knowingly and
after the Company has been apprised and counseled by its attorneys as to the
nature thereof and its possible alternative rights.

                                      -13-
<PAGE>

      IN WITNESS WHEREOF, the Company has signed this Agreement as a contract
under seal as of December 30 , 1997.

                                 COMPANY:

                                 VERSICOR INC.

                                 By: /s/ G.F. Horner III
                                    -------------------------------
                                    Name: G.F. Horner
                                         --------------------------
                                    Title:  C.E.O
                                           ------------------------

                                 CREDITOR:

                                 FLEET NATIONAL BANK

                                 By:
                                    -------------------------------
                                    Name: Kimberly A. Martone
                                    Title: Vice President

                                 BROKER:

                                 FLEET NATIONAL BANK

                                 By:
                                    -------------------------------
                                    Name: Kimberly A. Martone
                                    Title: Vice President

<PAGE>

      IN WITNESS WHEREOF, the Company has signed this Agreement as a contract
under seal as of December 30, 1997.

                                 COMPANY:

                                 VERSICOR INC.

                                 By:
                                    -------------------------------
                                    Name:
                                         --------------------------
                                    Title:
                                          -------------------------

                                 CREDITOR:

                                 FLEET NATIONAL BANK

                                 By: /s/ Kimberly Martone
                                    --------------------------------
                                    Name: Kimberly A. Martone
                                    Title: Vice President

                                 BROKER:

                                 FLEET NATIONAL BANK

                                 By: /s/ Kimberly Martone
                                    --------------------------------
                                    Name: Kimberly A. Martone
                                    Title: Vice President

<PAGE>

                                                                       EXHIBIT E

                                  Put Agreement

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