Document:

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                                                                   EXHIBIT 10.15

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

                                    AGREEMENT

         THIS AGREEMENT is made as of the 30th day of September, 2003 (the
"Effective Date") by and between Takeda Chemical Industries, Ltd., with its head
office at 1-1, Doshomachi 4-chome, Chuo-ku, Osaka 540-8645, Japan (hereinafter
called "TAKEDA"), and Peninsula Pharmaceuticals, Inc., with its head office at
1701 Harbor Bay Parkway, Alameda, CA 94502, USA (hereinafter called
"PENINSULA").

                                WITNESSETH THAT:

         WHEREAS, TAKEDA has been developing the Compound (as hereinafter
defined) and owns certain Information (as hereinafter defined), Manufacturing
Know-How (as hereinafter defined) and Patents (as hereinafter defined) which
cover the Compound as well as the Product (as hereinafter defined); and

         WHEREAS, PENINSULA desires to obtain a license from TAKEDA to import
the Compound, process the Compound into the Product and develop and sell the
Product in the Territory (as hereinafter defined) under the Information and the
Patents;

         WHEREAS, TAKEDA is willing to comply with such desire of PENINSULA;

         NOW, THEREFORE, the parties hereto agree as follows:

                                   ARTICLE 1

                                  DEFINITIONS

         The following terms whenever used in this Agreement shall have the
following meanings:

         1.1      "Lot" shall mean a specific quantity of the Compound that is
intended to have uniform character and quality, within the specified limits set
forth in the Specifications, and is produced as one lot with the intention of
being quality controlled and released as a single lot.

         1.2      "cGMP" shall mean the current good manufacturing practices
                  required by the FDA and set forth in the FD&C Act, or FDA
                  regulations, policies or guidelines in effect at a particular
                  time, for the manufacturing and testing of pharmaceutical
                  materials, and any other laws or regulations applicable to the
                  manufacturing and testing of pharmaceutical materials in a
                  country or jurisdiction in the Territory.

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

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         1.3      "Compound" shall mean: (i) the water-soluble prodrug
(6R,7R)-7-((Z)-2-(ethoxyimino-2-[5-(phosphonoamino)-1,2,4-thiadiazol-3-yl]
acetyl)amino)-3-[4-(1-methyl-4-pyridino)-1,3-thiazol-2-yl]thio-8-oxo-5-thia-1-
azabicyclo[4.2.0]oct-2-ene-2-carboxylate acetic acid solvate and coded by TAKEDA
internally as TAK-599, or (ii) the semisynthesized cephalosporin compound coded
by TAKEDA internally as T-91825.

         1.4      "Confidential Information" shall mean all confidential or
proprietary information relating to the Compound and/or the Product including,
without limitation, research, development, manufacturing, marketing, financial,
personnel, sales, and other business and technical information, compositions,
inventions, discoveries, processes, methods, formulae, procedures, protocols,
techniques, data, plans, the Specifications, and quality control procedures,
whether in oral, written, graphic, or electronic form. Confidential information
relating to the Compound and/or the Product that was disclosed to PENINSULA by
TAKEDA prior to the Effective Date shall be also deemed TAKEDA's Confidential
Information hereunder.

         1.5      "Controlled" shall mean, with respect to any patent,
Information, Manufacturing Know-How or other intellectual property right, that
the party owns or has a license to such patent, Information, Manufacturing
Know-How or other intellectual property right and has the ability, as of the
applicable time, to grant to the other party access, a license, or a sublicense
to such patent, Information, Manufacturing Know-How or other intellectual
property right as provided for in this Agreement without violating an agreement
with or rights of a third party.

         1.6      "Development Work" shall mean the conduct of pre-clinical and
clinical trials, the compilation of the dossier concerning the Compound and/or
the Product and the conduct of other work necessary or useful for obtaining
Registration by or on behalf of PENINSULA.

         1.7      "Drug Master File" or "DMF" shall mean a Drug Master File
maintained with the FDA, or a filing with a Regulatory Authority outside the
United States serving a purpose equivalent to that of a Drug Master File in the
United States, such that manufacturing information may be filed by a
manufacturer in such country in a manner that remains confidential from the
holder of the remaining portions of the Registration maintained with the FDA and
the equivalent thereof, if any, in jurisdictions outside the United States.

         1.8      "FDA" shall mean the United States Food and Drug
Administration or any successor thereto having the administrative authority to
regulate the investigation, development, and marketing of human pharmaceutical
products in the United States.

         1.9      "FD&C Act" means the United States Food, Drug and Cosmetic
Act, as amended, and any regulations promulgated thereunder.

         1.10     "IND" shall mean an Investigational New Drug Application as
defined in the FD&C Act and applicable regulations promulgated thereunder by the
FDA, or the equivalent application to the equivalent agency in any other country
or jurisdiction in the Territory, the filing of which is necessary to commence
clinical testing of a pharmaceutical product in humans.

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

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         1.11     "Information" shall mean all data, results and information
(other than the Manufacturing Know-How) relating to the Compound and/or the
Product, or the use of the Compound and/or the Product, or processing the
Compound into the Product including, without limitation, pre-clinical, clinical,
and/or regulatory documentation, data, information, and reports, if any, that
are Controlled by TAKEDA during the term of the Agreement and are necessary or
useful for PENINSULA to evaluate, develop, register, formulate, fill and finish,
sell and market Products in the Territory.

         1.12     "Intermediate Manufacturing Cost" shall mean either (a) [*]
percent ([*]%) of the actual, reasonable out-of-pocket costs incurred by TAKEDA
to obtain intermediates required for the manufacture of the Compound from a
third party manufacturer, or (b) [*] percent ([*]%) of the actual out-of-pocket
costs incurred, paid or borne by TAKEDA to manufacture, quality check and supply
intermediates required for the manufacture of the Compound to PENINSULA. It is
understood that TAKEDA may elect to entrust the manufacture, quality check
and/or supply of the Compound to a Third Party Manufacturer(s) and in such
event, all the reasonable consideration for such entrustment to be paid by
TAKEDA to such Third Party Manufacturer(s) for the manufacture of such
intermediates supplied to PENINSULA shall be included in the Intermediate
Manufacturing Cost. "Intermediate Manufacturing Cost" may include the actual
purchase price of raw materials, insurance payments, and any payment to third
party(ies) by TAKEDA to obtain a license under such third party's patent or
other intellectual property rights without which license the manufacture of such
intermediate would constitute an infringement of such patents or other
intellectual property rights, if any, provided that any such consideration is
commercially reasonable.

         1.13     "Major Market Country" shall mean the United States of
America, the United Kingdom, France, Germany, Italy, Spain, Austria and
Switzerland, to the extent such countries are included in the Territory.

         1.14     "Compound Manufacturing Cost" shall mean the actual
out-of-pocket costs incurred, paid or borne by TAKEDA to manufacture, quality
check and supply the Compound to PENINSULA. It is understood that TAKEDA may
elect to entrust the manufacture, quality check and/or supply of the Compound to
a Third Party Manufacturer(s) and in such event, all the reasonable
consideration for such entrustment to be paid by TAKEDA to such Third Party
Manufacturer(s) for the manufacture of the Compound supplied to PENINSULA shall
be included in the Compound Manufacturing Cost. "Compound Manufacturing Cost"
may include the actual purchase price of raw materials, insurance payments, and
any payment to third party(ies) by TAKEDA to obtain a license under such third
party's patent or other intellectual property rights without which license the
manufacture of the Compound would constitute an infringement of such patents or
other intellectual property rights, if any, provided that any such consideration
is commercially reasonable.

         1.15     "Product Manufacturing Cost" shall mean, with respect to a
particular Product sold by PENINSULA (or its Affiliate or sublicensee)
hereunder, the sum of: (a) either (i) [*] purchase price of the Compound from
TAKEDA, if the Compound in such Product was purchased from TAKEDA, or (ii) [*]
percent ([*]%) of the actual out-of-pocket costs incurred, paid or borne by
PENINSULA in the manufacture and quality check of the Compound, if

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

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PENINSULA manufactures or has a third party manufacture on its behalf the
Compound included in such Product; plus (b) [*] percent ([*]%) of the actual
out-of-pocket costs incurred, paid or borne by PENINSULA to process the Compound
into and package the Product and quality check (or have a third party contractor
perform such processing and packaging). "Product Manufacturing Cost" in
subclause (b) above may include [*]% of the actual purchase price of any raw
materials other than the Compound and insurance payments relating thereto,
provided that any such consideration is commercially reasonable. It is
understood that any payment to third party(ies) by PENINSULA to obtain a license
under such third party's patent or other intellectual property rights without
which license the above mentioned manufacturing, processing or packaging would
constitute an infringement of such patents or other intellectual property
rights, which shall be treated pursuant to Section 3.4, if any, shall not be
included in the Product Manufacturing Cost. For clarity, the term "Product
Manufacturing Cost" shall not include any royalty paid by PENINSULA to TAKEDA
under Section 3.3 or to any Third Party.

         1.16     "Manufacturing Know-How" shall mean all technical know-how and
information relating to the manufacture of the Compound and all intermediates
thereof that are Controlled by TAKEDA during the term of this Agreement and that
are necessary or useful for PENINSULA to manufacture the Compound and all
intermediates thereof.

         1.17     "NDA" shall mean a New Drug Application, as defined in the
FD&C Act, and applicable regulations promulgated thereunder by the FDA, or the
equivalent application to the equivalent agency in any other regulatory
jurisdiction in the Territory, to obtain approval or authorization to commence
marketing and sales of a pharmaceutical product.

         1.18     "Net Sales" shall mean the gross amount received by PENINSULA
and its sublicensees for sales of Compounds and/or Products to unaffiliated
third parties that are not sublicensees of the selling party, less the following
deductions or allowances:

                  (a)      reasonable trade, quantity, or cash discounts or
rebates, chargebacks, commissions, Medicaid/Medicare rebates and allowances;

                  (b)      sales, use, value added, inventory, and excise taxes,
import and customs duties, tariffs and any other similar taxes, duties, tariffs
or other governmental charges (but excluding income taxes) directly imposed on
the sales of the Product;

                  (c)      reasonable freight, insurance, packaging costs and
other transportation charges; and

                  (d)      amounts actually repaid or credits taken by reason of
rejections, outdating, defects or returns or because of retroactive price
reductions or due to recalls or government laws or regulations requiring
rebates.

         1.19     "NHI Price Listing" shall mean the listing of the Product in
the reimbursement list of a national health insurance system in a particular
country or jurisdiction in the Territory, any approval with regard to the
selling price of the Product, and the like in such country or jurisdiction.

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

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<PAGE>

         1.20     "Patents" shall mean all patent applications and patents
anywhere in the Territory that are Controlled by TAKEDA during the term of the
Agreement and that claim, cover, or disclose the composition of matter of, or
the method of making or using, the Compound or Product, or any intermediate used
in making the Compound, including all patent applications listed in Schedule I
attached hereto, all patents arising from any such applications, and any
additions, divisions, continuations, continuations in part, substitutions,
extensions, renewals, reissues, reexaminations, registrations, revalidations,
and the like of any of the foregoing.

         1.21     "Product" shall mean a pharmaceutical preparation in any
formulation in final packaged form suitable for sale which contains a Compound
as an active ingredient.

         1.22     "Registration" shall mean all permissions, licenses,
registrations, approvals, or authorizations by an applicable Regulatory
Authority in a particular country or jurisdiction in the Territory required for
the import of the Compound, the processing of the Compound into the Product and
the marketing and sale of the Product in such country or jurisdiction.

         1.23     "Regulatory Authority" shall mean the FDA in the United
States, and the equivalent regulatory authority or governmental entity having
the responsibility, jurisdiction, and authority to approve the manufacture, use,
importation, packaging, labeling, marketing, and sale of pharmaceutical products
in any country or jurisdiction other than the United States.

         1.24     "Results" shall mean all the data and information that is
produced as a result of the Development Work.

         1.25     "Specifications" shall mean the specifications and testing
methods of the Compound as set forth in Schedule II attached hereto. Schedule II
may be modified by mutual agreement between the parties hereto from time to time
during the term of this Agreement.

         1.26     "Territory" shall mean all countries and territories worldwide
except for Japan and those Option Countries (if any) that are excluded from the
Territory pursuant to Section 2.3.

         1.27     "Option Countries" shall mean all countries and territories
set forth in Schedule VII attached hereto.

         1.28     "Third Party Manufacturer" shall mean any entity other than
TAKEDA that is contracted by TAKEDA to manufacture, quality check and/or supply
the Compound and/or Intermediates supplied to PENINSULA hereunder, in part or in
whole.

         1.29     "Valid Claim" means a claim of an issued patent within the
Patents that has not (a) expired or been canceled, (b) been declared invalid by
an unreversed and unappealable decision of a court or other appropriate body of
competent jurisdiction, (c) been admitted to be invalid or unenforceable through
reissue, disclaimer, or otherwise, or (d) been abandoned.

         1.30     "Year" shall mean each consecutive twelve (12) month period
from April 1 to March 31.

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

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<PAGE>

                                   ARTICLE 2

                                GRANT OF LICENSE

         2.1      TAKEDA hereby grants to PENINSULA and PENINSULA hereby accepts
an exclusive license throughout the Territory under the Information and the
Patents, to develop and obtain the Registration for the Compound and/or Product
in the Territory, to import the Compound and/or Product in the Territory, to
process the Compound into the Product in the Territory, to use the Compound
and/or the Product and to sell the Product in the Territory. TAKEDA retains all
rights with regard to the Compound and/or the Product in Japan and in those
Option Countries (if any) that TAKEDA and PENINSULA agree to exclude from the
Territory pursuant to Section 2.3 (Japan and those Option Countries, if any,
that are excluded from the Territory are hereinafter collectively referred to as
the "TAKEDA Territory"). Solely for the purpose of developing and obtaining the
Registration for the Compound and/or Product in the TAKEDA Territory or selling
the Compound and/or Product in the TAKEDA Territory, TAKEDA retains the right
to, or to cause any third party to, import the Compound and/or the Product,
process the Compound into the Product, and use the Compound and/or Product in
the Territory. Takeda also retains the worldwide right to manufacture and cause
any third party to manufacture the Compound.

         2.2      PENINSULA shall have the right to grant to third parties
sublicenses under the license granted to PENINSULA in Section 2.1 subject to and
pursuant to Section 2.4.

         2.3      Subject to the provisions of this Section 2.3, PENINSULA
hereby grants to TAKEDA an exclusive option to negotiate for the right to
develop, offer for sale and/or sell the Product in the Option Countries by
itself or through any third party (the "Option"). Such Option shall be
exercisable solely as set forth in this Section 2.3. Within thirty (30) days
after the earlier of (a) the date on which any of the [*] clinical studies in
countries in North America, South America, or Europe have been completed in
relation to the Product (i.e., the date on which the summary of the results is
finalized based on the completed analysis of such [*] clinical study of the
Product last completed in the Territory) or, (b) on which any of the [*] studies
in relation to the Product in the Territory have been initiated (i.e., the
earlier of (i) the date on which a protocol for [*] clinical studies has been
submitted to the FDA in the USA, or (ii) the date on which PENINSULA submits any
documents, such as a clinical trial exemption, to a Regulatory Authority in the
Territory in order to commence [*] clinical studies), PENINSULA shall inform
TAKEDA of such event in writing and shall provide to TAKEDA all the final
reports then available for those [*] and other clinical studies of the Product
that have been completed. For the purpose of this Section 2.3, a final report of
a [*] clinical study means a final report of a [*] clinical study or, if such
final report is not then available, the draft thereof. TAKEDA shall have a
period of [*] ([*]) days after its receipt of the above notice and all the final
reports then available of [*] and of other clinical studies completed in
relation to the Product from PENINSULA, which may from time to time be extended
upon mutual agreement of the Parties (the "Option Notice Period"), in which to
inform PENINSULA in writing that it exercises the Option and the specific Option
Countries for which TAKEDA is exercising the Option. If TAKEDA exercises the
Option in writing within the Option Notice Period, TAKEDA and PENINSULA shall,
for a period of up to [*] ([*]) days from the date on which

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

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TAKEDA exercises the Option (the "Option Negotiation Period"), in good faith
negotiate the terms and conditions of an agreement covering the applicable
Option Countries (which agreement would provide, if applicable, that such Option
Countries are thereafter excluded from the Territory and included in the TAKEDA
Territory thereafter or that PENINSULA shall grant TAKEDA a sublicense, with the
right to grant further sublicenses through multiple tiers of sublicensees, to
develop, offer for sale and/or sell the Product in the applicable Option
Countries). If TAKEDA does not exercise the Option with respect to any or all of
the Option Countries in accordance with the provisions of this Section 2.3
during the Option Notice Period, TAKEDA's Option with respect to such Option
Countries, for which the Option was not exercised, shall expire and PENINSULA
shall have the right to develop, offer for sale, and/or sell the Product in such
Option Countries and/or grant sublicenses to one or more third parties to
develop, offer for sale, and/or sell the Product in such Option Countries. If
TAKEDA exercises the Option with respect to specific Option Countries during the
Option Notice Period but TAKEDA and PENINSULA fail to execute an agreement
covering such Option Countries prior to the expiration of the Option Negotiation
Period, then PENINSULA may develop, offer for sale, and/or sell the Product in
such Option Countries and may grant rights to one or more third parties to
develop, offer for sale, distribute and/or sell the Product in one or more of
such Option Countries; provided, however, that for a period of [*] from the date
of expiration of the Option Negotiation Period, PENINSULA shall not enter into
an agreement with any third party with respect to such Option Countries unless
the terms and conditions of such agreement, when taken as a whole, are better in
PENINSULA's reasonable judgement for PENINSULA than the terms and conditions
last offered by PENINSULA to TAKEDA during the Option Negotiation Period,
without first offering such terms to TAKEDA for TAKEDA's consideration and
possible acceptance. If TAKEDA does not elect to enter into an agreement with
PENINSULA on such better terms to TAKEDA within [*] days after the date on which
PENINSULA offers such terms to TAKEDA, then PENINSULA shall have the right to
enter into an agreement on such terms with a third party.

         2.4      In addition to Section 2.3, if PENINSULA elects not to develop
and/or sell the Product by itself in a country(ies) of the Territory and decides
to seek a third party sublicensee or distributor to develop and/or sell the
Product in such country(ies), PENINSULA shall first provide to TAKEDA written
notice offering to TAKEDA the opportunity to develop and/or sell the Product as
PENINSULA's sublicensee or distributor in such country(ies). Notwithstanding the
foregoing, if any of such country(ies) are Option Countries with respect to
which TAKEDA exercised the Option under Section 2.3 during the Option Notice
Period but TAKEDA and PENINSULA failed to execute an agreement covering such
Option Countries prior to the expiration of the Option Negotiation Period,
PENINSULA shall not be required to provide to TAKEDA written notice offering to
TAKEDA the opportunity to develop and/or sell the Product as PENINSULA's
sublicensee or distributor in such Option Countries except as may be required
under Section 2.3. TAKEDA shall inform PENINSULA of its interest in such an
opportunity within [*] days after its receipt of the applicable written offer
(the "Notice Period"). If TAKEDA informs PENINSULA in writing within the Notice
Period that TAKEDA is interested in developing, offering for sale and/or selling
Products in such country(ies) or distributing the Product in such country(ies),
as applicable, by itself or through any third party, TAKEDA and PENINSULA shall
in good faith negotiate the terms and conditions of an agreement covering such
country(ies) (which agreement would provide, if applicable, that

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

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TAKEDA would have the right to determine the sales price for and to promote
Products in such country(ies)) for up to [*] days from the date of TAKEDA's
notice expressing such interest (the "Negotiation Period"). If TAKEDA does not
inform PENINSULA of its interest in distributing the Product or developing,
offering for sale and/or selling the Products in such country(ies), as
applicable, during the Notice Period, or if TAKEDA and PENINSULA fail to execute
an agreement covering such country(ies) within the Negotiation Period, then
PENINSULA may grant rights to one or more third parties to develop, offer for
sale, distribute and/or sell the Product in such country(ies), as applicable;
provided, however, that if TAKEDA informed PENINSULA of its interest in a
particular opportunity set forth in a Notice during the applicable Notice Period
but PENINSULA and TAKEDA were unable to execute an agreement related to such
opportunity within the Negotiation Period, PENINSULA shall not enter into an
agreement with any third party with respect to such opportunity on terms and
conditions that, when taken as a whole, are better to such third party than the
terms and conditions last offered by PENINSULA to TAKEDA during the Negotiation
Period without first offering such terms to TAKEDA for TAKEDA's consideration
and possible acceptance. If TAKEDA does not elect to enter into an agreement
with PENINSULA on such better terms to TAKEDA within [*] days after the date on
which PENINSULA offers such terms to TAKEDA, then PENINSULA shall have the right
to enter into an agreement on such terms with a third party. PENINSULA shall
inform TAKEDA of the names of its third party distributor(s) and/or
sublicensee(s) and obtain TAKEDA's prior written consent, which consent shall
not be unreasonably withheld, impose upon the distributor(s) and/or
sublicensee(s) all applicable obligations which PENINSULA undertakes hereunder
and be responsible for the performance by the distributor(s) and/or
sublicensee(s) of such obligations.

         2.5      Each party covenants that during the term of this Agreement,
it will not develop, market or sell, and will not grant to any third party any
rights to develop, market or sell, any [*] product other than the Product in the
Territory (such product, a "Competitive Product"). Notwithstanding the
foregoing, TAKEDA shall have the right to develop, market, offer for sale or
sell a Competitive Product in the Territory provided that such Competitive
Product does not result from TAKEDA's (or its Affiliate's) own internal research
or discovery program, and instead such Competitive Product is discovered and
developed initially by a third party, and TAKEDA subsequently obtains, by
license from, as a result of a merger with or acquisition of, such third party
or otherwise, rights to develop, market, offer for sale or sell such Competitive
Product.

                                    ARTICLE 3

                                  CONSIDERATION

         3.1      As part of the consideration for the license granted by TAKEDA
hereunder, PENINSULA shall pay the following one-time milestone payments to
TAKEDA in U.S. Dollars upon the first occurrence of each of the following
events:

<TABLE>
<CAPTION>
MILESTONE EVENT                                               MILESTONE PAYMENT
---------------                                               -----------------
<S>                                                           <C>
Execution of the Agreement                                        US $500,000
--------------------------------------------------------------------------------
</TABLE>

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

                                       8
<PAGE>

<TABLE>
<S>                                                               <C>
Commencement of the first Phase III clinical study of the         US $[*]
Product (First administration for the first patient) in the
first country or jurisdiction in the Territory
--------------------------------------------------------------------------------
First submission of an NDA in the first country or                US $[*]
jurisdiction in the Territory
--------------------------------------------------------------------------------
Obtaining the first Registration of the Product in the first      US $[*]
country or jurisdiction in the Territory
--------------------------------------------------------------------------------
TOTAL POSSIBLE MILESTONE                                          US $18,500,000
PAYMENTS:
--------------------------------------------------------------------------------
</TABLE>

PENINSULA shall notify TAKEDA in writing upon its achievement of each milestone
event, and shall make each milestone payment payable hereunder no later than [*]
days from the date on which the applicable milestone event is achieved.

         3.2      For each half Year period ending September 30 and March 31,
PENINSULA shall send to TAKEDA a report in such a form as reasonably specified
by TAKEDA setting forth, on a country-by-country basis, the quantities of the
Product sold by PENINSULA and its sublicensees in the Territory during the
applicable half Year period, the Net Sales, and the amount of royalties owed to
TAKEDA under Section 3.3 hereof for such half Year, within [*] days after the
close of the applicable half Year period.

         3.3      As part of the consideration for the license granted by TAKEDA
hereunder, and subject to any applicable reductions and offsets under Sections
3.4 and 3.5, PENINSULA shall pay to TAKEDA royalties as a percentage of the
annual Net Sales of the Product sold in the Territory by PENINSULA in each Year,
according to the applicable royalty rates set forth below. Such royalty payments
shall be paid not later than [*] days after the end of each half Year with
respect to Net Sales in such half Year. For each country in the Territory,
PENINSULA shall pay TAKEDA royalties on a country-by-country basis for the
period commencing on the date of the first commercial sale of the Product by
PENINSULA or its sublicensee in such country and ending on the later of (i) the
[*] anniversary of the first commercial sale of the Product in such country, and
(ii) [*] of the last to expire Valid Claim in such country that claims the
composition of matter of such Product or the method of using such Product.

                  (a)      For Net Sales in those countries and jurisdictions in
the Territory in which PENINSULA has obtained Registration of the Product having
an approved indication for the treatment of infections due to MRSA (such
countries, the "MRSA Countries"), the royalties shall be a percentage of such
Net Sales in those countries and jurisdictions, with the royalty rate determined
based on the aggregate amount of Net Sales in the MRSA Countries during the
applicable calendar year as of the date of the applicable sale, according to the
following schedule:

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

                                       9
<PAGE>

<TABLE>
<CAPTION>
Royalty Rate                             Annual Net Sales in the MRSA Countries
------------                             --------------------------------------
<S>                                      <C>
[*]%                                     Up to US $[*]
[*]%                                     Over US $[*] up to US $[*]
[*]%                                     Over US $[*] up to US $[*]
[*]%                                     Over US $[*]
</TABLE>

For the avoidance of doubt, the aggregate annual Net Sales for any given Year
shall be reset to zero upon the beginning of the subsequent Year for purposes of
applying the applicable royalty rate.

                  (b)      For Net Sales in those countries and jurisdictions in
the Territory in which PENINSULA has not obtained Registration for the Product
in such countries or jurisdictions having an approved indication for the
treatment of infections due to MRSA (such countries, the "Adjusted Countries"),
the royalties shall be [*] percent ([*]%) of the Net Sales in those countries
and jurisdictions.

         By way of example, if the aggregate Net Sales achieved in a particular
first half Year is US $[*] million for MRSA Countries and US $[*] million for
Adjusted Countries, and in the second half Year is US $[*] million for MRSA
Countries and US $[*] million for Adjusted Countries, and assuming for purposes
of this example that any reductions and offsets under Section 3.4 and 3.5 are
not applicable, the amount payable hereunder for such sales in the first half
Year will be equal to the sum of (US $[*] million x [*]%) + (US $[*] million x
[*]%) + (US $[*] million x [*]%) + (US $[*] million x [*]%), i.e., $[*] million,
and the amount payable hereunder for the second half Year will be equal to the
aggregate of (US $[*] million x [*]%) + (US $[*] million x [*]%) + (US $[*]
million x [*]%), i.e., $[*] million.

         3.4      Subject to the limit set forth in Section 3.6, if PENINSULA
obtains a license or other similar right under any patent or patent application
owned or controlled by a third party in the Territory that claims or covers all
or any part of the composition of matter of, method of making, or method of
using the Product, pursuant to Section 15.3, then [*] percent ([*]%) of the
royalties due to such third party shall be offset against the amount of
royalties otherwise owed to TAKEDA pursuant to Section 3.3 after the application
of Section 3.5. In addition, if PENINSULA is required to pay any settlements or
damages to a third party under Section 15.3, then [*] percent ([*]%) of the
amount of such settlements or damages paid by PENINSULA shall be offset against
the amount of royalties otherwise owed to TAKEDA pursuant to Section 3.3 after
the application of Section 3.5, subject to the limit set forth in Section 3.6,
until such time as PENINSULA has offset an amount equal to [*] percent ([*]%) of
the amount of such settlements or damages.

         3.5      Subject to the limit set forth in Section 3.6, if the Product
Manufacturing Cost exceeds [*] percent ([*]%) of the Net Sales of the Product in
a certain half Year, the royalty rate

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

                                       10
<PAGE>

payable to TAKEDA on Net Sales of such Product under Section 3.3 shall be
reduced by [*] for each [*] that the Product Manufacturing Cost exceeds [*]
percent ([*]%) of the Net Sales of such Product. PENINSULA agrees to use all
commercially reasonable efforts to reduce the aspects of Product Manufacturing
Cost that are within its control. For example, if Product Manufacturing Cost is
equal to [*] percent ([*]%) of Net Sales of such Product in a certain half Year,
the royalty rate payable to TAKEDA on Net Sales of such Product under Section
3.3 shall be reduced by [*] (i.e., if the rate otherwise applicable under
Section 3.3 is [*] percent ([*]%), the royalty rate would be reduced to [*]
percent ([*]%)). If the above-mentioned reduction is applicable, PENINSULA shall
explain, if requested in writing by TAKEDA, the rationale of such reduction
together with a summary of the relevant records supporting the calculation of
the reduction.

         3.6      Notwithstanding anything in this Agreement to the contrary, in
no event shall the amount of royalties payable to TAKEDA hereunder on Net Sales
of Products in the Territory, after giving effect to applicable offsets or
reductions under Sections 3.4, 3.5 or 15.3 of this Agreement, be reduced by more
than [*] percent ([*]%) of the amount otherwise owed for any particular
reporting period.

         3.7      Income tax on the payments made to TAKEDA under Sections 3.1,
3.3, 7.3 and 7.6 hereof shall be borne by TAKEDA. PENINSULA shall deduct
mandatory withholding tax (if any) and shall pay such tax on behalf of TAKEDA,
and shall immediately send to TAKEDA a certified receipt for such payment issued
by the applicable taxing authority.

         3.8      Net Sales outside the United States shall be first determined
in the currency of the country in which they are earned and shall be converted
each half Year into an amount in U.S. Dollars using the rate of exchange
reported by Citibank in New York City as of the close of the last business day
of such half Year in which such royalty is due.

         3.9      PENINSULA shall keep accurate records of sales of the Product
and Product Manufacturing Cost in sufficient detail to permit TAKEDA to confirm
the accuracy of calculations of all payments made under Section 3. Once per
Year, TAKEDA, at its expense, may have an independent public accountant
reasonably acceptable to PENINSULA audit any and all account books and related
records or documents possessed by PENINSULA concerning the sale of the Product
and Product Manufacturing Cost, upon at least thirty (30) days notice and during
normal business hours, for the purpose of verifying the accuracy of royalty
payments made under Section 3. If the accountant finds a discrepancy of more
than five percent (5%) for the period audited, PENINSULA shall bear the
reasonable costs and expenses for such audit. For the above purpose, PENINSULA
shall keep such account books and their relating records or documents for five
(5) years after the end of the half Year concerned.

         3.10     TAKEDA shall not be obligated to refund payments made by
PENINSULA under this Agreement once received for any reason, including but not
limited to, invalidation of any claim(s) of the Patents. However, it is
understood that the foregoing sentence shall not be interpreted to limit the
damages available to PENINSULA in the event of an uncured breach of this
Agreement by TAKEDA (but subject to Section 13.8).

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

                                       11
<PAGE>

                                   ARTICLE 4

                            DISCLOSURE OF INFORMATION

         4.1      On the Effective Date, TAKEDA shall disclose to PENINSULA
and/or cause its appointee to disclose to PENINSULA in English the Information
set forth in the attached Schedule IV. In addition, TAKEDA shall promptly
disclose to PENINSULA in English any additional Information developed or
acquired and Controlled by TAKEDA during the term of this Agreement, if any.
PENINSULA may use all Information solely for the purposes contemplated under
this Agreement. If a Regulatory Authority in any jurisdiction or country of the
Territory requires PENINSULA to provide information which is not available to
TAKEDA and/or PENINSULA, both parties shall meet and agree on how to comply with
such requirement, provided, however, that such information shall be, except
otherwise agreed by the parties, generated by PENINSULA through the Development
Work and TAKEDA shall not be obligated to generate such information.

                                   ARTICLE 5

                                DEVELOPMENT WORK

         5.1      TAKEDA and PENINSULA shall establish a joint committee
(hereinafter called "JC") which will discuss and decide upon the development
plan and strategy for the Product in the Territory, and will coordinate the
development activities undertaken by PENINSULA for the Product with the
development activities undertaken by TAKEDA to generate data necessary to obtain
Registration of the Product in the TAKEDA Territory. The JC shall be comprised
of an equal number of members from TAKEDA and PENINSULA, which number of members
shall initially be a total of four (4), and will meet semi-annually at
alternating home office locations, or such other locations as the parties agree,
or by teleconference. Each party shall bear its own costs associated with
attendance at JC meetings. The JC shall keep minutes of all JC meetings in order
to confirm the matters discussed and the decisions reached at such meetings. If
the JC is unable to agree on a development plan or strategy for the Product, the
senior management of TAKEDA and PENINSULA shall discuss the issue in attempt to
resolve the dispute. However, if the parties are unable to resolve such dispute,
PENINSULA shall have the right to make all final decisions regarding the
development plan and strategy for the Product in the Territory; provided that
for clarity TAKEDA shall have the right to make final decisions regarding the
manufacture of the Compound and any other development work conducted by TAKEDA,
if any, except as otherwise expressly provided in this Agreement with respect to
Compound supplied to PENINSULA. The JC may discuss and decide upon other issues
with regard to the Compound and/or the Product that the parties mutually agree
to have decided by the JC.

         5.2      TAKEDA acknowledges and agrees that it shall use diligent
efforts to conduct and complete, at its expense and pursuant to protocols
determined by the JC, the preclinical studies of the Compound as described in
the attached Schedule V (the "Studies"), within the time frame for such studies
set forth in Schedule V, which Studies are reasonably anticipated to be required
by Regulatory Authorities in both the Territory and Japan in order for the

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

                                       12
<PAGE>

Compound to be approved for use in human clinical trials. For clarity, TAKEDA
shall have no obligation under this Agreement to conduct any preclinical studies
of the Compound other than the Studies and TAKEDA's obligation is to conduct the
Studies pursuant to the protocol to be separately determined by JC. It is
understood that TAKEDA makes no warranties with respect to the Studies,
including without limitation a warranty that PENINSULA will be able to
successfully develop the Compound using the results of the Studies. However, if
reasonably requested by PENINSULA, TAKEDA shall use diligent efforts to conduct
any additional preclinical studies on the Compound that are required by any
Regulatory Authority in the Territory at PENINSULA's expense. TAKEDA shall
disclose to PENINSULA in English all Information resulting from the Studies and
any other preclinical studies conducted by TAKEDA under this Section 5.2
promptly after the completion of such studies. Except as otherwise provided
above, PENINSULA shall be responsible for conducting, at PENINSULA's expense,
any additional preclinical and clinical studies, as Development Work, that are
required by Regulatory Authorities in the Territory, that are not Studies.

         5.3      Upon PENINSULA's reasonable request and to the extent that
TAKEDA has available inventory of Compound on the Effective Date, TAKEDA shall
promptly supply to PENINSULA that quantity of Compound necessary to conduct the
following preclinical studies of the Compound: (a) [*] study of the Compound
[*], (b) [*] study of the Compound [*], and (c) [*] study of the Compound [*].
All Compound supplied to PENINSULA by TAKEDA under this Section 5.3 shall be
supplied [*] to PENINSULA. Promptly after the Effective Date, the Parties shall
determine the specific quantity of Compound to be supplied by TAKEDA, the
delivery date for such Compound, and other details for such supply.

         5.4      PENINSULA shall undertake the Development Work as soon as
possible necessary to obtain the Registration for the Major Market Countries
promptly. In addition, PENINSULA shall use commercially reasonable efforts to
undertake Development Work necessary to obtain Registration in such other
countries in the Territory where PENINSULA elects to do so based on its sound
business judgment in light of the economic opportunities for sales of the
Product in such other countries. PENINSULA will report to TAKEDA on its
development progress, including without limitation its decision to seek
Registration in certain country(ies), from time to time, but no less frequently
than semi-annually in order for TAKEDA to confirm the status of development of
the Product.

         5.5      The Development Work shall be conducted by PENINSULA at its
sole cost, risk and responsibility. Upon the request of TAKEDA and at TAKEDA's
expense, PENINSULA shall allow TAKEDA representative(s), approved in advance by
PENINSULA, such approval not to be unreasonably withheld, to attend PENINSULA's
meetings concerning development and/or marketing of the Product (including
internal meetings and meetings with investigators). All TAKEDA representatives
that attend such meetings shall be bound by obligations of confidentiality
consistent with the obligations contained in Article 14.

         5.6      PENINSULA shall use commercially reasonable efforts to conduct
all Development Work and compile the Results in accordance with ICH guidelines
so that the Results may be accepted by Regulatory Authorities in the TAKEDA
Territory. PENINSULA shall, free of charge and without delay, provide TAKEDA
with all the Results in English.

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

                                       13
<PAGE>

TAKEDA shall have the right to use, and cause any third parties who have a
license under the Patents and Manufacturing Know-How to develop, manufacture, or
commercialize the Compound and/or the Product in the TAKEDA Territory to use,
the Results to develop, manufacture, offer for sale or sell the Product in the
TAKEDA Territory, including without limitation to pursue Registration in the
TAKEDA Territory, free of charge, subject to the rights granted to PENINSULA
hereunder. In addition, for the limited purpose of evaluating and determining
its interest for the Option Countries as set forth in Section 2.3, TAKEDA shall
have the right to use and cause any third party who is the candidate company to
develop, offer for sale and/or sell the Product in the Option Countries, to use
the Results and any other information which would be necessary or useful for
such purpose.

                                   ARTICLE 6

                       REGULATORY ISSUES AND REGISTRATION

         6.1      TAKEDA or its Third Party Manufacturer may, at its sole
discretion, prepare and file DMFs covering the manufacture of the Compound. If
TAKEDA or its Third Party Manufacturer files DMFs covering the manufacture of
the Compound, TAKEDA shall maintain, or shall cause its Third Party Manufacturer
to maintain, such DMFs including, without limitation, amending and updating such
DMFs, as required by applicable Regulatory Authorities. If any Regulatory
Authority deems a DMF prepared and filed by TAKEDA or its Third Party
Manufacturer to be deficient, TAKEDA shall take, or shall cause its Third Party
Manufacturer to take, all reasonable actions necessary to remedy such
deficiencies as soon as practicable, provided, however, that at any time and at
its sole discretion, TAKEDA shall have the right, upon written notice to
PENINSULA, to elect to give up remedying such deficiencies and cease supplying
the Compound to PENINSULA. PENINSULA shall have the right to elect, as a sole
and exclusive remedy for TAKEDA's decision to give up remedying such
deficiencies and cease supplying Compound to PENINSULA, to either (a) terminate
this Agreement pursuant to Section 17.3, or (b) manufacture, or have a third
party manufacture on PENINSULA's behalf, the Compound, in which event the
provisions of Sections 7.15 below shall apply. During the term of this
Agreement, TAKEDA grants, and shall cause its Third Party Manufacturers to
grant, to PENINSULA and its sublicensees a right of reference to such DMFs for
the purpose of preparing, filing, or maintaining INDs, NDAs, and other
regulatory filings relating to the Compound and/or the Product in the Territory.
TAKEDA shall obtain PENINSULA's prior written approval, not to be unreasonably
withheld, before it or its Third Party Manufacturer makes any material changes
to any DMF covering the manufacture of the Compound.

         6.2      PENINSULA (or its Affiliate or sublicensee) shall use all
commercially reasonable efforts to apply for and obtain Registration in each
Major Market Country as soon as reasonably possible, but in accordance with the
timeline established by the JC under Section 5.1. Notwithstanding the foregoing,
PENINSULA's obligation under this Section 6.2 is contingent upon TAKEDA
fulfilling its obligations under Sections 5.2, 5.3, 6.3, and Article 7 so long
as TAKEDA is supplying Compound to PENINSULA under this Agreement. In addition,
PENINSULA shall use commercially reasonable efforts to apply for and obtain
Registration in such other countries in the Territory where PENINSULA elects to
do so based

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

                                       14
<PAGE>

on its sound business judgment in light of the economic opportunities for sales
of the Product in such other countries. After obtaining Registration in each
country in the Territory, PENINSULA shall submit an application for the NHI
Price Listing in each such country as soon as possible, if necessary for the
marketing and sale of the Product in such country.

         6.3      PENINSULA shall have the sole responsibility hereunder to
apply for, obtain, and maintain Registrations in the Territory. All the expenses
necessary for applying for, obtaining, securing and maintaining Registrations in
the Territory shall be borne by PENINSULA. At PENINSULA's request, TAKEDA shall
cooperate in the preparation and maintenance of all regulatory filings for
Products filed by PENINSULA, including, without limitation, preparing all
sections of INDs that are applicable to the manufacturing activities of TAKEDA
or its Third Party Manufacturer (such as the Chemistry, Manufacturing and
Controls portions of INDs and NDAs) or to preclinical data generated by TAKEDA.
In addition, TAKEDA shall provide all reasonable assistance and cooperation to
assist PENINSULA to apply for, obtain, and maintain Registrations including,
without limitation, permitting inspection by Regulatory Authorities of TAKEDA's
manufacturing facilities or the facilities of all Third Party Manufacturers
manufacturing Compound or intermediates supplied to PENINSULA under Article 7 so
long as TAKEDA is supplying Compound to PENINSULA under this Agreement.
PENINSULA shall bear all of TAKEDA's or Third Party manufactures' reasonable
out-of-pocket costs incurred in providing such assistance and cooperation to
PENINSULA.

         6.4      Immediately after filing an application for Registration and
obtaining the Registration in a country or jurisdiction in the Territory,
PENINSULA shall notify TAKEDA of the dates and numbers of the application for
such Registration and the resulting Registration and at the same time shall send
to TAKEDA photostat copies of the certificates of the Registration.

         6.5      If PENINSULA fails to fulfill its obligations under Section
6.2 in accordance with the timeline established by the JC under Section 5.1,
PENINSULA shall provide to TAKEDA written notice of such failure, including a
detailed description of the basis for PENINSULA's belief that such failure has
occurred. In such event, the parties shall discuss and agree upon what steps
should be taken by PENINSULA in order to fulfill its obligations under Section
6.2 including a commercially reasonable period of time for PENINSULA to fulfill
such obligations (if the parties cannot agree on such time period, an
independent research and development organization located in the Territory with
good reputation in the pharmaceutical industry to be mutually agreed upon shall
establish a commercially reasonable time period). Thereafter, PENINSULA shall
use best efforts to take such steps in order to fulfill its obligations under
Section 6.2 within the period of time agreed to by the parties. If PENINSULA
fails to use best efforts to take such steps to obtain Registration in a
particular Major Market Country within the time period agreed to by the parties,
TAKEDA may eliminate such country from the definitions of "Territory" and "Major
Market Country", and in such event PENINSULA shall have no further rights or
obligations hereunder to market and sell the Product in such country.

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

                                       15
<PAGE>

         6.6      After the Effective Date and upon the request of PENINSULA,
PENINSULA, TAKEDA, and its Third Party Manufacturer, if applicable, shall enter
into a mutually agreeable written quality memorandum (the "Quality Memorandum")
that sets forth the parties' respective responsibilities related to the Compound
and Product and contains detailed procedures and guidelines for handling
regulatory matters and responding to customer questions and complaints related
to Products, as reasonably needed to comply with requirements of any Regulatory
Authority in the Territory and/or good clinical and marketing practices. To the
extent applicable, such Quality Memorandum shall also address other issues
related to the supply of the Compound to PENINSULA under Article 7. The parties
acknowledge and agree that the Quality Memorandum will need to be updated on an
ongoing basis to the extent necessary.

         6.7      TAKEDA shall, and will ensure that its Third Party
Manufacturer shall, conduct quality control and testing of the Compound
consistent with cGMP to ensure that the Compound supplied to PENINSULA under
Article 7 conforms to the Specifications. TAKEDA shall, and will ensure that its
Third Party Manufacturer shall, perform quality quality assurance review,
approval, and Lot release as set forth in the Quality Memorandum prior to
shipping each shipment of Compound to PENINSULA to ensure that the Compound
delivered to PENINSULA complies with the Specifications, cGMP, all other
applicable requirements of Regulatory Authorities, and all applicable laws and
regulations. With respect to the Compound supplied under Article 7, PENINSULA
may, at its expense and upon reasonable notice and during normal business hours,
conduct appropriate review and inspection (including of all documentation and
applicable facilities) related to such quality control and testing program, to
verify the adherence of TAKEDA and/or its Third Party Manufacturer, as
applicable, to the foregoing requirements, to assess compliance with cGMP, and
to discuss all related manufacturing issues, if any.

         6.8      If modifications to the Specifications are recommended or
required by a Regulatory Authority in the Territory, PENINSULA shall notify
TAKEDA and the parties shall discuss in good faith and agree upon the best way
to implement such modifications. If requested by PENINSULA, TAKEDA shall, and
will ensure that its Third Party Manufacturer shall, implement such
modifications, but PENINSULA shall bear the expense of implementing such
modifications. If TAKEDA desires to modify the Specifications and/or change some
items relating to the manufacture of the Compound, including without limitation
the manufacturing site, which would result in modifying the Registration by
PENINSULA, and such modification and/or change is not recommended or required by
a Regulatory Authority in the Territory, TAKEDA and its Third Party Manufacturer
shall not change the Specifications and/or such items without PENINSULA's prior
written approval, and TAKEDA shall bear the expense of implementing such
modification. If PENINSULA desires to modify the Specifications and such
modification is not recommended or required by a Regulatory Authority in the
Territory, TAKEDA shall use all commercially reasonable efforts to, and will use
commercially reasonable efforts to ensure that its Third Party Manufacturer
shall, implement such modification, but PENINSULA shall bear the cost of
implementing such modification.

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

                                       16
<PAGE>

         6.9      PENINSULA shall be responsible for receiving, investigating,
and documenting all serious adverse drug reactions relating to the use of the
Products which require reporting to appropriate Regulatory Authorities in the
Territory. PENINSULA will be solely responsible for filing all post-marketing
reports of such serious adverse drug reactions required by Regulatory
Authorities in the Territory, or as required by applicable laws or regulations.
During the term of this Agreement and at any time thereafter, in the event that
a party receives a report of a serious adverse drug reaction relating to the use
of a Product anywhere in the world, it shall notify the other in writing as soon
as practicable, but in no event more than 24 hours after becoming aware of such
adverse drug reaction. The parties shall periodically exchange a summary of all
serious adverse drug reactions of Products during the term of this Agreement and
any and all other information that becomes available regarding the
post-marketing surveillance of the Product. The scope and mechanisms for the
exchange and of the treatment of such information shall be provided for in
"Standard Operating Procedure (SOP) For International Post-Marketing
Surveillance" attached hereto as Schedule III, as it may be amended and updated
from time to time as agreed by the parties.

                                   ARTICLE 7

                                 CLINICAL SUPPLY

         7.1      Until and unless TAKEDA determines to cease supplying the
Compound pursuant to Sections 6.1 or 7.4, TAKEDA shall, upon the request of
PENINSULA and under the terms and conditions of this Article 7, provide
PENINSULA with sufficient quantities of the Compound meeting the Specifications
to the extent reasonably required by PENINSULA in order to conduct the
Development Work. PENINSULA shall use the Compound supplied under this Article 7
solely for conducting the Development Work and shall not use the same for any
other purpose without the prior written consent of TAKEDA.

         7.2      PENINSULA desires to have TAKEDA supply to PENINSULA [*] of
Compound meeting the Specifications, for PENINSULA's use in performing
Development Work, such supply desired to be completed as soon as possible and in
any event within [*] months after the Effective Date (the "Delivery Date").
PENINSULA understands that TAKEDA does not currently have sufficient inventory
of the Compound to provide such quantity to PENINSULA. PENINSULA has submitted a
purchase order for [*] of Compound for delivery no later than the Delivery Date.
TAKEDA shall use all commercially reasonable efforts to manufacture and/or have
a Third Party Manufacturer manufacture and supply at least [*] of Compound
meeting the Specifications to PENINSULA by the Delivery Date. TAKEDA shall
supply to PENINSULA the entire amount of Compound produced by TAKEDA and/or its
Third Party Manufacturer as a result of the manufacturing activities under this
Section 7.2, for the price set forth in Section 7.3. If TAKEDA is unable to
supply at least [*] of Compound to PENINSULA by the Delivery Date, but is able
to supply at least [*] of the Compound, TAKEDA shall nonetheless supply to
PENINSULA as much of the Compound as it is able to (i.e., at least [*]), and
PENINSULA shall purchase and take delivery of such quantity of Compound
manufactured and supplied by TAKEDA by the Delivery Date. TAKEDA's obligation to
supply to PENINSULA between [*] of Compound by the Delivery Date shall be
referred to herein as the "Supply Obligation". If TAKEDA, despite using its all
commercially

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

                                       17
<PAGE>

reasonable efforts to do so, is unable to satisfy its Supply Obligation,
PENINSULA shall elect to either (a) accept such quantity of the Compound as
TAKEDA is able to supply by the Delivery Date, in full satisfaction of the
Supply Obligation, subject to the price reduction in Section 7.3, or (b) cancel
the purchase order and reject all quantities of Compound delivered by TAKEDA, if
any, in which event PENINSULA shall have no payment obligation to TAKEDA under
Section 7.3 and TAKEDA shall have no further obligation to supply Compound to
PENINSULA under this Article 7. In addition, if TAKEDA is unable to satisfy the
Supply Obligation, PENINSULA shall, at its option, have the right, as a sole and
exclusive remedy for TAKEDA's inability to satisfy the Supply Obligation, to (a)
terminate this Agreement pursuant to Section 17.3, (b) manufacture, or have a
third party manufacture on PENINSULA's behalf, the Compound, in which event the
provisions of Section 7.15 below shall apply, or (c) if PENINSULA elects to
accept the quantity of the Compound delivered by TAKEDA in full satisfaction of
the Supply Obligation subject to the price reduction in Section 7.3, proceed to
order from TAKEDA additional quantities of Compound in accordance with Section
7.5.

         7.3      The supply price for the Compound supplied by TAKEDA pursuant
to Section 7.2 shall be a total of US $1,200,000 regardless of the actual
quantity delivered so long as the total quantity delivered is at least [*]. If
the actual quantity of Compound delivered by the Delivery Date is less than [*]
of Compound, the supply price shall be an amount equal to $[*] of Compound
actually delivered to PENINSULA. PENINSULA has provided TAKEDA with a letter of
credit from [*] entitling TAKEDA to receive payment for the actual quantity of
Compound delivered to PENINSULA in accordance with this Section 7.3 and Section
7.9 upon delivery and acceptance thereof so that TAKEDA will immediately
commence activities to satisfy its supply obligations under Section 7.2.
Promptly after the Effective Date, PENINSULA shall use best efforts to cancel
the letter of credit with [*] and instead establish a comparable letter of
credit with [*], or such other bank as the parties may agree. TAKEDA agrees to
provide a letter of cancellation to [*] releasing [*] from the letter of credit
established for TAKEDA's benefit. TAKEDA further agrees that upon reasonable
request from PENINSULA, TAKEDA may provide other documents which will enable
PENINSULA to cancel the letter of credit from [*] as soon as possible, but in no
event shall TAKEDA be obliged to provide any documents or perform any acts
through which TAKEDA may be held to bear any duty or liability in this relation.

         7.4      PENINSULA and TAKEDA agree that TAKEDA is currently planning
to have a Third Party Manufacturer manufacture the Compound to be supplied to
PENINSULA under this Article 7, but TAKEDA may, at its sole discretion and at
any time after TAKEDA has satisfied its Supply Obligation under Section 7.2,
elect to cease supplying the Compound to PENINSULA based on any additional
orders, and subject to the following. If TAKEDA makes such election, TAKEDA
shall notify PENINSULA of such decision in writing immediately, and TAKEDA
shall, notwithstanding such election, remain obligated to deliver all amounts of
Compound that were the subject of firm orders by PENINSULA submitted to TAKEDA
in accordance with Section 7.5 prior to such notice from TAKEDA. PENINSULA shall
have the right to elect, as a sole and exclusive remedy for TAKEDA's decision to
cease supplying Compound to PENINSULA, to either (a) terminate this Agreement
pursuant to Section 17.3, or (b) manufacture, or have a third party manufacture
on PENINSULA's behalf, the Compound, in which event the provisions of Sections
7.15 and 7.16 below shall apply.

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

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<PAGE>

         7.5      PENINSULA shall provide to TAKEDA firm orders of its
requirements of the Compound for Development Work as soon as possible, and from
time to time thereafter if any additional clinical supplies are needed. If
requested by TAKEDA [*] prior to delivery of the Compound covered by any such
firm order, PENINSULA shall provide to TAKEDA a letter of credit from [*], or
such other bank as the parties may agree entitling TAKEDA to receive payment for
the actual quantity of Compound delivered to PENINSULA pursuant to such firm
order in accordance with this Section 7.5 and Section 7.9 upon delivery and
acceptance thereof. Subject to Section 7.4, TAKEDA shall be required to fulfill
such firm orders for Compound within [*] months of the date of the order;
PENINSULA may, in any firm order, request a delivery date sooner than (but in
any event no sooner than [*] months of the date of the order) such required
delivery date, and TAKEDA shall use commercially reasonable efforts to deliver
the ordered quantity of Compound by such requested date. In addition, PENINSULA
may reduce, by sending TAKEDA a written notice describing in reasonable detail
the reason thereof during the [*] from the subject firm order, the ordered
quantity by up to [*] percent ([*]%), as a result of which PENINSULA shall
purchase [*]% to [*]% of the original order (provided that TAKEDA has not
already satisfied more than [*]% of such original order prior to any such
reduction in the order). Notwithstanding the foregoing, the provisions of
Section 7.2 (rather than this Section 7.5) shall apply to the initial [*] of
Compound ordered by PENINSULA for delivery to PENINSULA by the Delivery Date.

         7.6      The supply price for all quantities of Compound supplied by
TAKEDA to PENINSULA hereunder (other than those quantities of Compound supplied
as part of TAKEDA's Supply Obligation) for the conduct of Development Work shall
be equal to [*] percent ([*]%) of TAKEDA's actual Compound Manufacturing Cost
(the "Price"). TAKEDA shall use all commercially reasonable efforts to determine
if there are means to reduce the Compound Manufacturing Cost, and shall consult
with PENINSULA regarding any such means or other suggestions for reducing such
Compound Manufacturing Cost, including anticipated costs for implementing such
means to reduce the Compound Manufacturing Cost and the expected reduction in
the Compound Manufacturing Cost. If PENINSULA agrees [*] the implementation of
any such cost reduction means, TAKEDA (or its Third Party Manufacturer) shall
implement such agreed means, and PENINSULA shall [*] TAKEDA for [*] implementing
such cost reduction means, and all resulting reductions in the Compound
Manufacturing Cost shall be applied to reduce the supply price of the Compound.
TAKEDA shall invoice PENINSULA the Price for each shipment of Compound delivered
to PENINSULA hereunder, and PENINSULA shall pay such invoice not later than [*]
days after delivery of the applicable Compound, subject to Section 7.9. TAKEDA
shall keep, and shall require all Third Party Manufacturers to keep, accurate
records in sufficient detail concerning the Compound Manufacturing Cost and, if
applicable, the Intermediate Manufacturing Cost. Once per year, PENINSULA may
have examined at TAKEDA, by an independent public accountant, any and all
account books and related records or documents possessed by TAKEDA and its Third
Party Manufacturer(s) related to the Compound Manufacturing Cost and, if
applicable, the Intermediate Manufacturing Cost, for the purpose of verifying
the accuracy of the Price paid by PENINSULA under this Section 7.6 and, if
applicable, the Intermediate Manufacturing Cost paid by PENINSULA under Section
7.15(d). For the above purpose, TAKEDA shall keep, and shall require its Third
Party Manufacturers to keep, such account books and related records or documents
for five (5) years after the delivery date

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

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<PAGE>

concerned. In case such accountant finds a discrepancy of more than five percent
(5%), TAKEDA shall bear the reasonable costs and expenses of such audit, and
shall reimburse to PENINSULA the amount of the overpayment made by PENINSULA to
TAKEDA.

         7.7      All Compound supplied to PENINSULA by TAKEDA under this
Article 7 shall be delivered to PENINSULA [*] (Incoterms 2000) at one of the
following Major Market Country airports designated by PENINSULA in its purchase
orders: Chicago O'Hare International Airport, London Heathrow International
Airport, Charles de Gaulle Paris International Airport, Frankfurt International
Airport, Barajas Madrid International Airport, Zurich Kloten International
Airport, Vienna International Airport, or Milano Malpensa Airport (the "Delivery
Place"). Title to the Compound shall pass from TAKEDA to PENINSULA at such time
as it has been delivered to the first carrier for transportation to the named
place of destination, and risk of loss of the Compound shall pass from TAKEDA to
PENINSULA once the Compound [*]. Each shipment of Compound shall be accompanied
by a certificate of analysis (a) confirming that TAKEDA and/or its Third Party
Manufacturer conducted quality control and testing of the Compound consistent
with cGMP to ensure that the Compound conforms to the Specifications as required
under Section 6.7, (b) containing the quality control and quality assurance test
results for the Compound in such shipment, (c) certifying that each Batch of
Compound in such shipment was manufactured in accordance with cGMP, and (d)
confirming that the Compound in such shipment conforms to the Specifications.
TAKEDA agrees to store Compound to be supplied to PENINSULA in a secure area and
under appropriate product label storage conditions to ensure that such Compound
conforms to the Specifications at the time of delivery to PENINSULA. TAKEDA
shall pack the Compound for shipment in a commercially reasonable manner that
assures that such Compound will meet the Specifications upon delivery to
PENINSULA.

         7.8      TAKEDA shall ensure that all Compound supplied to PENINSULA
hereunder shall be manufactured in compliance with cGMP, all other applicable
requirements of Regulatory Authorities, and applicable laws and regulations,
including, without limitation, all applicable laws and regulations relating to
the transportation, storage, use, handling and disposal of hazardous materials
used to manufacture Compound of the countries and jurisdictions where PENINSULA
is selling the Product. TAKEDA, at its expense, shall obtain and maintain,
and/or shall ensure that its Third Party Manufacturer obtain and maintain, for
so long as TAKEDA is supplying Compound to PENINSULA hereunder, all facility
licenses and government permits, including without limitation health, safety,
and environmental permits, necessary for the conduct of the actions and
procedures undertaken to manufacture and supply the Compound for importation and
sale in the Territory. For so long as TAKEDA is supplying Compound to PENINSULA
under this Agreement, TAKEDA shall promptly notify PENINSULA in writing if
TAKEDA and/or its Third Party Manufacturer receives any citations with respect
to its manufacturing facilities, including, without limitation, FDA Form 483s or
warning letters, or if TAKEDA and/or its Third Party Manufacturer becomes
subject to an FDA consent decree or other action of a Regulatory Authority
impacting the manufacture of Compound by TAKEDA or its Third Party Manufacturer
under this Agreement.

         7.9      Upon receipt of the Compound, PENINSULA shall examine the
appearance and the quantity of the Compound supplied, and test samples thereof
in accordance with testing

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

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<PAGE>

methods agreed upon by the parties in the Quality Memorandum. Within thirty (30)
days after receipt of a shipment of Compound, PENINSULA may reject the Compound
if it is (a) damaged in appearance, (b) not manufactured in compliance with
cGMP, (c) adulterated, or (d) not in conformance with the Specifications
("Defective Compound"), or may notify TAKEDA of any shortage of Compound with
respect to the quantity delivered by giving written notice to TAKEDA, which
notice shall identify in reasonable detail the nature of the defect or shortage.
PENINSULA shall have no payment obligation to TAKEDA with respect to such
shortage of Compound or amount of Defective Compound rejected, unless and until
any such Compound has been replaced pursuant to Section 7.11 or any dispute
regarding whether such Compound is defective is resolved in TAKEDA's favor
pursuant to Section 7.12. If PENINSULA does not give such notice to TAKEDA
within such 30-day period, PENINSULA will be deemed to have accepted the
Compound and to have released TAKEDA from any claim with respect to such
Defective Compound, subject to Section 7.10, and except for Product Liability
Claims from PENINSULA's (or its Affiliate's or sublicensee's) customers, which
shall be handled pursuant to Section 13.4, and PENINSULA shall promptly execute
and deliver to TAKEDA an acceptance certificate substantially in the form of
Exhibit A attached hereto and incorporated by reference herein (an "Acceptance
Certificate").

         7.10     If, after acceptance as provided in Section 7.9 above,
PENINSULA discovers that any of the Compound supplied to PENINSULA is Defective
Compound, and the nature of such defect is such that it could not reasonably
have been discovered by testing samples thereof in accordance with the agreed
testing methods within the 30-day testing period under Section 7.9, PENINSULA
may revoke its acceptance of such Defective Compound by providing the above
written notice to TAKEDA of such revocation promptly after discovering such
defect, but in no event later than one year after the date such Compound was
delivered to PENINSULA. Such notice shall identify in reasonable detail the
nature of the defect.

         7.11     Subject to Section 7.13, if the Compound supplied by TAKEDA
pursuant to Section 7.2 is Defective Compound, PENINSULA may reject such
Compound within thirty (30) days after receipt of delivery thereof, and TAKEDA
shall refund PENINSULA for the amount paid by PENINSULA under Section 7.3 for
such Defective Compound. In such event, the amount of such Defective Compound
shall not be included in the amount used to determine whether TAKEDA has
satisfied the Supply Obligation. Subject to Section 7.12, if the Compound
supplied by TAKEDA pursuant to Section 7.5 is Defective Compound, or TAKEDA did
not supply all amount of Compound ordered, TAKEDA shall, as soon as practicable,
make up for any shortage in the quantity of Compound delivered to PENINSULA, or
replace Defective Compound with Compound that meets the warranty in Section 12.2
below, as applicable, and shall be entitled to invoice PENINSULA for the
applicable supply price for such replacement Compound upon delivery.

         7.12     Any dispute arising between TAKEDA and PENINSULA concerning
whether a shipment of Compound is Defective Compound that cannot be settled by
the parties hereto in good faith within thirty (30) days of PENINSULA's notice
of defect shall be submitted to an independent test organization located in the
Territory with good reputation in the pharmaceutical industry to be mutually
agreed upon. Such independent test organization shall determine whether the
applicable Compound is Defective Compound, and the parties agree that

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

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<PAGE>

the decision of said expert shall be final and binding on TAKEDA and PENINSULA.
The party against whom the expert rules shall bear all fees and expenses of the
expert relating to said dispute.

         7.13     TAKEDA shall promptly notify PENINSULA if it discovers that
any Compound supplied to PENINSULA might be Defective Compound. Such notice
shall identify in reasonable detail the nature of the defect, the Lot of such
Defective Compound, and the basis for TAKEDA's determination as to the nature of
the defect.

         7.14     If TAKEDA is unable, at any time, to supply PENINSULA on a
timely basis with the entire quantity of Compound ordered by PENINSULA in
accordance with Section 7.5 for any reason, including by reason of Force Majeure
under Article 16, TAKEDA shall immediately notify PENINSULA of such inability to
supply and the estimated extent of such inability (including delay time and the
quantity of Compound involved), and shall use good faith diligent efforts to
cure the supply problem as soon as possible. If a supply problem occurs to the
extent that, at any particular time, Compound that has been ordered by PENINSULA
pursuant to Section 7.5 is more than [*] days (or, in case caused by Force
Majeure, more than [*] days) past due according to the scheduled delivery dates
in the applicable orders (a "Supply Disruption"), then PENINSULA and TAKEDA will
discuss the Supply Disruption and seek all appropriate means of resolution.
TAKEDA will use best efforts to resolve the Supply Disruption. For the duration
of a Supply Disruption, TAKEDA shall [*] PENINSULA all Compound in [*] or [*],
intended for use by [*] for development [*], if any, until such time as the
Supply Disruption has been resolved. If the Supply Disruption is not cured
entirely (that is, all past due quantities of Compound on order are delivered to
PENINSULA) within [*] days of the beginning of the Supply Disruption, then
PENINSULA shall have the right, as a sole and exclusive remedy for the Supply
Disruption, to elect to (i) terminate this Agreement pursuant to Section 17.3 or
(ii) manufacture, or have a third party manufacturer manufacture on PENINSULA's
behalf, the Compound. If PENINSULA so elects to manufacture or have a third
party manufacturer manufacture the Compound, then the provisions of Sections
7.15 below shall apply.

         7.15     If PENINSULA elects to manufacture, or have a third party
manufacturer manufacture on PENINSULA's behalf, the Compound as permitted under
Sections 6.1, 7.2, 7.4 or 7.14, the following shall apply:

                  (a)      TAKEDA is deemed automatically to grant to PENINSULA
a license under the Information, Manufacturing Know-How and Patents to make and
have made the Compound and all intermediates thereof in the Territory without
any additional consideration to TAKEDA;

                  (b)      TAKEDA shall disclose to PENINSULA all Manufacturing
Know-How and any other information, data and know-how relating to the
manufacture of the Compound and all intermediates thereof Controlled by TAKEDA,
and PENINSULA may purchase some or all of its requirements of the Compound from
any third party manufacturer and/or manufacture by itself the Compound and may
use such information to do so; if there is any other information, data and
know-how relating to the manufacture of the Compound and/or any

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

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<PAGE>

intermediates thereof that is in the possession of TAKEDA or its Third Party
Manufacturer, but is not Controlled by TAKEDA, then TAKEDA shall use
commercially reasonable efforts to secure access and rights to such information,
data and know-how so that it Controls the same and can disclose same to
PENINSULA for its use under this Section 7.15;

                  (c)      TAKEDA shall promptly provide, at such times and
locations as may reasonably be requested by PENINSULA, reasonable, diligent and
good faith cooperation to enable PENINSULA to establish such manufacturing
capability, including, without limitation, assisting in qualifying PENINSULA or
its designated third party manufacturer to manufacture Compound and all
intermediates thereof;

                  (d)      TAKEDA shall assist PENINSULA with identifying a
third party that will be able to supply PENINSULA with those intermediates
required for the manufacture of Compound. TAKEDA shall assist PENINSULA if
PENINSULA desires the assignment of current agreement(s) between TAKEDA and
Third Party Manufacturer(s) with regard to the manufacture of the Compound, or
in enabling PENINSULA to enter into its own agreement with such party; provided,
however, that TAKEDA shall not be obligated to assign such agreement(s). In any
event, TAKEDA will, if requested by PENINSULA, use all commercially reasonable
efforts to continue to supply, to the extent it is able from its inventory or
otherwise, PENINSULA with PENINSULA's requirements of intermediates for use to
manufacture the Compound on commercially reasonable terms and conditions that
are consistent with the terms and conditions for the supply of Compound to
PENINSULA hereunder until such time as PENINSULA is able to obtain its
requirements of such intermediates from a third party manufacturer. PENINSULA
shall pay TAKEDA its Intermediate Manufacturing Cost for intermediates supplied
to PENINSULA hereunder, provided that TAKEDA ensures that such intermediates (i)
conform to the specifications therefor, (ii) are manufactured in accordance with
all applicable laws and regulations, and (iii) have free, clear, and marketable
title at the time of delivery to PENINSULA.

                  (e)      if TAKEDA desires to purchase the Compound and/or the
Product from PENINSULA in order to sell the Product outside the Territory,
PENINSULA shall use reasonable efforts to comply with TAKEDA's desire under such
terms and conditions as are separately determined by the mutual agreement of the
parties;

                  (f)      Any obligation of TAKEDA, including under Sections
6.1, 6.6, 6.7, 6.8, and Articles 7 and 8, to supply to PENINSULA any further
amounts of Compound shall terminate, and PENINSULA shall not have any further
right to compel TAKEDA to manufacture and supply the Compound as set forth
therein, except for the surviving obligations under Section 7.16 below (if
applicable); and

                  (g)      subsections (a) through (f) above and Sections 7.16
and 7.17 below are PENINSULA's sole and exclusive remedy for (i) TAKEDA's
election to not remedy deficiencies in the DMF and ceasing to supply Compound
under Section 6.1, (ii) TAKEDA's inability to satisfy the Supply Obligation
under Section 7.2, (iii) TAKEDA's election to cease supplying Compound under
Section 7.4, or (iv) for a Supply Disruption under Section 7.14, and

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

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in each case PENINSULA shall have no right to demand from TAKEDA any
compensation therefor.

         7.16     If PENINSULA elects to manufacture, or have a third party
manufacturer manufacture on PENINSULA's behalf, the Compound as permitted under
Section 7.4, and upon written request of PENINSULA, TAKEDA shall use best
efforts to continue to supply Compound to PENINSULA hereunder until at least [*]
months after the date on which TAKEDA provides written notice to PENINSULA that
it is electing to cease supplying the Compound to PENINSULA or until PENINSULA
establishes new manufacturing capacity that is able to manufacture PENINSULA's
total requirements of cGMP Compound meeting Specifications, whichever comes
earlier (such period, the "Wind-Down Period"). After the expiration of the
Wind-Down Period, and provided that TAKEDA has complied with its obligations
under Section 7.15, TAKEDA shall have no further obligation to supply Compound
to PENINSULA hereunder.

         7.17     If PENINSULA elects to manufacture, or have a third party
manufacturer manufacture on PENINSULA's behalf, the Compound because of a Supply
Disruption under Section 7.14, PENINSULA shall have the right, both during and
after the Supply Disruption, to continue to order and obtain from TAKEDA (on a
non-exclusive basis) supply of Compound up to TAKEDA's reasonable ability to
supply such Compound from its inventory or otherwise. TAKEDA shall use best
efforts to supply such Compound to PENINSULA. However, PENINSULA acknowledges
and agrees that under certain circumstances, i.e., Supply Disruptions that are
caused by reason of Force Majeure or Supply Disruptions resulting from the
failure of TAKEDA's Third Party Manufacturer to supply Compound ordered by
TAKEDA, TAKEDA may not have the ability to supply any Compound to PENINSULA. For
so long as such circumstances exist, TAKEDA shall not be deemed to have breached
its obligation to supply Compound to PENINSULA under this Section 7.17, provided
that TAKEDA continues to use best efforts to supply Compound to PENINSULA as
soon as practicable.

                                   ARTICLE 8

                                COMMERCIAL SUPPLY

         8.1      Except as otherwise set forth in Section 8.2, TAKEDA shall
supply and deliver to PENINSULA or TAKEDA shall cause its appointee to supply
and deliver to PENINSULA, and PENINSULA shall purchase and take delivery of,
PENINSULA's entire requirements of the Compound for processing into Products for
commercial sale. The parties shall negotiate in good faith and enter into a
commercial supply agreement setting forth the terms and conditions for such
commercial supply of the Compound, which terms shall include the terms set forth
in this Section 8.1 (the "Supply Agreement"). The parties shall commence such
negotiation when PENINSULA enters into Phase III clinical trials. Such Supply
Agreement shall contain terms that are commercially reasonable and typical for
transactions of this type, and shall incorporate the following guiding
principles:

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

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                  (a)      SUPPLY OBLIGATION. During the term of the Supply
Agreement, TAKEDA shall manufacture, or have a Third Party Manufacturer
manufacture, and supply to PENINSULA all PENINSULA's requirements of Compound
for processing into Products for commercial sale in the Territory as set forth
in purchase orders submitted by PENINSULA;

                  (b)      SUPPLY PRICE. The price of the Compound supplied to
PENINSULA under the Supply Agreement shall be negotiated in good faith and
determined by the parties hereto to be equivalent to [*] percent ([*]%) of the
Compound Manufacturing Cost, provided, however, that such transfer price shall
not in any event exceed US $[*] of Compound; TAKEDA shall, at PENINSULA's cost,
use best efforts to reduce the Compound Manufacturing Cost as much as
practicable and shall consult with PENINSULA regarding suggestions for reducing
such Compound Manufacturing Cost;

                  (c)      FORECASTING AND ORDERING. The Supply Agreement shall
contain a mechanism by which PENINSULA shall provide to TAKEDA rolling forecasts
of its estimated requirements of Compound, and a portion of each such forecast
shall represent a binding commitment on PENINSULA to purchase, and on TAKEDA to
supply, the quantity of Compound set forth in such portion of each forecast. The
Supply Agreement shall also include a mechanism by which PENINSULA shall provide
to TAKEDA purchase orders for Compound in accordance with the forecasts, and the
permitted delivery dates for Compound set forth in such orders shall incorporate
an appropriate lead time based on the time required by TAKEDA to manufacture
Compound. PENINSULA shall be able to increase or decrease the quantity of
Compound to be ordered in such purchase orders from the quantity of Compound set
forth in the applicable binding forecast by a certain percentage of the
forecasted quantity of Compound;

                  (d)      INABILITY/ CEASE TO SUPPLY. The Supply Agreement
shall address the consequences if TAKEDA is unable to supply PENINSULA on a
timely basis with PENINSULA's requirements of Compound, or if TAKEDA elects to
cease supplying the Compound to PENINSULA, and shall contain provisions, as a
sole and exclusive remedy therefor, similar to those set forth in Sections 7.4,
7.14, 7.15, 7.16, and 7.17 of this Agreement;

                  (e)      QUALITY MEMORANDUM. Recalls, market withdrawals,
corrections and field alert reporting of Products, responding to customer
questions and complaints related to Products sold in the Territory shall be the
responsibility of PENINSULA and the procedures and guidelines for such matters
and other issues related to the supply of the Compound to PENINSULA shall be
addressed in a separate quality memorandum entered into by the parties
including, without limitation, procedures and guidelines for Lot release,
quality control and quality assurance testing, and acceptance testing;

                  (f)      TERM AND TERMINATION. Unless the parties otherwise
agree, the term of the Supply Agreement shall be equal to the term of this
Agreement, subject to typical rights for early termination in appropriate
circumstances.

                  (g)      OTHER TERMS. The Supply Agreement shall contain other
terms that shall be identical, or substantially similar to, Sections 6.7, 6.8,
7.7, 7.8, 7.9, 7.10, 7.11, 7.12,

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

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7.13, 7.14, 7.15, 7.16, 7.17 and 12.2(a), and Articles 13, 14, and 18 of this
Agreement. In addition, under the Supply Agreement PENINSULA shall have audit
rights to confirm the accuracy of the amount of the Compound Manufacturing Cost
similar to PENINSULA's audit rights under Section 7.6 of this Agreement.

         8.2      Notwithstanding Section 8.1, at any time prior to the date on
which PENINSULA commences Phase III clinical trials of the Product, TAKEDA shall
have the right, upon written notice to PENINSULA, to elect not to supply
PENINSULA's entire requirements of the Compound for processing into Products for
commercial sale as set forth in Article 7, in which event the parties shall not
be required to enter into a Supply Agreement under Section 8.1.

                                   ARTICLE 9

                            PROCESSING AND PACKAGING

         9.1      PENINSULA shall procure its requirements of materials other
than the Compound which are necessary for processing the Compound into the
Product at its own responsibility and expense.

         9.2      PENINSULA shall prepare or have prepared, at its own expense,
packaging materials, labels and insert brochures of the Product for use in the
Territory, purchasing necessary materials from a source or sources selected by
PENINSULA. PENINSULA shall provide to TAKEDA the descriptions of such packaging
materials, labels and insert brochures therein and designs thereof. PENINSULA
shall be responsible for obtaining from Regulatory Authorities in the Territory
all approvals of the packaging materials, labels and insert brochures of the
Product that are necessary to secure and/or maintain the Registration.

                                   ARTICLE 10

                         SALE OF THE PRODUCT AND REPORT

         10.1     PENINSULA or its sublicensees or distributors shall make the
first commercial sale of the Product in each country of the Territory within [*]
months after achieving the NHI Price Listing in such country (if applicable),
provided, however, that PENINSULA shall do so within [*] months after obtaining
the Registration in each country of the Territory where the achievement of the
NHI Price Listing is not required for the marketing of the Product.

         10.2     Subject to Section 2.4, PENINSULA shall determine the selling
price of the Product in each country of the Territory at its discretion, but in
accordance with any applicable local laws or regulations.

         10.3     The introduction, advertisement and sales promotion of the
Product shall be made at PENINSULA's own expense and PENINSULA shall use
commercially reasonable efforts to maximize the sales of the Product. Upon
reasonable request of TAKEDA and to the extent permitted by applicable laws and
regulations, PENINSULA shall inform TAKEDA of

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

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its plans of its promotional and sales activities for the Product and any other
related information reasonably requested by TAKEDA.

         10.4     As a part of promotional and sales activities, and at
PENINSULA's sole discretion, PENINSULA may carry out those Phase IIIb and Phase
IV clinical studies in the Territory at its expense and responsibility that are
commercially appropriate and in accordance with the protocol prepared by
PENINSULA and approved by TAKEDA, which approval shall not unreasonably
withheld. PENINSULA shall from time to time make available to TAKEDA, for
TAKEDA's use in connection with the development and commercialization of
Products outside the Territory, all results obtained from such clinical studies
free of charge (other than reimbursement for copying and shipping charges).

         10.5     Upon TAKEDA's reasonable request, and to the extent permitted
by applicable laws and regulations, PENINSULA shall send to TAKEDA samples of
the Product, all packaging materials and other printed materials, including
promotional materials, for the Product at TAKEDA's expense. Should TAKEDA find
any defects in such samples, TAKEDA shall inform PENINSULA of such defects
immediately and PENISULA shall remove such defects at its own expense and
responsibility.

         10.6     During the term of this Agreement, PENINSULA shall use
reasonable efforts to disclose to TAKEDA medical and other technical information
that PENINSULA may gain relating directly to the Product, and TAKEDA shall have
the right to use, and cause any third parties who have a license under the
Patents and Manufacturing Know-How to develop, manufacture, or commercialize the
Compound and/or the Product in the TAKEDA Territory to use, such information
solely to develop, manufacture, offer for sale or sell the Product in the TAKEDA
Territory, including without limitation to pursue Registration in the TAKEDA
Territory, free of charge, subject to the rights granted to PENINSULA hereunder.

                                   ARTICLE 11

                        USE OF TAKEDA'S NAME; TRADEMARKS

         11.1     Subject to the laws and regulations in the Territory and
except as otherwise requested by TAKEDA, PENINSULA shall include the company
name of TAKEDA as the licensor on all packaging materials and other printed
materials, including promotional materials, for the Product in the Territory
(the "Mark"). TAKEDA hereby grants to PENINSULA the right to use the Mark to the
extent necessary for PENINSULA to fulfill the obligations set forth in this
Section 11.1 applicable to the Products sold in the Territory. PENINSULA will
have no obligation to pay royalties for such use of the Mark during the term the
Agreement.

         11.2     The Products sold in the Territory shall bear one or more
trademarks chosen and owned by PENINSULA. PENINSULA shall disclose to TAKEDA the
trademarks

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

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PENINSULA intends to use on the Product prior to filing its NDA covering the
Product and any changes thereof.

                                   ARTICLE 12

                                   WARRANTIES

         12.1     Each party warrants the following:

                  (a)      such party is duly organized and validly existing
under the laws of the state and/or nation of its organization and has full
corporate power and authority to enter into this Agreement and to carry out the
provisions hereof;

                  (b)      such party is duly authorized to execute and deliver
this Agreement and to perform its obligations hereunder. The person executing
this Agreement on such party's behalf has been duly authorized to do so by all
requisite corporate action; and

                  (c)      this Agreement is a legal and valid obligation
binding upon the parties and enforceable in accordance with its terms, subject
to applicable bankruptcy, insolvency, fraudulent transfer, moratorium or other
laws affecting the enforcement of creditors' rights and to general principles of
equity. The execution, delivery and performance of this Agreement by each party
does not conflict with any agreement, instrument or understanding, oral or
written, to which it is a party or by which it may be bound, nor does it violate
any material law or regulation of any court, governmental body or administrative
or other agency having jurisdiction over it.

         12.2     TAKEDA warrants to PENINSULA that:

                  (a)      all of the Compound supplied to PENINSULA under
Section 5.3 or Article 7: (i) conforms to the Specifications, (ii) is
manufactured in accordance with cGMP and all other applicable laws and
regulations, (iii) shall have free, clear, and marketable title at the time of
delivery to PENINSULA, and (iv) shall not be adulterated or misbranded within
the meaning of the FD&C Act, and shall not be an article that may not, under the
provisions of Sections 404 and 505 of the FD&C Act, be introduced into
interstate commerce, at the time of such delivery;

                  (b)      as of the Effective Date, TAKEDA has not received any
citations with respect to its manufacturing facilities, including without
limitation FDA Form 483s or warning letters, and is not currently subject to an
FDA consent decree or other action of a Regulatory Authority impacting the
manufacture of the Compound to be supplied by TAKEDA under Article 7;

                  (c)      to TAKEDA's knowledge as of the Effective Date,
PENINSULA's practice of the Patents or manufacture, importation, use or sale of
the Compound or Product in the Territory will not infringe the intellectual
property rights of a third party patent;

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

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                  (d)      to TAKEDA's knowledge as of the Effective Date, the
manufacture of the Compound and the intermediates thereof using the
Manufacturing Know-How that exists as of the Effective Date, or the related
importation by PENINSULA of the resulting Compound and/or Products into the
Territory will not infringe or misappropriate the intellectual property rights
of a third party patent;

                  (e)      the Patents licensed to PENINSULA hereunder are all
the patents and/or patent applications owned by or licensed to TAKEDA (or any of
its Affiliates) as of the Effective Date in the Territory that claim or cover
the Compound, the Product, any intermediates used in making the Compound, or the
use of the Compound or the Product;

                  (f)      to TAKEDA's knowledge as of the Effective Date, there
are no facts or circumstances which would render any patent or patent
application within the Patents in the Territory invalid or unenforceable;

                  (g)      there is no interference action, opposition, reissue
or reexamination proceeding, or any intellectual property litigation pending
before any patent office or court concerning any Patents as of the Effective
Date in the Territory, and there is no litigation proceeding pending before any
court concerning the Compound or any Product as of the Effective Date;

                  (h)      Neither TAKEDA nor any of its Affiliates have granted
to any third party any licenses or other rights to use or practice the Patents
in any manner relating to use, importation, offering for sale or sale of the
Compound or Product anywhere in the Territory in any manner that would conflict
with PENINSULA's rights granted herein, and TAKEDA has full legal rights and
authority to grant PENINSULA the license and other rights granted in this
Agreement; and

                  (i)      to TAKEDA's knowledge as of the Effective Date, the
manufacturing activities to be undertaken by TAKEDA and/or its Third Party
Manufacturer hereunder to make the Compound supplied to PENINSULA hereunder and
the related importation by PENINSULA of the Compound and/or Products into the
Territory will not infringe any intellectual property rights of any third party.

         12.3     EXCEPT AS EXPRESSLY STATED IN THIS AGREEMENT, NO
REPRESENTATION OR WARRANTY WHATSOEVER, WHETHER EXPRESS OR IMPLIED, INCLUDING
ALL IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR ANY PURPOSE, IS MADE
OR GIVEN BY OR ON BEHALF OF PENINSULA OR TAKEDA. ALL SUCH OTHER REPRESENTATIONS
AND WARRANTIES, WHETHER ARISING BY OPERATION OF LAW OR OTHERWISE, ARE HEREBY
EXPRESSLY EXCLUDED.

                                   ARTICLE 13

                      INDEMNIFICATION AND PRODUCT LIABILITY

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

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         13.1     Notwithstanding anything herein to the contrary, product
liability issues with regard to the Compound and/or the Product shall be, as
between the parties, exclusively governed by Section 13.4.

         13.2     PENINSULA shall be responsible for, and shall indemnify, hold
harmless and defend TAKEDA, TAKEDA's Third Party Manufacturer, and their
officers, employees and agents against any and all third party claims, suits,
losses, damages, costs, fees (including reasonable attorneys' fees) and expenses
(collectively "Claims") resulting from or arising out of (a) the Development
Work performed by PENINSULA to obtain the Registration; (b) the processing, use
and/or sale of the Compound or Product by PENINSULA or its distributor or
sublicensee; (c) the negligence, recklessness, or willful misconduct of
PENINSULA or its officers, directors, employees, distributor, sublicensee or
agents; or (d) PENINSULA's breach of its obligations, representations, or
warranties under this Agreement. Notwithstanding the foregoing, PENINSULA's
indemnification obligations under this Section 13.2 shall not apply to Product
Liability Claims (as defined in Section 13.4), which claims are addressed in
Section 13.4. In addition, PENINSULA's indemnification obligations under this
Section 13.2 shall not apply if TAKEDA fails to comply with the indemnification
procedures in Section 13.5, or to the extent that a Claim arises out of or
results from (i) the negligence, recklessness, or willful misconduct of TAKEDA,
its Third Party Manufacturer, or the officers, directors, employees, or agents
of TAKEDA or its Third Party Manufacturer; (ii) TAKEDA's breach of its
obligations, representations, or warranties under this Agreement; or (iii)
manufacturing defects resulting from the manufacture of the Compound by TAKEDA
or its Third Party Manufacturer hereunder.

         13.3     TAKEDA shall be responsible for, and shall indemnify, hold
harmless and defend PENINSULA, its officers, employees and agents against any
and all Claims resulting from or arising out of (a) the negligence,
recklessness, or willful misconduct of TAKEDA, its Third Party Manufacturer, or
the officers, directors, employees, or agents of TAKEDA or its Third Party
Manufacturer; (b) TAKEDA's breach of its obligations, representations, or
warranties under this Agreement; (c) manufacturing defects resulting from the
manufacture of the Compound by TAKEDA or its Third Party Manufacturer hereunder;
or (d) the development of the Compound and/or the Product by TAKEDA or its
sublicensee or distributor, the importation and sale of the Compound and/or the
Product in the TAKEDA Territory by TAKEDA or its sublicensee or distributor, or
the use of the Compound and/or the Product in the TAKEDA Territory.
Notwithstanding the foregoing, TAKEDA's indemnification obligations under this
Section 13.3 shall not apply to Product Liability Claims (as defined in Section
13.4), which claims are addressed in Section 13.4. In addition, such indemnity
shall not apply if PENINSULA fails to comply with the indemnification procedures
in Section 13.5, or to the extent that a Claim arises out of or results from (i)
the Development Work performed by PENINSULA for obtaining the Registration, (ii)
the processing, use and/or sale of the Compound and/or the Product by PENINSULA
or PENINSULA's distributor, customers or sublicensees; (iii) the negligence,
recklessness, or willful misconduct of PENINSULA or its officers, directors,
employees, distributor, sublicensee or agents; or (iv) PENINSULA's breach of its
obligations, representations, or warranties under this Agreement.

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

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         13.4     PENINSULA shall be responsible for, and shall indemnify, hold
harmless and defend TAKEDA, its Third Party Manufacturer, and their officers,
employees and agents against any and all third party claims, suits, losses,
damages, costs, fees (including reasonable attorneys' fees) and expenses with
respect to death or injury to any person ("Product Liability Claims") arising
out of or resulting from the use of the Compound and/or the Product by
PENINSULA's customers. Notwithstanding the foregoing, such indemnity shall not
apply if TAKEDA fails to comply with the indemnification procedures in Section
13.5, or to the extent that a Product Liability Claim arises out of or results
from (a) the negligence, recklessness, or willful misconduct of TAKEDA, its
Third Party Manufacturer, or the officers, directors, employees, or agents of
TAKEDA or its Third Party Manufacturer; (b) TAKEDA's breach of its obligations,
representations, or warranties under this Agreement; or (c) manufacturing
defects resulting from the manufacture of the Compound by TAKEDA or a Third
Party Manufacturer hereunder.

         13.5     Each party's indemnity obligations as provided for in this
Article 13 shall be conditioned upon the following:

                  (a)      the party entitled to indemnification for a Claim or
Product Liability Claim (the "Indemnified Party") providing prompt (where
practicable, within fifteen (15) days after the receipt thereof ) notice of such
Claim or Product Liability Claim to the party providing indemnification (the
"Indemnifying Party");

                  (b)      the Indemnified Party reasonably cooperating with the
Indemnifying Party in the defense of such Claim or Product Liability Claim; and

                  (c)      the Indemnified Party's agreement not to compromise
or otherwise settle any such claims without the Indemnifying Party's prior
written consent, which consent shall not be unreasonably withheld.

         13.6     Upon receiving prompt notice of a Claim or Product Liability
Claim, the Indemnifying Party shall assume the defense of such Claim or Product
Liability Claim with counsel reasonably satisfactory to the Indemnified Party.
Each party shall, at its expense, secure and maintain insurance coverage in
amounts sufficient to cover its indemnification obligations hereunder and shall,
upon the other party's request, deliver to the other party a copy of such
insurance policy.

         13.7     NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR ANY SPECIAL,
CONSEQUENTIAL, INCIDENTAL, OR INDIRECT DAMAGES ARISING FROM OR RELATING TO ANY
BREACH OF THIS AGREEMENT, REGARDLESS OF ANY NOTICE OF THE POSSIBILITY OF SUCH
DAMAGES. NOTWITHSTANDING THE FOREGOING, NOTHING IN THIS SECTION 13.7 IS INTENDED
TO LIMIT OR RESTRICT THE INDEMNIFICATION RIGHTS OR OBLIGATIONS OF ANY PARTY
UNDER ARTICLE 13, OR DAMAGES AVAILABLE FOR A BREACH OF CONFIDENTIALITY
OBLIGATIONS IN ARTICLE 14.

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

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         13.8     Notwithstanding anything to the contrary in this Agreement,
and in addition to the limitations in Section 13.7, neither party will be liable
to the other party for a claim brought by such other party under this Agreement
(other than indemnification with regard to any third party claim under Article
13 or for a breach of confidentiality obligations in Article 14) in an amount
that exceeds, in the aggregate, the amount which [*]. For clarity, this Section
13.8 is not intended to limit or restrict the indemnification rights or
obligations of any party with regard to any third party claim under Article 13
or damages available to a party for a breach of confidentiality obligations in
Article 14.

                                   ARTICLE 14

                                     SECRECY

         14.1     Except to the extent expressly authorized by this Agreement or
otherwise agreed to in writing by the parties, each party agrees that, for the
term of this Agreement and for seven (7) years thereafter, it shall keep
confidential and shall not publish or otherwise disclose and shall not use for
any purpose other than as provided for in this Agreement any Confidential
Information furnished to it by the other party pursuant to this Agreement,
except that the foregoing shall not apply to any information for which the
receiving party can demonstrate, by competent proof, that it:

                  (a)      was already known to the receiving party, other than
under an obligation of confidentiality, at the time of disclosure by the other
party;

                  (b)      was generally available to the public or otherwise
part of the public domain at the time of its disclosure to the receiving party;

                  (c)      later became part of the public domain through no act
or omission of the receiving party;

                  (d)      was disclosed to the receiving party without
obligations of confidentiality with respect thereto, by a third party who had no
obligation to the disclosing party not to disclose such information to others;
or

                  (e)      was independently developed by employees of either
party who were unaware of and did not have access to Confidential Information
disclosed by either party.

         14.2     Each party may disclose Confidential Information disclosed to
it by the other party to the extent such disclosure is reasonably necessary for
the following reasons:

                  (a)      for regulatory filings, including filings with the
U.S. Securities Exchange Commission, and filings with Regulatory Authorities
permitted hereunder;

                  (b)      prosecuting or defending litigation; and

                  (c)      complying with applicable governmental regulations,
court orders, and legal requirements.

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

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Notwithstanding the foregoing, in the event a party is required to make a
disclosure of the other party's Confidential Information pursuant to this
Section 14.2 it will, except where impracticable, give reasonable advance notice
to the other party of such disclosure and use reasonable efforts to cooperate
with the disclosing party's efforts to secure confidential treatment of such
information. In any event, each party agrees to take all reasonable actions to
avoid any unauthorized use or disclosure of Confidential Information of the
other party hereunder.

         14.3     Notwithstanding the provisions of Section 14.1 hereinabove,
PENINSULA may disclose TAKEDA's Confidential Information to its officers and
employees, sublicensees, advisors, consultants, its distributors in each country
of the Territory, and Regulatory Authorities in the Territory, provided,
however, that PENINSULA shall use commercially reasonable efforts to impose upon
such disclosees obligations of confidentiality and non-use at least equivalent
in scope to those set forth in Sections 14.1 and 14.2.

         14.4     The Parties agree to that each Party may issue the agreed
Press Release in the form attached as Schedule VI, after the Effective Date.

                                   ARTICLE 15

                                     PATENTS

         15.1     During the term of this Agreement, TAKEDA, at its cost and
expense, shall use diligent, good faith efforts to file, prosecute and maintain
the Patents having claims that cover composition of matter of or method of
manufacturing or using the Compound or Product in Major Market Countries and
other countries where PENINSULA is developing or selling the Product. TAKEDA
shall use reasonable efforts to extend the term of the Patents covering the
Compound and/or the Product or its use in the countries in the Territory where
PENINSULA (or its Affiliate or sublicensee or distributor) is selling the
Product, and in such other countries as TAKEDA may in its discretion select, and
PENINSULA shall cooperate with TAKEDA in obtaining such extension, provided,
however, that the external expenses for such procedures shall be borne by
TAKEDA. TAKEDA shall provide to PENINSULA, and PENINSULA shall be entitled to
review and comment upon, all documents to be filed or received from the
applicable patent offices relating to the prosecution of the Patents, and other
correspondence relating to such prosecution efforts to the extent that the
Patents directly relate to the Compound or the Product. TAKEDA shall reasonably
consider PENINSULA's reasonable comments regarding such prosecution.

         15.2     PENINSULA shall notify TAKEDA of any infringement or possible
infringement of the Patents in the Territory by a third party promptly after it
becomes aware of such infringement. TAKEDA and PENINSULA shall consult together
in order to determine the appropriate action to be taken for elimination of any
infringement of the Patents, in order to protect both parties' interests.
PENINSULA shall have the primary right, but not the obligation, to institute,
prosecute and control any action or proceeding with respect to such infringement
(an "Enforcement Action"), at its own expense, by counsel of its choice and
approved by TAKEDA, which approval shall not be withheld unreasonably, including
any

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

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declaratory judgment action arising from such infringement. TAKEDA shall provide
reasonable assistance and cooperation to PENINSULA at its own expense and may,
at its sole discretion, at its own expense, by counsel of its choice and at any
time, join in such Enforcement Action. If PENINSULA elects not to institute an
Enforcement Action within 120 days after it has notice of the infringement,
TAKEDA shall have the right to institute an Enforcement Action at its own
expense unless PENINSULA provides a reasonable business reason for not
instituting such Enforcement Action, and PENINSULA shall provide reasonable
assistance and cooperation to TAKEDA in connection with such Enforcement Action
at its own expense. All damages, settlement amounts or costs recovered in
connection with an Enforcement Action shall first be allocated to reimburse the
parties for their expenses in connection with such Enforcement Action, and the
remainder of such damages, settlement amounts or costs shall be [*].
Notwithstanding the foregoing, if the Patent is found or adjudicated invalid or
unenforceable in or as a result of the Enforcement Action taken by PENINSULA,
PENINSULA shall have the primary right, but not the obligation, to appeal such
adjudication or findings, or take any other procedure to secure the validity or
enforceability of the Patent (such appeal or other procedures are hereinafter
collectively referred to as the "Appeal"), at its own expense, by counsel of its
choice and approved by TAKEDA, which approval shall not be withheld
unreasonably. TAKEDA shall provide reasonable assistance and cooperation to
PENINSULA at its own expense and may, at its sole discretion, at its own
expense, by counsel of its choice and at any time, join in such Appeal, if
possible. If PENINSULA does not prosecute the Appeal immediately, TAKEDA may
prosecute the Appeal at its own expense, by counsel of its choice, and PENINSULA
shall provide reasonable assistance and cooperation to TAKEDA in connection with
such Appeal at its own expense. If TAKEDA is not entitled to prosecute the
Appeal, PENINSULA shall prosecute the Appeal upon TAKEDA's request to do so at
TAKEDA's expense. All damages, settlement amounts or costs recovered in
connection with an Appeal shall first be allocated to reimburse the parties for
their expenses in connection with such Appeal, and the remainder of such
damages, settlement amounts or costs shall be [*]. Any final decision with
regard to the Appeal, including the decision whether or not the Appeal is
maintained, shall be made by TAKEDA at its sole and absolute discretion.

         15.3     In the event of any claim, threat or suit by a third party
against PENINSULA and/or TAKEDA alleging that the import, formulation and/or
sale of the Compound and/or the Product in the Territory infringes any patents
or other intellectual property rights of such third party, each party hereto
shall inform the other party of such claim, threat or suit, and PENINSULA and
TAKEDA shall defend in close cooperation with each other against such claim,
threat or suit or settlement thereof and shall not settle such claim, threat or
suit without the prior written consent of the other party, which consent shall
not be unreasonably withheldprovided, however, PENINSULA shall reserve the final
control of the defense against such claim, threat or suit or settlement thereof
in the Territory; provided, further, that PENINSULA shall not in such case
settle such claim, threat or suit in a manner that may adversely affect TAKEDA's
interest in the Patents, Compound or Product, including without limitation the
validity of Patents, without the prior written consent of TAKEDA, which consent
shall not be unreasonably withheld. Each party shall bear its own internal costs
incurred by it in connection with such legal proceedings. The reasonable
out-of-pocket costs incurred by PENINSULA and/or TAKEDA in connection with such
legal proceedings and the amount of

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

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settlements or damages awarded to a third party as a result of the suit for
infringement by PENINSULA and/or TAKEDA of such third party's patents or other
intellectual property rights or settlement thereof shall be borne by PENINSULA,
provided, however, that pursuant to Section 3.4, PENINSULA shall be entitled to
offset [*] of the amount of settlements or damages paid by PENINSULA to a third
party under this Section 15.3 against any royalties owed to TAKEDA under Article
3, subject to Section 3.6. In addition, if PENINSULA believes that a patent or
patent application owned or controlled by a third party in the Territory may
claim or cover the composition of matter of, method of making, or method of
using the Compound, and PENINSULA intends to seek a license from such third
party under such patent or patent application, PENINSULA shall first notify
TAKEDA in writing of such intention, and if requested by TAKEDA, shall meet with
TAKEDA promptly and discuss in good faith the reasons for PENINSULA seeking such
license and the consideration that PENINSULA intends to offer for such license,
and PENINSULA shall consider in good faith TAKEDA's reasonable comments with
respect to such situation. PENINSULA shall not obtain such license without the
prior written consent of TAKEDA, which consent shall not be unreasonably
withheld. It is understood that in the communication pursuant to this Section
15.3, either party shall not be required to disclose any specific information
that is covered by the attorney-client privilege.

         15.4     Nothing in this Agreement shall be construed as:

                  (a)      a warranty or representation by TAKEDA of the
validity or scope of any of the Patents;

                  (b)      a warranty or a representation by TAKEDA that
anything made, used, sold or otherwise disposed of under any license granted
hereunder is or shall be free from infringement of patents or other property
rights of third parties; or

                  (c)      an agreement by TAKEDA to bring or prosecute actions
or suits against third parties for infringement of the Patents.

                                   ARTICLE 16

                                  FORCE MAJEURE

If either party is rendered unable to fulfill wholly or in part any part of its
obligations under this Agreement by reason of Force Majeure, such party shall
forthwith give to the other party a written notice briefly describing the
circumstances causing such inability, and, thereupon, to the extent that the
party giving such notice is unable to fulfill such obligations by reason of such
circumstances, such obligations shall be suspended during, but no longer than,
the continuance of such circumstances and provided that the party claiming force
majeure has exerted and continues diligently to exert all commercially
rea,,sonable efforts to overcome the same. "Force Majeure" means conditions
beyond the control of the parties, including without limitation, civil
commotion, terrorist act, failure or default of public utilities or common
carriers, destruction of production facilities or materials by fire, earthquake,
storm or like catastrophe, war, strikes, lockouts, riot, or epidemic diseases,
or Act of God. In the event of Force Majeure, the other party has no right to
seek damages in connection with the affected party's inability to

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

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perform its obligations under this Agreement as a result of Force Majeure. If a
Force Majeure event preventing a party's performance hereunder continues for
more than [*] consecutive months, both parties shall in good faith negotiate and
decide how to cope with the situation.

                                   ARTICLE 17

                              TERM AND TERMINATION

         17.1     This Agreement shall be effective as of the Effective Date
and, unless sooner terminated by mutual agreement or in accordance with other
provisions herein, shall remain in effect as long as PENINSULA's royalty
obligations exist. The provisions of Sections 3.9, 3.10, 6.9, 7.6, 17.1, 17.4,
17.5, 17.6, 18.2, 18.4, 18.6, 18.9, and 18.10, and Article 13 shall survive
termination or expiration of this Agreement. In addition, any payment obligation
that has accrued prior to such termination or expiration, including without
limitation pursuant to Sections 3.1, 3.3, and 7.3, if any, shall survive such
termination or expiration. The provisions of Article 14 shall survive
termination or expiration of this Agreement for seven (7) years. The license
granted to PENINSULA under Section 2.1 shall survive the expiration of this
Agreement, but shall, as of the date of expiration of the Agreement and unless
sooner terminated, be converted from a royalty-bearing license to a fully-paid
and royalty-free license.

         17.2     Either party may terminate this Agreement by a registered
letter to the other party effective upon the other party's receipt of such
notice in the following cases:

                  (a)      if the other party, after receiving written notice
identifying a material breach of this Agreement (including failure by PENINSULA
to pay on time the amounts owed under Article 3 or 7), fails to cure such breach
within [*] days (in case of failure by PENINSULA to pay on time the amounts owed
under Article 3 or 7, [*]) from the date of such notice; or

                  (b)      in case of the filing by the other party of a
petition in bankruptcy or insolvency, or in case of the filing by the other
party of any petition or answer seeking reorganization, readjustment, or
rearrangement of the business of the other party under any law or any government
regulation relating to bankruptcy or insolvency, or in case of the appointment
of a receiver for all or substantially all of the property of the other party,
or in case of the making by the other party of any assignment or attempted
assignment for the benefit of creditors, or in case of the institution by the
other party of any proceedings for the liquidation or winding up of its
business, or for the termination of its corporate charter; or

                  (c)      if a substantial change occurs in the shareholding of
PENINSULA and consequently, fifty percent (50%) or more of the voting shares of
PENINSULA come to be owned or controlled directly or indirectly by a person or
entity who is not a controlling shareholder of PENINSULA on the Effective Date.

         It is understood that TAKEDA's failure to satisfy its Supply Obligation
pursuant to Section 7.2, TAKEDA's decision to cease manufacturing the Compound
pursuant to Section 6.1 or 7.4, or TAKEDA's inability to cure a Supply
Disruption caused by a Force Majeure event,

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

                                       36
<PAGE>

shall not constitute a material breach under subclause (a) above, but shall be
treated pursuant to the following Section 17.3.

         17.3     PENINSULA may terminate this Agreement as follows:

                  (a)      upon written notice if TAKEDA elects to cease trying
to remedy a DMF deficiency and thus cease supplying the Compound to PENINSULA as
permitted under Section 6.1;

                  (b)       upon written notice if PENINSULA cancels its order
for [*] of Compound as permitted under Section 7.2;

                  (c)       upon written notice if TAKEDA elects to cease
manufacturing, or having a Third Party Manufacturer manufacture, Compound under
Section 7.4;

                  (d)       upon written notice if Supply Disruption is not
cured within [*] days as permitted under Section 7.14; or

                  (e)       if PENINSULA determines that it is not feasible to
pursue the development, launch or sale of the Product due to scientific,
technical regulatory and/or commercial reasons, including but not limited to
material adverse events caused by the Compound and/or the Product, refusal of
the indication for the treatment of infections caused by MRSA, infringement of
third party intellectual property rights, or other regulatory or marketplace
issues, PENINSULA may provide written notice to TAKEDA of such determination,
together with competent information thereof and have serious discussions with
TAKEDA regarding what steps to take in regards to the problem. PENINSULA may
then terminate this Agreement effective upon written notice [*] days.

         It is understood that PENINSULA shall have no right to demand from
TAKEDA any compensation for the termination of this Agreement pursuant to above
subsections (a), (b), (c), (d) (but only if the applicable Supply Disruption is
caused by a Force Majeure event) and (e).

         17.4     Upon the termination of this Agreement for any reason,
PENINSULA shall no longer make any use of the license granted by TAKEDA
hereunder and shall promptly return to TAKEDA any and all data and information
furnished by TAKEDA so far, including, but not limited to, the Information and
the Manufacturing Know-How. If the Agreement is terminated for any reason other
than for TAKEDA's uncured material breach of the Agreement or financial
insolvency, PENINSULA shall, at TAKEDA's request, transfer to TAKEDA or its
designee the Registration or the application therefor and any and all the data
and information so far obtained by PENINSULA, including the Results, if any, or
otherwise assist TAKEDA so that TAKEDA may take over the development and/or
commercialization of the Product, provided, however, if sublicensee(s) of
PENINSULA that are not in breach of their sublicense agreements, under which
PENINSULA has imposed such sublicensee(s) all applicable obligations which
PENINSULA undertakes hereunder, elect to continue the development and/or
commercialization of the Product, TAKEDA shall assume such sublicense agreements
as direct licenses from TAKEDA to such sublicensee(s), provided, however, that
TAKEDA shall not be obligated to assume any obligations under such agreements
that are in excess of the obligations of TAKEDA under this Agreement, unless
TAKEDA agrees otherwise in its sole discretion. If the transfer of the
Registration or the application therefor is prohibited by applicable laws or if

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

                                       37
<PAGE>

TAKEDA does not require PENINSULA to make such transfer, PENINSULA shall,
without requiring any compensation from TAKEDA, abandon and waive the
Registration or the application therefor in the Territory.

         17.5     Disposal of the Compound, goods in process and the Product in
PENINSULA's stock on the day of termination shall be made in the following
manner in accordance with TAKEDA's direction:

                  (a)      if TAKEDA consents, which consent shall not be
unreasonably withheld, PENINSULA may manufacture the Product using such Compound
and/or such goods in process and may sell the Product in the Territory at its
regular commercial conditions and only for the term of [*] months after such
termination, subject to PENINSULA's agreement to strictly observe the terms and
conditions contained in this Agreement including the obligation to pay royalties
in accordance with Article 3 hereof; and

                  (b)      if so requested by TAKEDA, PENINSULA shall, at any
time after [*] months post-termination, sell to TAKEDA any remaining portion of
its stock of Compound and/or Product (but only that portion of the stock that
has some shelf life remaining and meets the Specifications), at a price to be
negotiated and decided by the parties hereto, which price shall not be higher
than the Compound Manufacturing Cost and/or Product Manufacturing Cost (as
applicable).

         In any case, PENINSULA shall destroy all stock which does not meet the
Specifications at PENINSULA's expense and responsibility without requiring
TAKEDA to pay any compensation therefor.

         17.6     Without prejudice to the remedies for the breach of this
Agreement which have already accrued before the expiration of this Agreement,
the expiration or termination of this Agreement itself under this Article 17
shall not entitle either party to any compensation whatsoever based solely on
the fact of such expiration or termination.

                                   ARTICLE 18

                                  MISCELLANEOUS

         18.1     ASSIGNMENT. This Agreement or any of the rights or obligations
created under this Agreement shall not be assignable by either party hereto
without the prior written consent of the other party, except that each party may
assign this Agreement to its successor in interest pursuant to a merger,
acquisition, reorganization, consolidation or sale of all or substantially all
of the assets of the business to which this Agreement relates. Any attempted
assignment that does not comply with the requirements of this Section 18.1 shall
be null and void. This Agreement shall be binding upon each of the parties,
their successors and permitted assigns.

         18.2     SEVERABILITY. If any provision or provisions of this Agreement
shall, to any extent, be held to be invalid or unenforceable by a court of
competent jurisdiction, the remainder of this Agreement shall not be affected
thereby and shall be valid and enforceable to

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

                                       38
<PAGE>

the fullest extent permitted by law. However, in case such invalidation or
unenforceability injures the rights and interests of either party, the parties
hereto shall renegotiate this Agreement in good faith to replace any invalid or
unenforceable provision with a valid and enforceable one such that the
objectives contemplated by the parties when entering this Agreement may be
realized.

         18.3     ENTIRETY OF AGREEMENT; MODIFICATION. This Agreement
constitutes the entire, final and complete agreement and understanding between
the parties, and replaces and supersedes all prior discussions and agreements
between them with respect to the subject matter hereof. No modification or
amendment to this Agreement shall be valid or binding upon the parties hereto
unless made in writing and duly executed on behalf of each of the parties
hereto.

         18.4     OFFICIAL TEXT AND GOVERNING LAW. The English version of this
Agreement subscribed and executed by the parties hereto shall be the official
text, and this Agreement shall be governed by and interpreted in accordance with
the laws of the State of New York without giving effect to any choice of law
principles that would require the application of the laws of a different state
or country.

         18.5     NOTICE. Any notice required to be given by either party in
connection with this Agreement shall be given in the English language by prepaid
airmail, cable, international express delivery service, or facsimile addressed
to the other party at its principal office first above written, and shall be
deemed to have been given for all purposes (a) when received, if sent by cable
or international express delivery service, (b) seven (7) business days after
mailing, if mailed by airmail, or (c) when received by recipient, if sent by
facsimile transmission with electronic confirmation of transmission if
transmission is confirmed during the recipient's normal business hours, or
otherwise on the recipient's next business day.

         18.6     DISPUTE RESOLUTION/ARBITRATION. If the parties are unable to
resolve a dispute arising under this Agreement (other than a dispute arising
under Section 5.1) within thirty (30) days after such dispute is first
identified by either party in writing to the other, the parties shall refer such
dispute to the senior management of TAKEDA and PENINSULA for attempted
resolution by good faith negotiations within thirty (30) days after such notice
is received. If the senior management of TAKEDA and PENINSULA are not able to
resolve such dispute within such thirty (30) day period, such dispute shall be
finally settled under the Rules of Conciliation and Arbitration of the
International Chamber of Commerce by one or more arbitrators appointed in
accordance with the Rules. The award rendered shall be final and binding upon
both parties. Such arbitration shall be held in Osaka, Japan if it is initiated
by PENINSULA and in San Francisco, California, USA if initiated by TAKEDA.

         18.7     CONSTRUCTION. This Agreement has been prepared jointly and
shall not be strictly construed against either party. Ambiguities, if any, in
this Agreement shall not be construed against any party, without regard to which
party may be deemed to have authored the ambiguous provision. The headings of
each Article in this Agreement have been inserted for convenience of reference
only and are not intended to limit or expand on the meaning of the language
contained in the particular article or section.

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

                                       39
<PAGE>

         18.8     COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be an original and all of which shall
constitute together the same document.

         18.9     WAIVER. Any delay in enforcing a party's rights under this
Agreement or any waiver as to a particular default or other matter shall not
constitute a waiver of such party's rights to the future enforcement of its
rights under this Agreement unless such party provides an express written and
signed waiver as to a particular matter for a particular period of time.

         18.10    FURTHER ACTS. Each party agrees to execute, acknowledge and
deliver such further instruments, and to do all such other acts, as may be
necessary or appropriate in order to carry out the purposes and intent of this
Agreement.

         IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized officers in duplicate as of the Effective
Date.

TAKEDA CHEMICAL INDUSTRIES, LTD.

/s/ Saburo Hamanaka
-----------------------------
Name:  Saburo Hamanaka
Title: Corporate Officer
       General Manager
       Division of Americas

PENINSULA PHARMACEUTICALS, INC.

/s/ Paul F. Truex
-----------------------------
Name:  Paul F. Truex
Title: President & CEO

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

                                       40
<PAGE>

                                   SCHEDULE I

<TABLE>
<CAPTION>
TAKEDA'S             COUNTRY       APPLICATION       PATENT NO.      EXPIRATION
CASE NO.                           (FILING DATE)    (ISSUE DATE)        DATE
<S>                  <C>           <C>              <C>              <C>
  [*]
</TABLE>

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

                                       41
<PAGE>

                                   SCHEDULE II

TENTATIVE COMPOUND SPECIFICATIONS

<TABLE>
<CAPTION>
ITEM                                               CRITERIA
----                                               --------
<S>                                                <C>
[*]                                                  [*]
[*]                                                  [*]

[*]
                                                     [*]
[*]                                                  [*]
[*]                                                  [*]

[*]
                                                     [*]
[*]                                                  [*]
[*]                                                  [*]
                                                     [*]

[*]

[*]                                                  [*]
[*]                                                  [*]
[*]                                                  [*]
[*]                                                  [*]
[*]                                                  [*]
[*]                                                  [*]
[*]                                                  [*]
[*]                                                  [*]
[*]
[*]
[*]
</TABLE>

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

                                       42
<PAGE>

                                  SCHEDULE III

Standard Operating Procedure (SOP) For International Post-Marketing
Surveillance:

(TO BE ATTACHED)

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

                                       43
<PAGE>

                                   SCHEDULE IV

                                PRECLINICAL ITEMS

MICROBIOLOGY

1.       [*]
2.       [*]
3.       [*]
4.       [*]
5.       [*]

BIOANALYTICAL METHODS

1.       [*]
2.       [*]
3.       [*]

PHARMACOKINETICS AND ADME

1.       [*]
2.       [*]
3.       [*]
4.       [*]
5.       [*]
6.       [*]

TOXICOLOGY

1.       [*]

CHEMISTRY, MANUFACTURING AND CONTROL

1.       [*]
2.       [*]

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

                                       44
<PAGE>

3.       [*]
4.       [*]
5.       [*]
6.       [*]
7.       [*]
8.       [*]

PRODUCT AND FORMULATION DEVELOPMENT

1.       [*]
2.       [*]
3.       [*]
4.       [*]
5.       [*]
6.       [*]
7.       [*]

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

                                       45
<PAGE>

                                   SCHEDULE V

                               PRECLINICAL STUDIES

<TABLE>
<CAPTION>
        Study Title         Term            Note
        -----------         ----            ----
<S>                         <C>             <C>
[*]                         [*]             [*]
[*]                         [*]             [*]
[*]                         [*]             [*]
</TABLE>

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

                                       46
<PAGE>

                                   SCHEDULE VI

                           FORM OF JOINT PRESS RELEASE

(To be attached)

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

                                       47
<PAGE>

                                  SCHEDULE VII

                                OPTION COUNTRIES

Option Countries shall mean any and/or all of the following countries:

All countries in Central America (i.e., all countries south of Mexico and north
of Colombia),
All countries in South America (i.e., all countries in the South American
continent from Colombia in the north to Chile in the south), Spain, Portugal.

All Eastern European, CIS, and Middle Eastern countries set forth in the
schedule below

<TABLE>
<CAPTION>
EASTERN EUROPE                        CIS                         MIDDLE EAST
--------------                        ---                         -----------
<S>                                   <C>                         <C>
Republic of Albania                   Armenia                     Saudi Arabia
Bosnia-Herzegovina                    Azerbaijan                  U.A.E.
Republic of Bulgaria                  Georgia                     Oman
Republic of Estonia                   Kazakhstan                  Yemen
Republic of Croatia                   Kyrgyzstan                  Qatar
Republic of Latvia                    Moldova                     Bahrain
Republic of Lithuania                 Russia                      Kuwait
Macedonia                             Tajikistan                  Jordan
Republic of Poland                    Turkmenistan                Israel
Yugoslavia                            Ukraine                     Turkey
Romania                               Uzbekistan                  Cyprus
Republic of Slovenia                  Belarus                     Iraq
Republic of Slovakia                                              Iran
Czech Federal Republic                                            Afghanistan
Republic of Hungary                                               Egypt
                                                                  Palestine
                                                                  Lebanon
                                                                  Syria
</TABLE>

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

                                       48
<PAGE>

                                    EXHIBIT A

                         PENINSULA PHARMACEUTICALS, INC.

                             ACCEPTANCE CERTIFICATE

         _____________ hereby certifies that [s/]he is the duly authorized and
         elected _______________ of PENINSULA PHARMACEUTICALS, INC., a
         ___________ corporation (the "COMPANY"), and further certifies that:

         1.       This Acceptance Certificate is executed and delivered pursuant
to Section 7.9 of that certain Agreement by and between the Company and Takeda
Chemical Industries, Ltd., a corporation organized under the laws of [Japan]
("TAKEDA") dated ___________, 2003 (the "AGREEMENT"). Capitalized terms used but
not otherwise defined herein shall have the meanings given them in the
Agreement.

         2.       The Company hereby acknowledges receipt of [quantity] of
Compound from Takeda on [date] and accepts the delivery thereof. Pursuant to the
terms of Section 7.3 of the Agreement, the Company authorizes payment in the
amount of $________ to Takeda.

         3.       The execution and delivery of this Acceptance Certificate
shall not be deemed to be a waiver or modification of any other term or
condition of the Agreement or of any other instrument or agreement referred to
therein or to prejudice any right or remedy which the Company may now have or
may have in the future under or in connection with the Agreement or any
instrument or agreement referred to therein.

         IN WITNESS the undersigned has executed this Acceptance Certificate on
behalf of the Company as of [date].

                                                            ____________________
                                                            [PRINTED NAME]
                                                            [Title]

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

                                       49<PAGE>

                                                                  EXHIBIT 10.147

================================================================================

                                RESIDUAL INTEREST
                           LOAN AND SECURITY AGREEMENT

                          Dated as of January 13, 2004

                       ONYX ACCEPTANCE FUNDING CORPORATION
                                   as Borrower

                                       and

                              GALLEON CAPITAL, LLC,
                                    as Lender

================================================================================
<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                                   PAGE
                                                                                                                   ----
<S>                                                                                                                <C>
ARTICLE I DEFINITIONS AND ACCOUNTING MATTERS....................................................................     1
         Section 1.01. Defined Terms............................................................................     1
         Section 1.02. Accounting Terms and Determinations......................................................     1
         Section 1.03. Construction.............................................................................     1

ARTICLE II LOANS, NOTE AND PREPAYMENTS..........................................................................     1
         Section 2.01. Loans....................................................................................     1
         Section 2.02. The Note.................................................................................     2
         Section 2.03. Procedures for Borrowing.................................................................     2
         Section 2.04. Repayment of Loans; Interest.............................................................     2
         Section 2.05. Collateral Shortfall Event; Pledge and Removal of Residual Interest Instruments..........     3
         Section 2.06. Optional Prepayments.....................................................................     5
         Section 2.07. Yield Protection.........................................................................     5
         Section 2.08. Funding Losses...........................................................................     7
         Section 2.09. Commitment Fee...........................................................................     7

ARTICLE III PAYMENTS; COMPUTATIONS..............................................................................     7
         Section 3.01. Payments.................................................................................     7
         Section 3.02. Computations.............................................................................     8
         Section 3.03. Settlement Procedures....................................................................     8

ARTICLE IV COLLATERAL SECURITY..................................................................................    10
         Section 4.01. Collateral; Security Interest............................................................    10
         Section 4.02. Delivery of Pledged Residual Interest Instruments........................................    11
         Section 4.03. Further Documentation....................................................................    11
         Section 4.04. Changes in Locations, Name, etc..........................................................    11
         Section 4.05. Reimbursement for Performance by Lender of Borrower's Obligations........................    12
         Section 4.06. Proceeds.................................................................................    12
         Section 4.07. Remedies.................................................................................    12
         Section 4.08. Powers Coupled with an Interest..........................................................    13
         Section 4.09. Release of Lien..........................................................................    13
         Section 4.10. Rights of Secured Parties; Limitations on Secured Parties' Obligations...................    13
</TABLE>

                                       i

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                                   PAGE
                                                                                                                   ----
<S>                                                                                                                <C>
ARTICLE V CONDITIONS PRECEDENT..................................................................................    13
         Section 5.01. Initial Loan.............................................................................    13
         Section 5.02. Initial and Subsequent Loans.............................................................    15

ARTICLE VI REPRESENTATIONS AND WARRANTIES.......................................................................    16
         Section 6.01. Representations and Warranties Relating to Borrower......................................    16
         Section 6.02. Representations and Warranties of Lender.................................................    21
         Section 6.03. Representations and Warranties of Onyx...................................................    22
         Section 6.04. Representations and Warranties of Finco..................................................    23

ARTICLE VII COVENANTS...........................................................................................    24
         Section 7.01. Affirmative Covenants of Borrower........................................................    25
         Section 7.02. Reporting Requirements...................................................................    27
         Section 7.03. Negative Covenants of Borrower...........................................................    29
         Section 7.04. Additional Covenants of Onyx and Finco...................................................    29

ARTICLE VIII EVENTS OF DEFAULT..................................................................................    31
         Section 8.01. Events of Default........................................................................    31
         Section 8.02. Remedies.................................................................................    32

ARTICLE IX CREDIT TRIGGER EVENTS................................................................................    32
         Section 9.01. Credit Trigger Events....................................................................    32
         Section 9.02. Remedies.................................................................................    33

ARTICLE X ACCOUNTS; REPORTS.....................................................................................    33
         Section 10.01. Establishment of Blocked Account and Reserve Account....................................    33
         Section 10.02. Blocked Account Arrangement.............................................................    34
         Section 10.03. Reserve Account Deposits and Withdrawals................................................    34

ARTICLE XI INDEMNIFICATION AND EXPENSES.........................................................................    35
         Section 11.01. Expenses of Lender......................................................................    35
         Section 11.02. Indemnification.........................................................................    35
         Section 11.03. Survival of Indemnity and Expenses......................................................    36

ARTICLE XII MISCELLANEOUS.......................................................................................    36
         Section 12.01. No Waiver; Remedies Cumulative..........................................................    36
         Section 12.02. Notices.................................................................................    36
         Section 12.03. Amendments; Waivers.....................................................................    37
</TABLE>

                                       ii

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                                   PAGE
                                                                                                                   ----
<S>                                                                                                                <C>
         Section 12.04. Calculations............................................................................    37
         Section 12.05. Governmental Approval...................................................................    37
         Section 12.06. Severability............................................................................    38
         Section 12.07. Captions................................................................................    38
         Section 12.08. Counterparts............................................................................    38
         Section 12.09. Governing Law...........................................................................    38
         Section 12.10. Jurisdiction; Waiver of Jury Trial......................................................    38
         Section 12.11. Assignments; Participations.............................................................    38
         Section 12.12. Confidentiality.........................................................................    39
         Section 12.13. Entire Agreement........................................................................    39
         Section 12.14. Future Assurances.......................................................................    40
         Section 12.15. Third-Party Beneficiaries...............................................................    40
         Section 12.16. Termination.............................................................................    40
         Section 12.17. No Proceedings; Limitation on Payments..................................................    40
         Section 12.18. Administrative Duties of State Street...................................................    40
         Section 12.19. Administrative Duties of Onyx...........................................................    40
</TABLE>

                                      iii

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                    PAGE
                                                                                                    ----
<S>                                                                                                 <C>
APPENDICES
         APPENDIX A                 Defined Terms                                                    A-1

EXHIBITS
         EXHIBIT A                  Form of Note
         EXHIBIT B                  Form of Borrowing Base Certificate
         EXHIBIT C                  Example of Application of Certain Assumptions
                                    in Collateral Value Model Amount
</TABLE>

                                       iv

<PAGE>

                  RESIDUAL INTEREST LOAN AND SECURITY AGREEMENT

         This RESIDUAL INTEREST LOAN AND SECURITY AGREEMENT (this "Loan
Agreement"), dated as of January 13, 2004, is by and between ONYX ACCEPTANCE
FUNDING CORPORATION (the "Borrower"), a Delaware corporation, and GALLEON
CAPITAL, LLC (the "Lender"), a Delaware corporation.

         Borrower and Lender agree as follows:

                                    ARTICLE I

                       DEFINITIONS AND ACCOUNTING MATTERS

         Section 1.01. Defined Terms. Whenever used in this Loan Agreement
(including, without limitation, in the preamble, the recitals and the exhibits
hereto), capitalized terms used and not otherwise defined herein shall have the
meanings set forth in Appendix A attached hereto. Any and all terms used in this
Loan Agreement which are defined in the UCC shall be construed and defined in
accordance with the meaning and definition ascribed to such terms under the UCC,
unless otherwise defined in Appendix A.

         Section 1.02. Accounting Terms and Determinations. Except as otherwise
expressly provided herein, all accounting terms used herein shall be
interpreted, and all financial statements and certificates and reports as to
financial matters required to be delivered to Lender hereunder shall be
prepared, in accordance with GAAP.

         Section 1.03. Construction. Any reference to this Loan Agreement, the
Note or any other Loan Documents shall (unless otherwise indicated) be deemed to
refer to such writing as the same may be amended and/or restated from time to
time in accordance with the terms thereof. The words "herein", "hereof",
"hereunder" and words of like import shall refer to this Loan Agreement as a
whole and not to any particular section or paragraph of this Loan Agreement.

                                   ARTICLE II

                           LOANS, NOTE AND PREPAYMENTS

         Section 2.01. Loans.

         (a) Subject to the terms and conditions of this Loan Agreement, and
relying on the representations, warranties and covenants hereinafter set forth,
Lender agrees to make one or more loans (each, a "Loan" and, collectively, the
"Loans") to Borrower from time to time prior to the Conversion Date up to a
maximum principal amount at any one time outstanding equal to the Commitment
Amount; provided, however, that no Loan shall be made (i) on a date other than a
Permitted Funding Date, (ii) in an amount less than the Minimum Loan Amount,
(iii) in an amount which would exceed the Available Commitment on such Permitted
Funding Date, or (iv) in an amount which, when added to the Total Outstanding
Loans on such Permitted Funding Date (before giving effect to the Loan to be
made on such Permitted Funding Date), would result in a Collateral Shortfall
Event after giving effect to such Loan.

<PAGE>

         (b) Subject to the terms and conditions of this Loan Agreement, prior
to the Conversion Date Borrower may borrow, repay and reborrow hereunder in
accordance with the procedures set forth in Sections 2.03 and 2.04.

         (c) In no event shall a Loan be made when any Default or Event of
Default has occurred and is continuing or would occur as a result of such Loan.

         (d) Lender shall have no obligation to make any Loan on any Funding
Date unless each condition precedent set forth in Section 5.01 and Section 5.02,
as applicable, shall have been satisfied.

         Section 2.02. The Note.

         (a) The Loans made by Lender hereunder shall be evidenced by a single
promissory note of Borrower substantially in the form of Exhibit A hereto (the
"Note"), duly executed by Borrower, dated the date hereof, payable to the order
of Lender (or its designated agent) in a principal amount equal to the amount of
the Commitment Amount and otherwise duly completed.

         (b) The date and amount of each Loan made by Lender to Borrower, and
each payment made on account of the principal and interest thereof, shall be
recorded by Lender on its books and, at the option of Lender, endorsed by Lender
on a schedule attached to and constituting part of the Note and any continuation
thereof. Such recordation and endorsement shall be conclusive in the absence of
manifest error; provided that the failure of Lender to make any such recordation
or endorsement or any error in such recordation or endorsement shall not affect
the obligation of Borrower to make a payment when due of any amount owing
hereunder or under the Note.

         Section 2.03. Procedures for Borrowing.

         (a) On any Business Day prior to the Conversion Date, Borrower may
request that Lender make a Loan hereunder by delivering to Lender written notice
of such request, which notice may be delivered by telecopy or other facsimile or
electronic transmission (each, a "Notice of Borrowing"). Such Notice of
Borrowing shall (i) contain the amount of the requested Loan to be made on the
applicable Funding Date, which shall in all events be at least equal to the
Minimum Loan Amount, (ii) specify the requested Funding Date, which Funding Date
shall be a Permitted Funding Date, (iii) include a certificate in the form
attached hereto as Exhibit B (a "Borrowing Base Certificate"), and (iv) attach
such other information reasonably requested by Lender from time to time.

         (b) With respect to each requested Loan, upon satisfaction of all
conditions precedent set forth in Sections 5.01 and 5.02, as applicable, hereof
and the satisfaction of all procedures set forth in this Section 2.03, Lender
shall transfer an amount equal to the Loan to the Operating Account.

         Section 2.04. Repayment of Loans; Interest.

                                       2

<PAGE>

         (a) No later than the Final Scheduled Maturity Date, Borrower shall pay
to Lender the Total Outstanding Loans, plus all accrued and unpaid interest
thereon, and shall pay all other Secured Obligations then accrued, in full.

         (b) Borrower hereby promises to pay to Lender interest on the unpaid
principal amount of each Loan for each Accrual Period for such Loan until the
principal amount of such Loan is paid in full, at a rate per annum equal to the
Galleon Cost of Funds for such Loan plus the Applicable Margin (the "Note
Interest Rate"), calculated on the basis of the actual number of days elapsed in
a year of 360 days. The Galleon Cost of Funds as determined on the last day of
each Accrual Period shall be the Galleon Cost of Funds applicable for purposes
of calculating interest accruing at the Note Interest Rate for such Accrual
Period. Accrued interest on each Loan shall be payable on each Payment Date. If
the principal amount of a Loan varies during any Accrual Period, interest will
be computed on the average daily balance outstanding during the Accrual Period.

         (c) If, by the terms of this Loan Agreement or the Note, Borrower at
any time is required or obligated to pay interest at a rate in excess of the
maximum rate permitted by applicable law, the rate of interest shall be deemed
to be immediately reduced to such maximum rate and the portion of all prior
interest payments in excess of such maximum rate shall be applied and shall be
deemed to have been payments made in reduction of the principal amount due
hereunder and under the Note.

         Section 2.05. Collateral Shortfall Event; Pledge and Removal of
Residual Interest Instruments.

         (a) If at any time the Total Outstanding Loans exceed the Borrowing
Base (a "Collateral Shortfall Event"), Borrower shall no later than 1:00 p.m.,
Boston time, on the third (3rd) Business Day after the discovery of such
Collateral Shortfall Event, either

                           (i) deliver and pledge one or more additional
                  Eligible Residual Interest Instruments to Lender pursuant to
                  Section 2.05(c), such that after giving effect to such pledge
                  the Total Outstanding Loans do not exceed the Borrowing Base;
                  or

                           (ii) prepay the outstanding principal amount of the
                  Note, in whole or in part, together with accrued and unpaid
                  interest thereon, such that after giving effect to such
                  prepayment, the Total Outstanding Loans do not exceed the
                  Borrowing Base.

         (b) From time to time after the Closing Date, Borrower may (but shall
not be obligated to) request that Lender include within the definition of
Eligible Securitization Transactions, for all purposes of this Loan Agreement
and the other Loan Documents, securitization transactions with respect to which
the related Residual Interest Instrument was previously unpledged under this
Loan Agreement or securitization transactions occurring after the Closing Date,
in each case provided the related Residual Interest Instrument shall have been
issued and outstanding for a period of at least twelve (12) months
(collectively, the "Subsequent Securitization Transactions"). Any such inclusion
of a Subsequent Securitization Transaction

                                        3
<PAGE>

         within the definition of Eligible Securitization Transactions shall be
         effected in accordance with the provisions of this Section 2.05(b) and
         2.05(c) and shall be accomplished by written agreement among Borrower
         and Lender, without necessity of formal amendment to this Loan
         Agreement or any other Loan Document.

         Lender hereby agrees with Borrower to review the Required Information
submitted by Borrower for designation of the related Subsequent Securitization
Transaction as an Eligible Securitization Transaction. Borrower shall pay all
reasonable attorneys' fees incurred by Lender in connection with such review.
Each such Subsequent Securitization Transaction will become an Eligible
Securitization Transaction only if Lender provides its written approval thereof
to Borrower (which Lender may grant or withhold in its sole and absolute
discretion). Written notification shall be issued from Lender to Borrower within
ten (10) Business Days of confirmed receipt of all Required Information
indicating whether Lender consents to the inclusion of a Subsequent
Securitization Transaction within the definition of Eligible Securitization
Transaction for purposes of this Loan Agreement. If Borrower does not receive
written notice from Lender approving the inclusion of the Subsequent
Securitization Transaction as an Eligible Securitization Transaction within ten
(10) Business Days of Lender's receipt of the Required Information, the request
for such Subsequent Securitization Transaction as an Eligible Securitization
Transaction shall be deemed to be denied by Lender.

         Notwithstanding anything to the contrary in this Section 2.05(b) or
elsewhere in this Loan Agreement, Borrower shall have no obligation to submit
the Required Information relating to any Subsequent Securitization Transaction
to Lender on a right of first refusal basis, and shall have no obligation to
request that Lender include such Subsequent Securitization Transaction within
the definition of Eligible Securitization Transactions.

         (c) Borrower and Lender may, from time to time by written agreement
signed by Borrower and Lender and without necessity of formal amendment to this
Loan Agreement or any other Loan Document (other than an amendment or the filing
of a financing statement, if necessary), designate certain of the Residual
Interest Instruments related to Eligible Securitization Transactions (each, an
"Eligible Residual Interest Instrument" and, collectively, the "Eligible
Residual Interest Instruments") for inclusion as a Pledged Residual Interest
Instrument in the Borrowing Base. As of the Closing Date, the Residual Interest
Instruments related to the following Eligible Securitization Transactions are
included in the Borrowing Base: Onyx Acceptance Owner Trust 2001-B, Onyx
Acceptance Owner Trust 2001-C, Onyx Acceptance Owner Trust 2001-D, Onyx
Acceptance Owner Trust 2002-A, Onyx Acceptance Owner Trust 2002-B, Onyx
Acceptance Owner Trust 2002-C and Onyx Acceptance Owner Trust 2002-D (the
"Initial Pledged Residual Interest Instruments"). Lender shall maintain
possession of each of the Pledged Residual Interest Instruments from time to
time included in the Borrowing Base. Upon request of Borrower, Lender shall
provide a written record of those Pledged Residual Interest Instruments included
in the Borrowing Base as of the date of such request.

         (d) If Onyx fails to exercise a Clean-up Call with respect to an
Eligible Securitization Transaction, the Collateral Value Model Amount for the
Pledged Residual Interest Instruments shall be recalculated in accordance with
the assumptions set forth in the definition of Collateral Value Model Amount.
Upon the occurrence of a Credit Trigger Event with respect to a Pledged Residual
Interest Instrument, such Pledged Residual Interest Instrument shall be excluded
from

                                        4
<PAGE>

the calculation of the Borrowing Base. If a Pledged Residual Interest Instrument
is not included in the calculation of the Borrowing Base and no Collateral
Shortfall Event, Default or Event of Default has occurred and is continuing,
upon the written request of Borrower, Lender shall release its Lien on such
Pledged Residual Interest Instrument and any related Collateral. Upon any such
release, such Residual Interest Instrument shall no longer be a Pledged Residual
Interest Instrument or constitute part of the Collateral hereunder and Lender
shall execute and deliver or cause to be executed and delivered (at the cost and
expense of Borrower), such instruments and documents and take such further
actions as are reasonably requested by Borrower to evidence the release of
Lender's Lien in the Pledged Residual Interest Instrument, including, without
limitation, the delivery of the Residual Interest Instrument so released and any
instruments of assignment with respect thereto.

         Section 2.06. Optional Prepayments. With at least three (3) Business
Days' prior written notice to Lender, Borrower may, at its option, prepay the
Note in whole or in part (as designated below), without a premium or penalty of
any kind attributable to such prepayment, following the occurrence of either of
the following events:

                           (i) an Affected Party demands payment by Borrower of
                  any amounts pursuant to Section 2.07, in which case Borrower
                  may prepay the Loan in whole on any Payment Date following
                  such occurrence; or

                           (ii) a Collateral Shortfall Event has occurred, in
                  which case Borrower may prepay the Loan in whole or in part on
                  any date following such occurrence to cure such Collateral
                  Shortfall Event; provided that if such prepayment is made on a
                  day other than a Payment Date, Borrower shall become obligated
                  to pay funding losses, if any, pursuant to Section 2.08.

Any optional prepayment of the Note pursuant to this Section 2.06 shall be made
together with all accrued interest on the amount prepaid to the date of such
prepayment and all other fees and expenses due Lender hereunder. Except as set
forth in this Section 2.06, Borrower may not prepay the Note in whole or in
part.

         Section 2.07. Yield Protection.

         (a) If (i) Regulation D or (ii) any Regulatory Change occurring after
the date hereof:

                           (i) shall subject an Affected Party to any tax, duty
                  or other charge with respect to any portion of the Commitment
                  Amount owned by or funded by it, or any obligations or right
                  to provide funding therefor, or shall change the basis of
                  taxation of payments to the Affected Party in relation to any
                  funding of the Commitment Amount or interest owned by, owed to
                  or funded in whole or in part by it or any other amounts due
                  under this Loan Agreement in respect of any portion of the
                  Commitment Amount owned by or funded by it or its obligations
                  or rights, if any, to provide funding therefor (except for
                  taxes based on, or measured by, net income, or changes in the
                  rate of tax on or determined by reference to the overall net
                  income, of such Affected Party imposed by the United States of
                  America, by the jurisdiction in which such Affected Party's
                  principal executive office is located or, if such Affected
                  Party's principal executive office is not in the

                                        5
<PAGE>

                  United States of America, by the jurisdiction where such
                  Affected Party's principal office in the United States is
                  located); or

                           (ii) shall impose, modify or deem applicable any
                  reserve (including, without limitation, any reserve imposed by
                  the Federal Reserve Board, but excluding any reserve included
                  in the determination of interest), special deposit or similar
                  requirement against assets of any Affected Party, deposits or
                  obligations with or for the account of any Affected Party or
                  with or for the account of any Affiliate (or entity deemed by
                  the Federal Reserve Board to be an Affiliate) of any Affected
                  Party, or credit extended by any Affected Party; or

                           (iii) shall change the amount of capital maintained,
                  or required or requested or directed to be maintained, by any
                  Affected Party; or

                           (iv) shall impose any other condition affecting any
                  portion of the Commitment Amount owned or funded in whole or
                  in part by any Affected Party, or its obligations or rights,
                  if any, to provide funding or liquidity or credit support
                  therefor; or

                           (v) shall change the rate for, or the manner in which
                  the Federal Deposit Insurance Corporation (or a successor
                  thereto) assesses, deposit insurance premiums or similar
                  charges;

and the result of any of the foregoing is or would be:

                  (x) to increase the cost to or to impose a cost on (I) an
Affected Party funding or making or maintaining any portion of the Commitment
Amount, any purchases, reinvestments, or loans or other extensions of credit
under any Program Support Agreement, or any commitment of such Affected Party
with respect to any of the foregoing, or (II) an Affected Party for continuing
its or Borrower's relationship with Lender, in each case, in an amount deemed to
be material by such Affected Party,

                  (y) to reduce the amount of any sum received or receivable by
an Affected Party under this Loan Agreement or under any related Program Support
Agreement, or

                  (z) in the reasonable determination of such Affected Party, to
reduce the rate of return on the capital of an Affected Party as a consequence
of its obligations under this Loan Agreement or any related Program Support
Agreement, or arising in connection with this Loan Agreement or any related
Program Support Agreement to a level below that which such Affected Party could
otherwise have achieved,

then, within forty-five (45) days after demand by such Affected Party (which
demand shall be accompanied by a certificate setting forth, in reasonable
detail, the basis of such demand and the methodology for calculating, and the
calculation of, the amounts claimed by the Affected Party), Borrower shall
either (I) pay directly to such Affected Party such additional amount or amounts
as will compensate such Affected Party for such additional or increased cost or
such reduction or (II) repay the Note and all other Secured Obligations
hereunder, in full, and cause the termination of this Loan Agreement.

                                       6
<PAGE>

         (b) Each Affected Party will promptly notify Borrower of any event of
which it has knowledge which will entitle such Affected Party to compensation
pursuant to this Section 2.07; provided, however, no failure to give or delay in
giving such notification shall adversely affect the rights of any Affected Party
to such compensation.

         (c) In determining any amount provided for or referred to in this
Section 2.07, an Affected Party may use any reasonable averaging and attribution
methods (consistent with its ordinary business practices) that it (in its
reasonable discretion) shall deem applicable. Any Affected Party when making a
claim under this Section 2.07 shall submit to Borrower the above-referenced
certificate as to such increased cost or reduced return (including calculation
thereof in reasonable detail), which statement shall, in the absence of
demonstrable error, be conclusive and binding upon Borrower.

         Section 2.08. Funding Losses. In the event that Lender or any Program
Support Provider shall incur any loss or expense (including any loss or expense
incurred by reason of the liquidation or reemployment of deposits or other funds
acquired by Lender or such Program Support Provider to make any funding
hereunder or under any Program Support Agreement or maintain any funding
hereunder or under any Program Support Agreement, but excluding loss of profits)
as a result of (i) any payment or other settlement with respect to the Loan or
the Commitment Amount (or portion thereof) funded by Lender or a funding under
any Program Support Agreement being made on any day other than a Payment Date,
or (ii) any funding of the Loan or the Commitment Amount not being made in
accordance with a request therefor under Section 2.03 as the result of any
action by Borrower or failure to satisfy the conditions precedent set forth in
Section 5.01 and 5.02, then, upon written notice from Lender or such Program
Support Provider to Borrower, Borrower shall pay to Lender or such Program
Support Provider, as applicable, the amount of such loss or expense. Such
written notice (which shall include the methodology for calculating, and the
calculation of, the amount of such loss or expense, in reasonable detail) shall,
in the absence of demonstrable error, be conclusive and binding upon Borrower.

         Section 2.09. Commitment Fee. Borrower shall pay to Lender a commitment
fee (the "Commitment Fee") for the period commencing on the Closing Date to and
including the Conversion Date, equal to twenty one-hundredths of one percent
(0.20%) per annum (computed on the basis of the actual number of days elapsed
over a 360-day year) of the average daily unused portion of the Commitment
Amount. If at any time prior to the Conversion Date the outstanding principal
balance of Loans made hereunder is less than 50% of the Commitment Amount, the
Commitment Fee shall be equal to fifty one-hundredths of one percent (0.50%) per
annum of the unused portion of the Commitment Amount until such time as the
outstanding principal balance of the Loans is greater than 50% of the Commitment
Amount. The Commitment Fee shall be paid from amounts distributed pursuant to
Section 3.03 on each Payment Date with respect to the immediately preceding
Accrual Period.

                                   ARTICLE III

                             PAYMENTS; COMPUTATIONS

         Section 3.01. Payments.

                                       7
<PAGE>

         (a) Except to the extent otherwise provided herein, all payments of
principal, interest and other amounts to be made by Borrower to Lender under
this Loan Agreement, the Note and the other Loan Documents shall be made in
Dollars, in immediately available funds, without deduction, set-off or
counterclaim, to Lender from available funds on deposit in the Blocked Account,
not later than 1:00 p.m., Boston time, on the date on which such payment shall
become due (and each such payment made after such time on such due date shall be
deemed to have been made on the next succeeding Business Day). Borrower
acknowledges that it has no rights of withdrawal from the Blocked Account.

         (b) Except to the extent otherwise expressly provided herein, if the
due date of any payment under this Loan Agreement, the Note or the other Loan
Documents would otherwise fall on a day that is not a Business Day, such date
shall be extended to the next succeeding Business Day, and interest shall accrue
and be payable at the then applicable rate for any principal so extended for the
period of such extension.

         Section 3.02. Computations. Interest on the Loans shall be computed on
the basis of a 360-day year for the actual days elapsed in the period for which
payable.

         Section 3.03. Settlement Procedures.

         (a) Borrower shall cause the depository, paying agent, spread account
trustee or other trustee or paying agent maintaining any Spread Account or other
account from which proceeds of the Collateral are to be released to Borrower
pursuant to the Pledged Residual Interest Instruments, to deposit such proceeds
directly into the Blocked Account.

         (b) Prior to the Conversion Date or the commencement of the Accelerated
Amortization Period, Lender shall, on each Payment Date, apply available funds
on deposit in the Blocked Account as follows:

                  First, to Lender in respect of the Commitment Fee, if any;

                  Second, to the payment of the accrued but unpaid interest on
                  the Note;

                  Third, to the outstanding principal balance of the Note in the
                  amount necessary to cure any Collateral Shortfall Event;

                  Fourth, to the Reserve Account (after giving effect to the
                  distribution made in priority "Second" and "Third" above) to
                  the extent necessary to cause the amount on deposit in the
                  Reserve Account to equal the Required Reserve Account Amount;

                  Fifth, to Lender, for its own account or for the account of
                  any Affected Party, as applicable, in an amount equal to the
                  aggregate amount of all Secured Obligations, other than the
                  Note, then due and owing from Borrower to Lender pursuant to
                  any Loan Document; and

                  Sixth, to the Operating Account or to such other accounts as
                  may from time to time be designated by Borrower in writing.

                                       8
<PAGE>

         (c) Upon and after the earlier to occur of the Conversion Date or the
commencement of the Accelerated Amortization Period based on the occurrence of
the event described in clause (ii) of the definition of Accelerated Amortization
Period, until the Note and all other Secured Obligations are paid in full,
Lender shall, on each Payment Date, apply available funds on deposit in the
Blocked Account:

                  First, to the payment of the accrued but unpaid interest on
                  the Note;

                  Second, on each Payment Date prior to the commencement of the
                  Accelerated Amortization Period, to the outstanding principal
                  balance of the Note in an amount equal to $1,250,000;

                  Third, to the outstanding principal balance of the Note in the
                  amount necessary to cure any Collateral Shortfall Event;

                  Fourth, on each Payment Date prior to the commencement of the
                  Accelerated Amortization Period, to the Reserve Account (after
                  giving effect to the distributions made in priority "Second"
                  and "Third" above, if applicable) to the extent necessary to
                  cause the amount on deposit in the Reserve Account to equal
                  the Required Reserve Account Amount;

                  Fifth, on each Payment Date on and after the commencement of
                  the Accelerated Amortization Period, all available funds on
                  deposit in the Blocked Account to the outstanding principal
                  balance of the Note;

                  Sixth, to Lender, for its own account or for the account of
                  any Affected Party, as applicable, in an amount equal to the
                  aggregate amount of all Secured Obligations, other than the
                  Note, then due and owing from Borrower to Lender pursuant to
                  any Loan Document; and

                  Seventh, to the Operating Account or to such other accounts as
                  may from time to time be designated by Borrower in writing.

         (d) Notwithstanding anything herein to the contrary, from and after the
occurrence of an Event of Default, such Event of Default not having previously
been waived, and without prejudice to any other rights or remedies of Lender,
all available funds on deposit in the Blocked Account shall be applied by Lender
as follows:

                  First, to the payment of the reasonable costs and expenses
                  incurred by Lender in connection with such Event of Default;

                  Second, to the payment in full of all accrued and unpaid
                  interest and fees due and owing on the Note;

                  Third, all available funds on deposit in the Blocked Account
                  to the outstanding principal balance of the Note;

                                       9
<PAGE>

                  Fourth, to Lender, for its own account or for the account of
                  any Affected Party, as applicable, in an amount equal to the
                  aggregate amount of all Secured Obligations, other than the
                  Note, then due and owing from Borrower to Lender pursuant to
                  any Loan Document; and

                  Fifth, to the Operating Account or to such other accounts as
                  may from time to time be designated by Borrower in writing.

         Lender's application of amounts on deposit in the Blocked Account in
accordance with this Section 3.03(d) shall not affect, limit or impair in any
manner the rights and remedies of Lender set forth in Section 8.02 below (other
than to reduce the amount owed by Borrower under the Loans).

                                   ARTICLE IV

                               COLLATERAL SECURITY

         Section 4.01. Collateral; Security Interest.

         (a) The Note and all other Secured Obligations of Borrower hereunder
and/or under the other Loan Documents shall be secured by a first priority
perfected security interest in the following:

                           (i) The Initial Pledged Residual Interest Instruments
                  and each additional Eligible Residual Interest Instrument made
                  a part of the Borrowing Base pursuant to Section 2.05(c) (the
                  "Pledged Residual Interest Instruments");

                           (ii) All proceeds of the Pledged Residual Interest
                  Instruments and all other monies remitted, received or
                  otherwise recovered in respect of the Pledged Residual
                  Interest Instruments on or after the Closing Date;

                           (iii) The Reserve Account and the Blocked Account and
                  the balances, investments, and all Proceeds thereof and other
                  items of value attributable or credited to the Blocked Account
                  and the Reserve Account and all rights with respect thereto;

                           (iv) All rights of Borrower under the Residual Sale
                  Agreements with respect to the Pledged Residual Interest
                  Instruments; and

                           (v) Any and all replacements, substitutions,
                  distributions on, or Proceeds or products of any and all of
                  the foregoing, including, without limitation, all present and
                  future claims, demands, causes and choses in action in respect
                  of any or all of the foregoing and all payments on or under
                  and all Proceeds of every kind and nature whatsoever in
                  respect of any or all of the foregoing, including all Proceeds
                  of the conversion, voluntary or involuntary, into cash or
                  other liquid property, all cash Proceeds, accounts, accounts
                  receivable, notes, drafts, acceptances, chattel paper, checks,
                  deposit accounts, insurance proceeds, condemnation awards,
                  rights to payment of any and every kind and

                                       10
<PAGE>

                  other forms of receivables, instruments and other supporting
                  obligations and other property which at any time constitute
                  all or part of or are included in the Proceeds of any of the
                  foregoing.

         All of the property described in clauses (i), (ii), (iii) and (iv) of
this subsection, together with any additions thereto or replacements or proceeds
thereof, and any other real or personal property hereafter securing the Note and
the other Secured Obligations, are sometimes referred to herein collectively as
the "Collateral".

         (b) As collateral security for the prompt and complete payment and
performance when due (whether at the stated maturity, by acceleration or
otherwise) of the Note and the other Secured Obligations, Borrower hereby
pledges, assigns and transfers to Lender and its successors, endorsees,
transferees and assigns, and hereby grants to Lender and its successors,
endorsees, transferees and assigns, a continuing security interest in all of
Borrower's right, title and interest in, to and under all of the Collateral
whether now owned or existing or at any time hereafter acquired or arising by
Borrower or in which Borrower now has or at any time in the future may acquire
any right, title or interest.

         Section 4.02. Delivery of Pledged Residual Interest Instruments. Prior
to or contemporaneous with the Closing Date, Borrower shall deliver the Initial
Pledged Residual Interest Instruments to Lender, each such Initial Pledged
Residual Interest Instrument to be issued in the name of Lender (or its
designated agent). Lender shall hold or cause its duly appointed agent to hold
such Pledged Residual Interest Instrument until released to Borrower pursuant to
Section 2.05(d) or Section 4.09. Upon the addition of any additional Pledged
Residual Interest Instrument to the Borrowing Base pursuant to Section 2.05(c),
Borrower shall deliver each such additional Pledged Residual Interest Instrument
to Lender, each of which shall be issued in the name of Lender (or its
designated agent).

         Section 4.03. Further Documentation. At any time and from time to time,
and at the sole expense of Borrower, Borrower will promptly and duly execute and
deliver, or will promptly cause to be executed and delivered, such further
instruments and documents and take such further actions as are reasonably
necessary (or as are reasonably requested by Lender) for the purpose of
obtaining or preserving the full benefits of this Loan Agreement and of the
rights and powers herein granted, including, without limitation, the filing of
any financing or continuation statements under the UCC in effect in any
jurisdiction with respect to the Liens on the Collateral created hereby and the
taking of any other action necessary to preserve the status of the Liens on the
Collateral created hereby as first priority perfected Liens. Borrower also
hereby authorizes Lender to file any such financing or continuation statement to
the extent permitted by applicable law. A photographic or other reproduction of
this Loan Agreement shall be sufficient as a financing statement for filing in
any jurisdiction.

         Section 4.04. Changes in Locations, Name, etc. Borrower shall not
change its name, identity, structure or jurisdiction of formation or change the
location where it maintains its records with respect to the Collateral unless it
shall have given Lender at least thirty (30) days' prior written notice thereof
and shall have delivered to Lender all UCC financing statements and amendments
thereto and taken all other actions as are necessary (or as are requested by
Lender) to continue the status of Lender's Liens on the Collateral as perfected
first priority Liens.

                                       11
<PAGE>

         Section 4.05. Reimbursement for Performance by Lender of Borrower's
Obligations. If Borrower fails to perform or comply with any of its agreements
contained in this Loan Agreement or the other Loan Documents and Lender shall
itself perform or comply, or otherwise cause performance or compliance, with
such agreement, the out-of-pocket expenses of Lender incurred in connection with
such performance or compliance shall be payable by Borrower to Lender on demand
and shall constitute Secured Obligations.

         Section 4.06. Proceeds. If an Event of Default shall occur, (a) all
Proceeds of Collateral received by Borrower consisting of cash, checks and other
cash equivalents shall be held by Borrower in trust for Lender, segregated from
other funds of Borrower, and shall forthwith upon receipt by Borrower be turned
over to Lender in the exact form received by Borrower (duly endorsed by Borrower
to Lender) and (b) any and all such Proceeds received by Lender (whether from
Borrower or otherwise) shall be held by Lender as collateral security for, and
shall be applied by Lender against, the Secured Obligations (whether matured or
unmatured) in the order set forth in Section 3.03(d). Any balance of such
Proceeds remaining after the Secured Obligations shall have been paid in full
and this Loan Agreement shall have been terminated shall be paid over to
Borrower or to whomsoever may be lawfully entitled to receive the same.

         Section 4.07. Remedies. If an Event of Default under Section 8.01(e) or
(f) shall occur, Lender may exercise, in addition to all other rights and
remedies granted to it in this Loan Agreement, in the other Loan Documents and
in any other instrument or agreement securing, evidencing or relating to the
Secured Obligations, all rights and remedies of a secured party under the UCC.
Without limiting the generality of the foregoing, Lender, without demand of
performance or other demand, presentment, protest, advertisement or notice of
any kind (except any notice required by law referred to below) to or upon
Borrower or any other Person (each and all of which demands, presentments,
protests, advertisements and notices are hereby waived to the extent allowed by
law), may in such circumstances forthwith collect, receive, appropriate and
realize upon the Collateral, or any part thereof, and/or may forthwith sell,
lease, assign, give option or options to purchase, or otherwise dispose of and
deliver the Collateral or any part thereof (or contract to do any of the
foregoing), in one or more parcels or as an entirety at public or private sale
or sales, at any exchange, broker's board or office of Lender or elsewhere upon
such terms and conditions as it may deem advisable and at such prices as it may
deem best, for cash or on credit or for future delivery without assumption of
any credit risk. Lender shall have the right upon any such public sale or sales,
and, to the extent permitted by law, upon any such private sale or sales, to
purchase the whole or any part of the Collateral so sold, free of any right or
equity of redemption in Borrower, which right or equity is hereby waived or
released, and Lender's purchase of the Collateral shall be deemed full
satisfaction of this Loan Agreement, the Note and the Secured Obligations by
Borrower. Lender shall apply the net Proceeds of any such collection, recovery,
receipt, appropriation, realization or sale, after deducting all costs and
expenses of every kind incurred therein or incidental to the care or safekeeping
of any of the Collateral or in any way relating to the Collateral or the rights
of Lender hereunder, including, without limitation, reasonable attorneys' fees
and disbursements, to the payment in whole or in part of the Secured
Obligations, in the order and priority specified in Section 3.03(d). To the
extent permitted by applicable law, Borrower waives all claims, damages and
demands it may acquire against Lender arising out of the exercise by Lender of
any of its rights hereunder, other than those claims, damages and demands
arising from the gross negligence or willful misconduct of Lender. Lender shall
provide to Borrower at least 30 days' prior notice of a proposed sale or

                                       12
<PAGE>

other disposition of Collateral following an Event of Default. Lender may
specifically disclaim any warranties of title or the like. This procedure will
not be considered to adversely affect the commercial reasonableness of any sale
of the Collateral. If Lender sells any of the Collateral upon credit, Borrower
will be credited only with payments actually made by the purchaser, received by
Lender and applied to the Secured Obligations. In the event that the purchaser
fails to pay for the Collateral, Lender may resell the Collateral and Borrower
will be credited with the proceeds of such sale received by Lender. Lender may
comply with any applicable state or federal law requirements in connection with
a disposition of the Collateral and compliance will not be considered adversely
to affect the commercial reasonableness of any sale of the Collateral.

         Section 4.08. Powers Coupled with an Interest. All authorizations and
agencies herein contained with respect to the Collateral are irrevocable and are
powers coupled with an interest.

         Section 4.09. Release of Lien. Upon the termination of this Loan
Agreement, repayment of all Secured Obligations and the performance of all other
obligations under the Loan Documents, Lender shall release its Lien in any
remaining Collateral; provided that if any payment, or any part thereof, of any
of the Secured Obligations is rescinded or must otherwise be restored or
returned upon the insolvency, bankruptcy, dissolution, liquidation or
reorganization of Borrower or any Trust, or upon or as a result of the
appointment of a receiver, intervenor or conservator of, or a trustee or similar
officer for Borrower or any Trust or any substantial part of its property, or
otherwise, this Loan Agreement, all rights hereunder and the Liens created
hereby shall continue to be effective, or be reinstated, as though such payments
had not been made.

         Section 4.10. Rights of Secured Parties; Limitations on Secured
Parties' Obligations. Lender shall not have any obligation or liability under
any Pledged Residual Interest Instrument or any other Collateral by reason of or
arising out of this Loan Agreement or the receipt by Lender of any payment
relating to such Pledged Residual Interest Instrument or any other Collateral
pursuant hereto, nor shall Lender be obligated in any manner to perform any of
the obligations of Borrower under or pursuant to any Trust Agreement or any
Collateral, to make any payment, to make any inquiry as to the nature or the
sufficiency of any payment received by it or as to the sufficiency of any
performance by any party under any Pledged Residual Interest Instrument or any
other Collateral, to present or file any claim, to take any action to enforce
any performance or to collect the payment of any amounts which may have been
assigned to it or to which it may be entitled at any time or times.

                                    ARTICLE V

                              CONDITIONS PRECEDENT

         Section 5.01. Initial Loan. The obligation of Lender to make the
initial Loan requested to be made by it hereunder is subject to the
satisfaction, immediately prior to or concurrently with the making of such Loan,
of the following conditions precedent:

         (a) Loan Agreement. Lender shall have received this Loan Agreement,
executed and delivered by the duly authorized officers of the parties hereto.

                                       13
<PAGE>

         (b) Note. Lender shall have received the Note, conforming to the
requirements hereof and executed and delivered by a duly authorized officer of
Borrower.

         (c) Other Loan Documents. Lender shall have received each Loan
Document, each of which shall conform to the requirements hereof and shall have
been executed and delivered by the parties thereto.

         (d) Eligible Securitization Transfer Documents. Lender shall have
received all Eligible Securitization Transfer Documents, as such term is defined
in Section 10.02, each of which shall have been executed and delivered by the
parties thereto.

         (e) Filings, Registrations, Recordings; Lien Searches. All documents
(including, without limitation, financing statements) required to be filed,
registered or recorded in order to create in favor of Lender a perfected
first-priority security interest in the Collateral, subject to no Liens other
than those created hereunder, shall have been properly prepared and authorized
(and if required, executed) for filing, registration or recording in each office
in each jurisdiction in which such filings, registrations and recordations are
required to perfect such first-priority security interest; evidence that all
other actions necessary to perfect Lender's first-priority security interest in
the Collateral granted under this Loan Agreement have been taken; and lien
search results with respect to Borrower (dated as of a date that is as close to
the Closing Date as is practicable, but in no event dated as of a date occurring
more than ten Business Days prior to the Closing Date) in each such jurisdiction
(and in each other jurisdiction requested by Lender, as the case may be, in each
case in its sole discretion) that are in form and substance satisfactory to
Lender.

         (f) Closing Certificates. Lender shall have received a certificate of a
Responsible Officer of Borrower certifying that the conditions precedent
specified in this Section 5.01 have been fulfilled and such other certificates
of Borrower certifying as to such matters as Lender may reasonably request,
including without limitation an Officer's Certificate, dated as of the initial
Funding Date, as to the absence of (i) any Default or Event of Default, (ii) any
Credit Trigger Event and (iii) any event or condition which could have a
Material Adverse Effect.

         (g) Legal Opinions. Lender shall have received the executed legal
opinions of counsel of Borrower, dated the Closing Date and otherwise in form
and substance acceptable to Lender and covering such other matters incident to
the transactions contemplated by the Loan Documents as Lender shall reasonably
request.

         (h) Due Diligence Review. Lender shall have completed to its
satisfaction its standard and customary credit and due diligence review of
Borrower.

         (i) No Material Adverse Change. No Material Adverse Change with respect
to Borrower, Finco or Onyx shall have occurred since September 30, 2003.

         (j) Additional Matters. All corporate and other proceedings, and all
documents, instruments and other legal matters in connection with the
transactions contemplated by this Loan Agreement, the Note and the other Loan
Documents shall be satisfactory in form and substance to Lender, and Lender
shall have received such other documents and legal opinions in

                                       14
<PAGE>

respect of any aspect or consequence of the transactions contemplated hereby or
thereby as it shall reasonably request.

         Section 5.02. Initial and Subsequent Loans. Lender's obligation to make
any Loan to Borrower (including the initial Loan) on any Funding Date is subject
to the satisfaction of the following further conditions precedent and the
delivery of a Notice of Borrowing by Borrower pursuant to Section 2.03(a), and
the acceptance of the proceeds of any Loan by Borrower shall constitute
certification by Borrower that the following conditions shall have been
satisfied, both immediately prior to the making of such Loan and also after
giving effect thereto and to the intended use thereof:

         (a) No Default or Event of Default. No Default or Event of Default
shall have occurred and be continuing, and no Default or Event of Default will
occur as a result of making such Loan.

         (b) Representations and Warranties. Each representation and warranty
made by Borrower in this Loan Agreement and in each other Loan Document to which
it is a party shall be true and correct on and as of such Funding Date, both
before and after giving effect to such Loan and the application of the proceeds
therefrom with the same force and effect as if made on and as of such date (or,
if any such representation or warranty is expressly stated to have been made as
of a specific date, as of such specific date). Borrower shall also be in
compliance with all governmental licenses and authorizations and qualified to do
business and in good standing in all required jurisdictions where the failure to
be in compliance or so qualified could reasonably be expected to have a Material
Adverse Effect.

         (c) Permitted Funding Date. The Funding Date (other than the initial
Funding Date) shall be on a Permitted Funding Date.

         (d) Notice of Borrowing. Lender shall have received a Notice of
Borrowing with respect to such Loan, as required to be delivered in accordance
with Section 2.03(a) hereof.

         (e) No Material Adverse Effect. There shall not have occurred one or
more events that constitutes, or could reasonably be expected to constitute, a
Material Adverse Effect.

         (f) Principal Balance; Borrowing Base. The principal amount of such
Loan (i) does not exceed the Available Commitment on such Funding Date and (ii)
when added to the Total Outstanding Loans on such Funding Date (before giving
effect to the Loan to be made on such Funding Date), does not result in a
Collateral Shortfall Event after giving effect to such Loan. Lender shall have
received a completed Borrowing Base Certificate, showing minimum availability
under the Borrowing Base of an amount equal to or greater than the Loan
requested on such Funding Date.

         (g) Filings, Registrations, Recordings. All documents (including,
without limitation, financing statements) required to be filed, registered or
recorded in order to create, in favor of Lender, a perfected, first-priority
security interest in the Collateral, subject to no Liens other than those
created hereunder, shall have been properly prepared (and if required, executed)
for filing,

                                       15
<PAGE>

registration or recording in each office in each jurisdiction in which such
filings, registrations and recordations are required to perfect such
first-priority security interest.

         (h) Payoff Letters. Lender shall have received UCC-3 partial release
financing statements (or other appropriate forms including any "in-lieu"
financing statements or amendments to financing statements) in appropriate form
for filing, together with one or more Payoff Letters, in each case duly executed
by the applicable Prior Lender releasing the Previously Financed Residual
Interest Instrument(s) to be pledged by Borrower to Lender under this Loan
Agreement on such Funding Date from the security interest of such Prior Lender,
and Lender shall have received a copy of each such Payoff Letter.

         (i) Fees and Expenses. Lender shall have received all fees, expenses
and other amounts required to be paid by Borrower on or prior to such Funding
Date.

                                   ARTICLE VI

                         REPRESENTATIONS AND WARRANTIES

         Section 6.01. Representations and Warranties Relating to Borrower. In
order to induce Lender to enter into this Loan Agreement and to make the Loans
provided for hereunder, Borrower makes the following representations and
warranties, which shall survive the execution and delivery hereof and of the
Notes, and which shall be deemed re-made by Borrower each time Borrower submits
a Notice of Borrowing to Lender:

         (a) Corporate Existence; Compliance with Law. Borrower is (i) duly
organized and validly existing as a corporation in good standing under the laws
of the State of Delaware, (ii) has the corporate power and authority to own its
properties and to conduct its business as such properties are currently owned
and such business is presently conducted, (iii) had at all relevant times, and
shall have, power, authority, and legal right to acquire and own the Collateral
and (iv) is in compliance with all Requirements of Law and its obligations under
this Loan Agreement.

         (b) Due Qualification. Borrower is duly qualified to do business as a
foreign corporation in good standing, and has obtained all necessary licenses
and approvals, in all jurisdictions in which the ownership or lease of property,
or the conduct of its business shall require such qualifications, licenses and
approvals and where the failure to so qualify or to obtain such licenses and
approvals could be reasonably expected to have a Material Adverse Effect.

         (c) Power and Authority. Borrower has the power and authority to
execute and deliver this Loan Agreement and the other Loan Documents to which it
is a party and to carry out their respective terms; Borrower has full power and
authority to grant a security interest in the Collateral to Lender and has duly
authorized such grant by all necessary action; and the execution, delivery and
performance of this Loan Agreement and the other Loan Documents to which it is a
party have been duly authorized by Borrower by all necessary action.

                                       16
<PAGE>

         (d) Binding Obligation. This Loan Agreement, the Note and each other
Loan Document to which Borrower is a party has been duly and validly executed
and delivered by Borrower and constitutes the legal, valid and binding
obligation of Borrower enforceable in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforceability of creditors'
rights generally and by general equitable principles.

         (e) No Violation. The execution, delivery and performance by Borrower
of this Loan Agreement, the Note and the other Loan Documents and the
consummation of the transactions contemplated hereby and thereby and the
fulfillment by Borrower of the terms hereof and thereof do not (A) conflict
with, result in any breach of any of the terms and provisions of, or constitute
(with or without notice or lapse of time or both) a default under, the
certificate of incorporation or bylaws of Borrower; (B) conflict with, result in
any breach of any of the terms and provisions of, or constitute (with or without
notice or lapse of time) a default under any indenture, agreement, mortgage,
deed of trust, or other instrument to which Borrower is a party or by which it
is bound or any of its properties are subject; (C) result in the creation or
imposition of any Lien upon any of its properties pursuant to the terms of any
such indenture, agreement, mortgage, deed of trust, or other instrument (other
than this Loan Agreement and the other Loan Documents); or (D) violate any law,
order, rule, or regulation applicable to Borrower of any court or of any federal
or state regulatory body, administrative agency, or other governmental
instrumentality having jurisdiction over Borrower or its properties, which, in
the case of clause (D), could reasonably be expected to result in a Material
Adverse Effect.

         (f) No Proceedings. There are no proceedings or investigations pending,
or to Borrower's best knowledge, threatened, before any court, regulatory body,
administrative agency, or other governmental instrumentality having jurisdiction
over Borrower or its properties: (A) asserting the invalidity of this Loan
Agreement, the Note or the other Loan Documents to which Borrower is a party,
(B) seeking to prevent the consummation of any of the transactions contemplated
by this Loan Agreement or the other Loan Documents, (C) seeking any
determination or ruling that could materially and adversely affect the
performance by Borrower of its obligations under, or the validity or
enforceability of, this Loan Agreement or the other Loan Documents, or (D)
which, if adversely determined, would be reasonably likely to have a Material
Adverse Effect.

         (g) Approvals. All licenses, approvals, authorizations, consents,
orders or other actions of any Person or other organization, or of any court,
governmental agency or body or official, required to be obtained by Borrower in
connection with the execution and delivery of this Loan Agreement and the other
Loan Documents have been or will be taken or obtained, and will be in full force
and effect, on or prior to the Closing Date where the failure to take or obtain
the same could be reasonably likely to result in a Material Adverse Effect.

         (h) Credit Trigger Events. Without limiting the scope of Section
6.01(e), no Credit Trigger Event has occurred and is continuing under any
Eligible Securitization Transaction related to a Pledged Residual Interest
Instrument.

         (i) Offices. The principal place of business and chief executive office
of Borrower is located at 27051 Towne Centre Drive, Suite 220, Foothill Ranch,
California 92610, or such other

                                       17
<PAGE>

address with respect to which the requirements of Section 12.02 have been met.
Borrower's books and records evidencing or relating to the Pledged Residual
Interest Instruments, the related Eligible Securitization Transactions and other
Collateral are located at such address.

         (j) Legal Names. Since the date of its formation, (i) Borrower has not
(i) been known by any legal name other than its corporate name as of the date
hereof, or (ii) been the subject of any merger or other corporate reorganization
that resulted in a change of name, identity or its structure. Borrower uses no
trade names other than its actual corporate name.

         (k) Insolvency. Borrower is not insolvent, and will not be made
insolvent after giving effect to the transactions contemplated by this Loan
Agreement.

         (l) No Liens. Borrower has not assigned, pledged, or otherwise conveyed
or encumbered any of the Collateral to any Person other than Lender, and
immediately prior to the pledge of such Collateral, Borrower was the sole owner
of the Collateral and had good and marketable title thereto, free and clear of
all Liens, in each case except for Liens that have been released or are to be
released simultaneously with the Liens granted in favor of Lender hereunder. No
security agreement, financing statement or other public notice similar in effect
with respect to all or any part of the Collateral is or will be on file or of
record in any public office, except such as have been or may hereinafter be
filed pursuant to this Loan Agreement.

         (m) Security Interest. The provisions of this Loan Agreement are
effective to create in favor of Lender a valid and enforceable first priority
security interest in all right, title and interest of Borrower in, to and under
the Collateral free and clear of all other Liens. There are no agreements in
effect adversely affecting the rights of Borrower to make, or cause to be made,
the grant of the security interest in the Collateral contemplated by Section
4.01.

         (n) Special Purpose Entity; No Other Business. Borrower is a limited
purpose, bankruptcy remote entity authorized to engage in transactions of the
type contemplated by this Loan Agreement. Borrower engages in no other business
activities other than the acquisition of Residual Interest Instruments, pledging
such Residual Interest Instruments to obtain financing and other activities
relating to the foregoing to the extent permitted by the organizational
documents of Borrower.

         (o) No Fraudulent Conveyance. As of the Closing Date and immediately
after giving effect to each Loan, the fair value of the assets of Borrower is
greater than the fair value of its liabilities (including, without limitation,
contingent liabilities of Borrower), and Borrower is and will be solvent, is and
will be able to pay its debts as they mature and does not and will not have an
unreasonably small capital to engage in the business in which it is engaged and
proposes to engage. Borrower does not intend to incur, or believe that it has
incurred, debts beyond its ability to pay such debts as they mature. Borrower is
not contemplating the commencement of insolvency, bankruptcy, liquidation or
consolidation proceedings or the appointment of a receiver, liquidator,
conservator, trustee or similar official in respect of Borrower or any of its
assets. Borrower is not transferring any Collateral with any intent to hinder,
delay or defraud any of its creditors.

         (p) No Subsidiaries. Borrower has no Subsidiaries.

                                       18
<PAGE>

         (q) Use of Proceeds. No proceeds of any Loans will be used by Borrower
to acquire any security in any transaction which is subject to Section 13 or 14
of the Securities Exchange Act of 1934, as amended. No part of the proceeds of
any Loans will be used for "purchasing" or "carrying" any "margin stock" within
the respective meanings of each of the quoted terms under, or for any other
purpose which violates or would be inconsistent with the provisions of,
Regulation T, U or X.

         (r) Investment Company Act. Borrower is not an "investment company" or
an "affiliated person" of or "promoter" or "principal underwriter" for an
"investment company' as such terms are defined in the Investment Company Act nor
is Borrower otherwise subject to regulation thereunder.

         (s) Statutes and Regulations Regarding Indebtedness. Borrower is not
subject to regulation under any federal or state statute or regulation which
limits its ability to incur Indebtedness.

         (t) No Default or Event of Default. No Default or Event of Default has
occurred and is continuing. Borrower is not in default in the performance,
observance or fulfillment of any obligation, covenant or condition in any
agreement or instrument to which it is a party or by which it is bound the
result of which could reasonably be expected to have a Material Adverse Effect.

         (u) ERISA.

                           (i) No Plan is or has been a Multiemployer Plan.
                  Except for Onyx, neither Borrower nor any ERISA Affiliate of
                  Borrower has maintained any Plan which is subject to Title IV
                  of ERISA. No Reportable Event has occurred during the
                  five-year period prior to the date on which this
                  representation is made or deemed made with respect to any Plan
                  of Onyx, and each such Plan has complied in all material
                  respects with the applicable provisions of ERISA and the Code;
                  provided, that any non-compliance by the Plan with the
                  applicable provisions of ERISA or the Code that is reasonably
                  likely to subject Borrower to any tax, penalty or other
                  liability, shall be deemed material non-compliance. The
                  present value of all accrued benefits under each such Plan
                  (based on those assumptions used to fund the Plans) did not,
                  as of the last annual valuation date prior to the date on
                  which this representation is made or deemed made, exceed the
                  value of the assets of such Plan allocable to such accrued
                  benefits.

                           (ii) If required to be filed, Schedule B (Actuarial
                  Information) to each most recent annual report (Form 5500
                  Series) has been filed for each applicable Plan with the IRS.
                  Each such schedule is complete and accurate in all material
                  respects and fairly presents the funding status of such
                  applicable Plan.

                           (iii) Each Plan which is intended to be qualified
                  under Section 401 (a) of the Code is so qualified, and each
                  trust related to any such Plan has been determined to be
                  exempt from federal income tax under Section 501 (a) of the
                  Code, and neither Borrower nor any ERISA Affiliate has
                  materially breached any

                                       19
<PAGE>

                  of the responsibilities, obligations or duties imposed on it
                  by ERISA, the Code or regulations promulgated thereunder with
                  respect to any Plan.

                           (iv) Neither Borrower nor any ERISA Affiliate
                  maintains or contributes to any "employee welfare benefit
                  plan" within the meaning of Section 3(1) of ERISA which
                  provides benefits to employees after termination of employment
                  other than as required by Section 601 of ERISA, Section 4980B
                  of the Code, or any substantially similar state or local law.

                           (v) No Plan has incurred any accumulated funding
                  deficiency (as defined in Section 302 of ERISA and 412(a) of
                  the Code), whether or not waived.

                           (vi) Neither Borrower nor any ERISA Affiliate nor any
                  fiduciary of any Plan (i) has engaged in a nonexempt
                  prohibited transaction described in Sections 406 of ERISA or
                  4975 of the Code or (ii) has taken or failed to take any
                  action which would constitute or result in an ERISA
                  Termination Event.

                           (vii) Neither Borrower nor any ERISA Affiliate has
                  incurred, and no condition exists or event or transaction has
                  occurred with respect to any Plan that could result in, any
                  withdrawal liability under Section 4201 of ERISA that remains
                  unpaid or liability to the PBGC which remains outstanding
                  other than the payment of premiums, and there are no such
                  premium payments which have become due which are unpaid.

                           (viii) Neither Borrower nor any ERISA Affiliate has
                  (i) failed to make a required contribution or payment to a
                  Plan, (ii) made a complete or partial withdrawal from a
                  Multiple Employer Plan or a Multiemployer Plan or (iii) failed
                  to make a required installment or any other required payment
                  under Section 412 of the Code on or before the due date for
                  such installment or other payment.

                           (ix) Neither Borrower nor any ERISA Affiliate is
                  required to provide security to a Plan under Section
                  401(a)(29) of the Code due to a Plan amendment that results in
                  an increase in current liabilities for the plan year.

         (v) Taxes. Borrower has filed or caused to be filed all Federal, state
and other tax returns which are required to be filed by it and has paid all
taxes shown to be due and payable on said returns or on any Federal, state or
other tax assessments made against it or any of its property and all other
taxes, fees or other charges imposed on it or any of its property by any
Governmental Authority having taxing power, other than taxes, fees or other
charges being contested in good faith for which Borrower has reserved on its
books and records; no tax Lien has been filed against it, and no claim is being
asserted by any Governmental Authority, with respect to any such tax, fee or
other charge.

         (w) Accurate Information. No Monthly Servicer Report, Collateral Value
Model Amount, Eligible Securitization Document or other information, exhibit,
financial statement, document, book, record or report furnished by or on behalf
of Borrower to Lender or Program Support Provider in connection with any of the
Loan Documents was inaccurate in any material

                                       20
<PAGE>

respect as of the date so furnished except as otherwise disclosed to Lender or
Program Support Provider at such time, or contained any material misstatement of
fact or omitted to state a material fact or any fact necessary to make the
statements contained therein not misleading. All such documents and materials
are complete and include all amendments, modifications and waivers, if any, made
to such documents and materials on or prior to the date of delivery thereof.

         (x) True Sale and Non-Consolidation Opinion. All factual statements set
forth under the heading "Assumptions of Fact" in the True Sale and
Non-Consolidation Opinion are true, accurate and complete in all respects as
they relate to Borrower.

         Section 6.02. Representations and Warranties of Lender. Lender makes
the following representations and warranties, which shall survive the execution
and delivery hereof and of the Note, and which shall be deemed re-made by Lender
on each Funding Date:

         (a) Corporate Existence; Compliance with Law. Lender is (i) duly
organized and validly existing as a limited liability company in good standing
under the laws of the State of Delaware, (ii) has the corporate power and
authority to own its properties and to conduct its business as such properties
are currently owned and such business is presently conducted, (iii) had at all
relevant times, and shall have, power, authority, and legal right to make the
Loans as described hereunder and (iv) is in compliance with all Requirements of
Law and its obligations under this Loan Agreement.

         (b) Due Qualification. The Lender is duly qualified to do business as a
foreign entity in good standing, and has obtained all necessary licenses and
approvals, in all jurisdictions in which the ownership or lease of property, or
the conduct of its business shall require such qualifications, licenses and
approvals and where the failure to so qualify or to obtain such licenses and
approvals could be reasonably expected to have a material adverse effect on the
ability of Lender to perform hereunder and under the Loan Documents.

         (c) Power and Authority. Lender has the power and authority to execute
and deliver this Loan Agreement and the other Loan Documents to which it is a
party and to carry out their respective terms; and the execution, delivery and
performance of this Loan Agreement and the other Loan Documents to which it is a
party have been duly authorized by the Lender by all necessary action.

         (d) Binding Obligation. This Loan Agreement and each other Loan
Document to which Lender is a party has been duly and validly executed and
delivered by Lender and constitutes the legal, valid and binding obligation of
Lender enforceable in accordance with its terms, except as such enforceability
may be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the enforceability of creditors' rights generally and by
general equitable principles.

         (e) No Violation. The execution, delivery and performance by Lender of
this Loan Agreement and the other Loan Documents and the consummation of the
transactions contemplated hereby and thereby and the fulfillment by Lender of
the terms hereof and thereof do not (A) conflict with, result in any breach of
any of the terms and provisions of, or constitute (with or without notice or
lapse of time or both) a default under, the limited liability company

                                       21
<PAGE>

agreement of Lender; (B) conflict with, result in any breach of any of the terms
and provisions of, or constitute (with or without notice or lapse of time) a
default under any indenture, agreement, mortgage, deed of trust, or other
instrument to which Lender is a party or by which it is bound or any of its
properties are subject; or (C) violate any law, order, rule, or regulation
applicable to Lender of any court or of any federal or state regulatory body,
administrative agency, or other governmental instrumentality having jurisdiction
over Lender or its properties, which, in the case of clause (C), could
reasonably be expected to result in a material adverse effect on the ability of
Lender to perform hereunder and under the Loan Documents.

         (f) Liquidity Facility. Lender maintains a back-up liquidity facility
with State Street Bank & Trust Company pursuant to which it may satisfy its
obligations under this Agreement, and Lender will provide Borrower with 30 days
advance written notice of the termination of such facility.

         Section 6.03. Representations and Warranties of Onyx. Onyx makes the
following representations and warranties, which shall survive the execution and
delivery hereof, and which shall be deemed re-made by Onyx on each Funding Date:

         (a) Corporate Existence; Compliance with Law. Onyx is (i) duly
organized and validly existing as a corporation in good standing under the laws
of the State of Delaware, (ii) has the corporate power and authority to own its
properties and to conduct its business as such properties are currently owned
and such business is presently conducted, (iii) had at all relevant times, and
shall have, power, authority, and legal right to enter into and perform its
obligations under this Loan Agreement and (iv) is in compliance with all
Requirements of Law and its obligations under this Loan Agreement.

         (b) Due Qualification. Onyx is duly qualified to do business as a
foreign corporation in good standing, and has obtained all necessary licenses
and approvals, in all jurisdictions in which the ownership or lease of property,
or the conduct of its business shall require such qualifications, licenses and
approvals and where the failure to so qualify or to obtain such licenses and
approvals could be reasonably expected to have a material adverse effect on the
ability of Onyx to perform hereunder.

         (c) Power and Authority. Onyx has the power and authority to execute
and deliver this Loan Agreement and each Eligible Securitization Transfer
Document to which Onyx is a party and to carry out their respective terms; and
the execution, delivery and performance of this Loan Agreement and each Eligible
Securitization Transfer Document to which Onyx is a party have been duly
authorized by Onyx by all necessary action.

         (d) Binding Obligation. This Loan Agreement and each Eligible
Securitization Transfer Document to which Onyx is a party has been duly and
validly executed and delivered by Onyx and constitutes the legal, valid and
binding obligation of Onyx enforceable in accordance with its terms, except as
such enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforceability of creditors'
rights generally and by general equitable principles.

                                       22
<PAGE>

         (e) No Violation. The execution, delivery and performance by Onyx of
this Loan Agreement and each Eligible Securitization Transfer Document to which
Onyx is a party and the consummation of the transactions contemplated hereby and
thereby and the fulfillment by Onyx of the terms hereof and thereof do not (A)
conflict with, result in any breach of any of the terms and provisions of, or
constitute (with or without notice or lapse of time or both) a default under,
the certificate of incorporation or bylaws of Onyx ; (B) conflict with, result
in any breach of any of the terms and provisions of, or constitute (with or
without notice or lapse of time) a default under any indenture, agreement,
mortgage, deed of trust, or other instrument to which Onyx is a party or by
which it is bound or any of its properties are subject; or (C) violate any law,
order, rule, or regulation applicable to Onyx of any court or of any federal or
state regulatory body, administrative agency, or other governmental
instrumentality having jurisdiction over Onyx or its properties, which, in the
case of clause (C), could reasonably be expected to result in a material adverse
effect on the ability of Onyx to perform hereunder.

         (f) Accurate Information. No Monthly Servicer Report, Collateral Value
Model Amount, Eligible Securitization Document, or other information, exhibit,
financial statement, document, book, record or report furnished by or on behalf
of Onyx to Lender or Program Support Provider in connection with any of the Loan
Documents was inaccurate in any material respect as of the date so furnished
except as otherwise disclosed to Lender or Program Support Provider at such
time, or contained any material misstatement of fact or omitted to state a
material fact or any fact necessary to make the statements contained therein not
misleading. All such documents and materials are complete and include all
amendments, modifications and waivers, if any, made to such documents and
materials on or prior to the date of delivery thereof.

         (g) True Sale and Non-Consolidation Opinion. All factual statements set
forth under the heading "Assumptions of Fact" in the True Sale and
Non-Consolidation Opinion are true, accurate and complete in all respects as
they relate to Onyx.

         Section 6.04. Representations and Warranties of Finco. Finco makes the
following representations and warranties, which shall survive the execution and
delivery hereof, and which shall be deemed re-made by Finco on each Funding
Date:

         (a) Corporate Existence; Compliance with Law. Finco is (i) duly
organized and is validly existing as a corporation in good standing under the
laws of the State of Delaware, (ii) has the corporate power and authority to own
its properties and to conduct its business as such properties are currently
owned and such business is presently conducted, (iii) had at all relevant times,
and shall have, power, authority, and legal right to enter into and perform its
obligations under this Loan Agreement and (iv) is in compliance with all
Requirements of Law and its obligations under this Loan Agreement.

         (b) Due Qualification. Finco is duly qualified to do business as a
foreign corporation in good standing, and has obtained all necessary licenses
and approvals, in all jurisdictions in which the ownership or lease of property,
or the conduct of its business shall require such qualifications, licenses and
approvals and where the failure to so qualify or to obtain such licenses and
approvals could be reasonably expected to have a material adverse effect on the
ability of Finco to perform hereunder.

                                       23
<PAGE>

         (c) Power and Authority. Finco has the power and authority to execute
and deliver this Loan Agreement and each Eligible Securitization Transfer
Document to which Finco is a party and to carry out their respective terms; and
the execution, delivery and performance of this Loan Agreement and each Eligible
Securitization Transfer Document to which Finco is a party have been duly
authorized by Finco by all necessary action.

         (d) Binding Obligation. This Loan Agreement and each Eligible
Securitization Transfer Document to which Finco is a party has been duly and
validly executed and delivered by Finco and constitutes the legal, valid and
binding obligation of Finco enforceable in accordance with its terms, except as
such enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforceability of creditors'
rights generally and by general equitable principles.

         (e) No Violation. The execution, delivery and performance by Finco of
this Loan Agreement and each Eligible Securitization Transfer Document to which
Finco is a party and the consummation of the transactions contemplated hereby
and thereby and the fulfillment by Finco of the terms hereof and thereof do not
(A) conflict with, result in any breach of any of the terms and provisions of,
or constitute (with or without notice or lapse of time or both) a default under,
the certificate of incorporation or bylaws of Finco; (B) conflict with, result
in any breach of any of the terms and provisions of, or constitute (with or
without notice or lapse of time) a default under any indenture, agreement,
mortgage, deed of trust, or other instrument to which Finco is a party or by
which it is bound or any of its properties are subject; or (C) violate any law,
order, rule, or regulation applicable to Finco of any court or of any federal or
state regulatory body, administrative agency, or other governmental
instrumentality having jurisdiction over Finco or its properties, which, in the
case of clause (C), could reasonably be expected to result in a material adverse
effect on the ability of Finco to perform hereunder.

         (f) Accurate Information. No Eligible Securitization Document or other
information, exhibit, financial statement, document, book, record or report
furnished by or on behalf of Finco to Lender or Program Support Provider in
connection with any of the Loan Documents was inaccurate in any material respect
as of the date so furnished except as otherwise disclosed to Lender or Program
Support Provider at such time, or contained any material misstatement of fact or
omitted to state a material fact or any fact necessary to make the statements
contained therein not misleading. All such documents and materials are complete
and include all amendments, modifications and waivers, if any, made to such
documents and materials on or prior to the date of delivery thereof.

         (g) True Sale and Non-Consolidation Opinion. All factual statements set
forth under the heading "Assumptions of Fact" in the True Sale and
Non-Consolidation Opinion are true, accurate and complete in all respects as
they relate to Finco.

                                   ARTICLE VII

                                    COVENANTS

                                       24
<PAGE>

         Section 7.01. Affirmative Covenants of Borrower. So long as any of the
Loans shall remain outstanding, and until the principal of and interest on the
Note and all other Secured Obligations due hereunder shall have been paid in
full, Borrower agrees that it will:

         (a) Compliance with Laws, Etc. Comply in all material respects with all
applicable laws, rules, regulations and orders, including those with respect to
the Pledged Residual Interest Instruments and related Collateral, where the
failure to so comply could reasonably be expected to have a Material Adverse
Effect.

         (b) Preservation of Corporate Existence. Preserve and maintain its
corporate existence, rights, licenses, permits and privileges in the
jurisdiction of its organization, and qualify and remain qualified in good
standing as a foreign corporation, in each jurisdiction where the failure to
preserve and maintain such existence, rights, licenses, permits, privileges and
qualification could have a Material Adverse Effect.

         (c) Financial Covenants. Maintain a cumulative dollar weighted average
Net Yield for all Eligible Securitization Transactions relating to the Pledged
Residual Interest Instruments for any period of three (3) consecutive months at
greater than 0.0%.

         (d) Monthly Servicer's Reports. Deliver to Lender prior to each Payment
Date each Monthly Servicer Report for the immediately preceding calendar month.

         (e) Books and Records; Inspection. Keep proper books and records of
account in which full, true and correct entries in conformity with GAAP and all
Requirements of Law shall be made of all dealings and transactions in relation
to its business and activities, and permit representatives of Lender, including
certified public accountants or other auditors, to inspect, at Borrower's
expense, such books and records of account that relate to this Loan Agreement,
the Pledged Residual Interest Instruments and the other Collateral at any time
on prior notice during normal business hours; provided the maximum expense to
Borrower pursuant to this Section 7.01(e), together with Section 7.04(d), shall
not exceed $5,000 per annum, except that following and during the continuance of
an Event of Default the maximum expense to Borrower pursuant to Section this
7.01(e), together with Section 7.04(d), shall not exceed $5,000 per calendar
quarter.

         (f) Eligible Securitization Documents. Comply in all respects with
Borrower's obligations under each Eligible Securitization Document.

         (g) Maintain Security Interest. Take all actions necessary to obtain
and maintain, for the benefit of Lender, a first lien on and a first priority,
perfected security interest in the Collateral, including the execution or
authorization, as applicable, and delivery of all such supplements and
amendments hereto and all such financing statements, continuation statements,
instruments of further assurance and other instruments and take such other
action necessary or advisable to:

                           (i) grant more effectively all or any portion of the
                  Collateral;

                                       25
<PAGE>

                           (ii) maintain or preserve the lien and security
                  interest (and the priority thereof) created by this Loan
                  Agreement or carry out more effectively the purposes hereof;

                           (iii) perfect, publish notice of or protect the
                  validity of the grant of a security interest in the Collateral
                  made by this Loan Agreement;

                           (iv) enforce any of the Collateral;

                           (v) preserve and defend title to the Collateral and
                  the rights of Lender in such Collateral against the claims of
                  all persons and parties; or

                           (vi) pay all taxes or assessments levied or assessed
                  upon the Collateral when due.

         (h)      At all times:

                           (i) maintain its own deposit account or accounts,
                  separate from those of any Affiliate, with commercial banking
                  institutions and, except as otherwise provided in the Loan
                  Documents, ensure that its funds will not be diverted to any
                  other Person or for other than its own corporate uses, nor
                  will such funds be commingled with the funds of any Affiliate;

                           (ii) to the extent that it shares the same officers
                  or other employees as any of its Affiliates, the salaries of
                  and the expenses related to providing benefits to such
                  officers and other employees shall be fairly allocated among
                  such entities, and each such entity shall bear its fair share
                  of the salary and benefit costs associated with all such
                  common officers and employees;

                           (iii) to the extent that it jointly contracts with
                  any of its Affiliates to do business with vendors or service
                  providers or to share overhead expenses, the costs incurred in
                  so doing shall be allocated fairly among such entities, and
                  each such entity shall bear its fair share of such costs; to
                  the extent that it contracts or does business with vendors or
                  service providers where the goods and services provided are
                  partially for the benefit of any other Person, the costs
                  incurred in so doing shall be fairly allocated to or among
                  such entities for whose benefit the goods or services are
                  provided, and each such entity shall bear its fair share of
                  such costs;

                           (iv) enter into all material transactions with its
                  Affiliates, whether currently existing or hereafter entered
                  into, only on an arm's length basis;

                           (v) maintain office space that is distinct from the
                  office space of any of its Affiliates and, to the extent that
                  it and any of its Affiliates have offices in the same
                  location, there shall be a fair and appropriate allocation of
                  overhead costs among them, and each such entity shall bear its
                  fair share of such expenses;

                                       26
<PAGE>

                           (vi) conduct its affairs strictly in accordance with
                  its certificate of incorporation and observe all necessary,
                  appropriate and customary corporate formalities, including,
                  but not limited to, separate stationery, holding all regular
                  and special stockholders' and directors' meetings appropriate
                  to authorize all corporate action, keeping separate and
                  accurate minutes of its meetings, passing all resolutions or
                  consents necessary to authorize actions taken or to be taken,
                  and maintaining accurate and separate books, records,
                  financial records and accounts, including, but not limited to,
                  payroll and intercompany transaction accounts;

                           (vii) act solely in its own name, hold itself out as
                  a separate entity, pay its own liabilities out of its own
                  funds, and not assume or guarantee any of the liabilities of
                  any of its Affiliates; and

                           (viii) take, or refrain from taking, as the case may
                  be, all other actions that are necessary to be taken or not to
                  be taken in order to comply with this Section 7.01(h).

         (i) Collateral Shortfall Event. Upon discovery by Borrower of any
Collateral Shortfall Event (including, without limitation, pursuant to a notice
delivered by Lender to Borrower), deliver written notice to Lender no later than
1:00 p.m., Boston time, on the third (3rd) Business Day immediately succeeding
such discovery, which written notice shall (x) contain a description of the
cause of such deficiency and (y) set forth the manner in which Borrower will
cure such deficiency, if applicable. If at any time there exists a Collateral
Shortfall Event, Borrower shall cure the same in accordance with the terms of
this Loan Agreement.

         (j) Further Assurances. From time to time hereafter, execute and
deliver, or will cause to be executed and delivered, such additional
instruments, certificates or documents, and will take all such actions, as
Lender may reasonably request, for the purposes of implementing or effectuating
the provisions of this Loan Agreement or the Notes, or of more fully perfecting
or renewing the rights of Lender with respect to the Collateral pursuant hereto.
Upon the exercise by Lender of any power, right, privilege or remedy pursuant to
this Loan Agreement which requires any consent, approval, registration,
qualification or authorization of any governmental authority or instrumentality,
Borrower will execute and deliver, or will cause the execution and delivery of,
all applications, certifications, instruments and other documents and papers
that Lender may be required to obtain for such governmental consent, approval,
registration, qualification or authorization.

         (k) True Sale and Non-Consolidation Opinion. Comply in all respects
applicable to Borrower with the assumptions set forth under the heading
"Assumptions of Fact" in the True Sale and Non-Consolidation Opinion.

         Section 7.02. Reporting Requirements. Borrower will furnish, or cause
to be furnished, to Lender:

         (a) Monthly Borrowing Base Certificate. On the Business Day immediately
preceding each Payment Date, a Borrowing Base Certificate.

                                       27
<PAGE>

         (b) Quarterly Financial Statements. As soon as available and in any
event within 60 days after the end of each of the first three quarters of each
fiscal year of Onyx, (i) copies of Onyx's consolidated and consolidating
quarterly financial reports prepared in accordance with GAAP, and (ii) a
calculation of the financial covenants set forth in Sections 7.01(c) and 7.04(a)
and (b) demonstrating that there is no breach of such Section, all certified by
the chief financial officer or chief accounting officer of Onyx;

         (c) Annual Financial Statements. As soon as available and in any event
within 120 days after the end of each fiscal year of Onyx, a copy of Onyx's
consolidated and consolidating annual financial statements as reported on by
nationally recognized independent certified public accountants, along with
consolidated and consolidating schedules of Borrower;

         (d) Compliance Certificate. Concurrently with the delivery of the
financial statements required pursuant to Section 7.02(b) and (c) hereof, one or
more certificates signed by an officer of each of Borrower and Onyx authorized
to execute such certificates on behalf of Borrower or Onyx, as the case may be,
stating that:

                           (i) a review of Borrower's performance under the Loan
                  Documents during such period has been made under such
                  officer's supervision;

                           (ii) to the best of such officer's knowledge
                  following reasonable inquiry, no Default or Event of Default
                  has occurred, or if a Default or an Event of Default has
                  occurred, specifying the nature thereof and, if Borrower has a
                  right to cure pursuant to Section 8.01 hereof, stating in
                  reasonable detail (including, if applicable, any supporting
                  calculations) the steps, if any, being taken by Borrower to
                  cure such Default or Event of Default or to otherwise comply
                  with the terms of this Loan Agreement to which such Default or
                  Event of Default relates; and

                           (iii) in the case of financial statements submitted
                  in accordance with Section 7.02(b) hereof, such financial
                  statements are complete and correct in all material respects
                  and present fairly the financial condition and results of
                  operations of Onyx and Borrower as of the dates for the
                  periods indicated, in accordance with GAAP consistently
                  applied; and

         (e) Defaults. As soon as possible and in any event within five (5)
Business Days after obtaining knowledge of the occurrence of a Default or an
Event of Default, or a default or event of default under any instruments or
agreement evidencing, securing or providing for the issuance of indebtedness or
repurchase obligations of Borrower, a written statement of the chief financial
officer or chief accounting officer of Borrower setting forth details of such
event and the action that Borrower propose to take with respect thereto.

         (f) Notices. Promptly, notice of the occurrence of any of the following
events:

                           (i) any material litigation, investigation or
                  proceeding which may exist at any time affecting Borrower or
                  the Collateral;

                           (ii) any Material Adverse Change; or

                                       28
<PAGE>

                           (iii) any Change in Control.

         Section 7.03. Negative Covenants of Borrower. So long as any of the
Loans shall remain outstanding, and until the principal of and interest on the
Note and all other Secured Obligations due hereunder shall have been paid in
full, Borrower agrees that it will not:

         (a) Sales, Liens, Etc. Except pursuant hereto or in accordance with
this Loan Agreement, sell, assign (by operation of law or otherwise) or
otherwise dispose of, or create or suffer to exist any Lien (other than a tax
lien, so long as the taxes related thereto are not at the time due and payable)
upon or with respect to, any Pledged Residual Interest Instrument or related
Collateral, or any interest therein, or any right to receive income or Proceeds
from or in respect of any of the foregoing.

         (b) Mergers, Acquisitions, Sales, etc. Be a party to any merger or
consolidation, or purchase or otherwise acquire all or substantially all of the
assets or any stock of any class of, or any partnership or joint venture
interest in, any other Person, or sell, transfer, convey or lease all or any
substantial part of its assets, or sell or assign with or without recourse any
of the Pledged Residual Interest Instruments or any interest therein (other
than, in each case, pursuant hereto).

         (c) Amendment to Certain Eligible Securitization Documents. Borrower
will not amend, modify, change or waive its rights pursuant to (or consent to
any such amendment, modification, change or waiver to) any of the Eligible
Securitization Documents in any manner adverse to Lender's interest in the
Pledged Residual Interest Instruments, without the prior written consent of
Lender. Without limiting the foregoing, Borrower will not consent or agree,
without Lender's consent, to any increase in the amount on deposit in any Spread
Account related to a Pledged Residual Interest Instrument so as to maintain the
rating of the related securitization transaction. Borrower shall provide Lender
with (i) advance written notice of each proposed amendment, modification, change
or waiver to any Eligible Securitization Document and (ii) an executed copy of
each such amendment, modification, change or waiver, in each case, as soon as
practicable upon receipt by Borrower.

         (d) Amendment of Certificate of Incorporation; Change in Borrower's
Business. Amend its certificate of incorporation or bylaws, or engage in any
business other than as contemplated by the Borrower's certificate of
incorporation.

         Section 7.04. Additional Covenants of Onyx and Finco. So long as any
portion of the Loan shall remain outstanding, and until the principal of and
interest on the Note and all other Secured Obligations due hereunder shall have
been paid in full, each of Onyx and Finco, as applicable, hereby covenants as
follows:

         (a) Net Worth. Onyx's Net Worth as of the last day of any fiscal
quarter of Onyx ending after December 31, 2003, shall not be less than an amount
equal to (x) $50,000,000 plus, (y) on a cumulative basis, an amount equal to
fifty percent (50%) of Onyx's positive Net Income during each such fiscal
quarter ending after December 31, 2003 minus (z) on a cumulative basis from and
after December 31, 2003, up to $3,000,000 in respect of "FASB 125 Net Worth
Adjustments". As used herein, the term "FASB 125 Net Worth Adjustments" shall
mean downward adjustments in Net Worth required by Financial Accounting Standard
No. 125 issued

                                       29
<PAGE>

by the Financial Accounting Standards Board. Other than up to $3,000,000 in
respect of FASB 125 Net Worth Adjustments, the minimum Net Worth covenant amount
shall never decrease, regardless of whether Onyx shall have negative Net Income
during any fiscal quarter.

         Solely by way of example, if Onyx had Net Income of $1,000,000 for the
first fiscal quarter of 2004, the minimum Net Worth covenant at March 31, 2004
would be $50,000,000 plus ($l,000,000)(50%) = $50,500,000. Going forward, the
minimum Net Worth covenant at June 30, 2004 (the end of the second fiscal
quarter of 2004) would be an amount equal to $50,500,000 plus fifty percent
(50%) of Onyx's Net Income for such second fiscal quarter. The numbers used in
this paragraph are for informational purposes only. The actual step-up in the
minimum Net Worth covenant will be calculated based upon Onyx's actual Net
Income.

         (b) Minimum Servicing Balance. Onyx shall at all times maintain a
Minimum Servicing Balance of $2,000,000,000.

         (c) Amendment to Certain Eligible Securitization Documents. Each of
Onyx and Finco shall comply in all respects with their respective obligations
under each Eligible Securitization Document. Further, neither Onyx nor Finco
shall amend, modify, change or waive its rights pursuant to (or consent to any
such amendment, modification, change or waiver to) any of the Eligible
Securitization Documents in any manner adverse to Lender's interest in the
Pledged Residual Interest Instruments, without the prior written consent of
Lender. Without limiting the foregoing, neither Onyx nor Finco shall consent or
agree, without Lender's consent, to any increase in the amount on deposit in any
Spread Account related to a Pledged Residual Interest Instrument so as to
maintain the rating of the related securitization transaction. Onyx or Finco, as
applicable, shall provide Lender with (i) advance written notice of each
proposed amendment, modification, change or waiver to any Eligible
Securitization Document and (ii) an executed copy of each such amendment,
modification, change or waiver, in each case, as soon as practicable upon
receipt by Onyx or Finco, as applicable.

         (d) Books and Records; Inspection. Each of Finco and Onyx shall keep
proper books and records of account in which full, true and correct entries in
conformity with GAAP and all Requirements of Law shall be made of all dealings
and transactions in relation to its business and activities, and permit
representatives of Lender, including certified public accountants or other
auditors, to inspect, at Borrower's expense, such books and records of account
that relate to this Loan Agreement, the Pledged Residual Interest Instruments
and the other Collateral at any time on prior notice during normal business
hours; provided the maximum expense to Borrower pursuant to this Section
7.04(d), together with Section 7.01(e), shall not exceed $5,000 per annum,
except that following and during the continuance of an Event of Default the
maximum expense to Borrower pursuant to this Section 7.04(d), together with
Section 7.01(e), shall not exceed $5,000 per calendar quarter.

         (e) True Sale and Non-Consolidation Opinion. Each of Onyx and Finco
shall comply in all respects applicable to Onyx and Finco, respectively, with
the assumptions set forth under the heading "Assumptions of Fact" in the True
Sale and Non-Consolidation Opinion.

                                       30
<PAGE>

                                  ARTICLE VIII

                                EVENTS OF DEFAULT

         Section 8.01. Events of Default. Each of the following events shall
constitute an "Event of Default":

         (a) Borrower shall default in the payment of principal of or interest
on the Note when the same becomes due and payable, whether at maturity or at a
date fixed for the payment of any installment or prepayment thereof or
otherwise; or

         (b) Borrower, Onyx or Finco shall default in the performance of or
compliance with any term contained herein and such default shall not have been
remedied or waived by Lender within thirty (30) days after the earlier of
discovery and receipt of written notice thereof from Lender; provided, that, an
Event of Default shall occur automatically upon any breach of Section 7.03(c) or
7.04(c) of this Loan Agreement; or

         (c) Any representation or warranty made by Borrower, Onyx or Finco
herein or pursuant hereto shall prove to have been false or incorrect in any
material respect when made and such failure (if in the reasonable judgment of
Lender such failure is capable of being cured) shall continue unremedied for a
period of thirty (30) days after the earlier of (x) the date on which written
notice of such failure, requiring the same to be remedied, shall have been given
to Borrower by Lender, or (y) the date on which an officer of Borrower has
actual knowledge of such failure; or

         (d) A default shall have occurred and be continuing under any
instrument or agreement evidencing, securing or providing for (i) the issuance
of Indebtedness of Borrower or (ii) the issuance of Indebtedness of Onyx or
Finco or any Affiliate of either of them under any Warehouse Facility, which
default, in either case (A) is a default in payment of any principal or interest
on such Indebtedness when due or, if later, within any applicable grace period,
or (B) shall have resulted in acceleration of the maturity of such Indebtedness
without such acceleration having been rescinded or annulled or such Indebtedness
shall not have been discharged within a period of 30 days after such default or
acceleration; or

         (e) Borrower shall discontinue its business or Borrower shall make an
assignment for the benefit of creditors, or shall fail generally to pay its
debts as such debts become due, or shall apply for or consent to the appointment
of or taking possession by a trustee, receiver or liquidator (or other similar
official) of Borrower or any substantial part of the property of Borrower, or
shall commence a case or have an order for relief entered against it under the
federal bankruptcy laws, as now or hereafter constituted, or any other
applicable federal or state bankruptcy, insolvency or other similar law, or
Borrower shall take any action to dissolve or liquidate Borrower; or

         (f) If, within 60 days after the commencement against Borrower of a
case under the federal bankruptcy laws, as now or hereafter constituted, or any
other applicable federal or state bankruptcy, insolvency or other similar law,
such case shall have been consented to or shall not have been dismissed or all
orders or proceedings thereunder affecting the operations or the

                                       31
<PAGE>

business of Borrower stayed, or if the stay of any such order or proceeding
shall thereafter be set aside, or if within 60 days after the entry of a decree
appointing a trustee, receiver or liquidator (or other similar official) of
Borrower or any substantial part of the property of Borrower, such appointment
shall not have been vacated; or

         (g) Onyx is replaced as servicer of any Eligible Securitization
Transaction related to a Pledged Residual Interest Instrument; or

         (h) Any other event or condition occurs or exists which in Lender's
reasonable judgment impairs or creates a material risk of impairment of
Borrower's legal right to receive payments in respect of the Collateral; or

         (i) Borrower, Finco or Onyx shall fail to perform or observe any of its
obligations under any of the Loan Documents or the Eligible Securitization
Documents related to a Pledged Residual Interest Instrument, and such failure
could reasonably be expected to have a Material Adverse Effect (a default under
any Insurance Agreement shall be deemed to have a Material Adverse Effect), or
if the validity of this Loan Agreement, the Notes or other Loan Document, or of
any Eligible Securitization Document related to a Pledged Residual Interest
Instrument shall be challenged or disaffirmed by any party hereto or thereto
(other than Lender), or shall in any manner cease to be in full force and effect
(other than pursuant to its expiration or termination in accordance with its
terms), or if any notice of default shall be issued thereunder by any party
thereto; or

         (j) A Change in Control shall occur.

         Section 8.02. Remedies. If any Event of Default shall have occurred and
be continuing, Lender may, by written notice to Borrower, declare the
commencement of the Accelerated Amortization Period, whereupon the obligation of
Lender to make Loans hereunder shall automatically terminate without any other
notice of any kind; provided that, in the case of an Event of Default arising by
reason of the occurrence of any event described in Sections 8.01(e) or 8.01(f),
the Accelerated Amortization Period shall automatically commence with no action
required by Lender, and the obligations of the Lender to make Loans hereunder
shall automatically terminate without any other notice of any kind by Lender,
and further, all obligations of Borrower to Lender shall automatically become
due and payable without presentment, demand, protest or notice of any kind, all
of which are hereby expressly waived by Borrower.

                                   ARTICLE IX

                              CREDIT TRIGGER EVENTS

         Section 9.01. Credit Trigger Events. The occurrence of any "Trigger
Event" (or other event or condition, however defined, which has a substantially
similar meaning to the term "Trigger Event" as defined in the Insurance
Agreements), under any agreement between Onyx, Finco or Borrower and any Credit
Enhancer, or any default, event of default or credit trigger under and as
defined in any Eligible Securitization Document related to a Pledged Residual

                                       32
<PAGE>

Interest Instrument included in the calculation of the Borrowing Base shall be a
"Credit Trigger Event."

         Section 9.02. Remedies.

         (a) Without notice to Borrower or any other required action or notice
by Lender, the Eligible Securitization Transaction experiencing the Credit
Trigger Event shall automatically be removed from the calculation of the
Borrowing Base.

         (b) Notwithstanding any other terms contained in this Loan Agreement or
any other Loan Document, if any Pledged Residual Interest Instrument ceases to
be included in the calculation of the Borrowing Base as a result of a Credit
Trigger Event, Borrower may obtain the release of Lender's security interest in
such Pledged Residual Interest Instrument provided the following conditions are
satisfied:

                           (i) Borrower deposits the Repurchase Price related to
                  such Pledged Residual Interest Instrument into the Blocked
                  Account; and

                           (ii) there is no Collateral Shortfall Event
                  continuing following the removal of such Pledged Residual
                  Interest Instrument from the calculation of Borrowing Base.

                                    ARTICLE X

                                ACCOUNTS; REPORTS

         Section 10.01. Establishment of Blocked Account and Reserve Account.

         (a) Prior to the Closing Date, Borrower shall establish the following
deposit accounts in its name for the benefit of Lender with State Street Bank
and Trust Company:

                           (i) an account denominated "Onyx Acceptance Funding
                  Corporation Residual Blocked Account for the benefit of State
                  Street Bank and Trust Company" (the "Blocked Account"); and

                           (ii) an account denominated "Onyx Acceptance Funding
                  Corporation Residual Reserve Account for the benefit of State
                  Street Bank and Trust Company" (the "Reserve Account").

         (b) Except as otherwise provided herein, the Blocked Account and the
Reserve Account shall be under the sole dominion and control of Lender.
Notwithstanding the immediately preceding sentence, Lender shall not withdraw or
otherwise remove any funds in the Reserve Account or Blocked Account, other than
in accordance with this Loan Agreement.

         (c) Funds on deposit in the Blocked Account and the Reserve Account
shall be invested by Lender (or any custodian with respect to funds on deposit
in any such account) in Permitted Investments selected in writing by Borrower
(pursuant to standing instructions or otherwise). In the absence of any contrary
instruction, the investments that shall be deemed to

                                       33
<PAGE>

have been selected shall be the investments specified in clause (iv) of the
definition of "Permitted Investments" set forth in Appendix A to this Loan
Agreement. Other than as permitted by Lender, funds on deposit in the Blocked
Account or the Reserve Account shall be invested in Permitted Investments that
will mature so that such funds will be available at the close of business on the
Business Day immediately preceding the following Payment Date. All Permitted
Investments will be held to maturity.

         (d) All Investment Earnings of monies deposited in the Blocked Account
shall be deposited by Lender in the Blocked Account no later than the close of
business on the Business Day immediately preceding the related Payment Date, and
any loss resulting from such investments shall be charged to the Blocked
Account. All Investment Earnings of monies deposited in the Reserve Account
shall be deposited by Lender in the Reserve Account no later than the close of
business on the Business Day immediately preceding the related Payment Date, and
any loss resulting from such investments shall be charged to the Reserve
Account.

         (e) If (i) Borrower shall have failed to give investment directions for
any funds on deposit in the Blocked Account or the Reserve Account to Lender by
1:00 p.m., Boston time (or such other time as may be agreed by Borrower and
Lender), on any Business Day; or (ii) a Default shall have occurred and be
continuing; then Lender shall, to the fullest extent practicable, invest and
reinvest funds in the Blocked Account and the Reserve Account in one or more
Permitted Investments pursuant to paragraph (c) above.

         Section 10.02. Blocked Account Arrangement. Prior to the initial
Funding Date, Borrower, for the benefit of Lender, shall establish and maintain
an arrangement with State Street Bank and Trust Company with respect to the
Blocked Account and shall execute and cause to be executed by all necessary
parties all such agreements or instruments as may be deemed necessary by Lender
or the trustee or paying agent under each Eligible Securitization Transaction
related to a Pledged Residual Interest Instrument to ensure that (i) each
Pledged Residual Interest Instrument is transferred to the name of Lender, (ii)
each trustee or paying agent under each Eligible Securitization Transaction
related to a Pledged Residual Interest Instrument is directed to deposit
payments due to the residual interest holder directly to the Blocked Account,
(iii) the Collateral and all proceeds thereof will be deposited directly to the
Blocked Account, and (iv) the transactions contemplated by this Loan Agreement
are given effect (all such agreements, documents and instruments are referred to
collectively as the "Eligible Securitization Transfer Documents"). To the extent
that, notwithstanding the execution and delivery of the Eligible Securitization
Transfer Documents, Borrower, Onyx or Finco receive any amounts attributable to
any Eligible Securitization Transaction related to a Pledged Residual Interest
Instrument which should have been deposited in the Blocked Account, the party in
receipt of such amounts shall hold the same in trust for Lender immediately upon
receipt thereof, and deliver the same to Lender in the form received, together
with such party's endorsement thereon where necessary to permit collection
thereof for deposit into the Blocked Account.

         Section 10.03. Reserve Account Deposits and Withdrawals.

         (a) On the initial Funding Date, Borrower shall make a deposit into the
Reserve Account equal to $500,000 from the Loan effected on such Funding Date.
Thereafter, pursuant to Section 3.03(b) or (c), as applicable, Lender, on each
Payment Date (after giving effect to the

                                       34
<PAGE>

payment of principal, if any, and interest on the Note) shall deposit an amount
from the Blocked Account into the Reserve Account necessary to increase the
amount on deposit in the Reserve Account to the Required Reserve Account Amount.
To the extent that on any Payment Date (after giving effect to the payment of
principal, if any, and interest on the Note) the amount on deposit in the
Reserve Account is greater than the Required Reserve Account Amount, then such
excess amount shall constitute available funds to be distributed by Lender on
such Payment Date in accordance with the priority of payments set forth in
Section 3.03 of this Loan Agreement.

         (b) On any Payment Date for which available funds on deposit in the
Blocked Account are insufficient to fully satisfy the required payments of
interest pursuant to Section 3.03 hereof, Lender may withdraw from the Reserve
Account an amount necessary to satisfy any such shortfall. On any Payment Date
after the earlier to occur of the commencement of the Accelerated Amortization
Period or the Conversion Date, for which available funds on deposit in the
Blocked Account are insufficient to fully satisfy the required payments of
principal pursuant to Section 3.03 hereof, Lender may withdraw from the Reserve
Account an amount necessary to satisfy any such shortfall.

                                   ARTICLE XI

                          INDEMNIFICATION AND EXPENSES

         Section 11.01. Expenses of Lender. Whether or not the transactions
contemplated hereby shall be consummated, Borrower agrees (i) to pay all
reasonable expenses, including reasonable fees and disbursements of counsel for
Lender (subject to the term sheet), which Lender has incurred or may hereafter
incur in connection with the preparation and review of this Loan Agreement, the
Note, the Eligible Securitization Documents related to Pledged Residual Interest
Instruments and all other documents related hereto and thereto (including any
amendment, consent or waiver hereafter requested by Borrower hereunder or
thereunder) and the transactions contemplated hereby or the protection,
preservation and/or enforcement of the rights of Lender hereunder or under the
Note upon the occurrence of a Default or an Event of a Default hereunder or
thereunder or otherwise (including without limitation amounts incurred with
respect to any so-called "workout" of the Loan) and (ii) to pay all taxes (other
than Lender's income taxes) and fees (including interest and penalties),
including, without limitation, all recording and filing fees, transfer and
documentary stamp and similar taxes, which may be payable in respect of the
execution and delivery of this Loan Agreement, the Note, the Eligible
Securitization Documents related to Pledged Residual Interest Instruments and
all other documents related hereto and thereto (including any amendment, consent
or waiver hereafter requested by Borrower hereunder or thereunder) and to
indemnify Lender and hold Lender harmless against any loss or liability
resulting from non-payment or delay in payment of any such tax.

         Section 11.02. Indemnification. Each of Borrower and Onyx, jointly and
severally, agrees to indemnify Lender, each Affected Party, their respective
directors, officers and employees and each other Person, if any, who controls
Lender or such Affected Party (each, an "Indemnified Party"), and will hold each
Indemnified Party harmless from and against any and all claims, damages, losses,
liabilities, judgments and expenses (including without limitation all reasonable
fees and expenses of counsel and all expenses of litigation or preparation
therefor) which such Indemnified

                                       35
<PAGE>

Party may incur or which may be asserted against such Indemnified Party in
connection with or arising out of the Loan Documents (other than any loss
incurred as a result of Borrower's failure to pay principal or interest on the
Loans as a result of: (i) credit losses under the Pledged Residual Interest
Instruments, (ii) actual cash flow from the Pledged Residual Interest
Instruments being insufficient to pay principal and interest on the Loans or
(iii) actions taken, or the failure to take action, by parties to the Loan
Documents or Eligible Securitization Documents other than Onyx, Finco or
Borrower), including any investigation, litigation or proceeding involving
Borrower or any Affiliate of Borrower (including compliance with or contesting
of any subpoenas or other process issued against an Indemnified Party in any
proceeding involving Borrower or any Affiliate of Borrower), whether or not
Lender is party thereto, other than claims, damages, losses, liabilities or
judgments with respect to any matter as to which such Indemnified Party shall
have been grossly negligent or shall have committed willful misconduct in its
actions or inactions. Promptly upon receipt by any Indemnified Party hereunder
of notice of the commencement of any action, such Indemnified Party shall, if a
claim in respect thereof is to be made against Borrower hereunder, notify
Borrower in writing of the commencement thereof.

         Section 11.03. Survival of Indemnity and Expenses. Each of Borrower and
Onyx acknowledges and agrees that its agreements and obligations under this
Article XI shall survive the termination of this Loan Agreement and repayment in
full of the Note and the other Secured Obligations.

                                   ARTICLE XII

                                  MISCELLANEOUS

         Section 12.01. No Waiver; Remedies Cumulative. No failure or delay on
the part of Lender in exercising any right, remedy, power or privilege under
this Loan Agreement, the Note or any other Loan Document shall operate as a
waiver thereof, nor shall any single or partial exercise of, or any abandonment
or discontinuance of steps to enforce any right, remedy, power or privilege
under this Loan Agreement, the Note or any other Loan Document preclude any
other or further exercise thereof or the exercise of any other rights, remedies
or privileges thereunder. The rights, remedies, powers and privileges provided
in this Loan Agreement, the Note or any other Loan Documents are cumulative and
may be exercised singularly or concurrently and are not exclusive of any other
rights, remedies, powers or privileges provided by law.

         Section 12.02. Notices. Except as otherwise expressly permitted by this
Loan Agreement, all notices, requests and other communications provided for
under the Loan Documents (including without limitation any modifications of, or
waivers, requests or consents under, this Loan Agreement) shall be given or made
in writing (including without limitation by telecopy) delivered to the intended
recipient at the address specified for each party hereto below; or, as to any
party, at such other address as shall be designated by such party in a written
notice to each other party:

BORROWER:                           Onyx Acceptance Funding Corporation
                                    27051 Towne Centre Drive, Ste. 220
                                    Foothill Ranch, California  92610

                                       36
<PAGE>

                                    Attention:  Don Duffy
                                    Telecopier No.: 949-465-3505
                                    Telephone No.: 949-465-3530

LENDER:                             Galleon Capital, LLC
                                    c/o State Street Global Markets, LLC
                                    State Street Financial Center
                                    One Lincoln Street
                                    Boston, MA 02111
                                    Attention: J.K. Fagan
                                    Telecopier No.: 617-350-4020
                                    Telephone No.: 617-664-7960

                                    with a copy to:

                                    State Street Global Markets, LLC
                                    State Street Financial Center
                                    One Lincoln Street
                                    Boston, MA 02111
                                    Attention: J.K. Fagan
                                    Telecopier No.: 617-350-4020
                                    Telephone No.: 617-664-7960

         Except as otherwise provided in this Loan Agreement and except for
notices given under Article II (which shall be effective only on receipt), all
such communications shall be deemed to have been duly given when transmitted by
telecopy (evidenced by electronic receipt) or personally delivered or, in the
case of a mailed notice, upon receipt, in each case given or addressed as
aforesaid.

         Section 12.03. Amendments; Waivers. Any term or provision of any Loan
Document may be amended, supplemented or otherwise modified only by an
instrument in writing signed by Borrower and Lender. Any provision of a Loan
Document may be waived only by the written agreement of Lender. In the case of
any waiver of a Default or Event of Default, any Default or Event of Default
waived shall be deemed to be cured and not continuing; but no such waiver shall
extend to any subsequent or other Default or Event of Default, or impair any
right consequent thereon.

         Section 12.04. Calculations. Calculations hereunder shall be made and
financial data required hereby shall be prepared, both as to classification of
items and as to amounts, in accordance with GAAP and practices which principles
and practices shall be consistently applied and in conformity with those used in
the preparation of the financial statements referred to herein.

         Section 12.05. Governmental Approval. Borrower agrees to take any
action which Lender may reasonably request in order to obtain and enjoy the full
rights and benefits granted to Lender by this Loan Agreement, including
specifically, at Borrower's own cost and expense, the use of its best efforts to
assist in obtaining approval of any applicable governmental or regulatory

                                       37
<PAGE>

authority or court for any action or transaction contemplated by this Loan
Agreement which is then required by law.

         Section 12.06. Severability. Any provision of this Loan Agreement, the
Note or any other Loan Document which is prohibited, unenforceable or not
authorized in any jurisdiction shall, as to such jurisdiction, be ineffective to
the extent of such prohibition, unenforceability or non-authorization without
invalidating the remaining provisions hereof or thereof or affecting the
validity, enforceability or legality of such provisions in any other
jurisdiction.

         Section 12.07. Captions. The table of contents and captions and section
headings appearing herein are included solely for convenience of reference and
are not intended to affect the interpretation of any provision of this Loan
Agreement.

         Section 12.08. Counterparts. This Loan Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and the
same instrument, and any of the parties hereto may execute this Loan Agreement
by signing any such counterpart.

         Section 12.09. Governing Law. THIS LOAN AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF CALIFORNIA.

         Section 12.10. Jurisdiction; Waiver of Jury Trial. BORROWER, TO THE
EXTENT THAT IT MAY LAWFULLY DO SO, HEREBY CONSENTS TO SERVICE OF PROCESS, AND TO
BE SUED, IN THE STATE OF CALIFORNIA AND CONSENTS TO THE JURISDICTION OF THE
COURTS OF ORANGE COUNTY, IN THE STATE OF CALIFORNIA AND THE UNITED STATES
DISTRICT COURT FOR THE CENTRAL DISTRICT OF CALIFORNIA, 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 UNDER THE NOTE OR ANY OF THE LOAN DOCUMENTS OR WITH
RESPECT TO THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, AND EXPRESSLY WAIVES
ANY AND ALL OBJECTIONS IT MAY HAVE AS TO VENUE IN ANY SUCH COURTS. BORROWER
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 AS OTHERWISE PROVIDED UNDER THE LAWS OF THE
STATE OF CALIFORNIA.

         EACH OF BORROWER AND LENDER IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY
JURY IN ANY PROCEEDING HEREAFTER INSTITUTED IN RESPECT OF THIS LOAN AGREEMENT,
THE NOTE, THE LOAN DOCUMENTS, OR ANY OTHER DOCUMENTS EXECUTED IN CONNECTION
HEREWITH OR THEREWITH. EACH OF BORROWER AND LENDER HEREBY CERTIFIES TO THE OTHER
THAT THE NONE OF THE OTHER PARTY OR ANY OF ITS REPRESENTATIVES, AGENTS OR
COUNSEL HAVE REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF ANY SUCH SUIT, ACTION OR PROCEEDING, SEEK TO ENFORCE THIS
WAIVER OF RIGHT TO TRIAL BY JURY. BORROWER ACKNOWLEDGES THAT LENDER HAS BEEN
INDUCED TO ENTER INTO THIS LOAN AGREEMENT BY, AMONG OTHER THINGS, THIS WAIVER.
BORROWER ACKNOWLEDGES THAT IT HAS READ THE PROVISIONS OF THIS LOAN AGREEMENT AND
IN PARTICULAR THIS PARAGRAPH; HAS CONSULTED LEGAL COUNSEL; UNDERSTANDS THE
RIGHTS IT IS GRANTING IN THIS LOAN AGREEMENT AND IS WAIVING UNDER THIS SECTION
IN PARTICULAR; AND MAKES THE ABOVE WAIVER KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY.

         Section 12.11. Assignments; Participations.

                                       38
<PAGE>

         (a) This Loan Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and permitted assigns.
Borrower may not assign any of its rights or obligations hereunder or under the
Note or under any other Loan Document without the prior written consent of
Lender. Lender may assign, participate or otherwise transfer to any Affiliate of
Lender, any Program Support Provider or any Affiliate of any Program Support
Provider all or any of its rights or obligations under this Loan Agreement and
the other Loan Documents to not more than ten investors.

         (b) Borrower agrees to cooperate with Lender in connection with any
such assignment or transfer, to execute and deliver such replacement notes, and
to enter into such restatements of, and amendments, supplements and other
modifications to, this Loan Agreement and the other Loan Documents in order to
give effect to such assignment or transfer.

         Section 12.12. Confidentiality. Lender and Borrower agree to keep
confidential the terms of this Loan Agreement, the Note and the other Loan
Documents; provided, that Lender and Borrower shall have the right to
disseminate such information (i) to any outside accounting firm performing
analyses in connection with this Loan Agreement, the Note or any other Loan
Document or the transactions contemplated hereunder or thereunder which agrees
to comply with the provisions of this Section 12.12, to any proposed assignee or
transferee of Lender which agrees to comply with the provisions of this Section
12.12, (ii) to their respective employees, directors, agents, attorneys,
accountants and other professional advisors (other than competitors of Borrower
or Lender) who agree to comply with the provisions of this Section 12.12, (iii)
to the Rating Agencies and the employees, directors, agents and attorneys of the
Rating Agencies, (iv) upon the request or demand of any examiner or other
governmental authority having jurisdiction over such party, (v) in response to
any order of any court or other governmental authority, (vi) as may otherwise be
required pursuant to any Requirement of Law (including, without limitation, any
filing of information with the United States Securities and Exchange Commission
required under the Securities Exchange Act of 1934), (vii) in connection with
the exercise of any remedy hereunder, and (viii) to any other Person which
agrees to comply with the provisions of this Section 12.12 if such dissemination
is necessary in connection with this Loan Agreement, the Note or any other Loan
Document or the transactions contemplated hereunder or thereunder, in the good
faith determination of Borrower or Lender.

         (b) Notwithstanding anything herein to the contrary, either party to
this Loan Agreement (and any employee, representative, or other agent of any
party to this agreement) may disclose to any and all persons, without limitation
of any kind, the tax treatment and tax structure of the transactions
contemplated by this Loan Agreement and all materials of any kind (including
opinions or other tax analyses) that are provided to such party relating to such
tax treatment and tax structure; provided, however, that such disclosure may not
be made to the extent any information is required to be kept confidential to
comply with any federal or state securities laws.

         Section 12.13. Entire Agreement. This Loan Agreement, the Note and the
other Loan Documents constitute the entire agreement among the parties relative
to the subject matter hereof. Any previous agreement among the parties with
respect to the subject matter hereof is superseded by this Loan Agreement, the
Note and the other Loan Documents. Subject to Article XI, nothing in this Loan
Agreement, the Note or in the other Loan Documents, expressed or implied, is
intended to confer upon any Person other than the parties hereto and thereto any

                                       39
<PAGE>

rights, remedies, obligations or liabilities under or by reason of this Loan
Agreement, the Note or the other Loan Documents.

         Section 12.14. Future Assurances. At its sole cost and without expense
to Lender, on demand, Borrower shall do, execute, acknowledge and deliver all
and every such further acts, deeds, conveyances, assignments, notices of
assignment, transfers and assurances as Lender shall from time to time request
for better assuring, conveying, assigning, transferring and confirming unto
Lender the property and rights pledged or assigned or intended now or hereafter
so to be, or which Borrower may be or may hereafter become bound to convey,
pledge or assign to Lender, or for carrying out the intention or facilitating
the performance of the terms of this Loan Agreement, the Note or any of the
other Loan Documents, or for filing, registering or recording any UCC financing
statements.

         Section 12.15. Third-Party Beneficiaries. This Loan Agreement will
inure to the benefit of and be binding upon the parties hereto and their
respective successors and permitted assigns. Except as otherwise expressly
provided in this Loan Agreement, no other Person will have any right or
obligation hereunder.

         Section 12.16. Termination. This Loan Agreement and the obligations of
the parties hereunder shall terminate upon the repayment of the Note and all
other Secured Obligations hereunder.

         Section 12.17. No Proceedings; Limitation on Payments.

         (a) Borrower hereby covenants and agrees that it will not institute
against, or join any other Person in instituting against, the Lender, any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceeding,
or other proceeding under any federal or state bankruptcy or similar law, for
one year and one day after the latest maturing commercial paper note issued by
the Lender is paid in full.

         (b) Notwithstanding any provisions contained in this Agreement to the
contrary, the Lender shall not, nor shall be obligated to, pay any amount
pursuant to this Agreement unless the Lender has excess cash flow from
operations or has received funds with respect to such obligation or under its
liquidity facility with State Street Bank & Trust Company, which may be used to
make such payment and which funds or excess cash flow are not required to repay
its commercial paper notes when due. Any amounts which the Lender does not pay
pursuant to the operation of the preceding sentence shall not constitute a claim
against the Lender for any such insufficiency unless and until the condition
described in the preceding sentence are satisfied.

         Section 12.18. Administrative Duties of State Street. Borrower hereby
acknowledges and agrees that any action to be taken by or right to be exercised
by Lender hereunder may be taken or exercised, as applicable, by State Street
Global Markets, LLC, as administrator for Lender.

         Section 12.19. Administrative Duties of Onyx. Borrower and Onyx hereby
agree that Onyx shall provide certain administrative, clerical and record
keeping duties to Borrower, necessary for Borrower to perform its reporting
obligations set forth in the Loan Agreement,

                                       40
<PAGE>

including but not limited to the preparation of the Monthly Borrowing Base
Certificate as required by Section 7.02(a), and Borrower shall reimburse Onyx
for any direct costs and expenses related to such services.

                            [SIGNATURE PAGES FOLLOW]

                                       41
<PAGE>

         IN WITNESS WHEREOF, the parties hereto have caused this Loan Agreement
to be duly executed and delivered as of the day and year first above written.

                                ONYX ACCEPTANCE FUNDING CORPORATION, as Borrower

                                By:___________________________________________
                                   Name:
                                   Title:

                                GALLEON CAPITAL, LLC
                                  as Lender

                                By:___________________________________________
                                   Name:
                                   Title:

AGREED TO AND ACKNOWLEDGED BY:

ONYX ACCEPTANCE CORPORATION,
for purposes of Sections 6.03, 7.04, 10.02, 11.02, 11.03 and 12.19 only

By:_____________________________________
   Name:
   Title:

ONYX ACCEPTANCE FINANCIAL CORPORATION,
for purposes of Sections 6.04, 7.04 and 10.02 only:

By:_____________________________________
   Name:
   Title:

Signature Page - Residual Interest Loan and Security Agreement
<PAGE>

                                                                      APPENDIX A

                                  DEFINED TERMS

         "ABS" is calculated as ((1/Actual Balance)-(1/Scheduled Balance)) /
((Age Y/Actual Balance)-(Age X/Scheduled Balance))

         Where:

         Actual Balance equals the balance at period Y

         Age X equals the weighted average number of months from the applicable
         cut-off date to period X

         Age Y equals the weighted average number of months from the applicable
         cut-off date to period Y

         Scheduled Balance equals Beginning Period Balance*((1-(1+(WAC/12))(Pmt
         Interval-Remaining Term))/(1-(1+WAC/12))(-Remaining Term)))

         Where:

         Beginning Period Balance equals the balance at Period X

         WAC equals the weighted average coupon at Period X

         Payment Interval equals Age Y minus Age X

         Remaining Term equals the weighted average maturity of the remaining
         pool at period X.

         "Accelerated Amortization Period" means the period beginning on the
earliest to occur of (i) the date that is one calendar year after the Conversion
Date; (ii) the date on which Lender declares the commencement of the Accelerated
Amortization Period following an Event of Default, as provided in Section 8.02;
and (iii) the date on which an Event of Default of the type described under
Section 8.01(e) or 8.01(f) occurs.

         "Accrual Period" means with respect to any Payment Date the period from
and including the previous Payment Date to, but excluding, such Payment Date;
provided that with respect to the first Payment Date occurring after the
extension of any Loan hereunder, the Accrual Period for such Loan shall be the
period from and including the applicable Funding Date, to but excluding such
first Payment Date.

         "Affected Party" means Lender, State Street Global Markets, LLC, as
agent for Lender, any Program Support Provider and any assignee or participant
of any Program Support Provider.

                                       A-1
<PAGE>

         "Affiliate" means, with respect to any Person, any other Person
which, directly or indirectly, controls, is controlled by, or is under common
control with, such Person. For purposes of this definition, "control" (together
with the correlative meanings of "controlled by" and "under common control
with") means possession, directly or indirectly, of the power (a) to vote 50% or
more of the securities or interests (on a fully diluted basis) having ordinary
voting power for the directors or managing partners (or their equivalent) of
such Person, or (b) to direct or cause the direction of the management or
policies of such Person, whether through the ownership of voting securities or
interests, by contract, or otherwise.

         "Applicable Margin" means, for each Loan and (i) any date prior to
the occurrence and continuance of a Collateral Shortfall Event (and after any
cure thereof), 4.25% or (ii) any date that occurs on or after the occurrence and
during the continuance of a Collateral Shortfall Event, 6.25%.

         "Available Commitment" means, as of any date of determination, the
amount by which the Commitment Amount exceeds the Total Outstanding Loans.

         "Blocked Account" means the account designated as such, established and
maintained pursuant to Section 10.01(a) of this Loan Agreement.

         "Borrower" means Onyx Acceptance Funding Corporation, a Delaware
corporation.

         "Borrowing Base" means, as of any date of determination, the lesser of
(a) $30,000,000 and (b) the sum of the Collateral Value Model Amounts for all
Pledged Residual Interest Instruments.

         "Borrowing Base Certificate" has the meaning assigned to such term in
Section 2.03(a) of this Loan Agreement.

         "Business Day" means any day other than (i) a Saturday or Sunday or
(ii) a day on which banking institutions in New York or Boston are authorized or
obligated by law or executive order to be closed. Any action required to be
taken on a day which falls on a day other than a Business Day shall be taken on
the next Business Day. Any notice received after 3:00 p.m., Boston time on any
Business Day shall be deemed receive on the next succeeding Business Day.

         "Change in Control" means Onyx fails to own 100% of the capital stock
of Borrower.

         "Clean-up Call" means the purchase by Onyx, as servicer under an
Eligible Securitization Transaction related to a Pledged Residual Interest
Instrument, of the collateral underlying such Eligible Securitization
Transaction on or prior to the first Distribution Date (as defined in the
Eligible Securitization Documents) occurring after the Distribution Date on
which the Pool Balance (as defined in the Eligible Securitization Documents)
reaches 10% or less of the Original Pool Balance (as defined in the Eligible
Securitization Documents).

         "Closing Date" means January 13, 2004.

         "Code" means the Internal Revenue Code of 1986, as amended from time to
time.

                                      A-2
<PAGE>

         "Collateral" shall have the meaning provided in Section 4.01(a) of this
Loan Agreement.

         "Collateral Shortfall Event" shall have the meaning provided in Section
2.05(a) of this Loan Agreement.

         "Collateral Value Model Amount" means, with respect to each Pledged
Residual Interest Instrument, an estimate of the present value of cash flows
related thereto using a financial model developed and owned by Woodcliff
Company, LLC in the format existing as of the Closing Date, which financial
model has been delivered to Borrower and State Street Global Markets, LLC, as
agent for Lender, prior to the Closing Date and which financial model shall not
be changed or altered after the Closing Date without the consent of both Lender
and Borrower. The model will be run monthly by Borrower within three (3)
Business Days of receipt of the Monthly Servicer Reports. Lender, in its
discretion, may recalculate any Collateral Value Model Amount and if such
recalculation differs from Borrower's calculation, Lender's calculation shall be
used, absent manifest error. The key assumptions utilized in the calculation of
the Collateral Value Model Amount include, as applicable:

                  (i) The base case cumulative net credit loss assumptions will
         be 4.5% for each of Onyx Acceptance Owner Trust 2001-B and Onyx
         Acceptance Owner Trust 2001-C, unless the actual cumulative net credit
         loss percentages, as set forth in the related Monthly Servicer Report,
         exceed the base case cumulative net credit loss assumption percentages
         initially assumed in the model, in which case, the base case cumulative
         net credit loss assumption percentages for such related Eligible
         Securitization Transaction will be increased as set forth in the model
         and specified below.

                  The base case cumulative net credit loss assumptions will be
         3.5% for each of Onyx Acceptance Owner Trust 2001-D, Onyx Acceptance
         Owner Trust 2002-A, Onyx Acceptance Owner Trust 2002-B, Onyx Acceptance
         Owner Trust 2002-C and Onyx Acceptance Owner Trust 2002-D, unless the
         actual cumulative net credit loss percentages, as set forth in the
         related Monthly Servicer Report, exceed the base case cumulative net
         credit loss assumption percentages initially assumed in the model, in
         which case the base case cumulative net credit loss assumption
         percentages for such related Eligible Securitization Transaction will
         be increased as set forth in the model and specified below.

                  If the cumulative net credit loss percentage with respect to
         any given month for any given Eligible Securitization Transaction as a
         percentage of the base case cumulative net credit loss assumption
         percentage for that Eligible Securitization Transaction exceeds the
         level specified for the corresponding month in Table A, then a "Credit
         Loss Assumption Revaluation Event" has occurred.

                  Other than as set forth in the following paragraph, the
         occurrence of the Credit Loss Assumption Revaluation Event will result
         in a permanent increase in the base case cumulative net credit loss
         assumption for that particular transaction by the greater of:

                  (1) 0.05%; or

                                      A-3
<PAGE>

                  (2) the actual excess (i.e., the excess of the actual
         cumulative net credit loss percentage over the product of the base case
         cumulative net credit loss assumption percentage multiplied by the
         percentage specified for the applicable month in Table A).

                  Subsequent, consecutive occurrences of Credit Loss Assumption
         Revaluation Events will result in an increase in the base case
         cumulative net credit loss assumption for that particular transaction
         by the multiple of consecutive months breached and the greater of (1)
         and (2) above.

                                     TABLE A

<TABLE>
<CAPTION>
                        Cumulative Net
                         Credit Loss
Month                     Percentage
-----                     ----------
<S>                     <C>
  1                          0.000%
  2                          0.000%
  3                          0.341%
  4                          0.780%
  5                          1.804%
  6                          3.998%
  7                          6.728%
  8                          9.751%
  9                         12.969%
 10                         16.967%
 11                         20.819%
 12                         24.671%
 13                         28.181%
 14                         31.789%
 15                         35.056%
 16                         38.372%
 17                         42.272%
 18                         45.929%
 19                         48.903%
 20                         52.072%
 21                         54.803%
 22                         57.094%
 23                         59.532%
 24                         62.457%
 25                         64.749%
 26                         66.309%
 27                         68.454%
 28                         70.648%
 29                         72.355%
 30                         74.500%
 31                         76.304%
 32                         78.157%
 33                         80.156%
 34                         81.570%
 35                         83.130%
 36                         84.983%
 37                         86.251%
 38                         87.811%
 39                         89.127%
 40                         89.956%
 41                         91.224%
 42                         92.199%
 43                         93.028%
 44                         93.759%
 45                         94.149%
 46                         94.539%
 47                         94.929%
 48                         95.319%
 49                         95.709%
 50                         96.099%
 51                         96.490%
 52                         96.880%
 53                         97.270%
 54                         97.660%
 55                         98.050%
 56                         98.440%
 57                         98.830%
 58                         99.220%
 59                         99.610%
 60                        100.000%
</TABLE>

                                      A-4
<PAGE>

         See Exhibit C for examples of the application of this assumption.

         (ii)     Credit losses on each Eligible Securitization Transaction will
                  be two times the base case net credit losses for such Eligible
                  Securitization Transaction.

         (iii)    Any cash held in the Reserve Account or the Blocked Account
                  will accrue interest at the State Street Global Advisors net
                  offered Money Market Rate.

         (iv)     Future cash flows available for repayment of the Note will be
                  discounted at a rate equal to the sum of (a) the 2 year SWAP
                  rate (ask) as quoted on Bloomberg as USSWAP2 and (b) 6.25%.

         (v)      The prepayment speed for each Eligible Securitization
                  Transaction will be 1.75 ABS.

         (vi)     Each Clean-up Call will be exercised; provided, however:

                  (A)      if (1) Onyx fails to exercise a Clean-up Call with
                           respect to any Eligible Securitization Transaction
                           related to a Pledged Residual Interest Instrument and
                           (2) delivers (a) a certificate to Lender certifying
                           that it has adequate liquidity to exercise such
                           Clean-up Call but has made a business determination
                           not to do so and (b) any other documentation or
                           information requested by Lender in support of such
                           certificate, then, for purposes of calculating the
                           Collateral Value Model Amount, it will be assumed
                           (until the related Pledged Residual Interest
                           Instrument is released from the Lien created by the
                           Loan Agreement) that the Clean-up Call will not be
                           exercised for such Eligible Securitization
                           Transaction related to such Pledged Residual Interest
                           Instrument; or

                  (B)      if (1) Onyx fails to exercise a Clean-up Call with
                           respect to any Eligible Securitization Transaction
                           related to a Pledged Residual Interest Instrument and
                           (2) clause A has not been satisfied, then, for
                           purposes of calculating the Collateral Value Model
                           Amount, it will be assumed (until clause (A) is
                           satisfied, provided such clause (A) is satisfied
                           within 30 days of Onyx's failure to exercise the
                           Clean-up Call) that the Clean-up Call will not be
                           exercised for any Eligible Securitization
                           Transactions related to any Pledged Residual Interest
                           Instrument; or

         Each of Borrower and Lender acknowledges that such party has received
and reviewed the "Collateral Value Model" used for the calculation of the
Collateral Value Model Amount, and each party expressly approves such Collateral
Value Model for all purposes of this Loan Agreement, including for purposes of
calculating the Borrowing Base.

         "Commitment Amount" means $30,000,000.

                                      A-5
<PAGE>

         "Commitment Fee" shall have the meaning provided in Section 2.09 of
this Loan Agreement.

         "Conversion Date" means the first anniversary of the Closing Date;
provided, however, that if Lender, in its sole discretion, opts to extend the
term of this Loan Agreement, the "Conversion Date" shall be the date specified
by Lender as such in the writing to Borrower prior to the Conversion Date.

         "Credit Enhancer" means XL Capital Assurance Inc., MBIA Insurance
Corporation and/or any other entity which is not an Affiliate of Borrower that
issues any surety bond, letter of credit or other credit enhancement in
connection with any securitization transaction in which a Trust is the issuer.

         "Credit Trigger Event" shall have the meaning provided in Section 9.01
of this Loan Agreement.

         "Default" means an Event of Default or any condition, act or event that
with notice or lapse of time or both would constitute an Event of Default.

         "Dollars" and "$" means lawful money of the United States of America.

         "Eligible Residual Interest Instrument" shall have the meaning provided
in Section 2.05(c) of this Loan Agreement.

         "Eligible Securitization Documents" shall mean, collectively, the
Eligible Securitization Transfer Documents and all agreements, documents,
instruments and certificates executed and delivered in connection with any
securitization transaction which from time to time becomes an Eligible
Securitization Transaction in accordance with the terms of this Agreement and
with respect to which the Residual Interest Instrument becomes a Pledged
Residual Interest Instrument.

         "Eligible Securitization Transfer Documents" shall have the meaning
provided in Section 10.02 of this Loan Agreement.

         "Eligible Securitization Transactions" means each securitization
approved by Lender from time to time pursuant to Section 2.05(b) for which the
Residual Interest Instrument related thereto is an Eligible Residual Interest
Instrument and which is partially supported by internal credit enhancements in
the form of a separate Spread Account.

         "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations promulgated and all rulings
issued thereunder.

         "ERISA Affiliate" means with respect to any Person (a) any corporation
which is a member of the same controlled group of corporations (within the
meaning of Section 414(b) of the Code) as such Person, (b) a partnership or
other trade or business (whether or not incorporated) under common control
(within the meaning of Section 414(c) of the Code) with such Person, (c) a
member of the same affiliated service group (within the meaning of section
414(m) of the Code) as such Person, any corporation described in clause (a)
above or any

                                      A-6
<PAGE>

partnership or other trade or business described in clause (b) above or (d) any
other Person or entity which would be treated as a single employer with such
Person under Section 4001(b) of ERISA.

         "ERISA Termination Event" means a Reportable Event, the filing of a
notice of intent to terminate under Section 4041(c) of ERISA or any other event
or condition which is reasonably likely to constitute grounds under Section 4042
of ERISA for the termination of, or for the appointment of a trustee to
administer, any Plan.

         "Event of Default" shall have the meaning provided in Section 8.01 of
this Loan Agreement.

         "FDIC" means the Federal Deposit Insurance Corporation.

         "Final Scheduled Maturity Date" means the date that is eight (8) years
after the occurrence of the Conversion Date.

         "Finco" means Onyx Acceptance Financial Corporation, a Delaware
corporation.

         "Funding Date" means, with respect to a Loan, the date set forth in the
Notice of Borrowing on which Lender makes such Loan to Borrower hereunder and
which shall constitute a Permitted Funding Date.

         "GAAP" means generally accepted accounting principles as in effect from
time to time in the United States of America, applied on a consistent basis.

         "Galleon Cost of Funds" means, on any day, a per annum interest rate,
as determined by Lender, equivalent to (i) if Lender is funding the applicable
portion of its investment in the Note with commercial paper notes, the "weighted
average cost" related to the issuance of Lender's commercial paper notes or any
portion thereof designated by Lender or its agent (and which may also be
allocated in part to the funding of other assets of Lender); provided, however,
that if any component of such rate is a discount rate, such component shall be
converted to an interest bearing equivalent rate per annum and (ii) otherwise,
LIBOR. As used above, "weighted average cost" shall consist of (i) the actual
interest rate paid to purchasers of Lender's commercial paper notes, (ii) dealer
fees and commissions to commercial paper dealers in connection with the issuance
of such commercial paper notes and (iii) interest on other borrowing or funding
sources of Lender (other than under any liquidity facility) to fund small or odd
dollar amounts that are not easily accommodated in the commercial paper market.

         "Governmental Authority" means any nation or government, any state or
other political subdivision thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government and any court or arbitrator.

         "Indebtedness" as applied to any Person, means (i) all items (except
items of capital or surplus or of retained earnings) which in accordance with
GAAP would be included in determining total liabilities as shown on the
liability side of the balance sheet of such Person as of the date of which
Indebtedness is to be determined, (ii) all indebtedness secured by any mortgage,
pledge, lien or conditional sale or other title retention agreement to which any

                                      A-7
<PAGE>

property or asset owned or held by such Person is subject, whether or not the
indebtedness secured thereby shall have been assumed, and (iii) all indebtedness
of others which such Person has directly or indirectly guaranteed, endorsed
(otherwise than for collection or deposit in the ordinary course of business),
discounted or sold with recourse or agreed (contingently or otherwise) to
purchase or repurchase or otherwise acquire, or in respect of which such Person
has agreed to supply or advance funds (whether by way of loan, stock purchase,
capital contributions or otherwise) or otherwise to become directly or
indirectly liable.

         "Indemnified Party" has the meaning assigned to such term in Section
11.02 of this Loan Agreement.

         "Initial Pledged Residual Interest Instruments" has the meaning
assigned to such term in Section 2.05(c) of this Loan Agreement.

         "Intercreditor Agreement" means that certain Intercreditor Agreement,
dated as of January 13, 2004, by and among Borrower, Credit Suisse First Boston
(Europe) Limited, Credit Suisse First Boston LLC, Merrill Lynch International,
Merrill, Lynch, Pierce, Fenner & Smith Incorporated and Galleon Capital, LLC.

         "Insurance Agreement" means the agreement pursuant to which, with
respect to any Eligible Securitization Transaction related to Pledged Residual
Interest Instruments, the Credit Enhancer agrees to issue a surety bond,
financial guarantee insurance policy or other similar credit enhancement with
respect to the obligations of the related Trust.

         "Investment Company Act" means the Investment Company Act of 1940, as
amended.

         "Investment Earnings" means, with respect to the Blocked Account and
Reserve Account, the investment earnings on amounts on deposit in the applicable
account.

         "IRS" means the Internal Revenue Service, and its successors

         "Lender" means Galleon Capital, LLC and its successors and assigns
under this Loan Agreement.

         "LIBOR" means, for each Accrual Period, the rate per annum for the
second London Business Day preceding the first day of each Accrual Period shown
on page 3750 of Telerate or any successor page as the composite offered rate for
London interbank deposits for a 30-day period, as shown under the heading "USD"
as of 11:00 a.m. (London time); provided that in the event no such rate is
shown, the LIBOR shall be the rate per annum (rounded upwards, if necessary, to
the nearest 1/16th of one percent) based on the rates at which Dollar deposits
for a 30-day period are displayed on page "LIBOR" of the Reuters Screen as of
11:00 a.m. (London time) on the date of determination (it being understood that
if at least two such rates appear on such page, the rate will be the arithmetic
mean of such displayed rates); provided further, that in the event fewer than
two such rates are displayed, or if no such rate is relevant, the LIBOR shall be
the rate per annum equal to the average of the rates at which deposits in
Dollars are offered by State Street Bank and Trust Company at approximately
11:00 a.m. (London time) on the date of determination to prime banks in the
London interbank market for a 30-day period.

                                      A-8
<PAGE>

         "Lien" means any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge or other security
interest or any preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever (including, without limitation, any
conditional sale or other title retention agreement and any financing lease
having substantially the same economic effect as any of the foregoing).

         "Loan" shall have the meaning set forth in Section 2.01(a) of this Loan
Agreement.

         "Loan Agreement" means this Residual Interest Loan and Security
Agreement, as the same may be amended, supplemented or otherwise modified from
time to time in accordance with the terms hereof.

         "Loan Documents" means, collectively, this Loan Agreement, the Note,
the Intercreditor Agreement and all other documents and instruments executed and
delivered in connection herewith or therewith and any appendices, annexes,
schedules and exhibits thereto.

         "Material Adverse Change" means a material adverse change in, or the
disclosure or discovery of any information not previously disclosed to Lender
which Lender deems material and adverse relating to, the business, operations,
properties or condition (financial or otherwise) of Borrower, Onyx or Finco.

         "Material Adverse Effect" means a material adverse effect on (a) the
Pledged Residual Interest Instruments, (b) the property, business or condition
(financial or otherwise) of Borrower, Onyx or Finco (c) the ability of Borrower,
Onyx or Finco to perform its obligations under any of the Loan Documents to
which it is a party, (d) the validity or enforceability of any of the Loan
Documents, (e) the rights and remedies of Lender under any of the Loan
Documents, (f) the timely payment of the principal of or interest on the Loans
or other amounts payable in connection therewith or (h) the Collateral or
Lender's first priority perfected security interest therein.

         "Minimum Loan Amount" means $500,000.

         "Minimum Servicing Balance" shall mean the aggregate outstanding amount
of all motor vehicle installment contracts owned or serviced by Onyx under any
pooling and servicing agreement or (without duplication) sale and servicing
agreement.

         "Monthly Servicer Report" means, with respect to each Pledged
Residual Interest Instrument, each report delivered on a monthly basis by the
servicer to the indenture trustee related to the performance of the assets of
the related Trust and certain other information under any Eligible
Securitization Transaction related to such Pledged Residual Interest Instrument.

         "Moody's" means Moody's Investors Service, Inc., or its successor.

         "Multiemployer Plan" means a Plan which constitutes a "multiemployer
plan" as defined in Section 4001(a)(3) of ERISA.

         "Net Income" means net income (or loss), for the period in question,
determined in accordance with GAAP.

                                      A-9
<PAGE>

         "Net Worth" means, with respect to any Person, on any date of
determination, the Total Assets minus Total Liabilities of such Person,
determined in accordance with GAAP.

         "Net Yield" with respect to any Eligible Securitization Transaction
relating to a Pledged Residual Instrument, shall have the meaning assigned to
such term in the related Eligible Securitization Documents.

         "Note" shall have the meaning assigned to such term in Section 2.02(a)
of this Loan Agreement.

         "Note Interest Rate" shall have the meaning assigned to such term in
Section 2.04(b) of this Loan Agreement

         "Notice of Borrowing" shall have the meaning assigned to such term in
Section 2.03(a) of this Loan Agreement.

         "Officers' Certificate" or "Officer's Certificate" means a certificate
signed by any of the chairman of the board, the president, any executive vice
president, any senior vice president, or any treasurer or secretary of Borrower.

         "Onyx" means Onyx Acceptance Corporation, a Delaware corporation and
the parent of Borrower.

         "Operating Account" means the Onyx Acceptance Corporation account,
number 4159359082, maintained at Wells Fargo Bank, NA, ABA 121000248.

         "Opinion of Counsel" means an opinion of counsel acceptable to Lender
in form and substance acceptable to Lender.

         "Payment Date" means the first Business Day following the date which is
the 15th day of each month (or if the 15th day is not a Business Day, the next
succeeding Business Day) beginning in January 2004.

         "Payoff Letter" means a letter that (i) is addressed to Lender, (ii) is
signed by a Prior Lender, (iii) identifies particular Previously Financed
Residual Interest Instruments, (iv) specifies that, upon receipt of a specified
dollar amount by such Prior Lender, all Liens and other interests of such Prior
Lender in such Previously Financed Residual Interest Instruments shall
automatically be released and, if applicable, transferred to Borrower, without
any further action by any Person, and (v) is otherwise satisfactory in form and
substance satisfactory to Lender.

         "PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.

         "Permitted Funding Date" means (i) with respect to the initial Loan
made hereunder, any Business Day for which a Notice of Borrowing has been
received by Lender at least three (3) Business Days prior to the applicable
Funding Date, and (ii) with respect to any Loan other than the initial Loan made
hereunder, any Payment Date prior to the Conversion Date for which a

                                      A-10
<PAGE>

Notice of Borrowing has been received by Lender at least three (3) Business Days
prior to such Payment Date.

         "Permitted Investments" means:

                  (i) Direct obligations of, and obligations fully guaranteed as
         to timely payment by, the United States of America;

                  (ii) Demand deposits, time deposits or certificates of deposit
         of any depository institution or trust company incorporated under the
         laws of the United States of America or any state thereof (or any
         domestic branch of a foreign bank) and subject to supervision and
         examination by federal or state banking or depository institution
         authorities; provided, however, that at the time of the investment or
         contractual commitment to invest therein, the commercial paper or other
         short-term unsecured debt obligations (other than such obligations the
         rating of which is based on the credit of a Person other than such
         depository institution or trust company) thereof shall have a
         short-term credit rating of A-1+ or better by S&P and P-1 or better
         from Moody's;

                  (iii) Commercial paper having, at the time of the investment
         or contractual commitment to invest therein, a rating from Moody's of
         P-1 or better and a rating of A-1+ or better from S&P;

                  (iv) Investments in money market funds having a rating from
         Moody's in the highest investment category granted thereby and a rating
         of AAA from S&P;

                  (v) Demand deposits, time deposits and certificates of deposit
         that are fully insured by the FDIC;

                  (vi) Bankers' acceptances issued by any depository institution
         or trust company referred to in clause (ii) above;

                  (vii) Repurchase obligations with respect to any security that
         is a direct obligation of, or fully guaranteed by, the United States of
         America or any agency or instrumentality thereof the obligations of
         which are backed by the full faith and credit of the United States of
         America, in either case entered into with a depository institution or
         trust company (acting as principal) described in clause (ii) above; and

                  (viii) Any other investments approved in writing by Lender.

         "Person" means any individual, corporation, company, association,
partnership, joint venture, limited liability company, trust, unincorporated
association, government (or any agency, instrumentality or political subdivision
thereof) or any other entity of whatever nature.

         "Plan" means any employee benefit plan defined in Section 3(3) of ERISA
in respect of which Borrower, Onyx or any ERISA Affiliate thereof is or at any
time within the immediately preceding five years was an "employer" as defined in
Section 3(5) of ERISA or may have, or in the past five years have had,
liability, including but not limited to liability as a substantial

                                      A-11
<PAGE>

employer, within the meaning of Section 4063 of ERISA and liability as a
contributing sponsor under Section 4069 of ERISA

         "Pledged Residual Interest Instrument" shall have the meaning assigned
to such term in Section 4.01(a) of this Loan Agreement.

         "Pool Factor" shall mean the percentage equivalent of a fraction, the
numerator of which is the outstanding principal balance of notes or certificates
issued in connection with an Eligible Securitization Transaction related to a
Pledged Residual Interest Instrument as of any date of calculation, and the
denominator of which is the outstanding principal balance of notes or
certificates originally issued in connection with such Eligible Securitization
Transaction.

         "Previously Financed Residual Interest Instrument" means any Residual
Interest Instrument that at any time was subject to a Lien (other than the Lien
arising hereunder).

         "Prior Lender" means any creditor, purchaser or other Person (other
than Lender) that has held a Lien on a Residual Interest Instrument to be
included in the Borrowing Base.

         "Proceeds" means whatever is receivable or received from or upon the
sale, lease, license, collection, use, exchange or other disposition, whether
voluntary or involuntary, of any Collateral, including "proceeds" as defined in
the UCC, any and all proceeds of any insurance, indemnity, warranty or guaranty
payable under or in connection with any of the Collateral, any and all payments
(in any form whatsoever) made or due and payable from time to time in connection
with any requisition, confiscation, condemnation, seizure or forfeiture of all
or any part of the Collateral by any Governmental Authority (or any Person
acting under color of Governmental Authority), any and all other amounts from
time to time paid or payable under or in connection with any of the Collateral
or for or on account of any damage or injury to or conversion of any Collateral
by any Person, any and all other tangible or intangible property received upon
the sale or disposition of Collateral, and all proceeds of proceeds.

         "Program Support Agreement" with respect to Lender, means and includes
any agreement entered into by any Program Support Provider providing for the
issuance of one or more letters of credit for the account of Lender, the
issuance of one or more surety bonds for which Lender is obligated to reimburse
the applicable Program Support Provider for any drawings thereunder, the sale by
Lender to any Program Support Provider of its interest hereunder (or portions
thereof or participations therein) or the making of loans or other extensions of
liquidity or credit to Lender in connection with Lender's commercial paper
program, together with any letter of credit, surety bond or other instrument
issued thereunder.

         "Program Support Provider" means and includes any Person now or
hereafter extending liquidity or credit or having a commitment to extend
liquidity or credit to or for the account of, or to make purchases from Lender
or issuing a letter of credit, surety bond or other instrument to support any
obligations arising under or in connection with Lender's commercial paper
program.

         "Rating Agencies" means Standard & Poor's and Moody's.

         "Regulation D" means Regulation D of the Federal Reserve Board, or any
other regulation of the Federal Reserve Board that prescribes reserve
requirements applicable to

                                      A-12
<PAGE>

nonpersonal time deposits or "Eurocurrency Liabilities" as presently defined in
Regulation D, as in effect from time to time.

         "Regulations T, U and X" means Regulations T, U and X of the Board of
Governors of the Federal Reserve System (or any successor), as the same may be
amended, modified or supplemented and in effect from time to time.

         "Regulatory Change" means, relative to any Affected Party

         (a) any change in, or the adoption, implementation, phase-in or
commencement of effectiveness, after the date of this Agreement of, any

                  (i) United States federal or state law or foreign law
         applicable to such Affected Party;

                  (ii) regulation, interpretation, directive, requirement or
         request (whether or not having the force of law) applicable to such
         Affected Party of (A) any court, Governmental Authority charged with
         the interpretation or administration of any law referred to in clause
         (a)(i) or of (B) any fiscal, monetary or other authority having
         jurisdiction over such Affected Party; or

                  (iii) GAAP or regulatory accounting principles applicable to
         such Affected Party and affecting the application to such Affected
         Party of any law, regulation, interpretation, directive, requirement or
         request referred to in clause (a)(i) or (a)(ii) above; or

         (b) any change in the application to such Affected Party of any
existing law, regulation, interpretation, directive, requirement, request or
accounting principles referred to in clause (a)(i), (a)(ii) or (a)(iii) above
(other than such changes resulting from a change in the status of such Affected
Party). For avoidance of doubt, any interpretation or implementation of
Accounting Research Bulletin No. 51 by the Financial Accounting Standards Board
(including Interpretation No. 46: Consolidation of Variable Interest Entities)
shall constitute an adoption, change, request or directive, and any
implementation thereof shall be a "Regulatory Change".

         "Reportable Event" means any of the events set forth in Section 4043(b)
of ERISA or the regulations thereunder other than those events as to which the
thirty (30) day notice period is waived.

         "Repurchase Price" means, for any Pledged Residual Interest Instrument
on any date of determination, an amount equal to (i) the Collateral Value Model
Amount for such Pledged Residual Interest Instrument on such date multiplied by
(ii) an amount equal to (a) the Total Outstanding Loans on such date divided by
(b) the sum of the Collateral Value Model Amounts for all Pledged Residual
Interest Instruments on such date.

         "Required Information" with respect to any Subsequent Securitization
Transaction, shall mean: (i) the prospectus or, if a prospectus is not yet
available, a report outlining: initial pool balance; initial loan balance;
prefunding amount (if any); spread account initial deposit; spread account
maintenance level; spread account floor; spread account trigger levels; weighted
average

                                      A-13
<PAGE>

coupon; weighted average maturity; estimated note coupon rate; and (ii) Monthly
Servicer Reports to date (if any); (iii) original book value; (iv) current book
value; and (vi) pool selection, with tables showing breakdowns and averages of:
original balances; current balances; coupon (APR) rate report; original terms;
remaining terms; collateral code (e.g., new, used, new light truck, used light
truck); vehicle model years; borrower monthly incomes; borrower length of
employment; borrower length of residency; borrower debt ratios; loan to values;
and geographic distribution.

         "Required Reserve Account Amount" means as of any date of determination
the greater of (a) the Note Interest Rate for the most recently ended Accrual
Period multiplied by the Total Outstanding Loans (after giving effect to the
Loans made on such date of determination, if applicable) and (b) the Required
Reserve Account Floor Amount.

         "Required Reserve Account Floor Amount" means the lesser of (i)
$500,000 and (ii) the Total Outstanding Loans.

         "Requirement of Law" means as to any Person, the certificate of
incorporation and by-laws or other organizational or governing documents of such
Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or
any of its property is subject.

         "Reserve Account" means the account designated as such, established and
maintained pursuant to Section 10.01(a) of this Loan Agreement.

         "Reserve Account Available Amount" means, as of any date, all amounts
then on deposit in the Reserve Account (including, without limitation, all
Investment Earnings with respect to the Reserve Account).

         "Residual Interest Instrument" means an instrument or certificate
evidencing 100% of the residual interest in a Trust, which represents the right
to receive amounts to be distributed or paid to the holders of the "Residual
Interests" as defined in and pursuant to the Eligible Securitization Documents.

         "Residual Sale Agreements" means, collectively, (i) the Agreement for
Sale of Residual Certificates, dated as of September 3, 1998, between Onyx and
Borrower, (ii) the Amended and Restated Agreement for Sale of Residual
Certificates, dated as of May 2, 2003, between Onyx and Borrower and (iii) any
similar agreement pursuant to which Onyx conveys Residual Interest Instruments
to Borrower.

         "Responsible Officer" means, as to any Person, the chief executive
officer or, with respect to financial matters, the chief financial officer of
such Person; provided, that in the event any such officer is unavailable at any
time he or she is required to take any action hereunder, Responsible Officer
shall mean any officer authorized to act on such officer's behalf as
demonstrated to Lender to its satisfaction.

         "Secured Obligations" means the unpaid principal amount of, and
interest on, the Loans and all other obligations and liabilities of Borrower to
Lender or any Affected Party whether

                                      A-14
<PAGE>

direct or indirect, absolute or contingent, due or to become due, or now
existing or hereafter incurred, which may arise under, out of or in connection
with this Loan Agreement, the Note, any other Loan Document and any other
document made, delivered or given in connection herewith or therewith, whether
on account of principal, interest, reimbursement obligations, fees, indemnities,
costs, expenses (including, without limitation, all fees and disbursements of
counsel to Lender). For purposes hereof, "interest" shall include, without
limitation, interest accruing after the maturity of the Loans and interest
accruing after the filing of any petition in bankruptcy, or the commencement of
any insolvency, reorganization or like proceeding, relating to Borrower, whether
or not a claim for post-filing or post-petition interest is allowed in such
proceeding.

         "Spread Account" means, with respect to each Eligible Securitization
Transaction, the named "Spread Account," together with all other cash collateral
accounts or other escrow or reserve accounts established and maintained by the
trustee for the benefit of security holders and/or the Credit Enhancer; provided
that each Spread Account is subject to certain maximum and minimum balances
determined on a pool-by-pool basis, depending on the performance of the
underlying motor vehicle installment contracts, and after the applicable maximum
Spread Account balance has been achieved, and subject to (i) a certain minimum
Spread Account balance being maintained, and (ii) a certain
overcollateralization requirement being met and maintained, excess cash is
released to the holders of the related Residual Interest Instruments. The
maximum Spread Account balance for a particular Eligible Securitization
Transaction may increase or decrease over time as a result of floors, caps and
triggers set forth in the related Insurance Agreement.

         "Standard & Poor's" means Standard & Poor's Ratings Services, or its
successor.

         "Subsequent Securitization Transaction" shall have the meaning assigned
to such term in Section 2.05(b) of this Loan Agreement.

         "Subsidiary" means, as to any Person, a corporation, partnership or
other entity of which shares of stock or other ownership interests having
ordinary voting power (other than stock or such other ownership interests having
such power only by reason of the happening of a contingency) to elect a majority
of the board of directors or other managers of such corporation, partnership or
other entity are at the time owned, or the management of which is otherwise
controlled, directly or indirectly through one or more intermediaries, or both,
by such Person.

         "Total Assets" means, with respect to any Person, all assets of such
Person which may be properly classified as assets in accordance with GAAP.

         "Total Liabilities" means, with respect to any Person, all Indebtedness
of such Person, and all other liabilities which may be properly classified as
liabilities in accordance with GAAP.

         "Total Outstanding Loans" means, as of any date of determination, the
unpaid principal amount of all Loans outstanding hereunder.

         "True Sale and Non-Consolidation Opinion" means that certain true sale
and non-consolidated opinion rendered by Andrews Kurth LLP to Lender and the
Rating Agencies on the

                                      A-15
<PAGE>

date hereof related to the contribution of Residual Interest Instruments from
Finco to Onyx and from Onyx to Borrower.

         "Trust" means the statutory trust established pursuant to a Trust
Agreement to accept and hold a discrete pool of motor vehicle installment
contracts conveyed by Finco, Onyx or an Affiliate of either of them pursuant to
the related Eligible Securitization Documents, the beneficial ownership of which
is evidenced by the Residual Interest Instrument issued by such statutory trust.

         "Trust Agreement" means an agreement between Finco or Onyx, as
depositor, and another Person, as owner trustee, pursuant to which a Trust is
established and governed.

         "UCC" means the Uniform Commercial Code as in effect from time to time
in the applicable jurisdiction.

         "Warehouse Facility" means any funding arrangement with Triple-A One
Funding Corporation or Eiffel Funding, LLC to the extent such arrangement is
entered into to finance the purchase or origination of motor vehicle installment
contracts by Onyx or Finco for the purpose of pooling such motor vehicle
installment contracts prior to their securitization or sale in the ordinary
course of business.

                                      A-16
<PAGE>

                                                                       EXHIBIT A

                                 PROMISSORY NOTE

January 13, 2004

Amount: U.S. $30,000,000

         FOR VALUE RECEIVED, Onyx Acceptance Funding Corporation (the
"Borrower") unconditionally promises to pay on the Final Scheduled Maturity Date
(as defined in the Loan Agreement referred to below) to the order of State
Street Global Markets, LLC, as agent for Galleon Capital, LLC (the "Lender") in
federal or other immediately available funds in lawful money of the United
States of America the principal sum of THIRTY MILLION DOLLARS (U.S. $30,000,000)
or, if less, the aggregate unpaid principal amount of the Loans made by Lender
to Borrower pursuant to the Loan Agreement, and to pay interest thereon from the
date hereof until this Note is repaid in full at the rates per annum and in the
manner set forth in the Loan Agreement.

         The principal of and interest on this Note shall be payable in
immediately available funds without set-off or counterclaim, at the rates, on
the dates and otherwise in the manner set forth in the Loan Agreement.

         This Note is issued pursuant to the terms of the Residual Interest Loan
and Security Agreement dated as of January __, 2004, among Lender and Borrower
(as amended, supplemented or otherwise modified from time to time in accordance
with the terms thereof, the "Loan Agreement"), and is subject to the terms
thereof and is entitled to the benefits therein provided.

         This Note is secured by and entitled to the benefits specified in
Article IV of the Loan Agreement, and reference is hereby made to such Section
for a description of the nature and extent of the Collateral and the rights of
the parties to and beneficiaries of the Loan Agreement in respect of such
Collateral.

         In addition to and not in limitation of the foregoing and the
provisions of the Loan Agreement, the undersigned further agrees, subject only
to any limitation imposed by applicable law, to pay on demand all expenses,
including reasonable attorneys' fees and legal expenses, incurred by the holder
of this Note, in endeavoring to collect any amounts payable hereunder which are
not paid when due, whether by acceleration or otherwise.

         Upon the occurrence of an Event of Default (as defined in the Loan
Agreement), the principal of and accrued interest on this Note may be declared
due and payable in the manner and with the effect provided in the Loan
Agreement, without presentment, demand, protest or notice of any kind, each of
which is hereby expressly waived by Borrower.

         THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW
OF THE STATE OF CALIFORNIA.

<PAGE>

                                                  ONYX ACCEPTANCE FUNDING
                                                  CORPORATION

                                                  By: _________________________
                                                      Name:
                                                      Title:

<PAGE>

                                                                       EXHIBIT B

                           BORROWING BASE CERTIFICATE

FOR PERIOD ENDED:                                               JANUARY 15, 2004

Prior Month Borrowing Base per Collateral Value Model
                                                                ----------------
Current Month Borrowing Base per Collateral Value Model                      $0
                                                                ----------------

Underlying Securitizations and current month valuations

<TABLE>
<CAPTION>
  Trust                                         Valuation
  -----                                         ---------
<S>                                          <C>
OT2001B                                      ----------------
OT2001C                                      ----------------
OT2001D                                      ----------------
OT2002A                                      ----------------
OT2002B                                      ----------------
OT2002C                                      ----------------
OT2002D                                      ----------------
</TABLE>

Performance Compliance of Underlying Securitizations

<TABLE>
<CAPTION>
 Trust                    Net Yield               In Compliance?
 -----                    ---------               --------------
<S>                       <C>                     <C>
OT2001B                     4.00%                      Yes
OT2001C                     4.00%                      Yes
OT2001D                     4.00%                      Yes
OT2002A                     4.00%                      Yes
OT2002B                     4.00%                      Yes
OT2002C                     4.00%                      Yes
OT2002D                     4.00%                      Yes
</TABLE>

New Eligible Securitization Transactions to be added to facility
                                                                  --------------

                                                                  --------------
Prior Month Borrowing Outstandings
                                                                  --------------
Current Amount Requested Borrowing
                                                                  --------------

Each of Onyx and Borrower hereby certify that Onyx and Borrower are in
compliance with all of their respective covenants, representations and
warranties contained within the Loan Agreement, that (i) the calculations set
forth above have been gleaned from the output of the Collateral Value Model and
that the integrity of the Collateral Value Model is the same as it was at the
execution of the Loan Agreement, other than changes agreed to by Borrower and
Lender, and (ii) the Borrower has paid all Commitment Fees due and payable under
the Loan Agreement, and (iii) the Borrower has used the proceeds of all Loans
solely for purposes permitted by the Loan Agreement.

ONYX ACCEPTANCE FUNDING CORPORATION        ONYX ACCEPTANCE CORPORATION

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

<PAGE>
                                                                       EXHIBIT C

                                   EXAMPLE #1

<TABLE>
<CAPTION>
                                                                      2001-C
                                        ------------------------------------------------------------------
MONTH              % OF LOSS            MONTH                 ACTUAL CUMULATIVE LOSS            ASSUMPTION
-----              ---------            -----                 ----------------------            ----------
<S>                <C>                  <C>                   <C>                               <C>
  1                   0.000%              29                           2.52%                      4.50%
  2                   0.000%
  3                   0.341%
  4                   0.780%                                                                     56.00%(2.52% / 4.50%)
  5                   1.804%
  6                   3.998%
  7                   6.728%            CORRESPONDING PERIOD
  8                   9.751%
  9                  12.969%
  10                 16.967%
  11                 20.819%
  12                 24.671%
  13                 28.181%
  14                 31.789%
  15                 35.056%
  16                 38.372%
  17                 42.272%
  18                 45.929%
  19                 48.903%                         NO TRIGGER. 56% DOES NOT EXCEED 72.355%
  20                 52.072%
  21                 54.803%
  22                 57.094%
  23                 59.532%
  24                 62.457%
  25                 64.749%
  26                 66.309%
  27                 68.454%
  28                 70.648%
  29                 72.355%
  30                 74.500%
  31                 76.304%
  32                 78.157%
  33                 80.156%
  34                 81.570%
  35                 83.130%
  36                 84.983%
  37                 86.251%
  38                 87.811%
  39                 89.127%
  40                 89.956%
  41                 91.224%
  42                 92.199%
</TABLE>

<PAGE>

<TABLE>
<S>                  <C>
  43                 93.028%
  44                 93.759%
  45                 94.149%
  46                 94.539%
  47                 94.929%
  48                 95.319%
  49                 95.709%
  50                 96.099%
  51                 96.490%
  52                 96.880%
  53                 97.270%
  54                 97.660%
  55                 98.050%
  56                 98.440%
  57                 98.830%
  58                 99.220%
  59                 99.610%
  60                100.000%
</TABLE>
<PAGE>

                                   EXAMPLE #2

<TABLE>
<CAPTION>
                                                                        2001-C
                                        ----------------------------------------------------------------------------
MONTH               % OF LOSS           MONTH                   ACTUAL CUMULATIVE LOSS                    ASSUMPTION
-----               ---------           -----                   ----------------------                    ----------
<S>                 <C>                 <C>                     <C>                                       <C>
  1                   0.000%             29                            3.32%                                4.50%
  2                   0.000%
  3                   0.341%
  4                   0.780%                                                                 73.78%(3.32% / 4.50%)
  5                   1.804%
  6                   3.998%
  7                   6.728%            CORRESPONDING PERIOD
  8                   9.751%
  9                  12.969%
 10                  16.967%
 11                  20.819%
 12                  24.671%
 13                  28.181%
 14                  31.789%
 15                  35.056%
 16                  38.372%
 17                  42.272%
 18                  45.929%
 19                  48.903%                     TRIGGER. 73.78% DOES EXCEED 72.355%
 20                  52.072%                     WE NOW NEED TO CALCULATE BY
 21                  54.803%                     HOW MUCH IN ORDER TO FIGURE OUT THE PERMANENT INCREASE TO THE
 22                  57.094%                     ASSUMPTION
 23                  59.532%
 24                  62.457%                                   Actual Cumulative Loss Amount:               3.32%
 25                  64.749%                                Target Trigger (72.355% * 4.50%):               3.26%
 26                  66.309%                                                                                ----
 27                  68.454%                                               Actual Difference:               0.06%
 28                  70.648%                                                                                ----
 29                  72.355%
 30                  74.500%                     PER THE DOCUMENT WE INCREASE THE ASSUMPTION IN THE MODEL BY THE GREATER
 31                  76.304%                     OF (.05%*1) OR (THE ACTUAL DIFFERENCE*1) I.E.TIMES THE NUMBER OF
 32                  78.157%                     CONSECUTIVE VIOLATIONS OF THE TRIGGER
 33                  80.156%
 34                  81.570%                     SO, IN THIS EXAMPLE, WE WOULD INCREASE THE DIFFERENCE BY: 0.06%
 35                  83.130%
 36                  84.983%
 37                  86.251%
 38                  87.811%
 39                  89.127%
 40                  89.956%
 41                  91.224%
 42                  92.199%
 43                  93.028%
 44                  93.759%
</TABLE>

<PAGE>

<TABLE>
<S>                 <C>
 45                  94.149%
 46                  94.539%
 47                  94.929%
 48                  95.319%
 49                  95.709%
 50                  96.099%
 51                  96.490%
 52                  96.880%
 53                  97.270%
 54                  97.660%
 55                  98.050%
 56                  98.440%
 57                  98.830%
 58                  99.220%
 59                  99.610%
 60                 100.000%
</TABLE>
<PAGE>
                                   EXAMPLE #3

<TABLE>
<CAPTION>
                                                                               2001-C
                                                ---------------------------------------------------------------------
MONTH                   % OF LOSS               MONTH                   ACTUAL CUMULATIVE LOSS             ASSUMPTION
-----                   ---------               -----                   ----------------------             ----------
<S>                     <C>                     <C>                     <C>                                <C>
  1                       0.000%                 30                             3.42%                          4.56% NOTE ASSUMPTION
  2                       0.000%                                                                                     NOW CHANGED
  3                       0.341%
  4                       0.780%
  5                       1.804%                                                                75.00%(3.42% / 4.56%)
  6                       3.998%
  7                       6.728%                CORRESPONDING PERIOD
  8                       9.751%
  9                      12.969%
  10                     16.967%
  11                     20.819%
  12                     24.671%
  13                     28.181%
  14                     31.789%
  15                     35.056%
  16                     38.372%
  17                     42.272%
  18                     45.929%
  19                     48.903%                         TRIGGER. 75.00% DOES EXCEED 74.50%
  20                     52.072%                         WE NOW NEED TO CALCULATE BY
  21                     54.803%                         HOW MUCH THE ACTUAL EXCEEDS THE TRIGGER IN ORDER TO
  22                     57.094%                         FIGURE OUT THE PERMANENT INCREASE TO THE ASSUMPTION
  23                     59.532%
  24                     62.457%                           Actual Cumulative Loss Amount:                      3.42%
  25                     64.749%                         Target Trigger (74.50% * 4.56%):                      3.40%
  26                     66.309%                                                                               ----
  27                     68.454%                                       Actual Difference:                      0.02%
  28                     70.648%                                                                               ----
  29                     72.355%
  30                     74.500%                PER THE DOCUMENT WE INCREASE THE ASSUMPTION IN THE MODEL
  31                     76.304%                BY THE GREATER OF (.05%*2) OR (THE ACTUAL DIFFERENCE*2)
  32                     78.157%                i.e.TIMES THE NUMBER OF CONSECUTIVE VIOLATIONS OF THE TRIGGER
  33                     80.156%
  34                     81.570%                SO, IN THIS EXAMPLE, WE WOULD INCREASE THE DIFFERENCE BY: 0.05%*2 OR 0.10%
  35                     83.130%
  36                     84.983%
  37                     86.251%
  38                     87.811%
  39                     89.127%
  40                     89.956%
  41                     91.224%
  42                     92.199%
  43                     93.028%
  44                     93.759%
</TABLE>

<PAGE>

<TABLE>
<S>                     <C>
  45                     94.149%
  46                     94.539%
  47                     94.929%
  48                     95.319%
  49                     95.709%
  50                     96.099%
  51                     96.490%
  52                     96.880%
  53                     97.270%
  54                     97.660%
  55                     98.050%
  56                     98.440%
  57                     98.830%
  58                     99.220%
  59                     99.610%
  60                    100.000%
</TABLE>

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00066-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00066-of-00352.parquet"}]]